The United Nations’ Food and Agricultural Organization, through its Food Price Index, tells us that “the wholesale price of basic foods” jumped “to a record high in January.” Observing the effects of “increasing demand in emerging economies,” BBC News reports that World Bank president Robert Zoellick entreats “world leaders” to confront the food quandary.
Since, as the BBC story points out, political turbulence in Northern Africa and in the Middle East has been imputed largely to “the high price of food,” it would seem that on some level governments have an interest in mitigating prices. And while it’s certainly true that the pursuits of the state are the predominant influence on and root of the prices we actually contend with today, it is not for a paucity of state interferences that consumers are suffering.
Though it conflicts sharply with what the modest citizen is indoctrinated to believe about the state’s correspondence with economic activity, government “leaders” aren’tt scrupulously crunching the numbers to cushion the consumer from the harsh fickleness of the free market. Contrary to the myth that bureaucrats and politicians must intervene constantly just to stave off all-out economic calamity, they are, in reality, entirely responsible for the high prices they are entrusted to “correct.”
The state, the institution that Gustave de Molinari called the “monopoly [that] has engendered all other monopolies,” is the nerve center for elite interests. As such, its primary motivation, even without focused or streamlined premeditation, is to confine valuable resources like food commodities with the aim of creating occasions for completely unwarranted, extra profit. Quite the opposite of a glitch or complication that the supposedly commonsensical state is solicited to remedy, high prices are indeed the object of the game.
In explaining the monopolized economy, Murray Rothbard noted that cartels squander goods, engaging in economic “destruction” in order to manhandle price and stiff consumers. “The waste,” instructed Rothbard, “lies in the excessive production of [some state-anointed goods] at the expense of other goods that could have been produced” (emphasis in original). He warned of the economic volatility inherent in supplanting the “evenly rotating economy” of free and nonviolent exchange with the cartel practice of “restricting production” to serve elite interests.
The political class, by caching away everything of value without ever owning it in any legitimate way, is allowed to levy taxes that we never see, penalties embedded in the high prices we pay. Many of the scarcities that provide the basis of the high tolls exacted on us are not the result of any kind of market process, but are shortages created by the state. As Kevin Carson has frequently argued, our added costs — the spoils of state capitalism — result from “the State’s intervention to create market entry barriers.”
The inefficiencies and rents explained by Rothbard and Carson are not congenital features of freed markets; they are attributes instead of an economic system in which the state, rather than the unimpeded judgment of individuals, picks the winners through subsidies and a regulatory regime that flattens anything but the most ponderous economic arrangements. Among the central contentions of free market anarchism is that, in a true free market, labor is valuable enough to enable the common man to manage quite well without the kind of slogging required to line the elites’ pockets today.
In his dystopian classic Nineteen Eighty-Four, George Orwell wrote that “the economic … basis for a hierarchical society” is “to waste the surplus labor of the world.” And it’s that waste that the lucre of ruling class is built upon, that is reflected in, for instance, the U.S. government’s fortification of Big Agribusiness.
By forming an economy where neither price nor levels of production are tied to real, market needs, the state has created a needless struggle just to subsist. The way out is repudiation of the state’s arbitrary power to allow monopolists to divvy up our sustenance. Freed markets return that power to communities of individuals dealing with each other within voluntary agreements, the only legitimate way to allocate scarce resources.
Citations to this article:
- David D'Amato, The Very Literal “Conquest of Bread”, Seoul, Republic of Korea JoonAng Ilbo, 02/11/11
- David D'Amato, The Very Literal “Conquest of Bread”, Seoul, Republic of Korea Times, 02/09/11
I'm pretty sure the evenly rotating economy is not what you think it is. It isn't a "free" economy as opposed to a state-controlled one. The evenly rotating economy is a fictional construct used by economists to separate single factors that could not be isolated in the reality of economics from the noise of other factors. It's like a mental laboratory for economists.
Bleicke, I understand the use of the evenly-rotating economy as a metaphor for isolating one phenomenon away from other changes taking place around it; I was, perhaps unclearly, trying to employ that metaphor in another way, for the balance and order of real free markets.
You might be able to refresh my memory, though. Was it Mises himself who coined the phrase, or did it predate him?
Since it isn’t actually that valuable in general, even under a fully freed market, and acknowledging that is certainly consistent with free market anarchism, that definitely isn’t one of its central contentions.
The true situation is much subtler. Under the extreme of hitting Malthusian constraints, nothing can be done to meet everybody’s needs. At the other extreme where there are plentiful resources (“land”), everybody’s needs can indeed be met by applying their labour to those resources. But in between, e.g. under current availability of resources and with current levels of transformed resources (“capital”), labour alone isn’t necessarily enough even with freed markets (think “economic rents”); people might need the return on capital as well as on their own labour. Free market anarchism would let them have that, from owning both those readily available resources and those transformed resources – but they would still not be making a go of it on the back of their own labour alone. People working under those arrangements would not necessarily be earning a living wage and their labour would simply not be that valuable – but they would be earning a top up wage, maybe self employed, while getting the rest of what they needed from returns on capital – which they would own.
So, no, labour wouldn’t be that valuable – and, since it wouldn’t matter whether it was or not, it’s hardly central anyway.
I'm pretty sure it predates Mises, as he never claims it as his own invention in Human Action. He uses it as if mainstream economists (mostly mathematical economists) have been using it all along. In fact he always writes "the imaginary construction of the evenly rotating economy" to emphasize the point: It's an imagination, not real.
I think you misunderstood my point. Of course I don't think that in a freed market anyone would be able to "mak[e] a go of it on the back of their labour alone." I meant only that labour would be compensated more appropriately under a freed market's price mechanisms, and that — together with the other facets of production that you note (e.g, "transformed resources") — this would bring about a condition of economic justice for labor absent from today's state capitalism.
My recent post Contaminants of the Corporate State
And, call me crazy, but to my mind there is scarcely a claim more central to historical market anarchism than the one that the statist economy allows companies to buy labor from much less than it's actually worth. In any event, if that isn't a central contention of market anarchism, then it's no less a central feature of my idea of it.
My recent post Contaminants of the Corporate State