Cult of capitalism deserves more than Ginn’s short shrift

BY

Cliff Ginn (“The Cult of the Free Market,” Sept. 7) reads Indiana Harbor Belt Railroad Co. v. American Cyanamid Co., 916 F.2d 1174 (7th Cir. 1990), and is appalled at Judge Posner’s defense of negligence liability and his priceless dictum that “the inappropriate use to which land is being put in the Blue Island yard and neighborhood may be … residential living.” Are people outraged that you can be injured by toxic, flammable acrylonitrile and not recover because B was the wrong side of pL? Me, too. But what exactly does this have to do with “the cult of the free market”? Denying the injured party’s right to recover because the injurer is important to the economy is perhaps something some law-and-economics scholars might do … but it’s not the mantra of a free-marketeer. Free-marketeers, after all, believe in the sanctity of property, and what greater property is there than one’s body? Richard Epstein, definitely one of the high priests of this cult, if cult it is, has been arguing for strict liability on corrective-justice grounds for ages. See Epstein, “A Theory of Strict Liability,” 2 J. Legal Stud. 151 (1973), or casebook (6th ed. 1995) at 154. When Posner is taken as the mouthpiece of the “free-market ideology,” things have come to a bad pass indeed.

As for the causes of the Great Depression, which Cliff blames on “[l]aissez-faire capitalism,” and of its end, which Cliff credits to the New Deal and military programs — this is a bit outside my expertise, but I’m told that the leading article here is Ben S. Bernanke, “The Macroeconomics of the Great Depression: A Comparative Approach,” 27 J. Money, Credit, & Banking 1 (1995). Bernanke (along with the mainstream macroeconomics community, hardly a hotbed of conservative sentiment) blames the Depression mainly on monetary shocks — “deflation-induced financial crisis” and, interestingly, the failure of wages to drop to market-clearing levels. Bernanke discusses the French government’s response to the Depression — agricultural import restrictions, minimum grain prices, cartelization of industry, and shortening of work weeks, to soften the blow of the Depression. “These measures (comparable to New Deal-era actions in the United States)”, Bernanke reports, “tended to block the downward adjustment of wages and prices” which would have ended the Depression.

So I’m not convinced that the Great Depression was a result of Mammon-worship. But what of this whole “cult” idea? Yes, the free market is a cult — not in the pejorative, dismissive sense, but in the sense of “minority faith.” It’s a deep-seated, fundamental belief in the sanctity of human liberty. And it imposes a harsh discipline on its adherents. First, it forces us to tolerate our neighbors, who may want to start up clubs excluding gays, paint their houses pink, hire smokers, buy foreign cars or demand a lot of money before letting us live in their apartments. And second, it prevents us from demanding the servitude of our neighbors, who may not particularly want to hire us, rent to us, buy our products or let us onto their property. As Rutherford B. Hayes, whose finger points deep into your soul from the top floor of Langdell, once put it, “The price of liberty is no free lunch.”

With commandments like these, small wonder our cult doesn’t catch on. But beware of arguments that can be reduced to “The policies you advocate are wrong because they’re not being followed now, and besides, lots of people don’t agree with you.” Perhaps, as Cliff tells us, pointing out the many subsidies to favored businesses (including federal drug testing and limited corporate tort liability), the U.S. doesn’t really have a free-market economy. Perhaps Ronald Reagan failed to halt the growth of government, and perhaps he even added some programs of his own. Perhaps the beneficiaries weren’t seen complaining; who can blame them? (See cato.org for free-market critiques of all of the preceding, as well as of the IMF and World Bank.) Perhaps imperialists the world over, no lovers of freedom, have often seen the opportunity to enslave and massacre their fellow men and steal their property, and have gleefully taken it. And perhaps the free-market banner can be wrongly carried in an unholy cause. All faiths have their apostates, especially the demanding ones. Since when does that make a belief system false?

Alexander “Sasha” Volokh ’03

Sept. 11, 2001

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