Feed 44
IP Czar Admits Hamiltonian Nature of “Intellectual Property” on Feed 44

C4SS Feed 44 presents Kevin Carson‘s “IP Czar Admits Hamiltonian Nature of ‘Intellectual Property’” read by Mike Godzina and edited by Nick Ford.

Genuine productivity and progress destroys GDP. In a free economy, here’s how it should work: Profit is self-liquidating, and increased efficiency of producing things with less labor and capital — or even reproducing things like information at zero marginal cost — is passed on to the consumer in the form of lower prices. This means it takes less labor both for people to produce all the things they consume, and to earn the money to buy them.

The state can’t allow this to happen. Its copyrights and patents enable capitalists to monopolize the savings from efficiency as profit rather than passing it along to the consumer, and its regulatory entry barriers suppress competition from more efficient production technologies. That’s because the state — every state — works for the economic ruling classes that control it.

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Commentary
“Cultural Libertarianism” on Trial

In their July 20th Breitbart article, Milo Yiannopoulous and Allum Bokhari refer to the growing network of resistance to “social justice warriors” in the entertainment industry as “cultural libertarianism.” It’s a powerful term and intuitively appealing to supporters of a free society. Extending scepticism of “big government” to what the authors call “cultural authoritarianism” seems natural. In essence, what the authors call cultural libertarianism might be more accurately described as anti-political correctness.

Whilst cultural libertarianism (at least as the authors define the term) has merit, it’s often so intentionally “rough around the edges” that it becomes counterproductive. It also sometimes manifests itself in reprehensible ways. Rather than framing the debate as cultural libertarianism versus social justice, opponents of big government should take the best of both and discard what doesn’t work.

Let’s start with cultural libertarianism’s positives. It tends to be profoundly hostile towards anti-discrimination laws, and rightfully so. As Jeffrey Tucker argues, anti-discrimination laws represent an authoritarian approach to social change. They trample on free association and withhold information from consumers who may wish to avoid trading with bigots. In short, anti-discrimination laws push bigots into the shadows.

Cultural libertarians call out the vicious strategies social justice warriors frequently employ. There are numerous cases of online hate mobs — identifying as feminist and anti-racist — posting personal information (doxxing), harassing people, and sending death threats to those who express bigoted views.

Boycotts and pointed criticism of homophobes, sexists and racists are good things. Resorting to potentially life-ruining tactics, harassing, and threatening to kill those you disagree with are not. The immorality of such actions aside, John Stuart Mill reminds us in On Liberty that bigotry can only be extinguished by open debate:

Wrong opinions and practices gradually yield to fact and argument: but facts and arguments, to produce any effect on the mind, must be brought before it. Very few facts are able to tell their own story, without comments to bring out their meaning.

Despite their opposition to the social justice narrative, cultural libertarians frequently draw attention to issues facing marginalised groups. Those of us who are concerned with structural oppression could learn a lot about intersectionality from cultural libertarians. For example, feminist concerns about UK “lad culture” frequently ignore class considerations.  Empathy for low-income males is usually lacking in a social justice movement that claims to concern itself with disadvantaged groups.

But there are serious problems with cultural libertarianism too. Its proponents use doxxing, harassment, and death threats, just like the social justice warriors they criticise. This behaviour is far too often motivated by cultural libertarians’ blatant misogyny, overt racism and callous enjoyment of trolling.

Moreover, cultural libertarians are generally blind to structural oppression. They tend to view oppression as a phenomenon occurring on an individual or small group level, ignoring its systemic manifestations. Racism, sexism, and other cultural ills can’t be eradicated without an examination of the power structures within the world’s governments, media, criminal justice systems and other institutions.

Looking at the libertarian blogosphere, a neutral observer would be forgiven for thinking advocates of free markets have lost their way by failing to address non-state forms of oppression. The controversy surrounding Rihanna’s recent music video demonstrates this problem. Brendan O’Neill’s Reason article on Rihanna’s video is a prime example.

His criticism of any attempt to politicise pop culture is based on the false premise that art exists in a vacuum. The valid points O’Neill makes about the aggressive tone of some cultural critics are drowned out in a sea of scorn for anyone remotely interested in the morality of music videos.

Overall, there is value in cultural libertarianism just as there is value in social justice activism. Both sides are guilty of hyperbole and fail to acknowledge their own camp’s malicious elements. Instead, they tar the entirety of the other side as the problem. The shared attitude amongst both movements is, to paraphrase Scott Alexander, that they can tolerate anything except the outgroup.

My acquaintances with people from both groups probably biases me towards a non-partisan position. That said, I genuinely believe each side has something to offer. In the end, it’s perfectly consistent to be a cultural libertarian and a social justice warrior when one weeds out the authoritarian strains that exist in both.

Feature Articles, Symposium on Mutualist Political Economy
The Spooner-Tucker Doctrine: An Economist’s View

First, I [1] must begin by affirming my conviction that Lysander Spooner and Benjamin R. Tucker were unsurpassed as political philosophers and that nothing is more needed today than a revival and development of the largely forgotten legacy that they left to political philosophy. By the mid-nineteenth century, the libertarian individualist doctrine had reached the point where its most advanced thinkers in their varying ways (Thoreau, Hodgskin, and the early Fichte, the early Spencer) had begun to realize that the State was incompatible with liberty or morality. But they went only so far as to assert the right of the lone individual to opt out of the State’s network of power and tax-plunder. In this uncompleted form, their doctrines were not really a threat to the State-apparatus, for few individuals will contemplate opting out of the vast benefits of social living in order to get out from under the State.

It was left to Spooner and Tucker to adumbrate the way in which all individuals could abandon the State and cooperate to their own vast mutual benefit in a society of free and voluntary exchanges and interrelations. By doing this, Spooner and Tucker advanced libertarian individualism from a protest against existing evils to pointing the way to an ideal society toward which we can move; and what is more, they correctly located that ideal in the free market which already partially existed and was providing vast economic and social benefits. Thus, Spooner, Tucker, and their movement not only furnished a goal toward which to move, but they also greatly surpassed previous “utopians” in locating that goal in already-existing institutions rather than in a coercive or impossible vision of a transformed mankind. Their achievement was truly remarkable, and we have not yet risen to the level of their insights.

I cannot conclude a tribute to Spooner and Tucker’s political philosophy without quoting a particularly magnificent passage from Spooner’s No Treason No. VI, which meant a great deal to my own ideological development:

[I]t is true that the theory of our Constitution is, that all taxes are paid voluntarily; that our government is a mutual insurance company, voluntarily entered into by the people with each other. …

But this theory of our government is wholly different from the practical fact. The fact is that the government, like a highwayman, says to a man: “Your money or your life.” And many, if not most, taxes are paid under the compulsion of that threat.

The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is nonetheless a robbery on that account; and it is far more dastardly and shameful.

The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a “protector,” and that he takes men’s money against their will, merely to enable him to “protect” those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will, assuming to be your rightful “sovereign”; on account of the “protection” he affords you. He does not keep “protecting” you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villainies as these. In short, he does not; in addition to robbing you attempt to make you either his dupe or his slave.

The proceedings of those robbers and murderers, who call themselves “the government,” are directly the opposite of those of the single highwayman. [2]

Who, after reading that superb passage, can ever be a dupe of the State again?

