Reply to a Conservative
Friend
A clarifying look at fundamentals
of government and the economy
by Win Wenger, Ph.D.
- Clinging to one fixed principle or idea or ideology, to the exclusion of
every other consideration, creates monstrosities. Witness Marx and the other
Determinists, Watson-Skinner and Behaviorism, and all the fanatics of bloody
history, religious and secular.
- All human instrumentalities and processes are imperfect; error is implicit in
the system. The conservative friend whose letter prompted this reply and piece
pointed out: substituting government in place of areas where the free market
should be the instrument of choice, brings in error. There is also a shoe on the
other foot...
- Trying to force the free market to operate, without help, in areas where it
is not the instrument of choice, also brings error. Largely how we got into the
present fix was irresponsible deregulation, for example. There are two glaring
areas where the free market is definitely not, by itself, the instrument of
choice. One of these was the set of spill-over functions pointed out in 1776 by
Adam Smith himself, the "father of the free market": indivisibilities and external
economies and diseconomies. The other has been made glaringly apparent by both
history and the present: the key function of a free market, its pricing
mechanisms which act as a Directory directing people and resources toward more
and more productive uses—Adam Smith's "invisible guiding hand" rendering
congruent private and public interests—operates only within a relatively
narrow range of norms and expectations. Outside that range, non-rational factors
take over, resulting in destructive stampedes and cascades such as we have been
witnessing.
Within its range, and especially in handling the infinitely intricate detail of
people's lives and decisions, the free market is so clearly the preferable
instrument, that government policy should be to nurture the conditions which
allow the free market to function well—and to extend, by persuasion, law,
incentive and other means, the range of economic activities which the free
market can perform well over sustained periods of time. But treat the free
market economy as a means to an end, not as the ultimate end-goal and principle
to the absolute exclusion of all other considerations.
The long-term and
sustainable multi-dimensional well-being of many or most members of our society
and civilization, and even of humanity in general, should subsume lesser goals.
Government is a terribly flawed instrument, often inconsistent with its stated
reasons-for-being and therefore often illegitimate even in its own lights. With
the fall of Communism, the world has managed to survive its latest massive
demonstration of monstrosities resulting from a single idea or ideology being
driven to the exclusion of all other considerations. Is a similar fall of
Capitalism about to culminate the current demonstration?
Command economies don't
work—but in emergencies and in short-term situations where decisions, policy
and strategy need be made quickly, some sort of command arrangement is required.
A command arrangement which is answerable to some sort of democratic
checks-and-balances process within context of a generally agreed set of overall
rules. Which democratic checks-and-balances process itself results in
monstrosities and failure if pursued to the exclusion of common sense and
emergency short-run requirements.
The main point here is this:
To artificially force any human instrumentality to replace the one normally best
suited to its domain, results not only in an increase in error but in
monstrosities and costly profound failures. To substitute government and command
economics for the free market in areas where the free market is best left alone
to serve, brings disaster. But to force the free market to operate, to the
exclusion of all other considerations, in ranges and domains where it is not
suited, is not only just as disastrous, but it is largely how we got into the
present fix.
The answer lies not in an ill-suited substitution of one
instrumentality for another, the triumph of one ideology over another, but a
common-sense bringing-to-bear whatever factors are needed to re-rationalize the
economy, mitigate human suffering, and restore operating conditions and
expectations to the point where market pricing will not only permit the return
of people and resources to productive uses and to the production of wealth
generally, but serve once again as an effective Directory steering people and
resources toward ever more productive uses.
Hence, both the title and the substance of my article, Mixed
Economy.
Proposed action: that we look more toward the incentive side, in whatever
recovery packages we attempt, as minimizing the direct role of and cost to
government, while enabling policy to repair the areas of neglect and abuse and
ideologically-driven monstrosities in the ruins of which we now wallow.—As our
best and soonest chance of returning to conditions where people and resources
will again be productive, and where free market pricing can operate rationally.
Yes, government is a source of error. Yes, within government, checks-and-balances
democracy is a source of error—so is a command system. Outside of government,
the free market is also a source of error. All human instrumentalities are
sources of error.
Error compounds when we try to force a given instrumentality
to operate, for long, way outside its special competence. Within a multi-inputted
system at least partially independent of single-view ideologies, we have our
best chance of more people behaving more rationally and of enjoying a system in
which common sense plays a role.
...Win Wenger
|
