Most people seem convinced that a “market economy” is the optimal model for development and overall economic and financial performance. However, this conviction swiftly recedes when economic crises rear their heads.
In my view, the absolute application of this model is not feasible under the conditions we know in today’s world. In a pure market economy, the role of the state shrinks to protecting borders and combating crime. Ferdinand Lassalle compared this role to that of a “night-watchman” in his criticism of liberalism. A contemporary American philosopher, Robert Nozick, nonetheless strongly defended this idea, presenting it as the ideal model for preserving individual freedoms and self-expression.
Comparisons between the liberal model and a socialist alternative will usually favor the former. The liberal model’s celebration of individual initiative, which it rewards and valorizes, was key to the scientific and technological progress achieved in Western societies, and with it their prosperity and high living standards. Under socialism, people struggle to secure a decent life and meet essential needs.
Consider, for example, the carmaker Henry Ford, the man behind the American Ford automobile company, and compare his vehicles to those of his Soviet counterpart, Lev Yeremeyev, the designer of the Volga. Ford became one of the richest men in the world; his name remains iconic, and his material legacy is vast to this day, with dozens of articles and books written about his life and work.
By contrast, the Soviet designer led an ordinary life as a government employee. Little has ever been written about him, and he received no material rewards beyond certificates of appreciation. Today, we know virtually nothing about him. He is not a household name despite being a pioneer of Soviet industry. The same applies in the military sphere: if you ask about the designers of the MiG fighter jet (one of the proudest achievements of Soviet industry), you will find a similar result. Those who designed and built it lived and died in service of the state, without attaining rewards that would inspire future generations to pursue innovation and industry.
Comparisons between the two models (whether in terms of material returns, individual freedoms, or political participation) undoubtedly favor the free-market economy.
Nevertheless, many ordinary people, as well as scholars, politicians, and opinion leaders, worry about the dominance of this model. Last week, I discussed the views of the Hungarian-Austrian thinker Karl Polanyi, who offered a powerful critique of the market economy, albeit without advocating its replacement with socialism.
Here lies the distinction between Marxist critics of the market economy and those who oppose it from a communitarian perspective, which seeks a middle path between socialism and liberalism. Advocates of this third approach call for a broader role for the state in managing public resources that avoids restricting individual freedoms or interfering in citizens’ choices. They also argue for removing certain essential areas of life from the market, most notably land, education, healthcare, and the care of those unable to manage their own affairs.
I believe that the absolute application of a market economy, as advocated by Robert Nozick, for instance, would not empower citizens as he assumed. Rather, it would empower the market and its leaders, who would then govern society by controlling the supply and demand for goods, jobs, and capital.
I do not think anyone truly desires this outcome, just as few want a purely socialist model in which private property is extremely limited or nearly nonexistent. A “third way” that combines security with freedom, therefore, seems to be the most reasonable option.
That, however, is a discussion for another time.
