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Capitalist Free Markets are a Fraud

by Johnny Reb

A Left-Libertarian Analysis

Capitalist authoritarianism, elitism,  corporate power, monopolies, structural inequality and systemic  poverty

An asterisk "[*]" denotes a footnote following a paragraph.

The experience of oppressed people is that the living of one's life is confined and shaped by forces and barriers which are not accidental or occasional and hence avoidable, but are systematically related to each other in such a way as to catch one between and among them and restrict or penalize motion in any direction. It is the experience of being caged in: all avenues, in every direction, are blocked or booby trapped.  – Marilyn Frye, “Oppression,” in The Politics of Reality

Many consider capitalism synonymous with democracy, as many consider capitalism synonymous with free markets. But neither of these allegations is true. I've addressed the former claim on numerous occasions, more or less arguing that our so-called democracy is democracy of, for and by entrenched elites, the best government money can buy.* I think it's fair to say at this point that our national governments have now become wholly owned subsidiaries of multi-national corporations. The Iron Law of Oligarchy  still prevails, as it always has in all hierarchical societal arrangements, political or otherwise.** I will now turn to the latter claim..

[*] I continually ponder on how much deceit and prevarication spewed from governments and their lap dog corporate lame stream media people can continue to tolerate without some semblance of revolt. From WMD, to the phony "economic recovery", QE, the superficially bloated stock market as a measure of general economic health to the most egregious dollop of pure hot steaming bovine excrement, "Too Big to Fail", the public acquiesces like credulous docile sheep. We've been repeatedly informed by our oligarchic masters that large financial mega-corporations are "too big to fail"; otherwise we face financial Armageddon. This prime cut bullshit was used to justify multi-trillion dollar government bailouts of grossly criminal banks, insurance companies and investment houses, all courtesy of the taxpayer.

Now the burgeoning wage slave populace is being coerced into paying for the resulting massive government debt with brutal austerity. By "austerity" it means dismantling anything and everything within the public domain from education, pensions, public health care and other social services, selling off the remnants to the private sector at fire sale prices. But wait, just when you think the bullshit about "too big to fail" can't get more contemptible and putrid we are now told...wait for it... here it comes....banks are "TOO BIG TO JAIL". It seems as if George Carlin (follow link) was right as he was about almost everything else, bullshit is the societal glue that keeps everything together, from religion, politics, education and business (Follow the links). We've all been bullshitted into submission and docility. In testimony before the Senate Judiciary Committee in early March 2013, US Attorney General Eric Holder made an extraordinary admission. Responding to questioning from Republican Senator Chuck Grassley, who noted that there had been no major prosecutions of financial institutions or executives by the Obama administration, Holder said: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them, when we are hit with indications that if we do prosecute—if we do bring a criminal charge—it will have a negative impact on the national economy, perhaps even the world economy."

Barely a week after Holder's shocking admission that the Obama administration deemed the major Wall Street banks too powerful to prosecute, that is, they were above the law, the Senate Permanent Subcommittee on Investigations released a 300-page report documenting rampant fraud and law-breaking by JPMorgan Chase, the largest bank in the US and the world’s biggest dealer in derivatives. Moreover, today the IMF and European Central Bank have come up with another attack on the masses in cash strapped Cyprus to raise €6 billion by levying a one-off 10 percent tax on savings over €100,000 and a 6.75 percent tax on small depositors. Senior bank investors, bondholders, wealthy investors and hedge funds trading in Cyprus’ sovereign debt will of course be left untouched.

With US Attorney General Eric Holder's proclamation, the corporate financial takeover of government in the so-called free world is now complete. Nothing of course was changed following the 2007-08 global meltdown, no one punished for grotesque exploitation and blatant criminality. The bank mafia was back in business as usual. Now the financial oligarchy has been crowned. With the coronation, banks can now operate with impunity....

[**]As Jacques Rancière states in his book, Hatred of Democracy, "We do not live in democracies", but rather, "states of oligarchic law....They hold free elections. These elections essentially ensure that the same dominant personnel is reproduced, albeit under interchangeable labels..."

As I will endeavour to make clear, the present system of what I prefer to call state capitalism cannot be synonymous with free markets simply because we they are not "free". "Free enterprise" has been, and still is, a commonly invoked cosy euphemism employed by champions of various forms of state run capitalism that suggest universal freedom of exchange and enterprise. Yet it has been neither free nor enterprising.  As the eminent Canadian political theorist C. B. McPherson (1911-1987) pointed out, the idea that the "free market" eliminates coercion and oppression is ludicrous. To say that a man born into poverty struggling to stay alive and a man born into privilege who owns a multinational media conglomerate are equally "free" is a gross distortion of language. Within the state capitalist system, right wing libertarians such as Milton Friedman ignore the reality of the coercive power of the state legally ceded to those who control huge swaths of capital. In addition there is the subordinate position of labour, held in check by terms of employment, propaganda and the physical presence of police, military and prisons. Democracy, understood not as elitism, but  as a bottom-up demand for equal voice, opportunity and justice is always on the agenda.

Today the very visible hand of government is all over the economy, broadly and unequivocally favouring the wealthy and big business interests over all others. These favours take the form of business tax incentives, control of the money supply, manipulation of interest rates and banking to communications, transportation to manufacturing, agriculture, insurance to basic research to global trade mechanisms, and much else. Although pundits like Ludwig von Mises and Friedman fervently strived to have "capitalism"  understood as the "free market," they were dealing in fantasy. Mises and Friedman notwithstanding, from early on capitalism has historically been associated with government intervention on behalf of wealthy land and factory owners both at home and abroad. Colonialism and imperialism have typically been the primary drivers. These are the real historical and traditional "entitlements", designed to maintain and "conserve" the status of wealth and privilege. It's the essence of the Conservative Corporate Welfare State and conservatism in general; throughout history not much has changed.

