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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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Monday, August 20, 2007

Rideau's Second-Hand Critique of Contract Feudalism

[Note--Since I made the original post, my comments have appeared on Mr. Rideau's blog. It may well be that he never had any intention of censoring them, and that it simply took until now to screen them. I retract all comments below about cowardice and aversion to criticism, and especially comparisons to the Adam Smith Institute, with my apologies. The substantive response to his critique stands.]

François-René Rideau presents a second-hand critique of my "Contract Feudalism" pamphlet:

So the socialist story goes, employees are being exploited by employers because they have to work or starve. Yeah right. Paul Marks properly debunks this rhetoric, as defended by incoherent "anarchist" Kevin Carson....

I call it second-hand because Rideau seems to have based it entirely on Marks' critique, without ever having read my pamphlet. Although he fails to provide a link to my pamphlet, so that the reader may independently compare what I actually said with Marks' and Rideau's characterization, he helpfully provides a link to Marks' critique. And the response I left in the comments below Rideau's blog post has disappeared. Perhaps he's taken lessons from the Adam Smith Institute on how to avoid backtalk or independent scrutiny.

I do little topical blogging these days, and had my original comment at Mr. Rideau's blog remained up it likely would never have been seen outside that venue. But in the face of his cowardly aversion to criticism, I feel compelled to address his criticism in a venue which he does not control.

But let's examine what the socialist theory predicts. According to Lassalle's "iron law of wages", employers pay the minimum needed for survival and workers never rise above the limit of starvation -- and thus socialists claim that only the government-mandated minimum wage helps the poor workers. OK. Then how come some wage earners earn more, sometimes much more, than this decreed minimum wage? Weird isn't it? If government is the only cause for employee wealth, why would any employer ever bother to pay anyone more than the minimum? If there are other forces at play, what are they?

The socialist argument is only a one-sided consideration of the competition between employees that keeps their salary low. But they forget to consider that competition between employers keeps the salaries high. The balance between the two is called the market price.

The question of just how free competition between employers actually is, is precisely the point at issue in the individualist anarchist critique of employment relations--a point I explicitly raised in my pamphlet. Had Mr. Rideau read it, and not just Mr. Marks' critique, his commentary might be a little less, um, incoherent.

He continues:

The socialist "solution" is to reduce the competition between employers through regulations, taxes, confiscations and state monopolies. And the inevitable outcome is that actual wages lower through this combined reduced competition and overall destruction.

This is the state socialist solution. I challenge Mr. Rideau to find any such proposed "solution" in my pamphlet. The solution proposed by Tucker and other American individualist anarchists, whose claim to the "socialist" label is as good as anybody else's, was to open up employers and suppliers of capital to the same degree of competition as everyone else. And that is exactly what I proposed in my pamphlet.

But let's take competition between employers seriously. If a given worker chooses an employer over another one, clearly, it is because this employer offers him the best deal the worker can find. The deal may suck badly -- it is the best.

Ah, the best available alternative defense of bad working conditions! That brings back memories; it was the subject of my inaugural Vulgar Libertarianism Watch piece. As I suggested then, the validity of the defense depends on just why the other alternatives are all so bad in the first place. Tucker argued, and I concur, that the reason lies in the fact that the state is largely controlled by owners of the means of production, and the laws are designed to limit competition between employers, and between suppliers of capital. Hence the job market is characterized mainly by workers competing for jobs, rather than jobs competing for workers, and the unequal exchange in this buyer's market for labor results in labor accepting less than its full product as a wage.

Will killing or robbing the employer help the poor? Replacing him with a socialist bureaucrat in the name of the worker will certainly help the ruling socialist bureaucrat who becomes the new employer, now with a state monopoly. As for the worker, he still has an employer, under another name. But now it's a monopoly employer who owes his title to force rather than persuasion, an employer who faces no competition. One that claims to be a friend, but destroys the former best friend and the freedom of choosing this friend (for competition between employers is nothing else but freedom for employees to choose between employers).

