The Myth of the Market Miracle

Spain is learning the hard way that the market is agnostic about human welfare. The market is a mechanism that mediates not between human needs, but among market values. This is why individuals who make their living off the market–and those who don’t but who have drunk the coolaide–insist that human welfare be excluded as a variable in any functional market system. They are right. Including human welfare unhinges markets. This is different from saying that economic growth does not add to the welfare of some individuals. It does. But this is not and cannot be the aim of the market. Another way to put this is to say that the market is allergic to politics. Politics–discursively achieved policy decisions–thwarts the free functioning of markets. Which is why we have such a hard time handling human welfare during times of economic contraction. Our gut tells us that we should help one another. The market tells us that human welfare must be sacrificed to market equilibrium–where the market (not politics) determines the value of all needs. Like the rest of the world, Spain needs to rediscover the place where politics rationally overrides the market; because, in this limited way, Hayek is right: politics that do not listen to markets or human needs ends up either in 1918 or 1932, neither of which is preferable to free markets.