I am, therefore, strongly tempted to call myself an “individualist anarchist,” except for the fact that Spooner and Tucker have in a sense pre-empted that name for their doctrine and that from that doctrine I have certain differences. Politically, these differences are minor, and therefore the system that I advocate is very close to theirs; but economically, the differences are substantial, and this means that my view of the consequences of putting our more or less common system into practice is very far from theirs.

Politically, my differences with Spooner-Tucker individualist anarchism are two-fold. In the first place, there is the role of law and the jury system in the individualist–anarchist society. Spooner-Tucker believed in allowing each individual free-market court and more specifically, each free-market jury, totally free rein over judicial decisions. There would be no rational or objective body of law which the juries would in any sense — even morally — be bound to consult, nor even any judicial precedents, since each jury would have the power to decide both the facts and the law of every case strictly ad hoc. With no guides or standards to follow, even juries with the best of will could not be expected to arrive at just or even libertarian decisions.

In my view, law is a valuable good that is no more necessarily produced by the State than is postal or defense service; the State can be separated from law making just as it can be separated from the religious or the economic spheres of life. Specifically, it would not be a very difficult task for Libertarian lawyers and jurists to arrive at a rational and objective code of libertarian legal principles and procedures based on the axiom of defense of person and property, and consequently of no coercion to be used against anyone who is not a proven and convicted invader of such person and property. This code would then be followed and applied to specific cases by privately-competitive and free-market courts and judges, all of whom would be pledged to abide by the code, and who would be employed on the market proportionately as the quality of their service satisfies the consumers of their product. In the present society, juries have the inestimable virtue of being repositories of defense of the private citizen against the State; they are indispensable nuclei of people outside the State-apparatus who can be used for protection of the harried defendant in the State’s courts. But in the libertarian society, that special virtue would be gone. [3]

On the problem of justice, however, reconciliation is possible: Tucker, after all, does say at one point that, “Anarchism does mean exactly the observance and enforcement of the natural law of liberty,” and that is precisely what I am calling for. [4]

My second political difference with Spooner-Tucker is on the land question, specifically on the question of property rights in land title. Here, however, I believe that the Tucker position is superior to that of current laissez-faire economists who either take no position on land or else blithely assume that all land titles must be protected simply because some government has declared them “private property”; and superior to the Henry Georgists, who recognize the existence of a land problem but who deny the justice of any private property in ground land. The thesis of the individualist anarchists, developed by Joshua K. Ingalls, was that private ownership of land should be recognized only in those who themselves are using the specific areas of land. Such a theory of property would automatically abolish all rent payments for land, since only the direct user of a piece of land would be recognized as its owner.

While I strongly disagree with this doctrine, it does supply a useful corrective to those libertarians and laissez-faire economists who refuse to consider the problem of land monopoly in the State’s arbitrary granting of land titles to its favorites, and therefore who fail completely to tackle what is probably the number one problem in the undeveloped countries today. It is not enough to call simply for defense of the “rights of private property”; there must be an adequate theory of justice in property rights, else any property that some State once decreed to be “private” must now be defended by Libertarians, no matter how unjust the procedure or how mischievous its consequences.

In my view, the proper theory of justice in landed property can be found in John Locke: that it first become private property by the use criterion. This rules out State sales of unused and unowned “public domain” to land speculators in advance of use, as conveying any valid title whatever. This much of the way I proceed with Ingalls and the anarchists. But once use and settlement convey proper title, it seems to me a complete violation of the Spooner-Tucker “law of equal liberty” to prevent that legitimate owner from selling his land to someone else.

In short, once a piece of land passes justly into Mr. A’s ownership, he cannot be said to truly own that land unless he can convey or sell the title to Mr. B; and to prevent Mr. B from exercising his title simply because he doesn’t choose to use it himself but rather rents it out voluntarily to Mr. C, is an invasion of B’s freedom of contract and of his right to his justly-acquired private property. In contrast, I can see no rational grounds whatever for the principle that no man can ever get off or rent out his justly acquired property. Tucker’s usually spirited and intelligent defense of the free market and of private property is here sadly lacking. Furthermore, such hobbling of land sites or of optimum use of land ownership and cultivation and such arbitrary misallocation of land injures all of society.

But my main quarrel with the Spooner-Tucker doctrine is not political but economic, not the form of our ideal system but the consequences that would follow after such a system is adopted. To that extent, the quarrel is not moral or ethical but scientific. I am the first one to concede that most economists vaingloriously think of their science as proving an open sesame to ethical and political decisions;but where economic matters are under discussion, it is our responsibility to take the findings of economic science into account.

Actually, in contrast to collectivist anarchists and to many other types of radicals, Spooner and Tucker tried to use economics rather than scorn it as excessively rational. Some of their fallacies (for example, the “law of cost,” the labor theory of value) were embedded in much of classical economics; and it was their adoption of the labortheory of value that convinced them that rent, interest, and profit were payments exploitatively extracted from the worker. In contrast to the Marxists, however, Spooner and Tucker, understanding many of the virtues of the free market, did not wish to abolish that noble institution; instead, they believed that full freedom would lead, by the workings of economic law, to the peaceful disappearance of these three categories of income. The mechanism for this peaceful abolition Spooner and Tucker found — and here they unfortunately ignored the teachings of classical economics and substituted instead their own fallacies — in the sphere of money.

The two basic interrelated fallacies of Spoonerite theory (and the theory of all schools of writers who have unkindly been labelled by economists as “money-cranks”) are a failure to understand the nature of money and the nature of interest. [5] Money-crankism assumes (1) that more and ever more money is needed on the market; (2) that the lower the interest rate the better; and (3) that the interest rate is determined by the quantity of money, the former being inversely proportional to the latter. Given this set of totally fallacious assumptions, the prescription follows: keep increasing the quantity of money and lowering the rate of interest (or profits).

At this point, money-crankism separates into two schools: what we might call the “orthodox,” who call on the State to print enough paper money to do the job (for example, Ezra Pound, the Social Credit Movement); and the anarchist or Mutualist, who wants private persons or banks to do the work (for example, Proudhon, Spooner, Greene, Meulen). Actually, within these narrow limits, the statists are far better economists than the anarchists; for while the State can wreak havoc by inflating enormously and by temporarily lowering the rate of interest, the anarchist society would, contrary to anarchist notions, lead to much “harder” money than we have now.

In the first fallacy, it must be concluded that money-cranks are simply pushing to its logical conclusion a fallacy adopted widely by preclassical and by current Keynesian writers. The crucial point is that an increase in the supply of money does not confer any benefit whatever on society. On the contrary, it is a means of exploitation of the bulk of society by the State, State-manipulated banks and their favorites. The reason is that, in contrast to potatoes or steel, an increase of which means that more goods can be consumed and more people benefitted, money does its full social work regardless of its quantity on the market. More money will only dilute the purchasing power, the value in exchange, of each dollar; less money will add to the value of each dollar.