Again, Rideau puts the state socialist "solution" in my mouth with no evidence whatsoever. I challenge him to show where I have advocated state ownership of the means of production, or replacing employment by the private corporation with employment by the state. The only cases in which I have advocated seizure of the means of production by workers are those in which that notorious "socialist" Murray Rothbard advocated it (in "Confiscation and the Homestead Principle"): that is, in the case of enterprises which get the majority of their profits from state intervention, and can therefore justly be treated as branches of the state. And even in those cases I advocated, not nationalization, but the direct homesteading of plants by the labor force, and their conversion to producer cooperatives competing in an unregulated market.

Rideau makes it pretty clear elsewhere that his conception of socialism is somewhat--again--incoherent. Despite his identification of socialism with state ownership and central planning, in the post quoted above, in an earlier post he managed to dismiss as "socialistic" such manifestations of revealed preference as cooperatives, kibbutzim, and intentional communities:

Socialists, go live in your phalanstères, your kibbutzim, your cooperatives, your autarkic or trading "intentional communities", and leave others in peace -- or be crushed as the mass criminals you are, have always been, and will be again every time you are let loose.

That last bit is telling. Elsewhere in the same post, he advocates the mass slaughter of socialists, not only when they control the state, but when they "plot" to engage in political action (the qualifier "particularly" in the quote below suggests that such mass slaughter might be justified in other circumstances, as well):

Socialists are the enemies of those they claim to save as well as against those they explicitly target. They are criminals against mankind. A good socialist is a dead socialist. A very dead socialist.

Oh, in a free society, people are free to say whatever they want. Socialist liars will be free to spread their absurd religion. Their predicament will be met with laughter. The laughter of free men who will kill the bastards the second they are caught plotting to implement their crazy utopias by force -- and particularly so by public force.

Maybe he was inspired by George Reisman's lionization of Pinochet.


Anonymous Anonymous said...

Wow, I had forgotten how much they hate "socialism" and that many right-"Libertarians" have a thing for fascist dictatorships (in the short term, of course, until the workers are back in their place). Von Mises and fascism in the 1920s seems to be repeated in the many "libertarians" for Pinochet who seem to be about.

But it is interesting, though, that they seem to have no problem with implementing capitalism by force, particularly by public force. It is easy, I suppose, to attack others as "criminals" when you are living off the resources stolen in the past. Particularly if you do not bother to find out what they actually think!

Having recently read Walter Block's defence of slave contracts as well as Hoppe's defence of competitive monopolies, I am utterly sick of how right-"libertarians" have distorted the meaning of the word libertarian, like socialist, beyond all recognition.

Apparently, liberty means being able to enslave yourself for as long as you live (unless you can gather enough resources to become a boss). Anything else is statism. Oh, sweet liberty! Liberty is, after all, slavery -- or, at least, the ability to make yourself a slave ("The deal may suck badly -- it is the best").

David Ellerman's spoof on right-"Libertarian" ideology seems appropriate:

The Libertarian Case for Slavery

The parallels with Block's serious analysis are, sadly, all too obvious.

An Anarchist FAQ

August 21, 2007 1:39 AM  
Blogger scumble said...

I find economists such as Block and Hoppe perplexing. As Kevin has said before, they (and others like them) are very inconsistent in what they refer to as the "free market". The "free market" in certain hands becomes a permanantly malleable concept that can be used to justify any number of distateful situations and attitudes as just and proper.


August 21, 2007 8:50 AM  
Blogger FSK said...

I find your blog interesting overall. You might be interested in my blog: http://fskrealityguide.blogspot.com/

There's one important point that I address frequently in my blog that you don't mention at all. The Federal Reserve plays an important role in the government subsidy of large corporations. Artificially low interest rates are a massive subsidy to the financial industry and large corporations. Everyone else pays for this subsidy as inflation.

Whenever conditions for the average worker start improving, the Federal Reserve raises interest rates. They explicitly state that they try to keep unemployment at 5%, so that workers don't have too much bargaining power.

