Breaking Eggs to Make “Libertarian” Omelets
Posted by Kevin Carson on Aug 14, 2009 in Commentary, Feature Articles • 11 commentsWe hear consequentialist defenses of government coercion from liberals all the time.
Eminent domain is defended as a way of promoting development of “blighted” urban areas (never mind that it is, in fact, a way of promoting politically connected local businesses at the expense of making poor people homeless or driving up their rents with gentrification).
Elizabeth Anderson, of Left2Right (an academic blog), argued back in 2005 that artificial property rights were absolutely essential to capitalism as we know it:
I reject theories of natural property rights because they are incompatible with capitalism. More precisely, they are incompatible with the forms of modern capitalism that have proven so successful in expanding people’s opportunities, prosperity, and the scope of cooperation–that is, the forms worth supporting.
She defended, among other things, “intellectual property” and limited corporate liability. Citing Hernando de Soto on the need for formal property rights as a way to turn property into investment capital, she praised government efforts to create formalized, artificial, nationwide property systems even at the cost of abrogating informal and often locally idiosyncratic customary rules of property tenure. I couldn’t help thinking of the Enclosures.
At first, I thought her essay was a devastatingly brilliant Swiftian critique of corporate capitalism, in the spirit of “A Modest Proposal.” It was not, as it turned out; but despite her unfortunate standpoint of admiration for the existing system of corporate capitalism, she was nevertheless entirely correct in stating that capitalism as we know it (as opposed to the free market) depends heavily on artificial property rights. Anyone who thinks liberals are “anti-business” should stop drinking the Limbaugh Kool-Aid.
I’m used to such arguments by liberals. What’s a shame is to see self-proclaimed libertarians, or at least self-proclaimed admirers of the free market–the sort of people who are normally fond of Jeffersonian rhetorical appeals to individual rights–resorting to such Hamiltonian “you have to break a few eggs” arguments.
Take, for example, Sorin Cucerai’s article “The Fear of Capitalism and One of Its Sources,” kindly translated by John Medaille of Distributist Blog from the original Romanian. Cucerai, who considers himself a classical liberal, praises “free market capitalism” for the “virtuous circle” it creates of falling prices, innovation, and higher wages. But, he argues, there are certain preconditions to this state of affairs. After all, he points out contra market anarchist types, you don’t think things turn out that way just by leaving people alone and letting them do what they want, do you? As the Lone Ranger said in that Far Side cartoon, you have to organize a posse; you don’t just throw these things together.
According to Cucerai, the availability of subsistence on one’s own property is utterly incompatible with “free market capitalism.” I’m not making this up, people (somebody actually said that thing about “destroying the village in order to save it,” too).
In short, the fundamental condition for the existence of a capitalist order is the absence of the individual autonomy in the sense of owing the source of your food. Only in this case, the commercial exchanges can become the basis of social cooperation….
Under the modern states, the citizens are obliged to pay taxes only in denominations ( “with money”), not by products or labor. Even if one owes a food source he could not keep his property if he does not engage in commercial relations on a monetarised market in order to get the money necessary to pay the fees and taxes.
It is very important to understand that the capitalist order is not a natural order. People do not search instinctually a source of monetary revenue. And yet, they search, in a natural way, to have access to a source of food and shelter; in other words, in their natural way, people try to become autonomous – “autonomous” in the strong sense of the word. I dare say that people seeks spontaneously to own a source of food and shelter so that they do not need to make any effort to get their own food and maintain their shelter.
Capitalism is made possible only if this natural process is interrupted by an instrument that makes sure nobody could have access to food and shelter unless a monetary revenue is used as an intermediary. The survival of the capitalist order depends on this very tool. I assert all this mainly for those who promote “the anarcho-capitalism”: they consider the state to be the natural enemy of the capitalist order, it is without the state that capitalism is being supposed to flourish. Exactly the opposite is true. Without an institutional arrangement to mandate citizens to pay fees and taxes – and to do that exclusively on a monetary basis – it would be impossible to have capitalism.
What need have we of witnesses? He has condemned himself out of his own mouth.
That’s right, folks: he’s actually arguing that what he calls “free market capitalism” (defined as the cash nexus, as such–not a bunch of that pinko crap about people being left alone to do what they want with their own stuff) is an end, for which the individual is merely a means.
Lest you dismiss that as unrepresentative–after all, he admits his disdain for market anarchism and sees properly functioning capitalism as the product of an activist state–consider another piece (“Yes, Socialism is Collectivism, and Capitalism is ‘Wage System’”) by Wladimir Kraus at Mises.Org. That’s right, Mises.Org!
…the hated “wage system” is precisely the essence and beauty of capitalism and an indispensable element of civilization and human progress. Economically, the “wage system” is an indispensable precondition for and thus a necessary manifestation of a modern division of labor society, for it is responsible for every increase in productivity of labor and standard living of all members of society, especially the wage earners.
