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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, July 25, 2006

Smarter Wal-Mart Defenders, Please!

The Mises Blog linked to another by-the-numbers defense of Wal-Mart, this time by Paul Kirklin. The article was about what you'd expect (he even repeated the "best available alternative" cliche in the comment thread, in response to a discouraging word about sweatshops).

You have to wonder if these things are written on a prefab template:
1. Nobody's forced to shop there;
2. Nobody's forced to work there;
3. Its sweatshop suppliers beat the best available alternative for foreign labor;
4. And you're an ignorant socialist! Neener neener!

What stands out, though, is a great comment by our own frequent commenter, Joshua Holmes (aka Wild Pegasus):

Wal-Mart:

* soaks up hundreds of millions in direct subsidies

* gets millions more in wildly unfair tax breaks

* steals tens, perhaps hundreds of thousands of acres of land through public domain

* buys most of its products in blatantly corporatist China

* gets free access to the interstate highway system

Fuck them and their "free-market" defenders.

So what do you really think, Josh? In response, Mises comments frequenter "Person" repeated a predictable line of argument he has resorted to more than once (and taken a beating every time:

Yep, "foul" everyone who has and uses free access to the interstate highway system. They're obviously criminal and any business success they had obviously wouldn't have happened without the state.

Everyone is a statist. Everyone should be looted for that crime.

Person followed up shortly thereafter with

I have one more question for everyone who likes to play the game of "ooh, look at this one state intervention that appears to help Wal-mart and ignore all the others that hinder it, so obviously Sam Walton would have been incapable of success in business without the state":

If some anti-statist movement was able to achieve some success, would you say, "Obviously, they had an immense subsidy due to their ability to freely travel on the interstate highway system, so any success they can claim must be due to the state." ?

No, no of course you wouldn't. If you made the first claim about Wal-mart, you're probably not mentally capable of maintaining that much consistency in your positions.

Ahem. The argument, I believe, is that a subsidy to a given input disproportionately benefits those firms which make heaviest use of that input. Businesses operating over large market areas, and relying most heavily on long-distance distribution, will benefit disproportionately from the Interstates. Therefore, they constitute a subsidy to economic centralization. Anyone incapable of following that train of thought ought to go easy on the "mental capability" remarks; you know, glass houses and all that.

Yancey Ward also joined in with this argument:

Several commenters have complained that WalMart uses eminent domain. This is not true. WalMart may benefit from its usage, but it is government that actually wields the power.

Holmes attempted to explain why highway subsidies have this effect, and also used Brad Spangler's brilliant gun man/bag man analogy:

Yep, "foul" everyone who has and uses free access to the interstate highway system. They're obviously criminal and any business success they had obviously wouldn't have happened without the state.

They might have had business success, but certainly not on the scale they have it.

Compare the damage done by trucks to the damage done by cars. Trucks cause significantly more damage to highways than cars, for obvious reasons. So, are trucks and trucking companies paying more in taxes due to the damage they cause? No, of course not. This is a subsidy. A free market highway system, if such a creature could even exist, would have to charge trucks much more for access due to the extensive damage they cause.

Several commenters have complained that WalMart uses eminent domain. This is not true. WalMart may benefit from its usage, but it is government that actually wields the power.
So they're just holding the bag while the government holds the gun. Gotcha.
For those unfamiliar with the "holding the bag" reference, here's the original:

...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.

...at least to anyone outside of Galt's Gulch, where all the cheekbones are sharp and everyone's above average. Next came quincunx:

A free market highway system, if such a creature could even exist, would have to charge trucks much more for access due to the extensive damage they cause.

Well it did exist sans trucks in the early 1800s (~3500 mi of private roads). Vehicles were charged for their tire width and number of axles.

BTW, toll booths charge for axles even today (at least in my corner of the country).

Unless you have a problem with this example because technically, the state was around - so it might have subsidized someone somewhere which could have effected this in some vague marginal sense.

