In a preliminary finding issued last week, the U.S. Department of Commerce, acting through its International Trade Administration, announced new duties “applicable to all entries of Chinese solar cells.” The long-anticipated finding represents a first step toward a “final determination [of whether] imports of solar cells from China materially injure, or threaten material injury to, the domestic industry.”
With Chinese panels making up approximately half of the U.S. market — up by almost a multiple of five since 2009 — American companies like SolarWorld deemed it time to appeal to the government to lock out the competition. Tuesday’s decision is one result of their complaints, and concludes that Chinese companies have benefited from anti-competitive “subsidies ranging from 2.90 to 4.73 percent.”
It’s clear enough that the Chinese firms in question benefit from special assistance. What is perhaps less clear is the extent to which it outweighs the very similar aid that the United States government has given domestic firms. The question is thus how to strike the right balance, reaching a fair and equitable solution for all of the players in the solar panel market.
Conventional wisdom, worried about the perceived likely results of unbounded or cutthroat competition, bids us to beware the solutions of the free market. If commerce were let alone, without the checks of government, the argument goes, the powerful lords of industry would be free to exact upon society a congeries of abuses we couldn’t possibly imagine.
Accordingly, the state — public-spirited and benevolent — is regarded as the only institution capable of “finding the line” that separates the fair and competitive from the anti-competitive, that is, from unfair, special privilege. The flaw embedded in this account, however, is that it utterly misunderstands the role actually assumed by the state, one perfectly at odds with its putative role as minder of fairness and commercial equipoise.
As a group, well-connected economic interests haven’t favored the open competition of free markets in the least. Rather, economic license has been the chosen course of established economic elites, arranged strategically around the loci of coercive state power. Subsidies and tariffs on both sides of every international boundary are the natural results.
By constraining competition and impeding access to natural opportunities, big business is empowered to underpay and to collect hidden rents from the productive; for that reason, large corporations regularly lobby for and accept just the kinds of subsidies that are anathema to real free markets. All sorts of trade imbalances ensue, on both the micro and macro levels.
Writing in the nineteenth century, American anarchist Josiah Warren understood and explained the ways that coercive state involvement creates opportunities for unequal and unfair exchange. Warren contended — just as do today’s market anarchists — that without monopolization by force, “importing and vending would be paid in an equal amount of labor.” Of course unequal exchange would be possible, but without the intervention of authority, based in the state, trades would tend toward the fair and equitable.
Both Chinese and American companies use the state to benefit at the expense of ordinary, working people, that is, producers. Their interests naturally conflict, but only within the parameters of a system of monopolization that will continue to benefit them regardless of the International Trade Administration’s arbitrary rulings.
The best and only way to determine the real market price of a solar panel — or anything else — is to eliminate all privilege: No more subsidies of any kind, be they sweetheart loans, intellectual property protections, or cost barriers to entry.
Then we won’t need committees and panels, composed themselves of the privileged, to decide where the boundary line is between some supposed “free market” of “fair competition” and “anti-competitive practices.” We’ll see which manufacturers, Chinese or American (or both), can stay afloat while shouldering their own costs without government help.
C4SS News Analyst David S. D’Amato is a market anarchist and an attorney with an LL.M. in International Law and Business. His aversion to superstition and all permutations of political authority manifests itself atfirsttruths.org.