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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

Monday, August 21, 2006

Weekly Digest

Another extra. I should finish working through the backlog with another one on Thursday, and get into a regular schedule of weekly digests after that.

A nice Murray Bookchin obit by Jesse Walker, who quotes him from the 1979 Reason interview by Jeff Riggenbach:

People who resist authority, who defend the rights of the individual, who try in a period of increasing totalitarianism and centralization to reclaim these rights -- this is the true left in the United States. Whether they are anarcho-communists, anarcho-syndicalists, or libertarians who believe in free enterprise...I feel much closer, ideologically, to such individuals than I do to the totalitarian liberals and Marxist-Leninists of today.

Eugene Plawiuk writes on the shift toward decentralized, organic, community agriculture in Cuba after the cutoff of Soviet economic aid. I've blogged about it myself. When the USSR was still a source of life support, Castro preferred the Soviet model of large-scale, mechanized factory farms. The cutoff of Soviet aid resulted in a steep decline in the Cuban diet--followed by steady improvment as sugar cane was replaced by small-scale horticulture for local consumption. Could it be that the old Soviet bloc was following a "neoliberal" model of its own, encouraging satellites to specialize in export crops for the sake of the "socialist community"?

As Stephen King's Gunslinger would say, the world has moved on. My book is no longer the theme of the latest issue of Journal of Libertarian Studies. But the good news (or additional good news, some might say) is that there's a lot of good new stuff, so check it out. And the new practice of immediately publishing the new issue to the web, which began with the recent symposium issue on my book, continues with this issue.

Bob Murphy has an article at Mises.Org in defense of agribusiness. In response to a woman who complains of the inefficiency of shipping produce all the way around the world when it can be grown in the same community where it's consumed, he writes:

After all, isn't it a wondrous achievement of the market economy that costs of shipping are so low that we can enjoy goods delivered from all over the globe?...

Well it's true, I don't really know how many calories of fuel it takes, but I bet the owners of the shipping companies — you know, the ones who reckon that it's cheaper to ship spinach from China than from New Jersey — have a pretty good idea. (After all, they have to buy the fuel.)

Anyway, what's Taylor's point? Absent government interference, market prices reflect the different opportunities for resource usage in various lines....

Taylor, and you other critics of the spontaneous outcomes of the market economy, please do us all a favor: Go read Henry Hazlitt's Economics in One Lesson.

Let's see: low shipping costs an "achievement of the market economy".... "absent government interference".... "spontaneous outcomes of the market economy".... Yep, all the signs are there. What we've got here is a massive exercise in question-begging.

Carlton Hobbs, in the comments to a Mises Blog post linking to the Murphy article, is so impolitic as to quote ADM's Dwayne Andreas, the patron saint of an agribusiness industry about as "free market"-oriented as Big Pharma or Boeing and McDonnell-Douglass.

So much for those who say "Smash the State!" and then go back to singng "How great art thou Monsanto." How foolish art thou farmers' markets. If you want to know why it is cheaper to get spinach from China than from your neighbor, read "Everything I Want To Do Is Illegal"

Quasibill, in the comments to my "Outsource Everyone But the Pointy-Haired Bosses" post, directed me to a hilarious exchange in which an MBA took umbrage at the same article I linked in the post. This time, it was Jeffrey Tucker who linked to the article at Mises Blog. After a series of comments sniping at MBAs, an offended MBA jumped into the fray. Scroll down to the comment by MBA Grad. To quote quasibill's description, MBA Grad listed, among the insights he gained from an expensive business school education, a bunch of platitudes that any Mises Blog reader could have told you for free. Then he wrote:

My compensation is now better than triple what I earned pre-MBA (which was itself above average), however, I know that my employer will drop me in a heartbeat for some other bright kid if I fail to perform to their expectations.

Employers pay a premium because they value whatever it is that MBA grads have that the general population doesn't. Otherwise, they'd save themselves a whole lot of cash, and hire from high-schools or community colleges.

So, next time you want to complain that MBAs are stupid and overpaid because you happen to have met a few who fit that description, rethink your argument in a free-market context before spouting overgeneralized opinions.

