Whatever happened to private property and free markets?

By Allen Myers

If you listen to capitalist economists, media commentators or major party politicians, two things you will always find treated with reverence are private property and free markets. These, we are told, are essential not only to economic progress but even to “democracy” and “freedom”. US presidents have used these holy concepts as justification for threatening, or launching, wars. But in reality, capitalism’s relations with private property and free markets are not so simple.

Capitalism could come into existence in England only by denying property rights to a big part of the population. Early capitalists obtained the workers they needed because of the enclosure of villages and common lands — that is, the confiscation of the property of the peasantry. In Australia in the colonial period, governments ensured that either there was a plentiful supply of convict labour or that free workers had little opportunity to farm the land that was taken from the Indigenous people.

To continue functioning, capitalism has to go on denying most property rights to most of the population. That is, workers may be allowed to own a car or a house or various other items of consumption. But the vast majority have to be obliged to keep working for capitalists, which means they have to be denied ownership of anything that would allow them to make a living by any other method. Once capitalism is well established, this tends to happen automatically, through the usual functioning of the economy: most workers can’t accumulate the money needed, say, to start their own small business, and most small businesses can’t compete with the big capitalist companies. Exceptions don’t happen frequently enough to disrupt the supply of workers.

In recent months, US capitalists have given the world quite a clear picture of how much they are willing to leave the “free market” to determine what does or doesn’t happen in the economy. In a nutshell, “market rules” apply even less today than they did in the early 19th century when E.G. Wakefield was promoting artificially high land prices in South Australia to ensure a workforce adequate for capital’s needs. In September, the US government took control of the two giant mortgage finance corporations Freddie Mac and Fannie Mae, which between them had something like US$5.4 trillion in liabilities, and considerably less than that in assets. It was estimated in the press that the US government might lose $100 billion on Freddie and Fannie, but that was soon outdone by Congress voting $700 billion more to buy up “toxic” debt. In effect, the US government is guaranteeing the repayment of investors who loaned money for the buying of overpriced housing.

This “nationalising” of private debts was not just a whimsical touch of the departing Bush administration. As an article in the New York Times recalled, the US government’s intervention to rescue the savings and loan system in the late 1980s cost taxpayers more than $120 billion. Other precedents included the rescue of the Lockheed Corporation and Penn Central Railroad by the Nixon administration, the bailing out of Chrysler by the Carter administration and $15 billion in loans and subsidies to airline companies to help them cope with the business downturn following the September 11, 2001, terrorist attacks.

The Times was discussing only the rescue of failing companies, so the article didn’t go into numerous other notorious instances of capitalist corporations using the state to create or guarantee their profits — such as Halliburton and the other corporations that are currently minting gold from blood in Afghanistan and Iraq.

The reality is that the ideas we are constantly being fed about government non-interference with free markets and the sanctity of private property are simply designed to mislead us so that we don’t notice the big companies robbing us. Think about it: We’re supposed to believe that somebody who has a billion dollars and is in danger of losing it — or who sees a chance to make another billion — won’t demand, and receive, state help. Nobody with that attitude would ever have a billion in the first place. All the talk about letting the markets run everything is just that — talk. What actually runs everything, including the governments of capitalist countries, is the big corporations.