Most discussions of how economies work start in the middle where there is already a functioning economy. Indeed, it is always assumed in every economics text that markets are already in operation, money exists, labour is at work and capital is in place. What such discussions do not do is explain the basic economic problem that humans have always had to face in trying to make their way in a world in which they must create their own economic circumstances out of their own ingenuity and hard work. This presentation is taken from one of the opening chapters of Dr Kates’ Free Market Economics: an Introduction for the General Reader, a book being co-published by Edward Elgar and the IEA. It is in this chapter that he explains why the only way to create wealth and personal freedom is through markets, individual freedom and government regulations that are based on allowing markets to work. If you are interested in understanding why there is no alternative to a market economy if prosperity and personal freedom are your aims, this is a presentation not to be missed.
For most of his career Dr Kates worked for industry having been for a quarter of a century the Chief Economist for the Australian Chamber of Commerce and Industry (the Australian equivalent of the CBI). As part of this work, he was responsible for the preparation of economic submissions on behalf of business in every area of economic policy. His professional interests have therefore been closely related to the formation of economic theory in line with the needs of policy. He has recently completed an appointment as a Commissioner on the Australian Productivity Commission. His Say’s Law and the Keynesian Revolution, originally published in 1998 but released again in paper in 2009 following the GFC, discussed the loss to economic theory of the disappearance of the classical theory of the cycle.