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Mutualist Blog: Free Market Anti-Capitalism

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

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Thursday, June 14, 2007

Draft Chapter Three

Chapter Three: State Policies That Promote Corporate Size and Centralization


Anonymous Anonymous said...

I vaguely recall Peter F Drucker in his "The Age of Discontunuity" many years ago writing that double taxation of profits (i.e. corporate income tax and personal income tax on dividends etc) was the greatest engine for corporate and industrial centralisation, concentration and consolidation, and that all of the "anti-monopoly" and "anti-trust" apparatus of the state could hardly make a dent against the monopolisation double taxation encouraged.

June 17, 2007 2:53 AM  
Anonymous Anonymous said...

Been reading your draft chapters, great work so far.

One part in particular that caught my interest is the inclusion in Chapter 1 of Lazonick's description of the "innovative organisation", which when I read it I couldn't help but be reminded of a recent physorg article to do with the development of superorganisms: http://www.physorg.com/news100791257.html

Interesting parallels; how the emergence of "collective rationality", as Lazonick put it eerily resembles that of the insect hive, and that this itself is portrayed as the hieght of altruism or social cohesion in the study... and that's not even taking into account division of labor of which insects are the most notable of animal classes for employing. :P

Looking forward to reading the rest.

June 18, 2007 9:38 PM  
Anonymous Anonymous said...

very interesting read, Kevin. Lots of good work.

two things.

First, Rothbard really was a consistent Misesian in terms of unions and other forms of working class collective action. He positively hated them. His book on the Great Depression, for example, mentions that 6% of the workforce were in unions in 1929. It was clear he considered that 6% too many! So, I would say it is unfair to attack the Mises-fans for being anti-union when the inventor of right-"libertarianism" was just as bad...

secondly, Say's Law and the free market. Well, Say's Law is only applicable in a barter economy and, perhaps, in a money-based economy marked by artisanal (non-wage labour) production (i.e., C-M-C rather than M-C-M+ to use Marxian terms). It is *not* applicable to a money economy marked by capitalists. I think you would be thinking of such a market when you wrote your chapter, but I think you should be more specific.

But, all in all, these are minor points. It is a very good chapter.


June 19, 2007 8:18 AM  
Anonymous Anonymous said...

Hi Kevin,

I just started reading Chapter 3...very interesting and insightful, as usual.

However, the reason I am posting is to tell you that over at Mises Blog they have posted a thread titled "A Critique of Kevin Carson's Contract Feudalism" where they have posted your original article, "Contract Feudalism" and a lame and overly simplistic critique of said article written by Paul Marks. As usual, some of the posters are willfully ignoring your arguments while constructing various strawmen and other ad hoc fallacies, such as "Person" who, among other things, ignored the actual point you argued about capital and made the absurd and patently false assertion that: "If you look at the interest rate you get on risk-free, tax-free loans, it's about 1% (4% before inflation.)" (Boy, I would like to have one of those fictional loans, to bad they don't excist, at least in any meaningful, helpfull manner.)

Nick Bradley attempted to enlighten him that the point is access to capital, not interest rates as such...

Anyway, you get the picture: typical "vulgar libertarian" fare...

I just thought I'd let you know-perhaps you did, and just don't care-but I hate to see peoples ideas so willfully ignored and talked past, as Paul Marks and Person, among others, are currently doing. In sum, I just want you to have the chance to respond if you wish.

Dave, the mutualist leaning ancap

June 22, 2007 3:19 PM  
Blogger Kevin Carson said...


I'll definitely have to check that out! Was Drucker's opinion on the centralizing effect of double taxation based on the encouragement to reinvestment? It's occurred to me that the corporate income tax itself is a powerful cartelizing device, because it heightens the difference in privilege between firms with heavy debt loads, capital-intensive forms of production, heavy R&D, etc., and those without. After the interest deduction, R&D credit and depreciation are taken into account, many of the largest corporations pay no income tax at all--exactly the same result, in practical terms, as if you started with a rate of zero and then imposed a heavy punitive tax on small, labor-intensive, low-tech corporations.


I recently discovered that Chandler, from whom Lazonick cribbed most of the "organizational capability" stuff, wrote a book on the history of the computer and software industries. As you might expect, given the unusual importance of peer production and self-directed geeks, his emphasis on the "organizational capability" of giant corps puts a really distorting spin on things. His introductory chapter on the history of the electronics industry in early 20th century America is essentially a history of what corporations owned the patents on what technologies. He doesn't even seem to notice how much his idea of "organizational capability" is a proxy for the ability to crowd out or levy a toll on other ways of doing things, through legally enforced monopolies. MLK Jr. said once that when you see a turtle on a fencepost, you know he had help getting up there. Chandler looks at an industry controlled by turtles on fenceposts, and says they got up there by "organizational capability."


Thanks! For many Austrians, unfortunately, some "revealed preferences" seem to be more equal than others. When a lefty social critic makes fun of people who are willing to pay twice as much for raisin bran with the Post label as for identical generic cereal, the Misoids denounce them as "elitists" for thinking they know better than the consumer what's good for him. But when your "revealed preference" is honoring a picket line....

