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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Thursday, December 11, 2008

The Conflation Conflict, Continued

Part V: Stephan Kinsella vs. Kevin Carson

A. Kinsella's response to my comments directed at him

From being an observer on the sidelines of the debate, I have become a participant. In the comments to my last post, Stephan Kinsella made a serious, point-by-point critique of many of my arguments (he followed it up with a blog post at Mises.Org). In the process, several other readers jumped in with relevant arguments of their own. The only way to do them all justice is in a proper blog post.

Kinsella first addressed my arguments directed at him personally, commenting: "Kevin, I'm not quite sure what you disagree with in my comments." He began by quoting his earlier statement, with which I had taken issue.

And it is indeed true that criticisms of corporate power are usually anti-market ideology, and should be dismissed as such. Critics of corporations are in the grip of anti-market ideology, as Roderick notes. When left-wingers complain about corporate libertarians, they are confused. They are not responding sincerely or honestly to a genuine tendency.

He then added, by way of emphasis:

When most leftists--certainly most non-libertarian leftists--attack the corporation, they do so on anti-market grounds (at least in substantial part).

Next, he cited another of my criticisms:

For example, in an argument over whether the state, by reducing the transaction costs of establishing the corporate form, shifted bargaining power toward those who prefer the corporate form, [Kinsella] responded: "The notion of 'bargaining power' is leftist to the core."

In that case, Murray Rothbard must have been "leftist to the core," since he repeatedly remarked on the effect of state policies in making some factors artificially scarce in relation to others, and thus artificially inflating their returns.

Kinsella replied:

I was not referring to the real tendency of the state favoring one person over another thru its policies, but of the oft-cited concept "bargaining power" which permeates leftist reasoning used to invalidate contracts and undermine property rights. It is the equation of economic influence with physical force that is used to justify laws against actions that are not initiations of violence. We libertarians are opposed to the initiation of violence, not to the initiation of "economic force," whatever that is.

Scumble commented on the exchange:

The way it sounded to me was that accusations of "leftism" were being used to discredit an argument. You may be right that "leftists" use a term in a certain way, but that doesn't mean the terms cannot be used in another way....

I don't think anyone participating in the discussion uses the idea of "economic power" in the same way as a liberal might. There is a more subtle point about how certain people or organisations have disproportionate influence on the state, and that is where money becomes powerful. The combination of money and violence is what distorts everything.

I think we all know that anti-market arguments are confused, but the disagreements emerge around what does and does not represent "market phenomena". In a sense conservative libertarians are allowing the left to frame the debate by reacting negatively to issues that have been somehow apportioned as necessarily statist, when this is not the case at all.

To which Kinsella came back with:

I agree. I basically mean "socialist" by this, in a sense antithetical to libertarian principles. I realize Carson and Long et al. are not socialists. I do believe the leftist hostility to commerce, individualism, free markets, etc. and ignorance of economics and individualist political principles makes their arguments against "capitalism" flawed. The left-libertarians and other libertarians who rightly criticize modern statist corporatism need to be wary of this....

I don't regard myself as a "conservative" libertarian at all--but as a libertarian. But sure, we should not let the left frame the debate.

Brad Spangler wrote:

Before getting pedantic about the NAP, consider that we're discussing how the economic influence of particular market actors is derived from physical force in the first place.

Kinsella followed up his critique of bargaining power with the reiteration that corporate influence over the state "is not what the term 'bargaining power' refers to, AFAIK," and that

the idea of "bargaining power" is economically illiterate and is used to justify statist laws that prohibit or regulate peaceful action between consenting adults. The Marxiod notions of alienation of and exploitation of labor are also flawed and lead to flawed reasoning and conclusions.

And Araglin responded:

Where Kinsella goes wrong, IMO, is in saying that "bargaining power" is an analytically useless category. If a law protects one set of employers from competition from other employers (including potential new entrants), then the favored incumbents can use that legal privilege in order to negotiate with their employees for lower wages (than they would otherwise have been able to get away with), and their customers for higher prices (than they would otherwise have been able to get away with). This, in my book is an instance of artificially generated "bargaining power."