There's a fundamental structural flaw in debt-based money. I call this "The Compound Interest Paradox". You can't meaningfully talk about economics at all when the fundamental unit of trade, the dollar, is completely corrupt.

The bargaining relationship between employers and employees is an unequal one, due to massive government intervention in the marketplace. The subsidies received by large corporations are huge.

Skilled workers aren't able to command a premium salary. Large corporations have no need for highly skilled workers. The value of the government subsidies they receive is far greater than the benefit they would receive by competing for skilled workers. All that is needed is barely qualified workers.

For example, a truck does 1,000 to 25,000 times as much damage to roads as a car. If trucks had to pay user fees proportional to the amount they damage roads, then centralized production in large factories would not be as profitable. Road are funded via taxes. In other words, people are paying the cost of their own enslavement. When it happens via taxes, it's mostly transparent to the average person.

However, I have one criticism of your blog. You seem to be mostly writing and speculating. I'm an order of magnitude ahead of you; I'm looking for trading partners. You've correctly identified the problem. I'm more interested in implementing a solution.

August 21, 2007 9:13 AM  
Blogger Vache Folle said...

I really like the second hand critique thing. That way you don't have to read the original work and, if you get called on it, you can plausibly claim that it was all a misunderstanding. Best of all, you can erect the strawiest straw man ever and demolish it. In my second hand critique of the second hand critic, for example, I might riff on the part where he talks about murdering socialists and how he is just like Hitler, a paranoid nut babbling about conspiracies. I'll bet socialist is a code word for Jew. Ha. Ha. There would be nothing stopping me from claiming that your second hand critic is an Anti-Semite based on your excerpts and my vivid imagination.

August 21, 2007 11:25 AM  
Blogger Vache Folle said...

I got the Anti-Semite idea from his singling out the kibbutz. This is clearly really about Jews.

August 21, 2007 11:27 AM  
Anonymous Anonymous said...

OMG! I would have never known that Ocean Spray cranberries are "the enemy of all mankind"! ROFL!

August 21, 2007 12:12 PM  
Anonymous Anonymous said...

"Artificially low interest rates are a massive subsidy to the financial industry and large corporations. Everyone else pays for this subsidy as inflation."

Inflation is not caused by there being too much money or the interest rate being too low. It is to do with class conflict and economic power -- bosses passing on wage increases in the form of higher prices.

That is why inflation has fallen since the 1980s -- the workers are too weak to get back more of what they produce and so companies have been keeping the productivity gains imposed on their workers.

The notion that inflation is caused by too much money comes from those who do not understand real economies, i.e. those who subscribe to "Austrian" or Monetarist economics.

"Whenever conditions for the average worker start improving, the Federal Reserve raises interest rates. They explicitly state that they try to keep unemployment at 5%, so that workers don't have too much bargaining power."

Very true! But does this not contradict your first claim, which was that interest rates were too low? If interest rates are raised to their "natural" rate, then, surely (according to your own argument) mass unemployment will happen?

An Anarchist FAQ

August 22, 2007 2:38 AM  
Anonymous Anonymous said...

"I find economists such as Block and Hoppe perplexing."

It is only perplexing if you assume that right-"libertarian" ideology has anything to do with genuine libertarian/anarchist ideals.

Once you realise that this is not the case then it becomes pretty obvious why they come out with such nonsense.

An Anarchist FAQ

August 22, 2007 2:41 AM  
Anonymous Anonymous said...

I have just posted the following at Rideau's site (or at least tried to):-

I just went and checked an old reference of mine, about a century old, Routledge's Dictionary of Economic Terms. The "iron law of wages" does not predict that "workers never rise above the limit of starvation" but that economic improvements will be overwhelmed by population increases in a Malthusian way, bringing wage levels back down to workers' "Standard of Comfort". So even if the law applies, there are three things wrong:-

- It is quite possible to get out of equilibrium and stay that way on a time scale of human generations;

- the Standard of Comfort itself can increase (as the dictionary points out); and

- The equilibrium can easily be higher than starvation anyway.