Historical Perspective

"Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of the state even if the sovereignty of unwilling nations be outraged in the process." - Woodrow Wilson, 1907

The grinding destitution of Britain's industrial life in the 19th century provide a standing argument for proponents of positive reform of a system of systemic exploitation. Child labour in the mills and mines, starvation wages, horrendous hours for all and vile and hazardous conditions of labour concomitant parallel with obscene wealth and privilege for a tiny aristocracy were the norm.  Anyone who has read the many novels of Charles Dickens and Thomas Hardy or Friedrich Engels The Conditions of the Working Class in England can come to understand the depths of depravity for the masses. These horrific living conditions were attributed by most reformers and publicists to a regime of rugged individualism, unrestrained competition, and laissez-faire. This is an absurdity on its face, for no such regime has ever existed in England or anywhere else. The conditions were in fact due to systemic conditions of elite conservatism upheld by the state’s primary intervention whereby the population of England was expropriated from the land; due to the state's  removal of land from competition with industry for labour.

Many anarchist philosophers often refer to three variants of capitalism that I will describe later. Early capitalism, arising as a new class society directly from the old class society of the feudalism of the Middle Ages was founded on an act of theft as massive as the earlier feudal conquest of the land. From the outset of the industrial revolution, what is nostalgically called “laissez-faire" is in fact a system of ongoing state intervention to subsidize selective accumulation, guarantee privilege and maintain control, discipline and docility of the burgeoning working classes.

The contamination of government intervention into economic activity in Europe was carried over to the British North American colonies. The radical nature of the American Revolution has concealed the class struggle within American colonial society between what historian Merrill Jensen called “radicals” and “conservatives” in his book The Articles of Confederation: Interpretation of the Social-Constitutional History of the American Revolution, 1774–1781. The origins of class analysis does not flow exclusively from Karl Marx, but by earlier laissez-faire radicals such as Charles Comte and Charles Dunoyer. A privileged politically connected power elite came to dominate each colony, living off generous land grants and taxes from the state. Patronage, power and land were handed out as royal favours and the wealthy recipients became a fixture within the colonial system. In the northern states the ruling class consisted of factory owners and merchants whereas in the south it was big plantation barons. Jensen notes that in Pennsylvania, for example, “the merchants had tried by various means to overthrow the system of markets and auctions in order to get a monopoly of the retail trade.” Then, as now, established businesses preferred cartels to free and unpredictable competition.

"The twentieth century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power and the growth of corporate propaganda as a means of protecting corporate power from democracy" - Alex Carey

The 20th century* only accelerated this process of state complicity in legalized plunder by shifting it further to the national level. For the first several decades, despite working class rebellions, the conditions of working people were as bleak as ever. George Orwell's documented accounts in  Down and Out in Paris and London and Road to Wigan Pier are a revealing testament to the early years of the century. Big business's complicity in the Progressive Era "reforms" is also well documented. If you regard favours for major businesses as government intervention, then there was no laissez faire in the 20th century. Even during the "roaring twenties" of the Harding-Coolidge years and arch-conservative Herbert Hoover's  interfering administration on behalf of big business support this contention. Moreover, it ought to be understood that big business supported Franklin D Roosevelt's election in 1932 and his administration during its early years. The corporatist National Recovery Administration was supported by big business leaders and for some didn't go far enough. If one believes that in the depths of the Depression, America's elite might have embraced socialism and some explicit nationalization of key industries, then one can conclude that Roosevelt did indeed "save capitalism," but not in the sense of the free market, which had already been compromised virtually beyond recognition.

[*]The twentieth century social philosopher and educator John Dewey (1859-1952) could have been easily talking about current economic arrangements when he said: "Power today resides in control of the means of production, exchange, publicity, transportation and communication. Whoever owns them rules the life of a country." Politics becomes then "the shadow cast on society by big business," so long as the country is ruled by "business for private profit through private control of banking, land, industry, reinforced by command of the press, press agents and other modes of publicity and propaganda."

Corporatist economy is so closely aligned with the power of the state, that it makes more sense to think of the corporate ruling class as an offshoot of the state, in the same way that priests, monarchs and land barons were an integral  component of the state in the feudalism of the Middle Ages. I have referred to this state institutionalization of capitalism as the Conservative Corporate Welfare State. It surely doesn't make much sense to consider particular strategies for deregulating or cutting taxes without regard to the role taxes and regulations play in the overall structure of state capitalism. That's especially true considering that most mainstream proposals for "free market reform" are generated by the very class interests that benefit from the very same Conservative Corporate Welfare State.

I'm not about to suggest that everything that is not against the prevailing law is thereby compulsory. In every politico-economic system there is a blend of compulsory and discretionary behaviour. The ruling class allows some modicum of voluntary market exchange within the interstices of a system whose overall structure is defined by coercive state intervention. The choice of what areas to leave to voluntary exchange, just as much as of what to subject to compulsory regulation, reflects the overall strategic programme of the ruling class. It's part and parcel of the real interminable "golden rule": "those who have the gold make the rules." Throughout history, has there ever been anything else? The overall mixture of state corporatism and market activity will be chosen as most likely, in the estimation of the ruling plutocracy, to maximize net exploitation and profit by political means.

Some forms of state intervention, however, are derivative. Their purpose is to stabilize and ameliorate. They include welfare-state measures, Keynesian demand management, and the like, whose purpose is to limit the most destabilizing side effects of privilege and to secure the long-term survival of the system. Unfortunately, the typical "free market reform"  issuing from corporate interests involves eliminating only the ameliorative or regulatory forms of intervention, while leaving intact the primary structure of privilege and exploitation. The wealthy investor class and transnational corporations have always had as their agenda "privatize profits" and "socialize losses." If the real costs of doing business ("externalities" or "collateral damage") were factored into balance sheets (environmental degradation, offloading taxes, government infrastructure, labour exploitation, surplus value and harm, and so on) many companies would not survive as viable profitable entities. Corporations have now evolved into "personhood" but are in reality Frankenstein ogres without the moral and legal accountability and restraints that real people are expected to hold to.

When the state is controlled by "legal plunderers" and every decision for or against state intervention in a particular circumstance reflects their strategic assessment of the ideal mixture of intervention and non-intervention, it's a mistake for a genuine anti-state movement to allow the priorities for "free market reform" to be set by the plunderers' estimation of what forms of intervention no longer serve their purpose. If the corporate representatives in government are proposing a particular "free market reform," you can bet your life it's because they believe it will increase the net political extraction of wealth.

