This is the second installment of a two-part article. The first part ran on Monday.
If government regulation is primarily responsible for monopoly elements in industries, as Friedman and Hayek argue, then you’d think that the deregulation tsunami of the neoliberal era would have led to greater competition across the economy. Did it? Not exactly. Rob Larson, in his new book Capitalism vs. Freedom: The Toll Road to Serfdom, quotes a Forbes article:
"Since freight railroads were deregulated in 1980, the number of large, so-called Class I railroads has shrunk from 40 to seven. In truth, there are only four that matter… These four superpowers now take in more than 90% of the industry’s revenue… An estimated one-third of shippers have access to only one railroad."
Quod erat demonstrandum. But there are many other examples. The deregulatory Telecommunications Act of 1996 was supposed to throw open the industry to competition; what it accomplished, according to the Wall Street Journal, was “a new phase in the hyper-consolidation of the cable industry… An industry that was once a hodgepodge of family-owned companies has become one of the nation’s most visible and profitable oligopolies.” These trends have occurred throughout the media, on a global scale.
The same consolidation is found in the airline industry, where deregulation “set off a flurry of mergers” (as the Journal notes), “creating a short roster of powerful giants. And consumers are, in many cases, paying the price.” In fact, it’s well known that deregulation has facilitated an enormous wave of mergers and acquisitions since the 1980s. (Similarly, the big businesses, and later the mergers, of the Gilded Age appeared in a time of little public regulation.) All this market-driven oligopolization has certainly not increased consumer freedom, or the freedom of anyone but the top fraction of one percent in wealth.
Speaking of communications and the media, another classic libertarian claim is hollow: far from encouraging a rich and competitive diversity of information and opinion, the free market tends to narrow the spectrum of opinion and information sources. Hayek writes of totalitarian governments, “The word ‘truth’ ceases to have its old meaning. It describes no longer something to be found, with the individual conscience as the sole arbiter… it becomes laid down by authority,” referring to the “spirit of complete cynicism as regards truth…the loss of the sense of even the meaning of truth.”
It is easy to think he’s describing the mass media in the heavily capitalist United States. For one thing, because of scale economies and other market dynamics, over time fewer and fewer people or groups can afford to run, say, a successful and profitable newspaper. Across the West, in the twentieth century competition eventually weeded out working-class newspapers that had fewer resources than the capitalist mass media, and the spectrum of information consumed by the public drastically narrowed. “Market forces thus accomplished more than the most repressive measures of an aristocratic state,” to quote the authors of an important study.
At the same time, the sources of information became less and less independent, due to the development of the advertising market. Advertisers “acquired a de facto licensing power because, without their support, newspapers ceased to be economically viable.” As Edward Herman says, it wasn’t the final consumer’s but the advertiser’s choices that determined media prosperity and survival, and hence the content (broadly speaking) of the news and opinion pieces.
Moreover, the media increasingly consisted of giant corporations who had basically the same interests as advertisers anyway. The result corresponded less to Friedman’s slogan Free to Choose than to Edward Bernays’ slogan Free to Imagine That We Choose (because what we’re choosing from is a narrow range of corporate and government propaganda).
Capitalism vs. Freedom also has a chapter on “political freedom,” and another on the “freedom of future generations” – which is nonexistent in a strictly capitalist society because future generations have no money and therefore no power. They have to deal with whatever market externalities result from their ancestors’ monomaniacal pursuit of profit. Including the possible destruction of civilization from global warming, a rather large externality.
Even in the present, the IMF has estimated that the “external” costs of using fossil fuels, counting public health effects and environmental ramifications, are already $5 trillion a year. Again, this should suggest to anyone with a few neurons still functioning that markets aren’t particularly “efficient.” Especially considering the existence of major public goods that are undersupplied by the market, such as roads, bridges, sanitation systems, public parks, libraries, scientific research, public education, and social welfare programs.
What do Friedman and Hayek think of these things? Well, Hayek was writing for a Western European audience, so he had to at least pretend to be reasonable. “[T]he preservation of competition [is not] incompatible with an extensive system of social services,” he wrote, which leaves “a wide and unquestioned field for state activity.” Okay. But that’s a significant concession. Apparently his “libertarianism” wasn’t very consistent.
For Friedman, public goods should be paid for by those who use them and not by a wealthy minority that is being taxed against its wishes. “There is all the difference in the world,” he insists, “between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent.”
Thus, the wealthy and powerful shouldn’t have to pay taxes to maintain services from which they don’t directly benefit. We shouldn’t subtract any of the positive freedom from people who have an enormous amount of it (i.e., of power, the concentration of which libertarians are supposed to oppose) in order to give more positive freedom to people who have very little of it. That would be unforgivably compassionate.
