We should strive to understand why people with whom we disagree intellectually think differently than we do. Sometimes making a sincere effort to understand those with whom we disagree will change our minds, but even if that doesn’t happen, it usually deepens our own understanding of reality.
The reality as I understand it, and as most of my friends at AIER understand it, is that the material and ethical benefits of free markets are so obvious and overwhelming that it is difficult to understand why so many people are so enthusiastic about active government intervention in the market process. But I also understand another reality. My faith in free markets and my wariness of government intervention put me in a relative minority. There are many more people who doubt that markets can be trusted to provide enough goods for enough people than there are people who want to keep government small and strictly limited – people who want to allow individuals to freely make the peaceful choices they want in the marketplace.
Why is there this distrust? What do serious opponents of free markets have in mind when they are so keen to replace market processes with government dictates? Here are my guesses as to some of the things most serious opponents of free markets have in mind.
- The total amount of material wealth available to humanity is largely independent of human actions and institutions..
Wealth is natural – it arises automatically from natural or historical forces with little or no human intervention. Human action (and the institutions that govern it) determine only the distribution of this wealth, not its quantity or quality. Thus, if some individuals have more wealth than others, it is because the wealthy individuals are simply lucky or, more likely, because the wealthy individuals enjoy some kind of unfair advantage over other individuals – an advantage that enables them to acquire undeservedly large amounts of wealth.
As long as human actions and institutions do not appreciably affect the total amount of material wealth, taxes and regulatory measures will not reduce the accumulation of human wealth. These measures affect only the distribution of nature’s bounty, not its quantity.
- Prices and wages are arbitrary and set by the strong against the interests of the weak..
Because wealth is “produced” independently of human action, prices and wages determine only how wealth is distributed among buyers and sellers, employers and employees. High prices distribute more wealth to sellers and less to buyers, while low prices do the opposite. High wages distribute more wealth to workers and less to employers, while low wages do the opposite. Government control over prices and wages has little effect on the production of wealth; such control, or the lack thereof, determines only the distribution of wealth between buyers and sellers. Thus, to oppose something like a minimum wage law is to support the interests of greedy employers at the expense of workers, and to oppose the use of price ceilings to prevent “price gouging” is to support the interests of greedy merchants over consumers.
- Pursuit of profit is antisocial.
If the total amount of wealth is independent of human behavior, then the pursuit of profit is the pursuit of an unfair share of this wealth. The pursuit of profit is the pursuit of depriving one’s fellow man of his rightful share of wealth. Thus, those who defend profit-seeking entrepreneurs and corporations are defenders of plunder. These defenders may be genuinely ignorant of the rapacious nature of the profit-seeking, but this ignorance does not excuse them from carrying water for the plunderers.
- Commerce is antisocial because it is motivated by profit.
Because the profit motive is antisocial, so is commerce and anything else that has the profit motive. Commerce is a means by which the cunning, the crafty and the privileged profit at the expense of the gullible, the honest and the oppressed.
- A democratically elected government expresses the will of the people, and that will is sacred and truly good, as long as the people are not misled by the false ideas spread by moneyed politicians and their moneyed apologists. Unfortunately, ordinary people are easily misled by ideas and ideologies that are contrary to their true interests.
Thankfully, sometimes people understand their true interests and vote accordingly, as happened in the United States when it elected Franklin Roosevelt, Lyndon Johnson, and Barack Obama. But too often people are naively duped, especially by greedy corporations and their hired guns, into voting against their true interests, as clearly happened when people voted for Ronald Reagan and Donald Trump. This dire reality justifies many undemocratic means of collective action to advance the people’s true interests. Such actions occur when well-meaning and wise government administrators and judges impose market restrictions that elected officials are too corrupt or cowardly to impose.
- Serving as an elected official or civil servant in a democratic government is a noble thing, that is why we call them “civil servants.”
At the very least, working for a nonprofit that restrains government and commerce is a great way to avoid working in the profit-driven commercial sector. Government officials motivated by the public good work selflessly to “pre-distribute” or “redistribute” the fruits of nature’s economic bounty away from the greedy and privileged who want more than their fair share, and to the docile and oppressed whose only hope of a decent standard of living lies in the success of their government defenders.
- All social order, including economic order, comes from government..
In reality, there is no such thing as “laissez-faire” or anything close to it. If governments protect property and contract rights along the lines advocated by free-market advocates such as F.A. Hayek, Milton Friedman, and Deirdre McCloskey, they will be actively intervening to favor certain groups (mainly corporate interests), as they do when they use industrial policy, confiscatory taxes, and so on to redistribute wealth and reallocate resources. Because governments are the source of all social order, they have no choice but to choose certain kinds of order over other possible orders. A humane government will intervene using tools such as tariffs and redistributive taxation to ensure that the poor and oppressed have greater access to nature’s material bounty. A cruel government will intervene using tools such as the protection of “private property rights” and low taxes to ensure that the rich and powerful retain an unfairly large share of nature’s bounty.
The above list is not exhaustive of the relevant beliefs held by opponents of the free market order. Nor do all opponents of this order hold all of the above beliefs. And many of these beliefs, if held at all, differ in detail from those described here. But the above beliefs are common among many opponents of the free market order, whether consciously held or merely unconsciously assumed. These beliefs, needless to say, are, I am convinced, deeply false. But false or not, such beliefs are widespread and go a long way to explaining the public hostility toward the free market order. If the free market order is to survive, these beliefs must be challenged.
Donald J. Boudreau
Donald J. Boudreau is an Associate Senior Fellow at the American Institute for Economic Research and the F.A. Hayek Program in Advanced Studies in Philosophy, Politics, and Economics at the Marketas Center at George Mason University. He is Director of the Marketas Center and Professor of Economics and former Chair of the Department of Economics at George Mason University. He is the author of the following books: Hayek’s Essence, Globalization, Hypocrites and foolshis articles have appeared in publications such as: Wall Street Journal, New York Times, US News & World Report He has also contributed to numerous academic journals. He writes a blog called “Café Hayek”, Pittsburgh Tribune ReviewMr. Boudreau earned his doctorate in economics from Auburn University and his law degree from the University of Virginia.