So the fact that private roads existed before trucks came into existence, and therefore logically could not have charged trucks fees based on the damage they caused, proves that a free market road system's pricing wouldn't have to take trucks' damage into account today when they do exist? Didn't logic like this once cause a computer to explode in an episode of Star Trek?

Person came back with another argument that he's used before--that the recipients of direct government subsidies are net victims of government interference:

[Person]: "They might have had business success, but certainly not on the scale they have it."

Certainly? Certainly? I guess in all your moral indignation, it never once occurred to you that maybe government intervention is more of a hindrance to Wal-mart than a support? Could you for moment just contemplate that possibility? That maybe without government intervention in the transportation system, maybe their methods would have been even more successful? Or maybe the intelligence of Sam Walton maybe, just maybe, wouldn't have entered a blue screen of death if political/market conditions were different, but would have adapted just the same?

[Holmes]: Yes, certainly. As in "There would certainly be no atomic bomb without the state", so "Wal-Mart would certainly not have enjoyed this level of success without the state".

[Person]: If you don't have a meaningful response, please, just concede the point. You're not fooling anybody with a cryptic response. No one thinks you have a deep understanding of the issue you're trying to reveal through subtle comparisons. What they see is a troll who's trying to score some "street cred" with mutualists. Grow up.

Well, surely he can't have any less "street cred" than Person has scored with his faceless Misesian masters, after this pathetic performance. (Now that you've successfully passed the Mises Blog comments hazing challenge, Josh, your promotion papers for thirty-third degree mutualist will be in the mail. I expect to have your initiation ceremony sometime next week.)

[Holmes]: Concede what point? Wal-Mart benefits heavily from state interference on its behalf, making it more successful than it would be. I'm not sure what deeper insight you would like. Or did I defile your Church of the Rich?

[Person]: Did you not read anything I posted, at all? Sure, some interventions "benefit" Wal-mart. Such benefits could also be grossly inferior to what a free market would provide. What's your basis for claiming the free market would not be more conducive to their success through e.g. cheaper provision of such inputs?

....Yet all you can do is isolate one "benefit" and attribute to that, all of Wal-mart's success. You don't realize how hindering this "benefit" is, nor even realize it's incumbent upon you to demonstrate otherwise. I've explained this again and again, for example, by asking you to apply the same standards to anyone who uses "the interstate highway system" and ask if you consider the state the sine qua non of their success. That attempt was, of course, lost on you.

Quasibill, who has mopped the floor with Person in previous debates when he made that same argument about the Interstates, had at him once again:

You would realize that whatever "benefit" they're getting from the government, that input would be far, far, far cheaper if they could buy it on a free market. That "benefit" is a hindrance.

So, in person's world, welfare moms would receive better benefits to sit at home and churn out kids absent the state. The Robert Byrd outhouse on the appalachian trail would be furnished in platinum. The 15 administrative assistants in my school district would be making more than the $95,000.00 salary they are already making for their 30/hr a week jobs. Contractors on public works jobs are making less than they would in the absence of prevailing wage laws. Union members are actually making less than they would if companies were allowed to fire them if they went on strike.

Bwahahaha. This isn't the first time that Person has used that lame argument about the Interstate, and then been used to mop the floor by quasibill. Alas, quasibill's puny logic is powerless against Person's mighty head of brick. Flash back to this exchange:

[Person]: Furthermore, if you divide the costs of the road system out by the users, it's clear they're getting a great deal. If you don't beleive the free market could replicate this, that's an indictment of the free market, not of government -- hardly a libertarian position. What's more likely is that Wal-Mart is hindered by government, not helped. Transportation would be easier, not harder.

[quasibill]: Hardly. The whole point of state intervention is to give *someone* a good deal. Of course, the point that Rothbard made, and apparently many Austrians currently fail to realize, is that the unstated part of that deal is that someone else gets a raw deal. So to argue that big business wouldn't get such a good deal on roads in a true free market is NOT an indictment of the market.

