How do we restore confidence in free markets? Formulate a robust explanation of their moral value. Read Economic Liberalism and its Discontents on Public Discourse.

In his recent book The Creation and Destruction of Value, Princeton University’s Harold James observes that the 2008 financial crisis resulted in more than the devastation of economic value. It also facilitated a collapse of values in the sense of people’s faith in particular ideas, institutions, and practices. Among these, few would question that economic Liberalism’s credibility was significantly undermined.

As time passes, more people may recognize that the financial crisis owed much to factors that had little to do with markets as such. As several scholars illustrated in the 2009 monograph Verdict on the Crash, the causes included regulations that encouraged irresponsible behavior by banks, imprudent central bank policies, not to mention outright collusion between politicians and government-sponsored enterprises such as Fannie Mae and Freddie Mac.

Unfortunately for promoters of free markets, knowledge of these facts will take time to counter the widespread perception that economic liberalism—manifested in financial liberalization, privatization, deregulation, and increased competition—contributed significantly to the 2008 crisis.

In the meantime, those committed to economic liberalism have a chance to rethink and reformulate the case for markets. Certainly the efficiency arguments for economic freedom will be revisited, refined, and rearticulated. But it’s also an opportunity for economic liberals to reexamine what is often a weakness in their position—the principled case for markets.

  • http://commentarius-ioannis.blogspot.com/ Paul W. Primavera

    Samuel,

    You are 100% correct: “As time passes, more people may recognize that the financial crisis owed much to factors that had little to do with markets as such. As several scholars illustrated in the 2009 monograph Verdict on the Crash, the causes included regulations that encouraged irresponsible behavior by banks, imprudent central bank policies, not to mention outright collusion between politicians and government-sponsored enterprises such as Fannie Mae and Freddie Mac.”

    What many people called the “free market” under the previous Administration was nothing more than corporate socialism. By putting Obamolech into the Oval Office, we have essentially replaced that with “welfare socialism”. Such is our descent from Christian Constitutional Republic to atheist national demokracy. Was it not Woodrow Wilson who said the Democracy is on a coin whose opposite side is socialism? This is the exact thing our Founding Fathers wanted to prevent: dictatorship by the majority as it votes for itself bread and circuses.