Mutualist Blog: Free Market Anti-Capitalism
To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution
- Name: Kevin Carson
- Location: Northwest Arkansas, United States
Tuesday, February 13, 2007
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Saturday, February 03, 2007
Libertarian Forum: A Resource for UnCapitalists?
Thanks to Mises.Org, The Libertarian Forum's archives are now mostly online through 1984 (hat tip to Wally Conger). That journal was started by Murray Rothbard and Karl Hess in 1969, at the time of their split with the YAF and attempted alliance with the New Left, and chronicled libertarian movement politics into the 1980s.
Although Rothbard and Hess have some claim to being called the anarcho-capitalists, there's a lot in their work that's relevant to anti-capitalists. During the late 1960s, Murray Rothbard attempted a strategic alliance between the "isolationist," small government Old Right and the New Left. That alliance culminated in a walkout of the radical libertarian/anarchist caucus from the 1969 YAF convention in St. Louis, and a meeting with similar libertarian dissidents from the SDS. The high point (or low, depending on your point of view) of the event was Hess addressing a combined audience of YAF-SDS insurgents in combat fatigues and a Wobbly pin.
Rothbard's attempted coalition with the New Left produced, among other things: his writing for Ramparts; his own periodical Left and Right; his collaboration with New Leftist Ron Radosh (now, alas, one of David Horowitz's neocon crumb-bums) in editing A New History of Leviathan (a critique of 20th century corporate liberalism); and his contributions to the James Weinstein/William Appleman Williams project Studies on the Left. Even after Rothbard's break with the New Left, it continued well into the Seventies with Hess' hippy-dippy phase: his book Community Technology, his Neighborhood Government (coauthored with David Morris), and his "Plowboy Interview" in Mother Earth News.
It also resulted in some great writing by Rothbard and Hess in the first couple years of Libertarian Forum. For example, these 1969 passages by Karl Hess Hess should give pause to vulgar libertarians who identify "free market" principles with pro-corporate apologetics, as well as those on the left who dismiss all libertarians as "pot-smoking Republicans":
The truth, of course, is that libertarianism wants to advance principles of property but that it in no way wishes to defend, willy nilly, all property which now is called private.
Much of that property is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system which has condoned, built on, and profited from slavery; has expanded through and exploited a brutal and aggressive imperial and colonial foreign policy, and continues to hold the people in a roughly serf-master relationship to political-economic power concentrations.
Libertarians are concerned, first and foremost, with that most valuable of properties, the life of each individual. That is the property most brutally and constantly abused by state systems whether they are of the right or left. Property rights pertahing to material objects are seen by libextarlans as stemming from and as importantly secondary to rfie right to own, direct, and enjoy one's own life and those appurtenances thereto which may be acquired without coercion....
This is a far cry from sharing common ground with those who want to create a society in which super-capitalists are free to amass vast holdings and who say that that is ultimately the most important purpose of freedom. This is proto-heroic nonsense.
Libertarianism is a people's movement and a liberation movement. It seeks the sort of open, non-coercive society in which the people, the living, free, distinct people may voluntarily associate, dis-associate, and, as they see fit, participate in the decisions affecting their lives. This means a truly free market in everything from ideas to idiosyncrasies. It means people free collectively to organize the resources of their immediate community or individualistically to organize them; it means the freedom to have a community-based and supported judiciary where wanted, none where not, or private arbitration services where that is seen as most desirable. The same with police. The same with schools, hospitals, factories, farms, laboratories, parks, and pensions. Liberty means the right to shape your own institutions. It opposes the right of those institutions to shape you simply because of accreted power or gerontological status.
As examples of the concerns of such a "people's libertarianism," Hess proposed a series of questions for the libertarian movement to address, of special interest to the poor and powerless:
Libertarians could and should propose specific revolutionary tactics and goals which would have specific meaning to poor people and to all people; to analyze in depth and to demonstrate in example the meaning of liberty, revolutionary liberty to them.
I, for one, earnestly beseech such thinking from my comrades.
The proposals should take into account the revolutionary treatment of stolen 'private' and 'public' property in libertarian, radical, and revolutionary terms; the factors which have oppressed people so far, and so forth....
