The Self-Regulating Market requires state intervention

Tim Lee makes a couple of points about what he sees as the puzzling connections between free trade and protectionism, and he stumbles across the point I’d made earlier to one of Jerry Brito’s comments, (yes, the comment that Jerry can’t respond to, and therefore must censor) It’s a simple point that Karl Polanyi made in his excellent book The Great Transformation: that the self-regulating market requires state intervention, both for it’s creation and for its maintenance . So the creation of a self regulating market in copyrighted goods requires state intervention to create and maintain that market. But Tim, being a libertarian, can’t read or understand Polanyi, so he’s confused about why those who support free trade also support certain market interventions:

This is a fascinating question. One of the things I find really interesting about the 19th century political debate is that the opposing political coalitions were more sensibly aligned, perhaps because people had a slightly clearer sense of what was at stake. My impression (which may be wrong in its details) is that the free traders tended to be liberals and economic populists. They clearly understood that protectionism brought about a transfer of wealth from relatively poor consumers to relatively wealthy business interests. In the opposing coalition were a coalition of business interests and xenophobes making fundamentally mercantilist arguments about economic nationalism.


Karl Polanyi covers this period in his book The Great Transformation. His perspective is a little different.

First, Polanyi notes that those opposing the liberal agenda there were the defenders of the old order, ultimately derived from the feudal social structure, as well the working urban proletariat. Their interests never coincided and their visions of an alternative to the dominant liberal creed were so very different, it is not surprising that they never formed a united opposition. It is true that once the middle class realized that free trade meant cheaper food they were temporarily won over to its cause. But there were a few others who realized how disastrous free trade would be in the long run.

Second, Tim Lee, as all libertarians do, makes a whole series of informational exclusions about what comes along with liberalism. For example, it cannot be an accident that Great Britain, during the time of the ascendancy of liberal ideals, also maintained a very large colonial empire. Ultimately, adherence to the dogma of the self-regulating market requires state intervention to ensure that the prices of labor, land, and money are all controlled only by economic factors internal to that self-regulating market. When social, environmental, religious or national policies interfere with the operating of that self regulating market, state intervention is required. Case in point: US invasion of Iraq. When political ideals interfere with the functioning of the self-regulating market, state intervention is also called for by supporters of the market. Case in point: the DMCA. From this view, the fact that those who support the self-regulating market also support strong imposed patent, copyright and trademark laws is entirely consistent and unsurprising.


The bottom line is: you cannot separate the economic functioning of society from its broader social, political, environmental, national and social contexts, as liberals are wont to do. Human society just cannot be distilled into neatly separate fungible categories. They are all connected. Failure to come to grips with this reality is why libertarianism can only be maintained by making excluding whole categories of information.

Thus the following confusion on Tim’s part:

Today’s free trade debate is much weirder, because there are enough businesses who want to export things that significant parts of the business community are for freer trade. On the other hand, the liberals who fancy themselves defenders of relatively poor consumers find themselves in bed with predatory industries like sugar and stell that have been using trade barriers to gouge consumers. And the “trade” debate has increasingly come to be focused on issues that don’t actually have much to do with trade, whether it’s labor and environmental “standards,” copyright and patent requirements, working retraining programs, cross-border subsidies, etc.

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The Self-Regulating Market requires state intervention

Things to gone…?


An alert reader has noted to me that the Science Fiction masterpiece of the 1930’s, Things to Come, is no longer available in higher resolutions from the internet archive. I had linked to it earlier in this post: Journey to the End of the Night (H.G. Wells Edition)

There is still a link to a lower resolution version here, though: Lower Res version of Things to Come.

Of course I have downloaded it, and will post here if it disappears from the internet archive. Why would the internet archive remove the higher resolution versions? Of course, I suspect that it is available over in a bit torrent download somewhere.

Things to gone…?

Journey to the End of the Night (Seadrome Edition)


Looking through the overstock of my Grandfather’s bookstore, I have quite a number of Architectural Magazines, including many editions of “The American Architect,” “The Architectural Forum” (which actually covered Architecture, unlike today’s Architectural Forum, which almost no Architects read) and “The International Studio.” They cover the period from from the early teens to the late Thirties, but most fall between 1928 and 1934.

