The problem? A passive approach to advocacy of economic dynamism is no longer enough, as the hopes of many who support free markets are now being dashed. That's a shame. Moderate libertarians could have better aligned with the public in recent decades, to preserve the freedoms that are so vital for economic stability.
How could anyone forget, that economic participation is part and parcel of economic freedom? How could anyone not see that - as populations gradually lose their economic and social connections, political unrest would be the result? Yet some have yet to be convinced, re decreased labour force participation as important for political, social and economic outcomes. For instance, in a recent post, Arnold Kling called labour's share a "macro-Marxist concept", and likened "organizational capital" to what a company such as Google might capture in the future - irrespective of the actual employment involved.
What is organizational capital, if not human capital at the core, as noted by Ryan Avent and others? Indeed, organizational capital is crucial to the 21st century version of wealth. Organizational capital provides means for people to better their lives and assist one another in the process. Yet what's being missed, is that too much organizational capital remains aligned so as to be utterly dependent on preexisting wealth.
This shrinks the potential of organizational capital, and leaves it dependent on the definitions of special interests and governments. A lack of organizational capital in aggregate, also accounts for the fact prosperous regions are becoming off limits for the average citizen. Even the single category of construction, points to a sector which has not been allowed to experience innovation or growth. The consequent severe lack of productivity in a crucial area of life, hurts every citizen, and contributes yet another category in which the U.S. lags other nations.
It's understandable that libertarians have yet to carve out sanctuaries for economic freedom, since institutional evolution is part of the process. But it's not as easy to understand, how so much ground has been lost in other areas of economic freedom which were once taken for granted. As moderates of many persuasions have faltered in their support of free markets; like libertarians in general, they are becoming an endangered political species .
Fortunately it hasn't always been this way. For centuries, citizens had good reason to believe free markets would remain capable of contributing to long term growth in the foreseeable future. In this context, requests not to destroy inefficient markets "too quickly", made good sense as well. There's no need for production reform to endanger existing wealth or otherwise distort equilibrium value - which is why I've suggested a slow approach for the introduction of time arbitrage as a direct form of wealth creation. In an introduction to Adam Smith's "Wealth of Nations", Richard Teichgraeber, (1985), provides an apt reminder of the usefulness of a "take it slow" approach:
Smith thus concluded Chapter II, Book IV, with a cautious program of practical advice for statesmen and legislators who might happen to embrace his views. In the first place, he remarked that any thoughts of suddenly laying open the domestic market to freer competition were dangerous as well as utopian. While free competition would destroy the "great manufactures" of Britain, Smith saw no cause also to squander the capital they had invested in paying workmen and maintaining the material instruments of their trades. So the choice he posed was not regulations versus no regulations, but finding reasonable ways of eliminating or counterbalancing the worst regulations. An "equitable regard" to the interests of monopolies and corporations, as well as the more "extensive view of the general good," required that changes be made piecemeal - or, in Smith's words, "slowly, gradually, and after a very long warning." The task for government here was not simply one of restraint. The marketplace for Smith was a world of preexisting adversary relationships where government often must play the role of disinterested yet pragmatic judge. On the question of monopolies, what he hoped for was not the utopian world of pure laissez-faire, but instead a more pragmatic concern "neither to establish new monopolies of this kind, nor to extend further those which are already established. And the same spirit of pragmatism would later govern his remedies for the "mental mutilation" that was threatened by the division of labor...Why is this passage so relevant now? Today's greater threat to wealth creation and long term prosperity comes not from swift destruction of what is shown to be inefficient and impractical, but the abandonment of the effort to do so. When moderates disappear, it becomes increasingly difficult to focus on the worst regulatory atrocities. In other words, the "very long warning" has been forgotten and replaced with entrenched interests to such a degree, that long term growth and prosperity are now threatened. Indeed, no one need worry about lost wealth from dismantling monopolies "too soon", when the real concern is whether the long term growth trajectory can be restored.