Capitalism’s Just-So Stories
During one of the many civil wars between patricians and plebians that racked the early Roman Republic in Livy’s account, Menenius Agrippa — a spokesman for the oligarchy that had enclosed the common lands and reduced the Latin peasantry to tenant status and debt peonage — defended the privileges of the landed aristocracy with a Parable of the Body:
It once happened that all the other members of a man mutinied against the stomach, which they accused as the only idle, uncontributing part the whole body, while the rest were put to hardships and the expense of much labour to supply and minister to its appetites. The stomach, however, merely ridiculed the silliness of the members, who appeared not to be aware that the stomach certainly does receive the general nourishment, but only to return it again, and redistribute it amongst the rest.
Every system of class domination relies on a collection of myths — “just-so stories” — to present itself as natural and inevitable to those living under it, and to defend the wealth and power of the ruling classes as the result of merit. And they usually involve justifying the wealth of the ruling oligarchy as really being good for ordinary laboring folks. This is just as true — if not more so — for capitalism as for any other system.
At Foundation for Economic Education, Doug Thorburn — bless his heart — manages to roll most of capitalism’s just-so stories into a single by-the-numbers apologetic (“Can We Chill on Denouncing the Rich?” Aug. 6) that amounts to little more than a warmed-over version of Menenius Agrippa’s carney pitch 2500 years ago. The ahisorical myths Thorburn recycles are as central to the capitalist legitimizing ideology as the “Social Contract” is to that of the state.
The benefits of capital—owned by both the super-wealthy and more middle-to-upper income folks largely via retirement accounts, investing more modest amounts—are provided to us, from smartphones and laptops to trips to Disneyland and ocean cruises—for our enjoyment for a tiny fraction of the cost of that capital. Billions for the enjoyment and benefit of billions.
See? So vulgar, so unreflective, so utterly devoid of original thought, it might have come from one of those “The Wonders of Our Free Enterprise System” propaganda films the National Association of Manufacturers produced in the late 1940s. But it’s really pure Menenius Agrippa.
Thorburn begins by reminding readers of the indispensability of physical capital — paid for out of the wealth of the rich — to labor (his unfortunate use of a derogatory ethnic term doesn’t help matters).
Consider: what’s a trucker worth without a truck?
Let the question (and your intuitive response to self) sink in for a bit, while we ask similar questions of others. What’s a gaffer worth without the lights? What’s a ballplayer worth without TV? What’s a server worth without a restaurant? What’s a store clerk worth without the store and computer chips and scanner? I’ll even ask it of myself: what am I worth without my computer?
Let’s go back to the trucker. Without a truck, his value to others diminishes to near-zero. Compared with a Chinese Cooley carrying the trucker’s cargo on his back, the Cooley is worth a lot less, isn’t he? The trucker might not be as smart, as educated or as strong; yet, he’s worth thousands of times more than the Cooley. Why? Because of the truck.
Now, ask a simple question: who paid for that truck—a poor guy or a rich guy? You know the answer. Who employed the trucker—and kept him employed—a poor guy or a rich guy? Likely a rich guy. Few remain employed by poor guys, at least for very long.
And the factory that produces the truck is paid for by rich guys, he continues, as are all the other factories that produce all our consumption goods as well as all the tools that make our labor productive.
This is just a variation on the classical wage-fund doctrine, according to which the capitalist advances tools for workers to produce with, and wages to subsist on during the production process, out of pocket — and then pays himself back, along with compensation for his “abstention,” when the finished product is sold.
But the truck itself is produced by workers. And the factory that makes trucks is built by workers. And the food and other necessities of life consumed by workers while the factory and truck are being built are also produced by other workers. The “wage fund doctrine” is a lie. It was effectively demolished by Thomas Hodgskin, a free market advocate who wrote in the time before political economist became hired prize-fighters for capitalism. According to Hodgskin (“Labour Defended Against the Claims of Capital,” 1825), the material subsistence goods advanced to workers aren’t really saved from past production at all, but are produced near-simultaneously with their consumption. All capital goods and all subsistence goods consumed during the production process are created by other workers. Absent the capitalists, workers could carry out this function of continuously advancing their products to each other through some form of mutual credit. All capitalists do is interpose themselves between the workers in various industries, and collect tolls on their advancement of their respective outputs to each other during the production process.
