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The X-Rated Free Market

Is the pornography market the only free one? The question might seem provocative. Or a gross oversimplification. But it might also shed some light on certain points, namely those related with the political shaping of markets, to declare our interest in the matter at the outset.

The whole thing begins with the question of how much to tax society’s richest inhabitants. A legion of academics, journalists and intellectuals (let’s say) has been hard at work trying to prove – usually not in a wholly altruistic fashion, though there are always a few slavish ill-paid imitators – that raising the taxes of the rich is either morally deplorable, or economically inefficient, or an idea spawned by spite or envy, or whatever other drivel occurs to the scribe of the moment. With few variations, the argument tends to run along the following lines… Some people, due to their initiative, brilliance, creativity or bold originality, make great contributions to “society”. Thanks to these bounties with which the rest of us are blessed, whatever form they take, they should be paid much more than your average citizen, and should certainly not be penalised by being made to pay high taxes. This conclusion is merit-based and just, or so the argument goes. Markets (although some champions of the rich prefer to call it “the market” and, indeed, with a concentration of power in which 0.01% of the world’s population controls 50% of the wealth, they are perhaps being more truthful than they intend to be) must have free laws of supply and demand and interfering with them is tantamount to inefficiency, distortion, excessive costs, and so on. It’s incredible but true that such claptrap has made some writers very rich, has crowned others with the Nobel and other august laureateships, has ensconced still others in university chairs, and endowed all of them with a constant sycophantic media following.

Do free markets really exist? Maybe the pornography market comes close to it but the idea of a market needs closer attention before we tackle this X-rated matter. Markets are created by states. Every market is a compilation of laws, rules and regulations about what can and can’t be done, and these are formulated and approved by members of parliament, applied by functionaries and protected by means of police, courts and prisons. Depending on the times in which a law is conceived, politicians can legislate in favour of the rich, the poor or somewhere in between. Class struggle sets the tone. The police, courts and prisons obey the laws and rules of the day. Of those in power. In brief, markets are shaped by constant intervention by governments. Always, absolutely always. In favour of some, or in favour of others. They never work in everyone’s favour however much the governments of the day insist that their measures are what “the population” needs.

So what’s pornography got to do with all this? Well, who can name a few porn stars? Who can name a few Hollywood stars? Not many people can answer the first question and a lot will reel off names in response to the second. To get to the nitty-gritty, are porn stars paid the same as non-porn stars? Why do Sandra Bullock, Angelina Jolie and Leonardo DiCaprio earn so much more than Lisa Ann, Sandra Romais and James Deen? Do the first three work much better than the second trio? It wouldn’t be easy to demonstrate. But that’s not the point. There’s a big demand for porn, so much so that, according to a 2012 Huffington Post survey, a new porn video is produced every 39 minutes. Yet, in an interesting inversion of the market value usually assigned to male and female stars, female performers are paid between $600 and $1,000 per scene and males less than $150, compared with the top male and female Hollywo0d earners of 2013, Angelina Jolie ($33 million) and Robert Downey Jr ($75 million). These wage (and gender) differences are due to the different ways in which the Hollywood and porn markets are shaped. In the former case, property rights laws give actors royalties and their films can’t be freely copied and distributed. Anti-piracy laws are stringent and punitive, making sure that the big names of Hollywood make huge amounts of money. If their property rights were not thus protected, the market would be freer but they would earn much less. Porn stars might be better at their work but they don’t get the same legal protection in their market because, unlike other film producers who know that the law is on their side and do press charges in cases of piracy, producers of pornographic films are much less likely to win any kind of legal action against violation of copy protection and, in fact, they tend not to go to court. Their work is easily available on the Internet and – moral and other considerations aside – their stars are not high-earning household names thanks to the nature of the market.