Let me propose just a few examples of the sort of specific, revolutionary and radical questions to which members of our Movement might well address themselves.
--Land ownership and/or usage in a situation of declining state power.... And what about (realistically, not romantically) water and air pollution liability and prevention?
--Worker, share-owner, community roles or rights in productive facilities in terms of libertarian analysis and asspecific proposals in a radical and revolutionary context. What, for instance, might or should happen to General Motors in a liberated society?
Of particular interest, to me at any rate, is focusing libertarian analysis and ingenuity on finishing the great unfinished business of the abolition of slavery. Simply setting slaves free, in a world still owned by their masters, obviously was an historic inequity. (Libertarians hold that the South should have been permitted to secede so that the slaves themselves, along with their Northern friends, could have built a revolutionary liberation movement, overthrown the masters, and thus shaped the reparations of revolution.) Thoughts of reparations today are clouded by concern that it would be taken out against innocent persons who in no way could be connected to former oppression. There is an area where that could be avoided: in the use of government-'owned' lands and facilities as items of exchange in compensating the descendants of slaves and making it possible for them to participate i n the communities of the land, finally, as equals and not wards.
In an article in the same issue ("Confiscation and the Homestead Principle"), Rothbard dealt with Hess' question of what should happen to GM in a liberated society (that's not exactly the sort of question you imagine most self-described "libertarians" asking these days, is it?).
Rothbard started out with the question of what should be done with state property. His answer was quite different from that of today's vulgar libertarians ("Why, sell it to a giant corporation, of course, on terms most advantageous to the corporation!"). According to Rothbard, since state ownership of property is in principle illegitimate, all property currently "owned" by the government is really unowned. And since the rightful owner of any piece of unowned property is, in keeping with radical Lockean principles, the first person to occupy it and mix his or her labor with it, it follows that government property is rightfully the property of whoever is currently occupying and using it. That means, for example, that state universities are the rightful property of either the students or faculties, and should either be turned into student consumer co-ops, or placed under the control of scholars' guilds.
Combine this principle with some recent work by Carlton Hobbs on the commons as a good libertarian form of property, and by Roderick Long on the legitimate role of public (as opposed to state) property in a free market society, and you get all sorts of interesting ideas on the potential for cooperative ownership of currently state-owned utilities, schools, hospitals, and other services. In principle, it sounds an awful lot like Proudhon's project (in General Idea of the Revolution) of "devolving the state into the social body." In practice, it might look something like Larry Gambone's proposals for "mutualizing" social services.
If this wasn't provocative enough, Rothbard tentatively applied the same principle to the (theatrical gasp) private sector! First he raised the question of nominally "private" universities that got most of their funding from the state, like Columbia. Surely it was only a "private" college "in the most ironic sense." And therefore, it deserved "a similar fate of virtuous homesteading confiscation."
Once on the slippery slope, Rothbard couldn't stop:
But if Columbia University, what of General Dynamics? What of the myriad of corporations which are integral parts of the military-industrial complex, which not only get over half or sometimes virtually all their revenue from the government but also participate in mass murder? What are their credentials to "private" property? Surely less than zero. As eager lobbyists for these contracts and subsidies, as co-founders of the garrison stare, they deserve confiscation and reversion of their property to the genuine private sector as rapidly as possible. To say that their "private" property must be respected is to say that the property stolen by the horsethief and the murderer must be "respected."By this standard, I would argue, just about any large corporation in an oligopoly market deserves to be seized by its workers. As I argued in Chapter Six of Studies in Mutualist Political Economy, virtually the entire large corporate sector of the economy is a branch of the state. It has externalized a large part of its operating costs on the taxpayer, through direct and indirect government subsidy. It has been cartelized and protected from competition, through government regulation.
