Laissez-Faire - Time for a New Testament?

Let me start with the first, and most common, definition of what this means (from the Merriam-Webster online dictionary):

laissez-faire

1 : a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights

Nothing as complex as the global economy is simple, so there's no way a single person, in a single blog, can effect any major change. But this topic has been rolling around in my head for the past couple of years, and lately it's been pushing at me to let it out of my head and onto "paper."

I think it's time for a Laissez-faire New Testament.

While I am, in general, a fairly liberal person on social issues, and while I do believe that there is a role for the government to play in protecting the most vulnerable in our society, I have a "conservative" side that says that the drive for capital appreciation has driven a great deal of progress for society.

But it seems to me that some of the major societal and economic issues of our time are too big for us to continue to believe wholly in the self-centered mores of laissez-faire capitalism (l-fc). What issues? Well, global climate effects, sustainable energy sources for a growing technological population, world-wide growth of economies, basic health care as part of global human rights -- that sort of thing.

I think we've let business try to address these issues largely unencumbered by governmental interference. Even "liberal" politicians don't seriously propose structural changes that would be deemed as radical departures from traditional capitalism. For some, the reason for this reticence might be fear of being called "socialist" but I think the biggest reason is that traditional American capitalism has succeeded quite well, to this point.

Unfortunately, I think the complexities of global interconnectedness are changing the fundamentals of the world, and our reliance -- our faith -- in l-fc is blinding us to solutions that might be necessary, and almost certainly could be more successful.

For today's post, I want to have us consider that our belief in l-fc is, in fact, a faith. Sure, there have been plenty of studies and thesis papers and Harvard Business Reviews, but in the end, economics is not a science, let alone a logic problem with a clear answer. It's a set of principles that both reflects and influences behavior of human beings.

Like the Old Testament, l-fc has some hard-and-fast rules. Thou shalt, and Thou Shalt Not. But when the whole world is being condemned while the faithful are attempting to Do Things Right, what we need is for people to Do the Right Things. We need to re-examine lf-c, keep what works at a micro-level, and add some new principles that override it at the macro level.

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I'm amazed that I wrote this post yesterday (2/23/09), published it today (2/24/09), and then read a wonderful post in fivethirtyeight.com by George Lakoff that expounded on lf-c and many other points that ought to be in the "New Testament."

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"laissez-faire." Merriam-Webster Online Dictionary. 2009.

Merriam-Webster Online. 23 February 2009