David Hume, one of the greatest economists of all time, went to the heart of this question by asking what would happen if everybody magically woke up one morning with the quantity of money in his possession doubled, tripled, or whatever. It should be clear that everyone’s subjective feeling of affluence would fade quickly as the new dollars bid up the prices of goods and services, until these prices have doubled or tripled, and society would be no better off than before. The same would be true if everyone’s monetary assets were suddenly halved. Or we can postulate a sudden change of name from “cent” to “dollar,” with all denominations increasing proportionately. Would everyone really be one hundred times better off? No; indeed the popularity of inflation through the centuries stems from the very fact that everyone is not getting his money supply doubled or quadrupled all at once. It stems from the fact that inflation of the money supply takes place a step at a time and that the first beneficiaries, the people who get the new money first, gain at the expense of the people unfortunate enough to come last in line.

There was a brilliant New Yorker cartoon some years ago that cut to the heart of both the whole inflationist process and the sophisticated rationalizations for plunder and exploitation that have been used to justify it: a group of counterfeiters are happily contemplating their handiwork, and one says: “Retail spending in the neighborhood is about to get a needed shot in the arm.” Yes, the people who first receive new injections of money (whether the counterfeiting be legal or illegal) do benefit first (that is, the counterfeiters and those whom they spend the money on, or, as banks, lend the money to), but they do so at the expense of those who receive the money last and who find the prices of things they have to buy shooting up before the new injection filters down to them. There is a “multiplier” effect of injecting new money, but it is an effect that exploits some people for the benefit of others, and being exploitation, it is also a drag and a burden upon genuine production on the free market.

As for the rate of interest, it is not simply the price of money, and it is, therefore, not inversely proportional to its quantity. In the David Hume situation, for example, a fourfold rise in the quantity of money will lead to a fourfold rise in various prices, assets, etc., but there is no reason for this increase to affect the rate of interest. If $1,000 once brought $50 interest per year, $4,000 will now bring $200; the amount of interest will rise fourfold, like everything else, but there is no reason for the rate to change. Lysander Spooner believed that if the supplies of money were raised sufficiently (as it supposedly would on the purely free market), the rate of interest would fall to zero; actually, there is no reason for it to change at all.

In the process of inflation, as carried out in the real world, generally the new money first enters the loan market; while that occurs, the rate of interest on the loan market falls; but this fall is strictly temporary, and the market soon restores the rate to its proper level. Indeed, in the later stages of inflation, the rate of interest rises sharply. This process of inflationary distortion of the rate of interest followed by free-market restoration is, in fact, the true meaning of the familiar “business cycle” that has plagued capitalism since the rise of bank credit inflation. [6]

As for the rate of interest, it is not a function of the quantity of money. It is a function of “time preference,” of the rate at which people prefer satisfactions in the present to the same satisfactions in the future. In short, anybody would rather have $100 now than $100 ten years from now (setting aside possible changes in the value of money in the interim or the risk of not getting the money later), because he is better off if he can spend, or simply hold, the money right away.

It should be clear that this phenomenon of time preference is deeply rooted in human nature and the nature of man; it is not in the least a monetary phenomenon but would be just as true in a world of barter. And on the free market, interest is not just a phenomenon of lending, but (in the shape of “long-run” profit) would be fully as true of a world in which everyone invested his own money and nobody loaned or borrowed. In short, capitalists would pay out $100 this year to workers and landowners and then sell the product and reap, say, $110 next year, not because of exploitation, but because all parties prefer any given amount of money this year to next year. Hence, capitalists, to pay out wages and rents in advance and then wait for sale, will do so only if compensated by an “interest” (profit) return; while, for the same reason, workers and landowners are willing to accept this 10 percent discount of their product in order to take their money now and not have to wait for sales to the consumer.

It should be remembered by radicals that, if they wanted to, all workers could refuse to work for wages and instead form their own producers’ cooperatives and wait for years for their pay until the products are sold to the consumers; the fact that they do not do so, shows the enormous advantage of the capital investment, wage-paying system as a means of allowing workers to earn money far in advance of the sale of their products. Far from being exploitation of the workers, capital investment and the interest-profit system is an enormous boon to them and to all of society.

The rate of interest or profit on the free market, then, is a reflection of people’s time preferences, which in turn determine the degree to which people voluntarily allocate their assets between savings and consumption. Alower rate of interest on the free market is a good sign because it reflects a lower rate of time preference, and hence increased savings and capital investment. But any attempt to force a lower interest rate than that reflecting such voluntary savings causes incalculable damage and leads to depressions in the business cycle. Trying to lower the interest rate and expecting good results is very much like trying to raise the heat in a room by forcing up the thermometer.

Finally, it is important to show the true economic consequences of the Spooner Tucker system put into practice. Without the State to create the conditions and coercions for continued inflation, attempts at inflation and credit expansion could not succeed on the free market. Suppose, for example, that I decided to print paper tickets called “two Rothbards,” “ten Rothbards,” etc., and then tried to use these tickets as money. In the libertarian society I would have the perfect right and freedom to do so. But the question is: who would take the tickets as “money”? Money depends on general acceptance, and general acceptance of a medium of exchange can begin only with commodities, such as gold and silver. The “dollar,” “franc,” and other monetary units began not as names in themselves, but as the names of certain units of weight of gold or silver on the free market.

And this is precisely what would happen if the free market were given its head. Gold and silver would be generally used as money, and the various flighty attempts at creating new monetary units out of thin air would … vanish into thin air. Any banks which fraudulently printed paper tickets called “dollars,” thus implying that these were equivalent to, and therefore backed by, gold and silver, might continue in business a bit longer. But even they, without the State and its legal tender laws and central banks and “deposit insurance” to prop them up, would either disappear through “bank runs” or be confined to very narrow limits. For if a bank issued new paper tickets and loaned them to its clients, as soon as the clients tried to buy goods and services from nonclients of that bank, they would be undone, for the nonclients would no more accept Bank A’s notes or deposits as money than anyone would accept my “ten Rothbards.” [7]

Thus, a system of free banking, such as envisioned by Spooner and Tucker, far from leading to an indefinite increase of the supply of money and a disappearance of interest, would lead to a far “harder” and more restricted money supply. And to the extent that there would be no government-manipulated credit expansion, there would be a higher rate of interest. The nineteenth-century French economist, Henri Cemuschi, once expressed this very well:

I believe that what is called freedom of banking would result in a total suppression of banknotes (and also of bank deposits) in France. I want to give everybody the right to issue banknotes so that nobody should take any banknotes any longer. [8]

It seems to be a highly unfortunate trait of libertarian and quasilibertarian groups to spend the bulk of their time and energy emphasizing their most fallacious or unlibertarian points. Thus, many Georgists would be fine Libertarians if they would only abandon Georgists’ views on land, but, of course, the land question is by far their greatest point of concentration. Similarly, it has been particularly distressing to me as an ardent admirer of Spooner and Tucker to find that their followers have emphasized and concentrated on their totally fallacious monetary views almost to the exclusion of all else and even bring them forth as a panacea for all economic and social ills.

There is, in the body of thought known as “Austrian economics,” a scientific explanation of the workings of the free market (and of the consequences of government intervention in that market) which individualist anarchists could easily incorporate into their political and social Weltanschauung. But to do this, they must throw out the worthless excess baggage of money-crankism and reconsider the nature and justification of the economic categories of interest, rent and profit.

