Contradictions

There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course.  Just as cotton manufactuers — the leading free trade industry — were created by the help of protective tariffs, export bounties, and indirect wage subsidies, laissez-faire itself was enforced by the state.  The thirties and forties saw not only an outburst of legislation repealing restrictive regulations, but also an enormous increase in the administrative functions of the state, which was now being endowed with a central bureaucracy able to fulfil the tasks set by the adherents of liberalism.  To the typical utilitarian, economic liberalism was a social project which should be put into effect for the greatest happiness of the greatest number; laissez-faire was not a method to achieve a thing, it was the thing to be achieved.

[…]

The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism.  To make Adam Smith’s “simple and natural liberty” compatible with the needs of a human society was a most complicated affair.  Witness the complexity of the provisions in the innumerable enclosure laws; the amount of bureaucratic control involved in the administration of the New Poor Laws which for the first time since Queen Elizabeth’s reign were effectively supervised by central authority; or the increase in governmental administration entailed in the meritorious task of municipal reform.  And yet all these strongholds of governmental interference were erected with a view to the organizing of some simple freedom — such as that of land, labor, or municipal administration.  Just as, contrary, to expectation, the invention of labor-saving machinery had not diminished but actually increased the uses of human labor, the introduction of free markets, far from doing away with the need for control, regulation, and intervention, enormously increased their range.  Administrators had to be constantly on the watch to ensure the free working of the system.  Thus even those who wished most ardently to free the state from all unnecessary duties, and whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with the new powers, organs, and instruments required for the establishment of laissez-faire. (146-147)

Karl Polanyi | The Great Transformation: The Political and Economic Origins of Our Time

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