From the December 1930 edition of “The American Architect” there is an interesting article about Seadromes. Of course, no one today knows what a Seadrome is because they were never built, so this article is just about the only source I am aware of. There isn’t even an entry on Wikipedia. (Although there is a paragraph about them in the entry for Edward Robert Armstrong, the Engineer who had conceptualized and advocated the Seadrome concept.)

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Journey to the End of the Night (Seadrome Edition)

Types of Knowledge

An interesting excerpt from Collapse by Jared Diamond, about the native intelligence of New Guinea highland farmers, the utility and longevity of that knowledge:

New Guinea is the large island just North of Australia…lying almost on the equator and hence with hot tropical rainforest in the lowlands, but whose rugged interior consists of alternating ridges and valleys culminating in glacier-covered mountains….The terrain ruggedness confined Europeans to the coast and lowland rivers for almost 400 years, during which it became assumed that the interior was forest covered and uninhabited…It was therefore a shock, when airplanes chartered by biologists and miners first flew over the interior in the 1930’s for the pilots to see below them a landscape transformed by millions of people previously unknown to the outside world…..we know now…that agriculture has been going on there for about 7,000 years–one of the world’s longest-running experiments in sustainable agriculture.

…their farming methods are sophisticated, so much so that European agronomists still don’t understand today in some cases the reasons why New Guineans’ methods work and why well-intentioned European farming innovations failed there. For instance, one European agricultural adviser was horrified to notice that a New Guinean sweet potato garden on a steep slope in a wet area had vertical drainage ditches running straight down the slope. He convinced the villagers to correct their awful mistake, and instead to put in drains running horizontally along contours, according to good European practices. Awed by him the villagers re-oriented their drains, with the result that the water built up behind the drains, and in the next heavy rains a landslide carried the entire garden down the slope to the river below. To avoid exactly that outcome, New Guinea farmers long before the arrival of the Europeans learned the virtues of vertical drains under highland rain and soil conditions. (page 280)

My observation is that the knowledge of the European and the New Guinea highlander were different in one very crucial way: the way that the knowledge was acquired. The knowledge that the New Guinea highlander had was acquired over many generations, iteratively, through trial and error. Such knowledge could be called evolved knowledge, because it evolves, good replacing bad, and no overall theoretical framework is required to advance such knowledge. It also had a unique relation to the site at which the knowledge was acquired.

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Types of Knowledge

Journey to the End of the Night (Lynd Ward Edition)


As I may have mentioned, my Grandfather had a bookstore near Taylor and Olive in Saint Louis back in the 1930’s which, like many other enterprises of that time, went bust during the 1930’s. So I have seen quite a bit of his stock, almost none of which had been sold after the store closed. One really curious collection of illustrated books interested me, just for being so odd, and especially unlike any of the other old books which were in his stock. I used the term illustrated book, but that’s really an understatement, as the content of these books consists solely of illustrations, without any text whatsoever to interfere with the emotive power of the pictures.

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Journey to the End of the Night (Lynd Ward Edition)

Journey to the End of the Night (H.G. Wells edition)



A project that I have long wanted very much to do is to write a history of the Future, especially, a history of the Future as seen in popular culture. Certainly a society’s view of its future tells what it values, and what it fears. If the positive outweigh the negatives, then we have futures such as is seen in Star Trek. When the negatives outweigh the positives, we have distopias, such as Fritz Lang’s Metropolis, George Orwell’s 1984, the Mad Max movies, Brave New World, or works such as Philip Dick’s Blade Runner or The Lathe of Heaven. In each of these distopian visions though, society fails in different ways.


The failure modes are each different and therefore informative. Sometimes these distopias actually do seem to predict the future, or at least a little piece of it. It is telling that it is very easy to think of many distopian futures, but rather difficult to think of utopian ones. It is clear that we are more interested in our possible failures.

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Journey to the End of the Night (H.G. Wells edition)