Former President of Chile Ricardo Lagos recently asserted:
A society that is built on neoliberal economic ideas will indeed foster GDP growth and innovation. But unless it is complemented with public policy aimed at promoting equality, a free-market society will always be inherently unfair.
This is foolish because everyone in Chile is much more prosperous than his counterparts 20 years ago; Sweden’s “unfairness” is more bizarre:
A talented head cook at a school in central Sweden has been told to stop baking fresh bread and to cut back on her wide-ranging veggie buffets because it was unfair that students at other schools didn’t have access to the unusually tasty offerings.
Annika Eriksson, a lunch lady at a school in Falun, was told that her cooking is just too good. Pupils at the school have become accustomed to feasting on newly baked bread and an assortment of 15 vegetables at lunchtime, but now the good times are over. The municipality has ordered Eriksson to bring it down a notch since other schools do not receive the same calibre of food – and that is “unfair”.
From now on, the school’s vegetable buffet will be halved in size and Eriksson’s handmade loafs will be replaced with store-bought bread. Her traditional Easter and Christmas smörgåsbords may also be under threat.
Ludwig von Mises expains the thinking of the Swedes and President Ricardo Lagos in The Anti-Capitalistic Mentality:
From the very beginnings of the socialist movement and the endeavors to revive the interventionist policies of the precapitalistic ages, both socialism and interventionism were utterly discredited in the eyes of those conversant with economic theory. But the ideas of the revolutionaries and reformers found approval with the immense majority of ignorant people exclusively driven by the most powerful human passions of envy and hatred.
Nobody is needy in the market economy because of the fact that some people are rich. The riches of the rich are not the cause of the poverty of anybody. The process that makes some people rich is, on the contrary, the corollary of the process that improves many peoples’ want satisfaction. The entrepreneurs, the capitalists and the technologies prosper as far as they succeed in best supplying the consumers.
The most amazing thing concerning the unprecedented change in earthly conditions brought about by capitalism is the fact that it was accomplished by a small number of authors and a hardly greater number of statesmen who had assimilated their teachings. Not only the sluggish masses but also most of the businessmen who, by their trading, made the laissez-faire principles effective failed to comprehend the essential features of their operation. Even in the heyday of liberalism only a few people had a full grasp of the functioning of the market economy. Western civilization adopted capitalism upon recommendation on the part of a small elite.
The result of this ignorance is that people ascribe all improvements in economic conditions to the progress of the natural sciences and technology. As they see it, there prevails in the course of human history a self-acting tendency toward progressing advancement of the experimental natural sciences and their application to the solution of technological problems. This tendency is irresistible, it is inherent in the destiny of mankind, and its operation takes effect whatever the political and economic organization of society may be. As they see it, the unprecedented technological improvements of the last two hundred years were not caused or furthered by the economic policies of the age. They were not an achievement of classical liberalism, free trade, laissez faire and capitalism. They will therefore go on under any other system of society’s economic organization.
The truth is that the increase in what is called the productivity of labor is due to the employment of better tools and machines. A hundred workers in a modern factory produce per unit of time a multiple of what a hundred workers used to produce in the workshops of precapitalistic craftsmen. This improvement is not conditioned by higher skill, competence or application on the part of the individual worker. (It is a fact that the proficiency needed by medieval artisans towered far above that of many categories of present-day factory hands.) It is due to the employment of more efficient tools and machines which, in turn, is the effect of the accumulation and investment of more capital.
Every step forward on the way toward prosperity is the effect of saving. The most ingenious technological inventions would be practically useless if the capital goods required for their utilization had not been accumulated by saving.