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Title: Vulgar Libertarianism Watch Author: Kevin Carson Date: September 9, 2006 Language: en Topics: right libertarianism, anarcho-capitalism, critique Source: Retrieved on 3rd September 2021 from https://mutualist.blogspot.com/2006/09/vulgar-libertarianism-neoliberalism.html
Since I first considered doing a blog, Iâve envisioned a recurring
feature called âVulgar Libertarianism Watch,â or some such. At one
point, I toyed with the idea of making that the name of the blog, and
devoting most of my effort to reporting on the kind of faux âfree
marketâ analysis that consists of an apologetic for big business. But
although there would be more than enough such material to keep me
blogging indefinitely, I decided such an exclusive focus would be too
much of a one-trick pony.
So Iâve decided to go with the original impulse, and regularly feature
âVulgar Libertarianism Watchâ without making it the main focus of the
blog. And what better way to kick things off than with the first
installment of this feature?
First, a note on what vulgar libertarianism is. The term, coined as far
as I know by yours truly, alludes both to the âvulgar Marxismâ of
twentieth century Marxoids, and to what Marx called the âvulgar
political economyâ of the generation after Ricardo and Mill. The
defining feature of vulgar political economy, as Marx described it, was
that it had ceased to be an attempt at the scientific explication of the
laws of economics, and had become a hired prize-fighter on behalf of
plutocratic interests. Classical political economy was a revolutionary
creed that threatened the interests of the landed oligarchy and the
mercantilists. And it was amenable to even more revolutionary uses, as
evidenced by the Ricardian socialists. The most famous socialist
treatment of Ricardo, of course, is that of Marx. But the socialist
development of classical political economy also included free marketers
like Thomas Hodgskin (the most preeminent of Ricardian socialists), the
mutualist and individualist anarchists from Warren to Tucker and
Spooner, and many Georgists. My own work falls within this latter array
of petty bourgeois deviationationists. But with the triumph of the
industrial owning classes in 1830s Britain, the focus of political
economy shifted from scientific investigation and a radical challenge to
the power of the Old Regime, to an apology for the status quo.
I described vulgar libertarianism as an ideology in the opening section
of Chapter Four of my Studies in Mutualist Political Economy. Since that
passage is as coherent a description as I am likely to write, rather
than reinvent the wheel Iâll just take the lazy manâs way out and paste
in the relevant paragraphs:
This school of libertarianism has inscribed on its banner the
reactionary watchword: âThem pore ole bosses need all the help they can
get.â For every imaginable policy issue, the good guys and bad guys can
be predicted with ease, by simply inverting the slogan of Animal Farm:
âTwo legs good, four legs baaaad.â In every case, the good guys, the
sacrificial victims of the Progressive State, are the rich and powerful.
The bad guys are the consumer and the worker, acting to enrich
themselves from the public treasury. As one of the most egregious
examples of this tendency, consider Ayn Randâs characterization of big
business as an âoppressed minority,â and of the Military-Industrial
Complex as a âmyth or worse.â
The ideal âfree marketâ society of such people, it seems, is simply
actually existing capitalism, minus the regulatory and welfare state: a
hyper-thyroidal version of nineteenth century robber baron capitalism,
perhaps; or better yet, a society âreformedâ by the likes of Pinochet,
the Dionysius to whom Milton Friedman and the Chicago Boys played
Aristotle.
Vulgar libertarian apologists for capitalism use the term âfree marketâ
in an equivocal sense: they seem to have trouble remembering, from one
moment to the next, whether theyâre defending actually existing
capitalism or free market principles. So we get the standard boilerplate
article arguing that the rich canât get rich at the expense of the poor,
because âthatâs not how the free market worksâ--implicitly assuming that
this is a free market. When prodded, theyâll grudgingly admit that the
present system is not a free market, and that it includes a lot of state
intervention on behalf of the rich. But as soon as they think they can
get away with it, they go right back to defending the wealth of existing
corporations on the basis of âfree market principles.â
So, without further ado, we proceed to dissect the first specimen of
libertarianus vulgaris. It would have been too much of a coincidence for
me to stumble across such an egregious example by chance at the same
time I was planning to kick off my blog. In fact, what happened was just
the opposite: I stumbled across this article and decided that it was too
good a target to pass up. If I canât get into gear and start blogging
when something this good falls into my lap, I might as well just give
up.
In âThat Taco Bell Brouhaha,â Art Carden addresses the boycott (by the
Wobblies, various student anti-sweatshop coalitions, and others) of Taco
Bell on behalf of the Immolakee Indians who pick its tomatoes. In
response to charges that Taco Bellâs wages are exploitative, Carden
responds:
This is precisely wrong. Taco Bellâs wage policy alleviates the
âcontinued misery of farmworkers and their familiesâ rather than
contributing to it. Wages are not foisted upon workers; they agree to
pick tomatoes for âsub-poverty wagesâ for a reason. In a market economy,
they do so because the âsub-poverty wagesâ paid by Taco Bell suppliers
are a better deal than anyone else is offering. Itâs the same reason
people line up for âsweatshopâ jobs in developing countries. Far from
contributing to âcontinued misery,â Taco Bell is making workersâ lives a
little bit better by offering something better than their next-best
option.
Before we rush to condemn free markets and market forces, we have to ask
where the workers are coming from. In many cases, Taco Bell suppliers
employ migrant workers who are making their own ârun for the border.â
Migrant workers in Immokalee come from places like Haiti, Mexico, and
Central Americaâareas where markets have been crippled by state
intervention for generations. The end result is a veritable army of
workers who have not been allowed to build a skill set through free
market employment and who are now suited to do nothing better than pick
tomatoes for pennies. Far from being the enemies of labor, American
markets are offering migrant workers an opportunity to substantially
improve their standards of living and the prospects of their children.
There are so many features of vulgar libertarianism here, itâs hard to
decide where to begin. The defense of the behavior of big business under
âactually existing capitalismâ in terms of âhow the free market worksâ
is, as I already pointed out in the passage above from Mutualist
Political Economy, an immediate tipoff that weâve encountered a vulgar
libertarian.
Itâs quite jarring, though, to encounter such writing at the website of
an institution so closely associated with the memory of Murray Rothbard.
A central theme of Rothbardâs work, and that of left-Rothbardians like
Joseph Stromberg, has been the essentially statist (and exploitative)
nature of corporate capitalism in its existing form. As Rothbard put it
in âThe Student Revolutionâ (The Libertarian, May 1, 1969), âour
corporate state uses the coercive taxing power either to accumulate
corporate capital or to lower corporate costs.â So to pass from reading
an excellent piece of free market analysis like this or this, to reading
an apology for the status quo like the piece under consideration here,
is positively obscene.
Especially typical of the vulgar libertarian style is the argument that
Taco Bell offers a âbetter dealâ than the ânext-best option.â This
argument can be found, phrased in slightly different words, in
pseudo-âfree marketâ boilerplate in just about any issue of The Freeman:
Ideas on Liberty or any daily installment of the Adam Smith Institute
blog. Here are several almost identical examples culled from The
Freeman:
But are the âlow-wage, non-unionâ Ecuadorian laborers better off working
now for some foreign corporation? Apparently they think so, or else they
would have stayed with what they were doing previously. (Would you leave
your job for one with less pay and worse conditions?) [Barry Loberfeld.
âA Race to the Bottomâ (July 2001)]
People line up in China and Indonesia and Malaysia when American
multinationals open a factory. And that is because even though the wages
are low by American standards, the jobs created by those American firms
are often some of the best jobs in those economies. [Russell Roberts.
âThe Pursuit of Happiness: Does Trade Exploit the Poorest of the Poor?â
(September 2001)]
What the Industrial Revolution made possible, then, was for these
people, who had nothing else to offer to the market, to be able to sell
their labor to capitalists in exchange for wages. That is why they were
able to survive at all.... As Mises argues, the very fact that people
took factory jobs in the first place indicates that these jobs, however
distasteful to us, represented the best opportunity they had. [Thomas E.
Woods, Jr. âA Myth Shattered: Mises, Hayek, and the Industrial
Revolutionâ (November 2001)]
In nineteenth-century America, anti-sweatshop activism was focused on
domestic manufacturing facilities that employed poor immigrant men,
women, and children. Although conditions were horrendous, they provided
a means for many of the countryâs least-skilled people to earn livings.
Typically, those who worked there did so because it was their best
opportunity, given the choices available....
It is true that the wages earned by workers in developing nations are
outrageously low compared to American wages, and their working
conditions go counter to sensibilities in the rich, industrialized West.
However, I have seen how the foreign-based opportunities are normally
better than the local alternatives in case after case, from Central
America to Southeast Asia. [Stephan Spath, âThe Virtues of Sweatshopsâ
(March 2002)]
More recently, the argument was reincarnated by Radley Balko, who
referred to Third World sweatshops as âthe best of a series of bad
employment options availableâ to laborers there. Within a couple of
days, this piece was recirculated over the âfree marketâ [sic]
blogosphere, along with numerous comments that âsweatshops are far
superior to third-world workersâ next best options...,â or to similar
effect (the last phrase comes from another article by Carden posted on
the Mises blog last May, by the way). For more examples of the same
argument, just Google âsweatshopsâ+ânext-best alternativeâ.
But the grand-daddy of this argument was Ludwig von Mises, writing in
Human Action:
The factory owners did not have the power to compel anybody to take a
factory job. They could only hire people who were ready to work for the
wages offered to them. Low as these wage rates were, they were
nonetheless much more than these paupers could earn in any other field
open to them. [Regnery Third Revised Edition, 619â20]
See, laborers just happen to be stuck with this crappy set of
options--the employing classes have absolutely nothing to do with it.
And the owning classes just happen to have all these means of production
on their hands, and the laboring classes just happen to be propertyless
proletarians who are forced to sell their labor on the ownersâ terms.
The possibility that the employing classes might be directly implicated
in state policies that reduced the available options of laborers is too
ludicrous even to consider.
