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Focus on Freedom

The Incompleteness of
Free Market Economic Arguments;
as illustrated by
"How to Bureaucratize the Corporate World"

Ben O'Neill has written an excellent article illustrating the trend from capitalism to corporate bureaucratic socialism (fascism). However, as with every writer that I (Paul Antonik Wakfer) have ever seen on, in the greater society his article will still fall on mainly deaf ears because he avoids the hard questions from those who are not fully converted to the Austrian economics approach because they see fundamental conflicts of interests in the actions of individuals.

For example, O'Neill's following good example:

"If a corporation decides to open a store in my neighborhood then this affects my life. I may find it convenient to have a source of useful goods and services nearby. I may find it annoying to have more people visit my neighborhood to purchase these goods and services. I may even find the products or services offered by this store to be repugnant. My views are certainly relevant to corporate managers insofar as they affect the profitability of such a store - they will be rightly interested in whether or not I would choose to shop there. However, my "interest" in their decision does not give me any legitimate moral claim to a say in whether or not they should purchase property and open such a store. And it certainly should not allow me to impose my will over the preferences of the shareholders of this company."

will be immediately labeled as impractical by vast numbers of people who ask the simple and reasonable questions:

  1. By what current non-government mechanism do I prevent the opening of a store in my neighborhood which promotes "more people visit[ing] my neighborhood" or offers "products or services" that I find "to be repugnant"? When I decide to live in a certain area and raise my family there, is it to be merely a matter of chance, whether or not the area will change, from the reasons that I chose it, into an area where my purposes for being there can no longer be satisfied? By what non-government methods can I ensure that the physical environment of my property purchase will not deteriorate in this manner?
  2. If there have been no mechanisms in place to prevent such negative occurrences at the time that I decide to live in a neighborhood, by what current organized non-government methods can I influence the reduction/elimination of such negative occurrences after they have started to appear?

Mises' (and the standard Austrian economics) argument - provided in O'Neill's article - that:

"The real bosses, in the capitalist system of market economy, are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality."

is good as far as it goes, but again does not address the neighborhood problem of the example above for the simple fact that the consumers of the goods and services of the store are generally a very different group than the neighbors and/or other people affected by the presence and operation of the store.

These are the questions which free market proselytizers continually fail to address and thus, continually fail to sufficiently convince most people that their philosophical approach is a complete solution. In summary, the problem with the Austrian economics approach as currently constituted and presented is that, while it is certainly necessary for both market freedom and personal liberty, it is clearly not sufficient to solve all the practical problems of society. It is my conviction that the philosophical basis that I have termed Social Meta-Needs does provide such a complete and consistent solution to all practical problems of society.

In his article O'Neill quotes the following passage from Mises' _Human Action_ which is an important insight, but also illustrates the crux of Mises failure to address and provide the required complete solution to which I refer above.

"Bureaucratic conduct of affairs is conduct bound to comply with detailed rules and regulations fixed by the authority of a superior body. It is the only alternative to profit management. Profit management is inapplicable in the pursuit of affairs which have no cash value on the market and in the non-profit conduct of affairs which could also be operated on a profit basis. ... Whenever the operation of a system is not directed by the profit motive, it must be directed by bureaucratic rules."

Although elsewhere in _Human Action_:

"For a long time men failed to realize that the transition from the classical theory of value to the subjective theory of value was much more than the substitution of a more satisfactory theory of market exchange for a less satisfactory one. The general theory of choice and preference goes far beyond the horizon which encompassed the scope of economic problems as circumscribed by the economists from Cantillon, Hume, and Adam Smith down to John Stuart Mill. It is much more than merely a theory of the "economic side" of human endeavors and of man's striving for commodities and an improvement in his material well-being. It is the science of every kind of human action. Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference. The modern theory of value widens the scientific horizon and enlarges the field of economic studies. Out of the political economy of the classical school emerges the general theory of human action, praxeology. The economic or catallactic problems are embedded in a more general science, and can no longer be severed from this connection. No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology."

Mises clearly states that praxeology is applicable to all human action, whereas in the previously quoted passage (and in all economic examples in his works) he limits the concept of "profit" and its "management" only to "the pursuit of affairs which have ... cash value [emphasis mine] on the market". Presumably, although Mises clearly understood that there are values exchanged between humans which are not normally nor easily measurable by "cash", he did not include these in his economics because he could find no way to do calculations with them. Nevertheless in the reality of human interactions, there must exist such a calculus relating to values of all types (not merely cash and its standard equivalents) - the fundamental tenets of praxeology imply the existence of such an evaluative calculus, at least within the minds of acting humans. Furthermore, praxeology (and its money-economics implications and methods) will not prevail unless and until such an extended complete and consistent theory and practice is provided to a society that is desperately in need of it.

With respect to the current article, the entire reason why the practice of "the corporate manager [being given] given wide scope to determine the identity and importance of the stakeholders who he will work for" has arisen is precisely because there are no organized methods to implement a fully complete profit motive instead of one that deals merely with money and consumers. I am convinced that my Theory of Social Meta-Needs and its full implications/practical methods, which are illustrated here at, are that theory and practice, providing the basis for such organized methods as are neccessary and sufficient for spontaneous (stateless) social self-ordering.

Note: This is a slightly modified version of a comment posted to the blog on 1/25/08.

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