By Brett Linley
One doesn’t have to look very far to find critics of free-market economics. Many times from the left, and sometimes now from the right, market principles have come under seige. According to Bloomberg View, however, many of the free-market’s failures have been greatly exaggerated.
One of the best known examples, of course, is China. “By 2005, China’s market economy passed its state-run economy in size. What happened after China’s market reforms is now well-known — the most dramatic explosion of economic growth in world history.”
There wasn’t anything particularly revolutionary in what China took on in the 1980s. Simply, they undid many of the failed communist policies of the past, in favor of age-old market reforms. Now, China sees more success than Mao could have dreamed of when he sparked their communist movement.
China, of course, isn’t the only country to find hearty success through the free-market. India is another country that followed the China experiment, and to much success.
In 1991, after a sharp recession, Prime Minister Narasimha Rao and Finance Minister Manmohan Singh scrapped a cumbersome system of business licensing, eased curbs on foreign investment, ended many state-sanctioned monopolies, lowered tariffs and did a bunch of other neoliberal things. Although the results were not as dramatic as in China, there was a sustained rise in economic growth.
Both China and India have seen a heavy drop in their poverty rates. The real life implications of this are encouraging and exciting, as thousands now have access to shelter and clean water. For these countries, they found opportunity in the market. The market, in turn, helped them to taste success.
Disappointing Cases Don’t Define the Market
It is important to note, however, that the free-market is not a cure-all. Circumstances in individual countries all vary, and some have found less success. As the article notes, “[market reforms] didn’t boost Latin America into the ranks of rich countries. And the neoliberal reforms in the former Soviet Union met with mixed success.”
So many real world factors are always at play, and laissez-faire will not always yield unqualified success stories. That, however, is not an indictment of the system itself. The minor disappointments cannot overshadow the roaring success cases.
India and China account for more than three times as many people as [Latin America and the Soviet Union] combined. Their sweeping reduction in extreme poverty alone makes neoliberalism a qualified success.
What’s more, the failures of market economies rarely, if ever, reach the level of failure of communist states. As noted by Human Progress, communism has no legacy but death and deprivation. The past cases of China and Russia are not the only examples of these failures.
In Venezuela, for example, an 18-year-old experiment with socialism is entering a horrific denouement marked by hyperinflation, hunger, rising infant mortality rates and increasingly brutal suppression of the opposition.
As socialist and communist movements come back into vogue, both at home and abroad, it is invaluable to reflect on the lessons of history. On the one hand, there is an overwhelming amount of evidence to show that the free-market improves the lives of the most vulernable. On the other hand, there are many examples to show states rejecting the market relegate themselves to the poverty line.
The free-market isn’t perfect by any means. In today’s world, though, it’s the best we’ve got.