The legitimacy of free market capitalism in question

In today’s Times (February 20) Thomas B. Edsall summarizes what he sees as the electoral positions of the President and his Republican challengers (in as much as one can lump them together).

President Obama, he says, is calling for additional investment in public education thereby growing the chances of everyone to succeed, for revisions to the tax code insuring that everyone pays their fair share, and for new regulations insuring that everyone follows the rules. In other words, the President is calling for an even more active Federal government.

The Republicans, on the other hand, are calling for reduced taxes, regulation, and spending, in order thereby to free market forces and revive private sector economic growth, while all the time denouncing the expansion of a Democratic “entitlement society” and what they see as a trend toward European social democracy.

Edsall is questioning whether both positions are not “off the mark,” and in particular, (while perhaps revealing his own position in the debate) whether “the legitimacy of free market capitalism in America is facing fundamental challenges,” challenges that so far neither the President nor the Republican candidates are addressing.

And in fact, Edsall says, there are challenges or issues out there, that are making many of us, including some politicians and political thinkers, uneasy.

Issues such as whether,

– large segments of the American workforce — millions of people — might not be at a structural disadvantage in the face of global competition, technological advance and ever more sophisticated forms of automation, and if this situation is permanent.

– the  share of profits from improving corporate productivity flowing to capital and to high-earning C.E.O.s continue to grow, while the income of wage earners stagnates and their share of profits declines.

– the surging wealth and income of the top one percent and of the top 0.1 percent has reached a tipping point at which the political leverage of the very affluent decisively outweighs the influence of the electorate at large?

– in the United States and Europe democratic free market capitalism is no longer capable of providing broadly shared benefits to a solid majority of workers.

And if one may read between the lines it seems that for Edsall there is only one important issue, one that the presidential candidates, including the President himself, are not talking about it, that being the [questionable] “legitimacy of free market capitalism.” In America, of course, and elsewhere.

Is he correct, ought we now to be questioning the legitimacy of free market capitalism? I think he’s wrong. Hasn’t he forgotten, for example, that “free market capitalism” is more that anything else, certainly more than any number of leaders of nations, let alone the mistaken left and right political ideologies imposed upon their peoples by these leaders, responsible for the wealth and the accompanying growth of the numbers of the earth’s peoples?

Free market capitalism, or what is the same thing, the free exchange of goods and services among men, is perhaps the single most important force acting upon us, or with, or from us, as you like, that has brought us to where we are today, where millions of the poor live (are alive) with advantages that the kings and rulers of the earth of earlier times did not enjoy.

Free market capitalism is a force, no less than gravity or evolution, and no less than these two can it be denied without disastrous consequences as we’ve seen in any number of failed states when individuals were not allowed the simple freedoms of movement and exchange. Edsall should be asking a quite different question. And in fact most of the writers he cites in his piece are for the most part not questioning the legitimacy of free market capitalism. Instead, they are noting, again, that free exchange between peoples does also bring about creative destruction, and any number of other painful side effects.

And the question he, and we should be asking is how, if at all, we might manage and thereby reduce the painful side effects, the pain, the destructive forces of free market capitalism. We cannot, as the Republicans would do, just leave it alone, for too many people will suffer needlessly. In fact, for all our history we have managed it more or less well. But we have to be careful not to tie it down, as the Lilliputians Gulliver, with any number of rules and regulations that would ultimately prevent our freedom of movement and resulting new wealth creation.

I don’t believe that President Obama is questioning the legitimacy of free market capitalism, but he may not understand, for example, that corrections to our, in part, failed systems of health care and education, will not result from his actions but only from allowing, and then not obstacling the resulting myriads of free exchanges among free individuals in a free market.

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