Vinay Gupta on Limited Liability

Vinay Gupta, author of "The Unplugged: A Speculative Fiction," has an interesting post on corporate limited liability at WorldChanging. Essentially, he argues that limited liability works as a subsidy, if you consider the cost a corporation would have to pay for insurance to cover default or tort liability.

I tend to agree with commenter Stephen A. Fuqua that limited liability against creditors is something that could be established purely by contract, and that default on debt is just one of the risks of lending money. But limited liability for torts against third parties is something else again. It seems likely that, absent this privilege, creditors would demand a corporation take out some kind of liability insurance.

For that matter, even if limited liability for debt could be established by contract, it doesn't necessarily follow that it would be as prevalent as it is now. If such liability wasn't established as a matter of course under the corporate form of organization, there might be a little more dickering about it. Some portion of creditors, at least, might choose to require default insurance as a condition of lending money. Anyway, the post provoked a great debate in the comment thread.

Proudhon: Solution of the Social Problem

Shawn Wilbur has a pdf workup of extracts from "Proudhon's Solution of the Social Problem," by Henry Cohen. Cohen's work includes an expanded version of William Greene's translation of Solution du Probleme Social, along with Dana's Proudhon and His Bank of the People and a stripped-down version of the 1871 edition of Greene's Mutual Banking. This pdf version consists of the translations from Proudhon's original work.

Clarence L. Swartz translated additional sections of Solution du Problème Social....

A rough collation of Solution du Problème Social and Proudhon's Solution of the Social Problem: the opening section, "Solution du Problème Social," (pages 1-87 in the original) remains untranslated, except for its closing paragraph's which include the phrase "liberty not the daughter but the mother of order," which appeared on the masthead of Tucker's Liberty. Of the section "Organisation du Crédit et de la Circulation," (pages 89-131 in the original) pages 94-111 and 120-131 remain untranslated. The portion that have been translated focus on the Bank of Exchange, and Proudhon's larger economic programme is largely ignored. The section "Banque d'Échange" (pages 133-258 in the original) begins with an untranslated "Préface" by Alfred Darimon (pages 133-147). Three addition sub-sections— "Qu'est ce que la Propriété?" (147-155), "Comptabilité Propriétaire" (155-168), and "Identité de la Question Politique et de la Question Économique—Méthode de Solution" (168-180) follow. Swartz's translation picks up again with the sub-section "Banque d'Échange" (and about every third section seems to have some variation of this title) and covers, with minor omissions., the remainder of the section, omitting only a final section, "Autre Response au NATIONAL" (237-258). "Banque du Peuple," (259-284) which treats the mutual bank which Proudhon actually attempted, is translated in full, but the "Rapport de la Commission des Délégués du Luxembourg et des Corporations ouvrièrs" (284-312), which was published with it, is not.

George Reisman's Double Standard

One man's "neighbors" is another man's "armed gang"--to George Reisman, anyway (he crossposts it to his personal blog, as well).

To get the superficial stuff out of the way first, I can't help noticing Reisman is putting "iced-cream"--er, "mutualism"--in quotes, as though it were something I just invented. I'd like to take credit for it, I really would, but I don't think I'd get away with it. Reisman ought to do a Google on Proudhon, Warren, Tucker, et al. It's a good thing I'm not a Galambosian, or I'd be paying royalties on the "philosophy of thieves."

Reisman makes enough allusions, however distorted, to arguments I made in my last response, and to arguments I and others made in the comments at his Mises Blog post, to indicate that he at least attempted to follow the debate.

But he seems to have gotten fixated on the idea that the main application of mutualist property theory would be by cuckoos in the Lockean nest, waiting to surprise unsuspecting landlords after they sign a lease. He still doesn't grasp the idea that it's a rival, internally consistent set of private property rules that could only exist in a society where majority consensus backed it up. He assumes most of the present system into existence in his hypothetical scenario, with mutualist property relations being introduced only through individual perversity. He changes one little thing in a system that, in every other particular, is the present one. Ever see that episode of The Honeymooners where Ralph imagined how he'd live as a rich man? "And I'd put a telephone on the fire escape, so I could handle my big business deals if I had to sleep out there when it was hot." I suspect Reisman of a similar lack of imagination.

He presents a hypothetical case:

Thus, to elaborate on the case I presented in my last post, “Mutualism: A Philosophy for Thieves,” let us imagine that our legitimate land owner—legitimate even by Carson’s standards—has spent several years clearing or draining his land, pulling out stumps, removing rocks and boulders, digging a well, building a barn and a house, and putting up fences to keep in his livestock. It is this land that he agrees to rent to a tenant, or, what is not too different, sell on a thirty-year mortgage, which he himself will carry, on the understanding that every year for thirty years he will receive a payment of interest and principal.

The tenant or mortgagee signs a contractual agreement promising to pay rent, or interest and principal, and takes possession of the property. Being a secret mutualist, however, he thereupon proclaims that the property is now his, on the basis of the mutualist doctrine that, in Carson’s words, “occupancy and use is the only legitimate standard for establishing ownership of land.”

This is a clear theft not only of the land, but also of the product of labor. A worker has toiled for years and is now arbitrarily deprived of the benefit of his labor, and this in the name of the protection of the rights of workers!

Of course, this case is irrelevant. Mutualist property rules could only exist on a stable basis if there were a local consensus on them, embodied in some code of libertarian common law. And under those circumstances, it would be a singularly obtuse would-be landlord who entered into such an agreement knowing the local legal system. It would make about as much sense as somebody in Canada, around 1850, making a contract in which somebody else sold himself into slavery for $10,000. He'd be laughed out of court if he attempted to enforce the contract; if he pleaded hardship for losing his money, the likely response would be that life is necessarily hard for someone that stupid.

On the other hand, a closeted mutualist tenant who attempted to surprise his landlord in such a manner, in a Lockean-consensus community, would fare about as well as an absentee landlord attempting to collect rent in a Tuckerite-consensus community.

Here's an opposing case for you: Imagine I'm renting a house under a Lockean property system, and get permission to plant a garden on it. I invest a lot of effort in composting and green manuring, and even spend money on granite dust, greensand, rock phosphate and the like to improve the soil. When I get done with it, what was hardpan clay has been transformed into rich, black, friable soil. And when I cease renting, I lose the value of all the improvements I made. That's the sort of thing that happens all the time under Lockeanism. But I suspect that Reisman would say that I made the improvements with my eyes open, and am entitled to no sympathy because I knew what the rules were. I certainly doubt that he's shedding any tears over the invested labor that the South Central Farmers are in danger of losing.

The difference is, when it happens under the system he's defending, it's just life; when it happens under the system he's demonizing, it's an outrage.

Here's another example of the same double-standard:

Mutualists pretend that there will be communities in which such behavior is accepted and routine, and chide opponents for their lack of knowledge of anthropology for not understanding this. They do not care to admit that the only thing which can enforce such a practice is the threat of physical force against those who would put an end to it, i.e., for all practical purposes, the existence of some form of tyrannical state. Yes, mutualists are “anarchists” who turn out to be statists!

And just how could Lockean practice persist unless it was enforced by similar threats against those who would put an end to it (what Reisman calls a "state")? To put it in more neutral language, neither the Lockean nor the mutualist property system could function without the willingness of the majority of one's neighbors to recognize one's rights claims under that system and to back them up with what they perceive as defensive force, if necessary. If such a consensus, backed up by the power of the community, is a "state" under mutualism, then it's also a "state" under Lockeanism.

Reisman continues:

It is possible to see why this must be so by starting with a condition in which there is no government. In this state of affairs, our exploited worker-victim easily proves to his neighbors that a “lying, thieving mutualist” has stolen his land and deprived him of the benefit of years of work. If his neighbors have neither been lobotomized nor castrated, they will probably contemplate lynching this “mutualist.” In any case, they proceed with our victim to his land and are ready forcibly to evict the “mutualist.” What will stop them from doing so and thus putting an end to any practice of Mutualism’s depraved concept of “property rights”?

The only thing that will stop them is the threat or actuality of greater force exerted by mutualists, i.e., by a mutualist armed gang. If the mutualist gang has its way, it constitutes a de facto mutualist state, which must continue in existence indefinitely in order to uphold the mutualist concept of “property rights.”

See, when there's a consensus on Lockean rules, and neighbors band together to enforce each other's rights under those rules, it's a defensive action on behalf of all that's right and holy. When neighbors band together to enforce a consensus on mutualist rules, on the other hand, it's a band of thugs.

But any system of property rules requires a majority consensus of people willing to enforce each other's rights under that system, and such a majority will tend to view attempts to enforce any rival system as "aggression." In the one case, Reisman calls it a "state" or "armed gang." In the other, he doesn't. All Reisman proves, in so doing, is that he likes one system and hates the other--something we already knew. Refusing to admit any parallel in the cases just demonstrates a tribalistic emotional attachment to his own set of rules; it certainly does nothing to validate those rules.

Reisman simply starts from the assumption that the system of rules he favors is right and proper, and that other systems of rules are pernicious. He then uses loaded terminology, both god-terms and devil-terms, to describe analogous phenomena in the respective systems. I believe it's called begging the question.

Perhaps I'm overpsychologizing things, but Reisman seems almost pathologically deficient in the empathy or imagination, or whatever it takes to put oneself in someone else's place sufficiently to be able to understand, on its own terms, an argument he disagrees with.