August 22, 2007 8:14 AM  
Blogger FSK said...

"Austrian" economics is closer to true economics than Keynesian economics. As far as I can tell, Keynesian economics is a bunch of lies used to justify fiat money and central bank intervention in the economy.

In order to understand the fundamental defect in Keynesian economics, you need to understand "The Compound Interest Paradox", which I explain in my blog. There's a fundamental structural flaw in debt-based money.

Interest rates are always kept below the true "free market" rate. Still, by increasing interest rates, central banks can decrease the money supply and squeeze workers.

Inflation *HAS* been rising since 1980. The CPI understates the true inflation rate.

I read the anarchist FAQ and was quite disappointed. I think that "agorism" is a much better philosophy than "anarchism". Kevin Carson seems to be mostly describing "agorism" on his blog, but he doesn't name it as such.

August 22, 2007 9:41 AM  
Anonymous Anonymous said...


You're mistaken if you assume Iain Mckay favors Keynesian policies, though he opportunistically brings them up when they serve his purposes. He favors a planned economy run by "delegate" coordinators. Somehow that's not supposed to degenerate into a Gosplan-like bureaucracy and collapse, like most of the other planned economies in history.

August 22, 2007 8:52 PM  
Blogger Maldoror said...


It is worthless to discuss with people that do not read what they are criticizing. On the other side...do you have a post replying to Mark critique?

(by the way, check my new blog adress...the old one was hacked..I mean, to actualize your list)


Out of topic...have you read anything about french anarchist Elisée Reclus

August 23, 2007 6:19 PM  
Anonymous Anonymous said...

Groups of soi-disant "free men" going around killing socialists in the service of capital? We've been here before

August 27, 2007 9:55 AM  
Anonymous Anonymous said...

"You're mistaken if you assume Iain Mckay favors Keynesian policies, though he opportunistically brings them up when they serve his purposes."

Sure, you should never quote anyone or utilise their ideas -- particularly when they make a valid and correct point! And as Rothbard noted, mutualism shares many of the same analyses as Keynesianism. Needless to say, he did not think that a good thing!

"He favors a planned economy run by 'delegate' coordinators."

Interesting... Now, where did I argue that?

"Somehow that's not supposed to degenerate into a Gosplan-like bureaucracy and collapse, like most of the other planned economies in history."

Capitalism has not collapsed yet, in spite of the planning going on in Gosplan-like bureaucracy in the shape of capitalist corporations.

But, I forgot, favouring top-down centralised planning by capitalist management hierarchies is utterly different from favouring planning decisions from the bottom-up by workers' associations.

Do I really to remind people what Hayek noted, namely that all economies involve planning and so the question is, how extensive is that planning and who does it?

Will it be those who do the actual work, by means of free federation with their equals or will it be a hierarchical management strata? Whether that latter is by capitalist bureaucrats or by state ones does not make that much difference.

Still, I should be flattered that I've been honoured with such an attack -- must prove I'm doing something right!

Iain McKay
An Anarchist FAQ

September 03, 2007 6:05 AM  
Anonymous Anonymous said...

"'Austrian' economics is closer to true economics than Keynesian economics."

I did not mention Keynesian economics at all, most of which is neo-classical infused nonsense (slightly less nonsense that "Austrian" economics, though). I am influenced by Post-Keynesian economics, which is a different thing entirely.

"As far as I can tell, Keynesian economics is a bunch of lies used to justify fiat money and central bank intervention in the economy."

I would suggest you read Nicholas Kaldor, then. Perhaps then you will realise that Keynes was trying to analyse a real economy based on a non-neutral understanding of money and how credit works in the real world.

"In order to understand the fundamental defect in Keynesian economics"

from your comments, I'm guessing that you do not understand Keynesian economics -- I'm also guessing that post-Keynesian economics is equally unknown.

"Interest rates are always kept below the true 'free market' rate. Still, by increasing interest rates, central banks can decrease the money supply and squeeze workers."

