Crony Capitalism: The Free Market Cycle, Part II

"Also, in the course of the cycle described here, those groups and organizations in society who would aim for changing the arrangements of the market in order to balance or reduce negative externalities, gradually lost their economic and political power... Their revolts in the later stages of the cycle proved futile. This is also because of the consolidation and entrenchment of the elite in these later stages... Exactly in the last phases of the cycle the elites... closed their ranks...

"In all these cases, the state increasingly came under the influence of those who benefited most from the market system...

"In the first phase of the cycle, in each of these cases, the role of the state was not yet very prominent,  and it figured next to all kinds of other organizations and associations that fulfilled semi-public roles... In the second phase, states... increasingly stimulated the rise of markets in more direct ways, induced to do so because of fiscal reason. These markets, with the associated monetization and commodification of land and labour, enabled them to tap resources and tax transactions and wealth more easily than with other forms of exchange and allocation, such as barter or communal redistribution.

"Each of the cases discussed saw growing state repression, armed violence, and warfare by state and public authorities, in the last stage of the cycle. It is telling that this was done after the militias of ordinary people were replaced by professional soldiers or slaves, hired or bought in the market and being more dependent on their employers or masters than the independent producers in the former militias were."

-- Bas van Bavel, The Invisible Hand?, pp. 268-270


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