Free Markets Need Principled Entrepreneurs
Laws and institutions can do little against cronyism and corruption. A culture based on trust, fairness and good faith is needed.
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Growing discontent with economic conditions, even in the midst of unprecedented prosperity, is palpable in developed nations. There is a sense that even with healthy GDPs, the middle class is stagnating and our major cities are declining. We are frustrated by the dishonesty, exclusion, poverty, environmental degradation and social decline we see in our own communities and eager to make a change.
Because decline has happened gradually, citizens of Western nations may still think of the current system as unregulated free markets, but the reality is that cronyism and corruption abound. Lobbying, over-regulation, unnecessary licensing, and other processes are routinely used to stifle free competition and shut new-comers out of the market. This market distortion hurts us all, but it especially affects the poor by excluding them from prosperity. It makes a zero-sum game out of what could be a win-win system. Freedom, competition and access are being lost. Yet, too often pundits blame the “free” market.
It is noble to want to do better. In blaming free markets, however, we are misdiagnosing the problem and stand to destroy the most effective engine of human prosperity and flourishing ever devised.
Markets bring dignity
Over the last 30 years, my career has taken me from all over Europe, to the United States and the developing world. I have experienced the highs and lows of the free economy, a good share of corruption and cronyism. While frankly acknowledging its potential for abuse, I still remain a champion of free and competitive markets. Not only does the free market deliver prosperity, it offers people the freedom necessary to pursue the goods of the human spirit, thus finding deep meaning and dignity in their everyday work and relationships.
The market cannot function in isolation, however, but must be supported by the rule of law, viz by robust legal institutions which don’t play favorites and keep the playing field level. Liberty and free markets also rely on a healthy civic culture that fosters habits of mind, such as honesty, goodwill, community spirit, and a sense of fair play. It is not the freedom of markets that we need fear, but rather the loss of market freedom as the decay of our legal and civic spheres gives rise to crony capitalism, which in turn is causing economic stagnation and breaking down societal trust. People and markets thrive in a climate of hope and trust. Nothing crushes both faster than cronyism, which creates a multi-tier system of justice and the dispiriting feeling that the deck is hopelessly stacked.
I was born in Lucerne, Switzerland, and, after a stint in the Swiss Guard, arrived in the US at the age of twenty-two. A college there gave me a scholarship even though I could not speak proper English. Later, I worked in Boston as an unpaid intern at an early internet startup – though I knew nothing about computer software. I was eager to learn, and helped bridge the personal computer to the internet, bring speech recognition to the market, and make website content easier to manage. I rose quickly through the ranks, admiring a system that encouraged and rewarded my hard work, spirit of service, and risk tolerance. I grew personally, gained experience and friends, mastered new practical skills, and learned to shoulder responsibility. I point this out because it’s a mistake to evaluate what people gain from markets solely in material terms.