The corporate ruling class's approach to "free market reform" is a sort of mirror-image of  "lemon socialism." Under lemon socialism, the political capitalists acting through their enablers in government choose to nationalize those industries that corporate capital will most benefit from having taken off its hands, and to socialize those functions the cost of which capital would most prefer the state to bear (the aforementioned "privatize profits and socialize losses"). They shift functions from the private to the state sector when they are perceived as necessary for the functioning of the system, but not sufficiently profitable to justify the bother of running them under "private sector" auspices. Under "lemon market reform," on the other hand, the political capitalists liquidate interventionist policies after they have wrung out all the benefit from state action. Overt massive multi-trillion dollar bailouts by government of "too big to fail" banks, financial companies and other corporations such as the auto industry carried in 2007-09 is the other ploy under lemon socialism. Now we are informed by Obama's Attorney General Eric Holder (March 2012) that some corporate entities (primarily banks and huge investment houses) are "too big to jail", beyond the pale of prosecution that operate with total impunity. The corporatist state now seems compete.

In the 19th Century, British industrialists felt it was safe to adopt "free trade" after mercantilism had served its purpose. Half the world had been driven into a unified market by British force of arms and was held together by the British merchant fleet. Britain had systematically stamped out competing industry in the colonial world. It had re-introduced the Enclosure Acts  on a global scale, stealing enormous amounts of land from native populations and converting it to cash crops for the imperial market. The commanding position of British capital was the direct result of past mercantilism; having established this commanding position, it could afford "free trade.”

The so-called "free trade" movement in the past two or three decades in North America follows the same pattern. A century ago, high tariff barriers served the interests of American political capitalists. Today, when the dominant corporate interests in America are transnational, tariffs are no longer useful to them. They actually impede the transfer of goods and partially finished products between the national subdivisions of a single global corporation. On the other hand, so-called "intellectual property” today serves precisely the same protectionist function for transnational corporations that tariffs used to serve for the old national corporations a century ago. So the political capitalists promote a version of "free trade” that involves doing away with outmoded tariff barriers while greatly strengthening the new protectionism of "intellectual property" law.

The Facade of Free Trade

Man is a strange animal, he doesn't like to read the handwriting on the wall until his back is up against it - Adlai Stevenson

All governments around the world interfere in the economies of the countries they rule and intervene in cross-border trade on a regular basis. They favour and subsidize multinational corporations and specific businesses, such as fossil fuel extraction and agriculture, subsidize with obscenely low taxes and pay for international advertising of mega-corporations, and institute tariffs and customs rules that ban or complicate the free flow of goods between people on opposite sides of political borders. Such rules and regulations favour powerful domestic businesses that have powerful lobbies at the expense of producers in other countries. And to add insult to injury the state and their inept "bought- -and-paid-for "regulatory authorities protect their worst offenders, the banks and financial corporations with "get out of jail free cards". Most key cabinet positions in government are former executives of these same financial corporations such as Goldman Sachs and J P Morgan. In short, the fox guards the henhouse,

For them subprime mortgage fraud, toxic waste investment vehicles designed to crash and burn, laundering drug money and manipulating the LIBOR rates are deemed no worse than a parking ticket. But several weeks ago I read that the US Justice department is possibly bringing charges against the rating agency Standard and Poor’s, again highlighting the cesspool of illegality, conflict of interest and corrupt relations that lie at the very heart of the US and global financial system. It remains to be seen if they go ahead with a criminal prosecution. I doubt it. But the fact that corruption and lawlessness is rampant within the major banks and financial community overall and that charges are rarely laid clearly shows the failed corrupt dysfunctional system that prevails. The present system is beyond redemption or reform and needs to be toppled.

And let's not delude ourselves, the WTO, NAFTA and other "free trade" agreements fundamentally have little or nothing to do with real free trade. Rather, they are global blank cheques ceded to multinational corporations that facilitate their power to circumvent sovereign laws (or lack thereof) of foreign countries (generally the Third World) and exploit cheap labour and the natural  environment with impunity. For example they do not challenge the principle that governments are entitled to tell their subjects what they may and may not buy and whom they may trade with. Under NAFTA, for instance, it is illegal to buy lower-priced therapeutic drugs in Canada and resell them in the United States or for an ordinary citizen to cross the border with unlimited purchases made in the United States and bring them into Canada.

About a decade after NAFTA (North American Free Trade Agreement) was passed in the early 1990's cheap American corn flooded Mexico and destroyed the peasant agriculture that had sustained millions of peasant farmers for generations. Their livelihoods destroyed, those ‘freed’ from the land went to work either in Maquiladoras, factories established by multi-national corporations in Mexico to exploit cheap labour, or migrated to the U.S. in search of work. In the U.S. the "financial crisis" and global depression caused by de-regulated finance was then exploited by cynical and ethically challenged politicians to scapegoat for domestic economic travails the displaced peasant farmers from Mexico who had come to the U.S. looking for work. The circumstances of these economic refugees thus diminished, many now feed the detention and deportation ‘industries’ as new and ever more intrusive ‘"free-trade" agreements are negotiated in secret and to the exclusion of those affected by them. But the misery inflicted on the Mexican working people pales in comparison to the millions upon millions of job losses in North America and Europe. The so-called "middle class" has been decimated not only with massive job losses, but those that remain are low paying, often part-time, service industry jobs. Welcome to permanent Dickensian hard times where rather than a pay raise you are compensated with a worthless insult called "Employee of the Month".

Unionization has been declining for decades now and, along with diminishing pay slips, employees are now working harder than ever and not uncommonly, unpaid overtime. Add to this the cell phone obsession whereby your demanding boss can be in touch with you 24-7. In short, the conditions of the worker these days are dismal. In addition to cell phone addiction we have the mind-numbing preoccupation and mass ADD of face book, texting and twitter and you've got an anaesthetized society detaching itself from reality, literacy and any serious dialogue or criticism. Surveys have discovered that people now hold their cell phones more hours per day than they do their loved ones - or private parts. We've literally turned our children into robotic drones, who are engulfing themselves in a self-flagellating and lobotomizing techno-nightmare. Do young people read intellectually stimulating books or speak to one another face to face any longer about real vital concerns? One positive thing may come from this affliction: it will prepare them for the new 21st century workplace of feudalistic wage slavery and the Freedom 95 retirement plan. There's going to be a whole new meaning assigned to TGIF - or perhaps BGIM (Blame God, it's Monday).

