Defining the Free Market: From Abstract to Concrete,but always a Fallacy

Somewhere along the line, “free market” graduated from the world of abstractions and became an actual thing.  By “thing” I mean an entity, something identifiably self-contained, an object in time-space.   In reality, “free market” is simply a name we gave to an economy characterized by a reliance on market forces to determine value. But for many people, “free market” is more than a label: it is something concrete—at least that is how they talk about it. 

When abstractions are spoken of as real things, we call it reification.  Reification is a semantic fallacy, but its use is sometimes necessary when one wants to communicate complex realities with considerably less words.  However, a semantic fallacy, if not challenged, can go on to support faulty conceptualizations of reality, especially once it seeps into discourse.  The special problem in this case is that the reification complements an ideology, one that rejects the natural and necessary role of the government in the maintenance of the economy.  If expressed as a thing, “free market” can be thought of as being interfered with or kept from its natural activities.  If expressed as an entity, it can be given agency, rationality, and rights.  We often talk about government intrusions in the personal lives of people.  For some, a worse offense is when the government intrudes in the free market. 

But this conveys a faulty conception of reality.  As Robert Reich states: “Government doesn't ‘intrude’ on the free market.  It defines and organizes (and often reorganizes) it.”  In reality, an economy is the product of an infrastructure of law that is created, maintained, and enforced by the government.   It is an extension of the state for the purpose of ordering the complex human interactions that occur with economic activity.  And with the constant growth and complexity of technology, which puts economic relations in flux and opens loop holes for economic actors to exploit, these interactions need to be monitored regularly and the laws adjusted accordingly.  The “free market” is not a thing with a right to existence and freedom from molestation; it is a name for something that does not exist without the state and whose quality is wholly dependent upon the laws that form it.

But we are led to believe that economic regulations are always wrong and lead to a loss of freedom.   This rigidity often pits real people against a reified free market.  How else do we understand how a person who lost their health care through no fault of their own, and who, as a result, has lost their life savings because of an accident, is freer than one who has been helped by an update of the legal infrastructure?  Or, that gross accumulations of wealth at the top demand less taxation for the wealthy and less regulation over the actions of corporations—even when there is no historical evidence that this works?  In both examples, it is the “free market” that has been protected, not people.  And in both cases, rights-bearing people are being sacrificed to an ideology and a faulty conception of reality.

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If one accepts the idea that it is mostly hard work and sacrifice that determines one’s income and success in present-day America, it is impossible to explain the growing concentrations of wealth at the top.  Clearly other factors are involved.  A more satisfying explanation appears with a proper conceptualization of the economy and its contingent relationship to the government.   The reality is that the rules are out of date, the rich have given themselves an unfair and immoral influence over how things work, and we have the mechanism and the legitimacy to fix it.  Framing things this way makes it easier to get beyond the rhetoric, the confusing accusations of socialism, communism, or fascism, and on to clearer solutions and discourse.  This can be fixed, but not by those who think the “free market” can fix itself.


For a deeper understanding of how and why we got into this mess, and what the government can and should do to fix it, I highly recommend the documentary film by Robert Reich, Inequality for All.  


APPENDIX

While the Founders are quite removed from our world, they did understand that wealth discrepancy does not sit well with democracy.  It is interesting to see what they had to say about this, and the solutions they might have entertained.  While this is certainly not exhaustive or definitive, it does seem to suggest that at least some of them did not think it was unconstitutional or destructive of liberty for the government to take some kind of action on the economy.  According to David Cay Johntson, drawing on recent scholarship from The Citizen's Share: Putting Ownership Back into Democracy by  Blasi, Kruse, and Freeman, 

The second president, John Adams, feared “monopolies of land” would destroy the nation and that a business aristocracy born of inequality would manipulate voters, creating “a system of subordination to all... The capricious will of one or a very few” dominating the rest. Unless constrained, Adams wrote, “the rich and the proud” would wield economic and political power that “will destroy all the equality and liberty, with the consent and acclamations of the people themselves."

James Madison, the Constitution's main author, described inequality as an evil, saying government should prevent “an immoderate, and especially unmerited, accumulation of riches.” He favored “the silent operation of laws which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigents towards a state of comfort."

Late in life, Adams, pessimistic about whether the republic would endure, wrote that the goal of the democratic government was not to help the wealthy and powerful but to achieve “the greatest happiness for the greatest number."

R. Miller

David Brooks and the Jumping of Sharks.

It is not every day that a genuine social problem enters the American political discourse. In the 1930s the public and the government discovered that unregulated capitalism and wild financial speculation with depositor's money was a bad thing, and took great steps to rein in excesses. In the 1960s the public similarly decided it was time for the South to grow up and start treating African Americans like human beings. In the 1970s popular pressure encouraged Richard Nixon of all people to work with other Republicans, and Democrats to form the Environmental Protection Agency and other laws to curb pollution. Sometimes the stars align, critical mass forms and what was once simply discussion among intellectuals turns into actual policy with strong popular support. Occasionally we get it really wrong, drugs and terrorism come to mind, but there are real world examples when democracy functions and good policies emerge to combat social problems.

We may be approaching this point on income inequality. Slowly, belatedly, and against incredible opposition it is finally reaching the broad public mind that maybe having 85 people with the same wealth as the bottom half of the human race is not conducive to a good situation. Oxfam's executive director put it rather bluntly:

Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations. We will soon live in a world where equality of opportunity is just a dream. In too many countries economic growth already amounts to little more than a ‘winner takes all’ windfall for the richest.

