Every once in a while, someone states something so perfectly you just want to share it as widely as possible. A.R. Moxon’s explanation of billionaires and their role in society did that for me:
What they do is get themselves in proximity to the natural value generated by our natural human system — value created by humans simply by being human and living together in proximity to one another, the structure known as “society,” in other words, from which all possible value springs — and then steal it for themselves and only themselves. They capture certain parts of natural generative human value — some human enterprise or process or concept, something other that has been made possible only through the existence of human society, and has only become successful within that context by generating value for other humans — and use their unnaturally stolen value to own it, and then pervert it so that it increasingly stops providing value to others but only sends value to themselves. They then use the stolen value that they have hoarded all for themselves as proof that they are exceptionally valuable people.
Moxon’s first sentence is one of the most succinct summaries I’ve seen of the arguments that critics of capitalism have been making for the past two hundred years.
It’s an almost word-for-word echo of how Henry George described the working of landlord rent: landlords, by sitting atop a piece of land — something created by no human effort, which is in fixed supply — is able to engross the increased value of the location itself, which is created entirely by the prosperity of the surrounding community, and is completely independent of any improvements made by the landlord.
George was simply building on the analysis of differential rent by David Ricardo. The way it works is this: The most fertile land, which requires the least expenditure of effort and soil amendments to produce a given output of crops, is brought under cultivation first. As the population expands, more and more land — land of decreasing fertility, on which the same output of crops is increasingly costly — is brought into cultivation. Because farmers on the newly cultivated inferior land get smaller crops for the same expense, they must charge a higher price at market. The farmers cultivating the older, more fertile land are able to charge the same price because grain is a fungible commodity. The additional price they’re able to charge, just because the farmers on bad land charge the same amount, is an unearned income — a price they’re able to charge, over and above what would have been necessary to incentivize them to bring their goods to market, because of a situational advantage. This is the basis of the theory of economic rents, as unearned income resulting from power advantages rather than production.
Economic rents encompass not only differential rent on land resulting from location or fertility, but all forms of unearned income resulting from situational advantage. George’s son, Henry George, Jr., expanded his father’s analysis of land into a general critique of “privilege” — i.e., the ability to extract unearned income by engrossing and obstructing access to “natural opportunities:”
The monopoly of natural opportunities, heavy taxes upon production, private abuse of public services and other lesser privileges cause the great inequalities in the distribution of wealth which are evident all about. For these are not powers to produce wealth, but powers to appropriate it.
Institutionalist economist Thorstein Veblen’s term for the identical phenomenon, “capitalized disserviceability,” is helpful. It suggests not production, but refraining from obstruction when one has the power to do so, as the source of wealth.
Maurice Dobb, a Marxist, illustrated the same concept with the hypothetical example of tollgates: Suppose the state granted, to a favored class of people, the right to erect tollgates across all public highways and pocket the proceeds entirely for themselves. By all the laws of marginalist economics, property in these tollgates would become a “factor of production,” and allowing — forbearing to obstruct — commercial traffic on the highways would be a “productive service.” The amount the tolls pocketed by the gate owners added to the price of finished goods would be the “marginal productivity” of these productive services.
Neoclassical economics, unlike institutionalism, takes the “property rights” defined under a given society at face value, and treats the income which is created by the power to obstruct, in true wertfrei manner, as the reward for “value” created.
And indeed, the vast majority of wealth amassed by billionaires is the result of “value” which they create, not by producing, but by refraining from obstruction. In other words, the way to acquire wealth on the scale of billions of dollars is not through production, but through controlling the conditions under which others are allowed to produce. They do so through landlordism, through intellectual property laws, and through laws which restrict the function of supplying credit to the holders of stockpiled wealth. They are further facilitated by artificially cheap production inputs and socialization of costs thanks to the state, by state restraints on competition, and by state protections and indemnities against liability for the harms they cause.
On one point I take issue with Moxon: Billionaires don’t exactly “hoard” wealth — the sheer amount of wealth is beyond the ability of any human being to spend on consumption goods in many lifetimes — but rather use it to control the allocation of resources.
Apologists for capitalism, and for billionaires, frequently say that labor would be unable to produce any value if not for the “capital” which the capitalist “contributes” or “invests.” The capitalist “provides” the machinery which workers use to produce goods. But what does this mean? Does the capitalist actually construct the machinery themself? Is the machinery constructed from bundles of cash, stacked up like bricks? No.
Every single physical input into industry is either a free gift of nature extracted from the earth and modified by human labor, or the creation of successive groups of workers applying their labor to the previous output of other workers. It’s nothing but the free gifts of nature and human labor — both physical and intellectual — all the way down. The capitalist’s “capital” is nothing but a socially constructed ownership claim on the right to allocate these streams of output constantly flowing between the various groups of workers. The capitalist’s “provision” of capital is no different in kind from the feudal landlord’s “provision” of the land cultivated by peasants, or a Soviet industrial commissar’s “provision” of the factory machinery and raw materials employed by workers.
In every society in history, everything of value has been created by human labor acting on the free gifts of nature. All the various contending -isms are about is the socially constructed right to allocate the surplus. To date, with a few exceptions (Revolutionary Russia before Lenin dissolved the workers’ committees, Revolutionary Spain before the Communist-dominated Republic eliminated worker self-management, Chiapas, Rojava), no human society since the rise of the state has been without a parasitic class whose wealth resulted from “contributions to production” which consisted entirely of allowing it to occur without forcible hindrance.
The goal of anarchism is a society without such a class.