To explicate this concept in terms of standard Austrian price theory, see Menger or Bohm-bawerk's canonical expositions of the difference in price that tends to emerge when only one buyer (or seller) faces a number of sellers (or buyers), as compared to when several buyers (or sellers) face a number of sellers (or buyers). Not every exercise of this sort of "bargaining power" constitutes a rights-violation vis-a-vis the counter-party to the resultant contract (e.g., when an innocent incumbent employer benefits from the imposition of a regulation); hence, only non-coercive responses to such exercises of "bargaining power" could be squared with libertarian principles.

Exactly. Kinsella is correct that much of the Leftist criticism of corporate power, and its references to bargaining power, are motivated by anti-capitalist sentiment. He is correct that the reasoning of such critics is often "flawed." But to us an expression he is fond of, so what?

No matter how flawed or sloppy their reasoning, they object to phenomena that exist in the real world. Their sloppy reasoning about the causes of those phenomena, their failure to grasp the distinction between political coercion and "market power," and their failure to discern the former behind the latter, are all real failings. But they are failings that result from the same cause as the tendency of the libertarian Right to minimize corporate power, and to reflexively circle the wagons against Leftist critiques. Both result from the historic split between libertarianism and the Left in the late 19th century, and the subsequent rightward gravitation of much of the mainstream libertarian movement.

This later comment by Kinsella, from the same comment thread, is also relevant:

we libertarians are opposed to Marxism, you know--and it's not so out of bounds for me to detect it in the face of talk of alienation of workers; criminal capitalism; "expropriation" of workers; and so on.

Much of Kinsella's reaction here reflects, in my opinion, the cultural atmosphere specific to libertarianism from the 20th century on, rather than the principles of libertarianism as such. And much of what he finds so objectionable and suggestive of "Marxism" is by no means a trademark of the statist Left. Early classical liberalism shares many of its historical roots in common with the early socialist movement. Not only did it have a significantly more left-wing flavor, compared to the libertarianism of the twentieth century, but many of its left-wing strands overlapped with market-oriented strands of libertarian socialism. Some of the most titanic figures of nineteenth century free market libertarianism occupied this zone: Thomas Hodgskin, Herbert Spencer, the American Individualists, and Henry George, for example. And the rhetoric coming out of the early, radical classical liberal movement, including lots and lots of stuff about class exploitation, would no doubt give Kinsella hives. Some of the Boston anarchists (the circle that included Tucker and the Liberty group) participated in the Second International and celebrated May Day, for crying out loud.

To the individualists and other left-wing free marketers, the socialist and worker's movements were not an abomination against which they defined themselves. They were a larger current to which both they and the state socialists belonged. And they regarded the state socialists, for the most part, as erring bretheren who rightly objected to class exploitation and other pathologies of existing capitalism, but drew the wrong conclusions about how to eliminate it.

But libertarianism was largely reformulated, in the early 20th century, as a right-wing ideology in reaction to the Left. And part of its modern-day cultural baggage, as a legacy of having largely redefined itself in opposition to the Left, is a visceral reaction to stuff that "sounds commie."

A major focus of my work has been recovering the libertarianism of the nineteenth century, which shared so many of the values with the rest of the Left, but saw free markets as a friend to those values.


B. Kinsella's response to my overall argument

Next, Kinsella moved on to a critique of my comments on the other writers. Since they're all closely related, and my rebuttal involves essentially the same principles, I'll quote all of them together. For clarity, all of my original comments from the previous post are labeled CARSON, and the reader remarks from the comment thread have their respective names attached. My final comments follow the blockquoted material. Is everyone thoroughly confused now?

CARSON: Klein, in his rejoinder, fixated mainly on Long's reference to limited liability, arguing against holding shareholders stritly liable for the corporation's actions and debts. But this is a bit like Lincoln's Jesuit who, accused of killing ten men and a dog, triumphantly produced the dog in court. From reading the paragraph above, it should be clear that Long mentioned limited liability as one facet of a broader problem: the vagueness of ownership rights in the corporation, given the ambiguous division of control between management and shareholders. Klein failed to address the broader issue at all.

