Capitalism and ‘free market’
A recent editorial in the Fairborn Daily Herald by Jill Richardson was titled “There’s no such thing as a ‘free market’.”
O , we can agree on that, but that should not lead anyone to dismiss the value and benefits of “market capitalism.” History has validated Adam Smith’s 1776 idea that a government that “doesn’t set prices or quotas” is the key to economic innovations and prosperity. Yet, Ms. Richardson’s states: “Only, he (Smith) was wrong.” Here I disagree.
It is significant to note that many/most economist often begin their discussions by quoting him which validates the lasting and important principles he promoted. I think we can benefit from looking more closely at some of Adam Smith’s essays.
In his 1759 essay “The Theory of Moral Sentiments” he points out that people innately have an interest in the fortune of others, even if their priorities are focused on themselves. Market economies (not socialism) provide the resources for today’s social programs.
In the more often quoted “invisible hand” concept promoted in his more famous writings on the “Inquiry into the Nature and Causes of the Wealth of Nations,” he emphasized that government should not dictate the supply and demand of consumer goods. Letting the people (the consumers) decide what they want causes the entrepreneurs (the innovators) to create better products at lower prices through competition. Yet it is important to note that he does not advocate political nor economic anarchy.
Recent studies have shown us that most all modern democracies (whether presidential or parliamentary in nature) have evolved in countries with a market economy. Market economies not only provide the resources for social programs, but they appear to be a necessary pre-condition for democracy. When people are given economic choices (how and where they want to participate in the market places), they eventually want to also have political choices and freedoms. Thus we can conclude that Adam Smith was not wrong, and that market capitalism may not be a “free market” , but market capitalism has brought us “FREEdoms” as well as economic prosperity.
— Laurel Mayer, Fairborn