But at least he seems to be attempting to engage, however feebly, arguments that have been made in response to his last statement--and not just reasserting his original statements. That's a definite improvement.

Addendum. George Reisman isn't the only person who has attempted to challenge me with hypothetical scenarios. I've been asked more than once, in various discussion threads at Mises Blog and here, how a mutualist property system would handle this or that case. The short answer, in many cases, is "I don't know."

Manuel Lora, an anarcho-capitalist, put it quite well in reference to his own system:

I cannot provide an answer for every conceivable question regarding the organization of society. At best, one can offer opinions but not guarantees. And that does not mean that an answer would not exist, it’s just that right now, it’s impossible to know what it is. Furthermore, we could have several answers and even overlapping answers. With government, there is only one way to do things. Freedom is unknown, yet no less valid if we’re today unable to answer questions about a reality that does not exist. [via iceberg]

I can, however, put forth certain principles that would likely govern its practical application. Most importantly, any libertarian common law code based on mutualist property rules would be worked out in a mutualist community, the community being one made up overwhelmingly of small property owners who see their own property as the basis of security and independence, and see the distributive ownership of property in general as a bulwark of social stability against polarizing inequality and class conflict. The main evil to be prevented by their law code, accordingly, would be the concentration of large amounts of property in a few hands (particularly exclusion of homesteaders from large tracts of vacant land, or large-scale ownership of many rental properties by a single landlord).

For situations short of this, such as the one Reisman brings up in his latest post, the practical application of mutualist principle would be worked out by the local community in such a way as to avoid stepping on their own toes; and the majority of people in a community of small property owners would hardly wish to live in fear that their property might be seized by a squatter as soon as they went on vacation or let some of it lie fallow for a year. In other words, their application of mutualist law would be on the principle that the law is made for man, rather than the reverse.

For hard cases like the one Reisman presents, there is a variety of ways a jury of sympathetic neighbors might deal with it in a mutualist legal system, without undermining the central values of mutualist property law. I already discussed one possible way: the community might be willing to enforce a contractual agreement for a post-transfer payment for transfer of possession, by all means short of dispossessing the new owner: the remedies of the injuried party might extend to seizure of movable assets, shunning or exclusion from mutually organized social services, and the like (for a picture of how this might work, recall the story about the lazy guy who repeatedly skipped out on his "obs" in Russell's "And Then There Were None," and wound up starving because nobody would do business with him). This would be no more an impairment of the specifics of such a contract than the absence of debt slavery for bankruptcy is an impairment of debtors' obligations in our society.

On the other hand, the community might be willing to evict an occupant and restore the land to the original owner in cases where fraud was involved in the transfer of possession, on the grounds that the transaction was rendered null and void. Such fraud would be equivalent to violent dispossession, in which case the community would be justified in the use of force to restore the original owner. (I got this suggestion from Joshua Holmes, aka Wild Pegasus, in the comments to Reisman's post).

I can also imagine, consistent with mutualist principle, a local jury enforcing a contract to pay amortization costs of labor and improvements in return for a transfer of possession. There's no reason they could not do this, consistent with mutualist principle, and still refuse to enforce an extended rental agreement.

A mutualist community might do any, or all, or none of these things, or some that I haven't thought of. I just don't know.

It's interesting that critics portray such practical discretion as backtracking or inconsistency, when no system could exist without it. Lockean systems, for example, involve largely conventional provisions for constructive abandonment and salvage, adverse possession, etc., none of which can be derived in all its specifics from the basic principles of Lockean theory. As Sheldon Richman commented, any system, for its practical application, requires large elements of seemingly arbitrary convention.

Mutualism, on the other hand, is judged in the worst possible light, on the assumptions that neighbors either would be looking for the first opportunity to screw each other over, or would apply some cartoonish version of pure mutualist principle with no discretion or common sense whatever.

As I pointed out above, in a mutualist community any landowner who sought to negotiate payment for a transfer of possession would do so in the awareness of what the legal code allowed and did not allow. It would be decidedly odd, in such a community of small landowners, if the common law did not make some provision for the transfer of possession and recouping of improvement outlays (perhaps one of the expedients I listed above, or perhaps some other) other than a thirty year mortgage or an extended rental. I also wonder about the specifics of the hardship case that motivated the owner to dispossess himself of the property he had worked so hard to develop; whatever the specifics, I find it unlikely that a community of congenial neighbors with a vigorous tradition of mutual aid would fail to provide any means of hardship relief short of the alternatives Reisman mentions. Shawn Wilbur, for example, said this in a comment on an earlier post:

It's not hard to imagine a mutualism that includes summer homes and caretaking arrangements. On the other hand, i live in a town where something like half of the real estate is in the hands of a handful of folks, who live off the needs of a much larger group of folks for a place to live. that's a very different situation. The concentration of real property here has consequences that make certain kinds of basic personal security and justice much harder to attain. A mutualist society would undoubtedly attempt to reorganize itself along other lines.

Stromberg: Writing in Letters of Blood and Fire

Freeman, Libertarian Critter and Brad Spangler earlier had some comments on an old article on primitive accumulation by Joseph Stromberg, in Agorist Quarterly. Now Roderick Long announces he's made it available online. So here it is: "English Enclosures and Soviet Collectivization: Two Examples of an Anti-Peasant Mode of Development."

It's well worth reading. It compares the enclosures of early modern Britain, Stalin's forced collectivization, and latifundismo in Latin America.

Free-for-All on South Central Farmers

The South Central Farmers have created quite a tempest in the libertarian blogosphere. Before I get into the meat of my post, be forewarned that this is a long one, and I spend a long part of this post surveying the extended arguments at several blogs. So my own assessments are way, way, way down there near the bottom.

Rad Geek links to an L.A. Times story on the disputed urban farm:

The site has a contentious history. The city acquired the land from Horowitz through eminent domain in the 1980s for a planned trash incinerator, but the project was stopped by neighborhood opposition.

After the 1992 riots, the city leased the land to the Los Angeles Regional Food Bank, which began the community garden. In 2003, the city sold the land back to Horowitz for about $5 million.

But the farmers did not leave. In the last three years, and particularly in recent weeks, the farmers have pleaded to stay despite Horowitz's plans to sell the land for development.

A nonprofit group tried to buy the land and preserve the farm. But it announced last month that their fundraising effort was $10 million short of Horowitz's $16.3-million asking price.

Some in the community support him, arguing that the area would benefit from the jobs that would come if the land were developed.

But according to Rad Geek, the LAT story neglects some important aspects of the story. He links to another, earlier account in The New Standard:

In 1985–86, the land was taken via eminent domain from private owners by the Los Angeles Department of Public Works for development of a trash-to-energy incinerator called the Los Angeles City Energy Recovery (Lancer) Project. The largest of the private owners was the Alameda-Barbara Investment Company, which owned approximately 80 percent of the land taken for the Lancer project.

The people living near the proposed incinerator site – most of them African American – mobilized against Lancer. At the center of the environmental-justice struggle was the newly formed community-based nonprofit organization Concerned Citizens of South Central L.A., which demanded public hearings and a health-risk assessment of the Lancer project, both of which were granted by the city. In 1987, the City Council and mayor agreed to terminate the incinerator project.

The city retained ownership of the Lancer site. In June 1994, after canceling a plan to sell it to a public-housing corporation for the creation of 316 affordable town homes, the city sold the land to the L.A. Harbor Department for $13.3 million.

In court filings, Ralph Horowitz, a partner in former property owner Alameda-Barbara, claims to have engaged in talks with the city to regain the land title at about this time. Central to his argument is a claim that the city had attempted to sell the land in violation of his right to repurchase the land should the city sell it for non-public or non-housing purposes within ten years of the condemnation. (This right was established in the 1991 final order of condemnation of the property.)

Meanwhile, the land was sitting unused, and in July 1994 the Harbor Department granted a revocable permit to the L.A. Regional Food Bank – a private, nonprofit food-distribution network housed across the street from the Lancer site – to occupy and use the site as a community garden.

While poor families were cultivating the land and building community there, the L.A. City Council and then-Mayor Richard Riordan began in the late 1990s to discuss conversion of the site into an industrial park as part of Riordan’s Genesis L.A. economic-development program. Concerned Citizens of South Central, which had fought against the Lancer incinerator project, is listed in a 2001 report created for the mayor’s office as endorsing the proposal for the Lancer Industrial Park.

In 2001, Horowitz sued the city for breach of contract and shortly received a letter from City Attorney Rocky Delgadillo’s office, stating the city had denied his claim.

The farm continued to grow.

Then, in April 2002, operations began on the Alameda Corridor, a rail-cargo expressway linking the ports of Los Angeles and Long Beach to the inland transcontinental rail network that runs alongside the South Central Farm. This made the site valuable real estate for commercial or industrial development, pitting the environmental and social value of the community garden against the profit potential of developing the land for global-trade use.

In closed negotiations in 2003, the City of L.A. settled with Horowitz, selling him the land for just over $5 million – less than half the amount for which the land was sold to the Harbor Department in 1994 and less than the $6.6 million the City Council described as "less than fair-market value" in its cancelled 1991 sale to the Nehemiah Public Housing Corporation. As part of the 2003 settlement, Horowitz agreed to donate 2.6 acres of the site for a public soccer field. The City Council approved the closed-session agreement between Horowitz’s attorneys and City Attorney Delgadillo’s office. Councilmember Jan Perry, who represents the 9th Council District, in which the farm is located, began seeking alternate sites to relocate the gardens.

