How a Theology of "Free Markets" Destroyed the Party and Brought Calamity the the Nation
The G.O.P. was once a respectable political party, giving voice to cautious citizens who saw much to protect in the affairs of the nation. The Democratic Party offered a forum for less sanguine citizens to disagree and seek reform, and in the healthy conflict between the two a robust democracy served the nation well.
Neither party was rigidly ideological, driven passionately to impose a set of beliefs, as the Taliban, say, imposed Islam in prewar Afghanistan. Both parties respected democracy.
Except in their Orwellian rhetoric, the Republicans no longer do, and the G.O.P. has withdrawn from serving the nation at large. About 25 years ago it became the political arm of "Movement Conservatism," and today it promotes not the general welfare but the commercial interests of corporate enterprise.
Movement Conservatism is a self-serving and socially malevolent cabal of mega-corporations, right-wing think tanks in Washington, their archconservative foundation benefactors, and an intricate nationwide network of linkages in the communications media, religion, higher education, and law. It has been called the "conservative labyrinth," and common to all its elements is a theology of "free markets," an ideology coming to full bloom in the Administration of George W. Bush. Today, the G.O.P. seeks to impose it at every turn.
In the abstract, and historically, "free markets" are hugely appealing.
In the primitive markets of The Wealth of Nations, Adam Smith’s seminal book of 200 years ago, there was absolute parity in bargaining power between autonomous consumers and subservient, proprietary producers. There were enough of both, competing among and between each other, that no one on either side could fix the market price. Prices were set only by the aggregated bargaining of the market as a whole, and hence were powerful signals of social preferences.
Smith detailed how such "free markets" assured the socially optimum allocation of raw materials, capital, labor, goods, services, and incomes, "as if by an invisible hand."
"Free markets" so conceived still enchant the simplistic and determined thinking of Movement Conservatives, especially as they perceive and attack "government intervention" in the markets. They choose to ignore, however, 200 years of subsequent economic history.
"Free markets" today are a fantasy, because contemporary markets are wholly dominated by corporate, not proprietary enterprise, and characterized by its features: among others, by administered prices, branded goods and services, transnationalization, vertical integration, wholesale externalization of costs, consolidation by mergers and acquisitions, the instantaneous and international mobility of capital, and the subjugation, by ubiquitous advertising, of consumer sovereignty. Corporate domination of "free markets" has destroyed the ability of markets to make socially optimum allocations, but none of this seems to penetrate the minds of Movement Conservatives. Nor do they see that trumpeting "free markets" gives free reign to corporate license. (A cynic might suspect otherwise.)
There is nothing socially optimum about the calamitous conditions in the nation today.
A dangerous, unjust, and growing gap between rich and poor festers ominously. Public education is collapsing. Homelessness is rampant. Health care is denied 16% of our citizens. Real wages are stagnant or declining. The nation’s physical infrastructure is crumbling. According to the U.S. Department of Agriculture, eleven percent of American families are not adequately fed, while an epidemic of obesity, diabetes, and other "lifestyle diseases" ravishes the rest of society. State and municipal governments retrench in fiscal panic, and federal deficits transcend anything ever known. Our economy survives only by exporting high-paying jobs and importing daily a billion dollars of foreign capital_to finance not investment, but consumption. For the first time ever we have invaded a sovereign nation without provocation, sundering the world community and enraging much of it. In approximately 25 years, this is what Movement Conservatism has delivered, while trumpeting "free markets."
Public policy is malfunctioning. It is no longer fashioned to promote the welfare of the nation at large, but to create, enhance, or protect the profit opportunities of American corporations.
Two things occurred in sequence to enable corporations first to intervene and then to dominate politics, just as they have come to dominate markets.
Political campaigning switched, in the 1960’s, from party-centered rallies and print media to candidate-centered television_which was vastly more expensive. Then, in the 1970’s the campaign finance laws were rewritten, political action committees were authorized, and corporate PAC money soon flowed in floods. Today, about * of all campaign financing comes from corporate sources, and it is not contributed as a public service.
Often the payoffs are effected with infuriating arrogance.
Noncompetitive contracts come to mind, for the Halliburton and Bechtel Corporations to rebuild Iraq. The purchase of energy policy by the Enron Corporation is another example. Yet another is the Medicare Prescription Drug and Modernization Act, signed by President Bush on December 8, 2003.