But how then do we go about destatizing the entire mass of government property, as well as the "private property" of General Dynamics? All this needs detailed thought and inquiry on the part of libertarians. One method would be to turn over ownership to the homesteading workers in the particular plants; another to turn over pro-rata ownership to the individual taxpayers. But we must face the fact that it might prove the most practical route to first nationalize the property as a prelude to redistribution. Thus, how could the ownership of General Dynamics be transferred to the deserving taxpayers without first being nationalized enroute? And, further more, even if the government should decide to nationalize General Dynamics--without compensation, of course-- per se and not as a prelude to redistribution to the taxpayers, this is not immoral or something to be combatted. For it would only mean that one gang of thieves--the government--would be confiscating property from another previously cooperating gang, the corporation that has lived off the government. I do not often agree with John Kenneth Galbraith, but his recent suggestion to nationalize businesses which get more than 75% of their revenue from government, or from the military, has considerable merit. Certainly it does not mean aggression against private property, and, furthermore, we could expect a considerable diminution of zeal from the military-industrial complex if much of the profits were taken out of war and plunder. And besides, it would make the American military machine less efficient, being governmental, and that is surely all to the good. But why stop ar 75%? Fifty per cent seems to be a reasonable cutoff point on whether an organization is largely public or largely private.
Rothbard himself suggested as much himself at times: "[O]ur corporate state uses the coercive taxing power either to accumulate corporate capital or to lower corporate costs."
And certainly some of Rothbard's heirs have developed a very radical analysis of state capitalism. For example, Walter Grinder and John Hagel proposed a libertarian class theory in which the ruling class clusters around the central banks and the large corporations affiliated with them. And Joseph Stromberg has put a Misean spin on left-wing theories of monopoly capital and imperialism (in "The Role of State Monopoly Capitalism in the American Empire").
As Brad Spangler argued, the nominally "private sector" corporate beneficiaries of state capitalism are just as much a part of the statist ruling class as those officially drawing a government salary:
...one robber (the literal apparatus of government) keeps you covered with a pistol while the second (representing State-allied corporations) just holds the bag that you have to drop your wristwatch, wallet and car keys in. To say that your interaction with the bagman was a “voluntary transaction” is an absurdity. Such nonsense should be condemned by all libertarians. Both gunman and bagman together are the true State.
So, it seems to me, we have (in the work of Rothbard and Hess in their leftish phase) the working basis for a revolutionary coalition of free market libertarians and libertarian socialists:
*Syndicalist seizure of large enterprises (the Fortune 500 might be a useful proxy) by radical industrial unions.
*The devolution of government services, as quickly as possible, to local, cooperative ownership.
*The elimination of all corporate welfare and government subsidies, and the provision of roads and utilities on a cost-basis to those who use them (which would of course mean a radical decentralization of the economy, an end to suburban sprawl, and the growth of small-scale production for local markets).
*The nullification of all property titles based on government grants of large tracts of land, never actually appropriated by the grantee's direct occupancy and use; and the homesteading of all such unowned land on the basis of "the land to the tiller."
*The elimination of all legal barriers to the formation of mutual banks, by which working people can mobilize their own low-interest credit for cooperative enterprises, self-employment, etc.
*The elimination of all patent laws, which enable large corporations to cartelize their industries by controlling modern production technology among themselves.
*The treatment of scarce resources like aquifers, fisheries, mines, and old-growth forests as a socially-owned commons, with access regulated by the local community.
*The replacement of environmental and other regulatory laws with cost-based fees for access to natural resources, and common law tort damages for pollution and other impositions of cost.
*A totally free and unregulated market between the worker-controlled large enterprises, consumer and producer co-ops, social service mutuals, family farms and small businesses, and the self-employed.
The final goal would be a society in which (in Benjamin Tucker's words) "the natural wage of labor in a free market is its product," and all transactions--whether trade or gift--are voluntary exchanges of labor-product between producers.
thebhc wrote: I have been reading some Rothbard's stuff recently. His "Confessions of a Right Wing Liberal" is quick snippet of his ideas. Of particular interest these days is a 'graph in that essay:
"On the domestic front, virtually the only conservative interests are to suppress Negroes ("shoot looters," "crush those riots"), to call for more power for the police so as not to "shield the criminal" (i.e., not to protect his libertarian rights), to enforce prayer in the public schools, to put Reds and other subversives and "seditionists" in jail and to carry on the crusade for war abroad.
"The right wing, once in determined opposition to Big Government, has now become the conservative wing of the American corporate state and its foreign policy of expansionist imperialism."
