The Market Is Not Natural

Coverage of Bernie Sanders’s GWU speech:

America’s existing political economy is much easier to defend if one posits that the gross inequities it produces are ordained by an invisible hand. If some natural economic process dictates that wage growth must be tepid while corporations sit on cash, or that urban workers must be rent burdened while landlords live high off their labor, or that major financial institutions must be insulated from risk while underwater homeowners are left to drown, then one can plausibly argue that government action to alter such outcomes would be hubristic and self-defeating.

Who is man to challenge the wisdom of the market gods?

By contrast, if the electorate were to recognize that these outcomes are largely determined by public policy, then apologists for the existing order would have a much harder time rationalizing acquiescence.

Bernie’s Right: U.S. Already Has Socialism For The Rich (NY Intelligencer)

I bring this up because I’ve been reading “The Power of Market Fundamentalism: Karl Polanyi’s Critique” by Fred Block and Margaret Somers. This passage resonates with the one above:

…Polanyi’s belief in expanding democracy to include the economy is expressed in his idiosyncratic definition of socialism: “Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society.”

Implicit in this definition is a critique of the Marxist stipulation that the coercive power of the state would “wither away” once the socialist revolution ended class exploitation. Polanyi sees this claim as a parallel utopian fantasy to that of the self-regulating [libertarian] market. Indeed, he explicitly follows [Max] Weber in recognizing that political authority and power would inevitably continue into any future social order, especially as a countervailing source of power to that of the economy.

Two fundamental points follow. First, socialists could not ignore the difficulties entailed in imposing democratic accountability on governmental power. Second, Marxists were guilty of imagining that a shift in property relations would—by itself—usher in a new and better society. According to Polanyi, Marx mistakenly had accepted the claims of classical economists, especially [David] Ricardo, that property relations can and will determine the entire shape of the social order.

Polanyi’s view here is based on his unique insight that market society was imposed in the nineteenth century through political means. What we think of as “modern capitalist society” was, for Polanyi, not the result of underlying inevitable economic mechanisms, but rather the consequence of a series of political choices and explicit government policies. The pretense now stripped away of the economy as a “force of nature,” it follows logically that these arrangements can be undone and reversed through the same mechanism–the use of political power.

While Polanyi is usually not explicit on this point, his argument is consistent with those who have argued that private property represents a bundle of different rights that owners had at one particular moment in time. It follows that political and legal changes introduced over time can change that bundle of rights until many of the most important structural inequalities in labor markets, capital markets, and product markets are effectively eliminated. (pp. 26-27)

Private property is a creation of legal systems—and hence of human beings—and not some natural force that we are powerless to affect. Why is this so hard to understand? At one point, land was not private property (but collectively owned with usufructary rights). At one point, other human beings were property, along with horses and oxen. There is no “universal law” of what is and is not property, and what rights ownership entails. As Chris Dillow writes, “The limited company was we know it was created by two acts of parliament in 1844 and 1855. (The notion that free market capitalism is somehow natural and emerged without state intervention is a fiction.)” As the article cited above points out:

…[L]egal markets are themselves a kind of “big government” program. Absent a sovereign entity capable of enforcing contracts by commanding a monopoly on violence, mass commerce between strangers is nigh-impossible. Less abstractly, the introduction of private property across the North American continent required massive state violence and investment. Meanwhile, some human agency must decide roughly how much sovereign currency should be in circulation at any given time, and this decision will inevitably have large, economy-wide implications on how markets function and whose interests they best serve. Tight money will privilege those rich in cash by increasing the value of their holdings — and thus, the interest rates they can charge for lending them. Loose money can privilege borrowers by triggering inflation that reduces the cost of their debts…

Americans already live in a country where unelected bureaucrats pick economic winners and losers, where public policy exerts a massive influence over the distribution of income, where some indolent Americans live off the hard labor of others, and where the state directs investment toward official, conscious ends. If these are the defining features of socialism, then the United States lost the Cold War before it began, and the real debate between left and right in the U.S. isn’t over whether “big government” should intervene in markets, or even how much it should, but rather who should have a say over how it intervenes — and whose interests such “socialism” should serve.

These points may seem banal. Sophisticated conservative thinkers are well aware that money doesn’t grow on trees and markets do not make themselves. But efforts to naturalize the economy’s basic ground rules — by obscuring the state’s inescapable role in setting them — remain pervasive in America’s political discourse.

Now, here’s Sanders himself:

“…President Harry Truman was right when he said that: ‘Socialism is the epithet they have hurled at every advance the people have made in the last 20 years…Socialism is what they called Social Security. Socialism is what they called farm price supports. Socialism is what they called bank deposit insurance. Socialism is what they called the growth of free and independent labor organizations. Socialism is their name for almost anything that helps all the people.’

“Now let’s be clear: while President Trump and his fellow oligarchs attack us for our support of democratic socialism, they don’t really oppose all forms of socialism. They may hate democratic socialism because it benefits working people, but they absolutely love corporate socialism that enriches Trump and other billionaires…

One thought on “The Market Is Not Natural

  1. The idea that ‘ownership’ means ‘I and only I can do whatever I want with it’ is an invention, and not one of our finest.

Leave a Reply

Your email address will not be published.