"Free Market?" R.I.P. and Good Riddance!

Finally! No longer can anyone--from Friedmanite ideologues to the lords of the Federal Reserve, to GOP hacks, to neoliberal free-traders--say the words "free market" and U.S. economy in the same sentence with a straight face. It's going to cost the American people several trillion dollars, in lost pension funds, lost home equity, and tax revenues going to rescue the greedy gamblers who masquerade by day as economic titans--but we will finally be done with a myth that has warped American politics and economics for well over a century.

Not only are there no "free markets" on Wall Street--there never have been! There have only been institutions and markets receiving varying degrees of protection from the mass of American citizens. Even the robber barons of the Gilded Age of the 1880s and 1890s didn't work in anything resembling free markets--they had the Supreme Court, the Congress, and the U.S. Army backing them up when workers went on strike for fair wages and safer working conditions, or states passed laws to protect the general public from corporate rapacity. For the 20 years I've been teaching American history, I've tried to help students see that what they learned as "laissez-faire" was anything but--not when police, militias, and the army acted as enforcers for the richest men in the country, who declaimed endlessly on the virtues of the free market economy.

Until the last couple of weeks, the would-be masters of the universe promoted this ideology through the mainstream media, which duly repeated platitudes about the wonders of the market, the dangers of regulation, the social contributions of investment bankers and hedge fund managers, and the brainpower of the folks who who invented complex derivatives and collateralized debt obligations. Finally, we're done with all this talk, and the would-be free marketeers stand exposed as Knights of Greed, who showed their true faith in the free market by getting draggy old government to pony up replacement capital for the dough they'd already poured down the toilet.

The next time CEOs want to resist taxpayer oversight and regulation, and they talk about our need for "free markets," I hope Members of Congress, editorial writers, reporters, and public officials of all kinds will remember to burst out laughing, and show them the door.

Comments

[LewDan]

AngryOhioan--you just don't get it, do you? If the government has to support you through its monetary policy the market is not free. Once you honestly accept that free markets do not exist you can concentrate on cohesive, coherent, and effective policies that benefit society instead of sacrificing regulation on the alter of free markets to covertly privatize profits while socializing risk.

[twofish]

The easy credit for tapping into home equity was to make up for stagnant wages and falling benefits. As long as the money flowed and the shopping continued, no one cared. Now that THAT party is over, maybe people will again see the value of unions as an offsetting force to management power to treat them as expendable liabilities. But I wouldn't bet on it, because they've been thoroughly propagandized to hate unions, and the main stream media has not changed hands. Yet.

[AngryOhioan]

The roots of the this crisis lie monetary policy. Monetary policy is set by the government not so called free markets. When you have negative real interest rates for an extended period of time what do you expect to happen? People borrow cheaply and put money in things like commodities and housing. Why aren't more people talking about the CDS market? It was the decision of governments to allow banks to use credit default swaps to evade reserve requirements not a decision of the so called free market. Look at exchange rates which are driven by government policy. The government's decision to devalue the dollar drove up the price of dollar denominated commodities even further.
Did people in the private sector make bad decisions? Yes, which is why they should have been forced to take their losses not given a bailout. But it was the government's monetary policy which created the conditions that lead to this crisis. We need a stable monetary policy not a government takeover of industry. The politicians in Washington created this problem, why would you
want to put Washington politicians in charge of industry. We need reasonable laws and policies to create a stable fair system, not a takeover. Rules not arbitrary power for Washington officials.

[SurfCat]

Good work, Mister Goldstein.

Perhaps the best public take on this sordid corporate crime mess I've seen so far.

A few things...

By definition "capitalism" (however flawed it may be) requires real competition and free, open markets to operate let alone exist. Guess what? We haven't had competition and free, open markets since before Karl Marx coined the word "capitalism" at the Gilded Age when monopoly robber barons ruled the earth. Ditto for real democracy.

by the way, our system of sham government happens to be crypto-Fascism and it's getting more transparently Fascist all the time...

[Rule Of Law]

And not just the enforcement aspect of aligning your business with Washington, but the totally antithetical notion to the "up by your own bootstraps, individual initiative, Jack Armstrong," myth of the American Man.

There was a reason the "Big Four," Stanford, Crocker, Huntington, and Hopkins spent as much time in Washington DC as they did running their railroad. That's where the money and power were! If you wanted preferential treatment, laws made or bent, enemies and competitors dealt with, you went to DC and bought it. Nothing has changed. And yet those robber barons took all the credit for a railroad built on the sweat of thousands and with the money of others, just like today.

The banks drive us to the edge of Depression using our deposits and government deregulation, and then get more of our money in a bailout where they admit no wrong doing and are let off the hook by their highly placed benefactors and protectors. No personal responsibility. No personal initiative. It's all a con, and it always has been.

[Chavez08]

There's a name for it: "Fascism"

[Rule Of Law]

The joining of Corporate and Government to rule everyone else. Yeah, fascism sounds about right.

[americaforme]

Bravo, I wish I had you for a teacher. You really hit the nail on the head. Please continue writing, sharing your knowledge, so we dont feel so alone, in this sleepwalking society.