Reverse Adam Smith

Modern America and ancient Greece both articulated beautifully about freedom and democracy. But in order to do that, you need a leisure class, sitting around, pontificating, and in order to have that, you need a ton of other people doing the actual work work.

I’m not just talking about Bush or neo-conservatives or free marketers or whomever. Look at the guys in that movie Knocked Up. None of them did anything all day but loaf. How many millions of similarly slacker-y twenty-somethings are there in the US? What enables them to slack, of course, is the fact that millions of people around the planet work for pennies an hour.

I don’t wanna reconcile that, I want people to wake up and realize that if anything, globalization means that soon, we, too, might be working for pennies an hour. It’s like Adam Smith in reverse. Trade with people less free than you, and your own freedom is threatened.

From an interview with Jeremy Elton Jacquot for Tree Hugger.

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3 responses to “Reverse Adam Smith

  1. John,

    Thanks for pointing out the reverse Adam Smith thing. My thoughts exactly. You wonder why you don’t read more about this inevitable result bearing down on us like a freight train.

    The metaphor for the same thing that’s been in my mind for a few years is a divided swimming pool. The US is one side of a pool, full to the brim. The underdeveloped world the other, almost empty.

    When you lower the divider, what happens? Duh!! Even just a little. US water drains lowers; the other side goes up. This is our standard of living, folks. It’s a no-brainer.

    What were they thinking? Actually, it’s a good thing because resources worldwide are beginning to be allocated in a somewhat more just manner, but we in the U.S. are going to be in a world of hurt compared to what we’re used to. The “we must have infinite economic growth” crowd was really asleep at the wheel not to see that coming. The great glare of greed blinded them.

    I agree that if the economically enslaved ever bust out we’re in an even worse heap of sh*t than we’re presently headed for.

    Thanks for your outrage and courage to tell it like it is.

  2. John mentioned in Nobodies that his father-in-law Charlie, who teaches classes on corporate economics at Northwestern College in Minnesota, believes he is “one hundred percent libertarian” and an advocate of “the free market” (p267). John has no reason, until now I hope, to question Charlie’s claims. If, what Charlie says about corporations and the way they behave in the market is true, then why does a former professor at Harvard, then editor at Fortune magazine, and currently a fellow at the Hoover Institution at Stanford, make the following seemingly paradoxical statement?:

    “The final reason why the United States might convert to capitalism is that Americans are highly sensitive to the flaws of the corporate state, which are many, and powerfully attracted to the moral virtues of capitalism, which are profound” (Paul H. Weaver in The Suicidal Corporation, 1988: 252).

    Is this not a puzzling contradiction? Is there not consensus that the American economic system is dominated by capitalism? Why does Weaver say the U.S. might convert to capitalism? On the face of it, these questions make little sense. When has there been any other economic system in America other than capitalism and what is that?

    Weaver revealed it is the corporates state which is that alternative and it is entirely antithetical to capitalism. After becoming an insider at the Ford Motor Company, Weaver learned how corporations really work:

    “Corporatism accpets private ownership of business but sees economic life as a mainly institutional activity that occurs under a bureaucratic supervision rather than in a free marketplace. It likes oligopoly and mistrusts competition. It accepts representative democracy but sees political life as a process dominated by economic, ethnic, and other interest groups rather than individual citizens. That is why corporatism is often associated with racism and imperialism; it was, for example, the official ideology of fascist Italy under Mussolini …”(Weaver 1988: 183).

    In short, corporations are creations of the State. They are legal fictions, artificial persons claiming your constitutional rights. As children of the state, they are just as bureaucratic and inefficient as their parent. In a free market, there are no corporations.

    The term “corporatism” refers to the symbiotic relationship between the state and its offspring (corporations) in regards to the economic, social, and political decision-making process. Both are constrained by competition in the market.

    During the ’80s and early ’90s, under the guise of “privatization” sponsored by the Reagan/Bush governments in America, and the Thatcher/Major governments in the United Kingdom, corporate statism increased in both countries. Within the government-generated business cycles of both countries, privatization attempts were a cover story allowing governmetns to reduce expenditure by appliying business solutions without regard for the market. It led to the restructuring of the welfare state and the growth of a new public managerialism with the State playing an increase role in determing aims and outcomes, as well as montoring performance by numerous new agencies. Prices were determined by adminstrative fiat and by supply and demand. Taxes still remained the major source of revenue. In short, these new forms of governance associated with corporate globalization did not constitute privatization. Corporatism is a more accurate description of these business practices.

    It is true that the corporation has a contested history. Depending on one’s theoretical position and value-orientation, the corporation has been maligned and demonized as well as exalted and praised. It has been touted as the source of many important technological advances and rising standards of living by some, and indistuinguishable from exploitation and corruption by others. Weaver’s liberartarian view is that the “corporation had never been for markets, limited government, private property, or the other values associated with the business cause” (Weaver 1988: 99).