Patrick Dunlevy, an attorney representing the farmers, says that despite repeated requests, he has never seen documents detailing the negotiations that led up to the signed settlement agreement. "There are exchanges of letters between counsel, but nothing about the nitty-gritty of the negotiations and nothing indicating why the city decided to keel over and settle the lawsuit when they were from all appearances about to win by having the court dismiss the case."

Shortly after the settlement, on January 8, 2004, Horowitz gave written notice to the Food Bank that their revocable permit to occupy the land would "terminate as of February 29, 2004."

Upon learning of their imminent removal from the land, the farmers filed a lawsuit arguing that the city’s closed-session settlement with Horowitz violated their rights, and they were granted an injunction allowing them to remain on the land until the case was resolved. When an appellate court ruled against them in June 2005, they appealed to the California Supreme Court, which in October 2005 refused to hear their case.

On March 1, 2006, Horowitz issued an eviction notice, which would be stayed pending resolution of a separate lawsuit filed by the farmers. The basis of this last legal challenge is that the city’s behind-closed-doors settlement with Horowitz constitutes waste "for two reasons," attorney Dunlevy told TNS. "The city sold it to the developer for far less than what it was worth, and the city sold it to settle a meritless lawsuit." While that case moves through the courts, the farmers and their allies are seeking political solutions.

Currently, Horowitz is engaged in negotiations with the Trust for Public Land, which hopes to buy the land for public community-garden use.

Rad Geek argued that the state's seizure of the land rendered the land unowned, and that the farmers who homesteaded it and first mixed their labor with the undeveloped land in the interim period were the rightful owners.

In response to the predictably visceral sympathy for Horwitz expressed at Mises Blog, Brad Spangler entered the fray in the comments. He expressed the same opinion as Rad Geek on the property rights of the farmers, as homesteaders of unowned land under Rothbard's version of Lockeanism. Among the most controversial of his arguments were these:

That land became morally "unowned" and "abandoned" the instant the official title passed to the city. The first non-state users/occupiers to "mix their labor" with the land (as Locke would have put it) become the owners, morally....

...while that land was in the possession of the state, it became unowned and thus able to be homesteaded by non-state third parties, such as the farmers. They homesteaded it while it was unowned, making it their property, morally.

As I will discuss in my assessment of the controversy below, these arguments are problematic, and at least deserve further examination before they can be accepted.

David Reynolds, at the view from below, also wrote an eloquent defense of the farmers.

And finally, the story provoked a heated debate at Reason Hit&Run after Jesse Walker posted on it. In the discussion there, several commenters seemed to operate on the legalistic assumption that any title is good on the face of it. For instance, smalls:

I don't think Horowitz should be made into the bad guy here. As long as eminent domain is legal, he hasn't done anything wrong. If you have a problem with eminent domain (which I do), then take it up with the SCOTUS.

...and Ayn Randian:

Simple fact: Horowitz, through a company OWNED the land; city took land (legally, but not morally right) and OWNED it...it was theirs to give. Yet again, a problem with government, but it's Horowitz's land because it was the city's to give. Period.

...and Ayn Randian again:

A pure definition of homesteading is when you occupy land unowned by anyone, even the government. Now, we can go round and round and say the government can't really own anything because it's really our money, yadda yadda. But, as odious as eminent domain is, it's the law, and legally speaking there was an owner, and you can't homestead owned land.

...and Woozle:

Anyway, the city owned the land, even if it lay unused, even if they obtained it through eminent domain. They sold it to Horowitz for $5 million, which benefited the entire population of Los Angeles. Case closed.

In response to the last remark, our own good ol' quasibill retorted:

Each sentence violates principles of libertarian thought so profoundly that I'm guessing you got your concept of "libertarian" from Insta-sellout.

As for me, well, shee-it. If I seriously bought into all that "the law is the law, and if you don't like it change it, but until then keep obeying it" bullshit, I'd have become a fucking Republican.

kevrob also threw in a quote from Locke's Second Treatise on the homesteading process. Several commenters, while acknowledging that Locke might be edifying for an audience of middle class white people who had been safely prepared for such esoteric doctrine, seemed to consider it wiser to keep him safely "locked" away until the present danger had passed. After all, as useful as Locke may be at times for rich white guys, we don't want him putting funny ideas into the heads of those people.

Ayn Randian, especially, was upset about all this newfangledy stuff about Locke and the common law of adverse possession. Why just imagine: if you own a vacant tract of undeveloped woodland, and go ten years without bothering to inspect it, and somebody raises vegetables on it while you fail to make any reasonable effort to assert your title, somebody might actually construe that as "abandonment." Mercy me! To joe, who had commented favorably on the Lockean doctrine, Ayn Randian fumed:

Like it or not, joe, your position is garbage; land is an object, with boundaries (ask a surveyor) that is owned...you have a deed/title and it's worth money. It's the same as any other good, and if you own it, that's it...you can let it sit for 100 years as far as I am concerned, because it's yours to do with as you please.

That's what ownership means. You know, I always rolled my eyes when people complained about the leftward tilt of Reason. Now I am not so sure.

In other words, anything the state says is a land title is a land title, even if it declares David Rockefeller Duke of New York and grants him the entire state as a fiefdom. And there's no such thing as abandonment or salvage in a legitimate private property system. Anyone who says otherwise is Che Guevara. So I guess Locke's now up to replace Kant as the most evil man in history. Wouldn't be surprised if Randian is also some kind of Galamboid who thinks we ought to be paying royalties to the inventor of the alphabet.

What Ayn Randian calls property rights, Jerry Tuccille preferred to call "land-grabbism":

Free market anarchists base their theories of private property rights on the homestead principle: a person has the right to a private piece of real estate provided he mixes his labor with it and alters it in some way. Anarcho-land grabbers recognize no such restrictions. Simply climb to the highest mountain peak and claim all you can see. It then becomes morally and sacredly your own and no one else can so much as step on it. [The Libertarian Forum, November 1, 1970]

My Assessment:

To the extent that Rad Geek's and Brad Spangler's cases rest on Rothbard's radical Lockeanism, I would advise caution. One of Rothbard's disciples who also favored homesteading of state property, Hans Hermann Hoppe, would have denied that state seizure extinguished the original owner's title. Hoppe argued that state industry in post-Communist systems should be treated as the property of the labor force working it, because it was either predominantly capital accumulated under state ownership, or built from scratch under state ownership; land, on the other hand, should go to the original pre-Communist owners or their heirs, if they could be identified. So at least in cases of simple, uncompensated seizure, Rothbardianism is shaky ground for arguing that original property titles cease to exist.

But there are several other issues that I didn't really see addressed in all the debate, that weaken Horowitz's case considerably.

First: just what were the relations between the municipal government and the real estate firm in that eminent domain deal in the first place. Here in Northwest Arkansas, where local government itself is pretty much a showcase property of the big real estate agencies, it's pretty common for government to offer a sweetheard eminent domain deal to some politically connected landowner, sometimes taking property off the hands of a distressed owner for far more than its market value. At various times, city or county governments have bought land from their cronies for, among other things, a public golf course and a new county courthouse.

Second, the fact that the original owners received some money at least goes partway to stealing the fire from their moral claims to have been robbed. Certainly any forcing of a sale by the state is illegitimate, as is its arbitrary assignment of a standard market price to something the owner may subjectively value at a far higher rate. But Horowitz and his real estate associates were paid at least what the going price was for land in that neighborhood, so they're far from the victimized status they'd deserve if it were taken without compensation. And since as a real estate company they were holding it for purely speculative purposes, and sentimental value played little or no role in their subjective valuation of it (as it might have with a family business or home), the price they were paid is more suitable as a proxy for its "real" value than in many such cases. So even if the eminent domain "purchase" was far from a legitimate market purchase, the money paid for the land certainly weakens anyone's claim to be the rightful original owner at the expense of the farmers subsequently homesteading and developing it.

Considering the inflation in real estate prices since the 1980s, and comparing the $5 million that the original owners were paid to Horowitz's asking price today, it sounds like the original owners may have got a pretty sweet deal when the land was first condemned. That takes us back to that bit about political collusion between local governments and E.D. "victims." I wouldn't be at all surprised if Horowitz had made out like a bandit when the city originally bought the land, and then again when he bought it back at a sweetheart price.

At any rate, uncompensated seizure and compensated E.D. condemnation should be considered entirely different categories when it comes to assessing the legitimacy of any claims to have the land "restored." On that basis, I agree with Rad Geek and Brad Spangler that the farmers were homesteading unowned property. The original title wasn't extinguished by government seizure as such, in my opinion; but the fact that something approximating market value was received by Horowitz (and more importantly, as we see below, that the land had never been developed) is enough to extinguish the title, at least to the point that considerable weight is added to the claims of the farmers.

Given this, it follows that the subsequent title acquired by Horowitz, in negotiation with the city, was null and void because the city had no legitimate claim to negate the property rights of the farmer-homesteaders. Certainly to claim, as Paul D. did in the Mises Blog comments, that "[m]orally, the plot has been Horowitz's all along, even though the city appropriated it," strains Rothbardianism past the breaking point.

