Move Over, Lawrence O’Donnell

Michael Lind, at Salon (“Why libertarians apologize for autocracy,” Aug. 30,)  charges libertarians with an affinity for authoritarian regimes when it comes to implementing “free market reform.”

Of course he produces the obligatory quote from Mises on Mussolini having “saved European civilization,” along with the standard anecdotes of Hayek’s Chicago Boys and Pinochet.  He makes much, in particular, of Pinochet’s Secretary of Labor and Social Security — now a Cato fellow — Jose Piñera, who privatized the state pension system and “designed the labor laws that introduced flexibility to the Chilean labor market…”

I won’t even get into the question of Hayek’s complicity in specific policies, because that’s a topic for an entire monograph. Suffice it to say I’m skeptical of the extent to which he can be blamed for endorsing any particular measures.

More important is that Pinochet’s so-called “free market reforms” mostly fail a libertarian smell test, and bear little resemblance to anything like genuine free market reform.  There are plenty of us left-wing free market libertarians, at Center for a Stateless Society and Alliance of the Libertarian Left, who have nothing but outrage and contempt for Pinochet.

Some right-wing “libertarians,” who care more about defending the interests of big business than about genuine free market principles as such, are fond of saying that Pinochet was “economically libertarian but politically authoritarian.”  Balderdash!

Pinochet’s economic policies were more state capitalist than libertarian.

I don’t doubt a bit that Pinochet’s new labor laws “introduced flexibility to the Chilean labor market.”  All that hanging from hooks, and assorted other stress holds, would surely limber those uppity workers up just as supple as anyone could please.  Lest we forget, even the most orthodox of marginalist economists consider labor to be a coequal “factor of production.”  In Chile, owners of that particular “factor of production” who attempted to organize and negotiate a better rate for their services frequently found themselves lying in ditches with their faces hacked off.   Factory managers escorted members of the secret police onto the shop floor to point out the labor organizers and agitators, to be subsequently “disappeared,” tortured and murdered — their bellies, as Lind points out, slit open before they were dumped into the ocean from helicopters.  You think if a left-wing dictator had taken similar measures against the owners of capital, in order to reduce their bargaining power, it would be described as “politically authoritarian but economically libertarian”?

Genuine libertarians oppose the grant of artificial titles to vacant and unimproved land, by which the landed aristocracy is able to hold the land out of use or charge tribute to those who would homestead and cultivate it.  By this libertarian standard, the whole quasi-feudal hacienda system that prevails in Latin America is utterly illegitimate.  Up to eighty percent of the land on a hacienda is undeveloped, while neighboring land-poor peasants work as agricultural laborers on the landlord’s property — land which their ancestors probably broke for cultivation.  By any legitimate principle of free market libertarianism, this land would belong to the peasants.  Pinochet’s partial reversal of Allende’s land reform was just as much an act of theft, by libertarian standards, as the Enclosures in England or forced collectivization in the USSR.

Pinochet’s “privatization” program, like most other examples of such policies carried out around the world under the Washington Consensus, was really corporate looting.  The typical “privatization” cycle is this:  World Bank technocrats, in collusion with their native counterparts in the state bureaucracy, persuade a regime that’s utterly unaccountable to its people to go deep into hock to fund public infrastructure — mostly the utilities and road infrastructure to subsidize foreign capital investment and make it more profitable.  Once the regime is in debt, the World Bank and IMF act like a “company store” to extort desired behaviors from the regime.  Besides ratifying “intellectual property” protectionism, such measures usually entail “structural adjustment” policies like “privatizing” the infrastructure, often selling it to the same global investors it was built to subsidize in the first place, at fire sale prices.  The sale is often preceded by enormous amounts of government spending to make the assets sufficiently attractive to be salable.  The new owners’ first order of business, of course, is stripping assets and selling them off, usually realizing far more than the purchase price.  And the newly privatized state services continue to function within a web of state-enforced corporatist protections so the “private” state services don’t have to compete in a free market.

Most “Free Trade Agreements” are really corporate protectionist measures that have about as much to do with free trade as the Ministry of Truth had to do with truth.  The same is true of the extent to which most “free market reform” has anything to do with free market reform.

Lind’s critique takes on an extra layer of irony when we consider the role of FDR and Truman in creating the postwar global American Empire, and the role of Cold War liberals in installing reactionary dictators when “communists” like Arbenz menaced the moral sanctity of United Fruit’s bananas.  Sukarno and Diem were overthrown as part of Saint Kennedy’s “bear any burden, pay any price” policy of counterinsurgency, and it was carried out by idealistic liberals from Harvard and Georgetown.

