Politicians and talking heads, of both the mainstream liberal and conservative persuasions, commonly refer to this as “our free market system,” or maybe “free enterprise.”
But we haven’t had anything even remotely resembling a free market for over 150 years. (For that matter we didn’t have one before, what with Enclosures, the Combination Law, mercantilism, slavery and colonialism.) Since the mid-19th century, what we’ve had is massive collusion between big government and big business. The corporate economy was created almost whole-cloth through a monstrous act of top-down government intervention, with the help of such things as the railroad land grants and other infrastructure subsidies, the exchange and pooling of patents, tariffs, regulatory cartels, and union-busting by uniformed thugs. The New Deal was just corporatist icing on the cake.
What we have is not a free enterprise system, but an interlocking directorate of giant, centralized government and corporate bureaucracies. The same personnel circulate, through a revolving door system, between senior corporate management and government political appointees. The same person who is now Assistant Vice President for Such-and-Such at So-and-So Corp LLC, is apt in five years to be Deputy Undersecretary for the Other Thing. And vice versa, of course. It makes about as much sense to treat a Fortune 500 corporation as a “private business” as it makes to treat a count in fourteenth-century France as a private landlord.
Within the large corporation, management bears more resemblance to the Soviet Nomenklatura than to free market entrepreneurs. They justify their power in the name of shareholder value, but in fact shareholders exercise almost no control over corporate management. Proxy fights almost never work, and corporations are typically controlled by inside directors. After a brief period of hostile takeovers in the ’80s, management quickly acted to restore insider control and nullify the threat of such attacks through measures like poison pills and greenmail; today, most takeovers are friendly and carried out by the management of both companies in collusion. If some seats on the board are occupied by institutional investors, it’s more accurate to describe it as a coalition between interlocking corporations. Bond issues are reserved mainly for financing mergers and acquisitions, and most new investment is financed by retained earnings, so the external control exerted by the capital markets is largely mythical.
American corporate management claims to represent shareholders as a legitimizing ideology, just as the Soviet bureaucracy claimed to represent the workers or the people — meanwhile having dachas, private cars, and shopping privileges in the luxury department stores reserved for Party members. In both cases, though, what you really had (and have) is a self-perpetuating oligarchy in control of a free-floating mass of unowned capital.
The typical Fortune 500 CEO invests money that she didn’t contribute from her own past savings, but that lacks any external owner capable of exercising any genuine control over it. Corporate management spends other people’s money, amounting to de facto owners of it. Shareholders are conventionally regarded as residual claimants, because in legal theory they have a claim on all revenue that’s left over after after all contractual claims are paid. But in the real world, it makes more sense to say that the shareholder is a contractual claimant with even fewer rights than a bondholder, and that management is the real residual claimant. A shareholder is entitled only to whatever dividend management sees fit to issue, if any. But senior management is entitled to whatever salaries and bonuses they can get, through mutual logrolling with the board of directors.
A lot of establishment libertarians, when they call for a “free market,” really seem to mean the present corporatist system without the welfare or the health and safety regulations — a world owned by Wal-Mart and Halliburton.
But when you hear a call for a freed market by someone at the Center for a Stateless Society, or anyone else on the free market left, please be aware that we mean something completely different by it. What we want is a society in which corporations are deprived of all the subsidies, privileges, protections, and artificial property rights they currently enjoy. What we want is a society in which all market activity consists of free exchange between equals, without anyone paying monopoly rents to the privileged and powerful. What we want is a society in which all functions of the state are replaced by voluntary association, whether by market transactions, mutual aid associations, or gift economies.
In short, the free markets we talk about have nothing to do with those of Dick Armey and FreedomWorks, the AEI, or the Heritage Foundation. We’re not talking about socialism for the rich and a Dickensian work house for everyone else.
When we say we believe in free enterprise, we mean it.
Citations to this article:
- Kevin Carson, Back in the USSA, Des Moines, Iowa Free Press, 12/28/10
- Kevin Carson, America’s not so “free market” leads to capitalistocracy, The Canadian, 12/26/10
I'd love to see the term "Free Market Left" become used more widely. A quick google search turns up few results, about two of which are your own articles, and the rest being things like "Free market left rice growers behind".
Given that the corporate supporting vulgar libertarians are currently fighting with the even more vulgar conservatives to rights to the term "free market", how are we best to distinguish ourselves from what may broadly be called the libertarian right?
I have considered registering freemarketleft.co.uk- hoping to use it as a tool for getting a left-libertarian voice out there. Whether or not it's a worthwhile thing to do, I'm not sure- but I do think those of use on the lib left need to work harder at distinguishing ourselves from the Adam Smith Institutes and AEIs of the world.
I recently had a debate about Individualist Anarchism on a forum I frequent. I would say that the closest we've seen to a truly free market system is the USA before the Civil War. It was, of course, marred by the Slaveholders of the south and the factories in New England, but most of the (male) population was self-employed, and the Fed hadn't passed the Homestead Acts yet.
There were huge fights over "internal improvements" mostly about transportation, and also about privileges for business. And the people tended to win!
Then the Civil War happened and industry concentrated as the State spend it's stolen tax money on a few specific firms letting them get huge, along with Lincoln managing to forcing the Whig Railroad agenda through.