Ahem. Well, it might just be that the institutional structure and culture of MBA Grad's employer result from something besides a free market--that his skills are desireable, rather, in the Gosplan-like atmosphere of an enterprise bloated (thanks to state intervention in the market on behalf of big business) far beyond the optimal size for efficiency. The MBA's skills of milking organizations to inflate quarterly returns, of shifting finances between divisions of an organization based entirely on such returns, and imposing arbitrary cuts on entire divisions or categories of productive labor, with no idea of the internal productive workings involved, are quite similar to the skills of a state finance apparatchik in a planned economy. Robert Jackall, in Moral Mazes (which I reviewed last month), admirably described the effects of the MBA Disease in the bureaucratic culture of the large corporation.

Iceberg has a great post on a corporate welfare deal in New York, fascist economics passed off on the taxpayers as "privatization" of roads and bridges.

Elsewhere on the corporate welfare front, Sheldon Richman writes at FEE:

Libertarians should revise their attitude toward retailers that collude with government in land theft and other forms of corporate welfare. They are shoulder-deep in state privilege, enjoying all the creative financing and tax schemes their political friends can cook up. They are so integrated into the local and regional economic-planning establishment that they compromise their private-sector status. That should make laissez-fairists uncomfortable.

Alexander Kjerulf, at Positive Sharing, posts on Rosenbluth International, a corporate travel agency whose top priority is keeping its employees happy. CEO Hal Rosenbluth found that happy employees were the key to providing the best possible customer service. As counterintuitive as it seems, if you treat people like shit, all the corporate motivational programs in the world won't make them enthusiastic about doing a good job. And if you downsize service workers and then double the work load of the survivors, even Hallmark Cards can't write enough smarmy mission statement rhetoric to prevent lousy service. During the near-collapse of the travel industry after 9-11, Rosenbluth was hit hard. But layoffs were a last resort, after across-the-board pay cuts that included senior management. And even after the layoffs, Rosenbluth made rehiring laid off workers a top priority.

Mike O'Mara, on the geolibertarian-leaning ProLiberty Democrats list, links to a great article by Mason Gaffney: Land as a Distinctive Factor of Production.

According to Fred Foldvary, the "natural minimum wage" in a free market is determined by the alternative income a worker can expect from self-employment. One such source of alternative income is subsistence labor on cheap marginal land. Another is self-employment in low-overhead jobs like peddling and odd jobs. Anything government does to make cheap land scarcer and less accessible, or to set up entry barriers (i.e., licensing) for cabs, errand services, peddling, and the like, artificially reduces the minimum wage below its natural level.

Patri Friedman links to B.K. Marcus' classic "Straw Men and Ham Sandwiches," with this wonderful quote:

political capitalism (which we pro-capitalists sometimes call mercantilism, corporatism, state capitalism, crony capitalism, or even fascism), is something we and the anti-capitalists can agree on: it is the exploitation of the productive class by a parasitic class. We might even surprise them with our sample list of parasites: defense contractors, the banking cartel, the steel industry, big agribusiness, Halliburton … There is a persuasive power in joining the leftists’ rants against privilege once you’ve insisted that the term they mean is political capitalism. Similarly, it is easier to convince them to open their minds to the potential virtues of economic capitalism than it is to promote only ‘capitalism’ without the distinguishing modifiers.”

B.K.Marcus announces that The Market for Liberty, by Linda and Morris Tannehill, is available online. He also links to another great online resource, Robert Higgs'
"Quasi-Corporatism: America's Homegrown Fascism."

Finally, a great post at Oligopoly Watch on the "Patent Protection Racket," by which giant corporations buy up patents in bulk with no intention to work them, just so they can collect tolls on anyone who does.


Anonymous P.M.Lawrence said...

The USSR didn't try to make satellites specialise in export products, just specialise. East Germany, for instance, made cars. The isea was to enforce a more than optimal interdependence to prevent breakup, and the authorities knew precisely what they were doing. That's why so many of the "stans" had sub-optimal infrastructure when they were turned loose.

