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Mutualist Blog: Free Market Anti-Capitalism

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

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Location: Northwest Arkansas, United States

Friday, April 29, 2005

May Day Thoughts: Individualist Anarchism and the Labor Movement

May Day, the international holiday of the socialist and workers' movements, is popularly viewed in the U.S. as "that commie holiday." It's commonly associated with big parades and displays of military hardware on Red Square, and exchanges of "fraternal greetings" between leaders of the USSR and its satellites.

In fact, though, it's a holiday that started in the U.S., and is as American as apple pie. In 1884, the Federation of Organized Trades and Labor Unions, predecessor of the AFL, called for a nationwide general strike in favor of the eight-hour day. It was to be introduced on May 1, 1886. The political strife resulting directly from that movement included the Haymarket bomb and the subsequent police and judicial riot. The celebration of May Day as a worker's holiday dates back to that movement.

The foreign and communist associations of May Day, in the popular mind, are in large part the outcome of an elite propaganda campaign in the U.S. U.S. ruling circles attempted to identify the assorted workers' and populist movements, in popular consciousness, with foreign radicalism, "unAmericanism," and "Red Ruin." This campaign finally paid off in the War Hysteria and subsequent Red Scare of the Wilson administration, which was used as an opportunity to suppress (via mass arrests, "criminal syndicalism" laws, etc.) organizations as diverse as the I.WW., the Non-Partisan League, and the Farmer-Labor Party. Thanks to the war propaganda, the Palmer Raids and the quasi-private vigilantism of groups like the American Legion, socialism largely ceased to exist as a mass-based movement in the U.S. Around the same time, Congress designated May 1 as "Loyalty Day."

Bear in mind, also, that May Day and the workers' movement behind it were by no means a monopoly of communists and syndicalists, or collectivists of any other stripe. The International Working People's Association, formed by anarchists who withdrew from the First International as it fell increasingly under Marx's sway, played the chief role in organizing the general strike for the eight-hour day. Although anarcho-syndicalists certainly predominated in that organization, individualist anarchists of the period also had an interesting record of participation in it.

The "Boston anarchists" (individualists in the Tucker group) were, admittedly, mostly lukewarm toward labor unions. But some members of Tucker's Liberty circle had been active in the New England Labor Reform League, which promoted the mutual banking of William Greene and J.K. Ingalls' land theory as a way to eliminate exploitation by free market means: "free contracts, free money, free markets, free transit, and free land." "The currents of labor reform and radicalized laissez-faire," Frank Brooks wrote, "came together under Tucker's tutelage to form the individualist camp of anarchism in the mid-1880s." Some of the individualists in the League were later involved in the politics of the IWPA.

Ezra Heywood, for example, had been involved with the Worcester Labor Reform League (a precursor to the NELRL) and William Sylvis' National Labor Union. Because capital controlled finance and the means of production, not to mention the press and pulpit, Heywood argued, it could sit back and wait for recalcitrant workers to starve, without any word of rebuke from mainstream society. "But if labor, obedient to a sterner necessity, demands more pay, the air swarms with 'strike,' 'dictation,' 'force,' 'riot,' 'insurrection,' and many other epithets of rebuke..." And most importantly, government enforcement of privilege was at the root of the problem: "Through cunning legislation, ...privileged classes are allowed to steal largely according to law."

The American Labor Reform League, an organization formed subsequently, included (like the NELRL) several members of Tucker's circle: Heywood, William Greene, J.K. Ingalls, and Stephen Pearl Andrews. Heywood, in the first issue of his newspaper The Word,

warmly approved the declarations of the International Workingmen's Association at its gatherings in Belgium and Switzerland, especially those which called upon the members everywhere to "obliterate" nationalism and "abolish" patriotism, which he called "the most barbarous and stupid of virtues." He sounded one note of disapproval, however, reflecting the bitter dispute which had already split the anarchist and socialist factions in Europe: "It is not pleasant to see Dr. Marx and other leaders of this great and growing fraternity lean so strongly toward compulsory policies. If the International would succeed it must be true to its bottom idea--voluntary association in behalf of our common humanity."

Heywood also participated for a time in the IWPA, joining in 1872.

As Tucker was later to do, Heywood considered employers in the main to be the guilty parties when strikes resulted in violence, and to emphasize the role of state violence in aiding the side of the companies. Heywood, on principle, was unenthusiastic about combinations of labor, and preferred to leave the power of capital to be ended by the abolition of privileges like the land and money monopolies. Nevertheless, he considered the Mollie Maguires to be "morally lawful belligerents" engaged in "defensive warfare."

Tucker himself, despite his ambivalence concerning unions, responded enthusiastically at first to the 1881 revival of the IWPA in London. He expressed some reservations at the idea of coordinating propaganda work with organizational work, since he saw education as central to achieving a permanent revolution. But still, he supported the Socialistic-Revolutionary Congress in Chicago, aimed at organizing an American federation within the International. He sent J. H. Swain as Liberty's delegate to the Congress, and was informed that the body met "Josiah Warren's American socialism" with a "cordial reception." The Congress selected Liberty as its English language organ.

Tucker's attitude toward the labor war was reflected in this quote about Homestead:
....It is not enough, however true, to say that, "if a man has labor to sell, he must find some one with money to buy it"; it is necessary to add the much more important truth that, if a man has labor to sell, he has a right to a free market in which to sell it, - a market in which no one shall be prevented by restrictive laws from honestly obtaining the money to buy it. If the man with labor to sell has not this free market, then his liberty is violated and his property virtually taken from him. Now, such a market has constantly been denied, not only to the laborers at Homestead, but to the laborers of the entire civilized world. And the men who have denied it are the Andrew Carnegies. Capitalists of whom this Pittsburgh forge-master is a typical representative have placed and kept upon the statute-books all sorts of prohibitions and taxes (of which the customs tariff is among the least harmful) designed to limit and effective in limiting the number of bidders for the labor of those who have labor to sell....

....Let Carnegie, Dana & Co. first see to it that every law in violation of equal liberty is removed from the statute-books. If, after that, any laborers shall interfere with the rights of their employers, or shall use force upon inoffensive "scabs," or shall attack their employers' watchmen, whether these be Pinkerton detectives, sheriff's deputies, or the State militia, I pledge myself that, as an Anarchist and in consequence of my Anarchistic faith, I will be among the first to volunteer as a member of a force to repress these disturbers of order and, if necessary, sweep them from the earth. But while these invasive laws remain, I must view every forcible conflict that arises as the consequence of an original violation of liberty on the part of the employing classes, and, if any sweeping is done, may the laborers hold the broom! Still, while my sympathies thus go with the under dog, I shall never cease to proclaim my conviction that the annihilation of neither party can secure justice, and that the only effective sweeping will be that which clears from the statute-book every restriction of the freedom of the market....

More significant than any in the Boston group, however, was Dyer Lum, who attempted a genuine fusion of individualist anarchist economics with radical labor organization. According to Brooks,

Lum developed a "mutualist" theory of unions that led him first to activity within the Knights of Labor and then to promotion of anti-political strategies in the American Federation of Labor....

To fully appreciate Lum's significance in bridging this gap in anarchist historiography, it is useful to consider his evolution to anarchism, his mature vision of anarchism, and how he applied and modified that vision as an anarchist activist between 1885 and 1893. Lum moved toward anarchism because of frustration with abolitionism, spiritualism, and labor reform. While anarchism could develop out of such indigenous movements, it also arose out of immigrant socialism. As these two strains of anarchism converged in the 1880s, Lum concentrated on how to unite them into an anarchist movement. Drawing upon the economic reforms of the "Boston anarchists" and the revolutionary strategy of the "Chicago anarchists," Lum offered a more holistic anarchism than most of his comrades. He realized that anarchism, like any movement aiming at radical social change, had to combine an organization that could lead and coordinate action, an effective strategy, and an ideology that was convincing, inspiring and relevant to American culture.

Despite Lum's confusion at times over the role of the state in his agenda....

Lum began to develop an ideology that centered on the labor reformers' demand: "The Wage System must go!" Post-war labor reform inherited much of the moral fervor of abolitionism, as well as its connections to republican theory. For Radical Republicans and labor reformers, this legacy came together in the concept of "wage slavery." While widely used, the concept was also variously interpreted. Ira Steward, for example, focused on long working hours and urged adoption of the eight-hour day. Henry George, on the other hand, criticized the private appropriation of rising rents and advocated the "single tax." In part because of the breadth of his contacts, Lum interpreted "wage slavery" broadly, advocating reforms such as the Greenbackers' demand for the retention of paper money as legal tender, a land-loan bill, eight-hour legislation, and restriction of Chinese immigration. He saw these as interrelated reforms. Land, monetary, and labor reform were all necessary because "rent, interest, profit are the triple heads of the monster against which modern civilization is waging war."

he still brought an individualist sensibility, "a radicalized form of laissez-faire economics," to bear on the issue of exploitation, empasizing the state as the central force for privilege:

This inclusive and radical economic analysis led Lum to lay some of the blame for wage slavery at the feet of American national government. For example, instead of opening land up to settlers through a land-loan bill, the federal government offered huge grants of land to the railroads. Lum, echoing republican ideology, saw this as "class legislation," subordinating the public interest to the private interests of "soulless" corporations.