We've yet to consider, among the considerations that were left out, the most important of all: the fact that the land was undeveloped at the time it began to be farmed. I don't even need to defend the farmers on the basis of Ingalls-Tucker occupancy-and-use tenure, because as The Times was so helpful as to inform us, the land was undeveloped (at least, as Rad Geek points out, until the farmers homesteaded it). Note the effusive propaganda on the jobs and economic benefits to come from having the land "developed." As Rothbard argued, the first owner of a vacant tract of land is the homesteader who alters it in some way with his labor. All previous holders of title to unimproved land are simply the equivalent of feudal lords or tax-farmers, who in effect impose a tax on the rightful first owner. This is an example of how most of the titles to vacant land that we Tuckerites consider illegitimate are also illegitimate by radical Lockeans standards.

Spangler (after acknowledging, in response to commenter Peter's quote from The Ethics of Liberty, that he'd overstated Rothbard's position on the unowned status of state assets whose original owners could still be found), brought up the same point himself:

Another important question:

Was the land really "owned", in a moral sense, by the investor groups if it had never been put to any use in the first place?

If the farmers were the first to ever really do anything with that land, then they would surely be the rightful owners in a moral sense -- that is, if it had never actually been homesteaded at all in the first place by Horowitz and associates, regardless of what machinations have occurred with regard to the official title to the plot.

Does anyone know the development status of the land prior to the eminent domain seizure in 1985?

And as he argues later in the same thread, it's fairly common for such vacant land to have never been legitimately owned: vast tracts of vacant land were originally claimed by the state, distributed to its cronies, and then passed from one politically-connected speculator to another without having ever been actually homesteaded. The fact that one such sizeable tract still exists in an urban area like Los Angeles just backs up Albert Nock's observation on the undevelopment of land in old settled areas resulting from political appropriation of the land:

If our geographical development had been determined in a natural way, by the demands of use instead of the demands of speculation [that is, appropriated by labor], our western frontier would not yet be anywhere near the Mississippi River. Rhode Island is the most highly-populated member of the Union, yet one may drive from one end of it to the other on one of its "through" highways, and see hardly a sign of human occupancy.

New Wine in Old Bottles

You'd think by now it would be natural, when I read something by an author I like, to check whether they've got a blog. I didn't find out until now, though, that Barbara Ehrenreich has a blog--coincidentally after I'd just finished reading Nickel and Dimed and Bait and Switch. Anyway, she's got a good piece on what she calls "Bossism." One thing she says coincides with my own train of thought lately:

When corporations uphold the idea of “teams,” they’re grasping for the kind of ingenuity and creativity people naturally bring to a challenging situation – if they’re allowed to, i.e., if they’re treated like participants instead of like servants or subordinates.

That's exactly my impression of the proposals Tom Peters made in the late '80s and early '90s: organizing production in self-directed teams, eliminating first-line supervisors, and putting product development and marketing people in direct contact with production workers on the shop floor to reduce the turnaround time involved in innovation.

Reading Peters (especially Thriving on Chaos) is a lot like reading Kropotkin's Fields, Factories and Workshops. It's a great study of the seeds of a potentially decentralized and human-scale economic order of worker-managed production, that might actually sprout if the state stopped propping up the current corporate system.

There are two problems with Peters' approach, though. First, he greatly underestimated the inertia of state capitalism. His work of fifteen or twenty years ago was full of warnings that the hierarchical corporation was going the way of the dinosaur or Gosplan, and that his proposals for team self-management and the like were "must dos" if existing corporations were to survive into the near future. Of course, Peters is prone to hyperbole as a marketing tool, as suggested in this article I got from Jesse Walker; and he implicitly confessed his tendencies to self-parody and cartoonishness in his interview with Virginia Postrel. At any rate, the giant hierarchical corporation seems remarkably healthy fifteen years later. Peters greatly exaggerated the market pressures to efficiency in an industry cartelized among a handful of firms with the same organizational culture.

Second, Peters fit his genuinely good ideas of economic decentralism and worker-directed production into a conventional corporate framework. Virtually every radical management reform discussed in Thriving on Chaos is an attempt to artificially simulate, in the hostile environment of a large corporation, the situation that would naturally exist in a small enterprise (especially a worker co-op). His self-managed teams, obviously, are just a corporate version of the self-management that naturally occurs in producer cooperatives. His close contact between customer, marketing, research and production, and the resulting turnaround time, are also attempts to duplicate within the hostile environment of a corporation what would naturally occur in a small enterprise using general-purpose machine tools. In the latter case, product design and market research would be carried out by pretty much the same people setting up the machines. Peters' systems of worker incentives are just a weak version of what would exist in a self-managed cooperative, where the workers directly engaged in the production process would have the power to put their ideas for process improvement into immediate practice, and reap the full rewards for any increased efficiency.

And Peters made it clear that he was perfectly fine with bigness, as such, and preferred adopting such measures in the context of the large corporation. His idea was to combine the advantages of bigness and smallness in the same system. Production itself would be decentralized considerably, but it would take place within the boundaries of a giant mercantilist entity that retained central control over finance, as well as control of IP and branding, and the market power to enforce prices on suppliers and outlets.

Finally, self-directed teams didn't sweep the corporate world with anywhere near the force that Peters imagined they would. "Quality circles" were a popular management fad for a while, and were adopted piecemeal in some firms. And new models of bottom-up management have fared somewhat better in some industries, like information, where peer networking is so suited to the nature of the work. But for the most part, the average corporation as seen from the bottom by one of its employees is at least as authoritarian as ever.

Just how much the radicalism of prospective change was exaggerated by such gurus, and how low the bar was set for achieving it, is indicated by the examples of radically "reengineered" corporations showcased in Hammer's and Champy's Reengineering the Corporation. The reengineered corporation streamlines certain complicated processes that exist at that level of complexity in the first place only because the corporation has hypertrophied several orders of magnitude far beyond maximum economy of scale. The new, streamlined process is a considerable improvement, but the benchmark for measuring the improvement is the typical centralized, bureaucratic corporation. The more efficient processes are still more complicated and costly than would exist in small firms serving local markets. IBM's reengineered finance approval process, for example, in which the same person walks an application through all the stages of the process, in place of an older process that involved countless handoffs: the result is essentially what the manager of a small outlet would have done anyway, by himself, based on a common-sense assessment of the customer's creditworthiness--and probably in a fraction of the time taken even by IBM's reengineered process.

So Peters and likeminded writers are good at depicting the seeds of decentralism and bottom-up management; but they adapt them to the existing corporate system. They put new wine in old bottles.

There He Goes Again!

Well, George Reisman (or should I say Herr Doktor Doktor Reisman) is on a roll with what appears to be an anti-Carson theme, so it looks like I'll be getting some more free publicity.

I should mention that after seeing so many of Reisman's almost comically bowdlerized misreadings of my work (and worse, his continuing reassetions of them in the face of my corrections), I begin to wonder whether his obtuseness is just a pose: whether he's not instead following a deliberate strategy of counting on the far greater readership of his venues, and knowingly repeating arguments that have been shown to be erroneous, in the confidence that most of his readers will be familiar only with his own assertions and not my responses. Certainly anyone willing to take the trouble to read both Reisman's review of my book in JLS and my own rejoinder to Reisman will have ample reason to doubt either his reading comprehension skills or his sincerity, and never to accept his characterization of anyone else's work without seeing it firsthand for themselves.

I have some hope that this strategy of Reisman's, if it is indeed his strategy, will backfire. The people who accept his grossly distorted version of my positions, as presented in his review article, without bothering to read even my rejoinder, are likely to be firmly in Reisman's camp anyway. On the other hand, anyone who out of curiosity follows up a Reisman's bizarre misreadings with a reading of my rejoinder will never trust him again.

Quasibill's comment on an earlier thread seem to bear this out:

To be honest, it was the utter vapidity of Dr. Resiman's critique of your book that convinced me that there was something to be learned from your arguments.

Not that Reisman makes many good arguments (I think he takes Rothbard's prediction about experts specializing where they are weakest as a challenge to live up to), but his inability to address your arguments on the merits combined with his resort to ad hominems and vitriol were telling indicators of where the truth in the debate lay.

I'm still not a fan of mutualist property and banking theory, but I've learned a lot by reading your critiques of the standard Misesian position.

So despair not, your exchange with Reisman has at least one partial convert to show for it!

Reisman's criticisms do more to promote my ideas among thinking people than anything I could possibly write. So bring it on!

I spent a lot of time in my rejoinder pointing out as many of Reisman's errors and mischaracterizations as my space constraints would permit, and I don't have the time or energy to repeat all of them. All I can say is, if you're interested it's easy to click on the links above and read both Reisman's review and my rejoinder in their entirety and see for yourself. And if you can't be bothered to do that, please don't pretend that you know jack shit about my position on anything.

This time, in any case, Reisman's target is mutualist property theory (his remarks are also crossposted on his personal blog). He's no longer calling me a "Marxist," as he did by my count ten times in his review for JLS. So I guess that in itself is a marked improvement in his historical literacy in recent months.

Now he's attacking my positions under the label "mutualism," although he apparently has at best a weak grasp on the existence of individualist anarchism in the nineteenth century, its actual tenets, or the extent to which it has been addressed (often somewhat positively) by Rothbard and many of his followers. After reading Reisman's reference to "what [Carson] calls 'individualist anarchism,'" I can't help but think of a befuddled Montgomery Burns' encountering some (to him) newfangled phenomenon: "I'm beginning to like this so-called 'iced-cream.'" Or: "Ahoy! Ahoy!... I suspect you need more practice working your telephone machine."

