Dangerous Ideas, Part 2

Continuing to delve into What is Your Dangerous Idea?, edited by John Brockman (see my last post), I’ve been finding more things that challenge my thinking, which is of course what we should all be doing all the time but don’t—it’s a lot more comfortable to read only things we know in advance we’re going to agree with.

With my libertarian inclinations, I had to take a look at Mihaly Csikszentmihalyi’s piece entitled "The Free Market". Coming just after Matt Ridley’s "Government Is the Problem, Not the Solution", which was of course right in my comfort zone, this essay takes the opposite tack, challenging the value of the free market.

Csikszentmihalyi is bothered by what he sees as the triumph of free-market ideology, to the point where "it is embraced as a final solution to the ills of humankind". He claims that this overreach "risks destroying both the material resources and the cultural achievements our species has so painstakingly developed" and says that things like health, education, infrastructure, environment, human rights, and public safety "need to become part of our social and political agenda".

Well. I had somehow received a vague impression that health, education, infrastructure, environment, human rights, and public safety were on the social and political agenda, but I could be wrong. Let’s take a look at Csikszentmihalyi’s charges and see if they hold up. To begin with, we should ask whether his claim that the free market reins supreme is accurate. A key tactic in political polemics is to exaggerate the gains of one’s opponents, as when the Dittohead right fumes that President Obama is dragging us down the road to socialism. Get people alarmed about the apocalypse and they’ll be ripe for your pitch.

Csikszentmihalyi’s claims seem a little fevered: who exactly is embracing the free market "as a final solution to the ills of humankind?" (Note the use of the inflammatory phrase "the final solution".) Certainly not the Republican Party, which is enthusiastically behind any number of market-thwarting measures, from agricultural subsidies to windfall taxes on oil companies any time the price rises. If Csikszentmihalyi is aiming at genuine free-market ideologues like, say, Milton Friedman, he should be aware that Friedman’s prescriptions have never been more than imperfectly implemented anywhere. (Even in Chile, where free-market ideology was adopted with reasonable enthusiasm, there were always exceptions, such as limitations on capital flows.) And Csikszentmihalyi should actually go and read Friedman, whose temperate (and genuinely liberal) views were a very long way from considering anything to be a "final solution" to our problems.

Such caricatures, of course, are a favorite tool of the polemicist. Csikszentmihalyi’s statement of the free-market position is that it "must take precedence over any other value." Any other value? Who believes this? Who opposes efforts to disrupt human trafficking networks on the grounds that the market must be allowed to operate? Not me, at any rate, or any free-market advocate that I know of. Basic human rights take precedence over the pimp’s right to buy and sell Romanian orphan girls. And it is the proper role of political powers to ensure this. I don’t know of any responsible figure, not even in the darkest heart of the Republican Party, who really thinks that the free market ought to be "the ultimate arbiter of political decisions".

The whole point about the free market is that economic decisions and political decisions are two different animals. Economics is about the distribution of wealth, while politics is about the distribution of power. When politicians try to make economic decisions, they often get them wrong. That’s why people stood in line for toilet paper in the Soviet Union. The proper role of politics is to take care of the things that are more important than economics, such as the legal and institutional framework of society and collective defense against force and fraud. Those things really are important, and they ought to be enough to keep the politicians busy. But they keep losing sight of the distinction.

Adam Smith’s insight was that an economy, like an ecology, is too complicated for politicians to try to micro-manage it. Smith’s "invisible hand" refers to the self-adjusting mechanism of supply and demand. This mechanism is, at this point, time-tested and widely recognized. Even Csikszentmihalyi admits that it is "based on reasonable empirical foundations." Free market ideology simply means the claim that for the most part, as far as any generalization holds water in the real world, in the long run the supply/demand mechanism will do a better job of providing for people’s material needs than any number of government planning commissions. Of course, we have other needs besides the material ones. Those are what politicians, religious leaders and your mom and dad are properly in charge of.

I don’t think Mihaly Csikszentmihalyi is entirely clear on the distinction between politics and economics, as shown by his list of desirable social goods above. Some of them, like human rights and public safety, are not goods that lend themselves to an economic market. They’re things that require the exertion or the threat of force to safeguard. They’re political goods. But other things on that list, like health, education and infrastructure, involve goods and services that obey the laws of economics even if Csikszentmihalyi doesn’t think they should. The free market may help to provide them, and inept political interventions may impede their provision. To make that claim is very far from claiming that the free market is the ultimate value.

So I think, on one hand, that Csikszentmihalyi is more alarmed about the triumph of the free market than he needs to be. We’re a long way from seeing the free market hold sway everywhere. And on the other hand I think that Csikszentmihalyi ought to consider that the free market is not inimical to the things he values. The proper mix of public and private provision of things like health care and education will always be a legitimate topic of debate. And rigid absolutism about the free market is no more justifiable than rigid absolutism about the state. But I think it’s equally rare. Hysteria about the dire effects of free-market ideology only muddies the waters.

Sam Reaves
www.samreaves.com