Many have expressed valid concerns about the WTO weakening national sovereignty, implying that the participating governments are a force for good that should be defended. They seem to forget that these same governments rob workers while dispensing corporate welfare and golden parachutes when they face bankruptcy. So much for "laissez faire" and Adam Smith's "invisible hand". Such critics fail to understand that the United States, Canada and other national governments routinely limit individual autonomy, the only kind that is really important. These so-called democratic governments grant tax holidays for big business and wealthy investors, while they routinely steal money from workers in the form of income taxes, enforce laws perpetuating unfair land ownership, maintain a monopoly on the means of exchange, and defend the unjustly-gained wealth of the rich, thus impoverishing working people. The corporatization of the state is all but complete. Consequently, they should all be opposed.

The governments of the United States, the European Union, Canada, India, Japan and elsewhere are elected, presumably democratic, but this does not imply they are legitimately democratic, benign, or represent the interests of the mass majority of individual working class citizens of the countries they rule. A cursory examination of election campaigns, the wealthy business and professional classes from which the candidates are chosen and how and by whom the campaigns are financed is instructive. The purported democratic government of the United States, for instance, makes war on people in Kosovo, Afghanistan and Iraq, supports dozens of brutal (right wing) dictators who are nothing but facilitators for American corporate interests, murders people in places like Pakistan with drone rockets, supports the Chinese Communist  police state (ironically the most competitive and rabid capitalist country in the postmodern world), subsidizes the growing of tobacco and other favoured toxic crops in their country, and bans the domestic use of therapeutic drugs available in other countries. The list of transgressions is too long to cite here. And the United States is the same government even some critics of the WTO seem to feel can be an advocate for the interests of the world's workers and natural environment. Hardly! We need to get the various national pseudo-democratic governments, as well as the WTO (and its partners in crime, the World Bank and IMF), off the backs of the people in the countries they oppress, exploit, brutalize, torture and murder.

Economic imperialism* has a long history - colonialism, neo-colonialism and modern corporate extraction and exploitation through new and historical colonial channels, of which contemporary mainstream economists appear to have no knowledge. This is more likely than not why trade economists can write about "free-trade" without tying actual trade relations to imperial history. Progressives, liberals and social democrats hope to moderate the worst effects of capitalism without admitting their historical roles as facilitators of war and imperial predation. And contemporary liberals (neo-liberals or neo-conservatives) are proponents of the most radical forms of capitalism ever conceived. Merely consider which self-described liberals or conservatives win the "Nobel’ prize" in economics which is in reality a banker awarded prize having nothing to do with a choice of the Nobel Committee. Then take a hard look at their economic theories on trade. The Nobel Prize has become farcical, with war mongers and mass murderers like Henry Kissinger and Barrack Obama winning the peace prize. Obama won I suppose because he had the distinction of not being George W Bush. It doesn't get any better, does it? The latest winner for the "peace" prize was the EU, an institution responsible for the harsh austerity programs on working people throughout Europe driven to pay for the crimes of the iniquitous European banks and their subsequent bailouts.

[*] Imperialism may be defined as follows: "the process whereby the dominant investor interests in one country bring to bear state military and financial power upon another country in order to expropriate the land, labor, capital, natural resources, commerce, and markets of that other country. In short, empires do not just pursue power for power's sake". Empires are enormously profitable for the investor interests of the imperial nation but enormously costly to the people of the colonized country. Even today, plundered populations bemoan the resource curse, owing from bitter experience that countries rich in natural resources usually end up as losers. Many of the countries of Africa, Asia, and Latin America are rich, only the people are poor. The imperialists search out rich places, not barren ones, to plunder.

Governments all over the world deny their working subjects economic freedom and favour the interests powerful financial corporations, banks and wealthy owners of land and industry, thus impoverishing the many and enriching the few, who in turn enrich the politicians. For any semblance of real democracy to take place, these oppressive coercive structural institutions of wealth and privilege must be dismantled. The systemic corruption by the fusion of government with corporate power simply cannot be fixed. "Corporatism" was what Benito Mussolini referred to as his brand of fascism.* In a PBS television interview shortly before his death, the great Canadian economist John Kenneth Galbraith (1908-2006) succinctly summed up the current crisis of democracy when he asserted, "There's no question that this is a time when corporations have taken over the basic process of governing." But throughout its history capitalism has shown it will adapt itself to any political ideology, whether it be fascism (as in Hitler's Germany or Mussolini's Italy) or communism (as in today's China). Anyone who accepts the standard propaganda from our conservative masters that capitalism is tantamount to democracy ought to give their head a shake.

[*] "Fascism should more appropriately be called corporatism because it is a merger of state and corporate power."  - Benito Mussolini

Emma Goldman, the great anarchist once said, "If democracy and elections really fundamentally changed anything, they would be declared illegal." When, with the support of conservative elites and big business, Hitler gained absolute power he continued to hold elections, despite making it illegal for any once prominent socialist or communist party to exist in Germany.  Most leftist intellectuals, political leaders and union members found themselves languishing in Dachau. Elections were reduced to deciding "yes" or "no" to the only legal party, the Nazi Party. When one examines the negligible differences between the political parties in Canada and the US, are things really fundamentally different? When any of the major parties are elected, nothing really changes for the vast majority.

The upshot of the above revelations is that historical capitalism was and is not a democracy, nor a free market. Rather it's an anti-competitive, pro-business system of controls and subsidies in which government and mercantile interests work together in a injudicious attempt to produce economic growth and promote the fortunes of specific well-connected interests. As in any period, there are rent-seekers and obliging rulers, with a revolving door between the two groups. But it is important to note that there was no attempt at far-reaching economic planning. There was scope for genuine entrepreneurship, but it has never needed any encouragement to flourish. By historical standards the burden of government was light. Grass sprouts through the cracks in the sidewalk. A little economic freedom goes a long way.

This historical capsule is relevant to understanding the basis from which the economies of the U.S. and other Western  capitalist countries evolved and to realizing that the trajectory of development has been different from what it would have been had a real free market existed. Privilege has had long-lasting effects, which we still feel today. (see Roderick T Long, Corporations versus the Market)

What, then, is this system called "capitalism"?  

Consider the following categories articulated by many anarchist philosophers:

Capitalism 1 : an economic system that features personal property rights and voluntary free exchanges of goods and services. In short, an authentic free market.

