Laissez-faire ideologues like to argue that the breakdowns were caused by faulty regulations, not by unstable markets. ... their argument rings hollow, because it fails to explain why the regulations were imposed in the first place. It sidesteps the issue by using a different argument, which goes like this: since regulations are faulty, unregulated markets are perfect. The argument rests on the assumption of perfect knowledge: if a solution is wrong, its opposite must be right. In the absence of perfect knowledge, however, both free markets and regulations are flawed.
— George Soros
In the long run, Friedrich List argued, a society's well-being and its overall wealth are determined not by what the society can buy but by what it can make. The German school argued that emphasizing consumption would eventually be self-defeating. It would bias the system away from wealth creation — and ultimately make it impossible to consume as much: "The prosperity of a nation is not ... greater in the proportion in which it has amassed more wealth, but in the proportion in which it has more developed its powers of production."
By now the Anglo-American view has taken on a moral tone that was embryonic when Adam Smith wrote his book. If a country disagrees with the Anglo-American axioms, it doesn't just disagree: it is a "cheater." Japan "cheats" the world trading system by protecting its rice farmers. America "cheats" with its price supports for sugar-beet growers and its various other restrictions on trade. Malaysia "cheated" by requiring foreign investors to take on local partners. And on and on. If the rules of the trading system aren't protected from such cheating, the whole system might collapse and bring back the Great Depression.
In the German view, economics is not a matter of right or wrong, or cheating or playing fair. It is merely a matter of strong or weak. The gods of trade will help those who help themselves. No code of honor will defend the weak, as today's Latin Americans and Africans can attest. If a nation decides to help itself — by protecting its own industries, by discriminating against foreign products — then that is a decision, not a sin.
— James Fallows, How the World Works (1997)
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