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Friday, April 13, 2012

Variations on a Corporatist Theme

The people lose.

So the presidential campaign is shaping up as a contest between a Democrat who says we had a free market from 2001 through 2008 and a Republican who . . . agrees—he says “[w]e are only inches away from ceasing to be a free market economy.” You can’t cease to be something you never were.

Thus  Barack Obama claims and Mitt Romney implicitly concedes that the free market 1) has existed and 2) therefore presumably created the housing and financial debacle. This bodes ill for advocates of liberty and voluntary exchange.

Notice what will happen if this framing is widely accepted: Genuinely freed markets won’t make the list of feasible options. That will leave us with mere variations on a statist theme, namely, corporatism. How will voters choose among them? Most of those who abhor “socialism” (however they define it) will rally round Republican corporatism because of the pro-market rhetoric, while most who abhor the cruel “free market” (“Look at the hardship it created!”) will rush to Democratic corporatism because of its anti-market rhetoric.

And the winner will be: Corporatism. (That is, the use of government force primarily to benefit the well-connected business elite.) The loser? The people, who would benefit from freedom and freed markets—markets void of privileges and arbitrary decrees. That’s what maximizes consumer and worker bargaining power and enhances general living standards.

No Fundamental Difference

Does that mean the two contenders are really on the same side? Yes and no. They each want the reins of power. But the stakes are not what they are represented to be, and the differences are not fundamental. At the most fundamental level and despite appearances, Obama the government man and Romney the business man share common ground. Romney says, “Washington has to become an ally of business, not the opposition of business” (as though those were the only alternatives), and Obama would not disagree. Ask Jeffrey Immelt of GE, Jim McNerney of Boeing, and other beneficiaries of the Export-Import Bank. Or ask the principals of Bank of America. Obama would just want government to be the more dominant voice in any dispute.

As Roderick Long wrote in his 2006 Rothbard Memorial Lecture:

We might compare the alliance between government and big business to the alliance between church and state in the Middle Ages. Of course it’s in the interest of both parties to maintain the alliance—but all the same, each side would like to be the dominant partner, so it’s no surprise that the history of such alliances will often look like a history of conflict and antipathy, as each side struggles to get the upper hand. But this struggle must be read against a common background framework of cooperation to maintain the system of control.

Long is on to something important, and people as different as Ron Paul and Ralph Nader get it. At the rhetorical level the differences between the major parties look substantial: One side says it favors a dominant role for the central government (to promote fairness and jobs); the other, a dominant role for “the private sector” (to promote economic growth). This difference in emphasis sometimes matters at the margin. The fuzzy line between “private” and “public” sector may move slightly this way or that, depending on which side is in power. But big changes do not occur when power changes hands. Do you want recent evidence? Look at the central government’s record since 1981. If you want evidence from the more distant past, read Roy A. Childs’s 1971 libertarian classic, “Big Business and the Rise of American Statism.”

Viewing History

Each side of course views recent and distant history through its own self-serving lens. To gain power each must persuade voters that its philosophy differs sharply from the other’s and that the fate of the country—indeed, the world—hangs in the balance.

It all works neatly to the advantage of the permanent regime—the ruling elite, which has elements both inside and outside the formal government apparatus. Signs of the permanent regime can be seen in the presence of high-ranking corporate personnel from Wall Street banks and other firms no matter which party is in power. The revolving door is well greased. This phenomenon is captured in various Venn diagrams illustrating the bipartisan role of corporate leaders in government.  (Here are a few.)

Things are not so different from the days of Thomas Hodgskin, the great English libertarian author and editor, who wrote, among other works, The Natural and Artificial Right of Property Contrasted (1832). (See another article about him here.) Hodgskin was one of many classical liberals who understood that one cannot adequately analyze government without employing class analysis. (Others included Thomas Paine, Thomas Jefferson, J. B. Say, Frédéric Bastiat, Ludwig von Mises, Albert Jay Nock, and Murray Rothbard. Marx didn’t invent class analysis; he inherited it, before mangling it.) Hodgskin wrote:

And this law, founded on oppression, upheld by force and fraud, intended solely to preserve ill-gotten power, or ill-gotten wealth, to maintain the dominion of an aristocracy, and the supremacy of a priesthood, to perpetuate the slavery, ignorance, and poverty of the great body of the people, the political writers of our day, call on all mankind to obey, as the only means of social salvation.

When Obama and Romney argue over whether taxes should be raised on the rich, bear in mind that such disagreements are nothing new among factions of the ruling elite. (Besides, the rich can always find ways around higher rates). No matter which faction wins, the people will lose.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.