Burying the Laissez-Faire Zombie by Luigi Zingales published by Project Syndicate (12/2021)
“The long-standing dichotomy between the state and the market is misleading, and poses a major obstacle to understanding and addressing today’s policy challenges. We should instead aim to improve both, and to contain each within its respective sphere.
CHICAGO – “The return of the state” is a phrase seemingly on almost everyone’s lips nowadays. Given the global challenges posed by the COVID-19 pandemic and climate change, the argument goes, it is governments, not markets, that should be responsible for allocating resources. The neoliberal revolution started by Ronald Reagan and Margaret Thatcher has apparently run its course. New Deal-style state intervention is back.
But this opposition of state and market is misleading, and it poses a major obstacle to understanding and addressing today’s policy challenges. The dichotomy emerged in the nineteenth century, when arcane government rules, rooted in a feudal past, were the main obstacle to the creation of competitive markets. The battle cry of this quite legitimate struggle was later raised to the principle of laissez-faire, ignoring the fact that markets are themselves institutions whose efficient functioning depends on rules. The question is not whether there should be rules, but rather who should set them, and in whose interest…”