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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

Sunday, March 05, 2006

Capitalism and Social Justice

Not too long ago, the excellent new blog Through the Broken Window had a week-long series of posts on questions of egalitarianism and social justice under capitalism. Chris kicked off the series with "The Virtue of Capitalism," in which, among other things, he presented this challenge to anti-capitalists:

They believe private ownership of production is coercive. There are many out there that believe they are "wage slaves" to corporations. How is voluntary action, like accepting employment, coercion?

In the comments, Chris made a statement that I agree with to a large extent, despite the fact that we use the term "capitalism" in quite different ways:

I think our current political and economic system is quite lacking in its freedom and choice. If I had the change, I would get rid of all the fascist structures in this country and many others (monopolies, quotas, tariffs, regulation, restrictions, etc). The real difference between many of the folks who support either limited government or Anarchy is who they blame. I blame the State and its intervention with everything. Others blame religion, while others blame corporations.

Although we probably disagree somewhat on how integral statism is to the size and power of existing corporations, there's probably more semantic disagreement than disagreement over substance. His use of the terms "fascist" and "capitalist" overlaps considerably with my distinction between "capitalism" and the "free market." I don't really get bent out of shape over the C-word. I tried to clarify the semantic confusion in a comment of my own:

I can't really speak for any other current of anti-capitalism, but the reason for my own anti-capitalism lies in what I see as the difference between capitalism and the free market.

Although I don't have a problem with your sense of the term "capitalism," Chris, it's considerably different from how it was originally used in the early/mid-19th century. It was used by early classical liberals (and by some Ricardian radicals like Hodgskin, who were both classical liberals and market socialists) to describe a system of class rule in which the state intervenes in the market on behalf of capitalists. The position of capitalists under this kind of capitalism was analogous to the position of landlords under feudalism: a class acting through the state. And arguably today's corporation, as part of a statist constellation of power, is even closer to the analogy of the landed aristocracy under the old regime. They don't just pressure the state, as per most libertarian public choice theory. They are the state.

So bringing things back to your first point about the coerciveness of voluntary arrangements, I'd argue that wage slavery exists because the present system isn't entirely voluntary. The owning classes rig the game, and rely on the state to enforce privileges to keep land and capital artificially scarce, and enable them to draw monopoly returns. In that scenario, workers sell their labor in a buyer's market, and labor is competing for access to capital instead of the other way around. Things would be a lot different in a totally free market, in which jobs competed for workers.

Chris, having emailed a number of other bloggers with invitations to surf on over and participate in the debate, continued the series with "Questioning the Morality of Capitalism," which was pretty much an open thread. QÖTSÁISAW made this interesting comment on historic or "actually-existing" capitalism:

....capitalism as we have known it is reliant on classism, racism, rule of unjust law, exploitation, the unchecked draining of resources and destruction of the biosphere which we and other beings depend on for life, the enforcement of beliefs on non-believers, corupt government in colusion with corupt business, and that is just to start.

This parallels some of the things Chris Sciabarra had to say in "'Capitalism': The Known Reality." Further down the thread, he added:

The IMF and World Bank, amerika's current foreign policy, and other systems, governments, and organizations like trans-nationals, ARE HOLDING A VIRTUAL GUN at the heads of the world's people and sucking the life from the planet. "Conform to what we want or we will ultimately use our power to eliminate you" is the overt message to them. That isn't a far stretch or exageration at all. It is more covert here in amerika, but the message is the same: the amerikan government is becoming less and less tolerant of people here doing something radically different. Look at Waco, look at Ruby Ridge.

I jumped in shortly afterward. Judging that the debate kept circling around the issue of power in the present system, how integral it is to "capitalism," and how far pure capitalism can be disentangled from actually existing capitalism, I wrote:

Where does that power arise from?

I don't have a problem with calling the present system capitalist, but I consider it capitalist precisely to the extent that it isn't a free market.

The important thing is, all the inequities and concentrations of power QÖTSÁISAW complains of under capitalism are (ultimately at least) creations of the state. Without state intervention in the market to externalize corporate operating costs, cartelize industry, reduce the bargaining power, etc., the economy would be a lot more decentralized and worker-controlled, and costs like pollution and resource consumption would be fully internalized in price.

I agree with Benjamin Tucker that being a "consistent Manchester man" is the best way to achieve socialism.

Next, in "Social Justice and Capitalism?" Chris put forth another topic for debate:

Can Social Justice be achieved under Capitalism?

Can Equality be achieved under any political or economic structure? Equality of opportunity? Equality of outcome? To what point? At what cost?

What is justice, that gives particular individuals greater rights that others? Can there only be justice under the law (an equality of inequality)? Can egalitarianism only exist under the State's force?

Well, if that don't fetch 'em, I don't know Arkansaw. And sure enough, lots of people went for the bait. Unfortunately, 1) I wasn't one of them, having neglected for some reason to salivate at the sound of the bell, and 2) most of the comments were addressed to something besides Chris's questions.

Had I actually commented, as I thought I did until just now, I'd have said something about the present degree of inequality being a result of state intervention in the market. That is, the state has to intervene to make people unequal and keep them that way, not to correct the market's natural tendency toward inequality. That's not to say that there wouldn't be inequality in the kind of free market individualist anarchists envision. So long as some people are workaholics, blessed with entrepreneurial talent in predicting and filling needs better than their competitors, or just plain lucky, there will be some who are reasonably rich. But in a free market society, "rich" would level off at several orders of magnitude lower than today. With much lower returns on land and capital as such, in an economy with free competition in the supply of them, the wealth accruing from hard work and luck wouldn't be able to grow on itself, through the miracle of compounded interest. And with free market entry, the natural tendency of short-term profits from entrepreneurship and innovation is toward production cost; the entrepreneur reaps short-term quasi-rents for a while, until competitors enter the field and drive his profits back down. Only through market entry barriers, like patents, is it possible to derive long-term profits from an innovation.

