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To the Editor,
According to Adam Smith, “By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
This is Smith’s single mention of the “invisible hand” in his “Wealth of Nations.” It’s a referent to underlying social and structural forces which encourage, in this example, a domestic purchase preference. This holds “in many other cases,” according to Smith, suggesting that underlying pressures, which are invisible, shape people’s market relations.
Free market enthusiasts often distort Adam Smith (and others like Hume and Ricardo) by reducing the nuances of the political economy approach to “pure” economics, devoid of the mention of social, structural and class roles.
Furthermore, such “pure” economists have supplanted the labor theory of value with the utility theory of value — suggesting that people are “free” to sell their labor in an amoral market led by the invisible hand.
This negates the fact that some people only have their labor to sell — which they must sell in order to live — while others have land, capital or other power. This also ignores the class-based distribution of income and fundamentally negates class antagonisms or the disparity between the haves and the have-nots, a disparity that is growing steadily in the U.S. and elsewhere.
This “pure” economics also reduces all other social forces such as race, gender, location, education, language, religion and so on to unaccountable terms. People are simply rational individuals bent on maximizing their own selfish interests in an otherwise “free” market.
Some people want free markets only in a certain sense: one which preferences the owners of capital — the rich — while disempowering people.
Free markets are not synonymous with freedom. Free markets are not led by some benevolent god-like invisible hand but have real negative impacts on real people and on our environment when left unchecked and unregulated. 2008 is but one example, when the loosening of government financial regulations and new forms of capital investment created the biggest financial crisis since the Great Depression.
Another example is the privatization of prisons. Research from the University of Wisconsin-Madison has found that private prisons hold inmates 7% longer. The “First Step Act” is a bill passed by the Trump administration in 2018 which authorizes new markets for Federal Prison Industries.
Charlie Kirk, the founder of Turning Point USA, argued in favor of the “First Step Act” at his recent “Culture War” event. Prison work is a form of slavery and involuntary servitude.
The punishment and justice of our nation shouldn’t be a business. Business owners themselves should find this unjust, as prisoners working for FPI make only 23 cents to $1.15 per hour, which undermines fair competition from other companies who don’t have access to such cheap labor in U.S. industries ranging from textiles, electronics, metals and services like warehousing and distribution.
Neoliberals who claim to want free markets argue that global free trade is a wave which raises all boats. In order for market exchange to be completely free, all of the components of exchange (factors of production) must move freely.
However, the current paradigm frees capital finance and goods while constraining other components. For example, laborers are separated from markets by constraints on immigration and by literally erecting walls — if you are truly in favor of the free flow of labor, capital and goods, then it’s theoretically inconsistent to be anti-immigration. Period.
Some people want free markets only in a certain sense: one which preferences the owners of capital — the rich — while disempowering people. That’s why our clothing is made by women earning slave wages in Bangladesh and precious metals are extracted by children in Ghana, while the wealthiest people in the world now own more than ever before.
A 2017 Oxfam report found that “eight men now own the same amount of wealth as the poorest half of the world.” The rich continue to get richer at the expense of the poor.
TPUSA is a privately funded student activist group that is fighting for “freedom” and free markets. Even though the organization brought in more than $8.2 million dollars in 2017, they host their events at public venues using public police security — at the expense of taxpayers and students.
Their loyalties lie with wealthy elites. They are active here at Colorado State University, despite being linked to the alt-right and far-right extremists by the Anti-Defamation League and the Southern Poverty Law Center. Also puzzling is the incongruity of their message: free markets don’t mean freedom.
MA student, Political Science CSU
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