March 27, 2006

Differences Between Theory and Practice.

Increasingly I am of the opinion that the state (or any representative mechanisms of the overall societies) is utterly incompetent, and hence should not be mandated, to deal with economic issues. In principle, and as expressed in this.

However, I am disturbed by the sweeping ramifications that this opinion entails. This disturbance arises out of the painful, and obvious, ways in which many of the smooth hypotheses fail to hold in reality. It is true that systems should emerge out of a multitude of voluntary interactions and local decisions. Such systems are the most effective, and any interference in that process by a central authority will not only fail to achieve its intended objective, but will cause untold harm. I find all this very reasonable.

But oftentimes, in these voluntary interactions one side is so destitute that its volition hardly makes a difference. This enables the other side to play dirty. I am not talking here of businesses breaking the law, say by making it hard for their employees to find jobs elsewhere, or by blocking unionization attempts. Widespread as these acts undoubtedly are, they are only legal problems and in theory governments can deal with them. But is that all? Does all the foulness coming out of a capitalist system comprise of simple law-breaking? Is there no systemic exploitation?

I am not sure. There are two attitudes. You can either root for a completely free play of market forces and scoff at any interference with even (or particularly!) the noblest of intentions, or you dare to think that it is possible to moderate the growth so as to make it more equitable. While I am compelled by the logic of the former, I can not, in good faith, rule out any role for the later.


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