Betwixt him who produces food and him who produces clothing, betwixt him who makes instruments and him who uses them, in steps the capitalist, who neither makes nor uses them, and appropriates to himself the produce of both. With as niggard a hand as possible he transfers to each a part of the produce of the other, keeping to himself the large share. Gradually and successively has he insinuated himself betwixt them, expanding in bulk as he has been nourished by their increasingly productive labours, and separating them so widely from each other that neither can see whence that supply is drawn which each receives through the capitalist. While he despoils both, so completely does he exclude one from the view of the other that both believe they are indebted him for subsistence…. Not only do they appropriate the produce of the labourer; but they have succeeded in persuading him that they are his benefactors and employers.
The capitalists’ money is just a symbolic marker of their accumulated wealth — stolen from the workers in the past — which gives them an artificial claim on workers’ current labor products, and thereby enables them to preempt the avenues by which workers mutually advance their labor products to each other.
Even more fundamental, Thorburn just accepts that the rich investors have all this money to spend on capital goods, and that workers don’t have enough resources of their own to pool and acquire capital goods, without bothering to ask why.
All the traditional capitalist explanations for profit — the wage-fund doctrine, capitalist “abstention,” time-preference — simply ignore the question of what Adam Smith called “original accumulation.” As stated by capitalist apologists right up to Thorburn, the situation is something like this: See, some people just happen to own the means of production, and other people just happen not to have anything to offer but their own labor, and need access to the rich people’s means of production and advanced wages to live on while they work.
To the extent that mainstream classical political economy addressed the question at all, it treated the original accumulation of capital as the result of savings, thrift, abstention and industriousness by the classes that accumulated the capital in their hands.
But “original accumulation” or “primitive accumulation” (a term more current among radical political economists) isn’t something that “just happened,” or came about through a peaceful process of entrepreneurs working hard and saving and reinvesting their savings. No, as Marx put it, it was a process whose history “is written in letters of fire and blood.” The reason workers in the British Industrial Revolution were proletarians with no capital and no land, with nothing to sell but their own labor, is that they were made that way. The great majority of the land, that under the medieval regime was either in communally owned open fields to which the entire peasantry had hereditary rights of possession, or in common pasture, wood and waste. And all this land, to which the peasantry had customary property rights, was stolen — enclosed by the landed aristocracy and gentry — and the peasantry were reduced to tenants at will and agricultural wage labor. What’s more, the propertied classes stole the land precisely because they knew the peasantry wouldn’t work hard enough for long enough hours or low enough wages so long as they had independent rights to the means of production and subsistence.
The reason the propertied classes in the 18th and 19th centuries had all that accumulated wealth to “invest” and “employ people” was that they had stolen virtually the entire land of England out from under the people who worked it. And their state had fought mercantile wars to subdue most of the Global South, enslave millions of its people, and enclose enormous tracts of its land the same way it already had in England. The capitalists’ police state, through the early 19th century, criminalized free association through the Combination Laws. The Law of Settlement acted as an internal passport system that prevented people from travelling in search of work on any but the capitalists’ terms. Then the capitalist state — in the guise of the Poor Laws authorities — auctioned off the destitute population, mostly children, from the poorhouses and shipped them by the carload to the factories of Birmingham and Manchester.
On a global scale, it’s even worse. Everywhere we look, we see concentrated land and natural resources in the hands of small oligarchies of super-rich, as the result of the same kind of robbery that happened in Britain. The hacienda system in Latin America, Hastings’ Permanent Settlement in Bengal, the British seizure of the most fertile land in East Africa and eviction of the peasantry — nothing but plain and simple robbery, by which the land was stolen from its rightful owners, the people who lived and worked on it. The process of land enclosure has continued under the neo-colonial regimes established after formal decolonization, right up to the present day. And whenever the neo-feudal system of land ownership has been threatened by the activism of landless peasants, the United States has been more than willing to intervene to install regimes that would massacre activists by the thousands and tens of thousands, and restore the land to the oligarchs.
Likewise the holdings of western corporations in the oil of Indonesia and mineral wealth of Africa trace directly back to colonial robbery, and continue to be enforced as “property rights” under the neoliberal regime.
Super-rich capitalists have lots of money to invest, and workers don’t, primarily because the billionaires and multi-millionaires are robbers, or the heirs and assigns of robbers.
Thorburn goes on to restate two more legitimizing myths that, despite its continued popularity among professional capitalist apologists, have become even more contrary to truth under the conditions of late capitalism. First is the myth — time-honored in Econ 101 textbooks — that individual savings are transformed into investment; and second is the myth that large-scale capital accumulation is the source of productivity.
Anything that reduces the wealth of the rich, like high taxes — Thorburn says — reduces the total amount of money they have available to hire people and to invest in the capital goods that make labor more productive. “If instead investors were allowed to keep their funds and invest, we would all be wealthier—including those of us who make their living via the use of trucks and computers.”