In the world the rest of us non-vulgar libertoids inhabit, of course,
things are a little less rosy. There was a great deal of continuity
between the Whig landed aristocracy that carried out the enclosures and
other abrogations of traditional rights to the land, and the employing
classes of early industrial Britain. The early industrialists of
Manchester, far from being (as Mises portrayed them) an upstart class
who accumulated capital through their own parsimony, were junior
partners of the landed oligarchy; the latter were a major source of
investment capital. And the factory owners benefited, in addition, from
near-totalitarian social controls on the movement and free association
of labor; this legal regime included the Combination Acts, the Riot Act,
and the law of Settlements (the latter amounting to an internal passport
system).
In addition, the general legal framework (as Benjamin Tucker described
it) restricted laborâs access to its own capital through such forms of
self-organization as mutual banks. As a result of this âmoney monopoly,â
workers were forced to sell their labor in a buyerâs market on terms set
by the owning classes, and thus pay tribute (in the form of a wage less
than their labor-product) for access to the means of production.
Lysander Spooner, a hero to many anarcho-capitalists, in Natural Law
described the process in somewhat less than capitalistic language:
<em><em>In process of time, the robber, or slaveholding, class---who had
seized all the lands, and held all the means of creating wealth---began
to discover that the easiest mode of managing their slaves, and making
them profitable, was not for each slaveholder to hold his specified
number of slaves, as he had done before, and as he would hold so many
cattle, but to give them so much liberty as would throw upon themselves
(the slaves) the responsibility of their own subsistence, and yet compel
them to sell their labor to the land-holding class---their former
owners---for just what the latter might choose to give them. Of course,
these liberated slaves, as some have erroneously called them, having no
lands, or other property, and no means of obtaining an independent
subsistence, had no alternative---to save themselves from
starvation---but to sell their labor to the landholders, in exchange
only for the coarsest necessaries of life; not always for so much even
as that.
These liberated slaves, as they were called, were now scarcely less
slaves than they were before. Their means of subsistence were perhaps
even more precarious than when each had his own owner, who had an
interest to preserve his life. They were liable, at the caprice or
interest of the landholders, to be thrown out of home, employment, and
the opportunity of even earning a subsistence by their labor. They were,
therefore, in large numbers, driven to the necessity of begging,
stealing, or starving; and became, of course, dangerous to the property
and quiet of their late masters.
The consequence was, that these late owners found it necessary, for
their own safety and the safety of their property, to organize
themselves more perfectly as a government and make laws for keeping
these dangerous people in subjection; that is, laws fixing the prices at
which they should be compelled to labor, and also prescribing fearful
punishments, even death itself, for such thefts and tresspasses as they
were driven to commit, as their only means of saving themselves from
starvation.</em></em>
More neoliberal paint-by-numbers from the Adam Smith Institute.
Dr. Madsen Pirie, in surveying the âScorecard of Ideas,â attempts to
debunk critics of corporate globalization (which we know, of course, is
equivalent to âfree tradeâ in ASI-speak). Our Word has already given his
efforts a good fisking in the post linked above, but Iâd like to comment
on a couple of items myself.
One anti-globalist assertion supposedly debunked by Dr. Pirie is that
âThe rich world is getting richer, the poor poorer.â To disprove this
claim, he refers to national income statistics. Unfortunately, such
statistics are profoundly misleading. The monetization of activities
formerly carried out in a traditional subsistence and barter economy
results in skyrocketing nominal GDPs, even though such monetization
usually results from the expropriation of formerly self-employed
peasants and the use of the poll tax to coerce them into the wage labor
market (as in British East Africa). For that matter, when the English
rural labor force was dispossessed by the enclosure of commons and the
abrogation of copyhold rights to the land, the ânational incomeâ no
doubt went up considerably.
But best of all, in response to the claim that âMultinationals exploit
people in poor countries,â Dr. Pirie dusts off the âbest available
alternativeâ chestnut debunked in our post yesterday.
One personâs exploitation is anotherâs opportunity. Multinationals pay
lower wages in developing countries than in rich ones: thatâs why they
go there. But their pay and conditions are reportedly better than those
available elsewhere in poor countries, and so represent economic
advancement. There are usually waiting lists to work for them.
But golly, the transnationals sure do seem to gravitate toward banana
republics where the death squads torture and âdisappearâ labor
organizers and peasant co-op leaders, or toward âworkersâ paradisesâ
like China, where attempting to organize an independent union can get
you a stint in a mental hospital. Wonder why that is? And the foreign
policy of the U.S. government sure does seem to devote an awful lot of
effort to making sure such anti-labor regimes stay in power. For
example, the Suharto regime (which was put in power by a U.S.-sponsored
coup, followed by the mass-murder of several hundred thousand leftists)
treated independent labor organizing as a serious criminal offense. Even
today, in the neoliberal Indonesian âdemocracyâ(TM), theyâre barely
legal. And Indonesia is a favorite haven for sweatshops. Again, wonder
why that is?
A man who hands over his wallet to a mugger does so because he prefers
it to the ânext-best alternative.â So what? As Benjamin Tucker pointed
out over a century ago, the capitalists systematically manipulate the
state to create a buyersâ market for wages and limit the conditions
under which workers can sell their labor, and then blithely answer all
criticisms with the response that the workers âvoluntarily agreedâ to
work on those terms.
Now, to solemnly tell these men who are thus prevented by law from
getting the wages which their labor would command in a free market that
they have a right to reject any price that may be offered for their
labor is undoubtedly to speak a formal truth, but it is also to utter a
commonplace and a cruel impertinence. âThe Lesson of Homestead,â Instead
of a Book.
Note--I donât know how long the trackback to the ASI post will hold up,
since theyâre notorious for sabotaging links from sites that disagree
with them and deleting critical comments from their blog (as Ian Bertram
of Pancromatica has found). Thin-skinned buggers, eh?
Alex Singleton at the ASI gives a glowing review of Philippe Legrainâs
Open World: The Truth about Globalization.
Legrain may provide an actual definition of âglobalizationâ (I donât
know--I havenât read the book). But Singleton does not--it simply goes
without saying that we know what he means by the term. And we probably
do: the kind of corporate mercantilism that neoliberals call âfree
trade,â but which has about as much to do with the real free trade of
Cobden as Insoc did with the English Socialism of Rutherford, Aaronson
and Jones.
You see, âglobalizationâ can refer to any increase in the total volume
of a countryâs trade with the rest of the world. That doesnât mean much.
When U.S. government subsidies to the export of capital make overseas
production artificially competitive against production at home, the
increased imports count as âglobalization.â But theyâre a net reduction
in efficiency, brought about by state intervention on behalf of the
governmentâs corporate clients.
And thatâs the trouble with most of the trade that falls under the
heading of âglobalizationâ these days. Such global economic activity may
be âtrade,â but it isnât free trade. It wouldnât pay for itself in a
free market.
The central function of the World Bank and of Western foreign aid is to
subsidize the export of capital by funding the transportation and
utility infrastructure overseas, without which investments in production
facilities would not be profitable. It renders offshore production
artificially profitable, so that we buy stuff from China that weâd make
for ourselves close to home in a free market.
In addition, âintellectual propertyâ laws, impermissible in a free
market, lock Western corporations into control of the latest production
technology.
And subsidies to long-distance transportation artificially reduce the
cost of shipping the stuff back home to us.
Letâs not even get into the role of U.S. intervention and the threat of
U.S. intervention in guaranteeing the political security of capital
investments overseas. The last I heard, a free market means market
actors fully internalize all the costs and risks of their activity, and
pay for all the services needed (included security) to make their
investments profitable.
According to Singleton, Legrain points to the greater rate of increase
in national income for âglobalizingâ than for non-âglobalizingâ
countries, as evidence of the salutary effects of âglobalization.â
But any number of things, good or bad, can cause an increase in national
income. The monetization of the subsistence and barter economy, caused
by expropriating the producing classes and coercing them into the labor
market, can show up as an exponential increase in ânational income.â If
somebody figures out how to suck air out of the atmosphere, bottle it
up, and sell it back to workers as an alternative to suffocation,
thatâll probably kick the ânational incomeâ up a few notches. Not
everything that increases ânational incomeâ is good (these people have
heard of the broken window fallacy, right?).
In addition, if the income of the top few percent of the population
increases drastically, but that of the majority stagnates, it may show
up as a substantial increase in average real income. Thatâs essentially
what has happened in the U.S. over the past thirty years, where wage
income has been nearly flat while the income and wealth of the
plutocracy has increased several times over. Virtually all increases in
productivity have gone to those at the top.
For the welfare of the average person, what kind of âglobalizationâ
takes place matters a lot more than how much.
In âThe idyllic myth of peasant farming,â Dr. Eamon Butler takes the
destruction of Ethiopian crops by roaming goats as a paradigm for the
problems of âprimitiveâ peasant agriculture. See, the negligence of the
goat-owners makes it impossible for their neighbors to raise food of
their own. Itâs that simple: the only alternatives are either corporate
rule by ADM and Cargill, or an ass-backward system in which those
wooly-headed natives let their goats indiscriminately wreak havoc!
In the âCommentsâ thread, of course, Garrett Hardinâs Tragedy of the
Commons gets dragged out for another dusting off. This despite the fact
that Hardin evidently knew nothing about actual, historic commons:
commons were, in fact, heavily regulated to limit the number of
livestock any family could graze, the amount of wood they could gather,
etc. Hardin confused the commons, which were the joint private property
of a village, with unowned land. The prisonerâs dilemma Hardin described
was, in fact, a pretty good account of what happens in the case of
genuinely unowned land, in which there is no property system to
internalize costs in those using it. A genuine commons, as they existed
in historic Europe, would be a pretty good solution to the Ethiopian
goat problem. The Anarchist FAQ has more on Hardinâs ahistorical myth of
the commons. I do have to wonder, by the way: does this vulgar
libertarian aversion to joint private property extend to the modern
corporation?
In the course of his post, Butler comes up with some incredible gems of
vulgar libertarian boilerplate. For example:
The environazis disperse this myth about peasant farmers being at one
with nature. Sometimes the myth is so idyllic that I think they want us
all to become peasant farmers. Anyway, the idea is that while big,
grasping corporations are ruining the planet, if we just thought smaller
and more rustic we could turn things round.
