Quality Control in the Free Market

[Central Prestonia]

Quality control. When one hears this term, a myriad of visions come to mind: product inspectors at packinghouses, the constant tests and evaluations of new drugs and technology, the "Grade A" and "Inspected and Passed by the USDA" labels found on all food products in the United States. The term quality control has become synonymous with safety, with reliability and of course, with quality of the products we purchase and enjoy daily. It is what assures us our dinnertable goods are unadulterated. It assures us our furniture and electronics and countless other necessities are well-built, and when they break down, will be repaired or replaced. The institution of quality control is one which consumers in all developed nations of the world have become accustomed to, one which most will agree is necessary and proper for the market.

In the United States, the function of quality control is exercised by both the market and the state. However, for this article we shall ignore the market aspect, which is for the most part limited to consumer goods, and focus upon the state aspect. The state's assumed responsibilities of quality control deal with the most essential goods and services produced and consumed: food, medicine/medical care and water, though other less-important and varied regulatory bodies of the state do exist (occupational licensing boards, to name one example). For the purpose of this article, we shall focus upon the bare essentials previously mentioned. In the United States, the responsibility of quality control over food, medication and water is carried out by the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA). These bodies, founded in 1906 and 1862 respectively, are tasked with, among other things, the promotion of food, medical, cosmetic and (to a more limited degree) water safety. In other words, they are state apparatuses of quality control. Of these, the FDA is more powerful by far, carrying with it the responsibility for regulation of nearly all medical products, food and cosmetics sold within the United States. Let us now examine how this body, perhaps one of the most overarching and omnipresent of the United States' numerous regulatory agencies, came to be.

In 1903, muckraking author and unabashed socialist Upton Sinclair published his novel The Jungle, intended to be an expose on the so-called "predatory capitalism" of the Chicago-based Packinghouse Trust. What was accomplished, however, was something much more statist and overreaching (and, ironically, something which Sinclair himself expressed regret at, having felt his initial aim to have been lost): the formation of the FDA and the beginnings of state control over the most basic and necessary of human resources. Americans, having read Sinclair's sensationalist accounts of adulterated product, tuberculatic pork, and meats which were not what they claimed to be (rats being shoveled into corned beef hash mixtures, goats sold as lamb, etc), clamored for change and got it. President Theodore Roosevelt, having banished meat from his own table in disgust, signed into law the Pure Food and Drug Act, which laid down standards for the production of food and medical products. It dictated how livestock may be raised, in what manner it may be slaughtered, how it was to be transported and handled at packinghouses, how it was to be fed, how it should be labeled for sale, and the time period in which it must be sold. It dictated what kind and what amount of pesticide may be used for the growing of vegetables. It established regulations on compounds found in medicine, not only upon what may be used but in what concentrations. In an instant, the market for man's most basic needs had been rendered over to state control, and the state had clamped down with all its typical zeal.

Of course, in the modern welfare-statist/cult-of-the-state mindset predominating political discourse, it is a near-heresy to suggest that these "reforms" we excessive or perhaps unneeded. In this author's discussions on the subject, the typical response from the ignorant is something along the lines of "do you want to go back to how it was in the late 1800s, when shoddy product was the only choice?" Of course, this is a fallacious argument: "shoddy products" were never the only choice, and in some cases not even the predominant one. Farmers markets have always existed, selling locally-grown and pure products even in the face of large corporate dominance and the monopolies of the Trust Era. That aside, one cannot truly fault those uneducated in free market (I avoid the terms "Libertarian" and "Austrian" here not as a slight but in deference to that fact that not all free marketeers identify by those terms) doctrine for their ignorance, for Sinclair paints an admittedly powerful and compelling picture. The monolithic trust running out all who dare to compete and flooding the market with substandard product, cutting corners in the name of profit is a powerful image to those uninitiated. However, what few even among free market circles understand and appreciate is that this very mechanism, the trust of shoddy business, can be just as easily turned into a trust of quality control, performing all the necessary functions and none of the frivolous ones of the FDA.

Let us now consider how this might be accomplished. Suppose that the year is 1903, the place, Chicago. The packinghouses are reeling under the public outcry following Sinclair's expose, and losing revenue and public trust rapidly. The public demands reform, transparency and above all, quality. In the real progression of history, these were fulfilled by the state, but let us assume that the President and his men take their traditional stance of allowing the trust to sort itself out. At some point, likely soon after The Jungle's publication, the Trust will realize that "the gig is up" on impure product and begin its own form of crackdown and internal regulation in an effort to salvage public trust and of course, its own profit. Standards would be established, perhaps a regulatory sub-trust created, to satiate public demand. The regulatory trust, as we may call it, establishes a means by which its approved product will be easily recognizable, a seal perhaps, which is affixed to all goods passing its examinations. A media blitz ensues, assuring the public that things have changed and urging them to purchase only products with the seal of approval. Seeing that the public's trust will depend upon the word of the regulatory trust, the packinghouses flock to it to have their products vetted for approval, with minimal dues and fees to cover the labor of inspection of course. The consumer comes to associate the regulatory trust seal of approval with pure products, running any non-approved product out of the market with the supposition that it is impure. Vendors and businesses are contracted by the trust and the public to stock only certified pure products. The message resonates from the public through the business world: sell honest goods, or be eliminated by the unerring tide of market forces. All of this occurs with minimal if any price increase to the customer, and no increase in government size (and thus taxes).

Of course, this system is not perfect and relies on the ability of the regulatory trust to resist corruption, bribery and threats, but it can work. More than that, it can work independent of state control, of frivolous regulations (for example, the banning of folate in non-meat products by the FDA making vegemite illegal de jure) and bureaucratic red tape. The statist will no doubt discount this proposal due in large part to the factors listed, the susceptibility of the regulatory trust to outside influence, carefully ignoring the plain truth that the fledgling FDA faced much the same challenges. The counter to this argument, however, stands plain: the integration of a regulatory trust into mainstream market society over time will make its position less and less assailable (imagine the uproar, for instance, if ConAgra or somesuch corporation attempted to bribe the FDA). Once again, the old adage of the free market is proven correct and universally applicable: market forces can and will regulate the market independent of the apparatus of the state when left unmolested by the same.

[Allanea]

epic preston