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Friday, May 17, 2024

TGIF: The Nonsense of Statist Political Economy

In the video "How Capitalism Makes You Less Free," self-described Marxist Grace Blakeley, author of Vulture Capitalism: Corporate Crimes, Backdoor Bailouts and the Death of Freedom, boldly asserts that all societies must have some kind of economic planning. That's hardly news in 2024. Free-market liberals, or libertarians, have long taught that the issue is not planning versus no planning but who plans: free profit-motivated, consumer-oriented individuals independent of the state and other coercion or force-wielding centralized bureaucrats and their cronies, with or without democratic window-dressing. 

Blakeley rejects independent planning in favor of democratic planning. But that means coercion must be in the picture. For all her concern about freedom, she doesn't use the word as everyone else does.

Blakeley, a 30-year-old commentator on political economy with two books now under her belt, seems confused. She's worth discussing because her views would be well-received on American college campuses.

Her answer to the great social question is a complex system of multi-layered purportedly democratic planning and accountability. Worker-managed entities and other democratic bodies would check one another to keep them in line. Any other form of planning, ranging from business owners running their own firms in competitive markets to the centralized "fusion between public and private power" would be forbidden. Her argument heavily relies on horror stories involving profit-seeking businesses. Of course, democratic people's republics have never committed atrocities. The collectives she envisions would always serve the public interest because of "democratic oversight."

Need I point out that this is oversimplified and that some distinctions are required? Fully private profit-and-loss decision-making -- independent of the state -- is what authentic liberalism, or libertarianism, calls for. It requires no state whatsoever because entrepreneurs can produce law and rights protection. On the other hand, the "fusion between public and private power" is fascism, the negation of free private consensual enterprise. Like all fascism, Nazism was socialism with a thin veneer of private ownership.

Blakeley would have us believe that a bonafide free market is not an option. (She doesn't regret that. But why not?) So let's stop talking about it. We must choose between coercive planning for the rich and coercive planning for all.

"Capitalism requires a certain amount of centralized planning to function," she says. It is a "central part of the way the capitalist system works":

In the [pre-World War II] laissez-faire period [Henry] Ford does whatever he wants; the state does what he says. In the postwar period Ford has to manage his relationship with workers and he has to manage his relationship with the state and all three of these parties had to come together and try to decide what happens next. What changes in the neoliberal period [beginning in the 1980s] ... the decision-making power is basically returned solely to capitalists and their allies within the state.

Now hang on. What laissez-faire period? She told us laissez faire was impossible. So how did the impossible exist?

She has more problems. If the state did what Ford told it to do, why does she call that laissez faire? This is basic stuff that she can't get right.

After the war we got a sort of fascism, but Blakeley won't call it that. The federal government (gun in hand) tried to orchestrate cooperation between business and labor. (Ayn Rand properly labeled John Kennedy's New Frontier "the new fascism.") But then when Reagan (and Thatcher) came to power, we returned to the impossible laissez faire that can't exist. Confused? So am I, and apparently so is she.

Here's another gem. "Individualism is hampering any kind of change because it's hampering our ability to organize collectively." Never mind that for centuries, individuals have voluntarily joined together in formal and informal markets to accomplish what one could not do alone. Blakeley poses as a champion of workers, but she's an elitist. She knows better: what we need are coercively organized "democratic" collectives for everything. She condemns the "gig economy" because it does not have real employment. It's elitism in populist clothing.

And here's another doozy:

I harken back to this Marxist socialist idea of freedom, which looks at -- yes, individual freedom and autonomy, but also your freedom as a member of a group to shape the conditions that affect your life and your existence.

Where is room left for individual freedom and autonomy?

Even in this mixed economy, people -- thanks to the coordination that market exchange and prices make possible -- substantially shape their lives. Of course, they would have even more control if the government would get out of the way by abolishing housing and land-use restrictions, occupational licensing, business-permit requirements, central bank fiat money (that causes inflation and recessions), theft-by-taxation, immigration barriers, victimless crimes, intellectual "property," surveillance, and other impositions. To the extent workers are unfree, it's because politicians and bureaucrats have the power to privilege themselves and their cronies at everyone else's expense.

Democracy, of course, is majority rule. What's so great about forcing everyone, Rousseau-style, to obey the majority? Should the majority prevail on everything? If not, what's beyond its reach? How is that line drawn, by vote? What keeps the majority from crossing the line it establishes? What happens to the individual, the smallest minority?

Democracy settles nothing. It simply shifts problems from the realm of consent, where problems are manageable thanks to the profit incentive and price coordination, to the realm of coercion, one-size-fits-all answers, perverse incentives, one-vote impotence, and the mirage of accountability. (Compare a consumer who, without notice, switches products to a citizen who wants to switch democratic rulers.) 

Blakeley should read Benjamin Constant's classic essay, "The Liberty of the Ancients Compared with that of the Moderns." She is an ancient -- and in this context, that's no compliment.

Even with hampered markets, general living standards in the West and other places have been dramatically rising for hundreds of years because of the Industrial Revolution and global liberalization. Consumption inequality has fallen. The labor-time price of all goods has dropped. The division of labor and trade have created broad-based wealth. Global poverty has plummeted. Despite government interference, rich and poor get richer. We need more freedom, not less.

Finally, though much more could be said, Blakeley and her fellow socialists must come to terms with Ludwig von Mises's proof that socialism, democratic or otherwise, cannot produce high living standards for a modern society. For that, we need real prices, exchange ratios, for producer and consumer goods; otherwise no one can rationally calculate the best way to produce what we want in a world of scarcity and uncertainty. But you can't have real communicative prices without markets, and you can't have markets without free trade in labor services and goods and resources. That requires self-ownership and private property. Abolishing private property, Marx's chief hope, would destroy our ability to increase prosperity for all.

That is the century-old Mises-Hayek argument against socialism. The socialists lost. Someone should do Grace Blakeley a favor: send her a copy of one-time British Marxist David Ramsay Steele's From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation.

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