A nation’s vision is more than the sum total of its citizens’ desires.
Man Cannot Live by Systems Alone
Without a revival of purpose and moral clarity, neither the free market nor the government will save America.
Recently on the Right it has become more common to criticize the free market and assign it blame for the decadence in Western societies. Formerly a pillar of conservative thought, the free market is now often portrayed as ineffective—if not directly harmful.
Inez Stepman is “troubled” about free market principles’ “relevance and application to the challenges that confront us, and the country we love, in the 21st century.” An inactive or unenergetic government has left a vacuum that “has not been filled by a purely free market so much as a managerial and bureaucratic class and economy.”
Others, such as David Goldman, argue that a free market has fundamental flaws that require government to address in order that the economy serves the common good. Modern phenomena—such as the so-called “tech-monopolies,” the private companies which push anti-American and -Western propaganda, as well as the United States’ waning world influence—has led some on the Right to assign blame to one of the most fundamental aspects of free societies as well the vehicle for America’s economic dominance today.
However, these attacks on the free market are misguided. The real cause for the decadence of society lies outside the economical. It is not due to a lack of energetic government.
Goldman states that the rise of tech “monopolies” was unintentional and points to the failure of Friedman to predict them as evidence that economics cannot always look beyond the short term. He adds that competition itself is not actually ideal in situations such as these: just as two railways would not be ideal, neither would multiple competing social media sites. Further, were the tech monopolies not regulated by government, there would be no resort to protection for individuals from censorship and de-platforming.
But though it is true that large social media companies exert enormous influence in the way they operate their platforms, they are not truly “monopolies.” A common definition of a monopoly is a market with “the absence of competition.” But the fact that we do have several large social media sites and tech companies suggests that there is no one “monopoly.” There is competition, and we have seen the quick rise and fall of several social media and tech giants in this information age from IBM, to Amazon, to TikTok.
When competition does become negligible or non-existent, there can be various causes. One possibility is that consumers simply prefer a certain company’s goods. Does Apple have a monopoly over phones because consumers widely prefer Apple phones to Android? If everyone chose to have an iPhone, would that necessitate government intervention against Apple? Goldman recognizes this: “The free choice of consumers built the Big Tech Monopolies,” he writes.
One World Platform
But when even conservatives appeal to the power of the state to “break the information stranglehold,” there is a clear sense that the market is lacking and requires government intervention. One reason for this is the ideological conformity of the major available platforms: with the one notable exception of Twitter under Elon Musk, the Right is marginalized wherever it goes online. Critics who note this frequently also point out that the Big Tech companies did not gain their foothold exclusively through free consumer choice: companies such as Amazon accumulated much of their market share through government protections and subsidies.
But these arguments cut against the claim that government regulation is needed. They suggest rather that tech monopolies wield their influence not because of too little state intervention, but rather too much.
If one social media site is truly better than two, should regulators consolidate these platforms into one? Utilities, railroads, and other industries have either been granted monopolies or are heavily regulated on all levels of government. But under the current conditions and the current leadership, that kind of thinking is not likely to favor conservatives when applied to tech. It is hardly likely that things will work out well for the Right if the state chooses a single communications medium for digital life.
Economically, there is no good argument for government intervention.
These corporations have persisted, despite their pernicious effects on public and personal life, because of their popularity—people like them, even despite themselves. Politically, that will make it unpopular to suggest they be brought under government control. The private ownership of these platforms will rightfully be a further obstacle to their regulation. This is why many on the Right suggest government strip certain protections from these companies—as opposed to arguing for the per se regulation of them.
Beyond “tech monopolies,” there is an additional claim that a wholly unregulated market is fundamentally flawed as a concept altogether. Is the free market incapable of driving long term technological change and development? Goldman argues that “the greatest economic changes—for better or worse—occur when entrepreneurs invest in products that consumers do not yet know they want.” Then he suggests that the market will not invest in unproven products because no one knows “the price of a product that doesn’t yet exist” and the “expected return on investment in a technology that has never been employed.”
Goldman argues that private entrepreneurs will not innovate as well, or at least that they will not identify needed areas of innovation as effectively and precisely as the government would. Goldman argues that technological developments in the modern era are frequently the result of military and government objectives.
