Argument: Free-market capitalism is a sub-optimal socio-economic model

Issue Report: Libertarianism


Adam Przeworski – “If a Martian were asked to pick the most efficient and humane economic systems on earth, it would certainly not choose the countries which rely most on markets. The United States is a stagnant economy in which real wages have been constant for more than a decade and the real income of the bottom 40 percent of the population declined. It is an inhumane society in which 11.5 percent of the population, some 32 million people, including 20 percent of all children, live in absolute poverty. It is the oldest democracy on earth but also one with the lowest voting rates among democracies and the highest per capita prison population in the world. The fastest developing countries in the world today are among those where the state pursues active industrial and trade policies; the few countries in the world in which almost no one is poor today are those in which the state has been engaged in massive social welfare and labor market policies.”[1]

Brian Barry, The Continuing Relevance of Socialism – “I think it must be conceded that it is possible to create a society in which the response to market failure is not a swing to socialism, but an exacerbation of individual efforts to stay ahead by making and spending yet more money. Does the public health service have long waiting lists and inadequate facilities? Buy private insurance. Has public transport broken down? Buy a car for each member of the family above driving age. Has the countryside been built over or the footpaths eradicated? Buy some elaborate exercise machinery and work out at home. Is air pollution intolerable? Buy an air-filtering unit and stay indoors. Is what comes out of the tap foul to the taste and chock-full of carcinogens? Buy bottled water. And so on. We know it can all happen because it has: I have been doing little more than describing Southern California.
Now it is worth noticing two things about the private substitutes that I have described. The first is that in the aggregate they are probably much more expensive than would be the implementation of the appropriate public policy. The second is that they are extremely poor replacements for the missing outcomes of good public policy. Nevertheless, it is plain that the members of a society can become so alienated from one another, so mistrustful of any form of collective action, that they prefer to go it alone.”[2]

Jonathan Stein – “Once we begin distinguishing the many forms capitalism can take, analytic utility is lost by retaining talismanic terms like “free market.” There is no national economy in the world today that is not a mixed economy, which also means that there is no market that is free, or even “mostly” free. Rather, markets are structures that are culturally bounded, always regulated, and genetically dependent on government intervention for their reproduction. Never are they simply “permitted.””[3]