Yes, it is a hoax on many, many levels.
The first great error here is the mental habit that many have of thinking
that big government and big business are somehow at odds. The whole of
American history from the beginning to the present suggests precisely the
opposite. From Alexander Hamilton to Goldman Sachs, a careful look at the
history shows that there has been no major expansion of government that
some sector of big business hasn't backed with pressure and
funding.
Does Favoring Free Enterprise Mean Favoring
"Business"?
Tuesday, January 25, 2011
by Jeffrey A.
Tucker
American political rhetoric seems to operate on a regular cycle, like a
clock, which is why it seems lately like we are reliving the Clinton
years.
The story goes like this. A Democratic administration with lefty ideas
gets elected, pushes hard for a series of goofy reforms like
protosocialized medicine, which prompts a backlash and thereby a
rethinking among the rulers, who then tack to the right and become
"centrist" by praising the great contribution that the business
sector makes to American life.
Most of these grandiose shifts -- Obama is going through one now -- are
illusory and pointless, like slapping a new color of paint on a car that
is traveling in one direction in order to fool people into believing that
it is a different car going in a different direction.
But what interests me most here is the rhetoric and the way the Left uses
it. They imagine that they got themselves in trouble by being seen as too
progovernment and not sufficiently in favor of "business" as
they understand that term. And so then comes the change when they
discover phrases like "private sector" and even words like
"capitalism."
It's all superficial, and these shifts suggest that the Left accepts a
caricature of capitalism: the belief that it is the system that favors
the largest and most established capital owners in society. So when
things start to go wrong with a socialist agenda, they reach out to the
corporate kingpins in the name of becoming friendly to free
enterprise.
Look at Obama's pathetic attempt to reach out to business. The
administration claims it is reviewing government regulations to find
those for which the cost outruns the benefits. Well, we could make some
progress here by turning the Departments of Energy, Education, and Labor
into sports arenas, but that's not what the administration has in mind.
Instead, you are to go to
Regulations.gov and comment, if you can figure it out. I bumped into
one rant that seems typical -- some giant racket about home-energy
upgrades -- but no doubt that this site is more safety valve than work
order.
Obama also has some new thing he established in the White House called
the Council on Jobs and Competitiveness, and this is supposed to
represent his new centrism. And who is to head it? Not the owner of
Cupcake Kitchen down the street in my neighborhood but rather Jeff
Immelt, the CEO of General Electric, of all people. And this is supposed
to signal some kind of new turn for the administration.
Obama's advisers imagine that his image has become tainted with the
impression that he is too much in favor of big government -- hmm, where
did that come from? -- and so now is the time to do the Clinton thing and
triangulate by being probusiness, and hence this new council and new
appointment.
Yes, it is a hoax on many, many levels. The first great error here is the
mental habit that many have of thinking that big government and big
business are somehow at odds. The whole of American history from the
beginning to the present suggests precisely the opposite. From Alexander
Hamilton to Goldman Sachs, a careful look at the history shows that there
has been no major expansion of government that some sector of big
business hasn't backed with pressure and funding.
Who won from the mercantilism of the 19th century? Who came out ahead in
the war socialism of Woodrow Wilson? Who was the major power behind the
economic regimentation of the New Deal? What sectors of American life
made out like bandits during World War II and the Cold War and the
regulation of medical care and the American workplace in the 1960s and
1970s? Without exception, the corporate elite were behind every push for
expanding the leviathan state.
The 19th-century history here has been carefully documented by
Thomas
DiLorenzo. Murray Rothbard has revealed the
role of business in World War I. The postwar period through the New
Deal is documented by Butler Shaffer in his great book
In Restraint of Trade. The New Deal racket received a
thorough
exposé with John T. Flynn. The Cold War and after are shown to be
radically probusiness in
For a New Liberty, as well as Robert Higgs's
excellent works. And this is just the US case: it's been true in
every country where free competition was overtaken by state
interventions.