-- M Rothbard, Ramparts, VI, 4, June 15, 1968
presto wrote: Well said, Kevin. Definitely worth further study. Seems to be a good basis for a fair transition to an UnCapitalist economy.
What Can Bosses Know?
Is it possible for bosses to really know about their own businesses and markets? How much foresight can they have? What tools do they have for acquiring such foresight? To what extent are bosses prone to the problems of bounded rationality, inherently limited knowledge or cognitive biases, as proposed by Herbert Simon, Friedrich Hayek and Kahneman and Tversky, among many others?
Journalists systematically avoid these questions. Every management failure is presented as an exception to a general pattern of competence. But is this really the case? Could it be that bosses have less control and foresight than they pretend, and that success often results not from management's deliberate interventions but simply from force of habit or the fact that success breeds success? Could it be that the power, importance and money we give chief executives is therefore unmerited?
I don't know the answers to these questions. But I do know that the dead trees rarely ask them. But then, you wouldn't expect journalists to challenge hierarchies, would you?
I believe the problems are inherent in hierarchy. As Samuel Edward Konkin III (SEK3) of the Movement of the Libertarian Left said somewhere (I can't find it--little help?) organizational inefficiency starts when you have one supervisor taking orders from another supervisor: that is, the point at which hierarchy replaces market contracting.
Under such circumstances, problems of moral hazard and imperfect knowledge, internal transaction costs, principal-agent issues, etc., become unavoidable. I've already written at length on the problems of incentives (or even tracking the effects of individual decisions in the first place) in large organizations, and the effects of hierarchy on information flow (see "On the Irrationality of Large Organizations" and "On the Superior Efficiency of Small-Scale Organization").
The central problem is that, since the costs of tracking the results of individual decisions becomes prohibitively expensive in a large organization, market incentives must be replaced by administrative ones. Milton Friedman pointed out long ago that people do a better job of spending money on themselves than on other people, and do better spending their own money than other people's money. That's the standard, and correct, libertarian argument for why government is so inefficient. It's spending other people's money on other people; and unlike a private firm not only can it not go out of business for inefficiency, it gets rewarded with more money. Well, the very same incentive problems apply to the decision-maker in a corporate hierarchy. He's a steward of other people's money, and the costs and benefits of any decision he makes can be determined only badly, if at all. Unlike a self-employed actor whose relations with others are mediated by the market, he is motivated by purely administrative incentives.
Internalization of costs and benefits of decisions is further hampered by the fact that administrative authority is separated from the actual performance of productive work. As a result, labor is likely to bear all the costs and inconveniences of increased efficiency, while owners and senior management recieve the rewards. A speedup or layoff, or combination of attrition and added workloads for the surviving employees, is likely to be followed by a big bonus to the CEO for "increasing productivity." The workers on the shop floor, on the other hand, are likely know the most about how to improve the work process. But they have no authority to restructure it on their own, and no reason to do so when somebody else will benefit at their expense.
And the flow of information within a hierarchy means that senior managent receives distorted or falsified information, and as a result the people doing the work receive irrational orders from above. As Kenneth Boulding put it, those at the tops of large hierarchies live in almost completely imaginary worlds. The only thing keeping the average large corporation going is that it coexists, in a cartelized industry, with a handful of other firms that share the same organizational culture and whose "competing" managements base decisions on the "industry trend." Market entry barriers enable a "Big Three" or "Big Five" to maintain a shared, pathological organizational culture without significant competition. Rather, the cartelized corporate firm and the large government agency become the hegemonic norm in society at large, so that even non-profits and mutuals adopt the standard form of management featherbedding, prestige salaries, mission statements, and a senior management dominated by resume carpetbaggers).
So what are the alternatives? There are two ways of internalizing the costs and benefits of every decision in an individual actor, and thus achieving rationality: 1) Replace administrative relationships with contractual ones within the organization, effectively dissolving the outer walls of the firm and replacing it with an internal market; 2) make authority within the organization flow from the bottom up.
The first alternative, the one that (as mentioned above) SEK3 found more congenial, also has a venerable history in the socialist strand of individualist anarchism.
