Are Markets Wise?

This was recently posted by a poster calling himself "To Give Man Purpose" on the Turn Left Message Wall. Exceptionally thought-provoking and well-written, it is reproduced here.


GREAT MOMENTS IN LIBERTARIAN HISTORY (Otherwise known as 5 reasons why we'd be better without government):

1. In the 1850's, Southern slaveholders, recognizing that their region of the country was falling dramatically behind the industrial North, and perceiving that slavery was becoming an unacceptable drag on the Southern economy, began emancipating their slaves thus avoiding a potentially horrendous civil war.

2. In the 1890's, Robber Baron industrialists, observing the horrid conditions under which their employees toiled and realizing, as Adam Smith had recommended over a century before, that their own interests were also served when their workers had enough to eat (thus making them more productive) and additional money in their pockets (to buy goods produced by said same industrialists) embarked on reforms to provide workers with minimum wage and safety standards in the work place. Thus unions and progressive legislation to provide workers with a safe workplace and just compensation were obviated.

3. In the early 1950's, the American public, perceiving the injustice in Blacks, who had served their country faithfully and well during the second world war, having to send their children to inferior, segregated schools, began to withdraw their children from the segregated public school system and send them to integrated private schools. Thus, the market, once again enabled the nation to avoid divisive legal battles.

4. Businesses all over the country, recognizing the untapped resource represented by women and minorities, began hiring and compensating both groups without regard for race or gender.

5. Perceiving the public relations and commercial advantages of protecting the environment, these same businesses actively invested in technologies to decrease the amount of pollutants poured into our country's air and water. Similarly, recognizing the importance of maintaining our forest resources as a source of economic wealth for future generations, the logging industry wisely cut into forestsin a way that preserved their integrity for future generations. Cleaner air and water were achieved, and vital resources protected for our children and grandchildren and the government never once had to intervene.

All satire aside (and I hope no one was offended--it was meant to both be amusing and make a point), the belief that the free market, left unfettered will make everything right is unfounded in fact. The free market is an excellent guarantor of the interests of the wealthy, the powerful, the talented and the ambitious, but it protects far less the moral, the decent, the generous or the patriotic. There is, and will always be, a role for government as the protector of the less powerful.

The Libertarian suggestion that government is dispensible breeds cynicism which breeds complacency. The result of this complacency is that the public fails to take an active role in its own governance and that governance is co-opted by the wealthy and the powerful. In my opinion, Libertarianism greatly contributes to those facets of government it professes to most strongly abhor.

One of the most pervasive arguments one hears in politics today is that the "markets are wise" and will inevitably lead to improvements in the condition of life. While it is undeniably true that the free market makes many valuable contributions, it is as imperfect as any other human institution (remember the Edsel?). There are many important social changes it is simply not capable of.

Market forces exist. They are neither good nor bad; they simply are. They possess no more wisdom or virtue than the force of gravity. An economic system which ignores their existence (such as communism) is doomed to failure; however an economic system which allows market forces to dictate its performance will be as overly constrained as a science which accepted remaining Earthbound due to the existence of gravity (If the Good Lord had meant the middle class to share in the rewards of economic growth, he would have given them trust funds!).

Vilification of government persuades people to abandon their role in uniting (through government) to shape those economic forces which control their lives. Be assured, the rich and powerful do not abdicate this role. As common citizens become more and more disenchanted with their government, and thus less active in it, the powerful (the wealthy, corporations, and special interests) gain greater influence over the functions of government.

This is not to suggest that government is not often wrong, inefficient or corrupt or that there should not be bounds on the size and powers of government. It is merely a warning that contempt of government is NOT a trait conducive to wise or just governance.