There are several pieces of the puzzle one must understand to see why
this is so. The largest companies have a strong interest in crushing
upstarts any way they can. In a free market, they do this through better
products at better prices. But that's a hard-knock life. The struggle to
stay on top in this rat race consumes all energies. Profits are always
threatened in unexpected ways. Market share is never really secure. The
capitalist in this system feels like a slave to consumers, and there is
always another entrepreneur out there with a better idea to market. Not
even gigantic companies can be sure that they can hold on.
In a mixed economy, the government itself becomes an occasion of sin.
Capitalists are all-too-happy to jump out of the rat race and reach for
the levers of power. And to do what? To grant favors, privileges,
security, protection against failure, and, crucially, to stultify
competition by imposing business costs they have already absorbed onto
their less-lucrative competitors.
This is how the minimum wage and healthcare mandates and every manner of
regulations come to be imposed on the entire business sector: it is a
tactical move by the dominant players. It is the same with the regulatory
agencies, who hardly make a move without pressure and consultation from
business interests.
Antitrust is the classic case (protecting big business against
competition) but it is true with labor mandates, health mandates,
environmental mandates, and everything else. It's true with patents,
great inflations, higher taxes, mandated workplace benefits,
consumer-product regulations, and everything else. They are all
mechanisms to cartelize the market on behalf of the biggest players,
while the rhetoric about the small guy is just the political
excuse.
A
book that absolutely blew me away was written by Ludwig Erhard, the
great, Misesian-influenced reformer of the postwar German economy, a
passionate opponent of the interventionist state and a man who deserves
nearly all the credit for the so-called miracle experienced by Germany
after the war. The book is a patient-but-compelling argument in favor of
free competition and a plea to move away from wartime cartelization, from
which the German business sector benefited mightily. The book is
outstanding on its own terms, but much more interesting is the intended
audience: not consumers, not intellectuals, not voters, but business
itself, for Erhard knew what so many others seemed not to know, namely,
that the business sector is among the least likely to favor the free
market. It was this sector more than any other that needed to hear
the message.
And this becomes transparently obvious in the case of General Electric,
which is as intertwined with the government as the
East India
Company was in its day. Mr. Immelt himself is a good case in point:
not an advocate of free enterprise but rather an enthusiastic champion of
regulation, green-energy subsidies, high regulatory barriers in energy,
not free trade but export-driven trade, and a loud proponent of
regimentation in general insofar as interventions end up benefiting his
company. This guy finds a very happy home in the halls of power, pushing
for all kinds of policies that the state will love.
But back to Obama's new "centrism." What puzzles me is that
left-wing triangulation of this sort could possibly fool anyone. The
idealistic Left is undoubtedly upset with Obama's new turn, but are these
people really naïve enough to believe that there is such as thing as a
big government that is somehow untainted by the backing of big business?
As for the chamber-of-commerce Republicans, can they really be fooled
into believing that such moves amount to a new friendliness on the part
of Obama to the interests of the private sector?
Mises wrote in his inspiring book
Liberalism (still the bible of liberty after all these years)
that freedom is not about being in favor of the business sector; often
the business sector is the strongest and most well-heeled opponent of
freedom.
Did we not learn this during the succession of Bush/Obama bailouts, all
designed to privatize the gains of big business and socialize its losses?
These bailouts had nothing whatever to do with macroeconomic
stabilization or with the general interest of society; they were all
about looting society to favor large banks and corporations like General
Motors and AIG, protecting the state's friends from the wiles of market
change.
Mises goes on to speak of the tragedy of liberalism. As a doctrine, it is
not favored by any single special interest and certainly no single
political party. It is nonetheless in the interest of the whole society
over the long term; indeed, it is the wellspring of civilization. It is
for this reason that Mises believed that liberalism needs dedicated
champions in all walks of life. Otherwise we end up with endless cycles
of phony change such as we observe by looking at the whole history of
presidents after midterm elections.
Jeffrey Tucker is the editor of Mises.org and author of
Bourbon for Breakfast: Living Outside the Statist Quo.
http://mises.org/daily/4998
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