This law so heavily subsidizes the pharmaceutical and health insurance industries nearly 700 lobbyists were deployed to see it enacted. At the photo-op signing ceremony, President Bush was joined by five Senators and five Representatives. Together, these eleven public servants accepted more than $14 million in campaign contributions from the health and drug companies. (Roughly half went to Mr. Bush.) Among other provisions, the law makes it illegal for Medicare, using its market clout, to bargain down the cost of drugs, and effectively prohibits senior citizens from buying their prescriptions at far lower prices in Canada. Public policy to serve corporate well being? What, conceivably, else? Free markets at work?
Public policy is now a commodity, to be exchanged for value received.
The fantasy of "free markets" is politically expedient for Republicans and economically rewarding for their corporate clients. It suggests that parity still exists between producers and consumers, making palatable any policy said to increase the freedom of the market. (Deregulating markets for electricity comes to mind. Think Enron.) Such policies tend to increase only the freedom of corporate producers, typically at great expense to consumers. (Ask any Californian.) Only a malcontent would accuse Republicans of seeking this result intentionally.
How did the "free market" fantasy destroy the Republican party? First it had to be institutionalized as a coherent, secular theology, and that was done with skill, dispatch, money, and patience as Movement Conservatism took shape.
In the writings of Friedrich von Hayek (The Road to Serfdom, 1944), and his student Milton Friedman (Capitalism and Freedom, 1962) the ideology was at hand. Free markets, not governments, should regulate the affairs of society: that is the extent of the argument. "Government is not the solution," a devotee proclaimed, "government is the problem." And that is the extent of the vision.
Nuanced thinking is not a trademark of Movement Conservatism, however, and the need to apply the ideology was seen to be acute in the 1960’s and ’70’s. The nation’s campuses were percolating with protest, the result of anti-business, "liberal" faculties encouraging their impressionable students. On the national stage Nader’s Raiders were mounting successful attacks on what they alleged were excesses of corporate capitalism.
A seminal critique of the nation’s leftward drift was written in 1971 by Lewis F. Powell, Jr., a corporate attorney, a former president of the American Bar Association, a member of 11 corporate boards, and eventually a Supreme Court Justice. The "Powell Manifesto" saw the future of the free market at stake, and advocated a confrontational counterattack. It would become a long term, comprehensive, nationwide campaign to implant the "free market" paradigm, focusing on four primary arenas: higher education, the mass media, politics, and the court system. The "Manifesto" was widely circulated and it would achieve stunning success.
First Adolph Coors was persuaded. Beginning with a quarter-million dollar gift in the early 1970’s he transformed the obscure Analysis and Research Association into the Heritage Foundation. It has prospered with Coors funding ever since, channeled through his Castle Rock Foundation.
Endowed with corporate profits from the past, other archconservative foundations also established right-wing think tanks in Washington in the ’70’s and ’80’s or strengthened existing ones. In addition to Castle Rock, twelve other foundations form the financial core of Movement Conservatism. They are the Lynde and Harry Bradley Foundation, the Carthage Foundation, the Earhart Foundation, The Charles G. Koch, David H. Koch, and Claude R. Lambe foundations, the Phillip M. McKenna Foundation, the JM Foundation, the John M. Olin Foundation, the Henry Salvatori Foundation, the Sarah Scaife Foundation, and the Smith Richardson Foundation.
The Heritage Foundation is the largest and best financed beneficiary, but many others are familiar. The American Enterprise Institute, the Cato Institute, the Manhattan Institute, Citizens for a Sound Economy, the National Association of Scholars, Accuracy in Academe, the Media Research Center, and Accuracy in Media are prominent on the national level. Less well known are hundreds of "free market" cells scattered nationwide, all funded by these few foundations. (One such is F.R.E.E._the Foundation for Research in Economics and the Environment. It provides week-long indoctrinations into "free market" ideology, at luxury resorts near its home in Bozeman, Montana.. The invited participants, with all expenses paid by F.R.E.E., are federal judges.)
