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October 05, 2006

It Ain't About Bigness

The quick-moving conversation on whether liberals have anything to say to libertarians who believe corporate power is only dangerous when united with state patronage is an interesting one, and worth thinking seriously about. The libertarians involved argue that liberals -- many of whom want to extend, enlarge, or at least perpetuate state power -- are unwittingly but unerringly strengthening the corporations they seek to constrain. Many of the liberals involved think that's nonsense.

Part of the problem here is the simplicity and inadequacy of "Big Government" as a descriptor for much of anything. You can have a huge, interventionist, and corporatist government that doesn't do much to advocate for the public interest, but is nevertheless interventionist in nature and monumental in scale. As LB points out, after the Pinkertons would finish beating strikers, the police would throw the bloodied laborers into jail. That was Big Government, but not in the sense that the left means it.

At other times, government has been a pretty determined enemy of corporate power. It shattered Standard Oil, broke up AT&T, and curtailed Microsoft. It passed seatbelt laws, the Clean Air Act, and opened the door to unionization. It worked to elevate the interests of society over those of business. But yes, as the libertarians say, it can be as evil as it can be good. That warning suggests that it's not the size of government, but the type of government, that matters. Many libertarians reject the possibility of a positively-oriented state -- capture is inevitable. Liberals are fundamentally more optimistic on that front, and note that, in any case, the small government ideology has proven to do little but rechannel the state's efforts into promoting corporate power. So if liberals focus on the possibilities for restoring elements of the progressive movement into the state, they do so because nothing else has proven even partially capable of counterbalancing corporate power. Government may be a blunt tool, but it's the only one we've got.

October 5, 2006 in Big Business, Economics | Permalink

Comments

And why was AT&T a monopoly in the first place? What would have happened to you if you'd tried to sell other phones or set up a competing service?

Posted by: digamma | Oct 5, 2006 11:29:36 AM

And why was AT&T a monopoly in the first place?

Indeed, as Milton Friedman noted, the only thing worse than an unregulated monopoly is a regulated one. Because an unregulated monopoly, unrestrained by state power, can never quash an upstart that tries to undercut them. That's why AT&T was famous for its abusive pricing practices and its armies of thugs, while Standard Oil and US Steel were models of propriety and a free market of peers. Or just look at local utilities, telephone, and cable. Why, all my bills have declined so much since these monopolies were deregulated.

See, that's the problem with this list:

It shattered Standard Oil, broke up AT&T, and curtailed Microsoft. It passed seatbelt laws, the Clean Air Act, and opened the door to unionization. It worked to elevate the interests of society over those of business.

Virtually every right-libertarian I've known would consider every single one of those a bad thing, with the possible exception of the dismantlement of the socialist AT&T.

Posted by: mds | Oct 5, 2006 11:46:40 AM

digamma,

Yes, great example. Don't forget, the government did not rush in to break them up, they asked to no longer be a protected utility and the "breakup" was the result of the negotiated settlement they made with the feds.

Also, Standard Oil was a self-correcting problem that was in the process of being corrected without the help of the government.

The oil firms out west were sprouting up without any obstruction from Standard. Partly do the Getty "boycot" of parts of the west.

As mentioned before, nice touch on that "breakup" that resulted in no competition for decades between the resulting basket of firms. The Standard shareholders were granted proportionate shares of the new firms, the boards of directors were the same people and the voting blocks were identical within the new firms as they were with Standard.

The "romantic" version really needs to be placed in the P section of the LOC Call Number system.

Posted by: Guy Montag | Oct 5, 2006 11:52:13 AM

A major problem with letting the free market as we understand it govern everything which is what libertarians ask for is that the markets equate economic benefit with monetary benefit which is not always the same thing. However, it is how we measure and keep score. Then the quest for monetary benefit becomes the highest value our culture has, and anything is ok as long as it increases profit. That moral view comes to permeate the culture, so that the Costco CEO is looked upon as being a failure because he thinks people that work for him should be able to afford a house, car and health care. If money is the greatest good, there is no longer a need to self-regulate, because you don't have to feel bad about kicking others to the curb - that becomes the way it should be, your obligation, in fact.

What I'm trying to point out is that letting the markets rule means that the market's values become the ruling values. We don't necessarily guide the markets, they guide us.

Posted by: cathy | Oct 5, 2006 12:50:26 PM

There is no such thing as a free market, and never has been. There are different ways that the market can be regulated. It can be regulated well or it can be regulated poorly. It can be regulated in the interests of the workers or in the interests of the wealthy. But there has never been an utterly unregulated market and there never will be. Indeed, it's virtually impossible even to conceive what that would look like.

The US has a marketplace that is heavily regulated, and mostly in the interests of capital. So let's put to bed this foolish notion of a "free market" - which is as silly an idea as pure stateless Communism - and instead focus on how we can best regulate the marketplace to create a good life for the greatest number of people.

(If you doubt that this is not a free market, try practicing medicine or law without a license. Try comepeting with Microsoft by selling CD-Rs of Office. Try organizing a sympathy strike.)

Posted by: Firebug | Oct 5, 2006 3:00:52 PM

So let's put to bed this foolish notion of a "free market"

I think most non-anarchist libertarian thinkers would acknowledge the need for a state; they just think its powers should be minimized. For instance, rather than using tax dollars to heavy-handedly regulate capital or individual conduct, the State should devote its resources primarily to national defense. After all, a state apparatus whose basic function is to maintain as powerful a military as possible is the surest bulwark against government tyranny. Just ask Jim Henley. It's only when one tries to move past "provide for the common defense" to "promote the general welfare" that one ends up on a slippery slope to the revocation of habeas and the end of checks and balances.

