Tag Archives: free market

Free Market Either/Or Government?

      After listening to some of the tea party people blog about the government and liberals being fascist, it occurred to me that one possible source for this could be the notion that what they perceive as a unilateral intervention by the government into the private sector is what they deem `fascist’ (I have dealt with the historical notion of fascism as it pertains to liberalism in another blog  http://mixermuse.com/blog/2010/01/03/fascism-is-liberal-and-squares-are-circles/).  They have an emotive perception that liberals are fascist.  Conversely, let me state that while I would not think of many Republicans as historical fascists I certainly understand the emotion that results from feeling like you are being forced against your will to do something you totally detest.  I felt the emotion many times when Bush was president (In particular, especially when my tax dollars and our children were being forced into two, in my opinion, absurd wars that actually created terrorists more than diminished terrorism. see http://mixermuse.com/blog/2010/01/08/war-on-terrorism/).  The feeling is that one is powerless to stop the perceived aggression against one’s higher ideals.  I have dealt with the notion of `higher ideals’ to some extent in the previously mentioned blog (also, see http://mixermuse.com/blog/2010/01/19/the-criminal-and-the-human-a-rational-approach-to-liberalism/ ).  What is the higher ideal that is at work in the tea party folks? 

     I think it may be that they believe the `free market’ is the ultimate dispenser of justice and equality over and above the government.  I have also dealt with the notion of the `free market’ in another blog (http://mixermuse.com/blog/2009/12/23/why-i-am-not-a-conservative/)  `Free market’ as well as `government’ is a social, organizing dynamic.  If the metaphysic of the `free market’ is at work in the emotion of an individual (the meaning-bestowing, intention projecting, higher ideals of an individual), the perception of violation, sin or moral conflict is brought to the fore of the individual’s psyche when external interventions are perceived as threatening.  Thus, the emotional latent word `fascism’ seems to capture the dilemma succinctly for the tea party folks. 

     With the metaphysic of the `free market’ there is the idea that all external intervention is wrong.  I have heard many conservative commentators and economists that are lassie-faire draw heavily from the assumption that all intervention (by this government is implied) is disruptive of the implied and pre-understood `justice’ of the free market.  This brings the higher ideals of such an individual in conflict with the compelling need to subsidize these violations with their tax dollars.  Thus, we see the name calling, town hall yelling tea party phenomenon.

This is my answer to those folks:

     Not all intervention is fascist and not all “non-intervention” is free market.  Free market is full of intervention – intervention is another word for competition.  When a big business competes against a small business the small business will lose in a head to head competition because big business is always the “senior partner”.  On the other hand, government intervention is not always wrong as evidenced by the FDIC, NPS, NIST, NOAA, CDC, NIH, FAA, etc.  Why draw an abstract line between government and free market?  Why not look at it in terms of the dynamics of small and large? 

     Small companies can generate innovation and efficiency and so can small governments.  Large companies and governments can provide mass products and solutions at lower costs due to economies of scale.  However, large companies and governments can become fat and bureaucratic and drive out new competition and innovation.  If there are no other big companies that can do battle, then we get monopolies, multi-national corporations, “to big to fail”.  What is there to restrain corporate totalitarianism?  If there is no government that is big enough to intervene then what could possibly stop a corporate totalitarianism? 

     If the free market hits a snag and can’t solve the health care crisis do we keep trying to believe that the issues are only related to the lack of a truly free market; the market is not “pure” but contaminated by government intervention or can we honestly look at our metaphysic of “pure” vis-à-vis “free market”.   If we analyze the economic structures in terms of power structures ranging from small to large scales what we see is a sort of Machiavellian war of all against all; a Darwinian survival of the fittest; a perpetual revolution.  As long as these economies of scale are kept from devolving into totalitarianism the benefits to people, individuals, cultures and societies can be allowed to grow, diversify and thrive.   If the market is left to itself there really is no way for the small to perpetually overthrow the large.  David may have defeated Goliath once but without God to intervene the odds get much worse.  It is free market “religiosity” that makes one think the small can always keep the large in check.  What is needed is battle of the Goliaths.  Goliaths learned a long time ago that collusion (i.e., price fixing) is much better than battle.  If there were no government to intervene, regulate, make treaties, etc. the multi-national corporation would have no incentive to address anything such as a “health care” crisis.  They would simply continue to spin their propaganda about how wonderful they and the free market are while millions continue to die in emergency rooms and without any health care.  The “free market” can work well within limits but every market must have limits as they will not limit themselves in all cases. 

