By Con George-Kotzabasis
As Drew correctly states none of the classical liberal economists, Smith, Mises, Hayek, and I would add in this brilliant constellation Mill, Bawerk, and Schumpeter, ever argued that the free market was perfect and “market failure” was inconceivable. On the contrary they argued that the three cardinal principles of the free market were imperfect knowledge, uncertainty, and risk. How could any rational and economically literate person accuse the classical liberal economists of contending that the free market were free from market failure, when their whole argument was premised on the above three principles? Moreover, they did argue, that market failure could be cured mainly by the ‘elixir’ of the free market, and not by unqualified and ubiquitous government intervention.
It is the critics of the free market that engendered the ‘straw man’ of the perfect market so they could knock it down easily without any effort of critical thinking, which of course they lacked, and replace it with the socialist planning nostrums or, a la Kervick, with the hybrid panacea of the “mixed economy,” whose avatar was and is modern Europe, and which presently is at the threshold of economic bankruptcy. The sun is still shining in sunny Greece, but there are no more free suntans for its denizens.