I will grant that a great deal of modern technology was supported in part by military and government spending. But there was also contribution from the private sector—not to mention that before the digital age, private industry was a primary driver of the first Industrial Revolution. Not to defend “boomercons,” but they are right when they claim that the technological advancement and the increased standard of living over the last several centuries can be at least partially if not mostly attributed to free markets.
The problem of long-term investment and development is one of demand and capital. If there is no demand for something, an entrepreneur will not waste his effort and capital in developing and producing it. Perhaps this is Goldman’s point: the market will not invest in long-term developments, because these products don’t exist and there is no incentive to produce them.
But wouldn’t this also be a problem for a government? Why would it spend money and invest in development for something no one yet knows to want? Unless, of course, it believes it can satisfy some future demand—and that demand will be precisely its own demand, e.g., a demand for military advantage.
There is the key to understanding this problem. The government itself is a consumer. Governments have demands, though they are different in kind and content from those of individual consumers. And here, again, it is not clear that federal actors can satisfy those demands better than private entrepreneurs. In our own day, defense contractors compete to satisfy the government’s demand for increasing military advantage.
Matters of the Heart
One may argue further that private companies lack the capital to do what government can. But this is observably false. Many private companies are capable and do make huge investments in long-term technologies. The heightened risk also makes the potential reward even more lucrative. Convincing a board or investment bank to fund an idea or research project takes no less daring, and produces no worse results, than convincing the government to do so. Even if the government funds research programs to spur development, choices must be made regarding what should be researched and how lavishly it should be funded. That is an economic problem which the free market is most aptly equipped to handle. Again, if you are not arguing for nationalizing industry, then you will use the private sector to drive these developments. So why rail against the market?
Goldman makes the further claim that government alone can create debt to expand the economy in a way that covers the interest of the new debt. Would this not “constitute an increase in wealth?” No, it would not. No wealth would be created. Rather, all that would have been accomplished is an inflation of the money supply—hardly something we need more of. The expansion or boom caused by the increase in government spending can only be sustained by a continued increase of credit and money expansion. Once the increase of credit stops, the economy corrects and a recession takes place.
We are experiencing this dynamic right now. The influx of newly created money during the pandemic has resulted in high inflation. The Fed is wary of heightening interest rates too much because it would result in recession. They instead try to walk a fine line of reducing inflation they caused themselves without crashing the economy. In this scheme, there is no effective reduction of taxes, because the inflation during the expansion itself is effectively a tax. The only thing happening is a diversion of wealth from those actually producing things to the government (which has produced nothing).
Goldman is probably not advocating for simple inflationary spending, nor for nationalizing industries. His overarching concern is that the market does not create a vision for society beyond the “sum total of its citizens’ desires.” I will be the first to agree with his lament. I too want a vision that motivates and brings our nation together. But it’s not the market’s job to provide that. The market is a term to describe the effects of individual economic choices. If one were to substitute the government’s desires instead of the citizens’, would that solve the problem of vision? The lack of vision in our country is not because of the free market, but rather because no one in our country, including in the government, has “rallied the public around a vision.” Who are our leaders and visionaries? This is our problem, and this is what needs to be fixed.
A more energetic government will not save America. All of Goldman’s policies and solutions could be implemented, but without actually good and virtuous leaders there will still be no vision or national purpose. So the question is really: how do we form or find strong leaders who can give our nation a purpose? And not just any national vision will do—so how do we find and instill one that leads toward an ennobling future for the American regime and way of life?
The answer is not found in government programs or the free market. It must be forged in the human will. This requires individuals to find and acquire greatness in their own hearts and draw others in collaboration.
Stepman is right in that economic liberalism “cannot tell us if what we desire is good or compatible with the continuation of the very free society that sustains it.” The free market depends on a system of private ownership and respect for the free choices of individual actors and their property. The decline of the West is a metaphysical and existential issue. The market will not “refute the Marquis de Sade or Nietzsche,” but neither will an energetic government. These are structures that can be built, used, and manipulated for various ends. They rest on truths that lie at the core of man. Rebuilding the philosophical foundation requires a choice made heart by heart.
The American Mind presents a range of perspectives. Views are writers’ own and do not necessarily represent those of The Claremont Institute.
Classical liberalism’s future depends on reinvigorating the moral foundations for its core ideas.
Under radically new conditions, some of the old insights need modifying.