By now, anyone who is interested in economic matters should be familiar with the term "market fundamentalism." It's a low-cost but effective elbow thrown by leftish intellectuals engaged in rhetorical team sports. The idea is to ridicule and deride, rather than to reflect. In case you didn't catch it, the term "market fundamentalism" is designed to connect the dogmatism of, say, a Jerry Falwell, with the belief that markets do a better job than government at, well, almost everything. The implication is that faith in market processes is like faith in six-day creation. Nothing deeper--no double meaning or anything.
As popular as the barb has become in the titter-factories of the left blogosphere, it misses. For example, it's not that free-market types don't believe in "market failure." Indeed, far from being dogmatic about the power of markets to solve every problem under the sun, it's that we're skeptical about government power to solve any such problem. But prior to that, we start by asking "fail at what?" If we can agree on X and on the criteria for the success or failure of X, we want to then talk about alternative means--particularly those that involve the Rube Goldberg apparatus of state bureaucracy.
Free-market types know that because perverse incentives, power brokering and principal-agent problems are a given when it comes to any state action, government failure at X is almost a foregone conclusion--particularly when it comes to matters of economics. We realize that faith in government is like faith in God, except the average government bureaucrat is neither all-knowing nor all-powerful. At least markets have the benefit of the wisdom of crowds, voting, as they do, with their debit cards. What can we say about the wisdom of a cadre of elites whose political interests are almost never aligned with the "public interest"?
God or Government?
When reflecting on this rush to stimulus, I am reminded of a recent passage from the New Scientist magazine:
While many institutions collapsed during the Great Depression that began in 1929, one kind did rather well. During this leanest of times, the strictest, most authoritarian churches saw a surge in attendance.
This anomaly was documented in the early 1970s, but only now is science beginning to tell us why. It turns out that human beings have a natural inclination for religious belief, especially during hard times. Our brains effortlessly conjure up an imaginary world of spirits, gods and monsters, and the more insecure we feel, the harder it is to resist the pull of this supernatural world. It seems that our minds are finely tuned to believe in gods.
Today, the phenomenon is largely the same: Replace God with Government. Congregation with Congress. Messiah with President. Creationist with Keynesian. All those who would invest their faith and hope into a technocratic elite may find things continuing to worsen. Indeed, unless the emergent forces of creativity, productivity and collaborative human action can operate in spite of all that is being wrought in Washington, we -- the Iconoclasts -- should go ahead and prepare our hearts and minds for another Dark Age.
Turnabout is Fair Play
As I have argued elsewhere, unintended consequences will follow attempts to "run" or "fix" an economy like a bevy of black swans. Why? Because the economy is like an ecosystem and ecosystems can't be tinkered with in the manner of machines. Success and failure in the marketplace is evolutionary. That is, success or failure comes in our ability to satisfy one another's needs and desires. The Darwinian algorithm in economics has no more room for the intercession of Keynes or Krugman, or the emergence of the iPod, or the supreme pizza, than nature had need for Our Lord's hand in producing the eyeball or the bacterial flagellum. The economy is distributed and iterative; so is all of the information that animates it. That's why it must heal through holistic means rather than pump-priming. I will not spend many more pixels attempting to explain how markets are self-organizing systems that arise from institutional rules (not bureaucratic regulations). Nor is a blanket defense of free markets necessary here. No, we must set aside this time for turnabout. Turnabout, as they say, is fair play.
What do you call someone who believes that the economy can be run, fixed or managed by intelligent design? What do you call the person who honestly thinks that, with a legislative pen-stroke, the government can "create jobs"? What is the name for the person who believes that raining largess from on high will result in some magical "multiplier effect" that will increase wealth geometrically, like loaves and fishes?
Keynesian Creationists have descended on Washington like the Promise Keepers on Houston. Their disciples are abuzz in the blogosphere, casting aspersions on the non-believers. Lest I be accused of empty ad hominem, allow me to put a little substance behind the nickname and at the same time explain why the current ruling party's stimulus plan is little more than a faith-based initiative masking an unprecedented accretion of state power.
Continued in Part 2.
Max Borders is executive editor at Free To Choose Network. He blogs here