The myth of the free-market persists unchallenged as one of the distinctive features of the Western world, despite the aura of failure attached to it since the latest crisis that exploded over ten years ago. In truth, the legend was merely grazed; nourished by undaunted faith it survives as one of the great utopias that, while unattainable, are nevertheless to be pursued. Beyond the setbacks, it continues to offer enticing glimpses of its feasibility. Yet, rarely, if ever, has this type of myth and the related worldview demonstrated such fragility as in the most recent economic downturn (Tooze 2018). For the stalwart champions of free-market efficiency it was disconcerting to have to acknowledge that marketâs incapacity to thwart attempts to manipulate the valuation processes of the goods exchanged. In the sense of a forum in which value is attributed to goods, the market proved incapable of both self-correction and self-regulation, eradicatingâor at least underminingâthe efficiency that was one of its chief strongpoints. At the same time, the crisis once again laid bare the congenital pathology afflicting the marketâunderstood this time not merely as a forum but as an arena of opportunity in which individuals pursue their interestsânamely, its exposure to the delinquent designs of those populating and driving it. These immoral strategies came up against no restrictions or sanctions of any kind. The very people who ought to have enforced the rules of the game, and who had every interest in doing so, were unable on their own to eliminate collusive behaviour aimed at whitewashing pernicious practices implemented in flagrant violation of the most elementary rules underpinning the logic of the market, first and foremost the principle of competition. There were definitely some who thought they could benefit from these highly speculative albeit not transparent activities,1 but there were also many others who simply remained defenceless, watching the system crumble. Nonetheless, the liberal thinkers have always brandished the conviction that the marketâwith minimal support from the institutions guaranteeing judicial activityâwould be able not only to monitor the performance of the game and the correct behaviour of the players but also, at the same time, to trigger the necessary mechanisms for sanctioning any foul play. Conversely, in the recent economic crisis two aspects came to the fore, both as frequently discussed as they are undervalued. Firstly, the functioning of the markets inevitably depends on necessary compliance with a series of rules, foremost among them the prohibition of backroom deals aimed at creating concentrations of power and the prohibition of strategies pursued through fraud and deception. Secondly, it has been clear since the very first records that markets have always been exposed to approaches tending to breach one or other of these rules, and often both.
As a result, one of the great lessons of Adam Smithâs thought appears to be still able to tell us something. The self-sufficiency of the market is unconceivable without a supporting moral framework, for the simple reason that the alleged natural self-correcting and self-protecting mechanisms can be triggered only by the very people operating in the market (Barry 1990; Werhane 1991; Sen 2011; Sandmo 2016). Moreover, the relations of trust that these people benefit from and that fuel the market stem from agreement on and compliance with these same rules that the moral framework is built on.
However, this is only one side of the story. As I aim to show, it has long been thought (and still is by many people)2 that the self-sufficiency of the market, and the salvation of those who have fallen victim to conspiracies implemented through violence or fraud, could (and can) be achieved only by acknowledging the victimsâ right to resort to strategies of the same kind conducted using the same arms. This means that the market was conceived as capable of correcting and protecting itself, despite its structure as a place intrinsically bound to generate conflicts between subjects unwilling to adhere to the rationale of fair competition.3 In actual fact, another intellectual approach preceded the liberal idea triggered by Smithâs reflections, and later by classical political economy, and partially accompanied it almost as if it were a corollary. The path it followed appeared as discontinuous as it wasâin the endâexceptionally consistent. The idea initially emerged in theological-moral circuits after which it was significantly employed in the world of law, which took over its essential core. It was then formidably applied in the thought of Smith, where it ended up assuming a distinctly political tone. Finally, the liberal thought of classical economics endowed it with the necessary elements to be remodelled in a strictly economic sense and adapted to the new scenarios of the modern age.
My research has been directed by two clues. Although these are apparently unconnected, without any tangible relation and distant in time, they immediately appeared to belong to the same sphere of investigation. The link that holds them together became the guiding thread of this book. They are two fragments: a couple of pages from one of the great classics of modern Western thought, Adam Smithâs An Inquiry into the Nature and Causes of the Wealth of Nations (1776) and a fleeting passage in a legal text known only to specialists (but widely used in Europe during the seventeenth century until the first half of the eighteenth-century Europe), the Tractatus de commerciis et cambio (1619) by Sigismondo Scaccia.
