Friday, March 17, 2006

The Bottom Line on Market Conservatism

When Thomas Jefferson thought of business, he knew the people could not survive economically without regulation from “national authorities” – Congress.

"The commerce of the States cannot be regulated to the best advantage but by a single body, and no body so proper as Congress." During his campaign for Congress a little more than 200 years later, John Shimkus (R-Collinsville) ran a congressional campaign. His platform included working towards the elimination of the departments of Energy, Education, and Commerce.
One wonders if John Shimkus (IL-19) has ever finished re-evaluating that position since his erroneous 1996 election. At least he has learned that it is no easy task.
After six months in office he spoke candidly . . . admitting that, “I think you could safely say I’m re-evaluating that position, based upon trying to understand exactly what they do and the functions that are beneficial.”
Since he readily admits that he is a “market conservative Republican”, it is doubtful. Some of his constituents wonder why he never learned the true definition of that phrase. One of his MBA professors should have been able to help – if he knew enough to ask the question.

Just like supply-side economics, free market is a term used to describe a political or ideological viewpoint on policy and is not a field within economics. The foundation is supply and demand with little or no government control. A completely free market is an illusory form of a market economy. In it, buyers and sellers freely engage in transactions of buying, selling, or trading goods and services according to a mutual agreement on price. No government intervenes. In reality, the ideal free market can only exist in illusions and creates a monopoly. Taxes, price controls, and restrictions allow new competitors to enter a market.

George Soros considered market fundamentalism to be the primary threat to economic stability. He coined the phrase in 1998 to describe the belief that the common interest is best served by individual decision-making and that attempts to maintain the common interest by collective action distort the market mechanism. The ideology failed in the 1920’s and made the 1930’s Depression years even worse.

Soren Ambrose is Senior Policy Analyst at the 50 Years Is Enough: U.S. Network for Global Economic Justice takes the definition one step further:
The basic tenet of market fundamentalism is that the most efficient way to deliver services and goods, to keep an economy humming, to provide for members of society, and even, in its more advanced formulations, to maintain social order, is to conceive of virtually all human activity in commercial terms, with values negotiated between the contracting parties without outside interference, according to the laws of supply and demand. The market fundamentalist seeks to solve any imbalance by trying to reduce the role of government and expand the options of those operating in the marketplace.

Market fundamentalists insist that failures to provide adequately for people result not so much from imbalances in wealth or power, but in restrictions placed on the “invisible hand” of market logic -- restrictions created by governments becoming economic actors who do not obey market logic, or through government’s efforts to regulate private economic actions. Hence the demand is usually to “free” the markets so they can reach their own potential and so create a healthy economy: free markets, free trade, free enterprise.

These catch phrases are appealing. But the assumptions that underlie them are many: government regulation discourages creativity; in an unregulated market there will be enough jobs and resources for all, and their distribution will be adequate for general survival and stability; private businesses are more efficient than public enterprises; the profit incentive should be, and is, people’s primary motivation; natural resources and the things people and societies value will be preserved by economic actors. There are reasons to doubt all these positions. Market fundamentalism also assumes that all the parties in the market have relatively equal strength, or at least complimentary capacities.
According to Thom Hartmann, an award-winning, best-selling author and nationally syndicated daily talk show host, free market conservatives will succeed in creating feudalism and serfdom in America. Only Democracy can save the Middle Class. Market conservativism, the opposite of liberalism, is just another way of saying survival of the fittest – AKA, Social Darwinism.

William Graham Sumner stated the following:
. . . what social classes owe to each other is nothing except mutual acquiescence in the structures of unlimited capitalism. In a free market, each owner of a factor of production, whether it be land, labor or capital, will be paid what his contribution is worth provided that neither unions, government, nor monopolists interfere with the free movement of the forces of supply and demand. Indeed, such interference will likely help the unfit to survive, multiply, and transmit their inferior genes to future generations which will only slow down the evolutionary process which for so long had effectively culled out the weak and unfit. In short, unlimited capitalism contains and gives rise to the most efficient social institutions for the processes of natural selection and adaptation to work toward their ends; and these ends are the transmission of only those traits conducive to the survival of the fittest.
It is easy to see how popular Social Darwinism became. It made sense -- then. Jack London, a firm believer in the philosophy, was a well-known novelist during that era as a result of his survival stories.

Social Darwinism gained popularity in America because it is a country built on survival of the fittest. For example, frontiersmen withstood extreme hardships. Some of the Native people fought against the immigrant encroachment and survived. Many ambitious immigrants pursuing America's expansionist policy of Manifest Destiny also survived in greater numbers.

Sumner appeared to have abandoned Social Darwinism by the mid 1880s. The great majority of the robber-baron American businessmen rejected the anti-philanthropic implications of the theory. Between 1890 and 1920, Andrew Carnegie led the way in philanthropy in the world. Future generations continue to enjoy schools, colleges, hospitals, art institutes, parks and other institutions.

Losing the middle class to another round of Social Darwinism is bad enough. What else would Rep. Shimkus want to see for his constituents? A good guess would be a neo-Smoot-Hawley Tariff.

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