So much straw, so little time! Dr. Butler neglects to mention that the
phony âfree marketâ nazis, in their turn, disperse their own myth about
giant agribusiness corporations being a product of the free market, and
replacing peasant farmers through their superior efficiency alone.
How much more preferable would have been the âfree marketâ recipe of
British East Africa--for example Kenya, in which the peasantry were
evicted from the best 20% of arable land so that white colonists could
use it for cash crop agriculture! This is the same tried and true recipe
for âfree marketsâ used by the English gentry in enclosing the commons
so they could get more work out of the laboring classes; E. G. Wakefield
adapted the recipe to settler societies, advocating that colonial
administrations preempt ownership of vacant land so as to make
self-employment more difficult and relieve the better sortâs travails in
finding good help at cheap wages. The hidden subtext in all this fake
âfree marketâ agitprop, of course, is the tacit understanding that
robbery is only bad when it happens to rich people.
The time-honored âfree marketâ recipe, among the ruling classes, goes
like this: 1) rob the producing classes of their traditional property
rights in the land, and turn them into tenants at-will of the
plutocracy; 2) through coercive controls on the population, like the
Combination Laws and Law of Settlement, make it impossible for the
producing classes to bargain effectively in the wage market; 3) when the
process is complete, talk a lot about how great the free market works,
and justify the existing concentration of capital ownership as a result
of the superior efficiency of those who came out on top.
Thatâs pretty much what the neoliberals (e.g., Bush) mean when they talk
about promoting âdemocracy (more on which in yesterdayâs post), free
markets and free tradeâ:
The environment is a luxury that the worldâs poorest canât afford to
bother about. The only solution is to make the worldâs poor farmers
rich. And â Bush is right â the only way to do that is to spread
democracy, the free economy, and trade across the planet.
Yep--rigged spectator democracy, a mercantilist âfreeâ economy, and
heavily subsidized trade. Those poor farmers should see the cash start
rolling in any day now.
UPDATE (hat tip to Ken Macleod)--It seems I was unfair to Garrett
Hardin. According to Dan Sullivan,
In their search for excuses to deny any common right to land, royal
libertarians are fond of citing Garrett Hardinâs work, âTragedy of the
Commons.â Or at least they cite the title, which is all most royal
libertarians are familiar with. Hardin is himself an advocate of land
value taxation, and has criticized misinterpretations of his work with
the lament that âThe title of my 1968 paper should have been âThe
Tragedy of the Unmanaged Commons.ââ
Via (you guessed it) the Adam Smith Institute: Alan Greenspan to Give
Adam Smith Lecture
Alan Greenspan, chairman of the US Federal Reserve, is to deliver the
Adam Smith lecture at Kirkcaldy in Scotland, Smithâs birthplace, on
Sunday February 6^(th).
No further comment is necessary--except maybe that that thumping sound
you hear is Adam Smith spinning in his grave.
John Stossel has managed to catapult himself to the top of the vulgar
libertarian usual suspects list--no mean feat, with the kind of fierce
competition the Adam Smith Institute puts up. Among the âmythsâ he has
chosen to debunk are the following:
No. 4 â MYTH: Outsourcing Is Bad for American Workers
Weâve been hearing a lot lately about how American workers are suffering
because companies are âoutsourcingâ their jobs to other countries.
During the presidential campaign, both President Bush and Sen. John
Kerry, D-Mass., told voters they were concerned about keeping jobs here
at home. And CNN anchor Lou Dobbs has made complaints about outsourcing
a running theme of his nightly news program.
Dobbsâ new book, âExporting America,â says the government should limit
free trade and immediately outlaw outsourcing of government contracts.
âJust because of cheap labor, weâre destroying our middle class. That is
just stupid,â Dobbs said, adding, âBeing stupid is un-American.â
Wait a second. Itâs restricting outsourcing that would be un-American
and stupid....
In the course of making his point, Stossel canât resist using a Tom
Friedmanesque anecdote about an outsourced employee who wound up with a
better job. Of course, whether that anecdote is truly
representative--whether the average outsourced employee winds up with a
better real wage when he gets new work--he doesnât say. He sure as hell
implies, though!
But whatâs really important is Stosselâs heavy reliance on a strawman.
He begs the question of why so much outsourcing is going on. Stossel
implies, without making any attempt to demonstrate, that the relocation
of production overseas is the natural outcome of a free market; and that
the only way to reduce it is by positive government action.
Neither could be further from the truth. In fact, present levels of
outsourcing reflect massive government subsidies to the export of
capital. And the only thing necessary to reduce those levels drastically
is to corporations pay all the costs of investment on their own
dime--what used to be known as free trade, I believe.
Of course, both the vulgar libertarians and the big government liberals
have a common interest in presenting the issue that way. Big business
interests benefit from the myth that their wealth and power comes from
their success in the market, rather than from suckling at the government
teat; they also benefit from the pretense that they fear government
intervention in the economy and desire only to be left alone. Big
government liberals, on the other hand, benefit from the myth that a
laissez-faire era ever existed, and that the era of trusts and robber
barons was a direct outgrowth of laissez-faire capitalism; they benefit
from the myth that the âprogressiveâ state stepped in to act as a
âcountervailing powerâ to big business, and to regulate it against its
will. Compare the mirror-imaging in these two quotes:
Liberalism in America has ordinarily been the movement on the part of
the other sections of society to restrain the power of the business
community.--Art Schlesinger, The Age of Jackson.
Business has not really won or had its way in connection with even a
single piece of proposed regulatory or social legislation in the last
three-quarters of a century. Theodore Leavitt, âWhy Business Always
Loses,â Harvard Business Review (1968).
Uh, yeah. I guess that explains the army of corporation lawyers and
investment bankers (not to mention GEâs Gerard Swope) involved in
formulating the New Deal.
Both the capitalist plutes and the New Class planners have a common
interests in passing off a phony version of history on the American
people; and New Left revisionist historians of corporate liberalism,
like Gabriel Kolko, are dynamite to that phony version of history.
No. 2 â MYTH â Urban Sprawl Is Ruining America
Suburban sprawl is evil.
The unplanned growth, cookie cutter developments is gobbling up all the
space and ruining America. Right?
Wrong.
But in town after town, civic leaders talk about going to war! They want
âsmart growth.â They say sprawl has wrecked lives.
So-called experts on TV say all sorts of nasty things about the changing
suburban landscape.
Stossel puts forth Jim Kunstler as an example of the carping experts.
Interestingly, though, there are some bits of information in Kunstlerâs
The Geography of Nowhere that donât quite gibe with Stosselâs cartoony
âmarket sprawl vs. elitist plannersâ picture of the world. If you read
the book, youâll find that suburban sprawl was, in fact, mandated by the
planners. Car-centered bedroom communities, huge front lawns, and the
whole split-level cul-de-sac shebang, were all the rage among urban
planners in the postwar era. Large setbacks were actually mandated by
design plattes. Mixed use development--with neighborhood grocers and
other small businesses within easy walking distance of residential
streets--was prohibited by the planners. Similarly, walk-up apartments
and other forms of low-cost housing in downtown business districts were
also prohibited by law. Simply put, living with walking or bicycle
distance of where you worked or shopped, for all intents and purposes,
was made illegal.
For another kind of government benefit to sprawl, consider the role of
government at all levels in subsidizing the automobile-highway complex.
For starters, Kunstlerâs chapter on Robert Moses and Long Island is
quite instructive. Urban freeway systems, massively subsidized by the
same people who gasp in horror at the market-distorting effects of
public transportation subsidies, are in effect subsidies to suburban
sprawl.
Here in Northwest Arkansas, another form of government subsidy to sprawl
has been an issue lately. The Fayetteville school system has already
closed down one old neighborhood elementary school, to the dismay the
communities served by it; more closings are likely in the works, for
reasons of âefficiency.â Of course, new âreplacementâ schools are also
part of the picture--where this gets really interesting. Because those
new schools are being built out on the western edge of town, close to
the new real estate developments fed by assorted U.S. 471 exits. Golly,
that must do wonders for the property values of a certain local real
estate baron, whose names appears on half the âFor Saleâ signs in the
two-county area. Surprise, surprise, surprise!
And letâs not even get into FHA redlining of already-built houses in
old, inlying residential neighborhoods. Or the fact that utility
ratepayers in those older areas pay higher electric and water bills to
subsidize the extension of services to the new developments.
This issue presents the same spectacle of mirror-imaging between two
contending sides in alleged disagreement, as we witnessed in our
discussion of outsourcing above. The real estate industryâs apologists
have a vested interest in pretending that suburban sprawl is the outcome
of peopleâs choices in the free market, and that the only way to stop it
is through coercive and paternalistic interference by elitist planners.
The elitist planners, meanwhile, have a vested interest of their own--in
pretending that sprawl is a result of the free market, and that the only
way to stop it is by hiring more people like them to tell us what to do.
In the words of a regular feature in a certain vulgar libertarian
journal of record, âIt Just Ainât So!â
Stossel continues:
What upsets many critics most is the loss of open space.
But is open space disappearing in America? No, thatâs a total myth. More
than 95 percent of the country is still undeveloped.
You see it if you cross this country. Only a small percentage is
developed. Yes, in some places, like some suburbs, there are often huge
traffic jams.
Ah! When somebody like Stossel drops something like this into my lap, I
know that God is good. All that open, undeveloped space--wonder why that
is? Which brings us back to yet another reason for sprawl.
You see, there are two forms of property, according to Thomas Hodgskin
[Natual and Artificial Right of Property Contrasted]: labor-made
property, and law-made property. Whether youâre a good Lockean, a
Georgist, or a mutualist like me, you probably agree that the only
legitimate way to acquire unowned land is to appropriate it by labor--to
alter or develop it in some way, and thereby mix your labor with it.
Simply having a government give you title to land, with no âlaborâ
involved beyond that of drawing a line a map, is akin to a feudal land
grant. The recipient of such a grant, in effect, is enabled to tax those
who homestead within his feudal domain, and to charge a rent on the
rightful owner who legitimately appropriates the land by his own labor.
And whether youâre a mutualist, a Georgist, or just a Lockean who
actually believes what you profess to believe, the vast majority of
property in this country was appropriated by law rather than by labor.
