Another one from today's links. This is by Brad DeLong:
Making Sense of Friedrich A. von Hayek: Focus/The Honest Broker for the Week of August 9, 201, by Brad DeLong: One way to conceptualize it all is to think of it as the shape of a river:
The first current is the Adam Smith current, which makes the classical liberal bid: Smith claims that the system of natural liberty; with government restricted to the rule of law, infrastructure, defense, and education; is the best of all social arrangements.
This first current is then joined by the Karl Polanyi current: Polanyi says that, empirically, at least in the Industrial Age, the system of natural liberty fails to produce a good-enough society. The system of natural liberty turns land, labor, and finance into commodities. The market then moves them about the board in its typically disruptive fashion: “all that is solid melts into air”, or perhaps “established and inherited social orders are steamed away”. But land, finance, and labor–these three are not real commodities. They are, rather, “fictitious commodities”, for nobody wants their ability to earn a living, or to live where they grew up, or to start a business to be subject to the disruptive wheel of market fortuna.
The social disruption produced by allowing the prices of these “fictitious commodities” to be set by market forces is too great to be sustained. Politics will not allow it. And so a good society needs to regulate: A good society needs to regulate the market for land so that people are not thrown off of what they have good reason to regard as theirs even if they lack the proper pieces of paper. A good society needs to regulate the market for finance in order to maintain full employment and price stability. A good society needs to regulate the market for labor to ensure that everyone has the opportunity to work at a living wage.
Thus we must move forward from classical liberalism to social democracy.
That is Karl Polanyi’s argument. And it is convincing. Classical liberalism supports and justifies economies that produce a great deal of unnecessary human misery: that seems very, very clear indeed by the time of the Great Depression. As John Maynard Keynes wrote in his 1926 essay, “The End of Laissez Faire”, nineteenth and early twentieth-century history teach one big lesson...
There's quite a bit more after that, including a discussion of "three other channels in the delta besides Polanyi-style social democracy: call them Leninism, Keynesianism, and Hayekism."