Faith & Social Justice: In the spirit of Richard Overton and the 17th C. Levellers

Economic Justice Primer: 1) There are no “Free Markets.”

There are no “free markets” if by that we mean markets with absolutely no government intervention.  In any economy more complicated than a small village, a market cannot even exist without government “intervention.”  After all, just to HAVE a market takes at least the following:

  1. Standardized currency, backed by government guarantee of the worth of that legal tender.
  2. Standardized weights and measures–and a bureau of same to set those standards and enforce them.
  3. A mechanism for enforcing contracts.

Beyond that, for an efficient market, one needs some other things:

  1. Public roadways, waterways to move goods and services.  One can move everything by rail through private rail companies, but chances are the railway lines will be publicly maintained.    Bridges, public dredging of rivers and ports for commercial access, public airports even for private air shipping companies–all are government interventions in the market.
  2. Safety standards for workplaces and for products.  And a government agency to enforce the standards and review them.
  3. Pollution standards and government enforcement mechanisms.
  4. One doesn’t usually want privatized access to drinking water, so there is usually public water and sewage.

One can have purely privatized garbage pick-up and utilities, such as electricity, but these tend to be “natural monopolies” without much competition. So, usually, for the benefit of the whole community, these are either publicly owned or, at least, publicly regulated.

Public transportation systems, partially paid for by taxes, partially by user fares, help keep down congestion on roads (or keep it from getting worse), reduce pollution, and provide efficient transportation for all those without the means or desire of private transportation. 

Then, too, every society decides that not all values can be reduced to market values. Somethings are so valuable (or so dangerous to the common good) that the society judges that they should not be bought and sold. If they are to be distributed at all, they must be distributed by non-market forces.  Thus, in our society, several drugs are illegal (e.g., cannabis) and others (e.g., alcohol) are strictly regulated and not allowed to be sold to minors–this is a large interference in the marketplace.  Also, in our society, we do not permit sex to be distributed by market forces. When we forbid pornography (or certain types of it, such as “snuff” films) or regulate it who can be filmed (no minors) and to whom it can be sold (again, no minors), we interfere in the market.  When we forbid child labor or slavery, we interfere in the market.

The idea of a market that has no government interference is an illusion–and would not be desirable.   Once we see and acknowledge this basic truth, we can see the true nature of the debate: Over HOW MUCH and WHAT KIND of government interference in the marketplace.  Now that is a debate worth having. I do not think any political party or ideology has a corner on all the answers there.   But when anyone starts with the premise, “Government interference in the marketplace is always wrong,” you know they are either quite mistaken or being deceptive.


September 19, 2009 - Posted by | economic justice

1 Comment

  1. Excellent post. I have actually read Adam Smith, unlike some modern-day libertarian friends of mine, and he never advocated anything like “government interference in the marketplace is always wrong” or even “government always screws things up.” He always assumed a certain level of government activity and even understood the need for livable wages. His main target was mercantilist government policy.

    In similar fashion, Gilded Age “laissez faire” was very far from “government interference is always wrong.” The 19th-century Republican Party was the party of activist government. The reason we sometimes miss that is because, especially after about the 1870s, it also was deeply influenced by Social Darwinism. Republicans assumed that God had constructed the world in such a way that a free market would naturally reward virtue and punish sin. Therefore, pro-business policies like high tariffs, railroad subsidies, and anti-collective bargaining legislation, which benefited the rich, were seen as compatible with nature, and pro-labor policies were as “meddling with the natural order of things.” The Democratic Party at the time also had a “Whiggish” element which was business-oriented, but it tended to be more regional. It was interested in developing Southern business, but still too mad at the Republicans over Reconstruction to trust their national agenda.

    The “government-interference-is-always-wrong” idea is both a reaction to and the fault of the New Dealers. It’s a reaction to them in that it was constructed by anti-New Deal business interests, and other conservatives, beginning in the 1930s. Until the 1960s, their efforts had limited visible success but they were laying the foundation for later influence. It was the fault of the New Dealers to the extent that the New Deal, haphazardly and somewhat accidently, led to Keynesianism and Keynesianism made the pursuit of permanent consumerist growth official government policy. Consumerism privatizes the public sphere, and that has a tendency to make the public sector/private sector distinction seem more important that it did in previous periods of American history.

    Comment by Anthony | September 20, 2009

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