These dogmas have been obsolete for over a century, since industrial capitalism became subject to a chronic tendency towards overinvestment and excess production capacity.
First, most new capital expenditure doesn’t come from outside “investors” putting their money into corporate securities, or banks lending money to enterprises from depositors’ savings; rather, most corporate investment comes from retained earnings, and the supply of retained earnings is so massive that corporate management tends — if anything — to overinvest in wasteful, irrational capital spending boondoggles exactly the same way the Soviet planned economy did. Like the enterprise managers under Oskar Lange’s “market socialism” that Mises dismissed as “playing at markets,” American corporate management invests money it didn’t save out of its own pocket, that makes more money when the gamble pays off but loses nothing if it doesn’t, and therefore has nothing to lose. Like the Soviet nomenklatura, corporate management is a self-perpetuating oligarchy with de facto control over what amounts to a large mass of capital with no legal owner besides an entirely fictitious person.
And corporations have these enormous retained earnings, under monopoly capitalism, because they extract large super-profits at the expense of the consumer through rents on “intellectual property,” administered pricing in oligopoly markets, and all sorts of other entry barriers. Corporations are literally awash in more money than they know what to do with.
Second, the rich have way more capital than they’re investing, simply because there aren’t enough profitable investment opportunities to put all their money into. I repeat, late capitalism is chronically plagues by excess, idle production capacity and by excess investment funds with no profitable outlet. This — and not liberal do-goodism — is the real (i.e. functional, if not conscious) reason for massive government deficits and debt.
And third, the link between capital-intensiveness or the scale of capital accumulation and productivity has been growing obsolete for a long time, and continues to grow even more obsolete at a rate that increases with every passing year. As Douglas Rushkoff argued (“How the Tech Boom Terminated California’s Economy,” Fast Company, July 10, 2009), new digital information and networked communication technologies drastically reduced the amount of capital required to perform given tasks. In many fields — music, journalism, publishing, software — things that formerly required large office buildings with managerial hierarchies and expensive mainframe computers can instead be done by individuals with desktop computers. And the new open-source, browser-based and desktop productivity software people have at their disposal is many times more efficient and user-friendly than the shoddy, over-designed, proprietary gold-plated turds that corporations require their employees to use in-house. (To be honest, I’ve never in my working life used a corporate intranet or proprietary in-house “productivity software” at any job that didn’t seem like something from the movie Brazil.) At any rate, all this means a drop of one or two orders of magnitude in the need for investment capital in some information industries, and as a result lots of idle capital with nothing to invest it in.
The same tendency — ephemeralization of production technology, both in terms of material mass and money cost — has manifested itself in physical production. In the 1970s the development of relatively cheap, small-scale CNC (computer numeric controlled) machine tools meant that industrial production which formerly required large mass-production factories could be undertaken in garage factories and job shops like those in Italy’s Emilia-Romagna or China’s Shenzhen province. Since then, the scale and cost of CNC machinery has continued to plummet, until today open-source hardware hackers can produce a cutting table, router or 3-D printer for under $1000 — meaning that what was once done by multi-million dollar factories can be done in a garage shop with a collection of machinery amounting in cost to maybe six months good factory wages. That leaves a lot of unnecessary capital sitting around, competing for a diminishing number of profitable investment opportunities.
To get around this problem, capitalism increasingly relies on “intellectual property” to artificially prop up the scale of capital outlays required to produce, or to enclose cheap, small-scale production technologies within a corporate framework so that corporate headquarters can outsource all actual production to the job shops but use patents and trademarks to retain a monopoly on selling the product (and mark up the price 1000% or more). Capitalism also gets around the problem of over-accumulation and excess capacity through a series of one FIRE Economy bubble after another — the dotcom bubble of the ’90s, the housing bubble of the early noughts — and through government deficit spending and debt.
The latter is especially important. Military-industrial production utilizes enough idle capacity to make the difference in whether a company is profitable or not. And financing the U.S. debt with the sale of government bonds soaks up several hundred billion dollars a year in surplus capital that would otherwise simply sit idle — and gives it a modest guaranteed return. The US federal budget deficit and national debt are nothing but a farm price support program — for capitalists.
Menenius Agrippa was nothing but an apologist for the propertied classes of the Roman Republic, who put a veneer of legitimacy on their robbery. The mainstream of political economy served the same function in Britain, after industrial capitalists triumphed politically, and political economy went from being a revolutionary doctrine against the entrenched interests of the landed oligarch and mercantilists to being an apologetic doctrine in defense of the entrenched interests of capital. In this latter phase, Marx referred to them as “vulgar political economists,” “hired prize-fighters” on behalf of their capitalist patrons.
