Economic Authoritarianism (Part 3: Libertarian Myopia)

Kurt Luchs, author of “Frodo in a World of Boromirs,” an essay that appeared in the journal First Things,¹ draws an analogy between the lure of Tolkien’s ring of power and the very real temptations associated with governmental power. Using this analogy, he eventually arrives at the conclusion that because power is ultimately corrupting and government is both inefficient and evil, the free market is the only way to appropriately allocate resources, and liberty is only possible when government remains largely out of the picture.

As with all such libertarian reasoning on economics and limiting government power, Luchs’s essay leaves one enormous variable out of the equation: the modern corporation. Free-market proponents invariably fail to account for the fact that the free market isn’t really free, at least not for the people who work as hired labor. Free enterprise sometimes exists between businesses (and even that is questionable), but it rarely exists within them.

In a loosely regulated market, corporations (the real possessors of Tolkien’s “One Ring to rule them all”) have free reign to do as they please. And what they please is to purchase political influence so that they can remain unimpeded in concentrating power and wealth in the hands of a few elite stockholders and executives.

The great misconception about modern corporate capitalism is that it is a democratic economic system. Most Americans have naively associated communism with authoritarianism and capitalism with democracy. They would be shocked, however, to learn that corporate capitalism is, in practice, as incompatible with republican democracy as is the enforced cooperation of communism. Why? It all boils down to ownership and control of capital.

Ownership is the core issue that differentiates all economic systems. The ground-level assumption of corporate capitalism is that individual ownership of capital should be unlimited, resulting in one class of people that owns the time and efforts of another class. This assumption gives shape and direction to our economic system. When we peel away all its window dressing, however, corporate capitalism isn’t really about free markets or free enterprise, as the ultraconservatives and libertarians would have us believe. It is about ownership of capital. Period.

Because of the belief in unlimited ownership, most corporations (and most small businesses too) are authoritarian institutions. As such, they are at odds with our political system and our social ideals. Businesses may resemble monarchies, oligarchies, plutocracies, dictatorships, aristocracies, fiefdoms, or theocracies, but almost never could they be identified as democratic republics. The only exceptions would be worker-owned cooperatives and other businesses that share ownership with their employees.

Some may balk at this blunt description of our very undemocratic economic system, but consider the perspective of Michael Ventura:

As a worker, I am not an “operating cost.” I am how the job gets done. I am the job. I am the company. . . . I’m willing to take my lumps in a world in which little is certain, but I deserve a say. Not just some cosmetic “input,” but significant power in good times or bad. A place at the table where decisions are made. Nothing less is fair. So nothing less is moral. . . . It takes more than investment and management to make a company live. It takes the labor, skill, and talent of the people who do the company’s work. Isn’t that an investment? Doesn’t it deserve a fair return, a voice, a share of the power? . . . If the people who do the work don’t own some part of the product, and don’t have any power over what happens to their enterprise—they are being robbed. You are being robbed. And don’t think for a minute that those who are robbing you don’t know they are robbing you. They know how much they get from you and how little they give back. They are thieves. They are stealing your life.²

What Ventura is claiming is that most businesses in America are not in the least democratic. They are authoritarian institutions that do not give workers a real say in how their time and efforts are employed. Nor do they give workers a fair share of the profits they help create. Most executives treat labor as they would any other resource. But if we want to create an economy in which people are treated not as human resources but as human beings, with all the rights guaranteed by the Constitution, we must transform businesses from authoritarian organizations into small-scale democratic republics.

In order to have economic democracy, we must promote limited and widespread ownership. This is not a new idea. It is certainly not un-American. Thomas Paine declared, perhaps naively, that “commerce is capable of taking care of itself,”³ but he also condemned “all accumulation . . . of property, beyond what a man’s own hands produce.”⁴ This idea of limited, universal ownership persisted well into the nineteenth century. A mid-century labor leader, Robert MacFarlane, declared that “small but universal ownership” was the “true foundation of a stable and firm republic.”⁵ During this era, it was generally agreed that freedom could not thrive in a nation of hirelings.

But a nation of hirelings is exactly what we have become. The belief that small but universal ownership is necessary in a truly free society soon withered before the rising sun of corporate conquest, and the focus of those interested in improving the total human picture shifted from equal ownership, which was given up as a practical impossibility, to a vain (and still ongoing) attempt to create a viable substitute for true equality—in short, a counterfeit.

