Reconciling Free Markets and Conservatism
It may seem odd that an enthusiasm for market capitalism and Burke’s staid and patient conservative values often go hand in hand. The starting points for these systems of belief seem quite far from each other: the free marketer upholds the impersonal forces that allocate resources efficiently, sometimes cascading portions of the population into structural unemployment in the process, while the conservative maintains the worth of existing ideas and ways of doing things. Although the fundamental workings of economic liberalism and conservatism do not seem to fit together, they are truly compatible because both are based on an intellectual humility that doesn’t claim to know everything about either economics or society.
One problem with socialist policies is that they cannot solve “the information problem.” That is, a central planner cannot possibly know how much to produce because he cannot know how much consumers will want, how badly they will want it or the cost of production as the quantity produced varies. When these pieces of information are not processed through a market, the usual outcome is either vast excess or scarcity.
Markets usually solve this problem by relaying consumers’ desired quantity and intensity of desire to suppliers by the amount the consumers purchase at a given price. Thus, there aren’t excesses or shortages due to incomplete information because producers only provide the amount that consumers want and covers their costs. This diffuses the responsibility of decision making from one central planning to countless businessmen and consumers across the country. These smaller-scale decisions are more likely to produce economic benefit than ones made by a centralized bureaucracy.
Conservatives seem to have quite a different way of thinking. They are characterized by a trust in institutions and old values, a belief in G.K. Chesterton’s “democracy of the dead.” The idea Chesterton expresses so eloquently is that tradition has been developed and contoured by the generations that came before, such that many of the features of the present are intentional and benevolent gifts from ancestors of numerous times and places. Morality, religion and social roles are held as treasured inheritances by conservatives. Conservatism, at first glance, stands in opposition to abrupt shifts in society, which one may associate with the dynamism of markets and creative destruction. But the mechanism described above, the balancing of social values and costs, has as much to do with the world of ideas and tradition as it does with goods and services.
The commonality between reverence for free markets and for conservatism could be boiled down to humility. Advocates of free markets understand that systems of voluntary exchange collect information from millions of people and coalesce it into a coherent system which distributes to people what they want without anyone to make decisions for everyone else.
Similarly, conservatives know that they would be naive to look at their remarkably narrow slice in time and say, “This is the way to do things.” They respect the accumulated ideas and order, refined by time and trial, which are embedded in institutions. The overlap then between free marketers and conservatives does in fact make sense: both systems work best when their members don’t suppose to know more than the masses who formed them.