And so today, the mainstream of right-libertarianism — in particular, as exemplified by Thornburn — is nothing but an apologetic, twisting the language of “free markets” and “free trade” to defend the interests of the propertied classes who control the state.
Any true and honest free market doctrine will acknowledge that the great mass of wealth and property is stolen, and support the claims of the robbed rightful owners over those of the robbers. It will acknowledge that the overwhelming bulk of corporate profits come from rents on stolen land, artificial property rights, and artificial scarcities like “intellectual property,” and demand the abolition of monopolies and artificial property rights across the board. Rather than collusive “privatization” of public services, which amounts to a new corporate enclosure of the commons with the aid of the capitalist state, it will demand that properties and services funded by the taxes of working people be treated as the rightful property of those they serve, and restructured as stake-holder cooperatives controlled directly by those who use them. Rather than backing mercantilist agreements like TPP that enforce “intellectual property” monopolies and continue to enforce title to stolen land, it will demand the abolition of “intellectual property,” and the tearing down of all land enclosures and the restoration of the land to the cultivator.
Although the mainstream of right-libertarianism has become an apologetic operation on behalf of the economic ruling class, that is not to say by any means that all of classical liberalism or of free market libertarianism was so co-opted. Throughout the 19th century radical, anti-capitalist strands of classical liberalism survived — for example the above-quoted Thomas Hodgskin, the American individualists from Warren to Tucker, from Tucker to Voltairine De Cleyre and Dyer Lum, and the Georgists (and 20th century Georgists like Bolton Hall, Ralph Borsodi and Franz Oppenheimer). And a good many people from this free market anti-capitalist tradition write even today — among other places at Center for a Stateless Society, for which I write this.
It’s time to expose the “libertarian” apologists for capital for what they are, and to drive the money-changers from the Temple.
A first class essay, one of the best I have read on here.
However, I would go further than the author – we not only need to abolish capitalism, we need to abolish the market system as well. The two hang together, and I remain sceptical that you can have a sustainable market economy for very long without capitalism (and thus a state).
Do you not accept that both “capitalism” and socialism are forms of proletarianism, the former by economic means, the latter by more overt political means? Do you not accept that both of them are designed to centralise control of the means of production to a bureaucracy or plutocracy? If so, then the solution is a genuinely free market, which I believe would resemble the pre-19th century economy: the distributist “society of artisans.” The more I read of Chesterton and Belloc, the more I find their ambition for every man to have “three acres and a cow” rather satisfying. Surely what you want, Tom, is economic independence for every family unit, rather than yet more power to be shifted upwards to a few rich individuals in control of the state?
From your reply, I would conclude that you might not know what socialism is. You may be making the classic mistake that those on the Right make of thinking that a state-controlled economy is socialism. It isn’t. It may be called that, on the basis that the government of such a country might be made up of ideologically committed socialists, but that does not make such a country socialist.
Socialism is anarchoid or libertarian in character. It requires the abolition of capitalism and the removal of the state, property, the class system, for-profit production, money exchange and the market system. So-called ‘communist’ countries were in fact just capitalist societies in a slightly different form. They had all the essential features of capitalism – including a state to enforce property rights; money; for-profit production (albeit the ‘profits’ were returns to the state); a class system, with bosses who controlled the means of production and workers who sold their labour in exchange for a wage; and, a market system. They were state capitalist. Thus, the USSR was capitalist, not communist. The Eastern Bloc countries were capitalist, not communist. China is capitalist, not communist, as are Vietnam and North Korea.
I am not here indulging in a purist fallacy. What I am saying is that socialism, if it is ever established, would amount to a completely different social relationship to capital. There would be no owners, workers, bosses, property, money, or a state. There would be no borders either in any formal sense. None of this is because socialists necessarily dislike these things or take a moral position on them one way or the other, it is because a socialist system has no more need for these things than a capitalist system has for hoes, oxes, sargeantry, manorial immunity, the feudal summons, or other archaisms.
Private property ownership, employment contracts, bosses, the stock market, paper money and other features of capitalism will one day be regarded as archaisms and will be looked on in much the same way we might now look back at indentured slavery or the medieval feudal system.
“You mean they exchanged things with bits of paper?”
“Yes, they called it ‘money’.”
“But how silly and what a waste of time. What was the point of it?”
“They also put these bits of paper in places called banks.”
“What on earth for?”
“They locked up the pieces of paper in steel boxes called vaults and safes.”
“It says here they owned bits of land.”
“Yes, they used pieces of paper, called deeds, which confirmed who owned what.”
“I don’t understand how somebody can own something that has been there since the dinosaurs. That’s ridiculous.”
Back when I actually was a Marx-ist, I wrote a little story called ‘The Socialist Economic Historian, or An Echo of John Ball’, based on the concept of a historian in the distant future looking back at capitalism and its archaism. My character was amazed to find that in the past, intelligent people used little coloured maps which marked who owned what.
Without wishing to be captious, I think when you refer to ‘proletarianism’ you may in fact mean ‘proletarianisation’. The latter is a Marxian term and was taken up by neo-Marxist academics like E.P. Thompson, who wrote ‘The Making of the English Working Class’ (which, after Capital itself, should be considered the seminal Marxoid text on the English industrial period).
Capitalism, in both its forms – whether market capitalism or state capitalism – is, I would agree, based on the proletarianisation of the masses. Socialism however, as I think I have explained, is a political and social force against proletarianisation.
IN a way, socialism and Marxism can be seen as the classical liberal struggle against proletarianisation, based on a class analysis. Karl Marx and Adam Smith can be bracketed together, in that they both believed in an economy founded on rational self-interest, it’s just that Marx took the analysis in a more subversive (and revolutionary) direction, no doubt influenced by the industrial conditions of the time.
The reference I make is to abolishing the market system. I envisage that the more organic types of market transactions that arise from ordinary human relations and involve a genuine quid pro quo would probably continue.
I don’t doubt that many socialists were not satisfied by each of the great socialist experiments, and and I accept that there are countless parallels to be drawn between those experiments and the current economic order. My contention is that the current economic order is nothing to do with free markets, and everything to do with a corporatocracy or plutocracy, enabled by the state (as far back as the late 19th century!) and not by the market system.
But when socialists write of “abolishing the market system”, it is difficult to understand just what they mean. First of all, we don’t have a free market and as Kevin Carson argues, absent IP laws, oversubsidisation of transport, direct subsidies, regulations which disproportionately hurt smaller firms &c. there would be smaller economies of scale. But second, you also speak of abolishing private property, and you dismiss the idea of attempting to run anything for a profit.
Again, it is my contention that private property is an entirely natural and organic institution which attempts to solve the problem of social order, i.e. how to prevent conflicts, which invariably involve scarce resources. And, if not on the basis of cost and profit-maximisation, how are socialist planners to run societies and economies without the most tremendous waste and inefficiencies?
I hear you, and other socialists, loud and clear when you dismiss the USSR &c as not properly socialist. But the questions I often pose to such socialists are:
1) How else would you achieve and then run a socialist society other than using the coercive powers of the state to seize the means of production and redistribute income?
2) If what you argue for are worker’s co-operatives and syndicates &c, then this is entirely workable within an anarcho-capitalist framework, but the only difference is that these syndicates would be voluntary. So, do you believe in using violence to achieve your socialist society, or are you happy for it to come about through voluntary associations of property owners (i.e. voluntarily choosing to abandon their property and possessions, or to share them with others)?
Well I haven’t, exactly, self-described as a ‘socialist’. What I am ideologically is complicated, would be difficult to explain here, and would distract us from the main points, but my view is that to call oneself a ‘socialist’ is at this point in time just empty rhetoric and about as useful as a merchant in medieval feudal England calling himself a ‘capitalist’. Capitalism came about mainly due to shifts in technology. The merchant could call himself a capitalist, if such a recognised term existed, and could propound the benefits of a market economy, public stock ownership, mass democracies, the discipline of private equity and the profit motive, but such a society would only come about if it made sense economically and benefited a sufficiently large and influential group who were willing to effect the political changes that would then lead to the necessary laws being passed to bring capitalism into existence. In the event, this is what happened, but it only happened as a result of the shift in material interests.
I think an analogous technological process will, in turn, bring about the fall of capitalism – probably in such a way that most people won’t even realise it is happening and without even calling itself ‘socialism’ – and I think we are already seeing this process before our eyes. But I think what we are also seeing is a quite momentous psychological change: the collapse of hierarchy and the mass mind, and a shift towards human autonomy. A lot of the issues discussed on here are a consequence of this long-term shift, which is just a continuation of the individuated mindset brought about by liberalism and manifests as a process of de-stratification. The question is, what will the new system look like?