Interestingly, Joseph Stromberg, an Austrian (or maybe post-Austrian these days) who puts a lefty spin on Rothbardianism, made a similar point in his article "State Monopoly Capitalism and Imperialism": he argued that Say's law went out the window when the state created artificial disparities in purchasing power or promoted artificial levels of overaccumulation.

June 22, 2007 11:59 PM  
Anonymous Anonymous said...

It looks as though your emails aren't reaching you, KC (you're still at the hotmail address I confirmed by googling your pdf book, right?). I emailed you about that Mises activity a couple of days ago. Anyhow, I've been posting a fair bit on that and some nearby related threads now that I've got some stamina back (in due course you'll get some feedback here too).

June 23, 2007 1:06 AM  
Blogger Kevin Carson said...

I migrated to a gmail account, PML,
and I'm usually several days between checking the old hotmail. But I didn't find anything from you in my mailbox, so maybe that's also a problem.

June 23, 2007 11:26 AM  
Anonymous Anonymous said...

What do you think of class power? The view that the wealthy have more say in politics. (The recent Supreme Court decision striking a part of McCain-Feingold touches this issue.) The wealthy, then, use the state as a tool to advance their economic or political interests.

Do you agree? If so, isn't this an inevitable effect of a free market society in which you have rich and poor? If not, why not?

June 27, 2007 10:08 AM  
Blogger Kevin Carson said...


I don't believe you would have rich and poor to anything like the present degree in a free market--i.e., without state enforcement of privilege. State-enforced artificial scarcity of credit and land makes it possible for wealth to grow on itself through the magic of compound interest. And the normal tendency in a free market is for entrepreneurial profits to fall to zero, as competitors adopt a new process or copy a new product; only a state-enforced monopoly like patents and copyrights make it possible to live off perpetual rents from an innovation and keep the price from falling back to cost.

A free market would be the worst enemy of the rich.

June 27, 2007 10:33 AM  
Anonymous Anonymous said...


Thanks for your response. Do you believe that some rights-rectification would be in order to eliminate some of the mass inequalities of wealth? Or do you think that by "freeing" the market, it would in time right itself, i.e. mass inequalities in wealth would dissipate on their own?

Also what do you think of the socalled law of value? Doesn't industrialism tend to concentrate economic power in such a way that it creates a few wealthy and a great many poor? Or do you distinguish industrialism from capitalism?

Assuming you believe that political power is in the hands of the wealthy, how then do we get them to "free" the market, when it would not be in their interests to do so? Since they have the political power can't they effectively resist all attempts at change?

Thanks for your comments,

June 27, 2007 11:17 AM  
Anonymous Anonymous said...

It's just a little more complicated than that, KC, although you have the broad outlines. I won't go into the technical details, but financial risk tends to grow at a greater exponential rate than returns themselves (I'm ignoring cases where returns are shrinking or zero). Without aggregating through corporate structures, individuals or family lines tend to revert to the mean even though returns are growing; returns do not tend to zero but to a matching positive level. (Even with aggregating, eventually there is an across the board wipe out even for whole societies! But this is a statistical thing, not a regular progression.)

As for the state support thing causing something distorted, yes, but that is not a simplistic consequence of the presence or absence of structures like that from states. There are non-state structures that can achieve the same result, though of course only through being quasi-states themselves - or becoming such. One example is the role of monasteries in earlier times - that's why the Statute of Mortmain was brought in. Yes, the role of the monasteries isn't material today, but the point is that we should be careful not to design new stuff - building the new order within the framework of the old - that does the same. After all, the early monasteries were building the new order within the framework of the old when they first got started in pagan times; it really can happen.

Martin, KC will doubtless refer you to stuff that shows how you can be industrialised at various scales without needing concentrating structures. What it comes down to is that we now have structures that did too much concentrating when they started - gathering capital - and still do now that they are merely applying it beyond the true (no hidden subsidies) economies of scale. Sometimes they actually were the right size for acquiring enough capital fast enough but aren't worth having now, and sometimes they got started fighting fire with fire like the East India companies after the Dutch one, competing against others outside their own state support who were supported by other states, but that doesn't mean that they are needed for continuing operations as such. And, of course, some didn't even have that much justification.

The alternative structures are often mutual and/or municipal and so self-limiting; today things are so biassed that the overall system encourages mutual societies to go corporate, buying out partners with windfalls at others' hidden expense (follow the money to see how the new share issues achieve that, ultimately creating inflation since there is no matching wealth creation - just redistribution). The same is happening to Lloyd's syndicates.

There is scope for accelerating a reform, but the catch with that is that you risk creating something lasting to do that; the Statute of Mortmain solved corporate problems from the Church only to transfer power and resources to the secular arm. As I see it, municipalities can easily do fleet leasing of most equipment businesses need, and they have enough clout to achieve all the economies of scale that are really needed, both in acquiring and in applying capital for it. You can avoid creating a rentier class if they get their funds by selling bonds that are annuities rather than perpetuities, a bit like a sinking fund approach. (I think KC prefers something with more of a syndicalist flavour.)

June 27, 2007 5:54 PM  
Anonymous Anonymous said...

P.M. Lawrence or Kevin,
Thanks for your response. I'll need to digest it for a while. Honestly, I'm not well-studied in the field of economics. So, please bear with me in my reply. Mostly let me clarify my post.