Huge corporations, says historian and social critic Christopher Lasch, as well as the wage system and a more and more intricate subdivision of labor made it pointless to restore the independence of individual proprietorship. Instead of giving the wage earner a piece of the action (meaning capital), “enlightened social policy” aimed instead to make his job secure, his working conditions tolerable, and his wages equitable. “Hardly anyone asked any more whether freedom was consistent with hired labor. People groped instead, in effect, for a moral and social equivalent of the widespread property ownership once considered indispensable to the success of democracy.” But redistributing income, guaranteeing job security, and turning the working classes into consumers are nothing more than pale substitutes for ownership or real control of capital; for none of these strategies produce “the kind of active, enterprising citizenry envisioned by nineteenth-century democrats.”⁶ The consequence is that our authoritarian business arrangements tend to overwhelm our political democracy as well, since political influence is available only to those who have the means to purchase it.

The forsaken idea of widespread, limited ownership was also at the heart of the many utopian and communitarian experiments of the nineteenth century, including the failed attempts Joseph Smith and Brigham Young orchestrated among the Mormons. But we live in a different world today—so much so that many modern Americans would be surprised to learn that the definition of the American Dream is not “a mansion, a million dollars, and twenty milligrams of Ambien before bedtime.” The dictionary defines it instead as a “social ideal that stresses egalitarianism and especially material prosperity.”⁷ Yes, one of our uniquely American social ideals combines the notions of prosperity and equality, suggesting that they are not incompatible after all.

We live in a democratic republic, which, while imperfect, is better than any other political system humankind has yet devised. Within this democratic republic, we enjoy a wide variety of freedoms as well as having a voice in electing our governmental representatives. This is a right our forebears and many other oppressed peoples around the globe have been willing to fight for. Does it not seem odd then that we so willingly embrace economic authoritarianism?

William Greider identifies one fundamental element of freedom that the free market does not disperse very broadly: capital. “The problem,” says Greider, “is not that capital is privately owned, as Marx supposed. The problem is that most people don’t own any.”⁸ One might wonder how we can even call a system capitalism when only a small minority of the population can be considered capitalists. And please don’t confuse stock ownership through pension plans or 401k’s with being a capitalist. Recent statistics show that about 70 percent of stock is owned by the top 5 percent of the population. The top 10 percent own 81 percent of all shares. A staggering 53 percent of Americans do not own any stock, and the trend is not favorable for the noncapitalists.⁹ One fairly recent development is that excess profits that companies used to reinvest in their operations or share with workers in other ways are now being used to buy their own stock back on the open market. This increases the value of the shares owned by top executives and shareholders, further concentrating wealth and power in society.

Corporations often pay lip service to the idea of workplace democracy, but there is a world of difference between employee “empowerment” and worker ownership. A great deal has been written about giving employees a “sense of ownership,” but what on earth is a “sense of ownership”? Ownership is ownership. A “sense of ownership” is a mirage, a lie business owners and executives perpetuate to make their employees feel better about the inherent injustice and inconsistency of their organizational relationships.

How a business might actually share ownership with the workers is a subject for another day, but when all is said and done, ownership should reflect something similar to what we ideally experience as citizens in a democratic republic. Employees should have a voice in choosing their leaders and have input in major operational decisions. Anything less is authoritarianism.

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1. Kurt Luchs, “Frodo in a World of Boromirs,” First Things, October 2008. Apparently, this essay is now available online only to subscribers.

2. Michael Ventura, “Someone Is Stealing Your Life,” Utne Reader, July/August 1991, 78, 80, reprinted from the L.A. Weekly.

3. Thomas Paine, The Political Writings of Thomas Paine (Granville, Middletown, N.J.: George H. Evans, 1839), 398; http://books.google.com/books?id=42AaAAAAYAAJ&printsec=toc#PPA398,M1.

4. Moncure Daniel Conway, ed., The Writings of Thomas Paine (New York and London: G. P. Putnam’s Sons, 1895), 3:340, http://books.google.com/books?id=1ToPAAAAYAAJ&printsec=titlepage.

5. Christopher Lasch, The True and Only Heaven: Progress and Its Critics (New York: Norton, 1991), 205.

6. Lasch, The True and Only Heaven, 207–8, 224–25.

7. Webster’s Ninth New Collegiate Dictionary (Springfield, Mass.: Merriam-Webster, 1990).

8. William Greider, One World, Ready or Not: The Manic Logic of Global Capitalism (New York: Touchstone, 1997), 416.

9. Stephan Richter, “Stock Ownership: Who Benefits?” Salon, September 19, 2013, http://www.salon.com/2013/09/19/stock_ownership_who_benefits_partner/.