One of the problems with
living around powerful myths is that you can start to feel personally
responsible when they don't work out. If you don't lose weight,
have better sex, kick your phobia, earn 20% annually in the stock
market, or get the job you want, there are few around to tell
you that such outcomes are pretty normal. Instead, we are surrounded
by hucksters of success and salvation constantly luring us towards
illusory certainty. If we succumb to these chimeras of profit
and prophesy, if we accept the idea that God rightly favors the
successful, the economy justly favors the lucky, and society
fairly favors the glamorous, it can ultimately leave us with
a sense of failure for no greater fault than being a normal human
being. It is hard in such a context to remember that nearly all
people who dial the 900 number beckoning them on the cable screen
continue to find hard times on easy street. And it is hard to
remember a time when humans had other than monetary value.
One of the greatest of
our myths is that a free market cures all ills. One would never
guess listening to the commentator of NPR and PBS, for example,
that if there were, in fact, a free market in this country, they
would be out of work, as would be the conservative economists
and other welfare intellectuals sinecured at public universities.
Thousands of Washington lawyer-lobbyists would be unemployed,
the defense industry would crash, and all the airports would
have to close.
The truth is, as with every
society that has ever existed, our economy is not only a conglomerate,
but a part of, and dependent upon, a huge number of values, rules,
systems, and characteristics that comprise a culture. We can
no more isolate the use of money or labor from these factors
than we could declare society to be henceforth based on free
lunch.
Fortunately, economists
discovered money as an organizing principle rather than, say,
defecation. Otherwise, instead of the GDP, we would have to listen
to Eleanor Clift or George Will pontificating on the latest trends
in the Gross National Movement. Aside from avoiding that mishap,
however, the monomaniacal obsession with the flow of money offers
little in the way of insight. It is -- there is really no better
word -- childish, for it simplifies reality into infantile dichotomies
beyond all logic and evidence.
You need look no further
than the free marketers themselves to see how false the notion
of a free market is. Would a truly free market, for example,
tolerate government officials with as much arbitrary power as
the members of the Federal Reserve? Can one -- as a matter of
logic rather than economics -- love both the Federal Reserve
and a free market? Isn't monetarism really just a form of socialism
that favors capitalists instead of workers?
Certainly, if one thing
has not characterized the last two decades it has been any restraint
on the willingness of government to inject itself into our lives.
An era that has been devoted to the free market has simultaneously
been the most intrusive in our history. In the name of a free
market we have indentured ourselves to a government overflowing
in other regards with contempt for personal liberty. In many
ways, concepts such as the "market economy" and "monetarism"
have actually gilded the lily of power they pretend to oppose.
They provide a comfortable cover for what the government has
really been about.
Peter Jay once noted that
introducing the mother of new capitalism, Margaret Thatcher,
to monetarism was like showing Ghenghis Kahn a map of the world.
Thatcher had a mean and narrow view of life; she didn't even
accept the existence of community, declaring once that "there
is no such thing as society. There are individual men and women,
and there are families." Thatcher wrapped herself in economic
slogans that justified greed not only to accomplish economic
ends but also to deal with gays and abortions and everything
else she didn't like. In her paradigm, the free market and Victorian
tyranny formed a civil union. By the time Reagan, Bush, and Clinton
were through with the concept, they had created a gaping corporate
exemption from common morality and decency. The market not only
offered adequate justification for any act, it had replaced God
as the highest source of law.
Until the Reagan-Bush-Clinton
era it would have been next to impossible to find a culture that
survived for long believing that the unfettered, rapacious flow
of money and goods was the core of human existence. Elsewhere,
to be sure, commerce had looked to bottom lines, but these had
included those established by church, community, government,
and tradition.
Of course it could be argued
that the new capitalists, as single-factor fetishists, were no
worse than Marxists. I know, for example, that I can usually
stop an eruption of Marxist rhetoric for at least a few minutes
by asking the simple question: who will run the restaurants in
utopia? I find few people even on the hard left who wish to eat
and drink the product of collectivism for the rest of their lives.
Marxists and capitalists
share an obsession with money and a taste for clichéd
mantras about it. They also share a willingness to reduce the
complexity of human existence to just a couple of choices. Nonetheless,
it makes more sense to devote our attention to the capitalists
because they are doing far better job of making everyone go along
with them. And making them suffer in the process.