At the same time, with free access to unoccupied land (whether you take that in the Lockean or Tuckerite sense) and cheaper credit, with fewer barriers to employment by licensing cartels, and without "safety" restrictions on self-built housing and the like, the threshold of subsistence would probably be a lot lower.

So a lot of people who are presently destitute would be living in considerably more comfortable poverty, and the "super-rich" would probably top out at $10 million or so. That's pretty damn egalitarian compared to the existing alternative. For more individualist anarchist speculation on these issues, check out Joe Peacott's "Individualism and Inequality."

Anyway, check out for yourself this thought-provoking series of posts. The questions addressed are ones that keep popping up on this blog: How essential is the state to existing corporate capital? How far does capitalism differ from a free market? To what extent do the evils of actually existing corporate capitalism stem from state intervention, and to what extent would they exist in a free market? When I get involved in free for alls of this kind, and the various comments start sorting themselves out, I tend to find that I agree with the libertarian socialists and green types about their ends and their critique of the present system, while the free market types are right about the means and causation. Considering that the origins of both sides overlap considerably in the classical liberalism of the early nineteenth century, it's a shame they've diverged so much. The libertarian right has become predominantly devoted to an apologetic for corporate capitalism, while the socialist left has been largely taken over by authoritarian nanny-statist schoolmarms. But it doesn't have to be that way.


Anonymous Stefan said...

Sorry to post something a bit off-topic Kevin, but I'm curious about just how hostile you are toward absentee-landlordism. Here's something to illustrate: Today I went into a McDonald's and bought a Big Mac (it wasn't that great, actually, but I was hungry!). I saw the sign said "Managed and owned by so-and-so". I wondered then if it's just for the board of directors of McDonald's to extract money from the people owning and operating that building; standard libertarian theory seems to say they do.

Unless I'm mistaken, most socialists/mutualists would say otherwise. The workers actually "own" the building. But why even stop there? Under your system, would the construction workers who built the McDonald's really "own" it? If that's so, then I don't see how we can live in any condition more sophisticated than mud huts; after all, why pay for a house if the people who build the house throw you out of it when it's done? If you reply that a man can delegate his effort through contract, then it seems that you've justified the corporation. For example, Michael Eisner never personally occupied and used Disney world, but through contract he exercises a degree of control over it.

March 06, 2006 2:03 AM  
Blogger Kevin Carson said...

That's a very thoughtful question.

Tucker and the American individualists, at least, didn't seem to draw the conclusion that occupancy-ownership of land required worker ownership of all production facilities.

Tucker distinguished between buildings and improvements (which could be legitimately owned by an absentee owner), and the site itself.

But as to how this would translate in practice, he was pretty ambiguous. In places, he advocated that tenants simply stop paying rent--period.

In other places, he implied that if house rent was OK, but land rent wasn't. But if the state stopped enforcing absentee title to vacant land, the competition in supply of land would cause the rent of occupied sites to fall to the value of house-rent alone; and the cheapness of loans for house-building, caused by competition from mutual banks, would cause house-rent to fall to the simple amortization of cost.

But since titles to the vast majority of currently vacant land are probably illegitimate by even radical Lockean standards, it means that the practical difference between Rothbardianism and the latter form of Tuckerism might be fairly indistinct.

What's the answer? (Shrug)

March 06, 2006 1:06 PM  
Anonymous Stefan said...

For what it's worth, I still remember when I was a child and my parents hired a contractor to build our house. He seemed like a pretty nice guy (he even built a fun little sandbox/swingset). I'd hate to think that under a free-market my parents wouldn't have been able to do business with him. :)

You are correct, however, that much current property is illegitimate even by Lockean standards, so I guess the point is somewhat moot...

March 06, 2006 7:18 PM  
Anonymous Stefan said...

Also, I'm reminded of Roderick Long's piece defending public property awhile ago. A similar question that occurred to me there was: If the "community as a whole" owns the dirt path by trodding on it, what gives any individual community member the right to defend the dirt path from "peaceful homesteading" (like someone building a house in the middle of the road)? In practice I assumed the villagers would all just show up with knives and pitchforks if that happened (similar to what might happen if I tried to start constructing a house in the middle of Main Street). So even if my mudhut scenario were true, it would still fall to the "community of workers" to decide how to administer "their" new property, and then the same problem with the public dirt path arises.

March 06, 2006 7:26 PM  
Blogger Kevin Carson said...

Well, even if your contractor could somehow get away with saying "Thanks for the money. I built myself a nice house, with swings and everything!" it would have to be a one-time thing. The word of mouth, if he refused to transfer possession on the agreed terms, would pretty well dry up his business.

March 06, 2006 10:07 PM  
Anonymous Stefan said...

That's true Kevin. Thankfully libertarian fantasy-land does seem to have a limit on how weird it can get....

March 07, 2006 2:48 PM  
Blogger Chris said...

You might actually like to come back over and comment a bit more on this issue. We were talking today about the inequality debate on WSJ blog and the minimum wage arguments that keep popping up.

Additionally, determinism vs. free will keeps finding its way into the discussion. This is an open invitation to you and your readers.

March 13, 2006 6:12 PM  

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