Boris Yeltsin’s kleptocrats carried out policies in Russia that were quite similar to Pinochet’s “free market reform” in Chile.  And Jeffrey Sachs — you know, the same progressive fellow who hangs with Bono and Warren Buffet these days — was at least as culpable in the process as Friedman ever was.

Lind quotes at length from an 1857 letter from Macaulay:

It is quite plain that your Government will never be able to restrain a distressed and discontented majority. For with you the majority is the Government, and has the rich, who are always a minority, absolutely at its mercy. The day will come when, in the State of New-York, a multitude of people, none of whom has had more than half a breakfast, or expects to have more than half a dinner, will choose a Legislature. Is it possible to doubt what sort of Legislature will be chosen? On one side is a statesman preaching patience, respect for vested rights, strict observance of public faith. On the other is a demagogue ranting about the tyranny of capitalists and usurers, and asking why anybody should be permitted to drink champagne and to ride in a carriage, while thousands of honest folks are in want of necessaries. Which of the two candidates is likely to be preferred by a working man who hears his children cry for more bread?

Lind’s problem is that he has a mirror-image view to that of all the “autocracy sympathizers” he criticizes:  the state’s “progressive” interventions result from the power of the majority over the minority.  He ignores the possibility that the reason all those people had only half a breakfast was that the state was actively intervening to promote the interests of the minority against those of the majority, and that there wasn’t much libertarian about Macaulay’s “vested rights.”

The class polarization in Macaulay’s England was the culmination of a series of events that included both the Tudor and Parliamentary Enclosures, the nullification of copyhold, the Combination Act, and the Laws of Settlement.  In England, as J.L. and Barbara Hammond put it, the government took the society apart and put it back together much as a foreign occupier would do with a conquered country.  The industrial revolution as it actually took place was a coup d’etat by the state against society, by which the majority of the laboring population was robbed of its property in the land, forcibly turned into a propertyless proletariat, restricted from free association, and constrained in its movements by an internal passport system.  The main function of the state, on other words, was to enable a privileged class to live off the rents of artificial property rights and artificial scarcity.

Although right-wingers like to present the issue as one of preventing the state from redistributing wealth downward, the real issue is one of stopping the state from redistributing wealth upward.

Like the supposed friends of autocracy Lind criticizes, Lind himself seems to believe that an ostensible “representative democracy” can function as a genuinely popular government, and present a real threat to entrenched privilege.  A century of what Noam Chomsky calls “formal democracy” or “spectator democracy,” however, has shown experiments in representative government to be governed by Robert Michels’ Iron Law of Oligarchy:  “It is organization which gives birth to the domination of the elected over the electors, of the mandatories over the mandators, of the delegates over the delegators.”

The anarchist P. J. Proudhon compared representative democracy to constitutional monarchy:  “Instead of saying, as did M. Thiers, the King reigns and does not govern, democracy says, the People reigns and does not govern, which is to deny the Revolution…”

The so-called “progressive” policies of the 20th century welfare-regulatory state, on closer scrutiny, turn out to be measures adopted by the state as “executive committee of the (corporate) ruling class.”  Their primary purpose was to stabilize the corporate economy and guarantee a predictable rate of profit by restricting competition, guaranteeing sufficient aggregate demand to fully utilize industrial capacity, and prevent politically destabilizing levels of destitution.  As shown by Gabriel Kolko in The Triumph of Conservatism, the primary actors behind the Progressive Era regulatory regime was the regulated industries, which sought to cartelize their respective markets through the state.  G. William Domhoff has demonstrated, in a series of heavily documented policy studies, that FDR’s New Deal economic policies reflected the interests of one wing of organized capital.  Whatever incidental benefits these policies carried for the average person, they were not primarily the result of democratic pressure from below but a side-effect of the corporate ruling class promoting its own self-interest.

In other words, the political impetus behind the Food Stamps program had a lot more to do with the agribusiness interests in Bob Dole’s constituency than with the immensely powerful voting bloc of unemployed single mothers.

Roderick Long, in a post at Bleeding Heart Libertarians (“Libertarians In Jackboots?” August 30), challenges the “generous assumption”

that existing democracies really are majoritarian. As many libertarians have argued, the logic of monopoly government and special-interest capture explains why real-life “democracies” tend to be plutocratic oligarchies in democratic trappings.

On top of everything else, Lind repeats Lawrence O’Donnel’s howler about libertarians’ alleged silence about “abuses by police and the military.”  He’s seriously never heard of Radley Balko?  Liberals at The Nation have actually treated libertarian criticism of the TSA’s “papers, please” regime as a disingenuous right-wing conspiracy to discredit government.   If Lind is honestly unaware of just how prevalent libertarian critiques of the police state and national security state really are, it probably says something about the value of his opinion.

Translations for this article:

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory