HUFFINGTON POST Column: When the U.S. Army blasted into Baghdad in 2003, expelling Saddam’s Baathist regime, Defense Secretary Donald Rumsfeld expected “free markets” to pop up all over. Instead, he got looting, murder, and chaos. So much for the neocon myth that markets are “natural,” requiring only the absence of “government interference.”
In The Surprising Design of Market Economies, urban journalist Alex Marshall shows how in fact it always takes government — even bad government — to create and maintain markets. The idealized “free market” we meet in Ec. 1, with its large numbers of well-informed competing buyers and sellers — that kind of market would not exist without intensive government support and regulation. I provided an example in my post on Public Meat Markets in Old New York.
From the earliest times, government — at first perhaps just the local warlord — has at least provided a safe physical space for trade. Before 2000 BC, Chinese, Egyptian, and Babylonian governments not only established market places; they also built roads and canals to them. They created and enforced systems of weights and measures, and even forms of money. They also drew up sets of rules, such as the Code of Hammurabi, and provided courts to resolve disputes. Later, under the Roman Empire, of course Christ found money-changers in the temple courtyard, along with all sorts of other merchants — because that was a nice, safe, central location for a market… (more)
