A heroic defense of markets posted by Richard Seymour

There is an interesting debate between Eamonn Butler of the Bernard Mandeville Adam Smith Institute - which was originally established as Britain's own version of the Heritage Foundation - and Chris Harman in this week's Socialist Worker. It is an odd moment when Butler says: "I don't defend capitalism. I defend free markets." Moreover, said free markets are a force for peace: "Business people want to see goods moving across borders, not soldiers". Harman is brisk in reply: "markets have always been bound up with national states that seek to protect and promote the interests of firms based in their national economy. This is why the market system is so unstable and prone to war as economic competition spills over into military competition between states." Butler's argument, related elegantly enough in its way, is an astonishing case of fetish-worship. It is difficult not to be temporarily stunned by the palpable reverence for perfectly ordinary commerce: with amazing efficiency, markets are held to connect billions of people in voluntary arrangements to exchange surplus product, allowing one to savour dates from Tehran and wear Chinese-made footwear; they unite peoples in pacific relations, abhorring war, compelling peace; they 'enable' the world's poorest to work more productively... And who would not be seduced by such a lavish vision of free market virtue?

Aside from the fact that Dr Butler does actually "defend capitalism" (as his Twittering suggests), it is at base disingenuous to argue for 'free markets' and claim not to be defending capitalism - unless Dr Butler is arguing for the suppression of the market in human labour? And then if, as I infer, he is not so arguing, what becomes of the force necessary to ensure that labour is a reliable and pliable commodity? What becomes of the state intervention required: to produce the labour market out of a mass of small producers and peasants; secondly to determine at what rate and for how many hours labour will be put to work (an odd sort of commodity, this, that has an interest in being less productive for the owner); thirdly to prevent labour from aggregating its power in a way that free market ideology holds distorts markets and amounts to a form of extortion; finally, to circumvent and repress radicalisation of a kind that threatens the very longevity of market institutions? I have by no means been comprehensive here, but this is enough to indicate the range of state activities without which there might not be a labour market to speak of. These activities include, but are not restricted to, mass terrorism (however one romanticises the enclosure process as essentially a form of liberation of the land from outmoded communal tillage, the violence that produced this process is hardly in doubt). And one would gather that, whatever Dr Butler's views on enclosure, he certainly has no problem with extra-economic coercion if it is to tame the unions. And if this is right, what justice is there in the epithet 'free market'? It is clearly an arrangement that is highly structured and protected by the state, a politically managed one, and one in which most of the key actors are themselves - and this is particularly true of the billions of poorest workers whose cause Butler ostensibly serves - prodigiously unfree.

On the other side of the argument, even the Smithians are not so absurd as to advocate the complete removal of all forms of distorting influences on the market. They admit that some form of welfare state is necessary, but always kept in check, and always balanced against the 'perverse incentives' it is reported to produce in the labour market (workers with decent welfare systems are liable to drive up the wage bill). And this doesn't have to be seen as a politically expedient evasion, provided Smithians are willing to acknowledge that markets have an innate tendency to fail and that without substantial state intervention, there would be a social catastrophe that might physically destroy much of the labour market. But if states do intervene, and tax profits to ensure that they can pay for such intervention, what becomes of the freedom of capital - its freedom to move, to engage in free contracts, to dispose of its surplus according to the wishes of shareholders? The Smithians acknowledge that every such intervention is, according to their - to be frank - brutal ideology constitutes a curtailment of freedom, but equally hold that this curtailment is indispensable to the effective functioning of markets. The 'free market', then, is a chimera. The legend of market efficiency collapses under the weight of its own qualifications.

As to the pacifying influence of markets, one doesn't need any clairvoyant insight into "what business people want" to notice that many of them are actually sending soldiers across borders as commodities. They're also sending the guns and ammo. Global military spending is worth a trillion dollars a year, and I defy any Smithian to tell me he doesn't want a cut of that action. We know they'll take big tobacco's cash, and do so moreover while acting as an interface between private capital and the state in a way that, arguably at least, 'distorts' markets. They will also happily accept £7m out of the foreign aid budget to advise New Labour on privatization "public sector reform" in Afghanistan and Palestine - two countries where, it seems to me, the role of military force in preparing the ground for 'free markets' speaks for itself. One could also meditate on the relationship between markets, capital, the state and war, but I fear it would be somewhat beside the point. After all, if the reality fails to live up to the idealized fetish-object, so much the worse for reality.

Part of the reason for this astounding lack of sociological realism is - has to be - disavowal. It is the presumed technical virtuosity of market institutions that 'free market' panegyrics typically emphasise, rather than their deep social implications. (In a slightly analogous fashion, the lean years for workers in the 1990s was accompanied by a slavering technophilia - yes, yes, low wages, job insecurity, poverty, but look at the technology that this new economy is unleashing!) One such implication, clearly, is the tendency for wealth to polarize - and with it, everything that wealth affords from educational opportunity to political clout. This perceptibly operative tendency has been met with some suspiciously slight generalities. These include the argument from meritocracy, that wealth is allocated rationally, according to the relative inputs of different market actors (an argument which has a tendency to degenerate rapidly into circularity). Or that from supply side economics, that wealth accumulated at the top will eventually trickle down as elite expenditure and investment creates markets and jobs (to which the rather obvious retort is that such expenditure by the working class would also create markets and jobs). Realistically, it is the former argument that matters most to the apologists for 'free markets': the people at the top are uniquely entitled, and their very success is indicative of that entitlement. Market allocation just is rational allocation in this doctrine, just as feudal tribute was divinely ordained. In this sense, every system is a meritocracy, since every ruling class claims to possess what it does on account of some rare and invaluable merit, whose existence can be inferred from the fact that the ruling class possesses what it does. The idolatry of the market is simply the modern version of this superstition.

Labels: 'free markets', capitalism, imperialism, neoliberalism, socialism