How would you run the economy?

I thought a comment I left on Noah Stahl's Undercurrent blog post might be of general interest, so here it is:

In response to Rebecca who comments: “Its easy to criticize and point out the errors in what someone is doing. More difficult, however, is coming up with a different, better option. Do you have a proposal?”

While I can’t speak for Noah, I’d suggest that the crucial principle to uphold is freedom — as enshrined and protected by individual rights.

Under such a principle, the answer to the question: “How would you run the economy?” becomes: “I wouldn’t.” And neither would anyone else. Instead the “economy” would simply be the sum of all the voluntary production and trade between individuals and groups of individuals (a.k.a. corporations). Given such freedom, the market would allow the most efficient and rational processes and products to emerge, without any “commander” or “czar” (to use today’s jargon) to “guide” it.

While the role of the government in such a system is limited, it is also essential, viz. to preserve individual rights via the courts and the police.

And by the way, this system is not just a “proposal”, it was very nearly implemented in early nineteenth century America — in fact it even has a name: laissez faire capitalism.