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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Friday, January 14, 2005

Vulgar Libertarianism Watch, Part 3

Alex Singleton at the ASI gives a glowing review of Philippe Legrain's Open World: The Truth about Globalization.

Legrain may provide an actual definition of "globalization" (I don't know--I haven't read the book). But Singleton does not--it simply goes without saying that we know what he means by the term. And we probably do: the kind of corporate mercantilism that neoliberals call "free trade," but which has about as much to do with the real free trade of Cobden as Insoc did with the English Socialism of Rutherford, Aaronson and Jones.

You see, "globalization" can refer to any increase in the total volume of a country's trade with the rest of the world. That doesn't mean much. When U.S. government subsidies to the export of capital make overseas production artificially competitive against production at home, the increased imports count as "globalization." But they're a net reduction in efficiency, brought about by state intervention on behalf of the government's corporate clients.

And that's the trouble with most of the trade that falls under the heading of "globalization" these days. Such global economic activity may be "trade," but it isn't free trade. It wouldn't pay for itself in a free market.

The central function of the World Bank and of Western foreign aid is to subsidize the export of capital by funding the transportation and utility infrastructure overseas, without which investments in production facilities would not be profitable. It renders offshore production artificially profitable, so that we buy stuff from China that we'd make for ourselves close to home in a free market.

In addition, "intellectual property" laws, impermissible in a free market, lock Western corporations into control of the latest production technology.

And subsidies to long-distance transportation artificially reduce the cost of shipping the stuff back home to us.

Let's not even get into the role of U.S. intervention and the threat of U.S. intervention in guaranteeing the political security of capital investments overseas. The last I heard, a free market means market actors fully internalize all the costs and risks of their activity, and pay for all the services needed (included security) to make their investments profitable.

According to Singleton, Legrain points to the greater rate of increase in national income for "globalizing" than for non-"globalizing" countries, as evidence of the salutary effects of "globalization."

But any number of things, good or bad, can cause an increase in national income. The monetization of the subsistence and barter economy, caused by expropriating the producing classes and coercing them into the labor market, can show up as an exponential increase in "national income." If somebody figures out how to suck air out of the atmosphere, bottle it up, and sell it back to workers as an alternative to suffocation, that'll probably kick the "national income" up a few notches. Not everything that increases "national income" is good (these people have heard of the broken window fallacy, right?).

In addition, if the income of the top few percent of the population increases drastically, but that of the majority stagnates, it may show up as a substantial increase in average real income. That's essentially what has happened in the U.S. over the past thirty years, where wage income has been nearly flat while the income and wealth of the plutocracy has increased several times over. Virtually all increases in productivity have gone to those at the top.

For the welfare of the average person, what kind of "globalization" takes place matters a lot more than how much.


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