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There’s No Such Thing As “Free Markets”

Whenever I hear someone start to toss around phrases like “free markets” and complain about “big government” and “regulations.” I know I’m likely talking to a libertarian or neo-conservative shill making excuses for crony capitalism.  

The idea that there can be “free markets” in an anarchic capitalist society is a clever joke—a reality that dawns at some point on idealistic anarcho-libertarian undergrads that want to say they believe in something that sounds cool to say.  One day in between bong hits, it hits them—who pays taxes if no one makes them pay?  If you have no taxes how do you stop military invasion from even the most mediocre states?
Anyone pushing these ideas after age 30 are likely either fools or just sociopaths who want less rules so they can try to screw over everyone else.

Markets cannot exist without a state that uses the threat of force to guarantee property, profits, and contracts.  Thus the state has the implicit prerogative and responsibility to control the market.

Imagine what would happen to the local grocery if all police and soldiers disappeared.  The grocery would be forced to hire the local gang to defend their merchandise and before long, that gang would become the new state getting protection money(taxes) in exchange for their services.  Then, the guys with the guns, of course, get to call the shots.  

If the grocery owners hatch schemes to bleed the rest of community dry for their own benefit, the gangsters start to lose out on their neighborhood protection rackets.  The furious gangsters respond by threatening to shoot the store owners if they don’t follow certain rules.  Thus, we get regulations, which no market lacks.  The market itself is regulated into existence by the gangsters’ guns.

Even most “free market” ideologues can’t claim to believe in actual completely free market.  They usually recognize the need to prevent monopolies and try to have a “level playing field.”  But they are slippery and try to blame the centralization of wealth into monopolies on “big government” ineptitude and corruption.  In fact, power tends to centralize over time whether we speak of political bodies or business enterprises.  In real life, big, powerful government is the only thing that keeps markets competitive.

The market is one of the most powerful and flexible tools known for organizing and channeling the creative power of humanity.  Used properly, it can give rise to prosperous nations.  But it is first a tool to improve society, not an end unto itself.  Business exists to serve the people and is fundamentally subordinate to the needs of the tribe.

When businesses are allowed to do whatever they wish while enjoying the protection of armed men, the state creates and aids the growth of competitors for its power to rule.  The market is a dangerous tool that must be handled with firm discipline.  

If the gangsters grow soft, the grocery store competes with them for money that would’ve gone into taxes and eventually has its own armed men.  If the gangsters lose the ensuing struggle, the grocery store becomes the new government.  Then the grocery store has to worry about staying in power just like the gangsters did.  

The worst possible state, actually, is when the market is let to grow out of control with no responsibility for governing.  Then business, which should be enriching the neighborhood becomes like a brood of writhing tapeworms bloating the collective body even as it starves from within.

There will always be corruption and ineptitude in government so long as governments are ran by people, or even by machines programmed by people—and therefore infused with human bias. It has been argued endlessly if government is good or bad.  What cannot be debated is whether government is necessary and those who try to say otherwise in favor of business are most likely traitors.

Markets Exist To Benefit Society

If money is blood, the market is the circulatory system..
I have pointed out before that it’s impossible to have a market without the state, whether it’s run by an emperor or local gangsters. A store without protection is quickly looted.
So it’s up to the state to regulate markets so that they fulfill their mission— to serve as a substitute for small scale systems of status-based exchange.  It’s necessary and right to regulate the market as the market depends on regulators to exist in the first place.
Those who are most important to the survival of society naturally should have the most influence points, while there is a natural duty for society to protect itself from malicious people by denying them influence points. Those with low potential to return value or who are sure to make bad decisions with their influence have to be kept near enough to subsistence that they can’t do much harm.

We’ve established free markets are highly volatile and far from perfect in coinciding with the interests of society.
Even in an American culture that worships the market economy, there are plenty of laws dealing with everything from monopolies to insider trading. The existence of such laws in even the most permissive states is tacit admission of the necessity of state interference. The only question is how much interference there should be.
The market is a tool to further the good of a people, since it is an extension of customs of redistribution that further the good of small tribes, thus the purpose of regulation is to keep the system to its purpose. We suppose it is a good use of a hammer to drive in a nail and a bad use to shatter someone’s kneecaps. We can suppose a good use of a market is to make a people strong and a bad use to weaken everyone to enrich a few parasites and entertainers.  Used well, the market allows a group to get rich and outcompete less wealthy groups. Used poorly, it allows an entire society to destroy itself.
The trouble with a system of “free market” capitalism is the implicit belief that the market exists for its own sake, not to serve the best interests of the social body in which it is but an organ.   We should do as well to conclude that our own bodies exist for the good of the heart and arteries.  So if the brain, liver, or muscles were to suffer a blood shortage it is the will of the almighty drop of blood and evil for the brain to regulate the heart to more evenly distribute the blood supply throughout its organs.  Or if there were parasites in the blood, to conclude the veins “know” what’s best and to restrain the immune system because the parasites “earned” their place.
Isn’t it odd that when we examine more closely, the very idea of a “free market” sounds like a scam?

