(Page 2 of 2)
Ikeda’s book is a sweeping start toward a unified theory of the different varieties of interventionism. Part of the book is a friendly critique of Mises’s critique of interventionism, aimed at resolving what Ikeda calls the Misesian Paradox—namely, that theoretically unstable mixed economies nevertheless predominate and persist in our world. As I understand him, Ikeda concludes that the mixed economy does have the features of instability that Mises attributed to it, but compared to its alternatives, it can appear stable. Ikeda writes,
The key to resolving this paradox is to realize that to claim the mixed economy is unstable is not the same thing as asserting that it is transitory.… The roads between the minimal and maximal states can thus be very long and winding, and state expansion very gradual.…
Somewhat paradoxically, therefore, it appears that the product of interventionism, the mixed economy, though unstable, is likely to be more enduring than the pure forms of either collectivism or capitalism, offering as it does a much wider range of (ultimately futile) adaptive forms than either of its rival systems. The inherent instability of interventionism thus drives the mixed economy through a variety of transformations that are denied to the other systems.
Ironically, then, the unstable mixed economy is more stable than its alternatives. Mises wouldn’t be surprised at Ikeda’s claim that central planning is unstable. That was the conclusion of Mises’s economic-calculation critique of state socialism. But why does Ikeda say laissez-faire is unstable? Because, he writes, it is “highly sensitive to governmental error and to changes in ideological preferences (as well as exogenous shocks).” In other words, even a limited government is subject to the calculation and knowledge problems that plague totalitarian governments. And, it hardly needs pointing out, limited governments don’t stay limited.
Is there a lesson to be drawn from Mises’s critique? I think so. Intervention tends to beget intervention. Therefore, when you see a public problem, don’t look to government intervention for a solution. Instead, look for the previous intervention that created it—and work to have the offending legislation repealed.
This article was originally published at the Future of Freedom Foundation.