Rothbard on War Collectivism

Via Jesse Walker, on the LeftLibertarian yahoogroup. Murray Rothbard's classic essay "War Collectivism in World War I."

War collectivism showed the big-business interests of the Western world that it was possible to shift radically from the previous, largely free-market, capitalism to a new order marked by strong government, and extensive and pervasive government intervention and planning, for the purpose of providing a network of subsidies and monopolistic privileges to business, and especially to large business, interests. In particular, the economy could be cartelized under the aegis of government, with prices raised and production fixed and restricted, in the classic pattern of monopoly; and military and other government contracts could be channeled into the hands of favored corporate producers. Labor, which had been becoming increasingly rambunctious, could be tamed and bridled into the service of this new, state monopoly-capitalist order, through the device of promoting a suitably cooperative trade unionism, and by bringing the willing union leaders into the planning system as junior partners....

Of course, I take issue with Rothbard's characterization of the pre-WWI economy as "largely free-market." Although state intervention was admittedly much more massive and direct after that time, it already existed on a large scale in the nineteenth century. Benjamin Tucker's essay "State Socialism and Anarchism" described the four major forms of monopolistic privilege he saw as causing labor's wage to differ from its natural value (i.e., its product). And even before WWI, the state had intervened in all sorts of new ways (largely neglected by Tucker) to promote the rise of monopoly capitalism: subsidies to railroads and other "internal improvements," the cartelizing effects of patents, and the tariff as "mother of cartels."

For their part, the liberal intellectuals acquired not only prestige and a modicum of power in the new order, they also achieved the satisfaction of believing that this new system of government intervention was able to transcend the weaknesses and the social conflicts that they saw in the two major alternatives: laissez-faire capitalism or proletarian, Marxian socialism. The intellectuals saw the new order as bringing harmony and cooperation to all classes on behalf of the general welfare, under the aegis of big government. In the liberal view, the new order provided a middle way, a "vital center" for the nation, as contrasted to the divisive "extremes" of left and right.

big business , monopoly