Markets and the Common Good

John Quiggin complains that what the classic essay I, Pencil actually shows is the wonders of a mixed economy, not the market.  The essay traces all the amazing transactions that need to occur for a simple pencil to be made, pointing out that not one of the people involved could make a pencil by themselves, and most of them don't even know that they're involved in producing a pencil.  But what about the US Forestry Service? Rail rights of way? The education system?

This is an argument to which the left-wing has a great deal of recourse whenever anyone suggests that people have a right to keep what they earn from voluntary transactions.  You can only make money in the context of society, and so society has a right to regulate your transactions, and seize the proceeds, in any way that society sees fit.

And yet, the argument applies just as well to our sex lives or our political beliefs: they take place in the context of all sorts of government protections, from rape prosecutions to whistleblower laws.  Without markets and the government, the "anything between two consenting adults" morality to which the majority of the elite subscribes would be impossible; the closest substitute for these things is family, and families have a very clear, deep, and persistent interest in regulating the sexual behavior of their members.

Does this mean that the government (or our employers) may properly restrict our sexual behavior to that of which a majority of our neighbors approve? That bed you're having sex in probably travelled on the interstate highway system, so standby for government inspection . . .  

No?  The government can't do that?  Then why is this argument supposed to be a telling blow against arguments for strong property rights and freedom from interference in voluntary economic transactions?  

I'm certainly happy to argue that libertarians and conservatives underestimate the extent to which markets are supported by regulations and laws that shape transactions away from destructive ends.  But that doesn't mean that markets aren't pretty great--or that the government therefore has the right to regulate things in any way that the government pleases.

All the activity of a modern human takes place in the context of society.  That requires balancing of individual rights and the common good.  But this is not a blank check for the government to trample rights as it pleases . . . nor a blanket answer when people complain that the government has gotten too intrusive.