Turns Out a Market Economy is Cooperative
Thursday, September 9, 2010 at 6:04AM
Kevin Goll

NRO's Jonah Goldberg has an excellent column on the the market economy. Here's the meat:

"Friedrich Hayek did the heavy lifting on this point over half a century ago in his essay “The Use of Knowledge in Society.” The efficient pricing of markets allows millions of independent actors to decide for themselves how to allocate resources. According to Hayek, no central planner or bureaucrat could ever have enough knowledge to consistently and successfully guide all of those economic actions in a more efficient manner.

The latest proof of Hayek’s insight can be found not only in the economic winter that goes by the label “recovery summer,” but in the crown jewel of the stimulus known as “cash for clunkers,” which subsidized car purchases that would have happened anyway. That’s a major reason the auto industry just had its worst August in 27 years. Meanwhile, lower-income buyers are seeing used-car prices soar thanks to the artificial scarcity created by destroying perfectly good “clunkers.”

But that’s a small point in the grand scheme of things. According to progressives, the financial crisis discredited “market fundamentalism” and created a burning need for a more cooperative society where “we’re all in it together.” It’s an ancient argument, with many noble intentions behind it. But it rests on a misunderstanding of one simple, astounding, irrefutable fact. The market economy is cooperative, and more successfully so than any alternative system ever conceived of, never mind put into practice.

Goldberg is exactly right. And he barely scratches the surface of how Hayek deals with the subject. In The Road to Serfdom, Hayek spends time talking about how central planners operate under a false premise-- they seek to control that which they did not create, the market economy. Ultimately, according to Hayek, the inevitable result is failure.

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