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Political & Economic Theory

Balancing democracy and the free market

The question of balancing free market economic systems with democratic political systems seems at first a bit odd. How can our free choices in economic behavior be something to contrast with free choices in unified social action ie politics? And, How could these two spheres of human action be conflicted? Most people would say that it is the 'American way' to have free market and democratic systems together, as if they are not ever conflicted. But, there are dangers to some lifestyles under unrestrained democracy and unrestrained free markets.

I like the line of thought that there are overriding goals that can be achieved by following different paths of action in different circumstances in order to achieve the goals. I think of the topic of individual liberty in the history of the United States as an overriding goal that can be achieved through different courses of action.

In the early years of the United States people were constrained by the government. When the government acted in economic affairs it was most often to the benefit of the already wealthy. The people in general were less well off and had less freedom to pursue their view of the good life. The solution seemed obvious, to reduce government and have people make their own choices. Jefferson's formulation of this was for the majority of the population to be connected with small relatively independent farms. In general, letting individuals make their economic decisions would be a correction over the state influencing the market. Reducing the government role in the lives of people seemed to have the desired effect upon the overall goal of personal freedom and liberty.

However, the freedom of individuals diminished as free market economics ran out to unrestricted conclusions. 'Race to the bottom' was the order of the day for worker conditions. Incredible amassment of fortunes occurred for those few at the top of the economy. The individual freedoms and liberty of people in general were diminished in this scenario. So, with the overall goal in mind, and a huge decades long push, government became involved in the lives of its citizens for the purpose of creating a bottom floor of worker's rights and conditions. The goal was to create a more fair situation for people in general than was occurring in unrestrained free market conditions.

In perhaps all social circumstances we eventually find a few things going on. Free rider problem, Tragedy of the commons,


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Balancing democracy and the free market

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Balancing democracy and the free market

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