I am writing to respond to Ernest Partridge’s June 20th article Market Failure: The Back of the Invisible Hand in which he rails against what he sees as a common libertarian unwillingness to recognize market failures.
First off, it is quite disingenuous to call free-market fundamentalism “the dogma of the ruling elites.” Few politicians would qualify even as moderate libertarians. It is important not to confuse pro-business with free-market; subsidizing oil and farm businesses is pro-business but hardly free-market. President Bush could be rightfully called pro-business but not free-market. As a commenter pointed out, subsidies, tariffs and heavy handed regulations pervade much of the American economy; just look at how milk prices are regulated.
Although market fundamentalists do exist, I think Mr. Partridge is wrong to characterize all libertarians, especially the academic libertarian crowd, as market fundamentalists. Most libertarians with some economics knowledge recognize the existence of market failures, and they are often willing to use the government to fix those market failures but usually in more market oriented ways.
I also think Mr. Partridge has misunderstood Robert Smith. Although, I have not heard of Robert Smith before, the quote Mr. Partridge uses is quite clear; Smith’s point isn’t that the free market as it exists now will fix all problems but that establishing other property rights will help fix environmental problems. The theme that many environmental problems exist from insufficient or poorly designed property rights is quite common among libertarians. What he is discussing is the difference between “command and control” regulation and market based regulation. For example, a market based regulatory solution global warming would be to establish either a tax on green-house gas (GHG) emissions or have the government auction off permits for GHG emissions. In both cases, the government has created property rights over the right to pollute into the atmosphere (in the first case the government owns the right, but leases it out). A command and control solution would be for the government to set specific limits on how much GHG emissions individual polluters can release. Libertarians are much more likely to support the first type than the second type, although I (and I consider myself libertarian) would acknowledge limits on market based regulations. Market based solutions exist for many environmental problems, everything from fish stock depletion to ozone depletion, and other problems of social cost. You will find that market based solutions are often regarded as better and easier solutions to environmental problems command and control regulations for many problems by economists.
I understand that the left disagrees with libertarians in many significant ways, and it is useful to discuss those disagreements, but it is harmful to discourse to misrepresent the position of one’s intellectual opponents. I urge Mr. Partridge and Dissenting Voice to recognize that libertarianism is an intellectually serious philosophy, and engage in honest dialogue. Libertarians are much less likely to read Dissenting Voice if they are so seriously mischaracterized by its contributors.