[Person]: The state build roads. But the market is better -- the market would have made better, cheaper roads, and long-distance transportation would be even cheaper.

[quasibill]: This is not necessarily true. The market is better, but not always cheaper. Just ask any robber or burglar....

It appears from your answers that you have a serious misunderstanding of the issue of cost in general versus cost to an individual.

Just because transportation would be cheaper in general if left to the market does NOT necessarily imply that it would be cheaper to a given individual or business. In fact that is exactly why socialism exists - to defray the costs suffered by certain individuals off onto the taxpaying class as a whole. The whole point is obviously to make it cheaper for certain individuals or classes than it would be otherwise. Government is incompetent in general, sure, but it does succeed at re-distributing wealth fairly well.

So your assertion that transportation as a whole would be cheaper, while likely true, does nothing to refute the argument that for an individual actor like Wal-Mart, it would likely be more expensive, as they no longer could spread the costs among the taxpaying base.

A lot of other good criticism, as well. M.E. Hoffer, whose comment about sweatshops drew Kirklin's "best available alternative" response, repeatedly rubbed Kirkland's nose in the fact that the labor conditions being criticized extend to forced labor (another anonymous commenter referred to the rapes, tortures, and mass murders carried out by the regular military units that Exxon hired for security in Indonesia, helpfully supplying them with equipment to dig mass graves--say, isn't Indonesia another of those "free market" havens for sweatshop employers?).

Kirklin responded with a lot of embarrassed heming and hawing and "what I meant to says" to the effect that he didn't support rape, torture, or murder, and that no American company should be doing business with people engaged in such things. This got contemptuous responses from Anonymous...

Then maybe, just maybe, you shouldn't write an extensive article that praises state-capitalism and forced-labor camps, and assume that anyone who disagrees with you is "utterly ignorant of economics." And in many places, it is incredibly difficult for a worker to quit if he doesn't like his job. Many corporations sieze land and farms that are already being used by other workers, meaning that there isn't much of a choice whether to work for them or not. Other corporations refuse to pay workers for a very long time, so that they can't quit (or they get none of the pitiful amounts of money they earn)....

Take a gander at this article. This worker was literally worked to death in a sweatshop not much different from the ones Wal-Mart owns. This worker COULD NOT quit, because the company refused to pay her on time. Read about the totalitarian conditions in this place (even the most hardcore laissez-faire supporter will be wincing while reading this thing). Truly sickening....

...and Hoffer:

If you really believe what you say : "I don't think companies should use slave labor under any circumstances.", then you should revisit the main thesis of your article, check many of your premises, and fully research the source of many of the products WMT sells.

quincunx, that inexhaustible fountain of faulty logic, responded to Anonymous' Indonesia link with the brilliant argument that the atrocities were committed by the Indonesian army, not Exxon--this despite the fact that Exxon hired the army as rent-a-cops and then gave them the equipment to dig mass graves. Quincunx continued:

...you put yourself in a tight corner, since you can't praise ANYTHING as long as nation states exist. Period. Your examples show CRIME, fully backed by corrupt governments. If you want to solve these, you must protest their dictators....

"Many corporations sieze land and farms that are already being used by other workers"

And who is the broker in this transaction? I think you know.

Now that's a brilliant argument. The guy holding the bag is just a passive beneficiary of the guy holding the gun. He's a victim of circumstances! The robber would probably kill him if he didn't take the money! And anyway, as Person suggested above, just think of how much money the bag man could have got if he weren't for all that interference from the guy with the gun! Anonymous turned quincunx's upside-down logic back on its feet again:

And you put yourself in a tight corner by praising EVERYTHING as long as nation states exist. According to you, any corporation that makes a living by hopping in bed with the state is just as innocent as can be. Poor, poor corporate fatcats! I feel soooo sorry for them--being denounced for working with the state and stealing at gun-point.

