An important source of madness in the liberal politics of equality is the idea that inequality is somehow wrong in itself. But actually it is insufficiency, not equality, that causes suffering and is therefore an evil to be remedied.
According to the principles of free market laissez-faire capitalism, economic insufficiency in a society of able citizens is often attributed to government interference. This interference disrupts the natural mechanisms of the market, particularly the freedom of individuals to produce and exchange goods and services as they see fit. By imposing regulations, taxes, subsidies, or other controls, governments distort the incentives for production and trade, leading to inefficiencies and shortages.
Say's Law, which argues that supply creates its own demand, is a cornerstone of this economic theory. When individuals are free to produce without interference, the goods and services they create generate income, which in turn fosters demand for other goods and services. However, government intervention can prevent Say's Law from operating effectively. For example, excessive taxation reduces the resources available for production, while subsidies can lead to overproduction in some sectors and underproduction in others, disrupting the balance of supply and demand.
Furthermore, government-imposed barriers, such as price controls or restrictive regulations, hinder innovation and entrepreneurship, which are vital for a thriving economy. By restricting the ability of individuals to freely use their skills and resources, governments inadvertently create conditions where economic insufficiency persists, even in a society of capable individuals. This aligns with the laissez-faire philosophy, which advocates minimal government intervention to allow markets to function efficiently and allocate resources optimally.
Thus, economic insufficiency often arises not from a lack of ability among citizens but from artificial constraints imposed by government policies that interfere with the free market dynamics [1][3][6].
1 Capitalism by George Reisman
2 Economic Thought Before Adam Smith by Murry Rothbard
3 Man, Economy, and State with Power and Market, Scholar's Edition, by Murray Rothbard
4 A Theory of Socialism and Capitalism by Hans-Hermann Hoppe
5 Human Action, Third Revised Edition by Ludwig Von Mises
6 Classical Economics by Murry Rothbard
In addition:
Under the principles of free market laissez-faire capitalism, government interference disrupts the natural efficiency of market dynamics, leading to economic insufficiency even in a society of able and productive citizens. This inefficiency stems from the fact that such interference distorts the incentives and mechanisms that drive production, trade, and resource allocation.
One of the fundamental issues is that government intervention often obstructs the free operation of Say's Law, which posits that supply creates its own demand. In a true free market, producers create goods and services based on their capabilities and the needs of others. This production generates income, which is then used to purchase other goods and services, creating a self-sustaining cycle of economic activity. However, when governments impose restrictions—such as price controls, production quotas, or heavy taxation—they disrupt this natural flow. For instance, price controls can lead to shortages if prices are set too low, or surpluses if they are set too high, preventing markets from clearing efficiently [1][3].
Another factor is that government-imposed regulations and subsidies can create artificial distortions in the market. Subsidies, for example, may encourage overproduction in certain industries, causing waste, while other sectors may suffer from underproduction due to lack of similar support. Regulations can also stifle entrepreneurship by increasing the cost of starting or running a business, discouraging innovation and competition. Without the freedom to innovate and compete, productivity stagnates, and resources are not allocated to their most efficient uses [6].
Additionally, government interference often leads to the misallocation of resources. In a laissez-faire capitalist system, the price mechanism serves as a signal to producers and consumers, directing resources to their most valued uses. When governments intervene through subsidies, tariffs, or other policies, these price signals become distorted, leading to inefficiencies. For example, a subsidy for a particular industry may draw resources away from more productive sectors, reducing overall economic output [1][5].
Furthermore, interference such as welfare programs or unemployment benefits, while well-intentioned, can disincentivize work and productivity. In a society of able citizens, these programs may encourage dependency rather than self-reliance, reducing the labor force participation and overall economic output. The principles of laissez-faire capitalism emphasize that individuals should be free to engage in productive activities without artificial constraints, enabling them to reach their full potential and contribute to societal prosperity [3][6].
In summary, government interference undermines the efficiency of free markets by distorting price signals, disrupting the balance of supply and demand, and reducing incentives for productivity and innovation. This leads to economic insufficiency, as resources are not utilized optimally, and able citizens are prevented from fully contributing to and benefiting from the economy. Allowing markets to operate freely, without unnecessary intervention, ensures that resources are allocated efficiently and that economic activity thrives [1][3][6].
1 Capitalism by George Reisman
2 Economic Thought Before Adam Smith by Murry Rothbard
3 Man, Economy, and State with Power and Market, Scholar's Edition, by Murray Rothbard
4 A Theory of Socialism and Capitalism by Hans-Hermann Hoppe
5 Classical Economics by Murry Rothbard
6 Marxism/socialism, a sociopathic philosophy, conceived in gross error and ignorance, culminating in economic chaos, enslavement, terror, and mass murder by George Reisman
Finally, here is more on economic insufficiency in relation to government interference and Say's Law:
Say's Law: In his book, Capitalism by George Reisman, Reisman strongly supports Say's Law, arguing that in a free market, supply creates its own demand. He posits that economic production generates income, which is then spent, creating demand for other goods and services. He views this as a fundamental principle of economics that explains why a general glut of goods or persistent unemployment should not occur in an unhampered market economy.
Government Interference: Reisman asserts that government interventions, such as price controls, taxes, regulations, and inflation caused by monetary policy, disrupt the natural balance of supply and demand, leading to economic inefficiencies and insufficiency:
Price Controls: Reisman argues that price controls prevent prices from signaling the true scarcity or abundance of goods, leading to shortages or surpluses, which he sees as a primary cause of economic insufficiency.
Taxes and Regulations: He contends that these reduce the incentives for production and investment, hence limiting the economy's ability to grow and meet the needs of society. This, in his view, directly leads to economic insufficiency by hampering the operation of Say's Law.
Monetary Policy: Reisman criticizes government-induced inflation and credit expansion for causing malinvestment and economic cycles, which he believes are not inherent to capitalism but are consequences of government manipulation of money supply and interest rates.
Economic Insufficiency: In Reisman's analysis, economic insufficiency in a society of able citizens stems from:
The Prevention of Capital Accumulation: Government policies that discourage saving and investment (like high taxation) prevent the accumulation of capital, which is crucial for expanding production and meeting demand.
Misallocation of Resources: Government interventions misdirect resources from where they would be most productive under free market conditions, leading to inefficiencies and shortages.
Unemployment: Reisman disputes the Keynesian notion that unemployment is a natural outcome of capitalism; instead, he sees it as a result of government interference, particularly through policies that disrupt the labor market or discourage entrepreneurship.
Free Market Solution: He advocates for a return to laissez-faire capitalism where the government's role is limited to protecting property rights, enforcing contracts, and providing national defense, arguing this would allow Say's Law to operate effectively, leading to full employment and economic sufficiency.
Reisman's book can be accessed for free online, and he provides an extensive critique of various economic theories and practices, particularly those advocating for government intervention. His argument is that any economic insufficiency in a society of able citizens is due to government distorting the natural economic order rather than inherent flaws in the capitalist system itself. [1]
Sources:
1 Capitalism by George Reisman
