Criticize supposed "free market" capitalism these days and that makes you a flag-burning, god-hating, Socialist to some. There are some very wealthy capitalists who spread a bit of their wealth around to fund organizations, like the Tea Party, to get that very message out. It just sounds so much better when it comes from some old granny sitting on a cheap lawn chair.
What's curious is how these same wealthy capitalists actually work to destroy truly free markets so that they can make even more money. For them, it's "do as I say, not as I do." If anything, their corporate ethic is eerily reminiscent of the way business once got done in the Soviet Union.
The Soviet Union was known for narrowly held control of broad sectors of the Soviet economy. The state decided how collective farms would be organized, what they would produce and in what quantities. The state decided most aspects of production and consumption including how resources would be allocated. We knew this as an incident of Communism.
Barry Lynn explores this in a fascinating essay in this month's Harper's , "Killing the Competition, How the New Monopolies are Destroying Open Markets." Lynn traces the powerful narrowing of control of American market sectors, transforming small producers into serfs to an insidious form of feudal capitalism.
"...every day, there are fewer buyers; fewer of them. Hence they enjoy more and more liberty to dictate terms - or simply to dictate.
"...monopolization of our public markets is first and foremost a political crisis, amounting to nothing less than the re-establishment of private government. What is at stake is the survival of our democratic republic.
One sector Lynn examines is the high tech world of Silicon Valley.
"...today's lords of the Valley ..enjoy the power to choreograph competition among the latest generation of upstarts and then buy whom they please, when they please. ...the Justice Department complained in 2010 that senior executives at Apple, Google, Intel, Pixar and two other corporations had 'formed and actively managed' an agreement that 'deprived' the engineers and scientists who work for them of 'access to better job opportunistic.'"
It's the sort of thing we recall from movies about Hollywood. "Do that and you'll never work in this business again." Employees live in fear. If they lose their jobs their employer can see to it they're blackballed. It creates an inequality between the provider of services and the few buyers that can lead to perverse outcomes. Lynn interviewed the worker who stood up, leading the class action suit against the Tech Barons.
"Sure the pace was grinding, the hours crazy. One team, he recounts, worked for 110-hours per week for nine months straight. But 'everyone believed they were making something important.'
"...his attitude began to sour after Lucasfilm completed a particularly ambitious project. The very next day, he says, shaking his head, executives came in and 'fired almost everyone.' These were employees who hadn't had a day off in months. 'People were running around crying. It was a bad sight.'"
You can only treat faithful employees that brutally if your other employees live in abject fear of losing their own jobs and have no decent prospects if they bolt.
Another sector Lynn looks at is America's poultry industry where giant megacompanies harness small, independent producers, their suppliers, into a form of servitude that often pits one against the other.
"The concept of such competitions - or 'tournaments,' as the industry calls them - is generally credited to the economist Edward Lazear, who served as one of George w. Bush's top advisers. ...The idea, first laid out in a 1981 paper titled 'Rank-Order Tournaments as Optimim Labor contracts,' is straightforward. Rather than pay all workers the same rate for any particular task, Lazerar wrote, why not set up a 'labor market contest,' in which those who produce more also get paid more per task or per piece? Such a system of reward (ad, for those at the bottom, punishment would, he claimed, increase the incentive to work harder."
This distortion of capitalism institutionalizes inequality between seller and buyer. There is no open market. No producer is allowed to know the price his neighbour gets on market day. He can't judge what the market will bear. All he knows is what he's told he will get and, if he gets out of line, he may find his once perfect chickens will be graded as inferior.
Lynn's essay is well worth a read. Check out the latest Harper's.