FacebookTwitterGoogle+RedditEmail

There’s No Such Thing as a “Free Market”

by

The debates leading up to the election this year will no doubt invoke the “American value” of capitalism. But what, exactly, does that mean? And what should it mean?

I’m no economist, but I took a few economics courses while earning an undergraduate business degree. Growing up in a capitalist society, I thought I understood the basic concepts underlying capitalism — free markets, competitive advantage, and so forth.

Then I actually read The Wealth of Nations by Adam Smith, the founding work that described what we call capitalism in the first place. That was a game changer.

We’re all probably familiar with Smith’s ideas at some level.

The market regulates itself, as each of us operates based on our own self-interest. Businesses try to earn profits, and consumers try to meet their needs at the best prices. The market ensures that the demand of consumers is met with supply from business.

The government’s job, the doctrinaire thinking goes, is to get the heck out of the way. It doesn’t set prices or quotas. It just lets the market function.

Adam Smith cast this arrangement in glowing terms in 1776. He was describing England during the Industrial Revolution. He thought it was amazing that millions of individual actors, each operating based on self-interest, could so efficiently revolutionize society without any central planning at all.

Only, he was wrong.

In fact, the growing British Empire was undertaking economic interventions on a colossal scale — and would do even more in the centuries to come. The British set out all over the globe, claiming colonies in the New World and later India and Africa, setting up trade policies that benefited the British at the expense of the colonized.

The British imported cotton from their colonies for their own factories, as well as wheat to feed British workers in the isles. Colonial India, meanwhile, suffered several massive famines. Even as tens of millions of Indians starved to death, record amounts of Indian wheat were exported to feed British factory workers laboring in a so-called free market.

Before the Industrial Revolution, Indian textiles reigned supreme. But British authorities kept industrial textile technologies out of India in order to capture the global textile market, impoverishing the colony further.

Other British staples — tea and sugar — were also imported from British colonies. That sugar was produced by enslaved Africans in the Caribbean.

Some invisible hand.

Smith also overlooked the utter misery textile workers lived in, even in Britain. The system “worked” at making some people rich. But the squalid and wretched lifestyles of laborers, including children — which inspired the writing of Charles Dickens — were its cost.

We in America have meddled in markets plenty in our own right — not least through historical crimes like slavery and colonialism. But we’ve also developed more benign interventions that can actually help people.

We ban child labor, for example, and enforce (admittedly inadequate) minimum wage protections. We require businesses to offer safe and healthy workplaces. We ban the sale of dangerous drugs. We try to regulate pharmaceuticals to make sure they’re safe and effective.

In other words, capitalism with absolutely no government intervention is a myth — and always was.

We can debate the pros and cons of specific regulations. But if you hear a candidate claiming that capitalism means doing away with all regulations — or that any government interference in the market equates to socialism or communism — they’re being dishonest.

This column is distributed by Other Words.

More articles by:
Weekend Edition
February 16, 2018
Friday - Sunday
Jeffrey St. Clair
American Carnage
Paul Street
Michael Wolff, Class Rule, and the Madness of King Don
Andrew Levine
Had Hillary Won: What Now?
David Rosen
Donald Trump’s Pathetic Sex Life
Susan Roberts
Are Modern Cities Sustainable?
Joyce Nelson
Canada vs. Venezuela: Have the Koch Brothers Captured Canada’s Left?
Geoff Dutton
America Loves Islamic Terrorists (Abroad): ISIS as Proxy US Mercenaries
Mike Whitney
The Obnoxious Pence Shows Why Korea Must End US Occupation
Joseph Natoli
In the Post-Truth Classroom
John Eskow
One More Slaughter, One More Piece of Evidence: Racism is a Terminal Mental Disease
John W. Whitehead
War Spending Will Bankrupt America
Dave Lindorff
Trump’s Latest Insulting Proposal: Converting SNAP into a Canned Goods Distribution Program
Robert Fantina
Guns, Violence and the United States
Robert Hunziker
Global Warming Zaps Oxygen
John Laforge
$1.74 Trillion for H-bomb Profiteers and “Fake” Cleanups
CJ Hopkins
The War on Dissent: the Specter of Divisiveness
Peter A. Coclanis
Chipotle Bell
Anders Sandström – Joona-Hermanni Mäkinen
Ways Forward for the Left
Wilfred Burchett
Vietnam Will Win: Winning Hearts and Minds
Tommy Raskin
Syrian Quicksand
Martha Rosenberg
Big Pharma Still Tries to Push Dangerous Drug Class
Jill Richardson
The Attorney General Thinks Aspirin Helps Severe Pain – He’s Wrong
Mike Miller
Herb March: a Legend Deserved
Ann Garrison
If the Democrats Were Decent
Renee Parsons
The Times, They are a-Changing
Howard Gregory
The Democrats Must Campaign to End Trickle-Down Economics
Sean Keller
Agriculture and Autonomy in the Middle East
Ron Jacobs
Re-Visiting Gonzo
Eileen Appelbaum
Rapid Job Growth, More Education Fail to Translate into Higher Wages for Health Care Workers
Ralph Nader
Shernoff, Bidart, and Echeverria—Wide-Ranging Lawyers for the People
Chris Zinda
The Meaning of Virginia Park
Robert Koehler
War and Poverty: A Compromise with Hell
Mike Bader – Mike Garrity
Senator Tester Must Stop Playing Politics With Public Lands
Kenneth Culton
No Time for Olympic Inspired Nationalism
Graham Peebles
Ethiopia: Final Days of the Regime
Irene Tung – Teófilo Reyes
Tips are for Servers Not CEOs
Randy Shields
Yahoomans in Paradise – This is L.A. to Me
Thomas Knapp
No Huawei! US Spy Chiefs Reverse Course on Phone Spying
Mel Gurtov
Was There Really a Breakthrough in US-North Korea Relations?
David Swanson
Witness Out of Palestine
Binoy Kampmark
George Brandis, the Rule of Law and Populism
Dean Baker
The Washington Post’s Long-Running Attack on Unions
Andrew Stewart
Providence Public School Teachers Fight Back at City Hall
Stephen Cooper
Majestic Meditations with Jesse Royal: the Interview
David Yearsley
Olympic Music
FacebookTwitterGoogle+RedditEmail