You are arguing for a libertarian society based on some kind of market economy and, if I understand you correctly, a minarchist political settlement. My personal view is that market economies cannot work on any meaningful scale (beyond primitive quid pro quo transactions) without private property and private property inexorably leads to capitalism or some similar system in which there is a state and an axiomatic stratification in society, with owners and non-owners. This means that libertarianism is not a revolutionary movement. It is just advocacy of the same sort of society we have now, but with a much greater degree of freedom. We would therefore be left with the problem that society could, in time, slide back into doctrinal statism and authoritarianism. A libertarian society would still have owners and non-owners of property. There would be people selling their labour and others who live off the fruits of that labour without having to undertake any work themselves. The only system conceived of that does not have owners, and is thus genuinely anti-capitalist, is socialism. Ergo, socialism is the only system advocated that can lead to true freedom from statism and capitalism.
One of your objections to socialism is in reality a non-objection. You allege that there have, supposedly, already been mass experiments with socialism, but this is manifestly not the case. I have already explained why and provided you with a definition of socialism. The USSR and other similar societies were not “great socialist experiments”. They could not have been, since socialism could only work as a global system. The USSR and similar countries were nothing more than capitalist societies, masquerading as socialist, and they came about for particular historical reasons that we need not go into in any depth here. (In the case of the Soviet Union, Russia had an emerging middle-class and needed to industrialise, etc.). If you wish to argue against the USSR as a possible social model, you will hear no objection from me, but all you are doing is arguing against capitalism.
Turning to some of your specific points:
[quote]”My contention is that the current economic order is nothing to do with free markets, and everything to do with a corporatocracy or plutocracy, enabled by the state (as far back as the late 19th century!) and not by the market system.”[unquote]
I accept that capitalism and a market system are not the same thing. I’m not suggesting the two terms are synonymous, and I accept that theoretically a sustainable society could be built on market principles that lacked the other attributes and features of capitalism, but I see that as something for science fiction novels. In reality, such a society would not and could not last long without developing a legal framework for the enforcement of private property, and the relevant institutions would then evolve into statehood and a class hierarchy, with those who do not own selling their labour to those who do. One of the reasons I hold this view is because, unlike say Neil Lock, I hold that inequality between individual human beings and between different human races, is natural and inevitable. Capitalism reflects human nature, and is an outgrowth of it, but that does not mean that capitalism is inevitable or permanent . Capitalism is only one possible outcome. It is only inevitable in circumstances where we adopt market principles as the governing philosophy for the allocation and distribution of resources. If we adopt a different calculus and resolve that resources will be distributed and allocated democratically and co-operatively, and that production will be self-directed and for use rather than for profit, then capitalism not only ceases to be inevitable, it ceases to be relevant.
Now, I have asked this question (in various different forms) repeatedly on this site and nobody has ever been able to provide me with a satisfactory answer. Let me ask you: Has there ever been a successful example of a non-capitalist market economy that did not have some kind of state control, or something analogous to this, with centrally-enforced of private property ownership? If so, can you tell me when and where this existed?
[quote]”But when socialists write of “abolishing the market system”, it is difficult to understand just what they mean. First of all, we don’t have a free market and as Kevin Carson argues, absent IP laws, oversubsidisation of transport, direct subsidies, regulations which disproportionately hurt smaller firms &c. there would be smaller economies of scale.”[unquote]
But ‘free market’ is part of the terminology that marketeers like you use. You might not personally use it, but people like you do. I rather think that this argument that libertarians, capitalists and marketeers use that what we see now isn’t a true ‘free market’ does rather smack of a ‘No true Scotsman’ fallacy. One might instructively draw a comparison with my assertion that the Soviet Union and similar countries were not socialist.
I can confidently assert that the Soviet Union was not socialist. It had private property, including state ownership – which is just private property by another name. It had a class system, including a ruling class who owned all the resources at one remove through a complex network of political and managerial control. It had bosses who worked for them and did their bidding, and workers who did all the work. It had a market economy. It had production for profit (the ‘profit’ being the returns earned by the state committees). It was a capitalist country. To call it ‘socialist’ is as silly as claiming that an elephant is just a giant cow, despite the elephant having a trunk whereas the cow typically has no such appendage. I am not indulging in a ‘No true Scotsman’ pseudo-argument. I am simply making an observation based on facts. What is more, my argument can be replayed, tested and falsified as necessary and as the facts allow.
You, the other hand, want me to accept an argument that is untestable. You cheerily skip over the problem of how to introduce this mythical pure free market and jump straight to the merits of this fictitious system that hitherto has only existed in science fiction. You invite me to believe that because the way the market system has to work in practice isn’t very desirable – due to human inequality, the state, the laws of physics, and economic problems – we should accept that there is a purer version of the market that is possible and that works much better. Yet the problems of the Soviet Union and the problems you describe are both demonstrations of what happens when you apply market principles to reality. What that should tell you is that market economies might not work, not that a purer version of the market might be possible and might produce something better.
