There’s a popular misconception around the developed world, and even, to a lesser extent, among undeveloped nations: the misconception is that there is virtue in democracy. Whether political or economic, there is this notion that democracy, or democratic process, provides a positive good in and of itself. However, when pressed to support their claims, if they’re even prepared to defend them, more often than not its proponents are full of trite, dogmatic, or euphemistic language. Of course, most of them believe that the merits of democracy are self-evident, but beneath the trite, dogmatic, and euphemistic language, we find the disturbing truth about democracy: between the lines of propaganda and deceit, the treasured myths and misconceptions, we find nothing more than another form of mob rule.
As a people, we are better off with whatever system succeeds in securing the jewel of the public liberty, not for a term or dynasty, but for all of posterity. For the proponents of democracy, they are hypnotized by empty promises, notions of equality, and so-called social justice. They often fancy themselves the will of the people, but in truth they are the angry mob laying siege to the towns and traditions of the silent majority; indoctrinating the youth and priming them to promote democracy for their own ends; hoping that their disease will metastasize to destroy every last cell of liberty, both at home and abroad.
Fortunately, the antidote is near, not in democracy, but in virtue, liberty and the free market. While democracy claims to promote the public interest, the latter three are proven in both theory and practice; they are as good as a means as they are in producing outcomes. In fact, the record shows that, while free markets do not independently solve every problem, they tend to solve important ones over time; while they do not guarantee a standard of living, they afford the greatest good for the greatest number. Oddly enough, this is specifically because the free market is not a democracy.
Contrary to the myths and misconceptions, free markets are not as much a democracy as they are a meritocracy. Indeed, this is an invaluable feature for any productive and sustainable economic system. After all, one of the failings of democracy is that it operates from talk and the consensus of unaccountable actors; a free market, on the other hand, functions through actual productivity and the inputs of accountable owners, managers, stakeholders and investors. As the old adage goes, in the short run the markets are a voting machine; in the long run they’re a weighing machine. As for talk, it doesn’t even show up on the scale.
Apart from the good feelings often associated with the very mention of democracy, it’s no match for a free market. A free market operates from and incentivizes the productive use of land, labor, and capital, and no form of unbridled democratic process will ever match the efficiency of a sound monetary system and a market economy that together coordinate those resources between owners accountable to profits and losses; who, in assuming the risk, have every natural incentive to properly assess the risk and the prospects of any venture; and who, in managing that risk, stand, on aggregate and over time, to do the most good with those resources. The latter is an incidental byproduct of the free market, a positive utilitarian outcome which operates from a more important premise: respect for life, liberty, and property.
On the subject of free markets, they are not a panacea, but merely represent the most natural, honest and desirable of options, considering the alternatives. All economic and political affairs are a matter of tradeoffs; there are no solutions. The principal utilitarian advantage of a free market is that it inherently vets and regulates independent of any government body; it is regulated continuously in real time by countless inputs and eclectic economic preferences as expressed by the second.
Human action is interminable, happening all the time and all around us. The free market is constantly being shaped and reshaped by it, minute by minute, moment to moment, not by a defined interval of some arbitrary term of office, and not through a limited number of options at a ballot box; the latter kept so secret that it is less than credible. So long as life, liberty, and property are protected under rule of law, a free market is self-regulating, and so long as the people share common values, among them faith, goodwill and respect for life, liberty, and property, the free market will generally, on aggregate and over time, produce the most optimal of outcomes: indeed, it will yield the most good for the most people.
For this reason, multiculturalism and so-called social justice, combined with legislation demanding equal opportunity, has compromised many of the essential features of the free market. In a true free market where values are as important as prices, people are left free to associate and transact with any person of their choosing. Where they are forced to serve people and accommodate ideas of which they disapprove, or which are incompatible with their values, they are forced to serve people and advance ideas that are threatening to or incompatible with their tribe, community, society, etc. This is just one of the many ways that societies are reshaped, and certain people and cultures are targeted by the political machine, albeit discreetly. Indeed, this is just one of the many ways that cultures and customs are targeted for extermination: a subtle form of cultural genocide, becoming less subtle and more brazen over time.
