People do not love markets,” says Pascal Boyer of the International Cognition & Culture Institute, “there is a lot of evidence for that.” Sadly, Boyer is right and I suspect he’s right about the cause too: People do not like markets because people seem not to understand much about market economics.

We don’t fully understand this antipathy, Boyer notes, because there hasn’t been much research on folk-economics, a study of “what makes people’s economic modules tick.” But I think Boyer has identified one of the key reasons why people tend to prefer government interventions to market-driven solutions:

[H]umans may be motivated to place their trust in processes that are (or at least seem to be) driven by agents rather than impersonal factors. This may be why there is a strong correlation between being scared of markets and being in favour of state interventions in the economy. One of the most widespread political assumptions in modern industrial societies is that “the government should do something about x”, where x can be any social or economic problem. Why do people trust the state? The state (in people’s intuitions, not in actual fact) has all the trappings of an agent. It is supposed to have knowledge, memories, intentions, strategies, etc. Now it may be that people are vastly more comfortable trusting an agent to provide help or impose sanctions, than they would trust an impersonal, distributed and largely invisible process. That would be mostly a question of intuitive psychology (highly salient in our reasonings about social processes) versus population thinking (highly unintuitive, difficult to acquire and engage in without sustained effort).

While free-market conservatives and libertarians may not be as susceptible to this bias, we are partially responsible for its ubiquity. For example, we often talk—or allow others to talk—as if the President was the CEO of the American economy. While the POTUS can certainly have a significant (often negative) influence on the economy, the office has very little direct control over the economy. Yet many people truly believe that the president could “fix” the economy if only he had the will/knowledge/desire to do so.

Because we tend to have political reasons for perpetuating this myth, we often allow this belief to persist without challenge. But if we want to effectively champion the effectiveness of free enterprise, we need to find a way to make people realize that government is not a sentient creature that can make beneficent economic decision on our behalf.


  • Roger McKinney

    Excellent point about conservatives promoting the idea that the POTUS control the economy! Before we can wean socialists from that fallacy, we have to wean ourselves.

    I think Hayek hit on some of the main reasons for trust in government. Most people see the US government as an extension of “us”: we are the government. So they see the country as one big family or tribe. Tribal/family justice is different from market justice because tribes/families know all of the members intimately and have obligations to each other.

    Older market forms, like the suqs of the Middle East, are very personal. Negotiations take place only after getting to know and trust one another. The genius of modern market forms, as North has written, is that they are impersonal. We don’t have to get to know the seller/buyer personally because the rule of law, warranties, honest judges, etc., make the penalty for cheating much higher and the redress much more successful.

    But as Hayek wrote, applying family/tribal values to national governance is disastrous because we can’t know all of the people involved. National government must be impersonal just as modern markets are. At the same time, treating family/tribal members as impersonally as the market and national government treat people would destroy families and tribes. Each has its own requirements because of different circumstances.

    But I think Hayek and Boyer are too kind. At the heart of state worship, which is a form of idolatry, is the sinful nature. Men want to worship something and if they refuse to worship God, they will worship something else. In our case it happens to be the state. At the same time sinful man desperately wants to make over every other person in his own image.

    Then there is the problem of covetousness and envy. In the pantheon of modern man, the state is the good god and business is the evil god. Business is evil because we abandoned the bourgeois values when we abandoned traditional Christianity. Only the state has the power to destroy the evil god.

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  • Micha_Elyi

    I agree with Mr. McKinney (above) that the idea that the POTUS is the Great Helmsman of the US economy is a great, erroneous oversimplification. It’s an idea that must be stamped out if respect for individual freedom is to survive among Americans.
    Also, another great fallacy among Americans is that the opposite of the free market is government. The opposite of the free market is any kind of slave market, whether that slavery is wholesale or retail, imposed completely or piecemeal.

  • Micha_Elyi

    I agree with Mr. McKinney (above) that the idea that the POTUS is the Great Helmsman of the US economy is a great, erroneous oversimplification. It’s an idea that must be stamped out if respect for individual freedom is to survive among Americans.
    Also, another great fallacy among Americans is that the opposite of the free market is government. The opposite of the free market is any kind of slave market, whether that slavery is wholesale or retail, imposed completely or piecemeal.

    • Roger McKinney

      It’s interesting that you mentioned slave market. The role of the government is to defend life, liberty and property. Those are not goals of the market. Slavery in the US was the greatest government failure in the history of the nation.

      No wholesaler or retailer can enslave anyone without the power of the state behind them. Only the state can create monopolies. No monopoly can survive in a free market under the rule of law.

      And without the state forcing people to buy a product, as it does in the recent healthcare bill, no consumer is a slave to any retailer. It’s trivial for consumers to abandon one retailer for the competition. For retailers to enslave consumers requires the retailer to get a monopoly enforced by the power of the state.

  • kids4biz

    Good article. I’d like to point readers to “The Superiority of Capitalism” bill, H.RES.422. Please visit this link, read the 2 page bill and if you agree with its goals, email your representative asking him/her to Co-Sponsor. http://www.kids4biz.com/list3.php

  • Martial_Artist

    @Joe Carter,
    You write: “Yet many people truly believe that the president could “fix” the economy if only he had the will/knowledge/desire to do so.”
    I do argue that the President (actually the President’s administration, including the judiciary) could “fix” the economy, if by “fix” we intend that the market be made truly just and efficient. All that is required is that the government strictly enforce four principles:
    • the Rule of Law, especially that all people are treated equally before the law;
    • the right lawfully to own property and to use it freely, subject to the limitation that in using his property the owner does not infringe on the identical rights of other property owners;
    • the right of free association, which also implies the right not to associate with another person; and,
    • the right to freely trade the owner’s goods and services;
    If government restricted its activities to only those actions which are permitted under those four principles, the market would function as morally and efficiently as it is possible for anything to function. So, one can conclude that the actions of the President in accomplishing such a fix are already contained within his oath of office. The one argument which I have not addressed is that we already have a substantial number of laws which violate one or more of the above listed principles, which laws and statutes will first have to be overturned/repealed. But absent that reality, all else that remains is, I believe, included within the scope of the four I have listed.
    Pax et bonum,
    Keith Töpfer