Thatâs why so much of this country is vacant--the land was politically
appropriated, fenced off (or simply marked off on a map) and claimed by
people who probably never even saw it in person.
As the Georgist Nock pointed out (after an observation on the amount of
undeveloped land in language almost identical to Stosselâs),
If our geographical development had been determined in a natural way, by
the demands of use instead of the demands of speculation, our western
frontier would not yet be anywhere near the Mississippi River.... All
discussions of âover-populationâ from Malthus down, are based on the
premise of legal occupancy instead of actual occupancy, and are
therefore utterly incompetent and worthless. [Our Enemy, the State]
Or in the words of that old right-winger Mises, ordinarily nobodyâs idea
of a land reformer:
Nowhere and at no time has the large-scale ownership of land come into
being through the working of economic forces in the market. It is the
result of military and political effort.... The great landed fortunes
did not arise through the economic superiority of large-scale ownership,
but by violent annexation outside the area of trade.... [Socialism]
Dave Pollard laments: âThere seems to be something in progressivesâ DNA
that inclines them to want to centralize, globalize, homogenize.â
As a case in point, he mentions the overwrought fellow at the
alternative energy meeting Pollared mentioned earlier, who favored
suppressing decentralized energy technology (I covered it here). As it
turned out, the guy was a liberal (in the Ted Kennedy sense): he
preferred âcentrally-managed, efficient âwind farms.ââ
But compare his views to those of the Adam Smith Instituteâs Dr. Eamon
Butler:
But there is another problem that could lead to power cuts in a few
years too. The government decided to run down Britainâs nuclear
capacity. But the idea that wind and wave power can fill the gap is just
plain daft. (And many protestors are now pointing out that ugly wind
farms in rural areas and the pylons needed to transport their energy are
hardly environmentally friendly either.) Frankly, unless we start
thinking about new nuclear build â and clear the planning blight from
coal and gas generation â itâs going to be a cold, dark winter in 2008.
Notice how Butler just assumes that the only viable model for wind power
involves generating the electricity at huge, Stalinesque wind farms, and
distributing it via a centralized grid. Reminds me of Plunketâs Law,
quoted by Kirkpatrick Sale from solar power specialist Jerry Plunkett:
The Federal government has what I believe is an almost incurable habit
of undertaking large-scale projects. Given two equally valid technical
responses to a national problem... the technology that is larger in
scale will invariably be preferred to the smaller more decentralized
technology.
Apparently there are a few big government liberals hiding out in the
ASI.
As for ânuclear build,â if Dr. Butler thinks it can be done profitably
without massive government subsidies and government indemnities for
liability, I wish heâd explain how. It certainly hasnât been done that
way so far. As I have written elsewhere, virtually every step of the
nuclear production chain involves heavy taxpayer subsidies:
Close to 100% of all research and development for nuclear power is
either performed by the government itself, in its military reactor
program, or by lump-sum R & D grants; the government waives use-charges
for nuclear fuels, subsidizes uranium production, provides access to
government land below market price (and builds hundreds of miles of
access roads at taxpayer expense), enriches uranium, and disposes of
waste at sweetheart prices. The Price-Anderson Act of 1957 limited the
liability of the nuclear power industry, and assumed government
liability above that level.
As for the actual process of generating and distributing power, even in
these days of so-called âprivatizationâ of electric utilities, weâve
seen just how privatized the risk and cost really are.
Altogether, the state of affairs was explained quite well by an
unusually frank Westinghouse official testifying before Congress in the
1950s (quoted by Walter Adams):
If you were to inquire whether Westinghouse might consider putting up
its own money.., we would have to say âNo.â The cost of the plant would
be a question mark until after we built it and, by that sole means,
found out the answer. We would not be sure of successful plant operation
until after we had done all the work and operated successfully.... This
is still a situation of pyramiding uncertainties.... There is a
distinction between risk-taking and recklessness.
Lest Dr. Butlerâs post be dismissed as an aberration, consider Dr.
Madsen Pirieâs appeal to France, that bastion of free market economics,
as an example of a commendable nuclear energy policy.
Itâs safe to assume that neither Dr. Butler, âBritainâs largest energy
companies,â nor âthe unions working in them,â favor a free market in
energy. That would mean a price of energy that reflected the actual cost
of producing it--and people and businesses would consume a lot less of
it, and get more of what they did consume from wind and solar power
(generated in their own neighborhoods or even at home, not from giant
farms). And people might live closer to where they worked and shopped,
and buy goods produced a lot closer to home. But corporate capitalism as
we know it could not survive without the governmentâs role in
guaranteeing a supply of âcheap and abundant energy.â
The folks Adam Smith Institute, it seems, arenât entirely opposed to big
government welfare and regulations--just those that benefit working
people.
Seth DeLong has an interesting article on Venezuelan land reform at Z
Magazine.
As DeLong points out, Chavezâs land reforms are considerably more
cautious than those of, say, Arbenz in Guatemala fifty years ago. (Not
that the latter were unjustified; even from an orthodox Lockean
standpoint, let alone a Tuckerite or Georgist one, the claims of the
great landlords there didnât bear much looking into.)
DeLong describes the general outlines of Chavezâs policy:
The goals of this legislation were as follows: to set limits on the size
of landholdings, tax unused property as an incentive to spur
agricultural growth, redistribute unused, primarily government-owned
land to peasant families and cooperatives and, lastly, expropriate
uncultivated and fallow land from large, private estates for the purpose
of redistribution. On the last and most controversial goal, the
landowners would be compensated for their land at market value....
After a slow start, the Chavez government has redistributed about 2.2
million hectares of state owned land to more than 130,000 peasant
families and cooperatives (1 hectare = 2.47 acres). So far, although not
one acre of private property has been expropriated by the government,
tensions are beginning to mount as Chavez extends his reform program
from government-owned land to the latifundios (large, privately owned
estates of more than 5,000 hectares, roughly 12,350 acres).
Naturally, all hell has broken out on the Right. A Washington Post
editorial referred to Chavez as âa disciple of Castroâ and warned in
hysterical terms of his threat to âdemocracy and free enterpriseâ (for
an idea of the kind of âdemocracy and free enterpriseâ the U.S.
government and its lapdog press would like to see in place of
Bolivarianism, check out this quote from the opposition leader). Carlos
Ball of the CATO Institute, in a predictable vulgar libertarian exercise
in mirror-imaging, characterized the land reform policy as âChavezâs
Land Grab,â and asserted that for Venezuela âPrivate property is
history.â
Given the origins of the landed eliteâs holdings in state grants rather
than appropriation by labor, it would be more accurate to say that
legitimate private property in land will exist for the first time with
the breakup of the quasi-feudal latifundia.
In Venezuela roughly 75 to 80% of the countryâs private land is owned by
5% of all landowners. Regarding agricultural holdings, that figure drops
to a mere 2% of the population owning 60% of the countryâs farmland,
much of which is fallow. Because these stark statistics do not help one
understand the extraordinary levels of both rural and urban inequality
in Venezuela, perhaps the following analogy will. Imagine if in this
country a handful of families owned the entire state of California.
There is no California Coastal Commission, no limits on the amount of
land that may be purchased, no zoning laws, no government oversight of
any kind, nothing of the sort. But none of this really matters to the
average citizen because California, as a conglomeration of large,
privately owned estates, will never be seen by most US residents
(excepting itinerant laborers). In other words, try to think of one of
the most beautiful state in the union as one giant gated community.
Meanwhile, the countryâs landed oligarchy owns the vast majority of the
land, most of which lies fallow because they prefer to sit on it for the
purpose of land speculation rather than use it for agricultural
production. With most of its arable land unused, your country is the
only net importer of food on the continent and is forced to purchase
more than two-thirds of its foodstuffs abroad.
The alleged âfree marketâ libertarians who defend such a system of land
ownership are not advocates of private property--they are what Jerome
Tuccille called âanarcho-land-grabbersâ in a 1970 article in The
Libertarian Forum:
Free market anarchists base their theories of private property rights on
the homestead principle: a person has the right to a private piece of
real estate provided he mixes his labor with it and alters it in some
way. Anarcho-land grabbers recognize no such restrictions. Simply climb
to the highest mountain peak and claim all you can see. It then becomes
morally and sacredly your own and no one else can so much as step on it.
That, or something like it, is pretty much how most of those âprivate
propertyâ titles came into existence in the first place--if they even
saw the land at all, rather than having it granted sight-unseen by a
pope or king drawing a line on the map. In all such cases, the so-called
âownerâ is nothing but a feudal lord, who with the stateâs help is in a
position to collect tribute from the first person to homestead it with
his own labor. In other words, a tax farmer who robs the legitimate
first owner.
As that old disciple of Castro, Ludwig von Mises, put it in Socialism:
Nowhere and at no time has the large-scale ownership of land come into
being through the working of economic forces in the market. It is the
result of military and political effort. Founded by violence, it has
been upheld by violence and by that alone. As soon as the latifundia are
drawn into the sphere of market transactions they begin to crumble,
until at last they disappear completely. Neither at their formation or
in their maintenance have economic causes operated. The great landed
fortunes did not arise through the economic superiority of large-scale
ownership, but by violent annexation outside the area of trade.... The
non-economic origin of landed fortunes is clearly revealed by the fact
that, as a rule, the expropriation by which they have been created in no
way alters the manner of production. The old owner remains on the soil
under a different legal title and continues to carry on production.
More recently, in The Ethics of Liberty, Murray Rothbard explained that
...THERE ARE TWO types of ethically invalid land titles: âfeudalism,â in
which there is continuing aggression by titleholders of land against
peasants engaged in transforming the soil; and land-engrossing, where
arbitrary claims to virgin land are used to keep first-transformers out
of that land. We may call both of these aggressions âland monopolyâânot
in the sense that some one person or group owns all the land in society,
but in the sense that arbitrary privileges to land ownership are
asserted in both cases, clashing with the libertarian rule of
non-ownership of land except by actual transformers, their heirs, and
their assigns.
Of course, as a mutualist I donât share Rothbardâs Lockean views on
property in land. The point, though, is that by either Lockean or
mutualist standards, a great deal of existing property in land is
completely illegitimate.