But what strikes me most about Reisman's attacks is less their substance than their tone. As I say, he acts as though the history of individualist anarchism is something that just recently dropped into his lap. And in confronting it, he distances himself not only from Rothbard's halfway friendly treatment of it, but from the Rothbardians' entire critique of historical capitalism and from all of their points of agreement with New Left historiography.

What we're left with is pure right-wing Mises, without any admixture of Rothbardian leaven. The degree to which he has become a self-parody of the extreme Austrian right can be illustrated by these quotes from his review article, in which he takes extreme umbrage at any suggestion that workers might possess Hayek's "distributed idiosyncratic knowledge," or be capable of significant innovation in an economy of cooperatively owned enterprises:

Here Carson, the “individualist” anarchist shows himself to be quite the collectivist, attributing to the average person qualities of independent thought and judgment that are found only in exceptional individuals....

Carson is simply unaware that innovation is the product of exceptional, dedicated individuals who must overcome the uncomprehending dullness of most of their fellows, and often their hostility as well.

Egad! Maybe he should write a book of management theory entitled My Struggle Against Stupidity, Lies, and Ignorance. Austrian economics, indeed!

Of course, this last bit of frothy-mouthed rug chewing comes less from Austrianism, even its far right fringe, than from the outer fringes of Randroidism. The source of Reisman's antipathy to the Untermenschen outside Galt's Gulch is suggested by the fact that he lists Rand ahead of the Austrians in his intellectual influences. That's not to say that Rand fits in the intellectual box constructed for her by right-wing Randroids like Reisman; some Objectivists like Chris Sciabarra have refined aspects of her thought into indispensible tools of libertarian analysis, and some Austrians like Roderick Long are appreciative of her genuine contributions. In any case, the aspects of Randianism that Reisman stresses don't mesh very well with the mainstream of contemporary Austrian thought, and only imperfectly with the Old Man himself.

Reisman, interestingly, expresses a suspicion of me....

I cannot help but suspect that what Carson is actually opposed to is not at all force, fraud, or actual injustice in the history of mankind but the existence of large inequalities of wealth and income, whatever their basis.

...that mirror-images my own suspicions of him. I cannot help but suspect that what Reisman actually supports is not free market principles as such, but "the existence of large inequalities of wealth and income, whatever their basis."

As I wrote in my rejoinder to Reisman's review, I suspect he is forced for tactical reasons to distance himself from the last forty years of Rothbardian critiques of state capitalism. I was struck by the parallel between Friedrich Engels and George Reisman, in the extent to which they found it necessary to retreat stragetically from so many of the positions of their own respective sides, in order to maintain some defensible ground. I quote at length:

On the matter of primitive accumulation, there is an amazing parallel between Reisman and that most vulgar of vulgar Marxists, Friedrich Engels. Engels, in Anti-Dühring, argued that the process of primitive accumulation would have taken place in exactly the same way without any state expropriation whatsoever, solely through the effects of success and failure in the free market. Essentially, Engels retreated from Marx’s entire body of work on primitive accumulation, in which he described the massive expropriation of the peasantry, “written in fire and blood.” Engels, in effect, embraced the “bourgeois nursery tale” of primitive accumulation, ridiculed by Marx and Oppenheimer alike, in which the present distribution of property reflects an endless series of victories by the industrious ant over the lazy grasshopper. Marx himself, for that matter, was on the defensive about the logical implications of his history of primitive accumulation. Why? There was an entire school of radical classical liberals and market-oriented Ricardian socialists who argued that state robbery and state-enforced unequal exchange were the causes of economic exploitation. As Maurice Dobb wrote in his introduction to Marx’s Contribution to the Critique of Political Economy:

"...the school of writers to whom the name of the Ricardian Socialists has been given . . . who can be said to have held a “primitive” theory of exploitation, explained profit on capital as the product of superior bargaining power, lack of competition and “unequal exchanges between Capital and Labour.”. . . This was the kind of explanation that Marx was avoiding rather than seeking. It did not make exploitation consistent with the law of value and with market competition, but explained it by departures from, or imperfections in, the latter. To it there was an easy answer from the liberal economists and free traders: namely, “join with us in demanding really free trade and then there can be no ‘unequal exchanges’ and exploitation.” (Marx 1970, p. 13)"

And as I commented in my book, this “easy answer” was exactly the approach taken by Thomas Hodgskin and the individualist anarchists of America. The greatest of the latter, Benjamin Tucker, reproached as merely a “consistent Manchester man,” wore that label as a badge of honor. Engels was facing something similar, in Eugen Dühring’s “force theory” of economic exploitation. He was forced to retreat from Marx’s history of primitive accumulation, because he found the implications of that history politically and strategically intolerable. I suspect Reisman is forced to repudiate it for similar reasons.

I suspect, furthermore, that Reisman is forced to repudiate all of Rothbard's insights, especially his points of agreement with the New Left, on the history of state capitalism, for the same tactical reasons. Acknowledging the role of the state in creating the present corporate economy would destroy his romantic Galt's Gulch fantasy of big business as an "oppressed minority." In short, Reisman is forced to destroy much of Austrianism in order to save it.

At times, my suspicions go so far as doubting the genuineness of his ostensible lack of reading comprehension or ability to grasp unfamiliar arguments. Reisman's critiques of my work follow a rather disturbing pattern. He originally makes a criticism of my book that displays a seemingly total lack of reading comprehension or a total unwillingness to respond to what I actually said. But after I rub his nose in his bowdlerized misreading, he continues to talk past me, making the same assertions over and over as if I'd never said a word.

I've seen some past material of Reisman's that displays a considerable capacity for following nuanced thoughts and appreciating fine distinctions (i.e., his contrast of the "esoteric" and "exoteric" doctrines of Bohm-Bawerk), so I have reason to suspect that his pose of intellectual ham-handedness is just that: a pose.

Anyway, now to his substantive points.

First, Reisman quotes from his original review article:

Thus, for example, if I, a legitimate owner of a piece of property, legitimate even by Carson’s standards, decide to rent it out to a tenant who agrees to pay the rent, the property, according to Carson, becomes that of the tenant, and my attempt to collect the mutually-agreed-upon rent is regarded as a violent invasion of his [the tenant’s] “absolute right of property.” In effect, Carson considers as government intervention the government’s upholding the rights of a landlord against a thief.

This is question-begging. What constitutes agression or theft depends on the prior definition of property rights. I have argued that no system of property rights rules, whether Lockean, mutualist, or Georgist, can be logically deduced from the axiom of self-ownership. According to the arguments of "Hogeye" Bill Orton, from which I have borrowed extensively, such property rights rules are conventional. And as I have argued myself in elaborating this principle, the choice between such rival sets of rules can only be made on consequentialist grounds: on the extent to which they tend to promote other values that we consider fundamental. This was the point of contention between Roderick Long and myself in his review article (in which he argued with far more effectiveness and less pissiness than Reisman) and my rejoinder.

Reisman continued, in his review:

He believes he has the right to prohibit me and the tenant from entering into an enforceable contract respecting the payment of rent and that such action is somehow not a violation of our freedom of contract and not government intervention.

The term "enforceable" is the crux of the matter. The enforceability of a contract, in any society, stateless or otherwise, depends on the willingness of third parties to accept its validity. In a local community where the majority consensus is for title based on occupancy and use, any attempt to enforce title based on Lockean principles will ultimately cost more than it's worth. For that reason, the mutual defense associations and free juries in a Tuckerite or Warrenite community would likely have exclusionary clauses for occupants seeking aid against landlords in Lockean communities, and anarcho-capitalist defense agencies would likewise exclude enforcement of landlord claims against occupants in mutualist communities. Both would refuse to defend property owners against rental collection in Georgist communities. And in sparsely settled areas, the default position would likely be some form of de facto occupancy and use, since the costs of excluding squatters from vacant land would likely exceed any return on its value.

Following in the same vein in his blog post, Reisman attempts to portray the Ingalls-Tucker property doctrine in the context of a simple breach of contract:

Here there is a mutually and voluntarily agreed upon rental contract, but after taking possession, the new occupant decides that he is the owner of the land and will not pay any “absentee landlord rent,” which Carson believes it is his absolute right to decide. Has he not obtained another’s legitimate property and is now refusing to pay for it? And, having taken it, and both refusing to pay for it and refusing to give it back, is he thus not stealing that property?

Would he have been able to obtain the use and occupancy of the land if it had been known or suspected that this is how he would behave, once having obtained it? Obviously, he would not have been able to, and the assurance of his not behaving in this way is a written and signed enforceable rental contract.

In a society where property is established by occupancy and use, obviously, it would be a pretty obtuse would-be landlord who did not "know or suspect" that something like this would occur. Reisman considers the hypothetical operation of occupancy and use tenure not in the context of a legal system organized on that principle, but in an atomistic fashion, with individual cases operating in the context of a larger society based on the present rules.

He ignores my repeated stress on the principle that no system of property rights rules can survive without a local consensus on those rules, reflected in some body of law, which the local population is willing to enforce in civil disputes. Owner-occupancy, like Lockean absentee landlordism, would only be viable in a community where a majority of people were agreed on those rules. So any landowner who entered into a rental agreement with a tenant, like an employer entering a contract by which his employee agreed to sell himself into slavery, would do so knowing that the contract would be considered null and void on its face. By the very fundamentals of mutualist property laws, a contract to treat someone else as the real owner of a property which one occupies oneself would be considered repugnant.

