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Book Review: Market Liberalism

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Market Liberalism: A Paradigm for the 21st Century
edited by David Boaz and Edward H. Crane (Washington, D.C.: Cato Institute, 1993); 404 pages; $15.95.

As the 20th century approaches its end, the American people face the challenge of deciding their political and economic future. Socialism has been defeated. The experience of the centrally planned, command economy has proven that an economic system comprehensively controlled by the state is unworkable and breeds corruption and the abuse of power.

But while socialism of the soviet-type has few adherents anymore, the interventionist and welfare state is still considered as a viable and desirable option in comparison to an unregulated, free-market economy. Indeed, winning the battle against statism is more difficult when the opponent is the welfarist, managed economy rather than the more blatantly brutal Marxist-style regime.

When the enemy was Marxian socialism, the alternatives were clear and stark: the market versus government command, political democracy versus the one-party state, pluralistic society versus the totalitarian state.

But the advocate of the welfare, interventionist state is a more subtle opponent. He does not call for the elimination of the market, but for degrees of government regulation and manipulation; not the elimination of political democracy, but its use to bestow special benefits on some groups and individuals, with the purpose of influencing the societal outcomes into “preferred” directions; not the elimination of voluntary, societal relationships but the use of politics to transform their form and content.

It appears that all that is being asked for is the foregoing of some marginal degrees of freedom in return for some supposed marginal benefits that can only be provided through state interference into the private affairs of the citizenry. What can be more reasonable, moderate or enlightened, as opposed to the “extremism” of the laissez-faire, old-fashioned classical liberal who is said to believe that individual freedom is all important regardless of the price?

The enemy is even more sly when he insists that he, too, is for the free market, just not quite as free as the free market espoused by the doctrinaire classical liberal.

The problem with this apparently moderate, “enlightened” perspective is that it is, as the Austrian economist Carl Menger expressed it over a hundred years ago, a “superficial pragmatism, a pragmatism that contrary to the intention of its representatives inexorably leads to socialism.” Every displacement of the market with state regulation leads to imbalances in the economy, the results of which serve as the rationale for further regulations until the market becomes increasingly under state control; and every intrusion of politics into societal relationships expands the role of coercion in community life and reduces the peaceful and voluntary element in human affairs. The “middle-of-the-road policy,” as Ludwig von Mises insisted, eventually leads to some form of socialism.

Market Liberalism: A Paradigm for the 21st Century, edited by David Boaz and Edward H. Crane, attempts to offer the arguments against and to suggest the alternatives to the interventionist, welfare state. Published by the Cato Institute, the authors in this volume critically evaluate the political and economic consequences resulting from the regulated economy and the state-manipulated society.

Roger Pilon’s essay on “Freedom, Responsibility and the Constitution” is an excellent historical overview of the natural-rights foundation of the American political order and how this foundation was undermined by changing political and constitutional philosophies in the 19th and early 20th centuries.

Edward Crane’s contribution on “Reclaiming the Political Process” is a persuasive and entertaining defense of term limits for politicians and for the right of unlimited campaign contributions for candidates in political elections.

William Niskanen and Stephen Moore show why the federal budget deficit is a government-spending problem, not a problem of taxes being too low; and they offer a long list of programs that could and should be cut to bring the federal budget back into balance.

Thomas Hazlitt defends the importance of unregulated development of telecommunications, and Bert Ely demonstrates that the problems in the financial markets have been due to regulatory controls.

Robert Poole summarizes the case for privatizing municipal services; David Boaz calls for free markets and low taxes to save the inner cities; and Michael Tanner argues for freeing the medical industry from governmental control and manipulation.

In international affairs, Doug Bandow challenges the assumption that the United Nations should be strengthened and given more power; Malanie Tammen calls for ending the World Bank and the International Monetary Fund; Ian Vasquez proposes ending Washington’s drug war; and Christopher Layne argues that what the world needs is real free trade, not state-managed trade.

And a group of authors, including Aaron Wildavsky, Jerry Taylor, Patrick Michaels and Fred Smith destroy many of the arguments made by the environmentalists that the world is threatened by global warming, that a depletion of natural resources is eminent, that health and safety regulations make life more secure, and that government intervention is needed to conserve and protect nature from man.

If any criticism is to be made of these essays, it is the fact that the assumption of an intrusive state is now taken so much for granted in our society, that even those who understand the dangers from the welfare, interventionist state and who desire to make as strong a case as possible in defense of the free market and the free society, step back from challenging all statist controls and regulations. Thus, the case for completely abolishing social security, for example, is not made; and certain types of governmental intervention are conceded to be workable and possibly desirable.

But having said this, Market Liberalism offers a wide-ranging collection of arguments why the welfare, interventionist state is generally as dangerous and unworkable as socialism has been shown to be — and why a truly free market is the only economic order consistent with the attainment of both social peace and economic prosperity both within America and around the world.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).