Introduction to My New Book in Progress

Now that the Confiscation of American Prosperity has been published, I have a new book that is fairly well advanced. I expect that , The Manacles of Capitalism: How Market Control Undermines Productivity, I will have the manuscript ready to send to Stanford University Press in a few months.

Here is my introduction. Any suggestions would be appreciated. Most of all, my title is clunky. Anyone who comes up with a title that works for me, will win a free copy of the book.



Introduction: The Hidden Manacles

Setting the Stage

This book makes the case that the modern economy has matured to the point where markets do not and cannot harness the anything near the full productive potential of society; and even more important, that markets seriously undermine economic performance.

This book will emphasize only one of the many defects of the market that markets rely on a system of incentives that are self defeating. Purely monetary incentives may appear to work effectively when one takes a narrow view of their operation, but from a larger perspective they are counterproductive for the economy, as well as society as a whole.

To make my case, I will concentrate on the United States of America, which is the purest example of capitalism today. Here is the most powerful economy in the world, yet it seems powerless to meet the most pressing needs of society. The current U.S. economy falls short on a maddening array of counts. The list of pervasive problems includes excessive poverty, inadequate health care, environmental damage, pervasive toxins, and an unsatisfying quality of life, just to name a few. Although the United States neglects these problems in order to nurture market relations, the relative economic strength of its economy seems to be eroding.

The contradictory nature of the U.S. economy raises a host of relatively obvious questions about the quality of life. Why has a widening circle of poverty begun to engulf more and more people, even when the pace of technological change began to accelerate in the late twentieth century? Surely, an economy with a communication system that would have been unimaginable only a few years earlier should be able to nurture a sense of community or at least create a satisfying culture. Although the majority of the population may have access to considerable material goods, the current economic system fails miserably in creating a good quality lifestyle.

Such questions, while important, largely adopt the position of people as "consumers" whom the economy affects. This book will take a different perspective looking at how market incentives impact people as producers. To make this focus clearer, this book will, for the most part, leave aside many serious problems that typically tend to be seen from the perspective of people. For example, the market system has the adverse environmental consequences (see Perelman 2003). Most people regard these negative effects of the economy as a quality of life issue.

This producerist focus is doubly important because economists studiously ignore it; instead, they cleverly justify the status quo by arguing that people supposedly benefit greatly from the market through their participation in society as consumers. For example, Wal Mart is to be applauded because its prices are low while obscuring the company's effect on people as producers. Although the consumer perspective is important, the producer perspective should not be overlooked. This book is intended to remedy that neglect.

Some elements of the producer and consumer perspectives merge. For example, the pollution that degrades the quality of life can also seriously affect production through negative health effects on workers. Other seemingly consumer oriented questions have more far reching producerist consequences.

Consider the role of modern technology. Although engineers have devised methods of producing sophisticated electronic devices with virtually no human labor, the market economy has not managed to discover a way of reducing the working day. How is it that virtually nobody stops to ask even the better paid, but harried people if they would prefer to sacrifice some of the stuff that they consume for more leisure?

The producerist implication of this technology are equally important. One must wonder why an economy with such advanced technological capacities does not provide for more fulfilling work. Although this leisure might be used for more consumption, it could also increase the workers' productive capacity by improving their health. More leisure, like the opportunity for more fulfilling work, could also allow workers to develop improved skills.

The Theological Defense of Markets

The responses to anybody who dares to question the market are predictable. In their first strong line of defense, defenders of markets will respond, that any measures to address deficiencies other than the standard knee jerk remedy of expanding market powers even further threaten to interfere with economic efficiency. A second, and even stronger line of defence, will admit that problems exist, but insist that the cause is not the system, but the personal inadequacies of the people. As Margaret Thatcher, the Conservative British Prime Minister, popularly known as the Iron Lady once explained: "Economics (sic) are the method. The object is to change the soul" (Harris 1989). This call for spiritual Procrusteanism inspired the extreme neoliberalism that continues to this day.

The stubbornness of the prevailing ideological rhetoric of today reflects the view that markets are an end in themselves rather than a means to an end. Any challenge to the market, no matter how mild, reeks of heresy. Edmund Burke, perhaps the most famous British statesman of the eighteenth century, famously set the tone for theological defense of markets, declaring: "... the laws of commerce ... are the laws of nature, and consequently the laws of God" (Burke 1795, p. 137). The modern Journal of Markets and Morality continues to promote that theological tradition.

From a less elevated perspective, business and political leaders commonly join the familiar litany of praise for the market, bandying about lofty terms, such as freedom, democracy, and justice, not to mention efficiency and prosperity. While first running for president in 1999, George W. Bush offered a simpler formulation, declaring that "trade and markets are freedom" (Schwartz 2005, p. 6; citing Fischer 1999).

Surely nobody could object to people being allowed to enjoy freedom, democracy, or any of these other positive attributes of the market. Why would anyone be foolish enough to challenge the existing economic system, which supposedly represents the pinnacle of social organization or at least it would be if ill considered taxes and regulations did not interfere with what President Ronald Reagan called "the magic of the marketplace"?

