Meaning: The quote by David Korten touches upon two fundamental principles of a market economy. Korten is an American author, former professor of the Harvard Graduate School of Business, and a prominent critic of corporate globalization. His work often explores the relationship between economics, social justice, and environmental sustainability. In this quote, Korten highlights the concepts of equity and internalization of costs in a market economy.

The first principle mentioned in the quote is that a market economy is comprised of many small buyers and sellers, which implies a substantial degree of equity. This principle refers to the idea that in a functioning market economy, there is a relatively large number of individual participants, both on the buying and selling side. This multitude of participants helps to prevent any single entity from having excessive control or influence over the market. In theory, this structure promotes competition and prevents monopolistic practices, which can lead to more equitable outcomes for all participants.

The notion of equity in this context implies fairness and equal opportunity within the market. It suggests that in a healthy market economy, there should be mechanisms in place to ensure that all participants have a reasonable chance to succeed and prosper. This principle aligns with the concept of economic democracy, where economic power is distributed among a wide range of individuals and businesses rather than being concentrated in the hands of a few.

The second principle mentioned in the quote is that costs are internalized in the producer's price. This principle relates to the concept of internalizing externalities, which refers to the idea that the full costs associated with the production and consumption of goods and services should be reflected in their prices. In other words, producers should bear the true cost of their economic activities, including any negative external impacts on society or the environment.

Internalizing costs is a critical aspect of market economics because it ensures that the prices of goods and services accurately reflect their true social and environmental costs. When costs are internalized, it incentivizes producers to take into account the broader impact of their economic activities and encourages the development of more sustainable and socially responsible business practices.

Korten's emphasis on these principles reflects his broader concerns about the functioning of modern market economies and their impact on society and the environment. As an activist, he has been vocal in advocating for economic systems that prioritize social equity and environmental sustainability. His work often critiques the dominance of large corporations and financial institutions in shaping economic policies and the negative consequences of this concentration of power.

In summary, David Korten's quote highlights the importance of equity and cost internalization in a market economy. These principles speak to the broader issues of fairness, competition, and responsibility within economic systems. Korten's perspective provides valuable insights into the challenges and opportunities associated with creating more equitable and sustainable economic structures.