Government Obstructs the Free Market

That’s bunk!

Politicians of all stripes talk as if the rules that govern the economy are determined either by the free market or by government. But that’s wrong. There can’t be a choice between the “free market” and government because a market cannot exist without a government to organize and enforce it. 

A market is an arena where goods and services are exchanged. How that market functions depends upon rules determined by government. 

The rules govern property (what can be owned), monopoly (what degree of market power is permissible), contracts (what can be exchanged and under what circumstances), bankruptcy (what happens when borrowers can’t pay up), and how is all of this enforced?

These rules are decided on, one way or another, by human beings. But who, exactly? And whose interests are they representing?

Over the past few decades, large corporations, Wall Street, and wealthy individuals have gained increasing influence over politics. Corporate PAC spending has reached hundreds of millions of dollars a year, business lobbyists spend 68 times as much on lobbying as labor unions, and big corporations march into courtrooms with platoons of lawyers. 

Simultaneously, centers of countervailing power that between the nineteen-thirties and nineteen-eighties enabled America’s middle and lower-middle class to exert their own influence have withered. 

For example, labor union membership has fallen from a third of private sector workers in the 1950s to just 6% in 2023. Small businesses have been replaced by giant big-box and online retailers. Small investors, by giant institutional investors. Political parties, once anchored at state and local levels, have become giant Washington-based fundraising machines.

As a result, the rules of the American economy are now largely organized by big corporations and those with great wealth. Ever-larger upward distributions inside the market, from the poor, working, and middle class to the top have become normalized as functions of a market that is assumed to be neutral.

But remember, markets are not neutral. They reflect who wields power.