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Who Needs One Big Market?

I. One Big Market

It is remarkable that the prospect of One Big Market—planetary, inescapable, open all hours—raises no questions for libertarians, who scorn the idea of One Big Cartel (communism) or One Big State (world government). This seems an interesting case of social blindness. If One Big Cartel is impossible or not worth the trouble its creation entails, [1] why should One Big Market be different? And what if something very like One Big State is needed to build One Big Market? Yet libertarians allergic to the very word “society” can expatiate endlessly on unexplained “markets” and that reified entity, “the market.”

In a world where “free trade” amounts to American-led “globalization,” such views are gospel in libertarian think tanks. For Leftists, globalization entails terrible evils. The Leftists are not exactly wrong, and the damage done under neo-liberal slogans strengthens their case. Marx’s famous remarks on the sheer destructiveness of the process bear repeating. Neo-liberals take the destruction as a necessary step to some distant but better future.

This is not new. Early liberals thought trade was good and more was better. But there was frequently mercantilism in their madness—the desire to force trade into particular channels. From the 16th century onward, mercantilism suited rulers keen to get revenue from overseas empire, and early liberal theorists helpfully proclaimed that foreigners’ refusal to trade justified war and invasion. Here, Vitoria is found on much the same page as Thomas Friedman; and early international law begins to resemble a general European agreement on rules for receiving property stolen overseas. [2]

One hears much of British “free trade,” a.k.a. British “free trade imperialism.” [3] But was the trade or the adjective British the key to the alleged benefits? John Nye writes that because “Britain had an empire and relatively free trade,” a whole school of thought sees “international free trade [as] a pubic good requiring a powerful leader, or hegemon . . .” [4] Yet the freedom in British trade is much exaggerated.

Many economists still endorse violent institution of “spontaneous” orders, if covertly, along the following lines: first, impose an order meant to be largely self-regulating, once established—a “machine that will go of itself.” Having redistributed property titles and reformed institutions, we are done. Henceforth, we may concentrate on flexible price movements within the system, or fret about the downward rigidity of wages after 1929.

II. History before Theory


A short historical excursion may help. Debating English enclosures, liberal “optimists” argue that millions would have perished absent industrialization, and (therefore), absent preceding (and parallel) enclosures. Socialist and Tory “pessimists” stressed smallholders’ dispossession, loss of commons and traditional values. Such cases as Ireland, India, and South Africa leave much room for doubting that English elites ever cared deeply about lesser persons’ properties. And even if estimates involving increased rents could prove that English agriculture was “more productive” after enclosure, they do not exactly demonstrate that actually-occurring enclosures were the only possible path to more food for the population. It seems odd indeed that only ex-feudal rent-seekers (and some sturdy yeomen) clothed with re-jiggered property titles, could clear the paths of disembodied incentives, rational choices, and the like. There were “improving landlords,” to be sure, but they mostly improved their own incomes. [5]

Much classical liberal history simply equates English practices with political and economic liberalism. “Whig economics” buttresses Whig History with pie-in-the-sky about the “best possible” outcomes under the circumstances while abstracting from the circumstances. Peasants and copyholders were evidently economic “collateral damage.” (Compare Condi Rice’s “generational sacrifice” of present Iraqis to future, happier Iraqis). But as “Eric Dalton” wrote in 1966, “The fact that a future generation may be better off because of a forced rate of growth during the previous generations excuses nothing.” [6] Lesson: forced savings, expropriations, and even famines are benign under capitalism, but very wicked under socialism.

As in practice, so too in theory: Michael Perelman gives much evidence that classical economists were “unwilling to trust market forces to determine the social division of labor,” and therefore enlisted the state to force independent producers into unwanted waged labor. [7]


In America, interested parties set comparable processes in motion under less promising conditions. Here “small commodity production” was feasible and had to be suppressed. In the South, coastal planters pushed would-be independents into frontier zones, as Andrew Lytle complained. [8] Some decades later, the Northern coalition gathered around Lincoln, copper-riveted its idea of proper market mechanisms on the whole federation. The later 19th century witnessed a Great Barbecue of continuous state-assisted capital accumulation. [9]

Subsequent American history served up a partially centralized state increasingly dedicated to securing foreign markets (the Open Door) and poised to interfere with everything else, as needed. During the Great Depression, many nations adopted corporatism, tariffs, and inflation, disrupting the old international division of labor. New Dealers turned to export markets—and war—and then, as Cold War liberals, opened the doors further, imposing “embedded liberalism”—a coordinated corporatism [10]—to revive world trade. For two generations, anti-communism supplied the rationale. Now “neo-fascism,” terrorism, and state “roguery” fill the bill.

