It’s time for all men and women of good will to defend the market.
It’s currently fashionable to say that the state has to do more, and the market less. It’s is conventional wisdom that “markets have failed” so we need to try more regulation, nationalisation and state direction. The left are on the march, telling us that markets are cruel and immoral, forcing people into low pay or no pay, delivering boom and bust.
I am a democrat. I believe in democracy. It is the least bad way of organising government. At its best it allows political choice, defends the rights of all, protects minorities from abuse and offers a peaceful way of settling differences and changing course.
The market is democracy in action in the worlds of business and consumption. The market is more democratic than political democracy. In the latter you get a chance every four or five years to express your view and change the government. In the market you have a minute by minute opportunity to express your view and exercise your choice. In democratic government there is the danger of a single decision by a small group of people messing everything up. In a market for everyone deciding to do something there is someone else deciding to do the opposite. They will not all be wrong.
Markets are n either cruel nor immoral. They are amoral – they are a stage for your drama, a platform for your train, an opportunity for your future. They are more likely to be the source of new employment than the cause of the loss of your job. They allow you to buy the daily bread to stay alive, and to visit the weekly circuses to enjoy yourself. We should be grateful for their myriad successes, as well as rightly worrying over their troubles and failures.
My youth was disfigured by the cruel experiment in the Soviet bloc. They thought that comprehensive nationalisation, direction of labour, state planning and the denial of the market would cut out the waste of competitive capitalism and the injustices of the markets. Their experiment ended in ignominious failure. Their people were much poorer as well as much less free than we in the west. Their technology was years behind, they were starved of fridges, cars and washing machines, they diverted too much production to weapons and privilege for the political bosses. There was not much moral or just about the Zil lanes and the special education for the favoured few.
No sensible defender of the market believes in an absence of law or a lawless state of anarchy. We seek a legal freedom, with sensible rules laid down by democratic assemblies. You cannot have a successful market without a law of contract and a law of property. You need a strongly enforced competition law to prevent monopoly abuse. You need to enact a minimum income ( wider than a minimum wage) and generous treatment for those who cannot compete in the market for a job. You need a strong Central Bank which upholds the value of a monopoly currency, and polices the solvency and liquidity of the commercial banks well.
It would be wrong to go from a position where the state has failed to carry out its side of the bargain to one where the state nationalises banks and other companies, seeks to regulate individual transactions and activities, and seeks to influence what we make and what we buy and sell. That way is the way back towards the failures of state socialism, which will be worse than failures of the market.
This recession is a failure of a regulated market. The regulators must carry much of the blame, for stoking the fires of credit too high, and then tipping too much water over the fire in one go. There is one thing worse than too much credit, and that is too little. Many people will pay with their jobs and businesses for these mistakes. Yes, the bankers got it wrong. The bosses should pay for their mistakes. But so too did the regulators, whose main task should be to prevent such excess. Today the Regulators main task should be to get the banking system going again. They are still too tempted to put out the fires when the economies are now shivering to death.