Saturday, August 22, 2009

Government and Markets

Via Tom Harris.

If government decides it can intervene in the market to dictate wages, why shouldn’t it have a role in deciding other areas of corporate policy? And if it starts doing that, it might as well nationalise the-… Oh. Okay, I get it now…

I should say first that I disagree with a hell of a lot of what Tom says, but I'm not particularly singling him out here more than anyone else. This argument crops up a lot and Tom Harris is hardly alone in using it. From a personal point of view I think the whole government shouldn't intervene argument does doesn't add up.

The market is not a natural thing it is a construction of the state and it is political in it's nature. The forces that direct it are shaped quite heavily by the political preferences some imposed by the government, some so entrenched that no one would ever dare change them.

As an example, consider the examples of child labour and slavery. I doubt the most hardened libertarian in this country would advocate either, but it could be argued that the abolition of slavery was a "intervention by a narrow political interest in a vital area of property rights" it could similarly be argued that child labour was "the government interfering in the right of an individual to enter the labour market" the point of these two examples is that it demonstrates the ultimately political nature of the market, there are always political interests present.

Ultimately, I don't get the whole not interfering in markets argument, because ultimately it's what every government does to some degree. Taxation, education, infrastructure, there are plenty of ways in which the government does interfere when the market. For most it's not a matter of principle but a defence of their own "narrow political interest".

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