‘Nations stumble upon establishments, which are indeed the result of human action,
but not the execution of any human design.’
Adam Ferguson, An Essay on the History of Civil Society (1767)

08 May 2009

A Defence of Free Markets and the Rule of Law

A Reply to Chris Bowen’s ‘Neo-liberalism is dead as people realise markets need regulation (The Sunday Morning Herald, 6 May 2009)’:

Chris Bowen’s article on Phillip Blond’s progressive conservative philosophy highlights a welcome opportunity to set the market system within the aims of the common good.

An implication raised, however — ‘that markets work better with a degree of regulation’ — is that it is necessary to augment the conventional respect for rule of law: that all forms of regulation are treated either indifferently or with aversion by the market.

To the contrary, a case can be made that markets are only efficient when they abide by internal moral obligations. Abuses of capitalism are assaults upon its very own economic prescriptions.

A fractional banking system of catastrophic over-extension is a violation of the trust between depositor and lender, and whether a more sound basis of reserve ratios is maintained speaks more to the wisdom of regulators than with market prerequisites.

Likewise, monopolisation (animating Blond’s arguments for the wide distribution of property and capital) lies principally at the feet of regulatory intent, since a tenet of the open market is expansive consumer choice made possible by diverse entrepreneurial innovation.

We may be witnessing less the death of neo-liberalism than a renewed appreciation of the moral implications inherent in the free economy, and a determination that its imperatives are neither ignored nor manipulated for immoral gain.

[See DMI’s ‘Free Economy Plus]

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