The role of markets
Brand, H.
IN HIS article "Markets and Social Pain" (Dissent, Winter 1998), James B. Rule argues that market ideology "poses a historic challenge to the kind of thinking we do in Dissent." He observes that...
...The Chicago School was surely instrumental in constructing what R.J...
...Privatization 84 n DISSENT / Spring 1998 of some social functions may indeed entail such abdication...
...Market ideology has affected labor market policy to an amazing degree since the mid1970s...
...Thousands of such closings have occurred, but in most cases workers have been stranded without retraining or job search possibilities...
...Unions like the United Auto Workers, which do not in principle object to productivity improvement, have argued for decades that there needs to be a system of advance warning when it comes to the impact of technological change on employment...
...I find this a singularly thoughtless statement coming from someone on the left...
...The world might be "a perfectly satisfactory place if there were only one hundred companies," President Reagan's antitrust chief, William Baxter, said, and "an industry trend toward concentration is not a factor that will be considered...
...The Chicago School and its allies have revived the fiction that there is equality between employer and employee in labor contracts...
...RULE BELIEVES that in order to keep economic life "dynamic," a certain amount of "creative destruction" (the term is Joseph Schumpeter's) is necessary...
...Rule may not regard it as a market in the conventional sense of the word, and he might be right...
...Output of all persons engaged in nonfarm business slowed from an annual average rise of 2.8 percent during 1960-1973 to 1.1 percent between 1973 and 1990 and 0.9 percent between 1990 and 1996...
...lately it is particularly pronounced in banking and telecommunications...
...Individuals affected by this should receive various kinds of social support, including retraining...
...The mass layoffs of the 1980s finally led to legislation mandating advance notice of plant shutdowns (the Worker Adjustment and Retraining Notification [WARN] Act...
...So he fragments the market into specific arrangements...
...It is a strange omission in an article dealing with market ideology...
...Annual surveys by the Department of Labor have documented the large-scale dislocation of workers, a substantial proportion of whom cannot find reemployment or, when finding it, must accept lower pay...
...The drive to privatize public functions, which began in earnest under Ronald Reagan's administration, is one facet of a deliberate effort to diminish the reach and authority of government and to downgrade the status of civil-service employees...
...There is one aspect of "market arrangements" Rule doesn't discuss, and that is the labor market...
...In grappling with the criteria that might make privatization desirable or not, Rule misses the broader issue...
...The labor market lies at the core of the economy...
...insecurity engendered by widespread dismissals does it...
...This amounts to a dismissal of collective rights defended by the unions and tends to legitimate their repression...
...For it has been market ideology that has legitimated the attack on the regulatory and fiscal powers of government, powers that are indispensable in resisting or lessening the socially destructive impact of the market...
...This approach follows from what I take to be his rejection of any attempt to formulate an overall concept of the market as being too abstract...
...He has nothing to say about the rampant commercialization of health care or the degradation of physicians' autonomy that this has entailed...
...The market in modern capitalism is the instrument of corporate domination, and it is protected by well-defined and stringently enforced property rights...
...If we cannot think of fruitful alternatives to retraining fifty-year-old workers who have spent thirty years of their lives in a steel mill silenced by imports or technology, we should not call ourselves partisans of the left...
...Weakening trade unions is not the only way of doing this...
...Technological displacement can do it...
...relocating or threatening to relocate a plant does it...
...Official concern with market power diminished...
...communities have suffered economic losses that an effective system of advance notification might have cushioned...
...Whatever the reasons, consolidation has obviously broadened corporate control of assets and markets...
...Rule is, of course, right to reject the worldview of the Chicago School of economists...
...The agency of repression has been corporate control of free markets—which has meant, first and foremost, in Peritz's words, "the subjugation of labor unions...
...He would reduce the cost of medical care by lifting restrictions to entry and creating "authentic competition...
...The relevant statistics do not provide evidence of increased "efficiency...
...How this is practiced has often been discussed in Dissent's pages, and need not be detailed here...
...witness judicial tolerance of hiring replacements for striking workers...
...But the chief agent of such amelioration, and the only one that can limit corporate dominance, is government— which Rule does not mention...
...The problem is that this ideology is a coherent system of thought, embodying a politically legitimating purpose...
...And he asks what principles should govern the left's efforts to "resolve the tensions between prospective market efficiencies and the divisive inegalitarian consequences that markets may bring...
...witness the reduction and in most instances the virtual elimination of aid to the poor, forcing them to accept low-wage jobs...
...witness the Earned Income DISSENT / Spring 1998 n 85 ARGUMENTS Tax Credit and the low wage levels it helps make possible...
...Rule does note the problem of lower-skilled workers, but he fails to examine the institutional issues...
...It is also part of the seemingly irresistible penetration of the market into fields, private and public, previously shielded from it...
...Witness the resistance to raising the minimum wage...
...Unfortunately market criteria are applied to it by business, government, and academia and, perverse as it seems, market ideology pervades these criteria...
...Rule, bless him, would resist privatizing the judiciary, even though this would make for efficiency and even profitability...
...and, at a more broadly effective level, the pursuit of anti-inflationary monetary policy does it...
...He observes that no question is currently more important for the left than the "press of market thinking in all areas of public life...
...With few exceptions, privatization shifts public functions to firms not otherwise accountable to the electorate...
...But he cannot, perhaps does not wish to, formulate any of those principles, offering instead a "seat-of-the-pants" approach, weighing the "virtues and vices of specific market arrangements...
...He is concerned with how the left might reduce the inequities engendered by the market...
...LET US assume that the labor market can be subjected to "efficiency" like commodity markets...
...I have already mentioned one yardstick, an indirect one to be sure: the control of labor cost by reducing the bargaining power of workers...
...this, however, prevents him from defining adequately the "market ideology" confronted by the left...
...What is the yardstick for this efficiency...
...Creative destruction" may be good for Wall Street, but it is a sickness unto the affected worker...
...True, Rule differentiates between markets in which efficiency increases consumer choice and markets in which "efficiency" conceals abdication of social responsibility...
...See the Economic Report of the President, February 1997...
...Rule may not believe it is necessary to deal with the forces that underlie the market...
...official concern with corporate concentration disappeared...
...The trend toward consolidation did not moderate during the 1990s...
...For them—I'm being only a little unfair— all the world's a market, filled with consumers and producers yearning to be free of government regulation...
...Of ten thousand merger notifications filed with the antitrust division of the Justice Department during the Reagan administration, only twenty-eight were challenged...
...Peritz (in his Competition Policy in America, 1888-1992) terms the "unifying image" of the 1980s: the free market subject to corporate control, providing "unbounded legitimation . . . to Reagan administration policies [by its] rhetoric of efficiency, consumer welfare, and free competition...
...Let us first look at a few instances of the market arrangements Rule would ameliorate...
...The introduction of labor-saving technologies is usually presided over by powerful private concerns, which base their decisions on profitability and costsaving criteria, without regard to social or human consequences...
...The ARGUMENTS act was also intended to ameliorate the social costs of plant closings on communities...
...Rule wants to address these matters on the individual level rather than that of the downsizing or relocating firms, but this is hardly persuasive when one looks at the results...
...Despite its limited character and weak provisions for implementation, business opposed it furiously...
...H. BRAND is a longtime contributor to Dissent...
...Yet it is "market ideology" that has fostered such commercialization...
...The weakening of the unions, initiated by Reagan's breaking of the air traffic controllers' strike in 1981, has been a major factor in the decline of the wages of lower-skilled workers, and thus in forestalling labor cost increases...
Vol. 45 • April 1998 • No. 2
