Wednesday, 20 June 2012

The Bicomponent Free Market

Ha-Joon Chang has pointed out many fallacies of free market capitalism in his book "23 Things They Don't Tell You About Capitalism". You can watch his summary lecture here.
He paraphrases Winston Churchill's comment about democracy, "capitalism is the worst economic system except for all the others" and he points out that no markets are entirely free: they are all limited by politics, laws and social norms.
Yet we feel free to choose how to spend or invest our money. The market alocates resources and makes choices by a process of individual choice and approval, punishing bad choices with loss and supporting good choices with gain. It's survival of the fittest. The best products and best investments win.
I suggest that the second layer of free market capitalism is how we 'spend' our votes. And I suggest that if we can choose policies freely, from a wide range of 'suppliers', then the best ideas will emerge. These ideas may define the boundaries of capitalism, moulding it in ways that best suit the common good. Furthermore, if the ideas are only produced by a small political oligopoly, the major parties, it is unlikely that society will evolve and adapt as quickly and as effectively as the entrepreneaurial politics that Interactive Democracy fosters. Oligopolies may be as retarding to politics as they are to markets!

1 comment:

Amanda said...

I kept waiting while watching the clip to see if Australia was mentioned, but unfortunately we seem to slip under the radar. I think our economy and the strength of it is a result of our isolation from the 'norms' of western economic thinking and the influence of being Asian. We only really have two major party's and the role of the minor party's is as an ex politician Don Chip is (in)famous for saying "our role is to keep the bastards honest". I wonder if we get ignored because we are so far from the 'norm' or it may be our cultural preferences of keeping things as simple as possible and confidence (most of the time) in our governance because of its legitimacy and our voting procedures (the preferential and proportional voting). Either way our economy is strong, pragmatism and lack of extremes are the order of the day here, we seem to have little resistance to government regulation as long as it achieves the ends required.

Happy Thursday