Market economy and social justice

 

Clichéd assumptions about the market economy are horrifying to those who have been making observations on liberal economic policy for years.

Moreover, these assumptions are particularly popular among intellectuals, and in that respect, there is no significant difference between the leftist and rightist intellectuals who almost all agree that a market economy is a source of injustice and inequality. Some even assert that the market is treated by its proponents as if it is a divine order. Some stress that we should not submit to the markets and that markets have been turned into fetishes. One of the most common criticisms is that a market economy is destroying social justice and puts the poor at a disadvantage. This view holds that markets should not be left to their own devices and that the state should hold the power to interfere in order to deal with the problem of poverty and eradicate it. Stronger state intervention would be better for the poor.

Are these arguments correct? If they were, it would have been pretty easy to resolve poverty. We would have asked for state assistance and resolved economic issues through direct state action. However, our historical experience as well as reason dismiss the allegations of market opponents. So why are these arguments and assumptions so prevalent and popular? There are three reasons: 1) failure to appreciate and comprehend the true content and meaning of economic life; 2) lack of proper information on a market economy; and 3) lack of any proper understanding of the true intentions and capacities of states and state officials. People live in a world of scarce resources rather than in a paradise of abundant and infinite assets. We live in a world where not only material resources but also information, knowledge and time are scarce. For this reason, it is impossible to meet every demand all the time. Inevitably, it is necessary to have a rank for the delivery of goods and services to meet demands. From this perspective, every economic system is a system of priorities. It is impossible to avoid having a sequence and an order of priorities. The way we order the priorities also affects social justice and productivity. Common ignorance of how a market economy works is still prevalent in a variety of social groups. Unfortunately, these include the departments of economics at some universities. Many people speak of the market economy as if it is an organism or an organization. There are many writers and thinkers like Karl Polanyi and journalists like Osman Ulagay who did not properly understand the market. Those who subject the market to meaningless and unreasonable criticism make reference to the state, state officials and the state units in an attempt to prove their point. They ignore the inherent limits of the state and mercilessly criticize the current and potential errors of market actors (market failure), and they reduce the grave mistakes of the state officials (state failure) to the level of simple human error. For this reason, there are many popular rumors and academic theories on the weakness of a market economy.

I should admit that I used to subscribe to these assumptions and stories in the past. I used to criticize the market economy and demonize it. I started to admire it, however, as I learned more about how it works. Now, without a doubt, I strongly maintain that a market economy is the main pillar of freedom and public welfare. I also believe that it constitutes the basis of justice and is the greatest friend of the poor. The opponents of a market economy usually say that they have mercy for the poor and that the poor should be protected, but they fail to offer concrete examples of how this should be done.

Market solutions

The poverty issue would have been resolved long ago if feeling sorry for the poor and calls for fighting poverty were enough. However, we still struggle with the problem of poverty. How can we eliminate it? A market economy and expanding the sphere of economic freedoms is the solution. The primary condition necessary to resolve the issue of poverty is economic wealth and progress. It is only in an environment of wealth that poverty is significantly reduced and living standards are raised. A market economy is the greatest friend of the poor.

It should be noted that there are some signs indicating that this reality is being appreciated. Recently, speaking at a seminar sponsored by the Association for Liberal Thinking (LDT), Social Democratic Party (SODEP) Chairman Hüseyin Ergün said: “The market is not a preference, it is a necessity; it is like the atmosphere.” This is a reality. As Ergün said, in a slowing economy, the struggle for a share of the resources becomes fierce. In this struggle, the poor do not have a great chance. The powerful will always get the lion’s share and the poor are suppressed. History is full of examples to prove this point. During the single-party regime in Turkey, the people were extremely poor; they were struggling with food scarcity and infectious disease, but the political elites in Ankara were leading a luxurious life. In the 20th century, major incidents of food shortages were experienced in Soviet Russia (particularly in Ukraine) and China. Millions of people died of hunger; however, no dictator died of starvation in these countries. In a wealthy country, there is a chance to help the poor and the powerless.

Let us take a look at Turkey. The current government has pursued some policies that should be favored for the sake of social justice. Mothers are paid a certain amount of money, which, though it is actually small, it is meaningful to these people because it allows them to send their kids to school; a monthly allowance is also distributed to the disabled and for the people who take care of them. What made the allocation of these funds for social justice practices possible is the visible increase in Turkey’s gross domestic product (GDP) over the last decade. Without this, social justice practices would never have been put in place. There are also other examples. The success of the Nordic countries, which was covered in the most recent issue of The Economist (2-8 February), is due to greater attention to economic freedom and market economy rather than state involvement in the redistribution of resources. The truth and reality is out there. Those who are sincere and realistic in their demands for social justice should ask for a greater market economy.

Today’s Zaman, 17.02.2013

 

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