The Natural End of Economic Structures

In my previous post I proposed that corporatism is worse than socialism because of the inherent inequality that lies therein. However, it got me thinking about the natural ends of these economic structures. This is a line of thinking that I have considered before, but not to the point of writing about it.

Does socialism (the common ownership of the means of production) always tend to statism? Libertarian socialists argue that it won’t, but historically it seems to lead to that end. Why? Ludwig von Mises and Frederic Bastiat would argue it is because socialism is an unnatural  economic construct (human nature such that individuals seek their own interest) and therefore it requires force to implement, thus can only be implemented via the power of the state.

Does the “free market” always end in corporatism? If property is privately held, does the structure that acts to protect that property also encourage the positive legislation that alters the economic playing field so as to disrupt the free flow of goods, products, labor, and prosperity that Adam Smith and Bastiat see resulting from this free market?

Smith gives the following warnings regarding free markets:

“The interest of the dealers…in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.

The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

Bastiat gives another injunction against the evils of capitalism (remember these are coming from the “free market” guys) in his introduction to the most important book of the 19th century:

Predatory men, you who, by force or fraud, in spite of the law or through the agency of the law, grow fat on the people’s substance; you who live by the errors you disseminate, by the ignorance you foster, by the wars you foment, by the restraints you impose on trade; you who tax the labor you have made unproductive, making it lose even more than you snatch away; you who charge for the obstacles you set up, so as to charge again for those you subsequently take down; you who are the living embodiment of selfishness in its bad sense; parasitical excrescences of faulty policies, prepare the corrosive ink of your critique: to you alone I can make no appeal, for the purpose of this book is to eliminate you, or rather to eliminate your unjust claims. However much we may admire compromise, there are two principles between which there can be no compromise: liberty and coercion.

Therefore the question seems: If there is private property, will the government instituted to protect that property tend to manipulate the free-ness of the market in favor of the wealthy; and conversely, if there is no private property, will the government instituted to preserve the equality of property end up needing to continually increase the power of the state to ensure that it forces equality? Essentially, can government preserve and protect and promote the prosperity of individuals, families, and communities; or does government destroy prosperity by its nature regardless of whether it is a socialistic or free market structure?

In my next post I will explore John Locke‘s discussion on property in his essay The Second Treatise on Government for answers as it is fascinating in this regard.

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