Corporations Are Not Humans : Not Even Close ---Episode 10

               The Corporate Libertarian Alliance ----continued

PROPERTY RIGHTS ADVOCATES : Ardent property rights advocates, sometimes called "market liberals,"commonly present themselves as libertarians dedicated to the defense of individual rights and freedom. While true libertarians seek to defend individual freedom against intrusion from coercive institutions of any kind, market liberals are mostly concerned with protecting the rights from public accountability. This highly elitist ideology in effect apportions rights to people in proportion to the property they own. According to Roger Pilon of the Cato Institute, a libertarian thinking tank in Washington, D.C., market liberals believe that "rights and property are inextricably connected. . . Broadly understood. . . property is the foundation of all our natural rights. Exercising those rights, consistent with the rights of others, we may pursue happiness in any way we wish." In the exercise of these rights individuals form voluntary associations with others through the mechanism of the contract. In the eyes of a market liberal, the only responsibility attached to the rights of property are to respect the same rights of others, obey the law, and honor contractual agreements. Those without property have no rights that the market liberal is bound to respect. 
   Like the neoclassical economists, market liberals make little distinction between individuals and corporations. Corporations are presumed to have the same right as an individual to use their property in any way that suits their self-interest. Market liberals give corporate libertarianism its cast of moral legitimacy. In return, corporate interests give leading proponents of market liberalism, such as the Cato Thinking Institute, the same financial support and political leverage they give to the neoclassical economists. 

CORPORATIONS AND MEMBERS OF THE CORPORATE
CLASS :  Corporations and members of the corporate class ---such as corporate managers, lawyers, consultants, public-relations specialists, financial brokers, and wealthy investors ---comprise the third pillar of the corporate libertarian alliance. Some are drawn to corporate libertarianism purely by financial self-interest or because they are paid to do so, others by moral conviction. Although few members of the corporate class have a serious interest in the fine points of academic theories or moral philosophy, they find a natural common cause with those who provide an intellectual and ethical case for freeing corporations from the restraining hand of government and absolving them of moral responsibility for the social and environmental consequences of their actions. Furthermore, they have the financial resources at their disposal to handsomely reward those who legitimate their power. 
   This combination of economic theory, moral philosophy, and elite political interest makes for a powerful alliance. Yet in many ways it has served even its own members poorly, as its corrupting influence has not been limited to the broader society. It has led neoliberal economists to seriously debase the integrity and social utility of economics by reducing it to a system of ideological indoctrination that violates its own theoretical foundations and is deeply at odds with reality.  It has similarly engaged libertarians in a cause that violates their own commitment to individual freedom, as corporations infringe on the property rights of real people and use their growing power to suppress the individual freedoms of all but society's wealthiest members. The enormous success of of the alliance in shielding corporations from public accountability has created a monster that even the members of the corporate class no longer control and is creating a world that they would scarcely wish to bequeath to their children.
   As pointed out a couple of weeks back, the contemporary corporation exists as an entity apart --- even from the people who work for it. Every member of the corporate class, no matter how powerful his or her position within the corporation, has become expendable, as many top executives have learned. As corporations gains in autonomous institutional power and become more detached from people and place, the human interest and the corporate interest increasing diverge. It is like being invaded by alien beings intent on colonizing our planet, reducing us to serfs, and then eliminating those of us they don't need. 


   BETRAYING ADAM SMITH AND DAVID RICARDO 

   It is ironic that corporate libertarians regularly pay homage to Adam Smith as their intellectual patron saint, since it is obvious to even the most casual reader of his epic work The Wealth of Nations that Smith would have vigorously opposed most of their claims and policy positions. For example, corporate libertarians fervently oppose any restraint on corporate size or power. Smith, on the other hand, opposed any form of economic concentration on the ground that it distorts the market's natural ability to establish a price that provides a fair return on land, labor, and capital ; to produce a satisfactory outcome for both buyers and sellers; and to optimally allocate society's resources. 
   Through trade agreements, corporate libertarians press governments to provide absolute protection for the intellectual property rights of corporations. Smith was strongly opposed to trade secrets as contrary to market principles and would have vigorously opposed governments enforcing a person or corporation's claim to the right to monopolize a lifesaving drug or device and to charge whatever the market would bear. 

