a recent book on the myth of free self-regulating markets, from the University of Chicago of all places:<br><br>basic thesis: self-regulation is always done for the benefit of the few ... <br><br>but the larger question is: have their ever been, apart from illegal markets, self-regulated markets? nearly all market activities are incredibly embedded in institutional regulations, norms, etc ..<br>
<br>if indeed self-regulated markets are few and far between, then the question is more: what kind of regulations, and who produces and controls the regulations and the regulators,<br><br>seems pretty clear that since the 80's, under the ethos of self-regulation, there has been a very strong tendency towards regulatory capture ..<br>
<br>Michel<br><br><p><b>* Book: The Illusion of Free Markets. Punishment and the Myth of
Natural Order. By Bernard E. Harcourt. Publisher: Harvard University
Press, 2011</b>
</p><br><h1><span class="mw-headline" id="Description">Description</span></h1>
<p>Allan Engler:
</p><p>"In The Illusion of Free Markets: Punishment and the Myth of
Natural Order, Harcourt holds that markets will be regulated by
governments or by the rich on behalf of themselves. Few markets are
actually unregulated. He goes on to make the case that markets directed
by dominant players in their private interest result not in greater
freedom but in heavier repression.
</p><p>Harcourt begins by examining the Chicago Board of Trade and the
New York Stock Exchange. These exchanges are widely viewed as epitomes
of the free market, but they are actually self-regulated private
monopolies protected by legislation. Their rules are made by member
firms and policed by internal committees that determine the methods and
time of trading as well as who may participate. As should be expected,
the rules favor those who make them.
</p><p>...
</p><p>It is no revelation to point out that when a few are allowed to
make the rules, they will direct markets in their own interests.
Nonetheless, in mainstream opinion it is now taken for granted that
markets regulated by dominant players are preferable to government
regulation. This was not always so.
</p><p>Before the rise of industrial capitalism, industries were
self-regulated�by Guilds that were usually dominated by wealthy
merchants. Seeing this, political thinkers from the Scholastics to the
Enlightenment generally held that governments had a responsibility to
intervene to curb speculation, price gouging, and hoarding, to keep the
prices of necessities low, to police the quality of goods and services,
and to maintain public hygiene.
</p><p>Mainstream economists now teach that support for free markets can
be traced back to Adam Smith in the late eighteenth century and Jeremy
Bentham in the early nineteenth. Harcourt notes that Smith and Bentham
did view self-interest in the market as generally beneficial, but he
points out both also wrote of circumstances in which government
intervention was clearly required to curb the self-interested power of
great merchants and masters.
</p><p>Harcourt also questions the prevailing view that the late
nineteenth century was a time of laissez faire policies. While
industrial production did expand dramatically, governments played
critical roles in the accumulation of capitalist wealth. To expand their
countries� shares of global trade, governments organized and financed
shipyards and railway construction. They spent lavishly on navies and
armies and colonial wars. Each empire restricted access to captive
markets through imperial preferences and tariff walls."
(<a href="http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/" class="external free">http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/</a>)
</p><p><br>
</p> <span class="mw-headline" id="History_of_self-regulation_by_the_rich">History
of self-regulation by the rich</span>
<p>Allan Engler:
</p><p>"the claim that control of markets should be left to the rich has
an historical precedent. Harcourt draws our attention to France before
the 1789 revolution and the Physiocrats�so called because they
advocated rule by natural laws. Most economic histories now dismiss
Physiocrats for having insisted that land alone is the source of
exchange value. In France in their time, that was not so controversial:
land still was the main source of great wealth. In their time, what
distinguished the Physiocrats was the claim that private property and
unregulated markets were in accord with laws of nature and that the role
of government was to vigorously repress criminal acts against this
natural order.
</p><p>Physiocrats held that absolute monarchy, by placing government in
the hands of the largest landowners, was the natural form of
government. Leading Physiocrats�Francois Quesnay, Samuel Du Pont de
Nemours, and Le Mercier de la Riviere�were prominent in the Court of
Louis XV. For them it was natural to oppose government restriction on
profit-making. They likewise viewed it as natural to advocate repressive
policing and onerous penalties for thieves, the idle, the disorderly
and anyone else who could interfere with their natural order. Le
Mercier, as governor of Martinique�then one of the wealthiest French
slave colonies�gained notoriety for his heavy-handed policing which even
plantation owners came to believe was provoking disorder among the
slave population.
