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The Unmaking of the Market
In the most famous passage in "The Wealth of Nations", grandfather of capitalism Adam Smith wrote:
Every individual... generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. 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.
In other words, Smith argued, that which is selfish also serves the greater good. A few years after the fall of Enron and a few months into the sub-prime mortgage crisis and ensuing recession, it should now be fairly obvious that the invisible hand is, in fact, a visible fist -- a greedy few organizing the economy to their own benefit with the rest of us reeling, not benefiting, from the consequences.
Of course, this shouldn't come as a surprise. During the Gilded Age, robber barons like Carnegie and Rockefeller made their fortunes on the backs of steelworkers and miners. Throughout colonialism and continuing today, Western empires have grown their coffers at the expense of natural resources and communities in the Global South. Milton Friedman, the midwife of capitalism in its present form, once wrote that the "social responsibility of business is to increase profits." There may be a few occasions in which corporate profit motives and the public good are aligned but from public housing to AIDS drugs in Africa to military contracting, it's altogether too easy to think of instances where the private sector's bottom line comes at the cost of the public interest.
Once upon a time, we had a healthy and robust government -- public structures to look out for the public good. From roads to water systems to schools to emergency management, we used our shared tax dollars to pay for our shared needs. Then, around the 1980s, corporations looking for the next business opportunity figured that attacking government could open up a whole new industry, making money off the things that make America work. Sanitation, transportation, healthcare -- we took good public programs and turned them over to private profit. The idea was that business would do it better. But the aftermath of Hurricane Katrina, with private contractors filling the role of the once robust Federal Emergency Management Agency, proved a stark illustration of Milton Friedman's point: Left to its own devices, the market will put profit ahead of everything, even human life.
It's a funny twist on history, really. Time and time again we see the market fail to look after the public interest. And time and time again we rush to privatize public services, or spend tax dollars not on public programs but exorbitant subsidies for private business. Why, with Wall Street collapsing around us, do we continue to privatizing everything that isn't nailed down?
In a fantastic new book entitled "Keeping the Promise?", Leigh Dingerson and colleagues from Rethinking Schools and the Center for Community Change explore the debate over charter schools and the privatization of public education. And in a very provocative pamphlet entitled "Just Another Emperor? The Myths and Realities of Philanthrocapitalism", Michael Edwards examines how venture capitalism and other for-profit principles have invaded and affected philanthropy and whether profit-driven means can achieve the ends of social justice. Both pieces push us to examine scenarios when Adam Smith's invisible hand is playing puppet master with the public interest, to gain private profits but not really help the greater good.
Maybe, with the limits of privatization confronting us from the classroom to the emergency room and everywhere in between, it's time we start investing in the very visible hands of all of us, public structures that protect the common good and community values, and not just profit.
Sally Kohn is the Director of the Movement Vision Lab at the Center for Community Change.