Market economies, in which the key productive inputs such as land, labor, and capital are bought and sold, display a notable long-run tendency toward business concentration, high inequality, political capture, domination of the laboring classes, and ultimate economic sclerosis. Auspicious beginnings in economic and political freedom and relative equality seem ineluctably, despite periods of reprieve, to end in oligarchy, authoritarianism, and decline.
This is not just a surmise based on the current US trajectory, or on the higher returns to capital than labor.11xThomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: The Belknap Press of Harvard University Press, 2014). It is also a conclusion of the comparative study of market economies from medieval Persia through the Dutch and Italian republics down to today.22xBas van Bavel, The Invisible Hand? How Market Economies Have Emerged and Declined Since AD 500 (New York, NY: Oxford University Press, 2016). To date, there has been no exception that would give us reason to ignore the words of caution attributed to Supreme Court Justice Louis Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” The fates of political democracy and political economy have always been linked.
The great challenge today is that the colonization of the market by corporations has, if anything, accelerated this process of business and wealth concentration. Corporations centralize control over the individual investments of multitudes and make takeovers easier. Meanwhile, neoliberal policies of privatization, deregulation, globalization, unrestrained economic concentration, shareholder empowerment, and tax reduction have cleared the way for corporations to concentrate business and wealth even further. There is no billionaire class without the corporation. And signs suggest the billionaires are taking over—in the economy, in the media, and in government.
The pressing question, then, is whether there is a way—a politically realizable and sustainable way—of governing corporations that retains their productivity while more broadly spreading the returns. If not, it is hard to imagine the United States avoiding the same fate as other market civilizations before it. The received approach, of redistribution through taxation, has proven insufficient and, at the levels that would be required to check economic concentration, politically unsustainable.
Fortunately, there may be such a way. Incorporated business enterprise, which in its current manifestation has been pushing us down the road to ruin at breakneck speed, also has unprecedented potential to lead us off it. The problem is that in Anglo-American countries this potential is being squandered as a result of bad ideas and bad law. Margaret Thatcher was wrong when she said, “There is no alternative”: There are alternatives to Anglo-American neoliberal political economy—truly existing ones that are functioning vigorously, in plain sight, and they have nothing at all to do with socialism, against which Thatcher so adamantly set herself.