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The Collapse of Free-Market Ideology
[Analysis] Giving the markets over to a command economy is to be avoided
Layne Hartsell (prose)     Print Article 
Published 2008-09-20 16:49 (KST)   
The media are using the terms seismic and potential meltdown, accurately, to describe the current conditions of the market and what seems to be the defining moment of the collapse of the free-market ideology. The much stronger terms indicate the situation is beyond crisis as other institutions teeter. Failure and massive, worldwide governmental intervention signals the overall collapse where there will be no reasonable way to believe in the ideology without looking completely out of touch, or worse.

Up until this point, there has been plenty of incentive to perpetuate the myth, because of the rewards of money and power. Such belief is delusion, nevertheless. The potential meltdown is a scenario where the scientific and moral evidence was completely ignored by the elite structures, because the eventual consequences are not existential threats to publicly secured elite wealth. The ideology has been perpetuated in order to indoctrinate people into a belief that their lives are to be competitive in every way and that they are to submit to the free-market and worship riches and privilege. From recent times forward, with free market ideology not only discredited but functionally impossible, regular markets must continue, as they should continue, and as people work to create better circumstances. Giving the markets over to a command economy is to be avoided.

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While it may be too much to expect the average citizen to know the inner workings of the complex economic system, it is not necessary that they do. People know what consumerism and greed are. They know that somewhere, someone will be left with empty hands. In reality, on a global scale, the case is far more grave, where the empty-handed end up being the large majority with empty stomachs. Rather than the very small minority that society is willing to sacrifice for its "progress," there is a large majority. Yet, in developed countries the prominent issue of the times is considered to be frustration in moving from the middle to the upper, and the upper to the rich classes. Many have been willing to trade principle for personal gain, and have enjoyed the comfort of overwhelming public consideration for frustrated aspirations in the sympathetic, mainstream media. However, what is not focused on in the media is the incalculable suffering that has been caused by the proliferation of the free market. For instance, in the mainstream media, there are no sections specifically devoted to Labor and Poverty (or the Empowerment of the Poor).

Regardless of misinformation about strong markets, there has been a massive economic problem in the United States, and the world, for some time. The problem is not the subprime crisis from last year, though that was a consequence and indicator of the ongoing ideological crisis. One would not know about the ongoing crisis if they chose to be solely informed by the mainstream media because its interests lie with big business. Simply put, the ideology is an ideal business climate of no regulation, no intervention or public involvement, e.g. protests and boycotts. It is a kind of utopian dream of a market working in a perfect fluidity, sold to the populace, but not believed by the sellers. The market is supposed to regulate itself through competition, and supply and demand, without price controls or what is seen as coercive, solely from the business perspective. Where capitalism is an ideology of talented, self-determined people, the best, serving society by entering the marketplace and creating wealth, the free-market has been a specific aspect of capitalism about how the market is supposed to work.

In society, in general, one of the main cultural translations of the ideology says that people must be promised riches to get them to innovate, create quality goods and services, and to serve society. In truth, capitalism did indeed emerge as a great public service, or as a massive social movement for self-determination in protest of monarchy and wealth through inheritance and family. People wanted a fair system that valued hard work and ability, and they were not willing to tolerate absolute control over their lives.

As far back in history as we can go, we will find markets and entrepreneurs, but with the pre-capitalists of the 1700's and the capitalism of the following century as a mass movement, individuals could gain access to markets and generate wealth. The wealth generated could be used as capital to invest in other endeavors and create opportunity through entrepreneurship. Herein lies the skillful risk taking of the capitalist. Further, capitalism being a massive wealth generator was also supposed to represent the greater distribution of wealth. Eventually, the free market ideology developed as a conceptualization of a way to move products without economic friction within the system, where the price of a product is derived from production cost, supply and demand, competition and noninterference. Fees, such as tariffs, regulation, protection and popular movements created friction to the fluid movement of products and were to be eliminated. Over time, the ideology was fully adopted by the Republican Party in the United States, and moderately by the Democratic, as a bulwark against the social concerns of the populace at home and abroad.

The evidence gathered from the proponents of the free market or elitists shows the opposite of free market ideology with protection and intervention for elitist constructs. However, one aspect of elitism that is in favor of the free market is the removal of the public from interference in the market such as the massive attempt to suppress popular movements representing the legitimate concerns of people -- access to essential and basic needs. The WTO protests in Seattle and Cancun are two examples. Protection and deregulation can been seen in the fact that of the Fortune 500's top 100 companies, all have received handouts from the taxpayers, and a number of the companies would not be on the list had it not been for the People. Handouts going to companies that are already making a profit should be considered robbery. The rugged individualism and risk taking is not apparent when considering the evidence. And, public service is all but absent. In the pharmaceutical industry a comparative amount is spent on marketing as on research, and that figure is more than double for some companies.

In addition, more than half of the research, of the entire pharmaceutical system, is paid for and conducted in public supported institutions such as universities, state research institutions and nonprofit institutions, thus proving that a majority of people do not necessarily have to be "rewarded" by the free market in order to innovate. Finally, the US medical system is largely supported by taxpayer money, nearly 60 percent, but people are not receiving the health insurance they have already paid for. Much of their money goes to support a dependent private sector.

On the global level, it is important to remember, in relation to the current collapse is that the ideology has been proliferated throughout the world under globalization and its institutions: the World Bank, the IMF and the WTO. These institutions are tied directly into the free-market ideology, thus creating the conditions for serious consequences for other countries which adopt the regressive policies such as the privatization of human services. Yet, even under massive pressure from the free-market or the institutions of globalization, there are stellar examples of economic prosperity that run counter to the ideology. The vibrant and dynamic South Korean economy was developed out of a highly protectionist system. Today, Seoul is one of the major centers for ultra technology. And, the world's best airline, which has reasonable air fares, is not a private company -- Singapore Air.

Wealth, prosperity, innovation and quality are not by definition equal to the free market ideology; therefore, it is of utmost important that we adhere to evidence. Evidence must run in direct proportion to adherence to sound financial principles, human commitment to excellence, and a sense of humanity before numbers and astronomical profits. The system is not a free market and never was; it has been manipulated, opportunistically, to suit greed. As a system of greed, the free market ideology is not morally defensible; however, it has been powerful and rich enough to last for a long-time as history has been witness to. The ideology is a doctrine of greed in that it claims the goods and services which pertain to human essential and basic needs as fair game in its utopia of mechanistic fluidity. For those who adhered to the doctrine, which is to gain riches, forgetting all others but self, they have celebrated with triumphalism in avarice and personal gain from the propagation of the ideology.

However, the game of greed on Wall Street is neither game, nor dream, for the masses of people who have lost their homes or are feeling the insecurity and intense anxiety over making ends meet. The game is a nightmare for those who carry in their hearts the essence of the United States and the dream of prosperity where each can thrive. The fact that there is plenty of wealth, but the abundance is directed into the corporate accounts, while the suffering of the populace has increased, is telling of the actual workings of the free-market ideology. The reality is that a society has been created where one-half of a percent of the people own 39 percent of the stocks. Freddie Mac, Sallie Mae, Lehman Brothers, AIG, Merrill-Lynch and others including Enron, WorldCom, Wal-Mart, Exxon and big agribusiness are representative examples of the free-market construct and should bear the responsibility for imposing impossible and unreal standards creating tremendous suffering for people. Instead, institutions are given public money for rescue when they should have been brought to justice long ago, before they collapsed.

The current deindustrialization of the US and outsourcing of professional jobs coupled with the mass exodus of people, globally, from the appalling conditions of IMF and WTO impositions in their home countries, creates the conditions for enormous suffering. In other words, the US is headed in the direction of a technocratic feudalism where people are increasingly exposed to the ravages of the greed of powerful structures. On the global level, one comparison illustrates the situation of widespread suffering related to free-markets and its alleviation. The government of India, which has adopted the US free market ideology, has produced atrocious results for those masses left to the "natural" regulatory of the free market. Suffering from lack of basic nutrition and healthcare, more than 4 million people die each year. On the other hand, China, which operates on a kind of mixed communist/capitalist economy saw the suffering and mortalities arising from lack, and scientifically devised and implemented a plan to effectively prevent and diminish suffering. To China's credit, the results of the proactive intervention to decrease suffering proved far more effective than leaving people to fend for themselves.

Viewing the devastating socio-economic data we cannot help but feel the warmth of humanity, which is a different matter than the glitter and glitz of what is popularly referred to as a global casino. As can be expected, important data is little seen in the corporate media, and when it is, it is marginalized or minimized. In the U.S., up until recently, more than one-third of children lived in low income or poverty stricken families: 37 percent. This number has very likely changed for the worse in the last year. And, contrary to the misinformation about and criticism of the dispossessed, mostly all of the parents of these children were employed, rather than biding their time in idleness as they are so often criticized for.

Aside from the obvious violence of taking the parents away from their children for most of the day, the ideology of the system imposes further violence, psychological violence, by stigmas attached to the haves and have-nots. It is no wonder that many single parents will forego the low paying job, preferring welfare in order to stay at home with their children. The free-market has said little about them except to demand that they get a job or to say that they should not have taken a sub-prime mortgage in the first place.

For the global poor, the free-market ideology is the same. The free-markets say nothing, except to "get out," to the farmer who sees his or her high quality produce devalued because of cheaper, lower quality and "subsidized" imports. Neither does the free-market consider the human side of supply and demand. Taking the coffee market as a representative example, without price regulation, when there is overproduction, the price falls dramatically. Farmers cannot liquidate their investments (trees) and plant another cash crop quickly, so they are forced to stay with what they have. In desperation for income, they begin to produce more and even borrow against future production. Finally, the aggregate of a country or region in desperate production causes the market to bottom out. Eventually, the farmers are driven from the land, a place where they had lived in dignity and where families were sustained before they were forced to plant cash crops, decades ago.

Into the "void" big agribusiness and the rich can buy land at rock bottom prices and move in to set up feudalism. When this scenario occurred in the past, the free-market provided the Starbucks Company and big business with huge profits. To make the matter a further catastrophe, Starbucks did not reflect their savings by lowering the prices of their coffees which were enjoyed in stores around the world. The prices remained the same, or increased, and the profits went to the company, not the producers. In this light, the current farmer advocacy campaign by Starbucks seems to be for marketing purposes. What made it possible for the company to behave in such a way was the widespread influence that Starbucks had over the market and distribution, through buying power and the company's tendency towards monopoly. In brief, the lack of protection for farmers leads to their poverty, while the handouts and protections afforded to powerful companies leads to astronomical profits.

Overall, the system as a construct has run the regular market into the ground on two fronts - the greed of the corporation and the greed of the consumerist. On the home economics level, widespread consumerism is responsible because people have taken on unnecessary, excessive debt in order to secure the goods and services of privilege and status, while household incomes have leveled out or declined. Real incomes and savings are lower than they were in the 1970's and debt has skyrocketed. In addition, Americans are forced to work long hours.

When stagnant earning power is coupled with years of elevated gas prices, which have drained what savings people had, we find a serious set of circumstances. In this difficult climate, the jobless rate has increased dramatically to more than 6 percent, which is of concern, but the figure does not represent the great concern of the many who have "jobs" but not jobs that provide livelihoods. The parallels on the larger level are little different in form -- decades of focus on short term gain. In addition, deregulation and protectionism were used to create a system where risk was passed along to the populace and huge risks were taken for private profit but backed by the taxpayer. Deregulation also allowed for firms like the current ones to get involved with high risk investments and lending to normally unqualified borrowers ? a practice called predatory lending within the business world.

An analysis of the seismic conditions shows the Current Account Deficit to be larger than is has ever been -- almost 7 percent of GDP . US jobs are leaving the country at a rapid pace, the stock market is inflated and money has been printed without backing, creating artificiality. There have been numerous attempts to quell the market, but at some point, the consequences of what have been set in motion long ago will reveal themselves through crises and an eventual meltdown. Socially, the free-market myth has been used to wage a cultural war against the legitimate aspirations of human beings trying to better themselves, as they demand basic needs such as a job and healthcare when they pay into the system. Scientifically, the free market never added up. Practices such as the aforementioned printing of money without backing, accumulating massive debts, war, corporate handouts from the taxpayer and technology transfer from the state sector to the private sector were a prescription for disaster. It is difficult to understand where were the controls of defense, e.g. the FBI and other investigative agencies, when they were needed? Even under the free market ideology, there is a provision for governmental intervention, when there is need for defensive measures.

There must be other options rather than a dichotomy between a command economy and a free market. The market cannot decide on fairness or justice because those decisions are in the realm of human subjectivity. Thus, people must act to create a fair market, one that is morally defensible, if we are as a society to steer clear of the shoals of greed. People will have to roll up their sleeves and create a climate for enterprising individuals and groups to do business. A fair market can be developed by people who recognize the potential for greed and domination, and who seek to diminish negative effects. Benefits can, and will be created through the tremendous wealth which has been, and will be, created by a better system in the US and in the globalized market. Indeed, a vast majority of people resonate with a strong, beneficial economy when it is developed out of reasonable protection, sound guidance and strong investment opportunities.

The answers to the current collapse of the free-market ideology in the US, and to the actual suffering of Americans, is to be found in the essence of the United States which is the essence of people. People adhering to basic principles and applying themselves to solving problems is the old reliable way of creating systems that attend to human need and development. The first place they might start is to withdraw their participation from the greed of the failed system and begin to create other systems that can assist people who are suffering the consequences of the current conditions. On the level of the home, intelligent consuming rather than consumerism, along with saving money will be helpful to protect families from fluctuations in the market, especially the energy market. Intelligent consuming is the simplification of wants and desires which arise from an understanding of the social crisis and its underpinnings.

By making use of the same human ingenuity and genuine concern that has made them strong before, people can work for a just economic system; one based on essential needs, creating true prosperity for all. The future of the US economy, or globalization, does not depend upon the goodwill of the government, the corporations or the free market but on people and the essence of liberty and justice they carry with them into the future; a future that can be much different than the recent past.

Layne Hartsell, Globalization and the Poor, Konkuk University, 2008
©2008 Layne Hartsell

Layne Hartsell has graduate degrees in biomedicine and developmental psychology. He works in education and community service with his wife, Patcharin Chaimongkol. They live in South Korea and Thailand.
©2008 OhmyNews
Other articles by reporter Layne Hartsell

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