In an article in Tikkun last year, Rabbi Michael Lerner argued that “[f]rom the standpoint of the large corporate interests, nothing could be better than to de-fund government or dramatically downsize it, because then it can’t constrain their economic power.” (“After the Health Care Legislation,” April 5, 2010).
And now Corey Robin, writing in The Nation, challenges the claim — which he dismissively calls a “right-wing idea” — that “the market equals freedom and government is the threat to freedom” (“Reclaiming the Politics of Freedom,” April 6). What’s more, he equates a belief in free markets to a prescription to “let the men of money decide.” In response, Robinson proposes a liberal counter-framing: “change the argument from the abstractions of the free market to the very real power of the businessman.” For example: “Without a strong government hand in the economy, men and women are at the mercy of their employer….”
These writers have things exactly backward. All power that is wielded by corporate interests and employers is exercised with the help of government.
Lerner and Robin take a decidedly naive liberal view of the historic role of government in the corporate economy. Their real enemy is not so much the Right as the genuine Left. Historically, Marx’s view of the state as “executive committee of the ruling class” is much closer to the truth than the liberal view of it as a “countervailing power.”
As New Left historian Gabriel Kolko argued in The Triumph of Conservatism, the main political force behind the Progressive Era regulatory agenda was big business. The corporate economy, even before Progressive regulatory legislation, was virtually a creature of the state. The economic model of large national manufacturers serving a continent-sized market was the direct result of land grants and other direct subsidies to the railroad system, that hammered the country together into a single national market. The pooling and exchange of patents — government-enforced monopolies — was a powerful tool for the leading firms in an industry to cartelize their market. And the industrial tariff was called — with good reason — “the Mother of Cartels.”
Even against this post-Civil War background, the big manufacturers were still unable to maintain stable oligopolies. Purely private attempts at creating trusts, at the turn of the century, were failures. Overleveraged and unstable, big trusts like the Standard Oil cartel immediately began losing market share to smaller, more efficient and less indebted companies. Hence, according to Kolko, big business turned to the state to create stable regulatory cartels. Although the Clayton Act is conventionally referred to as antitrust legislation, according to Kolko it was its unfair competition provisions — which outlawed destabilizing price wars — that first made possible stable oligopoly markets. FTC regulations that put it into execution, by prohibiting below-cost pricing as an unfair trade practice, acted as a structural support for administered pricing based on cost-plus markups.
FDR may have attacked an “economic aristocracy” in his political speeches, as Robin says. But when it came to concrete economic policy, economic barons like GE’s Gerard Swope and the Business Advisory Council were firmly in control. The National Industrial Recovery Act, far from being a left-wing social democratic constraint on corporate power, would have created a corporatist economy on the fascist model. The NIRA authorized boards controlled by the big players in each industry to restrict output and establish prices at whatever level was necessary to guarantee a “reasonable profit.” So the big industrial corporations would have operated with the cost-maximizing incentives of a public utility or Pentagon contractor, on the same cost-plus accounting model that gave us the infamous $600 toilet seat.
Today so-called “intellectual property” plays the same protectionist role for global corporations that the tariff did for the old national industrial giants. Like the tariff, IP is a restriction on who is allowed to sell some good in a market, which enables the “owner” to mark up prices to far above free market levels. The dominant corporate players in the global economy are in industries that rely heavily on IP monopolies for their business model: entertainment, software, biotech, pharma and electronics.
It’s big business interests, contrary to what Robin says, that see the market as a source of constraint. He’s entirely correct that “conservatives fear above all else… any challenge to that power, any inversion of the obligations of deference and command, any extension of freedom that would curtail their own.” But the market — the genuine, freed market, without subsidies, without anti-competitive protections, without rents on state-enforced artificial scarcities — is exactly the challenge to corporate power that big business interests fear.
As former ADM chief Dwayne Andreas put it: “The competitor is our friend. The customer is our enemy.” And as he also helpfully explained, “There isn’t a free market in anything, anywhere in the world.”
Citations to this article:
- Kevin Carson, Knowing the real enemy, Dhaka, Bangladesh New Nation, 05/04/11
- Kevin Carson, Knowing the Real Enemy, Sagittarius News & Style Magazine, 04/25/11
Dominick T. Armentano goes into great detail on how antitrust legislation has actually served an opposite function from its stated purpose, namely to cartelize industries through use of the "unfair competition" and other clauses. This analysis seems to agree with yours. http://mises.org/books/antitrust.pdf
My recent post Assuming the Point That Must be Proven
Thanks a lot, Michael. I’ll check out the reference.
