Corporations and Governments

Lawrence Lessig praises a book “Supercapitalism” by Robert Reich:
Reich and Lessig count it a mistake that We push for “corporate social responsibility” and praise corporations who agree to do the “good” thing, imagining that this means something other than the “money making” thing. We know a song about that, don’t we children?… government is pretty good at forcing internalization when it benefits strong special interests (again, copyright), and not when it harms strong special interests (again, carbon). Here, and in a million contexts, the government is coopted by the powerful influence of powerful interests.Phase 2 of Lessig’s journey will be when he realises that, just as a corporation exists to create profits, and cannot reasonably or usefully do anything else, a government exists to serve powerful interests, and cannot reasonably or usefully do anything else.Lessig’s article is fascinating, and I’m not doing it justice, because of the completely alien worldview it exhibits.
We’ve now … Reich says, entered a period of Supercapitalism — a time when competition has grown dramatically, and when half of us (meaning half of each of us, or at least half) more effectively demand lower prices in the product and service market place and higher returns in the investment market place.The problem, from Reich’s (and my) perspective, is that the other half of us – the part that thinks not as an actor in a market, but as a citizen – has atrophied. That is, the half of us (again, of each of us – Reich’s point is that each of us has these two parts) that demands that government set sensible and efficient limits on private action has atrophied.That division – between “market actor” and “citizen”, is not one that it would have occured to me in a hundred years. “citizenship” in the sense he talks about means nothing to me but busybodying: interfering with people who have nothing to do with me. Does that mean I am half a person – a “market actor” only? I don’t think so. If I help someone up the steps at the station, (or for that matter kick them down those steps for fun), I am not a “market actor”, but neither am I being a citizen in the political sense that Lessig seems to mean. I am interacting with those around me. I do not draw a sharp distinction between those I work with (or “interact in the labour market with”), and my other circles of neighbours and friends.

There is a danger of treating libertarianism (in the broad sense) as being entirely about markets. This mistake can be made by supporters as well as opponents. Markets are not the point; freedom (and particularly free association) is the point. People should be free to associate and co-operate in whatever manner they wish. Often that co-operation have the structure of a market, but frequently we can do better than the market (particularly at small scales). The significance of the market is that if we are free to market, then we might do better than we would by market, but we need not do worse. If we are prevented from using a market, then there is no limit to how ineffective our co-operation can be.

At one point there I had to use “market” as a verb. Trading or “marketing” is something that people do, and markets are an emergent property of that action. Without wanting to get too hung up on parts of speech, it’s a bit awkward to have to talk as if the market is primary, and people acting in a market secondary, when the opposite is the case.

In essence, then, we have three categories of interaction. There is market interaction. There is other voluntary interaction outside of markets, which I might call “citizenship” but which Lessig apparently doesn’t, and there is politics, or achieving goals through government action, which Lessig considers “citizenship”, and which I consider almost entirely harmful.

(As an aside, I have written previously on why we choose to clearly separate market interaction and other voluntary interaction).

The history is what I find interesting here. Lessig has long been arguing that we need government to control the excessive power of corporations. That is a reasonable argument in vacuuo, but suffers from the observation that in the real world government almost always intervenes on the side of the corporations. Having noticed this, Lessig now turns his attention to it. I am being serious when I suggest he may reach the stage where he recognises that the problems of corrupt government are not fundamentally fixable, only containable (by restricting government).

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