At least twice in the heyday of anarchism in the United States, individualist anarchists were exposed to critiques of their economic fallacies; but, unfortunately, the lesson, despite the weakness of Tucker’s replies, did not take. In the August 1877 issue of Tucker’s Radical Review, Spooner had written of “The Law of Prices: A Demonstration of the Necessity for an Indefinite Increase of Money.” In the November 1877 issue, the economist, Edward Stanwood, wrote an excellent critique, “Mr. Spooner’s Island Community.” Also, in Tucker’s Instead of a Book, there are a series of interchanges in which J. Greevz Fisher, the English follower of the quasi-anarchist Auberon Herbert, criticized Tucker’s monetary doctrines from the point of view of sound economics.

<< Back to Studies in Carsonian Mutualism.

Notes:

1. Murray N. Rothbard was founding editor of the Journal of Libertarian Studies. This article is reprinted from Rothbard’s Egalitarianism as a Revolt Against Nature and Other Essays (Auburn, Ala.: Ludwig von Mises Institute, 2000) chap. 13.

2. Lysander Spooner, No Treason: The Constitution of No Authority, No. VI (Boston, 1870), pp. 12–13.

3. Professor Bruno Leoni of the University of Pavia, though far from an anarchist, has recently written a stimulating defense of the superiority of the making of law by privately-competitive judges to the arbitrary and changing decrees of a state legislature. He, too, however, fails to recognize the necessity for a rational and libertarian code to provide the standard. See Bruno Leoni, Freedom and the Law (Princeton, N.J.: D. Van Nostrand, 1961) and Murray N. Rothbard, “On Freedom and the Law,” New Individualist Review(Winter, 1962): 37–40.

4. Benjamin R. Tucker, Instead of a Book (New York, 1893), p. 37.

5. For the sake of simplicity, we will here continue the practice of the classical economists of lumping “interest” and “profits” together. Actually, the rate of profit on the market tends, in the long-run, to equal the rate of interest. Short-run profit (and losses) would continue to exist on the market even if Spooner had his way and the rate of interest (and of long-run profit) fell to zero. The true nature of the distinction between interest and profit was not discovered until the work of Frank H. Knight, Risk, Uncertainty, and Profit (Boston, Mass.: Houghton Mifflin, 1921).

6. The Great Depression of 1929 has been universally blamed on free-market capitalism. For an explanation of this depression based on the above theory of bank credit inflation, see Murray N. Rothbard, America’s Great Depression (Auburn, Ala.: Mises Institute, 2000).

7. For a fuller description of the principles of money and banking on the free market and under government intervention, see Murray N. Rothbard, What Has Government Done to Our Money? (Auburn, Ala.: Mises Institute, 1990).

8. Henri Cernuschi, Conte Le Billet de Banque (Paris, 1866), p. 55. Quoted in Ludwig von Mises, Human Action (Auburn, Ala.: Mises Institute, 1998), p.443.

Commentary
Capitalism Smothers the Sharing Economy

Russia may have finally caught up with the rest of the world’s governments in cracking down on ridesharing services like Uber. Russia’s Federation of Car Owners (FAR), like any good oligarchy, has complained to Russian state authorities that “rogue” elements such as Uber, Gett, and Yandex represent a “threat to society.” Exactly what kind of threat do the web-based taxi services represent? FAR claims they don’t have “real world” taxicab expenses. Code for: They threaten our profits by avoiding artificial entry barriers we’ve secured.

This desperate play at stifling competition by FAR is not unique. By petitioning the Russian state to put an end to the threat these companies pose, Russia may soon join the growing list of countries in which established taxi services have used lawsuits and state regulation to rein in competitors who operate outside of the standard business model.

On his Café Hayek blog, Donald Boudreaux discusses the attacks governments around the world are waging against new “sharing economy” services such as Uber and Airbnb. Though it’s naïve to call Uber a part of the sharing economy, Boudreaux rightfully denounces the assaults, pointing out that these businesses offer a way for everyday people to turn their consumer goods into capital goods. Boudreaux recognizes that their business models shift ownership of the means of production away from “older” capital and into the hands of those formerly on the “periphery of those ranks.” He goes on to condemn government intervention which would smother the sharing economy, calling out the hypocrisy of those who in one breath decry the existing wealth gap, and in the next, attempt to suppress market forces that would achieve a more equitable distribution.

What’s missing from Boudreaux’s critique, among other things, is the role played by “private” enterprise in this global anti-competitive phenomenon. Government intervention suffocating innovative new enterprise doesn’t originate from within the state. Sure, the “reforms” which would quash the sharing economy are couched in government do-gooder phraseology like “consumer protection” and “safety standards,” but that language is only a diversion. As evidenced in the Russian FAR saga, the primary motivation behind the scheme is to protect existing capitalists from encroachment by dormant competitors. It is through the state that entrenched owners of capital seek to restrict others from also becoming owners of capital. In other words, today’s capitalists seek to maintain their profitable status quo through the strong-arm of the state using tactics such as regulatory schemes and intellectual “property.”

FAR’s efforts, like those being carried out by taxicab oligopolies in Germany, Australia, France, the US and elsewhere, show us how quickly so-called private enterprise jumps on any deviation from the current capitalist structure. That’s the name of their game: try to transcend the set boundaries of capitalism and you’ll be lassoed back in so as not to upset the apple cart. It’s all the more shameful that such parasitism is sold to the public by outfits who claim to be looking out for the good of the consumer.

Uber itself appears to have now become one of “today’s capitalists,” if it wasn’t one already. It has succumbed to the urge to strangle its other web-based competitors through political brinksmanship. It now works directly with local governments to craft ridesharing regulations. This serves not only to ingratiate it with bureaucrats, but also to hamstring genuine peer-to-peer ridesharing services that seek to route around Uber’s siphoning of funds from the driver-passenger transaction (as well as Uber’s well-documented mistreatment of its drivers). As it continues to grow, Uber seems destined to become more and more like FAR and the other capitalist creatures who will stop at nothing to snuff out any attempt to render them irrelevant.

Stigmergy - C4SS Blog, Weekly Libertarian Leftist Review
The Weekly Libertarian Leftist Review 92

Jonathan Cook discusses Israel’s endless misery for Gaza.

Curtis Bell discusses parallels between U.S. and Israeli racism.

Sheldon Richman discusses no compensation to Israel for the Iran deal.

Richard M. Ebeling discusses freedom of migration.

Lucy Steigerwald discusses America’s limited space for Iran stories.

George H. Smith discusses Spinoza’s thought from a critical perspective.

Helen Dale discusses paternalism and a book by Chris Berg.

Sheldon Richman discusses thought crimes, domestic “terrorism”, and police bullying.

Marjorie Cohn discusses U.S. abetted war crimes in the Philipines.

Dan Sanchez discusses why a foreign enemy is a tyrant’s best friend.

Sheldon Richman discusses how Obama and Kerry are playing with fire on the Iran deal.

Richard M. Ebeling discusses government control of freedom of movement vs personal freedom.

Stephen Kinzer discusses the Iran deal.

Laurence M. Vance discusses why libertarians pay taxes.

Laurence M. Vance discusses Ron Paul’s new book.

Laurence M. Vance discusses the hypocrisy of Christian fundamentalists.

Laurence M. Vance discusses Medicare and Medicaid.

Bill Blunden discusses the NSA’s 9-11 cover up.

