Economics 101

Every year I "do" Columbus Day, and I have often "done" Thanksgiving, but I think I'll skip it this year. I'm not going to burden people with having to think too much about what the occasion really symbolizes, and obscures. Maybe I'll get around to it later.*

Today, however, I want to seize the occasion of coming across this essay by Neil Fligstein and Steven Vogel in Boston Review. They say exactly what I have said, repeatedly, about economics and the economy. They explain, at least as well as I can, that there is no such thing as the Free Market(tm). There never has been, there never will be, there never can be. The concept is nonsensical:

[G]overnments and markets are co-constituted. Government regulation is not an intrusion into the market but rather a prerequisite for a functioning market economy. Critics of neoliberalism often make the case for government “intervention” in the market. But why refer to government action as intervention? The language of intervention implies that government action contaminates a market otherwise free of public action. To the contrary, the alternative to government action is not a perfect market, but rather real-world markets thoroughly sullied with collusion, fraud, imbalances of power, production of substandard or dangerous products, and prone to crises due to excessive risk-taking.

Likewise, critics of neoliberalism often adopt the fictional “free market” as a reference point even as they make the case for deviation from it. For example, they follow the standard practice of economists by identifying market failures and proposing solutions to those failures. To be fair, this can be a useful way to see how government action can remedy specific problems, and to assess when action may be helpful or not. But this approach also risks obscuring the fact that market failure is the rule and not the exception. More fundamentally, the government is not a repair technician for a market economy that functions reasonably well, but rather the master craftsperson of market infrastructure.

Proponents of the "free market" are actually just using the rhetoric to object to specific regulations that they don't like, ordinarily because they think they can make more money if the regulations go away. But someone else, in many cases just about everybody else, will be harmed in that case. But we can't see it because of the blinders of free market ideology. Markets are not forces of nature, they are socio-political constructions. The question is not whether they are regulated, or whether government intervenes, but rather how they are regulated and how government intervenes,  at whose behest and to whose benefit. I recommend that you do read the whole thing.

*For now, I will just tell you that since 1970, the remnants of the Wampanoag have gathered in Plymouth on the same day as Thanksgiving to observe a day of mourning.