(part of the following is taken from the work on a new book, discussing questions of so-called populism)
The present reflections are limited to the discussion of so-called market freedom. Though often misunderstood, in the beginning it had not been the word but the deed; while it is again and again said that the anti-feudal revolutions had been about asking for civil liberties – the freedom of thought and speech etc. – they had been in fact about the freedom of the market: the idea of engaging, as free individual, in economic activities: the deeds; that meant that everyone would work for himself (women hardly played role within this ideological framework, or where they did it had been the role of serving the husband/family).
In the words of Adam Smith
[i]t is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.
(Smith, Adam, 1776: An Inquiry Into The Nature And Causes Of The Wealth Of Nations; Edited, With An Introduction, Notes, Marginal Summary And An Enlarged Index By Edwin Cannan; Volume I; London: 1904: 16)
The idea of equality and the individual working for himself didn’t really work out as promised – for several reasons the promised freedom turned out to be a castle in the air for most of the people, only for a few the castle had been one of bricks and mortar, growing to a palace, erected from the most precious stones. One of the reasons is the short period of free competition amongst equals. The enormous concentration and centralisation of capital had been the mark of Cain.
The first man who, having enclosed a piece of ground, bethought himself of saying This is mine, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, “Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.
(Rousseau, Jean Jacques, 1755: Discours sur l’origine et les fondements de l’inégalité parmi les hommes ; in : Œvres complètes de J. J. Rousseau avec des éclaircissements et des notes historiques ; P.R. Augis ; Paris : Chez Dalibons, Libraires, M.DCCC.XXV : 218-375 ; here : 273; translation, P.H.)
Capitalism developed in fact to a harsh system of exploitation: (i) the brutish nature of the so-called Manchester stage had been not labour pains but its curse and mark of Cain: comparable with what we read in Genesis, (i) the profitability slowed down[1] – amongst others as consequence of the fall of the rate of profits, notwithstanding the enormous profits in absolute terms, that are amongst others result of a crawling inflation and (ii) the ‘forced migration of capital’ resulted in permanent instability of the finance system and from there spilling over into other areas – global competition, at the end unsuccessful attempts to secure national economies with protectionist measures, labour market migration, failure of supply chains etc.[2] The ‘freedom’ had been burdened with a paradoxical result: the weakening of accumulation, countered by increasingly aggressive forms of securing monopolist profitability – a vicious circle.
The economic mechanisms are already well explained a long time before the inequality of wealth distribution reached today’s levels.
Still, at least one point must be mentioned: latest in today’s developed capitalism it is not the demand that stands behind and enforces supply but the other way around: at least for luxurious products there is no intrinsic – it is in the same way designed as the products that are supplied. It is a perfidious system that takes no account of human needs or rights.
This understanding of freedom from state intervention is, of course, not complete as the following shows.
The US-economy is little export dependent – the foreign trade balance is mixed. Still, for decades the balance shows a structural deficit, i.e. imports are higher than exports. The two main reasons are (i) the focus of the US economy on services and (ii) the one-sided orientation on certain sectors and segments that ultimately distort the results. Both are result of the federal industrial, tax and trade policies, in conjunction with the measures by the Fed.
An outstanding example is Apple and the production of the i-phone. Without going into details, a rough picture can be gained by a short statista-report from 2022:
Apple’s new iPhone 13 Pro is a remarkable feat of international cooperation. With its battery developed by the China-based company Sunwoda Electronic, the display by Samsung and LG from South Korea, and the glass casing by Corning from the USA, the iPhone unites the work of companies from around the globe. On further inspection, you’ll find that the microchips are designed by third-party manufacturers, the flash memory is developed by Kioxa from Japan, and the display port interface is from NXP Semiconductors in the Netherlands.
(Fleck, Anna, Jul 6, 2022: iPhone Components Are Developed All Over the World; Statista report; sources: Tech Insights, Gizmochina; https://www.statista.com/chart/27730/iphone-design-by-country/;20/12/2024)
The pattern that emerges here is that costs and risks are externalised, while the profitable area is located directly in the USA. This is also reflected in the tax balance sheets of the companies in question.
It has to be seen that this one-sided distribution of power is reflecting very much what Foucault said about power: it is everywhere, and it is not simply by being executed but also by being accepted. Then oppressor can only act as such because the oppressed is accepting the subordination; but the oppressor knows this and will very much anticipated certain patterns of acceptance, thus making the oppressed powerful.
Concrete: Ireland as low tax country “hosted” Apple with even lower taxes other companies had been charged.