I don't, however, dispute the possibility that a person might make contractual agreement to quit a piece of land on certain terms. I have raised that possibility myself in the case of mortgaging real property to a mutual bank. The question is by what civil remedies the contract would be enforced. A parallel case is that of bankruptcy, as Lysander Spooner considered it. Certain remedies are allowed the creditor (i.e., seizure of existing assets), while others are denied (i.e., debtor's prison or any claim on the future income of the defaulting debtor). In a libertarian society, bank accounts and moveable assets might be forfeit in the event of a default on an agreement to quit one's property, and assorted sanctions by third parties (including a refusal to enter into further agreements with the party in default) would be likely; the sanctions and universal shunning of those who defaulted on their "obs" in Eric Frank Russell's "And Then There Were None" is a pretty good illustration of the principle. In short, the injured party would have access to many remedies short of being treated as actual owner of a property which he did not occupy.

And I have also repeatedly stressed, in quite conciliatory terms, the possibility for peaceful coexistence between such rival systems of property rights rules. In a panarchy or "anarchy without adjectives," there would have to be some sort of meta-agreement between communities based on different systems of property, in which each one agreed not to attempt to enforce property rights claims in another community that were at odds with the local rules. David Friedman has envisioned similar meta-agreements on questions other than property, in which (say) a protection agency in the Jerry Garcia People's Collective refused to defend members against prosecution for adultery against members of the Sword of Jehovah Covenant Community.

Reisman also ignores the fact that the boundary between Ingalls-Tucker and Lockean rules is fairly blurry. As I've pointed out before, the thought of Tucker himself underwent some evolution on just how he imagined his usufructory property system operating. At times, he made a simple equation of rent to taxation, and argued that tenants should simply stop paying rent en masse. At others, he seemed to view building rent as legitimate, and to believe that free access to vacant land would drive rents down the level of building rent alone, while mutual banking would drive building rent down to simple amortization costs. But in the latter case, arguably most vacant land would likewise be consider unowned under a radical application of Lockean rules.

All of Reisman's arguments on property so far can at least be plausibly written off as legitimate misunderstandings of a topic with which he isn't very familiar. But he proceeds to an argument which puts the needle on my disingenuousness meter off the end of the dial:

Non-use is alleged justification for legitimate property being seized, and, as I’ve shown, not just land but also homes and apartments, and by implication, automobiles, clothing, and everything else that is not being used by its owner.

Huh?!! Surely anyone even vaguely acquainted with the history of political economy should be aware that philosophies that treat property in land as fundamentally different do so for a reason: the almost totally inelastic supply of sites. That state of affairs has led not only mutualists and Georgists to see land as different, but even Locke himself--ever heard of the Lockean Proviso, Herr Doktor? If Reisman wants to reject such arguments for treating property in land differently, that's fine. Rothbard made some pretty good efforts at countering the Georgist argument from scarcity, although I don't think he succeeded. But I have a hard time believing that Reisman is addle-brained enough to sincerely believe that there's a danger of Tuckerites or Georgists applying their scarcity-based theories of property in land to moveable property. Anyone making such an argument in a freshman Great Ideas paper would justifiably earn a big red "F."

Others in the comments thread have raised questions about the difficulty of determining how much of a tract was "used," how much labor must be mixed with a given amount of land to establish ownership, and the potential difficulties encountered by those going on extended vacations or letting land lie fallow in a crop-rotation system. The proper answer, of course, is that such questions would be settled by convention in a local community where the juries setting the rules would be motivated by a desire to minimize inconvenience. And the reliance on convention in working out the practical application of mutualist doctrine is no greater than is the case with Lockean doctrine; one could just as easily question just what constitutes sufficient admixture of labor for Lockean homesteading, or what is necessary to construe abandonment or relinquishment of claim on a piece of property. In fact David Heinrich, the same commenter who raises questions about an extended vacation, discusses constructive abandonment of apartment buildings in terms that considerably undermine Reisman's moral indignation about "sqatters" in the main post.

Any Time Now: New Issue!

Issue #24 of Any Time Now is out. It includes an article on the Mondragon cooperative system by John Griffin, Harold Barclay's "On the Matricentric Character of Early Human Society," a dismissal of anarchist kewl kidz faddishness by joey only, a review of a platformist history of anarchism by Pat Murtagh, and a review of Roy Morrison's Eco Civilization 2140 by yours truly. You can read it in pdf format here, or contact me for a hard copy.

Klassen on Rural Homesteading for the "Time of Troubles"

Via Ender's Review, June 5. Robert Klassen has some observations that should be of interest to any lefty who's into Peak Oil, any Misesian who believes we're headed for a crackup boom, or anybody in general who believes state capitalism is headed for some kind of messy crisis of inputs: "The Transition II."

How can communities be organized to survive the threat? I would like to begin to try to answer that question by talking about the farm where I grew up.

This farm was located two-miles west of LaPorte, Indiana. The town was named by French trappers as "The Door" out of the forests to the prairies of rich soil to the south. Our farm sat on the edge of the glacial boundary, on the leftover sand and clay and stones of the melted glacier. Around sixty-five acres, the soil was fertile enough to grow anything appropriate to that climate with sufficient patience and labor.

Our family consisted of three generations, eight adults and nine children, living in three separate households. Our immediate neighbors lived on parcels of one to ten acres and comprised a dozen adults and two-dozen children. By working together in completely free and informal manner, expressing an innate spirit of cooperation, all of these people survived the privations of the Depression and WWII without suffering. How?

What I remember most clearly is a spontaneous division of labor, and trade. Our family produced raw milk, chickens, eggs, fruit, cider, honey, and grains. One neighbor specialized in strawberries and sweet corn, another in vegetables, another in goat products. Food was traded within the group, and the surplus was sold in individual roadside stands.

There was no fuzzy warm feeling of family or community here, that was simply the way things were done. There was a fierce sense of property ownership, and woe betide cheats or trespassers, including children – maybe especially children who stole watermelons. Borrowed tools were returned promptly, and if a neighbor asked for help with a major job, one would be wise to arrive early and stay late, or at least until milking time....

State sponsored corporations are trying to sell these people single-harvest hybrid seeds, and discourage the use of native seeds that will reproduce identical genetic copies year after year for free. I have to agree that costly hybrids are inappropriate to poor subsistence farmers even though potential yields may be many times greater, because high-tech agriculture presupposes high-tech farmers, which they are not. The matriarch interviewed in this essay simply said no to hybrid seeds. No sale. What’s wrong with that? It doesn’t take a UN resolution to say, I won’t buy it.

Klassen says one thing I disagree with:

This kind of rural model cannot be imported to the cities, and city dwellers would not willingly be exported to the rural model. The millions of hungry urban people require intensive mechanized agriculture with its high-yield hybrid seeds, fertilizers, pesticides, and herbicides plus thoroughly educated farming practitioners and skilled banking creditors. For urban dwellers rhapsodizing on an organic garden theme in nature, I suggest they try it before they try to sell the idea: turn over an acre with a spade, break it up with a hoe, rake it out, plant it, cultivate and harvest by hand, and then talk about it. They didn’t call it back-breaking work for nothing. Even Thoreau hired a teamster with oxen and plow to break Emerson’s land at Walden.

First of all, he sets up a false dichotomy between "intensively mechanized" chemical agriculture and spadework. What about the possibility of appropriate-scale mechanization: i.e., the use of a simple rototiller? They won't throw you out of the organic club for using it. Second, even without any mechanization at all, there's a lot (really a lot) less spadework involved in intensive raised bed techniques than in spading up a field for row crops. One double-digging job for a bed can last for years, with only U-bar cultivation subsequently, if you're careful not to compact the soil. Third, the vacant space in even a built-up city is sufficient to meet a surprising proportion of people's total needs, what with rooftop gardens, vacant lots, small yards, and the like. John Jeavons, through years of experimentation, has managed to get the amount of space needed to produce an average person's diet (meat included) down to 4,000 sq. ft. Fourth, from the point of view of labor-time, such techniques are probably a net plus for most people, if you compare the amount of time it takes to grow the stuff to the amount of time you'd have to work to earn it. Borsodi calculated, in Flight From the City, that the total cost of labor and supplies to grow and can one's own tomatoes was about a third less than the grocery store price.

I recently received, by email, this criticism of Borsodi's latter claim, with the request that I post it on my blog:

Of the many comments I would like to make, I'm only going to focus on one comment you made in your Rejoinder to George Reisman, who, by the way, is a PHD and should be addressed accordingly.

Your rejoinder states,

"......Further, as counter-intuitive as Reisman may find it, the economies of mechanized farming and food processing are not that great even over the ordinary techniques of the average backyard gardener. Borsodi did a careful study of all the costs (including labor time and supplies) involved in growing and canning vegetables at home, and found that it was cheaper overall to grow one’s own. As I said above, the increased overhead and distribution costs of large scale production offset many of the economies that Reisman is so enamored of."

