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Sat May 30, 2015, 05:46 AM

Basic principle of progressive economics: Leverage is coercion.

This is hardly a new idea in the history of labor organizing and left-wing economic theory, but it's a non-obvious principle worth stating as often as possible: Markets eventually fail because economic leverage is coercion.

The idea that markets are inherently non-coercive is an article of faith among conservatives and libertarians, and yet we see every day in our own lives that this is just plain false. Our time, energy, and information is finite, so our options are apt to be encompassed and limited by those who simply have more of them. The theoretical freedom to choose becomes moot if someone else has the practical power to define the set of options you're presented with.

Knowing this is why anti-trust laws exist, and also why there are regulations against anti-competitive practices. Unfortunately, these acknowledge the principle in the most extreme cases while missing the elephant in the room: The fact that coercion exists on a granular level in every economic transaction of a "free" market, because participants are not negotiating from equal positions. As an entire system, the result is exactly the same as monopolies: Money flowing downhill toward where money already exists, pooling in the bank accounts of the absolute wealthiest, and robbing everyone else.

In other words, "free" markets aren't free, and they aren't even efficient. Even economies with redistribution mechanisms merely delay the inevitable, because the imbalances of everyday transactions steadily (and fluidly) erode the resources and power of the masses while the redistributive mechanisms are too slow to adapt. The only way to really correct that would be to address the problem of leverage on a completely granular level, so that leverage is neutralized and every transaction occurs as a market calculation between equivalent positions.

Perfecting that isn't possible (leverage can be infinitely abstracted), but approximations certainly are. Once you start approximating bargaining parity in each economic transaction, the genuine benefits of a market mechanism can finally be realized without undermining democracy or surrendering to Malthus. It would be like having a different labor or consumer union for everything, in every single transaction, and without the personal hardships of traditional organizing and strikes - one perfectly sized to bargain with management/suppliers on an equal basis.

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