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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

Tuesday, January 31, 2006

Faux Private Interests, Revisited

Social Memory Complex tears David Boaz a new corn chute for his typical display of vulgar libertarian public choice theory (or as Jeremy put it, "the old Cato Institute line that institutional analysis need only go so far as to frame up politicians, letting the other players in the politics itself go blameless"). Boaz writes:

When you spread food out on a picnic table, you can expect ants. When you put $3 trillion on the table, you can expect special interests, lobbyists and pork-barrel politicians....

Actually, I think it's the other way around. When you've got a centralized state that's amenable to control by a ruling class, you get $3 trillion on the table. Of course, it's something of a chicken-and-egg thing. Big business is a lot bigger and more cartelized because of big government. But big government is also a lot bigger because of big business acting through it to stabilize political capitalism. The synergy between them has been there since the moneyed classes created a Hamiltonian federal government, and both government and business have enjoyed cancerous rates of growth since the simultaneous corporate revolution and explosion of centralizing federalism in the 1860s.

Anyway, getting back to Boaz:

People invest money to make money. In a free economy they invest in building homes and factories, inventing new products, finding oil, and other economic activities. That kind of investment benefits us all -- it's a positive-sum game, as economists say. People get rich by producing what other people want.

But you can also invest in Washington. You can organize an interest group, or hire a lobbyist, and try to get some taxpayers' money routed to you. That's what the farm lobbies, AARP, industry associations, and teachers unions do. And that kind of investment is zero-sum -- money is taken from some people and given to others, but no new wealth is created.

If you want to drill an oil well, you hire petroleum engineers. If you want to drill for money in Washington, you hire a lobbyist. And more people have been doing that.

At Social Memory Complex, Jeremy responds:

And if you want to kill somebody, you hire a hitman. That doesn’t make it ok that people hire them, just because the service is available for purchase. This apologism for the corporate influence in - nay, the perpetuation of - state capitalism is the very portrait of the vulgar libertarian approach. Selling influence is bad. But buying influence is mere economic survival. Politicians should be more principled, but businessmen looking for a buck can be forgiven for looking at the short term gains of rigging the game.

In fact, Brad Spangler once argued not only that the corporate beneficiaries of statism are directly culpable in the state's coercion, but that it's misleading even to call one side of the equation "public" and the other "private." Rather, he referred to the latter as "faux private interests that are actually part of the state":

Let’s postulate two sorts of robbery scenarios.

In one, a lone robber points a gun at you and takes your cash. All libertarians would recognize this as a micro-example of any kind of government at work, resembling most closely State Socialism.

In the second, depicting State Capitalism, one robber (the literal apparatus of government) keeps you covered with a pistol while the second (representing State-allied corporations) just holds the bag that you have to drop your wristwatch, wallet and car keys in. To say that your interaction with the bagman was a “voluntary transaction” is an absurdity. Such nonsense should be condemned by all libertarians. Both gunman and bagman together are the true State.

Jeremy says something similar here:

Here’s the truth of the matter: mega corporations derive their existence, power, and modus operandi from the government from the get-go. Government charters corporations and protects them from liability, subsidizes, allows de-facto cartelization, etc. Big business has sought not only to expand their influence of gov’t, but to expand the power of that very state they are buying an interest in - using regulation to offset market mechanics, accquire sweetheart loans and bailouts, sieze private property through eminent domain, and otherwise manipulate this so-called free market. For every businessman who distastefully lobbies Congress there are at least 5 who see the dollar signs and are quite content to let our individual freedoms and pocketbooks take the hit.

Business is part of the problem. Corporations are quasi-states, using government to gobble up the market and returning the favor by funding the politicians who enable it. They’ve always been part of the political equation, from the Civil War at least.


Blogger Adem D. Kupi said...

I think Jefferson totally sold "us" out.

February 01, 2006 8:28 AM  
Blogger Adem D. Kupi said...

... to clarify:
He compromised certain key issues to the Federalists in order to take the election.

I also think Burr was a hero for capping Hamilton's ass, so take that with a grain of salt. :)

February 01, 2006 8:30 AM  
Blogger alan said...

