11/14/2017

Who Is The Real Market Fundamentalist?

Mateusz Machaj, Foundation for Economic Education

Calling names nowadays is very common. It is much easier to categorize someone, to put him or her in the imagined intellectual box, rather than engage in meaningful discussion and honest rational exchange. This mode of action is even more widespread if it allows for mild insults, suggesting lack of vision and critical thinking. Such is the case with a famous label of a “market fundamentalist.” Apparently, one supporting market solutions is a “fundamentalist,” because one is not interested in sensible reasoning but only in blindly following trivial suggestions of the apparent market “religion.”

Yet, think about it for a second. What really constitutes being a market fundamentalist? Surely any fan of such a label would tell you: that is a person who believes the market can take care of virtually everything. That there is no reason to worry about any real-world problems on the administrative level because somehow things would take care of themselves spontaneously without government interference. Fair enough.

Now in contraposition to this, consider some of the strongest statist propositions in different fields: monetary policy, fiscal policy, and labor policy.

Who’s Being Fundamentalist?

Contemplate fiscal policy based on taxing capital in various forms. Proponents of levying taxes believe they are not a big burden to the economy. Who cares if high taxes are shrinking the amount of available funding? Market theory will tell you that with levied taxes, retained earnings are shrinking and there is less money for the company. To the proponent of high taxes, that should be no problem. Somehow the business will still manage to support high levels of economic growth. It can still take care of itself, and the potential consequences of lower social wealth and overall production can be avoided. Is that not a strong belief in an amazing potential of the market? Is treating the economy as tax-proof not putting too much faith in the market mechanism?

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In Search Of History

4,000 Years Of Price Control

Tablets, said to be 200 years older than the Babylonian Code of Hammurabi ... show that the ancient kingdom of Eshnunna had wage control and price control. The news ought not to have come as a surprise. For the code of Hammurabi itself (unearthed in 1902), which was promulgated earlier than 2000 B.C., fixed prices, wages, interest rates, and fees. This makes price control at least about 4,000 years old. ...

 

Ironically, it is those who now wish to return to this ancient totalitarian device who are fondest of calling themselves “progressives.” They are also fond of saying that those who believe in economic liberty “are living in the nineteenth century.” These controlists have yet to learn that they themselves are still living, as the discoveries in Babylonia attest, in the nineteenth century—B.C.!

-- Henry Hazlitt,

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