The people with the power to create our money and rule say they believe in a free market. They invest billions to promote their idea of a free market, which shouldn’t be necessary if the idea is truly beneficial to all. The evidence suggests they mean a market in which the rich act freely to exploit everyone else.
What is a ‘free’ market?
People prosper when they are free to choose a work life that makes the best of their gifts and gives them a sense of purpose. People prosper when they can create products, services, and businesses that bring them satisfaction and wealth. People prosper when they are free to buy what is freely offered. Businesses succeed when they meet consumers’ needs. A free market is about keeping the ownership of business in the private sector, allowing businesses to make and sell what they can, and giving consumers the freedom to buy what they want.
However, based on this premise, some say we should each be free to define our responsibilities to others, to the environment, and to society as we see fit. We should be free from standards, rules, and regulations imposed by government. This corrupts what is otherwise a reasonable idea. In order for free enterprise to work for the general welfare there must be a balance of freedom and responsibility. Because human nature is always at various stages of development, including moral development, not everyone will make responsible decisions. For many, stuck at the stage of “it’s all about ME & MINE,” shortsightedness and greed will harm the community unless there are standards, rules, regulations, and enforcement.
We are also relatively easy to manipulate. Douglas Rushkoff, in his book, Coercion; Why we listen to what ‘they’ say (1999), details a fascinating litany of how we are readily manipulated in the marketplace.263 Retailers invest billions to find ways to get you to spend, carefully designing stores and displays to generate impulse sales and increase profits. Laws can counterbalance manipulation by requiring full product information and disclosure of risks.
The core idea of a free market – and of a democracy – is that aggregating many choices will serve the market and community best. However, to make this premise valid, there are important requirements. The people making choices and decisions in the marketplace must be informed, diverse, and independent. This is true whether we’re talking political decision-making or marketplace decisions.
In the marketplace, the consumer must be informed. We’ve made progress in getting information onto packaging about what’s in our food and home products. We’ve passed laws to improve labeling on menus, improve nutrition information on foods and, in 2016, to require GMO labeling.264
It’s an uphill battle against the money power, who know that an informed public may not choose cheap-to-make, money-making foods and personal care products that include harmful ingredients. For example, more money can be made with a product that has a long shelf life. Twinkies were re-engineered in 2013 to extend their shelf life from 26 to 45 days. While many will not be deterred from eating a sweet with 36 ingredients (mostly chemical constructs), others will avoid these products when they are informed about the impact of those chemicals on our bodies. And, while that cuts into the profits of an existing company, it gives someone the opportunity to make a better and more desirable product.265 266 Unfortunately, the existing companies are the ones with the political power to block laws that would inform customers.
Diverse & Independent
Diversity and independence in a marketplace require many small businesses, with many different approaches vying for your dollars. We struggle to maintain this today. Today in nearly every industry, we have a handful of giant corporations who set the market’s direction and determine consumer choices. Anti-trust laws, passed to protect us from collusion, price-fixing and controlling monopolies, are rarely enforced.
Free to make money
Today, most free market advocates are not really arguing for a free marketplace; they are arguing for giving the owners of capital free rein/reign to make as much money as they can at any expense to the community. The freedom to exploit people by paying wages impossible to live on, to exploit common wealth natural resources for short-term gain, and to hide information about food safety, are considered some of the divine rights of capital. Free market advocates are not even shy about promoting the idea that killing a few people with unsafe products is part of the noble free enterprise system.
From just 2005 to 2014, the Charles Koch Foundation doled out nearly $108 million to colleges and universities to promote laissez- faire economics – low taxes, minimal regulations on business. In 2008, Florida State University made an agreement with this foundation that gives the foundation a say in the curriculum and hiring decisions of the University. The Koch funding established a Program for Excellence in Economic Education within the Stavros Center for the Advancement of Free Enterprise and Economic Education, part of the economics department.267
The Stavros Center promotes Common Sense Economics: What Everyone Should Know About Wealth and Prosperity (2005), by James D. Gwartney, Richard L. Stroup and Dwight R. Lee.268 The university has an entire economics program by this name. And this free-market- focused text book is accompanied by course materials for economics teachers all the way down to the kindergarten level. Endowment funds spread this curriculum to elementary and high schools.
The text book, Common Sense Economics makes no mention of the power of the private sector to create our nation’s money. Any economics textbook ignoring this fundamental and foundational economic factor is suspect, and this particular textbook is a gross distortion of a free AND responsible marketplace. It is discouraging when a few men can and do use their extraordinary wealth to corrupt economics education throughout the nation.
Here is one selection from the Foundation for Economic Education website: Sacrificing Lives for Profits by Common Sense Economics co-author Dwight Lee. It argues we’d be better off if companies cut corners, even risking customers’ lives, in the name of profit. He says,
The charge that sways juries and offends public sensitivities…is that greedy corporations sacrifice human lives to increase their profits. Is this charge true? Of course it is. But this isn’t a criticism of corporations; rather it is a reflection of the proper functioning of a market economy. Corporations routinely sacrifice the lives of some of their customers to increase profits, and we are all better off because they do. That’s right, we are lucky to live in an economy that allows corporations to increase profits by intentionally selling products less safe than could be produced. The desirability of sacrificing lives for profits may not be as comforting as milk, cookies and a bedtime story, but it follows directly from a reality we cannot wish away.
The reality is scarcity. There are limits to the desirable things that can be produced. If we want more of one thing, we have to do with less of other things.” (Bold added for emphasis.)269
So, a child who dies in a poorly designed car helps the market economy function. Lee makes the argument that if, for instance, we require an auto manufacturer to install seat belts, that will add to the cost of a car and you will have less to spend on other things. He claims free enterprise is looking out for your choices and your money. Nowhere does this curriculum argue that businesses have an obligation to fully inform their customers about the level of risk and their options.
