Markets are not perfect. They are filled with mistakes, failures, and missteps. What’s more, disruptions (like a flood wiping out food crops) happen. Free market advocates, such as myself, do not disagree nor do we think that markets are this always-perfect, never disrupted, recession-proof process. Indeed, quite the opposite: the fact markets can fail, and are subjected to natural forces, is why we advocate for markets over other forms of resource rationing.
The market process is extremely flexible:
-Market participants need not wait for a diktat from On High to enter (or leave) a market; they get signals (such as profit) that help guide those decisions. If a firm cannot earn enough profit, they leave a market. Likewise, if firms are earning very high profits, firms will seek to enter the market.
-Market participants need not wait for directions from some governing body on how to react following a disruption. Signals from prices(and good ol’ fashion human kindness) help drive that. If a flood in Louisiana destroys the city’s stores of food and other goods, firms not affected can and do send aid immediately.
-Market participants need not have perfect information, guided by an omnipotent governing agency, to make rational decisions. They need only the knowledge of their own goals to accomplish this.
-Market participants need not wait around doing nothing until a government agency saves them from recession. Through the signals of price and profit, people can (and will) do what they need to do and determine a way to survive.
Yes, bad things happen. Such is life. But the mere fact that bad things happen does not justify intervention by a governing body or outside force. The reason is simple: such intervention has no promise to make things better; in fact, it often makes things worse. Government intervention is inherently rigid. Governments are inherently rigid. It is not dependent upon the type of government, nor even the people who make it up; you could have a social democracy filled with the purest men and women who ever walked the face of the Earth or a totalitarian dictatorship lead by Satan himself, and the outcome would still be worse than the market process because they do not have the flexibility or knowledge to handle ever-changing (and sometimes dramatically changing) situations.
Markets have failed. Long live markets