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Business Is the Business of Government Is the Business of Business

Via Jesse Walker [1] comes a splendid Cato Unbound essay by Auburn philosopher Roderick Long [2], explaining why free markets and concentrated corporate power aren’t really mutually supportive [3], even if most defenders of “free markets” really are just a bunch of corporate shills. (Disclosure: I’ve been holding on to the title of this post for months.) Here’s the crux:

Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.

As any regular reader of this blog is no doubt well aware, I love this shit – and it’s exactly this sort of idea that undergirds my take on raw milk [4] and was an essential element for my argument for “culinary conservatism” [5]. (My friend Tim Carney has written a nice book on the subject [6], too.) Long runs through a bunch of examples of this kind of phenomenon – corporate welfare, tariffs, monopoly privilege, eminent domain abuse, cartel enforcement, heavy regulatory burdens, tax breaks, intellectual property laws, environmental laws, inflationary monetary policies, and so on and so on – but then, after taking some well-deserved shots at the left and the right, urges libertarians to face up to their (our) own role in this charade:

If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing (though here, as above, there are plenty of honorable exceptions to this tendency). Consider libertarian icon Ayn Rand’s description of big business as a “persecuted minority,” or the way libertarians defend “our free-market health-care system” against the alternative of socialized medicine, as though the health care system that prevails in the United States were the product of free competition rather than of systematic government intervention on behalf of insurance companies and the medical establishment at the expense of ordinary people. Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about “corporate libertarians” they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.

This is all really good stuff, and while it should be chewed on with care – the interaction between government, genuine market forces, and the rest clearly creates one of those knots that are hard to untangle [7] – it is absolutely brimming with important truths. Truths which I have a lot more to say about but can’t find the time (or words) right now. And truths which, one hopes, will be at the core of the F5GG agenda [8] for the next few weeks (hint, hint). So read the whole thing [3]; check back in [9] for the scheduled follow-ups from Matt Yglesias, Steve Horowitz, and Dean Baker; and help fight Wal-Mart through capitalism!

P.S. In related news, see Mike Riggs [10] on how the American Dental Association uses licensing laws to keep people in Appalachia from getting new teeth. More on medical cartels here [11], and also here [12] and here [13] (that last link is to a post of Prof. Long’s).

14 Comments (Open | Close)

14 Comments To "Business Is the Business of Government Is the Business of Business"

#1 Comment By William Randolph On November 10, 2008 @ 4:32 pm

Hint taken. This is a good starter.

#2 Comment By John On November 10, 2008 @ 5:02 pm

Yeah, I know you wrote about this before, William. Nathan and – especially – Mark have lots of strong views on this stuff.

#3 Comment By Will On November 10, 2008 @ 5:17 pm

I’m intuitively sympathetic to this view, and I enjoyed reading Long’s entry. That said, I’ve always thought the strongest argument against libertarianism mirrors arguments deployed by libertarians against progressive regulatory policies. We tend to argue that well-meaning government initiatives inevitably fall prey to regulatory capture, but I think it’s possible that this criticism is equally applicable to libertarians’ preferred policy choies. In other words, small-government advocates provide the principled intellectual heft to justify programs aimed at reducing the size and scope of government. In an ideal world, those policies might work, but the end result is warped beyond all recognition by the political process.

#4 Comment By John On November 10, 2008 @ 5:35 pm

You’re right, Will, but that’s exactly what Long says! (See the second paragraph that I block quoted.) So the burden here is on both sides: on the Left, to give up on using government to fix everything; and on libertarians, to stop throwing their weight behind terrible policies. The latter fault might be a strong argument against libertarians, but against libertarianism it seems to me to fall flat.

#5 Comment By Will On November 10, 2008 @ 5:56 pm

Right but he’s discussing a PR problem, not the real, pragmatic hurdle of actually implementing libertarian policies. So yes, in an ideal world, libertarianism would undoubtedly reduce corporatism. But defending your ideology in theory while hanging the implementation out to dry is profoundly short-sighted. I mean, this is why the Left is so effective at disarming small-government objectors. Sure, your ideas sound great in theory, but in practice you get two terms of Bush-sponsored corporate hand-outs.

#6 Pingback By Honorable Intentions « On November 10, 2008 @ 5:59 pm

[…] while I enjoyed reading Roderick Long and John Schwenkler on corporatism and libertarianism, I’m left wondering how exactly one would go about […]

#7 Comment By John On November 10, 2008 @ 6:07 pm

I agree that there is a serious concern here. But I don’t think it’s fair to describe the sorts of policies you have in mind as “the implementation” of libertarianism. The question is whether you can make meaningful distinctions between the good policies and the bad ones – and failures in this department are by no means the exclusive province of conservatives and libertarians.