Josiah Warren, in Practical Details in Equitable Commerce, proposed (in James Martin's words) "a system based on voluntary cooperation, but at no place rising above any individual within its structure..."
Society must be so converted as to preserve the SOVEREIGNTY OF EVERY INDIVIDUAL inviolate. That it must avoid all combinations and connections of persons and interests, and all other arrangements which will not leave every individual at all times at liberty to dispose of his or her person, and time, and property in any manner in which his or her feelings or judgment may dictate. WITHOUT INVOLVING THE PERSONS OR INTERESTS OF OTHERS.As he developed the idea further in Equitable Commerce,
If governments originate in combined interests, and if government and liberty cannot exist together, then the solution of our problem demands that there be NO COMBINED INTERESTS TO MANAGE. All interests must be individualized--all responsibilities must be individual, before men can enjoy complete liberty or security, and before society can be completely harmonious....
When one's person, his labor, his responsibilities, the soil he rests on, his food, his property, and all his interests are so disconnected, disunited from others, that he can control or dispose of them at all times, according to his own views and feelings, without controling or disturbing others; and when his premises are sacred to himself, and his person is not approached, nor his time and attention taken up, against his inclination, then the individual may be said to be practically SOVEREIGN OF HIMSELF....
He proposed a system for labor accounting within the enterprise, based on the severability of all individual interests and the coordination of all internal transactions by contract or exchange. This was, in part, supplemental to a point made by Thomas Hodgskin in Labour Defended Against the Claims of Capital. Hodgskin raised the question of how the labor-product could be apportioned among laborers engaged in work which was, by its nature, collective. The answer lay in the ability of each to withdraw his labor from the collective enterprise if his pay did not compensate the perceived toil and trouble of his labor. The lesson for worker self-management is that wages will be apportioned among workers within the enterprise through the "higgling and bargaining of the market." Warren supplemented this with the caveat that the problem should be avoided as much as possible by de-aggregating work units as much as feasible.
Of course, Warren's model applies mainly to an artisan economy in which the largest work units are small shops. It's of limited relevance for capital-intensive forms of production with larger work units, in which some steps in the production process by their nature involve collective work. At some points, in such a process, contractual relations must be supplemented by worker self-management as alternatives to traditional managerial hierarchies. But, as I will discuss in greater detail below, there's no reason that contracting and self-management can't coexist within a single production process.
It's something Jane Jacobs touched on in The Economy of Cities. Contrary to what technocratic liberals like Schumpeter and Galbraith had to say, the large corporation isn't much good at innovation. It's possible for an organization to do essentially the same functional job within a larger production process, either as a division within a vertically integrated corporation or as an independent firm contracting to supply a higher stage of production. For example, 3M might just as easily been an abrasive sand division with a larger metal castings corporation, rather than an independent firm doing the same thing. But it would have been a lot less likely to attempt sandpaper production as a sideline, or to use its failed experiments with sandpaper backing as the basis for a new venture in adhesive tape. Such side ventures would have been shelved as irrelevant to the larger organization's goals. For purposes of innovation, the ideal economy is one of small, specialized firms related contractually in a free market.
The second alternative, workers' control of production, internalizes the costs and benefits of decisions in the same people by making decision-makers directly responsible to those doing the work. It has a long track record of success stories, with worker self-management resulting in steep increases in productivity and morale, and decreases in absenteeism and scrap rates.
Unfortunately, the increased productivity is outweighed by the imperatives of social control within the workplace. For one thing, a self-managed work unit has a lot more bargaining strength: it's considerably harder to replace your workforce with unskilled labor in the event of a walkout when production is planned by blue collar workers on the shop floor. This was one of the central attractions of automated control systems, like numeric control technology in the machine tool industry. It shifted control of production from master machinists on the shop floor to white-collar engineers in the managerial hierarchy. Numeric control technology was developed largely by Army Air Corps/USAF money in the 1940s, by the way, and first introduced in the aircraft industry and its suppliers. For more on this, read Forces of Production, by David Noble.