Rockefeller: Oh the Joys of Deregulation

Railroads, factories, refineries…In the 19th century it became possible for a few people to control a few critical chokepoints of commerce and exploit them for all they were worth.

To some, these people were “captains of industry” to the worker on the street they were often known as “robber barons.”
Once one of them dominated a key commodity or transport system they could wield monopolistic powers with impunity.

Many people believed that “free” markets would naturally lead to the optimal public good, the regulations that could have stopped the near destruction of competition in the economy didn’t yet exist.

John D. Rockefeller grew up poor in rural America, his father absent most of the time womanizing and plying money-making schemes, his mother overworked at home on the farm.
Because they never knew when people would come calling to collect debts incurred by the father, they always had money in reserve and kept close track of finances.

When Rockefeller got his first job in Cleveland he started keeping a personal ledger poetically named “Ledger A” that he used to keep track of every penny that passed through his hands.
To put this worship of order and precision in perspective, Ledger A became Rockefeller’s personal Rosebud, a sacred artifact he later had locked away in one of his private vaults.

It was with this methodical spirit that Rockefeller continued to accumulate wealth and assets. He saw commerce itself and the accumulation of capital as a sacred mission.

Realizing that drilling for oil itself tended towards booms and busts, Rockefeller had the brains to focus on refineries that could bring in steady profits whether or not there were localized surges or shortages.

He also leveraged his growing economy of scale to get discount rates from the railroads which allowed him to sell his product cheaper than the competition. Soon everyone had to push for these discounts or go out of business. To a few victors who could push the railroad transport prices lowest went the spoils.

This price war over the railways is why today we have interstate commerce laws. Because Rockefeller could use railroads to help him sell more cheaply than the competition wherever he went, no one else stood a chance.

State governments and the feds tried to make regulations to prevent companies like Standard Oil from operating across state borders without having to answer to any set of local laws. Soon,companies had to operate under the laws of a single state.

Standard Oil simply split up into nominally separate companies, one for each state and all were governed from a seemingly innocuous holding company.

As government continued to try to restrict the reach of robber barons, men like Rockefeller kept finding ways to honor the letter of the law while circumventing its spirit.

Rockefeller responded to concern over the growing size of his company by maintaining every appearance of competition.
Companies he bought out would keep their old names and management. No one would even know anything had changed except for a few people at the top of the hierarchy.
He also allowed an insignificant sliver of the industry to remain somewhat independent so he could always make the claim that some competition existed.

Because of these stealthy tactics, few people realized just how big Standard Oil had become until it was too late. Whereas other Robber Barons liked to behave like celebrities, Rockefeller kept quiet operating largely behind the scenes. He didn’t truly become a household name until long after he had taken over.

Perhaps more than anyone, Rockefeller invented the modern corporation with its precisely organized state-sized bureacracies.
Because Rockefeller found himself in charge of so much, much of his effort was spent simply figuring out how to delegate tasks.

He also invented much of the modern corporate culture even becoming one of the first executives to organize much of his social life around holes of golf.

Like many magnates of his time, Rockefeller seemed to feel a certain tie to a homeland and people that today’s borderless tycoons would be hard-pressed to understand.

That Rockefeller retained some kind of moral vision and notion of a higher purpose even as he gained absolute power seems unthinkable after all the horrors of the 20th century and the dominance of disconnected kleptocrats in the 21st century.

It truly is amazing in retrospect that he actually tried to build things and give back to the society that gave him his wealth rather than relentlessly hoarding everything he had by running his operations out of multiple countries.

Indeed in the 21st century, today’s Robber Barons have transcended obsolete nation states.
They play the laws of one zone against the other for their gain much as Rockefeller once did with the laws of different U.S. states.

As unpopular as the notion of some kind of world governing system is, some kind of international commerce system may become necessary to stem the depredations of billionaires who reap all the benefits of playing a game of arbitrage within the current decrepit and outdated international system: If one nation objects to being exploited by them, they simply take their money somewhere else with a government more amenable to their desires.
If particular countries try to enforce regulations, elites can simply split different operations into different countries all under different names just like Rockefeller used to do in the states with bits and pieces of Standard Oil.

In our age of multi-national corporate entities effectively acting outside of the laws of nation states, we would do well to pay attention to the lessons we can learn from men like John D. Rockefeller.

Titan: The Life of John D. Rockefeller Sr.

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