Faux-free marketers argue that adults should be able to choose their own levels of risk-taking. But, then they argue against testing for levels of risk, and against informing the public of those risks. The public cannot make an informed choice.270
The argument is that if pesky government just stays out of setting safety standards, you would be free to choose a cheaper unsafe car - your choice determined by the effectiveness of advertising, which is not required to tell you whether the car is safe. The manufacturer makes higher profits on cheaper cars, and you save money you can spend elsewhere until you die early in an automobile accident. See? It’s win-win. It’s just part of the market economy. Easy profits are more important than the deaths of those who die unnecessarily without seat belts. According to the CDC, 13,000 people were saved by a seatbelt, and another 4,000 would have lived if they’d worn theirs in 2009 alone.271 Author Dwight Lee thinks their deaths are a worthy sacrifice on the altar of lazy profits and a proper functioning market economy.
This tells us, it’s not about a market in which the customer is free-to- choose; it’s about a free-to-make-as-much-money-as-possible market for business. And again, this pseudo-free market argument assumes our businesses are too stupid to make safe cheap cars and a profit. On the issue of safety belts, even though faux-free-marketeers gave it their best, genuine common sense prevailed. Our auto makers rose to the challenge and we have safer and cheaper cars.
The other half of their argument is that scarcity is real. Yes, it is. We can’t have everything we want. But, that does not mean that we must choose between one unsafe product and another. This is the same thinking that Tufts University’s nutrition program used to justify their good food check on Froot Loops. They said if parents have to choose between a candy bar and Froot Loops, then Froot Loops are the right choice. There are other choices.
The level of iniquitous thinking in the Common Sense Economics’ premise that killing some people is just part of a well-functioning free market is jaw-dropping – especially when you consider these men have the money to push this thinking into our institutes of learning, our Judiciary, Executive Branch and Congress. The book spouts the propaganda of a greedy and lazy money power as if it is sacred doctrine: low taxes, limited government, free enterprise, the importance of unrestricted freedom for the money powers, without any references to community responsibility and protecting citizens from the unscrupulous.
There is no free market when a single sector of the economy can blackmail the rest into doing its bidding. Our financial sector has this power, and exercises it. On a day-to-day basis, our decision- makers must consider what Wall Street will think of any policy decisions. And, in times of crisis, the bankers threaten to take the entire economy down if they are not given a save. We now submit to making bank and big business profits our nation’s highest imperative - and to hell with the common wealth.
Today there are over 100,000 private family foundations with assets of over $800 billion, using their power of the dole to manipulate elections, government policy, educational curriculums and grassroots policy campaigns.272 If you don’t promote or teach or what they want, you won’t have enough funding to survive. This is blackmail, too – and far from a free marketplace of ideas.
With wariness I’ll touch briefly on capitalism. The concept of capitalism often goes hand in hand with free-market advocacy. Again, capitalism and free market are terms requiring a definition with every use, because they are often conflated, confused or polluted with other concepts.
Google defines capitalism as, “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.” What this definition leaves out is the importance of the money-creation power, which will determine how capital, hence capitalism works in practice. Since whoever has the privilege and power to create money will rule, there can be no free market when the privilege of money creation and all the power that bestows belongs to a tiny elite.
For many capitalism includes the concept of wealthy people creating a nation’s money. When they advocate for capitalism, they are advocating for private ownership of industry, the profit motive, and for the right of capital owners to create a nation’s money. Their policy choices demonstrate a belief in what can be called predatory capitalism – capitalism that allows a small elite to prey on and devour as much wealth as they can to sustain their status, no matter the cost to those in the rest of the economy.
However, private ownership of industry and profit-making is easily tweezed apart from the process of money creation and exploitation. A simple amendment to the Google definition changes capitalism from predatory to partnership. Add “…controlled by private owners for profit and for community well-being.” With this definition we have the benefits of capitalism, a truly free market, and the benefits of a healthy community.
And, with equal trepidation, I’ll touch briefly on socialism – another term that is widely misunderstood and misused. Dictionary definitions don’t even agree. Here’s one from Merriam-Webster,
1. any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods; 2.a: a system of society or group living in which there is no private property; b: a system or condition of society in which the means of production are owned and controlled by the state.
This definition comes closest to the authoritarian socialism- communism of the 20th century.
Here’s the definition that shows up front and center on Google: “a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”
These definitions allow for night and day. There is a significant difference between owning, controlling, or administering, and regulating. This second definition leaves a very wide range of possibilities from owned and controlled to simply regulated. Some people are using socialism to refer to a system in which the community as a whole, through a government of, by, and for the people, opt to create a solid foundation for all their citizens and still have a free market. They believe that standards, rules, regulations, monitoring, and accountability are all part of the foundation for a truly free market – one that respects all participants. This is closest to the late 20th early 21st century models of governance in northern European socialist countries today.
Ask what people mean when they refer to either capitalism or socialism. And, then ask, who they believe should have the power to create money, because that will determine how ANY version of capitalism or socialism works out in practice.
True freedom and a free market require information and the discipline of structure and rules. When there is a balance of decisions made for the benefit of the ‘I’ with decisions made for the benefit of the ‘WE,’ individuals and communities can prosper.
This sounds contradictory, but it’s not. Visit a Montessori classroom to understand how a structured and disciplined classroom gives children the greatest freedom to follow their own interests and develop self-discipline, self-confidence, creativity and responsibility to their community. This is true for a marketplace, society, and economy as well.
Capitalism does not have to be a wealth transfer machine. And, a free market can be a fair and safe market, too.