The Limits of Law and Markets
Markets alone cannot settle debates about values. They can price what people value but they cannot answer the prior question of what people ought to value.
That question is usually settled by law.
. As Oliver Wendell Holmes Jr. put it, “The law is the witness and external deposit of our moral life.” It is, at least aspirationally, where a society works out what it stands for.
Buthe relationship between law and markets is rarely one of simple sequence. Sometimes markets wait for the law to settle a values question before entrepreneurs build around it.
Other times, markets move first — reflecting what people already want — and the law rushes to catch up. What this means is that law and markets are not separate institutions but a single, reflexive system, each one continuously shaping and being shaped by the other.
The pathology comes when one side gains the upper hand for too long.
Progressives understood half of this. They recognized the danger of concentrated corporate power corrupting the legal system — capturing regulators, writing favorable rules, bending democratic outcomes toward private gain. When that happens, the law stops reflecting the will of the people and starts reflecting the will of whoever can afford to influence it.
What they underestimated — and what the Austrian economists saw more clearly — is the symmetric danger on the other side. When the state accumulates too much control over economic life, the law becomes rigid in a different way: not corrupt, but sclerotic. Individual initiative gets crowded out. People lose the freedom to explore their interests, test ideas, and build things.
Thus the proper balance between law and markets is not a fixed point. It has to be reassessed continuously — which is uncomfortable, but probably unavoidable for any society that wants both order and vitality.
Both of which are conspicuously missing from the modern world.
Zigmund Reichenbach has an M.A. in Philosophy from West Chester University and is a professional advocate for less government. You can help him combat bad ideas in politics and philosophy by donating to his work at https://ko-fi.com/zigmundreichenbach .
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