What many people call the "free market" has nothing to do with what we at the Acton Institute call a free market. In fact, I would say there is a real deception at work in the flurry of books and articles blaming the free market for the current economic crisis. They redefine the common meaning of the term in order to serve an ideological agenda of expanding state power.
In order to understand the causes of and solutions to the current crisis, it is critical that we at least have some common vocabulary. By "market," we mean the social matrix of cooperation, competition, and emulation that occurs through the unhampered exercise of human volition. The old classical liberals called it the "natural society," while Pope John Paul II called it the "business economy." Others prefer the name "capitalism," though this is not my favorite term.
What is not part of the market order are all the attempts by government to distort and shape it, subsidize one activity at the expense of another, punish producers or consumers for failing to advance political goals, cut off avenues for exchange or production domestically or internationally, or generate artificial credit flows to bolster one sector at the expense of another.
These kinds of activities have bad consequences. They introduce inefficiencies or unsustainable patterns of production. That is to say, the strategies do not work to achieve the state aims of the policy. The welfare state is one example and protectionism is another. Another concerns the loose monetary policies of federal lending agencies and the central bank. These institutions and policies amount to distortions of the market. These distortions cannot be corrected through further intervention and the current policy path is driving us further into recession.
The work of the Acton Institute has never been more important than it is now.