Which, as I noted before, shows a distinct contradiction in your analysis. On the one hand, you complain that interest rates are too low. Then you complain that rising interest rates decrease the money supply and squeeze workers.

Just to state the obvious, if you think interest rates are too low because of "Keynesian" lies, then your system will result in higher interest rates. This will squeeze the workers, increase unemployment and reduce workers' bargaining power.

You really cannot have it both ways, sorry. Perhaps if you addressed my basic point rather than labelling me a Keynesian, I could see if you have an answer to this obvious contradiction.

And sorry for my delay in replying, I was on holiday.

Iain McKay
An Anarchist FAQ

September 03, 2007 6:17 AM  
Blogger Xavier M said...

Iain and Nathan,

It seems you are not much aware of what Hoppe has written. It should be clear that his defense of "competitive monopolies" is just the same than Rothbard, namely that there can be no problem of monopoly in a free market even if it happens that there is only one seller at any given time for one good, that the monopoly price concept makes no sense in a free market.

Now, Hoppe explicitly endorsed the view that there is a tendency toward a damaging industrial concentration in our mixed economies as a consequence of State involvement. His defense of "free market monopolies" has nothing to do with a defense of present day monopolies. In fact, his views on the present order are not the typical vulgar libertarian ones that Kevin criticizes.

You may read with interest the two following articles since reprinted in his book, The Economics and Ethics of Private Property, as good examples of what I am talking about.

Marxist and Austrian Class Analysis: http://www.mises.org/journals/jls/9_2/9_2_5.pdf

Banking, Nation States and International Politics: a Sociological Reconstruction of the Present Economic Order: http://www.mises.org/journals/rae/pdf/rae4_1_3.pdf

I'd like to point out that this last article gives insights along the way FSK points out above at the beginning of his first comment, about monetary policy, and that Hoppe's explanation on the State-Banks-Big Business alliance seems to me very powerful.

By the way guys, it seems to me pointless to stress the so-called right wing associations of some authors while ignoring their work. Sounds very much like the anti-left knee-jerk reactions that some libertarians have against any proposal that sounds more or less leftist.

Kevin, I'd be curious to know what you think about Hoppe's articles.

September 03, 2007 8:57 AM  
Blogger Kevin Carson said...


The really sickening thing about opportunistic support for Pinochet and their ilk (including the CPA and subsequent puppet regime in Iraq--see Naomi Klein) is that their actual policies diverged so far from free market principles: reversing land reform and restoring the feudal titles of the latifundistas, looting of state assets by crony capitalists, implementing stronger "intellectual property" laws, etc.

Iain and Xavier,

I'll read the Hoppe links when I have more time. But in fairness to Hoppe, from what I've read on monopolies by Rothbard and Mises, I think Xavier's assessment is likely to be correct. The problem (this time in fairness to Iain) is that the right-wing Austrians are so slippery about their stance in relation to the present system, from one moment to the next. Hoppe and others tip their hats to the existence of state capitalism and the possibility of monopoly backed by the interventionist state. But they often respond to leftist critiques of monopoly as though they were attacks on actually existing capitalism, with defenses in terms of free market principle. They are all too prone to reflexively defend corporate power against left-wing critiques, using rhetoric about "how the free market works" (present indicative, not subjunctive), and then only stipulate that much of existing corporate power results from state intervention when you pin them down on it. But when the moment passes, they're back to writing another pro-Wal-Mart piece for Mises.


Yes, that's the essential feature of vulgar libertarianism. Shifting ground, from one minute to the next, as to whether one is defending the present system in terms of free market values, or simply defending the free market in principle.


I agree that central banking is a very important aspect of state policy. I've bookmarket your blog to add to my links when I ever get around to updating my template.

The main reason I write comparatively little about the effects of central banking policy is that I have such trouble getting my head around all the technical details. Sometimes I get everything to fit together, but the next day it's run out of my head like a sieve.

