No, markets are considered efficient where there are voluntary transactions considered mutually beneficial ex ante. This does not concern coerced transactions, where a majority (or even a better capitalised minority) can afford to coerce others into doing its bidding, which is precisely why arbitration and security exist: to prevent and, where applicable, rectify coerced losses of welfare. More demand means you can potentially charge a higher price for your good or service, and not that a demand for coercing others into doing your bidding somehow magically leads to positive sum, Pareto-efficient outcomes. You're correct that departments for which there is greater demand will attract more resources under pragmatarianism, which I am not disputing, but if we're discussing the relative efficiency of this system versus full blown voluntaryism, the demand to initiate coercion against others is detrimental to the achievement of positive sum economic exchanges, as by definition the coerced will be forced to engage in (trans)actions which they would rather have not. - Jon Irenicus
As I've said over and over...I have absolutely no problem with the assumption that anarcho-capitalism is Pareto optimal and pragmatarianism is not. But in order for this to have any sort of relevance...you have to explain why pragmatarianism wouldn't lead us to anarcho-capitalism.
Imagine we're at a train station. You want to go to the promised land and so do I. A train pulls into the station. The conductor is the invisible hand. I go to board the train and you tell me that it's not going to the promised land. Ok, so where is it going? Why wouldn't the invisible hand take us to the promised land? Would it take us half way and then run out of steam?
Pragmatarianism would create a market in the public sector. Just like in the private sector...consumers would exchange less valuable options for more valuable options. Is congress a more or less valuable option? Is the IRS a more or less valuable option?
What are your options?
1. You can say that these options are more valuable...but then this would mean that anarcho-capitalism is NOT Pareto optimal. Why not? Because it would be missing more valuable options.
2. You can say that these options are less valuable...but that consumers would choose them anyways. If consumers consistently fail to choose more valuable options...then markets really wouldn't work. People would choose to starve rather than buy food.
Do you have another option? I don't see one. If people are willing to spend their money on watermelons... then an outcome without watermelons really wouldn't be Pareto optimal. If people are willing to spend their money on congress and the IRS...then an outcome without these options really wouldn't be Pareto optimal.
So in order for your point about pragmatarianism being a suboptimal outcome to have any relevance...you need to explain why this would continue to be the case.
I agree that the first day of pragmatarianism the outcome would be extremely suboptimal. The options would still largely reflect the preferences of government planners rather than consumers. But the second day...the outcome would be marginally more optimal. Same thing with the third day...and the fourth day...and so on. Why do you perceive that this trend wouldn't continue? If each day the outcome becomes more optimal (because consumers choose more valuable options)...then why wouldn't the outcome eventually become optimal?
Going back to the train analogy. Imagine we board the train conducted by the invisible hand. Just as soon as we sit down you say...
Irenicus: Our location is extremely suboptimal
Xero: Well...yeah...we're still at the station
A second after we leave the station you say...
Irenicus: Our location is still very suboptimal
Xero: Well...yeah...we just left the station
An hour later you say...
Irenicus: We're going the wrong way. The promised land is in the opposite direction.
Xero: How can we be going the wrong way when the conductor is the invisible hand?