The idea that markets need government is as old as government itself. Even Milton Friedman believed this was true. As he put it: “government is essential both as a forum for determining the ‘rules of the game’ and as an umpire to interpret and enforce the rules decided on.”
According to conventional wisdom, Adam Smith’s “invisible hand” can privately generate market order within well-defined institutions of property rights and contract enforcement. But it can’t privately generate these institutions themselves.
My chapter asks: why not?...
Do markets need government? At the very least, the answer to this question is more ambiguous than we normally think. Hopefully, my chapter will help spur additional thinking about why the answer just might be no.
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