Capitalism 2:  an economic system that features a symbiotic relationship between big business and government.

Capitalism 3: an authoritarian rule of workplaces, society, and (if there is one) the state by self-serving crony capitalists, that is, by a relatively small number of privileged people who control investable wealth and the means of production.

Capitalism 2 and 3 are inconsistent with free markets. I leave to the reader the simple problem of determining which of these three is the ideological variant we have today. Most anarchists and libertarians endorse the first edition which they would deem genuine "free enterprise". I'm inclined to think that many of those who employ "capitalism" in the pejorative sense intend it to encompass the dominance by capitalists of all social and political institutions, and not just workplaces, though they doubtless see societal dominance and workplace dominance as connected, if not inseparable. While capitalism 2 prevails whenever big business and the state are in a state of wedlock (state capitalism*), whereas under capitalism 3 big business is clearly in the dominant position (corporatism) which controls and dictates to the political establishment . "Anti-capitalism" is an expression often employed more broadly, as a way of identifying with ordinary people around the world who express their opposition to globalism and imperialism which has become concomitant with the increasing power of multi-national corporations and their exploitation of both people and the natural environment throughout the world.

[*] By state capitalism, I'm alluding to the current condition whereby the conservative corporate welfare state invokes their coercive taxing power and regulatory mechanisms to lower costs to big business, in addition to facilitating the monopolization of markets through regulations and enforcing artificial property rights such as intellectual property. The desired effect is to protect corporate privilege against competition. With corporate tax rates at all time lows throughout the world  (in Canada it's 15% federally and 4% provincially in British Columbia) one wonders where tax revenue inflows into government are being obtained. It's no mystery as to why governments are strapped financially and cannot provide services to its citizens and deal with disintegrating infrastructure. Also, capital gains and taxes on dividends are at an all time low, benefiting primarily the already wealthy investor class. Add to the above the massive multi-trillion dollar bailouts of "too big to fail" rogue banks and financial companies, massive unemployment and stagnating wages and it's obvious to anyone with a brain stem as to why governments at all levels are facing bankruptcy. One can provide compelling arguments that neo-conservative ploy is all by design to justify privatization of everything within the public domain. The notion of social justice and attention to the common good has always been anathema to amoral conservatives whose only abiding rule is self-interest, Economic prosperity is thereby narrowly construed as the condition by which corporations can function free of any government constraints or regulations of their bottom line while relying on government intervention in the form of tax breaks, corporate welfare, bailouts and a myriad of other forms of business enhancement and support when they fail.

Because most people who value freedom generally do not like working in hierarchical despotic work environments and because horizontal, more nimble democratic organizations would be much more attractive and viable than large clunky ones without government support for big businesses, most people in a a real free market would work as independent contractors or in partnerships, cooperatives or worker controlled corporations. There would be far fewer large businesses and those that still existed likely wouldn't be as large as today's corporate behemoths that are deemed by our pliable liberal and conservative politicians as "too big to fail" and "too big to jail". And most importantly, societal wealth would be more widely dispersed among a vast number of small firms and their workers.

The Current Situation

 In this, the beginning of the fifth year of the global economic depression, and amid signs of the worst global slowdown since 2008, the graphs of world stock markets are beginning to look parabolic. Triple tops and head and shoulder formations abound in all the major indexes. Historically these technical indicators have been reliable signs of another bubble and subsequent meltdown. In any event, overpriced stock values do not usually mean anything positive for the average wage earner. In fact when a large corporation announces massive layoffs, the stock price moves higher. But the disconnect between the bloated stock markets and the dismal economic conditions for the majority ought to produce grave concern.

In the US, the three major stock indices have either reached or are within a few percentage points of their 2007 highs, despite the fact that the economy has stalled, contracting for the first quarter since 2009, according to figures recently released. The Dow reached 15000 on Friday February 2 after bottoming out at 6700 in 2009. Was there any fundamental economic reason for this euphoria? Hardly. The conditions are alarmingly similar today as the Dow hover around 14,500.

Europe is in a state of disintegration, with Greece and Spain facing grim  conditions not seen since the Great Depression, while even Germany is experiencing a sharp slowdown. In Britain, the economy is now 3.3 percent smaller than at the start of the downturn, but the benchmark FTSE 250 index has doubled. China, Brazil and India have posted sharply lower figures for economic growth, amidst a slowdown in exports. Yet global share prices have risen ten to twenty percent in the past year alone.

These apparently contradictory phenomena - surging financial markets and economic stagnation - are in fact intimately linked. The continued rise in the markets is not a sign of overall economic strength, but a particular expression of the contaminated state of the world state capitalist system. The world’s financial plutocrats, confronting a historic crisis of productivity, demand and investment, have responded by re-inflating of asset values - namely their own incomes - through historically unprecedented measures of wealth redistribution. These are the same vultures and parasites who brought down the global financial system in 2007-8 and who are operating under the same rules or lack thereof. They are back in business pillaging what's left of the public realm and disassembling any modicum of democracy we have enjoyed.

In particular, there has been a massive infusion of cash into the financial system by the US Federal Reserve and other central banks around the world. The US Fed is currently purchasing some $85 billion worth of mortgage-backed securities and treasury bills every month, essentially printing money like drunken sailors to buy up government debt and bad assets held by the banks. This free ride for the big banks and theft of public assets is referred to euphemistically as quantitative easing (QE). The total payload from this larceny by the Federal Reserve has climbed to $3.01 trillion, more than triple what it was in 2008. All major world central banks have taken similar actions. In July, the European Central Bank moved to reduce its benchmark interest rate to the lowest level in the history of the euro. The size of the holdings of the six largest world central banks has nearly tripled, to €14 trillion in 2012.

The actions of the central banks are invariably described in the lap dog corporate mass media as necessary measures to address unemployment and other social ills. Does anyone believe this rubbish? When has any business person ever cared about these issues? In fact, their central purpose is to make virtually unlimited sums of money available for financial speculation and into the pockets Wall Street financial houses and the wealthy investor class. Moreover, unemployment benefits corporations with workers competing feverishly for diminishing jobs and wages. This policy is directly tied to the frontal assault on the working class throughout the world. Flooded with cash, the corporate and financial elite insists that there is no funding for health care, pensions, social services such as education or decent wages. Every basic human right to social justice must be eliminated in order to ensure the continued flow of assets into the banks. Hundreds of millions of people have been thrown into unemployment, poverty and destitution as a consequence.