After the Cold War, embeddedness abides, scholars praise American provision of “global public goods,” and U.S. functionaries press all countries to adopt the “rule of law,” elections, effective bureaucracies, and transparency. [11] By sustaining existing corporatism and managed trade, these items will produce universal “free-market democracy.” Meanwhile, conservatives in power have cut disfavored programs while their “strong state” grows fat on others. Under a slightly different agenda, government remains an economic savior. [12] The central state—“withering away” it seems under Republican management—still presides over engrossment of foreign markets; a military-industrial complex; state-sponsored R&D; state-funded education; currency and credit (= overproduction of money); transportation subsidies; global patents and copyright (a second enclosure movement); communications subsidies (whence TV, Internet, and global surveillance); a police-lawyer-prison-industrial complex, d.b.a. as a War on Drugs; and more. [13] No free-market utopia looms.

Hilaire Belloc argued that reforms of capitalism along socialist lines would yield a third thing—the Servile State. Today, we see that alleged reforms of existing Servile States along “free-market” lines produce, in practice, novel and interesting forms of the Servile State.

III. The Imperialism of Economic Theory

With so much at stake, some skepticism about reigning economic truisms seems warranted. Emma Rothschild has questioned early economists’ “synoptic vision” and “reverence for the all-seeing theorist.” She quotes Lionel Robbins on the “the highly artificial environment . . . necessary if [the market] is to function properly . . .” Betting the farm on unproven probabilities, economists assert that “the swerving moleculae of the universe of commerce tend to become more orderly . . . as the size of the universe increases.” [14] (Here indeed is a Madisonian moment.)

Individualist Foundations

Still, liberalism and economics display tender feelings for “individuals.” Jump-starting their theories, Hobbes, Locke, and Rousseau fielded “individuals” uniting their “wills” in some absurd “contract,” and then rudely swept them off stage. Hegel, too, noticed individuals just before eradicating them in favor of History’s cunning. In neoclassical circles, mere ciphers (politely called “individuals”) knock around with “fixed tastes” on indifference curves, thereby facilitating mathematical equilibrium analysis.

Practitioners of individualist methodologies insert routine warnings that terms like “market” are merely short-hand for complex interactions ultimately reducible to strictly individual actions. Soon enough, they, like other social scientists, lose track of the level of abstraction and the reified market emerges as a single supra-human actor. With so many abstracted atoms randomly colliding, nominalism begets institutionalism, because “any common rule that exists must be imposed upon those objects.” Hence the Thatcher-Reagan program of “free” market and strong state. [15]

Two-Person Follies

From individuals, economists turn to two-person barter analogies. These can be quite misleading. Two parties value two goods differently and exchange results; this model now expands to explain everything, but its utility seems marginal. [16] Similarly, two-person cases “explain” war, taken as a fight between two giant “individuals,” and undergird the Democratic Peace said to prevail between “pairs” of nice states. [17] Bad analogies go far.

Two-party tall-tales bring us to free trade and comparative advantage. For Ricardo, Portugal and Britain seem to trade one-to-one, although of course specific organizations and persons made exchanges, mediated by state policies. We might expect the mediation to have compromised whatever advantages really arise from two-party trades. Theory nods and, anyway, in historically given “free trade,” the comparative advantage was very often military.

