rising tide of center/right socioeconomic policies in the United States (among
other societies) appalls a goodly share of our people. Riding high on what is
now a flood tide, propelled by and propelling it, has been the phenomenal Second
Coming of capital’s deity, "the free market" — otherwise known as
"laissez-faire," or "rugged individualism," its slogan
"Each for himself and God for all" (as the elephant said, while he
danced among the chickens).
ideas enabling its reincarnation, today as earlier, are as meretricious as the
policies they justify are odious; for the past twenty years or so they have
swamped us in an almost totalitarian onslaught from economists, politicians, and
business, with abundant amplification through the media. In that same process,
much abetted by other and linked developments (weakened unions, strengthened
corporations, consumerist addictions, and marketed politicians), traditional
opposition has been rendered scattered, muted, feckless.
yesterday. Now that folks like (and some unlike) us are once more getting our
act together, it may be useful — briefly, perforce — to underscore some of the
elements of today’s self-adulatory ideology which, though they have become
"common sense" are very much the opposite of good sense.
economist Sam Bowles pointed out in 1991 (in Challenge Magazine), "Markets
not only allocate resources and distribute income, they also shape our culture,
foster or thwart desirable forms of human development, and support a well
defined structure of power. Markets are as much political and cultural
institutions as they are economic." The marketability of everything, an aim
long-expressed by market guru Milton Friedman, means the commodification of
everything; such commodification is already in place where it should exist not
at all, or only when subject to public scrutiny or control: in education, health
care, in the preservation of natural resources, in social insurance, in prisons,
in national and state parks.
spuriousness of today’s free market dogma is many-sided; take the command
"listen to the markets." WHICH market?" Only rarely is there a
hint of the usually correct answer: financial markets, and their
"investors." The well-spun belief is that the financial sector’s main
function the servicing of productive investment in plant and equipment (etc.).
Not now. Wall Street now is dominated by speculation in securities and foreign
exchange (to say nothing of their rock-and-roll troublemaker, derivatives).
Foreign exchange markets do between $1.5 and $2 trillion (repeat: trillion)
daily; the derivatives market plays with upwards of $90 trillion annually.
"Investors"? Gamblers is the better term. And it is a commonplace that
most of those doing the gambling for financial companies (or themselves) are
very young, little experienced or knowledgeable, prone to "animal
house" impulses and behavior — see Liar’s Poker, by Michael Lewis — not
the ideal personnel for guiding zillions of dollars through a global economy
that would be uncomfortably volatile even if steered by old geezers. Writing in
1936, when all this was in its adolescence, Keynes famously remarked
"Speculators may do no harm as bubbles on a steady stream of enterprise.
But the situation is serious when enterprise becomes the bubble on a whirlpool
of speculation. When the capital development of a country becomes the by-product
of the activities of a casino, the job is likely to be ill-done."
gospel of the free market was articulated by Adam Smith in 1776, for an entirely
different world. Setting aside for the moment reservations noted above about the
free market as icon, it may be believed that Smith would be distressed by the
use of his arguments today: 1) the free markets he had in mind were competitive
in a particular sense, reflecting the emerging realities of his time and place;
2) his emphasis was on production and trade (not finance); 3) his arguments
assumed only small firms, none having power to shape let alone to control its
own market, either as regards demand or supply.
arguments could apply to the many millions of today’s tiny — not
"small" — companies: even "small" businesses as now defined
have hundreds of employees (and Fortune Small Business is written for them). The
millions of "tinies" are retailers, restaurants/ bars, artisans,
whatever, run by families, partners, individuals, mostly working hard to
survive, often as an alternative to having to work for someone else.
almost all commodities and many services are produced and controlled by mammoth,
mostly transnational companies (TNCs): about 300 TNCs control at least a quarter
of the entire world’s productive assets. Their rivalries are intense; they fear
and even hate each other, hit below the belt, advertise till the cows come home,
you name it: they do not "compete" as Smith or current economic theory
means it. The TNCs inflict considerably more damage — of all kinds — on people
and nature in their own and other countries than Smith could have imagined; and
he imagined a fair amount: "Businessmen," he said, "are an order
of men whose interest is never exactly the same with that of the public, who
have generally an interest to deceive and even to oppress the public, and who
accordingly have, upon many occasions, both deceived and oppressed it."
And, he added, "Wherever there is great property, there is great
inequality. For one rich man, there must be at least five hundred poor…."
relied upon "the invisible hand" of active and ubiquitous competition
to keep business power in check; what we have, instead, is the not always
invisible fist of giant business, shaping both demand and supply, owning much of
the State, gussied up by their media slickies 24/7.
focus was the national economy. His most influential follower, David Ricardo
(writing in 1817), focused on the world economy, and was the source of the
"free trade" arguments of our time. A supporter of industrialization,
his aim was to get rid of tariffs on imports, existing because of the political
power of the landed gentry. The tariff lifted the price of their crops, gave
them an "unearned income," pushed up the price of food and thus the
subsistence wage, and thus held back industrialization. Ricardo assumed (among
other now totally unrealistic assumptions) that industrial technology is
immobile. It was then; now it is easily mobile, and a main basis for the TNCs
and their "downsizing and outsourcing."
And for the devastation the TNCs have wrought in the "emerging market
economies." Unspeakable though the colonial/imperialist practices of the
past were, the havoc of recent decades has affected considerably more people and
created human, social, and natural disasters in ways and to degrees that are
likely to be irreversible. Unsurprisingly, it is the TNCs that have been the
main force behind "free trade" today. Marx got that right in 1848 when
"If the Free Traders cannot understand how one nation can grow rich at the
expense of another, we need not wonder, since these same gentlemen also refuse
to understand how in the same country one class can enrich itself at the expense
brief glance at a few historical realities of "the free market"
operating at its freest is instructive. Great Britain was the first society to
convert land and labor into commodities, as the eighteenth century ended. One
consequence was that 80 percent of the cultivable land came to be owned by
2-3000 families, and that the largest part of the population — once the
"sturdy yeomanry" of England — had become a proletariat, greasing the
skids for Britain to become the first industrial capitalist nation.
the United States both land and labor had long been commodities. By the 1920s
that had meant disaster for producers of staple crops such as wheat and corn; it
had been a disaster from the beginning for most workers in almost all
occupations, most dangerously so in coal mining. The free market for farmers
meant producing the wrong crops in the wrong quantities in the wrong places and
getting hammered both by the market and by nature: see Grapes of Wrath. For coal
miners — and for mine owners — the disasters mixed bodily with monetary harm.
took a lot of effort to end those free markets (unions for workers, governmental
market control for farmers); efforts whose good effects have been allowed to
diminish and whose bad effects have grown: thus every weeknight on PBS, Archer
Daniels Midland, the largest agricultural firm in the world, we may depend on
them to see that the children of the future will be fed. ADM was fined $100
million last year for price-fixing. (Sue me, sue me, ADM; what can you do me?)
a nutshell, and far from originally: free markets mean freedom for business to
get what they want, anywhere, in any way they want, and if you don’t like it,
you can lump it. Or organize.