But adults should not believe in magic. Despite Reagan's fanciful rhetoric, the market is a harsh taskmaster. Frederick Winslow Taylor, known as the father of scientific management and who devoted his life to cutting split seconds from workers' tasks, gave a more realistic verdict of the modern situation, observing: "In the past the man has been first; in the future the system must be first" (Taylor 1911, p. 7). But how well does this system serve people's essential needs? This book argues that it does not.

A Different Theology

Turning to a quite different theology than that of Burke according to Greek legend, a bandit named Damastes terrorized people near Eleusis, in Attica. People called him Procrustes, or "The Stretcher" because he compelled unwary travelers who fell into his hands to spend the night on an iron bed. He sadistically murdered his guests by stretching the ones who were too short for the bed, or, if they were too tall, cutting off as much of their limbs as necessary to fit the dimensions. His sadism supposedly turned the surrounding countryside into a desert. Procrustes's reign of terror was eventually cut short. Theseus, famous for his legendary exploits and destined to become king of Athens, subjected Procrustes to his own bed treatment.

This mythological reference might seem out of place in a book on the economy, but the workings of the economy have become so absurd and the language of the economy so perverted that reframing the subject in an unfamiliar context seems appropriate. As Frederick Winslow Taylor, who attempted to use the scientific method to tighten the screws on the Procrustean bed, suggested, the modern economy requires that people conform to its dictates: "the system must be first."

Max Weber, the famed German sociologist, who was hardly a radical, vividly captured this harsh spirit of the Procrustean world. For Weber, "the market is the most impersonal relationship of practical life into which humans can enter with one another .... Such absolute depersonalization is contrary to all the elementary form, of human relationship" (Weber 1921, pp. 636 37).

One of Weber's most famous expressions is his metaphor of the iron cage (actually a mistranslation of a less poetic "shell as hard as steel") (Weber 1904 5, p. 121). Weber described the inhuman consequences of this cage/shell:

Today's capitalist economic order is a monstrous cosmos, into which the individual is born and which in practice is for him, at least as an individual, simply a given, an immutable shell, in which he is obliged to live. It forces on the individual, to the extent that he is caught up in the relationships of the "market," the norms of its economic activity. [Weber 1904 5, p. 13]

Beyond the Procrustean Economy

In the spirit of Weber at least the mistranslated Weber you can think of the market as a Procrustean bed. Those who do not accommodate themselves to the system suffer a cruel fate. Like Procrustes, the market is also destructive of its surroundings.

In describing the economy as Procrustean, I realize that I am distancing myself from conventional economics. Certainly, the story economics tells about the market economy is very different. Markets are supposed to be purely voluntary arrangements. People chose to work where they want and to buy what they want. Nobody tells anybody what to do (except on the job).

Unlike the irrational sadism of Procrustes a parasite that destroyed its host economists present the modern economy as the height of rationality. Contemporary economists are fond of comparing the organizational achievements of a market economy with the efficiency of a computer or even the brain itself.

While I admit that many individual actors in the economy often do act quite rationally in furthering their own short term self interest, this book will show how, taken as a whole, the modern market economy falls quite short of the excellence ascribed to it. How can anyone rationalize that hours of work have not radically decreased despite the proliferation of modern, labor saving technology? How anyone reconcile increasing job insecurity and stagnating wages with market efficiency?

No, the market is indeed Procrustean. The business leaders, politicians, and economists who are quick to explain that the logic of the system is immutable and who come down hard on anyone who dares to question Procrustean rationality, are generally immune from the harsh demands of Procrusteanism.

The position advocated in this book flies in the face of prevailing opinion. Besides the dogmatic defenders of the markt, some well intentioned people acknowledge some shortcomings, but pin their hopes on minor regulatory tinkering. History does not look kindly on those who have expected much from such piecemeal measures in the past. Still others might promise that better technologies will be able to correct existing problems within the framework of market. The underlying problem, however, is not technological inadequacy. Nor is it a material deficiency. For example, people do not go hungry because too little food is produced. After all, food surpluses have long plagued most developed countries.

Viable alternatives do exist, but they might seem impossibly utopian only because the gatekeepers of the Procrustean economy adamantly refuse to accept any dialogue or even the possibility of a dialogue. As Prime Minister Thatcher proclaimed: "There is no alternative." The iron bed must remain in place. Everyone must learn to accept the dictates of the Procrustean economy. Neither individuals nor societies have any choice in the matter. To defy the logic of the market would be suicidal at least in an economic sense.

This book makes the case that this Procrustean ideology is as absurd as it is inhuman. The book shows why markets are incapable of permitting people to use their productive potential, while, at the same time, pointing in a more positive direction. Once people realize that the economy does not have to put the system first, as Taylor suggested, society can tap into people's potential and create a more fulfilling life.

The first step is a critical evaluation of the market. Hopefully, with sufficient intelligence, courage, and imagination we can get the kind of economy we deserve an anti Procrustean one in which the productive system will finally adjust to meet society's most pressing needs.