A new book suggests a modern marketing label for classical liberal ideas: individuals acting in markets are engines of human flourishing.

Venture capitalist Nick Hanauer, an acknowledged “one percenter,” makes a spirited case in this week’s Wall Street Journal for a “new economics” to alleviate what he sees as the inherent societal dangers of wealth inequality. It’s a traditional Durantian concern: when the have-nots have had enough, they may well turn their pitchforks on the haves. Hanauer, for whom the pitchforks loom large, contends there is an easier way — some form of a new New Deal that purports to bridge the gap between the baser impulses of Democratic Socialists and Market Capitalists. 

Credit Hanauer for trying. These hyper-polarized times are indeed troubling and we should welcome novel ideas outside our ideological tribal pale. I fear, however, that Hanauer and his Oxford economist colleague Eric Beinhocker don’t offer much that is genuinely innovative. Their “new economics” may serve as a useful marketing pitch for their new book, but pouring old wine into new bottles doesn’t qualify as great winemaking.

Hanauer and Beinhocker describe “Market Humanism” as a new paradigm “grounded in twenty-first century thinking.” What that means isn’t clear, but they argue that the “old paradigm” — economics as the study of how society manages its scarce resources — has “constrained economic thinking for the past 150 years.”  They propose instead an economics centered on human flourishing, in which “markets are servants, not masters,” and argue that the real genius of markets lies less in their efficiency at allocating existing resources, but rather in their ability to generate innovation. Erm… paging Dr. Schumpeter to address the blindingly obvious. He wrote, way back in 1942, of the “perennial gale of creative destruction” that allows continuous innovation across the entire economy.

...read more at thedailyeconomy.org