There is, believe it or not, a free market libertarian tradition that
defends justly-acquired property, rather than reflexively identifying
with the onwers of all large property holdings as âour sort.â As Karl
Hess put it in another Libertarian Forum article from 1970,
Because so many of its [the libertarian movementâs] people... have come
from the right there remains about it at least an aura or, perhaps,
miasma of defensiveness, as though its interests really center in, for
instance, defending private property. The truth, of course, is that
libertarianism wants to advance principles of property but that it in no
way wishes to defend, willy nilly, all property which now is called
private.
Much of that property is stolen. Much is of dubious title. All of it is
deeply intertwined with an immoral, coercive state system which has
condoned, built on, and profited from slavery; has expanded through and
exploited a brutal and aggressive imperial and colonial foreign policy,
and continues to hold the people in a roughly serf-master relationship
to political-economic power concentrations.
Come to think of it, Rothbard referred with approval (in a footnote to
the chapter quoted above) to the proposed âprivatizationâ of Southern
plantations by giving âforty acres and a muleâ to former slaves.
Unfortunately, as Joseph Stromberg points out, the school of
âlibertarianismâ that usually wins out under state capitalism is the one
whose idea of the âfree marketâ translates into âThem pore ole
plantation owners need all the help they can getâ:
Slavery had been abolished in Jamaica some thirty years earlier, but not
everyone was happy with the resulting society. The 13,000 whites â out
of a population of 440,000 â lived in constant fear of a revolt like
that in Haiti (1791â1804). Many blacks, understandably tired of
gang-work on plantations, even as free men receiving low wages,
âsquattedâ on land in the hills, where they raised crops to support
themselves. Rather than seeing this as a creative instance of Lockean
homesteading, the British authorities lectured these would-be peasant
farmers on their proper role in the market economy, which was to work
for their former masters. When that didnât work, soldiers burned the
squattersâ villages from time to time, to encourage them to enter the
real market â as defined by the authorities and the planters.
Fortunately, the authorities and planters of today have the CATO
institute to put it all into scholarly language for them.
Incidentally, the right-wing furor to date has been a response entirely
to Chavezâs distribution of government land to peasants. Given such a
strong reaction on the American Right to homesteading of government land
by actual cultivators, one has to wonder how the so-called âSagebrush
Rebelsâ would react to the U.S. government opening up its lands to
small-scale homesteading, instead of continuing to allow preferential
access by mining, lumber, oil and agribusiness companies at heavily
subsidized rates. A coup dâetat, perhaps? The irony is that theyâd
probably get Milton Friedman to advise them, and the neocon think tanks
would praise them to high heaven for restoring the ârule of law.â Theyâd
certainly get the imprimatur of Carlos Ball and other vulgar
libertarians, whose idea of âmarket liberalismâ is whoring for whatever
benefits the rich.
The Independentâs article on sweatshop labor takes us right back to our
starting point in the Vulgar Libertarianism Watch feature:
Economists across the political spectrum, from Paul Krugman on the left
to Walter Williams on the right, have defended sweatshops. The economic
reasoning is straightforward. People choose what is in their perceived
best interests. If workers voluntarily choose to work in a sweatshop,
without being physically coerced, it must be because it is their best
option compared to their other even worse alternatives.
Admittedly, sweatshops have abhorrently low wages and poor working
conditions by western standards. However, economists point out that
alternatives to working in a sweatshop are often much worse; oftentimes
scavenging through trash, prostitution, crime, or even starvation are
the other choices workers face.
Sure. And if I stick the muzzle of a .45 in your belly, handing over
your wallet might be your best option compared to your other even worse
alternatives.
Whether physical coercion enters into the picture, in setting the
âavailable alternativesâ to sweatshop labor, is precisely the question
at issue.
If the people working in sweatshops (or their parents or grandparents)
were robbed of traditional property rights in agricultural land, in a
modern replay of the enclosure movement, then Iâd say that counts as
physical coercion. If they are prevented from organizing independent
labor unions, as a result of their authortarian governmentâs policy,
thatâs physical coercion. And youâd better believe American sweatshops
gravitate toward places where land robbery and death squad atrocities
take place.
In fact, itâs the very same kind of physical coercion that occurred in
âlaissez-faireâ Britain during the Industrial Revolution: that other
period in which, as vulgar libertarians like to point out endlessly, the
âavailable alternativesâ to the dark satanic mills were so
unsatisfactory.
In the first installment of Vulgar Libertarianism Watch, I pointed out
how frequently the term âavailable alternativesâ seems to pop up in
apologetics for modern sweatshops, and the sweatshops of early
industrial Britain. The idea appears in Misesâ defense of working
conditions in the Industrial Revolution:
The factory owners did not have the power to compel anybody to take a
factory job. They could only hire people who were ready to work for the
wages offered to them. Low as these wage rates were, they were
nonetheless much more than these paupers could earn in any other field
open to them. [Human Action, Regnery Third Revised Edition, 619â20]
It appeared more recentlly in articles by Radley Balko, who described
Third World sweatshops as âthe best of a series of bad employment
options available,â and Art Carden (on the Imolakee farm workers):
Wages are not foisted upon workers; they agree to pick tomatoes for
âsub-poverty wagesâ for a reason. In a market economy, they do so
because the âsub-poverty wagesâ paid by Taco Bell suppliers are a better
deal than anyone else is offering. Itâs the same reason people line up
for âsweatshopâ jobs in developing countries. Far from contributing to
âcontinued misery,â Taco Bell is making workersâ lives a little bit
better by offering something better than their next-best option.
And in between, it has reared its ugly head in a long series of
by-the-numbers boilerplate in The Freeman: Ideas on Liberty:
But are the âlow-wage, non-unionâ Ecuadorian laborers better off working
now for some foreign corporation? Apparently they think so, or else they
would have stayed with what they were doing previously. (Would you leave
your job for one with less pay and worse conditions?) [Barry Loberfeld.
âA Race to the Bottomâ (July 2001)]
People line up in China and Indonesia and Malaysia when American
multinationals open a factory. And that is because even though the wages
are low by American standards, the jobs created by those American firms
are often some of the best jobs in those economies. [Russell Roberts.
âThe Pursuit of Happiness: Does Trade Exploit the Poorest of the Poor?â
(September 2001)]
What the Industrial Revolution made possible, then, was for these
people, who had nothing else to offer to the market, to be able to sell
their labor to capitalists in exchange for wages. That is why they were
able to survive at all.... As Mises argues, the very fact that people
took factory jobs in the first place indicates that these jobs, however
distasteful to us, represented the best opportunity they had. [Thomas E.
Woods, Jr. âA Myth Shattered: Mises, Hayek, and the Industrial
Revolutionâ (November 2001)]
In nineteenth-century America, anti-sweatshop activism was focused on
domestic manufacturing facilities that employed poor immigrant men,
women, and children. Although conditions were horrendous, they provided
a means for many of the countryâs least-skilled people to earn livings.
Typically, those who worked there did so because it was their best
opportunity, given the choices available....
It is true that the wages earned by workers in developing nations are
outrageously low compared to American wages, and their working
conditions go counter to sensibilities in the rich, industrialized West.
However, I have seen how the foreign-based opportunities are normally
better than the local alternatives in case after case, from Central
America to Southeast Asia. [Stephan Spath, âThe Virtues of Sweatshopsâ
(March 2002)]
If youâre a glutton for punishment, you can also calls up an almighty
long list of examples by Googling it.
Granted, thereâs no gun immediately at the backs of Third World workers
(at least for the most part), forcing them into the sweatshops. And
thereâs no sign over the gates that says âArbeit macht frei.â But the
coercion is there. Itâs in the basic framework of rules, set largely by
employers, that determines what the âavailable alternativesâ are.
Another piece of corporate apologetics, whose central message amounts to
âthem pore olâ bosses need all the help they can get.â And the
pot-smoking Republicans wonder why itâs so hard to sell libertarian
ideas to working people.
Anyway, here it is again. Sigh. The âbest available optionâ bromide has
been, once again, hauled out in defense of sweatshops. This time the
recyclers are Benjamin Powell and David Skarbek (via Catallarchy):
Though these efforts are intended to help poor workers in the third
world, they actually hurt them....
Economists across the political spectrum, from Paul Krugman on the left,
to Walter Williams on the right, have defended sweatshops. Their
reasoning is straightforward: People choose what they perceive to be in
their best interest. If workers voluntarily choose to work in
sweatshops, without physical coercion, it must be because sweatshops are
their best option....
Iâve already pointed out the flaws in this sorry excuse for an argument.
The âbest available optionsâ are heavily influenced by authoritarian
governments, by such means as land theft and draconian labor policies;
and the corporations that use sweatshop labor tend to gravitate toward
such authoritarian regimes, and often have incestuously close relations
with those governments. People like Powell like to talk about the âbest
available option,â while ignoring the issue of employer collusion with
authoritarian Third World governments in determining the range of
options that are available. To borrow a metaphor from Harry Browne,
corporate capital works through the state to break workersâ legs, and
then pats itself on the back for handing them a crutch: âSee! Look at
me! Iâve provided you a job! Ainât I wonderful?â Itâs only in societies
where the producing classes have been robbed of the means of production,
by the state, that work is viewed as something youâre âgivenâ--instead
of something you do.
I think vulgar libertarians ought to have a special key for âbest
available optionâ on their keyboard, just to save time when theyâre
churning out another piece of pro-sweatshop drivel for the mainstream
press. If you want to see a very long series of examples of the
âavailable alternativesâ rhetoric, check out my inaugural post Vulgar
Libertarianism Watch, Part I. It even includes several examples from The
Freeman: Ideas on Liberty (see below).
Of course, Powellâs CSM editorial is linked by Donald Boudreaux at Cafe
Hayek. Boudreaux, a frequent writer of vulgar libertarian boilerplate
himself at The Freeman: Ideas on Liberty, calls it âexcellent.â Why am I
not surprised?
Cameron Carswell at the Globalization Institute:
There is a myth that the status of the richer countries of the world has
somehow come at the expense of the poorer ones, and that the only way
for the poorer nations to climb the ladder is for massive transfers of
wealth to occur.
