Publicopoly and the Sale of America

At The Huffington Post, Dylan Ratigan bemoans the “ownership and operation of public services, such as airports, toll roads and shipping ports,” by private companies with “monopolistic positions.” Ratigan notes the “conflicts of interest” created by the venal, revolving-door business of political privatization, asking “if truly want to see America for Sale.”

Ratigan’s column implicates a number of issues of importance for anyone who calls himself a “libertarian.” What many Americans may not realize, though, is that the free market left shares many, if not all, of Ratigan’s concerns about the game of monopoly being played with the country’s infrastructure.

In virtually every country, there is some version of the same folklore that casts the state as the trust-busting crusader for the powerless, bullied consumer. The familiar fallacy, which places business and government in adversarial struggle, is summed up in twin, art deco statues at the Federal Trade Commission (FTC) headquarters in Washington.

The statues, collectively called “Man Controlling Trade,” depict a burly man locked in contest with raging horse, trade, that, if left unchecked, would rampage out of control. A question thus arises as to the origin of monopolies or trusts, as to what society can do to prevent the undesirable condition of one or a handful of commercial powerhouses cornering a given market.

When discussions of antitrust or competition law arise, mainstream economists and FTC lawyers alike are quickly to invoke the nebulous idea of “perfect competition,” a state they imagine can be brought about under their careful nurturing. Without the state’s many regulations, they claim, companies would naturally gravitate together and collude, amassing the market power to set prices wherever they wished.

And since the state’s does, from time to time, prosecute firms for monopolizing or attempting to do so, there is an assumption that what I’ll call the “Man Controlling Trade” thesis is, for the most part, true. But are the economic incentives of a genuine free market really such that firms will abandon competition freely? Were anyone allowed to enter any market, would we really witness an utter lack of enterprising entrants ready to undercut a price-gouging monopolist?

Distinguishing real free markets from capitalism as it exists today, market anarchists contend that the accepted conjectures about “perfect competition” and market power are mistaken. Rather than curbing the market power of firms dreaming of combination, the state — without any mastermind’s conspiracy — installs the preconditions of cartelization in society. Market anarchists suggest a different solution for staving off commercial domination.

The anarchist Pierre-Joseph Proudhon envisioned a society without the state in which “the notion of commutative justice, first brought forward by the primitive fact of exchange, … is substituted for distributive justice.” For Proudhon, commutative justice, synonymous with “the reign of contract, [and] the industrial or economic system,” was itself the best means to a fair distribution of wealth in society, to the full reward of labor.

The free market, then, the sum of all voluntary exchanges, was to be the practical answer to the “social question” or “social problem” defined by the disjunction between work and wealth in society. This was the puzzle that the anarchist movement of the nineteenth century set out to unravel, both challenging and absorbing the foregoing liberal tradition. Following from Proudhon, American anarchists like Benjamin Tucker saw the competition of true free markets as constantly undercutting attempts at monopolization, preventing the over-accumulation of wealth in a few hands.

Far from thriving due to unhampered competition, powerful businesses were (and are) properly to be regarded as the principle beneficiaries of state protection and privilege. Their market power is sheltered from the strains of competition by the very legal framework that the state has sold as serving the consumer.

Market anarchists have long been dedicated to showing that markets freed from the strictures of the state are best not just to, for instance, promote innovation, but also to fairly distribute wealth. Indeed, the only way the bosses can get the better of the blue collars is through the use of state coercion to corrupt what would be the effects of consensual exchange.

True competition law is simply the law of nonaggression. Once the state is extracted from the economic system, monopoly and exploitation will go with it.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory