Horwitz and Carden on corporatism

Lynne Kiesling

Steve Horwitz continues to provide excellent focal point arguments about political protests and crony corporatism. In his Freeman column yesterday, he elaborated on the arguments that I developed here earlier in the week and that others have made elsewhere, that the core problem underlying corporate power is its connection to government power:

The question is just what is the nature of their objection to the role of corporations and the bailout culture.  To complain about bank bailouts while also arguing, as some have, for student-loan debt forgiveness would suggest the problem is not that government shouldn’t bail out failed investments, only that it shouldn’t bail out failed investments by corporations.  (It would be interesting to see if the Occupiers opposing bailouts also oppose agricultural subsidies and subsidies for alternative energy like wind and solar.)

This point gets to the larger issue at the core of the Occupiers’ criticisms of corporations: Is the problem corporations per se or is it that they align themselves with government?  One other tension we see in these protests is that even as they object to corporate power, they make use of technology and social media that are the products of the very corporate form they critique.  This is not necessarily hypocritical, no more than libertarians using various government-supplied goods that we think would be better supplied by the market.  However, it does suggest that the Occupiers should be asked why some corporate products are good and others not. …

Perhaps the problem is best phrased as “corporatism.”  The core complaint seems to be that corporations have too much power over people’s lives.  This is a complaint that libertarians should not dismiss;  corporations do have too much power.  But as Sheldon Richman has noted, the only way they get that kind of power is be in cahoots with government.  Corporations, whether Apple or Bank of America, that are forced to compete in a genuinely freed market would have to work to please consumers and would have market power only to the extent that we grant it to them by purchasing their products.  Market power thus granted can also be taken away.  (Ask Borders).

Just saying “corporations have too much power” is insufficient. Much of that excess power is a result of their ability to manipulate government power to their own benefit. As Steve rightly notes, in the absence of this corporatism, the only power that companies can amass is the power derived from consumers who choose freely to buy their products.

I also recommend Art Carden’s new Forbes column, in which he makes this cogent observation:

While a lot of people envision a model of politics as a form of noble savagery that is corrupted by evil people who stubbornly refuse to play the game the “right” way, the kinds of intrigue that have the Occupiers (and the Tea Partiers) so exercised are (to borrow from Steven Horwitz again) features of political society, not bugs. As the economist Gordon Tullock has argued, what should puzzle us is not that politicians are for sale. What should puzzle us is that the supply side of the market for political favors is so competitive that favors can be had for such low prices.

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One thought on “Horwitz and Carden on corporatism

  1. These are all excellent points. They all “hit the nail on the head” when we question where corporations get their power and influence. It’s, unfortunately, a waste of time to present these points to the current “Occupy” crowd. The policies they ask for are nothing short of police-state enforced Marxism. They lament the current police-state but do not realize the policies they demand would only call for an even larger police-state to enforce them. This issue, I believe, goes deeper than economics or even politics. It’s also a cultural one. All the freebies they demand are only by-products of the slothfulness they have been living in. For every “free” service they ask only demands the free service of their fellow man. By definition this is slavery. Maybe Mommy and Daddy volunteered their services and money to keep them afloat, but when the state does so, it demands the service or fruit of ones labor of another person. Moreover, the state uses the threat of force to do so. As much a the “Occupiers” and mass media complain of greed being the source of all our ills, perhaps these people should look closer in the mirror the next time they demand something for nothing.

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