Thanks a lot for the reference, Michael. I'll check it out.
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Gosh their abstractions are so vague, that how do you even debate it really? Their arguments are not intellectually rigorous at all, in fact they are intellectual un-serious.
There are definitely times when those arguing for free markets are arguing to "let the money decide". I have no doubt that that is the motive of some of those who use that rhetoric.
On the other hand, and the other hand is huge: the entire world economy would have collapsed without Federal Reserve bailouts! (and these bailouts went overwhelming to large companies). A worldview that can make the same arguments it would have 10 years ago about government and corporate interests always being opposed and pretend that a free market economic system actually exists, while ignoring we live in a world post TARP, post trillions of dollars in federal reserve float to prop up the economic system which was probably used to play with the spread on Treasuries, post an economic system at least in the U.S. that is being almost entirely sustained via quantitative easing, post accounting rules that help them hide the dishonesty, is what exactly? A worldview for Rip Van Winkles that slept through he last decade? When every single individual nobody American who got enraged over TARP saw the world we really live in and the man behind the curtain.
Stuff like this is also hilarious: "For example: “Without a strong government hand in the economy, men and women are at the mercy of their employer….”
Gosh, I'm glad that is no longer true! Oh wait, reality check, individuals are STILL at the mercy of their employers. Have these people never worked? Granted there may be some health and safety checks which are the crutches that I don't quibble with. But a few protections doesn't change the fundamental relations within the economic system!!!
My pleasure, and you're welcome. I've really enjoyed your work.
My recent post Assuming the Point That Must be Proven
Great post as always Kevin, but in the interest of intellectual honesty it might be pertinent to mention that the toilet *seats* you mentioned above actually only cost under ten dollars, (nine-something, IIRC). The $640 was for the specially molded plastic *shrouds* around each of the 54 toilet assemblies (including the seats) on an out-of-production 1960s antisubmarine aircraft. Given that the manufacturers had to retool their production line and buy whole new equipment, produce new molds, and still profit even while making only 54 of these covers (which hadn't been made in over two decades, and even then by a different firm) $640-per-cover doesn't seem unreasonable given the sad state of the industry, then and now. It goes without saying, of course, that if manufacturing was more flexible and decentralized, the contracts more competitive, and proper incentives put in place (such as rewarding manufacturers for cutting costs by increasing the contractual profit margin for every demonstrable cut in cost, perhaps) they probably wouldn't have cost SO much in the first place, but no dramatically less. I think the $400 hammers are better examples to use; I can't see anyone justifying that, not even Leviathan.
I had the same thought ready Corey Robin's piece: statist to the core. I wrote and told him so, and he was unapologetic about it, claiming that the state had played such an important role in various freedom struggles that the state remained worth struggling over. My thought was that however much one might be able to wrangle some welfare provisions out of the state, the one thing it could never do was free workers from their dependence on capital. That, and the downsides (no need to enumerate them here), have forced me to rethink a long commitment to (what I now see as thoroughly statist) socialism.
One reason I think the American left is unpopular with Americans is this deep-seated statism. My students resist statist alternatives to capitalism–capitalist propaganda having done a very good job of equating captialism with freedom and free markets. They understand, intellectually and from experience working at crummy jobs for fast food chains, that there's something wrong with captialism, but they aren't the least convinced that welfare statism is the solution. Once they understand it, however, many are open to thinking about free-market anti-capitalism. It's much, much easier to move along the track from right libertariansm to left libertarianism than from right libertarianism (these days the default, if inherited and unarticulated, perspective of most college students) to left statism/collectivism.
The problem is not dumb leftists who conflate corporate socialism with free markets because these people don't have their history staight. If they did I think they would be more amicable. The problem is right-wingers who try to fuse libertarian free market radicalism with corporate conservatism, as Kevin Carson refers to as "vulgar libertarians." The problem is libertarians like Dr. Paul pandering to the Tea Party right and acting like one can be both a libertarian and a conservative at the same time. As a libertarian who comes out of the left and became a libertarian in the Bush years when libertarians were actively opposing Republicans, something tells me that I could have never become a libertarian in the age of the Tea Party. I write about how Dr. Paul is destroying libertarianism unwittingly at my blog.
http://postperspective.blogspot.com/2011/04/how-r…
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I think there's more than one problem…
" All power that is wielded by corporate interests and employers is exercised with the help of government."
Right now. In anarchy, they wield it without the help of government.
I was under the impression that Standard Oil was a great success. And that it had seen the price of oil drop from something like 30 cents to 5. And that it was not until the actions of the state under anti-trust regulation that this scenario was undermined.