     The only agency that can limit and require intervention when necessary is the government.  The government is not an ideal solution.  It is merely another Goliath among the others.  However, since a democracy (not a fascist or communist state) has other dynamics and entropies at work it has the innate tendency against collusion and for battle.  When the battle is diminished, Wall Street will win every time.  If the government continually squashes other Goliaths, totalitarianism will reign supreme.  In either case, individuals lose.  The natural regulation of the market is not found in Adam Smith or Carl Marx but in-between.  Those that are pure free marketers or communists will effectively promote totalitarianism.  Diversity should not be thought merely in terms of an un-regulated, pure free market but in terms of the natural antipathy between government and business.  When one side of that equation dominates individuals lose.  It is ludicrous to think that Goliaths will not arise when humans are present but Davids do much better when Goliaths collide than when God walks away and lets the Goliaths decide.  I suppose this means God is not lassie-faire.

Why I Am Not a Conservative


There is nothing inherently evil about government and nothing inherently good about private business.  Those that would insist on either can only do so based on dogmatic, immutable and therefore, un-falsifiable, ideological grounds.  Once an ideology is calcified into a meta-ideology of this sort no contrarian, empirical event can dislodge it.  A meta-ideology can only re-prove itself.  It becomes an object of faith and ultimately requires violence to maintain it. 

The necessary condition that determines the merit of government or private business is vigilance.  Government and private business is actually an organizational continuum from large to small.  Those that deem big government as evil also deem small government as good.  Those that deem big business as evil deem small business as good.  A powerful government is like a monopoly.  It can determine the “free market” cost of its products and services. It can also determine its cost of materials (i.e., negotiating mass purchases) and salaries (i.e., forbidding collective bargaining and unions, outsourcing, relocating) based on its economies of scale.  This inherent organizational capacity actually diminishes viable competition.  While governments generally can’t go global, multinational corporations are global.  To the degree that a multinational corporation is global, it can subsidize its many business ventures vis-à-vis its enormous capital resources.  This results in decreased competition in the market.  For example, when a government subsidizes agriculture it makes it much harder for other countries to compete on equal footing and therefore, minimizes the possibility for viable competition.  Likewise, when the availability of capital is subsidized by corporations with huge reserves of capital it can leverage itself to such an extent that it can offer its products at a much lower cost than other competitors.  Thus, for example, mortgages can be cheaper in all the countries that it competes in than mere regional companies.  Economies of scale are what make anything such as a “free market” only possible as a meta-theology.  The “free market” left to itself will not encourage competition – it will stifle it. 

If the values implied by the use of the word “free” are innovation and increased value for the consumer then the more successful a corporation is and the larger it becomes the less meaningful these implications are and, in the worst case, the word “free” becomes only a bankrupt ideal.  The disadvantages of economies of scale in government or big business are the loss of efficiency and therefore, vigilance.  To the degree that inefficiency grows in an organization, bureaucracy grows and organizational entropy increases.  Diversity is suppressed and conformity is encouraged.  In this case, the organizational dynamic is reductionary and is aimed at self-preservation rather than innovation.  Conserving the inertia of the organization reduces the need for responsiveness to conditions outside the organization.  Responsiveness is vigilance.  Increasing organizational vigilance increases value to the consumer.  To the degree that an organization is enmeshed within itself also decreases value to the consumer and simultaneously makes competitive entry more difficult.  The result is a monopoly.  Furthermore, when a few large multi-national corporations determine a market segment without limitations the dynamics of a traditional single corporation monopoly equally apply to the market segment.  Competition decreases and inefficiencies increase.