The market is certainly not about merit. The analogy of the spermatozoon and the high-level job market is illustrative. The recently abdicated King of Spain, Juan Carlos I, is well known for a lot of things: he’s a high-living Bourbon; he got very rich by obscure means; the expenses of his Royal Household were paid for by public money but not made public; in 2004 he shot one of Europe’s last bison and a bear in the Carpathians and, in 2006, “with a single shot”, another bear in Russia (a “good-natured”, tame animal called Mitrofan, previously intoxicated with vodka) and, in 2012, an elephant in Botswana (this time it took seven shots with a very fancy rifle decorated with gold and Swarovski crystals); a great fan of bullfights although whether this is because of Spanish nationalist sentiment or cognitive difficulties is unknown; and on 29 March, 1956, Alfonso, Juan Carlos’s younger brother, aged 14, died from a bullet wound to the head when he was playing with a gun, according to the royal family’s official statement. In fact, Juan Carlos was responsible for the accident. No investigation was ever carried out. His uncle Don Jaime demanded an inquiry (in vain): “… because I cannot accept that someone who has failed to fulfil his responsibilities might aspire to the Spanish throne.” Well, he did aspire to, and did sit on the Spanish throne, but who chose this chap for the plum job of head of state? The laws decided it, laws, as everyone knows and few want to remember, inherited from Franco regime. And that’s how his son, Felipe VI, succeeded him. A spermatozoon imposed by law.

So, it’s not about talent, not about merit, and not about hard work. Some rich people might combine some measure of all three, of course, but that’s not the point. That doesn’t explain why, for example, John Paulson, the US billionaire hedge fund manager, earns as much as 80,000 nurses in his country. His wealth is the result of a certain kind of market intervention, in this case by the financial market, in which the big banks and the big multinationals call the shots. To their own benefit. Paulson would never have got so rich if the finance market were regulated differently or as it was, say, about three decades ago and still less in the 1950s and 1960s when the richest members of society were paying marginal tax rates of around 90%. If anyone still wants to believe the myth of the (benign) free market they will need to explain why, for example, the financial industry spends more than €120 million per year on lobbying in Brussels with more than 1,700 lobbyists and using more than 700 organisations to influence the post-crisis EU regulation, thus outnumbering civil society groups and trade unions by a factor of more than seven. Or what must one think about the shaping of the market when reading that Philip Morris, ExxonMobil and Microsoft each spend more than €4.5 million per year on lobbying the EU institutions?

Nowadays we have certain kinds of markets that are politically shaped to serve the interests of a very small percentage of the world’s population. But it hasn’t always and everywhere been thus. The bottom line is class warfare, as another billionaire investor Warren Buffett wasn’t shy to recognise. The winners are in the top wealth decile. It doesn’t have to be like that forever. For the moment, whatever we might think about it, pornography is one of the few examples we have of a (roughly) free market. Today’s markets are highly regulated and it is glaringly clear who benefits. The problem isn’t so much whether the markets are more or less regulated but who regulates them and, underlying this, the basic, essential question of political economy: Cui bono.

This is why many Basic Income supporters believe that an unconditional guaranteed payment (above the poverty line) made by the state to the whole population is needed to usher in another kind of political economy, one which, organised with the interests of the poorer citizens in mind, would be as “subversive” and “radical” as universal suffrage was in its day. Indeed, Basic Income has the same secular, unconditional and universal features as democratic universal suffrage, so the mere fact of existing as a citizen (or accredited resident), independently of gender, ethnic group, sexual option, religion (if relevant) would make every person eligible for the right to a basic income. A lot of people think that a matter of such elementary justice is “impossible to achieve”, “madness” or “utopian”. The struggles for universal suffrage were similarly branded but the citizens won in the end. Now the fight must be about a completely different political economy, one where markets are shaped in the interests of the people and not against them, one that won’t let Warren Buffett boast that his class is winning.

Daniel Raventós is a lecturer in Economics at the University of Barcelona and author inter alia of Basic Income: The Material Conditions of Freedom (Pluto Press, 2007). He is on the editorial board of the international political review Sin Permiso

Julie Wark is an advisory board member of the international political review Sin Permiso. Her last book is The Human Rights Manifesto (Zero Books, 2013).

 

 

 

Daniel Raventós is a lecturer in Economics at the University of Barcelona and author inter alia of Basic Income: The Material Conditions of Freedom (Pluto Press, 2007). He is on the editorial board of the international political review Sin Permiso.   Julie Wark is an advisory board member of the international political review Sin Permiso. Her last book is The Human Rights Manifesto (Zero Books, 2013).

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