Lum's individualist leanings owed much to the influence of Herbert Spencer and Pierre-Joseph Proudhon. He often quoted Spencer's "law of equal freedom." Lum, along with many other anarchists and trade unionists,

found in Spencer's scientific analysis cogent arguments for individual liberty and against collectivism, especially as they competed with Marxists within the labor movement. Many, including Lum, were also amenable to a radical interpretation of "laissez-faire," where government would not interfere in the sphere of labor activities, even through "favorable" legislation, for fear that this would undermine organized labor's initiative and independence.

Lum's fusion of individualist laissez-faire economics with radical labor agitation was a creative one:

From the collectivists, he kept the strategic focus on organizing proletarians as a revolutionary class. From the individualists, he kept ideological focus on an anarchist economics that was theoretically sophisticated and grounded in labor reform and laissez-faire. At the same time, Lum's alloy had an external function, creating a radical labor ideology that could attract enough adherents to become a significant force for revolutionary social change. His appeals to American and European history and thinkers, his commitment to solving the "labor problem," and his advocacy of forcible efforts at social change were all designed to make anarchism a magnet to radicalized workers....

Dyer Lum applied radical laissez-faire economics to union and anarchist organization, hoping to develop a theoretical underpinning that was sophisticated and grounded in American labor reform. He cited liberal thinkers such as Thomas Paine and Herbert Spencer to give theoretical and rhetorical weight to this project. Paine seemed useful rhetorically as a hero of the American Revolution and a radical liberal. Spencer's contribution was more theoretical: he argued for an expansion of individual liberty and restraint of government action on both natural-rights and evolutionary grounds. Spencer seemed especially useful to Lum as a counterweight to the influence of Marx on the collectivist anarchists. While Spencer and Paine were useful primarily in developing a critique of the state, Lum drew from the French anarchist Proudhon, as mentioned earlier, a radical critique of classical political economy and, perhaps more importantly, a set of positive reforms in land tenure and banking....

Combining thinkers such as Proudhon, Spencer, and Paine, Dyer Lum produced an antistatist economics that drew upon liberal economics and labor reform in order to promote the interests of the proletariat. Following individualists such as Tucker, Lum argued that the "labor problem" could be explained by the government's creation of "monopolies," particularly the land and money monopolies. Echoing Joshua K. Ingalls, an anarchist active in the New England Labor Reform League, Lum argued that the land monopoly had been created when the state granted legal titles to land. The way to destroy it was to abolish these titles and to institute the principle of free access to land. This would make it impossible for landlords to extract rent from the labor product. The money monopoly was the result of the state establishing its monetary notes as the only legal form of currency. Following Proudhon's American disciple, William B. Greene, Lum argued that this monopoly would be ended when mutual banks were set up to issue their own currencies. This would provide enough stable money to supply the needs of a growing economy and thus undercut the ability of moneylenders and bankers to charge interest. 39

Yet land and monetary reform were not enough for Lum; they simply laid the groundwork for the ultimate solution to the labor problem, producer cooperation.

Lum had a close association with the Knights of Labor in the 1880s and the AFL in the 1890s. By the latter time, he was coming to soften his revolutionary stance in favor of an evolutionary approach, relying on peaceful education and organization of counter-institutions. Working in the AFL, he published a pamphlet, The Economics of Anarchy, to be read in "worker study groups"; it centered on the theme of "mutual banks, free access to land, and producer cooperation."

Lum's agenda of bridging the gap between individualist laissez-faire radicalism and the radical labor movement was taken up, as well, by Joseph Labadie and Voltairine DeCleyre.

Labadie promoted individualist and mutualist ideas in the I.W.W. in much the same way that Lum had in the Knights of Labor and the AFL.

…Nothing exists without a cause, and the cause of the labor movement is that labor products have not been justly distributed. This defect in the present industrial system has brought into existence the trades unions, the political labor parties, the socialists, communists, anarchists, single-taxers, etc., the central aim of all being to give to the laborer the full fruits of his toil…

Liberty of the individual should be the guiding principle of all reforms…Individual liberty does not, however, destroy the right of association for the accomplishment of specific objects....

It seems to me that those who are desirous of reform should keep these things in mind, namely, that the movement is international, and any attempt to confine it within national boundaries simply retards it; that immigration or the prevention of immigration is no means of reform, and is of no practical benefit to the movement in general; that occupancy and use only must be recognized as a valid title to land; that the monopoly of machinery must be destroyed by the abolition of the patent right system; that the furnishing of a currency, of a medium of exchange, must be left to individuals and associations, taking away from the general governments the monopoly of making the tools of exchange--that, in fact, general governments have no more right to monopolize the making of the tools of trade than they have to monopolize the making of the tools of production; that the true interests of the working and business classes is in the repeal of laws instead of the making of new ones, and that the powers and functions of governments must be reduced as so as to leave the individual a greater degree of freedom and responsibility for his own acts.

DeCleyre evolved in a direction the direct opposite of Lum's, starting out as an orthodox Tuckerite individualist, and developing increasingly strong ties with the radical labor movement. She eventually formulated a theory of "anarchism without adjectives" (roughly equivalent to panarchy), as a non-coercive framework within which individualist and collectivist anarchists could co-exist peacefully.

The Borg Collective Faces Resistance from Within

I usually think of Utahans (Utahites?) as authoritarian pod people, thanks to the prominence of anal-rententive Nazis like Orrin Hatch. But now I'm pleasantly surprised.

The Republican-dominated Utah legislature passed a bill recently that orders state officials to ignore provisions of a federal law that conflict with Utah's education goals or that requires state financing.

The bill, say some critics, is the most explicit legislative challenge to the federal law by a state, and its passage marked the failure of a lengthy lobbying effort against it by the Bush administration....

Utah’s action is not simply grandstanding. The feds have made known that this temerity will cost Utahans between $750 million and a cool $1 billion in federal education funds.

That last bit, about them actually giving up the money, is especially heartening.

Back when the alleged "small government" Republican Revolution began in 1995, following the passage of the so-called Contract With America, one of its central themes was the "New Federalism." The New Federalism, like most small government rhetoric emanating from the GOP establishment, was largely a sham. In practice, it meant an end to "unfunded mandates" and a little more administrative autonomy in spending federal grants-in-aid (except when the neocons wanted to use federal money to impose socially conservative policies on the states, of course). My response at the time was that they should simply stop providing grants-in-aid for purposes not enumerated in Article I, Section 8, cut federal taxes by an equal amount (preferably by raising the personal exemption), and let the states fund their own spending programs. But "Tenth Amendment Movement" people like Ben Nelson of Nebraska certainly weren't having any of that nonsense, and neither were the "devolutionist" GOP Congressmen. (Looking at troglodytes like Tom Delay, I have to wonder if they didn't mean something else by "devolution.")

It's kinda funny, in a sick sort of way. One of the main grievances that pushed Massachusetts into revolution 200-odd years ago was that the Brits insisted on collecting taxes in the colonies and then spending the money to fund colonial government, as a way of reducing their indendence. The colonial governor and judges in Massachusetts would receive their pay from Parliament rather than from the Massachusetts legislature. Likewise, thanks to grants-in-aid, today the average state's agencies gets about a fifth of the money it spends from Washington. Not only does that 20% tie down significantly more money, what with matching funds and strings attached; but many state constitutions actually empower agencies to accept money from the feds and spend it without any appropriation by the state legislature. They have effectively alienated the power of the purse and allowed their own executive agencies to become adminstrative arms of the imperial center.

The patriots of Massachusetts, on the other hand, were smart enough to understand that whoever pays the piper calls the tune. They weren't objecting to "unfunded mandates"; rather, they demanded an end to the funding.

An Update on My Project

I've just posted a working outline for my research project on the anarchist theory of organizational behavior at Mutualist.Org. Comments?

Thursday, April 28, 2005

On the Other Hand....

Before I get too carried away, I also spotted this quote from Alex Singleton:

According to Alex Singleton, the report's author: "The Trade Justice Movement thinks the world economy would work better if it were centrally planned. We saw central planning in the Soviet Union and all it produced was poverty. The only trade that has ever lifted countries out of poverty is free trade."

Ah, well, comrades--two steps forward, one step back....

As far as I can tell, the present world economy goes a long way toward being centrally planned--and most of it's done by the sort of corporate CEOs and neoliberal politicians who talk most about "free trade." This quote from Sean Gabb deserves another reading:

If you think that I came here tonight to defend multinational corporations and the international government institutions, you have chosen the wrong person. These are dishonest. They are corrupt. They are incompetent. They have blood on their hands.

But do not suppose for a moment that the world trading order as it actually exists is liberal or more than incidentally connected with free markets. A free market is a place where individuals and groups of individuals come together to transact voluntary exchanges without any backing of government force. To call the actually existing order liberal – or “neo-liberal” – is as taxonomically accurate as calling the old Soviet Communist Party syndicalist. That order is based on tariffs, subsidies and a web of other often invisible regulations. The international institutions are a projection of Western states. The multinational corporations are creatures of these states. They shelter behind the privilege of limited liability. They get their political friends to cartelise markets, and do favours in return.

