Instead of laissez faire economics, root values in our shared humanity: column

Know the history of markets to know how we can advance

4:20 PM, Feb. 27, 2014  |  Comments
Nearly 150 years later, the ideas of Adam Smith, father of laissez faire economics, have led us to a dark place.
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As a student of the history of ideas for the past 60 years, I am intrigued by the absence of an understanding of the historic origins of a "free" market political economy.

In its 17th century roots, "free" is not an adjective, but a verb. Before we had what came to be called capitalism, we had mercantilism: merchants enabled to engage in business enterprise when empowered by the monarch. Integral to this was the establishment of colonies, which initiated the growth of empires, the globalization of political economies and the wars with which we are still enthralled, in which we are still entrapped.

In 1776, 13 of these colonies became the United States of America. Also in 1776, Adam Smith published his treatise "The Wealth of Nations," arguing that individual enterprises should be private affairs, free of any government interference; the birth of laissez faire economics.

When representatives from the former British colonies met in 1787 to draft a new Constitution, they rejected any notion that their national government could charter business corporations. Under principles of federalism - that is, divided sovereignty between national, state and local governments - the chartering of corporations was left to the states through specific acts of legislation.

As the nation expanded westward, the need for more corporate entrepreneurial endeavors became self-evident. In the mid-19th century, state legislatures passed general laws of incorporation, corporation charters now readily granted by secretaries of states.

After the Civil War, as the nation continued its westward expansion, a question arose as to whether the states could regulate these corporations. In an epic decision of 1886, Santa Clara County v. Southern Pacific Railroad, the Supreme Court ruled that states could not do so. Under the 14th Amendment, corporations are "persons" who cannot be deprived of their "property."

Here we find a radical transition from an American dream of democracy, into the corpocracy we now confront.

In 2010, of course, the Supreme Court ruled in Citizens United v. Federal Election Commission, that there are no restrictions on corporate and labor union funding of political campaigns. Since corporate wealth is colossally greater than that of labor unions, emphasis has been given to the notion that corporations are persons who are guaranteed the rights of free speech.

Once we were taught that the golden rule meant that we should treat others, as we would like to be treated by them. But now it means that those who own the gold can make the rules.

Politics in the United States of America has become deadly. It is time we Americans seek a more authentic free market with a very minimal role for government. What we now have is the protection of private property and the collectivization of capital in multinational corporations, not concerning ourselves with the rights of labor to bargain collectively in unions.

In an authentic and a more free-of-government market economy that is more self-regulatory, we would speak truth to power with love, attending to these four fundamental considerations: prices, wages, salaries and profits.

What and who sets the prices of goods and services? Why do we have such fluctuations in prices through advertised sales? Are prices for goods and services ever set just to meet human needs? What and who determines wages? Is there a living wage? How many workers bargain collectively for their income?

As a democratic republic, we need to root our lives in being a human community. As a democracy, we elect our represenstives. But as a republic, the primary responsibility of our representatives is to secure the public welfare of all the people. As a democratic republic, we must focus our attention not only on the rights we own, but also the duties we owe one another.

How do we do justice to both the personal and communal dimensions of our humanity, doing justice to both our individuality and sociality?

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