One of the reasons a free
market is so hard to come by is because it has never existed.
In modern times the drug trade comes closer in some respects
than more legal activities, but even there monopolies and murders
interrupt the flow of capital goods. The form of capitalism known
as "free trade" doesn't even come close, else one wouldn't
need 2,000-page agreements and the World Trade Organization.
And we wouldn't have laws against usury and on behalf of workplace
safety.
Besides, culture keeps
interfering with the economists' theories. A World Bank official
once noticed that women in a certain third-world village had
to row daily across a broad lake in order to reach the market.
Using the efficient analysis of first-world MBAs, it was determined
that what these third-world women needed were some outboard motors.
And so motors were bought
and distributed. Within a month or two, however, every one of
them had fallen overboard. At which point, the bank realized
an important non-economic truth: the women actually liked rowing
together across the lake, finding it a convivial communal activity.
The idea that such factors
as social mores or religious values take precedence over efficient
cash flow did not really seem odd until the 1980s. The term capitalism
wasn't even invented until the middle of the 19th century and
the early robber barons carried out their business without a
manic need to justify their addictions publicly. Part of the
earlier privilege of wealth was that no one had to know what
you did with it. And it wasn't until the 1980s that the proselytizing
of greed became so ubiquitous that even otherwise humble human
beings began using words in ordinary conversation like entrepreneur,
bottom-line, strategic vision, and market-driven.
Much of this language is
not that of management, but of marketing. It is almost as if
the ghost of Willy Loman had risen from the dead to exercise
some supernatural vengeance on the nation. Not only is the salesman-hustler
fully alive; he is all of us everywhere all the time -- from
the several thousand advertising messages we confront daily;
to the hour each day we spend reading, hearing, or viewing them;
to the 77 distinct images in one 60-second GE commercial; to
the massive shift in the work day during which the production
of propaganda has often replaced the production of products.
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But haven't we been repeatedly
told that it all works out for the better in the end? Well, that
isn't what Adam Smith thought. The patron saint of capitalism
said in Wealth of Nations that "consumption is the sole
end and purpose of all production; and the interest of the producer
ought to be attended to only so far as it may be necessary for
promoting that of the consumers . . . In the mercantile system
the interest of the consumer is almost constantly sacrificed
to that of the producer; and it seems to consider production,
and not consumption, as the ultimate end and object of all industry
and commerce."
The state restraints and
protectionism that bothered Smith were those affecting small
business. As David Korten notes, today's economic system "bears
far greater resemblance to the monopolistic market system [Smith]
condemned than it does to the theoretical competitive market
system he hypothesized:
Adam Smith's ideal was
a market comprised solely of small buyers and sellers, each too
small to influence the market price of the commodities exchanged.
Thus, Smith's concept of a competitive market was one in which
there were no large business with monopolistic market powers
. . . Smith was opposed to any kind of monopoly power . . . Adam
Smith also assumed that investors have a natural preference for
selling close to home. In other words, Adam Smith assumed that
capital would be rooted in a particular place.
Neither can historical
justification for the boomer barons be found in the history of
our own country, though the "market economy" is often
mentioned as though imbedded in the Constitution. It is true
that the American Revolution was an economic as well as a political
victory, triumphing over a system in which only the nobility
and a few large merchants held economic power. But the definition
of economic freedom at the time was quite different from that
used by today's corporate chief executive seeking yet another
tax break or a bigger bonus. Early free Americans widely believed
that one was entitled to the "fruits of your labor"
and no more. They opposed the concentration of property because
it would allow property owners to seize political power.
There was already more
than a little experience with this. Eric Foner points out that
by 1770,
profits derived from slavery
furnished up to a third of Britain's capital formation, and slave-grown
products had became ubiquitous in England, emblems of a rising
bourgeoisie and common even in the working class . . . Now, as
then, commerce unrestrained by social control ends up stripping
economic relations of all moral content, while the drive toward
fulfilling market demands at the lowest possible price created
widespread indifference to the conditions under which marketable
goods are produced. Today's Chinatown sweatshops and Third World
child labor factories are the functional equivalents of colonial
slavery in that the demands of the consumer and the profit drive
of the entrepreneur overwhelm the rights of those whose labor
actually produces the salable commodity.
In America, by the time
of the Civil War, slaves were the country's most valuable capital
asset. In a nation with an annual federal budget of only $50
million, slaves had a market value of $2 billion, or more than
twice that of all the country's railroads.
