by From Duncan Austin and RWER The “free market” advocate is in the dissonant position of wishing market actors to be the sole conferees of new property rights while also depending on the government to uphold a general rule of law which is the necessary condition for property to being meaningful at all. Indeed, because of the indispensability of the rule of law, we should be more accurate with our terminology. We never have “free markets”. We only ever have “enabled markets” – markets enabled by an authority capable of upholding the rule of law that gives property meaning. Language matters. “Free markets” is a highly misleading term – routinely deployed as an unassailable universal principle to cloak a more parochial agenda. Too often, what “free market” proponents are really advocating
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from Duncan Austin and RWER
The “free market” advocate is in the dissonant position of wishing market actors to be the sole conferees of new property rights while also depending on the government to uphold a general rule of law which is the necessary condition for property to being meaningful at all. Indeed, because of the indispensability of the rule of law, we should be more accurate with our terminology. We never have “free markets”. We only ever have “enabled markets” – markets enabled by an authority capable of upholding the rule of law that gives property meaning. Language matters. “Free markets” is a highly misleading term – routinely deployed as an unassailable universal principle to cloak a more parochial agenda. Too often, what “free market” proponents are really advocating is a system of “enabled markets where we want them and not where we don’t.” Or, put another way, the working slogan of neoliberalism has come to be: “some markets are the solution; government is the problem”.
Government is in the loop!
The problem, as should now be clear, is that we have created a narrative and cultural norms that limit governments’ ability to correct the huge gaps in the market’s grasp of real value. We expect government to support the market and governments now find themselves “caught in the loop” of promoting unsustainable economic growth.
Governments increasingly use economic performance – even stock market performance! – as a measure of their success, which negates their ability or even interest to introduce new markets that may impose costs. Other reinforcing loops are more tangible, still. For example, corporations use profits to lobby for lax regulations that enhance profits which can be used to lobby for more lax regulations etc. This dynamic – Friedman’s Feedback Loop, call it – has inexorably neutered government’s ability to improve human welfare by modulating market forces.
read more: http://www.paecon.net/PAEReview/issue95/Austin95.pdf