If you are reading this post I probably do not need to spend more time making the case that inequality of wealth and income are bad for most people, or society in general. But briefly, when too much wealth is concentrated at the top, the rich can bid the price of necessities up and out of reach for the rest of us. They can also corrupt the political process with money and when all else fails hire strong men with guns to intimidate, beat up, or kill anyone who disagrees.

Leaders shape opinion to some degree in any situation. During the American Revolution pamphlets written by very smart men were passed around and discussed at taverns all over the colonies. Some ideas were accepted, others rejected, and still more changed through debate and compromise. While you may be hard-pressed to find serious political discussion in American watering holes today, this process still exists. And here is where David Brooks enters, finally. I know I'm a little tardy in writing about a column from January 16th and I apologize but this is a debate long overdue in America and is an ongoing discussion that will likely last longer than a few news cycles. In short, this New York Times Op-Ed writer who makes an ungainly number of appearances on Sunday talk shows to represent the "respectable" conservative position is not the opinion leader we need right now.

In The Inequality Problem Brooks leverages every ounce of his mainstream respectability to misdirect and mislead his readers on the title subject. From the first line: "Suddenly the whole world is talking about income inequality." Brooks turns reality on it's head. No Davey, this did not happen "suddenly," nor is inequality "lump[ing] together different issues that are not especially related." You may recall the champion of private equity and GOP standard-bearer Mitt Romney stating that inequality is something people should discuss only in private, and in dimly-lit rooms. Or that a few protestors made a little noise in Seattle during the WTO's 1999 meeting in that city to voice their concerns that a few unelected corporations should not be able to reorder society along plutocratic lines. Thank goodness George W. Bush came along to put inequality on the back burner by making war, torture, wire-tapping, and general tyrannical behavior the prime concerns of activists, but that does not mean inequality somehow disappeared from 2001 to today.

As the blogger Driftglass succinctly put it:

For the record, without too much effort, any competent citizen from Paul Krugman to my sainted mother can incinerate Mr. Brooks' increasingly frantic and transparent attempt to decouple 30 years of aggressively pro-plutocrat, anti-labor, anti-equality policies of the Right from any discussion of income inequality...

 

...which is so much of out mainstream is devoted to keeping fragile Conservatives like Mr. Brooks as carefully protected and climate-controlled as any hothouse orchid, and the Hell away from competent citizens. [emphasis mine]

Driftglass further ridicules the pompous and insulated Brooks' argument as irrelevant misdirection by summarizing the rest of The Inequality Problem as " Look over here!  Look over here! -- please for God's sake lets get back to talking about unwed teenage mothers and stuff." Yup, that is pretty much all he has, roll out the usual "blame the victim" tripe that poor people are poor because they are lazy and spend too much time having unprotected, out of wedlock sex. Ben Cohen at The Daily Banter also summarized Brooks' position as "divid[ing] the world into responsible rich people and irresponsible poor people, and postulates that inequality has nothing to do with the wealthy rigging the economy to maintain their wealth, but more to do with failed policies towards poor people, who just breed and won’t work." Since it is poor peoples' own fault, raising the minimum wage or other policies will not help and the responsible aristocrats like Brooks can wave it away without evidence. David Brooks represents the respectable mainstream arm of the conservative media complex, like his fellow shills for the rich on fox news or talk radio he is well paid to muddy the waters and present reasonable doubt against common sense. Leave no stone unturned, no rhetorical device unused, and no logical fallacy unfoisted to protect profit margins.

Cohen cites a further analysis and refutation of the "respectable" position by Robert Reich, an intellectual who combines empathy, erudition, education, with the empirically obvious plight of the increasingly poor working class of America. After reciting well-established facts about inequality, Professor Reich hits on the biggest of the gaping holes in Brooks' argument. In a display of stunning ignorance, Brooks states without irony that we cannot allow class-consciousness enter the debate on income inequality, because: "America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness." In other words, yes the poor are a problem but talking about inequality "needlessly polarizes the debate [emphasis in original]" Not to put too fine a point on it, but has Brooks ever left his comfy little bubble? America is utterly, and intractably, polarized. For crying out loud, there are people freaking out that Coke ran an ad where America the beautiful was sung in languages other than English. Influential conservatives regularly call for impeachment and armed rebellion against a twice elected president. Everything from chicken sandwiches to Duck Dynasty has been thoroughly politicized. If ever Noam Chomsky's thesis that only one side is waging the class war was made apparent, this is it.

Ben Cohen followed up his analysis of David Brooks and whether conservatives really hate the poor by presenting, with referencing links and context, five examples of Brooks' unending class-consciousness and polarizing language in the defense of the rich. In this debate, we have great examples of confusing correlation and causation, lies of omission, framing devices, and wealth apologia. The debate on income inequality also shows how the discussions which used to be held in taverns have migrated to cyberspace. Not a moment too soon has the internet allowed the commoners to challenge the lords and their heralds. This might be our last chance to have this debate too, as well as our last chance to preserve some small space for popular participation in the business of state.

"Jumping the shark" has become a euphemism for television programs that have run out of ideas. It refers to an episode of Happy Days when Fonzie proved once again to be the coolest guy around by water skiing and jumping over shark infested waters, or something to that effect. It was too much for the audience and most people point to that moment of Fonzie in the air wearing his leather jacket and swim trunks as when Happy Days went over the edge of cool. One can only hope that David Brooks' breathless defense of wealth and concurrent condemnation of the poor has finally jumped the shark on our indefensible system of corporate personhood and human commodification.