Monday, 10 November 2008

Corporations vs. the Free Market

Via Reason, there's an interesting new piece by libertarian philosopher Roderick Long at Cato Unbound, a Cato Institute project in which leading academics debate an issue of libertarian interest each month. This month's lead essay, on the subject of corporatism, challenges a popular myth about libertarianism: that it's a front for corporate interests.
"It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite."
This reminded me of the case of meatpacking in early 20th Century America, recently featured in the Freeman (the monthly journal of the Foundation for Economic Education, copies of which society members receive free copies during their course in Oxford):
"As popular myth would have it, there were no government inspectors before Congress acted in response to The Jungle and the greedy meatpackers fought federal inspection all the way. The truth is that not only did government inspection exist, but meatpackers themselves supported it and were in the forefront of the effort to extend it!...

In the end, Americans got a new federal meat inspection law. The big packers got the taxpayers to pick up the entire $3 million price tag for its implementation as well asnew regulations on their smaller competitors, and another myth entered the annals of anti-market dogma."

Long makes the point that it is only by the deliberate conflation of the free market and plutocracy by the ideological enemies of classical liberalism that such a myth persists. And it is precisely this erroneous conflation that leads opponents to seek further regulation and control over the free market, which cyclically is captured by big business to be demonised as 'untramelled free markets' by the next generation of opportunistic politicians. As the eloquent P J O'Rourke testifies, via Econlog:
"The free market is just a measurement, a device to tell us what people are willing to pay for any given thing at any given moment. The free market is a bathroom scale. You may hate what you see when you step on the scale. "Jeeze, 230 pounds!" But you can't pass a law making yourself weigh 185. Liberals think you can. And voters--all the voters, right up to the tippy-top corner office of Goldman Sachs--think so too."
Read the entire piece at Cato Unbound. Some of it is a little speculative and conjectural for my taste, but there's much to be thought on. The other contributors, whose essays will be forthcoming over the next week, are unfamiliar, with the exception of Steve Horwitz, whose 'Open Letter to my Friends on the Left' does much to dispel the notion that the current crisis is the fault of free markets.

On a related note, the Chris R. Tame Memorial Prize was awarded at this year's Libertarian Alliance conference to Keith Preston, for an essay entitled, 'Free Enterprise: The Antidote to Corporate Plutocracy.' It can be found at the LA's blog.


Anonymous said...

Thanks for the plug! But I do have to quibble about one sentence:

Long makes the point that it is only by the deliberate conflation of the free market and plutocracy by the ideological enemies of classical liberalism that such a myth persists.

a) I didn't say it was deliberate.

b) I definitely didn't say the conflation is propounded only by classical liberalism's enemies; I argued that classical liberals themselves have had their share in promoting the conflation.

-- Roderick T. Long

oxlibertarian said...

Re a), it strikes me that it's certainly the case that left-wing conflation of free-markets and corporations is deliberate, even if it isn't deliberately deceptive (though it often is). Indeed, in your description of Noam Chomsky's arguments against the free market, it is precisely his fear of "unduly empower[ing] the corporate elite" that causes him to oppose free markets, and, later on, you claim that "many critics of corporate power are in the grip of anti-market ideology." Similarly, conservatives have "done all they can to foster precisely this confusion" - the substance of your case against conservatives is the "widespread (though again not universal) tendency for conservatives to cloak corporatist policies in free-market rhetoric."

I did inadvertently mischaracterise your position on the latter point, though (the Rothbard quote was in my head). Apologies, as I particularly enjoyed that part of your essay. It should be interesting to see the response essays; my impression from previous Cato Unbound debates is that they're very variable in quality, with a tendency for the contributors to talk past one another.