KINSELLA: Who cares if there is a "vagueness" (read: complexity) in the ownership of corporate assets? How is this unlibertarian? Why is it any outsider's business?

CARSON: The root of all these problems is the very pretense that management represents shareholders or that the latter are the owners in any real sense, which is as transparently false a legitimizing ideology as the claim of Soviet industrial management to represent the workers or the workers' state.

KINSELLA: Libertarianism does not require any "pretense" that "management represents shareholders or that the latter are the owners in any real sense." It only requires respect for property rights and not interfering in capitalist acts between consenting adults. That is, if you can somehow show that "management" does NOT "represent" shareholders, or that they are not "the owners" in "any real sense"--so what? Whose rights are being violated? If you don't like the way a firm is organized, don't work there; don't invest in it. Beyond that: in a libertarian society we need only identify who has the right to control a given resource; and who is responsible for the commission of various torts or crimes. If a collection of people (shareholders, directors, managers, creditors) whatever all agree to some complicated internal set of rules that specify their right to control a set of private assets, then their rights are not violated (they all agreed to it), and outsiders have no business complaining, any more than they would have a right to complain about the "messiness" of ownership claims within a neighborhood that has an ambiguously drawn set of restrictive covenants. For example if I buy a share of Wal-Mart stock I am in some sense an owner, but only in specified ways--I don't have the right to use the Wal-Mart HQ for a picnic etc. I have agreed to a contractual set of rules that divide control--day-to-day control is given to managers; and a set of procedures determines how changes to the rules or to the decision-makers is made. From the perspective of an outsider, Wal-mart property is owned by a set of people (shareholders plus directors plus managers).

CARSON: "Corporate management, in fact, is a self-perpetuating oligarchy in control of a free-floating mass of unowned capital."

KINSELLA: Unowned? Hogwash. Walmart's inventory and factories and stores are not unowned by any stretch of the imagination. Just because some anti-market or anti-capitalist types don't like the messiness and complexity of the internal rules governing rights of control (ownership) of these assets is utterly irrelevant. You don't have to work for them, or invest in them. This "unowned" comments has a whiff of Georgism about it.

CARSON: "It uses its purported representation of shareholders as a legitimizing ideology to insulate it from accountability to internal stakeholders"

KINSELLA: And here we have the leftist buzzword: "stakeholder". This is routinely used by governments to justify infringing property rights.

Again: in libertarianism, the corporation does not need to justify anything--so it does not need to pretend it "represents" anyone. If a group of people agree to pool their money and become shareholders, this just means they have agreed to collectively purchase some things with their money, and to have specified rights of control and rights to gain or dividends, that is their business. The consent of the parties is all that is needed to justify it.

As for "stakeholders," it depends on who this means. For people that are employed by, or contract with, or invest in, or sell to or buy from the company--their rights are defined by contract already.

That "whiff of Georgism" really required some heavy-duty reaching. By "unowned," I mean simply that the purported ownership of the corporate entity by shareholders, and the purported representation of shareholders by management, are myths. Shares are not "marketable ownership claims" in any real sense. The entity is not the property of shareholders in any meaningful sense. It is indeed the de facto property of the management, in the sense that they exercise genuine control off of it and use it primarily in their own interests. But as with the de facto power of the Party apparat and the managerial bureaucracy in the old USSR, that flies in the face of the official ideology. Corporate management does everything possible to legitimize its power in the name of shareholder supremacy and its own status as the shareholders' hired help, and does everything possible to conceal or distract attention from its own de facto ownership.

The only de jure legal property rights inhere in a legal entity entirely separate from the shareholders, and de facto property rights inhere in the management which controls that entity and its capital assets despite never having purchased rights in the property they control. One might just as well argue that every factory and shop in the USSR was the property of some de jure owner, and that everyone working there did so willingly with their share in the returns defined contractually.

Kinsella's idea that the corporation is formed contractually by shareholders pooling their money is a throwback to the Dartmouth College case. For the overwhelming majority of the largest corporations there is no such agreement and no such contract. The status of the corporation as a contractual arrangement between owners was undermined by the very developments Kinsella celebrates: the supplanting of the concession doctrine by general incorporation, and the rise of markets in securities. As understood under the earlier doctrine, the property rights of the individual shareholder really were analogous to those of a partner. The understanding is exemplified by the majority opinion in the Dartmouth College case, in which any amendment to a corporate charter, or indeed "any fundamental corporate change," was considered a breach of the shareholder's contract, a "taking" of his property. All such changes had to be consented to unanimously by shareholders, in exactly the same manner as members would consent to the change in terms of a partnership.

General incorporation and the rise of securities markets resulted in a serious attenuation of shareholder property rights in the corporation. They resulted, by the early twentieth century, in a common legal understanding in which "the modern stockholder is a negligible factor in... management," and in which a sharp distinction was made between the status of "investor" and "proprietor." The shift was encouraged by the rise of public securities markets. Until the 1890s, public issues of stock were rare and public trading (outside of railroad stock) almost unheard of. In an environment in which the issuance of stock was still largely private and associated with the formation of joint-stock companies, it was more plausible to regard investment in a corporation as equivalent to buying into a partnership. The creation of public equity markets, in which shares were commonly acquired by those with no direct role in the formation or governance of the firm, and bought on an anonymous market rather than issued directly to the shareholder by the firm, made the cultural holdover far less tenable. It became virtually impossible to maintain with a straight face the earlier "trust fund" doctrine of Dartmouth and other decisions, in which the shareholder was a partner with absolute property rights in the governance of the corporation. By the turn of the century, the board of directors was clearly coming to be seen as the agent, not of shareholders, but of the corporation as a separate entity. [See Horwitz, The Transformation of American Law 1870-1960, pp. 93-99]

CARSON: ...and is free to expropriate the latter's efforts because of the vaguely defined property rights in the organization.

KINSELLA: And here we have what appears to me to be Marxian reasoning: the "expropriation of efforts"? What? I'd like to see exactly whose "labor" is being "stolen"? An employee? Hey, he isn't compelled to work for them.

CARSON: More generally, hierarchy and the separation of labor from residual claimancy are inherently prone to incentive and agency problems.

KINSELLA: Here we go with complaints about the separation of labor from "residual claimancy." Libertarianism does not require labor to not be "separated" from XYZ; it does not base property rights on whether there are or are not "incentive" or "agency" "problems". If incentive or agency problems that arise when using a given firm structure, presumably people over time will invest in or employ more efficient structures. If they don't--hey, it's their money.

CARSON: Luigi Zingales, for example, argues ("In Search of New Foundations," The Journal of Finance, August 2000) that a major problem is that much if not most of the value of the ostensibly shareholder-owned corporation results from the human capital contributed by internal stakeholders, but that this value is not reflected in formal ownership rights. The result is that much of the value created by internal stakeholders is expropriated by management, thus undermining the incentives of human capital to invest its efforts in the organization."

KINSELLA: How can you "expropriate" value? Do people own their value? Workers do not have any ownership claim to a company they have worked for--they have a claim to whatever they have contractually agreed to, that's all.

First of all, regarding the "so what" challenge Kinsella raises so many times, the answer should be obvious from the context in which the quoted material was written. So what? So, that's what Klein and I were arguing about in the first place.

Long argued for the worker cooperative as a solution to many of the agency and information problems of the conventional corporation, and also argued that the conventional corporation nevertheless predominated despite these problems because the state protected it from the inefficiency costs and competitive penalties of that form of organization. Klein responded that there was a large body of organizational theory literature on the agency problems of cooperatives, and provided a partial list--chief among them vaguely defined property rights. I responded, in turn, that the conventional corporation was even more prone to the same agency problems discussed in the literature, and that its property rights in particular were at least as vaguely defined as those of the cooperative.

