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Monday, August 06, 2007
Preaching To People Who Aren't In The Choir
I thought I'd point up an interesting article I read over the weekend in Reason, a libertarian magazine.
It's a review of a critique by a leftist economist of F.A. Hayek, a strong advocate for free markets who challenged socialist economic policy when it was ascendant in the '30s and '40s (that's right- this leftist blogger is commenting on a libertarian review of a leftist critique of a libertarian economist). Socialist planned economies, Hayek argued, were hampered mostly by information asymmetries and distorted economic incentives that caused massive waste and discouraged work. Hayek made the case that markets served as more efficient means of distributing information, and that market actors over time could price goods more accurately than government agencies.
Much of Hayek's analysis has been borne out by failed planned economies in eastern Europe and Asia. But the review's author, a self-described libertarian economist, recognizes that neither history, nor libertarian principles alone, will convince more people to further relax governmental controls on the market. The key argument is an empirical one- which outperforms the other in achieving common goals, civil society or governmental interventions?
If Burczak is a bellwether, his book suggests the debate over markets vs. socialism will become more and more empirical. Do unconstrained markets produce outcomes for the least well-off that are at least as good as could be produced under other economic systems? Can political processes achieve the goals that critics of markets would like?
The review's author believes these questions have pro-market answers. But recent events and research reveal that they might not. This is the argument that can win the hearts and minds of people who don't reflexively support governmental intervention.
Information asymmetries still cause lots of waste, but they occur because the government isn't involved enough- i.e. in health care. And the free market has unleashed the screwy incentives that have so widened inequality and threaten ecological catastrophe. Meanwhile, the tonic of market competition just doesn't seem to cure what ails us- either in education, product, workplace and environmental regulation, or lending and credit practices, to name a few.
Sometimes the market is the problem, and you don't put out a fire by pouring fuel on it. In other cases, injecting market dynamics just doesn't solve the problem.
A convincing liberalism is one that does not cede the ground of governmental superiority. Liberals can make a selective argument for governmental efficacy and market inefficacy that convinces and helps broaden liberalism's appeal.
Posted by Matt Lewis
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