But what happens when there a declaration by our conservative masters of another imperialistic war. Abracadabra! Money gushes forth - seemingly out of thin air.

The Systemic Problem

It is difficult to get a man to understand something when his salary depends on not understanding it. - Upton Sinclair

The entire aforementioned developments are inherently unjust, unstable and, worst of all, incompatible with freed markets. The ruling class staggers about from crisis to crisis like a paranoid cocaine addict, and its reaction to one crisis sets the stage for the next. Following each euphoric bubble, the bungled system is bailed out by governments that are already indebted for generations to come. The economy stagnates, and new speculative bubbles threaten to explode, unleashing a yet another financial tsunami and predictable collapse. The next one will quite conceivably far surpass the debacle of 2008. The social and historical catastrophe confronting humankind is not simply the consequence of an economic crisis in the abstract according to extrapolations according to mathematical formulae. The crises are reconciled by class interests, and these class interests find expression in explicit strategies and actions. Behind the central banks and governments stand the interests of a financial elite whose relationship to the rest of society is fundamentally and undeniably parasitic.

In every aspect of our economic lives, the political structure of the Conservative Corporate Welfare State  is predisposed to produce, and sustain, the privileges, entitlements and  material conditions of the economy of the wealthy investor class and the corporate oligarchs who call all the shots. The  political economy of state capitalism is so deeply ensconced and inculcated within our culture that most do not even question it. Adolph Hitler once said that is was fortunate "for those in power that people don't think." Propaganda does work, especially within a population of docile unthinking credulous drones, addicted to their smart phones and driven to distraction by the lame stream media of spectacle, sports trivia and celebrity worship. Even the ethics and efficacy of the massive multi-trillion dollar bailouts of the criminal banks by governments around the world is being challenged by only a very few.

The inculcation of state capitalist dogma is so complete that many ordinary wage earning citizens have been convinced that the huge taxpayer funded rescue packages were carried out with their interests in mind. Really? Whenever one hears a politician invoke the expression "in the national interest" as a justification for some dramatic policy shift or military intervention, be very skeptical.

Massive concentrations of wealth, rigid economic hierarchies, and unsustainable modes of production are not the results of free markets, but rather markets deformed and manipulated by a network of globally agreed upon "free trade" agreements that have nothing to do with free trade and a structure of  state-secured controls and privileges to the business class elite.

It's a rigged and gamed system often called "state capitalism" by many, but I've come up with my personal label I've invoked in several papers written on the problem from a left-libertarian/anarchist perspective. I refer to it as the Conservative Corporate Welfare State. Contrary to popular mythology, capitalism is not about competition and free market trade, but rather monopolization and concentration of wealth in the hands of a conservative elite. it's always been thus.

An Anarchist Critique: Benjamin Tucker

All progress has resulted from people who took unpopular positions - Adlai Stevenson

Under capitalism, man exploits man. Under communism, it's just the opposite - John Kenneth Galbraith

Anarchists believe in a fully free and consensual, non-hierarchical, non-coercive society – a society in which order is achieved not through legal force or state coercion, but through free agreements and voluntary cooperation on a basis of equality. What makes them market anarchists is their recognition of free market exchange as a vital medium for peaceful anarchic social order. But the markets they envision are not like the farcical privilege-peppered "markets" that afflict us today. Markets labouring under government and state capitalism that are permeated by booms and busts, unrelenting poverty, ecological destruction, radical inequalities of wealth, and concentrated power in the hands of corporations, bosses, and landlords. The consensus view is that exploitation – whether of human beings or the natural environment – is simply the spontaneous upshot of unrestrained markets.  Moreover, the consensus view holds that private property, competitive pressure, and the profit motive must – whether for good or for ill –by some social Darwinian determinism inevitably lead to capitalistic wage labour, to the concentration of wealth and social power in the hands of a select class, or to business practices based on growth at all costs - and the devil take the hindmost.

Economic privilege is a real and omnipresent social problem, but the problem is not a problem of private property, competition, or profits per se. It is not a problem of the market form but of markets deformed – deformed by the long shadow of historical injustices and the ongoing, continuous exercise of legal privilege and entitlements on behalf of capital. The numinous "invisible hand of the marketplace" of Adam Smith has always been all too visible or anyone inclined to look. The market anarchist tradition is radically pro-market and anti-capitalist – reflecting its constant concern with the deeply political character of corporate power, the dependence of economic elites on the tolerance or active support of the state, the permeable barriers between political and economic elites, and the culturally and historically entrenched conservative hierarchies established and maintained by state-perpetrated and state-sanctioned violence. Police forces are created to "serve and protect", but to serve and protect whom?

Market anarchism advocates individual liberty and mutual consent in every aspect of social life. It rejects all forms state and corporate coercion, manipulation, exploitation, domination and interference with liberty and genuine free exchange. The market anarchists distinct contribution to anarchist thought is their analysis of the market form as a core component of a thoroughly free, equal and just society – their understanding of the revolutionary possibilities inherent in market relationships freed from government and state capitalistic privilege, and their insights into the structures of political privilege and control that deform actually-existing markets and uphold exploitation of people and the natural environment in spite of the naturally equilibrating tendencies of market processes. Since they insist on such a severe distinction between the market forms as such and the economic features of actually-existing capitalism, it is important to carefully distinguish the key features of markets as market anarchists understand them.

Market anarchism aims to draw out social realities not by propagandizing or laying down the law, but rather by allowing as far as possible for the free interplay of ideas and social forces, by looking for the unintended consequences of accepted ideas. That's the essence of freedom of thought and genuine democracy. By engagement in an open-ended process of experimentation and discovery that permits the constant testing of both ideas and institutions against competitors and bottom-line reality rather than appealing to ideologies, religious superstition, mysticism and all and any other all-encompassing salvation plans and closed systems thought.

We must put and end to hierarchical, social and political structures and conservative elitism that have subjugated people throughout history. The political deformations that distort, obliterate, or pervert the naturally positive and mutual relationships characteristic of free markets, and the naturally productive and harmonizing role of market forces such as competition, trade, and the division of labour, into the alienating, exploitative structure of state capitalism. State capitalism is every bit as exploitive and manipulative as state communism and organized religion. They are hierarchical and authoritarian - anathema to the anarchist ideal. The critiques of state capitalism by Karl Marx* were accurate and justified but his alternative simply replaced one form of state privilege, dominance and exploitation with another, equally undemocratic.