Kinsella says if I don't like the inefficiencies and vaguely defined property rights of the corporation, I don't have to work there or shop there. People will do so, or not do so, as it suits their interests. Beyond that, again, so what? But to repeat, that's precisely what Long, Klein and I were arguing about. In a freed market, these agency problems attending vaguely defined property rights would be offset, or not, by the increased efficiencies offered by the corporate form from one case to the next, and the corporate form would be adopted or abandoned accordingly. True enough, as far as it goes. Long and I both argue that the inefficiencies exceed the efficiencies for most large corporations, and that such large organizational size nevertheless persists because the state artificially shifts the boundary. The main area of dispute, between Long and me on the one hand and Klein on the other, is precisely what the respective inefficiencies of the conventional corporation and the cooperative actually are, and therefore whether it's likely that the conventional corporation predominates to a greater extent than would be the case in a free market. That's so what.

Regarding the terms "appropriated" and "expropriated," of which Kinsella made so much, P.M. Lawrence requested clarification:

Over at his rebuttal, Stephan Kinsella builds a great mountain on that single use of the word "expropriated", so I think you should clarify:-

- whether it is your term or whether you are quoting Luigi Zingales; and

- that "expropriated" is the correct term when there are property systems in place that are being overridden, but that something like "appropriated" is the correct term when there are not (your context makes it clear what you are talking about, but Stephan Kinsella omits that context).

As Lawrence suggests, they are technical terms from organization theory. And I should have consistently used the term "appropriate," since it suggests the absence rather than the overriding of clearly defined property rights. The term refers to the ability of one party, in the presence of poorly defined property rights that do not efficiently internalize the results of action, to free ride on the value created by the efforts of another party. They are frequently used in the work of Oliver Williamson, and are useful for summarizing the arguments on stakeholder property rights made by Grossman and Hart and by Zingales. I thought they were appropriate to use in the context of Klein's questions regarding the organization theory literature, particularly on the ways that vaguely defined property rights create agency problems. I should have made it clear that they were org theory terms.

And the concept is by no means a monopoly of the left-libertarian tendency in org theory. It was at the heart of Robert Jensen's critique of the bureaucratic corporation and his support for the injection of entrepreneurialism into corporate management. As he perceived it, corporate management, because of poorly designed incentive systems, was engaged in self-dealing that expropriated shareholders and violated their fundamental obligation as agent for the shareholders.

In this case, I think Kinsella was so bemused by the terms "appropriation" and "expropriation," and their seeming Marxist connotations, that he did not pay adequate attention to the arguments I cited from Grossman and Hart or Zingales. The point was that, because of the vaguely defined property rights within the corporation, the equity or book value created by members of the organization is not efficiently allocated among them in such a way as to maximize individual effort or minimize agency problems. And again, to anticipate another possible "so what?" response from Kinsella, I brought all this up specifically in response to Klein's assertions about what the org theory literature has to say about the agency problems and inefficiencies created by vaguely defined property rights in the cooperative.

When I said as much in the comments to the earlier post, it provoked this response from Kinsella.

Yes, I read "expropriation" as meaning what it typically means -- theft, typically organized theft by an institution such as the state. As when a host state expropriates property of a company under international law. If you just mean that corporations (firms in general? I am never sure if you are against only big firms; or only corporations; or only big corporations; or only big for-profit corporations) are inefficient--sure. All firms have various inefficiencies and incentive and agency problems. They also overcome other problems (yes, as Klein adumbrates in his classic piece). When the costs of a firm (due to agency, incentive, calculation, etc. problems) become prohibitive and are not outweighed by the gains, then this poses some limits to the size and/or structure/organization of that entity, as determined by competition on the market. I do not see what is supposed to be so illuminating about this fairly simple insight.

He reiterated this statement at Lew Rockwell Blog, along with the following:

...the left-libertarians keep playing a type of bait and switch with their terminology. Someone cheers on the return of "militant" unions: when this is objected to, on the grounds that we libertarians oppose union violence, then they crawfish and dance around and say that if one reads thru 17 email chains he'll see they didn't mean "violent," for heaven's sake. When I object to accusations that companies "expropriate" the "value" of the "efforts" of "stakeholders"--they say by "expropriate" they don't really mean "expropriate"; and by "stakeholder" they don't mean what leftists usually mean by it; and by "bargaining power" they don't mean what leftists usually mean by it.

