Why Does the Market Not Serve the Interests of Human Beings?

So people are casting about for the means to protect themselves against that insecurity. They are looking for a way to not only afford decent housing but to buy the house in the neighborhood that feeds into the good k-12 schools that will give their own kids a better chance at a life not marred by the insecurity that keeps them up nights. They are looking for a way to be respected at work, to be respected in their communities, to locate their position in the larger social structure and to find it congruent with their ideal selves. They are looking for dignity and rest. That we have constructed the only means for achieving those things as credential hoarding can be understood as “market demand” but I would call it mass insecurity. Again, language, tools, kings and masters.

If we accept my story of profit and higher education market we get to different kinds of questions that lead to different kinds of policies. Rather than disrupting higher education because it does not serve the needs of the market we can ask the market why it does not serve the interests of human beings. Why, as corporations increasingly use their moral authority and political will to limit their tax exposure and their contribution to social institutions like k-12 schools, why is public education being refashioned to provide them the “human capital” they require to continue their abdication of the greater social good?

Tressie McMillan Cottom, Profit, HigherEd and Lessons on the Prestige Cartel

What is Democratic Efficiency?

Alex Sparrow has been interested in the idea I’ve been discussing called ‘democratic efficiency.’  He encouraged me to talk a bit more about how to achieve it, and then since has written about this.  His post is well worth checking out, and in many ways parallels my own thinking. But his use of the term democratic efficiency and mine are a different, so it seems worth taking the opportunity to explain my own position a bit more clearly. I also noticed as I looked through my posts that I had been defining democratic efficiency differently – by emphasizing different elements of the idea.  This no doubt adds to the confusion.

The Economics-Politics Distinction: The Shift from the Welfare to the Predator State

If “economics” is isolated from other aspects of social life, then the criterion for policymakers becomes the simple one of efficiency. Expenditure, and government policy generally, is to be viewed in terms of whether or not a program pays, whether it creates incentives for the private sector to expand output and employment. In a market economy [sic], government must depend on tax collection, and this in turn depends on the level of economic activity–which depends on the expectation of profit. In the economist’s view, if tax incentives can attract or retain business, they should be granted. The income redistribution effects [sic] of such policies may be regressive but this is simply an unavoidable consequence of a market economy: government can step in after production decisions are made and through tax expenditure policies rectify any damage that may have resulted. How much and what type of action it will take will be decided in the political arena.

Yet government, especially at the local level, in under constant pressure not to redistribute from the rich to the poor.

–William K. Tabb, The Long Default : New York City and the Urban Fiscal Crisis.

Robbed of the protective covering of cultural institutions, human beings would perish…

To allow the market mechanism to be the sole director of the fate of human beings and their natural environment, indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity ‘labour power’ cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this particular commodity. In disposing of man’s labour power the system would, incidentally, dispose of the physical, psychological, and moral entity ‘man’ [sic] attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as victims of acute social dislocation through vice, perversion, crime and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society.

Karl Polanyi, quoted in David Harvey, A Brief History of Neoliberalism.

“The community is not bound to provide…a subsidy for unconscionable employers”

I’ve noticed that even when people are sympathetic to the concerns of workers, many people still use the unspoken idea that employers right to exploit workers is natural whereas government action to prevent such exploitation is an interference that needs some special justification.  Part of this is a failure to notice what the baseline is, and that any choice of baseline is a political act, not one that can be justified by talk of what is ‘natural.’ That is, it is the same mistake that leads people to imagine that ‘redistribution’ is a coherent concept.  Thankfully, those who came before us equipped us to avoid such mistakes, if we would only listen.

Chief Justice Charles Evans Hughes:

There is an additional and compelling consideration which recent economic experience has brought into a strong light. The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenseless against the denial of a living wage is not only detrimental to their health and well being, but casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers are called upon to pay. The bare cost of living must be met. We may take judicial notice of the unparalleled demands for relief which arose during the recent period of depression and still continue to an alarming extent despite the degree of economic recovery which has been achieved. It is unnecessary to cite official statistics to establish what is of common knowledge through the length and breadth of the land. While in the instant case no factual brief has been presented, there is no reason to doubt that the state of Washington has encountered the same social problem that is present elsewhere. The community is not bound to provide what is in effect a subsidy for unconscionable employers. The community may direct its law-making power to correct the abuse which springs from their selfish disregard of the public interest. [my emphasis]

The cost of doing business should, as a matter of course, include the cost of paying a living wage.  Companies have no right to impose costs on the rest of us to facilitate their ability to make money.