Free Market

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Discussion

Critique of Free Market Ideology

Dmytri Kleiner:


"Capitalism depends on the appropriation of value for its subsistence and growth. The disingenuous rhetoric of the “Free Market” is a smoke screen to justify a system of privilege and exploitation, better called the “Casino Market,” there are certainly some conspicuous winners, but the odds always favour the house. Any organised attempt to beat the odds will be excluded, perhaps violently. In a genuine free market, competition among producers would reduce the price of everything to the lowest level that it can be produced for. If everything truly traded in a perfect “market,” then land and capital, like labour would never be able to earn any more than the cost of providing it. There could be no class that is exempt from working as there would be no income to sustain such a class. For a Capitalist class to exist, the market must be rigged, and all markets are. Capitalism must increase the price of Capital by withholding it from labour. In reality, the “free market” is what property owners want to impose on workers, while retaining their own privileges. Capital needs to make the price of labour low enough to prevent workers, as a class, from being able to retain enough of their own earnings to acquire their own property. If workers could acquire their own property, they could also stop selling their labour to the capitalists. Capitalism could not exist in a free market. The whole idea of the “free market” is part of the mythology of capitalism, is not possible within capitalism and just as unlikely to exist without it. “Free” from the coercion of profit-seeking Capitalists, producers would produce for social value, not for profits, as they do in their private and family lives, and as they have in non-capitalist communities. This is not to say that a free society would not have competition or that it’s members would not seek to benefit from their own labour, the division of labour required in a complex society implies exchange and reciprocity. However the metaphor of “the market” as it is currently used would no longer dominate. The “Market Economy” is by definition a surveillance economy, where contributions to production and consumption must be measured in minute detail, it is an economy of accountants and security guards. The need to account value exchange in tiny and reductive lists of individually priced transactions must be superseded by more fluid and generalized forms of exchange. The motive to maximize profit from ownership, so often the driving force behind irrational and destructive production, would give way to much stronger motive, doing work that has direct benefits for our lives and our society, production that fulfills our real world needs and desires. Without the need to measure our consumption and production to appease the imposers of capitalist control, workers in a free society may not bother producing exclusively for exchange within a “Market Economy,” they may more often produce what they want and what their community needs and share based on mutual respect. This type of economy does not resemble a “market.” A market is not a free space. Control of the physical location of the market has always been the domain of hierarchy and authority, and proximity to the market is the textbook example of unearned income; economic rent. The Market stall is a physical manifestation of the division between producer and consumer. None of these seem like essential characteristics of a free society. Instead of an idealised and impossible “Free Market,” a workers economy would be better imagined as a “Network Economy,” where independent participants exchange according their mutual desires within the context of a common platform, not centrally controlled by any of them, but composed of their own voluntary interconnections." (http://docs.telekommunisten.org)


The Distributist Critique

Richard Aleman:

"So what is the Distributist solution? What is a genuine free market?

The author suggests certain steps are needed to achieve a free market. Corporate tax subsidies must be eradicated so that the collectivizing of production and the strong political power of corporations can be eliminated. The federal budget—which consumes approximately 20 percent of our Gross Domestic Product—will also have to be curbed and slashed and, most importantly, our economy must be transformed into a political arrangement of distributed ownership. Only a decentralized economy holds the key to a sane tax structure, material stability for the masses, and a legitimate free market.

Toward a Truly Free Market is a meticulous analysis of our economic system, its crisis, a critique of capitalism and socialism, and a brilliant look at the ideas and economic foundations of the Distributism solution. With chapters dedicated to the fictitious commodities of money, labor, and land, the proper exercise of government, taxes and economic rent, and an entire chapter devoted to the real answer to health care, Médaille has written a masterful follow-up to his impressive The Vocation of Business. But perhaps the book’s “Building an Ownership Society” will be the most appetizing chapter for Distributists. This chapter includes the trade, agrarian, banking, and industrial reforms needed to rebuild the local economy and restore subsidiarity.

John Médaille’s Toward a Truly Free Market is the book Distributists have been waiting for. The way to fix our economy begins with understanding our economy, and this book will be necessary reading for layman and academic alike. As satisfying a read as the author’s previous effort, this explicitly Distributist work is bound to present a challenge to skeptics who have doubted the viability of Distributism, educate those unfamiliar with it, and present a long-awaited opus for its supporters." (http://distributistreview.com/mag/2011/02/toward-a-truly-free-market-a-review/)


The History of the Free Market myth

John Restakis:

(from ch. 1 of the book Humanizing the Economy)

"Markets have never been “free” in the normal sense of the term, nor will they ever be. They have always been, and will always remain, subject to external constraints – legal, political, cultural, religious. The question is to what degree and for what ends these controls operate. Purely free markets exist only in the ethereal regions of laissez faire economic theory that, along with such treasured notions as perfect competition, freedom of choice and the “invisible hand” that guides the market to produce the optimum outcome for all through the unrestricted pursuit of self interest.

