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What the Hell Does the Market Mean?

Mercado, El American

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Perhaps we must be held accountable for using the market as an abbreviation or simplifying formula that actually appears as an anthropomorphism instead of specifying its meaning. When it is said and written that the market decides, the market prefers, the market thinks, the market responds, the only thing missing to be said is that the market copulates. All this conveys the false idea that the market is a kind of mysterious apparatus alien to humans that functions independently and mercilessly with respect to the social aspect.

But what is the market? The market is the people, the market is all of us. The market is not a place or a strange thing, it is a process managed by each person in carrying out daily transactions. That is why when we try to point out with a certain derision that not everything should be left in the hands of the market, we are saying no more and no less that decisions should not be left in the hands of the people. People purchasing and refraining from buying show their preferences based on exchanges of property rights, which is evidenced by the prices that are the only indicators to know where to invest and where to refrain from doing so.

As has been pointed out so many times, the institution of private property is indispensable for the purpose of allocating the always scarce resources in the most efficient hands to meet the requirements of others. Those who are right with the tastes and preferences of others increase their profits and those who are not right incur losses. Since goods do not grow on trees and there is not enough of them to go around all the time, such allocation is vital.

To the extent that the state apparatuses interfere with property and prices are blurring the above-mentioned signs which inexorably leads to the waste of capital that in turn causes wages and income in real terms to decrease. And if in the extreme it is decided to abolish property as Marx and Engels propose, there is no way to economize, there is no sense in accounting, project evaluation or economic calculation. As I have exemplified before in this context, it is not known if it is convenient to build roads with asphalt or with gold, and if someone maintains that gold is a waste, it is because he remembered the relative prices before abolishing property.

In addition to the humanitarian reasons for so many killings and massacres in all totalitarian regimes, the collapse of the Wall of Shame is due to the permanent chaos and consequent shortages that are invariably generated by attacks on private property.

Private property is indissolubly linked to the sacredness of one’s body, to the manifestations of one’s thought and to the use and disposition of what has been legitimately acquired. This constitutes the moral foundation of liberalism and its legal, philosophical and economic ramifications. This conceptual approach constitutes the central axis of the tradition of liberal thought that is always in ferment discovering new paradigms since our navigation never arrives at a safe port since knowledge has the characteristic of provisionality, always subject to refutations in a pilgrimage in search of truth in the sea of ignorance in which we live.

A manifestation of supine ignorance regarding the meaning of the market is when one alludes to “the abuses of the market” without perceiving the contradiction in the terms since, as it is expressed, the central axis of the market consists in the respect for rights. It is as the master Marco Aurelio Risolia wrote in his extraordinary work Sovereignty and Crisis of the Contract, anticipating the folly of having included in codes the so-called “abuse of law” which, again, constitutes a gross contradiction in terms since law cannot at the same time be non-law. The positive norm to be consistent with the law rests on the milestones or guides outside the walls of the mere legislation in force.

In liberalism there are no poles that dictate what should be thought, we liberals are not a herd and we detest single thinking, so there are many nuances within this noble tradition.

However, we observe that sometimes some friends coming from authoritarian extremes in their youth, with some shyness and without completely shedding their previous scars, propose outlandish labels in order not to identify with liberalism altogether.

Liberals share unrestricted respect for the life projects of others and know that this respect does not mean adhering to the project of others even if we judge them to be ill-advised and even repugnant. Respect is unrestricted as long as it does not mean harming the rights of others which results in the use of defensive force but never offensive by the protection agency that in this instance of the process of cultural evolution we call government.

In this sense, I recall that Leonard Read has said that despite his admiration for the American Founding Fathers, he believes that they were wrong to use the expression “government” since it translates into commanding and directing what each person should do with their lives. He concludes that terms such as security agency or protection agency should have been used “since using the word government is as ill-advised as calling the general manager the guardian of a company.”

It is interesting to note that unlike in the realm of zoology where the more apt species eliminate the less efficient ones, in the market the stronger ones, as a consequence not necessarily wanted, transmit their strength to the weaker ones via capitalization rates. This is the only reason why in some countries there are higher standards of living than in others, it is not a question of greater generosity of the Canadian with respect to the Bolivian, is that investments resulting from civilized institutional frameworks force to pay higher wages in the first case.

As has been said, there are many nuances within liberalism. The resulting debates enrich this tradition, but there are issues on which there is full agreement in general. In addition to what we have stated above, I would like to make three additional points to illustrate the issue.

In the first place, they do not fall into the deification of the collective and, instead, highlight the transcendence of individual autonomies. They know how devastating the tragedy of the commons is, that is, what belongs to everyone belongs to no one: you do not have the same incentives when you must pay the bills as when third parties are forced to take over by force. Nobody better than Borges to exemplify this theme when he said goodbye to his audiences and said “I say goodbye to each one and I don’t say all because all is an abstraction while each one is a reality.”