To which Blah responded:

We're talking about a pretty gray area here (i.e. When a state commits a crime, how much of the blame falls on corporations for not stopping, or even aiding, the state?). In my opinion, to say that it seriously hurts the author's thesis is insane, and not worth debating further.

Yeah, sure enough, it's a pretty gray area. Hiring the army to commit mass murder and then helping it dig the mass graves. Or constructing the Nazi death camps, and then using their inmates as slave labor in your factories. Yeah, that's a toughie, all right. Could take an army of ethical theorists forever to work through all the complexities and permutations of moral ambiguity like that. Certainly anyone who jumps to moral conclusions about something as iffy as the free market credentials of I.G. Farben must be barking batshit insane. In the meantime, let's get back to praising Wal-Mart's holy name!

Another great comment came from Shane Steinfeld, Minister of Truth for the Bureaucrash Activist Network:

I have a hard time thinking of Wal-Mart as a "shining example" of market economics. First, Wal-mart is a corporation -- a business that has purchased "limited liability" protections from the government, in the form of a "corporate license". Corporations (in the "limited liability" sense; not the formal, "corporate structure" sense) wouldn't exist in a truly free market.

Too many "free-market" libertarians seem to forget (or fail to realize) that Adam Smith's Wealth of Nations was the premiere anti-corporate manifesto: The free market was conceived as a way of protecting against the unholy marriage of business & government. I'm no economist, but I'd venture to guess that the issuance of corporate licenses represents the single-biggest intrusion of government into the economy today.

Second, let's not forget that Wal-Mart is one of the nation's largest beneficiaries of eminent domain abuse. The company seems to have no problem asking local governments to grab up private property & transfer it into their hands.

Let's not all line up to be corporate cheerleaders, just because it's the opposite of what the socialists are doing. Wal-Mart is no hero, in my book.

14 Comments:

Anonymous Wild Pegasus said...

(Now that you've successfully passed the Mises Blog comments hazing challenge, Josh, your promotion papers for thirty-third degree mutualist will be in the mail. I expect to have your initiation ceremony sometime next week.)

Who controls the British crown? Who keeps the metric system down?
We do! We do!

Who leaves Atlantis off the maps?
Who keeps the Martians under wraps?
We do! We do!

Who holds back the electric car?
Who makes Steve Gutenberg a star? We do! We do!

Who robs cavefish of their sight?
Who rigs every Oscar night?
We do! We do!

ObTopic: If libertarians wonder why we're called pot-smoking Republicans, paeans to Wal*Mart would be the first place to start.

- Josh

July 25, 2006 12:53 PM  
Blogger Adam B. Ricketson said...

I don't think this was explicitly stated, but I think that the main distinction is whether the person/corporation:

a) simply acted within market conditions created by the state (such as, by using the interstate highway system that already existed)

or

b) acted within the state to modify market conditions to their advantage

It's not a clear cut situation, since almost everyone "acts within the state" in a standard way by voting or endorsing politicians. However, we can look for exceptional activity within the state. If we identify exceptional in-state action, we can assume that the person is also engaged in the standard in-state action of voting.

Common exceptional in-state actions:
1) Lobbying the government, perhaps with the exception of just trying to keep what you have (i.e., not have your facilities taken away by eminent domain).

2) Funding politicians, or PACs.

3) Negotiating and making contracts with the government, perhaps with the exception of contracts to provide a service in exchange for a fee (like in the free market). Negotiating for special tax breaks, or the provision of land or other stolen resources is clearly abusive.

Other possibilities:
1) Being among the first to take advantage of an abusive situation created by the state
2) Being directly involved in an abusive situation, and using the threat of state action in your own relationships (threatening to call the cops on someone, for example)

Just some thoughts, to try to refine the above ideas. It would be nice to have an explicit list of crimes, so that we can make direct accusations. Maybe I'll put this on the libertarian wiki.
-adam

July 25, 2006 1:48 PM  
Blogger quasibill said...

