Capitalism Requires Government

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Government and the Deification of the Market

Up until this point, I have been talking about how government policies and programs actually help businesses and stimulate economic growth. These have clearly positive effects on business, and even most conservatives would not deny the beneficial economic results of the government enforcing contracts, keeping the money supply stable, limiting liability of corporations, and so on. But the fact is that modern democratic governments also do a lot of things that are not necessarily good for particular businesses – at least in the short run. And these are what really bother anti-government conservatives – things like environmental and workplace regulations that add to the cost of doing business, taxes that lower the profitability of corporations, and social programs that insulate people from the discipline of the labor market. There is no getting around that fact that some governmental actions do indeed reduce profits for some businesses.

For free-market, anti-government conservatives, most of this damaging government interference in the economy is simply unnecessary. In their view, if we simply leave the market alone, it can be trusted to produce virtually all of what we need for the good life in America. This unbridled enthusiasm about the wondrous abilities of markets is expressed well in a variation of the old light bulb joke:

Q: “How many conservatives does it take to screw in a light bulb?”

A: “None. If the government would just leave it alone, it would screw itself in.”

A silly joke – but it does capture well the sense of delusional optimism that many conservatives have about markets. The market is seen as a marvelous self-regulating mechanism that if left unfettered will provide all our basic needs – and a great many luxuries as well. This view rests in large part, as mentioned earlier, on the notion that markets are “natural” and can achieve a kind of perfection that manmade, artificial government cannot. It assumes that market-based decision-making will always produce the public interest – and that attempts by government to regulate markets only distort them and cause problems. As Rep. Dick Armey liked to quip: “The market is rational and the government is dumb." 5

In many ways, then, the conservative movement’s demonizing of government is merely the flip side of its deifying the market. And the term “deifying,” with all its religious connotations, may not be that far off. After all, it was Rep. Armey who suggested that our inspiration to participate in the market may come from above. “We have all been called to Freedom by God,” he said. “I think the free market arose from the calling.”6 Of course, most anti-government conservatives would not take it so far as to claim some kind of divine endorsement of the market; but many do adhere to a kind of “market fundamentalism.” This fundamentalism consists of an unquestioning faith that unrestricted markets are the best way to organize human activity and that they can largely do no wrong. We all need only follow our own selfish economic interests, and the “invisible hand” of the market will inevitably weave this all together to produce the public interest. Moreover, free market mechanisms, if allowed to, would eventually solve virtually every pressing problem we have, including spiraling health costs, poor quality education, environmental pollution, unsafe products, retirement insecurity, and so on. So if we simply place our faith in laissez-faire capitalism, then we will all reap the rewards.

 

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