Richard Ward discusses Sandra Bland.

Kathy Kelly and Buddy Bell discusses the conditions for peacemaking in Afghanistan.

Ramzy Baroud discusses rethinking the war on ISIS.

Stephen Lendman discusses the show trial of Gaddafi.

Mark Schuller discusses U.S. intervention in Haiti throughout history.

Jacob G. Hornberger discusses Donald Trump’s recent comment on John McCain.

Jacob G. Hornberger discusses immigration policy.

Ivan Eland discusses the Iran deal.

Roderick T. Long discusses ancient Greece and libertarianism.

George F. Smith discusses Lew Rockwell’s most recent book.

Lucy Steigerwald discusses American nuclear horror.

Josh Marshall discusses how Egypt’s policy breeds terrorism.

Commentary
Will the Real Feminists Please Stand Up?

Amnesty International has drafted a proposal calling for sex work to be legalized worldwide. The proposal “reflects a growing body of research from UN agencies, human rights organisations, and social science which indicates that criminalisation, in its varying forms, exposes sex workers to increased risk of human rights abuses.” According to Amnesty, the policy is inspired by the principles of harm reduction, physical integrity, and autonomy. Amnesty has never had an official policy regarding sex work in the past, and many involved in the sex industry view this as a huge step in the right direction.

In response to the proposal, several celebrities and human rights advocates, including self-proclaimed feminist Lena Dunham, have drafted a letter condemning Amnesty’s decision and calling for the proposal to be discarded. The letter cherry-picks statistics, saying that legalization leads to increased sex trafficking, and that “without a vibrant sex industry, there would be no sex trafficking.” The letter is misguided and comes from a place of privilege and downright ignorance about the realities of sex work.

Amnesty International understands what Lena Dunham apparently doesn’t: women own their own bodies. Outlawing sex work is just another way in which the State exerts its control over women’s bodies (as most sex workers are women). For someone like Lena Dunham, an outspoken advocate of reproductive rights, to call for the criminalization of sex work and for more restrictions on women’s bodily integrity is the epitome of white feminist hypocrisy. Speaking for other women rather than listening to them is a habit that seems to haunt white feminism.

Since the letter’s publication, many sex workers have spoken out in defense of Amnesty International’s proposal and their own human dignity. Dr. Brooke Magnanti took to Twitter, saying, “If anyone thinks they know better about the current state of sex work conditions than sex workers, they are fucking deluded.” In reference to Anne Hathaway, who also signed the letter, porn star Stoya tweeted, “Oh, you played a prostitute in a movie? I played a nurse in a porno. Does that qualify me to talk about working conditions in hospitals?” Thousands of sex worker supporters have signed a competing petition asking Amnesty to stand firm in their proposal.

The legalization of sex work is of the utmost importance in fighting against violence toward women. Laws against sex work marginalize sex workers and leave them exposed to sexual abuse, police violence, and trafficking. When rapists attack sex workers on the job, those sex workers have little to no recourse against their attackers. For sex workers, any encounter with police means losing their livelihood and their freedom. Because of the underground nature of sex work, prostitution lends itself to trafficking and sex slavery. If sex workers were able to work without fear of being arrested, they would have much more say in the conditions of their employment, and it would be much easier to leave the business if they so desired.

If Lena Dunham and the other signers of the letter against Amnesty International’s proposal care about women’s right to bodily autonomy, they should retract their signatures. Claiming to be a feminist while simultaneously calling for restrictions on the way women can use their own bodies to earn a living is duplicitous and wrong. Lena Dunham, if you think feminism is about shouting over other women and telling them you know what’s best for them while using the violent apparatus of the State to enforce your moral norms, you’d best take a seat.

Portuguese, Stateless Embassies
Simpósio sobre a economia política mutualista

Muitos dos anarquistas individualistas do século 19, particularmente os pensadores associados ao jornal Liberty, editado por Benjamin Tucker, procuravam combinar uma teoria política baseada na soberania individual e na autopropriedade com uma teoria econômica baseada na teoria do valor-trabalho. Como os marxistas, eles tendiam a condenar o sistema de trabalho assalariado como opressivo e interpretavam os lucros, a renda e os juros como formas de exploração; ao contrário dos marxistas, porém, consideravam essa exploração um produto não do mercado livre, mas da intervenção governamental e, assim, recomendavam não a abolição da propriedade privada, mas do estado.

Embora defendessem a competição, o livre mercado e a propriedade privada (ou uma manifestação dela), esses pensadores chamavam a si mesmos de “socialistas”, i.e. oponentes do capitalismo — porque pelo termo “capitalismo” eles não falavam do mercado em si, mas da divisão econômica prevalente entre capitalistas e trabalhadores, que enxergavam como uma interferência estatal nos mercados (especificamente, a proibição da emissão monetária e a defesa de títulos de propriedade que não se baseavam na ocupação pessoal). Frequentemente esses autores se chamavam também de “mutualistas”.

Embora a teoria política austro-libertária contemporânea se baseie em grande parte nas ideias de Benjamin Tucker, Lysander Spooner e outros da tradição mutualista, a teoria econômica austro-libertária foi inaugurada pela revolução marginalista e subjetivista inaugurada nos anos 1870 por Carl Menger e outros. Os austríacos consideram que essa revolução sepultou a teoria do valor-trabalho, vindicando assim o lucro, a renda e os juros como fenômenos legítimos de mercado. Os austro-libertários normalmente (embora nem sempre) inferem, assim, que não há nada de errado com o sistema “capitalista” de trabalho assalariado em si.

O livro Studies in Mutualist Political Economy (em português, “Estudos sobre a economia política mutualista”), escrito pelo anarquista individualista Kevin A. Carson, pretende reviver e defender a posição mutualista sobre esses tópicos e, ao mesmo tempo, incorporar alguns conceitos austro-libertários. Por exemplo, Carson pretende defender a teoria do valor-trabalho — mas em uma versão “austrianizada” que, ao contrário da marxista, tenta incorporar tanto o subjetivismo quanto a preferência temporal. Além disso, o trabalho histórico de Carson sobre o papel das elites corporativas é influenciado pelo trabalho de austro-libertários radicais como Murray Rothbard e Joseph Stromberg.

Contudo, embora a versão mutualista das ideias libertárias que Carson expõe tenham muito em comum com a versão austríaca, ele — como seus antecessores mutualistas e em contraste com a maior parte dos austríacos — considera injusta a separação dos trabalhadores da propriedade dos meios de produção. Sua investida contra o “capitalismo” (neste sentido do termo) tem caráter interdisciplinar e emprega argumentos econômicos sobre o grau de interferência do estado no mercado, argumentos históricos sobre o processo pelo qual essa separação de fato ocorreu e argumentos filosóficos a respeito dos princípios de justiça adequados que governam a aquisição e a transferência dos direitos de propriedade. A avaliação dos argumentos de Carson, igualmente, deve ser interdisciplinar.

