‘Students learn that private companies destroy jobs while government policy creates them. Employers exploit while the state protects. Free markets offer chaos while government regulation brings order. Globalization is destructive, if not catastrophic. Business is a zero-sum game, the source of a litany of modern social problems’.These bizarre cultural beliefs drive social and economic outcomes - low levels of innovation, low entrepreneurship and high unemployment. It is frightening and an abyss social democrats can fall into unless they maintain a sense of perspective. One does not need to be a rabid supporter of Chicago School free enterprise economics to see the virtues of markets and entrepreneurship.
A 'slippery slope' argument often advanced by libertarians is that any intervention in free markets provides a precedent for unlimited public intervention in an economy and ultimately loss of both freedom and economic prosperity. I strongly disagree. One can respect the efficacy of private markets and the overwhelming value of personal freedom while recognising a limited case for public intervention based on market failures and fairness in the distribution of income. Indeed its what I was taught in Economics 101 and which I still believe.
The key issue is not whether markets fail or the distribution of income produced by markets is unjust but whether or not public interventions can improve things. Often they cannot and we need to live with capitalism's hiccups.
See also the discussion by Henry over at Crooked Timber.
HT Greg Mankiw.