There’s no such thing as free markets. Never has been. Never will be. The Invisible Hand is a figment of economists’ imagination. Sure there’s a hand — on the levers of power — but it’s only invisible because the private sector doesn’t allow for transparency.
There’s no such thing as non-socialism. There’s no country that’s not socialist. Never has been. Never will be. Socialism is not where the government pulls all the levers from the top. Socialism is where somebody pulls the levers from the top, and everyone at the bottom falls in line. It doesn’t matter whether it’s a corporate CEO or a Soviet Commisar, somebody’s pulling the levers — and telling you they aren’t.
I didn’t say there’s no competition. Every system is sloppy. Every complex control mechanism gets loose at the bottom, and some free space creeps in. There’s where you find some room for actual competition. It’s often highly productive, and highly useful for perpetuating the myth. In fact, deliberately loose control is the tightest control of all. Soviet micromanagement lost control in mere decades.
But how can I call capitalism socialist? Well, I have a more foundational definition of it. The “social” in “socialist” points to social engineering. It doesn’t matter whether it’s done by the private or public sector, or some coalition thereof. It’s still social engineering. Everybody lives by the corporate agenda.
It’s still socialist. The private sector is often more efficient at social engineering (and everything else) than the public sector. That doesn’t make it superior. That just makes it more socialist than the socialists.
I take some of these ideas from the French professional sociologist and Christian amateur theologian, Jaques Ellul. The Stop the Machine current in western counterculture owes a lot to him.
So anyway, where does this free market myth come from? Well, economists invented a fantasyland because they were mesmerized by Adam Smith’s Invisible Hand fable. They dedicated their careers to proving that free competition not only solves everything perfectly, but is the only thing that can possibly solve anything at all.
The issue isn’t so much that it doesn’t work. The free market of capitalist dogma doesn’t exist, not even in theory.
Let me give a couple of examples. First, nothing is as iconic as market demand theory. We all know that if the price of X goes down, you’ll buy more X. But can we say that about everybody, so we can talk about demand in the whole market?
For you, getting X cheaper is like having more money to spend, so you’ll buy more X. But others may have different tastes. When they’re feeling richer, they’ll buy more Y instead of X. If there are enough of them, sales of X may go down — not up — as X falls in price. The law of demand fails when we try to add up diverse individuals.
But economists said, “We can fix that. We just have to assume that all individuals are the same, with all the same tastes. Then demand theory works perfectly.” Think I’m kidding? Check the advanced theory textbooks.
Second example, we want competition that sticks around over the years. In practice, we find that when companies get big they can clobber the little guys and drive them out of business. Simple laws of physics.
But economists have an answer for that too. “Let’s assume that bigness confers no advantages whatsoever, so nobody will ever get big. Voila. Perfect competition forever.” Think I’m kidding? The advanced textbooks all begin with an assumption of “constant returns to scale” — big and small are the same.
So the core features of market theory work only on a planet of clones where the law of physics don’t apply. Told ya — functional competitive markets don’t even exist in theory, let alone real life.
But the myth lives on, because they have to have some story in which capitalism is different from socialism. They’re not. Free markets are a fairy tale, and social engineering runs the show everywhere.
So if capitalism and socialism merge into the social engineering machine that Jaques Ellul so eloquently laments — where does that leave us? Well, Ellul was first and foremost a Christian. And if Christ stood for any kind of social movement, it was to create a counter-culture in the belly of the beast. “Render unto Caesar the things that are Caesar’s” — but subvert the hell out of the beast.
The great call to revolution went, “Love your neighbour as yourself”.