I was specifically referring to Marxian theoretical concept. Personally, I find that by using the word Marx, it tends to create outrage and confusion. So, I prefer to just put the idea out there on its own without all the baggage of Marx.

My understanding of the law of value is that industry concentrates economic wealth in the few insofar as it reduces the value of labor. This follows from the socalled law of value: that the exchange-value of a commodity is determined by amount of average socially necessary labor-time expended on the commodity. So, as production techniques become more and more efficient and reduce the amount of the average socially necessary labor-time needed to produce an item, worker's labor has a much less value. As a result, they have very little bargaining power. I'm little fuzzy how this plays out on the other side, the rich. My sense is that as the worker's labor become much less valuable, capital become much more so. Those who can afford the improved production techniques get a big leg up on those who can't.

June 28, 2007 5:56 AM  
Anonymous Anonymous said...

Martin (if "anonymous" is still you), there are several issues involved. In economics, a lot of things are going on at once. If the bulk of people are only wage earners, then yes, wealth concentrates with the rest of the people if industry is making a lot of wealth. If institutions don't make the wealth trickle down faster than this concentrating effect, then yes, a concentration builds up. Even then it may not matter if the inequality doesn't produce inequity, that is, so long as wages are enough for ordinary needs and ambitions and there is no barrier to entry for those who do want to bust a gut and become rich. If you google for the online version of Keynes's "The Economic Consequences of the Peace" you will find a good presentation of this comfortable scenario in the background material he gives in the introductory part; the late 19th century actually was like that in much of Europe (even though there were clouds on the horizon, which Keynes also noted).

But getting back to the risk areas. Those two ifs don't have to be there. Georgists had in mind a land tax system that (they hoped) would redistribute any gains faster than any build up. They were probably right for their time and place, though I doubt if that would work now. However, the price is from the cure - it would enable a system over us and defeat the object of freeing us up. That is the risk involved in your point that "some rights-rectification [might] be in order to eliminate some of the mass inequalities of wealth".

A better way is that of the distributists, who had in mind that people would not simply end up confined to being wage earners. As G.K.Chesterton said, "the trouble with capitalism is that there are not enough capitalists". They had in mind that the vast bulk would themselves be capitalists on at least a small scale and so end up gaining as small businessmen what they missed out on from just doing the work. Their ideas are still sound, though they are often criticised for recommending that people could be small farmers; that was the recommendation for the 1920s and '30s, and the critics are using that as a straw man by mistaking that for the best recommendation for the here and now. And distributism does not actually require going through a state-sponsored continuing redistribution, though of course it does not rule it out either. The task for us then becomes, how to achieve something in that area without ourselves becoming what we fear; it does not look inherently impossible, given the sort of mutualist options I mentioned (and there are others, too).

With these methods, you find that the "wealthy" grow to include everybody else. People get promoted, and there is no levelling down - unless, that is, the firebrands insist on a rapid change. With reform rather than revolution the short sighted among the old elite don't worry, and the far-sighted not only see others coming up but also see that they are heading off dangerous pressures. Enough of them do, anyway.

I take your point about people mistaking you for a Marxist if you use any of their terminology. I think that's why Professor Reisman accused KC of it, from reading things like "actually existing" in his work and then running on an association of ideas rather than looking any further at what was in front of him. As Oscar Wilde said, "my mind is made up, do not confuse me with the facts". In fact, one of my points of feedback to KC is to write to his audience. But I don't yet know just what audience he has in mind.

June 29, 2007 2:49 AM  
Anonymous Anonymous said...

I appreciate your replies, and this is the same Martin. I read your post carefully and tried my best to understand it. I have almost nil familiarity with Henry George, Distributionists, Keynes, and the like. So please bear with me. In what follows, I tried to pull together what I've been discussing and hopefully respond to some of your points along they way. Please accept my apology in advance if I misunderstood or distorted your views.

Let me start by putting my theoretical cards on the table. I am very interested in the theories Marx and even Lenin. However, I would not consider myself a Marxist, although I would not be deeply offended if someone mistook me for one--provided it wasn't a vicious red-baiter, that is. I'm just reading and thinking. Why not? Perhaps, I should also say that I lean to the left, and have a more or less disfavorable view of capitalism. But I feel hopeless as to any alternative.

Let me talk a little more about my (renewed) interset in Marx. I studied Marx in college in several sociology courses. They taught Marx as a humanist. One of the most interesting concepts was 'alienation.' the paradigm e.g. of the alienated worker is probably the assembly line worker. She doesn't control her labor, keep the labor-product, etc. I still sympathise with assembly line workers. As an aside, I read some of Nozick's Anarchy, State and Utopia, he argued that assembly line worker like their jobs, it fits their personalities. Anyway, for awhile I more or less agreed with this kind of "soft" Marxism.

okay, my father-in-law probably suspects me of being a socialist. So, he gave me David Shrub's bio of Lenin. I was really appalled and outraged by the lying and terrorizing of this man. Recall that I had only studied Western Marxism (Fromm, Marcuse, etc). But the interesting thing about Lenin is--this is my sense anyway--was that the man truly believed he was promoting a noble ideal, socialism. I really don't think he was totally ruled by a lust for power. The difficulty is this: How do you square the terrible deeds with the arguably noble ideals of this man.

