A question was posed by a reader today - with reference to my morning post on Prashant Bhushan & Co. - regarding corporate corruption. I have posted a reply - but let me take the discussion of this important matter to the main page.
Socialists practise "interventionism." They are always to be found loudly proclaiming that The Market may be fine - but the State must "regulate." This is their ideology. What is "regulation" and how is it carried out?
Regulations are the product of parliaments and bureaus (government departments). Parliaments produce Legislation; and bureaus are empowered by "subordinate legislation." All these rules and regulations are "enforced" upon human beings during their actions in The Market. Thus, they are unfree.
Understand this "vision of the damned": this is their "command economy." They want to turn society into a machine that must obey their commands issued via Legislation. Socialist democracy is nothing but Legislation: the "social market economy."
The immediate effect of such interventionism is what Peter Bauer called "the politicisation of economic life." Businessmen, realising they must influence the rules under which they will be regulated (by force), begin "lobbying," thereby diverting their attention to worthless politics, rather that tending to their businesses. To the uncritical eye - this is "democracy."
In the US of the 1940s, Ludwig von Mises pointed out how rampant interventionism was destroying American democracy. He said the "representatives of the people" have all become "representatives of special interests" - from agriculture to mining, to whatever. No one represents his "constituency" - and it's all about special interests. The politicisation of economic life through interventionism destroys both politics as well as democracy - and destroys the character of the business community, too.
Then, there is the Vision of the Anointed: those who see Market Society as the Wondrous Creation of God - an "order without design"; something that is "the result of human action but not human design." If humans did not design it - who did? We could call him God. His is the "invisible hand."
This is the laissez faire vision - of a completely Free Market. A natural, spontaneous order based on rules all of us follow - without knowing why. This Golden Rule of Property comes from the past. All I have done is articulate this rule - the Inviolability of Property - but I did not make this rule, nor did anyone else. It is a part of human evolution, which includes our "intellectual evolution" - an "order without design"; the "result of human action, but not human design." It took millions of years before any intellect could articulate this rule - as for example, the Greek philosopher Strabo did in 40 AD, whom I quoted in my post of yesterday.
This commercial, bazaar culture is our real "cultural heritage." It is a culture of of peaceful and gainful exchange. A "commercial culture." A bania can buy from a Scot and sell to a Jew and still emerge with a profit - or so they say in London!
This natural order of the Free Market is what Hayek called a Great Society - as did Adam Smith. And since Smith influenced Darwin, the latter's evolutionary theories also looked at the natural world as an "order without design." This cannot be coincidental.
Similarly, Frederic Bastiat, battling socialists and protectionists in France circa 1850, wrote an entire volume titled Economic Harmonies. There is no "class war." The motive of self-interest does not destroy society - rather, it enriches it, by creating Competition, which is the essence of Liberty, its biggest fruit. Everything and everyone improves all the time. "Competition is Liberty - and the Absence of Competition is Tyranny," said Bastiat.
He was a devout Catholic, and he proclaimed his faith thus: "To believe in Liberty is to believe in God - and have faith in His creation, Man."
These classical liberals believed in "natural honesty" - and the Scottish Enlightenment was all about "natural religion." This was their vision - of a natural, harmonious order among all mankind, all based on gainful trade, because God planted in all of us "a natural propensity to truck, barter and exchange."
If the State is completely separated from The Market - laissez faire, private money, free banking under law, private law, unilateral free trade - all businessmen will find that their only way to preserve and accumulate capital will be by "serving the consumer" - and not the politicians and their bureaus. Only then will corporate corruption cease.
Of course, businessmen must realise that their "rightfully understood interests" do not lie in interventionism. That is also the task of the economist. I will address that task in my post of tomorrow morning.
Recommended reading: Ludwig von Mises' Interventionism: An Economic Analysis. This was written in German in the 1940s, shortly after the Miseses had migrated to America to escape Hitler. Mises was working for the National Bureau of Economic Research (NBER) then, and this was translated into English by two NBER staff - but never published till after his death! You can download the book from the Mises Institute here. Obviously, this is how the USA became the USSA - by preferring democracy to liberty, confusing the two, confusing means and ends.