Tuesday, April 8, 2008

On the role of government

"Of course, free marketeers will argue that whenever government sets prices, markets become inefficient. Indeed, it will be a long time before the world forgets the demise of the Soviet system and its conceit that trading and prices could be mediated by government. But what a government can and must do is set the conditions of the market in order to enforce the payment of costs. We no longer sell human beings in the free market, and yet all were "legitimate" market-based commodities in the previous century. Government did not wait to abolish the injustice of slavery until the market "regulated" itself for the simple reason that it could not wait. Where harm and suffering exist because of market dealings--when the real costs of that market are not factored into the price of goods and services--we require the government as representative of citizenry to step in to prevent those abuses, one way or another."

Paul Hawken, The Ecology of Commerce. A Declaration of Sustainability. (Chapter "Pigou's solution").

I like the parallel with the problem of slavery, but I should add that the government itself waited much too long before dealing with the problem. President Lincoln is praised for having put an end to slavery, but in 1858 he said: "I will say, then, that I am not, nor even have been, in favor of bringing about in any way the social and political equality of the white and black races... I as much as any other man am in favor of having the superior position assigned to the white race." (quoted by Howard Zinn in Passionate Declarations--Essays on war and justice, chapter "Representative government"). As Howard Zinn goes on: "In January 1865 the House of Representatives, following the lead of the Senate, passed the Thirteenth Amendment, declaring slavery unconstitutional. The representative system of government, the constitutional structure of the modern democratic state, unresponsive for eighty years to the moral issue of mass enslavement, had now finally responded. It had taken thirty years of antislavery agitation and four years of bloody war. It had required a long struggle--in the streets, in the countryside, and on the battlefield."

The problem is that government itself is often controlled by the power of money from big businesses with interests that nothing changes. Therefore it takes time and large public involvement before something actually changes. The same is happening now regarding the ecological threats...


Fran├žois Ascani said...

And in any case, even in the land of capitalism that is the US, the government intervenes at a level that would surprise even the most European socialist -I might actually write a book to show the very strong anti-capitalist forces that exist in the US and that few people have recognized as such.

The actual financial crisis is a double illustration: 1) with the government pouring an enormous amount of money to save faulty companies which should have disappeared according to the law of competition 2) that the "invisible hand" is a faulty religion, as all religions. There is no way all the greedy manipulations of financial institutions have created a greater good. I think we can all agree they have created a greater bad. Good job. And it is NOT the exception which confirms the rule. Please.

Cedric said...

That would be a very interesting book !
I'm waiting for you to write it.