Lenin's brother was executed for treason--an attempted assisination of the Czar. At his trial, Lenin's brother essentially said I didn't have any choice, this was the only availabe means of promoting democracy. And there really wasn't much freedom in Russia at that time. Due to his experience and Marx's theory, I think Lenin believed that suppressing the bourgeous was the only way that workers would get ahead. For in a capitalist democracy--so the Marxian theory goes--the wealthy have a decisive say in politics, and they use the state as tool to advance their political and economic interests. I think this is why Lenin boycotted the Russian general assembly. And this view does seem to follow from Marx's class analysis. The wealthy have all the advantages (education, manners, breeding, and money) that help win elections. How can the poor compete? This is the point I was trying to get at in my pior post.

Regardless of how the masses of poor got to be that way (and I think this was really what KC was responding to), how are they going to get out? If the wealthy really do have all these advantages that help them elections, can this be achieved democratically? You suggest that the wealthy would submit to reforms. Would they? Do they? Take, for e.g., food stamps, I think corporations (some of them anyway)probably love food stamps because they don't have to pay their low-wage workers as much. It's like a subsidy for Mal-Wart. Better still if they dump most of the tax burden on the middle class. So, if we believe that the rich hold the reigns of power and they won't willingly let go, does it even matter to extol the virtues of the free market?

And what's the solution? A dictatorship of the proletariat? Gulags? Censorship? Land reform? Libertarian revolution? (As you aptly point out any efforts at rectification would only strengthen the state.) Anarchy? None of them, it would seem. they are either nightmarish or hopelessly utopian.

does any of this make sense? Long-winded I know but I appreciate your patience and you replies.

June 29, 2007 9:39 AM  
Anonymous Anonymous said...

This comment is going to be rather off-topic, but it had been a while since I visited your blog and I thought you might be interested in some of this.

Samuel Bowles and Arjun Jayadev claim that one-fourth of the labor in the United States is not productive but "guard labor".

Because I have found Thomas Sowell's "Are Jews Generic?" I have hosted it here. The reason I thought you'd be interested is that you consider interest/usury to be part of state-capitalist privilege that would not be found a free market. Sowell presents pretty convincing evidence (to me at least) that the lending of money for interest and animosity directed towards moneylenders (often by state authorities) has been nearly universal. One of the most pertinent examples is in an allied P.O.W camp in Nazi germany in which the "middlemen" had not been selected by authorities or their ethnic background, but simply their own initiative. The social pattern found in that camp seemed pretty much the same as what is found elsewhere.

June 29, 2007 3:57 PM  
Anonymous Anonymous said...

Martin -

I don't know Nozick's views first hand, but I can say that while many people did like assembly line work they nearly always came from even worse working environments. These in turn were not the historical norm, and when we look at what people preferred given the chance, that is, when we have comparisons we can make, we see that they demonstrated preferring mixed activities, including the putting out system of manufacture, a little hunting/fishing/gathering, keeping their own livestock and vegetable patches, all with access to infrastructure needing minimal maintenance like a village common. But if they had to pick just one and it was available, they preferred a semi-nomadic herding lifestyle to near-monoculture of crops (read Spenser on 16th century Ireland). That's why we can't read assembly line work as "best" just by comparing it with crop farming, when we know that other viable lifestyles were also better than that.

Don't bet that Lenin's ideals were noble except in the way that Robespierre's were, so concerned about the generality that he ignored the distasteful stuff in front of him as in the old saying "I love mankind, it's just people I can't stand". But it gets worse. He may have been aiming for something even more detached, a regime that ran "properly" and for which people were merely incidental, the way that Chinese philosophy aimed for celestial harmony rather than for human interests. And don't get the idea that Lenin would have had to objectify and dehumanise people before he could do that. It's where a lot of people from a lot of backgrounds come from - me, for instance. We don't start off from a position where people are the whole point, so Lenin - from a Russo-Tartar background, as I am from a Scottish and Irish one - may not have had to let go of anything in the first place (I, on the other hand, had to come to it, and I still don't feel it in my bones or even react that way as second nature). You don't have to demonise your victims if they never counted in the first place.

Another point. Lenin may have boycotted the pseudo-democratic processes because - great tactician that he was - he understood that he was more likely to lend legitimacy to its proceedings by making it more inclusive than to alter its outcome in any way that was meaningful in his terms. (The 19th century Irish at Westminster understood the problem, and they resorted to "join and sabotage parliamentary proceedings" rather than let it appear that they had no problem with Westminster doing what it would without them, which is the risk with a boycott.)

As for "how do the poor compete", the answer is, they don't - not as "poor", that is. We should aim at promoting people out of poverty. Rather than focus on an abstract class of "poor", we move Fred, and Bill, and, yes, Martin, out of that group. This is where mutualism came in during the 19th century, motivating people to form the British building societies so that they could gain enough property for the vote, one at a time. This working the system is what led the elite to allow the system to change, since they preferred to give people the vote without money than with money. But it wasn't in the elite's interest simply to screw down the safety valve, and they knew it. That is why they won't resist any material reform of this sort. As I more or less said earlier, the smart ones won't sit on the safety valve and the stupid ones won't see it coming, while there won't be enough of any middle sort to matter. I outline the first steps of a transition in my discussion of Negative Payroll Tax at my publications page (I do know the later steps but I haven't written them up).