The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses.
(European Commission, Aug 30, 2016: press release; Brussels: State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion; https://ec.europa.eu/commission/presscorner/detail/en/ip_16_2923; 21/12/2024)
And
Following an in-depth state aid investigation, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a “head office”. The Commission’s assessment showed that these “head offices” existed only on paper and could not have generated such profits. These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
(ibid.)
It still took a while until the European Court of Justice finally ruled against apple and Ireland, obliging the company to pay (European Court of Justice,2024: Judgment of the Court (Grand Chamber) of 10 September 2024. European Commission v Ireland and Apple Sales International. Appeal – State aid – Article 107(1) TFEU – Tax rulings issued by a Member State – Selective tax advantages – Allocation of profits generated by intellectual property licences to branches of non-resident companies – Arm’s length principle. Case C-465/20 P.; ECLI identifier: ECLI:EU:C:2024:724; https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62020CJ0465; 21/12/2024).
Another area of profits that can be seen in connection with state failure and/or direct state support are related to the corona crisis – in general rejected, in concrete cases shamelessly exploited. The Corporate Europe Observatory highlights lobbying efforts, the focus on the protection of intellectual property rights and the opposition to measures that could affect profits negatively (see Corporate Europe Observatory, 21.09.2020: Power and profit during a pandemic. Why the pharmaceutical industry needs more scrutiny not less; https://corporateeurope.org/en/2020/09/power-and-profit-during-pandemic#; 17/01/2025; cf e.g. de Haan, Esther/ten Kate, Albert, February 2023: Pharma’s Pandemic Profits Pharma profits from COVID-19 vaccines; Amsterdam: Stichting Onderzoek Multinationale Ondernemingen; https://www.somo.nl/download/39232/?tmstv=1737104120; 17/01/202; ActionAid International, 15 September 2021: Pharmaceutical companies reaping immoral profits from Covid vaccines yet paying low tax rates; https://actionaid.org/news/2021/pharmaceutical-companies-reaping-immoral-profits-covid-vaccines-yet-paying-low-tax-rates#:~:text=Moderna, BioNTech, and Pfizer are,upwards of 69% profit margins; 17/01/2025; Marriott, Anna/Maitland, Alex/The People’s Vaccine Alliance, without date: The Great Vaccine Robbery. Pharmaceutical Corporations Charge Excessive Prices for COVID-19 vaccines while Rich Countries Block Faster and Cheaper Route to Global Vaccination. Policy Brief; https://app.box.com/s/inqlaf8gwoy6cxutocs8kngu0g8regce; 17/01/2025)There is another issue that is frequently highlighted in today’s political debates, turning our attention back to the original claim of the freedom of the market, namely the deed. We find again an emphasis of the demand of no interference by the state. This debate plays today a role in two arrays: the one is about taxation and in particular a wealth tax. It is about making the rich giving away from the huge amount of money they have – here it is about money and not profit. The other is the voluntary engagement of super-rich people, giving part of their fortune away. The latter is surely a laudable exercise. However, one question must be asked: Why is the resistance against the wealth tax maintained? Isn’t a just tax system the only way to move towards policies guided by rights and not depending on the mercy of self-appointed philanthropists?
[1] Genesis speaks of the soil becoming infertile
And now art thou cursed from the earth, which hath opened her mouth to receive thy brother’s blood from thy hand; when thou tillest the ground, it shall not henceforth yield unto thee her strength… (Genesis 4:11-14 KJV)
[2] Like what happened to Cain, according to Genesis
… a fugitive and a vagabond shalt thou be in the earth. And Cain said unto the LORD, My punishment is greater than I can bear. (Genesis 4:11-14 KJV)
Hi Peter,
thanks for these thoughts on the market and the nature of anti-feudal revolutions. However, why do you insist that these revolutions were about economic freedoms for nascent capitalists only – why could they not also have been about, even to a lesser extent, civil and political, freedoms?
Thank you for the reflection, Joe; I agree … as you say “even to a lesser extent” and that is the reason for not having omitted this dimension. Saying so, I am increasingly convinced – not least in the light of recent developments in the US and many EU-countries – that the close interwoveness must be more closely analysed. I personally attempted some modest reflection on this, by extending the theory of regulation – suggesting that accumulation regime, mode of regulation (the traditional focus) must be extended and we also have to look at living regime and mode of living (going beyond Brand/Wissen and their reflection on the “imperial mode of living”. Surely something to be further elaborated. Thank You!!