I recently had a debate about Individualist Anarchism on a forum I frequent. I would say that the closest we've seen to a truly free market system is the USA before the Civil War. It was, of course, marred by the Slaveholders of the south and the factories in New England, but most of the (male) population was self-employed, and the Fed hadn't passed the Homestead Acts yet.
Bravo! Another great succinct statement.
Great, great stuff, Mr. Carson — one of my favorites! I tried to cover a lot of the same ground (nowhere near as articulately) in my comment on the strikes in Greece. Keep it up!
My recent post The USSR Died- But the State Survived
Right on!
Those are pretty big exceptions. What about protectionism and patents? There also also banking regulation and land speculation rooted in privilege.
My recent post Well- Mr Moore
Oh, it wasn't a truly free market, just the closest we've had to one. It approximated, but did not reach, the ideal.
Still better than what we have now from a perspective of liberty and independence though.
a self-perpetuating oligarchy in control of a free-floating mass of unowned capital
When I read that I couldn't help but see a dirt farmer named Dennis (I'm 37, I'm not old) talking about working class exploitation
What most people don't realize (or possibly don't care to know) is that shares of common stock don't really impart any ownership of a corporation. That's nice whitewashing, but in the end is really only marketing to get people to buy-in to the whole idea of "public corporations". A share of common stock is an equity share. Basically it is a claim against the corp's equity – which doesn't exist. It's an accounting concept; equity is quite literally nothing more than the difference between assets and liabilities. It's what makes the balance sheet balance. Equity doesn't come into physical existence until the company is liquidated – and then there isn't likely to be any equity left for the shareholders to claim since the corp probably wouldn't have folded if it was solvent.
The shares themselves are commoditized, easily traded independent of actual company financial data (as the dot com bubble clearly demonstrated). The only value they have is from the supply/demand function of the stock markets; they have no intrinsic value and really no organic link to the corporation they bear the name of. If a corp reported record profits, but no one bought or sold a single share of the corp's stock (everyone held on to what they had), the price wouldn't change. Likewise if the corp reported record losses. Now, that's not likely to ever happen, but for me it helped illustrate the irrationality of the whole thing.
With Wikileaks and the recent FCC call to perhaps “regulate” the internet, I thought about the telecomm corporations (telcos), and the “subsidies, privileges, protections, and artificial property rights” they may have enjoyed, if any, to get where they are. In the coming debate, some people are going to point to the telcos as "taking risks" and "investing billions," so hands off etc. Is the FCC needed to stop potential abuses like fast and slow lanes, or worse road blocks and ”no send lists”? Would there be tiers according to what you pay, and will the FCC really try to stop this and other abuses? Will this be a way for the governmess to expand the rapidly growing domestic spying trend (see: http://www.kcrw.com/news/programs/tp/tp101223expl…
I am sure I will be corrected if I have this wrong: Don’t "We" pay (and paid) for the infrastructure (and the improvements) of the telcos. We pay/paid for services, but obviously in amounts over what they should be if the telcos have money left to invest etc…are they are using 'our money' and in a way we own the telcos? Further, taxes subsidized a great deal of the connectivity (remember Bell?), much of it with USF subsidies. Is this yet one more example of ‘privatizing profits and socializing costs’– not a bailout, but a hand out? I'm ok with paying, my concern is that we keep the net "free" and we don't get shafted for the investments we all make/made. Yet I pay for war and the growing police state as well, like it or not. If I were truly free couldn’t I pick and choose where my money would go, if it had to “go” from my pocket into another?
As an aside, yet another strike against anarchists occurred just a few hours ago. Supposedly two embassy mail bombs are being linked to “anarchists.” The commentary I heard about “what anarchists are…” was not pretty– as if it ever is.
Great article. . . but I don't think that one can claim the principles outlined as belonging to the "free market left" any more than they belong to the "free market right". True, there are those libertarians (like myself) who came in to the fold from the conservative right, and as such, many have not followed the market-anarchy thought process to it's logical ends. . . nevertheless, one can't truly claim the title of libertarian with any degree of intellect unless one acknowledges that in a truly free market, not only is the regulatory state dismantled, but the corporatocracy is as well. . . .and that the Walmarts and Haliburtons are unlikely to reemerge from a market controlled by the consumer. Increasing awareness of how the corporate bureaucracy operates is important, but I think there's a lack of commentary and study, on the part of the libertarian right and left, as to the order of operations in successfully bringing down the corporatocracy. . . . I believe that it must start with dismantling government, not in attacking the front businesses of the thieves. I happen to like shopping at Walmart, but have no delusions as to the fact that it would not exist in it's current form without the subsidies, patents, and privileges of the state. On the other hand, the statist-left provide false, or at best, inconsistent complaints as to how Walmart harms us (citing such things as the outsourcing of product manufacture, abusive labor practices, low employee wages and benefits, and even rampant racism), when in reality these things (the ones that exist at all) are symptoms of the regulatory state, and not the inevitable result of corporate greed left unchecked by a government. I doubt that the author's intention was to be divisive of the libertarian-right and libertarian-left; but there should be more acknowledgment that such doesn't really exist. . . . it's more like libertarian and libertarian-lite.