So there's only one small but so far unbridgeable middle step to take: how to get these acceptable promote-out-of-poverty measures onto any agenda, under way. And so far that's been impossible for me because of the duopoly party system that is impervious to outside ideas. My next trick is to try to bypass structures, go to small parties and through them to the electorate the way Gladstone bypassed his party's rigidities in his Midlothian campaign. But for that to work I would need energy and be enough of a people person to be a marketer. Over to you...

July 01, 2007 6:40 AM  
Anonymous Anonymous said...

I wish I could properly respond to your post. I may do research and get back to you. For several weeks I won't have the time to invest in such research. I appreciate your willingnes to discuss some of these issues. You may be on to something, I don't know because I'm just not following everything you've written. I'm hoping this due to my ignorance and not my lack of intelligence, in any event, I'll probably post again after I've read up a little more. Thanks,

July 02, 2007 10:32 AM  
Blogger Kevin Carson said...

My apologies to all for the delay in rejoining the dialogue. This is my first day off after another spell of wage-slavery.


PML has already anticipated my answer on industrialism. Most industrial production is centralized and capital-intensive far beyond what would be justified by efficiency considerations, or what could survive in a free market. If you dig around through the posts under the Org Theory project on my sidebar, I've got a draft chapter on decentralized production technology somewhere.

As to rights rectification, I believe simply removing state-enforced privilege and subsidies of various kinds would result in the market tearing through the largest corporations and private fortunes like an atomic blast. But I also tend to favor syndicalist action against firms that clearly get a majority of their profits from state action, on the assumption that they are essentially branches of the state and therefore not legitimate property, and should be treated as "unowned" and "homesteaded" by those currently in actual occupancy. Rothbard, at his most radical, suggested something like that during his alliance with the New Left, although he surely would not have agreed with my assessment that all of the several hundred large firms in oligopoly markets would qualify.

The question in your last paragraph is one that I've struggled over for a long time. I don't have any certain answers, aside from the belief that our plutocratic rulers are as prone to the "boiled frog syndrome" as we are. If they are in control of the final form taken by policy, it is often nevertheless a second-best (or worse) choice among alternatives from their perspectives; the political system is to some extent contested terrain. For example, while the corporate leadership no doubt played the leading role in shaping the form taken by the New Deal, including Social Security and the Wagner Act, and even though it was their policy, it was nevertheless their policy taken *in response to pressure from below*. The political system is often responsive to long-term, concerted pressure from outside; it just isn't amenable to being governed from the inside by anyone except an oligarchy. The strategy, therefore, should be to pressure it from outside and seize on any immediate opportunity to completely dismantle state functions that serve mainly to buttress corporate power: force the state, from outside pressure, to retreat from its support to the corporate economy, and immediately dismantle any administrative apparatus by which it might resume similar policies in the future. Workers and ordinary citizens can't direct the state from inside without being coopted into the corporate oligarchy, but we can raise hell from outside and cause it to retreat in the face of public pressure.

Getting back to the "boiled frog" thing, the corporate ruling class, even when they see such retreats as inimical to their interests, will be extremely hesitant to judge that any particular measure is the last straw or that they must resort to extreme measures to stave off total defeat. The natural human tendency is to avoid any irreversal and final measure, and to live to fight another day.

PML, you wrote:

"...financial risk tends to grow at a greater exponential rate than returns themselves (I'm ignoring cases where returns are shrinking or zero). Without aggregating through corporate structures, individuals or family lines tend to revert to the mean even though returns are growing."

If I read you correctly, the effect of this phenomenon is for the accumulation of personal wealth to level off at a much smaller predominant size; one of the main effects of corporate structures is to counteract this phenomenon by mitigating "creative destruction"--and that goes double for the state's interfaces with the corporate economy.

Re Mortmain, the parallels are interesting IMO between it and the ability of the immortal corporation to accumulate assets over multiple human lifetimes. I tend to think the distinction between statelike structures and states is largely one without a difference, to the extent that the power of the former results from coercion.

More to follow tomorrow.

July 02, 2007 11:50 AM  
Anonymous Anonymous said...

KC and Martin, I had the slow boiled frog part in mind for many of the elite who did not appreciate what was happening, but I was also allowing for smarter ones who appreciated reform coming instead of revolution (particularly if they could see out their time), and I allowed for a residue that would be too small to matter. This approach works best if you can co-opt the smarter ones to be on the winning team, buy them out as poachers turned gamekeepers. Think Captain Morgan and General Monck - pardon me, the Governor of Jamaica and the Duke of Albemarle.

I see a syndicalist approach to transitions for enterprises as defective from not compensating those who really did put wealth in before the change. I don't take homesteading as fundamental but merely a way of marking territory, so we don't automatically come out with the result that the workers before have a claim afterwards. As between management and workers after a corporate structure vanishes, it leaves the original arms-length investors out in the cold - and don't forget, those don't "deserve" it from trying to exploit the system, those also include people who were forced into saving via coercive pensions schemes and such too. So a better approach (not "the" solution) would be, a management buyout paid for by creating matching liabilities to the original shareholders - converting shares to time limited debentures, possibly with buy-back options, say - and a capping of management liability to the extent that they took out insurance for it.