If someone can give me a dictionary to translate it might be helpful.

In response to these charges, P.M. Lawrence accused Kinsella of being too lazy, or too obsessed with his emotional reactions to my terminology, to read what was directly in front of his eyes--let alone going through "17 email chains":

KINSELLA: "and is free to expropriate the latter's efforts because of the vaguely defined property rights in the organization." And here we have what appears to me to be Marxian reasoning: the "expropriation of efforts"? What? I'd like to see exactly whose "labor" is being "stolen"? An employee? Hey, he isn't compelled to work for them.'

LAWRENCE: That "stolen" is made up. The answer is clear from the earlier, fuller statement, not covered by that selective quotation: "... a major problem is that much if not most of the value of the ostensibly shareholder-owned corporation results from the human capital contributed by internal stakeholders, but that this value is not reflected in formal ownership rights. The result is that much of the value created by internal stakeholders is expropriated by management, thus undermining the incentives of human capital to invest its efforts in the organization." It's not formally "stolen" because there are no formal ownership rights, and it is unethical to the extent that the constrained lack of choice forced people into that vulnerability (see above about all corporations being similar). "Appropriated" might have been clearer in this respect, but "expropriated" also conveys the idea that these things are taken from people who would otherwise have had them. This passage also implicitly defines "stakeholder" - a person who would otherwise have had some of that, who contributed to its being there.

KINSELLA: Yes, I read "expropriation" as meaning what it typically means -- theft, typically organized theft by an institution such as the state.

LAWRENCE: Why not read it the way it was first used, with context and all? "... a major problem is that much if not most of the value of the ostensibly shareholder-owned corporation results from the human capital contributed by internal stakeholders, but that this value is not reflected in formal ownership rights. The result is that much of the value created by internal stakeholders is expropriated by management, thus undermining the incentives of human capital to invest its efforts in the organization." Likewise it tells you what "stakeholder" is. That doesn't take tracking through several posts. So "If someone can give me a dictionary to translate it might be helpful" probably wouldn't work. He had that right in front of him, but a dictionary would just be something else he wouldn't chase up.

Again, I concede that I should have explicitly stated that I was using "appropriate" and "expropriate" as technical terms from organization theory. But looking back on what I originally wrote, I believe Lawrence is right. Figuring out what I meant did not require recourse to the Secret Mutualist Dictionary, or tracking through 17 email chains, or any other such heroic measures. It simply required reading the statements Kinsella selectively quoted in the context in which it appeared, which was right in front of him--no mouse-clicking required. In that context, I think my meaning was quite clear. My meaning could only have been mistaken by someone who was so wrapped around the axle about what my language "sounded like," or how it made him feel, that he was unwilling or unable to read carefully.

Kinsella also provided this helpful summary of the debate:

Here's a summary of the discussion so far:

Long/Carson: "Corporations are imperfect, and thus proprietorships and cooperatives are what would emerge on the free market."

Klein: "Proprietorships and cooperatives are also imperfect [various arguments and examples given], so they might not dominate on the free market."

Long/Carson: "Yes, but corporations are imperfect!"

Actually, I think it went more like this:

Long/Carson: Corporations are imperfect and proprietorships and cooperatives are what would emerge on the free market because they are less imperfect.

Klein: You're neglecting the body of org theory literature on how imperfect proprietorships and cooperatives are in particular [various arguments and examples given], so they might not dominate on the free market.

Long/Carson: But the imperfections ascribed to cooperatives in the literature, arguably, applies even more strongly to the corporation [various arguments and examples given], so it's likely that cooperatives would be an improvement.

Kinsella: Huh? So what?

8 Comments:

Blogger iceberg said...

Counting this post, we now are up to 18 chain emails... a few more and my head will go splody.

All kidding aside, I would just like to express my gratitude to all participants (left and right) of this long-overdue debate.

December 11, 2008 3:11 PM  
Anonymous P.M.Lawrence said...

More later, but for now people should know that Stephan Kinsella has started up yet another post to follow all this up, over at the Mises blog.