The top 20 conservative think tanks spend about $150 million a year, but not on short-term projects. Coordinated by an umbrella group, the Philanthropy Roundtable, they concentrate on a long-term ideological program: sustaining and expanding the free-market paradigm, and enshrining it in public thought, action, and policy.
Taking shape in the late ’70’s, Movement Conservatism became a sort of economic Taliban, absolutist in conviction, righteous, and anxious to impose its ideology on the American people. It found its vehicle in the presidential candidacy and election of Ronald Reagan, and over the next eight years Movement Conservatism and the Republican Party came to be coterminous.
There was little resistance. Since the Republican Party traditionally has been the party of commerce and finance, Movement Conservatism had only to sell an appealing ideology to a receptive constituency. As the pursuit of "free markets" came to mean "corporate well being," the transaction was consummated. The Republican Party took on the ideology, and also assumed a commercial function: marketing public policy as a product. It became the G.O.P., Inc., and forfeited its role as a party of the people.
President Reagan’s agenda came almost whole-cloth from the Heritage Foundation. His massive tax cut slashed current revenues, but Reagan shoveled trillions of dollars to corporations in the defense industries anyway. In so doing he added twice as much to the national debt as all his predecessors combined, from George Washington to Jimmy Carter.
This was the first shot from the most vicious and despicable weapon in the arsenal of Movement Conservatism: pile more and more indebtedness onto future generations so that debt service increasingly forecloses public expenditures for anything else. The stupendous deficits of George W. Bush preordain a starving public sector for decades to come.
In 1988 the Democrats learned how effectively corporate financing can facilitate television-based campaigns. A lot of money can make Willy Horton a household name. And so by 1992, dominated by the Democratic Leadership Council, the Democrats veered sharply toward the center, seeking corporate financing for the Clinton campaign. Clinton delivered, enthusiastically embracing "free trade," a global version of the free market fantasy. The Democrats were flirting with their own transformation to corporate status, and they continued in 2000, running free-trader Al Gore and Joe Lieberman, once chairman of the DLC.
Ralph Nader’s Greens couldn’t see much distinction between the G.O.P., Inc., and its Democratic emulators, and they high-centered the election. The Supreme Court, sporting a couple of Movement Conservatives on the bench, did the rest.
Some Democrats today are openly critical of a centrist, corporate-friendly stance for the party. Others still cling to it: the threat remains.
This is how the GOP, Inc., sells public policy as a commodity today.
45 million Americans have no health care coverage, as President Bush, on Heritage Foundation cue, undertakes the privatizing of Medicare. The greater his success, the more the Hospital Corporation of America will benefit. HCA operates the country’s largest chain of for-profit hospitals, but can’t make enough money honestly when Medicare is public. The company has paid $1.7 billion in fines for overcharging Medicare and Medicaid, the largest fraud settlement ever. HCA was formed by a Mr. Thomas Frist. One of his sons, Thomas Jr., earned $160 million a year as CEO. Another son, William, has a $26 million interest in HCA, and he is the Majority Leader of the United States Senate. Health care corporations and PAC’s have contributed over $2 million to William Frist’s campaigns. Mr. Frist engineered a provision in the Homeland Security Bill shielding the Eli Lilly drug company from liability lawsuits. Lilly contributed $1.6 million to Senate election campaigns in the 2000 election cycle, 79% to the G.O.P., Inc. And now Mr. Frist has steered through the Senate the Medicare Prescription Drug and Modernization Act. Drug sales are expected to increase, under the law, by $13 billion a year.
The American Enterprise Institute, the Cato Institute, and the Heritage Foundation have crafted or influenced virtually the entire programs of both domestic and foreign policy for the George W. Bush Administration. They display the intricate personal networks_mutually beneficial and self-serving_that characterize Movement Conservatism.
Mr. Jeb Bush, the President’s brother, served as a Trustee of the Heritage Foundation. Virginia Lamp Thomas is the Director of Executive Branch Relations there. Jeb Bush’s father appointed Ms. Thomas’ husband to the Supreme Court, which decided the 2000 election in favor of Jeb Bushs’ brother. Privatizing Medicare and public education are two of the targets at Heritage.