Secondly, the importance of competition for which I refer to the case of the monopoly which is two-faced. On the one hand the pretension of the statists to have the monopoly of compassion that in the end turns it into the increase of misery and, on the other hand, it is the meaning of the monopoly in the market process.

It is truly outrageous that the statists of our world claim to be the only ones who have a sense of compassion for the poor and suffering. As is well known, compassion means participating in misfortune, sharing the pain, being in solidarity with the tragedy of others, commiserating with the pain of others, feeling the affliction of others as one’s own.

These noble feelings are present in every good person, no one can be indifferent to the suffering of others. It is not the heritage of a certain current of thought. The basic question is to know what are the means to alleviate this situation.

In any case, almsgiving itself, the delivery of material resources to the person in need, is a way. But the most powerful way is to help people understand the recipes for the best possible welfare by that “teaching to fish is more help than giving a fish”. The former endures over time, while the latter is exhausted when food is eaten (St. Thomas Aquinas includes “teaching the unlearned” in the category of almsgiving he calls “spiritual”).

In that sense, however better the intentions might be (let us remember that “the road to hell is paved with good intentions”), conspiring against open societies destroys creativity and the incentives to be productive.

How many liberal intellectuals and their equivalents have been working ceaselessly since time immemorial in pursuit of values and principles that improve the living conditions of the weakest? Can it be said with any laxity that the always authoritarian statists are really compassionate towards the misfortunes of others? Aren’t enough for us the failed experiences of so many megalomaniacs who with the greatest arrogance have claimed the welfare of the people but who have plunged them into misery, while with crushing frequency have raised public money in the context of a macabre farce?

As we have reiterated so many times, besides the need to open wide the doors of creativity that can only be achieved with civilized institutional frameworks, those who believe that we must move forward with the times and help the helpless immediately, must resort to the first person of the singular and proceed accordingly or gather interested in collaborating with that very noble purpose. What is not conducive is to resort to the third person from the plural and try to pluck the fruit of others’ work for such purpose.

Whenever it is said that the state apparatus must deal with the matter, one must ask which neighbors will the state take their resources from by force. This is what politicians in office usually do.

On the other hand, it must be kept in mind that charity and solidarity refer to what is done voluntarily, with one’s own resources and, if possible, anonymously. Compulsive removal of wallets and purses of others is not charity, philanthropy or solidarity, but rather a robbery. This procedure degrades and prostitutes the sacred idea of charity and becomes the greatest of hypocrisies.

It is interesting to review what happened in many different countries before the irruption of the evil called “Welfare State” (as it is said, the use of violence is incompatible with charity). The number of immigrant associations, guilds, philanthropic foundations was notable and for the most diverse purposes. Then “the philanthropic ogre” confiscated pensions and imposed the rest of the battery of statist measures, with results known to all.

It is not possible to help things improve if the right is destroyed which, precisely, allows an increase in investments which, as we say, is the only thing that raises salaries and income in real terms. The aforementioned demolition occurs when pseudo-rights are proclaimed. This is so because the counterpart of the right always implies an obligation. The fact that someone earns a certain amount through his work carries with it a universal obligation to respect that wage, but if an income is claimed that is not earned and the government grants that amount, it necessarily means that others will have the obligation to provide the difference, which naturally means that their rights are harmed, so it is a matter of pseudo-rights.

The second chapter of this second example of the monopoly lies in the understanding that in a free society the one who first discovers a medicine, a technology or whatever is monopolistic, that if it is attractive it will attract others to that rule but to argue that an anti-monopoly law should be enacted would not have allowed us to get out of the cave and the stick since the first one who discovered the advantages of the bow and arrow would have been banned by the monopolist. The only harmful monopoly is the one imposed by the state apparatus since it necessarily means a worse situation than the one the people would have obtained in freedom.

Finally, and just to illustrate in a telegraphic way some of the general coincidences in liberalism, the opposition to wired cultures and nationalisms that do not allow the movement of people and goods across borders must be stressed. The liberal believes that the fractioning of the globe into nations is for the sole purpose of avoiding the immense danger of abuse of power in a universal government. He believes that decentralization and federalism within nations are defenses of people’s rights.

In short, the market is not a boogeyman; we are the ones who, among many other things, decide on inequalities of income and wealth as we reveal our preferences in the supermarket and the like every day. And when bureaucrats interfere, they destroy the process, harming everyone, but especially the most needy, since they block the information system of prices, which is the result of fragmented and dispersed knowledge, in order to concentrate ignorance in the hands of the usual arrogant people.

The Nobel Prize in Economics, Vernon L. Smith, summarizes the meaning of the market when he underlines that in the free society “the rules emerge as a spontaneous order, they are discovered and not the result of the deliberate design of any mind”.

Alberto Benegas Lynch (h)

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