Os argumentos provocantes de Carson merecem ser escutados se corretos e refutados quando incorretos. Portanto, eu apresento esta edição do Journal of Libertarian Studies dedicada a uma avaliação do livro de Carson de um ponto de vista austro-libertário (ou melhor, a partir de vários pontos de vista austro-libertários). Artigos escritos por mim, Robert Murphy, Walter Block e George Reisman examinam vários aspectos dos argumentos de Carson — econômicos, históricos e filosóficos. A eles, segue uma resposta de Carson. O simpósio é aberto com um artigo de 1965 de Murray Rothbard que, embora obviamente não direcionado à versão de Carson do mutualismo, pode servir como uma introdução útil a algumas das maiores semelhanças e diferenças entre as tradições aqui expostas.

Traduzido por Erick Vasconcelos.

Portuguese, Stateless Embassies
Estudos sobre o mutualismo carsoniano

Nas próximas semanas, o C4SS publicará em português e hospedará cópias do volume 20, número 1, do Journal of Libertarian Studies. Esse volume específico contém um simpósio sobre o livro de Kevin Carson Studies in Mutualist Political Economy. Links para os artigos podem ser encontrados nesta página e através da categoria “Simpósio sobre a economia política mutualista“. Os artigos a serem publicados nos próximos dias serão os seguintes:

1. “Editorial do simpósio sobre a economia política mutualista“, por Roderick T. Long
2. “A síntese marshalliana“, por Kevin A. Carson
3. “Rothbard contra a síntese marshalliana“, por Kevin A. Carson
4. “A doutrina de Spooner-Tucker: a opinião de um economista“, por Murray N. Rothbard
5. “A teoria do valor-trabalho: uma crítica a Carson“, por Robert P. Murphy
6. “Spooner sobre os aluguéis“, por Roderick T. Long
7. “Kevin Carson como Dr. Jekyll e Sr. Hyde”, por Walter Block
8. “Liberdade é escravidão: O capitalismo laissez-faire é intervenção estatal: uma crítica a Kevin Carson”, por George Reisman
9. “Cercados: uma crítica às ideias de Carson sobre os direitos de propriedade”, por Roderick T. Long
10. “Respostas”, por Kevin A. Carson

Feature Articles, Symposium on Mutualist Political Economy
Rothbard versus the Marshallian Synthesis

Murray Rothbard rejected, in the strongest terms, this Marshallian attempt at a synthesis of marginalist innovations with the legacy of Ricardo. And with it, he rejected Marshall’s attempted synthesis of labor and waiting as elements of “real cost.” To understand why, we must start with Rothbard’s distinction between the judging of actions ex ante and ex post. In judging ex ante, an actor determines which future course of action is most likely to maximize his utility. Judgment ex post, in contrast, is an assessment of the results of past action. Rothbard denied that “sunken costs” could confer value. “….cost incurred in the past cannot confer any value… now.” [88] “It is evident… that once the product has been made, ‘cost’ has no influence on the price of the product. Past costs, being ephemeral, are irrelevant to present determination of prices. …” [89]

Against the doctrine of classical political economy that “costs determine price,” which was “supposed to be the law of price determination ‘in the long run,'” he argued that “the truth is precisely the reverse”:

The price of the final product is determined by the valuations and demands of the consumers, and this price determines what the cost will be. Factor payments are the result of sales to consumers and do not determine the latter in advance. Costs of production, then, are at the mercy of final price, and not the other way around…. [90]

A revolutionary doctrine, indeed! Only, on closer inspection, it does not seem so revolutionary after all. And the Marshall and Ricardo to whom Rothbard opposed himself so dramatically, turn out to be gross caricatures. Their statement of the cost principle was nothing so crudely metaphysical as “the price of the final product is determined by ‘costs of production….'” [91] (Rothbard was, if anything, more charitable than Böhm-Bawerk, who felt compelled to deny that there was power “in any element of production to infuse value immediately or necessarily into its product.” [92])

Admittedly, too, Rothbard made a half-hearted attempt at fairness, in giving a slightly less cartoonish description of the Marshallian “scissors”:

Marshall tried to rehabilitate the cost-of-production theory of the classicists by conceding that, in the “short-run,” in the immediate market place, consumers’ demand rules price. But in the long run, among the important reproducible goods, cost of production is determining. According to Marshall, both utility and money costs determine price, like blades of a scissors, but one blade is more important in the short run, and another in the long run….

But he immediately proceeded to tear Marshall’s doctrine apart–or rather a caricature of it. In this straw-man version of Marshall, a modern counterpart of the scholastic realists of the Middle Ages, the “long run” was a phenomenon with concrete existence.

Marshall’s analysis suffers from a grave methodological defect–indeed, from an almost hopeless methodological confusion as regards the “short run” and the “long run.” He considers the “long run” as actually existing, as being the permanent, persistent, observable element beneath the fitful, basically unimportant flux of market value….

Marshall’s conception of the long run is completely fallacious, and this eliminates the whole groundwork of his theoretical structure. The long run, by its very nature, never does and never can exist….

To analyze the determining forces in a world of change, [the economist] must construct hypothetically a world of non-change [i.e., the Evenly Rotating Economy]. This is far different from… saying that the long run exists or that it is somehow more permanently or more persistently existent than the actual market data…. The fact that costs equal prices in the “long run” does not mean that costs will actually equal prices, but that the tendency exists, a tendency that is continually being disrupted in reality by the very fitful changes in market data that Marshall points out. [93]

(We have already seen, by the way, that Marshall’s long-run is not equivalent to the Austrians’ hypothetical world of non-change, or ERE, but rather to the Austrian “final equilibrium” toward which the economy tends, but never approaches).

Compare Rothbard’s version of Marshall to what Marshall himself said, as we have already quoted him above:

But in real life such oscillations are seldom as rhythmical as those of a stone hanging freely from a string; the comparison would be more exact if the string were supposed to hang in the troubled waters of a mill-race, whose stream was at one time allowed to flow freely, and at another partially cut off…. For indeed the demand and supply schedules do not in practice remain unchanged for a long time together, but are constantly being changed, and every change in them alters the equilibrium amount and the equilibrium price, and thus gives new positions to the centres about which the amount and the price tend to oscillate. [94]

There is a constant tendency towards a position of normal equilibrium, in which the supply of each of these agents [i.e., factors of production] will stand in such a relation to the demand for its services, as to give to those who have provided the supply a sufficient reward for their efforts and sacrifices. If the economic conditions of the country remained stationary sufficiently long, this tendency would realize itself in such an adjustment of supply to demand, that both machines and human beings would earn generally an amount that corresponded fairly with their cost of rearing and training…. As it is, the economic conditions of the country are constantly changing, and the point of adjustment of normal demand and supply in relation to labour is constantly being shifted. [95]

More important than the deviation of most prices from their normal value, at any given time, is the fact that they will tend toward this value over time if not impeded by monopolistic privilege. As Schumpeter wrote, although there may always be a positive average rate of profit, “[i]t is sufficient that… the profit of every individual plant is incessantly threatened by actual or potential competition from new commodities or methods of production which sooner or later will turn it into a loss.” The price trajectory of any particular capital or consumer good, under the influence of competition, will be toward cost: “for no individual assemblage of capital goods remains a source of surplus gains forever…” [96] Or in the words of Tucker, “competition [is] the great leveler of prices to the labor cost of production.” [97]

Setting aside Rothbard’s caricature of Marshall’s views (i.e., his supposed view of the long-run as actually existing in some real sense, as a static model like the Evenly Rotating Economy), we find that Marshall actually said something quite like what Rothbard said: the price of reproducible goods tends toward  the cost of production. Equilibrium price and the “long run,” like the Austrian “final equilibrium,” are not viewed in conceptual realist terms as actually existing things. Rather, they are theoretical constructs for making real world phenomena more comprehensible. The Austrian pose of radical skepticism, when it is ideologically convenient, effectively deprives economists of the ability to make useful generalizations about observed regularities in the phenomena of the real world.

