Market and State

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Discussion

How they are intertwined

CRISPIN SARTWELL:

"The familiar notion is that when you reduce the power of the state, you increase the power of capital, and vice versa. To put it mildly, this claim is non-empirical. The rise of capital, its consolidation into a few hands, and the enduring structures of monopoly or gigantism to which it gives rise are inconceivable without the state.

Michel Beaud, in his History of Capitalism, is one of many historians who have found the state connection criterial: "What one in any case should remember is the importance of the state in the birth, the first beginnings of capitalism .... The primary transforming factor is the state. National unity, currency standardization, juridical coherence, military strength and the beginnings of a national economy: all these were created and developed by the state, or with the state as organizing principle."

Capital accumulations on the vast scales we see today are not possible in the absence of pervasive domestic policing and the ability to project military power. The British colonial economy—one capitalist apogee—would have been impossible without a huge state. The American robber-baron period is often held to have been to have led to hyper-concentration of wealth in a few private hands and to have been constrained ultimately by the state. If you look at the actual procedures employed by a Vanderbilt, a Rockefeller, a Carnegie, you see that they depended fundamentally on state sponsorship and state violence, which such men were in a position to command in virtue of their wealth. This underwent various adjustments in the so-called Progressive Era, but though specific cartels and fortunes were compromised, the consolidation in the long run continued, as the government became the central bank (more or less merging with J.P. Morgan) and the modern bureaucratic corporation emerged.

Consider by way of comparison the Soviet system. Nationalizing industry and imposing five-year plans didn’t make society more equal; it just made the Communist Party a committee of capitalists. Communist totalitarianism was a particular and particularly extreme form of the merger of state and capital, but that merger is everywhere. If one thought a bit, for example, about the way that government energy policies and private energy concerns are interlocked, one would see less and less sense of distinction. Regulators and corporate lobbyists and congressional staffers are all the same people.

The idea that free markets are historically distinguished from large, powerful states is an ahistorical ideology shared by the capitalist right and the communist left. We might think of the left-right spectrum as a single ideology rather than a taxonomy of opposites. Thus, the left/right or Democrat/Republican split—which turns American politics into a hyper-repetitive, mechanical set of partisan bromides about free markets versus government programs with egalitarian results—depends on a historical mistake.

The left-right spectrum is often characterized in terms of two extreme poles. One way to see that this is incoherent is that these poles can be defined in mutually incompatible ways. It’s awfully strange that Rand Paul and John McCain belong to the same political party and are generally held to be on the same end of the political spectrum. I'd say they each disagree more profoundly and substantially with the other than either disagrees with Barack Obama, for example. Some of the most historically salient “right-wing” movements are monarchism, fascism, fundamentalism, and libertarianism, which have nothing in common except that they all have reasons to oppose Marxist communism, and vice versa. Yet they also all have similar reasons to oppose one another. Toss in David Brooks Burkeans, security-state neocons, and so on, and you have a miscellany of unrelated positions." (http://www.theatlantic.com/politics/archive/2014/06/the-left-right-political-spectrum-is-bogus/373139/)