"I'm not a marxist but I think that somebody needs to point out to all those who say that controlled economies don't work that, right now, the Chinese and their controlled economy are burying us."As it happens, I had been accused of being a marxist just a couple of days before that, because I had suggested that market power tends to end up in the hands of a few small firms.
It seems like even claiming that there is a problem with the "free market" will get you called a Marxist. In this post, I'm going in the opposite direction; in this post I'm going to suggest that standing up for the "free market" is un-American--specifically, it is opposed to the U.S. Constitution.
You may have noticed by now that I keep putting "free market" in quotes. The reason for this is because there is no such thing as a "free market"--rather there is a variety of economic theories which describe economic behavior, and these theories are not uniform in what they consider "free" for a market.
A couple of years ago I wrote a post in which I discuss the effect of classical "free market" theory on moral values (The Free Market and the Death of Compassion.), and I will take that as a starting point. In that post I quote John Maynard Keynes saying ""foul is useful and fair is not; avarice and usury and precaution must be our gods" and a longer passage from Adam Smith's Wealth of Nations:
He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security ; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.
-- Wealth of Nations, Book IV, chapter II
We can see in both of these quotes that the individual actor is called upon to act in his or her own personal interest, without attention to the needs of others or any sort of "public interest". In short: "free market" theories call for selfish behavior. Such behavior, however, is in stark contrast to the values set forth by the authors of the U.S. Constitution, as we can see just by looking at the preamble:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Let me emphasize those opening words: "We the People." This is a document about people working together. It is about people working together for the public good--not a bunch of people acting selfishly and trying to maximize their own gain. By this basic analysis, we can clearly see that the principles guiding the creation of the United States are principles of cooperation and of people working together for a larger shared public good. In the preamble, too, we can see hints (at least) that we should care for the welfare of all, not just individually.
In short: the basic principles behind the formation of the United States are principles of cooperation towards a greater social good. The principles behind "free markets" are selfish principles. These two value systems are in conflict, and--as the bible suggests--one can only serve one value system at a time:
No man can serve two masters: for either he will hate the one and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.
-- Matthew 6:24
So which is important to you? The "free market" or the U.S. Constitution? If you say that the "free market" is more important, then I call you out as being opposed to American values and being opposed to American democracy.
There's a mountain more that could be said on this subject, but I don't want to get too deep in here. Before closing, however, I will address one argument--it is claimed (by Adam Smith and those who follow) that the selfish aims of the individual actors will lead to the greatest social good, and therefore that by acting selfishly, one promotes the overall good of the society. There are several responses I could make to this, but one is that the values of the people in the society are part of the society and part of what makes a society good or bad. The good that Adam Smith predicted was limited to a prediction of wealth: the free market increases wealth. However, what if we measure the quality of a society in more complex terms--in terms of wealth and other factors? In that case, the increase in wealth predicted by Smith's theories might well be counterbalanced by a corresponding decrease in other factors that contribute to a good society.
Ultimately both Adam Smith (and following free market proponents) are putting forth a recipe for how to create a better society. So, too, were the framers of the U.S. Constitution. One of these recipes says (explicitly) that social interest and a sense of social responsibility are bad. The other puts a sense of social responsibility at its very heart.
So the next time someone tells you how great the "free market" is, just say "yeah, as long as you don't believe in the Constitution."
This post is long enough now, but really these issues are complex. The critique of "free markets" that I posted here is a critique of certain aspects of this complex economic theory. In the current political climate of the US, the complexity of real issues is swept under the table in favor of a sound-bite logic suitable for 30-second answers on televised debates and televised commercials. The real complexity of issues that needs to be addressed isn't: in this case, I want to point out that there is a huge gap between "free markets" as often propounded by the media and politicians, and the idea of a controlled non-market economy (which is often called Marxism, though that is not really what Marx was talking about). Just because I don't blithely accept any and all claims that the "free market" is the best social system, doesn't mean that I don't believe in the value of a market economy. Indeed, if the "free market" is defined properly, then I even agree with "free markets."
But wouldn't it be great if people actually cared about the Constitution, with its guarantees of political freedom, more than they cared about their own personal gain? Wouldn't it be great if people held the good of society--the general welfare--as a value to be honored instead of serving mammon?
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