The problem with Rothbard’s critique of Marshall is that it could be applied with almost as much justice to Rothbard himself. For example, Rothbard admitted that cost of production could have an indirect effect on price, through its effect on supply. In his discussion of the distinction between ex ante and ex post judgments, from which we quoted above, he also proclaimed it “clear that [the actor’s] ex post judgments are mainly useful to him in the weighing of his ex ante considerations for future action. [98] And directly after his statement quoted above that “‘cost’ has no influence on the price of the product,” he went on at greater length:

That costs do have an influence in production is not denied by anyone. However, the influence is not directly on the price, but on the amount that will be produced or, more specifically, on the degree to which factors will be used…. The height of costs on individual value scales, then, is one of the determinants of the quantity, the stock, that will be produced. This stock, of course, later plays a role in the determination of market price. This, however, is a far cry from stating that cost either determines, or is co-ordinate with utility in determining, price. [99]

But this is almost exactly how Marshall himself explained the action of the cost principle, at length, in his discussion of Jevons’ critique of Ricardo, in Appendix I of Principles of Economics. Indeed, one can find many passages in the Principles of Economics in which Marshall describes the action of cost on price through supply, in language almost identical to that of Rothbard above. Marshall did not claim that the price of a specific present good was mystically “determined” by its past cost of production. He argued, rather, that prices over time tended toward the cost of production through the decisions of producers as to whether market prices justified future production.

And the Austrians attached some very compromising qualifications to their bald statements that utility determined value, and that final price determined the cost of production. Böhm-Bawerk, in Positive Theory, wrote that value was determined by “the importance of that concrete want… which is least urgent among the wants that are met from the available stocks of similar goods. [emphasis added]” [100] Rothbard wrote that “[t]he price of a good is determined by its total stock in existence and the demand schedule for it on the market. [emphasis added]” [101] Likewise: “In the real world of immediate market prices, …it is obvious to all that price is solely determined by valuations of stock — by ‘utilities’ — and not at all by money cost…. [M]ost economists recognize that in the real world (the so-called ‘short-run’) costs cannot determine price…. [emphasis added]” [102] This sounds awfully similar, in practice, to Marshall’s understanding of the predominance of the “utility” blade of the scissors in the “short run.” The difference, as we saw above, was that Rothbard denounced the very idea of the “long run” as utterly meaningless.

Rothbard’s qualifications of the utility principle suggest a weakness of the subjective theory of value which we have recurrently pointed to in the sections above: it can be taken literally only to the extent that we ignore the dynamic aspect of supply, and treat the balance between demand and existing stocks of supplies at any point as given, without regard to the time factor.

This is true both of the Austrians’ utility theory of value of consumer goods, which assumes fixed stocks at the point of exchange, and of their imputation theory of factor prices, which likewise assumes a fixed stock of higher-order goods. As Dobb criticized the latter,

If the situation is handled in terms of concrete capital-goods (dispensing with the genus of “capital” as a supposedly scarce factor), then if these goods are reproducible there should be no reason for any positive rate of profit at all in strictly static conditions. If all inputs other than labour are produced inputs, whence the specific “scarcity” from which profit is supposed to arise? If assumptions of full static equilibrium are consistently adhered to, then production in the capital-goods sector of the economy will tend to be enlarged until the output of goods is eventually adapted to the need for them…. With the supply of them fully adapted to the demand for them for purposes of current replacement, there will no longer be any ground for their prices to be above the (prime) cost of their own current replacement (or depreciation). [103]

Dobb also wrote of the Austrian “assumption of given supplies of various factors, with consequential demand-determination of all prices…. [104] Later in the same work, Dobb remarked on the artificiality of value theories based entirely on the short-term balance of supply and demand:

….in order to make such statements, a number of things have to be taken as given (as — to take the extreme case — in all statements about Marshallian “short-period”, or quasi-short-period, situations): data that are dependent variables at another, and “deeper”, level of analysis….

One way of illustrating what is meant when one speaks of contexts in which demand-determined exchange-relations are applicable may be the following. One could suppose that all productive inputs were natural objects available at any given date in given nature-determined amounts [e.g., Marshall’s meteoric stones]…. But then, of course, the process of production as ordinarily viewed… would be non-existent….

To the extent, per contra, that human activity is assigned a major role in the production process and reproducible inputs… replace scarce natural objects, the essentials of the economic problem become different….

But if a formal mode of determination in terms of scarcity-relations… can be constructed, and can convey some information, in a situation of naturally-determined means or inputs, why should it not be able to do so in analogous situations where any set of n means or inputs, although not dependent on natural limitations, are necessarily determined as to their supplies in some other way? … Indeed, this is quite possible; but… subject to the restrictive condition that the set of n means or inputs is already given as datum. The restriction is a large one. It excludes from consideration all situations in which these supplies are likely to change (i.e. to change as a “feedback” effect of their prices), and analysis thus restricted can make no pronouncement as to why and how these changes occur or as to their effects–for which reason we spoke of the situations to which such a theory can apply as “quasi-short-period situations”. [105]

In Political Economy and Capitalism, Dobb wrote in similar terms of the Austrian assumption that, “in any given set of conditions, the supply of such ultimate productive factors was fixed.” [106] He qualified this in a footnote by adding, “Strictly speaking, the Austrians did not assume, or need to assume, that the supply of basic factors of production was unchangeable: merely that the quantity of them was determined by conditions external to the market, and hence could be treated as independent.” [107] Nevertheless, the practical effect was that, “[b]eing limited by an unalterable (for the moment) scarcity, these factors, like any commodity, would acquire a price equal to the marginal service which they could render in production: these prices formed the constituent elements of cost. [108] This required deliberately abstracting the “theory of value” of factors of production from cost, or any “characteristics affecting the supply.” [109]

In addition, the Austrian theory of factor pricing is, in a sense, an elaborate exercise in question-begging. Saying that factors are priced according to their marginal productivity is just another way of saying the price is based on capitalizing expected profit and rent. But the latter quantities, and their natural level in a free market, are precisely the points at issue between the mutualist and Austrian versions of free market theory.

As James Buchanan characterized it, the subjective theory was an attempt to apply the classical theory of value for goods in fixed supply to all goods, both reproducible and not.

The development of a general theory of exchange value became a primary concern. Classical analysis was rejected because it contained two separate models, one for reproducible goods, another for goods in fixed supply. The solution was to claim generality for the simple model of exchange value that the classical writers had reserved for the second category. Exchange value is, in all cases, said the marginal utility theorists, determined by marginal utility, by demand. At the point of market exchange, all supplies are fixed. Hence, relative values or prices are set exclusively by relative marginal utilities. [110]

Marshall believed, by the way, that production cost influenced demand, even in the short run, through buyers’ expectations of future changes in price as output increased. For a similar case of the effect of expectations on demand-price, we need go no further than electronic goods. How many people have postponed the purchase of a DVD player in the expectation that they would be produced more cheaply in a year or two?