Damn, Adem! You sound bitter and non-plussed by the whole thing. ;)

"Capping Hamilton's ass" good one! I hope the NSA, FBI, CIA and Big Swingin' Dick Cheney aren't listening in on us right now. Those boys ain't too bright. They might take it as a threat toward Hamilton. You know how ignorant USAmericans are about history ya know. They must put us through a retroactive rendition to Andersonville or something. ha ha ha.

Big Swingin' Dick. Gawd I made a funny.

I'm so creative when I'm full of four double bocks. Sam Adams. Cheers!~

February 01, 2006 9:27 AM  
Anonymous Jeremy said...

Thanks for the props, Kevin! I'm enjoying Studies much more than most economic works.

February 01, 2006 10:08 AM  
Anonymous Wild Pegasus said...

While Brad is right that the robber is too simple, his example also is too simple. Let's take a industry where there are 3 big players and 10 small ones. The 3 big players form a lobby and lobby Congress for more stringent regulations to protect their customers. Congress agrees and creates a regulatory agency. The regulatory agency squeezes 7 of the 10 small players out of the market.

The remaining 3 small players are being squeezed and realise they have to play ball. They call up a friend in the Senate and get a "research" subsidy passed in the next appropriations bill. They stay in business, continuing to compete against the big players.

This is more complicated than any robber/bagman scenario. There are a range of undesirable actions from a libertarian standpoint. But they don't affect the game - they have to play to do business. You may not like the designated hitter, but if you're managing an American League team, you've got to "field" one.

Of course, saying the whole thing is a capitalist class conspiracy is saying way too much. Taking mine safety, for example, the public outcry for regulation is virtually unanimous and covers the entire political spectrum.

- Josh

February 01, 2006 10:50 AM  
Blogger Adem D. Kupi said...

I don't believe in mine safety regulation... at least in a non-political environment.
I would rather have miners sue for reckless endangerment, if anything.

Really the question should be moot, because the labor market shouldn't be so skewed against labor that people are taking those kinds of jobs without risk compensation.

February 01, 2006 12:03 PM  
Anonymous Wild Pegasus said...

Mindful of the danger of making some sort of vulgar libertarian fallacy, the mountain people of West Virginia were pretty much always poor and had no capital to mine coal. Outside capital was needed to mine the coal, and the coal companies brought it.

- Josh

February 01, 2006 1:10 PM  
Blogger Jesse said...

They also acquired a lot of land fraudulently...

February 01, 2006 8:11 PM  
Anonymous P.M.Lawrence said...

Wild Pegasus, whether outside capital is needed or not depends on the geology. In some places, e.g. Staffordshire, seams slope slightly downwards but valleys are steeper. When this happens, you can start digging at the lower end where it breaks the surface and mine upwards, paying for struts out of profits and not bothering with shafts or drainafe systems until later. Was there anything like this available to kick start West Virginian mining?

February 02, 2006 1:14 AM  
Anonymous Anonymous said...

I'll have to admit, I shake my head at those "libertarians" who are so ga-ga over Wal-Mart, not realizing it's a State-created corporate monstrosity with very litte of the "free market" about it. The same with SUVs; they're not free market, either. The auto makers created them in response to federal fuel standards; without that interference they would have never existed.

Bob Walllace

February 02, 2006 4:24 AM  
Anonymous Hogeye said...

I agree with everything in the article ... except the rather mystifying misunderstanding of Boaz. The part that sticks in Jeremy's craw is this:

But you can also invest in Washington. You can organize an interest group, or hire a lobbyist, and try to get some taxpayers' money routed to you. That's what the farm lobbies, AARP, industry associations, and teachers unions do. And that kind of investment is zero-sum -- money is taken from some people and given to others, but no new wealth is created.

Somehow, Jeremy seems to construe this as Boaz approving of political entrepreneurship, privileged corporations, lobbying, etc. The way I read it, Boaz disapproves of such, comparing to a zero-sum game and robbery. Basically, the tone of the blog article is that it disagrees with Boaz about state capitalism, when it is really agreeing.

February 02, 2006 1:01 PM  
Blogger Sheldon Richman said...

