Is the economy “overheating,” or is it “humming” along smoothly? Should the Federal Reserve “prime the pump” to spur investment, or “pump the brakes?”
Such questions of course use an engine metaphor to describe the economy. But why?
In fact, the economy is more like a complex ecosystem rather than an engine or machine.
Indeed, a machine is consciously designed to accomplish one main purpose, and its parts fitted together to achieve that objective.
The economy, in contrast, is comprised of a complex, constantly evolving web of transactions between buyers and sellers. Elaborate and intricate patterns of production and exchange involving human beings emerge, based on the multitude of their individual preferences and desires. These patterns are constantly in flux.
Unlike a machine, which is made to accomplish a singular goal or purpose, the economy does not have one goal or purpose, but billions of them.
What is ‘the Market’?
In his 1949 magnum opus “Human Action,” economist Ludwig von Mises provided an insightful description of the economy. Referring to it as “the market,” Mises wrote:
“The market is not a place, a thing, or a collective entity. The market is a process, actuated by the interplay of the actions of the various individuals cooperating under the division of labor. The forces determining the – continually changing – state of the market are the value judgments of these individuals and their actions as directed by these value judgments.”
Note Mises’ emphasis on the market not being any sort of entity, meaning that it can have no designed purpose or desired outcome. Rather, he describes the economy as a process, one comprised of “the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation.”
Thus, the economy is not an entity or organization with a will of its own. Instead, it is a self-organizing process of individuals and entities interacting with each other that involves constant adjustment by its participants.
Individuals are constantly altering their needs and wants and adjusting to changing prices and choices. Entrepreneurs are continually adjusting to consumer preferences, and attempting to anticipate demand, in a world offering near unlimited options and combinations with which to create goods and services, but scarce resources.
The Goal is Control
So why the desire by progressives and many on the Left to reduce the economy to a cold, faceless machine with a purpose of its own?
The answer can be reduced to two words: social control.
It is much easier for government planners to control the economy when the public perceives it as some mechanical entity, that can be improved simply by pushing the right buttons or turning the right dials.
For instance, during the depths of the Great Recession, Paul Krugman in 2008 found inspiration from one of his favorite John Maynard Keynes quotes, ““we have magneto [alternator] trouble.” Krugman likened the economic downturn to an instance of a “crucial part” of the “economic engine” malfunctioning, and rhetorically asking “(a)nybody know a good mechanic?”.
Giving the Economy a Will of its Own
Or worse still, is attempting to personify the economy itself, as Hillary Clinton and countless others put it: “an economy that works for everyone.” As if the economy is an entity with a will of its own, that decides who it “works” for, and a goal in mind that it is “working” toward.
Engines should be designed and controlled by an external force to ensure it is working “properly.” A massive entity with a will of its own needs oversight to ensure those intentions are not evil.
So imagine how much easier it is to sell the public on government controls of a tool or engine, or reining in the sinister intentions of a villainous entity, compared to what government economic intervention really is: controlling the voluntary actions of human beings attempting to improve their lives as they best see fit.
Beyond protecting property rights and enforcing contracts to ensure against theft, harm or fraud; state intervention in the market necessarily involves the ruling class forcibly overriding the preferences of you, your neighbors and your loved ones.
Regulating “the Economy” Means Overriding Individual Preferences
Most government regulations involve restrictions on the actions of people. Certain behaviors are prohibited or mandated, often with the threat of punishment. That doesn’t sound quite as romanticized as finding a “good mechanic” to fix a “malfunctioning engine”, does it?
Or consider government wealth redistribution programs. These involve the state forcibly taking the earned income of some to give as an unearned benefit to others, while much of the loot goes to bureaucrats tasked with administering these behemoth schemes. If this more accurate description was actually used, I doubt the “economy that works for everyone” sales pitch would gather much support.
Since their beginning, Leftists have viewed the market as “chaos” unless guided by the conscious direction of a centralized overseer. What makes such thinking so dangerous is that Leftists have the hubris to appoint themselves as the wise overlords who decide how scarce resources should be allocated among their subjects. In such a system, people are mere pawns on a chessboard to be moved around by the planners.
Such truths are hidden by economic planners who deftly conceal their lust for social control by characterizing the economy as a sort of machine in need of an operator, or an entity with a will of its own that – without the proper guidance – would wreak havoc and destruction on society.
But peel back that cloak, and realize that central planning, regulations and government intervention of all sorts involves the forcible control of the actions of flesh and blood humans.
For the economy is not an engine, or a tool, and does not perform any “work.” The economy is you and me.