#8 Comment By Mark On November 11, 2008 @ 7:21 am

Professor Long’s piece is TEH AWESOME! I could probably write 10 long posts just on his piece (if I have time, tonight will be the first one). Just briefly, though, it’s worth noting that Professor Long has been beating this drum for a rather long time. The thing is that, as libertarians continue to abandon the GOP in ever-increasing numbers due to GOP social and foreign interventionism, they are starting to see the ways in which de-regulation can (and probably SHOULD) be used to support ends that are traditionally associated with the political Left.
Another thing that was particularly refreshing to read was Long’s argument that what we now call libertarianism was, in the 19th century, most associated with the political Left. This is something I have long realized, but which I think is lost on too many libertarians. Libertarians sometimes will acknowledge the closeness in philosophy to Thoreau’s transcendentalism (though, for some reason they only rarely acknowledge the even stronger connection with my favorite essayist, Emerson). What they almost never acknowledge is that these essayists were, and more importantly, continue to be most commonly associated with the political Left – even the radical political Left. Yet if you read Emerson’s “Self-Reliance,” you will find it virtually indistinguishable from much of Ayn Rand’s arguments – the only difference is the way in which Rand uses those arguments to defend the virtues of big business (well, that, and the fact that Rand adds tons of invective that would be completely foreign to Emerson).

#9 Comment By Mark On November 11, 2008 @ 7:41 am

One thing I should have added – not only can and should libertarian views be put to supporting traditionally Left ends, but the relevant policies should – by far – be a priority over pro-big business deregulation, which can just exacerbate the problems caused by pro-big business regulation. This means refocusing libertarian policy efforts on things like licensing laws, the military-industrial complex, corporate tax breaks (and simplifying the tax code more generally). It also means realizing that there is nothing inherently just about supply-side economics – a 4-5% increase or decrease in the top marginal tax rates simply is not the difference between socialism and freedom, nor between economic ruin and economic prosperity. The failure to realize the latter has probably done more to discredit libertarianism with the political Left than anything else, because libertarians so frequently choose to emphasize taxes over just about everything else.

#10 Comment By John On November 11, 2008 @ 8:49 am

Mark,

I think you make a lot of good points, but – like that one blogger you linked yesterday, actually – I’m still inclined to think that a serious political coalition along these lines is a pipe dream.

For one thing, you have to distinguish between liberals (i.e., Democrats) and “the Left”: even if the latter group can come to see what it has in affinity with libertarians (on which more in a moment), the former is every bit as beholden to corporate interests as the GOP is – perhaps a slightly different group of such interests, but are the medical lobby and the unions really going to stand for the elimination of licensing requirements? (Hell no.) Any coalition that agitates for these sorts of things is going to have to be made up primarily of libetarians and free market conservatives, with dissident liberals and leftists along for the ride.

Similarly (and this is the point that was made in the post you linked yesterday), the fact is that the average left-liberal’s ideological take on things is so thoroughly pro-government that there often seems to be no possibility of getting through. See for example what happens when Yglesias talks about unlicensed plumbers or tradeable water rights – his commenters go berserk, and simply don’t have patience for real conversation. Some of this is a matter of public education, and you’re right that libertarians would do themselves a lot of good if they softened up on tax cuts and bad cases of deregulation, but I really do think that there are serious ideological barriers here that are likely to take generations to removed – if they can be removed at all.

And ’round and ’round the two of us go …

#11 Comment By Mark On November 11, 2008 @ 10:24 am

John:
Point taken, particularly regarding entrenched interests. I should note that my argument above was mostly intended to be a normative argument about the types of policies libertarians should actively pursue (regardless of with whom they align), although it certainly has its implications for my positive argument that libertarianism will, in the coming years, become increasingly associated with the political Left.

As for the issue of entrenched interests, you’ll get little argument from me, at least in terms of the likely end result. But that is as much because politicians of any stripe so rarely match rhetoric with action as it is anything else. Libertarians are human just like everyone else, and tend to fall for rhetoric over practice quite regularly (see Reagan, Ronald – who I still have a lot of affection for even though I’m aware his policies fell well short of his rhetoric). The question is really whether Dem politicians will, in the long run, start using their anti-corporate rhetoric to advocate for anti-corporate deregulation or just continue as is, advocating solely for anti-corporate regulation (keeping in mind, of course, that they will probably never actually implement either).

But – returning to my normative argument – I suspect that libertarians will be better off in putting an end to their emphasis on pro-big business deregulation. In such instances, it’s possible that we are simply advocating for policies that further exacerbate the problems created by the pre-existing pro-big business regulation. This is not to say that we should do a 180 and start advocating for anti-big business regulation, which comes with its own set of problems. Rather it is to say that of the four options (pro- and anti- big business regulation and pro- and anti- big business deregulation), the only one for which the benefits clearly outweigh the harms at this point is anti-big business deregulation. Even if we are unsuccessful in advocating for such policies, at least we can take solace in the knowledge that we haven’t made things worse by advocating for one of the other three options.

#12 Comment By John On November 11, 2008 @ 10:34 am

On that normative point, Mark, I agree pretty much entirely – though you know as well as I do that it may well be a recipe for political irrelevancy.

#13 Comment By Mark On November 11, 2008 @ 11:17 am

John-

No doubt. Which would mean the return of the “remnant” years. But, hey, we survived those years once, we can survive them again. But it’s a winning gamble. If we fade into irrelevance, then we’re not making matters worse; if we don’t, then we may actually see a real influence of libertarianism in government.

#14 Comment By John On November 11, 2008 @ 11:28 am

Nice way to put it, Mark. Another approach would be to devote more energies toward policy changes at subsidiary levels, to show that (the right sorts of) libertarian ideas can actually work.