Well Known Biases

Politics, Economics, and the Law

You Can’t Blame the Free Market When it Doesn’t Exist

Corporatism vs. the Free Market, over at Reason. A response to those who would erroneously blame the relative lack on income mobility in the United States on capitalism.

It’s not the fault of capitalism, because America isn’t a capitalist nation. Instead try “crony capitalism,”  “corporatism,” “corporate socialism,” or perhaps very nearly “fascism.”

Also a pair of old articles at The Freeman are linked within the above, which I’ll also directly link here for the sake of emphasis:

Government Is No Friend of the Poor
Scratching By: How Government Creates Poverty as We Know It 

2 responses to “You Can’t Blame the Free Market When it Doesn’t Exist

  1. adewvall February 28, 2012 at 3:56 pm

    Interesting perspective. Do you consider capitalism to be more desirable than corporatism?

    • WKB February 28, 2012 at 5:23 pm

      Absolutely. Corporatism serves first and foremost the interests of the political and business elites. The arrangement becomes (and is) cyclical, with enormous mega-corporations essentially purchasing politicians who in turn award them government contracts and funnel tax dollars back to them. These same politicians enable the corporations “rent-seeking,” enacting law and policy to make further entry into a given field difficult and expensive. After retirement from public life, the politicians will be rewarded with profitable lobbying jobs. Government also influences banking policy through ostensibly-but-not-actually independent entities such as the Federal Reserve. With the merger of state of business interests, and the endemic waste and corruption this engenders, it comes as no surprise that a public, badly versed in economic theory, would blame the “free market” for the various debacles that stem not from it, but from this corruption and moral hazard. Calls for more regulation, passed eagerly by disingenuous politicians, ultimately serve not to protect the public, but to further entrench the already corrupt organizations, as miles of red tape make entrance into a given enterprise yet more difficult.

      Capitalism, conducted honestly, needn’t have a government at all to function. The ultimate “bosses” in capitalism are the end-consumer, who may “vote with their wallets” and purchase the products or services that best serve their interests. A government which grants neither special privileges nor stifles business through onerous taxes and meddling is a government which ultimately best serves the public, as any money taken through taxes is money -not- being spent by the people on what they really want, or by businesses to produce those products and services.

      As we cannot expect corporations to refrain from influencing politicians, when it is obviously in their best interest to do so (e.g. MPAA/RIAA on copyright law, the military-industrial complex on defense spending), the most workable option is to restrain the power of government, so that buying off politicians confers much fewer benefits.

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