A return to the Golden Age of Laissez Faire ?

Abstract

At the base of event, problem and policy in the American economy today is a deep ideological dilemma. To understand it one must recall that from the days of the founding of the Republic and even earlier. American thought. American policy and formation of American institutions, as Tocqueville knew, were dominated by an ideological liberalism that conceived a world of self-seeking, rational individuals, self-sufficient, free and able to control their private destinies ; the liberties of each based upon the perogatives of ownership ; the volition of each in the quest for happiness and affluence expressed through the powers of property ; with the energies of all fused and channelized as a force for efficiency and progress through market competition ; and with resources allocated and income distributed through the autonomous movements of market price — for market price was seen as the true and beneficent « invisible hand » that equated price to cost, and income to reward, value for value. The state was not to impose its clumsy hands into the operations of such a marvel of natural harmony nor had individuals the right to conspire to constrain its operation. Such, then, was the prevailing image of the way things were and, even more, how they ought to be. Correspondingly, the American state was thus designed to constrain collective action ; it was designed for inaction, designed to stumble over itself no matter what its chosen direction ; and the Supreme Court imposed absolute constitutional barriers against virtually any positive action by the state vis à vis the private economy and the prerogatives of property. So it was up until that virtual collapse of Western Capitalism in the 1930’s that we call the Great Depression.