This conflates two separate claims. If the status of the richer
countries has come at the expense of the poorer ones through state
intervention in the market, then the only way for the poorer nations to
climb the ladder is to replace neo-mercantilist institutions like the
World Bank, IMF, and WTO, and other forms of political intervention by
the West, with a genuine Cobdenite free market. What the neoliberals
call âfree tradeâ is really Palmerstonianism: state loans to subsidize
foreign capital investment by underwriting the operating expenses of
plants overseas, and gunboat diplomacy to prop up anti-labor governments
and protect investments at taxpayer expense. Once again, I quote Joseph
Stromberg:
For many in the US political and foreign policy Establishment, the
formula for having free trade would go something like this: 1) Find
yourself a global superpower; 2) have this superpower knock together the
heads of all opponents and skeptics until everyone is playing by the
same rules; 3) refer to this new imperial order as âfree trade;â 4) talk
quite a bit about âdemocracy.â This is the end of the story except for
such possible corollaries as 1) never allow rival claimants to arise
which might aspire to co-manage the system of âfree tradeâ; 2) the
global superpower rightfully in charge of world order must also control
the world monetary system....
The formula outlined above was decidedly not the 18^(th) and
19^(th)-century liberal view of free trade. Free traders like Richard
Cobden, John Bright, Frederic Bastiat, and Condy Raguet believed that
free trade is the absence of barriers to goods crossing borders...
Classical free traders never thought it necessary to draw up thousands
of pages of detailed regulations to implement free trade. They saw no
need to fine-tune a sort of Gleichschaltung (co-ordination) of different
nationsâ labor laws, environmental regulations, and the host of other
such issues dealt with by NAFTA, GATT, and so on. Clearly, there is a
difference between free trade, considered as the repeal, by treaty or
even unilaterally, of existing barriers to trade, and modern âfree
tradeâ which seems to require truckloads of regulations pondered over by
legions of bureaucrats.
Carswell continues:
When a rich country trades with a poor one, the rich one gets richer,
the other gets poorer. There is, according to this view, a fixed
quantity of wealth....
Nonsense. All that âthis viewâ requires is a state-enforced system of
unequal exchange. By definition, state intervention in the market
creates a zero sum game in which one party uses coercion to benefit at
the otherâs expense. The mutually beneficial, Pareto-optimal form of
trade requires uncoerced exchange--about as far from the neoliberal
regime as you can get.
Rather the development of China occurred due to a simple combination of
a move toward free markets coupled with an opening of the country to
foreign trade and investment. In short, China embraced globalization
rather than trying to fence the world out, engaging in a massive
programme of unilateral liberalization.
And political repression to keep sweatshop labor docile (thereâs a
reason the only union Wal-Mart likes is the Chinese state labor
federation--you know, the one that belonging to wonât get you committed
to a mental hospital); to protect industrial polluters from liability to
local communities; and to suppress protests against the seizure of
ordinary peopleâs land to give to politically connected businesses:
Each week brings news of at least one or two incidents, with thousands
of villagers in a pitched battle with the police, or bloody crackdowns
in which hundreds of protesters are tear-gassed and clubbed during
roundups by the police. And by the governmentâs own official tally,
hundreds of these events each week escape wider public attention
altogether....
Last week, for example, the government announced it was setting up
special police units in 36 cities to put down riots and counter what the
authorities say is the threat of terrorism....
The entire campaign appears to have been kicked off with a strongly
worded recent editorial, published in Peopleâs Daily, the Communist
Partyâs mouthpiece, under the headline âMaintain Stability to Speed
Development.â The commentary warned citizens to obey the law, saying
threats to social order would not be tolerated.
In the last two weeks, the demonstrations have come to Shanghai, a
showcase city that is among the countryâs most tightly policed, and
where public protests are relatively rare.
Day after day recently, the angry complaints of citizens could be heard
in the heart of downtown here, especially across the street from the
elegant exhibition center where city government was in session. In one
protest, middle-aged residents invoked rebellious slogans from their
youth during the Cultural Revolution, reportedly saying things like âto
rebel is justâ as they denounced summary evictions to make way for
high-rise developers and demanded fair compensation....
In China, cases of dangerous industrial pollution are rife, even if
their full human toll is not yet known. But local authorities often side
with industrial interests, and the courts provide little relief....
Golly, arenât âfree marketsâ grand?
This serves as a reminder that those countries that accept the
globalization process can expect to be rewarded with higher living
standards and rates of economic growth, and illustrates the fact that a
country can create wealth, and such gains do not come at the expense of
other nations.
Another mindless identification of âthe globalization processâ with free
trade and free markets, regardless of whoâs paying for it. Get this
through your head: increased âtradeâ is good only if itâs worth it to
people voluntarily spending their own money, and internalizing all their
own risks and costs, without government protection or subsidies. âTradeâ
that exists because of government efforts to make it artificially
profitable is nothing but parasitism and theft.
I close with a quote from Sean Gabb:
If you think that I came here tonight to defend multinational
corporations and the international government institutions, you have
chosen the wrong person. These are dishonest. They are corrupt. They are
incompetent. They have blood on their hands.
But do not suppose for a moment that the world trading order as it
actually exists is liberal or more than incidentally connected with free
markets. A free market is a place where individuals and groups of
individuals come together to transact voluntary exchanges without any
backing of government force. To call the actually existing order liberal
â or âneo-liberalâ â is as taxonomically accurate as calling the old
Soviet Communist Party syndicalist. That order is based on tariffs,
subsidies and a web of other often invisible regulations. The
international institutions are a projection of Western states. The
multinational corporations are creatures of these states. They shelter
behind the privilege of limited liability. They get their political
friends to cartelise markets, and do favours in return.
This is not market liberalism. It is a fraud played on us all by our
ruling classes â these being those politicians, bureaucrats, educators,
lawyers and media and business people who derive wealth, power and
status from an enlarged and activist state.
Please note, Mr. Carswell: that is what free market advocacy--as opposed
to by-the-numbers corporate agitprop--looks like!
What to make of this?
The expansion of human creativity, wealth and liberty made possible by
the digital revolution will best be accomplished in a world respectful
of property rights, writes The Progress & Freedom Foundation President
Ray Gifford. In the Progress on Point âThe Place for Property and
Commons,â Gifford cites the agricultural and industrial revolutions of
the 18^(th) and 19^(th) centuries, and in particular the âenclosure
movementâ in England in the 18^(th) century, to demonstrate that
progress and societal well-being can result from a greater emphasis on
property rights and the return those rights give to producers....
The digital revolution, writes Gifford, is leading to massive increases
in wealth and productivity, as well as changes to the social and
political structures of our age, just as the agricultural and industrial
revolutions did in their time. But those in the commons movement are
mistaken in arguing that the digital revolution threatens to foreclose
knowledge or innovation. When English common land was enclosed for more
efficient private farming, this shift to a property rights model created
a manifold increase in food production, as well as a new labor force
that fueled the industrial revolution.
The âreturn... to producersâ bit is especially hilarious, by the way.
The enclosures were aimed precisely at reducing the return to producers
to the smallest amount feasible--a fact that Gifford can verify for
himself by a simple survey of the contemporary pro-enclosure literature.
The employing classes of that day did everything but twirl their
moustaches, chortle âWe are evil, heh heh,â and tie Little Nell to the
train tracks.
In his speech itself, Gifford facilely describes the enclosures as
âstronger property rights in landâ--as opposed to âthe old rules of
peasants eking out a living on the commons.â Now, some backward-thinking
folks might say that those âold rulesâ were property rights, and that
enclosures were a violation of those property rights. It resulted in
âstronger property rights in land,â all right: stronger property rights
for the thief over his stolen loot.
And naturally, Gifford canât resist defending the robbery on the grounds
that the thieves made better use of the property (supposedly scientific
farming would never have come about, otherwise). Hmmm.... thatâs pretty
much what the state of Connecticut was saying in the Kelo case, I
believe.
What Gifford calls âpropertyâ in the digital sphere is an example of
what Hodgskin called an âartificial,â as opposed to a ânatural,â right
of property. Property in tangibles and land is rooted in the fact of
physical reality that two objects cannot occupy the same space at the
same time. My wallet cannot be in my pocket and yours at the same time.
And when I occupy a piece of ground, and homestead it with my labor, it
precludes your doing the same. By the very fact of maintaining my
occupancy, I am at the same time excluding others. And I can call on my
neighbors, if necessary, to support me in maintaining my occupancy
against any attempt to dispossess me.
âIntellectual propertyâ [sic], on the other hand, is a state-granted
monopoly on something that is not finite by nature, and can be used by
an unlimited number of people at the same time. And unlike tangible
property, I cannot defend intellectual âpropertyâ rights by the mere
fact of possession. In fact, I have to call on the state to invade
someone elseâs space and coercively prevent him from arranging his own
tangible property in a configuration, or using it to organize
information in a configuration, over which the state has granted me a
monopoly. Would-be enforcers of âintellectual propertyâ find that
thereâs always a way around their measures, requiring ever more
intrusive forms of surveillance to control what we can do with our own
stuff. The intrusive measures havenât yet reached this level of
absurdity--but give it time.
Intellectual property, in other words, is theft. Gifford comes close to
admitting as much himself:
What do I mean by âlegislative regulation?â Of course, in one sense, all
rights are contingent upon their enforcement by the state. However, in
the digital sphere, these rights are acutely the prerogative of the
legislative sphere, and its extension, the administrative sphere. Thus,
property rights for network owners are contingent upon their
construction by the FCC and the state utility commissions. Can you, as a
network owner, exclude certain content or uses of your network? That is
a question for the FCC to answer. And then there is copyright and patent
law, which constitutionally are matters for legislative regulation. The
Congress gets to define the parameters of these intangible property
rights, and their terms too.
In other words, theyâre just some shit somebody made up.
I contrast this âlegislative regulationâ with ârule of law regulation.â
Though admittedly a matter of degree and not kind, ârule of law
regulationâ as experienced through common law norms of property and
contract and enforced through the formalism of courts is more stable
and, well, normative than the less fixed legislative regulation.
This fact of legislative regulation in turn means there is intense
pressure and grand incentives to seek definitions of the rights
favorable to a given interest. There is, in other words, an enhanced
incentive in the world of legislative regulation for rentseeking.
