Recovering the American Tradition of Economic Policy

In unwitting homage to Congressman Barney Frank’s line that “government is simply the name we give to the things we choose to do together,” Senator Pat Toomey recently defined “the market” as “just the name that we assign to the sum total of all the voluntary exchanges that occur every day.” These equal and opposite platitudes share more than a formulation and a woeful inadequacy. Each represents, for the ideologues who adopt it, a comfortably absolute view of the world that either validates or invalidates whatever policymakers might attempt. If government is nothing more than voluntary collaboration, who could object? If the market is nothing more than the sum of voluntary exchanges, why should the government ever get involved?

Toomey’s market reductivism is widely embraced on the right-of-center, imposing blinders that limit the economic-policy menu to the task of avoiding interference — so, tax cuts, perhaps served with a side of “occupational licensing reform.” This abdication scorns the American tradition. It lacks support in economic theory. And it deprives policymakers of the tools for sustaining a well-functioning market economy and widespread prosperity.