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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

Thursday, October 19, 2006

A Case of Misdirected Fear: Meekins vs. the LETS Menace

Thanks to Roy F. Moore on the Distributism list, I came across this unique perspective on the world: "Communitarian Fools and Their Money Soon Parted," by Frederick Meekins.

In the mind of Mr. Meekins, a voluntary local alternative currency or LETS system is a sign of impending totalitarianism. But corporations--subsidized by the state, cartelized by the state, and protected against market competition by state-granted privileges like patents and copyrights--are just part of "the market."

Likewise, in Mr. Meekins' bizarro world, the individual's making a decision for himself to use a voluntary local currency signals that "the era of the individual making their own decisions for themselves is coming to an end."

Indeed, Mr. Meekins displays no small paranoia that local alternative currencies will be "made mandatory for the rest of us." Well, I tend toward paranoia myself. And I consider it a lot more plausible that participating in the corporate-state economy with its official monetary system will be made mandatory for all of us. The dominant forces in our political and economic system are far more likely to see LETS systems as threatening their interests than as serving them.

LETS systems and other alternative currencies are an instrument of individual freedom, a tool for economic independence from the unholy alliance of the centralized state and the centralized corporate economy.

Things like LETS systems, barter, the household and gift economies, etc. (all falling under the category of the "informal economy"), enable participating individuals to transform their skills and labor-power directly into consumption, without being dependent on the vicissitudes of the national boom-and-bust cycle or the authoritarian whims of an employer. Take the example of a small organic truck farmer who lives next door to a plumber or other skilled tradesman. If the farmer barters produce for the plumber's services, it's still true that neither the farmer nor the plumber has a market for his entire output. But each has a reliable and stable outlet for the portion of his product consumed by the other; and the two together can be pretty secure in the knowledge that they can meet all their needs for vegetables and plumbing without any worries about fluctuations in the greater money economy. The more trades and occupations that are brought into such a barter system, the larger the proportion of each person's output will have a reliable and secure market within the system.

Such local currencies were used in the past with great success as local responses to economic depression. By putting local producers in direct contact with each other, they enabled them to translate their skills into consuming power without the need to acquire money from the outside economy. In effect, the local economy was transformed into a peaceful harbor in the midst of a violent economic storm. The greater the size of the market, and the more distant producer and consumer are from one another, the greater the danger that economic dislocations will create both great stocks of unsold goods and masses of unemployed laborers. Local, informal economies create stable ties between individual producers and consumers that can be preserved without fear of macroeconomic disruption.

The slogan Mr. Meekins finds so objectionable on the local currency notes ("In each other we trust") is certainly an unfortunate choice, being understandably open to interpretation as a gratuitous slap at religious believers. But I believe the intended reference was to the mutual, voluntary dependence of producers as opposed to dependence on the large corporation and the government that serves it, not independence from God--unless Greenspan and Bernanke are God's viceroys on Earth.

Even so, Mr. Meekins' reaction to the unfortunate slogan is more revealing than the slogan itself: "So instead of looking to God to get us through the trials and travails of life, we are suppose[d] to rely on the drunken wife beater down the street or around the corner." Apparently Mr. Meekins has a much higher opinion of the average character of the managerialists, technocrats, and corporate welfare parasites who run the national economy than he does of the people living in his own neighborhood. The greatest criminals in history have sat behind desks, and robbed and murdered millions from their tastefully-appointed offices. But Albert Speer and Bob McNamara, apparently, had the advantage (in Mr. Meekins' mind) of not living in Mr. Meekins' neighborhood.

Another benefit of the informal economy: the greater the proportion of each household's needs that are met through home production or local barter systems, the less dependent it is on wage labor. The ability to meet one's own needs through subsistence production or production for direct exchange with one's neighbors is a source of economic independence, and greatly increases the bargaining power of labor.

Indeed, some of the greatest acts of government robbery in history--the enclosures of Europe, and the abrogation of traditional land tenure rights by colonial governments in the Third World--were motivated by the plutocratic classes' understanding that people would work hard for low wages only when they were robbed of all other means of supporting themselves. When workers are no longer desperate to hold onto a job at any cost, and have the ability to walk away and support themselves independently if need be, the relative bargaining power of labor and capital becomes a lot different. Apologists for Third World sweatshops and for McJobs in this country like to say that they're the "best available alternative" for those who choose them. Well, the large corporations and their government have a great deal of vested interest in making sure that they stay the "best available alternative."

Most of what we consume that's currently produced in giant factories hundreds or thousands of miles away, could be produced far more efficiently by small factories close to the point of consumption. The reason they're not: government subsidies to the inefficiency costs of large-scale production and long-distance distribution, which enable the giant corporations to externalize part of their costs on the taxpayer rather than in the retail price of their goods.

It's interesting that Mr. Meekins equates local currencies to some kind of corporate scrip. The state's banking laws, in fact, are set up to guarantee that the official currency is corporate scrip.

Licensing and capitalization requirements, and other state-created market entry barriers, artificially reduce the number of banks competing to provide credit, and enable them to charge a usurious monopoly price for the service. Without such artificial, state-imposed scarcity, voluntary banking cooperatives could issue share-currency against their members' assets for an "interest rate" sufficient to cover administrative cost. Competition from such mutual banks would reduce the real rate of interest on secured loans to zero.

But with the state's enforcement of special monopoly privileges for the provision of credit, capital becomes artificially scarce and expensive for working people. Instead of being able to organize their own credit on the free market, they become dependant on a state-privileged class of capitalists to provide them with wage-labor.

It's also interesting that Mr. Meekins sees private automobile use as mainly the victim, rather than the beneficiary, of government policy. For most of the past century, the state-subsidized highway-automobile complex has been the greatest welfare client in history. We've lived through a massive, top-down government experiment in social engineering, imposed on us over the past several decades, to render us completely dependent on the automobile. Local governments encourage sprawl with zoning laws that prohibit mixed-use development, and with subsidized utility and road infrastructure for the real estate developers' new housing additions. Tax- and rate-payers in existing neighborhoods subsidize the land values of real estate barons. And FHA redlining subsidizes home mortgages in new suburban neighborhoods at the expense of already-built homes in the older part of town. Without all this corporate welfare for land barons, the incentives of the free market would result in most people living a lot closer to where they worked and shopped.

If the government imposes travel restrictions and sets up checkpoints for internal passports, which is indeed quite likely if Fatherland Security gets its way, the population will be far more vulnerable to such police controls thanks to government promotion of the automobile. And Mr. Meekins can rest assured that those citizens classified as loyal to the corporate state will be let through the checkpoints. But with decentralized local economies, the rest of us might be a lot less dependent on the good pleasure of the Gestapo manning those checkpoints.

Finally, it's interesting that Mr. Meekins sees alleged criticism of his choice to shop at Wal-Mart and patronize private schools as an implied call for coercive sanction. Regarding a response to one of his letters to the editor several years ago, he writes:

From the tone of the indignant epistle, one might conclude that the author believed I should have had my freedom of speech and other civil protections abridged for not prostrating myself before the radical whims of the neighborhood.

Well, Mr. Meekins' interlocutors would have to go some to beat the tone of his indignant epistle. Is it fair to infer that he favors government suppression of LETS systems?

14 Comments:

Blogger Adam B. Ricketson said...

Wow, he's a real paranoid nut. It seems that any new, voluntary social organization is actually a conspiracy to brainwash the masses.

October 19, 2006 10:44 PM  
Anonymous Reisman's Ghost said...

I thought mutualism with it's approval of theft and the exploitation of labor was the menace to the masses, a cleverly disguised campaign of misinformation designed to brainwash people into accepting occupancy-and-use land tenure. Since only a band of mutualist thugs would go along with that, they must want to spread their sinister plans by propaganda!

October 20, 2006 12:54 AM  
Blogger scumble said...

I have to say this "Reisman satire" is getting a bit old...

Re. Meekins, Kevin, it's interesting the way writers use sarcastic misrepresentations to supposedly lend authority to their critique. Classic straw man stuff, but the tone of ridicule probably misleads a lot of people.

It's easy to get a bit depressed by the sheer quantity of ignorant punditry around the web. Even mises.org has turned sour for me, because although much of the material is carefully written, too much of it is devoid of references and sound more like opinion that rational argument. But then it's easy to get pulled into the vulgar libertarian trap.

I think even you could do with toning down the emotive language a bit on occasion. This is a blog of course, but I prefer the level-headed tone of your Mutualist Political Economy book.

October 20, 2006 2:11 AM  
Anonymous Ian said...

I think on this occasin, there is justification in strong language. The man is clearly a fool - he doesn't understand most of what LETS schemes are about and misrepresents the rest.

October 20, 2006 3:18 AM  
Anonymous Reisman's Ghost said...

Sorry about that scumbles; looks like somebody occupied-and-used the wrong side of their bed this morning...

October 20, 2006 5:41 AM  
Blogger Larry Gambone said...

Our opponents are getting crazier all the time. Perhaps its a good thing. I expect the next thing will be to accuse anarchists of being dictators and state-worshipers...

October 20, 2006 9:48 PM  
Blogger James said...

Barter and co-ops seem to me a good measure to begin with, if you can find loyal, reliable sources locally. Why don't we just opt out of consumerism? I'm a man, not a consumer of stuff I don't need. If we don't embrace Glad Poverty and support only local families and family run businesses, we have no alternatives. What stands in the way is that we want everything now, and we can get it with a mouse click. If you think about it, every book you buy on Amazon is taking money away from a local independent bookseller who could be feeding his family. &c. I'm guilty there, too, as I read a lot and buy most of it online. We need to change how we do business if Distributism is going to grab hold in the soil and grow. Do I just want the book, or do I also want the friendship and prayers of the local independent bookseller? And do I see myself taking food out of his kids' mouths when I click that mouse? More and more, I do. Yes, I do.

October 21, 2006 8:49 AM  
Blogger Presto said...

James, if you want to buy books online and still support independent booksellers, you might try Abebooks.com. Most of the sellers there are independents. I buy most of my books there. I only buy stuff on Amazon when I cannot find it on Abebooks. There are other online bookselling sites that sell books from independents, but I have no experience with them.

October 21, 2006 9:17 AM  
Anonymous Reisman's Ghost said...

Yes, that's what I was going to say - rather than worry about "selling books locally", just let the non-Amazon sellers affiliate themselves into their own website and then shop at that.

October 21, 2006 3:17 PM  
Anonymous bk_2112 said...

Well "ReisG", the "right side" was obviously enclosed by corporate-statist pirates eager to find a way to make us all pay "ambulation access fees" to get up every day...

Brian K.

October 22, 2006 7:03 PM  
Anonymous quasibill said...

Kevin,

I've been meaning to raise this:

"But with the state's enforcement of special monopoly privileges for the provision of credit, capital becomes artificially scarce and expensive for working people. Instead of being able to organize their own credit on the free market, they become dependant on a state-privileged class of capitalists to provide them with wage-labor."

for a while now. At some point, someone on here (Presto? iceberg? Adem? I forget...) made a comment that capital is made artificially scarce by other means (deficit spending, etc.) and it seems to me, now (after doing more looking into the issue), that these other means might in fact be the true cause of scarce capital.

It seems to me that in the absence of inflationary monetary policy, the incentive to borrow money for profit will slowly get strangled out of the market - you'd be paying back with most likely more valuable money (due to productivity increases), so you're not rationally going to agree to higher interest rates. So even absent all the access restrictions (supply side interventions), the market would likely be very efficient at bringing down interest rates.

On the other hand, inflation hits the demand side of the equation in several ways. First, it robs those on the lower end of the scale of their earnings - they are the ones who most need to keep their savings "liquid" and can least afford to buy big ticket investment assets. These people then need to borrow capital, because their ability to save it for themselves is severely compromised.

Once people start borrowing to pay for capital goods, a vicious cycle of sorts starts where the price of capital goods will increase greater than they would otherwise. Granted, there might be some increase for highly sought after capital goods anyway, as there might be a competitive advantage to borrowing to pay for them even in a naturally deflating economy, but there would be a much stronger limit to how much people would be willing to go into debt to purchase the good - they'd have a very attractive option of merely delaying the purchase for a while until their own savings could finance the purchase.

So inflation looks to me like a major factor in high interest rates and therefore the scarcity of capital, as it artificially boosts the demand side of the equation. Sure, the supply side restrictions are wrong, etc., but I think monetary policy is at least as important (probably more important) as the supply side distortions in creating a scarcity of capital.

October 23, 2006 8:19 AM  
Blogger Kevin Carson said...

I still get a kick out of the "lying, thieving mutualists" stuff, myself. I probably do adopt too much of an over-the-top tone at times; but actually it's there in the book, too. The most negative things I said about vulgar libertarianism on the blog are quotes from the book.

James,

We've got one of the best used bookstores in the country in Fayetteville (the Dickson Street Bookshop). I always check there for a book before I go to Amazon. But even from Amazon, I usually buy a used copy if its available, and I notice most of the used book suppliers are local independents. I definitely second Presto's abebooks recommendation, though.

quasibill,

Inflationary policy and Tucker's money monopoly probably have a synergistic effect in promoting capital scarcity. I agree it's certainly another factor in the equation.

October 24, 2006 10:32 AM  
Blogger Ali Massoud said...

Barter to some extent has worked very well for me. It does drive my bookeeper crazy sometimes though.

A auto repair facility I use often has traded me repairs on my car and trucks for firewood, repairing his home chimney, wood furnaces, and land clearing and other goods and services.

I doubt I could run the business or support myself by barter alone but it's a start.

October 25, 2006 2:19 PM  
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November 16, 2006 8:52 AM  

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