Bypassing government

Few would question that the free market has been one of mankind’s greatest blessings. Having produced life expectancies that more than double those of our historical antecedents and widely enjoyed riches that even the wealthiest king of yore would have envied – what price a hot shower and flea powder in the stinking court of the Sun King – capitalism has enriched the world.

Even its most notorious critic, Karl Marx, spoke surprisingly well of capitalism, saying that it “has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts and Gothic cathedrals.” And few would deny that America is a capitalist society … but is it?

After all, NAFTA-sanctioned trade can hardly be characterized as free. A real free-trade agreement requires but a single page, saying something to the effect of “Congress shall make no law. …” And for all that the denizens of Wall Street are considered the vanguard of global capitalism, the extreme level of government interference, barriers to entry and bureaucratic cronyism is hardly indicative of a free and open market. No one who has ever witnessed the exegeses that follow every sibylline Greenspan pronouncement can fail to miss the significance of the interest-rate whip that keeps the Wall Street beast well-tamed.

It is quite possible that the reality of the modern corporation has become incompatible with free-market capitalism. Global corporations now embrace government regulation as an aid to stifling embryonic competition, and government spending is an important source of their revenue. The concept of big government versus big business is outmoded, a 19th century fossil as hopelessly beside the point as Howard Dean, Madonna or the labor theory of value.

Indeed, we seem to have fallen into the rabbit hole of the corporatist Third Way, halfway between socialism and capitalism, a concept first dreamed up by Benito Mussolini before being revived by Tony Blair and Bill Clinton.

But the Third Way is no more inevitable than the death of its two progenitors, which in both cases have been announced prematurely. Like its capitalist father, the Third Way is inextricably tied to the technological development required for economic growth, and therein may lie the contradiction of corporatism. For the advancement of human freedom, this contradiction presents both an opportunity and a threat.

Already, the technological imperative is looming ominously over one of the great champions of the Third Way, Microsoft. It is ironic, to be sure, but due to corporatist restraints on competition, the open-source movement was forced to develop outside the corporate environment until products such as the Linux operating system reached a point where corporations could no longer afford to ignore it.

And where open source leads, open markets can follow. Neal Stephenson’s “Cryptonomicon” paints a brilliant and entertaining portrait of the development of an independent data haven operating outside the bounds of government, and therefore corporatist, intervention. An intriguing notion, especially when one considers that international money is nothing but data.

It sounds impossible today, of course. But who would have thought a free operating system cobbled together by techno-enthusiasts could pose a threat that is taken very seriously by the world’s reigning technology company? On a similar note, who would have imagined 20 years ago that a large percentage of private investors would begin to ignore their stockbrokers and invest their assets directly? The stockbroker has already been cut out of the process. How long will it be before the inherent inefficiencies of the investment banks and government-regulated exchanges are likewise cast aside?

The implications go far beyond who makes a buck on the middleman’s cut. A world where the entrepreneurs behind Google do not have to hand over large slices of equity to investment banks and wait years before cashing in on their success, and where other talented young minds can make their case directly to investors via the Internet, will represent a real shift of financial muscle that cannot help but make a significant impact on the American economy and political system.

After 70 years of failure, Soviet and Chinese communists finally came to recognize that the free market is more powerful than socialist dictatorship. In like manner, the corporatist debate will revolve around whether it is possible to harness the power of the market without permitting the concomitant freedom that it engenders and demands.

One hopes that America elects to align itself with the forces of freedom and the markets, not against them.