The government will always intervene in markets. But EricLevitz writes that the real debate is about whose interests it should serve when it does so
The Art of the New Deal. Photo: David McNew/Getty Images From a certain angle, Bernie Sanders’s case for socialism is the same as Margaret Thatcher’s for “free market” capitalism: “There is no alternative.”
Nevertheless, by coopting the right’s expansive definition of “socialism” — which holds that any major government intervention in the economy is a fulfillment of Marx’s vision — Sanders was able to recast the terms of America’s economic debate. There may be more politically optimal ways of making this point . But Sanders’s broad argument is a vital one.
After all, legal markets are themselves a kind of “big government” program. Absent a sovereign entity capable of enforcing contracts by commanding a monopoly on violence, mass commerce between strangers is nigh-impossible. Less abstractly, the introduction of private property across the North American continent required massive state violence and investment.
In other words, unelected bureaucrats picked the finance industry’s winners and losers, created a public option for short-term corporate financing, and manipulated asset prices by creating artificial demand for various securities, all for the sake of promoting their conception of the public interest.
For many — both inside and outside the Fed — these kinds of large-scale asset purchases represent undesirable “distortions” of financial markets. But, as Bernanke notes, these criticisms are incoherent. The goal of all monetary policy is to “set financial conditions consistent with full employment and stable prices.” So it is always going to produce a different pattern of asset prices and yields than it would have obtained otherwise.
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