We've seen about as much of free trade in the post-1945 world (or the post-1500 world, for that matter) as we did of syndicalism in Stalinist Russia. "Free trade" is something that's allowed to operate within the interstices of state capitalism, and tolerated only to the extent it's compatible with a larger state capitalist agenda. So long as corporate elites--our class enemy--are able to determine the strategic framework within which "free market reform" is selectively introduced, the "free market" activity that exists will simply be an engine harnessed to turn the wheels of a state-enforced system of class exploitation. Any description of the benefits of free trade to the Third World, therefore, should be in the subjunctive.

Strawman Alert

Tim Worstall comes out ahead in a dustup with George Monbiot over wind farms. Of course, it helps if you can put words in your opponent's mouth. Monbiot, in this article, writes:

In other words, there is no sustainable way of meeting current projections for energy demand. The only strategy in any way compatible with environmentalism is one led by a vast reduction in total use.

Worstall comments:

Yup, George wants us all to go back to being medieval peasants. Good one.

Of course--it's that simple! Current levels of energy consumption are absolutely necessary to maintain the present standard of living. It couldn't be possible that subsidies to transportation and energy consumption make large factories thousands of miles away artificially competitive against small ones where we live, or that such subsidies combined with zoning laws and FHA redlining reduce the market incentive to live where you work and shop. When it comes to technological determinism, nobody comes close to a state socialist or a technocratic liberal for sheer, crude materialism--except a corporate capitalist, that is! Worstall sounds like Friedrich Engels, Art Schlesinger, or J.K. Galbraith at their worst.

Here's another Monbiot quote, to put the one above in context:

Wind farms, while necessary, are a classic example of what environmentalists call an "end-of-the-pipe solution". Instead of tackling the problem - our massive demand for energy - at source, they provide less damaging means of accommodating it. Or part of it. The Whinash project, by replacing energy generation from power stations burning fossil fuel, will reduce carbon dioxide emission by 178,000 tonnes a year. This is impressive, until you discover that a single jumbo jet, flying from London to Miami and back every day, releases the climate-change equivalent of 520,000 tonnes of carbon dioxide a year. One daily connection between Britain and Florida costs three giant wind farms.

If anything is a prime candidate for free-market problem solving, it's the fuel-guzzling jumbo jets Monbiot complains of. The civil aviation system in the U.S., jumbo jets and all, is almost entirely a creature of the state. The airport infrastructure of the 20th century was built mostly with government funds, with heavy use of eminent domain. No attempt was made until the 1970s to run airports on aviation fuel tax revenue--and even then, the operating cost didn't figure in amortization of previous government loot. Had the system been built from the first entirely with voluntary user fees, and voluntary sales of land, we'd have a civil aviation system several orders of magnitude smaller--and "air freight" would probably mean shipping by zeppelin. Even today, if the system had to forego eminent domain and operate entirely on user fees, it would be frozen at its present scale. For example, see "On Airports and Individual Rights," by Tibor Machan:

Some people will say that stringent protection of rights would lead to small airports, at best, and many constraints on construction. Of course—but what’s so wrong with that?

As for those jumbo jets themselves, they are a spinoff of Cold War military production. The aircraft industry was spiralling into red ink with the postwar demobilization, and did not regain solvency until the uptick in military spending of the late '40s. [Frank Kofsky, Harry S. Truman and the War Scare of 1948] What's more, the machine tools for producing large airplanes were so complex and expensive that the production runs for civilian airliners alone wouldn't pay for them--which is where heavy bomber production came into the picture. [David Noble, America by Design: Science, Technology and the Rise of Corporate Capitalism]

If it weren't for the state's role in subsidizing those airports and freeways, we'd be consuming most of our stuff from factories a lot closer to home, and shipping most of the rest by rail. We don't need the government to knock this crap down; we just need it to stop propping it up.

Granted, Monbiot probably isn't thinking primarily of market forces or cost internalization as a way to produce present levels of consumption goods with less energy input. But nothing in the phrase "vast reduction in total use" is inconsistent with that. In fact, I sent Mr. Monbiot the following email a while back, and got a pretty favorable response:

I believe the solution to the crisis is already built in. There's no need for government-imposed austerity measures. The price of oil itself will lead to the austerity measures. Such a scenario was depicted over twenty years ago by Warren Johnson in Muddling Toward Frugality: rising fuel prices make transportation-intensive forms of production less and less competitive, and force a radical decentralization of the economy.

As it is, the corporate economy exists at the present level of concentration only because of state capitalist intervention in the free market. The government absorbs (or rather transfers to the taxpayers) all the inefficiency costs of large-scale production, so that big business can operate at many times the peak economy of scale. But the more fuel prices rise, the less feasible subsidies to transportation and fuel consumption become. Eventually the breaking point will be reached at which the state can no longer absorb the costs of subsidizing inefficiency.

Such subsidies lead to fundamental irrationality by distorting the function of the market price system as a feedback mechanism: when allowed to operate without interference, it coordinates supply to demand by telling the consumer the real cost of providing a resource, and enabling him to make a rational decision about how much to consume. Interference with price-feeback produces the same results as a distortion of the hormonal feedback mechanism in the human body: gigantism and collapse. In the case of transportation, we have demands on highways and airports increasing many times faster than new capacity can be built, and existing structures decaying faster than money can be appropriated to replace them.

When we have a genuine free market, and big business has to internalize all its operating costs, we will also have an end to corporate capitalism.

Credit Where Due

I try to remember to call my recurring feature "Vulgar Libertarianism (not Libertarian) Watch," because the same people who publish the worst exercises in vulgar libertarianism one week often turn around the next and surprise me. Radley Balko is especially prone to slip out of his pigeonhole from time to time. Now Alex Singleton's done it as well, calling in this article for the open source development of drugs for the Third World, and arguing that existing patent terms are "overkill" even in the West. More like this, please!

Tuesday, April 26, 2005

More on the World Bank

Since the actual nature and purpose of the World Bank's activities has become the subject of heated discussion in an earlier comment thread, with one rather thin-skinned anonymous commenter who claims to work for the World Bank calling my comments "grossly insulting" and referring to me as an "armchair smartarse," I am posting the following information condensed from Chapter Seven of Studies in Mutualist Political Economy.

The problem of access to foreign markets and resources was central to U.S. policy planning for a postwar world. Given the structural imperatives of "export dependent monopoly capitalism," the fear of a postwar depression was a real one. The original drive toward foreign expansion at the end of the nineteenth century reflected the fact that industry, with state capitalist encouragement, had expanded far beyond the ability of the domestic market to consume its output. Even before World War II, the state capitalist economy had serious trouble operating at the level of output needed for full utilization of capacity and cost control. Military-industrial policy during the war greatly exacerbated the problem of over-accumulation, increasing the value of plant and equipment by two-thirds at taxpayer expense. The end of the war, if followed by the traditional pattern of demobilization, would result in a drastic reduction in orders to this overbuilt industry at the same time that over ten million workers were dumped back into the civilian labor force. And four years of forced restraints on consumption had created a vast backlog of savings with no outlet in the already overbuilt domestic economy.

In November 1944, Dean Acheson addressed the Congressional committee on Postwar Economic Policy and Planning. He stressed the consequences if the war were to be followed by a slide back into depression: "it seems clear that we are in for a very bad time, so far as the economic and social position of the country is concerned. We cannot go through another ten years like the ten years at the end of the twenties and the beginning of the thirties, without having the most far-reaching consequences upon our economic and social system." The problem, he said, was markets, not production. "You don't have a problem of production.... The important thing is markets. We have got to see that what the country produces is used and is sold under financial arrangements which make its production possible." Short of the introduction of a command economy, with controls over income and distribution to ensure the domestic consumption of all that was produced, Acheson said, the only way to achieve full output and full employment was through access to foreign markets. [William Appleman Williams, The Tragedy of American Diplomacy]

A central facet of postwar economic policy, as reflected in the Bretton Woods agencies, was state intervention to guarantee markets for the full output of U.S. industry and profitable outlets for surplus capital. The World Bank was designed to subsidize the export of capital to the Third World, by financing the infrastructure without which Western-owned production facilities could not be established there. According to Gabriel Kolko's 1988 estimate, almost two thirds of the World Bank's loans since its inception had gone to transportation and power infrastructure. [Gabriel Kolko, Confronting the Third World: United States Foreign Policy 1945-1980] A laudatory Treasury Department report referred to such infrastructure projects (comprising some 48% of lending in FY 1980) as "externalities" to business, and spoke glowingly of the benefits of such projects in promoting the expansion of business into large market areas and the consolidation and commercialization of agriculture. [Dept. of the Treasury. United States Participation in the Multilateral Development Banks in the 1980s (GPO, 1982)]

Besides the benefit of building "an internal infrastructure which is a vital prerequisite for the development of resources and direct United States private investments," such banks (because they must be repaid in U.S. dollars) require the borrowing nations "to export goods capable of earning them, which is to say, raw materials...." [Gabriel Kolko, The Roots of American Foreign Policy]

Besides facilitating the export of goods and capital, the Bretton Woods agencies play a central role in the discipline of recalcitrant regimes. There is a considerable body of radical literature on the Left on the use of debt as a political weapon to impose pro-corporate policies (e.g., the infamous "structural adjustment program") on Third World governments, analogous to the historic function of debt in keeping miners and sharecroppers in their place. [Cheryl Payer, The Debt Trap: The International Monetary Fund and the Third World; Walden Bello, "Structural Adjustment Programs: 'Success' for Whom?" in Jerry Mander and Edward Goldsmith, eds., The Case Against the Global Economy; Bruce Franklin, "Debt Peonage: The Highest Form of Imperialism?" Monthly Review (March 1982)]

