The myth of the ‘free market’
How often do you hear criticisms of the free market, claims that we are living in an era of laissez-faire, that markets rain supreme?
Its something I come across frequently.
Its lesser heard cousin is that laissez-faire or classical liberalism failed in the 19th Century.
Both are absolute nonsense. We never had a laissez-faire system. Even in the heyday of Manchester Liberalism the state still intervened in the economy. Perhaps we were in a situation where the gains from freer trade created more of a boost than the hindrance of intervention, war and imperialism, but it certainly was no laissez-faire or even classical liberal order.
Today we live in an era of vast economic intervention. Corporations depend on the state for their existence, rent seeking is rife. Privatisation is now largely an exercise in extending state control over private business and allowing the state to run things more efficiently.
The only difference is that we are not so exposed to the intervention as we were in the 70s say. Instead the interaction is between us and business and then business and the state in its varying forms.
Even setting aside the argument as to what is the preferable system, this is a gross distortion of the facts.
Today’s Mises.org daily story has more, along with a brief (and insufficient) attempt to attack the assumption of the beneficial state.
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January 22nd, 2008 at 9:28 am
No I see that the bad talking of the free market is a particular pet hate of yours. Good. We can’t allow people to forget how much intervention there still is in the economy and that the failings of life cannot be lazily put down to the market system.
January 22nd, 2008 at 9:52 am
Perhaps I notice them a lot more than other people…
Within the LibDems we have talk of classical liberalism having failed every so often.
The other area this is nearly always brought up is in debates over health care where a standard attack on any sort of market in health care is ‘the free market doesn’t work in America’, but the US health care system is far from a free market.
I tend to find that any criticism of the ‘free market’ is aimed not at a free market but at an interventionist system with elements of market (that is except in the economics of neo-liberals - ie those who argue that markets work but can benefit from government direction).
January 22nd, 2008 at 11:44 am
Nothing to do with the article itself but I really can’t stand mises. They basically sell “paleolibertarianism”, with all the unplesant consequences that comes with in terms of views of other cultures and races.
That they still give Lee Rockwell space when its an open secret as to how involved he was in writing the vile newsletters than have been troubling Ron Paul lately is beyond me. Same with Hermann Hoppe.
I’m sure they still do some fine writing on economic issues but my view of them is so coloured by their connections.
January 22nd, 2008 at 12:19 pm
The Mises Institute has some really good stuff. I think Mises’s work deserves a good look from liberals, Rothbard can be a bit doctrinaire and abrasive, but many of his ideas are again worth looking at.
Funnily, the institute has become rather anti-immigration but Mises was one of the first to argue /for/ free immigration…
As for the Ron Paul newsletters - David Friedman (Milton’s anarcho-capitalist son) has some interesting things to say (and he’s got no reason to like Rockwell and Rothbard).
It also highlights one of the main differences between most LibDems and many liberals outside the LibDems…
January 22nd, 2008 at 10:07 pm
Well, I wasn’t speaking about Mises work. Rather, the institute that has his name has a large number of people in it who have a documented record of reaching out to far-right parties in continental Europe, and to what I will generously call confederates in the USA.
As well as finding such work highly worthy of criticism, it also lends a very negative impression of what individualist politics is like. Its not the kind of impression anyone should want the movement to have, and I say that despite my vast policy disagrements with Mises anyway.
As to the newsletter issue, even pandering is so stupid as to deserve disowning. I myself see the quote as at best spin. “the federal-homosexual cover-up on AIDS”?
“We are constantly told that it is evil to be afraid of black men, but it is hardly irrational.” Fear of a “race” is close enough to hatred that I don’t care to differentiate; its certainly racist.
“I think we can safely assume that 95% of the black males in that city [Washington, D.C.] are semi-criminal or entirely criminal.” Surely any principled liberal or libertarian would be against such group judgements without evidence, even if it wasn’t racist?