Most of Larson’s chapter on political freedom consists of salutary reminders of how politics actually works in the capitalist United States. Drawing on Thomas Ferguson’s investment theory of party competition, Larson describes the political machinations of big business, the concerted and frequently successful efforts to erode the positive and negative freedoms of the populace, the permanent class war footing, the fanatical union-busting, the absurdly cruel austerity programs of the IMF (which, again, serve but to crush popular freedom and power), and the horrifying legacy of European and U.S. imperialism around the world.
Readers who want to learn more about the dark side of humanity can consult William Blum’s Killing Hope, Naomi Klein’s The Shock Doctrine (which also describes Hayek and Friedman’s love-affairs with neo-Nazi Latin American generals), Robert Fisk’s The Great War for Civilization, and most of Noam Chomsky’s books. In light of all these practices and policies that have emerged, directly or indirectly, out of the dynamics of the West’s market economy, to argue that capitalism promotes human freedom is to be a hopeless intellectual fraud and amoral minion of power.
(If that judgment sounds harsh, consider this gem from Hayek, directed against measures to ensure worker security: “It is essential that we should relearn frankly to face the fact that freedom can be had only at a price and that as individuals we must be prepared to make severe material sacrifices to preserve our liberty.” More exactly, working-class individuals have to make severe sacrifices to preserve the liberty of the capitalist class.)
In fact, to the extent that we have freedom and democracy at all, it has been achieved mainly through decades and centuries of popular struggle against capitalism, and against vicious modes of production and politics (including slavery and Latin American semi-feudalism) that have been essential to the functioning of the capitalist world-economy. Göran Therborn’s classic article “The Rule of Capital and the Rise of Democracy” gives details, as does Howard Zinn’s famous People’s History of the United States.
Larson, unlike the charlatans whose work he reviews, actually does believe that “concentrated power is opposed to human freedom,” so he dedicates his final chapter to briefly expositing a genuinely libertarian vision, that of socialism. Here I need only refer to the work of such writers as Anton Pannekoek, Rudolf Rocker, Peter Kropotkin, Errico Malatesta, Murray Bookchin, and others in the anarchist and/or left-Marxist tradition.
There’s a lot of talk of socialism these days, but few commentators (except on the left) know what they’re talking about. For instance, like Hayek and Friedman, they tend to equate socialism with state control, authoritarianism, the Soviet Union, and other boogeymen. This ignores the fact that anarchism, which reviles the state, is committed to socialism. So virtually all mainstream commentary on socialism is garbage and immediately refuted from that one consideration alone.
The basic point that conservatives, centrists, and liberals refuse to mention, because it sounds too appealing, is that socialism means nothing else but worker and community control. Economic, political, and social democracy. It is, in essence, a set of moral principles that can theoretically be fleshed out in a variety of ways, for instance some preserving a place for the market and others based only on democratic planning (at the level of the neighborhood, the community, the firm, the city, the nation, etc.). The core of socialism is freedom – the absence of concentrated power – not absolute equality.
Whether a truly socialist, libertarian society will ever exist is an open question, but certain societies have approached the ideal more closely than others. The Soviet Union was, and the U.S. is, very far from socialism, while Scandinavian countries are a little closer (since the population generally has more freedom and power there than in the U.S. and the Soviet Union). The Bolivian Constitution of 2009 is vastly closer to socialism, which is to say morality and the ideal of human dignity, than the reactionary U.S. Constitution. On a smaller scale, worker cooperatives – see this book – tend to embody a microcosmic socialism.
Larson ends his book on the note sounded by Rosa Luxemburg a century ago: socialism or barbarism. Margaret Thatcher’s infamous declaration “There is no alternative” can now be given a more enlightened meaning: there is no alternative to socialism, except the destruction of civilization and maybe the human species. Morality and pragmatic necessity, the necessities of survival, now coincide. Concentrated corporate power must be dismantled and democracy substituted for it – which is a global project that will take generations but is likely to develop momentum as society experiences ever-greater crises.
In the end, perhaps Friedman, Hayek, and their ilk will be seen to have contributed to the realization of a truly libertarian program after all, albeit indirectly. For by aiding in the growth of an increasingly authoritarian system, they may have hastened the birth of a democratic opposition that will finally tear up the foundations of tyranny and lay the groundwork for an emancipated world. Or at least a world in which Friedmans and Hayeks can’t become intellectual celebrities. For now, I’d settle for that.
Chris Wright has a Ph.D. in U.S. history from the University of Illinois at Chicago, and is the author of Notes of an Underground Humanist, Worker Cooperatives and Revolution: History and Possibilities in the United States, and Finding Our Compass: Reflections on a World in Crisis. His website is www.wrightswriting.com.