Monday, October 20, 2008

The "Free" Market Did Not Fail

In recent weeks, a number of commentators – including several prominent Catholic writers – have announced the "death" of free-market capitalism. These reports are often tinged with a bit of "I told you so" smugness, and laced with the satisfaction that so often comes with the conviction that one was "right all along."

These reports are inaccurate, though – at least, we should hope that they are.

To be clear, the purist-libertarian fantasy of Ayn Rand novels and the early Rush albums is not what we have (thank goodness). Indeed, as the Washington Post editorializes today, the "market that failed" was not free: "We are not," the Post observed, "witnessing a crisis of the free market but a crisis of distorted markets." This is true, and it is true of many of the social and policy problems that are often chalked up to excessive economic freedom. The housing market and the credit environment – like, for example, the agricultural sector and so many others – are not unregulated, they are not arenas in which incentives operate, prices are set, and risks are taken without interference by government. Even in our "free" markets, regulation is ubiquitous.

As we move forward, and no matter who wins the election, let’s remember this fact: Reasonably-regulated-but-largely-free markets are tremendous forces for good and engines of creativity worth celebrating and protecting. The world needs more of them, not fewer. To be clear: to say this is not to deny the importance of government’s task, or to baptize selfishness, or to deny the overriding public obligation to the common good. It is merely to join the late Pope John Paul II in insisting that the great principles of the Catholic Social Thought tradition – including a "preferential option" for the poor, and "solidarity" among all persons – are likely to be best realized through the responsible exercise of human freedom – including economic freedom – and not through centralized command-and-control schemes.
Rick Garnett

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