Liberalism and Capitalism Today. Paul-Jacques Lehmann

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Liberalism and Capitalism Today - Paul-Jacques Lehmann


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the economic field. However, it can be said, without much risk of contradiction, that no liberal has ever demanded that all economic operations be left in the hands of the markets. Thus, again, for Hayek, public power must ensure the vital minima for all citizens in the areas of food, housing, health, etc., and the state must be able to provide them with a minimum level of services. However, it should not go further, for example, by guaranteeing material equality among all, because social order should not be based on the results obtained by the activities carried out, but on the remuneration of the conduct of the various economic actors. It is illegitimate for a government to use coercion to determine an income scale that corrects distortions of competition by providing a uniform gain to all those who, for one reason or another, are unable to obtain this income on the market.

      For more moderate liberals, the other interventions of political power in the economic domain are the subject of more nuanced positions, with a multitude of proposals as to the more or less numerous activities that public authorities must ensure, according to the judgments made with regard to the consequences of capitalism on the collective well-being. Even if everyone believes that state “obesity” is harmful, there are different solutions adopted in different countries, certainly according to their level of development, but also, above all, according to their history and culture. For example, as we will see, the power to mint money and guarantee its value did not appear everywhere at the same time and has evolved in disparate ways.

      Beyond the functions that some call those of a “night watchman”, the other interventions of political power (especially in the economic field) are the subject of more nuanced positions. Excluding the advocates of an omnipotent state that rejects all market transactions, a centralized and planning body that ensures all the mechanisms leading to transactions, we find a multitude of proposals as to the more or less numerous activities that public power must ensure, depending on the judgments made about the consequences of pure capitalism on collective well-being.

      All in all, from a strictly economic point of view, the state does not have the necessary means of action to ensure growth. On the contrary, it must be able to create the conditions for market mechanisms to achieve this growth. While it is true that in reality the market is incapable of setting the “true” price of a good or service, it is not clear that the public authorities would be able to determine its “fair” price. Thus, the policy of price control is, most of the time, a failure. Blocking prices at a certain level leads to perverse effects, particularly an increase in public spending. For example, the existence of a minimum wage is often equated with an increase in unemployment insofar as some labor-intensive firms refuse to hire workers whose qualifications would require lower pay. The same is true of rent freezes, which turn against the tenants themselves, since landlords are less inclined to build, reducing the number of housing units on offer and leading to higher rents.

      There is also the definition of goods and services that are presented as not being abandoned to market mechanisms (public goods) and, as a result, can only be managed by the state. The political approach to this question is often more important than the purely economic approach, which explains why this definition differs from one country to another. Nevertheless, there is agreement on the fact that collective goods are presented as indivisible and non-appropriable goods, and therefore cannot be sold and are not part of the market economy. For example, the construction, operation and maintenance of a lighthouse at the entrance to a port can be considered as responding to this approach. Yet, the choice quickly becomes more delicate: should health, education, transportation infrastructure or public transportation be considered services or public goods?

      However, it is questionable whether it is up to the state to establish a list of collective property by determining what is good or what is necessary for individuals, deciding that public resources should be allocated to one good or service over another, when the majority of the public does not feel the need, arbitrating between methods to reduce waste, deciding what to do or not to do based on moral or ideological considerations. Moreover, we can never be certain that the state manages more efficiently than private companies. Thus, de Tocqueville already condemned the fact that the state seizes functions for which private initiative would be more efficient.

      If we consider that the price resulting from the confrontation of supply and demand is the best signal, we can only condemn the practice of administrative pricing of collective goods and services. Moreover, if the public authorities set a price lower than that which would come from market mechanisms, financing by taxpayers can be considered a source of greater inconvenience than a high price. Similarly, if the market is not capable of meeting the needs of consumers, is it certain that public authorities can satisfy the demands of customers?

      Even when they are managed according to the standards in force within private firms, for example with regard to making a profit and therefore seeking cost savings, we must also question the justification for public companies. We can envisage three types of firms under the authority of the state:

       – those that have been nationalized for moral or political reasons, as well as to fight against proven collusion of private companies in the sector, which brings us back to the problem of questionable unilateral decisions by public authorities;

       – those that concern


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