Friday, December 30, 2016

The Market Is 'Self-Correcting' in the Way That Science Is 'Self-Correcting'

Stuart K. Hayashi

Circa 1788, Jacques-Louis David did this portrait of Antoine Lavoisier and his wife.

If science is "self-correcting," then science is to Divine Revelation what the free market is to government control. Most of the scientists I know dislike anyone pointing that out, because they are left-wing statists and philosophically inconsistent. But here goes.

To say that science is self-correcting doesn't mean everybody stands idly by and then some erroneous misunderstanding magically reverses itself. Rather, insofar as there is freedom, a scientist is free to look into other people's conclusions and double-check them. Some people say that science is inferior to Divine Revelation because scientists are admittedly fallible in their conclusions, whereas Divine Revelation is infallible. But they miss that the reason why Divine Revelation is infallible is that arbitrary postulations cannot even be right or wrong.

The majority of scientists I know absolutely hate the free market. They want the government to be their sugar daddy and supply them more taxpayer funding. But there is a limit to that; the taxation and regulation they favor does have some inhibiting effect on economic growth, and there is that danger of reaching the point where the goose will be killed and lay no more golden eggs.

Many scientists who properly praise science for being "self-correcting" make it a point to ridicule those who observe that the free market is "self-correcting" as well. They employ the straw man that one who considers the market to be self-correcting presumes that everyone can sit idly by and do nothing, and then some problem will magically disappear. That is indeed a false impression that the term laissez faire gives as long as laissez faire is taken to mean "let it alone." Politicians hate referring to themselves as laissez faire because they think that if they call themselves that -- if they say they know how to leave people alone -- that makes such politicians sound passive and lazy, whereas politicians gain fame by developing a reputation for being proactive (which, in real life, translates to that politician being meddling). But in the free market, a peaceable entrepreneur improves living standards exactly because she is not letting something alone.

A more precise translation of laissez faire, and one that applies more closely to what happens in the market, is "let you do" -- emphasis on the DO. That is free enterprise. Insofar as peace is maintained, people are free to enterprise -- you are left free to DO. A free-market entrepreneur is proactive in the way that a meddling government cannot be -- she remains peaceful and obtains help from others through their voluntary consent. A peaceful market is self-correcting in the way that science is self-correcting: someone who notices a problem has the freedom to take action and do something about it. Insofar as peace is maintained, financial profit is often a good impetus to motivate someone to devise some solution.

We often hear the misleading phrase market failure. The implication of it is that even when no one is being violent as some problem occurs (say, no one is being violent but someone at some company made an error resulting in unsafe units of some product being sold), the problem is inherent to those people being left free to cooperate or not, and only the initiation of the use of force on the government's part can solve the problem. But no, the error is not a market failure but a human failure -- people make the same errors both in private organizations and in government-controlled enterprises. The difference is that insofar as people are free and peaceful, a company continually making a dangerous error is ultimately penalized by losing customers, whereas, if a government-controlled enterprise makes the same error, taxes still pay to support that government-controlled enterprise's staff anyway. The notion that government force is necessarily more competent than free individuals to perform any nonviolent enterprise -- say, mail delivery or educating children -- is an article of faith.

No matter how statist any scientist becomes, science and free enterprise are connected. Science is the peaceful pursuit of empirical knowledge, and free enterprise is the peaceful application of that knowledge.