On the way financial risk grows, yes, I was thinking of how it would tend to bring average wealth back to a norm. (If anybody technically minded is lurking, I obtained a recurrence relationship for variance at different intervals by using the composition of probabilty generating functions and taking advantage of the fact that composition of the PGFs in a single family is commutative. I wanted to explore one possible behaviour of a portfolio if you did not continually rebalance it for beta.)

As for "the distinction between statelike structures and states is largely one without a difference", I had already put some thought into that. It's so post hoc, that is, after the event once all the facts are in. But before and during, that isn't so. You might be faced with something that didn't have the label "state" and which you had to diagnose on the basis of some other markers - like a church hierarchy, say.

July 03, 2007 4:56 AM  
Anonymous Anonymous said...

"Rothbard, at his most radical, suggested something like that during his alliance with the New Left."

Rothbard suggested something similar as regards the ex-Stalinist states. However, he was explicitly against the idea that the workers themselves should take over the workplaces. Rather, the state would issue negotible shares to those who were lucky to be employed in a workplace when it happened. Needless to say, he was also against the "syndicalist" solution of the workers themselves deciding to hold their workplaces as a co-operative or collective. That would be socialism and you cannot have that!

I'm sure that his homesteading theory as regards corporations with their hands in the state's pockets would have been similar.

What I found interesting was how his theory of transition was nearly identical to Engels. For Engels, rather than the workers seizing the means of production, the state would. For Rothbard, rather than the workers denationalising the means of production, the state would. Then, for both, the state would then wither away...

But I can hardly say I was too surprised by Rothbard's "top-down" vision of social change. His whole ideology is an attempt to dispossess the masses from any say in how society was run, so why should social change be any different?


July 03, 2007 8:09 AM  
Blogger Kevin Carson said...

Well, damn me for a liar. I didn't get back yesterday after all.


I think Sowell is conflating two separate critiques of the banking industry. One is a fairly crude producerism that views exchange, and other value-added activities that aren't directly involved in physical production, as "parasitic." The other is a critique of unequal exchange, of which usurious finance is one example. Sowell's analysis begs the question of whether or not unequal exchange exists. It's possible to view the issue of credit as a necessary and productive activity, and an effort that should be fairly compensated, and still view the "actually existing" (sorry PML) credit industry as extorting a monopoly price from a state-privileged position.

Thanks for the link to the Bowles and Jadayev quote. I'd never seen the argument before, but I'm a big fan of Sam Bowles. I would argue that much of the managerial hierarchy qualifies as "guard labor"; David Gordon, in *Fat and Mean*, took on the common perception that corporate management had been streamlined and downsized in the '80s and '90s, pointing out that the percentage of the labor force in supervisory, non-production jobs had increased drastically since the 1970s, and that compensation to supervisory personnel had increased from 20-something percent of total compensation in the '70s to over 40% in the mid-90s. He associated the increased resources devoted to internal surveillance with stagnant wages and speedups since the '70s, arguing that there's a strong international correlation between income inequality within a corporation and the size of the management hierarchy. The average European and Japanese corporation has about half as much management as a portion of the total labor force, I believe.


"...the smart ones won't sit on the safety valve and the stupid ones won't see it coming..."

That's an absolutely brilliant quote.

On the formative phase of quasi-state entities, your point is well taken. It ties in, I believe, with your earlier observations on ground cover plants creating externalities to prevent alien organisms from taking over the system. In this case, I think the key is to set up the rules at the outset to prevent the kinds of privilege that allow wealth to grow on itself; without access to a territorial state with taxing power to create subsidies and externalities, and without the forms of artificial scarcity by which property becomes a large-scale source of income, I don't think a quasi-state institution could reach the takeoff point.


I found Rothbard's reliance on the state to be problematic, to say the least. I'd also prefer the "homesteading" be done by direct action. Likewise, I take a negative view of his obsession with the workers' "homestead" title taking the form of transferrable and marketable equity. I'd much prefer something like one of the legal forms of collective ownership Ellerman talks about, with the firm being the inalienable property of the work group, with the individual worker's equity account being portable in liquid form only on severance.


I agree that there would be injustices involved in expropriation because of all the small-time savings invested through pension funds and the like. There might need to be some ad hoc arrangements to compensate owners of holdings up to some arbitrary amount. A more likely scenario, though, is IMO something like Argentina, with the capitalists' equity collapsing to near zero and the owners simply abandoning production facilities to avoid legal judgments.

July 04, 2007 10:32 PM  
Anonymous Anonymous said...

"Sowell's analysis begs the question of whether or not unequal exchange exists. It's possible to view the issue of credit as a necessary and productive activity, and an effort that should be fairly compensated, and still view the "actually existing" (sorry PML) credit industry as extorting a monopoly price from a state-privileged position."

You should look at my remarks on banks in my critique of a globalisation article. The problems do not arise from the fact of state sponsorship, but from the presence of a zero sum game (or worse). Once you realise that the language is allegorical for want of a mature system with a terminology, you can make sense of mediaeval criticism of usury. It boils down to: there are no ways of boosting production, let alone productivity, therefore any gain you make with borrowed funds must necessarily be at someone else's expense even if we can't quite see just who is getting hurt. The later economists laughed at this and said "but there's no fixed lump of labour or capital or anything; you necessarily must be boosting output or borrowing and lending wouldn't be happening".