   Corporate libertarians maintain that the market turns unrestrained greed into socially optimal outcomes. Smith would be outraged by those who attribute this idea to him. He was talking about small farmers and artisans trying to get the best price for their products to provide for themselves and their families. That is self-interest, not greed. Greed is a high-paid corporate executive firing 10,000 employees and then rewarding himself with a multimillion-dollar bonus for having saved the company so much money. Greed is what the economic system being constructed by the corporate libertarians encourages and rewards.
   Smith strongly disliked both governments and corporations. He viewed government primarily an instrument for extracting taxes to subsidize elites and intervening in the market to protect corporate monopolies. In his words, "Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all." Smith never suggested that government should not intervene to set and enforce minimum social, health, worker safety, and environmental standards in the common interest or to protect the poor and nature from the rich. Given that most governments of his day were monarchies, the possibility probably never occurred to him. 
   The theory of market economics, in contrast to free-market ideology, specifies a number of basic conditions needed for a market to set prices efficiently in the public interest. The greater the deviation from these conditions, the less socially efficient the market system becomes. Most basic is the condition that markets must be competitive.  An Economics 101 professor might use the example of small wheat farmers selling to small grain millers to illustrate the idea of perfect market competition. Today, four companies ---Conagra, ADM Milling, Cargill, and Pillsbury ---mill nearly 60 percent of all flour produced in the United States, and two of them --- Conagra and Cargill---control 50 percent of grain exports. 
   In the real world of unregulated markets, successful players get larger and, in many instances, use the resulting economic power to drive or buy out weaker players to gain control of even larger shares of the market. In other instances, "competitors" collude through cartels or strategic alliances to increase profits by setting market prices above the level of optimal efficiency. The larger and more collusive individual market players become, the more difficult it is for newcomers and small independent firms to survive, the more monopolistic and less competitive the market becomes, and the more political power the biggest firms can wield to demand concessions from governments that allow them to externalize even more of their costs to the community. 
   Given this reality, one might expect the neoliberal economists who claim Smiths tradition as their own to be outspoken in arguing for the need to restrict mergers and acquisitions and break up monopolistic firms to restore market competition. More often, they argue exactly the opposite position ---that to"compete"in today's global markets, firms must merge into larger combinations. In other words, they use a theory that assumes small firms to advocate policies that favor large firms. 
  Market theory also specifies that for a market to allocate efficiently, the full costs of each product must be born by the producer and be included in the selling price. Economists call it cost internalization. Externalizing some part of a product's cost to others not a party to the transaction is a form of SUBSIDY that encourages excessive production and use of the product at the expense of others. When, for example, a forest products corporation is allowed to clear-cutgovernment lands at giveaway prices, it lowers the cost of timber products, thus encouraging the wasteful use and discouraging their recycling. While profitable for the company and a bargain for consumers, the public is forced, without its consent, to bear a host of costs relating to water shed destruction, loss of natural habitat and recreational areas, global warming, and diminished future timber production. 
   The consequences are similar when a chemical corporation dumps wastes without adequate treatment, thus passing the resulting costs of air, water, and soil pollution to the community in the form of health costs, genetic deformities, discomfort, lost working days, a need to buy bottled water, and the cost of cleaning up contamination. If the users of the resulting chemical products were required to pay the full cost of their production and use, there would be a lot less chemical contamination in our environment, our food and water would be cleaner, there would be fewer cancers and genetic deformities, and we would have more frogs and songbirds. If the full cost of producing and driving cars were passed on to the consumer we would all benefit from a dramatic reduction in urban sprawl, traffic congestion, the paving over of productive lands, pollution, global warming, and depletion of finite petroleum reserves. 
   There is good reason why cost internalization is one of the most basic principles of market theory. Yet in the name of market, corporate libertarians actively advocate eliminating government regulation and point to the private cost savings for consumers whir ignoring the social and environmental consequences for the broader society. Indeed, in the name of being internationally competitive, corporate libertarians urge nations and communities to increase market distorting subsidies---including resource giveaways, low wage labor, lax environmental regulation, and tax breaks ---to attract the jobs of footloose corporations. An unregulated market invariably encourages the externalization of costs because the resulting public costs become private gains. In the end it seems that corporate libertarians are more interested in increasing corporate profits than in defending markeyprinciples.