The "Siren's Song of Stability," European Version
Back in the heady days of September of 2008, I had an entry here that made the following point:One of the things market capitalism
does best is enable us to peer through the fog of uncertainty that
surrounds human action. Prices provide signals for capitalists to
interpret to try to provide the goods and services people will want in
the future. Profits tell them they've done well at it, losses tell them
they haven't. The competitive process is how we learn what it is
people want and how best to produce it - and who is best at doing so.
Competition is, in Hayek's words, a "discovery
procedure." Competition sucks if you're one of the competitors. It
makes you have to constantly be on your toes, watching for new
entrants, new innovations, and changes in the relevant variables. How
much easier life would be in a more stable and predictable world where
capitalists didn't have to serve the fickle consumer! If we cut short
this discovery process, and especially the mechanism of profit and loss,
the benefits to the capitalists will not come from behaving in ways
that benefit the rest of us."The Market" (which, as Heyne, Boettke,
and Prychitko note, is a particularly bad metaphor for millions of
individual decisions) rallied late last week as the bailout plan was
conceived and publicized. Today, as the plan has got some pushback
(though not always for the right reasons), "The Market" has taken
another dive. The explanation, I think, is that capitalists prefer the
stability and predictability of the known over anything unknown,
especially when it promises to socialize their losses on the rest of
us. Capitalists have long despised the uncertainty and unpredictability
of a truly free market and have
frequently succeeded at using the state to reduce that uncertainty
(see also Gabriel Kolko and other historians of the Progressive Era).
Of course this has benefited them, but it has harmed the economy and the
citizenry in the process.
This is precisely why those of us
concerned with preserving whatever bits of capitalism we have left
should be largely ignoring "The Market's" response to the various
bailout plans. What's good for GM or the financial sector is not
necessarily what's good for America. In fact what's good for America,
might be very, very bad for the financial sector. The desire
for stability and predictability has been the calling card of dirigisme
regimes since the dawn of capitalism, whether they called themselves
"socialist", "fascist", or just plain "interventionist." It is but a
thinly disguised power grab by those who own the means of production,
and who will profit at our expense, rather than profiting by serving us
better. "Stability" is a siren song that we must do our best to ignore,
lest we enable them to make an even bigger mess than they already have.
As we see the market rally this morning on news of the near-trillion dollar European bailout, we should keep this point in mind. What's good for capitalists is often NOT what's good for capitalism, not to mention the long-term well-being of most of the citizenry. Yes, I'm happy my TIAA-CREF will be doing better, but I'm far more concerned that we continue to bailout the short-sighted, immature behavior of our European counterparts. At the current rate, it may be only a matter of time before we see the Greece scenario play out in individual states or at the federal level here.
The desire for "stability" is indeed the siren's song of the
end of freedom.