snowplough

Forbes contributor Tim Worstall is always a joy to read. Despite overwhelming evidence to the contrary, Worstall’s columns offer steady defense after steady defense of the free market system – he’s even smarter than Pope Francis. It is, of course, his job – or shtick – to defend the failing system. And to his credit, I’m amazed at how quickly one can get sucked into his vortex of moral platitudes.

One of his latest rhetorical tactics is to argue that the market is always right, even when it isn’t. According to Worstall, the free market is always best, even when it requires government intervention, because, hey, no system is perfect. Typically, market liberals don’t know what to do with things like patents, limited liability laws, freeways; that is, all the stuff that is a precondition for the market’s existence. Worstall, however, brilliantly sidesteps this issue, writing:

As we all know there’s enough people out there who tell us that markets don’t work very well, free markets especially don’t work all that well and so, well, we should all be dragooned into doing whatever it is that these people have planned for us. One answer to this is simply to start shouting that free markets do to work so there. A slightly more sophisticated approach would be to agree that yes, markets (whether free or freeish) sometimes they don’t work well. But that markets don’t work well, or even at all, in one or another set of circumstances is not actually proof either that they won’t work well elsewhere or that they’re not working elsewhere. For example, the observation that a monopolised market is not working could well be true but that isn’t proof that non-monopolised markets don’t work.

In other words, the free market is working, it just experiences bumps in the road from time to time. It’s not so much that there is evidence to the contrary, it’s just that there are aberrations, or a lack of will to see the free market through. Worstall blithely concedes, writing, “ free markets aren’t perfect. Yes, we know that, the very existence of the idea of IP is proof of that. The public goods problems of creation and innovation are such that too little will be produced in an entirely free market environment. Therefore we intervene in markets to make them better.”

Several years ago, Karl Polanyi spotted this common tendency among market liberals in The Great Transformation. Their first step is to claim that markets and governments are two separate entities, whereby the latter is often forced to intervene into the autonomous domain of the former (would that it were not so!). When government intervention is required, as with patents for example, market liberals will insist that the source of the problem is “the incomplete application” of the market’s principles. This, writes Polanyi,

is the last remaining argument of economic liberalism today. Its apologists are repeating in endless variations that but for the policies advocated by its critics, liberalism would have delivered the goods; that not the competitive system and the self-regulating market, but the interference with that system and interventions with that market are responsible for our ills. And this argument does not find support in innumerable recent infringements of economic freedom only, but also in the indubitable fact that the movement to spread the system of self-regulating markets was met in the second half of the nineteenth century by a persistent countermove obstructing the free working of such an economy (149-150).

What Worstall and his ilk fail to see is that markets and governments are not two distinct entities in competition with each other. “Laissez-faire was planned,” as Polanyi famously stated. The genesis of the so-called free market system is this: “the road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism” (146ff.).

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