Markets in a Democracy

The global financial – and now economic – crisis has demonstrated that markets, and particularly financial markets, are not self‐correcting and that, if left unregulated, they will inevitably overreach themselves and lead to excess. Governments have a duty to regulate markets in the public interest but where (as in the case of recession) markets produce adverse outcomes, governments also have a duty to lean against market logic in order to minimise those outcomes. These lessons extend well beyond purely economic matters. Unregulated markets will inevitably produce social and environmental outcomes that reflect narrow and short‐term individual and sectoral interests rather than those of society as a whole. The whole point of democracy is that it allows the less powerful majority to use the power and legitimacy of government to offset and counteract the economic power of a minority. If the market cannot be or is not challenged, democracy itself is weakened, loses its point and forfeits the confidence of the people it is meant to serve.