And once workers get a taste of deciding the how, there's always a danger they might get the idea that they can decide the what and why just as well. If they can do a better job managing production without the foreman, they might start wondering whether they can do the jobs of the CEO, the vice presidents, and the Board of Directors better, as well. For that matter, they might decide they can do a better job than the wankers at Gosplan, in the Ministry of Non-Ferrous Metallurgy, and the branch ministry for copper. Experiments in worker self-management met the same reaction in the corporate West, as in the Leninist East (Lenin quoted Taylor to justify his suppression of the factory committees), for largely the same reasons.
Of course, there's no reason the two approaches can't be combined in a decentralized, bottom-up economy, with self-managed work units functioning both as firms in a market economy (producer co-ops), and as contractors carrying out each separate stage of production in what used to be vertically integrated corporations. In both approaches, the idea is to decentralize decision-making to the smallest feasible units; to replace hierarchical relations between such units with market relations; and thus to unite decision-making authority, responsibility for results, and direct experience of the consequences in the same persons.
presto wrote: Excellent post, Kevin. I spent nearly two decades working in the corporate world in quality control analysis, where my job was (supposedly) to gather data and analyze consequences of management decisions regarding the production process, and have found that in addition to the difficulties in gathering good information regarding management decisions, they tended to shoot the messenger (me) regarding bad news than using the information to make better decisions.
I later realized that there is a significant difference in a corporation between what your job description says and what your job actually is. My job was to tell middle management what they wanted to hear, and middle management's job was to do the same to senior management. Senior management's job is to do whatever it takes to have stock prices go up every quarter, including manipulation of data to make things look better than they are. Outright falsification is not that common, but picking the right measures to guarantee a rosy picture is. Accurate information was not wanted, especially if it interfered with the yarn that senior management was trying to spin to stockholders and major customers. I couldn't do that and look myself in the mirror, and so have quit working in a field that I was very good at. Gave up a lot of money, too.
Enron wasn't an unnatural oddity, it was the natural outgrowth of the corporate structure. CEO's are not rewarded for making good business decisions for the long-term health of the company if they hurt the stock short term, because the majority of large stock-traded corporations are owned primarily by institutional investors, who are only interested in short term stock price.
For one example, look at mergers. Mergers rarely benefit the companies involved in the long run, so why do they happen? Because the news of the merger boosts the short-term stock price of the acquired company and bonuses are paid to the senior management of both companies. Long term effects on the companies health are not an issue.
You are right, Kevin, that managers are not able to make informed decisions regarding the workings of the business, but that is not their real job in a large corporation. Their real job is pumping the short-term stock price. Stock price manipulation has been perfected into an art form, and the CEO's who are best at it are rewarded handsomely.
Sorry about being so long winded, but this goes to the heart of why I started the journey from Republican to Mutualist. Seemingly irrrational decisions are actually quite rational (but often immoral)if seen in their proper context.
thebhc wrote: "Such side ventures would have been shelved as irrelevant to the larger organization's goals."
I am immediately reminded of the history of the nascent company, Apple. Jobs, et al., had discovered that the Xerox PARC had developed a GUI for their operating system, which also made use of "mouse" that had been developed at Standford Research Center. Much to the chagrin of Xerox engineers (the low level workers), Xerox granted Apple access to this technology in exchange for some pre-IPO Apple stock. Xerox managers had little understanding or appreciation for what was being developed on their own research floor and obviously had no idea what it might mean in the long term. To them, a quick million in Apple stock for what was no doubt considered the worthless product of indulged geeks was a "no-brainer."
thebhc wrote: I quite agree with presto that, if Enron is anything, it is an excellent example of the inherent problems with the modern market. And the modern market is now considerably more volatile in the short term and it certainly no coincidence that the raft of enormous corporate accounting scandals that have taken place lately have occurred within such an environment. Pressures on stock gains now exist at the minute, or less, level. No one is thinking about six days down the road let alone six months. And years? Ha. This creates a very irrational climate with little or no thought in the long run. I always find it amusing that retirement investors will tell everyone to keep calm and take the long view when Wall Street itself can't do that.
[Note--This originally appeared in September of 2005 in Uncapitalist Journal. Since that blog is unfortunately offline, I decided to reproduce it here.]