Doubts about Say’s Law

Say’s Law held that goods exchange (ultimately) for other goods, with money only the neutral medium of exchange. Production and consumption will balance, mostly. General overproduction is impossible. Say has not lacked critics. John Hobson thought Say wrongly presupposed “that the power to consume and the desire to consume necessarily co-exist in the same persons.” Joseph Schumpeter said the law “states a tendency correctly” but “is impeded by certain important facts” that inspired Keynesian theory. Henry Hazlitt defended Say’s Law with so many qualifications that the “law” seemed headed for serious real-world trouble. Recently, Stephan Hopp finds “no ‘law-like’ proposition” in Say’s treatment of markets. [18]

Steve Keen observes that capitalists do not personally bestow any use-value (“utility”) on their wares. Instead, goods are produced and sold for money—as a means to other goods, reinvestment, power, or whatever. This is not, perhaps, disastrous, but it is not very good for neoclassical theorems grounded on an analogy with two-person exchanges of actual goods traded for their use-value. With money in the picture, Marx writes, “the exchange is separated into two actions which are independent of each other both temporally and spatially.” [19] Here is ample room for exceptions to Say’s law. As a two-sided construct, arrived at by aggregating two-party exchanges, Say’s law yields overall balance. But as Marx comments, Say has asserted a Hegelian unity of opposites, just where that philosopher is little help. [20]

Modern corporations armed with state-like legal advantages play a major role in undercutting Say’s hoped-for balance. Corporate managers control not just other people’s money, but other people’s property as well. As Rothbard says, “it is the controller who is the real owner . . .” Carl Kaysen remarks the great “discretionary authority” of management, secured by large absolute size, barriers to entry, patents, control over scarce raw materials, or government limitation of competition. This discretionary power allows managers to adopt a “longer time-horizon” and ignore “likely short-period losses.” Gardiner Means believed that, in labor markets, administered prices endemic to the corporate economy could “equate demand and supply only by chance.” Finally (pace Mises), corporate bureaucracy increasingly resembles state bureaucracy. Now the problem of economic calculation under corporatism appears alongside the more famous one under socialism. [21]

Finally, modern competition does not necessarily take place within a given industry, where their actual products might matter to producers, but can run across all profitable endeavors in the attempt to engross as much as possible of the One Big Pile of Money that artificially large markets and fractional-reserve banking create. There is more. Recall that for Hazlitt, there must always be “some preceding disturbing factor” standing athwart Say’s law. [22] But, what if the disturbing factors—fractional-reserve banking, immortal corporations, and many others—are permanently institutionalized? The rulers have learned how to stave off a reckoning indefinitely through exported inflation [23] and other mechanisms, and we find ourselves living with regularly recurring (but smaller) business cycles kept within politically tolerable limits. John Taylor of Caroline, among others, warned us in detail of the perils of fictitious capital. [24]

In the end, Say’s law applies, if anywhere, in ideal free markets, which seldom exist. Like the Fourth Amendment, it survives (barely) as an unenforce able dead letter. It is (pace Böhm-Bawerk) just where the law of gravity is, when other forces (divine or human) counteract it. [25] Defenders of abstracted markets always counter that any case that might be instanced was not “really” a free market; by definition, nothing bad is endogenous to markets. Perhaps so, but by now we begin to suspect that an historical approach offers some advantages over Market Platonism. There is an array of problems endogenous to the market economy as we know it; that they are not endogenous to the theory of a market economy is cold comfort.

Open Doors and Closed Systems

The classical economists’ treatment of economies as closed Newtonian systems entails other problems. Closed physical systems conserve energy and matter. Closed-system economics makes do with fictitious equilibrium. [26] Thus, foreign trade, which comes in from outside, was already a headache. Today, many parties would answer, practically and theoretically, that once a single closed system has spread everywhere, the world will be “open.” Naturally, we want to know what this One Big Market is really all about. It would seem to be about empire. Here is truly an enclosure movement to enclose the world.

How did we get here? Economic liberals sometimes (rightly) dispute the concept of “market failure.” Yet there are such: markets, left to private transactions, would not provide us with interstate highways or wars in Vietnam and Iraq (rather benign “failures” here). There is, however, one kind of market failure, in which economic liberals typically believe; these involve somebody’s “failure” to supply reified, neoclassical “markets” that ought to exist. Here state intervention, including war, may be needed. The wheel returns to Vitoria’s (and occasionally Mises’) notion that “refusal to communicate” (and trade) justifies force to bring absent “markets” into being.

