Check out this excerpt from Majorie Kelley’s “Divine Right of Capital” (was a recommended read in my last outsourcing talk):
When stockholders might try to improve their negotiating position by organizing into mutual funds, corporations would threaten to cut off payments altogether. The companies would threaten to replace stockholder money with funds from overseas, willing to accept lower returns.
Of course overseas stockholders would have less power. For while free trade agreements would provide intricate protections for labor and environmental rights, they would offer capital no protections. “What does capital have to do with trade?” pundits might ask. “Trade is about goods and services and the people who create them, it’s not about capital.”
If stockholders staged protests at the World Labor Organization to suggest changes in this economic order, they would be accused of “tampering with the free market.”
That’s what we’re told today. But we don’t have to buy it. For we can begin to see how the sleight-of-hand of the “free market” serves as an apology for institutional arrangements. The truth is, free market ideology contains two separate assertions, worth unpacking.
First is the assertion that natural processes are self-regulating. Which is valid. We see it in nature, where the renewal of life in spring comes on its own. Where we mate for our own pleasure-and thus help in the rebirth of the world. In like manner, we serve the economic polity best by serving ourselves. The drive to make money gets us out of bed in the morning, and brings us to do our part in holding the world together. Our economic drives are part of the natural order and are trustworthy. We can take comfort in this assertion.
But free market ideology carries a second assertion: that corporate and trade governance structures embody the natural order. And this does not follow logically from the first. For it glosses over institutions of power. To call the stockholder-centered corporate structure “natural” is reminiscent of the ancient claim that the monarchy was the only “natural” way to structure government.
A truly natural free market would free all groups to compete equally, to pursue their own self-interest. Real free markets are not about enshrining the self-interest of one group alone in law. Privilege like that has no place in a market economy. Even an imaginary one.