What you fail to recognize, as did Borsodi, is the violation of the fundamental rules of economics, (see Hazlitt, “Economics in One Lesson” for further clarification). Namely, Borsodi's ‘careful study’ obviously does not calculate ‘the costs to society’ if everyone had to take the time to can their own vegetables. Would we have electricity?, Automobiles?, High rise buildings?, etc.? if Edison, Ford, Carnegie, etc. spent most of there time canning vegetables, baking bread, building their homes, etc? Of course not!

May I suggest that you read Prof Reisman's book Capitalism and study the recommended readings he provides, then come back and see if you still think Mutualism is viable. Until you complete this exercise and master that body of economic knowledge, your ideas cannot be considered reasonable by any intellectual that does have that body of knowledge (economics) mastered. You owe this to your participants and followers that, I believe, are being led down a path of economic ignorance....

Sincerely,
Mark Baumann
Project Manager, The Boeing Company

Mr. Baumann's interpretation of Hazlitt sounds remarkably like a public good argument for innovation, if (as it seems) he posits some sort of "cost to society" that's not reflected in the costs of materials and one's own labor time. Remember, Borsodi's calculation of costs included the average value of labor time involved in growing and canning. So if he was correct, there would be a net gain in time for a person of average income in doing it himself; he wouldn't "have to take the time," but rather would choose to spend the time doing it himself instead, in order to maximize his own available time.

Remember, also, that Borsodi's calculation was made using an average wage. Someone who earns significantly more than the average for an hour's work might find it pays better to buy groceries. And whether an hour spent inventing automobiles is more remunerative than an hour raising one's own vegetables is an individual decision, based on the individual's perception of cost. If the individual perceives the potential payoffs from invention to exceed the benefits growing vegetables, he's free to do so. If not, I see no reason for him to feel under obligation to worry about "social cost." Besides, if growing one's own vegetables reduces the total labor time needed for procuring food, a person will have more time left over for other pursuits. If anything, in a society with less dependence on wage labor and more bargaining power for labor, and with decentralized small-scale production, I'd expect more productive innovation by people tinkering in small shops.

If the costs and benefits of various uses of an hour's labor are fully internalized by the laborer, then it seems to me that a simple economic calculation of comparative advantage will lead to the most "socially useful" use of time. Unless, again, you're proposing some public good standard of the "best" individual use of time apart from individual calculations of efficiency? If the individual is expected work longer hours to buy something than it would take to make it himself, because his wage-labor is more socially useful, it seems you're elevating some standard above demonstrated preference.

I've already read Economics in One Lesson, but I'll add Reisman's book to my reading list lest I wander off the Celestial Highway onto the Path of Economic Ignorance. As for my "followers," Mr. Baumann flatters me: these cats don't much care to be herded.

By the way: I believe it's fairly standard in this genre to refer to authors by last name without any honorific. At least I don't recall seeing any prefatory "Mr." cluttering up "Carson" in Reisman's article. And in the States, at least, any insistence on the social use of "Dr." by PhDs produces an effect more comical than anything else.

William Greene: Individualist Anarchists in the First International

Shawn Wilbur has some new William Greene texts at In the Libertarian Labyrinth blog. I quote from two of my favorites. First:

TO THE REV. H. W. FOOTE, Minister of King's Chapel, Boston.

You say (p. 14), "The honest price of riches, ever since the beginning of human society, has been work, self-denial, intelligence," &c. You begin very far back; but can you think of any special instance in point? The patriarch Jacob became rich through the blessing of the Almighty, not by work. The methods employed by him to increase his flocks and herds, at the expense of his father-in-law, were not those you specify. To-day men get rich, not by work, but by interest on money, the accumulation of rents and dividends, and the like; or by the rise in the value of real estate, monopolizing to themselves the profits that belong, not to themselves, but to whole neighborhoods; and so on....

But it's the second, "Address of the Internationals," that I find especially interesting from an individualist anarchist perspective. The role of American individualist anarchists in the International Working Men's Association is a fascinating topic that's received far too little attention. It's touched on in James Martin's Men Against the State (chapters 5 and 6 are online here), and in somewhat greater depth in Timothy Messer-Kruse's The Yankee International: Marxism and the American Reform Tradition, 1848-1876. I quote at length, starting with Shawn Wilbur's preface:

[The Address of the Internationals also appeared in the Fragments, after separate pamphlet publication in 1873. Although this was apparently a work "by divers hands," much of the language and subject matter is very obviously Greene's. Note that this piece was issued after the IWA had largely self-destructed, and certainly after the American individualists had been cast out from among its numbers, so it is, perhaps, less a document of the "First International" than a statement of belief in an unceasing revolutionary struggle. Understood in this way, the connections of the International with the Knights Templar and some of the more bizarre elements of the piece are more understandable.]

Not to mention Greene's rather purple descriptions of the International, in terms reminiscent of the Church Militant. Or maybe it's just a New England Transcendentalist thing. Next comes an introduction later added by Greene:

NOTE.—The Boston Section, No. I (French-speaking), of The Working-People's International Association, detailed a committee, in the latter part of the year 1872, consisting of "citizens Gruber, Sandoz, Greene, Prand, Coquard, and Jotterand," to draw up an address, explaining and defending the distinctive principles of the society. The committee attended to their duty, drew up the address, sent it to the headquarters of the association, and, after an interval of many weeks, received it back again, but covered all over with notes and observations. The changes recommended by the chiefs of the society were incorporated into the text; and the address was read before the New England Labor Reform League, at its regular convention for the year 1873. It was afterwards published by the Co-operative Publishing Company. Although the address was the work of many hands, yet, as the present writer saw his way clear to sign it, and finally did sign it, and now deems it worthy of being preserved in some more permanent shape than that of a loose pamphlet, it is here given as a sequel to the foregoing articles.

W. B. G....

In the main body, Greene takes a critical view of the collectivist strain of socialism's visceral rejection of wage labor as such (not necessarily the same as the "wage system," by the way), and profit. His defense of wage labor in principle, so long as the wage is not driven down by privilege, prefigured Tucker's later debates with Johann Most. As Tucker said, it's understandable that communists don't want anything sold, but why labor in particular? The whole point of socialism, after all, is precisely that labor be paid its full product. The word "profit" Greene uses in the sense of an accounting surplus, rather than returns on accumulated wealth as such, and so probably exaggerates his differences with the socialists (including Tucker) who use it in the second sense.

Amelioration of the condition of the working people is not exactly the emancipation of the working-people. The amelioration of the condition of the poorer classes, through the exercise of alms-giving and charity, means a postponement of the emancipation of the working-classes, and a perpetuation of existing privileges. The privileged classes are, without doubt, disposed to alleviate individual cases of suffering; for it is not to be presumed that they have no natural sympathy for the human beings they employ: nevertheless, as a general thing, they are not in favor of the economic emancipation, at the expense of their own privilege, of the entire working-class. The reform called for by the International Association is organic, and naturally incapable of being brought about by mere acts of charity....

Many working-men maintain that there should be an immediate radical change in the constitution of the workshop, and that all production should take place, hereafter, under the principle of co-operation. According to them, the workmen of every shop ought to organize themselves into companies owning their own tools; ought to contribute to the common product by their labor; ought to be paid by receiving their fair share of the common product when it is created; and ought to direct and govern the business of the workshop democratically, and by the majority rule. Among the objections to this scheme, the following may be mentioned: The company would have to buy their raw material, and sell their product, in the market; and purchases and sales can seldom be conducted to good advantage by workmen in business meetings, and deciding matters by majority votes. Persons who know the least would talk the most; persons of very little capacity would make the greater number of the motions; and much, if not all, of the time, would be wasted in determining points of order. "Many men, many minds." The company would probably end by employing a competent merchant to do their buying and selling. This merchant, a man outside the solidarity of the co-operators, would be able to direct his purchases and sales to his own advantage, and would, almost inevitably, usurp a privileged position. Furthermore, since working-men differ in capacity and assiduity, and since combined production requires a central direction, a manager, or foreman, with authority to discriminate in the matter of wages, would be found necessary. This manager would be a privileged person; and the company would be in his power. If they should quarrel with him, he would move into the next street, set up a workshop for himself on the wages principle; and nearly all the best workmen would go with him. He and the merchant would hold the company in their hands. If the co-operative workshop should be under the patronage and charge of the State, the case of the workmen would be still worse; for privileged positions would be created in the company for the purpose of providing places for mere politicians, or for the exercise of nepotism.

The success of the co-operative principle in companies organized for consumption [protective-union stores], and in mutual insurance-companies, is conceded. The success of productive enterprises carried on under the principle of industrial partnership, which is a mixed wages-and-share system, with the important risks falling on the employers, is also conceded.

But the hitherto uniform failures of strictly co-operative companies for production render it necessary that the International Association should patiently wait, before it gives its approval to any scheme of cooperative production, until that scheme shall have been thoroughly thought out, and until a guaranty shall be given that it will not "tend to the constitution of new privileges."

"The General Statutes" state the third fundamental principle of the Association in the words following:—

"The subjection of the laborer to capital is a source of all political, moral, and material servitude."

Many labor-reformers affirm that the fact of WAGES is the special source of the political, moral, and material servitude of the working-men to their employers. These reformers say, "Wages is slavery; and the man who works at wages sells himself and his children for slaves."

