Brief Introduction To Left-Wing Laissez Faire Economic Theory: Part One

In my last two blog posts, I responded to Lynn Stuart Parramore’s article titled How Piketty’s Bombshell Book Blew Up Libertarian Fantasies. At the end of the second one, I promised an explanation of the economic theory I used to critique her article. This post will be a brief introduction to said economic theory. Let’s get started.

This theory is called left-wing market anarchism or laissez faire socialism. Its basic contention is that a truly freed market has never existed, and that capitalism is a statist system. There is also the conviction that genuinely freed markets would result in greater relative equality and more worker friendly conditions. The first thing to cover are the four big monopolies identified by the late individualist anarchist, Benjamin Tucker. They are described in his famous essay, State Socialism and Anarchism: How Far They Agree, And Wherein They Differ. They are the money monopoly, land monopoly, tariff monopoly, and the patent monopoly or intellectual property monopolies. Let us consider each in turn.

1) The money monopoly pertains to a government or state grant of privilege to select individuals or people possessing certain types of property. This privilege is the exclusive right to issue money. The effect of this is to keep interest rates artificially high or maintain them period. In a left-libertarian market anarchist society, anyone would be free to issue a currency. There would be a competitive whittling down of lending money to the labor cost of conducting banking business. Another positive effect identified by Tucker would be the absence of control mentioned below:

It is claimed that the holders of this privilege control the rate of interest, the rate of rent of houses and buildings, and the prices of goods,—the first directly, and the second and third indirectly.

Kevin Carson has quoted Alexander Cairncross to the effect that:

the American worker has at his disposal a larger stock of capital at home than in the factory where he is employed….

Said capital or property would serve as collateral or backing. This would increase the bargaining power of labor in relation to capital, because the laborers would be able to organize their own credit systems for conducting independent business apart from the capitalists. As Gary Elkin notes:

It’s important to note that because of Tucker’s proposal to increase the bargaining power of workers through access to mutual credit, his so-called Individualist anarchism is not only compatible with workers’ control but would in fact promote it. For if access to mutual credit were to increase the bargaining power of workers to the extent that Tucker claimed it would, they would then be able to (1) demand and get workplace democracy, and (2) pool their credit buy and own companies collectively.

2) The land monopoly consists of governments or states granting or protecting land titles not based on occupation and use. This is a critique of absentee landlordism and the rent following therefrom. This has the effect of shutting out land based work as a competitive factor with industry. It also destroyed the independence to be derived from occupying land or making use of a stateless commons.

3) The tariff monopoly pertains to the protection of the profits of domestic capitalist industry from foreign competition. This increases the price of goods and thus extracts more of the product of laborers from them. It also helps create oligopolies or monopolies, because there is no competitive whittling down of profit or size. It’s worth noting that Pierre-Joseph Proudhon thought the money monopoly had to be abolished before the tariff monopoly, because the people put out of work by foreign competition would need a market with a vast demand for labor to find different work.

4) The patent or intellectual property monopoly allows people to extract monopoly prices from things that could conceivably be competed over. A person is also denied the ability to use their property in a way they see fit through aggressive force. Two people can write the same book without stealing from each other. Patents are also pooled by corporations to prevent any competition and to control economic resources. This allows them to lock the third world into a dependence on them for technology. In addition to the above, Kevin Carson has noted:

A survey of U.S. firms found that 86% of inventions would have been developed without patents. In the case of automobiles, office equipment, rubber products, and textiles, the figure was 100%.

The one exception was drugs, in which 60% supposedly would not have been invented. I suspect disingenuousness on the part of the respondants, however. For one thing, drug companies get an unusually high portion of their R & D funding from the government, and many of their most lucrative products were developed entirely at government expense. And Scherer himself cited evidence to the contrary. The reputation advantage for being the first into a market is considerable. For example in the late 1970s, the structure of the industry and pricing behavior was found to be very similar between drugs with and those without patents. Being the first mover with a non-patented drug allowed a company to maintain a 30% market share and to charge premium prices.

In my next post, I will continue this introduction.

Stay tuned!

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist