Democracy & Markets
Worse still, as Jack & I point out here, the economists neglect how their own models of technocratic rule (the modern day form Platonic guardians would take) in fact highlight the inevitability of distributive politics and the ubiquitous opportunity for corruption. If politics is unavoidable, democratic politics is indeed what we need.
Well-functioning markets are always embedded within broader mechanisms of collective governance. That is why the world’s wealthier economies, those with the most productive market systems, also have large public sectors.
Once we recognize that markets require rules, we must next ask who writes those rules. Economists who denigrate the value of democracy sometimes talk as if the alternative to democratic governance is decision-making by high-minded Platonic philosopher-kings – ideally economists!
But this scenario is neither relevant nor desirable. For one thing, the lower the political system’s transparency, representativeness, and accountability, the more likely it is that special interests will hijack the rules. Of course, democracies can be captured too. But they are still our best safeguard against arbitrary rule.