I think, as always, much of the fog dissipates when you strip collectives of any special status. In other words, if the action is such that an individual would be considered a criminal (under a libertarian theory) for doing it.

So, assisting the state in killing or robbing a person is being an accomplice, while failing to stop the state is not a problem. Fairly straightforward.

Now, I'll grant that there can be some gray areas, like Google's deal with China. However, that gray area will resolve to dark black if Google actually assists China in executing or imprisoning an innocent.

I'm actually somewhat agnostic on the issue of land use planning/eminent domain use - certainly Wal-Mart's opponents haven't forgone the use of such coercion to prevent Wal-Mart from coming to town, so it almost falls into the realm of self-defense for them in many (but certainly not all) cases.

Furthermore, Wal-Mart exploits the interstate, but didn't really create it. That's fairly white along my spectrum. However, it IS important to note that Wal-Mart is exploiting a pre-existing externality created by the state - it does NOT reflect the free market at work. It's an important distinction to make in this discussion, and one that Person consistently (purposely?) misconstrued: the exploitation of the pre-existing state intervention does not make Wal-Mart's actions wrong, but it doesn't make the result "free market".

July 25, 2006 6:26 PM  
Blogger Kevin Carson said...

quasibill,

According to Alfred Chandler, the first nationwide wholesalers piggybacked directly on the national railroad system. And then the national retailers piggybacked on them, and industry consolidated on a national scale and began producing for the national market thus created. So the present structure of the economy is almost entirely a creation of the state. And Wal-Mart's innovative inventory control system, as ingenious as it is, presupposes a national transportation system with a high degree of predictability.

You're right--nothing wrong with taking advantage of this when it exists, in itself-- but it's not a business model that would have arisen in a free market.

As for complicity, I don't know the political history of civil aviation or the Interstate. Let's just say I'd be surprised if there weren't some pretty heavy industry lobbying involved in their creation. Wal-Mart is without a doubt one of the biggest participants in local "growth machines" when it comes to lobbying for highway and airport pork in a given area. In nothwest Arkansas, it's less accurate to say Wal-Mart influences government than to say Wal-Mart *is* the government.

July 25, 2006 10:20 PM  
Blogger Sheldon Richman said...

Kevin, for what it's worth, the secretary of defense during the initial construction of the interstate highway system, which was justified as a cold-war defense measure, was Charles Wilson, former chief of GM, the guy who said that what's good for GM is good for the country and vice versa.

July 26, 2006 3:29 AM  
Blogger Sheldon Richman said...

Point of information: aren't trucks tax to use the highways at least theoretically on the basis of the damage they do? Aren't they weighed?

July 26, 2006 3:31 AM  
Anonymous quasibill said...

Kevin,

I agree with you (again, that original discussion on Mises you cite is the one that convinced me to re-visit this site) but I just feel that it is really important to make a distinction between acts that are objectively morally repugnant and acts that are merely taking advantage of a pre-existing externality. It's a difference between being a bag-man and being a theft-insurance company (there's probably a better analogy, but my brain is only working on one neuron today).

Blurring that distinction just encourages people to make emotional responses to your valid critiques of the current system. And your critiques are too important and well-reasoned to receive that fate, IMHO.

July 26, 2006 6:40 AM  
Blogger Kevin Carson said...

quasibill,

I agree with your distinction. I was just seconding the motion that Wal-Mart's business model, regarless of their culpability or lack of it, couldn't exist without massive piggybacking on a preexisting situation created by the state. As to the separate issue of their culpability, I've seen that (at the local level, at least) they're one of the biggest participants in local coalitions for highway pork.

Sheldon,

I did not know that. And the direct involvement of a GM alumnus in creating the Interstates, to put it mildly, hit me like a shotgun blast. Thanks a lot for the information--I expect to be using it for all it's worth in the future!

