Back to the Stone Age IIC
The Price of Free Markets
One point on which Old Right and traditional conservatives could generally agree with Libertarians is the high value they put upon economic freedom and a deep distrust of government regulation. In our free-wheeling discussions, Rothbard and I struck a bargain. Since we agreed on eliminating about 90% of the powers of the Federal government, we would only quarrel over that disputed 10% once we had achieved our impossible dream. Murray, as an anarchist, wanted to privatize roads, bridges, and prisons, while I, though willing to entertain the possibility, thought it not unreasonable for government to have some role in providing for the common good. Since we would be lucky even to slow, much less halt the growth of government power, there was no point in arguing about the things that could never be put on the table.
I have not changed my mind or reneged on the agreement. The problem with the Libertarian position, however, is not that it is impractical or that I find parts of it morally repugnant. The problem is that it is false. They speak in abstract and universal terms about the "free market" as if it were a force of nature like the laws of gravity or thermodynamics. If it were, then we would expect to find free markets, in the classical liberal sense, flourishing everywhere, whereas in fact the varieties of human social life have engendered thousands of systems of economic exchange, but nowhere have we a record of a truly free-market economy.
Advocates of capitalism write as if there were some natural or divine force known as "the market". There is no such thing. There is no MARKET, only markets, and a market is not a metaphysical principle but a place where people exchange goods and services, sometimes but not always for money. Think of the Athenian Agora or a local farmers' market. Another way to look at markets is to describe them as playing fields for exchanges. A market as place or playing field may become institutionalized, as a person or group of persons or a community or government claims ownership and the right to regulate it, just as the city or a business group may own a baseball stadium and a league of team owners agree to a set of rules.
The word "free" is a little ambiguous. Pretending not to understand, I used to observe that in every market, sellers and buyers generally have to pay someone or some entity a tax or a toll or agree to use a currency (and currencies, including precious metals, always include a percentage for the sovereign). Libertarians and classical liberals will usually retort that they don't mean "free" in the sense of "gratis" but in the sense of unconstrained. But markets historically have been subject to any number of constraints: there are market officials who guard against false weights and frauds, rules excluding contraband merchandize or merchants from hostile tribes or countries. Once a market become institutionalized, they can never be entirely free, because the owners and regulators will always seek to maximize their own revenues and those of their friends, relations, allies, and fellow-citizens.
There is no known society without some kind of market. Even communist countries had informal and black markets, and one may have comparatively free markets (hardly ever absolutely free) in societies where even the word capitalism is unknown. When capitalists equate the "free market" with capitalism, they are either lying or hopelessly ignorant.
The free market, like other aspects of human liberty, is an ideal, not a universal reality. It is a little like what Aristotle says about natural justice. Is it, he asks, like fire, which burns the same in Greece and in Persia? Obviously not. It is more like right-handedness, a natural tendency (at least in a majority of men and women) but one that can be over-ridden, to a great extent, through disciplined training. My father was left-handed, but the sisters in his school tied his left hand behind his back and forced him to do everything with his right. I know this is supposed to cause problems, but in his case it made him so ambidexterous that he could win bets on the golf course. He played left-handed and if he got too far ahead, he would offer to use his partner's clubs and swing with his right. He was less good with the right, but good enough.
So there is a human tendency to resent interference in our efforts to provide for necessities, whether by growing food or making exchanges, and there is a tradition in the West—one that goes back to the ancients—to give a great deal of social and economic liberty to citizens. Since the Renaissance, these market freedoms have been increasingly (until the 20th century) taken for granted as desirable.
But the free market is not an ultimate good; it is not even a good in se. It is a mechanism by which people provide for necessities and satisfy desires. If those desires are destructive, than a free market actually does harm. Think of the market as a tool or weapon, a hammer or a gun. They can be used for useful and necessary purposes—building bookshelves or shooting game, but you can also beat someone's brains out with a hammer and commit a series of murders with the gun.
Free markets serve our desires—natural and otherwise—to enhance our material life and increase our stock of things we need or want. The desire to acquire and possess is natural, and it is found in all human societies. But, like the sex drive, it can either be channeled into useful and constructive activities, or it can take a perverse turn in the direction of greed, cupidity, and the pointless and repetitive impulse to acquire more and more and more. I have known some quite rich people who made good use of their wealth and enjoyed a full life. But there are others—I know several but can point to Warren Buffet—who are never satisfied with the enormous wealth they possess but cannot enjoy. People who pass their entire lives making money never learn how to spend it.
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There is no case on record in history of "capitalists" (people with a lot of capital) seeking to practice in a "free market." Several generations of fools have thought when they heard that the Republican party was pro-business, that meant it was for free enterprise. What it actually means and has always meant in an allegiance to State Capitalism---i.e., private ownership and profit with government favours and subsidy.
Glad you're back. I was tempted to think you went back beyond the stone age, which perhaps-?-would have been premature.
"They speak in abstract and universal terms about the "free market" as if it were a force of nature like the laws of gravity or thermodynamics. "
Furthermore, is it just me, or does it also seem that that other capitalist "law", the one dealing with the forces of "supply and demand", is seen as a mandate on a par with the Decalog itself? One gets the feeling that those economic forces are viewed by Capitalists as every bit as inevitable and deterministic as anything Marx or Engels could have posited in their theories of class struggle, obviating all human free will, virtue or self- discipline. But if I claim to be created in God's image, where does that kind of thinking leave me?
Sorry to be a bit slow. We're traveling for Yorkshire to Suffolk. Along the way we spendthrift time I with Derek Turner and are now a bit north of Norwich with Michael McMahon
"The desire to acquire and possess is natural...But...it can either be channeled into useful and constructive activities, or it can take a perverse turn in the direction of greed, cupidity, and the pointless and repetitive impulse to acquire more and more and more."
