TGIF: Police-State Progressives

Progressives see themselves as, well, progressive. But they aren't. Even at their best, in opposing the national security state, they support massive government power in other realms of life. At heart they are social engineers. They seek a "moral equivalent of war," that is, regimentation without bloodshed. They are even anti-democratic when it suits them.

We can see all of this through the eyes of Ludwig von Mises. This is from his book Planned Chaos (1947; free audiobook here). Mises, of course, championed the unhampered market economy, or laissez-faire capitalism. He wrote:

In the market economy the consumers are supreme. Their buying and their abstention from buying ultimately determine what the entrepreneurs produce and in what quantity and quality. It determines directly the prices of the consumers' goods and indirectly the prices of all producers' goods, viz., labour and material factors of production. It determines the emergence of profits and losses and the formation of the rate of interest. It determines every individual's income. The focal point of the market economy is the market, i.e., the process of the formation of commodity prices, wage rates and interest rates and their derivatives, profits and losses. It makes all men in their capacity as producers responsible to the consumers. This dependence is direct with entrepreneurs, capitalists, farmers and professional men, and indirect with people working for salaries and wages. The market adjusts the efforts of all those engaged in supplying the needs of the consumers to the wishes of those for whom they produce, the consumers. It subjects production to consumption.

When you recall that all people are consumers, we can see that Mises is saying that the people ultimately call the shots in a market economy. In that respect, we can shout, "Power to the people!"

No progressive would endorse Mises's position that in the free-market economy, producers strive to fulfill consumers' most urgent demands because that's the only way to earn profits and avoid losses. No one earns profits for long by neglecting consumers. Competitors with better ideas about serving consumers are always ready to pounce on incompetent entrepreneurs and managers. (We're assuming zero government intervention, which can put its thumb on the scale for favored producers.)

Mises goes further, however, by claiming that the market is the true democratic arena. To the extent that the government regulates, subsidizes, and penalizes peaceful producers, it is anti-democratic. "The market is a democracy in which every penny gives a right to vote," Mises wrote.  Can he have meant that? The market is not based on the one-person-one-vote principle. Mises anticipated the objection.

It is true that the various individuals have not the same power to vote. The richer man casts more ballots than the poorer fellow. But to be rich and to earn a higher income is, in the market economy, already the outcome of a previous election. [Emphasis added.]

The free-market participant with more money got that way because of his previous good service to consumers. A dollar is not just a claim on goods and services. It is proof of one's contribution to the creation of wealth for everyone else. This person has won many "elections." Consumers voted to make him or her rich by purchasing what he was selling. A fortune reflects good service. It's not a privilege. Had this person done a bad job, the bottom line would have shown a loss, maybe bankruptcy, which is equivalent to being voted by consumers out of office.

The only means to acquire wealth and to preserve it, in a market economy not adulterated by government-made privileges and restrictions, is to serve the consumers in the best and cheapest way. Capitalists and landowners who fail in this regard suffer losses. If they do not change their procedure, they lose their wealth and become poor. It is consumers who make poor people rich and rich people poor. It is the consumers who fix the wages of a movie star and an opera singer at a higher level than those of a welder or an accountant. [Emphasis added.]

The people qua consumers rule! No, they don't gather at a mass meeting and vote a la syndicalism, a terrible way to make decisions. Rather, they individually demonstrate their preferences by how they spend and don't spend their money. Note the irony here: catallactically, all people who participate in the laissez-faire market as consumers ultimately decide who will (tentatively) oversee the material and human factors of production. That may sound like socialism, but it is not. In fact, the people would not have such control under any form of socialism, national or international.

In the market economy, consumers decide who controls producers' goods through their purchases and abstentions. If a would-be entrepreneur cannot accurately anticipate future consumer demand, the public, individually and socially, will "expropriate" his assets and allocate them to someone else, who will have to prove himself more capable of satisfying them. Consumers can be merciless taskmasters. They don't care if a business owner or his workforce had an "underprivileged" or "disadvantaged" upbringing. They don't care where the producer's parents were born or what his skin tone is. What they want to know is: "What are you offering on what terms?"

