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Sunday, August 7, 2011

Economy Terminally Ill

Amidst the continuing debate over the debt ceiling, with the deadline looming, CNNMoney reports the “worst week of 2011” for stocks, citing stagnant growth numbers for the second quarter.

Analysts at one bank, the Zurich, Switzerland-based Credit Suisse, have even predicted that, if the federal government defaults on its payments, U.S. stock prices “could tumble 30% over the following six months to a year.” Given the varied doomsday scenarios currently circulating in both the news cycle and the markets — accompanied as they are by a healthy dose of esoteric financial and economic jargon — it’s easy to feel confused and overwhelmed.

And while market anarchists don’t all agree on the niceties of economic doctrine, our internal controversies haven’t stopped us from citing plenty of evidence to demonstrate why the state ought to be removed from the markets altogether. Rather than promoting order, predictability and stability in the economic system, the state’s coercive palisades cause the kinds of market volatility we see today.

Prices in a genuine free market, one without the ruling class’s needless restrictions on consensual arrangements, would signal to investors and consumers where their labor and resources ought to be directed — to those activities that fulfill a substantive, economic need or demand.

Were the price of a particular good or service distended with the addition of rents, real competition would drive that price away from the exploitative levels only possible due to state-created conditions of monopoly. Without arbitrary legal commands to enforce what economist C. Ford Runge describes as the “right[] to exclude others from a stream of rents,” then, today’s privileged corporate giants would soon wither.

The labor hours currently tied up in feathering the nests of the power elite would be freed to propel the new economy. The societal wealth and resources that are today dissipated in the inefficiencies of the corporatist economy could be invested in the sorts of endeavors that free human beings really want.

Instead of a society wherein the masses serve as cogs in institutions that serve only the very few, the free market would necessarily breed more just and efficient social structures. Today, we live and work in an environment where Washington and Wall Street parasites connive together to limit our options for profit.

Through volumes of laws and regulations, the chances for free exchange and association are suffocated, rendering us a captive market for price gouging corporate giants. Just like the state itself, state-protected economic actors have no incentive but to squander resources and produce garbage products; they have no fear that true competition from below will impel them toward economical methods and thus no need to adopt them.

Resources under statism therefore gather in institutions that neither desire nor are able to serve the public at large — to be understood not as an organism in itself, but as the aggregate of individuals’ freely made choices. What we’re witnessing in the stock market is that, without the sensory and responsive functions of price in a freed market, the economy will always be terminally ill.

An economy based on mutual respect between sovereign individuals, on trade and cooperation, is the pathway to the solution and the solution itself. The state and the corporate economy profit from our ingrained attitudes; they win when we fail to dispute the myth that the financial elite supports the free market.

They don’t want to compete with the fluidity and logic of authentic social power, of an economic system that allocates resources not through the circumscriptions of privilege but through voluntary exchange.

-by David S. D'Amato The Terminally Ill Economy under Creative Commons

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