L.A. Liberty

The Conservative Statist’s Definition of a “Free Market”

Several folks have highlighted this Romneyism from the US presidential debate:

“You can’t have a free market work if you don’t have regulation.”

This is a good opportunity to consider the more globally relevant question of the meaning of “free market” in the eyes of the conservative variant of statism.

To a conservative statist, part of the “free market” “working” means that citizens work more effectively for the state when they are able to produce a larger extractable wealth surplus. Permitting a “free market,” from this perspective, is a concession, a strategic relaxation of the conservative version of the default totalitarian dream. As Hoppe has explained, states that allow somewhat freer markets simply win out as a practical matter over those with a more totalitarian economic strategy because economic totalitarianism makes it impossible for people to actually produce any significant wealth at all that can then become a target for expropriation by the bureaucracy (see former Soviet Union, etc.). The strategic conservative statist views the “free market” as justified to the extent that it raises the quantity of bureaucratically “legible” (professor James C. Scott’s language), and thus more readily extractable, wealth created within its geographic tax base.

The modern “debate” is largely over the question of how—not whether—to increase the power, funding, and glory of the state. This is why it is so intolerable to allow libertarians into the debate who might ask precisely this “whether” question. It is also relevant to the foregoing argument to understand how “regulation” favors larger and more formal enterprises that can more easily fund fixed compliance costs. Individuals and more informal and smaller enterprises have greater compliance burdens relative to the scale of their operations at all levels (product design, HR, tax, legal, and so on). The larger firms also happen to be more visible and therefore easier to monitor and collect revenue from. You can see where this is going.

From the state’s perspective (“seeing like a state” in Scott’s memorable phrase), quasi-private wealth production is more useful to the extent that the state’s own cut can be most efficiently and reliably extracted. This is one factor (among others) that helps explain the alliance between larger businesses and bureaucracies in relation to “regulation.” The larger businesses gain a relative advantage over the smaller ones (including those ever-pesky start-up challengers), while the bureaucrats get a more visible, trackable, and “orderly” market from which to conduct institutionalized wealth extractions. This is the conservative dream of law and order (that is, legal and orderly expropriation of large amounts of wealth).

— Konrad Graf