I could go on quoting, but you get the picture. Its not about being PC, racist conspiracy theories are as stupid as they are unplesant. Really, many of the newsletters verge on the incoherent in their bile for the “Jewish lobby”, “skull and bones” conspiracies and MLK being a child molester.
It all reprehensible stuff, and Rockwell has wormed this kind of attitude into the Mises Institute. Allowing these kind of view to come out as the face of libertarianism- defending them- will only serve to discredit it in the eyes of the general public.
January 27th, 2008 at 7:32 pm
A really interesting post. It raises a couple of thoughts. If there has never been a true free market is that because there simply isn’t the will or desire to let the market be free? And in that case perhaps one has to accept this limitation. But if the market was free, without any government interference, what would happen if the market is distorted by business or other forces? Does one wait for market forces to adjust or does government step in? Another question is, when the market had the opportunity to be free, in the 19th century, why didn’t it become embedded in Britain and show what it can truly do?
And what does one make of Hayek’s argument in ‘The Road to Serfdom’ where he argues that government can boost the market in dire circumstances? Surely an endorsement of Keynsian market economics at times of crisis?
I don’t have answers and am not at all anti market but think these things have to be thought about long and hard.
January 30th, 2008 at 10:29 am
Tinter:
More reading around and I yes, I see your point about the LvMI.
My view on the Ron Paul letters is pretty much that he should have known what was going out under his name. I don’t think he holds such views, but the lapse in letting them be published like that is unforgivable. It may also have done substantial damage to the libertarian movement.
There’s some good stuff which comes out of LvMI, but the Rockwell paleo-conservative slant as well as some of the rather doctrinaire approaches is damaging and taints the good work which they do and the libertarian movement as a whole and is deservedly criticised.
I don’t think total disconnection from them is the thing to do, but when they do say idiotic things, they should be taken to task over it.
(I note there’s a LvMI Europe which doesn’t seem to be the same people and Sarah Ludford has just participated in a conference they organised - Mart Laar is a patron who I recognise)
January 30th, 2008 at 10:39 am
Simon:
You make a good point on whether there is a desire for a free market, however if there is not, but some people think it is the best thing, then they should advocate it.
As for business distorting the market, only if business uses violence (or the threat of violence) to gain its ends would it be an unfree market. Things such as limited liability for example, are actually enforced by the government with the backing of force.
As for why the market did not become free in the 19th Century - I’m not sure, but it could be because the supporters of a free market whilst being more than today, were still a minority and the majority still favoured intervention, either in favour of the propertied classes (the Tories) or the poor (socialists and Liberals).
Hayek’s view is essentially the neo-liberal view and is criticised by hard core free marketeers for being interventionist. His argument is not in favour of free markets, but in favour of intervention to make markets work ‘better’ (the intervention is beyond securing property rights and prevention and punishment of the initiation of violence which non-anarchist free marketeers support).
As you say, these things need lots of thought and working out. Hayek’s view may produce the best results (however we decide what they are) in which case we would not have a free market, but does that matter?
January 30th, 2008 at 7:12 pm
When talking about LvMI actions in Europe, I was basically talking about Rockwell. Giving interviews to Nazi newspapers and holding meetings with racially-oriented Dutch parties is as bad as it gets. I think it means they should be cut off at the limb, because people will gain a view of individualist politics as being filled with racists and not come near us with a bargepole. Half measures won’t do.
After all, if we are to criticise the likes of Hilary for her actions, should we not hold those close to us to at least such a standard (if not higher)?
On Ron Paul; the newsletters came out in 1996 and he defended them, on national television I believe. I’m not sure what more evidence can be asked for. Best case? He is happy to pander to them. I’m not.
As to the free market, I think one of the major issues is that removing regulation may overall result in more harm. It creates a system reliant on taking companies to court after they have, say, poluted and caused many cases of cancer for example. I think theres a danger in taking a no-first-use policy and applying it to the state, and ending up with more violations overall by non-state actors. I find it hard to see this as more than paper ideology over any realism.
Not that I am an anarcho-capitalist in any case, but nonetheless.