By PLS
Milton Friedman, the apostle of free markets, lived to see the publication of a book entitled Adam’s Fallacy: Theology of Economics, which surveys the evolution of economic thought in order to demonstrate there are no independent, ironclad laws of economics. In short, the laws of physics operate whether we mortals like them or not, but there is no such thing as markets free of human intention. This past week or so we have seen many tributes to a man who was widely admired for his fine human qualities. Many have also praised his contributions to economic theory and its application to the apparently thriving American economy.
However, when Americans went to the polls in November, they were not so enthusiastic about free market absolutism, as interpreted by the George W. Bush administration. It seems that the apologists for free markets hadn’t been playing by the rules over the past six years, and it finally dawned on ordinary Americans that the much heralded expansion of the American economy had done little for them. Yes, disillusionment with Iraq was the first concern, but corruption and the increasing insecurity of life for most Americans played a big role, too. Post Enron, people noticed that big corporations left to themselves aren’t subject to the great big Economic Pumpkin the sky. Corporate lawyers and accountants rig the game. And corporate lobbyists pay legislators to write the laws accordingly.
With Democrats in control there’s talk of raising the minimum wage, which now stands at $5.15 an hour, and conservatives are aghast at the threat to the well oiled (!) operations of the free market. (A chorus of laughter is appropriate here.)
Academic economists, too, are straying from recent free market orthodoxy. Reviewers of Duncan K. Foley’s survey of economic theology use the following phrases: there are “no fixed, necessary or inevitable laws that govern markets.” The “disconnect of values and policies from markets isn’t ordained of heaven.” One simply cannot “separate economics from moral judgement.”
Meanwhile, Hugo Chavez has won re-election to the presidency of Venezuala with an increased majority. Had the opposition, which is dominated by the middle and upper classes, paid more attention to the needs of the society as a whole during their years in control of an oil rich country, the Chavez phenomenon would never have gathered momentum. It’s not at all certain that Chavez will manage the economy so that sufficient oil profits will go into much needed national development, but his predecessors and ideological opposites didn’t do a good job of that either. The difference is that the earlier give-aways went to the haves, while today’s give-aways go to the old have-nots, who happily re-elected Chavez.
The Democrats have an opportunity here. One doesn’t have to love Hugo Chavez to talk the language of economic and social justice. It’s a foreign language to the Bush administration, of course, and the Bushies are even farther from walking the walk. There’s another area for quick improvment. Chavez will no doubt continue to taunt the United States. It’s to be hoped that the US will stop responding in kind to playground name-calling of the sort that has become a specialty of George W. Bush—when he isn’t sermonizing or barking orders.
Finally, there’s the case of Mexico, which proves the rule of economic transformation even as it seems to contradict it. The leftist, populist candidate Andres Manuel Lopex Obrador lost the presidency by a half a percentage point, but winner Felipe Calderon, from the conservative National Action Party, coopted some highly symbolic issues on his very first day as president. He cut his own salary and those of other high officials and decreed immediate spending cuts sufficient to build 2,500 schools. He also promised transparency and accountability. If Calderon can pull this off, Obrador’s street power will diminish.
Economic laws will continue to operate, once set in motion, no doubt. But in so far as it is really human beings and their variously controlled governments that pull the economic strings, economies may be operating by different values and moral judgements in the days to come.