Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
Why Does Ron Bailey Hate Free Markets?

Reason‘s science editor Ron Bailey (“Pope Francis and Naomi Klein Both Hate Free Markets, Technological Progress, and Economic Growth,” Reason, June 29) refers to Naomi Klein as a “prominent hater of free markets,” adding that she also hates “technological progress and economic growth.” But based on my readings of both Klein and Bailey, I think she knows a damn sight more about the difference between the corporate capitalist system and actual free markets than Bailey does.

Here’s how she describes the defining structural characteristics of global corporate capitalism in The Shock Doctrine — the same phenomena that Bailey, in his utterly assbrained article, refers to as “the spread of sweet commerce”:

In every country where Chicago School policies have been applied over the past three decades, what has emerged is a powerful ruling alliance between a few very large corporations and a class of mostly wealthy politicians — with hazy and ever-shifting lines between the two groups. In Russia, the billionaire private players in the alliance are called “the oligarchs”; in China, “the princelings”; in Chile, “the piranhas”; in the U.S., the Bush-Cheney campaign “Pioneers.” Far from freeing the market from the state, these political and corporate elites have simply merged, trading favors to secure the right to appropriate precious resources previously held in the public domain–from Russia’s oil fields, to China’s collective lands, to the no-bid reconstruction contracts for work in Iraq.

A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. But because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, though not always, torture.

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It’s clear that Chile was never the laboratory of “pure” free markets that its cheerleaders claimed. Instead, it was a country where a small elite leapt from wealthy to super-rich in extremely short order–a highly profitable formula bankrolled by debt and heavily subsidized (then bailed out) with public funds. When the hype and salesmanship behind the miracle are stripped away, Chile under Pinochet and the Chicago Boys was not a capitalist state featuring a liberated market but a corporatist one. Corporatism, or “corporativism,” originally referred to Mussolini’s model of a police state run as an alliance of the three major power sources in society–government, businesses and trade unions–all collaborating to guarantee order in the name of nationalism. What Chile pioneered under Pinochet was an evolution of corporatism: a mutually supporting alliance between a police state and large corporations, joining forces to wage all-out war on the third power sector — the workers — thereby drastically increasing the alliance’s share of the national wealth….

…[P]erhaps shock treatment was never really about jolting the economy into health. Perhaps it was meant to do exactly what it did–hoover wealth up to the top and shock much of the middle class out of existence.

When I say Bailey equates this kind of corporatism and disaster capitalism with “free markets,” it’s not hyperbole. I mean it literally. In the opening paragraph of his review of This Changes Everything (“Naomi Klein Changes Nothing With This Changes Everything,” Reason, Sept. 16, 2014), he directly conflates “capitalism and corporations,” “transnational corporations” and “free market institutions”:

In her 2000 bestseller No Logo, the progressive journalist attempted to harness the nascent anti-globalization movement to unleash “a vast wave of opposition squarely targeting transnational corporations.” In 2007, her book The Shock Doctrine bogusly asserted that free market institutions spread only by taking advantage of coups, wars, and natural calamities.

As I argued in my own review of The Shock Doctrine, Klein was mistaken in using the term “free market” to describe the spread of corporate hegemony into Chile, Russia and Iraq. But as evidenced in the long block quote above, Klein herself demonstrated considerable awareness that what she was attacking wasn’t really the free market, but rather a totalitarian system of power characterized to its very core by structural collusion between corporations and state. And she was absolutely correct that the form of corporate capitalism pushed by the Washington Consensus — and Ron Bailey — was spread only by taking advantage of coups, wars, and natural calamities.

I repeat: Naomi Klein is absolutely correct that what Ron Bailey calls “the free market” is foisted by force on unwilling populations through coups and wars, and depends on constant, massive state intervention for its continued existence.

Just take a look at some of the things Bailey lists as examples of Klein’s hatred of the “free market”:

She wants to ban fracking, nuclear power, genetically modified crops…, thus turning her back on some of the climate-friendliest solutions currently on offer. She wants to block the Keystone pipeline, which would transport petroleum from Canadian oil sands to U.S. refineries….

Fracking depends on the role of the minimal standards established under environmental regulations in preempting more stringent standards of tort liability and establishing regulatory safe harbors against such liability. A fracking operation that poisons the groundwater and air of surrounding communities, or causes earthquakes, can counter a civil lawsuit simply by saying “we’re in full compliance with all EPA standards.” Under the strict liability standards that existed under the common law, before the courts weakened them in the mid-19th century and the regulatory state supplanted them in the 20th, no investor would put money into something as risky as a fracking operation.

Nuclear power depends on massive subsidies at every step in the production chain, from uranium mining to the subsidized disposal of waste — not to mention the federal government assuming all liability for a meltdown above a very low figure, and simply indemnifying the industry from liability above a still higher cap.

Keystone, like all pipelines, simply could not exist without the use of eminent domain to seize land along its route — some of it on sacred grounds guaranteed by treaty to Indian nations.

Genetically modified crops are profitable because of highly protectionist patent monopolies — every bit as protectionist as any tariff. What’s more, they’re developed primarily with the needs in mind of giant cash crop agribusiness operations on engrossed, enclosed and otherwise stolen land — especially those on land stolen from peasants by colonial or post-colonial regimes backed by the U.S. Frances Moore Lappe refers to the “Green Revolution” seeds Bailey enthuses over as “high response varieties” because, unlike traditional varieties bred for local hardiness for growers who don’t have privileged access to large tracts of stolen land or subsidized inputs, they generally thrive only with large inputs of subsidized irrigation water and other inputs.  And of course governments are more than willing to supply such subsidized inputs to landed oligarchs at taxpayer expense — whether on haciendas in Latin America or giant agribusiness operations in California.

Speaking of patents, “intellectual property” is the state-enforced monopoly which is most structurally central to global corporate capitalism. The dominant corporate players in the global economy are in industries whose business models center on “intellectual property”:  entertainment, software, biotech, pharma, agribusiness, and electronics. And of course the ability of corporations like Nike and Apple to outsource all actual production to independently owned factories in the Third World, while retaining a legal monopoly on disposal of the product at whatever price they care to set, depends entirely on patents and trademarks.

So Ron Bailey defends a system that depends, completely and utterly, on a boot stamping on a human face, and calls it the “free market.” I tell you this:  If I thought the free market meant what Ronald Bailey calls “the free market,” I’d hate it more than a thousand Naomi Kleins and Michael Moores put together could hate it. The system of corporate power Bailey loves, the system he defends, was founded on robbery and enslavement, and couldn’t survive for a single day if it weren’t backed by armed thugs interfering with peaceful trade and cooperation between ordinary human beings.

It is Ron Bailey, not Naomi Klein, who hates the free market.

Citations to this article:

Markets Not Capitalism
Organization Theory
Conscience of an Anarchist