December 11, 2008 4:13 PM  
Blogger Brainpolice said...

This really is starting to get ridiculous and the right-libertarians are showing their true colors.

December 12, 2008 12:06 AM  
Anonymous Anonymous said...

"The notion of 'bargaining power' is leftist to the core"

Is this the "libertarian" equivalent of "reality has a well known liberal bias"?

After all, it is a fact that different people and companies have differing bargaining power on the market -- unless you want to assert that a huge corporation can strike exactly the same deal as an individual worker of course.

As "anarcho"-capitalist Hans-Hermann Hoppe put it, the "natural outcome of the voluntary transactions between various private property owners is decidedly non-egalitarian, hierarchical and elitist."

What conclusions you wish to draw from that fact can be debated, but to reject the fact of inequality of bargaining power is unconvincing.

Particularly as the state intervenes repeatedly to skew bargaining power in favour of the capitalist class (NAIRU, anyone?)

As I've noted elsewhere, even Rothbard had to acknowledge economic power at times. To quote him on the abolition of slavery and serfdom in the 19th century. He argued, correctly, that the "bodies of the oppressed were freed, but the property which they had worked and eminently deserved to own, remained in the hands of their former oppressors. With economic power thus remaining in their hands, the former lords soon found themselves virtual masters once more of what were now free tenants or farm labourers. The serfs and slaves had tasted freedom, but had been cruelly derived of its fruits."

Now, how does that change under "pure" capitalism? The workers are in exactly the same situation as the ex-slaves, yet Rothbard sees the obvious economic power in the latter case but not the former. That suggests a serious ideological blindness.

I'm impressed that Kevin is still trying to save right-wing "libertarians" from themselves, I suppose it may make the less reactionary look into genuine libertarian ideas. But, I cannot help feeling that the deeply anti-socialist nature of the typical right-"libertarian" is no accident, it flows from the ideology...

Iain
An Anarchist FAQ

December 12, 2008 1:18 AM  
Blogger scumble said...

Quick thought - I can see that Kinsella is trying to maintain the position that he is, in a way, indifferent to the form companies take. The market will decide which is better.

However, at the same time he does positively support the corporate form and large businesses such as good old Wal-Mart.

So is it fair to say that he wants to have it both ways? To really support "big business" as a libertarian, you do have to think that what we see in a mixed economy can illustrate what may occur in a free market.

Where I get stuck is that we know that there is nothing like a real free market in the world, so how do you refer to gigantic businesses like Universal and Siemens and pick out things that are benefits of a free market? It seems as dodgy as republican rhetoric on the surface.

December 12, 2008 1:52 AM  
Blogger ConvertedLefty said...

The reality of "bargaining power" is obvious to anyone who has ever bought a house. Should we stop using the terms "buyers market" and "sellers market", too?

December 12, 2008 11:23 AM  
Blogger Decentralist said...

Kevin:

Seriously Kevin why do you waste so much time on these silly people, you are way above them.

It seems to many of them that questioning the economics of Mises is to be "ignorant of economics" also that they can't imagine anything but a methodological individualism or atomism and that leftist is actually an insult.

They are not all bad no doubt but there are a lot more interesting libertarians and decentralists out there who no doubt can communicate on a more civil and decent level.

Iain:

The inability to recognise bargaining power comes from a profound methodological individualism or atomism among many American style libertarians.

They can't conceive of society beyond this narrow and very incomplete lense and hence are blind to such things as bargaining power. There is no such thing as society to them bascially.

December 12, 2008 7:35 PM  
Blogger Gary Chartier said...

I suspect Decentralist is right that some libertarians are atomists. But Decentralist’s comments prompted me to think and write about another possible explanation for some libertarians’ discomfort with talk about bargaining power, here: http://liberalaw.blogspot.com/2009/01/bargaining-power.html. Take a look and add to the conversation if you’re so inclined. (In essence, my point is that libertarians who are afraid or dismissive of talk about bargaining power seem to assume that treating this as a real problem somehow means opening the door to state coercion.)

January 04, 2009 8:56 AM  

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