Cheryl Payer compared Third World debt to individual debt peonage, in that the aim of the latter was "neither to collect the debt once and for all, nor to starve the employee to death, but rather to keep the labourer permanently indentured through his debt to his employer...." David Korten argued, likewise:

The very process of the borrowing that created the indebtedness that gave the World Bank and the IMF the power to dictate the policies of borrowing countries represented an egregious assault on the principles of democratic accountability. Loan agreements, whether with the World Bank, the IMF, other official lending institutions, or commercial banks, are routinely negotiated in secret between banking officials and a handful of government officials--who in many instances are themselves unelected and unaccountable to the people on whose behalf they are obligating the national treasury to foreign lenders. Even in democracies, the borrowing procedures generally bypass the normal appropriation processes of democratically elected legislative bodies. Thus, government agencies are able to increase their own budgets without legislative approval, even though the legislative body will have to come up with the revenues to cover repayment. Foreign loans also enable governments to increase current expenditures without the need to raise current taxes--a feature that is especially popular with wealthy decision makers. The same officials who approve the loans often benefit directly through participation in contracts and "commissions" from grateful contractors. The system creates a powerful incentive to over-borrow.
[When Corporations Rule the World]

Another way the Bretton Woods agencies exercise political power over recalcitrant regimes is the punitive withholding of aid. This powerful political weapon has been used at times to undermine elective democracies whose policies fell afoul of corporate interests, and to reward compliant dictatorships. For example, the World Bank refused to lend to the Goulart government in Brazil; but following the installation of a military dictatorship by the 1964 coup, the Bank's lending averaged $73 million a year for the rest of the decade, and reached almost a half-billion by the mid-70s. Chile, before and after the Pinochet coup, followed a similar pattern. [Bruce Rich, "The Cuckoo in the Nest: Fifty Years of Political Meddling by the World Bank," The Ecologist (January/February 1994)]

Payer's The Debt Trap is an excellent historical survey of the use of debt crises to force countries into standby arrangements, precipitate coups, or provoke military crackdowns. In addition to their use against Goulart and Allende, as mentioned above, she provides case studies of the Suharto coup in Indonesia and Marcos' declaration of martial law in the Philippines. Walden Bello, in Development Debacle, goes into much greater depth on the Philippines specifically, based on extensive (leaked) documentation of World Bank collaboration with Marcos in support of the authoritarian crackdown preceding his austerity programs.

Among the many features of the so-called structural adjustment program, mentioned above, the policy of "privatization" (by selling state assets to "latter-day Reconstructionists," as Sean Corrigan says below) stands out. Joseph Stromberg described the process, as it has been used by the Iraq Provisional Authority, as "funny auctions, that amounted to new expropriations by domestic and foreign investors...." Such auctions of state properties will "likely lead... to a massive alienation of resources into the hands of select foreign interests."

The promotion of unaccountable, technocratic Third World governments, insulated from popular pressure and closely tied to international financial elites, has been a central goal of Bretton Woods agencies since World War II. Bruce Rich writes:

From the 1950s onwards, a primary focus of [World] Bank policy was "institution-building", most often taking the form of promoting the creation of autonomous agencies within governments that would be continual World Bank borrowers. Such agencies were intentionally established to be independent financially from their host governments, as well as minimally accountable politically--except, of course, to the Bank.

The World Bank created the Economic Development Institute in 1956 specifically to enculture Third World elites into the values of the Bretton Woods system. As Rich described it, it offered a six-month course in "the theory and practice of development," whose 1300 alumni by 1971 included prime ministers, ministers of planning, and ministers of finance.

The creation of such patronage networks has been one of the World Bank's most important strategies for inserting itself in the political economies of Third World countries. Operating according to their own charters and rules (frequently drafted in response to Bank suggestions), and staffed with rising technocrats sympathetic, even beholden, to the Bank, the agencies it has funded have served to create a steady, reliable source of what the Bank needs most--bankable loan proposals. They have also provided the Bank with critical power bases through which it has been able to transform national economies, indeed whole societies, without the bothersome procedures of democratic review and discussion of the alternatives.

Despite the vast body of scholarly literature on the issues discussed in this passage, perhaps the most apt description of it was this pithy comment, in a polemic by free market libertarian Sean Corrigan:

Does he [Treasury Secretary O'Neill] not know that the whole IMF-US Treasury carpet-bagging strategy of full-spectrum dominance is based on promoting unproductive government-led indebtedness abroad, at increasingly usurious rates of interest, and then--either before or, more often these days, after, the point of default--bailing out the Western banks who have been the agents provocateurs of this financial Operation Overlord, with newly-minted dollars, to the detriment of the citizenry at home?

Is he not aware that, subsequent to the collapse, these latter-day Reconstructionists must be allowed to swoop and to buy controlling ownership stakes in resources and productive capital made ludicrously cheap by devaluation, or outright monetary collapse?

Does he not understand that he must simultaneously coerce the target nation into sweating its people to churn out export goods in order to service the newly refinanced debt, in addition to piling up excess dollar reserves as a supposed bulwark against future speculative attacks (usually financed by the same Western banks’ lending to their Special Forces colleagues at the macro hedge funds) - thus ensuring the reverse mercantilism of Rubinomics is maintained?

Notice on Mutualist Political Economy

I've just run out of regular copies of Studies in Mutualist Political Economy. There are still plenty (a lot) of unpaginated copies available for $10, if you're interested. They're completely identical, except the publisher left off the page numbers. If you order the regular edition, there may be a wait of several weeks until I receive the new printing. Sorry for any inconvenience.

Sunday, April 24, 2005

Carnival of the Un-Capitalists

This week's carnival is hosted by Red Harvest. (You know any blog with a Gramsci quote in the header has to be good.)

Remembering Tucker

Check out Kenneth Gregg's appreciation of Benjamin Tucker at Liberty & Power.

Friday, April 22, 2005

Gagnon Interview

Via Democratic Freedom. The Democratic Freedom Caucus' Paul Gagnon was interviewed by Free Liberal.

There was a time when a number of Libertarians that were saying the first thing we should cut is corporate welfare, and to reduce the military. So it was a very left-wing tinge to the L[ibertarian] P[arty], which has slowly faded out. [We] still feel that, when we’re going to cut government, we should first talk about how we’re going to cut subsidies to the wealthy and to the corporations. And then we can talk about kicking out the so-called ‘welfare queens,’ which tend to be the poor....

FL: Why a DFC? Why not join the Democratic Leadership Caucus, which was home for Bill Clinton? Do you aim to make the DFC as influential as the DLC?

PG: [The DLC] has held themselves hostage to corporate interests. Frankly, we’ve never tried the free market in this country. We’ve always had government working hand in hand with the wealthy to secure their interests, whether it was the original land developers, and then the commercial interests, and then of course the Civil War, which led to one of the biggest boons in the corporate/state nexus.... We’re very much in favor of free markets, but we are opposed to government giveaways, protections, and subsidies of corporations.

Thursday, April 21, 2005

A Perfect Fit: Wolfowitz at the World Bank

Jude Wanniski writes:

That's what the World Bank is all about. It was created as an adjunct of the United Nations at the end of World War II, along with its brother institution, the International Monetary Fund. On paper, its function was to lend money to developing countries to help them grow. Its real job has been to serve the interests of the major money-center banks and the multinational corporations who make the big bucks in World Bank development projects. The Bank, which is really a "fund," persuades a poor country like Ghana, for example, to build a new industrial complex in order make stuff for export. It will lend the money to Ghana -- which it gets from global taxpayers including you and me -- and arrange for the complex to be built by one of the favored corporations in the military-industrial complex. The list always includes Bechtel Corporation, Halliburton, and Kellogg Brown & Root, a division of Halliburton. These outfits go in and build the projects because the locals have no expertise....

If this seems harsh, as if I'm writing about something new under the rocks on which our Uncle Sam perches, I suggest you read my 1978 book, "The Way the World Works," which describes how the British Empire worked in exactly this fashion. My best example was the first multinational corporations, the British railroad builders. Once they ran out of places to build rail lines in the U.K., they persuaded Parliament to promote railroads in the colonies, and were enormously successful in talking the Raj into criss-crossing India with railroads in the mid-19th century. It was one thing in England, where the companies could only build where there was a clear sign the line would be profitable, because it was their own money at risk. In India, the locals borrowed the money from the Bank of England and hired the builders to put in rail lines that couldn't possibly be profitable. India was burdened with debts from these schemes well into the 20th century.

RFK2 Redux

Recently B.K. Marcus expressed his surprised pleasure, with some reservations, at RFK Jr.'s apparent endorsement of a free market approach to environmentalism.

I read this and I'm awfully suspicious. I'm suspicious of any Kennedy. I'm especially suspicious of a rich-boy Yankees in the spotlight.

But I read this. I reread this. And all I can say for now is:

"Right on, Bobby, Jr!"

As it turns out, his misgivings were probably based on sound instinct.

