Neo-Feudalism and the Invisible Fist

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“The sleekest revolutions,” notes Barry Lynn, “are won not at the barricades but in the dictionary.” To control the terms of a debate is to control the outcome. This is certainly true of the term “free market,” a term which has come to mean almost its opposite, and hence a system which is manifestly unfree. The claim that our markets are not free is a serious one, and should only be made on serious evidence, just the kind of evidence that Barry Lynn provides in Cornered: The New Monopoly Capitalism and the Economics of Destruction.

The surest sign that a market is free is that it is competitive; there should be a rich variety of products provided by a vast number of firms, a situation which affords entrepreneurs many opportunities to enter the market and workers many places to sell their labor. And when we waltz into our local Wal Mart, that is what we seem to see. Alas, it is an illusion of competition rather than the reality. For example, if you want eyeglasses, you can go to Pearl Vision, or Lenscrafters, Sears Optical, JC Penney, Target, Macy’s, Sunglass Hut, or buy frames from 25 different manufacturers. Surely choice and competition prevail in this market. But no. All of these are one company, the Italian conglomerate Luxottica. And as with glasses, so also with so many other products. Most of our beer—even some that try to pass themselves off as “craft” beer—is provided by just two companies, ImBev of Belgium or the South African Brewing Company. Proctor & Gamble provides 75% of razors, 60% of detergent, 50% of feminine pads, etc. Even what few companies remain in each market often engage in collusion rather than competition. Wal Mart, for example, appoints one company as a “category manager” to allocate shelf space for all the “competing” companies.

Another sign of a free market is the expansive space it provides for entrepreneurs. But from 1948-2003, self-employment in America dropped from 18.5% to 7.5%. Indeed, among developed nations only Luxembourg has a lower rate of self-employment than we do. There has been a new “enclosure” movement, as the spaces that used to be occupied by small retailers, farmers, and manufacturers have been colonized by the conglomerates.

So how did we get to a situation where the “freedom of markets” has come to mean “servility” and corporate control? Lynn recounts this history, but those who expect a neat tale of “conservatives” versus “liberals” (Lynn prefers the term “progressives”) will be disappointed. Rather, the two cooperated to produce the servile state. In our colonial history, open markets were the means to escape the network of feudal dependencies that governed European systems. In the open market, small landowners and laborers could freely trade their produce and gain independence. Hence, the early Republic kept a watchful eye on the corporate and financial powers. But that care began to break down with the Civil War, as the government directed millions to industry, and the corporations were able to free themselves from control of the states and gain new privileges, even becoming, in a bit of Supreme Court legislation, “legal persons.” For the rest of the century, the “Robber Barons” consolidated their hold on industry after industry to become the dominant force in society and government.