Tuesday, October 14, 2008

Radical Menace to the Market Is on the Right

E.J. Dionne points out that it's the doctrinaire marketeers who threaten to destroy the market:
What’s astonishing is that people keep forgetting that critics of pure capitalism (FDR comes to mind) have often had to save capitalism from the capitalists and from those who claim to love capitalism the most ....

Acknowledging an important role for government in social and economic life is -- and always has been -- the American way. American capitalism has thrived in a mixed economy that accomodated a large role for the state. The exceptional period has been the last three decades, when truly radical doctrines took hold. It is actually radical to imagine that the economy will go forward smoothly if the government rips up the rules, deregulates willy-nilly, gets out of the way and stops investing in public goods (education among them) that the market tends to under-finance.

just consider the Morrill Act of 1862, which provided a huge boost to learning and productivity through the creation of land-grant colleges; government cooperation (sometimes corrupt) in building the railroads; Progressive Era regulations such as the Pure Food and Drug Act; the creation of the Federal Reserve bank; and, of course, all the innovations of the New Deal, the Fair Deal and the Great Society. (And, okay, I can’t resist mentioning one more important intervention: The explosion of growth in the period between 1945 and 1970 was made possible in part by the GI Bill, in which government invested heavily in the education of our people, and also by big spending increases on new schools to provide K-12 education for the baby boomers.)

What’s going away today, in other words, is not “American Capitalism” but a doctrine of pure laissez-faire capitalism that was deeply flawed and not in keeping with the traditionally American approach to markets. We are coming back to how we historically did business.

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