The Commons Blog and Steve Verdon go so far, respectively, as to denounce Kennedy as a "Free Market Fraud,"

Of course, Robert Kennedy has little interest in the free market or protecting property rights. Rather, he is a “faux market environmentalist” and partisan defender of the federal environmental regulatory bureaucracy....

and a "prevaricator."

Both bloggers object strenuously to RFK's claim to the "free market" label, owing to his frequent statements like this one in The Grist:

You have to force companies to internalize costs. All of the federal environmental laws are designed to restore free-market capitalism in America in this regard....

I'm a free-marketeer. I go out into the marketplace and I catch the polluters who are cheating the free market and I say, "We are going to force you to internalize your costs the same way you are internalizing your profit." That's what the federal environmental laws allow us to do: restore real property rights in America.

Kennedy seems, as evidenced by quotes like that above and the following one from a Buzzflash interview, to view the federal regulatory state as the best mechanism for internalizing costs:

But the energy industry gave $48 million to President Bush and the Republican Party during the 2000 race, and the payback is billions of dollars of relief from regulations that are meant to protect the commons, including the Clean Air Acts’ resource performance standards, which the Bush Administration abandoned last month. So it’s illegal for those companies to put those substances into our air, but the Bush Administration has now said that it is no longer going to enforce the laws against them....

Let me add one other thing. Yesterday, the Bush Administration announced that it wasn’t going to enforce mercury standards....

A government regulation, enforced by administrative law, is about the most inappropriate mechanism for cost internalization I can think of. Even if you believe some form of federal action is necessary, which I do not, some form of "green tax" or Pigouvian tax on externalities (which Verdon seems to suggest at one point) is a much better way of doing it. Personally, I'd prefer restoring the common law of public and private nuisance as it existed before the commercial interests emasculated it in the 19th century, and let local juries assess damages against corporations that pollute their neighbors' air and groundwater. The polluters might just decide that the EPA was a big ol' pussycat, after all. Indeed, the whole point of administrative penalties enforced by executive agencies was that they preempted potentially much costlier civil actions and replaced them with a lowest-common-denominator standard.

RFK2 continues:

All of our federal agencies have now been captured by the industries that they’re intended to regulate. The head of the Forest Service is a timber industry lobbyist. The head of our public lands is a mining industry lobbyist....

Captured? They are the creations of the agencies they were ostensibly intended to regulate, as Gabriel Kolko might have told him. The great land barons and timber interests worked hand in glove with "progressive" government to create conservation laws, as Murray Rothbard described the process in Power and Market:

Conservation laws... must also be looked upon as grants of monopolistic privilege. One outstanding example is the American government's policy, since the end of the nineteenth century, of "reserving" vast land tracts of the "public domain"--i.e., the government's land holdings.... Forests, in particular, have been reserved, ostensibly for the purpose of conservation. What is the effect of withholding huge tracts of timberland from production? It is to confer a monopolistic privilege, and therefore a restrictionist price, on competing private lands and on competing timber.

The great landed interests and the timber industry were, therefore, major supporters of federal conservation policy.

Kennedy's statement below, especially, demonstrates a muddled thought process:

And the free market has to be protected through government regulation. As I say, capitalists do not want free markets. They want profits. And the best way to capture profits -- to capture a reliable profit stream -- is to get control of government and use government to crush your competition.

If government intervention itself, what Kolko called "political capitalism," is the best way to capture profits, then it doesn't make much sense to argue at the same time that government intervention is also the best way to prevent such profiteering. Government cannot simultaneously be the main cause of something, and the only way of preventing it.

Mr. Kennedy also seems rather mixed up about the nature of the commons, confusing a common with state property:

One of the central roles of government from the beginning of the first organized communities has been protection -- the safeguarding of the commons on behalf of the public. The commons under Roman law -- under the Code of Justinian -- were defined as those things that are not susceptible to private ownership; in other words, the shared resources, the air that we breathe, the waterways, the dune lands, wetlands, wandering animals.

And under Roman law, if you were a citizen of Rome, the Emperor himself, whether you were humble, noble, rich or poor, could not stop you from crossing a beach flowing at an ebb and taking out the fish. Everybody had a right to use those resources. Nobody had a right to use them in a way that would diminish or injure their use and enjoyment by others.

That principle is echoed in the Magna Carta and in the constitutions of all of our states, through a doctrine that’s called the Public Trust Doctrine. And it’s at the heart of our environmental laws. And again, from the beginning of time, the first acts of tyranny were to privatize the commons. In fact, the Magna Carta was passed because of the Battle of Runneymede, which was precipitated by King John’s efforts to turn the rivers, the fisheries and the deer over to private corporations and privileged parties.

For too many free market libertarians, this would be the cue to bring in a horrible misrepresentation of Garrett Hardin's Tragedy of the Commons, and an argument that the only solution is to "privatize" forests into the hands of the usual big busienss suspects. Verdon does himself credit, and throws away any chance for sitting at the vulgar libertarian kool kids table, by coming to the defense of the commons as a legitimate form of property.

....Kennedy is also prevaricating when he talks about both the tragedy of the commons as well as firms internalizing costs.

First, there is no law in economics that says a common resources has to result in the tragedy of the commons scenario. In fact, there are instances where common resources are managed just fine with little or no government internvention.

Verdon then quotes this statement from a review of Elinor Ostrom et al.'s Governing the Commons to bolster his position:

In contrast to the proposition of the tragedy of the commons argument, common pool problems sometimes are solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forests, irrigation communities and other water rights, and fisheries.

(In fairness to Hardin, he himself specified that his argument applied only to an unregulated common.)

Contrary to popular stereotype, quite a few free market libertarians are amenable to the idea of the common, as a form of socially-owned (not state-owned) property. For example, check out this article by Roderick Long, and this one by Carlton Hobbs.

Still another Kennedy quote that raises some problems is this:

And that’s what’s happening in this country -- the free market is being eliminated. And in many of the major sectors, the free market has already disappeared. There is no free market left in agriculture. A farmer can’t raise a pig and get it slaughtered, and bring it to a stockyard and sell it. The stockyards are gone. The farmers are out of business, and hog production and meat production and chicken production in this country is now controlled by giant agri-businesses, as is grain production. The same is true in the energy sector, and in the media -- you’ve got 17,000 news outlets in this country that are now controlled by 11 corporations.

He apparently confuses a particular market structure--what neoclassical economists call "perfect competition"--with the free market, and regards it as government's job to promote the "free market" by actively intervening to breaking up concentrations of ownership. In that sense, he is a throwback to the liberals at the turn of the 20th century, who regarded a petty bourgeois economy of small firms and atomistic competition as their beau ideal, but considered federal anti-trust action necessary to maintain such an economy in existence. For him, the free market is not a set of procedural rules, but a particular outcome. He confuses a symptom with the disease.

Now, I agree with Mr. Kennedy's view that the state of affairs he describes in the block quote above is not a free market. But not because any particular level of concentration violates the model of "perfect competition" necessary for a free market. I object, rather, because I believe such levels of concentration came about through massive state intervention to cartelize the market; further, I do not believe that such concentration is possible through a free market mechanism, in the vast majority of cases. If, however, the levels of concentration he describes were the outcome of a genuinely free market, and resulted from superior efficiency of such large-scale organization against smaller-scale competitors rather than from state coercion, then I would have to accept them as legitimate (despite some aesthetic revulsion).

Kennedy is greatly in need of theoretical clarity; he needs to state exactly why such market concentration is incompatible with the free market. Does he believe that certain outcomes of a free market can create, without government intervention, the preconditions for a non-free market? Does the market concentration he describes result from laissez-faire, or from state intervention? And if the latter, how does it gibe with his claim that government intervention is necessary to prevent concentration?

His theoretical confusion in this regard reminds me of Chomsky, who sometimes writes in great detail of the utter dependence of large corporations on the state to externalize their costs on the taxpayer and protect them from competition, and then at other times calls for a dramatic strenghtening of the state as the only way to break up "private concentrations of power." For Chomsky, the corporation is utterly dependent on the state, but at the same time threatens to achieve total power if the state does not restrain it.

But despite all these caveats, I cannot go so far as Kennedy's other critics in calling him a prevaricator or a fraud. He is, all in all, much superior to the general run of Democratic politicians (not to mention having a claim to the "free market" title at least as good as that of the hangers-on at ASI and the Globalization Institute). Although admittedly he isn't thinking very clearly about the solutions, he often hits fairly near the mark in pointing out the problems. And even when he's somewhat off the mark, his general approach is quite an improvement on that of most big government liberals. He at least sees that the big polluters are engaged in some sort of collusion with the government, and that government action is somehow involved in preventing costs from being internalized. He's not nearly as far from the right path as other members of his party, and could well be amenable to rational persuasion regarding legitimate free market environmentalist policies. Certainly, in using "free market" as a god-term rather than a devil-term, and portraying big business as its main enemy, he's light years ahead of the average "progressive." After reading the work of someone like, say, Thomas Frank, who treats "laissez-faire" and "free market" as synonyms for the feudal dominion of GM and Wal-Mart, RFK Jr.'s rhetoric is a breath of fresh air.

All things considered, I still think Kennedy holds more promise for fruitful cooperation with the free market left than almost any other prominent Democratic figure.

