All hail the market
A person I am acquainted with through Facebook posted some days back that it’s time to abandon Keynesianism and return to the free market.
I find this a remarkable statement of faith—speaking as someone who watched the free market efficiently erase a third of his retirement savings a couple of years back.
Though I am not an economist, I know a little history, and anyone else who knows any will remember that recurring boom-and-bust cycles that have marked the free market in the United States for the past two centuries. The nineteenth century was predisposed to what were called “panics,” financial collapses that ushered in recessions and depressions. The Panic of 1837, which killed Martin Van Buren’s hopes of re-election to the presidency. The Panic of 1873, the Panic of 1893, and others leading up to the Big One in 1929.
Problems with the money supply were associated with such panics, as your recollection of those unenlightening debates over bimetallism will remind you. And panics were also marked by speculative excesses—bubbles. The consequences, when reckless speculators got their comeuppance from the Invisible Hand, also included the collateral damage of unemployment and bankruptcy for tens of thousands of ordinary people who had little or no role in the money supply or the stock market.
Those who romanticize the free market gloss over its destabilizing tendencies. And those who attempt to intervene to moderate that destabilization—the creators of the Federal Reserve System in Woodrow Wilson’s administration or the banking and securities reformers and creators of Social Security in Franklin Roosevelt’s administration—are labeled radicals, Bolsheviks, socialists, etc., etc. You can depend on it that today, as for the past century and more, any effort to establish governmental regulation in any area will be denounced as socialism, a word that has pretty much lost any tangible meaning in our political discourse.
I’m an American citizen resident in a capitalist mixed economy, and, thank you, I have no wish to go elsewhere. What I do wish, vainly, is that our public discourse could come to rely a little less on shouted slogans and a little more on examination of facts.
That said, I admit to a certain mordant pleasure at the knowledge that the circus is perpetually in town.