Historically, such super-structures will collapse in on itself whether it is a government or a multi-national corporation but not before much misery and even tragedy has been expended.  The question that must be brought to the fore is, can we influence structures that are created by us to intervene before the natural death of our super-structures to prevent its cataclysmic havoc or do we adopt a lassie-faire approach in adherence to a non-retractable mega-ideology?     Government regulations can be implemented to protect the integrity of a governmental super-structure (self-protection) or to break down super-structure tendencies in multi-national corporations and increase competition and innovation in the market.  If government regulations stifle competition and innovation then, in a democracy, voters regulate the regulators by getting rid of them or, if not a democracy, then revolution. 

Revolution is the natural consequence for an oppressive government, super-structure to die.  However, the human cost is enormous.  Democracies intervene before this natural consequence is allowed to play itself out.  Democracy proves that it is possible to intervene and stifle the inertial effect of our government, super-structures.  Likewise, sound regulations whether on a national or international level can intervene in the natural death of a multi-national corporation.

 It would be sheer pessimism to insist that regulation cannot reduce the fallout from the natural death of global monopolies.  What this position really demonstrates is a mindless adherence to the meta-ideology of a mythical “free market”.  In this case, pessimism assumes nothing can be done to intervene in global monopolies and resulting economic catastrophes.  Lassie-faire hides an economic fatalism under the unquestioned metaphysic of a “free market”.  Pessimism always protects its underlying, unquestioned metaphysic.  If there is no underlying metaphysic then it is simply nihilism and pessimism is itself meaningless.  Unabated nihilism may rarely lead to creation but most typically results in infantile narcissism.  The only practical, alternative course of action is to intervene in the natural course of the market to prevent its global, cataclysmic demise. 

                Another inequality built into the global market is the varying temporalities of capital acquisition.  Multi-national corporations that are imbued with its own guiding value for self-preservation tend to make major decisions with its guiding principle favoring short term capital gain versus long term capital gain.  Ventures like research and development into fundamental new technologies are long term capital ventures.  If a large company can see a viable way to preserve itself by reducing this type of research and development, it will generally choose to do so.  This is how the auto industry in the United States has lost its way.  Instead of pursuing alternative energy for cars, they spent their time leveraging their current gasoline based technology and simultaneously trying to intervene in government regulations to preserve their existence.  Long term fundamental research into new technologies can never be equally competitive with short term capital gains for multi-national corporations.  If the natural tendency to realize short term capital gain in the market is not overcome and intervention does not occur then research and development is put off until it is too late.  The temporality of this type of research and development cannot be made to realize short term capital as other alternate strategies. 

                In medicine government has proven that public funding can offset the inherent inequities in long term research and development.  The government has used grants successfully for many years to introduce fundamentally new technologies into the market.  This technique can be generalized into energy and other pressing needs.  While this is not government intervention in the form of regulation it is a pro-reactive government intervention.

                The last point that needs to be made here is the crash course that traditional conservatism set us on.  Conservatives want “free market”, lassie-faire capitalism.  They also want less government.  This means less government intervention.  As has been pointed out smaller is good in terms of efficiency and innovation but in terms of checks and balances for multi-nationally corporations (or super-structures) less government intervention means the market is left to implode unimpeded from time to time.  Since the market is global and corporations can and will expand beyond the borders of a country, a policy of non-intervention and small government will not favor any particular country.  Capital and wealth can freely flow out to other countries beyond our borders as has been the case in recent years.  To insist that a “free market” thrive as conservatives would like is simultaneously to give up the notion to maintain our government’s status and ultimately, our self-preservation.  To insist that we are always going to be the best at every major undertaking and therefore always prolonging the existence of our government is to ignore the lessons of history and demonstrates another meta-ideology.  In the practical world, both conservative positions cannot be simultaneously held without sacrificing one.  While we do not want to condemn our country to oblivion we also do not want the government of the United States to take on the super-structure, inefficiencies previously discussed.  A global market owes no allegiance to a country.  The only way out is not to conserve but to intervene wisely.