Study Guide to Man, Economy, and State with Power and Market

166 Study Guide to Man, Economy, and State with Power and Market
12. Conclusion: The Free Market and Coercion
Contrary to popular opinion, the free market is not chaotic
and harmful, but rather results in the best possible achievement
of orderly commerce and psychic utilities for all members of
society. In contrast, each act of government intervention always
harms at least one party, and moreover suffers from indirect
consequences that further distort the economy.
APPENDIX A:
Government Borrowing
Government borrowing is not inflationary per se; it merely
diverts spending from private capital goods to projects favored
by the government. However, to the extent that government
borrowing is financed through credit expansion, inflation is a
common side effect. Government borrowing is harmful because
it siphons funds that would otherwise have gone into private
investment.
APPENDIX B:
“Collective Goods” and “External Benefits”:
Two Arguments for Government Activity
Mainstream economics justifies government measures in the
case of “public goods,” which are those goods that cannot be
excluded from nonpayers, and which can confer benefits on
additional users without diminishing their usefulness to others.
Prototypical examples of public goods are national defense and
lighthouses. This theory is open to severe criticism, because
many so-called public goods (national defense, roads) do not
actually fit the criteria. In any event, even if such a public good
exists, it does not follow that government must provide it.
Another popular justification concerns positive (negative)
“externalities,” where the market actions of two individuals