I do accept that socialism has not been tried and that presents my argument with some of the same problems – but there is a significant difference between, on the one hand, something that has not been tried because it is a purer form of something that already exists, and on the other, something that has not been tried because material conditions do not yet allow for it. The first category looks awfully like idealism, the only is a possible future reality.
[quote]”But second, you also speak of abolishing private property, and you dismiss the idea of attempting to run anything for a profit.”[unquote]
You haven’t quite captured me accurately there. I’m not dismissing the idea of attempting run anything for profit. I am not morally or ethically against capitalism, the market or profit. What I am suggesting is that there may be a better way of organising things. This is not a moral or ethical position for me. I don’t see capitalism as something ‘bad’. I just see it as a particular form of social relations that is now starting to look archaic.
When I talk of abolishing private property, I am not suggesting that people should stop ‘having things’ of their own. You would still have a home of your own, if you want one. You would still have personal possessions of your own. And so on. But having things of your own is not the same as owning things. One is a natural and organic state of affairs – “I live here, and these are my things” – the other is an imposed system. I would make a similar observation about abolishing the market system. Quid pro quo trades, whether for goods or services, will probably always exist in some form, but a market system is quite different in that it’s a whole society based on trading and doing business, which depends on the existence of private property, which in turn depends on having some people own resources and other people not own resources (otherwise, why trade?), which in turn means that resources are not allocated for use, but for profit (otherwise, why have a market in the first place?). Capitalism and statism are just a logical progression from this.
[quote]”Again, it is my contention that private property is an entirely natural and organic institution which attempts to solve the problem of social order, i.e. how to prevent conflicts, which invariably involve scarce resources.”[unquote]
Here your understanding of economics is built on a certain form of political economy and the ideology it creates to sustain itself. Capitalists want us to believe that resources are scarce. I suppose in a physical sense one could argue this is true, but economic scarcity is not quite the same concept as physical (or natural) scarcity. Economic scarcity is the result of a market economy.
“Quick, you simply must buy these fashion items, which are limited edition and based on a very rare type of leather!”
“We must invade X, Y and Z countries to ensure we have a sufficiently cheap oil supply for our economy! Anybody who says we shouldn’t launch military action right now is a traitor for not supporting our Brave Boys!”
“Sale on at Psycho Steve’s. Sausages only £2.00 per pound. Hot chocolate only £1.00 per kilo. Buy, buy, buy, buy, buy, buy, buy, buy, buy while stocks last!”
These are examples of how scarcity is invented or ’caused’ by the application of market principles to the allocation and distribution of goods. Ideology (capitalism is a very ideological system) is used, through propaganda, to encourage us to support market systems and reproduce these principles in our everyday lives, unthinkingly.
Now, let’s imagine if leather, oil, pork and cocoa were distributed under a co-operative system, where the aim was to address human needs. What we’d find is that the type of products and services that resulted would be entirely different.
What I am trying to encourage you to understand is that, whatever its rights and wrongs (and I accept that capitalism and the market has good points), the market system is an artifice. It may also be organic in the sense that it stems from organic human relations, but it is now a man-made system serving vested interests. What you call scarcity is not a ‘natural’ phenomenon. It is a concept, formulated to ideologically justify the market system politically (through discussions like this, where you repeat the formulas given to you) and commercially (through ordinary commerce, where the impression of scarcity is given in order to prop up demand and justify the continuation of social relations that reproduce capitalism).
I will concede that private property probably stems from some kind of modus vivendi that evolved in primitive cultures to minimise conflict. You make a valid point, but then you have to ask why people would need to have such a concept systemised. I can see why someone would want space and land of their own – I certainly do – but do many people have that now? Do you know many people who are living mortgage-free, for instance? Do any of these millions who live in capitalism’s cities and urban sprawl really have space of their own? It seems to me that ‘ownership’ under capitalism more often just means nominal ownership and not really having space of your own. You are just a slave or a prisoner. I appreciate that your vision of a market system might be intended to address this, but as I have already explained, these problems are coded into the market system itself and its foundational concepts, including private property.
Under a resource-based economy, people might have space and land of their own, not out of any benevolence or munificence on the part of a ruling class, but due to it being a material necessity. That, really, is the only basis on which ‘private space’ has any meaning. To get personal about it, I would like to live alone out in the countryside somewhere and be independent and self-sufficient. Thus, I need space and land of my own. If I didn’t have these wishes (and needs), then I would not have a need for space and land of my own, would I, so it’s unlikely I would go to the trouble.
