price-determining arrangements of the economy have considerable inflexibility. They do not respond nearly so well to new information as do, for example, organized securities and commodities exchanges. The economy simply does not maintain, under normal conditions, a set of market institutions that is well adapted to the peculiar short-term needs of an emergency. Market arrangements that work well under normal conditions may be quite inadequate to an emergency, as participants may need to find new and unusual transaction patterns or information sources. Self-interest may be expected to bring about needed adaptations eventually, but the market may function poorly for some time. Since these conditions prevail in different markets in differing degrees, and since prices are interdependent, it is unlikely that prices would move quickly to a configuration appropriate to guide efficient response to the emergency. Serious instability is not to be excluded, and a protracted period of “hunting” for a new equilibrium is likely.

The issue of compatibility with other national objectives recalls the fact that energy is not only a commodity but an ecological resource, a social necessity, and a set of strategic materials. The problem is most starkly illustrated by the possibility of an energy emergency combined with a military mobilization effort. The heart of the problem is the fact that the market is plainly not an appropriate institution to weigh the urgency of the mobilization or to determine its form. There are major complicating factors: the importance of government procurement, the fact that governments usually are not particularly nimble market participants, and the fact that many of the markets in which the government would seek to buy are far from competitive. There are further complications involving the macroeconomic problem of financing the mobilization. Taken together, these considerations strongly suggest that, in a future mobilization as in past ones, the government would have to intervene strongly in the economy to bring about an economic response compatible with national objectives. In such a context, much of the efficiency that markets display is likely to be efficiency in support of objectives contrary to those selected by the government.

The compatibility issue applies to civilian priorities as well. The political process often makes decisions based on judgments of energy needs or national economic security. Thus, if it is agreed that there is more need to heat houses of the poor than to run the snow-making machines at ski resorts, direct policy intervention in the market might be needed. Similarly, if the nation decides it needs all the primary aluminum it can get, it would be appropriate to override a market signal that was shutting the industry down.

It is to be emphasized that the force of the objections to reliance on the market increases with the severity of the emergency. While government passivity might effectively encourage adaptive decentralized preparations

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