Paul Ryan’s road to serfdom
Rising star Paul Ryan co-wrote an article the other day in the Wall Street Journal setting out his view on the critical choices we must make on the future direction of our society. He frames it as one “between free markets and managed capitalism; between limited government and an ever-expanding state; between rewarding entrepreneurs and equalizing economic rewards”. Do we prefer “a free enterprise society with a solid but limited safety net, or a cradle-to-grave, redistributive welfare state”? The authors are of course arguing for the former and warn, a la Friedrich Hayek, that the later is a ‘road to serfdom’. We must “stand up for America’s enduring principles of freedom and entrepreneurship”.
This is not at all original. Beyond Hayek, the same argument can be seen dating back to the early 19th century and even before. It’s a useful way of framing the issue and it sways a lot of people. But it’s a deeply flawed and obnoxious vision for those who truly oppose serfdom and favor democracy. Like the tea baggers, Ryan idealizes a pre-industrial Adam Smithian world of the 18th century that is not at all applicable to today.
Ryan says he favors ‘free markets’ but somehow ignores the reality that the global system is not remotely ‘free’. Virtually every industry in the world is an oligopoly consisting of just a few massive multinational corporations having near monopoly pricing power. Ongoing globalization will undoubtedly magnify this trend due to economies of scale and the drive of each corporation to maximize power. We don’t have an economic ‘free market’ – it’s a controlled market. Any move toward ‘freedom’ as it regards markets would require a radical break up of entire industries, an action that would seem impossible with Ryanian limited government. When it comes to markets, Ryan doesn’t favor freedom, he favors the status quo concentration of power.
Ryan’s list of ideals also includes the rewarding of entrepreneurs. Most innovations in the past decades, though, seem to have originated from employees working at firms, government agencies, and universities who were not obviously motivated by profit. Small businesses can provide important technological breakthroughs but it doesn’t require a Ryanian system to encourage them.
Ryan poses the alternative to his free market, entrepreneurial friendly society of freedom as one of an “ever expanding state” that “equalizes economic rewards”, “a cradle-to-grave redistributive welfare state”. This is a straw man argument. An ever expanding state is not the necessary alternative to Ryan’s vision of freedom. Ryan’s vision, in fact, is pure Darwinism in which the powerful and connected rule. It’s the opposite of true freedom. The society Ryan favors is one that concentrates financial wealth in the hands of the very few and requires the overwhelming majority to work for them with limited rights and virtually no security. The great majority would in fact be serf-like and Ryan’s vision should be seen as the most likely road to serfdom.
Ryan’s society isn’t one in which small businesses can thrive; it’s one that’s controlled by massively consolidated capital. The odds of succeeding as a small business have probably never been worse given the ever rising domination of big business. The possibility, however remote, of making a fortune is not a needed pre-condition to encourage small business or entrepreneurship. Why not vastly expand funds for small businesses, controlled democratically at the local level, so that anyone who wished to start one could have the financial capacity to do so? Rewards would not have to be high if the risks were much lower. Beyond this, though, the reality of ever expanding technology and productivity is that there is an ever reducing need for labor. ‘Redistribution’ will be necessary if we want technology to serve society without causing ever declining living standards. To use the term ‘redistribution’ implies an acceptance of market determined distribution as somehow fair, just, and efficient, a value judgment that seems very hard to sustain. An expanded state isn’t required – it could be handled through the tax code. Democratization of monetary policy would be an excellent first step.
An alternative to Ryan’s vision of an intensified status quo would be one of intensified democracy. A powerful state has never been the friend of democracy and it needs to be opposed to the same degree as Ryan’s concentrated wealth. The answer to Ryan is not an ‘ever-expanding state’ but an ever-expanding democracy that fights power concentrations wherever they may be.