This consumer supremacy is the main point of Mises's Human Action and his life's work:

If an employee asks for a raise because his wife has borne him a new baby and the employer refuses on the ground that the infant does not contribute to the factory’s effort, the employer acts as the mandatary of the consumers. These consumers are not prepared to pay more for any commodity merely because the worker has a large family. The naivete of the syndicalists [and other market opponents] manifests itself in the fact that they would never concede to those producing the articles which they themselves are using the same privileges which they claim for themselves. [Emphasis added.]

Entrepreneurs indeed drive the economy by, exercising foresight, bidding for scarce resources and labor, which always have alternative uses, when they think they can profitably combine them into something that consumers want. (That is, revenues will exceed money costs, yielding profit.) However, consumers are the ones who give thumbs-up or thumbs-down to each entrepreneurial offering. Some entrepreneurs win,  but many others are dispatched to the locker room, relinquishing their assets to others perhaps better able to please consumers.

Let's be clear: people with more dollars indeed have more "votes" in the market-as-democracy analogy. Still, the rich don't routinely buy up all the bread, leaving none for the rest of us, or all the shoes, houses, apartments, eggs, hamburgers, cars, smartphones, etc. The rich are no threat to the rest of us as long they can't get their hands on government power. Quite the contrary: the rich make us richer. To build their fortunes, they have to offer us things we want at a price we are willing to pay. Mass consumption follows from mass production.

As Mises wrote in Human Action in demolishing the arguments for syndicalism, or worker expropriation and "democratic" control of business firms:

The entrepreneurs and capitalists are not irresponsible autocrats. They are unconditionally subject to the sovereignty of the consumers. The market is a consumers’ democracy.

He went on, "The syndicalists want to transform it into a producers’ democracy. This idea is fallacious, for the sole end and purpose of production is consumption." [Emphasis added.]

In other words, the boss has a boss, lots of them! As the wonderful and sadly late economist Walter Willians used to say: here's my deal with my grocery store: it doesn't know when I'm going to show up or what I will want or how much—but if it lets me down, it's fired. That's our position as consumers. Of course, as producers we are in some manner at the beck and call of consumers.

Next Mises draws an important distinction between political democracy and market democracy. From Planned Chaos:

Every individual is free to disagree with the outcome of an election campaign or of the market process. But in a democracy he has no other means to alter things than persuasion. If a man were to say: "I do not like the mayor elected by majority vote; therefore I ask the government to replace him by the man I prefer," one would hardly call him a democrat. But if the same claims are raised with regard to the market, most people are too dull to discover the dictatorial aspirations involved.

The consumers have made their choices and determined the income of the shoe manufacturer, the movie star and the welder. Who is Professor X to arrogate to himself the privilege of overthrowing their decision? If he were not a potential dictator, he would not ask the government to interfere. He would try to persuade his fellow-citizens to increase their demand for the products of the welders and to reduce their demand for shoes and pictures.

It's not okay to call on the government to veto the choices of voters. Why, then, is okay to call on the government to veto the choices of consumers?

The consumers are not prepared to pay for cotton prices which would render the marginal farms, i.e., those producing under the least favourable conditions, profitable. This is very unfortunate indeed for the farmers concerned; they must discontinue growing cotton and try to integrate themselves in another way into the whole of production.

But what shall we think of the statesman who interferes by compulsion in order to raise the price of cotton above the level it would reach on the free market? [Mises's emphasis.]

Here is where the progressive police state kicks in. Ultimately, the progressives want force used against peaceful individuals who don't share their vision of society. Those dissenters won't be asked to obey with a "pretty please"; they'll be compelled. That's the nature of the state.

[The interventionist authority] wants to achieve its aim by injecting into the working of the market orders, commands and prohibitions for whose enforcement the police power and its apparatus of coercion and compulsion stand ready....

What the interventionist aims at is the substitution of police pressure for the choice of the consumers. All this talk: the state should do this or that, ultimately means: the police should force consumers to behave otherwise than they would behave spontaneously. In such proposals as: let us raise farm prices, let us raise wage rates, let us lower profits, let us curtail the salaries of executives, the us ultimately refers to the police. [Mises's emphasis.]

If you dislike the police state, you should repudiate progressivism and its variations.

I am the executive editor of The Libertarian Institute and the author of Coming to Palestine and What Social Animals Owe to Each Other. TGIF—The Goal Is Freedom—appears on Friday.