In a conversation with a microbiologist friend the other day, he complained that the trouble with conservationism is that it assumes the natural world and the human world to be separate things, when in fact, humans are part of the natural world. Depending on your perch, we are either massively influential as in species extinction from habitat loss, or only minutely consequential as in the flow of the jetstream.
It's a proper metaphor for the Keynesian vs. Neoclassical rivalry: a heated academic debate about the role of government in markets and to what degree it should or shouldn't be there.
In fact, government is always a part of markets. That it is more or less involved does not necessarily determine a market's efficiency or lack thereof.
For example, as soon as we agree to live in a community and defend it, we allocate resources (products, currency and time) to defense, and thus influence prices for production, borrowing and labor.
And the argument holds water for simpler things. If we agree through referendum that we should have street signs to help people navigate our neighborhoods, then the government and the makers of signs are linked and their trades and contracts influence widely. People are employed to make and install signs. They spend and invest. Sign-making capacity is consumed for a time as backlogs are worked out. Prices are affected.
If we want free markets in the purest neoclassical sense, we'll have to do it without an army and without street signs. I doubt that we're ready in America to do without either of these things.
From a distance, it appears that Keynes thought this too... and advocated that as long as government is there, it ought to be used as an instrument of good, if at all possible. The counter is that it isn't possible that government can do good, and therefore, it can't be used. The truth, of course, is that government is there... as large a part of the market world as humans can be in the natural world. And it's not going away.
Of course, in the midst of dealings between businesses and governments there is the possibility, indeed perhaps the probability of corruption, especially as institutions become complex and opaque. Corruption hobbles systems and leaves cynicism in its wake. That's what we're really talking about here: failure to lead and to act honestly at all levels of government and business has us believing that that neither can work towards any greater good.
That is why we have regulations. Not, as some would say, to thwart commerce or slow progress, but as tools of common sense and transparency meant to protect against corruption and move markets forward.
Can regulation get out of hand? Sure. Can regulations be improved? Of course, but only when enough of us recognize that we are the government and the businesses that we blame for our troubles. We are also the market with all its freedoms and all its flaws. When we come to see this then we have a chance to engage, debate, compromise, and do the best we can.
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