Now Mr. Kraus doesn’t explicitly say that the state was necessary for suppressing subsistence production and forcing people into the wage system. But it’s pretty clear that the Enclosures and other property rights nullifications gave a strong boost to the wage system. Mises himself, in his comments on the Industrial Revolution in Human Action, argues that the factory employers did their workers a favor by offering jobs to people who were starving because they’d been kicked off their land. So if Mr. Kraus agrees with Mises on this point, to be consistent he’d have to say the English landed oligarchy was doing the peasants a favor by driving them off the land. It’s rare to see a libertarian come right out and say the Enclosures were actually justified, but considerably more common to see them hem and haw around and argue that the English working class was “better off” (e.g. the late Sudha Shenoy).
A certain class of self-described “libertarian” is also sometimes prone to similar omelet-making arguments when it comes to so-called “intellectual property.” Charles Johnson, of Rad Geek People’s Daily, cited a whole slew of arguments at Catallarchy blog in favor of Big Pharma’s drug patents, on the grounds that their high sunken costs required some such mechanism to recoup their outlays. And record companies need copyright to recoup the capital outlays for producing record albums. Johnson’s response:
And so, if copyright protectionism is withdrawn music companies might have to rethink their current business model!
O tempora! O mores!
Economics lesson for the day: protectionism doesn’t work. Markets do.
Ethics lesson for the day: the world doesn’t owe you a living, even if you’re very smart or very creative. Honest people try to find a new way to make a living if the old way can’t work without the use of government force. Clever people find out new ways of making useful things, if they realize they can’t make an honest living in the old ways.
Read that again: the world doesn’t owe you a living. The owners of factories weren’t entitled to cheap labor if nobody wanted to leave their own land to work on the factory’s terms. Large corporations aren’t entitled to profit from a business model that requires government subsidies or protections. Record and drug companies aren’t entitled to profit from a business model that requires preventing people at gunpoint from doing what they want with their own stuff. Funny any “libertarian” would have to be told that.
C4SS (c4ss.org) Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.
"purporting" should read "suggesting"
I'm sure there are a few more errors in there as well. I apologize, it's been a long day.
“Mises himself, in his comments on the Industrial Revolution in Human Action, argues that the factory employers did their workers a favor by offering jobs to people who were starving because they’d been kicked off their land. So if Mr. Kraus agrees with Mises on this point, to be consistent he’d have to say the English landed oligarchy was doing the peasants a favor by driving them off the land.”
Kevin, I’ve read this over a few times here, and I can’t for the life of me figure out what you are trying to say here. The statement (by Mises) that factory owners were doing recently landless peasants a favor by employing them is perhaps poorly worded (employment agreements are not “favors” per se, but mutually beneficial agreements), but still expresses a generally true principle. Granted, to the extent that the factory owners were culpable for the Enclosures in the first place, they were guilty of aggression, but is this what you are purporting? It’s not clear in the text.
Furthermore, I’m not sure how the statement “Factory owners giving jobs to peasants after the Enclosures bettered the peasants’ circumstances” logically leads to “The Enclosures bettered the peasants’ circumstances”. If anything, it seems to imply the opposite.
Mr. Carson, it took me a couple reads to see what you were actually arguing, and what you were (very dryly) striking down. I think the third paragraph from the bottom deserves some block-quotes, but it’s still quite readable.
MikeD, I think that Mr. Carson is pointing out that Mises and some others believed the Enclose-Exclude-Rent process benefits those excluded from what was formerly their means of production, by forcing them to produce surpluses (as if they weren’t already) and drawing them into wage labor. Obviously, this defense of expropriation is absurd, especially coming from those for whom private property is supposedly sacrosanct.
Mike D: My point was not to disagree with Mises, or to raise the issue of factory owners’ moral culpability one way or the other. It was simply to cite Mises as an authority to the effect that the Enclosures probably did, as a pure matter of fact, promote the wage system and increase wage employment by artificially restricting the range of alternatives. But if Enclosures were responsible for promoting the wage system beyond its natural levels, and if Mr. Kraus considers the wage system good in and of itself, to be consistent he must admit that the Enclosures were of net benefit. I was not attributing that opinion to Mises.
"But if Enclosures were responsible for promoting the wage system beyond its natural levels, and if Mr. Kraus considers the wage system good in and of itself, to be consistent he must admit that the Enclosures were of net benefit."
I would argue that this is not necessarily the case. One can view wage labor as good in and of itself while simultaneously acknowledging that state aggression has increased wage labor beyond the level it would naturally occur at in a free market. I can't speak for Mr. Kraus, but logically I don't see a contradiction here.
Mr. Carson I have a special appreciation for your clear thinking and writing style. It is always a pleasure to read you. Concerning the above discussion MikeD makes the valid point that:
"One can view wage labor as good in and of itself while simultaneously acknowledging that state aggression has increased wage labor beyond the level it would naturally occur at in a free market"
This of course is a logically valid statement however I would add that it is in fact the case that Mr. Kraus has argued for the necessity of the "wage system" which is the essence of state capitalism. Mr. Krause does not argue that the occasional exchange of labor in a free market is a good thing but rather that a "wage system", which can seemingly only exist with the enclosure of the commons, is necessary for the kind of capitalism which he praises so much.
