External Markets in a Self-Regulating Society

by Angelo Mike 

Exclusive to STR

January 16, 2007

So many times I’ve heard cynical critics of freedom and human nature itself mock how regulation works in a free market, as if any subject that is regulated on a market must consciously impose on himself purely altruistic motives if his conduct with others is to be responsible. Absent such a group of perfect men, we need government regulators to impose upon businessmen their own sense of responsible conduct.

It’s a peculiar debate when the opponents of unpopular ideas--such as freedom--get to define for everyone else what such a term as self-regulation really means. Because once we stop defining self-regulating so as to mean that businessmen and women constantly curb their conduct so as not to let their self-interest drive them to benefit themselves at the expense of another, much of the difficulty in finding some ground on which to debate statists can be gained.

That is, statists frequently discuss businesses as if it was the state, and the state as if it is a voluntary business. They ignore the fact that libertarians don’t pretend that altruism and foregoing the profit motive is what will make a free society work. In fact, as Mises explains in Human Action, that if such a system came about, voluntarily or not, such as a workers’ syndicalism, the economy would be destroyed and regress back to primitive levels.

What differentiates the operations of a society versus government is not self-interest, but rather self-interest as directed through voluntarism as opposed to coercion. Businessmen simply have a world of alternatives, or external markets, against which they must base their calculations as to what alternatives, exactly, should be foregone in this investment or deciding upon that price. Their actions on a market are regulated by economic calculation, which is facilitated by private property and prices.

But look at how statists define government action. I’ll provide links to two debates with an anarcho-capitalist, Walter Block. Both videos are about an hour long, but are worth watching for the great insight, if not necessarily into the pro-freedom arguments Block presents on each respective subject, the mindset that statists have when examining how governments encroach upon businesses.

First, Walter Block’s debate on a TV show, “Our Story.” The host and his ally (his ally also being Block’s opponent) raise a number of issues on just about everything Block brings up, from how markets dealt with Hurricane Katrina as opposed to FEMA, to how Wal-Mart operates. Throughout the entire show, the host and Block’s opponent bitterly attack markets as racist, calloused, and as impoverishing the poor without exception.

Towards the end of the show, when Block disparages government welfare as worse in some respects than slavery, something amazing happens. The show is wrapping up and the host objects that welfare has been created in response to the real needs of the poor and blacks (as if spontaneously through a market process), and that it exemplifies good intentions.

So when entrepreneurs try and capitalize on the underestimations of consumer desires of other entrepreneurs by entering such a market and providing goods that people will desire and maintain a good reputation, this is exploitation and part of a bitter system which exists to reduce our welfare, and against which we have no recourse. And when governments arise absent the consent of everyone who never agreed to support them or their invasions of property; control where roads are made, so that tax collectors, police, and the military can easily invade your home; that is courted by lobbyists and businesses to create laws favorable to them; that alone creates law and is immune from the law; that can disarm everyone; that can now destroy anyone they wish with their huge arsenals of weapons; that can make wars and destroy entire civilizations; and that compulsorily unifies everyone to their own ends--this is essential to our welfare!

Also: Up is down, day is night, and freedom is slavery.

The other Block video is a debate he had in Canada about income security and rights. After some debate and then some time for taking questions from the audience (and the Canadians in this 19 year old video sound amusingly like the characters in Napoleon Dynamite with their slow, monotone speaking style), Block’s slimy, redistributionist opponent went on an unprovoked rant about how inhumane markets are, and if a corporation wants more profits, all it has to do is raise prices.

Block may not have had the opportunity to respond to this diatribe, but a refutation of this is simple: A corporation can’t take your money without your consent. Governments can and do, and will raise your taxes whenever they want to raise their own profits. Governments don’t reckon in economic calculation, but political calculation.

It’s also worth noting that while on the one hand, markets are criticized for these corporate excesses, they are also deplored for how they create scarcity where profits aren’t high enough (and thus, the impetus for the government to save whatever pet industry some special interest favors).

In other words, capitalism isn’t cozy enough to special interests, but it favors them all too much.

In any case, don’t let the intellectual laziness of defenders of the indefensible prevent you from getting to the very root of their assumptions when it comes to the inherent corruption of political calculation.