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    The Ghost of the Free Market Economy Myth

    By cmaukonen on Wed, 12/29/2010 - 9:27pm |
    "Mercy!" he said.  "Dreadful apparition, why do you trouble me?"

    "Man of the worldly mind!" replied the Ghost, "do you believe in me or not?"

    "I do," said Scrooge.  "I must.  But why do spirits walk the earth, and why do they come to me?"
    "It is required of every man," the Ghost returned, "that the spirit within him should walk abroad among his fellowmen, and travel far and wide; and if that spirit goes not forth in life, it is condemned to do so after death.  It is doomed to wander through the world -- oh, woe is me! -- and witness what it cannot share, but might have shared on earth, and turned to happiness!"

    Again the spectre raised a cry, and shook its chain and wrung its shadowy hands.

    "You are fettered," said Scrooge, trembling.  "Tell me why?"

    "I wear the chain I forged in life," replied the Ghost. "I made it link by link, and yard by yard; I girded it on of my own free will, and of my own free will I wore it.  Is its pattern strange to you?"

    Scrooge trembled more and more.

    "Or would you know," pursued the Ghost, "the weight and length of the strong coil you bear yourself?  It was full as heavy and as long as this, seven Christmas Eves ago.  You have laboured on it, since. It is a ponderous chain!"

    Scrooge glanced about him on the floor, in the expectation of finding himself surrounded by some fifty or sixty fathoms of iron cable: but he could see nothing.

    "Jacob," he said, imploringly.  "Old Jacob Marley, tell me more.  Speak comfort to me, Jacob!"

    "I have none to give," the Ghost replied.  "It comes from other regions, Ebenezer Scrooge, and is conveyed by other ministers, to other kinds of men.  Nor can I tell you what I would.  A very little more, is all permitted to me.  I cannot rest, I cannot stay, I cannot linger anywhere.  My spirit never walked beyond our counting-house -- mark me! -- in life my spirit never roved beyond the narrow limits of our money-changing hole; and weary journeys lie before me!"

     "But you were always a good man of business, Jacob," faltered Scrooge, who now began to apply this to himself.

    "Business!" cried the Ghost, wringing its hands again.  "Mankind was my business.  The common welfare was my business; charity, mercy, forbearance, and benevolence, were, all, my business.  The dealings of my trade were but a drop of water in the comprehensive ocean of my business!"

    There is a ghost in the myth of Free Market Capitalism that nobody on the right, left or middle wishes to acknowledge.  It's slavery.  Sam Smith has a snippet from an essay done by Marvin Brown of University of San Francisco. You can get the PDF of it here.  It's a take down of the meme perpetrated by Adam Smith in his work The Wealth of Nations.

    Of the many contradictions we witness between fact and fiction, few would rank more significant today than the contradiction between the small town image commonly used to represent the essence of free enterprise and the real context of early capitalism—the Atlantic trade among the peoples of Europe, Africa, and the Americas. Here is the fiction:
    It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.2
    Such a context is not so difficult to imagine. Small shop owners provide different goods to each other, and the best way of doing this is for each to be guided by one’s self-interest, since in this intimate setting, it is certainly in one’s self-interest to provide a good product at a good price. How nice that we so easily do what is best for us and it turns out best for our neighbors.
    The reality of commerce when Adam Smith was composing The Wealth of Nations was something else. The center of this trade was not the town square, but the Atlantic Ocean, which was used for the trafficking of millions of captive Africans to the Americas and the trafficking of American grown sugar and tobacco to the Europeans, as well as the Europeans sending other products and services—such as credit and weapons—that went along with the development of any empire. The “success” of early British economics, in other words, was not so much the result of small town exchanges as the result of the economic connections among Europe, Africa, and America.
    Robin Blackburn estimates that of the 21 million Africans enslaved between 1700 and 1850, nine million slaves were delivered to the Americas, 5 million were lost during the passage, and another 11 million were enslaved in Africa.3    The numbers are astonishing. In fact, more Africans than Europeans settled in the Americas during the seventeenth and early eighteenth century.
    Indeed, in every year from about the mid-sixteenth century to 1831, more Africans than Europeans quite likely came to the Americas, and not until the second wage of mass migration began in the 1880s did the sum of net European immigration start to match and then excel the cumulative influx from Africa . . . . In terms of immigration alone, then, America was an extension of Africa rather than Europe until late in the nineteenth century.4
    True, one finds slavery in earlier historical periods, but the Atlantic-based slavery was unique. For the first time, slavery was an integral part of the global economy. Yes, the Romans had many slaves, but they became slaves mostly due to conquest. As Blackburn writes: “One might say that many Roman slaves were sold because they had been captured, while many African slaves entering the Atlantic trade had been captured so that they might be sold.” 5

    In other words this Free Market Utopia that the right and even a few on the left seem to think is ideal was in fact built on the backs of slaves. Not only here, but through out the world. That capitalism as it has existed for centuries, was only making the Anglo Saxon west prosperous because of the enslavement of other people. This after a brief respite in the pillaging and burning of other people and nations.   And yet we refuse to let go of this myth that the "market will take care of itself" even though we still insist on pillaging other nations for our own gain.

