CXVIX – The Market and the State

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I am weary of otherwise intelligent people who insist
on conflating the free market and a political system
dominated by business interests who use state power
to achieve their ends. To what extent this confusion
arises from a failure to conceptualize the distinction,
as opposed to a need to condemn alternatives to collectivist
ideologies, will vary from one person to the next.

Mankind has long suffered from the consequences of
assumptions that have received far too little intelligent
questioning. In considering how human society is to
be organized, the premise has long been accepted that
“responsible” and “caring” behavior
consists of men and women subordinating themselves to
the authority of the state. Collective activity is presumed
to be orderly, while individual action raises the specter
of social turbulence. Adherents to such a point of view
often end up contrasting “altruistic” politicians
and government functionaries with “greedy”

I would have thought that such simplistic thinking
might have evaporated in the historic awareness of how
corporate interests have been the principal promoters
of government regulatory schemes to accomplish, through
political coercion, ends they were unable to achieve
in a free market. Economic historians of socialist and
other leftist persuasion, and those of libertarian inclinations,
have produced numerous books and other studies documenting
this practice. My book, In
Restraint of Trade: The Business Campaign Against Competition,
, was just such an undertaking, demonstrating
how — as others have also concluded — major
business interests were responsible for the creation
of the New Deal’s keystone program, the National
Industrial Recovery Act.

In the face of so much evidence demonstrating the symbiotic
relationship between corporate and political interests
— always achieved at the expense of free market
processes — I would think that we would witness
a decline in the confusion of the “free market”
with the “business system.” Following the
destructive events in New Orleans, various commentators
have shown the earlier assumptions to be very much alive.
Robert Scheer’s article, “The Real Costs
of a Culture of Greed,” and Michael Parenti’s
“How the Free Market Killed New Orleans,”
demonstrate not simply their conceptual errors in failing
to contrast political and marketplace forces, but the
strength of their commitment to fusing the two.

Scheer is a writer with an otherwise strong dedication
to the protection of individual liberties vis-à-vis
the state, and has written strong pieces in opposition
to the war in Iraq. It is because of the general thoughtfulness
of his writings that I find his explanations of the
New Orleans devastation troubling, albeit predictable
from someone of the Left. He begins by attacking “free-market
purists” who have “denigrated the essential
role that modern government performs,” going on
to praise government “social services that benefit
everyone — education, community policing, public
health, environmental protections and infrastructure
repair, [and] emergency services.”

Without any apparent sense of the self-refuting nature
of his argument, he later writes of the “ill-equipped
public schools,” and the lack of “adequate
police protection” experienced by people in New
Orleans. Nor does he detail the prolonged failure, of
the federal government (i.e., the Army Corps of Engineers)
to engage in the “infrastructure repair”
of its levees, despite many months of prior warnings
of incipient danger.

How any of these governmental shortcomings can be laid
at the feet of the marketplace, Scheer does not relate.
A business-dominated political system is reflected in
both the Republican and Democratic parties, even though
Scheer refers to the Republicans as “the party
of Big Business.” Nevertheless, how corporate
interests controlling and manipulating the coercive
machinery of the state in furtherance of their ends,
can be said to express the thinking of “free-market
purists,” greatly diminishes the intellectual
credibility this man otherwise expresses in his critiques
of government.

Parenti goes even further in his condemnation. Apparently
unaware that the flooding was caused by the failure
of the federal government to maintain its levees, he
declares that “[t]he free market played a crucial
role” in the resulting death and destruction.
In an amazing twist of absurdity, Parenti criticizes
those who looked to “private means” for
relief, “just as the free market dictates. . .
. This is the way the invisible hand works its wonders.”

Had the man been paying attention to reality —
instead of spinning his statist prayer-wheel for another
shibboleth — he would have discovered that, when
New Orleans residents needed help the most, it was “the
invisible hand,” alone, that provided it. The
millions of individuals and private organizations who
spontaneously collected money, clothing, food, water,
and other necessities for delivery to the Gulf region,
contrasted with the Gilbert and Sullivan show of ineptitude
by the federal government. As truckloads of relief items
began rolling into the damaged areas, the director of
FEMA was announcing that his agency was going to start
responding! It took many days for the government to
approve the offer from financially troubled airlines
to transport flood victims, free of charge, out of New
Orleans. What might Mr. Scheer have to say about this
expression of the “greed” inherent in the

There were many reported instances of the federal government
refusing to allow shipments of human necessities into
the stricken area, although there was no shortage of
armed troops brought into the city to menace flood victims
and forcibly remove people from their homes. (This latter
government effort apparently satisfied Mr. Parenti’s
humane sensibilities, after noting, with approval, the
forced evacuation of residents by the Cuban government
following a hurricane last year.) The mayor of Slidell,
Louisiana offered this assessment of federal efforts:
“[w]e are still hampered by some of the most stupid,
idiotic regulations by FEMA. They have turned away generators,
we’ve heard that they’ve gone around seizing
equipment from our contractors.”

