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.
o
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.
o
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.
TO
WRITE THE AUTHOR
TO ORDER 'WHY
BOTHER?'