Wednesday, April 20, 2005

Another Publik Skool Atrocity

At Lew Rockwell, Linda Schrock Taylor describes her son's horrible experience in the Odyssey of the Mind program, supposedly designed to encourage creative thinking:

The children were put into small teams. Each team was given a small stack of papers – squares that had been cut from construction paper. The teams were instructed to build the highest tower possible. His team members put the thin pieces of paper on top of each other, making a tower about 1/8 inch high. They stared at it in confusion, unable to think of another way to stack the flat sheets. David began folding the pieces of paper into shapes, bending corners to make 'legs' and soon had a tall structure. When I picked him up following the auditions, he felt positive about his chances but shocked at the flat-thinking of his schoolmates.

David failed to win a spot on an OM team, while the flat-tower thinkers survived the cuts. When I requested feedback regarding the votes against David, I was told that he was not chosen because "He was not a team player."

There you have it: as good a description as any of the kinds of "human resources" the publik skools want to mold. You know, the sort of "team players" who kept juicing non-responsive subjects in the Milgram experiment, so long as an authority figure in a white coat told them to do it. If the slave factories let someone with non-"team player" traits slip through, they might later do something really "extreme," like taking a principled stand when they believe they're right. They might upset the processors of human raw material in some corporation or government agency by suddenly developing a voice: "Get your stinking paws off me, you damned dirty apes!"

Another incident is also quite instructive:

One day he arrived home upset and explained that he was "in trouble." When I asked what he had done wrong, he repeated the explanation that he had been given, "You are not supposed to trade." (Huh??) Right! He had taken his Pogs (toy pieces resembling the old milk bottle tops) to school then at recess he and another boy sat on a bench and "traded Pogs" since David had doubles of one color; the other boy had doubles of another. David's Pogs had been confiscated by the recess aide (who was also the librarian who would not let him check out chapter books) and the aide had informed him that she would keep the Pogs "until you tell your mother what you have done."

Engaging in trade? That's twenty years in a forced labor camp!

I believed that I already knew the underlying reason for such a school rule: if people understand and use their right to trade, exchanges will be done under the radar of the tax collectors. The State certainly does not want individual bartering to continue. If the State cannot stop American adults from exchanging goods and services "under the table" then the State's focus must switch to brainwashing the next generations into believing that they have no right to strike deals with consenting individuals, groups or companies.

She's right; the State does not want free people to participate in any kind of underground economy that isn't properly regulated (all for our own good, of course--pay no attention to the man behind the curtain). As an individualist anarchist, I'd add that they don't want us taking things like banking and currency into our own hands through mutual banks and LETS systems, or creating our own sick benefit societies outside the insurance cartel. Taking it even further, they don't want kids learning the habit of exchanging their labor directly with other producers, as equals, instead of relying on the wage system. Such trade undermines the central lesson of the publik skools: that all good things are bestowed by authority, as a reward for obedience.

The Primal Wound Online

Larry Gambone has a new pamplet out: The Primal Wound, available in hard copy from Red Lion Press in Montreal. Larry's historical analysis resembles in many ways Oppenheimer's treatment of the state as an institution rooted in military conquest, and motivated by economic exploitation. In addition, he ties in a lot of interesting anthropological material on "cooperator" vs. "dominator" societies, and the libertarian psychology of Alice Miller. Very thought-provoking.

Tuesday, April 19, 2005

Sean Gabb Gives the Corporatists Nine Kinds of Free Market Hell

From the latest Free Life Commentary. Sean Gabb recently spoke at a debate on "Free Trade vs. Fair Trade" hosted by Oxfam and Christian Aid. Although he expressed some doubts after the fact about his effectiveness (he is not, he said, a good speaker given such time constraints), Sean packed quite a bit of rhetorical force into his short speech. The ASI's Alex Singleton (now of the Globalization Institute) used the first half of the free trade side's time to give a speech that, from Sean's summary, sounds to me pretty much like what you'd expect from that quarter (although that's my characterization, and mine alone). Sean, using the other half of the time alloted to his side, proceeded to preach the old-time free trade religion of Cobden and Bright, and to damn the transnational corporatists to hell. Among my favorite parts:

If you think that I came here tonight to defend multinational corporations and the international government institutions, you have chosen the wrong person. These are dishonest. They are corrupt. They are incompetent. They have blood on their hands.

But do not suppose for a moment that the world trading order as it actually exists is liberal or more than incidentally connected with free markets. A free market is a place where individuals and groups of individuals come together to transact voluntary exchanges without any backing of government force. To call the actually existing order liberal – or “neo-liberal” – is as taxonomically accurate as calling the old Soviet Communist Party syndicalist. That order is based on tariffs, subsidies and a web of other often invisible regulations. The international institutions are a projection of Western states. The multinational corporations are creatures of these states. They shelter behind the privilege of limited liability. They get their political friends to cartelise markets, and do favours in return.

This is not market liberalism. It is a fraud played on us all by our ruling classes – these being those politicians, bureaucrats, educators, lawyers and media and business people who derive wealth, power and status from an enlarged and activist state.

In his later assessment of the speech in Free Life Commentary, he added:

....I grow increasingly convinced that allowing the creation of joint stock limited liability corporations was one of the greatest legislative mistakes of the 19th century. Their existence is based on a separation of ownership from control. The owners are released from all responsibility. The controllers form a separate class of corporate bureaucrats little different in outlook from civil servants. The usual psychology operates. They will commit immoral acts for their organisations they might not consider committing for themselves. The owners will assent. The legal privileges and unlimited lifespan of these corporations let them grow to enormous size and wealth. The opportunities exist for highly effective immorality. Collectively, they become part of the state apparatus, and work to destroy true, unregulated enterprise.

These corporations could not exist in any natural economic order. I have heard other libertarians argue that they might emerge without legal privilege on some loose contractual basis. But I do not agree. The shareholders would still be liable in tort, and that alone would deter them from any involvement with a business that they did not personally control. As for the utilitarian argument, that large undertakings need large companies, I also disagree. So long as it showed an acceptable return on investment, there is no project too big to be taken on by clusters of sole traders and partnerships. No doubt, things like the Channel Tunnel would not have been built – but I fail to see how not having that would have made the world a poorer place. Even if some highly valuable projects might not be undertaken, their lack would be compensated by the greater general innovation to be expected in an order of small, unregulated firms.

Sean concluded his assessment rather modestly:

On balance, it was worth attending. I waved the flag for the Libertarian Alliance. I handed out several dozen business cards.

He accomplished much more than that. The audience included Martin Khor of the Third World Network, along with a whole gaggle of people from Oxfam. Their agenda for addressing the evils of corporate globalization is, as Sean said in his speech, an ineffectual one of "kumbaya socialism." But most of the evils they object to, and much of their analysis of those evils, is right on the mark. It's in their proposed solutions that they go wrong; and I think many in the anti-globalization movement are amenable to rational persuasion, if they ever heard sound economic arguments from a free market advocate they didn't have good reason to distrust. Sean's speech was possibly the first free market libertarian argument they ever heard that wasn't vulgar libertarian boilerplate, nor a disingenuous cloaking of the interests of state capitalist global corporations behind "free market" rhetoric. Perhaps some seeds were planted that night.

The Revolution is Not Being Televised

(Via Green Lantern). In the course of his post, Richard Cranium cites an excellent article at Counterpunch ("How to Change the World Without Taking Power," by John Ross).

The title of Ross' article is an allusion to a book by John Holloway, Change the World Without Taking Power.

According to Ross, Holloway's book (which I haven't read, but have put on my must-read list) contrasts the Zapatista movement, as a general type, to the state-oriented leftism of Hugo Chavez.

When a Lula or a Chavez take the power of the state, they suddenly find themselves trapped in alignments that force obeisance to the World Bank and the White House from which they cannot break away. Their promises begin to sound hollow as transnationals reap fortunes at the expense of the people whose progress is pretty much straight down hill.

Cranium quotes this article as evidence that Brazil's Lula has succumbed to just such neoliberal pressure.

I'd also add that, back in the bipolar days when such leftish regimes were forced (more or less as a matter of course) into dependence on the USSR for patronage against the US, their Soviet ties resulted in "entrapping alignments" and "obeisances" virtually identical to those Ross wrote of. The effect of such dependence on the Soviet Union was to strengthen the hand of the Communist Party against elements of the libertarian and decentralist left.

As Hannah Arendt argued in On Revolution, any revolution has such elements, alongside the statist and centralizing elements. The real revolution, or revolution within the revolution, is the local organs of self-government and self-management that ordinary working people create for themselves. For a time, if the transition of power results in a partial or total collapse of central power, those local organs may become the basis of social organization, as they did in the southeastern parts of Spain in the summer of 1936.

The usual pattern, unfortunately, is for them to be coopted and absorbed (or suppressed) by the new "people's state" when it consolidates power (e.g. the conquest of CNT-dominated areas by the Communist-dominated Madrid regime in late 1936 and 1937, and the suppression of worker self-management)--in other words, a revolution in name coupled with a counter-revolution in practice. A similar counter-revolution took place under Lenin, with the soviets coopted into instruments of the Party Apparat's domination, and the workers' committees suppressed in favor of Lenin's Taylorism and "One-Man Management." It's not difficult to fit the American Revolution into this pattern, with the Federalists' court party coup of 1787-89 and the subsequent suppression of the genuine revolutionary tradition in the Whiskey Rebellion. Murray Bookchin's magisterial four-volume work The Third Revolution is an excellent survey of this pattern in the modern era. The process is hastened by the imperatives of acquiring and defending political power in a national center, and by the parallel imperatives of maintaining the delicate relationship with a statist foreign patron.

