The defensiveness of free marketeers

A substantial feature in Monday’s Wall Street Journal on the new “limits to growth” illustrated, if anything, the limitations of the free market critique of environmentalism. The article – which unfortunately it not freely available on line – started with the correct observation that the Cassandras have always proved wrong on limited resources. But it lacked confidence in the ability of the current generation to increase supply to meet rising demand. Its conclusion:

“Indeed, the true lesson of Thomas Malthus, an English economist who died in 1834, isn’t that the world is doomed, but that preservation of human life requires analysis and then tough action. Given the history of England, with its plagues and famines, Malthus had good cause to wonder if society was “condemned to a perpetual oscillation between happiness and misery.” That he was able to analyze that “perpetual oscillation” set him and his time apart from England’s past. And that capacity to understand and respond meant that the world was less Malthusian thereafter.”

By coincidence the Financial Times today ran a piece by Martin Wolf, its chief economics commentator, lamenting the death of the free market:

“Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Josef Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.”