The free market is an impossible utopia

– This is one of the best things I’ve read in some time.  

– Will it be generally appealing?   I don’t think so.  

– Most of us just want simple understandings and good guys and bad guys.  We only need look around to see that sound bites predominate in the discussions among the average man.  

– Among these, I would include the “Free Marketeers“.   They want a world made of good guys and bad guys and a simple idealistic world in which entrepreneurs are absolutely free, where market economics solves all problems, and where all forms of government control simply withers away before the market’s profound self-balancing wisdom.

– This article says it cannot be so.

– dennis

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Article by Henry Farrell of The Washington Post about a book, The Power of Market FUNDAMENTALISM, by Fred Block and Margaret R. Somers:

Fred Block (research professor of sociology at University of California at Davis) and Margaret Somers (professor of sociology and history at the University of Michigan) have a new book, “The Power of Market Fundamentalism: Karl Polanyi’s Critique” (Harvard University Press, 2014). The book argues that the ideas of Karl Polanyi, the author of “The Great Transformation,” a classic of 20th century political economy, are crucial if you want to understand the recession and its aftermath. I asked the authors a series of questions.

HF – Your book argues for the continued relevance of Karl Polanyi’s work, especially “The Great Transformation.” What are the ideas at the core of Polanyi’s thought?

FB & MS – Polanyi’s core thesis is that there is no such thing as a free market; there never has been, nor can there ever be. Indeed he calls the very idea of an economy independent of government and political institutions a “stark utopia”—utopian because it is unrealizable, and the effort to bring it into being is doomed to fail and will inevitably produce dystopian consequences. While markets are necessary for any functioning economy, Polanyi argues that the attempt to create a market society is fundamentally threatening to human society and the common goodIn the first instance the market is simply one of many different social institutions; the second represents the effort to subject not just real commodities (computers and widgets) to market principles but virtually all of what makes social life possible, including clean air and water, education, health care, personal, legal, and social security, and the right to earn a livelihood. When these public goods and social necessities (what Polanyi calls “fictitious commodities”) are treated as if they are commodities produced for sale on the market, rather than protected rights, our social world is endangered and major crises will ensue.

Free market doctrine aims to liberate the economy from government “interference”, but Polanyi challenges the very idea that markets and governments are separate and autonomous entities. Government action is not some kind of “interference” in the autonomous sphere of economic activity; there simply is no economy without government rules and institutions. It is not just that society depends on roads, schools, a justice system, and other public goods that only government can provide. It is thatall of the key inputs into the economy—land, labor, and money—are only created and sustained through continuous government action. The employment system, the arrangements for buying and selling real estate, and the supplies of money and credit are organized and maintained through the exercise of government’s rules, regulations, and powers.

By claiming it is free-market advocates who are the true utopians, Polanyi helps explain the free market’s otherwise puzzlingly tenacious appeal: It embodies a perfectionist ideal of a world without “coercive” constraints on economic activities while it fiercely represses the fact that power and coercion are the unacknowledged features of all market participation.

– More…

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