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The Free-Market Fantasy

Labeling the market natural and the state unnatural is a convenient fiction for those wedded to the status quo.

by Nicole Aschoff / April 15, 2015

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Aschoff, N. (2015, April 15). The Free-Market Fantasy. Jacobin. https://www.jacobinmag.com/2015/04/free-market-conscious-capitalism-government/

Today, the dominant discourse governing discussion of markets, states, and companies is neoliberalism, and Mackey’s free-market business model and historical narrative fit neatly within this framework. In this vision, the economic sphere is “an autonomous, self-adjusting, and self-regulated system that [can] achieve a natural equilibrium spontaneously and produce increased wealth.”

But the free-market historical narrative lacks empirical weight. As economic historian Karl Polanyi argued decades ago, capitalist markets are a product of state engineering, not nature.

The history of industrial development in the United States, often considered the epicenter of free markets, demonstrates the political nature of markets. The history of market formation in the United States reveals an industrial structure supplied by goods and capital extracted from slave labor and facilitated through a state-sponsored, genocidal land grab.

Far-reaching government legislation protected domestic markets and infant industries from external competition, and federal and state governments played a central role in the development of physical infrastructure (canals, railways, telegraphy) and the creation of huge bodies of agricultural and industrial knowledge — all essential elements in the genesis of American industrial capitalism.

At the same time, society’s greatest inventions and innovations of the past two hundred years — rockets to the moon, penicillin, computers, the Internet — were not bestowed upon us by lone entrepreneurs and firms operating in free markets under conditions of healthy competition. They were the work of institutions: CERN and the Department of Defense created the Internet, while Bell Labs — a subdivision of AT&T, freed from market competition by federally granted monopoly rights — generated transistors, radar, information theory, “quality control,” and dozens of other innovations central to our epoch.

by Nicole Aschoff 4 months, 1 week ago

Today, the dominant discourse governing discussion of markets, states, and companies is neoliberalism, and Mackey’s free-market business model and historical narrative fit neatly within this framework. In this vision, the economic sphere is “an autonomous, self-adjusting, and self-regulated system that [can] achieve a natural equilibrium spontaneously and produce increased wealth.”

But the free-market historical narrative lacks empirical weight. As economic historian Karl Polanyi argued decades ago, capitalist markets are a product of state engineering, not nature.

The history of industrial development in the United States, often considered the epicenter of free markets, demonstrates the political nature of markets. The history of market formation in the United States reveals an industrial structure supplied by goods and capital extracted from slave labor and facilitated through a state-sponsored, genocidal land grab.

Far-reaching government legislation protected domestic markets and infant industries from external competition, and federal and state governments played a central role in the development of physical infrastructure (canals, railways, telegraphy) and the creation of huge bodies of agricultural and industrial knowledge — all essential elements in the genesis of American industrial capitalism.

At the same time, society’s greatest inventions and innovations of the past two hundred years — rockets to the moon, penicillin, computers, the Internet — were not bestowed upon us by lone entrepreneurs and firms operating in free markets under conditions of healthy competition. They were the work of institutions: CERN and the Department of Defense created the Internet, while Bell Labs — a subdivision of AT&T, freed from market competition by federally granted monopoly rights — generated transistors, radar, information theory, “quality control,” and dozens of other innovations central to our epoch.

by Nicole Aschoff 4 months, 1 week ago

Designating the market as natural and the state as unnatural is a convenient fiction for those wedded to the status quo. It makes the current distribution of power, wealth, and resources seem natural and thus inevitable and uncontestable.

But of course this isn’t true. States shape, sustain, and often create, markets, including neoliberal markets. The complexion of those markets depends on the balance of class forces at any given point in time. Capitalist markets, and the inequality and degradation they engender, are a political creation not a product of nature. Nature and society (and states and markets) are inseparable — simultaneously produced by humans through ideological, political, and economic processes.

Understanding this enables us to challenge the dominant idea of natural, free markets and the emancipatory potential of the firm promised by Mackey.

very simple point but worth remembering

by Nicole Aschoff 4 months, 1 week ago

Designating the market as natural and the state as unnatural is a convenient fiction for those wedded to the status quo. It makes the current distribution of power, wealth, and resources seem natural and thus inevitable and uncontestable.

But of course this isn’t true. States shape, sustain, and often create, markets, including neoliberal markets. The complexion of those markets depends on the balance of class forces at any given point in time. Capitalist markets, and the inequality and degradation they engender, are a political creation not a product of nature. Nature and society (and states and markets) are inseparable — simultaneously produced by humans through ideological, political, and economic processes.

Understanding this enables us to challenge the dominant idea of natural, free markets and the emancipatory potential of the firm promised by Mackey.

very simple point but worth remembering

by Nicole Aschoff 4 months, 1 week ago