Posted by: mds | Oct 5, 2006 3:22:48 PM

Wait, so we're considering a state that only provides a military and a police force (not mentioned by mds, but I've yet to see non-anarchist Libertarians leave it out of the required functions) to somehow be a weaker state? A state that can still shoot me dead for any reason is still one that has all the tools it needs for abuse.

Look, there's a real good point to be made that Libertarian politics are primarily about aesthetics- what they think a government should do, rather than what a government can do better than private industry. A minarchist government can do just as many bad things to me as a totalitarian government if it goes corrupt- I just won't be getting a social security check. If Libertarians want to argue that a government stripped down to a police force and army is incorruptible, fine. That's a discussion we should have. Because if they want me to take them seriously, they'll have to address the fact that this is an implicit assumption in a good number of these arguments.

Posted by: Moleman | Oct 5, 2006 4:19:52 PM

At other times, government has been a pretty determined enemy of corporate power. It shattered Standard Oil, broke up AT&T, and curtailed Microsoft. It passed seatbelt laws, the Clean Air Act, and opened the door to unionization. It worked to elevate the interests of society over those of business.

I think that you are missing a key distinction. In most of those cases, the government WASN'T opposing corporate power; it was opposing a PARTICULAR corporation's power--picking winners in a squabble among corporations. And when the government is picking winners in inter-corporate squabbles, all the corporations start lobbying. (Look at the political involvement of the software industry pre and post the Microsoft case.)

I'll grant that much is done with the best of intentions--but in general, regulation is a very effective way of strangling small firms, and non-corporate suppliers. (Small farms and local slaughterhouses in the food industry are my favorite example.)

Posted by: SamChevre | Oct 5, 2006 4:34:25 PM

Until libertarians buy, borrow, or rent a clue and realize that the corporation itself is a product of government (limited liability, the legal fiction of the corporate person, special rates of taxation, restrictions on stockholder suits, the list goes on and on), there will never be a sane thing said by any libertarian on the subject or corporate regulation.

For that matter, libertarians also show a disturbing inability to distinguish between group behavior and individual behavior, coupled with a sad tendency to identify their own individual rights with "group rights," leading to all sorts of silly notions like "State's Rights" and the ridiculous idea that restricting corporate disinformation strategies somehow endangers free speech for individuals.

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"Karl Hess once told me he thought that Ayn Rand stole all her best ideas from Max Stirner. I disagreed. I didn't think she was that well read."

Posted by: James Killus | Oct 5, 2006 7:45:07 PM

Until libertarians buy, borrow, or rent a clue and realize that the corporation itself is a product of government (limited liability, the legal fiction of the corporate person, special rates of taxation, restrictions on stockholder suits, the list goes on and on), there will never be a sane thing said by any libertarian on the subject or corporate regulation.

Yeah, pretty much.

Libertarians are those who have relatively coasted through life, consuming state services and benefits at probably a greater rate than most others, all the while patting themselves on the back at how "self-made" and "independent" they are.

This "political philosophy" requires such high levels of self-delusion as to make George Bush look informed and engaged.

Posted by: Stephen | Oct 6, 2006 12:42:15 AM

'Government may be a blunt tool, but it's the only one we've got.'

It is? You mean that we as individuals are helpless? We cannot, for example, change corporate behaviour without Government?

If this is so then why are there so many damn boycotts of companies organized?

Posted by: Tim Worstall | Oct 6, 2006 9:35:18 AM

Until libertarians buy, borrow, or rent a clue and realize that the corporation itself is a product of government

To be fair, some libertarians acknowledge that the personhood of the limited liability corporation is also an abuse of government power. If nothing else, there's rarely any personal accountability if a corporation breaches contracts. E.g., Rick Thoman almost singlehandedly wrecked Xerox's sales division, and when stockholders brought suit against him, he was defended using the stockholders' own money, even though he was no longer an employee. And SEC fines for fraud levied against former execs including Thoman were likewise paid out of company holdings, not their personal fortunes. I think a number of libertarians would find that slightly out-of-whack.

You mean that we as individuals are helpless?

Yes.

If this is so then why are there so many damn boycotts of companies organized?

Try conducting an individual boycott of a company, and see how far it gets. Oh, wait, you're actually referring to the power of collective action of like-minded people to effect change. In that case, since in principle we live in a democratic republic, why don't we use that collective action to elect a government? See, that's what bothers me about the American Apathetic Libertarian: government does not have to be "them." Government does not have to be taking "your" money away to spend on "itself." Democracy is supposed to be power to the people.

Posted by: mds | Oct 6, 2006 9:57:45 AM

Posted by: Moleman | Oct 5, 2006 1:19:52 PM A minarchist government can do just as many bad things to me as a totalitarian government if it goes corrupt- I just won't be getting a social security check.

But Social Security is not really a "big government" program. A big government program would provide pensioners with a ration book and set up a system of ration stores where the rations can be obtained.

Equally, the "big government" approach to lack of affordable housing is to build public housing, hire people to manage it, maintain it, vet the applications whether people are qualified to live in it, and of course another several layers of bureaucracy on top to keep tabs on the managers and maintainers and application deciders. Setting that up as the only alternative to doing nothing is a false dichotomy. As, indeed, it is false to put down the lack of affordable housing to the "operation of the free market" ... we already regulate the supply of new housing through zoning and subsidize new developments in a large number of ways ... its just that the present system works to ensure a shortage of affordable housing.

A combination of regulatory reform to reverse the bias against affordable housing and a voucher program for those who would still be locked out can get more people into affordable housing for less resources from the government, per person.

Of course, if you the "bigness" of government simply based on the budget, you will miss much of this dimension of the problem, which is more about the size of government overheads compared to the total number of people served.


Posted by: BruceMcF | Oct 6, 2006 12:39:07 PM

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