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The Myth of the “Free Market”

It is an often repeated assertion among many that the fundamental problem within American capitalism is the regulation placed on private enterprise by the government. The claim is that corruption and poverty are the result of regulators making business more difficult for entrepreneurs. The theory states that a pure Free Market, void of government intervention, will result in prosperity for everyone.

This theory is flawed from the outset because it ignores the historical interactions between big business and the government. For many years, business interests have manipulated elected officials through bribes and financial leverage. Every politician, regardless of their initial intention, is forced into a system where they cannot be elected without corporate campaign contributors who demand free-run of states, counties, and cities. Politicians are forced into making their community more appealing to the large business interests that offer jobs to the politicians’ constituency. Business owners hold the livelihoods of people hostage to get what they want from our elected representatives.

When you consider the billions of dollars spent every election year (projected at nearly $10,000,000,000 for 2012) by the wealthy to influence elections, one must ask “What are they getting for their money and how will it affect the working class?” A typical list of expectations lobbyists have of their political puppets goes like this:

$ Elimination of environmental protections to allow for the use of cheap unhealthy industrial technologies.

$ “Right to Work” laws which make the formation of unions impossible in order to destroy collective bargaining rights.

$ Erosion of safety regulations which put workers in danger for company profit while eliminating liability.

$ Loosened regulations on financial practices which allow for the unfair manipulation of the economy by banks.

$ Bailouts using tax-payer money to reward irresponsibility by privatizing profit and socializing cost.

$ Grants and low-interest government loans to expand a business’s facilities at the expense of tax-payers.

$ Tax loopholes which make it possible for the wealthiest corporations in the world to avoid paying any taxes at all.

The Snowball Effect

When a rich man is actively trying to increase his fortune, the sky is the limit. This is an economic privilege that most people never get to see. When his income is sufficient to pay for all of his needs and he finds himself having the luxury to throw money into profit-making ventures, he no longer has to labor to earn more; his money is working for him. He doesn’t contribute anything productive except for money which itself is a complete fabrication based purely on the burden of debt.

Everyone knows that it takes money to make money. Once a fortune reaches a critical mass, it becomes difficult for it not to grow. A fortune that is broadly invested in reliable stocks will balloon at a steady pace for as long as the investor desires. There is no threat of poverty for the rich. They have options and are never required to sell their lives to survive.

Insulated within this shielded bubble of economic privilege, the wealthy can horde property at an exponential rate. The rest of the pie shrinks but must still be divided up among the poor majority. The accumulation of wealth itself must create poverty. This is why greed is harmful to the people. It is not practicing personal liberty in a vacuum. It is a zero-sum game that is costing millions of people their lives.

The New Gilded Age

A free-market system like the one that Libertarians, the TEA Party, and other conservatives promote existed at one time in American history. It was in the late 1800’s in an era historians refer to as The Gilded Age. Robber Barons built financial empires from banking, lumber, coal, steel, and railroads on the backs of poor people who had no alternative. We are still living with the ripple effects of that system today. The result has been a century of generational poverty. The rich act as parasites living off of the productive labor of the poor workers, giving their employees only enough to survive to continue working while keeping the bulk of the profits for themselves.

The distribution of wealth is already incredibly unfair. A handful of people control the majority of wealth while the rest of us are left to squabble over the scraps. In the US, the richest 20% control 85% of the wealth, meaning 80% control only 15% of the wealth. The 400 richest Americans control more wealth than the 150,000,000 poorest Americans combined.

Regulations on business are a response to unrest in the working class. In the early 20th century, there was a growing American Socialist movement. Liberals passed laws regulating business as a counter-revolutionary measure under the guise of concern for the poor to soften the cruelty of capitalism which is an inevitable result of its greedy nature.

The Libertarian Elite

The free-market ideology is, in all actuality, simply a myth perpetuated by the wealthy for the purposes of getting poor people (who are often keenly aware of government intrusion into their lives, but less aware of the subtle indirect intrusions by corporations) to support policies which will maximize the profits of the wealthy at the expense of the people. From the perspective of the rich entrepreneur, the government has the potential to be a hurdle or a resource. Billions of dollars are taken from tax-payers every year and used by politicians beholden to the rich as corporate welfare to prop up businesses that would fail in a laissez-faire economic system. Campaign contributions are an investment that not only increases profits but, in many cases, ensures the very existence of the enterprise for years to come.

When the primary driving goal is the accumulation of wealth, any abstract philosophical positions concerning the proper role of government are only useful to the rich when they are used to sway poor people under false pretenses and promote division among the people. The narrative is presented as being one of the people wanting to be free to do as they please versus the government wanting to control people’s lives. This is a smoke-screen intended to hide the true conflict, class war.

Class War

Right-wing politicians and conservative personalities on Fox News and the like are quick to make accusations of promoting “class war” whenever economic inequality is being pointed out. They say that those on the Left are stirring jealous sentiment and attempting to divide society. The truth of the matter is that money is power in this system and only those who have the power are capable of waging a class war.

It is not the investment banker, the multi-billionaire, or the corporate CEO that becomes a casualty of the class war. The wealthy class takes no losses in this conflict. The casualties are the working poor who toil their lives away for minimum wage; the families who lose their homes to predatory bankers; the indigenous people who’s ancestral homes are decimated by unaccountable neo-colonial industry; the kids who can’t afford a good education and end up incarcerated as modern slaves in the privatized prison-industrial complex; the hungry masses who starve because stock market speculators and artificial scarcity inflated the price of food; the sick people who die needlessly from preventable illness because they did not have the money for good healthcare. Class war is as old as civilization and the aggressor has always been the ruling elite. Socialism is not a class war, but a war on the class system.

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About Students for Appalachian Socialism

We are a student group at Marshall University working to create real political and economic democracy.

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