It is in the state's interest to indoctrinate the public with the belief that the "free market" is to blame for consequences of state interventions.
There is a tendency, particularly among liberals, to reflexively blame “the free market” for various economic woes, including the housing bubble, the consequent financial crisis, and the enduring slump; even to blame wars on ostensible “free market” policies.
This tendency reveals a widespread lack of understanding about what a free market is, and so many problems routinely attributed to the free market are actually the consequence of government intervention into the market.
The housing bubble and the woes it precipitated are a perfect example. The bubble was a consequence of the Federal Reserve’s policy of holding interest rates artificially low and the government’s policy of encouraging homeownership.
So what is a free market?
It is curious that the adjective “free” when placed in front of “market” would inspire negative feelings in people. Typically, in any other context, it would invoke positive thoughts. Freedom is good, after all. Politicians invoke the goodness of freedom all the time.
Why would freedom in the marketplace, therefore, inherently be a bad thing?
The principle of Liberty is that you have the right to do anything you want so long as you don’t infringe upon the equal rights of others.
So by definition, if force or the threat of force is used to coerce individuals into acting a certain way, this is not freedom, but a violation of freedom.
The market is simply wherever two parties engage in exchange for mutual benefit. If I have a widget I want to sell, and you are in need of one and like my price, by definition, that means I value the dollars more than the widget while you value the widget more than the dollars.
If you and I want to make this trade, we have a right to do so. Our freedom to mutually benefit by such exchanges ought not to be violated.
But what about fraudsters?
Now, this is not to say that a marketplace in which there is a total lack of government intervention would be a utopian paradise. Certainly, there will always be those immoral individuals who will seek to gain by cheating others.
But does having a government with greater power to assert itself into people’s lives to attempt to control their behavior mitigate this problem?
It isn’t obviously so.
In fact, the entire weight of historical evidence leads to precisely the opposite conclusion: that it is the existence of the state that has always posed the greatest threat to peace and to freedom.
It’s like St. Augustine’s story in City of God about the pirate and the emperor.
The truth is that it is when individuals or groups use the force of government to pursue private interests that the greatest abuses occur. It is precisely the existence of the state and its monopoly on violence that permits such abuses, from confiscation of wealth to murderous war.
The very existence of the Federal Reserve—a government-legislated monopoly over the supply of currency (so much for the belief the US has a free market economy)—is a perfect example of this. Through inflation, the Fed system defrauds the masses of their wealth, resulting in a transfer up wealth upwards to the 1%.
No individual or corporation, no matter how malevolent, could ever dream of defrauding the public on such a massive scale without the weight of government being used in the pursuit of private interests.
The idea that the state somehow exists to protect us from the abuses of the marketplace is simply counterfactual. It is through the government that the greatest abuses occur.
It is through the state that the financial and political elite are able to enslave the people–and to convince the masses that their servitude is in their own best interest.
The government, of course, produces endless propaganda to convince the public that up is down. From early childhood, individuals are indoctrinated in what Noam Chomsky has appropriately described as “the state religion”.
It’s powerful indoctrination. Remember in The Matrix films how many people were willing to fight to keep the very system that kept them enslaved because they preferred happy delusion to uncomfortable reality?
Well, that’s a lot like reality.
And so it is that a word that normally invokes good feelings, when coupled with the word “market”, somehow produces emotions like revulsion or indignation.
On “Neoliberal” Foreign Policy
It is reminiscent of a verse from the Bible (2 Thessalonians 2, verses 9-10):
The coming of the lawless one is according to the working of Satan, with all power, signs, and lying wonders, and with all unrighteous deception among those who perish, because they did not receive the love of the truth, that they might be saved.
This devilish power of deception is manifest in the institutionalized corruption that permeates our society, the government being a tentacled beast that asserts its influence and power into every aspect of our lives, attempting to affect our behavior so we act the way the financial and political elite wish us to precisely because they would be unable to coerce us into doing so without use of government force.
It’s precisely those who don’t want to fairly compete in the free market who resort to force to achieve their aims.
The fallacy of blaming the free market for various problems is omnipresent even when it comes to US foreign policy. The US government favors “neoliberal” policies, we are told, meaning:
relating to a modified form of liberalism tending to favor free-market capitalism.
It’s an article of faith among many that, for example, the US war on Iraq was an example of “neoliberalism”.
So the war on Iraq was undertaken by policymakers who favor free markets…?
This is not obviously so.
In fact, it is quite difficult to see how anyone could equate the use of government force and violence with the promotion of a free market.
War is just about as far away from the principle of a free market as one could possibly get.
Yet everyone seems convinced of it.
That is some powerful indoctrination.
