Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
Corporate Capitalism, Not Simply a Product of the State
This is the first response to Kevin Carson's lead essay in C4SS's October 2015 Mutual Exchange. The second response from Steven Horwitz will follow. Kevin Carson will conclude with rejoinders to each.

Derek Wall’s Response to Kevin Carson.

My background is in ecosocialism. I am not an anarchist; in fact, I am currently International Coordinator of the Green Party of England and Wales. I would see ecosocialism as rooted in Marxist thought. So unsurprisingly I would tend to argue that non-capitalist markets tend to lead to the restoration of capitalism.

However, my polemic with Kevin is going to be blunted for three reasons. First, while I was mystified by the existence of free market left anarchism, I have had some education on the matter. While I am neither an anarchist nor an advocate of markets, I would agree, surprisingly perhaps, with much of Kevin’s analysis. We are both keen followers of Elinor Ostrom, whose perspectives are absolutely essential to me. Second, I do not adhere to a model of social change based on pure knowledge. Winning an intellectual argument is not the same as creating social change; debates like this are useful but are no substitute for applied practical action. There is a kind of gnostic Leninism that argues that correct intellectual positions are almost everything. I don’t agree. Third, I live with my wife in a trailer, we brew beer, and currently have about one hundred bottles of IPA, Pilsner and wheat beer. To some extent I was inspired to begin brewing by Kevin’s homebrew revolution. I have a materialistic perspective, and what can be more material than large quantities of home produced beer? This gives me a warm feeling whenever I see the words ‘Kevin Carson’. Nonetheless I have enough disagreement to make a debate, but I am not going to be calling anybody foolish and I will attempt to resist being dogmatic in my assertions here.

We certainly have a common enemy. Corporations dominate both economics and politics, concentrating power in their hands and encroaching on more and more of daily life. A fictional but clear illustration can be found David Foster Wallace’s novel Infinite Jest. Years are no longer numerical but are named by corporations as a form of sponsorship and advertising as part of the ‘Chronology of organization of North American nations’ revenue-enhancing subsidized time. The “Years” include Year of the Whopper, Year of the Tucks Medicated Pad, Year of the Trial-Size Dove Bar and so on to the year of the Depend Adult Undergarment and the Year of Glad. Corporations seem to impose an ever growing invasion of daily life and can be contrasted, apparently, with more innocent and constrained competitive markets. It is easy to see markets as normal and corporate markets as absurd and unnatural.

The writer David Korten argued that the relationship between a competitive market and corporate capitalism is like the relationship between a healthy body and a cancer. Markets are natural and beneficial in his view, but monopolies are not. They are the poisonous outgrowth of a healthy system. While I think Kevin’s approach is much, much more nuanced than Korten’s, I think this is a good starting point for debate. I would argue that the relationship between markets and corporate capitalism is more like a chicken and an egg. Markets tend, in largely spontaneous ways, to generate capitalism.

I think there are number of arguments to suggest that if we replaced corporate control with market competition, we would, in a relatively short time, be back to concentrated markets. I am, incidentally, a market skeptic; I tend to feel that any market is to a large extent oppressive and ecologically destructive, but that is part of a larger and perhaps more difficult debate than can be completed here.

Marx argued, I feel correctly, that there is a tendency for capital to become concentrated. Whatever the intention of market agents, competition tends to lead to the removal of smaller enterprises and a drive to monopoly. Even ignoring Marx, it is clear that traditionally, and I know that Kevin challenges this in an interesting way, economies of scale mean larger firms often drive out smaller. Internal economies of scale occur when increased output leads to falling average costs in the long term. Bulk buying reduces average costs for raw materials. Market power pushes down wages and prevents better uses of machinery and storage, which leads to falling overall average costs which can be used to drive out higher cost, smaller producers.

Marx argued in Capital that human labour power tends to be replaced by non-human capital. This has a number of implications. One is that the firms that invest first in new technologies tend to drive out those firms that don’t. Technological innovation with increased investment tends to lead to market concentration. This contrasts sharply with the libertarian view (to the extent as a non-libertarian that I understand it) that market power is a product largely of legal barriers created by the state.

Brewer, in his handy guide book Marxist Theories of Imperialism, summarizes Marx’s view:

Constant efforts to cut costs are forced on capitalists by competition, the primary driving force in capitalism. Any new method of production which reduces costs (a technical improvement, or an ‘improvement’ in labour discipline) will bring extra profits to those who introduce it quickly, before the general price level has been forced down. Once it is generally adopted, competition forces prices down in line with costs, wiping out any remaining high cost producers. Marx assumed (in general rightly) that large scale-production is more efficient than small-scale. Competition therefore forces capitalists to accumulate and reinvest as much as possible in order to produce on a large scale. Marx called growth through reinvestment of profits, concentration of capital. Bigger firms will be better able to survive, especially in slumps, and will be able to buy out smaller firms. The growth of the scale of production by amalgamation of capitals is called centralization of capital. (Brewer 1990: 33)

Markets also tend to encroach on more and more of human life. We haven’t got to the point where years are sponsored by corporations, but no doubt the moon will be used as an advertising billboard and our lives are increasingly spent in corporate space. Kurt Vonnegut’s novel Cat’s Cradle illustrates this with the concept of Ice Nine. In the book, Ice Nine is invented to help the US marines do battle. It is a fictional kind of ice with a chemical twist: When it comes into contact with water, it turns the water into ice. The idea is that the marines can drop ice nine into a river and create an instant bridge to move forward. The unintended consequence is that ice nine can never stop turning water into ice. If ice nine were to be used it would eventually turn all of the world’s water into ice, extinguishing life. In the novel, a chip of Ice Nine is held in a thermos flask, but inevitably it is released and life on earth is destroyed. Money tends to move into new areas of society with exchange value taking over more and more of human life. Money may not be Ice Nine, but it does tend to corrode non-market systems into money. Cash infiltrates more and more of society, so competitive markets, rather being natural and nonviolent, have increasingly totalitarian consequences.