    Two writers who played leading roles in the recent popularizing of Smith were Milton Friedman and Michael Novak. Friedman proposed in his book with the apt title, Capital and Freedom, that Smith’s “invisible hand” of the market system had been more “potent for progress” than the visible hand of government.11    Michael Novak gave expression to Smith’s influence in his thinking with the following formulation of Smith’s vision:
    Adam Smith’s hope was that the self-love of human beings might be transformed into a social system which benefited all as no other system had ever done. Thus his purpose in granting human self-interest its due was to transform it into a system of order, imagination, initiative, and progress for all. . . Each individual would then participate in a good society, in such a way that his self-love would come to include the whole.12
    In Friedman and Novak, one finds an optimistic economics that proposes that if we would just mind our own business, so to speak, market forces will provide us with the prosperity we desire. This message found its political voice in Ronald Reagan’s 1980 campaign for the Presidency, where he contrasted his message of optimism and promised prosperity to Jimmy Carter’s message of difficult challenges and the need for sacrifices. He won. “Regannomics,” and in Great Britain “Thatcherism,” became the basic economic framework for the policies of the final decades of the last century, providing the ideology for such influential organizations as the World Bank, the International Monetary Fund, and the World Trade Organization. The recent chair of the Federal Reserve, Alan Greenspan, continues this praise of Smith. Just before the advent of the financial disaster that continues to threaten our global community, he wrote in his autobiography:
    It is striking to me that our ideas about the efficacy of market competition have remained essentially unchanged since the eighteenth-century Enlightenment, when they first emerged, to a remarkable extent, largely from the mind of one man, Adam Smith.13
    Now we know that Greenspan’s comment was more germane that he probably intended. Smith’s ideas did emerge largely from his mind, rather than from the data that was available to him in the city of Glasgow. This is also somewhat true of Benjamin Friedman’s use of Smith in his arguments for a positive relationship between economic growth and morality. In his book, The Moral Consequences of Economic Growth, Friedman writes of Smith’s The Wealth of Nations.

    Of course neither of these gentleman will admit that even into the twentieth century slavery was still feeding out economic system, though we refused to call it that.  Because these people were being payed for their work, though not as well as their enslaved forbears. See Harvest of Shame. Or those who have been forced to work under conditions far worse in dictatorships that this country either supported or installed itself. The truth is that without this slave labor capitalism, as envisioned by this country and most of the western world, would fall flat on it's face. Slavery in one form or another has supported the economies of the US, Briton, Germany and France through the twentieth century. In such places as Iraq, Iran, India and on and on.

    Oh we called it different things. Euphemisms such as sweat shops or company towns or child labor. But it all boils down to the same thing. People being forced to work to survive or face various horrendous consequences. And our own pillaging and burning as well. Such as the two world wars and the various smaller ones that came after. Not unlike the Mafia blowing up the Pizza Parlor because the owner refused to pay the protection money. Only on a much larger scale.

    What the true irony of this is, is that the Republican Party was formed on the proposition that slavery needed to be abolished for a fair and equitable economy to take hold and yet they then turn around and fight any attempt to remove the de-facto slave states that they themselves prospered on. And still do.

    And yet with the last economic catastrophe still being felt, they will refuse to their dying breath to admit that this myth of Unencumbered Capitalism is nothing but a fantasy. Because to do so makes the whole point of their political party null and void. That this idea that man working for his own self interest would have any beneficial effects on society is contradictory at best and dangerously delusional at worst.

    We have seen twice now what happens when man is allowed to work for his own self interest and it ain't pretty.

    Comments

    Well pyramid schemes provide for the many at the bottom and a few at the top.

    McDonalds made billions only because it paid those at the bottom a buck an hour (in 1966 dollars) to perform simple tasks in order to provide Americans with enough fat and salt in their diets.

    Without unions, like Wily Loman's son proclaimed, most of us are worth about a buck an hour.


    by Richard Day on Thu, 12/30/2010 - 2:53pm

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