Survival In A Culture of Laissez-Faire

This article, written by a legal scholar, provides an informative history of deregulation in the US.  The role of government in providing for the public good has been systematically eroded over an extended period of time.  We look much more like we did during the "Guilded Age",  prior to the Great Depression,  when businesses had free reign to do as they pleased without worrying about how government might react. Our return to the Guilded Age, is well described as a revival of the culture of laissez-faire which was also the spirit of that era.  The theology of laissez-faire has its own infrastructure.  Temples were created by wealthy donors who hired theologians to transmit the culture of laissez-faire in numerous think tanks created for that purpose. Most were funded with tax deductible contributions by the wealthy. In a sense, the revival of the laissez-faire culture, which limited the role of government in serving the public good, was partially funded by taxpayers.  Economics departments in most of our universities also preached the gospel of laissez-faire, and they helped to transmit it to the rest of the world.  It has become a religion within the business community, but it has also been sold to many in government and to much of the public.  The theology of laissez-faire has been successfully blended into evangelical theology and doctrines of natural liberty which inspires many devotees of the Tea Party.

The Great Depression ended the Guilded Age, as well as the doctrine of laissez-faire,  the apparatus of government was used to restore the economy following the Depression and also in preparation for a world war and its aftermath.  The revival of laissez-faire served two purposes: it was important during the cold war which was viewed as a battle of economic theologies,  and it was also part of an effort to establish a new partnership between government and business interests.  Government could best serve the public interest by interfering less in the operation of the market economy.

The Great Recession, which was made possible by government deregulation created a new problem for the theology of laissez-faire.  The temples that sermonize on the theology of laissez-faire have been put on the defensive.  Much of their effort is devoted to preventing a reaction from the public which might lead to a greater role for government in serving the public interest.  President Obama's recent speech about rising inequality and its impact on social mobility was a step in that direction.  He signaled several ways in which government might restore the American dream of upward social mobility.  Although his speech was rather light on the role that deregulation has played in altering the American dream, the the temples of laissez-faire will have their work cut out for them.  It is a more difficult product to sell during hard times.  It is also harder to sell laissez-faire when even business leaders recognize that government has a big role to play in addressing the problems of climate change.  Attacks against the theology of laissez-faire are not an attack on the market economy.  Government has an important role to play in market economies, and it may need to play an even larger role in order to deal with many of the problems that we face.  It is important to distinguish between an idealized version of a market economy, and the utopia promised by laissez-faire theologians, and the real economy which must also serve the public interest.  Part of the public interest may consist of preventing the self-destruction of the market economy.