Had a discussion with a friend who is a staunch libertarian that caused a few things to click for me that have been rattling around for a while.
I studied economic and political philosophy for a bit before I began studying theology. Something that interested me about both economic and political philosophy is that both are, in some foundational sense, concerned with the question “how can society best provide for all its members?”
In economics, this question is explicitly on the minds of many of the founders of modern economic theory. Adam Smith, for instance, when he wrote The Wealth of Nations was certainly trying to answer this question and believed that answer lay in human self-interest. He believed that the most efficient economy was the one that provided for the needs of all of its members and that such efficiency would occur when we allowed the process of pursuing self-interest to freely play. In other words, Smith argued that a free market was the most ethical system not because of concerns about property rights or about the authority of the government but because he felt that the end result of a free market was the best provision of peoples’ needs.
In my discussion with my libertarian friend, he argued that the free market was the best system. So far nothing too controversial. He then argued that government actions like “The New Deal” were bad because they interfered with the free market.
This is where I begin to disagree. A free market is ideal not as an end in itself but as a means to an end: the best provision for society. Because the free market is a means and not an end in itself, I do not believe that when the market fails we are required to sit and wait on the market to fix itself in the name of preserving a free market.
Lets take the historic example of the Great Depression. Initially, preserving a free market was the policy of choice. However, three years later when unemployment was at a record 35% with no sign of getting any better, it became fairly apparent that the preservation of a free market was no longer in societies best interest. Letting people starve for the sake of preserving the free market is ethically questionable, and so I think the government was correct in deciding to step in and relieve the strain.
At the end of the day, economic philosophy should not be about making efficient markets or making the most profit. Granted, both of those things are products of good economic policies. However, the real motivation behind economic philosophy and policy must be ethical: the greatest good for society as a whole, or, put another way, the greatest provision of the needs and wants of societies’ members. To that end, I would argue that free markets are usually the best way to accomplish this goal. However, the market is at the end of the day simply a tool, a means to an end. When the tool doesn’t work, you fix it. Likewise, when the market fails, I believe it is acceptable for the government to intervene.