Robert Kuttner, of the American Prospect, has written a clear and convincing repudiation of right wing worship of the free market — the kind of worship you hear from the Freedom Foundation.
Kuttner writes in It’s Bizarre: Libertarians Are Clueless About the ‘Free Market’ That They Worship: “the free market is neither efficient, nor fair, nor free from periodic catastrophe.”
On the supposed efficiency of the market, Kuttner mentions global climate change as a huge market failure. “The price of carbon-based energy is “correct”—it reflects what consumers will pay and what producers can supply—if you leave out the fact that carbon is destroying a livable planet.” He goes on:
The other great catastrophe of our time is the financial collapse. Supposedly self-regulating markets could not discern that the securities created by financial engineers were toxic. Markets were not competent to adjust prices accordingly. The details of the bonds were opaque; they were designed to enrich middlemen; the securities were subject to investor herd-instincts; and their prices were prone to crash once a wave of panic-selling hit. Only government could provide regulations against fraudulent or deceptive financial products, as it did to good effect until the regulatory process became corrupted beginning in the 1970s. Deregulation arguably created small efficiencies by steering capital to suitable uses—but any such gains were obliterated many times over by the more than $10 trillion of GDP lost in the 2008 crash.
In short, we shouldn’t mistake corruption and negligence for freedom. We need government to regulate markets, provide for the common good, and lay the foundations for capitalism itself.
As Karl Polanyi famously wrote in a seeming oxymoron, “laissez-faire was planned.” Markets could not exist without states defining the terms of property ownership and commerce, creating money, enforcing contracts, protecting patents and trademarks, and providing basic public institutions.
As Kuttner admits, nowadays government is so corrupted by private interests, in particular from Wall Street, that it often doesn’t serve its intended function. Consequently, the public has lost faith in government and the political system. Of course, Republicans and libertarians love it when government doesn’t work and when people give up hope. We need to fix that.
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