A prime example of this is in housing, where landlords have declined applicants on the basis of credit and rental history, lifestyle preferences, and cultural incompatibility. Whether a member of the LGBTQIA+ cohort in a primarily-Christian community or even a white person in a primarily-black neighborhood — a noted experience in Greensboro, North Carolina — smart businessmen make decisions based on more than just price alone. However, in modern America, only certain people are afforded protections against this sort of discrimination: they are called the protected class.
Contrary to its politicization, it's worth noting that discrimination is not inherently a bad word; while it can be exercised nefariously, people discriminate in virtually every decision they make, as it is not only a matter of preferences, but essential to survival.
Now, the privileges enjoyed by the protected class may not appear to conflict with the price system, and yet they do. Now, this system whereby one particular class is protected at the exclusion of the others is just one means to the destruction of those other classes — and that destruction will come through the vestiges of a free market in a form of jujitsu that leverages the strength of the market against the protected class’s political enemies, in this case the heirs of the very people who built it and sacrificed to defend it.
So, just as businessmen and consumers respond to prices, it is just as important that they promote virtue all the while. As George Washington once wrote, “Human rights can only be assured among a virtuous people. The general government… can never be in danger of degenerating into a monarchy, an oligarchy, an aristocracy, or any despotic or oppressive form so long as there is any virtue in the body of the people.” Now, in addition to human rights, I would add the free market, the first being indispensable to the second. A free market can yield positive results, on aggregate and over time, only among a virtuous people.
Now, this doesn’t mean that a free and virtuous people will not fail. Indeed, just as free people are free to commit mistakes or err in judgment, so too can any businessman, property owner, employee, or consumer. From a utilitarian perspective, the most important aspect of the free market is that it not only vets participants (or voters) on the basis of their value-add, but it automatically signals to business owners whether they are efficiently using and allocating resources. Industries and businesses will flourish and fail on this basis, yet, as odd as it may sound, that is an advantage of the free market. After all, if a business or industry is not efficiently using resources, or if, all else equal, a competitor has discovered or invented a better mousetrap, we are all better off in reallocating those resources where they are best utilized.
This is a feature of the free market, not just because it is right and just, but because it frees up resources to be used where they can offer the most value. This means that, as opposed to governments and managed economies determining who gets what, free markets empower the people to make that determination on their own merits. It is in this way that free markets are the purest form of opportunity: they are dynamic and adaptable, meaning that power is limited, decentralized and impermanent, and they are therefore always subject to new buyers and sellers.
Indeed, the power of the market is strictly limited, reshaped time and again by the people who comprise it. In this way, accountability is supersonic, whereas government moves at a snail's pace to remedy its failures, if it even gets around to doing it at all. One of the overlooked advantages of the free market is that its power is not of the coercive variety; it is more aptly termed influence or pricing power, as opposed to the case of government, whose powers are absolute. Just as essential, a free market respects private property, which, in the investment of one's labor and capital, is the entire essence of life and self-ownership. Indeed, insofar as any business fails to deliver value, the right to private property protects the individual's last resort and his ability to meet his needs and work for himself.
Ultimately, in a free market we haven't a universal panacea, but rather the least threatening arrangement, and the most bountiful one to boot. After all, the most dangerous arrangement is that which confers power permanently and without question, or, in the more practical view, which systematically threatens life, liberty, property, and every last resort of the people in the defense and exercise of their rights.
Contrary to the characterization of a free market as a democracy or an unregulated free-for-all, it is the price system whereby votes are expressed and the system is kept accountable. Whereas votes are expressed per capita in a democracy, they are expressed by stake in a free market; whereas government regulations are tied to political interests, market regulations are tied to the the protections on private property and the daily decisions of the people. The latter is a far more reliable and efficient mechanism.