So yes i think Mr. Carson's argument is clear, logical, consistent, and cogent. And that is how a philosophers arguments should be
So, factory owners aren't entitled to cheap labor, pharmaceutical companies aren't entitled to even trade secrets, but evidently peasants are entitled to free land owned by others, and their objections to being excluded from land they didn't own get championed by Marxists and Kevin Carson.
Thanks, Micah. I can see that such a position would be logically consistent–just no sign of such nuance in Kraus' position.
Tim: That's an interesting way of seeing the land question. I would put it like this: peasants are entitled to THEIR land, and nobody else is entitled to take it on the basis of feudal legal fictions. The Engish landed aristocracy didn't "own" the land. Their "title" to it consisted of the fact that a bunch of inbred yahoos made the cultivators pay rent on their own land.
My first thought on reading your essay was about the efforts Cecil Rhodes went to in South Africa to force black farmers off their own land. You see, he needed to have lots of workers for his mines. Can't mine gold and diamonds without workers. So much easier to force happy and prosperous farmers nearby to become poor and miserable miners than to import miners from, say, Newcastle. I think your discussion of Enclosures is right on target.
I also note my own family's history of being cleared off their land in the Highland clearances after the failed 1744 uprising. Our lot was transported to North America. Later Davidsons were transported to Botany Bay in some cases. (The famous author James Dale Davidson's ancestors were, e.g.) It seems like a classic Norman/British approach to making people miserable. I think it matches up with techniques the hated Romans used against conquered peoples.
A thought about Elizabeth Anderson and her sort of apologists for the established order. It seems like enthusiasm for turning ever more things into investment capital was a raging fad in the 1990s and earlier this century. Not surprising, really, when you consider that many tens of millions of Americans seem to have been convinced that they were experiencing prosperity in the midst of ever growing mountainous houses of cards. With everything being turned into an exchange traded fund, a fund of funds, a derivative, a credit default swap, a hedge for price risk, a hedge for counter-party risk (the taxpayer's role in the AIG bailout, for example), or a bundle of such claims, the appetite for making more things into investment capital seemed unquenchable.
Of course, it was obvious to many people that there was something odd about it. I came to the conclusion in the 1980s that there was something terribly wrong with owning stocks that I didn't understand. How could I value Gencorp – a traditional manufacturing company that made auto tires and sold them to the government for the war machine – when its price to earnings ratio went from 5 to 15 to 25 in a matter of years? I couldn't. Its stock price made no sense. So I sold it. I sold everything that stopped making sense. I stopped believing in the market mania a very long time ago.
I believe we have an enormous, unprecedented, and long lasting opportunity before us now. People see the bubble has burst. Millions are out of work. There is a crisis. The crisis is growing. And the opportunity for us is that people who are prosperous don't seek much change. Prosperous people, and people who think they are going to become prosperous, tend to support the established order that they think created the prosperity. I think that's what Anderson is talking about – how great things were.
Of course there are dangers and difficulties. And it is not well to gloat about how bad things have become, how badly the government screwed up. Many people are suffering, and many more are going to suffer more greatly.
It took the last great economic cataclysm, and most of a sixty-year depression to launch the American Revolution. The crash of 1722 burst the South Sea bubble and the John Law bubble. By 1730, about 95% of stocks that had been listed in 1722 were bankrupt. Of the stocks still listed in London, Paris, and Amsterdam, about 90% of their value had been wiped out. We are looking at the same sort of dramatic change, now.
My guess is that there will be at least a decade, perhaps several, in which to set things in motion on a good course toward a stateless society.
Unless markets are pefectly competitive for goods, the market for labor cannot be. Capitalism cannot exist in a perfectly competitive labor or commercial market since in such a market it cannot collect economic rent on the wages of its workers, since it workers would always go to where they were fully compensated for their efforts.
Ignoring this reality is the most glaring omission by the Austrians – who also fail to see that central banks and stock exchanges go hand in hand. If you want to get rid of the former you must first disband the latter.
Admittedly, I do not know much about enclosures. I do know that in The Market for Liberty, one area in which I absolutely believe the authors are in error is their belief that one can come to own a plot of land merely by placing a fence around it. Rothbard, on the other hand, correctly says that if one erects a fence, one has only acquired just ownership of the land immediately below the fence, and not everything in between; and that, if one wishes to also acquire legitimate ownership of the land within your fenced-off area, you must actively homestead it by mixing your labour therewith. (I believe this is in his The Ethics of Liberty, but I could be wrong.) I have to side with Rothbard on this.
Mr. Binder, I have to look at your comment with some confusion. Perfect competition in good or in labour is impossible. It is merely a concept that has no actual bearing on reality. Wage slavery, as Mr. Spangler has pointed out, is the product of the oligopsonising effects that statist regulation has on the purchase of labour; nevertheless, the abolition of the state and of its regulations would not create a condition of perfect competition.
I also cannot understand your objection to stocks, or what that has to do with central banks. How do these things go hand in hand?
Sincerely yours,
Alex Peak