I agree that debt-based money, preferentially loaned out to the commanding heights of the corporate economy, amounts to privileged access to credit cheaper than that available to everybody else. But I doubt that the Fed's interest rate for its favored customers is really lower than a hypothetical free market rate. The rate paid by those outside the loop is probably much higher than would prevail if all legal barriers to cooperative banking were eliminated, and workers could use their own property as backing for mutual credit. So on the interest rate between you and Iain, I'd say this is a case of the blind man and the elephant: you're both making correct assessments of different aspects of a larger system. The overall rate of interest is inflated by the entry barriers for banking, but the central banking cartel operates within that larger framework to provide cheaper credit to its favored clients.

Vache Folle and Brad,

I strongly suspect that the same fellow is the anonymous commenter up-blog at the "Solidary Economy Network" post--the same fixation on the kibbutzim is there, but on a completely different order of magnitude. And he seems to consider producer co-ops morally equivalent to kibbutzim. So I guess when the new Pinochet comes to power, kibbutzniks will be sharing space in the Gulag with downeast Yankees from the cranberry bogs.


I saw your comments over there. Rideau's response reminds me a bit of Emila Litella--only instead of "never mind," it's "yeah--so what?" And it's an excellent point that even for Marx, standards of immiseration are relative; the minimal level of subsistence is subject to heavy cultural influence.


As Iain says, he uses Keynesian material in his own framework. If this is opportunistic, then I'm an opportunist myself, since I borrow ideas from a lot of different traditions without subscribing to their general principles.

And I've never seen Iain advocate any kind of central planning. He's generally what he calls a "social anarchist" in preference to market forms of anarchy. But then there are many forms of social anarchism that don't involve central planning. For instance, Bakunin's collectivism involved the trading of surpluses by local communes. Depending on how much production is carried out on a self-sustaining basis by local collectives, the rest could be handled on a pretty much ad hoc and loosely federalized basis (possibly including large elements of exchange), even under collectivist anarchism.

On Keynesianism more generally: I consider the free market responses to Hobson and Keynes, based on Say's Law, to be true--as far as they go. The problem is, they don't go very far. Say's Law applies to a free market. And Hobson and Keynes were describing the maldistribution of purchasing power under state capitalism. They were quite shaky on the *causes* of such maldistribution, and the question of whether it could arise from a strictly laissez-faire system. But given the *existence* of such maldistribution under state capitalism, their descriptions of its operation were pretty much on the mark. Keynesian fiscal policy fulfills a necessary function for the corporate economy, given the problems of underconsumption created by state capitalism. Joseph Stromberg pointed out that left-wing analyses of overaccumulation and overproduction were quite valid within an Austrian framework, as a description of how the economy actually worked given state-created cartels of overbuilt industry that can't dispose of their entire product at cartel prices. It's the corporate capitalists themselves who promote fiat money and state intervention, as a necessary corrective mechanism *given* the distortions that their privileges have already introduced into the economy.


Afraid I'm totally unfamiliar with the work of Reclus.

September 03, 2007 12:11 PM  
Anonymous Anonymous said...


Shouldn't mutualists promote mutualist political parties?

Is it not just what they lack to start fighting in the field: public opinion?

September 03, 2007 2:29 PM  
Blogger Kevin Carson said...

I'm pretty much an agnostic on the idea of libertarian political parties in general. I'm not anywhere near as fixed in my opposition to voting as a defensive measure or a means for gradually scaling back the state as, say, Brad Spangler. But as to the effectiveness of action in the political arena, I reserve judgment. There are a lot of other functions, e.g. like you suggest education, that could benefit from some organizational base like a political party, think tank, etc. I kind of like the British idea of a shadow cabinet proposing alternative policies, for example.

September 03, 2007 5:40 PM  
Anonymous Anonymous said...

opps, some confusion has resulted from a typo. I wrote:

"Hoppe's defence of competitive monopolies"

I meant:

"Hoppe's defence of competitive monarchies"

Sorry for the confusion. I only noticed it myself.

Iain McKay
An Anarchist FAQ

September 05, 2007 2:51 AM  

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