Anonymous writes: "I'll have to admit, I shake my head at those 'libertarians' who are so ga-ga over Wal-Mart, not realizing it's a State-created corporate monstrosity with very litte of the 'free market' about it."

How so exactly? Details would be helpful. Wal-Mart is a fairly young firm; it hardly was an architect of the corporate state. It outcompeted some big established players: Kmart, Sears, Montgomery Ward. Are special privileges responsible for its growth? The highway system may constitute a subsidy, but it's not just available to Wal-Mart. It has benefited from eminent domain (theft), but surely but to such a large extent that ED is responsible for Wal-Mart's growth. Details please. I stand ready to be disabused of my not unfavorable attitude toward Wal-Mart.

February 03, 2006 8:59 AM  
Blogger Kevin Carson said...


It would probably be more accurate to say they're beneficiaries of the corporate state, but not to any greater extent than the rest of the Big Box store companies.


The critique, as I understand it, is that Boaz disapproves of the process. But he blames only the state, and sees the corporations as passive victims rather than actively users of the state.

February 03, 2006 4:46 PM  
Blogger Sheldon Richman said...

Kevin, yes, Wal-Mart profits from the general benefits bestowed on big corporations. But not long ago it was not a big corporation. It beat out some big corporations to get where it is. I just think we need to keep the full context in mind. I condemn Wal-Mart for building on stolen land or for trying to have land stolen on its behalf. I condemn its CEO for pushing for a higher minimum-wage by law. But I find it hard to fault Wal-Mart for its general success. It acts in a particular context with a particular physical and legal infrastructure it did not create. What it has done is provide products at low prices (a godsend to poorer people) and lots of job opportunities for low-skilled workers. As economist Russell Roberts points out, Wal-Mart can't be lowering wages by increasing the demand for low-skilled workers. That makes no sense. It is fair to ask why Wal-Mart is some people's best opportunity for work. But whatever the reason, I don't see how it can be Wal-Mart's fault. If Wal-Mart were to disappear and nothing else were to chance, those people would be worse off. I'm open to argument that I am wrong.

February 04, 2006 5:12 AM  
Anonymous P.M.Lawrence said...

Phew, I'm just pulling out of a bad week after more got thrown at my reactive depression. I've been delayed putting some stuff on the "no more stealing starting now" thread (BTW, KC, you might want to follow up the last material I put on your latest vulgar libertarian thread).

Anyhow, back on topic. Sheldon, the key point is the way people or groups who succeed despite the odds get co-opted. This doesn't just mean psychologically by believing that success was due solely to their own efforts and not a large element of lottery (meaning, they believe that others could succeed too if only they were up to it).

It also means that the co-optees start supporting the system.

With Walmart, that means that - to the extent they have been co-opted already - their fall would mean the immediate problems for their workers you describe, but - if the system were also stopped - then a reduction in whatever pressure Walmart is throwing in the scales to make people need Walmart.

So there's the catch: the time delay, plus the way the Hydra grows new heads whenever you cut one off, means that one Wal-Mart more or less can't make any long term difference, but it can make a problem for the people who get swept up when one goes under.

The problem needs to be addressed at both levels - cut off heads and cauterise, the way Hercules did it. But what precisely does that mean?

February 05, 2006 4:30 AM  
Blogger Sheldon Richman said...

"...whatever pressure Walmart is throwing in the scales to make people need Walmart."

With all due respect, I sense some question-begging here and a level of abstraction that is, frankly, unhelpful. What exactly does Wal-Mart do to make us need it? (Besides offering convenience, low prices, and job opportunities--those bastards!) I really want to know. I'm no corporate shill. I own no stock in the company.

Wal-Mart was not responsible for forcing the taxpayers to pay for the interstate highway system or other subsidized infrastructure. It can hardly be blamed for using the highways. (I confess, I use them too.) What should one do about Wal-Mart -- call for the use of government violence against it? That would be ironic -- the state is a bigger threat than Wal-Mart. When Wal-Mart acts like it's co-opted (e.g., uses eminent domain, seeks subsidies), we should condemn it loudly. But I have the feeling some people would hate the company even if it forswore ED and the like. Slamming Wal-Mart per se seems unjustified. Acting within the given context, it beat the big established high-priced competition and made a lot of regular people better off. What should it have done?

