How do we keep markets flat-open-fair and competitive?
I find it ironic that the great economist Friedrich Hayek is generally dismissed as an apologist for elimination of all market regulation, yet the liberal (leaning-Keynesian) economics site — Evonomics — explores Hayek’s views on both market theory and evolution with considerable respect. (Evonomics is also the one place, online, that most often studies and lauds Adam Smith!)
In this conversation — How Hayek’s Evolutionary Theory Disproves His Politics — David Sloan Wilson and Samuel Bowles, leaders in both economic theory and evolution start by praising Hayek’s revelations that markets are about information and how over-regulation is inherently fraught with errors that stymie the crowd- and open-sourced wisdom of markets.
Alas, Hayek thereupon was lured to the opposite extreme, as his arguments were used to justify elimination of regulations that kept markets flat-open-fair and competitive. If 500,000 civil servants are too narrow a clade to allocate economic resources well, then how is an incestuous, conniving-secretive and conspiratorially greedy CEO caste of golf buddies supposed to be more wise? Hayek’s criticisms of socialism applied cogently to Leninist regimes, but as these scholars point out, they’re much less meaningful when aimed at Norway.
“Regulations” that break up power concentrations (e.g. monopolies and duopolies) are not suppressors of competitive enterprise, but rather gave birth to its golden age… as our parents in the Greatest Generation well-knew, before those beneficial and stimulative regulations were chopped away by right wing “reforms.” (Followed by collapsing growth rates.)
Hayek’s greatest failing? His inability to refer to the other great enemy of market enterprise, feudalism, which wrecked far more nations and economies than poor, dumb socialism could ever dream of. A flawed and stupid system that wrought hell in 99% of past cultures, feudalism is rooted in human temptation to cheat, and it appears to be roaring back. And the shills who work for the lords are — alas — really good at oversimplifying and misquoting Friedrich Hayek.
The fundamental is this: if markets work best when the maximum amount of information (and least deception) is acted upon by the widest diversity of market participants… then liberal policies that intervene to ensure all children get education, health care and infrastructure are best, for entirely pragmatic and Hayekian-capitalist reasons! And “conservative” policies that empower a narrow caste of 5000 secretive-conniving golf buddies are the worst enemy that free and creative markets could possibly have.