[*]Karl Marx (1818-1883) is undeniably the most influential philosopher of the past 150 years. Here is Marxist scholar and literary critic Terry Eagleton:

"What Marx did was to " identify capitalism as a specific historical system, powered by its own peculiar laws. It was no longer simply the invisible color of everyday life, too close to the eyeball to be objectified. What he did in this respect was exactly what crises of capitalism — like that of 2008 — tend to do. Such crises prove embarrassing to those who run the show not only because they involve some people rummaging in trash cans while others fill up their Cadillacs. They are embarrassing also because by throwing the workings of the system into stark relief, they disclose the disagreeable truth that the system represents one particular way of doing things among a range of other possibilities. If the past did things differently, so might the future. It is far simpler to pretend that the Inca traded in futures just like we do, or that the ancient Assyrians lost sleep over the alarming size of their deficit.

Marx may have shown the limits of the capitalist system, but he was by no means a fanatical opponent of it. In Marx’s admiring view, the middle classes had in the brief span of a few centuries transformed the face of the earth and swept the anciens régimes into the ash can of history. (It is true that one or two vestiges of that past were carelessly let slip — Prince Charles, for example — but otherwise the job was remarkably thorough.) These sober, prudent creatures had toppled autocracies, freed slaves, dismantled empires, invented human rights, launched feminism and liberal democracy, produced a resplendent artistic culture, and laid the foundations for global community. It was true that they had had their catastrophes: famines, world wars, and the like. Indeed, they had proved not only the most enthrallingly emancipatory force in history but also the most savagely exploitative. Their precious achievements were everywhere steeped in blood. These two aspects of the middle-class capitalist narrative were in Marx’s view as inseparable as the two sides of a sheet of paper.

Seizing the wealth-producing machine of the middle classes, Marx believed, was the only way to lay the basis for socialism. You could go socialist only if you were reasonably well-off. Or if you weren’t, then some well-disposed neighbors needed to be. Otherwise you would end up with what Marx scathingly called “generalized scarcity,” the historical name for which turned out to be “Stalinism.” Building up material production from a dismally low level is an arduous task; and if one has eliminated the motive that made such a project so astonishingly successful under capitalism, namely greed, it is likely that a brutally authoritarian state will need to step in and force people to undertake at rifle point what they would be reluctant to accomplish voluntarily. Marx, whose view of “backward” nations could be at best unenlightened and at worst racist, never imagined for a moment that one could build socialism in an isolated, besieged, destitute society. Socialism would quickly give way to state tyranny. There are those who speak of democratic socialism, but this in Marx’s eyes was a tautology. For Marx, non-democratic socialism was a contradiction in terms, rather like the phrase “business ethics.” Socialism was a matter of taking democracy seriously in everyday life, rather than confining it to a purely formal, governmental set of procedures. Human beings might misuse their freedom in this respect, but they were not fully human without it.

It is true that Marx’s ideas are no longer exactly shaping the world, but it is also true that they do a lot to explain how capitalism is not in charge of events. The younger generation today may not be made up of card-carrying Marxists, but a sizable chunk of them are increasingly and vociferously anti-capitalist. This is not to say that they could give you a cogent account of the Asiatic mode of production. It is rather to say that they are revolted by the prospect of the state using the hard-earned wealth of its citizens to bail out a bunch of financial gangsters, and properly unconvinced that this is the only conceivable way of running a modern economy. In Britain each summer, thousands of young Marxists, some of them workers sacrificing their vacations, gather to discuss the possibility of a less brutal and obscenely inequitable way of conducting our civil affairs.

Capitalism has indeed undergone some momentous changes since Marx’s day. It is more global than it was, more capable of colonizing the inner recesses of the human spirit, even more blatant in its inequalities, and every bit as crisis-racked. The hunt for profit still governs most of the world, giving rise to imperial war, child labor, and stinking slums. The proletariat may no longer be massed in the factories of the West, but its presence is as palpable as ever in the sweatshops of the South and East. We are, in short, as far from lying around in loose crimson garments as we ever were." (From "Is Marx Still Relevant?" by Terry Eagleton, Harper's Magazine, April, 2013)

Arrangements of corporate ownership and common business practices are sustained by state intervention are erroneously defended as if they were the outcome of natural free market processes. And when they collapse and fail as they repeatedly do (as in 2007-08), they are rescued by the same Conservative Corporate Welfare State. The extent to which the focus and consolidation of economic power is vested in the corporate welfare state and concomitant inequality and competition in the labour market depend on laws and large-scale privileges conferred persistently by the state. The real competition in such a rigged system is within the high unemployment labour market where workers are continually scrambling for ever diminishing jobs with declining wages.

The growth of state power in Western European and North American history cannot be perceived as a mitigating counterbalance to the growth of corporate power because it has largely been driven by the corporate interests of the systemic politically-connected entitlements of conservative elites and robber barons. It was not a free financial market, but rather a long history of unaccountable, government-insulated financed state capitalism which produced the most recent financial and economic collapse and subsequent ongoing economic depression of the past five or six years. There is nothing free or enterprising about what many affectionately refer to as "free enterprise". The game is fixed - it always has been - and there is no end in sight because the same failed and unjust neo-conservative economic model that has plagued us since the 1980s remains fully in place.

Many of the recognizable patterns of state capitalist economics result from the fact that certain key markets – importantly, the labour market, housing rental, insurance, pharmaceutical and financial markets, and other key markets are rigged markets. For market anarchists and libertarians who have contempt for state capitalism, there are at least three specific mechanisms one might mention that coerce people into fixed markets – mechanisms that are especially pervasive and especially important to the overall structure of actually-existing markets. These are mechanisms by which incumbent big businesses, and capitalistic arrangements broadly, benefit from rigged markets, at the expense of workers, consumers, taxpayers, and collective alternatives to the statist quo. These three are:

1.  Government monopolies and cartels: in which government penalties directly suppress competition or erect effective barriers to entry against newcomers or substitute goods and services;

2. Regressive redistribution: in which property is directly seized from ordinary workers by government expropriation, and transferred to economically powerful beneficiaries, in the form of tax-funded subsidies and corporate welfare, taxpayer-backed sweetheart loans, the widespread use of eminent domain to seize property from small owners and transfer it to big commercial developers (just ask any Native Indian), etc.; and

3. Captive markets: in which demand for a commodity is created, or artificially ratcheted up, by government coercion – which can mean a direct mandate with penalties inflicted on those who do not accept it; or a situation in which market actors are driven into a market on artificially prejudicial terms as an indirect, perhaps even unintended, ripple-effect of prior government interventions.

