Adam Smith Meets George Orwell: Markets and the Politics of Language

• In Event: Ideational Contributions to State-Building

Abstract

Globalization, the removal of tariff barriers, and the liberalization of sectoral, labor, and financial regulations worldwide, is often understood as a shift away from the state towards the market, with increased cross-border market competition as both the intended and actual outcome. Yet over time such policies have instead led to less competition, evidenced in part by the rise of a few “superstar” firms that dominate the most rapidly-expanding industries. This article provides an alternative understanding of these shifts, questioning the link between openness, integration, and competition. I emphasize that many of these supposedly “liberalizing” changes were in fact market-closing, restricting access to new markets, growth, and income for all but the most technologically-advanced firms from the global north, domestically and internationally. The United States has led the way in changing the legal architecture of domestic and transnational markets to prevent its own lead firms from being subject to market forces, even as direct barriers to trade have been progressively removed. In scaling back domestica and international antitrust restraints on its own companies, the United States has also dramatically strengthened property rights, preempting prior antitrust rules restricting them. Why this pattern has not been as obvious as one might think lies in the language used in these legal and policy reforms. Just as George Orwell wrote in 1984, where “freedom is slavery,” in this case “protect our firms on the technological frontier” became translated into doublespeak language about “market opening.” This language has become normalized across the ideological spectrum, reframing opposing political attempts to expose lead firms to market pressures as protectionist and anti-market. This argument is supported by cases studies and original archival evidence from American presidential administrations in the 1970s and 1980s through to today, showing how the overtly protectionist and market-closing motivations of policymakers in executive agencies were translated into liberalizing language and arguments from legal and economic scholarship.

Author

• Erik Peinert, Boston University