Furthermore, there is less stability in the rights defined under
legislative regulation, because they are always contingent upon the next
session of congress or the next meeting of the regulatory commission.
You donât say! âRentseekingâ... could you describe that for us, Mr.
Gifford? You wouldnât have heard of something called the RIAA, would
you, Mr. Gifford?
There really is a parallel between the enclosures and digital copyright
law: both are cases of privileged interests acting through the state to
rob people of genuine property rights.
Shameless apologetics for the rich and powerful, wrapped up in faux
populism. Isnât one Tom Friedman enough?
Hat tip to Jesse Walker, who forwarded the link and suggested it might
be just the thing for another âVulgar Libertarianismâ piece.
Jeffrey Tuckerâs post at Mises Blog includes this howler:
In 1900, 40% of Americans worked on farms. Today it is only 3%. This is
progress. It really is. Whatâs more, it represents the results of
choice. No one was ever forced to leave a farm. They choose to leave to
undertake more socially useful and economically profitable endeavors.
Nobody was ever forced to leave a farm!!?? That sounds an awful lot like
the vulgar libertarian argument that all those happy darkies choose to
work in sweatshops because theyâre the âbest available alternative.â In
the comment thread, P. M. Lawrence responds, in part:
(2) It is not true that wherever and whenever people were given the
choice they chose urban life over agriculture. The Highland Clearances
and Irish Evictions forced people into the cities. One natural
experiment â Leverburgh â showed that when crofting remained an
alternative, Scottish islanders stayed away from the factory in droves.
Also, historically, cities like Antioch were stocked by compulsorily
settling local peasantry as well as Macedonian veterans....
(4) Most rural people, if not oppressed by rents and/or taxes, were
effectively free peasant proprietors; the comparison should be with
those who stayed, not with those like the ploughboy who left. Even those
were often demographically different from not having inherited yet,
rather than part of a landless underclass (both cases existed). From
what little we can reliably infer, unless someone is carrying an extra
burden or being forced onto marginal land that yields with work,
subsistence farming is a comfortable 20 hours per week....
Tucker, in response, conceded that some examples of forced
industrialization existed--the best-known among them being Stalinist
Russia and the American south after the Civil War. So, apparently, some
people really were forced to, you know, leave the farm. Another example
of forced industrialization that readers of E.P. Thompson, J.L. and
Barbara Hammond, and the like might be familiar with is the Industrial
Revolution in Britain. You know, those little matters of the enclosures,
the laws of settlement, the combination laws, an internal passport
system coupled with slave auctions by the parish Poor Law overseers, and
so forth; but other than that, everything was completely voluntary and
non-coercive!
So Tuckerâs fallback position, it seems, is nobody was ever forced to
leave a farm, unless they were forced to leave a farm.
Hereâs a great quote from Benjamin Tucker, his critique of the later
Herbert Spencer, that reminds me of my own criticisms of vulgar
libertarianism:
He is making a wholesale onslaught on Socialism as the incarnation of
the doctrine of State omnipotence carried to its highest power. And I am
not sure he is quite honest in this. I begin to be a little suspicious
of him. It seems as if he had forgotten the teachings of his earlier
writings, and had become a champion of the capitalistic class... amid
his multitudinous illustrations... of the evils of legislatoin, he in
every instance cites some law passed ostensibly at least to protect
labor, alleviating suffering, or promote the peopleâs welfare. But never
once does he call attention to the far more deadly and deep-seated evils
growing out of the innumerable laws creating privilege and sustaining
monopoly (Liberty, May 17, 1884).
In my inaugural post on this blog, and the first installment of my
recurring âVulgar Libertarianism Watchâ feature, I quoted a passage from
Mutualist Political Economy on the defining characteristics of the
vulgar libertarian:
This school of libertarianism has inscribed on its banner the
reactionary watchword: âThem pore ole bosses need all the help they can
get.â For every imaginable policy issue, the good guys and bad guys can
be predicted with ease, by simply inverting the slogan of Animal Farm:
âTwo legs good, four legs baaaad.â In every case, the good guys, the
sacrificial victims of the Progressive State, are the rich and powerful.
The bad guys are the consumer and the worker, acting to enrich
themselves from the public treasury. As one of the most egregious
examples of this tendency, consider Ayn Randâs characterization of big
business as an âoppressed minority,â and of the Military-Industrial
Complex as a âmyth or worse.â
The ideal âfree marketâ society of such people, it seems, is simply
actually existing capitalism, minus the regulatory and welfare state: a
hyper-thyroidal version of nineteenth century robber baron capitalism,
perhaps; or better yet, a society âreformedâ by the likes of Pinochet,
the Dionysius to whom Milton Friedman and the Chicago Boys played
Aristotle.
Vulgar libertarian apologists for capitalism use the term âfree marketâ
in an equivocal sense: they seem to have trouble remembering, from one
moment to the next, whether theyâre defending actually existing
capitalism or free market principles. So we get the standard boilerplate
article in The Freeman arguing that the rich canât get rich at the
expense of the poor, because âthatâs not how the free market
worksâ--implicitly assuming that this is a free market. When prodded,
theyâll grudgingly admit that the present system is not a free market,
and that it includes a lot of state intervention on behalf of the rich.
But as soon as they think they can get away with it, they go right back
to defending the wealth of existing corporations on the basis of âfree
market principles.â
[Note, as Gene Callahan pointed out, I mixed my classical metaphors--it
should have been Plato and Dionysius, not Aristotle.]
If you want to see some textbook examples of that last vulgar
libertarian trait, the equivocal use of âfree market,â you can find at
least three of them in an article by John Semmens in the October issue
of The Freeman: Ideas on Liberty: âWal-Mart Is Good for the Economyâ:
Since competition in the free market is continuous, todayâs losers can
be tomorrowâs winners. Instead of fomenting political opposition to
Wal-Mart, its rivals should be improving their own game....
Ideologues who rant against Wal-Mart do not understand economics. In a
market economy, success goes to those businesses that best and most
efficiently serve consumer needs....
The free market requires that transactions be carried out voluntarily
between the parties. No one is forced to work for Wal-Mart.The wages it
pays must be adequate to secure the services of its employees....
Semmens manages to drag out the old ânext-best alternativeâ chestnut so
dear to sweatshop apologists, which was the target of the first
installment of âVulgar Libertarianism Watchâ:
So as bad as these âsweatshopâ wages and working conditions may appear
to Americans who have a fabulous array of lucrative employment
opportunities, they are obviously superior to the alternatives that
inhabitants of less-developed economies are offered. If the
âsweatshopâjobs werenât superior, people wouldnât take them.
As I wrote in that first post, this argument neglects the fundamental
question of just why the other alternatives are so shitty, and whether
there might be some collusion between sweatshop employers and the state
in determining what range of alternatives is available.
Semmens also seems to think the labor relations rules are slanted in
favor of organized labor. Um, perhaps heâs heard of something called
Taft-Hartley? He also displays a fundamental misunderstanding of the
union shop, treating it as a creature of NLRB regluations. In fact, the
union shop can be established by simple contract between management and
the union local. Prohibiting the union shop, by impairing the right of
free contract, is what requires government intervention (i.e., the
so-called âright to workâ law). Hereâs Benjamin Tuckerâs view of
management-labor relations, with which I heartily concur:
....It is not enough, however true, to say that, âif a man has labor to
sell, he must find some one with money to buy itâ; it is necessary to
add the much more important truth that, if a man has labor to sell, he
has a right to a free market in which to sell it, â a market in which no
one shall be prevented by restrictive laws from honestly obtaining the
money to buy it. If the man with labor to sell has not this free market,
then his liberty is violated and his property virtually taken from him.
Now, such a market has constantly been denied, not only to the laborers
at Homestead, but to the laborers of the entire civilized world. And the
men who have denied it are the Andrew Carnegies. Capitalists of whom
this Pittsburgh forge-master is a typical representative have placed and
kept upon the statute-books all sorts of prohibitions and taxes (of
which the customs tariff is among the least harmful) designed to limit
and effective in limiting the number of bidders for the labor of those
who have labor to sell....
....Let Carnegie, Dana & Co. first see to it that every law in violation
of equal liberty is removed from the statute-books. If, after that, any
laborers shall interfere with the rights of their employers, or shall
use force upon inoffensive âscabs,â or shall attack their employersâ
watchmen, whether these be Pinkerton detectives, sheriffâs deputies, or
the State militia, I pledge myself that, as an Anarchist and in
consequence of my Anarchistic faith, I will be among the first to
volunteer as a member of a force to repress these disturbers of order
and, if necessary, sweep them from the earth. But while these invasive
laws remain, I must view every forcible conflict that arises as the
consequence of an original violation of liberty on the part of the
employing classes, and, if any sweeping is done, may the laborers hold
the broom! Still, while my sympathies thus go with the under dog, I
shall never cease to proclaim my conviction that the annihilation of
neither party can secure justice, and that the only effective sweeping
will be that which clears from the statute-book every restriction of the
freedom of the market....
Finally, Semmens lauds Wal-Mart for its charitable contributions:
Wal-Mart runs the largest corporate cash-giving foundation in America.
In 2004 Wal-Mart donated over $170 million. More than 90 percent of
these donations went to charities in the communities served by Wal-Mart
stores.
But if Wal-Martâs profit isnât the reward of superior virtue, as Semmens
contends, then his admiration for their corporal works of mercy may be
somewhat misplaced. As Iâve heard from more than one native Ozarker, if
they werenât such crooks in the first place, they might not have so much
money to give away. After reading that, I couldnât resist dusting of my
copy of Thompsonâs The Making of the English Working Class for one of my
favorite quotes. As a group of textile workers passed a chapel built by
their mill-owner, Mr. Sutcliffe, one of the workers
looked towards the chapel and wished that it might sink into hell, and
Mr. Sutcliffe go with it.
The narrator of the anecdote remonstrated with him, apparently to little
effect:
I said it was too bad, as Mr. Sutcliffe had built the chapel for their
good. âDamn him,â said another, âI know him, I have had a swatch of him,
and a corner of that chapel is mine, and it all belongs to his
workpeople.