Subsidies are pervasive in this economy. It's all so tangled up that no one really knows if and how one might have benefitted in any given instance. Does that mean no one should act? Yes, let's go after the system and identify the bad guys for their bad acts. But let's be discriminmating in choosing our targets.

February 05, 2006 8:22 AM  
Blogger Kevin Carson said...


On the mining example, wouldn't sitting on top of valuable mineral reserves put a community in a powerful bargaining position to obtain capital for exploiting those reserves, if they weren't dispossessed in some way?


I'll go so far as to say Wal-Mart isn't any more culpable than the other big box retailers. All those retailers are collectively exploiting an ecological niche created by state capitalism--Wal-Mart's just exploiting it more efficiently, and crowding the other species out of the niche.

But the exploiters and the niche have coexisted synergistically since the state created the railroad system in the 19th century. The first to exploit it effectively were the national wholesalers, followed by department stores and retail chains. "Just in time" distribution and the other wonders of Wal-Mart's innovative warehousing system grew up as the latest way of exploiting that niche.

But the fact remains, if the highways were funded on a cost basis (weight-distance tolls on trucks), and deprived of eminent domain, none of those distribution systems would survive.

And I'd add that creating the railroads and then the interstates wasn't a one-time, now-we're-done-with-it thing. It's an ongoing process. From what I've seen, Wal-Mart is one of the leading lobbying forces to create new highways or expand existing ones, and to build new airports. The Walton family owns NW Arkansas governments lock, stock, and barrel, and were the main force behind the creation of the regional airport at Highfill. So I hate them on a very, very personal level.

I'd also add that there's considerably more moral shadiness, IMO, involved in gravitating toward countries with slave labor and state-enforced sweatshop conditions. And Wal-Mart is one of the most shameless in pressuring its vendors to move to countries where workers are treated like livestock.

February 05, 2006 11:16 AM  
Blogger Kevin Carson said...

I also meant to add, that if W-M disappeared overnight, with nothing to fill the void, of course people would be worse off.

The question is, what alternatives have been crowded out by Wal-Mart as the beneficiary of state capitalism?

I'd get rid of Wal-Mart by getting rid of all the subsidies and privileges that benefit it, and letting a decentralized distribution system and locally-owned retailers grow up in its place.

So in response to the question "What should Wal-Mart have done," I can't help but think of that great line from the James Bond movie: "Why I expect you to DIE, Mr. Bond."

February 05, 2006 11:20 AM  
Blogger Sheldon Richman said...

Kevin, thanks for those specifics. They are what I was looking for. I'd like to find documentation of the slave-labor point. I too would get rid of all subsidies, regulations, and taxes--to put it less wordily, the state. Then we can see if continent-wide chains and distribution can be justified purely in economic terms. I hesitate to prejudge the case.

Incidentally, why are trucks weighed on the interstates?

February 05, 2006 12:35 PM  
Blogger Jeremy said...

The critique, as I understand it, is that Boaz disapproves of the process. But he blames only the state, and sees the corporations as passive victims rather than actively users of the state.

Thanks, Kevin, that's precisely what I meant, though I could have been clearer. The title of the article was "Whitewashing the Bribers" - pointing out that both private and public players are responsible for the system. It's not a matter of one fatal flaw that is at the source of our system's imbalance. If I were more sophisticated I would have summed this up as another example of the dialectical approach to libertarianism.

March 31, 2006 8:31 AM  
Blogger Jeremy said...

I hesitate to prejudge the case.

I respect that position 100%. Basically the point of my article was to get libertarians to widen their criticism of political institutions. The state is not the only player.

March 31, 2006 8:32 AM  
Anonymous Anonymous said...

Isn't this the philosophy of the so well distained carpetbagger philosophy played out after the Civil War made contemporary in today's business/state environment?

When corporate lobbyists and Congress are allies in targeting the American republic through legislation or taxation, isn't it just the same as targeting the so called freed slaves during Reconstruction?

Except that now, all Americans are those so called freed slaves, and it is jobs, wages, income, and wealth that has been targeted for exploitation.

January 07, 2009 12:05 PM  

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