Indeed, the price system is the single most efficient mechanism by which to coordinate land, labor, and capital, and it accomplishes this end without necessarily imposing upon the public liberty. Of course, this doesn’t mean that businessmen won’t make mistakes, but that they will personally suffer those losses and, all else equal, they will continue to accrue losses until they eventually run out of capital; the latter is especially prompt in an economy of market interest rates, as opposed to rates artificially set by a governing body assuming a monopoly over the money supply, as well as the instruments of force and coercion.
This also does not mean that businessmen won’t engage in fraud, but that the free market, through improved vetting and information technology, will generally, over time, expose it. Ultimately, whether fraud, inferior goods or services, unethical business practices, or an inefficient allocation of resources, the price system will expose it. As the 1974 Nobel laureate Friedrich von Hayek put it, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” That task is accomplished through the price system, and through the aggregation of data through a decentralized web of inputs by individual actors pursuing their own interest; in this way, the free market has the brains of countless innovators and entrepreneurs, whereas government has the brains of the select few who couldn't cut it, who prefer to exercise their power instead of creating value.
Hayek put it best:
“To the naive of mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.”
Indeed, it sounds almost paradoxical to conceive of order absent deliberate arrangement, but this is the case in nature through homeostasis, just as it is in the free market through prices. Indeed, this is supported not only by theoretical conjecture but by real results. Free markets are always changing and adapting to new information — new inputs, technologies, and incentives — and they consistently introduce innovations and efficiencies that, absent the price system, would be neither feasible nor sustainable. It is only because of the price system that the modern world enjoys such sophisticated economies of scale, and that the most consequential of business investments are even possible.
Now, the free market is viable over the long run only through the continued vigilance of the people, who must stay wary of the interference of government: because of this inherent weakness, and because people have the tendency to get comfortable and complacent, the price system has not kept governments from exploiting, manipulating, or interfering in the market. Indeed, the price system has often been employed by governments to cleverly conceal their influence, but wherever the government imposes upon or interferes in the free market, it causes distortions in both prices and incentives; and so, wherever government interferes in this way, we have progressively less of a free market and more of a controlled economy, the latter benefiting initially from the extant product of a beleaguered free market.
For example, the United States is, by virtually all accounts, less of a free market today than ever: it is driven not by capitalism, but by corporatism; so, if one measures the principles and the value of the free market, in theory, against the outcomes of the United States in practice, then he is sorely mistaken in this comparison.
It is important to note that, in the United States, the most important price in the economy is set unilaterally by one committee: the single most important price in any economy is the rate of interest, the prime rate. Every price, and virtually every business and consumer decision, is based on or influenced by the price of capital. For this reason alone, the whole economic structure of the United States, as it currently exists, is strictly incompatible with a free market. It is through the means of control, whether through public debt, monetary or fiscal policy, tariffs, taxes, sanctions, prohibitions, embargoes, price controls, affirmative action, artificial barriers to entry, or a managed economy, that political forces threaten the free market; so, whether democracy or any other despotism, it is opposed to liberty.
Only a state of liberty can sustain the life worth living, and only the free market can do the greatest good for the greatest number. Ultimately, a free market is a necessary, but not sufficient, condition for liberty; and liberty is a necessary, but not sufficient, condition for a free market. It is not democracy which shapes the free market, but rather, as Adam Smith once famously put it, one's regard for his own self-interest, and that of his family. It is not through a vote at the ballot box, but through one's own productivity that he shapes the free market and provides for his family. Democracy, on the other hand, is all talk and no action, a death sentence for liberty and any free market as soon as voters discover that they can, as one Alexander Fraser Tytler put it, vote themselves generous gifts from the public treasury.
So, while the free market functions from the premise that we need to produce before we consume, democracy operates from the premise that we can enjoy the same benefits by casting a vote. While we all seek to bring meaning to our lives, and to meet our wants and needs with as little work as possible, the free market enables the people to pursue that end through their work, whereas the proponents of democracy claim we can do this with a pen, or worse the sword.
Comments
Post a Comment