Hayek, Novak & the Limits of Laissez Faire

The Cult of Capitalism

When laissez-faire economists believe in God, they are usually certain that he is one of them. The invisible hand of the market is, they think, also the hand of Divine Providence, which anoints and protects those who manage to provide for themselves.

In 1835, the American economist Henry Carey complained that Britain and France, in restricting trade between themselves, were “doing all in their power to frustrate the designs of the Deity.” (Carey later converted to protectionism.) In the 1840s, English politician Richard Cobden claimed that “free trade is the international law of God.” Thus, those who opposed free trade were not only mistaken; they also lacked faith. Today, many American Christians, including Catholics such as Michael Novak, Thomas Woods, and Robert Sirico, proclaim similar ideas. Novak quarrels with the church’s official teachings on social justice, disparaging in particular the traditional emphasis on distributive justice. He argues that state power should be used minimally and only as a last resort in promoting economic justice.

Novak and other contemporary free-marketeers owe much to the “Austrian school” of economists, and especially to one of its founding members, Friedrich von Hayek (1899–1992). A professor at the University of Chicago from 1950 to 1962, Hayek was one of the chief instigators of the wave of libertarian economics that has swept the world since the...

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About the Author

Angus Sibley, a fellow of the Institute of Actuaries and a former member of the London Stock Exchange, writes from Paris. His Web site is www.equilibrium-economicum.net.