Corporations seem to have cultural capital too. We can see Facebook, Uber, Twitter and other forms of web-based commons using cash to expand, floating on markets and squeezing out alternatives. Amazon is another example. In short, it is not enough to see corporations as purely a product of government intervention; there are additional powerful forces that tend to lead to market concentration.

Finally, I think Hegel noted somewhere that it is impossible to leap over one’s age. In a society even where we try to imagine alternatives, our dreams are powerfully conditioned by the world we exist within. We never have pure free will with which to design other ways of being. What we can imagine is limited by social forces that are often to a large extent unconscious, and even where we can mentally make a leap, material conditions limit what we can achieve. I think the literary theorist Raymond Williams argued that in this sense, utopias are more compensatory than emancipatory. We map alternatives as a substitute because our attempts to practically challenge the rich and powerful are impotent.

Elinor Ostrom once described how, as a school student, she was encouraged to join the debating society. She recounted how members of the society would argue one side of the debate and then change sides to debate the other. I believe this gave her considerable mental flexibility, and to some extent, with her pragmatic grassroots approach, she was able to envision some very radical things about political economy. I am not (Ostrom fan that I am) going to use this method and argue against my own points and suggest markets may not lead to corporate capitalism. Nonetheless, to move things forward I am going to look at some alternative perspectives. What is the point of Marxism if you cannot embrace contradiction?

Marx generally examined countervailing tendencies to the process that he sought to describe. Far from outlining a theological or deterministic system, he was aware that multiple factors, including intentional human agency, might blunt or reverse likely change. Equally in his late Russian discussion, where he toyed with the idea of the Russian communal farming system (the Mir) as providing a way of reaching communism without a capitalist stage, he suggested that his work in Capital might only be applicable to Western Europe. So while both theoretical argument and empirical evidence suggest that his argument for capital concentration is sound, counter tendencies are possible. Certainly Kevin has made a strong case for the fact that diseconomies of scale may mean that small scale production is cost efficient. Equally, in an era of fast evolving 3D printing and web-based advances, open source manufacturing may reverse any apparent historical trend.

Neither should we be technological determinists; to my view Marxism is an intellectual network approach with institutional, economic, ecological and social class all interacting. All history may be the history of class struggle but a range of factors including the legal come into play. I reject the idea that capital concentration is always and everywhere an effect of government action. However, institutional factors do shape economics. Companies seek to create barriers to competition and governments often help them. Concentration cannot, I feel, be explained purely as a product of governments manipulating otherwise competitive markets, but governments do contribute to corporate rule. In fact, any economy has an institutional element.

Kevin and I are perhaps starting off from different perspectives, close too, in the kind of non-corporate economy we both want to see. While he sees value in markets, he does to some extent over-leap the conventional assumptions, like both Marx and Ostrom, recognising that economic activity extends beyond markets and states. This position is vitally important because there is a large and increasingly militant rebellion against corporate neoliberalism taking place. In Europe, parties like Podemos and Syriza have risen on opposition to austerity and corporate control. I am still amazed that my friend Jeremy Corbyn, a lonely left wing MP who was more popular with Greens than his own party, has won a landslide victory to lead the opposition Labour Party here in the UK. In Rojava and the rest of Kurdistan, the revolutionary Kurds, learning from their own participatory experiments and the writings of green anarchist Murray Bookchin, are creating a left libertarian non-state.

The forces for change are rising. The debate around markets and corporations can have a modest but material effect on the change that occurs. Rather than simply dismissing Kevin Carson’s view, I would note that the kind of diverse market-plus-commons economy he, and indeed Elinor Ostrom, advocated, risks turning back into capitalism. To avoid this will require precise mechanism, perhaps some kind of jubilee as advocated in the Torah for wiping out debt and redistributing resources. Nonetheless, this vision of democratic ownership of the means of production is close to that of Marx. Marxists, in rejecting the market have, instead of creating a stateless society, often tended to recreate statist societies. While we cannot at a stroke move beyond both markets and states, we can I believe to some extent, roll both markets and states back, democratize the economy and create institutional governance which is participatory rather than elitist.

Finally, a heretical thought is that Kevin’s observation that corporate control involves violence through primitive accumulation is, of course, Marx’s view too. In Chapters 26 and 27, Marx hints, in contradiction to much of the rest of his work, that markets based on personal, broadly democratic ownership are possible. With the breakdown of feudalism, a measure of freedom existed but was snuffed out in England by the violence of enclosure. Rothbard, Marx and Carson have some shared perspectives; no wonder Kevin’s work is threatening and too often ignored both by left and right.

In summary, I don’t think corporate capitalism is simply a product of state-created legal barriers. This is part of the story but there are other forces that tend to promote monopoly. Equally, I don’t see markets as a panacea. However, like Kevin, I want to promote a diverse economy that moves beyond the state and the market to the commons. Last, much of Kevin’s analysis mirrors readings of Marx that suggest that democratic ownership of the means of production is essential to a more equal and ecological future.

Citations to this article:

Markets Not Capitalism
Organization Theory
Conscience of an Anarchist