The word "wages" is old, and was current among English-speaking people, with its present meaning, long before the existing wages-system came into being. According to the common popular sense of the word in New England at the present day, a man may say, I wage a dollar, I wage a horse, meaning, I bet a dollar, I bet a horse. The word "wages" implies an element of risk. If a competent person devise some important undertaking, provide himself with capital, hire working-people at wages, and begin to carry out his plans, the money he advances from day to day, or from week to week, to the working-people, in wages, is money wagered by him; for the undertaking may ultimately fail, and yield no return for the outlay. The workingman wagers his pay for the current day only, or for the current week; but the employer wagers all that he invests in the undertaking. If the undertaking be carried on according to a share-system, and not according to a wage-system, the workman will have to contribute his share of the capital in the beginning, and wait for his pay and his share of the profits, until the work is ended, and the product is transmuted into money; the workman risking the loss, in the case of failure, not only of the capital by him contributed, but also of all the labor he has expended. Perhaps every one is willing to hold shares in privileged joint stock companies, and to receive a percentage, without himself working, of the product of other people's labor; but for every one person who is willing to work upon a strictly equitable share-system, taking his own risks, and insuring himself, a hundred other persons will probably be found who prefer to work at stipulated wages. Working-men are not, as a general thing, of the opinion, that "the man who works at wages sells himself and his children for slaves." The phrase, "wages is slavery," first put forth in the neighborhood of Boston, some twenty-five years ago, by the Brook Farm Fourierists, has met with a temporary but undeserved success.

The wages of labor are determined, under the existing system, by competition in the labor market; the employers striving, through combinations among themselves, and the exercise of legal and political privileges, to lower the rate of the workman's remuneration, while the workmen strive, through counter-combinations, and other processes, to raise the rate of their own pay.

Properly-directed and successful labor always leaves a profit; and it is a mistake to suppose, with some of the extreme labor-reformers, that all profit is extortion and robbery. When Robinson Crusoe was alone in his island, he planted seed which he had providentially put away in his pocket; and, from the consequent harvest, he laid aside seed for the next year, and had enough left to supply him with food, and a little more. This little more was clear profit. Nature worked with Robinson, giving him an increased product, and making no charge for her aid....

"The General Statutes" of the Working-People's Association make little, if any, reference, either to profits, or to the fact of wages: they declare no vain war against poverty in the abstract; neither do they denounce capital or the capitalists. They simply denounce that "subjection of the workingman to capital" which necessitates the existing wage-system, which creates the sovereignty of the capitalists, which makes an iniquitous division of profits inevitable, which causes the poverty of the working-people, and which brings about the existing political, moral, and material servitude of laborers to their employers. Capital is innocent enough. What is capital? It is the surplus product of labor laid aside, and used in reproduction. It is wealth invested in trade, in manufactures, or in any business requiring expenditures with a view to profit.7 "The General Statutes" condemn, not capital at all, not the surplus product of labor, not profits saved up and used in reproduction, but "the subjugation of the laborer to capital, " which is something altogether different. Capital is created by the laborer; and the existing subjection of the laborer to capital is the result of an unnatural subjugation of a creator by its own creature. It is the abuse of capital, the unjust privilege of capital, its domination over the laborer, not capital itself, that is in fault....

The best part of the article, without a doubt, is Greene's analysis of privilege as a state construct:

"The subjugation of the working-man to capital" is not an ultimate fact: there are grounds and reasons for that "subjugation." Those grounds and reasons are to be found in positive and arbitrary legislation, which creates privileges. Protective tariff laws enhance the price of products, and so carry diminished consumption, and consequent privation, into every poor household in the land: they, moreover, strengthen and confirm the control of the labormarket by capital. Arbitrary privileges granted to chartered corporations translate themselves into outrages upon wage-laborers. Restrictions upon the use of a circulating medium based on products—whether those restrictions take the form of swindling banking-laws, or of laws (such as those borne on the Massachusetts Statute-book) prohibiting the circulation of bills-of-exchange, due-bills, checks and drafts, and the like, as currency—deprive the working-man of natural and just rights, and put him at disadvantage. It is not necessary to speak of railroad monopolies, of the giving-away of public lands to speculators, and of a thousand kindred iniquities. All laws creating privileges tend and work to defraud the working-man of his fair wages; and it is by the operation of tyrannical and wicked positive laws, and not, as is sometimes calumniously affirmed, by the improvidence of the laborer, that the working-man has been and is brought into "subjection" to capital. That subjection is, therefore, arbitrary, artificial, and not natural: it is contrary to the normal order of things. It is impossible to organize a privilege in favor of the working-man, as such; for, as soon as a working-man is privileged, he is a member of the favored classes, and must exercise his privilege, if at all, to the detriment of working-people. The International Association, in its Inaugural Address of 1864, defines its position as follows: "Landlords and money-lords will always make use of their political privileges to defend their economic privileges. Instead of helping on the emancipation of labor, they will continue to clog it with all possible obstacles. The achievement of political supremacy has, therefore, become THE FIRST DUTY of the working-class.

....The privilege of capital is guaranteed by the courts, and defended by the whole armed power of the State, military and naval. Saint James says, "Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are motheaten. Your gold and silver are cankered, and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days. Behold, the hire of the laborers who have reaped down your fields, which is of you kept back by fraud, crieth: and the cries of them which have reaped are entered into the ears of the Lord of Sabaoth." Woe to them that bring about iniquity by law! The prophet Micah says, " Woe to them that devise iniquity, and work evil upon their beds !—when the morning is light, they practise it, because it is in the power of their hand." The prophet Habakkuk says, "Woe to him that buildeth a town with blood, and etablisheth a city by iniquity!" The prophet Amos says, "Hear this, O ye that swallow up the needy, even to make the poor to fail from the land, that ye may buy the poor for silver, and the needy for a pair of shoes!" The prophet Isaiah says, "Woe unto them that join house to house, that lay field to field, till there is no more place, that they may be alone in the midst of the earth!" King Solomon says, "There is a generation that are pure in their own eyes, and yet is not washed of their filthiness; a generation, O how lofty are their eyes! and how their eyelids are lifted up a generation whose teeth are as swords, and their jaw-teeth as knives, to devour the poor from off the earth, and the needy from among men. The horse-leech hath two daughters" (land-monopoly and money-monopoly), "crying, Give, give!"

Economic laws creating privileges are usually enacted at the instance of persons intent upon private interest, and for temporary purposes, without foresight of the permanent privileges which those laws create. For example, the banking-laws were passed in the interests of the stockholders and officers of the banks, without any special intention, or even thought, of annoying the working-people in their exchanges of labor for labor. The giving-away of the public lands was, and is, for the purpose of enriching the persons who received them, and are receiving them, not for the purpose of leaving future generations of working-men without homes. The immediate purpose is to cheat and rob the people, not to enslave them. The whole thing is one of shortsighted avarice, rather than of concerted ambition; and the subjection of the laborer comes incidentally only, and "without observation." The servitude of the working-class is of indirect but efficacious LEGAL origin: the emancipation of the working-class must come, therefore, the nature of the State being what it now is, from political action, resulting, not in the making of new laws,—for very few new laws, perhaps none, are called for,—but in the repeal of all existing laws that breed and hatch out privileges It is for this reason that "the achievement of political supremacy by the working-class has become A DUTY."

The members of the International are no office-seekers. They are confident, that, with the abolition of privileges, nine-tenths of the existing political offices, since they are constituted as privileges, and with a view to the protection of privileges, will also be abolished. The abolition of privileges would also abolish the necessity for ninety-nine one-hundredths of the current legislation. Many members of the International maintain that office-holders should no longer be paid, as they are now, fancy salaries, but that they should be paid, like other working-men, simple working-men's wages. This plan succeeded well in the Commune of Paris, during the siege, and provided a superior class of public functionaries. Better men, and more competent men, taken directly from the working-class, were hired by the Commune, at a dollar and a half per day, than had been hired by the old governments at five times those wages. If special honor is attached to any position, that honor should be counted as a part of the wages; and the pay in money should be proportionably less. If there were no privileges to be protected, the necessities for political government would go on gradually diminishing; and the social autonomy of the people would gradually establish itself outside of the government. "The best government is the government which governs least." The public treasury ought to be kept at all times nearly empty, so that knaves and adventurers may not be tempted to thrust their fingers into it. The people should be rich, and the government should be very poor. The triumph of the International would throw an effectual wet blanket on the existing lust for public positions, and would cause a return to productive pursuits, and to day's wages, of many very brilliant, but now worse than useless, members of society....

What is required at the present time is not so much equality before the laws as equal laws: that is to say, laws that do not themselves bring forth and perpetuate inequality; for laws organizing privilege have not, of necessity, a respect for particular persons; since they may have the effect to render it inevitable that a privileged class shall exist, without themselves designating the persons who are to compose that class. The privileged man of the period may say, "I took the world as I found it; and by taking the world as I took it, since we both of us have to deal with the same world, you also may perhaps, if you show the same talent, diligence, and perseverance that I showed, attain to a position similar to the one I hold. There is equality after all; for every one of us faces the same chances." The college sophomore may say to the freshman, "I kick you in accordance with time-honored custom; but I, also, was kicked, in my time, by my predecessors; and, if you wait patiently, you may, in your turn, kick your successors. There is an equality in the matter; for, ultimately, all kick, and all are kicked." Would there not be a better equality, and at the same time more justice and more dignity, if no one should kick, and no one should be kicked? Justice—not equal chances in injustice, not the satisfaction of knowing that you may, if you have luck, bite as much as you are bitten, and eat as much as you are eaten—ought to govern the world....