[quote]”And, if not on the basis of cost and profit-maximisation, how are socialist planners to run societies and economies without the most tremendous waste and inefficiencies?”[unquote]
By ‘socialist planners’, what you have in mind is capitalism (i.e. state-capitalism). Production in socialism would be self-directed. There would of course also be some central planning for larger projects – for instance, if a socialist society wanted to explore space, it’s likely that this sort of endeavour would require some kind of central co-ordination. But socialist planners would not run whole societies.
Now I will turn to your questions…
[quote]”1) How else would you achieve and then run a socialist society other than using the coercive powers of the state to seize the means of production and redistribute income?”[unquote]
I might ask you the same question, but regarding socialism, my view about how it can come about is explained above. I think it will chiefly be a technological process, which will then be formalised legislatively with the necessary laws being passed to bring co-operative means of production into being – in short, socialism will arise in a similar way to capitalism, without most people noticing or understanding the process as it is happening. I believe we are in the middle of this process now.
[quote]”2) If what you argue for are worker’s co-operatives and syndicates &c, then this is entirely workable within an anarcho-capitalist framework, but the only difference is that these syndicates would be voluntary. So, do you believe in using violence to achieve your socialist society, or are you happy for it to come about through voluntary associations of property owners (i.e. voluntarily choosing to abandon their property and possessions, or to share them with others)?”[unquote]
The question is misconceived as socialism does not involve property ownership in the first place. Nor would it involve workers’ co-operatives or syndicates. Those are capitalist forms of business organisation. As explained above, I doubt violence is necessary to ‘achieve’ socialism, as it will arise through a shift in the material basis of production. In a sense, socialism is not something to be ‘achieved’. This is not a moral case. It is just a different system of social relations, just as the shift from feudalism to capitalism was so.
Your comment to Keir is like a gold mine. Containing a nugget of truth, but otherwise full of soil.
The nugget is this: “the collapse of hierarchy and the mass mind, and a shift towards human autonomy.” I’ve raised this point before in this very forum, and I was laughed at.
But socialism? Capitalism and socialism seem to be polar, incompatible opposites. Some like the one, some like the other. Then how does anyone acquire a right to forcibly impose their choice on others – without a state? Should there not be capitalist communes, and socialist communes, competing with each other? And, in what kind of market should they compete?
But anyway Tom, you and I both are providing decent material for Keir’s Ph.D. thesis.
Socialism cannot be imposed by any ‘state’ other than in the nominal sense that a post-capitalist state might seek to formalise co-operative means and mechanisms of production, but that could only be a formal process during a transitional phase of society between capitalism and socialism.
Socialism, properly understood, is the antithesis of both capitalism and statism. Any attempt to use anti-democratic force or coercion to create socialism will fail, and in any event will not result in socialism. It will just result in another version of capitalism – which is what the USSR was.
Capitalism, on the other hand, does require a state. Even anarcho-capitalists mostly allow for the existence of a minarchist settlement or minimalist state in their envisioned anarchist societies. The same mostly applies to anarchoid marketeers such as yourself – even you, Neil, acknowledge the need for some kind of central authority that will recognise and enforce private property rights. We are then just left with the legal semantics of whether such a construct would be a ‘state’ or not. My view is that even if it isn’t, it soon would be.
Some argue that socialism can only come about when it is the expressed democratic will of the overwhelmingly majority of people. I concede that this is one possible way for socialism to become reality, but I personally don’t think this will happen. I think socialism will develop into existence implicitly, probably without many people noticing much, and the main causative factors will be social change and technology.
I think we may be in agreement that a fundamental shift in human consciousness is going on, in simple terms from the collective mindset to the individuated mindset, a process that is not yet complete but will result in a complete reconfiguration of human social organisation. Your view appears to be that this will lead to a revival in a sort of market economy combined with a devolved political settlement. My view is that human autonomism will lead to socialism. In basic terms, this will happen because people will question why there is a need for institutions that are essentially hierarchical, including private property ownership, employment contracts and market economies. These things will become redundant, not because they are useless as such, but because no further use will be seen for them. Why should I work for you for a living if I can just work for myself? Why should I accept your imposed ideas about my identity and so on if I am an individual with my own destiny and autonomy? Why should we formally trade goods, a wasteful exercise, when we can have production systems that satisfy human needs? And so on. We could call this the will-to-freedom. It will result not in market revivalism, but in socialism. It probably won’t be called ‘socialism’, if that makes you feel any better, just like the early pioneers of capitalism probably called it by some other name that fell into disuse. There won’t be a need to name it. It will just be the way normal life is.
Yes, a most interesting essay. Demands a full response. It won’t be quick.