Some of the anarchists, including Friedman’s son David, are anarchist extremists. There was a point at which he was suggesting that justice should be bought and sold like any other commdoity and didn’t need to be a public good. I pointed out to him that what he was proposing was essentially a protection racket. Anarchists don’t have much of a sense of humor about their ideas!

For me, it’s very interesting to see the Republicans going from a party which ostensibly worshipped the market (Marx would have said “fetishized,” which, aside from its abominable construction in English, is a brilliant sociological analysis; Marx was a lousy economist but one of the great political sociologists of all time) to becoming addicted to corrupt monopolies, just as the 18th Century Whigs were. It was fascinating to watch Milton Friedman, a very sharp intellect aside from the fact that he was occasionally known to have committed the mathematical sin of dividing by zero (but hey, so did Einstein when he first applied the thoery of general relativity to cosmological processes and accidentally came up with the mathematical formulation suggesting an expanding universe), in the last years of his life defended the Bush administration as a group of free-marketeers when, in fact, they were moving toward crony capitalism that Friedman had reviled during his long career as a public intellectual. The problem, I think, is that people who began with a defensible intellectual position–that markets in the long run tend to work things out–failed to realize that markets need certain conditions for their effective operation, and that without those conditions you will not get the results that your model predicts. Markets are an appropriate beginning for modelling human behavior, but while a necessary condition, they are far from a sufficient condition for optimizing your outcomes.

What has happened with the regulatory failures is that the radicals who have been running the government since 2001 began worshipping the “market” in and of itself, not understanding that a certain amount of restriction is necessary in markets for them to work as predicted. Access to information is a particular problem; the free marketeers claim that the market forces information to the forefront, whereas our experience in the past 100 years, in my reading of it, suggests the contrary, that businessmen, like most human beings, will lie and conceal and suppress unpleasant truths. Yet transparency is absolutely essential for the market model to work, and the attempts of conservative economists to justify the status quo by creating elaborate arguments of why information gets to the market no matter what business does are singularly unconvincing. But I betcha that the political folks at the SEC will offer a theoretical explanation designed to support the status quo of how oversight was unnecessary in this case. Don’t try to argue the facts with you. Their response will be something like this: who are you going to beleive? Your lying eyes or me?