    The pro-market view regarding capitalism is not a monolithic group. It comprises an uneasy alliance of two groups grounded in different realities – libertarians and conservatives. This fact is not easily discerned by observers. The libertarian/classical liberal/ Rothbardian Austrian school of economics view sees corporations through a lens of liberty as creations of the state and therefore as incompatible with the free market. A corporation such as Microsoft is seen as a miniature Soviet Union.

    The conservative/neoconservative view, observing through a corporatist lens, does not distinguish business enterprises from corporations. Weaver explained the tensions between these two types of free market advocates – “By becoming a critic of the corporation, I saw, I had become a critic of neoconservatism itself (Weaver 1988: 102).

    Weaver’s shift toward libertarianism from the corrupting neoconservative embrace of the corporate state opened his ears to the criticisms of corporations coming from the left:

    “Aside from their socialism and anticapitalist animus, which I found as alien as ever, the strictly historical conclusions of hte New Left historians now struck me as persuasive and even revelatory. There WAS something exploitative, aggressive, and constitutionally subversive about the corporation as it emerged in the nineteenth century, …”(Weaver 1988: 102).

    Another problem for pro-market advocates and those observing them is that some of the libertarians tend to forget that pro-market advocates are of two types. So we find the late libertarian director of Laizzez-Faire Books, Roy Childs, erroneously lauding a neoconservative part-faction memoir titled Revolution (1988) by Martin Anderson as “a libertarian counterpart to what liberal historians and commentators did to – 0r for -the adminstrations of Roosevelt and Kennedy” (in Henderson 1988: 34). Child’s statement is simply wrong and not true. What Anderson’s corporatist and Republican diatribe did for free enterprise is arguably what Hamilton’s nationalist Federalist Papers (1787-88) did for Amerian federalism. The contradiction of the stated aim to the realized outcome brings to mind George Orwell’s “War is Peace (1944) and other “doublethink” phraseology. Many Americans today remain just as confused as they were in the 1980s and 1990s, or even the 1780s and ’90s.

    When I perused the leftist literature on corporations, it took many readings before I figured out that what most libertarians refer to as corporate statism (Radosh and Rothbard 1972, Galambos and Pratt 1988), leftists largely refer to as “capitalism” (Buroway 1979, Dale et al 1976, George 1993, McCormick 1982, McLaren and Leonard 1993). If the term “capitalist” were changed to “swindler” by leftists, and the terms “corporation” and “statist” were changed to “swindler” by free marketeers, by and large both camps would be in agreement when talking about “swindlers”. Compounding this confusion in language is the hazy area where confused neoconservagtives defend corporations and socialists defend their parent – the State. When this happens, the language employed appears to the other as criminal, and rightly so – advocating the activities of “swindlers”. At this point, all potential for further discussion breaks down, despite the fact that the criticisms, if not the solutions, of both sides have merit.

    That there is a decided lack of commonly held definitions for much of the terminology used in these debates makes it difficult for anyone with less than a scholarly interest to make sense of the confusion in political language. The only apparent solution seems to be if one can decode the double-speak and create universal terms that carry the same meaning for both sides and all parties within each side. Compounding this confusion is the fact that our CIA publishes thousands of text books without anyone’s knowledge in order to perpetuate this confusion. Congress Frank Church uncoverd these disinformation campaigns in the ’70s.

    To wrap this up, I want to point out again that corporations are universally a unique creature of the state, therefore special acts of Congress or of state legislatures were usually necessary for their creation. No one under the law apart from government possessed the authority to remove responsibility from the owners of a business enterprise. Only the state could divorce the business owners from the context of social responsibility through a charter of incorporation. The corporate mode of business organization limits the owner’s liability to his share in the corporation.

    Critics claim corporations are given status in law as “artificial persons” but a human person lives and dies usually within a social relationship to the community in which they live and do business. Corporation owners remain anonymous and live in another locale free from local constraints of community. Corporations do not shoulder liability in the same way as a human simply because these “artificial persons” are not human. Instead they are a managerial barrier made up of human employees standing between the the human business owners and the humans of the community.

    I’ll close with David Hapgood, former evaluator for the Peace Corps who studied programs in Education, Public Health, and Agriculture in West Africa, India, and Costa Rica from ’64-68, who described in a populist fasion the concentration of American economic production from the many to the few:

    “Since the earliest times, ambitious swindlers have been trying to eliminate competition and charge the average man more for less. The robber barons, viewed nowadays as wicked old capitalists, could better be described as early adherents of the currently fashionable philosophy of socialism for the rich … Their fortunes were made not on capitalist competition but on the opposite: … names like Dupont, … and Rockefeller … The fastest comer of them all, H. Ross Perot, made his serving the poor and sick on government contracts. All these fortunes have one charactistic in common: none of them was earned in the competitive free market that, according to high-level wordnoise, is the bedrock of the American economic system”(Hapgood 1974: 246).

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