Twofish's Blog

August 10, 2008

In praise of markets

Filed under: china — Tags: , — twofish @ 4:17 am

One of my objections to central planning is that in the end, it involves a group of people that think that they can run other people’s lives better than they do. If you live your life with an “anti-greed” philosophy and it works for you, then great. I’ve got enough trouble trying to run my life to worry too much about changing yours, and if being totally against greed and selfishness works for you, then go with it. I also don’t want to set up the way that I live my life as some sort of model. I was in a conversation today when I described my daily routine and the person at the other end thought it was horrificly hellish way to leave. To them, it probably is, but people are different.

So if you think that selfishness is a bad thing for you and that accquistion of material objects is not the goal of your life then that’s fine by me, but that isn’t what we are arguing about. What I object to is the idea that if you are anti-greed, that somehow that makes you morally superior, more spiritual, or that what you are doing is even better for the planet or the people around you. If you want to lead your life being anti-greed then fine, but if you end up trying to argue that somehow for living your life differently, you end up being morally superior to me or that your attitudes somehow make the world a better place whereas mine’s don’t, then we have an argument, since I don’t think that is true at all.

One of the things I spend a lot of time thinking about is how communism failed and market economies succeeded. Communism sounds absolutely wonderful, but in the end created one of the most hellish and vile political systems that have every existed on this planet. By contrast, if you explain how a market economy works, it sounds vile, corrupt, and decadent, but it somehow manages to work. How did this happen?

Part of it involves this “I know how to run your life better than you do” attitude that is an inherent part of communism. Once you think that you know how other people should run their lives, and it turns out that other people don’t want to run their lives that way, at that point you have to bring out the secret police and force people to run their lives the way that you think they should be run, and at that point things turn really bad since the people that think they know better, really don’t, and people who think that they are unselfish vanguards of the people, really aren’t.

People are different. People should be different. If people were the same, there wouldn’t be any real need for markets, since if I’m the same as you, then what is there for us to trade? It’s the fact that market economies benefit from the fact that people are different and in fact encourages people to be different, that makes market economies much nicer to live in. Instead of sending in the secret police to mold people into the ideal “socialist man” and eliminate people who aren’t, you go up to someone and figure out what economic exchange is possible that makes two parties better off.


  1. It’s rather amusing that Dynamic General Equilibrium Models set it foundation upon a “representative agent.” Too much modeling, too little, too little something. And to think that 80% of macroeconomics research after mid-eighties starts with Max u(.), it just makes your stomach churn.

    By the way, why is that your life sound hellish to that guy? You work long hours? Commute too much? Just curious.

    Comment by anonymous — August 10, 2008 @ 8:17 am

  2. “communism failed and market economies succeeded”

    What about: “totalitarism failed and democracies succeeded”?

    Market economy is a potential consequence of democratic freedom, not the source, no?

    Comment by Laurent GUERBY — August 24, 2008 @ 1:16 pm

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