From When Corporations Rule the World – Third, 20th Anniversary Edition

In the quest for economic growth, free market ideology has been embraced around the world with a near religious fervor. The beliefs espoused by free market ideologues are familiar to anyone conversant with the language of contemporary economic discourse.

  • Sustained economic growth, as measured by Gross Domestic Product, is the path to human progress.
  • Free markets, unrestrained by governments, generally result in the most efficient and socially optimal allocation of resources.
  • Economic globalization, achieved by removing barriers to the free flow of goods and money anywhere in the world, spurs competition, increases economic efficiency, creates jobs, lowers consumer prices, increases economic growth, and is generally beneficial to almost everyone.
  • Privatization, which moves functions and assets from governments to the private sector, improves efficiency; lowers prices, increases consumer choice, increases economic growth, and is generally beneficial to almost everyone.
  • The primary responsibility of government is to provide the infrastructure necessary to advance commerce, maintain public order, protect property rights, and enforce contracts.

These beliefs are based on a number of explicit, underlying assumptions imbedded in the theories of neoclassical economics.

  • Humans are motivated by self-interest, which is expressed primarily through the quest for financial gain.
  • The action that yields the greatest financial return to the individual or firm also yields the most benefit to society.
  • Competitive behavior is more rational for the individual than cooperative behavior and ultimately more beneficial for society.
  • Human progress and improvements in well-being are best measured by increases in the aggregate market value of economic output.

To put it in harsher language, these ideological doctrines assume that:

  • People are by nature motivated primarily by greed.
  • The drive to acquire is the highest expression of what it means to be human.
  • The relentless pursuit of greed and acquisition leads to socially optimal outcomes.
  • The interests of human societies are best served by encouraging, honoring, and rewarding the above values.

A number of valid ideas and insights have become twisted into an extremist ideology that raises the baser aspects of human nature to a self-justifying ideal. Reminiscent of twentieth-century Marxist ideologues now passed from the scene, advocates of this extremist ideology seek to cut off debate by proclaiming the inevitability of the historical forces advancing their cause. They tell us that a globalized free market that leaves resource allocation decisions in the hands of giant corporations is inevitable, and we had best concentrate on learning how to adapt to the new rules of the game.

They countenance no middle ground, such as a market that functions within a framework of democratically determined rules.

The extremist quality of their position is revealed in the stark choices they pose between a “free” market unencumbered by governmental restraint or a Soviet-style, centrally planned, state-controlled economy in which government makes all economic decisions. They countenance no middle ground, such as a market that functions within a framework of democratically determined rules.

Similarly, they divide the world into two groups: “free” traders who would remove all economic borders to allow goods and money to flow unimpeded by public oversight; and the protectionists who would build impenetrable walls around countries, cutting off all trade and exchange with others. Again, in defiance of history and logic they recognize no middle ground, such as the possibility that governments might establish appropriate rules to assure that cross border exchanges are fair and balanced to the mutual benefit of people on both sides.

The most descriptive label for those of this ideological persuasion is corporate libertarian, because whatever they call themselves, the “free” market, “free” trade policies they advocate do not free trade, markets, or people. Rather they free global corporations to plan and organize the world’s economic affairs to the benefit of their bottom line, without regard to public consequences.

The Corporate Libertarian Alliance

Three major constituencies have joined in a powerful political alliance to advance the ideological agenda of corporate libertarianism with a dogmatic fervor normally associated with religious crusades.

Neoliberal Economists. Neoliberal economists embrace two first principles as fundamental articles of faith. One is that individuals are motivated solely by self-interest. The other is that individual choice based on the unrestrained pursuit of self-interest leads to socially optimal outcomes. [See The Betrayal of Adam Smith.] Neoliberal economists provide corporate libertarianism with a patina of intellectual legitimacy.

Property Rights Advocates. Ardent property rights advocates, sometimes called “market liberals,” commonly present themselves as libertarians dedicated to the defense of individual rights and freedoms. While true libertarians seek to defend individual freedom against intrusion from coercive institutions of any kind, market liberals are mostly concerned with protecting the rights from property from public accountability. Those without property have no rights that the market liberal is bound to respect. Market liberals give corporate libertarianism its cast of moral legitimacy.

Corporations and Members of the Corporate Class. Corporations and members of the corporate class–such as corporate managers, lawyers, consultants, public-relations specialists, financial brokers, and wealthy investors–comprise the third pillar of the corporate libertarian alliance. Some are drawn to corporate libertarianism purely by financial self-interest or because they are paid to do so, others by moral conviction. Although few members of the corporate class have a serious interest in the fine points of academic theories or moral philosophy, they find a natural common cause with those who provide an intellectual and ethical case for freeing corporations from the restraining hand of government and absolving them of moral responsibility for the social and environmental consequences of their actions. Furthermore, they have the financial resources at their disposal to handsomely reward those who legitimate their power.

The freedom of the market is the freedom of those with money.

This combination of economic theory, moral philosophy, and elite political interest makes for a powerful alliance. Yet in many ways it has served even its own members poorly, as its corrupting influence has not been limited to the broader society. It has led neoliberal economists to seriously debase the integrity and social utility of economics by reducing it to a system of ideological indoctrination that violates its own theoretical foundations and is deeply at odds with reality. It has similarly engaged libertarians in a cause that violates their own commitment to individual freedom, as corporations infringe on the property rights of real people and use their growing power to suppress the individual freedoms of all but society’s wealthiest members. The enormous political success of the alliance in shielding corporations from public accountability has create a monster that even the members of the corporate class no longer control and is creating a world that they would scarcely wish to bequeath to their children.

The Moral Justification of Injustice

The moral philosophers of market liberalism perpetrate a serious distortion by neglecting the distinction between the rights of property and the rights of people. Indeed, they equate the freedom and rights of individuals with market freedom and property rights. The freedom of the market is the freedom of those with money. When rights are a function of property rather than personhood, only those with property have rights.

It is a basic premise of democracy that each individual has equal rights before the law and an equal voice in political affairs–one person, one vote. We can rightfully look to the market as a democratic arbiter of rights and preferences only to the extent that money and property are equitably distributed. Although a market can allocate efficiently with less than complete equality, when 358 billionaires enjoy a combined net worth of $760 billion–equal to the net worth of the poorest 2.5 billion of the world’s people–the market is neither just nor efficient and it loses all legitimacy as a democratic institution.