Free Enterprise vs Corporatism
This
article began as a comment on Paul Craig Roberts' Jan.27 OpEd News article,
"How Ron Paul Could Win". Jeff
Rock replied that "Ron Paul's economic policies are draconian", as Mr. Paul
favors a libertarian laissez faire economic policy that, theoretically, allows
"the free market" to do its virtuous work. But Jeff, and I, observe that the conditions under which a
free market can function no longer exist in the real world, so laissez faire in
fact generates corporatism and plutocracy, not individual liberty. Market freedom may have motivated
primitive capitalism's struggles against landed aristocracy, but mature
capitalism is a privately governed oligarchic beast not much different from the
feudalism it overthrew.
Adam
Smith's idealized free market was made up of very large numbers of small
businesses, small tradespeople and craftsmen and merchants and farmers, cottage
industries, and a newly emerging class of small scale (by today's standards)
factories. Small scale is critical to the viability of "free"
markets. If one participant fails, he is too small to affect the industry
in which he produces. Other participants immediately replace his market
share. The economy keeps going, and the failed entrepreneur can try try again,
because his personal failure did not bring down the economy, and there is still
a fully functioning economy for him to go back to work in.
In
today's world we have transnational corporations that control more financial
and economic resources than all but the largest nations. We have private
megabankers issuing all the money as loans, with most of the people (and our
governments) in debt to the bankers. If one of these corporate giants fails,
the economy as a whole is wounded. These participants are WAY too big to
be "free market" players whose personal success or failure has no
noticeable effect on the markets in which they operate. Too big to fail is too big for a "free"
market.
"Corporates"
are "collectives" of large numbers of people who all cooperate towards a single
purpose. A "nation" is also a
corporate body, whose individual members accept "government", towards achieving
the corporate purposes of the whole nation. Adam Smith's free market was populated by individual human
beings who personally feel and are "disciplined by" the consequences of their
actions, not by enormous corporate collectives. Smith's "Wealth of Nations" was written explicitly AGAINST
the corporate-government collusion of his era called "mercantilism", which
Smith correctly saw as politically empowering some market participants at the
expense of the others, to the detriment of the nation as a whole.
In
a collective the rewards and costs are necessarily distributed by human political
decisions, because the governors of the collective are the people who directly allocate
the work and receive the revenues and distribute these costs and benefits to
the members. The political or
corporation governors might try to distribute the rewards and costs according
to somebody's idea of what the various members of the collective "deserve", but
this kind of highly corruptible human evaluation is supposed to be ELIMINATED
in a free market where "the invisible hand" makes all these allocations.
And
as everybody knows by now after seeing bankrupt Wall St bankers once again paying
themselves $megamillion "bonuses", political allocations are almost always
corrupted by self-serving interests.
The closer you are to the source of the money, the greater portion of it
you take for yourself. Bill Black
calls this a "criminogenic environment" that virtually guarantees there will be
accounting control fraud to disguise looting of the company by its managers and
other employees who are in on the fix.
In
a real free market the small businesses' customers directly pay the owners by
buying their wares. A customer
"allocates" his spending to whichever individual business he happens to
prefer. Hundreds, thousands,
millions of individual consumers, acting independently of each other,
effectively determine which businesses flourish and which flounder and
fail.
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