The alternative model that Holloway presents (according to Ross), centered on such decentralized grass-roots movements as the Zapatistas and the post-Seattle movement, has been analyzed under various names since the '90s. The Zapatistas were taken as the leading example of this kind of "netwar" back in the '90s, in a Rand study by David Ronfeldt and others. The idea was, by using the internet as an organizing tool, to put together ad hoc coalitions with little advance notice, and either to put together mass demonstrations in support of the Zapatistas or overwhelm (or "swarm") government with phone calls, emails, letters, and generalized public pressure, than it could possibly cope with. Ronfeldt et al expressed their dismay in language quite similar to that used by Samuel Huntington in his 1970s lamentation over the "excess of democracy" and "crisis of governability." The authors also compared "netwar" to the kind of decentralized "leaderless resistance" advocated by right-wing racists like Louis Beam. And the Rand study, bear in mind, came out before the Seattle anti-WTO demonstrations of December 1999. It's a fair characterization, after those events, to describe elite reaction as barely controlled hysteria. The anti-globalization movement replaced anti-government "militias" as federal law enforcement's Enemy Number One, as described by commentators like Alexander Cockburn and Sam Smith. Paul Rosenberg did a frightening analysis of the evolution of the Gestapo tactics used against anti-globalization activists at subsequent protests.

The lesson is that our focus should be primarily on building counter-institutions from the ground up, and using them as the building-blocks of a decentralized counter-system. Political effort is not, by any means, to be ruled out. But the focus of any activity within the state should be toward immediately seizing it to deny it as a weapon to the enemy, and dismantling it as quickly as possible, so that it can be supplanted by a bottom-up system based on voluntary cooperation and mutual aid.

In the meantime, though, some states are bigger targets than others; any left-wing bloc that can serve as a political counterweight to the "sole remaining superpower" and provide cover for such institution building may serve as a tactical ally. Richard Cranium suggests that an organized bloc of regimes like Lula's and Chavez's might succeed, where individual regimes have failed, in resisting neoliberal pressure.

That's why the "Pax SouthAmericana" approach that seems to be emerging is so intriguing to me. While an individual nation state can ultimately be isolated by the hegemonists, a continental left-democratic movement has the potential to be self sustaining. A broad based alliance that spans several countries in the same geographic region doesn't require nearly as much external political and/or economic support from the rest of the world.

This especially caught my eye, because I've periodically tossed around similar ideas myself. There's a passage on a Third World bloc, much like the one that Cranium envisions, in a subsection of the "Crisis Tendencies" chapter of Studies in Mutualist Political Economy:

It's interesting that we've seen a near-collapse of central power in Argentina, with the emergence of a variety of grass-roots economic and political organs of self-government; and anti-neoliberal populist regimes in Brazil and Venezuela--all in just a couple years' time. As the impacts of the Uruguay Round and other neoliberal policies make themselves felt in the Third and Fourth world, with the resulting political unrest and emergence of populist and nationalist movements, we can expect more and more such defections. At some point, such countries are likely to stop negotiating with the IMF individually, and attempt a joint action of some kind.

Imagine if several significant Third World countries made such a coordinated withdrawal from the Bretton Woods institutions, and repudiated their international debts. They could combine this with other genuinely free market reforms, like abrogating the intellectual property and industrial property provisions of GATT, so that native-owned competition might emerge to Western corporations, and be allowed to adopt modern production technology without restraint. If the domestic power of feudal oligarchies was broken in these countries, and with it their collusion with Western agribusiness, the land could be deeded to the actual peasant cultivators or agricultural laborers. A number of countries might enter into an accord to legalize mutual banks, LETS, and all other voluntary credit or money systems--and possibly organize a state asset-backed currency of some sort for trade between themselves, as an alternative to dependence on the dollar. They might announce a policy, finally, of ceasing to subsidize from state revenues the infrastructure projects on which Western capital depended to be profitable in their countries: that would mean all electricity, transportation, etc., services would be paid for by western firms on a cost basis. Rather than "privatizing" state enterprises by auctioning them off to kleptocrats and TNCs, they might transform them into either producers' or consumers' cooperatives--at least as genuine a form of privatization as the looting commonly practiced, but one that never seems to be adopted in Jeffrey Sachs' version of "free market" reform.

If this seems overly fanciful, consider Brazil's recent proposal for a free trade area among the G-20 group of developing nations--without the imprimatur of the Usual Suspects. The purpose, said Brazil's president, was "to fully exploit the potential among us, which does not depend on the concessions of the rich countries...."

Such a movement might even coordinate with the OPEC countries or China in adopting the Euro as a medium for international trade--the equivalent of a monetary atom bomb on the U.S.

If any one country undertook such measures, the CIA would probably begin immediate destabilization attempts, as it did with Allende's Chile or Chavez's Venezuela; but if several countries made such a withdrawal from the world corporate system simultaneously, pledged each other mutual support, and appealed for support to the people of the rest of the world, it might be more than the U.S. could handle. This latter would include mobilizing popular discontent against non-supportive regimes throughout the Third and Fourth worlds, promoting defaults and withdrawals by even more countries, and radical opposition within the core of the Empire itself.

With the serious political divisions between international capital, such a movement might even attract the support of a great power rival to the U.S. The Europeans, Russians or Chinese would be quite likely to ignore any U.S. attempt to impose trade sanctions. Any would-be rival "Eurasian bloc" of such powers might, indeed, welcome the movement as a form of strategic leverage, the same way the USSR welcomed the old nonaligned movement.

Of course all this presents us with endless strategic difficulties. The states involed in such a counter-bloc are, like the U.S. and other neoliberal states, ultimately just more regimes to be seized and dismantled. But so long as the bloc's primary focus is on resisting and weakening the "sole remaining superpower," it may be a useful tactical ally (you know the saying about "the enemy of my enemy...."). There is, however, another equally valid proverb to remember: when dining with the Devil, one should use a very long spoon. The challenge is to take advantage of the maneuvering room and political cover presented by such a Third World leftist bloc, in order to build our own counter-institutions, without being coopted into its statist model of resistance.

Monday, April 18, 2005

Commodified Rebellion for the Wage-Slave

Via Ross Heckmann on the Distributism yahoogroup. A quote from the Agrarian Wendell Berry's book What Are People For?

Women have complained, justly, about the behavior of "macho" men. But despite their he-man pretensions and their captivation by masculine heroes of sports, war, and the Old West, most men are now entirely accustomed to obeying and currying the favor of their bosses. Because of this, of course, they hate their jobs--they mutter, "Thank God it's Friday" and "Pretty Good for Monday"--but they do as they are told. They are more compliant than most housewives have been. Their characters combine feudal submissiveness with modern helplessness. They have accepted almost without protest, and often with relief, their dispossession of any usable property and, with that, their loss of economic independence and their consequent subordination to bosses. They have submitted to the destruction of the household economy and thus of the household, to the loss of home employment and self-employment, to the disintegration of their families and communities, to the desecration and pillage of their country, and they have continued abjectly to believe, obey, and vote for the people who have most eagerly abetted this ruin and who have most profited from it. These men, moreover, are helpless to do anything for themselves or anyone else without money, and so for money they do whatever they are told. They know that their ability to be useful is precisely defined by their willingness to be somebody else's tool. Is it any wonder that they talk tough and worship athletes and cowboys? Is it any wonder that some of them are violent?

A related phenomenon is the manufactured "rebellion" of teens in high school and college, who know that forty or fifty years as docile "human resources" looms ahead, as surely as Thanksgiving looms for the condemned turkey. How many frat boys pose as Blutto Blutarsky as a way of pretending they won't be a brown-nose Darren Stevens in five years? Likewise the "alternative" culture adopted by young adults as an over-compensation for their working life as white collar drones.

This insistent denial, this clutching at any psychological defense against the sheer repugnance of a "job," this desperate need to believe that "this is not really us, this is not what we really do," is quite understandable. We don't cut loose our values, our priorities, our judgment, and our dignity, and leave them at the door when we enter our homes; but that's exactly what we do in our existence on the job. For the majority of people throughout history, for the majority of Americans until around a hundred years ago, "work" was something we did on our own turf: the farmer or tradesman planned the order of his tasks as he saw fit, and carried them out from beginning to end in accordance with his own judgment and sense of workmanship. A "job," on the other hand, amounts (as Berry said) to being somebody else's tool. And the main reason for the change, a dead horse I've spent a considerable amount of time beating in this blog, is: We Was Robbed!

What's more, it's utterly unnatural. As a commentator on the local public access channel recently pointed out, we're biologically designed to respond, when somebody won't stop following us around and bugging us, by either kicking the crap out of them or getting away from them. But for eight hours or more at a time, we're put into a situation where we're expected to smile and nod, instead. No wonder so many people who get tired of smiling and nodding show up on the six o'clock news.

But less dramatically, it's no wonder so many people drag themselves to their jobs every day with a sense of dread, and spend their lives in the real world attempting to prove that those jobs have nothing to do with who they really are.