Mr. Rupert Murdoch served on the Board of The Cato Institute. He owns Fox Television News and the Weekly Standard, virtual house organs of the Bush Administration. Mr. Murdoch’s application to acquire Direct TV was finally approved by the Federal Communications Commission, chaired by Colin Powell’s son Michael. The approval was delayed because Mr. Murdoch’s communications empire exceeds the national media ownership cap of 35%. The Republican House raised the cap with a rider on the Omnibus spending bill to 39%–precisely the number Mr. Murdoch needs.
Charles Koch is a founder of the Cato Institute. His brother David is a Director. The Cato Institute wants to privatize both Social Security and the federal public lands. Charles and David own Koch Industries, a $35 billion oil company indicted in 1999 for cheating on its federal-land oil leases. It faced charges of $214 million. The Kochs and their employees contributed generously to George Bush’s several campaigns. David Koch and his wife gave $487,500 exclusively to Republican candidates in the 2000 election cycle. In that cycle Koch Industries contributed over a million dollars, 90% to the G.O.P., Inc.
The Clinton Administration charged Koch Industries with $352 million in pollution and hazardous waste violations. The Bush Administration dropped the charges when Koch Industries agreed to settle for $332 million less. Shortly after that, the Bush Justice Department settled the lease-cheating case for $20 million, saving Koch Industries another $194 million.
The Kochs have given handsomely to the Mercatus Center at George Mason University. So did Enron CEO Kenneth Lay. Wendy Gramm, Senator Phillip Gramm’s wife, was an ardent deregulator at Mercatus, and sat on Enron’s Board of Directors.
Mr. Lay in turn was a Trustee of the American Enterprise Institute. He no longer is, but more than half the current trustees are CEO’s of American corporations, including Dow Chemical, State Farm Insurance, Mead Westvaco Corporation, American Express, Merck & Co., Motorola, and Exxon/Mobil.
Vice President Richard Cheney has been a Trustee of the American Enterprise Institute. His wife, Dr. Lynn Cheney, is currently a senior staffer there. So is Richard Perle, a chief architect of the National Security Strategy that drove the invasion of Iraq. So is Michael A. Ledeen who, grateful for Perle’s work, reveled in the success of the Iraqi war. "Every ten years or so," Ledeen said recently, "the United States needs to pick up some crappy little country and throw it against the wall, just to show the world we mean business."
The Annual Dinner of the American Enterprise Institute was held last February 26th, in Washington. The featured speaker was President Bush, who "…delivered a historic address on the need for a new government in Iraq and the role it could play in spreading democracy in the Middle East."  Soon thereafter, justified by a threat we now realize he fabricated, Mr. Bush picked up Iraq and threw it against the wall.
 "Household Food Security in the United States, 2001." U.S. Department of Agriculture, ERS Food Assistance and Nutrition Research Report No. FANRR29, October, 2002.
 See opensecrets.org website, at http://www.opensecrets.org/
 See Public Citizen Congress Watch, June 2003
 See Center for American Progress, "The Progress Report, December 9, 2003."
 See "How Conservative Philanthropies and Think Tanks Transform US Policy," by Sally Covington, in Covert Action Quarterly #63, Winter, 1998.
 See "The Bad Doctor; Bill Frist’s long record of corporate vice," by Doug Ireland, in the L.A. Weekly, January 10-16, 2003.
 See "Understanding the New Medicare Prescription Drug Benefit," published by Families, USA, Nov. 25, 2003
 As reported in "Oil & Gas: Top Contributors," at http://www.opensecrets.org/
 As reported in "Koch Industries and the Pollution of the Bush Whitehouse," at www.mediawhoresonline.com/
 See "Bull Market," by Garance Franke-Ruta, cover story in the Washington City Paper, March 8-14, 2002
 As quoted in "The Demonstration Effect," by Lewis H. Lapham, Harper’s Magazine, June, 2003, p. 11
 Described on the American Enterprise Institute website, at http://www.aei.org/about/c
RICHARD W. BEHAN’s latest book is Plundered Promise: Capitalism, Politics, and the Fate of the Federal Lands (Island Press, 2001). For information about the book go to http://www.rockisland.com/~rwbehan/. Behan is currently working on a more broadly rendered critique, Citizens, Arise! A Patriotic Call to Retrieve Our Democracy.
This essay is deliberately not copyrighted, so permission to reproduce it is unnecessary.