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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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Friday, January 06, 2006

Selective "Market Reform"

Sheldon Richman at Free Association has a great quote on free trade from Albert Nock:

It must be observed, however, that free trade is impractical so long as land is kept out of free competition with industry in the labour-market. Discussions of the rival policies of free trade and protection invariably leave this limitation out of account, and are therefore nugatory. Holland and England, commonly spoken of as free-trade countries, were never really such; they had only so much freedom of trade as was consistent with their special economic requirements. American free-traders of the last century, such as Sumner and Godkin, were not really free-traders; they were never able – or willing – to entertain the crucial question why, if free trade is a good thing, the conditions of labour were no better in free-trade England than, for instance, in protectionist Germany, but were in fact worse. The answer is, of course, that England had no unpreempted land to absorb displaced labour, or to stand in continuous competition with industry for labour.

That one part, "they had only so much freedom of trade as was consistent with their special economic requirements," is especially on the mark. As Sheldon says,

Nock regarded the tariff as “robbery,” but understood the systemic advantage that the history state capitalism has bestowed on “capital” at the expense of the rest of us.

That reminds me of something Chomsky wrote a while back:

Concentrated private power strongly resists exposure to market forces, unless it’s confident it can win in the competition. That goes back centuries.... Protectionist devices, such as those of NAFTA and the WTO, are only a fraction of the means by which the wealthy and powerful protect themselves from market forces. In fact, the core of the “new economy” is based on the principle that cost and risk should be socialized, and profit privatized (often after decades in the dynamic state sector).

In other words, most of what passes for "privatization" and "market reform" in the political mainstream is really just liquidating statist policies after corporate interests have squeezed all the benefit out of them. The legacy beneficiaries of all that statism decide it's finally safe to change the rules and compete with the non-beneficiaries on a "level playing field." That's pretty much what was involved in the British adoption of "free trade" in the nineteenth century: after they'd built a global commercial empire through mercantilism, forcibly unified world commerce in British bottoms, suppressed foreign textile trade, committed holocausts in Ireland and India, and exported enclosures to half the world, they decided it was time for the lion and the lamb to compete under a single law. "OK, no more government intervention, starting.... NOW!"

Of course, even then, the statism isn't uniformly abandoned. The most successful industries in the global economy--information/entertainment and agribusiness--are also the most heavily subsidized and the most protected through IP laws. So what it really amounts to is a selective abandonment of statism, combined with a selective augmentation of it in other areas--with big business choosing the ground according to its own structural needs.

Or, as P.M. Lawrence said in the comments,

...consider that the result isn't free trade but a selected halfway move. Then you see that the lobbies pressing to remove their particular restrictions ar just as much rent seeking as their predecessor protectionists ever were.


Blogger Sheldon Richman said...

Your Chomsky quote makes me wonder why he isn't a consistent Manchester man. Thanks, Kevin.

January 06, 2006 1:38 PM  
Anonymous Anonymous said...

The essential element to understand here is that Nock believed that the landowner's monopoly on economic rent was the key to understanding why tarrifs made no sense (robbery) because so long as the landowner could make more money keeping his land idle (speculating) then being forced by the market (locational land values) to optimize it's use by hiring labor to produce something (wealth generation)...

Tarrifs were the policy of the centralist/Hamiltonians who wanted to protect privilege vs. the decentralist/Jeffersonians who wanted to protect absolute rights to labor-based property and equal freedom for all by sharing the economic rent amongst community members.

January 06, 2006 2:04 PM  
Anonymous Anonymous said...

Of course selective reform matters, though I think the land issue is a red herring here. But consider that the result isn't free trade but a selected halfway move. Then you see that the lobbies pressing to remove their particular restrictions ar just as much rent seeking as their predecessor protectionists ever were.

That shows, e.g. in Australia, because many of the restrictions were ham fisted offsets to other problems. But we know that Pigovian taxes and subsidies were deliberately chosen distortions to offset other distortions to achieve more optimal behaviour.

Why then suppose that selective reform won't just leave a set of imperfections that on average lean one way, rather than causing a random walk away from the optimal?

The reason I suppose that British free trade was a red herring is that it allowed landowners in other countries to gain by exporting food to the UK; British landowners got worse off and British workers got worse off, while the deterioration hit other countries.

Then there started a tendency for the next countries to repeat the trick on yet others, and so on - a process that was overtaken by events in 1914-18. Marx sort of observed this, but misdiagnosed it without our benefit of hindsight.

Those comments on holocausts are more historical overstatement, though what did happen there did cause hardship. In the case of Ireland there wasn't the French opportunity to start developing in turn, and in the case of India there actually were opportunities for people to move into, although they couldn't end up as well off as before.

But emigration was possible for both Irish and Indians (even though that wasn't as good as the status quo ante), so the very real problems were mostly transitional. Which isn't denying them, just presenting them in a different light.

By the way, KC, I've put some more on the end of a recent post, now I've mastered the trick of getting at your longer threads.

January 07, 2006 12:03 AM  
Anonymous Anonymous said...

I meant, British workers got better off; can you correct it? That is, better off than before the Repeal of the Corn Laws, not better off than the immiseration of the late 18th/early 19th centuries that put them in the industrial base in the first place.

January 07, 2006 12:06 AM  
Anonymous Anonymous said...

The emphasis you put on that excerpt from my comments isn't quite right.

What I tried to bring out was the self interested motives of the rent seekers (it's not a statist interest, although it furthers the ends of thsoe that are).

Also, I wanted to show that the result of partial but selective reform was likely to be a deterioration in the optimality of the market, i.e. contrary to the stated and maybe even believed aims of the statists.

(I've done the mathematics, but I won't quote it in a casual forum like this - too heavy.)

For what it's worth, I think that any "-ism" or "-ist" labelling muddies the water, pushing things into pigeonholes that are liable to be misunderstood (as "vulgar libertarians" do). That especially applies when something new comes along.

From that point of view it's a bit like metal fatigue, with "mutualism" merely not yet having had so much. Even so, I feel it lacks machinery to express/describe the feelings of group identity that it admits exist.

It has to approach these as individual expressions - which of course they are - but that doesn't allow much room for insight into where classes or nations came from in the first place, etc.

January 08, 2006 2:52 AM  

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