IV. Scale Matters

Wendell Berry complains, “Sentimental capitalism holds in effect that everything small, local, private, personal, natural, good, and beautiful must be sacrificed in the interest of the ‘free market’ and the great corporations, which will bring unprecedented security and happiness to ‘the many’—in, of course, the future.” [27] Alas, such solutions seem incompatible with what some writers call “human scale.” Overgrown systems of any kind call to mind Karl Polanyi’s comment that “Hobbes’ grotesque vision of the State . . . was dwarfed by the Ricardian construct of the labor market: a flow of human lives the supply of which was regulated by the amount of food put at their disposal.” And as Wilhelm Röpke has written, “Economism, materialism, and utilitarianism have in our time merged into a cult of productivity, material expansion, and the standard of living,” revealing “the evil nature of the absolute, the unlimited, and the excessive.” Compare, again, Polanyi: “Instead of economy being embedded in social relations, social relations are embedded in the economic system.” [28] At this rate, there will soon be no social relations worth mentioning, much less conserving.

If the state provides the scale, “economies” will follow—but not the economies we might have otherwise enjoyed. [29] At home, Americans were long since coercively “globalized” from sea to shining sea, and key sectors operate well beyond the scale possible if, counterfactually, corporate-state collusion had not taken hold. Central banking helped integrate local and regional economies into our artificial One Big Market at home, and transportation subsidies have done for the rest.

Internationally, a single powerful state, providing global inflation and wielding an immense (“unproductive”) military machine, might for a time contain and roll back any number of economic “laws.” Its leaders might hope to shape not just short-run outcomes but the very conditions of any market’s existence. [30] Yet forcing foreigners to “trade freely” hardly seems self-evidently moral. Instead, Rousseau’s ancient-republican scheme of “forcing men to be free” is what comes to mind.

In actual modern life, if we experience any market freedom at all, it is probably on the micro level—maybe at the flea market. On the macro level, we get state-capitalist determinism, arbitrary and episodic. (Here at least is an interesting basis on which to divide micro from macro studies). Probably, the only genuinely “free” markets that could arise entirely on their own, would never take in more than a region, leaving aside some specialized long-distance trade in luxuries or raw materials. [31] From this angle, the costs of 19th-century Liberal “biggism” must be reconsidered; how German National Liberals, for example, sold out important political freedoms for a unified national market, and dragged small-state particularists along with them. Similarly, John Kincaid has noted how Quaker conservative Felix Morley’s stress on federalism vs. centralization gave way in more recent forms of conservatism to the gospel of monolithic national markets under uniform federal rules as the essence of American freedom. [32] Congress, the Supreme Court, and the Unitary Executive shall give us free markets, and the rules shall be legion.

I hold no brief for unfree markets. We have a lot of those already. But greater realism and less pie-in-the-sky might be wise. This is especially true with respect to claims that the outcomes of existing artificially extended markets pretty much approximate those which theory decrees must arise between pairs of trading individuals. Scale has consequences. (Here, I have to take my own advice, as I am among those who long took certain under-examined economic propositions as axiomatic.)

There are also problems of context—cultural and moral. As Röpke put it, the market system “must find its place in a higher order of things which is not ruled by supply and demand, free prices, and competition.” [33] On that view, we might do better to turn to Agrarians and Distributists—and indeed anyone with a modest view of what markets are good for—rather than take advice from the official friends of markets and freedom. The latter might be called “corporate libertarians,” [34] as the heirs of a waning corporate liberalism tottering on the edge of receivership.

Claes Ryn finds room for a “free market of goods and services . . . in a decentralized, group-oriented society” where “moral and other disciplines” persist. [35] Small may well be beautiful. Minus the costs—moral, sanguinary, and monetary—of forcibly providing One Big Market, it looks to be cheaper as well.

Can we keep states and allied corporations from forcing us, and others, into “markets”? [36] Well, as the economists love to say, the future is uncertain.

To learn more, visit our short course on Free Markets and Civil Society.


  1. Murray N. Rothbard, Man, Economy and State, II (Los Angeles: Nash Publishing, 1970), 560–660.

  2. Brian Tierney, The Idea of Natural Rights (Grand Rapids, MI: William B. Eerdmans, 1997), 271; Antony Anghie, “Finding the Peripheries: Sovereignty and Colonialism in Nineteenth-Century International Law,” Harvard International Law Journal, 40, 1 (Winter 1999), 1–71

  3. John Gallagher and Ronald Robinson, “The Imperialism of Free Trade,” Economic History Review, 2nd ser., 6 (1953), 1–15.

