Many people think that growing inequality, the rise of populism and nativism, and the decay of democratic institutions all have the same cause—the overreach of markets.
Is the market the key to freedom and prosperity? Don’t markets necessarily lead to economic inequality? Is it possible to make markets work better for everyone? This week we’re exploring Radical Markets for a New Gilded Age.
And we do live in a gilded age, with rampant inequality, the rich getting richer, wages stagnating for the rest. So our question for today is whether markets—so called radical markets—can cure the ills of this new gilded age.
But how could markets possibly be the cure if markets are what got us in this mess? Markets may have given us everything from iPhones and autos to skyscrapers and airlines, but they’ve also concentrated wealth in the hands of the few—to say nothing of pollution and climate change. So we don’t want to overly romanticize markets.
But do we want the government in control? Many of us would take the decentralized power of free markets over the concentrated power of a command economy any day.
Even so, economic power is still highly concentrated today—but instead of being concentrated in the hands of the state, it’s concentrated in the hands of huge multinational corporations. They’re like the robber barons of old except they control everything—including our personal information.
But is the fact that there’s too much power in the hands of corporations really the fault of the market? You could argue that we rely on the market way too much. But what if maybe we don’t rely on markets nearly enough? What if giving more power to the market was in fact the answer to the concentration of economic power?
You might just reply, “Break up the corporations! We’ll get more competition and less concentration of wealth!” But that response doesn’t appreciate the true logic of capitalism and the fact that competition necessarily leads to monopolies. After all, capitalism is all about economic efficiency, and monopolies are, if nothing else, ruthlessly efficient.
Of course monopolies also mean less competition, higher prices, and less choice. So how is that “efficient?” For example, before the Depression there were over a hundred American automobile companies. The market decided it could produce more cars more cheaply with just three.
That’s not to say that unfettered markets are all we need; we also need things like antitrust laws. Does that sound like trying to have our market cake and eat it too? If that means having markets that are lightly regulated, well then… guilty as charged.
So it’s clearly more complicated than just letting unfettered markets do their thing. But let’s take this a little bit farther. Think about labor unions. Without objecting to them on principle, we could view them as a form of monopoly—one that helps to restrain concentrated corporate power. In other words, labor unions are yet another important non-market force.
But let’s not lose sight of the fundamental point: at bottom, either the market is going to allocate things or the government is going to do it. Given the choice between the two, many would take the market over the government almost any day.
Of course, governments can focus on fairness, justice, and the common good; markets don’t care about that. Adam Smith’s invisible hand is a cruel master. Consider how automation has displaced unskilled labor and decimated whole communities. Or consider the gig economy, which looks like it lets everyone work as much as they want whenever they want but actually turns out atomized workers struggling to make a living.
Sound like we need some radical solutions, which is what we’ll ask our guest, Glen Weyl, co-author of Radical Markets: Uprooting Capitalism and Democracy for a Just Society.