ASSAULT OF THE CORPORATE LIBERTARIANS

The following is excerpted from
David C. Korten, When Corporations Rule the World
(Kumarian Press and Berrett-Koehler Publishers, 1995)

If there were an Economist's Creed, it would surely contain the affirmations, "I believe in the Principle of Comparative Advantage," and "I believe in free trade." - Paul Krugman, MIT economist, 1987

The difference between a system dominated by General Motors and Exxon and one based upon the individual landholding farmer and small businessperson of an earlier day in American history may very well be greater-in the real life experience of the average person-than the difference between a system based upon large private bureaucracies in the United States and public bureaucracies in socialist nations. - Gar Alperovitz, "Building a Living Democracy."

In the quest for economic growth, free market ideology has been embraced around the world with the fervor of a fundamentalist religious faith. The beliefs espoused by free market ideologues are familiar to anyone conversant with the language of contemporary economic discourse.

Sustained economic growth, as measured by Gross National Product, is the path to human progress.

Free markets, unrestrained by government, generally result in the most efficient and socially optimal allocation of resources;

Economic globalization, achieved by removing barriers to the free flow of goods and money anywhere in the world, spurs competition, increases economic efficiency, creates jobs, lowers consumer prices, increases economic growth, and is generally beneficial to most everyone;

Privatization, which moves functions and assets from governments to the private sector, improves efficiency;

The primary responsibility of government is to provide the infrastructure necessary to advance commerce and assure the rule of law with respect to property rights and contracts;

International competition strengthens productive efficiency and provides consumers with greater choice at a lower cost.

These beliefs are based on a number of explicit underlying assumptions imbedded in the theories of neoclassical economics.

Humans are motivated by self-interest expressed primarily through the quest for financial gain;

The action that yields the greatest financial return to the individual or firm is the one that is most beneficial to society;

Competitive behavior is more rational for the individual and the firm than cooperative behavior and consequently societies should be built around the competitive motive;

Human progress is best measured by increases in the value of what the members of society consume and ever higher levels of consumer spending advance the well-being of society by stimulating greater economic output.

To put it in harsher language, these ideological doctrines assume that:

People are by nature motivated primarily by greed;

The drive to acquire is the highest expression of what it means to be human;

The relentless pursuit of greed and acquisition leads to socially optimal outcomes;

It is in the best interest of human societies to encourage, honor, and reward these above other values.

Thus a number of valid ideas and insights have become twisted into an extremist ideology that raises the baser aspects of human nature to a self-justifying ideal. Reminiscent of Marxist ideologues now passed from the scene, advocates of this extremist ideology seek to cut off debate by proclaiming the inevitability of the historical forces advancing their cause. They tell us that a globalized free market that leaves resource allocation decisions in the hands of giant corporations is inevitable, and we had best concentrate on learning how to adapt to the new rules of the game.

The extremist quality of their position is revealed in the stark choices they pose between a "free" market unencumbered by governmental restraint or a centrally planned state-controlled economy on the former Soviet model. Similarly, it is implied that the only alternative to throwing open national borders to the unrestrained flow of goods and money is to build impenetrable walls that cut us off from the rest of the world and deprive us of the benefits of participating in international commerce. As they would have it, if you are not a free trader, then you are a protectionist. There is no middle ground.

In defiance of history and logic, they see no place in the public discourse for those who reject free markets in favor of markets that function within a framework of public accountability. Nor will they countenance the possibility of countries managing exchanges of money and goods among themselves in a fair and balanced way.

THE CORPORATE LIBERTARIAN ALLIANCE

At least three major constituencies have formed a powerful political alliance in support of a shared ideological agenda.

Economic Rationalists. The economic rationalists are predominantly professional economists of the neoclassical school of economics. Their theories-grounded in the premise that individuals are motivated by self-interest and that the pursuit of self-interest lead to socially optimal outcomes-provide free market ideology with a cloak of intellectual legitimacy. See The Betrayal of Adam Smith

Market Liberals. The market liberals bring to the coalition a moral philosophy grounded in individual rights that has strong appeal for those who harbor a natural distrust of big government. The only responsibilities attached to these rights are to respect the same rights for others, obey the law, and honor contractual agreements. Market liberals gives the dominant ideology its cast of moral legitimacy.

Members of the Corporate Class. This class is comprised of people such as corporate managers, lawyers, consultants, and public relations specialists, financial brokers, and wealthy investors who stand to gain from advancing the rights and freedom of the corporate persona. They are generally strong advocates of both market freedom and property rights as vested in the legal persona of the corporation. Finding natural common cause with an intellectual tradition that legitimates the cause of freeing market institutions from the restraining hand of government and with a philosophy that absolves the corporation of moral responsibility for many of the social and environmental consequences of its actions, they back the ideological agenda with significant financial resources.

These three groups form a powerful political alliance that combines an intellectual tradition and a moral philosophy with a political interest. As is often the case in political alliances, however, they make strange bedfellows. Furthermore, contrary to outward appearances, participation in the alliance serves even its own members poorly. For the economic rationalists, the alliance has seriously debased the integrity and social utility of economics by reducing it to a system of ideological indoctrination that violates its own theoretical foundations-including the crucial assumptions of market competition and rooted capital-and is deeply at odds with reality. It has similarly engaged the moral philosophers of individual freedom in a cause that increases the ability of corporations to co-opt the property rights of people and use them to suppress the individual freedoms of all but society's wealthiest members. The enormous political success of the alliance in restructuring economic institutions in line with the corporate interest is creating a monster that even the members of the corporate class no longer control and a world they would scarcely wish to bequeath to their children.

In the name of individual freedom, this alliance advances a doctrine that places the rights and freedoms of corporations ahead of the rights and freedoms of individuals acting through governments to hold corporations accountable to the public good. Their ideological doctrine is perhaps most accurately described as corporate libertarianism, because its consequence is to increase the freedom of corporations the expense of human freedom. Presented as an economic agenda, it is in truth a governance agenda that systematically transfers power from people and governments to the persona of the corporation and those whose interests align with corporate power.

THE MORAL JUSTIFICATION OF INJUSTICE

Market libertarians are prone to erroneously equate the freedom and rights of the person with market freedom and property rights. The freedom of the market is the freedom of money and when rights are a function of property rather than personhood, only those with property have rights. Furthermore, by maintaining that the only obligation of the individual is to honor contracts and the property rights of others, the "moral" philosophy of market liberalism effectively releases those who have property from obligation to those who do not. It ignores the reality that contracts between the weak and the powerful are seldom equal, and that the institution of contract, like the institution of property, in unequal societies tends to reinforce and even increase inequality. It legitimates and strengthens systems that institutionalize poverty, even while maintaining that poverty is a consequence of indolence and inherent character defects of the poor.

The most basic premise of democracy is that each individual has the equal rights before the law and an equal voice in political affairs-one person, one vote. We can rightfully look to the market as a democratic arbiter of rights and preferences-as market liberals advocate-only to the extent that property rights are equally distributed. Though a market can allocate efficiently with less than complete equality, when 358 billionaires enjoy a combined net worth of $760 billion-equal to that of poorest 2.5 billion of the world's people-it cannot be assumed that the market will function either justly or efficiently and the market's very legitimacy as an institution is called into question.