For the Austrians, by definition, “value” was identical to market price at any given time. “Future price” was indeed subject to change, through producers’ reactions to present price; but to go so far as to introduce “equilibrium price” as a useful concept, or to claim a relation between equilibrium price and cost of production, was a no-no. Theoretical constructs are well and good — but only for Austrians.

The Austrian doctrine that utility determines price, if taken literally, is utter nonsense. The doctrine is true only with the qualifications that they, parenthetically, provided: that value is determined without regard to the long run, but only by the existing stocks of supplies in relation to market demand at any given time. And these qualifications, taken with Rothbard’s admission that cost of production indirectly affected price through its effects on supply, bring the substance of Rothbard’s theory quite close to that of Marshall.

Rothbard’s caricature of Marshall closely parallels the straw-man version of classical political economy which Jevons congratulated himself on destroying over a century ago. And Marshall’s analysis of the Jevonian critique of Ricardo, which we saw above, could be turned against Rothbard to great effect: if we consider Marshall’s actual doctrine, rather than Rothbard’s crude parody of it, it is apparent that the two are much closer in substance than Rothbard would admit; but if we are to take the doctrines of either Marshall or Rothbard as lampooned by their enemies–as the bare assertion either that cost “determines” price, or that utility “determines” price–the truth is much closer to the former than to the latter assertion.

Once we take into account changes in supply in response to changes in demand, we end up with a model in which the supply of goods adjusts to demand until the marginal price equals marginal cost; and the supply of factors of production, when it is elastic, will increase until factor prices reflect the cost of providing them. In other words, exactly what Ricardo and the rest of the classical school said.

The subjectivist utility and imputation doctrines, as stated, are true as far as they go; but they depend on taking the statements in other than the ordinary or obvious sense, and attaching special qualifications to them that render them irrelevant to the traditional problems of political economy. Perhaps that’s just the point.

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Notes:

88. Rothbard, Man, Economy, and State 239.
89. Ibid. 292.
90. Ibid. 302-3.
91. Ibid. 304.
92. Böhm-Bawerk, Capital and Interest 140.
93. Rothbard, Man, Economy, and State 305.
94. Marshall, Principles of Economics 346-7.
95. Ibid. 577.
96. Joseph Schumpeter, Ten Great Economists From Marx to Keynes (New York: Oxford University Press, 1965) 40-1.
97. Benjamin Tucker, “Does Competition Mean War?” Liberty August 4, 1888, in Tucker, Instead of a Book 405.
98. Rothbard, Man, Economy, and State 239.
99. Ibid. 292.
100. Böhm-Bawerk, Positive Theory of Capital 148.
101. Murray Rothbard, Power and Market: Government and the Economy (Kansas City: Sheed Andrews and Mcmeel, Inc., 1970, 1977) 88-9.
102. Rothbard, Man, Economy, and State 303.
103. Dobb, Theories of Value and Distribution 205-6.
104. Ibid. 114.
105. Ibid. 179-82.
106. Dobb, Political Economy and Capitalism 160.
107. Ibid. 160n.
108. Ibid. 160.
109. Ibid. 140.
110. James Buchanan, Cost and Choice: An Inquiry in Economic Theory, vol. 6 Collected Works (Indianapolis: Liberty Fund, 1999) 9.

Commentary
Snowden Proves the State Can’t Be Restrained

The Obama Administration finally responded this week to a two-year-old petition on Whitehouse.gov requesting the pardon of Edward Snowden. 170,000 signatures and a wave of anti-NSA public sentiment later, the White House formally refused the pardon alleging unspecified damage Snowden’s leaks inflicted on American national security.

The White House response made no mention of any public service benefit Snowden may have bestowed. Not a surprising omission considering most of what Snowden exposed was policy embraced by the president. Take for example the May 7, 2015 federal appeals court ruling finding the telephone metadata program Obama repeatedly defended illegal. The reality is Snowden’s leaks revealed that the growth of state power cannot be constrained—even by normal legal means—without assistance from extra-legal measures.

The intelligence apparatus not only hid behind the secrecy of its surveillance capabilities, it tried to protect itself from scrutiny by claiming that any substantive information released to a court would damage national security. It even claimed that it couldn’t explain exactly why or how this damage would occur, and never bothered to define “national security” or why it trumps individual rights.

We’re fortunate the Court of Appeals saw through this phony argument. However, it likely would never have heard the case if not for Snowden’s heroic actions—actions which the White House sneeringly called “civil disobedience.”

The government’s obstruction of justice has already wreaked havoc on plaintiffs like Wikimedia Foundation, who are fighting to maintain some semblance of Fourth Amendment privacy rights. According to Just Security:

By a vote of 5–4, the Supreme Court held that the plaintiffs in the [Clapper v. Amnesty International, 2013] case lacked standing to challenge the constitutionality of the FAA. Specifically, the Court reasoned that the plaintiffs had not shown that they had been injured by FAA surveillance, because they couldn’t establish a sufficient likelihood that their communications were being monitored under the statute. The plaintiffs couldn’t make that showing, because the government had refused to disclose, even in the most general terms, how the statute was being used. [emphasis added]

That case was decided just before the Snowden leaks. But the leaks may have signaled a shift in judicial opinion. The Circuit Court determined in ACLU v. Clapper that the Snowden leaks provided valuable new information:

The government has pointed to no affirmative evidence, whether “clear and convincing” or “fairly discernible,” that suggests that Congress intended to preclude judicial review. Indeed, the government’s argument from secrecy suggests that Congress did not contemplate a situation in which targets of § 215 orders would become aware of those orders on anything resembling the scale that they now have. That revelation, of course, came to pass only because of an unprecedented leak of classified information. [emphasis added]

According to Senator Ron Wyden (D-OR): “Now that this program is finally being examined in the sunlight, the Executive Branch’s claims about its legality and effectiveness are crumbling.”

Without leaks such as Snowden’s, public review of sweeping and intrusive government policies may never occur. These cases show that the architecture of democracy may in fact be crumbling as a result of advances in technologies that, in the possession of states, give them enormous power to spy on their citizens without detection.

All states expand their authority as a result of internal and external pressures, among them the battle for information supremacy. Logically, if knowledge is power, then more knowledge is more power. That expansion progresses toward the end goal of absolute authority. The progression may be halted by different factors including the democratic process, competition among states, and safeguards against the state’s technological capabilities.

We should consider, though, that the state’s ability to expand its surveillance power in secret may have outstripped the ability of existing democratic or legal checks against it. In short, we may be at the outset of a new era, one in which information can be acquired so rapidly and efficiently that lumbering, deliberative, and arcane processes like elections, legislation and even the court system may be at a permanent disadvantage against the power of what some experts call the “deep state,” a network of secretive government agencies and their corporate partners that form the clandestine security apparatus.

This suggests that such “illegal” acts as Snowden’s leaks are not only effective forms of counter-power, but essential to the cause of justice and limiting of government force.

Leakers and their journalist allies can serve as a bulwark against expansion of state power regardless of which government happens to be the offender. We should assume a state’s lack of transparency means it’s an offender, and is guilty until forced transparency proves otherwise.

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