Anarchists, among them Benjamin Tucker (1854-1939), Dyer Lum, Victor Yarros, and Voltairine de Cleyre. Tucker, the individualist editor of Liberty, wrote in 18886 that his Anarchism called for "Absolute Free Trade"… laissez faire the universal rule;  but all the while he described this doctrine of complete laissez faire and free competition a form of “Anarchistic socialism.”  For Tucker, of course, "socialism" did not mean government ownership of the means of production ("State Socialism" which Tucker opposed root and branch); what he meant, rather, was worker control over the conditions of their labour – opposition to actually-existing economic inequalities, capitalist labour relations, and the exploitative practices of big businesses supported by state concessions. For Tucker, the surest way to dismantle capitalist privilege was to dismantle the political privileges which shield it, and to expose it, unprotected, to the full range of competing enterprises – including mutual aid enterprises of, for, and by freed workers that genuine free exchange would acknowledge.

In order to make clear what those privileges were and how they manoeuvre  markets in favour of state capitalistic big business, Tucker identified and analyzed of four great areas where government intervention artificially created or encouraged "class monopolies" – concentrating wealth and access to factors of production into the hands of a politically-select class insulated from competition, and prohibiting workers from organizing shared mutually beneficial alternatives. The four primary monopolies he categorized as: Land Monopolies, Money Monopolies, Patent (Intellectual Property) Monopolies and Protectionist Monopolies. Tucker's Big Four remain pervasive, and at least three of those four have in fact dramatically expanded their scope and invasiveness since Tucker originally described them over a century ago

Notwithstanding the expansion and intensification of Tucker's Four*, the past century has seen the proliferation and metastatic spread of government regulatory bodies intended to re-structure markets and monitor and regiment economic transactions. If we were to try to make a similar list of all the major ways in which local, state, federal and foreign governments now intervene to protect incumbent interests and place barriers to entry against potential competitors, there's no knowing how many monopolies in which we would be shackled. To name but a few, one could mention the evolution and expansion of monopolies such as agribusinesses, security forces, infrastructure, communications and the structural effects of mass criminalization, incarceration, punishment and deportation of socially or economically marginalized people. Anarchists and libertarians have often condemned, on a moral and political level, the government's War on Drugs, or Border Apartheid, or other government efforts to criminalize the poor and activist groups such as environmental activists, anti-war groups and indigenous people by subjecting them to state harassment and imprisonment for victimless crimes. As well they should – these government "wars (everything in the United States is deemed a "war") are nothing more than massive terrorism and cruelty directed against innocent people.

[**]Capitalism" and "socialism" are characteristically seen as forming an oppositional pair. But it was precisely the "socialist" label that a radical proponent of freed markets, Benjamin Tucker, owned at the time when these terms were being passionately debated and defined. Tucker clearly saw no conflict between his intense commitment to freed markets and his membership in the First International. That's because he understood socialism as a matter of liberating workers from oppression by aristocrats and business executives, and he, plausibly, believed that ending the privileges conferred on economic elites by the state would be the most effective and safest way of achieving socialism's liberating goal. Opposing state capitalism helps to underscore the important place of radicals like Tucker in the contemporary freedom movement's lineage and to provide today's advocates of freedom with a persuasive rationale for capturing the socialist label from state socialists.

Furthermore, there has not yet been enough recognition of the structural, economic by-products of government policies which confine, dispossess, terrorize, and stigmatize minorities, immigrants, and the poor generally. These policies in the United States which is verging on a full-blown fascist police state, lock one out of every three African-American men in a profit based prison, often for years at a time, take away years of their working life, expose their homes, cars and money to police forfeiture proceedings, subject them to humiliating, sub-minimum wage prison labour (often outsourced to politically connected corporations), and permanently stigmatize them as they try to re-enter the labour market and civil society. Approximately 12%-13% of the American population is African-American, yet they make up 72.7% of the almost 2.1 million male inmates in jail or prison (U.S. Department of Justice, 2009). The same overt racism faces native peoples in both Canada and the United States. In 2007-2008 Aboriginal adults in Canada account for 22% of admissions to sentenced custody, while representing 3% of the Canadian population.

Moreover, these prejudicial polices constantly threaten undocumented immigrants with the threat of arrest, imprisonment, and exile from their homes and livelihoods, cutting them off from nearly all opportunities outside of immediate cash wages and exhausting under-the-table manual labour; locking away opportunities for education behind proof-of-residency requirements; and putting them constantly at the mercy of bosses, coworkers, landlords and neighbours who can threaten to turn them in and have them deported for retaliation, leverage, or simply for the sake of employee turnover. Such a massive system of government violence, dispossession, and constraint on livelihoods is sure to have massive impacts on the conditions under which many poor and legally-vulnerable people enter into labour markets, housing markets, and all other areas of economic life.

Much of the  "progressive" regulatory structure, supposedly aimed at curbing big business, has mainly served to cartelize big business, and to create large fixed costs which tend to drive out potential competitors from the phoney rigged markets in which they have entrenched themselves. Historical work by Gabriel Kolko and Butler Shaffer has convincingly shown that these regulatory measures mainly served to solidify the positions of existing market incumbents, and to bail out failing cartelists, so as to prevent freedom from "disrupting" a well-regulated extremely biased market. Nor was this, generally, an accident; these measures were, most often, passed at the behest of the incumbent companies which hoped to see their competitors squashed by the compliance costs. On the face of it there are justifiable reasons – from the public choice analysis of the incentives faced by politically-appointed regulators – to believe that such regulatory efforts will always be highly prone to capture by the concentrated interests of market incumbents, to be wielded against the dispersed interests of consumers, workers, and would-be start-up competitors.

JR

April. 2013

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