It's not by accident that the main lesson taught in the publik skools is the skills necessary to survive and advance in a hierarchy: to identify the person in a position to benefit us, identify what that authority figure expects and then do it, to feel a temporary easing-up of our permanent state of unfocused anxiety whenever that gold star is stuck on our paper or that extra item is added to our resume. Those are exactly the skills a job calls for. A job, as opposed to work, involves infantilization: a man with a job is, while on his employer's turf, a glorified third-grader trying to win Teacher's approval.

The sooner we restore a society where work is something we do, and not something we're "given," a society where we're in control of our working lives, the sooner we can do away with fake machismo, commodified rebellion, and going postal.

Carnival of the Un-Capitalists

This week's Carnival is hosted by Majikthise, on the topic of "Markets and Health."

Thursday, April 14, 2005

Medical Nemesis: or, Follow the Money

Via Dr. Chris Tame, on the Libertarian Alliance yahoogroup. Alternet has an interview with Dr. Richard Deyo, who co-authored Hope or Hype: The Obsession with Medical Advances and the High Cost of False Promises. Some excellent bits of analysis, although (like a typical goo-goo) he gets the big picture wrong.

The problem with me-too drugs is a big one. Me-too drugs are chemically very similar to other drugs already available, yet they are typically marketed as if they were important new breakthroughs, and typically with very high prices. We found in many cases that new, expensive me-too drugs are not necessarily better than older generic and less expensive drugs. Because new and heavily marketed drugs seem like they must be better, manufacturers can command higher prices. That is an important driver of drug costs.

The central factor in this process is the state's patent policies, which drastically inflate the profitability of the newer "me, too" drugs against much cheaper competitors that do very nearly the same thing. Indeed, the patent process has a huge distorting effect on R&D, since it results in so many resources being channelled into tweaking existing drugs just enough so that they can be re-patented as "new." Then the drug reps hit every hospital and clinic in America, drop off some free samples and pamphlets, and (most M.D.s relying on drug industry handouts for their information on the new drugs that have come out since they left med school) the "me, too" drug becomes the new standard form of treatment.

The state having created the "honey pot" with its patent system, it is quite predictable that the state-enforced drug cartels and the white-coat Mafia (medical licensing boards with their mainly pharma-influenced "standards of practice") should drive the industry toward a model focused on these high-cost drugs, and crowd out low-cost alternatives.

Any doc who (say) recommends Co-Enzyme Q-10 as a first recourse against congestive heart failure, or attempts some other low-cost departure from the drug-'em-and-cut-'em model, had better remember the state licensing board has its eye on him. Even stipulating that patents themselves are legitimate (which they are not), this latter practice has the effect of outlawing one of the most important defenses against monopoly: what Schumpeter called "product-substitution."

The fact that the authors' proposed response to this state capitalist sewer is even more state intervention (finessing the FDA approval process, more regulation of advertising, more procedural oversight of research), rather than eliminating the forms of state intervention that create the honey-pot in the first place, is mind-boggling. It's like looking at one of those Rube Goldberg inventions.

Speaking of inventions.... One of the best regular features on MST3K was the weekly "Inventions" segment. My favorite was a treadmill with motorized wheels on the bottom, just in case you felt like moving around outside while you were walking. But with big government liberals making proposals like these, it's hard for the farceurs on the Satellite of Love to compete.

Tuesday, April 12, 2005

Capitalism and Un-Freedom (More on Contract Feudalism)

A bon mot from Lenin's Tomb (via Freiheit und Wissen):

The illusion of a free and equal contract between employee and employer is one that exerts considerable hold, particularly given the paucity of industrial conflict over the last fifteen years. The thought that the situation might be rigged in advance, by virtue of the capitalists control of the means of production, is so obvious that it eludes many people who otherwise place themselves on the Left.

In part, this is because people are prepared from an early age to expect and accept this state of affairs. In high school Business Studies class, I was shown along with my class mates a video sponsored by some bank which purported to demonstrate how the division of labour came about. It all took place, it seemed, in a relatively benign and peaceful fashion, with no intruding political questions or economic phases. From the cavemen to cashcards, it was really all about work being broken down into separate tasks which would be undertaken by those most able to do them. Then, finding contact with nearby villages, they would trade things that they were good at making for the things that the other villages were good at making. David Ricardo chortled from beyond the grave. The only interesting thing about this propaganda video is that it raised not a single eyebrow - as how could it? One is led to expect to work for a capitalist without seeing anything necessarily unjust about it, and one has nothing to compare it to. The worker is taught to sell herself (all those job interview training schemes) without perceiving herself as a commodity.

I had a similar reaction to all those passages on time-preference in Bohm-Bawerk and Mises that just accepted, as a matter of course, that one person was in a position to "contribute" capital to the production process, while another person for some mysterious reason needed the means of production and the labor-fund that were so graciously "provided." The old bourgeois nursery tale of primitive accumulation is still a favorite, although it has been thoroughly discredited by commentators ranging from the statist Marx....

In times long gone-by there were two sorts of people; one, the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living. The legend of theological original sin tells us certainly how man came to be condemned to eat his bread in the sweat of his brow; but the history of economic original sin reveals to us that there are people to whom this is by no means essential. Never mind! Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell except their own skins. And from this original sin dates the poverty of the great majority that, despite all its labour, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work.

to the free market socialist Franz Oppenheimer.

According to Adam Smith, the classes in a society are the results of "natural" development. From an original state of equality, these arose from no other cause than the exercise of the economic virtues of industry, frugality and providence. Since these virtues are pre-eminently those of a bourgeois society, the capitalist rule, thus sanctioned by natural law, is just and unassailable. As a corollary to this theorem the claims of Socialism cannot be admitted....

For them, class domination, on this theory, is the result of a gradual differentiation from an original state of general equality and freedom, with no implication in it of any extra-economic power....

This assumed proof is based upon the concept of a "primitive accumulation," or an original store of wealth, in lands and in movable property, brought about by means of purely economic forces; a doctrine justly derided by Karl Marx as a "fairy tale." Its scheme of reasoning approximates this:

Somewhere, in some far-stretching, fertile country, a number of free men, of equal status, form a union for mutual protection. Gradually they differentiate into property classes. Those best endowed with strength, wisdom, capacity for saving, industry and caution, slowly acquire a basic amount of real or movable property; while the stupid and less efficient, and those given to carelessness and waste, remain without possessions. The well-to-do lend their productive property to the less well-off in return for tribute, either ground-rent or profit, and become thereby continually richer, while the others always remain poor. These differences in possession gradually develop social class distinctions; since everywhere the rich have preference, while they alone have the time and the means to devote to public affairs and to turn the laws administered by them to their own advantage. Thus, in time, there develops a ruling and property-owning estate, and a proletariat, a class without property. The primitive state of free and equal fellows becomes a class-state, by an inherent law of development, because in every conceivable mass of men there are, as may readily be seen, strong and weak, clever and foolish, cautious and wasteful ones.

As a free market anti-capitalist, of course, I have to stipulate that there's nothing inherently wrong with wage labor. There's nothing inherently wrong with someone owning means of production, and hiring the labor of another to work them--if (and it's a big if) there was no coercion involved in acquiring the means of production, and no coercion is involved in the terms under which the worker must sell his labor. Under such circumstances, the owner's means of production are simply his own crystallized labor, and his returns from ownership are nothing but the cost of amortizing that labor. The natural wage of labor, under such circumstances, is its full product. And all exchanges are exchanges of labor. After all, as Benjamin Tucker put it, the whole point of socialism, rightfully speaking, is that labor should be paid its full product--not that being paid is a bad thing.

[Johann] Most being a Communist, he must, to be consistent, object to the purchase or sale of anything whatever; but why he should particularly object to the purchase and sale of labor is more than I can understand. Really, in the last analysis, labor is the only thing that has any title to be bought or sold. Is there any just basis of price except cost? And is there anything that costs except labor or suffering (another name for labor)? Labor should be paid! Horrible, isn't it? Why, I thought the fact that is not paid was the whole grievance. "Unpaid labor" has been the chief complaint of all Socialists, and that labor should get its reward has been their chief contention. Suppose I had said to Kropotkin that the real question is whether Communism will permit individuals to exchange their labor or products on their own terms. Would then Most have been as shocked? ....Yet in another form I said precisely that.

Now these principles would be a great guide to practice, if we lived in a free market society that had evolved peacefully from the society of the High Middle Ages, based on free exchange between peasant proprietors living on their own land and self-governing tradesmen in the town communes.

As it is, however, the means of production, during the centuries of the capitalist epoch, have been concentrated in a few hands by one of the greatest robberies in human history. The peasants of Europe were driven off the land by state-approved robbery, and driven into the factories like cattle. Their movements during the early industrial era were restricted by what amounted to an internal passport system, and their bargaining power in the labor market restricted by draconian Combination Laws enforced by administrative fiat. And even in the so-called "free market" that ensued, owners of capital and land were able to exact tribute from labor, thanks to state policies that restricted workers' access to cheap, self-organized capital, and forced them to sell their labor in a buyer's market. So the worker has been robbed doubly: by the state's initial use of force to forestall a producer-owned market economy; and by the state's ongoing intervention that forces him to sell his labor for less than his product. The vast majority of accumulated capital today is the result, not of the capitalist's past labor and abstention, but of robbery.