To be fair, the laissez faire doctrine of free markets has been all but abandoned by most respected economists. But this has come late and only after a monumental accumulation of evidence and the sustained criticism of decades. No one, it seems, has informed the politicians and the policy makers. Throughout the crisis, pundits and political leaders continued to argue that these were extraordinary times calling for radical government measures. That under normal conditions, the free market functions best when left alone. But this has never been true. The free market system – such as it is - has been able to survive only because the state has been there to support it and to salvage it. It happened during the Depression of 1873-86, during the Great Depression of the 1930s, and the same pattern of state rescue in times of crisis continues today. The role of the state in sustaining the free market is constant and pervasive and has been so for well over a century. The regulation of financial markets, the regulation of banking and the insurance of deposits, the enactment and enforcement of commercial and corporate legislation, the maintenance of monetary policy, the management of labour policy, the negotiation and regulation of trade, the creation and administration of tax policy - all these are indispensable institutional supports for the operation of a market system in times of “normalcy.” The collapse of any one of them would entail a crisis for the system, as it did with the unraveling of bank oversight that sparked the current crisis. All this is plain. And so, one might ask, what exactly lay beneath this continuing insistence on the sanctity of the free market system? Was it the residual force of an ingrained ideology? Was it blithe ignorance? Or was it a cynical ploy to protect the privileges of powerful vested interests? Probably, it was all three.

In any event, with shameless, jaw-dropping audacity Bush continued to bang the free market drum in the closing days of his presidency, appearing all the while before international summits convened to clean up the colossal wreckage that resulted from his policies.

The closing decades of this most delirious of economic times saw perhaps the most ambitious application of that grandest of all economic delusions, the self-regulating market. This cornerstone of classical economics is rooted in the belief that economics exists in a sphere of its own, that its laws are complete and sufficient to themselves, and that the broader social and human relations that constitute the day-to-day reality of our lives are not only apart from it but should be subject to its dictates. In substance, the collapse of the US financial markets and the wreckage of the global economic order that followed their fall was the price to be paid by enacting in the real world the insane dictates of this delusion.

Indeed, the grand delusion goes even further. Not only does it hold that the free market operates in a perfect order of its own but that the market itself is the source of free and democratic societies. When left to operate without interference, the market functions as a perfect democracy with free choice in the marketplace representing the summit of human achievement. The supposed triumph of this idea over all competing worldviews in the late 20th century inspired one writer to claim seriously that human history had come to an end. The unfolding of the human story as a continuous striving toward human freedom had now been fulfilled in the neoliberal order of the United States, Western Europe and the growing fraternity of free market countries. All that remained was for the perfected model of free market capitalism as realized in the US to be implemented in the backwaters of the world through the inexorable march of globalization. Today, with global economic recession working its way like a virus through national economies it seems hardly credible that such a view might have been taken seriously. But in truth, it was only those already spellbound by the free market myth that were seduced. For just like the free market they believed in, the prophets and pundits of this Brave New World seemed to inhabit a world of their own devising – a world apart.

No amount of evidence to the contrary could shake their faith. One could point to the growing disparities of wealth at home and abroad. One could cite the declining conditions of work, health, education and social welfare that plagued the very countries that followed the neo liberal prescription. The obscene concentrations of power and money that were the predictable result of privatizing public assets in already impoverished nations were plain to see. None of this mattered. Always, it was dismissed as the harsh medicine that preceded the remaking of economies in the free market mould. As in all ideologies, the effects on actual people were secondary. What mattered was the advancement of the free market model. And if some became very, very wealthy in the process, while others searched through heaps of rubbish for food, this was further evidence of the bounty for all that lay ahead.

The dogged allegiance of the free market faithful bore all the marks of a religious fervour – blind faith, supreme self-confidence, imperviousness to evidence, hostility to opposing views. Economics has, at the opening of the millennium, acquired the traits of a secular religion - a religion perfectly suited to a material age.

Of course, there is a long backstory to this tale. The rise of the free market myth that has so enthralled politicians, policy makers, academics and a great swathe of the public in western democracies owes its origins to the early 18th century and the onset of the Industrial Revolution. Here there arose a school of economic thought deeply influenced by the mechanistic model of the universe embodied in Newtonian physics and utilitarianism – a philosophy in which the individual came to be regarded not as an integral part of a social whole, but as an isolated social atom struggling with impersonal and unchanging market forces.

Utilitarianism, and the repressive doctrine of submission and work that defined Methodism, worked together to forge the reigning ideology of the Industrial Revolution."