I’m so tired of hearing about the “free market” as though it’s the perfect economic ideal. It’s fiction. Worse than that, it’s a lie. And as it is with all successful lies, it’s entwined with enough truth to fool common sense if you’re not careful.
I believe in capitalism–as in capital investment in private enterprise for profit. It’s a beautiful thing. And it works like gangbusters.
But the “free market” is capitalism in a vacuum.
An economy built on free markets–i.e., unregulated markets–is an economic theory. And it’s an impossible economic theory at that.
The markets dictate everything?!
Let the chips fall where they may, argue the purists (country be damned, I guess). Some will profit, others with perish. C’est la vie. Nevermind the fact that in deregulated markets companies can grow “too big to fail” and threaten to drag the entire economy down with them. I guess it’s better that a generation starves than a few bankers have to play by rules.
Free market supporters allege that industries will police themselves as a matter of sound business. Utter nonsense. Businesses are always cutting corners to make an extra buck. Gun manufacturers pushed for Stand Your Ground legislation and BP dumped 200 million gallons of oil into the Gulf of Mexico because they were too cheap to properly inspect their facilities. Deregulation of Savings and Loan Associations in 1980 (under President Reagan) led to an $87 Billion crisis ten years later and contributed to the to the U.S. recession in 1992. Deregulation of banks in 1999 (under Clinton) and 2004 (under Bush) contributed directly to the financial crisis of 2007, the $700 Billion TARP bailouts in 2008, the $135 Billion+ bailout of Fannie Mae and Freddie Mac in 2010, and our current global recession.
The fatal flaw in free market capitalism is that the markets are friends to no one. They will always go to where the water is calm and the grass is greenest. They will decimate–or flat abandon–regions, nations, continents, even entire hemispheres if it is profitable to do so.
Poor enforcement of regulation has led to catastrophic mine collapses, oil spills, energy shortages, and nuclear meltdowns. Unregulated markets in Central Africa and Southeast Asia have led to destitution, internecine conflict, and slavery. It’s 3rd world hell.
Of course, a 3rd world economy might be the goal for many of the wealthy disciples of free market capitalism. It’s to their benefit. Money gets overwhelming power and influence. Sure, labor conditions might be exploitative and dangerous. Products and services might suck. But profits will overflow. (Eventually the quality of life goes down even for the wealthy. They wind up stuck behind fortress walls and need an armed security detail to go shopping. Unfortunately for everyone, their greed overwhelms their reason.)
Is that really the ideal?
If this was 1789 and most people were doing business in the town square, the argument for free market capitalism would have some merit. But if I walk into a Wal-mart today, which way is the power dynamic skewed?
That is the flip-side of the free market dynamic. Labor forces in modern nations are in often in direct competition with developing nations where wages are at bare subsistence levels–or lower–and regulations are dangerously lax. Wages in developed nations are driven downward in order to remain competitive. Buying power is consequently diminished among consumers, in which case less capital investment is made, leading to fewer jobs. Who’s going to invest in a business in a place where no one has any money?
In this way, what is good for business can be detrimental to the country. Corporate interests overrun consumer interests and it’s a race to the bottom.
The proof is in our current economic predicament. We’ve had a devastating extraction of jobs and capital over the last twenty years. Wages have stagnated and now threaten to recede.
So again I ask, how is this ideal?
The answer is that it’s obviously not.
Yet in propagating free market capitalism as the high standard–initially by conservatives, but now as political axiom–we have prioritized profits–for an already wealthy minority–above everything else, including our national economic security.
The term regulation has become anathema–2nd only to taxes–in 21st century political rhetoric. Yet, much like taxes, they are essential.
As soon as you acknowledge that no one should be able to dump radioactive waste into the water supply or sell rat poison as apple juice, you have acknowledged that a truly free market is impossible, irrational, and not an ideal anyone should be aspiring to.
Instead, the ideal should be a well-regulated, capitalist system; one that balances the present and future interests of workers, consumers, communities, the nation, and the environment, while encouraging capital investment in private enterprise. That is a strong economy. It keeps workers and consumers safe and the environment protected; it also promotes a broad and robust middle-class to participate in the economy, not concentrating billions into the hands of a few.
We want lots of people buying cars and computers and trips to Disneyland, while putting money away for college and retirement without burying themselves in debt. That allows for stability as well as an attainable upward mobility that can spur the invention, innovation, and ingenuity necessary for successful private enterprise ventures.
I know, it’s a complex and highly variable ideal. It requires expertise to navigate. That is the necessary evil of a global economy that also carries the benefit of potentially elevating everyone’s quality of life in every income level across the globe.
We have to get past these simple-minded conventions from centuries ago. Because the people in power who are perpetuating these ideas know that it’s a fallacy. They’re just too greedy to help themselves.
Money out of politics.