Difference between revisions of "Laissez Faire"

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Revision as of 03:07, 15 March 2013

History shows pretty clearly that unregulated, unfettered capitalism is a brutal environment where wealth accumulates in the hands of an elite leaving most people in poverty, deeply vulnerable to the inevitable economic shocks that follow.


Capitalism, Markets and Laissez-Faire (22 links)
Libertarian ideology worships these gods with feet of clay, and wishes no limits to them. History and common sense tell us that limits must be imposed on them, they must be regulated.
Coercion and Distribution in a Supposedly Non-Coercive State [More...]
Property systems are coercive. Robert Hale points out in 1923: [T]he systems advocated by professed upholders of laissez-faire are in reality permeated with coercive restrictions of individual freedom and with restrictions, moreover, out of conformity with any formula of "equal opportunity" or of "preserving the equal rights of others." A difficult read.
Degrees of Laissez Faire [More...]
A list of a dozen different types of economic theories that support various forms of "laissez faire." Includes a discussion of capitalism versus laissez faire.
Desert Theory, Rehashed [More...]
The idea of "just deserts", so important to laissez-faire ideas, would not result from laissez-faire and in reality has significant problems..
Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (book) (1 link)
An excellent academic (but readable) rebuttal to the propaganda in Economics in One Lesson, the fallacies of Economics 101, some Chicago Economics and some Austrian Economics. Very simply, markets do not take into account ALL opportunity costs.
Economists Are Warming to Government Intervention [More...]
Based on recent surveys, "... on many issues, economists are actually more likely than the general public to summon the guiding hand of the state."
Existential Comics 370: Herbert Spencer Visits Pittsburgh [More...]
Herbert Spencer was a proto-libertarian capitalist philosopher. Andrew Carnegie invited him to see capitalism in Pittsburgh, where Spencer remarked: "six months residence here would justify suicide."
Firm Market Power and the Earnings Distribution [More...]
Market power, a form of market failure, produces a positive relationship between a firm's labor supply elasticity and the earnings of its workers. This paper provides empirical evidence measuring market power and showing that employers with more power pay lower wages. Especially at lowest incomes.
Free markets need more regulation than you think [More...]
"... the existence of a free market where individuals can freely pursue their economic desires and enjoy the fruits of their labor is a product of freedoms secured through government regulation... it is no coincidence that the market economy only really began to develop when the modern democratic state did too."
Globalization, Free Trade and Economic Freedom (35 links)
Code for "let business run the world and the heck with the populace." The anti-liberal dominance of plutocratic property and business over popular sovereignty. Historically, we could extend these concepts to include buying, owning, and selling slaves. The arguments made then were the same. Used by propagandists to trump other freedoms. Also known as economic liberty. These also result in large-scale redistribution, which capitalists prefer you not notice.
Inequality and the Pandemic, Part 3: Risk and reward [More...]
"I want to consider the claim that we need inequality in order to encourage people to take risks. The simplest response is to point to the empirical fact that high income earners take (or, more accurately, are subject to) less risk than average not more."
Keynes on Laissez-Faire [More...]
Gavin Kennedy writes: "‘Laissez-nous faire’ is not advocated as a universal principle for merchants and their customers; it was a very partial principle for merchants only... [Mill and mine owners] wrapped themselves in laissez-faire flags to wipe up the blood of their employees when they demanded their own freedoms and not those of their labourers or their customers."
Libertarians Are Huge Fans of Economic Coercion [More...]
"Hale showed that all economic regimes rely upon economic coercion, laissez-faire ones just as much as socialist ones."
Mind over Market [More...]
Nobel laureate Michael Spence writes:"[...] most societies have important economic and social objectives that markets and competition are not designed to achieve. In today’s rapidly globalizing world, the most important of these objectives – expressed in various ways through the political and policymaking process in a wide range of countries – are stability, distributional equity, and sustainability."
Ode to the Odious: A Poet Ridicules Laissez-Faire [More...]
Phillips Thompson's “The Political Economist and the Tramp" (Labor Standard (New York), 14 December 1878) ridicules Herbert Spencer's Social Darwinist arguments for Laissez Faire.
Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy – Part VI [More...]
Dan Kervick proposes six challenging progressive tasks whose successful pursuit would help us achieve a more just, equal and democratic society.
Reading Hamilton From the Left [More...]
An excellent overview of how Alexander Hamilton's Federalist, dirigiste vision of state-supported capitalism was the basis for the growth of American capitalism. As opposed to Jefferson's large, patrimonial, slave-owning, agrarian elites who exported primary commodities and imported finished manufactured goods from Europe.
Ronald Coase, a Pragmatic Voice for Government’s Role [More...]
"Mr. Coase’s work cannot be read as a case for minimal government. On the contrary, his message was more purely pragmatic: Because we can’t negotiate efficient private solutions most of the time, we must ask whether laws and other institutions can help steer us toward solutions we would have chosen if negotiation had been practical."
The end of laissez-faire [More...]
John Maynard Keynes points out that laissez faire is based on false assumptions, and that there are many necessary social undertakings.
The Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics Movement (book) (2 links)
The first, full-length study of Hale's work, which showed that "private", unregulated economic relations were in fact determined by a state imposed regime of property and contract rights which were hard to square with common-sense notions of social justice.
The TransPacific Partnership And "Free Trade" [More...]
A short, clear, graphic-novel introduction to the how the wealthy collect the benefits of Free Trade and the rest of us bear the costs. It includes the loss of national sovreignty through trade agreements that force deregulation.
Unregulated Market (7 links)
Includes black markets. In an unregulated market, you have the freedom to buy and sell whatever you want, no matter how noxious, no matter how fraudulently. Drugs, fake drugs, poisons, child prostitutes, slaves, beatings, torture, executions, military force, mass murder: all these are sold in unregulated markets. Libertarians generally oppose market regulation, and thus would produce these ills. Unregulated markets cannot correspond to the free market model because there is not perfect competition (assumptions of perfect information and rationality fail.)
When The Economist blamed Irish peasants for starving to death [More...]
"Even so, its extraordinary blindness to how real life economic power relations work is reminiscent of the magazine’s beginnings in the 19th century, when it fulminated at the very idea that the British government should do anything about the Irish famine that was happening on its doorstep. After all, it was the peasants’ own fault that they were starving."


People who think "free markets" work in healthcare or the Internet are just as functionally stupid about economics as the most hardline Communist who thinks that the government should exercise full control of the toothpaste market. Most of the world understands by now that the second guy is a dangerous fool. But we're at a weird point in history where the first guy undeservedly has more credibility. He shouldn't--and he won't for long.
David Atkins, "Americans: we love paying more for less"
But a careful scrutiny ... will demonstrate that the systems advocated by professed upholders of laissez-faire are in reality permeated with coercive restrictions of individual freedom, and with restrictions, moreover, out of conformity with any formula of 'equal opportunity' or of 'preserving the equal rights of others'.
Robert Hale (1923), "Coercion and Distribution in a Supposedly Non-Coercive State", Political Science Quarterly, V. 38, N. 3 (Sep): 470-494.
The bloodstained story of economic individualism and unrestrained capitalist competition does not, I should have thought, today need stressing. Nevertheless, in view of the astonishing opinions which some of my critics have imputed to me, I should […] have made even clearer […] the evils of unrestricted laissez-faire.
Isaiah Berlin, "Four Essays on Liberty"
Freedom for the wolves has often meant death to the sheep.
Isaiah Berlin, "Four Essays on Liberty" p.xlv.
But the key thing that Hayek grasped that many modern advocates of laissez faire don't is that government regulation of markets is not the same thing and not even close to being the same thing as full-on central economic planning.
John Aziz, "Free markets need more regulation than you think"
[...] the inequality of incomes in our society is largely a matter of luck rather than inherent personal ability, and that it is only distantly related to the social value of the contributions people make through their work. These conclusions undercut the idea that taxing those on high incomes will harm society by reducing incentives to work for the most able and social valuable workers.
John Quiggin, "Inequality and the Pandemic, Part 3: Risk and reward"
What’s amusing about libertarians and laissez-faire people (and the loose way certain economists talk) is that they will describe my choice to pay rent as non-coerced and voluntary while describing my choice to pay income taxes as coerced and involuntary. But there is no neutral construction of “coercion” that would ever support such a distinction. As Hale aptly demonstrates, coercion occurs when there are “background constraints on the universe of socially available choices from which an individual might ‘freely’ choose.”
Matt Bruenig, "Libertarians Are Huge Fans of Economic Coercion"
… Economic doctrines always come to us as propaganda. This is bound up with the very nature of the subject and to pretend that it is not so in the name of ‘pure science’ is a very unscientific refusal to accept the facts.
Joan Robinson, in Marx, Marshall And Keynes
[L]ibertarianism has a naïve view of economics that seems to have stopped paying attention to the actual history of capitalism around 1880. There is not the space here to refute simplistic laissez faire, but note for now that the second-richest nation in the world, Japan, has one of the most regulated economies, while nations in which government has essentially lost control over economic life, like Russia, are hardly economic paradises. Legitimate criticism of over-regulation does not entail going to the opposite extreme.
