Does Friedman's free
private enterprise exchange
economy1 exist anywhere? No. Today, many
transactions are billed as voluntary -- but they are neither voluntary nor
uncoerced. The deception of the marketplace is not even subtle -- it is real,
absolute, farcical, and can be evil. Friedman's "competitive capitalism" -- the
market's "wide diversity" as "great advantage"2 -- is nothing but an illusion.
The recurrent boom-bust cycles have nothing spontaneous about them.
Consider, this transaction.
An entrepreneur negotiates a credit line for his company with big bank X. The contract
arrangement (1) increases trivially the opportunities of the firm, but (2) gives the
bank net advantages, including the option to destabilize and entangle the
entrepreneur. The entrepreneur does not have much of a choice -- the country's banking
sector is monopolized by a few giant banks with monstrous, concentrated powers.
Speculators, backed by bank X, overinvest in commercial real estate for quick
profits. Overinvestment contagion spreads from one financial institution to another. Misdirected
loans at banks and trust companies play havoc with the economy. As a result,
non-accrual loans swell at bank X. Many businesses and consumers are driven to bankruptcy.
The number of fraud incidents increases. The unemployment rate increases. The crime rate
increases. And prices melt down. The debt outstanding of persons and unincorporated
businesses increases out-of-control. Government debts also increase out-of-control.
The economy is destabilized. Per-share cash resources at bank X falls
substantially. Even though the entrepreneur's firm is sound, bank X cuts with suddenness
its credit line (ironically, bank public relations deny the occurrence of a credit
crunch). The bank's action sends false signals to creditors, and destabilizes the
entrepreneur's firm. To the entrepreneur's horror, the bank deploys coercive tricks,
directly and through agents, against his firm. The firm is virtually destroyed. The bank's
usurpation is followed with abuses of commercial powers. Of course, the
bank denies any wrongdoing -- the bank's audacious fac et excusa3 is followed with si fecisti,
nega.4 For the entrepreneur, the
"free" market provides no economic freedom. The unfoldment of the
"voluntary" transaction unconceals the "free" market as a Hobbesian
theater of economic war -- of everyone against everyone.5
For the entrepreneur,
Friedman's and Hayek's canting are farcical: the harm and the threat to the
entrepreneur's economic freedom do not come from "evil men in the Kremlin," but
from local practical Capitalists -- with "good intentions and good will."6
The history of
the transactions of the marketplace unconceals the hidden practices of the
marketplace -- and its rapacious cunning motives. The "free"
marketplace is a myth -- an old phantasm. The myth conceals an ancient evil
ethic that legitimizes what Ricoeur called the "cannibal desire to have and to
possess."7 The myth of the rulership
of the rich over the poor, or of the servitude of the borrower to the lender, is
false -- it must be deciphered and renounced. The pretense of its perpetrators
must be exposed before true free exchange can be recovered for the benefit of the
of young men and women may be forced to finance their education with student loans. Should
their contracts with financial institutions inform them about the "Monopolistic
Practices"9 they may have to endure?
- Should they trust their
banks to provide a stable and reliable economic environment? If not, should
they plan on being destabilized in the long run?
- How many risk being at the
mercy of the vicissitudes of the next business cycle?
- Can student loans indenture
students to their bankers? Are student loans a new form of economic servitude?
will the future generation of students have that "cannibal desire" must
See Milton Friedman, Capitalism and Freedom, 1962 and 1982, at 13.
2 Ibid., at 15.
3 "Act first,
then justify"; see Immanuel Kant, Perpetual Peace and Other Essays (1795),
translated with Introduction by Ted Humphrey, 1983, at 130 and 142 (Note 30).
4 "If you are
the perpetrator, deny it"; ibid., at 130 and 142 (Note 31).
5 See Thomas Hobbes, Leviathan
(1651), edited by C.B. Macpherson, 1968, at 214-215.
6 Friedman identified
two threats to freedom: (1) the external threat from "the evil men in the
Kremlin who promise to bury us," and (2) the internal threat from "men of
good intentions and good will who wish to reform us"; see Milton Friedman, Capitalism
and Freedom, 1962 and 1982, at 201. See also Friedrich A. Hayek, The Road to
Serfdom, 1972 and 1994.
7 For a
discussion of demythization, see Paul Ricoeur, The Conflict of Interpretations,
edited by Don Ihde, 1969 and 1974, at 335-353 (The Demythization of Accusation, translated
by Peter McCormick), especially 340. Freud viewed the cannibalistic phase of libidinal
development as a relation between the sons and the father such that "in the act
of devouring him they accomplish their identification with him"; see Editor's Note in
Sigmund Freud, On Metapsychology,Vol. 11, compiled and edited by Angela Richards,
1955, 1957, 1958, 1961, 1962, 1964, 1984, at 249.
8 Ibid., at
340 ("destruction of myth as a false transcendence of obligation").
expression; see Joseph A. Schumpeter, Capitalism, Socialism and Democracy (1942),
with an Introduction by Tom Bottomore, 3rd ed., 1942, 1947, 1950, and 1976, at 87-106
(Monopolistic Practices), especially 94.