Both "necessarily"s are special cases, roughly true of the middle ages and of the early industrial era respectively - but not axioms you can put your weight on in this day and age without seeing whether they can carry it. And the way the mediaeval situation worked out, with states trying to stop usury if they bothered with it at all (not counting when princes themselves had to borrow) - why, that shows that problems can come from other quarters than from states. I suspect diminishing returns mean that we are getting less like the early industrial era now, i.e. now a larger proportion of any profit opportunity is likely to be at others' expense.

Do you see the slippery slope involved in "In this case, I think the key is to set up the rules at the outset to prevent the kinds of privilege that allow wealth to grow on itself; without access to a territorial state with taxing power to create subsidies and externalities, and without the forms of artificial scarcity by which property becomes a large-scale source of income, I don't think a quasi-state institution could reach the takeoff point"? It's the large idea that you, dear reader, make the rules. In fact real feudalism - as opposed to the caricature people think of - was the nearest to true workable anarchy history has seen. Its imperfections arose in part from asymmetries in the initial stakes people had, but much more from spontaneous symmetry breaking from the nature of military tactics and techniques, notably the development of heavy cavalry and of the castle. We can compare this with Greek city states that tended to be oligarchic or democratic according as to whether their geography meant they needed wealthy hoplite foot soldiers or oarsmen needing only a sliding cushion of their own. If mutual policing needs call forth an elite because of specialising, then that elite will command a disproportionate part of resources. So the trick is to think in terms of the Colt .45 equaliser (that displaced knife fighting strengths).

By the way, after allowing for a generation or so of time lage, the levers of economic control fasten on land, labour or capital depending on which is the bottleneck. That is why ancient times and frontier systems had slavery, but the middle ages focussed on land. The idea of making it impossible to put a stranglehold on land only works until somewhere else becomes a choke point. (That could lead me into a discussion of Georgism if I'm not careful...)

There's also a slippery slope hidden in "...There might need to be some ad hoc arrangements to compensate owners of holdings up to some arbitrary amount. A more likely scenario, though, is IMO something like Argentina, with the capitalists' equity collapsing to near zero and the owners simply abandoning production facilities to avoid legal judgments." Partly it's the implied transitional rule maker and enforcer (and we know what happens to "temporary" things like that). Partly it's the accounting cut off. The actual accounting dates should match when effective control passes. If mutualism comes in after a general collapse, it isn't at fault. But if it is brought in by white anting and ringbarking, then there is also the responsibility for the collapse, and it is bad accounting only to account from dates when the other lot gave up their formal and de jure claims. This is why, if mutualists had influence in the declining days, they should offer a soft landing as soon as they could.

One possible way out is to offer a factory's management some bridging liability insurance for a grace period in which they could restructure as a management buyout that made them a partnership, not a limited company. They should be reminded of the physical facts that they wouldn't need much capital if they arranged sale and lease back of whatever land, fixed assets, and equipment municipalities were willing to take off their hands for fleet leasing. They should also be reminded that they would still need specialised equipment and skills, and perhaps loans of working capital, and that since most of their assets would be goodwill and their own staff wouldn't have barriers to entry stopping them setting up elsewhere, they had better not try for a dog in the manger keeping the whole pot for themselves. With that, the restructuring would be of a going concern, and the shares would be converted back to negotiable instruments with no great loss over and above things caused by others, i.e. not mutualism's fault.

But it would be wrong to skip out on something that was its fault. Sometime I will t5ell some stories about how communism managed transitions in the Eastern Bloc and in Cuba, like how Poland "bought" out its small farmers or how Guevara became Cuba's Minister of Finance ("Oh, did you ask if anyone was an economist? I thought you said communist!").

In closing, have another look at the Mises post on the critique of the contract feudalism article for my latest comments.

July 05, 2007 4:07 AM  
Anonymous Anonymous said...

Your damned purblind system twitched the button positions just as I was about to click preview and posted the above before I had finalised the corrections.

It's not "Sometime I will t5ell...", it's "Sometime I will tell...", and it's not "critique of a globalisation article", it's "critique of a globalisation article". And so on.

July 05, 2007 4:21 AM  
Anonymous Anonymous said...

Your boiled frog theory doesn't have much romance to it. Not that that matters. Class struggle or chess moves?

I do think this point here, this question of praxis, is where the neo-liberal and marxist elements of your theory just don't mix. I mean they just don't seem to hang together.

I think it all goes back to class struggle. Whether you believe in class struggle or not. I mean if you do, then you must believe that the ruling class is quite conscious of their class interests and work together to promote them. I don't see how boiled frogs fit here. Moreover, the ruling classes seek their ends as in a tunnel. The point is they don't recognize the big picture. Their class interests cloud their vision. I mean if it didn't cloud their vision, there wouldn't be a class struggle at all. No, it would be a big happy family--where we all work together to increase the wealth of the nation. (And this is precisely what the ruling class says it is doing, and believes it is doing, even as it wages class warfare.) In other words, they don't and won't see a revolution coming.

All of this is to point up what class struggle explicitly means.

