First off, welcome to my first post on MrCredible.  I run the Classical Liberalism Blog and the The Classical Liberal Wordpress site.  I will be a guest contributor here every once in a while.

This essay will focus on some basic tenets of a market-based political economy, and explain why markets are the best place to start.

I often make posts about the minutia of economics: many of my essays deal with theories of (counter)cyclical theory, central banking, and the Virtue approach that I’ve subscribed to in recent months. However, the economy at large must be viewed beyond the squabbles of economics, as a system of political economy. Indeed, taking away recessions and certain banking system facets, a Hayekian Austrian and a New Keynesian have relatively few policy differences. They are both capitalists, supporters of free markets. The predominance of (relatively) free markets over the last four centuries has led to some of the greatest feats of human ability and to the empirical discovery of why markets are inherently of value that exists beyond the scope of economic modeling.
First, free markets work because humanity is subjective and individual. Though some societies are more collective than others, the fact that person X cannot know the thought and perception of person Y means that the odds are in favor of self-direction in a market.  Further, the right of property (essential to a market system) is the only justifiable way to manifest materially the merit of one person to all others in society.  Property is essential because it’s an agent of mobility and longevity alike.  With strong property rights, society can undertake risks and strive to innovate with self-motivation working in line with  organic physical incentive.
The leftist critique of capitalism often rests on the notion that it either “helps consumers, but not producers” or that it “leads to consumerism and stupidity”. Yet these arguments are both flawed in important ways. Firstly, in a free market system, all goods consumed not produced by oneself must be bought; this means that the producer does, in fact, benefit from the efficiency of capitalism through the lower prices of goods and services. Secondly, the innovation driven by capitalism is so diverse and so dramatic that gains in human life and in personal profit are not mutually exclusive. Indeed, a nation with a GINI Coefficient of 45 but with an average income of $100,000/year is much better off than one with a GINI Coefficient of 20 but an average income of $1000/year. Finally, the notion that capitalism leads to consumerism disregards human agency; people have the ability to live a non-consumerist lifestyle in a free market, and indeed are free to actively decide between many readily available consumer goods and an ascetic life.
It is also true, from a perspective of political economy, that government is inefficient. While a group of people can compete to provide the best goods, a government faces little to no real competition. Further, governments are designed to be slow to act on issues, with law slow and opaque. Herein lies another central benefit of markets that might appeal to the center a bit more: they can be amended. They are a rule that can allow a few exceptions; by comparison, the totalitarian economy of the state is too slow to adapt to change and thus too rigid to accommodate for human complaint. Markets can be formed and shaped quickly, even in the face of regulation or law.
Thus, it is the issue of the right and left that is truly highlighted by a difference in dishonesty. The economic recovery of the Obama administration, while slow, would not have happened had he been ideological and decided to over-restrict or even shut down markets. Only through capitalism have Millennials had the opportunity to go to college, and making college free is simply a way to avoid dealing with the structural issues of American higher education. The center-left has essentially taken credit for the good of markets, acting with dishonesty concerning the true force behind human wellbeing. In an opposite but still troubling way, many of the right profess to hold the principles of capitalism close to their hearts, but continue to feed state-side corruption, divide the economic right between Keynesians, Austrians and Chicagoans, and foster fondness for economically illiberal action. While neither side is necessarily free from sin, it is not my goal to chastise. Instead, I hope that this short essay has demonstrated the importance of free markets to forming the global economy.

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Posted by Benjamin French

Chicago, IL.

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