Republic, Lost_ How Money Corrupts Congress--And a Plan to Stop It - Lawrence Lessig [96]
It was from this recognition that Smith offered his rule for interpreting any proposal by successful incumbents for regulating the market. Such proposals, Smith said, “ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.”44
For such proposals “come… from an order of men, whose interest is never exactly the same with that of the public who generally have an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”45
Thus, as an example, Rajan and Zingales point to Congress’s aid for the tourism industry after 9/11: “The terrorist attacks affected the entire tourism industry. But the first legislation was not relief for the hundreds of thousands of taxi drivers or restaurant and hotel workers, but for the airlines, which conducted an organized lobbying effort for taxpayer subsidies.”46
Principled souls on the Right thus worry about how to protect, as Rajan and Zingales put it, capitalism from the capitalists. As Rajan writes in his own work, “The central problem of free-enterprise capitalism in a modern democracy has always been how to balance the role of the government and that of the market. While much intellectual energy has been focused on defining the appropriate activities of each, it is the interaction between the two that is a central source of fragility.”47
This is a worry because there are only two things we can be certain of when talking of free markets: first, that new innovation will challenge old; and second, that old innovation will try to protect itself against the new. Again and again, across history and nations, the successful defend their success in whatever way they can. Principles—such as “I got here because of a free market; I shouldn’t interfere with others challenging me by interfering with a free market”—are good so long as they don’t actually constrain. Once they constrain, the principles disappear. And once they disappear, the previously successful use whatever means, including government, to protect against the new. This was one of the problems the Progressives fought against: “To destroy this invisible government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”48 This is one of the battles that should join progressives of the Left and free-market advocates on the Right.
Rajan and Zingales offer a range of remedies to secure a free society from this type of market protection. The most interesting I’ve described: the notion of a political antitrust doctrine, a doctrine that aims at blocking not only inefficient economic behavior, but also concentrations in economic power that could too easily translate into political power. In this, their work echoes Louis Brandeis, who opposed “bigness” not just for (mistaken) economic reasons, but more important, because of the view that “in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people.”49 It also echoes the battles by Presidents Jefferson and Jackson centuries ago, who both fought the first Bank of the United States, because both “saw a powerful bank as a corrupting influence that could undermine the proper functioning of a democratic government.”50
But the one point that Rajan and Zingales strangely leave aside is the effect of the corruption I’ve described here on the capacity for capitalists to corrupt capitalism. So long as wealth can be used to leverage political power, wealth will be used to leverage political power to protect itself. This was Teddy Roosevelt’s view: “Corporate expenditures for