Robert Locke, "Marxism of the Right"
The invisible hand of the market makes a very good pickpocket.
Mike Huben
Extreme laissez faire capitalism of the kind extolled off and on over the past two centuries, and increasingly preached by economists, financiers and conservative thinkers over the past four decades, is a perverse distortion of human nature, foisted upon us by cold and demented thinkers captivated by inhuman notions of efficiency and domination. In the end, it is a system that reduces each human being to an object whose value is nothing beyond what it is worth in the market. We need to restore a social balance, in which private property, entrepreneurialism and commercial activity do not dominate our lives and set all the rules for our existence, but function within a democratic social order framed by a politically coherent and effective commitment to the public good. In a democratic social order there exists an activist public sector controlling a substantial store of social goods, and channeling democratic energies and intelligence into the ambitious perfection of such goods.
Dan Kervick, " Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy – Part VI"
[...] a huge part of the problem is the Jeffersonian notion that “the government that governs best is the one that governs least.” While that is true as regards individual liberty, it is absolutely dangerous to think that way as regards the economy.
Christian Parenti, "Reading Hamilton From the Left"
Mr. Coase’s work cannot be read as a case for minimal government. On the contrary, his message was more purely pragmatic: Because we can’t negotiate efficient private solutions most of the time, we must ask whether laws and other institutions can help steer us toward solutions we would have chosen if negotiation had been practical.
Robert Frank, "Ronald Coase, a Pragmatic Voice for Government’s Role"
Capitalism, arising as a new class society directly from the old class society of the Middle Ages, was founded on an act of robbery as massive as the earlier feudal conquest of the land. It has been sustained to the present by continual state intervention to protect its system of privilege, without which its survival is unimaginable. The current structure of capital ownership and organization of production in our so-called "market" economy, reflects coercive state intervention prior to and extraneous to the market. From the outset of the industrial revolution, what is nostalgically called "laissez-faire" was in fact a system of continuing state intervention to subsidize accumulation, guarantee privilege, and maintain work discipline.
Kevin Carson, "Studies in Mutualist Political Economy", Chapter 4 Introduction.
Of course, laissez-faire private property gives to owners greater economic freedom to use, consume, transfer, and dispose of their holdings than more qualified property rights do. But this is trivial; it’s simply what laissez faire means. Laissez-faire rights and liberties do not mean that everyone’s liberty or freedom, in anything but this purely formal sense, is on the whole increased, maximized, or better realized. Depending on the distribution of property, and especially in a grossly unequal society where many reject laissez-faire property norms, all that really may be increased is the sum total of interference with and coercion required to enforce the laissez-faire property system against those who oppose it. Excerpt From: Brennan, Jason; van der Vossen, Bas; Schmidtz, David. “The Routledge Handbook of Libertarianism.” Apple Books.
Samuel Freeman, "The Routledge Handbook of Libertarianism", pg. 118.
I believe that in many cases the ideal size for the unit of control and organisation lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and the recognition of semi-autonomous bodies within the State - bodies whose criterion of action within their own field is solely the public good as they understand it, and from whose deliberations motives of private advantage are excluded, though some place it may still be necessary to leave, until the ambit of men's altruism grows wider, to the separate advantage of particular groups, classes, or faculties - bodies which in the ordinary course of affairs are mainly autonomous within their prescribed limitations, but are subject in the last resort to the sovereignty of the democracy expressed through Parliament.
John Maynard Keynes, "The end of laissez-faire"
Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive 'natural liberty' in their economic activities. There is no 'compact' conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.
John Maynard Keynes, "The end of laissez-faire"
I criticise doctrinaire State Socialism, not because it seeks to engage men's altruistic impulses in the service of society, or because it departs from laissez-faire, or because it takes away from man's natural liberty to make a million, or because it has courage for bold experiments. All these things I applaude. I criticise it because it misses the significance of what is actually happening; because it is, in fact, little better than a dusty survival of a plan to meet the problems of fifty years ago, based on a misunderstanding of what someone said a hundred years ago. Nineteenth-century State Socialism sprang from Bentham, free competition, etc., and is in some respects a clearer, in some respects a more muddled version of just the same philosophy as underlies nineteenth-century individualism. Both equally laid all their stress on freedom, the one negatively to avoid limitations on existing freedom, the other positively to destroy natural or acquired monopolies. They are different reactions to the same intellectual atmosphere.
John Maynard Keynes, "The end of laissez-faire"