  4. John Vincent Nye, “The Myth of Free-Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century,” Journal of Economic History, 51 (March 1991), 24 note.

  5. See Daniel H. Cole, “‘An Unqualified Human Good’: E. P. Thompson and the Rule of Law,” 2001, paper online, 2–6.

  6. Eric Dalton (James Sadowsky, SJ), “Private Property and Collective Ownership,” Left and Right, 2 (Autumn 1966), 39.

  7. Michael Perelman, The Invention of Capitalism (Durham: Duke University Press, 2000), excerpt online, at

  8. Edward Countryman, “Of Republicanism, Capitalism, and the ‘American Mind,’” William and Mary Quarterly, 44 (July 1987), 556–562; Colin Gordon, “Crafting a Usable Past: Consensus, Ideology, and Historians of the American Revolution,” William and Mary Quarterly, 46 (October 1989), 671–695; and Michael Merrill, “Putting ‘Capitalism’ in Its Place: A Review of Recent Literature,” William and Mary Quarterly, 52 (April 1995), 317–326. Andrew Lytle, “The Backwoods Progression,” in M. E. Bradford, ed., From Eden to Babylon: The Social and Political Essays of Andrew Nelson Lytle (Washington, DC: Regnery/Gateway, 1990), 77–94.

  9. Richard Franklin Bensel, Yankee Leviathan: The Origins of Central State Authority in America, 1859–1877 (New York: Cambridge University Press, 1990).

  10. John Gerard Ruggie, “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order,” International Organization, 36 (Spring 1982), 379–415.

  11. See Andrew J. Bacevich, American Empire: The Realities and Consequences of U.S. Diplomacy (Cambridge, Mass.: Harvard University Press, 2002).

  12. Gianfranco Poggi, The Development of the Modern State (Stanford, CA: Stanford University Press, 1978), 133–134.

  13. Kevin Carson, “Austrian and Marxist Theories of Monopoly-Capital: A Mutualist Synthesis,” Economic Notes, No. 102 (London: Libertarian Alliance, 2004), paper online.

  14. Emma Rothschild, Economic Sentiments (Cambridge, MA: Harvard University Press, 2001), 141, 145–146, 245–246. Cf. Massimo de Angelis, “Global Capital, Abstract Labour, and the Fractal-Panopticon,” The Commoner, 1 (May 2001), 1–19.

  15. R. Jeffrey Lustig, Corporate Liberalism: The Origins of Modern American Political Theory, 1890–1920 (Berkeley: University of California Press, 1982) 181 (nominalism); Claus Offe, Contradictions of the Welfare State (Cambridge, MA: MIT Press, 1984), 149–154 (Thatcherism), 290.

  16. B. M. Anderson, The Value of Money (Grove City, PA: Libertarian Press, n.d. [1917]), 497–498 note; Nikolai Bukharin, Economic Theory of the Leisure Class (New York: Monthly Review Press, 1972 [1927]), Ch. 1; and; Kevin Carson, Mutualist Political Economy (Fayetteville, AK: Kevin Carson, 2004), 16–49, 81–82.

  17. Elaine Scarry, “Injury and the Structure of War,” Representations, 0 (Spring 1985), 7–9. Christopher Layne, “Kant or Cant: The Myth of the Democratic Peace,” International Security, 19 (Fall 1994), 5–49.

  18. John A. Hobson, The Evolution of Modern Capitalism (London: George Allen & Unwin, 1926 [1894]), 289. Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), 624 (my italics). Henry Hazlitt, The Failure of the “New Economics”: An Analysis of the Keynesian Fallacies (Princeton, NJ: D. Van Nostrand Co., 1959). Stephan Hopp, “J.-B. Say’s 1803 Treatise and the Coordination of Economic Activity,” Working Paper No. 47, Bamberg Economic Research Group (2004), 7 (online).

  19. Marx quoted in John D. Wilson, “A Note: Marx and the Trade Cycle,” Review of Economic Studies, 5 (February 1938), 108.

