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Market process is not automatic mechanism. It is cooperation of individuals

May 17, 2011

People sometimes criticize the idea that the market should be left to itself, without intervention from government. They think about the market as an automatic, unconscious, mechanical force. Therefore, according to these people, it is not wise to let it to itself. Some action must be taken to fix the problems caused by the market.

They are wrong. Mises explains their error very clearly in this passage from Human Action:

As the interventionist sees things, the alternative is “automatic forces” or “conscious planning.” It is obvious, he implies, that to rely upon automatic processes is sheer stupidity. No reasonable man can seriously recommend doing nothing and letting things go as they do without interference on the part of purposive action. A plan, by the very fact that it is a display of conscious action, is incomparably superior to the absence of any planning. Laissez faire is said to mean: Let the evils last, do not try to improve the lot of mankind by reasonable action. This is utterly fallacious talk. The argument advanced for planning is entirely derived from an impermissible interpretation of a metaphor. It has no foundation other than the connotations implied in the term “automatic” which it is customary to apply in a metaphorical sense for the description of the market process. Automatic, says the Concise Oxford Dictionary, means “unconscious, unintelligent, merely mechanical.” Automatic, says Webster’s Collegiate Dictionary, means “not subject to the control of the will, … performed without active thought and without conscious intention or direction.” What a triumph for the champion of planning to play this trump card!

The truth is that the alternative is not between a dead mechanism or a rigid automatism on one hand and conscious planning on the other hand. The alternative is not plan or no plan. The question is whose planning? Should each member of society plan for himself, or should a benevolent government alone plan for them all? The issue is not automatism versus conscious action; it is autonomous action of each individual versus the exclusive action of the government. It is freedom versus government omnipotence.

Laissez faire does not mean: Let soulless mechanical forces operate. It means: Let each individual choose how he wants to cooperate in the social division of labor; let the consumers determine what the entrepreneurs should produce.

(Human Action, Chapter XXVII., 5. The Meaning of Laissez Faire, p. 730-731)

Thanks to Danny Sanchez for the quote. He mentioned it in his post Mises on Metaphorical Mechanism at Mises.org.

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