Soft Economy For Us, Record Profits for the Rich

On Monday, June 13, PBS’s Nightly Business Report observed that while “American workers may be struggling, … the nation’s biggest companies are set to report record second-quarter profits.” With the United States economy in “a soft patch,” ordinary people are tightening their belts, but, according to J.P. Morgan’s Joseph Tanious, “corporate balance sheets are as healthy as they’ve ever been.”

Although it may appear an anomaly that America’s top companies would be getting along so well while the great majority remains in economic distress, market anarchism offers a thoroughgoing explanation. The inequalities on display in the PBS story are, contrary to a common misunderstanding, not a symptom of free markets, but of statist, crony capitalism.

Most Americans are familiar with the arguments against monopoly, regarding it as a wraithlike threat inherent in some equally indistinct notion of “cutthroat competition.” The general idea is that we need the state to act as a counterbalance to the greedy capitalists who would price gouge us into destitution but for vigilant watch of government.

As it is of service to the ruling class, this myth has been reiterated and reinforced by the court intellectuals whose livelihood is intertwined with the state’s hierarchies of power. Powerful though it is, the myth is also fragile, susceptible to the explosive potential of the truth. And the truth is that the state’s role in the economy is not to protect us from the corporate kingpins, but to protect them from a market freed from coercive constraints.

“The struggle for existence now,” wrote Henry Addis, “is due to monopoly: to the legal restriction of natural opportunities.” The state, by engendering an economic situation of scarcity in areas where there would otherwise be none, enables its favorites to profit at rates a true free market would not allow.

Thus is the monopolistic system imposed by the state, giving us an economy in which opportunities for the laboring majority are methodically disrupted for the power elite. Basic principles of economics — the uncontroversial, elementary sort apropos of supply and demand — teach us that constricting the supply of a good or service will drive up its price.

Obstacles and barricades erected by the state, its arbitrary rules and regulations, limit entry into markets, binding our economic “choices” to powerful cartels. And since state-protected monopolists are able to charge far more for goods and services than their actual worth, we are all obliged to work harder and for longer than we would in a society without privilege, one with genuine market competition.

The state’s regulatory environment precludes such open competition by way of rendering legally acceptable forms of participation far more expensive, not better in any measureable way — just more costly; it’s a pay-to-play schema, gatekeepers taking their tributes at every level and, at least for the bosses, it’s working to perfection.

For the rest of us, though, the state’s intervention means that everything we buy is marked up to reflect the difference between the price as it would be in a free market and the monopoly price. Every cent of that difference is exploitation, is a criminal profit achieved only as a result of the introduction of force into the economy.

Taking into account all of the societal wealth that is lost to this kind of exploitation — to feathering the nests of ruling class loafers — we might wonder too how much time is lost. Could we open all of the economic avenues closed off by the state, the “natural opportunities” Addis referred to, maybe we could get off of the corporate hamster wheel long enough to honestly address social problems.

The market anarchist alternative contends that peaceful society does not need the state, that trade and common cause can provide all of the regulation we need. In light of the current state of things, we have absolutely nothing to lose by casting off the state. Then again, maybe we should just continue to base our opinions about the country’s economic health on whether the Dow closed up or down.

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