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I, Too, Fear Unfettered Capitalism

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Here’s a letter to the Frederick News-Post:

Editor:

Jonah Goldberg eloquently expresses understandable befuddlement at people – left and right – who assert that capitalism today is “unfettered” (“Opponents of ‘unfettered capitalism’ are fighting a phantom [2],” Nov. 25). As Mr. Goldberg explains, government in the U.S. has now a very long track record of restraining, modifying, and otherwise obstructing markets.

But there’s a deeper point: free markets by their very nature are self-fettered, and robustly so.

Firms in free markets are fettered both by the competition of rival firms – existing as well as potential – and by the ability of each consumer and each worker to refuse their offers. This competition, along with the ability of consumers and suppliers to refuse to deal, is the most powerful fetter available for keeping producers not only honest, but also for obliging them constantly to seek to operate more efficiently and to offer ever-more-improved products for sale. Similarly, each consumer in free markets is fettered from taking from society more than he or she contributes as a producer – meaning, fettered from greedily snatching what belongs to fellow human beings.

Ironically, many of the so-called “fetters” imposed by the state on market activities in fact loosen the fetters that are naturally at work in markets. Tariffs loosen the fetter of competition that harnesses domestic producers to the obligation to serve the public as well as possible. Subsidies loosen the fetter that requires recipient firms to offer to creditors, suppliers, and customers deals that are as attractive as possible. Social Security loosens the fetter that that keeps each of us attentive to our responsibility of saving for our own retirements.

Anyone truly worried about the consequences of unfettered human behavior should seek to reduce, rather than to increase, the number of government-imposed “fetters” on free markets.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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