</p><p>Although slavery, landed aristocracies, and absolute monarchies
have largely passed into history, the ideology of natural order, freedom
for the rich and powerful, and repression for the dispossessed and
disaffected still resonates with the very rich and their supporters.
That is at the root of the current neo-conservative reaction.
</p><p>Beginning in the 1940s, University of Chicago economists Milton
Friedman and Friedrich Hayek, began campaigning to replace
liberal-social democratic welfare state policies with old ruling class
verities. By the 1970s, they had a powerful constituency: the
super-rich. Long hostile to Keynesian policies, and frustrated that
domestic profit-making opportunities were decreasing, the wealthy heirs
of great family fortunes were smitten by arguments that economic rewards
and decisions are best left to the very rich. By the early 1980s, the
policies promoted by Chicago School economists and generously financed
by corporations and the foundations of wealthy families were adopted by
the newly elected conservative governments of Margaret Thatcher in the
U.K., Ronald Reagan in the U.S., and Brian Mulroney in Canada.
</p><p>By the late 1980s a Washington Consensus called for the
deregulation of markets, cuts to the taxes paid by corporations and the
wealthy, privatization of public utilities and cuts to social services.
Although some of the advocates of unregulated markets call themselves
libertarians, the widening disparities that followed anti-Keynesian
policies were accompanied by more repressive state power.
</p><p>Freeing the rich to do as they choose in the markets they
dominate, obviously allows them to appropriate more of total income.
Among the masses, some may benefit from a trickle down. Of those who are
left with less income and employment, some will find comfort in knowing
that at least a few have gained more wealth than they can imagine.
Others will go on strike, organize boycotts, or participate in
unauthorized protests. A few will engage in petty criminality. In
countries that have been impoverished, some may lash out with any
weapons available. In response or in anticipation, the privileged will
demand more aggressive policing, more onerous criminal sanctions and
more punitive military actions abroad.
</p><p>Neo-conservatives view repressive violence as a required response
to domestic and international criminality. Harcourt makes the case that
crime rates are actually related to entitlements, employment
opportunities, and income disparities."
(<a href="http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/" class="external free">http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/</a>)
</p>
<h2><span class="editsection"></span><span class="mw-headline" id="Example_of_self-regulation">Example of
self-regulation</span></h2>
<p>Allan Engler:
</p><p>"Harcourt begins by examining the Chicago Board of Trade and the
New York Stock Exchange. These exchanges are widely viewed as epitomes
of the free market, but they are actually self-regulated private
monopolies protected by legislation. Their rules are made by member
firms and policed by internal committees that determine the methods and
time of trading as well as who may participate. As should be expected,
the rules favor those who make them.
</p><p>The Chicago Board of Trade forbids outsiders from engaging in
after-hours trading. However, the insiders who control the Board, when
they agree among themselves, can modify the rules, giving themselves
opportunities for exceptionally profitable trades. The Chicago Board of
Trade and the New York Stock Exchange allow brokerage firms to restrict
retail buyers (outsiders) from reselling for periods of thirty to ninety
days. �But the same brokerage firms may allow large institutions to
dump their stock in the after-market at any time.� In New York,
�members of the stock exchange may get together and fix the commission
rates on stock transactions of less than $500,000,� but they can �freely
negotiate commissions for larger stock transactions��which they
dominate.
</p><p>In Chicago, when parties are in dispute, the Board�s Office of
Investigation and Audits may investigate. Where its decisions are
challenged, the Commodity Futures Trading Commission may get involved.
If disputes are unresolved, the U.S. Attorney�s office can initiate
civil or criminal actions. The point is that these �free markets� are
minutely regulated, first by the dominant insiders and then by civil and
criminal law."
(<a href="http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/" class="external free">http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/</a>)
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