Economics/Class Relations

Saving the Free Market from Big Business and Big Government

By William Ruger

Luigi Zingales photo: House Republican Conference (CC BY-NC 2.0)

Luigi Zingales photo: House Republican Conference (CC BY-NC 2.0)

In 1934, University of Chicago economist Henry C. Simons published a seminal policy pamphlet titled A Positive Program for Laissez Faire. An early leader of the so-called Chicago School of economics, Simons laid out in this short but dense work a series of reforms aimed at rehabilitating a free-market liberal economic order in the United States.

Simons began by noting the grave threats to liberty and democracy posed by the challenges of the Great Depression and the political responses to it. Indeed, A Positive Program was the product of a classical-liberal mind petrified by what could happen in a world in which capitalism and freedom were under siege: “the future of our civilization hangs in balance,” Simons wrote.

He fleshed out his argument in two steps. First, he diagnosed the overarching problems afflicting America’s economic and political systems. Perhaps surprising for a Chicago economist who influenced Milton Friedman and George Stigler, Simons considered monopoly to be foremost among these afflictions: “the great enemy of democracy is monopoly, in all its forms,” he argued, while the “existence of competition … serves to protect the community as a whole and to give an essential flexibility to the economy.”

Simons also fingered government as a major part of the problem. He argued that the state failed to meet its responsibilities in the area of money, harmfully interfered with prices, and was ineffective in maintaining market competition. Most radically, Simons thought government was not doing enough to diminish inequality of power and income.

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