I Which economic system serves the most people?
On one side of the economic debate are those who believe in largely unfettered markets, in which companies are allowed to agglomerate market power or pollute or exploit. They believe firms should maximize shareholder value, doing whatever they can get away with, because bigger profits serve the common good.
The most famous 20th-century proponents of this low-tax/low-regulation shareholder-centric economy, often referred to as neoliberalism, are Milton Friedman and Friedrich Hayek. These Nobel Prize-winning economists took the idea beyond the economy, claiming this kind of economic system was necessary to achieve political freedom.
They worried about the growth of government in the aftermath of the Great Depression, when, under the influence of John Maynard Keynes, the state was taking on new responsibilities to stabilize the economy. In “Capitalism and Freedom,” Friedman argued that “free markets” were indispensable to ensure political freedom. In Hayek’s words, government overreach would lead us down “The Road to Serfdom.”
We’ve now had four decades of the neoliberal “experiment,” beginning with Ronald Reagan and Margaret Thatcher. The results are clear. Neoliberalism expanded the freedom of corporations and billionaires to do as they will and amass huge fortunes, but it also exacted a steep price: the well-being and freedom of the rest of society.
Neoliberals’ political analysis was even worse than their economics, with perhaps even graver consequences. Friedman and his acolytes failed to understand an essential feature of freedom: that there are two kinds, positive and negative; freedom to do and freedom from harm. “Free markets” alone fail to provide economic stability or security against the economic vagaries they create, let alone allow large fractions of the population to live up to their potential. Government is needed to deliver both. In doing so, government expands freedom in multiple ways.
Discontent festers in places facing unaddressed economic stresses, where people feel a loss of control over their destinies; where too little is done to address unemployment, economic insecurity and inequality.
There are trade-offs --the bread and butter of economics. The climate crisis shows that we have not gone far enough in regulating pollution; giving more freedom to corporations to pollute reduces the freedom of the rest of us to live a healthy life. Freeing bankers from what they claimed to be excessively burdensome regulations put the rest of us at risk of a downturn potentially as bad as the Great Depression of the 1930s when the banking system imploded in 2008. This forced society to provide banks hundreds of billions of dollars in the largest bailout ever. The rest of society faced a reduction in their freedoms in so many ways — including the freedom from the fear of losing one’s house, one’s job and, with that, one’s health insurance.
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