I myself have an MBA, which I got to try to break the typecasting which kept me trapped in IT. That didn't work. The other usual motive is to turbocharge an existing career, "if you can't lick them, join them".

An MBA is an outward sign that a person is capable of various things, but given the other life experience you also need to be useful, it doesn't usually add much to that. In particular, an MBA gives a good grounding in only two of the three legs needed in business - finance and marketing, omitting operations.

In my case, I did get an insight into and an interest in economics, but that was in part from a previous mathematical background and in part from spotting what wasn't true in what they were telling us (informed by my own separate experience and observation). I had more sense than to disagree.

On patents, I have been told of an Australian company that bought up a patent to obtain dry animal protein from byproducts like blood. That would have allowed more sausages to make the grade as official meat products for the same cost. The buy up preserved an existing position in the sausage market. But would sausages have been better with the new additive?

August 22, 2006 12:03 AM  
Blogger alan said...

I'm presently working toward an MBA.

Other than my electives, most of what I'm getting out of it now I could quite easily have obtained if I had simply gotten a plain vanilla bachelor degree in business administration.

Personally I think engineers and journeyman machinists have much more of what it takes to run a business than a young freshly-minted MBA with little industry experience. I've noticed that German and Italian companies seem to do just fine without the leadership of MBAs.

I don't believe MBAs are useless, far from it. Mondragon in its first phase basically put cooperators starting a business together through a 2 year program that amounted to an MBA while they were pulling together the business plan for their new cooperative.

August 22, 2006 6:25 AM  
Anonymous Anonymous said...

Down with capitalism!

August 22, 2006 2:20 PM  
Blogger buermann said...

"to set up entry barriers (i.e., licensing) for cabs, errand services, peddling, and the like, artificially reduces the minimum wage below its natural level"

I'm just thinking of all the doctors and lawyers and other professionals who have licensing to artificially raise their wages. :P

Fred argues that "the legal minimum wage" is a "political fraud, because it is a tax that does not appear on the government budget" - sure it is: you do the calculations from the labor survey to calculate the balance of revenue from those who have increased their wages from the previous minimum compared to those who have lost their jobs due to the increased minimum.

In the present system increases to the legal mimimum have no detectable impact on employment, and so presumably must increase wage tax revenues. If we accept his argument otherwise then presumably the "natural wage" is well above the legal minimum and there are forces at work artificially suppressing the natural minimum.

August 23, 2006 12:01 AM  
Anonymous tin360 said...

I seriously love that quote. It is so dignified and full of spirit. Full of spirit that's what we all need today.

August 23, 2006 11:25 PM  
Blogger Kevin Carson said...

Thanks for the clarification on the Eastern Bloc, PML. It sounds as though, if the methods were somewhat different, the pattern of dependency was similar.

Thanks, also, PML and alan, for the inside take on the MBA. From what both of you say, I get the impression that the degree includes much education that would be useful, if it were integrated into the training of those actually directing production. The marketing and financial skills would certainly be useful to those engaged in self-managed production, because they would fully internalize the costs and benefits of their own decisions. But for someone to whom the production process itself is a black box, and whose golden parachute insulates him from the consequences of deliberately milking organizations and running them into the ground, it's a different matter.


The licensing cartels certainly raise the "minimum wage"--for those already in the cartel, anyway.

I suspect you're right about the relative level of the natural and legal minimums. The legal minimum, IMO, is another case of the ruling class acting through its executive commitee, as Marx said of the 10-hour day law, to mandate "manuring of the fields" that would be subject to prisoner's dilemma constraints in a private, defectable cartel. Of course, the main opposition comes from those in the relatively more competitive wing of organized capital--those employing the lower tier of unskilled workers. But even for them, as you say, the effects of a higher legal minimum really aren't that significant. Since the minimum is applied across the board, to all employers alike in a given industry (say fast food restaurants in a local market), it isn't a competitive issue between them, and the only ill effects will come from whatever elasticity of demand there is for fast food.

August 24, 2006 10:24 PM  

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