I suspect that those who continue to praise government
for its perceived beneficence, and to condemn the marketplace
for its alleged shortcomings, are people who have never
managed to work the entropy of New Deal thinking out
of their minds. There is an allure, to many, of collectivist
systems that allow human beings, their energies, and
other resources, to be marshaled under a centralized,
coercive authority that they fashion themselves fit
to exercise. I have no way of knowing whether this is
the thinking that drives these men, or whether they
are simply distrustful of individualized decision-making.
Friedrich Hayek has written of those who have a “fear
of trusting uncontrolled social forces,” an attitude
that motivates both the people-pushers of our world
and those who have learned to be security-freaks.

One of the most dangerous assumptions to infect the
human mind has been the idea that people can act out
of any motivation other than the pursuit of their self-interests.
To war against self-interest is to war against the nature
of life itself. There is no action you or I can take
that is not driven by self-interest.

Neither the state nor the marketplace has a monopoly
on wisdom, efficacy, or motivation. People can be well-
or ill-motivated in either sector. The primary distinction
between a political system, and a non-political, free-market
system, is whether some people will be allowed to use
violence against others to achieve their desired ends.
By definition, the marketplace eschews coercive means;
by its nature, the state is organized force.

But having said that is not to confine the scope of
one’s self-interested pursuits. If individuals
or groups want to accomplish some objective, they are
free to organize themselves and their resources to do
so. The spontaneous efforts of millions of people to
part with their own money or other property to help
flood victims exemplified self-interested motivations.
One who wishes to understand why this is so need look
no further than the Austrian school of economics. Mises
expressed the point so clearly: people act out of a
desire to be better off after acting than they were

In our materialistic culture — and socialist
thinking is thoroughly dominated by materialism —
most people tend to think of self-interested pursuits
only in terms of monetary profits. Many of my students
have the hardest time understanding how risking one’s
life to save a stranger, or giving away vast sums of
money to a charitable purpose, can be acts of self-interest.
Each of us is motivated by a wide range of desires,
many of which have nothing to do with making money!
Why do people commit themselves to the lifelong expense
of time and money to the raising of children? If child-rearing
was evaluated by the same criteria by which we traditionally
measure the success or failure of a business, the activity
would end up in the bankruptcy courts.

Rather than condemning the marketplace of free men
and women who voluntarily responded to this disaster,
Messrs. Scheer and Parenti might have addressed one
of the debilitating consequences of statism that was
so clearly revealed in the aftermath of this flooding.
Mr. Scheer, for instance, might have written of “The
Real Costs of a Culture of Power,” and focused
attention on what statism has produced: the dispirited
men and women who, for days, sat passively in the New
Orleans convention center waiting to be rescued by government
rescuers who never arrived. Human beings corralled,
locked up, and held at gunpoint by government troops:
this is the “role that modern government performs”
in the lives of increasing numbers of Americans.

I would also be interested in his opinions about Jabbor
Gibson, the eighteen-year-old who saw an abandoned bus
in New Orleans, loaded it with people who wanted nothing
more than to get to safety, and drove to Houston. “I
just took the bus and drove all the way here . . . seven
hours straight,” Jabbor stated. “I hadn’t
ever drove a bus.” Perhaps Mr. Scheer will use
this young man’s grammar as evidence of “ill-equipped
public schools.” On the other hand, he may see
in Mr. Gibson a healthier omen for the people of New
Orleans and elsewhere: an awareness of the life-and-death
importance of self-motivation and cooperation in the
pursuit of self-interest. Decades of state domination
of people’s lives have shown us the dehumanized
resignation of the human spirit. Perhaps truckload after
truckload of life-saving supplies pouring into the Gulf
Coast through the spontaneous processes of an “invisible
hand” that permitted millions of people to pursue
their self-interests in helping others, will provide
a superior model for societal behavior.

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