Anyone advocating alternatives to free-market capitalism will soon find themselves challenged to back their beliefs by moving to a socialist country. When I was younger it was East Germany, I think it’s now North Korea. “If socialism is so great, why don’t you go and live in East Germany” articulates two things, firstly the failure of actually existing 20th century ‘socialism’, and the perceived hypocrisy of those advocating alternatives to the free market as a way of organising society.
But interestingly those who argue for the free market as a the way of organising society are strikingly reluctant to run their own businesses in these ways. When they do try to run companies on the principles of the free market, they fail.
This is exacerbated by the erasure of ways of talking about the world that aren’t about the free market. When we discuss how the world could work in different ways we have no vocabulary at either conceptual or linguistic level to describe alternatives to the free market.
But the fascinating thing about the free market is that it isn’t really the guiding principle of any of the big organisations whose leaders are its greatest cheerleaders. Almost every big corporation operates through information-rich planning processes.
Most don’t operate internal free markets, because they’re wasteful, inhibit innovation and promote damaging competition. In almost every circumstance they’ve been tried they result in gaming the system, rather than improved results.
It used to be the case that our economy was incredibly information-poor. When Chile tried economic planning in the 1970s they used telex in a fascinating experiment called Cybersyn. It didn’t really work.
But information technology is totally unrecognisable today, and could easily be deployed in developing economic plans in a way that was unimaginable in the 1970s. In fact, it’s this form of ‘information capitalism’ that made Google a trillion dollar company.
Sears, the US supermarket company, is probably the most notable corporate attempt at internal free markets. Sears filed for bankruptcy last year.
Yet we continue to use the free market as the sole guiding principle for our society. Time to think again.