In some of your other posts you complain that market anarchists like yourself are not welcomed by the larger anarchist community. I don't know. Perhaps, and this is only a suggestion, you should engage in a theoretical dialogue with them. Your site has little if anything to say about the Situationists, Gille Dauve, Council Communism and so on. Unlike your theoretical sources, these theorists are not backed and trumpeted by every elite academic and government institution. They are cranks, I suppose. But none the worse for it in my view. I don't think you can dismiss them out of hand.

Be realistic: demand the impossible!

August 09, 2007 7:06 AM  
Blogger Kevin Carson said...


I think your reference to the "neo-liberal" and "Marxist" portions of my theory, and how well or badly they mesh together, is based on an erroneous assumption: that free markets and theories of exploitation, respectively, are integrally and inseverably related to capitalism and Marxism. In fact, individualist anarchism (as well as some other radical interpretations of classical liberalism) have included both characteristics from the beginning. If anything, it's more accurate to say that right-libertarianism and Marxism, respectively, are later permutations of free market and socialist movements that were both much more amenable to my tradition.

As for class struggle, I do believe in it. That doesn't mean that any class is omniscient, or even particularly astute. It doesn't, for that matter, mean that a ruling class is self-consciously E-vil, with a capital E. To the extent that ruling class interests are masked in a hegemonic ideology of "national interest" or the "general welfare," that ideology may take on a life of its own so that the ruling class itself is sometimes befuddled by it. Your version of "class struggle" sounds more like the vulgar Marxist teachings in a Stalinist textbook ca. 1936.

August 14, 2007 12:13 PM  
Anonymous Anonymous said...

I don't know if this thread is dead, but here goes. First of all, I think it a little unfair to associate my view with Stalin. That is hitting a little below the belt, don't you think. Can't we respectfully disagree, without resorting to ad hominen attack?

I think class struggle implies class consciousness. How else would a class struggle, if didn't understand itself to be a class. Nowhere did I imply that capitalists are evil or omniscient. On the contrary, I suggested that capitalists behave as in a tunnel. They sincerely believe that promoting their class is in the best interests of everyone. They are myopic. In sum, class struggle implies that we cannot all get along as one happy family AS LONG AS economic interests divide us--i.e. in capitalism.

You think that capitalists will let reforms pass (out of carelessness?), if put forward. But I think they currently exercise political power with great CARE to their profit-making advantage. As individual persons, I'm sure the capitalists believe that they are helping everyone: Whether they do or not, they cannot do otherwise but to seek to make profits. THAT IS, as long as we are in a capitalist society.

Now if we can all get along then I don't see how that squares with class struggle. I assume that you must accept certain assumption that underly all free market theories. Free rider theories and the like that turn on the assumption that humans are "rational" self-maximizers. How do you square that with class struggle? Wouldn't the costs of the struggle exceed putative individual benefit, making the fight economically irrational?

I think I am entitled to a modicum of respect. But then I guess I'm just a commie bastard... Thanks

August 31, 2007 2:10 PM  
Blogger Kevin Carson said...


I only compared you to Stalin in the specific sense of what I regard as a crude class essentialism. If you interpreted as more generally tarring you with Stalin's authoritarianism, I apologize.

Capitalists may be profit-maximizers, but (as you yourself concede) that doesn't make them omniscient. And it certainly doesn't preclude the possibilities, suggested above by PML, that

1) individual capitalists or sectors of capital will perceive their impending defeat as a class, and screw over other capitalists by seeking a better deal for themselves; or

2) sectors of capital will be in denial about the risk of impending defeat and put off decisive measures that might achieve genuine victory if they succeed, but might also make defeat earlier and more total if they fail.

As to whether the cost-benefit ratio of class struggle for the individual capitalist exceeds that of cutting a separate deal is a matter for individual assessment, given all the strictures of imperfect information and poor judgment.

September 02, 2007 11:56 AM  
Anonymous Anonymous said...

Now the thread is really dead. Oh well. Whenever you make a comparison with an especially heinous person like Hitler or Stalin, there is necessarily a stink that attaches to the comparison ABOVE AND BEYOND the "specific sense" to which it was ostensibly directed. You certainly could have compared my "crude class essentialism" to Lenin's. You didn't. You compared it to Stalin. Forgive me if I am suspicious of your good faith.

Your first point contradicts that the "capitalist" is NOT omniscient. Being profit-maximizers is precisely what makes them not omniscient... that and being human. They must maximize profit, b/c if they don't their business goes belly up, and any other concern like "impending defeat" for their class or whatever becomes moot for them.

Your second point is more consisent with the view that capitalists are not omniscient. I don't think the ruling class is even aware per se that it is waging class war. It follows the bottom line: profit. It is only conscious of itself when the working class moves against it. Then the ruling class feels itself attacked. In other words as a conscious class it probably does act on the defensive (at least in its ideological interpretatin of thigns. so, the rulign class is not looking to win the class war: they are trying to generate profits as part of their day to day business. Why? B/c The ruling class has won, in other words, that is why we call them the ruling class. So they are not out there looking to decisively defeat the working class.

I also note that you are careful to use the term individual capitalists or sectors of capital not class. Then you hedge a great deal on whether it is economically rational for an individual capitalist to wage class war when he or she could free-ride on the efforts of other capitalists. This all points the original point I tried to make which is that it is a little doubtful whether you subscribe to class struggle.

September 03, 2007 8:05 AM  

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