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No Third Way to the Market

SAN FRANCISCO - Today, the "market" is said to be either utterly triumphant or a grave threat. Politicians everywhere quest for a "third way" around its rigors, yearning for "national champions" in industries like telecoms capable of holding off globalization. The market, however, is simply a mechanism that can be mobilized for any number of purposes. Depending on the way it is used, the market may contribute to social and economic development or inhibit it.

Using or not using the market is not the crucial distinction. Every society - communist, socialist, or capitalist - uses the market. The crucial distinction is private property. Who are the participants in the market and on whose behalf are they operating? Are the participants government bureaucrats operating on behalf of "the state"? Or are they individuals operating on their own behalf?

Once, on a visit to China, a deputy minister asked "Who in the America is in charge of materials distribution?" The question took me aback, yet it was natural. For it was almost inconceivable that a citizen from a command economy could understand how markets distribute materials among millions of people for thousands of uses untouched by political hands.

Introducing greater private market mechanisms may be partially or completely frustrated by too limited a change, which is something to be watched out for in today's supposed takeover boom in Europe. Take American airline deregulation of 20 years ago. It enhanced competition, resulting in reduced prices and new services. The volume of air traffic increased.