  20. Karl Marx, Grundrisse, in Robert C. Tucker, ed., Marx-Engels Reader, (New York: W. W. Norton, 1978), 231.

  21. Rothbard, Man, Economy and State, II, 905 note. Carl Kaysen (1959), “The Corporation: How Much Power? What Scope?” in Edward O. Laumann, Paul M. Siegel, and Robert W. Hodge, eds., The Logic of Social Hierarchies (Chicago: Markham Publishing, 1970), 217–219; Gardiner C. Means, “Collective Capitalism and Economic Theory” (1957) in Andrew Hacker, ed., The Corporation Take-Over (Garden City, NY: Anchor Books, 1965), 70–77. Kevin Carson, “Economic Calculation in the Corporate Commonwealth,” Freeman, June 2007, 13–18, and “Austrian and Marxist Theories of Monopoly-Capital,” 24. Rothbard, II, 585–586, 825–826 (calculation).

  22. Hazlitt, Failure of the “New Economics,” 372.

  23. John A. Hall, Powers and Liberties (Harmondsworth, UK: Penguin, 1986), 255, and David Calleo, Beyond American Hegemony: The Future of the Western Alliance (New York: Basic Books, 1987), 138–142, Hans-Hermann Hoppe, “Banking, Nation States, and International Politics: A Sociological Reconstruction of the Present Economic Order,” Review of Austrian Economics, 4 (1990), 83–84.

  24. John Taylor of Caroline, An Inquiry into the Principles and Policy of the Government of the United States (London: Routledge & Kegan Paul, 1950 [1814]), esp. Section 5, “Banking.” Hyman P. Minsky, “The Financial Instability Hypothesis,” Working Paper #74, May 1992, paper online. Steve Keen, “A classical foundation for the non-neoclassical economics of the 21st century,” paper online.

  25. Eugen von Böhm-Bawerk, “Control or Economic Law?” in Shorter Classics of Böhm-Bawerk (Spring Mills, PA: Libertarian Press, 1962), 159.

  26. Philip Mirowski, “Machine Dreams: Economic Agents as Cyborgs,” in John B. Davis, ed., New Economics and Its History (Durham, NC: Duke University Press, 1997), 14–17.

  27. Wendell Berry, In the Presence of Fear (Great Barrington, MA: The Orion Society, 2001), 14–15.

  28. Karl Polanyi, The Great Transformation (New York: Rinehart & Co., 1944), 164. Wilhelm Röpke, “The Conditions and Limits of the Market,” in A Humane Economy: The Social Framework of the Free Market (Indianapolis: Liberty Fund, 1971), 109. Polanyi, 57.

  29. On counterfactual analysis, see Jörg Guido H?n, “Facts and Counterfactuals in Economic Law,” Journal of Libertarian Studies, 17, 1 (Winter 2003), 57–102.

  30. John L. Campbell and Leon Lindberg, “Property Rights and the Organization of Economic Activity by the State,” American Sociological Review, 55 (October 1990), 634–647.

  31. Polanyi, Great Transformation, Ch. 5.

  32. Theodore S. Hamerow, The Social Foundations of German Unification, 1858–1871 (Princeton, NJ: Princeton University Press, 1972), esp. Ch. 7 and 8. John Kincaid, “Felix Morley on Freedom and Federalism,” Publius: The Journal of Federalism, 34 (2004), 84–87.

  33. Wilhelm Röpke, A Humane Economy, 91.

  34. David C. Korten, “Assault of the Corporate Libertarians,” from When Corporations Rule the World (Bloomfield, CT : Kumarian Press, 2001), at

  35. Claes G. Ryn, America the Virtuous: The Crisis of Democracy and the Quest for Empire (New Brunswick, NJ: Transaction Publishers, 2003), 151.

  36. See Paul H. Dembinksi, “From Cracks in the Liberal Edifice to the Rediscovery of the Common Good,” Journal of Markets and Morality, 7 (Fall 2004), 423–439, and William T. Cavanaugh, “Killing for the Phone Company: Why the Nation-State Is Not the Keeper of the Common Good,” Modern Theology, 20 (April 2004), 246–260.

Joseph R. Stromberg is an independent historian and a Research Fellow at The Independent Institute.

© Copyright 2009, Intercollegiate Studies Institute.