I was poking around on the Internet yesterday, and I happened to come across President Bush's speech before the G20 meeting. I decided to listen. Most of it was the usual economic rhetoric, such as:
"...the surest path to growth is free markets and free people."
Ok, that sounds good....but then Bush said this:
"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown."
Mind you that the article where I found this quote is entitled:
"Bush defends free-market system ahead of G20."
That is not a defense of a free-market system. A defense of a free-market system would have been something like, "I'm a market-oriented guy, ESPECIALLY when I'm faced with the prospect of a global meltdown." If you don't trust the market in the face of a meltdown, then when do you trust it?
I found the answer today on the Mises site (thank you, Scott). In the November 13 audio article Jeffery Tucker at about minute 2:30 explains that one who studies the Austrian or Classical schools of economic theory...
"...is immediately confronted with the reality that this is of course not the economic theory propounded in the business press or accepted by the government. The major theoretical apparatus that these people use has its origin in the work of John Maynard Keynes, whose major assumption...is that the price system does not work properly."
Tucker then explains that Keynesians view prices as something that should be controlled, prodded and guided, along with everything else in the economy.
Even though Bush talks a lot about free markets, his seemingly off-the-cuff personal admission is actually seriously profound. He just admitted to which school of thought he belongs. He's a Keynesian, or at least he's acting that way. So is Paulson, Bernanke, and probably every government official we've had for the past century. And finally, probably so is Greenspan. Maybe Greenspan WAS a laissez-faire guy, but it looks like he changed his mind. Or maybe he decided that if you can't beat 'em, join 'em was a better approach.
Granted that this theory isn't nearly as cool as thinking that Greenspan wants to start his own free-market society somewhere....actually, it sounds kind of nice....
Go to John Galt!