Markets are a creation of government, just as corporations exist only by authorization of government. Governments set the rules of the market. And, since our government is of, by, and for We The People, those rules have historically been set to first maximize the public goodresulting from people doing business.
If you want to play the game of business, we've said in the US since 1784 (when Tench Coxe got the first tariffs passed "to protect domestic industries") then you have to play in a way that both makes you money AND serves the public interest.
When government sets the rules of the game of business in such a way that working people must receive a living wage, labor has the power to organize into unions just as capital can organize into corporations, and domestic industries are protected from overseas competition, a middle class will emerge. When government gives up these functions, the middle class vanishes and we return to the Dickens-era "normal" form of totally free market conservative economics where the rich get richer while the working poor are kept in a constant state of fear and anxiety so the cost of their labor will always be cheap.
The fact that the "marketplace" was an artifact of government activity was well known to our Founders. As Thomas Jefferson said in an 1803 letter to David Williams, "The greatest evils of populous society have ever appeared to me to spring from the vicious distribution of its members among the occupations... But when, by a blind concourse, particular occupations are ruinously overcharged and others left in want of hands, the national authorities can do much towards restoring the equilibrium."
And the "national authorities," in Jefferson's mind, should be the Congress, as he wrote in a series of answers to the French politician de Meusnier in 1786: "The commerce of the States cannot be regulated to the best advantage but by a single body, and no body so proper as Congress."
Of course, there were conservatives (like Hamilton and Adams) in Jefferson's time, too, who took exception, thinking that the trickle-down theory that had dominated feudal Europe for ten centuries was a stable and healthy form of governance. Jefferson took exception, in an 1809 letter to members of his Democratic Republican Party (now called the Democratic Party): "The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government."
But, conservatives say, government is the problem, not the solution.
Of course, they can't explain how it was that the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression, while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class. (The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.)
Thomas Jefferson pointed out, in an 1816 letter to William H. Crawford, "Every society has a right to fix the fundamental principles of its association." He also pointed out in that letter that some people - and businesses - would prefer that government not play referee to the game of business, not fix rules that protect labor or provide for the protection of the commons and the public good.
We must, Jefferson wrote to Crawford, "...say to all [such] individuals, that if they contemplate pursuits beyond the limits of these principles and involving dangers which the society chooses to avoid, they must go somewhere else for their exercise; that we want no citizens, and still less ephemeral and pseudo-citizens [like corporations], on such terms. We may exclude them from our territory, as we do persons infected with disease."
Most of the Founders advocated - and all ultimately passed - tariffs to protect domestic industries and workers. Seventy years later, Abraham Lincoln actively stood up for the right for labor to organize, intervening in several strikes to stop corporations and local governments from using hired goon squads to beat and murder strikers.
But conservative economics - the return of ancient feudalism - rose up after Lincoln's death and reigned through the Gilded Age, creating both great wealth and a huge population of what today we call the "working poor." American reaction to these disparities gave birth to the Populist, Progressive, and modern Labor movements. Two generations later, Franklin Roosevelt brought us out of Herbert Hoover's conservative-economics-produced Great Depression and bequeathed us with more than a half-century of prosperity.
But now the conservatives are back in the driver's seat, and heading us back toward feudalism and serfdom (and possibly another Great Depression).
Only a return to liberal economic policies - a return to We The People again setting and enforcing the rules of the game of business - will reverse this dangerous trend. We've done it before, with tariffs, anti-trust legislation, and worker protections ranging from enforcing the rights of organized labor to restricting American companies' access to cheap foreign labor through visas and tariffs. The result was the production of something never before seen in history: a strong and vibrant middle class.
If the remnants of that modern middle class are to survive - and grow - we must learn the lessons of the past and return to the policies that in the 1780s and the late 1930s brought this nation back from the brink of economic disaster.
