Vantage point

Sunday, December 03, 2006

The Sanest Rebuttal in a Long Time

Ashutosh has written the sanest rebuttal of a pro-free-market blog post I have read in recent times. In response to Gautam's post about Ram Guha, he has written Why Do We Always Have To Defend Free Markets?

There are a couple of oints in Ashutosh's post that I disagree with, but this really hits the nail on the head -

* The market disregards those without purchasing power:
Gautam calls this the "most brutal misrepresentation" of free markets. I would call it the most brutal truth about free markets. Again, I would have no objection accepting this point. In fact, of course free markets disregard many people who don't have purchasing power. But what system on earth can possibly not do that?? What distinguishes free markets is that they give incentives to every person in their purview to gain that purchasing power. That is really the nature of the free market soul. So this objection, while true, does not really say anything dramatic. One might as well criticise free markets for saying that they don't make sure that every victim of AIDS in Africa does not get access to the best anti-HIV drugs. Of course he or she does not. But find me a system which would make those drugs available to all those people, and which simultaneoulsy has incentives for self-advancement and progress that are built in Adam Smith's grand ball game. In fact, find me a system which satisfies even the first condition. Except in very limited circumstances, I cannot envisage free markets duly regarding every person and his brother who doesn't have purchasing power. So this critcism by Guha, while warranted, is a trite truism. We knew that for many years; in fact, wasn't that what the communists and leftists have been saying for time immemorial? To say that free markets don't regard people with purchasing power is to enunciate a bitter truth of humanity; all humans are simply not born equal, and in fact most humans won't ever become equal. But what free markets do is to give every man a realistic chance to become equal. In this respect, they are remarkably humanising structures which promise decency to every individual. Again, they may not do this in the best way, but they do this better than any other system we have dared to imagine and implement. So this trite truism will in the end elicit a trite response from me- "True, so what?"

(emphasis mine)