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Further, the Constitution
was written for non-slave Americans and not for corporations.
Free enterprise was not mentioned in it. During the entire American
colonial period only about a half dozen business corporations
were chartered. In the first 20 years after the Revolution only
about 150 corporations were chartered. Each of these charters
required that the corporation be in the public interest. Jefferson
to the end opposed liberal grants of corporate charters and argued
that states should be allowed to intervene in corporate matters
or take back a charter if necessary.
These early Americans were,
however, deeply commercial. One reason for this was that commercial
activity allowed you to break free of the social and economic
restrictions of a British economy based on nobility and monopoly.
Americans didn't want to work for such a system; they wanted
to work for themselves. And they weren't concerned about competition
because there wasn't much.
With the pressure for more
commerce, and indications that corporate grants were becoming
a form of patronage, states began passing free incorporation
laws and before long Massachusetts had thirty times as many corporations
as there were in all of Europe.
Still it wasn't until after
the Civil War that economic conditions turned sharply in favor
of the large corporation. These corporations, says historian
James Huston:
. . . killed the republican
theory of the distribution of wealth and probably ended whatever
was left of the political theory of republicanism as well. .
. .[The] corporation brought about a new form of dependency.
Instead of industry, frugality, and initiatives producing fruits,
underlings in the corporate hierarchy had to be aware of style,
manners, office politics, and choice of patrons -- very reminiscent
of the Old Whig corruption in England at the time of the revolution
-- what is today called "corporate culture."
Concludes Huston:
The rise of big business
generated the most important transformation of American life
that North America has ever experienced.
It truly represented a
counter-coup against the values of the American Revolution. It
dramatically undermined both political and economic freedom,
corrupted politicians and ransacked national assets. It replaced
the feudalism of the monarchy with the feudalism of the corporation.
Perhaps the most important
event occurred 110 years after the launching of the Revolution.
In 1886, the Supreme Court ruled that a corporation was a person
under the 14th Amendment and entitled to such constitutional
protections as those of free speech.
With this fiction, the
court helped to boost the corporate takeover of America. It helped
personalize the corporation and depersonalize the individual,
giving the former moral standing without moral responsibility,
and making the human soul subservient to a soulless creation
of the law.
As Morton Mintz pointed
out, this case ignored the fact that "the only 'person'
Congress had in mind when it adopted the 14th Amendment in 1866
was the newly freed slave." Justice Black observed in the
1930s that in the first fifty years following the adoption of
the 14th Amendment, less than one-half of one percent of Supreme
Court cases "invoked it in protection of the Negro race,
and more than 50 percent asked that its benefits be extended
to corporations." During this same period the courts moved
to limit democratic power in other ways as well. For example,
the Supreme Court restricted the common law right of juries to
nullify a wrongful law; other courts erected barriers against
third parties, such as banning fusion slates.
It was during this time
that the myth of competitive virtue sprouted, helping to justify
the rapaciousness of American business. It was a time when J.P.
Morgan would come to own half the railroad mileage in the country
-- the same J. P. Morgan who got his start during the Civil War
buying defective rifles for $3.50 each from an army arsenal and
then selling them to a general in the field for $22 apiece. What
we now proudly call the "American free market system,"
was initially propelled by slavery and flowered in an era of
enormous bribes, massive legislative corruption, and great anti-competitive
cartels. It was a time when the government, in a precursor to
modern industrial policy, gave two railroad companies 21 million
acres of free land.
It was also the time that
American workers, who had once used commerce to free themselves
from the economic and social straitjacket of the monarchy, found
themselves servants of a new rigid hierarchy, that of the modern
corporation.
As persons, corporations
could inject themselves fully into civic life (such as influencing
campaigns and politicians) while still repelling public interference
in their own affairs. They could construct barriers on civil
liberties grounds against efforts to control their greed. Many
of the rights that corporations secured by law came even as blacks
and women were still struggling towards full enfranchisement.
The political movement
of populism did battle with the new corporations but lost, as
did the socialists who followed. Save during the Depression,
generations of Americans would come to accept the myth of the
free markets and free enterprise.
They did so in part because
these companies provided higher incomes and ever-increasing jobs.
But in the last quarter of the 20th century, these two conditions
began to disappear. No small part of today's political tension
stems from the rising power of big corporations even as their
social and economic contribution to America declines.