Laissez faire

The dictionary defines laissez faire as "An economic doctrine that opposes governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws."

Now, who or what decides the "minimum necessary" government regulations or interference in a free-enterprise system, in accordance with its laws? And when do we know when governments have gone far enough with their minimum necessary regulations or have gone overboard with them? My feeling is that such things are determined through experience. It also depends on the nature of the economics society. For instance, the laissez faire of Hong Kong would not be appropriate or acceptable in Britain.

Laissez faire proponents oppose "economic interventionism and taxation by the state beyond that which is perceived to be necessary to maintain peace, security, and property rights." But how about people's safety and protection from unscrupulous operators and harmful products? Shouldn't safety be a responsibility of the state? According to true believers of laissez faire safety concerns should be something the business community and corporations should undertake themselves, through the self-policing of their respective industries, making government legislation unnecessary. The theory is that corporations would realize it is in their own self-interest to keep people safe. For instance, there is an incentive for corporations to keep the work place safe because injuries on the job increase the cost of doing business. Also, as the theory goes, product and consumer safety should also be an incentive for corporations because lawsuits brought about by disgruntled customers and defective products also drives up the cost of doing business. Alas, the business world does not work in such a noble way or with such insight, developing and maintaining its own safety standards. Also, there are always unscrupulous business operators who cheat and cut corners, making it bad for everybody. And since the business community has historically done a poor job of policing itself the state has had to intervene and implement its own safety standards. Therefore, I would think, safety is another minimum requirement in accordance with a society’s laissez faire economic laws.

I started thinking about laissez faire because of what is happening in China and to its economy. If ever there was an opportunity to see laissez faire at work, what it's involved and how it fits into the scheme of things, China is it. The way capitalism is developing and taking hold in China is very much like it developed in the West, where capitalism was born. China has been learning capitalism from the ground up and it’s remarkable. In doing so it to is beginning to grasp the true meaning of laissez faire and what it entails, in accordance with economic laws. Theoretically anything goes with laissez faire. But there are a lot of unscrupulous business people in China who are giving free trade and capitalism a bad name, as we have discovered from the tainted pet food additives the world has been buying from China. Those additives poised and killed many pets. Also, medicines and toothpastes from China have poisoned and killed people. And more recently poisonous lead paint was discovered in toys manufactured China. Now, in order for China to remain in good standing with its trading partners around the world it has had to insure them that it is taking steps to implement strict international safety standards. In these instances China is learning the limits of laissez faire.

Though the notion implies it, pure laissez faire doesn’t exist. Things can’t be totally unregulated. All systems need some kind of framework in how to function. Systems function best when they have a set of rules. Capitalism is no exception. And even though business people protest against government regulations and intervention they feel more comfortable in having them than not. Government sets up the networks in which business is done, creating the environment in which business can be conducted equitably and in relative safety. Business people also rely on the government when things go wrong, to enforce the laws and sometimes even bail them out. If business activity were truly laissez faire capitalism would be replete with Enron situations where companies would behave unscrupulously to the point of destroying the very system of capitalism. Nevertheless, the notion of laissez faire is advocated with great gusto and hubris as a way to see how much the market will bear.

Proponents of laissez faire are not all bad guys, as some would have us believe. They do capitalism and society a big service. They are part of the push-me-pull-me polemics that keeps a society humming and remaining vibrant and flexible so that it survives and continues. Realistically, believers of laissez faire know they will never totally have things their way, just like their opponents will never totally have things their way. Nevertheless, in imposing their beliefs they keep government’s role to a necessary minimum and from becoming too domineering and controlling, like governments would get if given the chance. A laissez faire attitude is needed to keep the chief economic engine of humankind, capitalism, from becoming stale but remaining agile and always innovative so that it will always deliver the sustenance we need and to keep the world working.

Thought experiments

I have been reading about Niall Ferguson, the Scottish historian who teaches at Harvard. I was reading about his "thought experiments". His thought experiments involve history and are like "what if" argument, such as what if John Kennedy had not been assassinated or what if Hitler had been killed when a truck hit his car. Such thought experiments, also known as counterfactual thinking, can be used to avoid making the same mistakes in the future. However, mostly they are just intellectual parlor games because as we know history can't be changed.

Ferguson does not believe the world is governed by Reason or by a class struggle or by any other deterministic laws. Therefore he is no a Hegelian. Hegel believed history is the product of Reason and determinants, and sculpted by the actions of all humankind. However, Ferguson thinks that world history could have been different if events had handled differently by its leaders. For instances, he believes Britain could have avoided getting involved in WW1 if its leaders and diplomats had acted differently. And the same goes for WW2. A Hegelian thinker, though, would explain that those two events could not have been avoided because they were a culmination of other inextricable events. In other words, a world ethos determined those events, not just a few wrong decisions made here and there. To paraphrase Emerson, history was in the saddle riding humankind, meaning those wars were in the works long before they happened.

I don't think you can particularly isolate world’s event as Ferguson has done in his thought experiments. He has particularly isolated two events, WW1 and WW2. He thinks Britain could have avoided those wars if it had used more diplomacy or if had acted earlier on their causes. Why I don't think you can isolate those events and think they could have been prevented is because they were embedded with too many variables, which, even with hindsight, are impossible to separate.

Many things can cause wars and they happen for a multiple of complex reasons. One reason I think WW1 and WW2 happened is because the political will or wisdom – the political technology - didn't sufficiently exist to prevent them. There was another friction factor that could have ignited those wars, a collective stubbornness for political change. Another reason was that there were very few legitimate democracies in those days that may or would have counseled against war, being that democracies don't go to war with each other. No, history culminated itself into those two wars for a number of human shortcomings and intransigencies. Conflicts tend to insinuate themselves because of human inadequacies, as a means of transcending and resolving them. What I think also made the wars unstoppable is the collision of two histories, a world history that was on a course of integration and globalization and a nation or state history that still had the attitude of isolationism. World history being the more powerful induced those wars as a way of transcending the opposition to internationalism.

Had the nations who were victorious in WW1 been wiser, most likely WW2 would not have occurred. Received wisdom believes that WW2 was an extension of the unfinished WW1. Had a League of Nations been put in place after WW1, as the United Nations was after WW2, WW2 most likely wouldn't have occurred. Had Germany been forced into an unconditional surrender, like it was after WW2, WW2 most likely would never have happened because the conditions for future European wars would have been greatly diminished. Had Germany not been burdened with payments of remuneration to the countries it attacked, a burden that destroyed its chances for a peacetime recovery, but instead been rehabilitated like it was by the allies after WW2, WW2 most likely would not have occurred. Alas, the victors of WW1 were none the wiser and had not yet learned the art of preventing global wars.

However, when counterfactual thinkers like Ferguson reshape history in their minds they don’t consider the fact that people back then were not privy to the wisdom or the wherewithal we have today to stop conflicts and maintain peace, hence the reason why leaders acted as they did. Also, in the past there was a different attitude towards war. Men were more apt to go to war because of a greater allegiance to the state. Also, back then war was viewed more as the courageous, honorable think to do. That attitude towards war doesn't exist much anymore.

The famous historian Edward Gibbon said that history is essentially the recounting of “the crimes, follies and misfortunes of mankind”. There have been so many crimes, follies and misfortunes committed during the span of humankind that they are virtually impossible to separate and unravel. I think all this entanglement makes speculating about what may or may not have happened in history quite a questionable endeavor.