And so we can read things like the following:
The challenges facing neoliberalism were apparent during the US invasion of Iraq in 2003. A common criticism of the 2003 invasion of Iraq was that George W. Bush did not have a post-war plan. Author Naomi Klein counters this accusation asserting that the Bush administration did in fact have a post-war plan, to turn Iraq into a neoliberal utopia. The neocons in the Bush administration (Dick Cheney, Donald Rumsfeld, Paul Wolfowitz and Douglas Feith) considered the invasion to be an opportunity for Iraq to be reborn into a neoliberal capitalist state.
We are supposed to believe that neocons like Dick Cheney are strong advocates of free markets…?
The fallacy that allows people to actually hold such irrational beliefs is the assumption that anything having to do with private interests equates to the “free market”.
So if Dick Cheney’s former company, Halliburton, profited from the war he was a principle architect of, that’s the ostensible “free market” at work since Halliburton is a private company and the war was waged to pursue the private interests of a tiny elite at the expense of the public.
Of course, the fallacy is that Halliburton patently isn’t profiting by competing in a free market; it is profiting by rejecting the principle of free markets and instead using state power to achieve ends.
We may refer to this as crony capitalism. Another apt description for it is fascism as defined by Musssolini: a merger of state and corporate power. Of course, fascism is the virtual opposite of free market ideology.
Crony capitalism is emphatically not the same thing as free market capitalism. And in the vernacular, “capitalism” by itself is routinely misused to equate the two, despite the former being anathema to the latter.
It’s the former system that dominates today, despite the bad rap the latter always gets for the endemic problems we see in the global economy.
Yet it’s virtual dogma among liberals that the neocon policies that continue under the Obama administration are “neoliberal”, which is to say, favoring free markets.
So we can read headlines like “How the US got its neoliberal way in Iraq” (Asia Times Online) or the “The Neoliberal Wars” (The Huffington Post) and how the Iraq war was a war for freer marketplaces—an Orwellianism that belongs right up there with WAR = PEACE and FREEDOM = SLAVERY.
The author of the HuffPo piece quotes an academic paper titled “Neoliberalism and the Rise of the Private Military Industry” as saying:
In the United States, the effects of military neoliberalism run deep, as the figures below will attest. However, the US did not arrive at this state overnight. Military privatization and marketization has been an uneven and improvised process, reflecting the real world limitations of applied neoliberalism, and the evolution of the neoliberal ideational framework itself.
All of which is, of course, pretentious nonsense.
Another illustrative academic paper: “Globalization and the Invasion of Iraq: State Power and the Enforcement of Neoliberalism”. The title is an oxymoron, but the self-contradiction goes unnoticed due to the full indoctrination and absolute faith in anti-free-market ideology. The abstract is more of the same, describing as “neoliberalism” what the author attributes to “the central role of the nation-state in global capitalism”.
As noted above, it is in the state’s interest to indoctrinate the public with the belief that the negative consequences of its interventions into the market are attributable to there being too much Liberty in the marketplace.
The utility of such propaganda is that it convinces people that “free market” equals something bad, and consequently, they will acquiesce to the government assuming ever greater powers to ostensibly curb the abuses of free market.
They will surrender even more of their precious Liberty, clinging to the belief that the state is somehow there to watch out for them and protect them from the ravages of the marketplace….
Government routinely causes a problem by intervening in the marketplace, blames the problem on the free market, then assumes even more power to do even more of the same that caused the problem in the first place only on an even greater scale.
Take the Federal Reserve…
When the NASDAQ bubble burst, threatening to plunge the economy into recession, the Fed’s response was to push interest rates further down. This wise policy, as liberal economist Paul Krugman assured readers in his New York Times columns, would spur borrowing and spending.
Krugman’s only criticism of the Fed was that it never lowered rates enough. He advocated low rates specifically to fuel a boom in the housing industry.
Which is precisely what happened. And we all know how that turned out….
Yet when the bubble turned to bust, what was Krugman’s response?
Why, to run the printing presses and push interest rates down, of course! This, he assured, was necessary to prevent an even deeper recession.
And there’s truth to that. It did prevent a deeper recession. Without this intervention, a painful brief market correction would have certainly occurred.
The Fed intervened to prevent this correction from occurring, thus preserving the inefficiencies and misallocation of resources that caused all the problems in the first place, prolonging the pain, and setting the economy up again for another, even more damaging collapse.
When the result was what Paul Krugman described as the “Great Recession”, naturally, as one of the high priests of the state religion, he blamed the market and a shortage of government intervention in to the economy.
Krugman mistakes the heroin as the cure rather than cause of the withdrawal symptoms.
And the population goes along with it, acquiescing to ever increasing amounts of more of the same. More laws. More regulations. More government. More loss of their Liberty.
What can end this vicious cycle?
Only an awakening.