Dr. Fleming,
Your emphasis of the word 'more' reminds me of the Johnny Rocko character in the movie "Key Largo." Interestingly, the film's plot has Rocko involved in a counterfeit scheme, in a manner privatizing the issue of currency - something I believe libertarians generally would leave to the market as well.
Does history provide an example of any civilization where the issuance of the money supply was left in private hands?
My apologies: it's Rocco. An acting tour de force by Edward G. Robinson, by the way.
Dear Dr. Fleming, take care as you pass through East Anglia. It is one of the Devil's favourite stomping grounds.
I've really enjoyed this series of articles. The common perception among neo-conservatives is that the market place is a highly perfected mechanism that separates the economic "wheat" from the "chaff", the good from the bad. It often doesn't work that way, however.
The Packard Motor Car Company was known for quality and luxury, particularly during the early 1930's. Cadillac and Lincoln were both viewed as being a notch or two beneath Packard back then. In the midst of the depression, however, it was hard to make a go of it in the luxury car market, so Packard did what every good company is supposed to do - it adapted to the times. Paraphrasing, the company's CEO announced that they were going to start making cars for "Methodists instead of Episcopalians". More to the point, they were going to start making Episcopalian cars for Methodists. Cadillac and Lincoln didn't need to adapt in this fashion, as GM and Ford also made "bread and butter" automobiles that were able to keep the two high end makers afloat during tough times.
This transition wasn't kind to Packard - the public felt that the brand had been "tarnished" by the presence of affordable cars in their showrooms. The company survived the depression, and made high quality aircraft engines in WW2, but the post-war economic boom didn't find it's way to Packard. The car buying public was "confused" by what they saw as "ambiguous" market placement of a product. As sales fell, so did the resources needed to be competitive in the industry. In other words, a decline in public perception lead to a decline in quality, rather than the other way around. The Packard Company didn't go out of business because they didn't know how to make good cars.
Prof Wilson, you'll be happy to learn that my local friends agree. Interstingly there is another side. John smith came from Lincolnshire and down here in beautiful Norfolk there are lots of our people such as Thomas Browne.
Oh, yes, to Mr Terenzio: there is no reason you should recall my essay a fe years back "Johhmy Rocco's World" but I'll try to posit soon
Jim2's remarks call into question whether in an industrial economy pride in craftsmanship and quality (and machines *can*, if well-tended, make very high-quality products) will always be tempered by the diabolical forces that the commensurate mass market and consumerist mentality impose on it.
Nevertheless, this issue also makes me wonder how the conservative is supposed to deal with industrialization, since incorporation (read: state regulation) seems impossible to avoid with such large-scale economic activity. Dr. Fleming, will we hear some words on the relationship between conservatism and Luddism or Romanticism?
Moses Nicholas,
I should mention that the Packard story didn't end exactly where I left it. In an attempt to survive the American auto industry purge of the 1950's, Packard purchased Studebaker with the long term intention of creating another GM-type company that might eventually include Hudson and Nash (which had joined forces to create American Motors). As I've read it, Packard had entered into this union rather blindly and foolishly. Studebaker lasted a few more years, while Packard disappeared in short order, so it's not as if they were faultless in their demise. The company's story does demonstrate, however, that the marketplace, despite it's obvious benefits, isn't our country's linear path to economic progress as some would like to think.
Dr. Wilson,
If I correctly recall my British history in the matter of East Anglia, it was among other things - including the devil and his witches - a hotbed of Puritans who made their way to that territory which would become the fabled New England, where again there would be Puritans and witches to be hunted. I am reminded of a quote of words by Jefferson Davis while President of the Confederacy in an address which he gave the legislature of Mississippi in December of 1862:
"Our enemies are a traditionless and a homeless race; from the time of Cromwell to the present moment they have been disturbers of the peace of the world. Gathered together by Cromwell from the bogs and fens of the North of Ireland and of England, they commenced by disturbing the peace of their own country; they disturbed Holland, to which they fled, and they disturbed England on their return. They persecuted Catholics in England, and they hung Quakers and witches in America."
It would appear that East Anglia is no more dangerous than New England.
Mr. Peters,
Thank you for reminding me of this great insight from Jefferson Davis. The description is so true and such an old truth that one can really not ponder it enough. It was the Manichean way before it was the Albigensian way, before it morphed into the Puritan way and it has always been marked by a vituperate hatred for the Christian reply to suffering and death. It is always marked by a belief in perfection, sterility, and either arrogance about some form of knew knowledge ( in our own day it is disguised as a materialist faith or Gnosis, a discovery of knowledge not actuallty acquired, the Origens of all things, the meaning of all things etc.) but in in other ages, it was disguised as a more spiritual type of gnosis or secret. It has always hated the Revelation of Christ and its voice through the Church. I think it is part of that legion of meanings we have for the devil, the great disturber of the peace, the great fallen angel, the perfect one, the purest one, the evil one who fell from the great heights etc..
I have also noticed that it seems always to retreat when its baseless allegations and character assasinations are admitted. It will kill and murder if they are not. Of all the folks they accused or hanged in Salem, only the ones who denied they were witches were hanged, those who admitted the craft or the evil allegations, for whatever reason, almost always lived. It is the same today. So long as one is willing to submit to them, he can get along with them quite well. So long as their originality and innovations are blessed, they allow the most preposterous notions to carry on unchallendged,;but challenge their earthy power or authority and they turn hysterical. Best to leave them alone today in their secular form, as they still believe vengeance is theirs for the distributing.