Generalizing my last post a little, or, "how liberals should talk to libertarians"

Allow me to generalize my last post with a little advice (take it or leave it) for those of you who, like me, find yourself "to the left of the right" (I say it that way because I find myself feeling more left some days than others). This is inspired by the fact that I agree completely with Gavin on the differences between Smith and neoclassical general equilibrium but would still say forcefully that Smith believed in a generalized invisible hand, guiding private interest toward public good.

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So here it goes: Libertarians are simply wrong when it comes to many economic questions that society faces (they're also often wrong on economics as a scientific matter, but that's a different conversation entirely).

In addition to be wrong, libertarians also have a tendency to claim the power of markets as their own solution to the problem at hand. It is their solution, that's true. But just because they're wrong and you know they're wrong and they claim markets as their own doesn't mean you are obligated to downplay the value of markets.

There are lots of ways in which free markets can be a disappointment. Market power privileges the wealthy few, externalities simply give us the wrong solution in lots of cases, and asymmetric information burdens the disadvantaged. The fact that markets exist in a social context of reproducing families also means that disadvantages that are transmitted intergenerationally can be exacerbated by markets.

All of this is true.

But you can say forcefully that this is all true without denying that as a general principle, markets channel private self-interest into a public benefit and that therefore we need market economies to guarantee human flourishing.

I personally find it frustrating that liberals like Joe Stiglitz - who is not an enemy of markets - criticizes markets as short-hand for criticizing what is really a libertarian view of the role that markets play in the broader constellation of social institutions. Because that's really where the difference is: not a disagreement over the value of markets, but over the value of other institutions (in most cases, government).

This way of talking about markets that a lot of liberals have forfeits the whole discussion to libertarians, who are implicitly treating governments and markets as opposites. We shouldn't forfeit that point. That's the whole discussion.

Liberals are pretty consistently supportive of markets and government. If you are actually not a fan of markets then you're really a part of the illiberal left - you're getting into socialist territory - and that's a whole different can of worms. But most Americans on the left are liberals and they are in the liberal tradition of free markets and free government.

Some of them need to start acting like it, and not forfeit the whole debate to the libertarians.