Progressives and Free Markets

Progressivism mutated when Woodrow Wilson came along.  Originally Progressives, a purely American community, were devoutly religious and strongly opposed to the concentration of power in the hands of a few rapacious individuals and organizations.  The weak federal government of the time was to be strengthened to a limited degree so as to provide a sufficient counterbalance to this concentration.  That was Teddy Roosevelt’s brand of progressivism. 

Wilsonian progressivism was the antithesis of the original religious and individualist progressive movement.  Under Wilson, secular progressivism adopted the new idea of technocracy.  Technocracy is the notion that centralized experts (i.e., technocrats) are better able to make economic decisions than the people on the spot.  Grabbing power became the obsession of the new progressivism.

Technocracy quickly spread internationally, blended with Marxism, and further mutated into various toxic versions.  One branch of the new progressivism evolved to become despotic Stalinism and its close relatives, Nazism, Fascism, and Maoism.  Another branch merged with the softer Fabian Socialism and developed into Progressive Socialism and Euro Socialism.  In both major branches, the individual is smothered by the resulting governmental centralism.

Centralized Progressivism is fundamentally alien to human nature.  Humane, individualist society exists only through a free-market exchange of value.  This is the consequence of the simple fact that each of us is different.  Each has something that he is good at and something he is not.  You have value that I lack but need.  The converse is true.  Let us bargain.

Economics tells us that there are only three ways that value can be exchanged.  Until the twentieth century, the way was predominantly through a market – usually free, but sometimes mercantile and centrally controlled.  For individual liberty, a market must be free – thus the American Revolution’s rebellion against mercantilism.  The only other ways of exchanging value are through theft and through slavery – mechanisms adopted by despotic twentieth-century states. 

So what does this have to do with the conflict between progressivism and freedom?  There is a characteristic of the free market that goes to the heart of the primal conflict between individual liberty and progressive centralization: a free market is the most tightly coupled mechanism for value exchange.  Conversely, a centralized technocratic economy is the least coupled such mechanism.  This issue of coupling is critical.  The loose coupling, which is characteristic of excessive central control, invariably destroys personal freedom.

Allow me to explain:

Engineers are familiar with lag-induced oscillation. 

A down-to-earth example will make this easier to understand.  In the early days of automotive power steering, power steering placed a servo mechanism between the steering wheel and the front wheels – an approach since abandoned.  In this system, the steering wheel is not directly connected with the front wheels.  Instead, turning the steering wheel signals the servo to turn the front wheels. 

Now, suppose that a faulty steering servo introduces a substantial time delay, a lag, between turning the steering wheel and turning the front wheels.  You are driving along and decide to steer to the right.  You turn the steering wheel, but nothing happens for a while.  So you turn the wheel some more.  Suddenly, the car starts to turn right, but you have, by now, dialed in too much right turn.  You try to compensate by turning the steering wheel to the left.  The same thing happens to the left – you overshoot.  You are now in a lag-induced steering oscillation.  What is worse, the amplitude of the oscillation rapidly increases until you crash.  This is a loosely coupled system.

What are you to do in such a situation?  In order to survive, you must quickly slow way down to a sufficiently slow speed that the steering lag does not cause catastrophe.  Engineers call this “low pass filtering.”

Now consider a technocratic economy.  A real economy is far too complex, and opaque, for any centralized group of planners to see what is really going on and make timely adjustments accordingly.  Central planning bureaucrats use aggregate statistical models of the economy.  These models, by their very nature, substantially lag the actual activity in the economy.  They also lack detail – and they are often wrong. 

A real economy has rapid random fluctuations in activity and unanticipated demands that require rapid response.  The lag involved in central planning creates ever increasing oscillations in response to these fluctuating demands.  Either too much product is produced, with great waste, or too little, with a resulting fight over the scraps.  A classic contemporary example of this is the inability of  Venezuela’s socialist government to supply toilet paper to its citizens.

So how does a technocratic system avoid lag oscillations?  It low pass filters the society.  It radically slows down economic and political activity.  It must do this to avoid oscillating chaos.  But this dampening of activity can be achieved only by dictating to each individual what he may buy, how much he can buy, and when.  Producers are equally shackled.  Excessive taxation and regulation are also filtering mechanisms.

This effort to control spills over into other areas as well.  Unsanctioned political activity is suppressed because it overstresses centralization.  In other words, technocracy can maintain control only by diminishing or eliminating individual freedom and initiative.

If you think this cannot happen here, think again.  During the Second World War, economic freedom and mobility were practically nonexistent in the United States.  You had a job if you wanted one.  You’d better want one – you had little choice in the matter.  But you could buy little – except War Bonds.  Goods were severely rationed.  What’s worse, government bureaucrats dictated, in detail, to each and every business what it could produce and just how much and when.  For the most part, the country supported this unlimited technocracy for the survival of the nation.  However, the intensity of the postwar political reaction indicated just how unpopular such a system actually was.

In the United States, unelected regulatory agencies are our government’s mechanism for economic control.  In principle, light regulation can be very beneficial.  Unfortunately, beginning with Franklin Roosevelt’s administration, many regulatory agencies have become overweening progressive technocracies – this with the tacit approval of Congress and the Courts.  These agencies now deliberately use their power to cripple free markets (i.e., they “shape” the markets) – all in the name of a higher good, of course.  It doesn’t matter that the economy suffers; that is merely an unfortunate side-effect.

Power corrupts.  Modern progressives, increasingly secure in their increasingly centralized power, become hungry for still more.  Deliberately fomented division, envy, and hate are some of the political tools they use to sweep more control into their hands.  Civility withers away, and society begins fragmenting beyond repair.  We have a preview of this in the destruction within many progressive-led cities, such as Detroit and Baltimore and St. Louis.

If progressive technocracy inevitably evolves to tyranny and decay, what happens with a free market?  Free-market decentralization strips power from the technocrats and returns it to the citizen, where it belongs.

A tightly coupled free market minimizes the time delay between demand and supply.  If product doesn’t match demand, there may still be some time delay as production is ramped up or diminished.  But this delay is minimal because the signals coming from the marketplace reach the individual producers almost immediately. 

With a free market, there will still be lag-induced oscillations.  This includes the periodic recessions that occur when the economy builds up surplus productive capacity (usually a consequence of investors misreading the market).  However, if there is no interference with the market, these macro-oscillations usually damp out quickly.  The reason is that a recession (or depression, as it used be called) quickly weeds out the inefficient producers.  The result is a quick and effective reallocation of resources.  Thus, a free market does not require low pass filtering. 

Historically, free markets have produced steadily increasing prosperity.  Most important of all:  with a free market, the individual makes his own decisions – he is free!

We have a choice: will it be progressive technocracy and growing servitude, conflict, and decay, or free markets and regained liberty, civility, and prosperity?