Monday, February 16, 2009

The death of the Free Market

P.J. O'Rourke, in the FT (free registration required for full article):

The free market is dead. It was killed by the Bolshevik Revolution, fascist dirigisme, Keynesianism, the Great Depression, the second world war economic controls, the Labour party victory of 1945, Keynesianism again, the Arab oil embargo, Anthony Giddens’s “third way” and the current financial crisis. The free market has died at least 10 times in the past century.


AntiCitizenOne said...

It's a bit like that "Economists have predicted 8 of the last 5 recessions!" quote.

Anonymous said...

If you edit the URL that the FT gives out, to change "authorised=false" to "authorised=true" and delete the ireferer and everything after this, then the URL will work, without having to register.

Security, what security?

Stan said...

The "free market" has never existed - at least never in modern times. How can it be free when one country has strict regulatory controls, minimum wages and workers rights and another has none of these? The only truly free market you can have is an internal - national - free market where the government can ensure standards and a level playing field for all competing parties. Even across the "internal market" of the EU we have countless distortions to the "free market" - which is why we have lost so much of our manufacturing, agriculture and industry over the last 30 years. Protectionism? All countries use protectionism all the time - but usually they do it at an individual level - through grants, subsidies and concessions - rather than at a national level through controlled borders and imports. The trouble with that sort of protectionism (what is the Common Agricultural Policy if not protectionism) is the worst sort because it requires a huge army of bureaucrats (working for countless "agencies") to administer and manage it whereas a national protectionist policy of flexible trade barriers and tariffs only requires a small number of people to set the parameters.

So, a free market is possible and desirable within the national context but is impossible and undesirable on a global scale. Remember, ALL depressions are preceded by a period of "globalisation" and what appearrs to be a sustained period of growth bouyed by the availability of cheap and plentiful credit - and that period always ends in the most spectacular failure of the system. It has never worked before, it hasn't worked this time and it won't work in the future.