July 26, 2006 11:55 AM  
Blogger Kevin Carson said...

Sheldon,

I forgot to add: Trucks are weighed, but total trucking fees and diesel fuel tax only pay only about half the trust fund's revenues. On the other hand, cars and light trucks cause virtually zero damage to the road beds; only big rigs cross the weight threshold necessary to cause roadbed damage.

And highways are subsidized with general revenues in addition to the highway trust fund.

So those piggies are sucking swill from the trough like there's no tomorrow.

July 26, 2006 11:59 AM  
Anonymous Anonymous said...

Mr. Carson, Wal-Mart does receive some preferential treatment by the government in the US, and I am opposed to this, but it is comparatively minor. Wal-Mart is successful mainly because it has been able to become extremely productive. It would do best under an environment of total economic freedom (not mutualist "freedom"), and it would have no motivation or desire to terrorize its workers as is implied by those opposed to "sweatshops."

There is a major difference between a sweatshop and forced labor. One is voluntary and the other is not. To equate the two is an egregious error. Just because you have alleged examples of businesses who decided to partner with foreign governments in forcing people to work doesn't mean that this is the essential nature of a sweatshop. I haven't seen any convincing evidence that this is the standard operating procedure used by Wal-Mart in foreign countries. The reason they have production facilities in foreign countries is because the voluntary labor is cheap, not because they are seeking involuntary labor.

The supposed "embarrassed heming and hawing" about "what I meant to say" is nothing of the sort. The poster committed the same error that you are now making, which is to equate sweatshops with forced labor. I correctly pointed out his error. A sweatshop doesn't murder, torture, or force anyone to do anything. The minute it does, it becomes something else entirely.

Yes, I used the same old "best available alternative" cliche. The reason I use that argument is because it is absolutely correct. I have a terrible habit of repeating old correct arguments in the face of old incorrect ones. (By the way, I didn't hear an explanation of why this old "cliche" is incorrect.)

The most fundamental reason that there is government terror in China and other places in the world is because they have rejected economic freedom. To blame the government terror that has existed for a very long time in China on Wal-Mart is to blame the very recent introduction of the antidote for the long-term damage caused by the poison. To the extent that China embraces economic freedom they will lay the foundation for a society that can eradicate government terror.

Paul Kirklin

July 28, 2006 1:08 PM  
Blogger Kevin Carson said...

Thanks for stopping by, Mr. Kirklin.

On the extent of Wal-Mart's preferential treatment, you might Google "Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth," by Philip Mattera and Anna Purinton.

It's hard for me to see how a corporation whose business model depends on mass distribution through a centralized system of transportation infrastructure, and pressuring local governments for special goodies, could "do best" having to actually pay for what it uses.

For why I consider the "best available alternative" cliche to be invalid, you can click on "Vulgar Libertarianism Watch, Part I" under "Favorite Posts" on the sidebar.

People choose to work in sweatshops because the government has artificially restricted the range of "available alternatives."

And it's not exactly coincidental that sweatshops gravitate toward countries with authoritarian governments. To borrow a phrase, the most fundamental reason that sweatshops locate in China and other places in the world is because they have rejected economic freedom.

July 28, 2006 10:33 PM  
Anonymous Anonymous said...

I'll take a look at those links and have a reply for you within the next week.

PK

July 30, 2006 12:48 PM  
Blogger Sheldon Richman said...

Kevin--I would love for The Freeman to have a well-researched article on how the road-damage subsidy to trucks gives nonmarket advantages to national retailers and manufacturers over local companies. If you can, please let me know who could produce such an article.

August 02, 2006 1:07 PM  
Anonymous Anonymous said...

Sheldon,

I'd like to say I can. But given that I'm a bad procrastinator, and that a lot of my arguments are based on stuff I remember reading and would have trouble tracking down again, I'd hate to promise anything.

--Kevin Carson

August 02, 2006 5:02 PM  

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