In Book I, chapter viii (On the Wages of Labour) of his masterpiece Smith devotes a couple of pages to drawing attention to the fraudulent strategies of the capitalists, engaged in a sort of tacit agreement to elude the rationale of competition and keep wages low. It was the first time that someone had denounced the conspiracy that was underway, aimed at manipulating one of the principal novelties of industrial civilisation: the labour market. In putting his readers on their guard against what only those Ê»as ignorant of the world as of the subjectÊŒ (Smith 1976, I.viii.13: 84) could be unaware of, Smith radically alters the interpretation hitherto provided of the wage-setting mechanism and hence of why wages remained at a level that could barely guarantee the workersâ subsistence. It didnât take much to realise that it wasnât mere demographics that caused this effect; the inequitable relation of power between the conflicting interests was clearly undeniable (Stirati 1994: chs. 2â3). It derived from the fact that the workers were numerous, weak and disorganised and that the law forbade them to organise themselves, while the masters were few and hence found it easier to conspire and, above all, were protected by the state and evidently legitimised in acting in this way by social consensus. Smith believed that the crux of the problem lay in the conspiratorial monopolistic thrust that the masters could exert through tacit agreement. The practice of combinationsâwhich is how Smith denoted the action of the mastersâafflicted all markets , not just the new-born labour market. It was a species of disease, the most natural, possibly congenital, and definitely the most threatening and such agreements were the most eloquent illustration of it.
However, Smith does not settle for merely illustrating the problem. In his description of the way things were, alongside the word âcombinationâ there emerged another, âresistance â (Rosolino 2018). Every so often the workers would resist, or attempt to resist, in ways that were often disordered and always illegal, since they were prohibited from organising themselves to define shared strategies. Ambiguously, Smith not only fails to suggest any way of getting out of this blind alley, but also leaves the two aspects of the issueâpolitical and economicâvague and indistinct. In addition to the right to resist a force that was in itself tyrannical, it was also possible to clearly discern the right to dispose freely of oneâs resources and negotiate the best price for oneâs labour, namely, the right to protection of oneâs contractual power. All this was trampled underfoot. Then there was the economic aspect related to the labour market, which was caught up in that stranglehold. Capitalism had put down its roots exploiting not so much the virtues of competition but the more formidable aspect of the fragility of the market.4 Given that state intervention was almost always in the best case ineffective and in the worst case detrimental, there appeared to be no other choice. Without offering a clear answer, Smith left it to the reader to deduce the answers to the question. Was allowing the workers recourse to the same weapons as the capitalists the only way to restore room for manoeuvre to the wage-setting process and the natural trend of wages? Or, put another way, was allowing the opposing forces to counterbalance each other the only way to ensure that the competition mechanism could still mean something in the labour market? Chapter 2 of the book takes shape around this question and identifies the elements involved: no longer only moral and not yet entirely economic; no longer only legal and not yet entirely political.
Obviously, many people have dwelt on these pages of Smith, but they failed to realise that in these observations there was aâpossibly unconsciousâallusion to the idea of fighting fire with fire that was anything but new. They also failed to realise that this idea, in its original version and in Smithâs formidable application of it, was part of an ideological trajectory fundamental for an understanding of how market self-sufficiency was conceived in the West.
The second clue guiding this investigation is found in a page of the Tractatus de commerciis et cambio by Sigismondo Scaccia, published in Rome in 1619, which states that resorting to one monopoly to thwart another does not constitute an offence. Conceived for the solution of a case, this maxim had already been circulating in the theological world for over fifty years.5 In adopting it, Scaccia not only legitimised it but also fostered its acquisition within another, one might say adjacent, discipline: the strictly juridical world of commercial law.6 Why on earth would it be considered legitimate to resort to a monopoly to defend oneself against another monopoly? In the Ancien RĂ©gime culture, this particular term was used to indicate any action aimed at manipulating the dynamics of trade, and hence...