Rethinking Markets

I suppose I’m not the first to make this point, but it seems to me that this argument comes up quite a bit:

If “capitalism” is taken to mean business administration, wealth accumulation, finance — “bulls . . . bears . . . people from Connecticut!”, as Seinfeld once put it — then one can imagine young people’s eyes glazing over. But the opposite of socialism isn’t “capitalism,” that shopworn Marxist term, but “the free market” or “the voluntary society” or, simply, “liberalism.” The great evangelists for the free market, from the classical liberals and Bastiat to Hayek and Friedman, wrote about [freedom] from coercion, individual autonomy, the rights of free association, and the like, not the mundane business of buying and selling. (Not that there’s anything _wrong_ with buying and selling.)

Leonard Rapping once took the pro-capitalist “new classical” macroeconomists (Lucas, Sargent) to task for framing their arguments in technical efficiency terms: “Many of the young and idealistic are attracted by the concepts of freedom and justice, not efficiency and abundance. Aside from their contributions to economic theory, Friedman and Hayek wrote powerful defenses of capitalism as a system that promotes liberal democracy and individual freedom. This attracted to their ideas many adherents outside of economics. The new classicals have no such agenda. They operate in the rarefied world of economic theory and mathematical exposition.”

My guess is that these Australian students have had some economics courses but have never read Bastiat, Mill, Hayek, Friedman, Rothbard, etc. etc. I take that as an indictment of their professors, not the market.

These classical liberal economists are indeed the silk purse of capitalism. The high road of capitalism is the freedom it conveys to all and the maximization of human autonomy.

The sow’s ear is the hard slog of both the lived reality and the current thinking about (capitalist-oriented) economics: that it is about efficiency, not about equity; that the hard work and unequal distribution of resources and rewards seems like a failure of imagination of how best to create a good, just society; that ‘the voluntary society’ is much better for the haves than the have-nots. In other words, it is not that capitalism has always been uninspiring and soulless. Perhaps it is that it is currently assumed to be wonderful and apparently defended (not necessarily by economists, I’m saying. By, say, the Federal Reserve Bank) on behalf of those who already benefit most from it.

Is it wrong to acknowledge the latter instead of always trying to shift the argument back to the former?