Breaking Eggs to Make “Libertarian” Omelets

We 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.

Translations for this article:

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