• 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”
    businessmen.

    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,
    1918-1938
    , 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
    marketplace?

    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
    before.

    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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