Bits & Pieces on Free Market Anti-Capitalism: Rigged markets, captive markets, and capitalistic business as usual

Like I said in the previous instalment, one of the things that we need to do, and don’t do often enough, is to carefully distinguish the broad meaning of markets as the sum of all voluntary exchanges, and the narrow meaning, and connotations, of markets as the cash nexus, and the particular forms of relationship and mediation which that brings along with it. The importance of consensual society, to any libertarian theory worthy of the name, is obvious. But the social and economic value of the cash nexus, as a social relationship, depends entirely on the context. What is positive and productive in a context of free exchange easily becomes an instrument of alienation and exploitation when it is forced on unwilling participants through government coercion.

In particular, for free-market anti-capitalists, there are at least three specific mechanisms we might mention — mechanisms that are especially important and especially pervasive, by which incumbent big businesses, and capitalistic arrangements broadly, benefit from rigged markets, at the expense of workers, consumers, taxpayers, and mutualistic alternatives to the statist quo:

  1. Government monopolies and cartels — in which government penalties directly suppress competition or erect effective barriers to entry against newcomers or substitute goods and services;

  2. Regressive redistribution — in which property is directly seized from ordinary workers by government expropriation, and transferred to economically powerful beneficiaries, in the form of tax-funded subsidies and corporate welfare, taxpayer-backed sweetheart loans, Kelo-style eminent domain transfers, &c.; and

  3. Captive Markets — in which demand for a good is created, or artificially ratcheted up, by government coercion — which can mean a direct mandate with penalties inflicted on those who do not buy in; or a situation in which market actors are driven into a market on artificially disadvantageous terms as an indirect (perhaps even unintended) ripple-effect of prior government interventions.

As an easy example of a directly-imposed captive market, consider the demand for corporate car insurance. When state governments mandate that every driver to purchase and maintain car insurance from bureaucratically-approved insurance companies, they necessarily shrink the scope of voluntary exchange, but they also dramatically bulk up a particular, fetishized form of cash exchange – by creating a new bill that everyone is forced to pay, and a select class of incumbent companies with easy access to a steady stream of customers, many of whom might not pay for their services but for the threat of fines and arrest. As an example of an indirectly-imposed captive market, consider the demand for professionally-certified accountants. CPAs perform a useful service, but it’s a service that far fewer people, and indeed far fewer businesses, would need, except for the fact that they need help coping with the documentation and paperwork requirements imposed by the government’s tax code. A CPA is essentially someone trained in dealing with financial complexity, but finances are much more complex than they would be in a free society precisely because of government taxation and the bizarre requirements and perverse incentives tend to make things much more complex than they would otherwise be. Although government has no special interest in benefiting the bottom line of CPAs, it is nevertheless the case that CPAs are able to get far more business, and at a far higher rate, than they would in a market without income tax, capital gains tax, sales tax, and the myriad other taxes that demand specialized expertise in accounting and interpretation of legal requirements.

A quick way to gloss the free-market anti-capitalist thesis, then, is that we hold that many of the recognizable patterns of capitalist economics result from the fact that certain key markets – importantly, the labor market, housing rental market, insurance and financial markets, and other key markets are rigged markets. And, in particular, that they are often indirectly-created captive markets, and that the extent to which these needs are met through through conventionally commercial relationships under the heading of the cash nexus — rather than being met through other, possibly radically different sorts of social relationships, like co-ops, homesteading, sweat equity, informal exchange, loosely reciprocal gift economies, grassroots mutual aid networks, and other mutualistic alternatives — has little to do with people’s underlying desires or preferences, and a great deal to do with the constraints placed on the expression of those desires or preferences. Commercial relationships and the cash nexus grow fat because working-class folks in need of houses or jobs are driven into a market where they are systematically stripped of resources and alternatives, where they are constantly faced by artificially high costs, and where they are generally constrained to negotiate with incumbent market players who have been placed in an artificially advantageous position over them through continuous government interventions in the incumbents’ favor.[1]

  1. [1] See also Scratching By: How Government Creates Poverty as We Know It.

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8 replies to Bits & Pieces on Free Market Anti-Capitalism: Rigged markets, captive markets, and capitalistic business as usual Use a feed to Follow replies to this article · TrackBack URI

  1. Discussed at radgeek.com

    Rad Geek People’s Daily 2010-05-10 – Bits & Pieces on Free Market Anti-Capitalism: What about them poor ol’ bosses? What about gains from trade and economies of scale?:

    […] spent a fair amount of time in these remarks discussing the general outlines of the thesis that the cash-nexus is artificially expanded, and forcibly deformed, into the […]

  2. Discussed at radgeek.com

    Rad Geek People’s Daily 2010-05-13 – Bits & Pieces on Free Market Anti-Capitalism: Is this all just a semantic debate?:

    […] traditional sense and reasonable way, straight out of ordinary language, when we use it to describe the political privileges we’re against (capitalism2) and the [nasty structural consequences][many monopolies] of those privileges […]

  3. Discussed at www.nostate.com

    Free Market Anti-Capitalism?:

    […] Rigged markets, captive markets, and capitalistic business as usual […]

· November 2010 ·

  1. Discussed at radgeek.com

    Rad Geek People’s Daily 2010-05-07 – Bits & Pieces on Free Market Anti-Capitalism: two meanings of “markets”:

    […] Next »Bits & Pieces on Free Market Anti-Capitalism: Rigged markets, captive markets, and capitalistic… […]

  2. Discussed at radgeek.com

    Rad Geek People’s Daily 2010-05-10 – Bits & Pieces on Free Market Anti-Capitalism: the Many Monopolies:

    […] Rigged markets, captive markets, and capitalistic business as usual […]

— 2011 —

  1. Discussed at bleedingheartlibertarians.com

    I’m Against Free Trade Agreements Because I’m For Free Trade | Bleeding Heart Libertarians:

    […] the best non-state means of mitigating against the risk of losing your job is twofold. One, you focus on getting rid of the state capitalist political controls which dispossess the poor and margin…. (The basic problem here, as stated, is that the labor market is constrained in such a way that any […]

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