Note--Although more than one writer for The Freeman has been in my
crosshairs in previous editions of this feature, I should add the caveat
that this is called Vulgar Libertarianism, not Libertarian, Watch for a
reason. With the possible exception of the Adam Smith Instituteâs blog,
which may be beyond redemption, nobody is ever consistently vulgar
libertarian. I learned that lesson with Alex Singleton, another of my
frequent targets, who himself got fragged by some disgruntled vulgar
libertarians for going wobbly on drug patents and other IP issues (check
out the new Pharmopoly blog, by the way). The Freeman often mixes vulgar
libertarian chaff like my blog-fodder above with some nourishing kernels
of genuine wheat by (for example) Roderick Long and Chris Sciabarra.
Just thought I ought to throw in that disclaimer, especially since I got
a nice email from The Freeman editor Sheldon Richman today, and I donât
want to seem too churlish.
Thereâs been a lot of right-wing pissing and moaning out there recently
about Venezuela and Bolivia, a lot of it under âfree marketâ colors.
First off, Doug Allen at Catallarchy:
Add another anti-US leftist [Evo Morales] to the Latin American leader
list.
Well, for anyone whoâs just emerged from a time warp and has a century
worth of news to catch up on, Iâd say the Latin American left has some
pretty fucking good reasons to be anti-US.
In the comments to the same post, Jonathan Wilde identifies Hugo Chavez
as
the latest in a long tradition of South American populist thugs like
Allende and Lula.
Well, golly, we canât have any of those thugs in South America now, can
we? Given the vast number of individuals who might have deserved that
epithet in recent Latin American history, Wildeâs singling out of
Allende and Lula speaks volumes. First, consider the wide range of
political forces in Latin America over the past half century or so; the
single biggest, probably, is the U.S. government--the Marines, CIA, and
School of the Americas, inter alia. Next, consider the governments
installed by the U.S. over the same period by means of those same
interventionist forces, starting with the intervention in Guatemala in
1954, continuing through the Brazilian coup in the 1960s, the overthrow
of Allende, Operation Condor, and the tens upon tens of thousands of
people murdered by U.S.-supported death squads in the 1980s. Finally,
consider that the two most prominent political figures in Chile alone in
the past 35 years have been Allende and Pinochet. The choice of Allende
and Lula as exemplary âthugs,â in such a context, indicates (to put it
mildly) a rather idiosyncratic view of reality.
MaxSpeak quotes a similar piece of invective against Chavez from the
Washington Post: Jackson Diehl, âOur Latin Conundrumâ
The year ended with a string of reverses. In a regional summit in Mar
del Plata, Argentina, in November, President Bush was jeered by
demonstrators and taunted by Venezuelaâs Hugo Chavez, who aspires to
make Latin America anti-American and anti-democratic. He was seconded by
Argentinaâs Nestor Kirchner, who in the past few weeks has moved from
the hemisphereâs camp of moderate democratic leftists toward Chavezâs
ârevolutionaryâ embrace.
Then came the Chavez-backed victory in Bolivia of Evo Morales, a former
llama herder and coca farmer who describes himself as Washingtonâs
ânightmare.â Lacking any coherent policies of his own, Morales will
probably take instruction from Chavez, Kirchner and Fidel Castro â who
at age 79 must believe he is finally seeing the emergence of the
totalitarian bloc he and Che Guevara tried and failed to create in the
1960s....
In the short term, however, much of Latin America is going to be an
unfriendly place for liberal ideas and free markets â and with them the
United States.
Most of Latin America has been an unfriendly place for liberal ideas and
free markets for decades--and their worst enemies have been the people
who throw around the term âfree marketâ the most. MaxSpeak comments:
If you start counting you find relatively few right-wing outfits in
control. This is bad. Liberal governments start to question previous
arrangements for ownership of their nationsâ resources. They take a
jaundiced view of privatization. Theyâre not happy about paying
extortion for the use of patents and copyrights. They donât like the
IMFâs regime of parasitic financial monopoly. This all makes them
hostile to âliberal ideas and free markets.â [sic] Who wouldnât be.
Bully for them.
Hugo Chavez wins elections and the U.S. supports coups-dâetat, and
Chavez is âanti-democratic.â Beautiful. The electoral victories of the
Left pave the way for a Castroite âtotalitarian bloc.â Chavez is a pain
for contemplating a regional television network, but itâs fine for the
VOA to do its number anywhere in the world. Oh for the
Washington-supported dictatorships of yesteryear.
MaxSpeak gets to the heart of the matter. I suspect that for Diehl, as
well as for Allen, questioning âprevious arrangements for ownership
of... resources,â reconsidering the benefits of faux privatization (aka
looting) via insider deals with politically connected financial elites,
and refusing to pay extortion for patents and copyrights is the very
definition of âunfriendly... for free markets.â
But none of those things really has much to do with free markets, now,
does it? Any time a leftist land reform threatens the power of the
latifundia owners to extract rent from the majority of people actually
cultivate the land, the Catoids squeal like stuck pigs over âproperty
rights.â But in fact that land belongs to the people who appropriated it
with their labor, not to a statist class of landlords, and the Catoids
are just pimping free market principles for the defense of the
mercantilist corporations--the institution at the center of the single
greatest concentration of statist power in the world today.
So Chavez, Lula and Morales are hostile to the Catoid/ASI version of
âfree markets.â Theyâre probably hostile to real free markets as well.
But they canât possibly be any more hostile toward real free markets
than are the neoliberal swine from whose filthy mouths the words âfree
marketâ most commonly issue. If theyâre hostile to free markets, then
more damnation to the corporate apologists whoâve deliberately tainted
the term by association with their shameless defense of corporate power.
To put Moralesâ anti-US thuggery in context, weâd do well to consider
the track record of pro-US (or more accurately, US-installed) thuggery
that previously existed. Mark Monson, on the Land Theory yahoogroup,
linked to an excellent article by Leila Lu on the concentration of
landed property in a tiny number of latifundia, going back to colonial
times.
In Latin America alone, since WWII, the U.S. neoliberal empire has
probably overthrown and replaced more governments than any other empire
in history. In just about every case, its enemies were the people
actually working the land. And in just about every case, the âpro-USâ
forces put in power were the landlord oligarchies, the right-wing
paramilitaries, and the death squads: in other words, the kind of
âpro-marketâ forces who deal with peasant activists, cooperative
leaders, and independent labor organizers by working on their testicles
with pliers, by torturing, murdering, and disappearing them, or by
leaving their mutilated bodies to be found in a ditch and thus keep the
workers and peasants properly terrorized and docile.
In a recent comment thread, troutsky asked for my opinion of Chavez. OK,
here it is: heâs certainly not especially market-friendly, as Latin
American pols go. But heâs certainly no more market-unfriendly than the
corporate mercantilists who use gunboat diplomacy to make the world safe
for corporate rule, and then profane the words âfree marketâ and âfree
tradeâ with their stinking pie-holes.
I donât believe Chavezâs intervention on behalf of the cooperative
economy and local counter-institutions is sustainable in the long run.
In the end, these institutions must be able to survive in a free market
without state inputs if they are to be viable. But the practical effect
of Chavezâs current state intervention is merely to countervail the
previous fifty years of intervention against peasant proprietorship, and
against economic institutions controlled by ordinary people, and thus to
partially cancel out the legacy benefits currently enjoyed by the giant
transnationals. So while I canât applaud his statism, I canât exactly
work up much moral outrage over the poor, picked-on corporations that
are squealing so much about his âthuggeryâ and enmity toward âfree
markets.â
If Chavez and Lula are âthugs,â then so were the political leaders
installed by the transnational corporations over the past fifty years.
And equally thugs, likewise, have been the corporations which profited
from the rule of those thugs this past half century, and which now seek
to regain power by coup if necessary to keep their statist corporate
welfare gravy train from being cut off.
If Chavez and the agribusiness, oil, software, and other corporations
wind up fighting each other to a standstill, the end result is likely to
be better (and more legitimately free market) than the previous
situation, in which those corporations had unchallenged hegemony. I
figure that the practical effect of Chavezâs anti-corporate statism,
following on the heels of fifty years of much greater pro-corporate
statism, might just possibly be for the two to cancel each other out.
Maybe when the dust settles, the final outcome might leave in place a
network of cooperatives and local social economy institutions that
really can survive in the free market. Such a network of cooperative
institutions, if it survives Chavez, canât possibly be any less
libertarian than the existing transnational corporations that too many
âlibertariansâ instinctively identify with.
Thomas Woods. âWhatâs Wrong with âDistributismââ
Even granting the distributist premise that smaller businesses have been
swallowed up by larger firms, it is by no means obvious that it is
always preferable for a man to operate his own business rather than to
work for another. It may well be that a man is better able to care for
his family precisely if he does not own his own business or work the
backbreaking schedule of running his own farm, partially because he is
not ruined if the enterprise for which he works should have to close,
and partially because he doubtless enjoys more leisure time that he can
spend with his family than if he had the cares and responsibilities of
his own business. Surely, therefore, we are dealing here with a matter
for individual circumstances rather than crude generalization.
This makes the unwarranted assumption that working for someone else is
the only way of reducing risk, as opposed to cooperative ownership,
federation, etc.. It assumes, as a basic premise, the very thing that
distributism objects to: that capital is concentrated in the hands of a
few owners who hire wage labor, instead of widely distributed among the
general population who pool it through cooperative mechanisms.
And the proper contrast is not between the work schedule of an American
farmer, producing for a capitalist commodity market, despite the
hindrances of banks and railroads, versus the early 19^(th) century
factory labor. The proper contrast is between a laborer making a
subsistence living off a small family plot with access to a common, and
supplementing his income when necessary with wage labor, versus that
same factory worker. To compare the hours and quality of work of a
genuine subsistence farmer with the mind-numbing 12- or 14-hour days in
a dark satanic mill is a joke.
Suppose, moreover, that âdistributismâ had been in effect as the
Industrial Revolution was developing in Britain in the late 18^(th)
century. We would have heard ceaseless laments regarding the increasing
concentration of economic power and the dramatic growth in the number
people working for wages. What we probably wouldnât have heard about was
the actual condition of those people who were seeking employment in the
factories. They werenât lucky enough to be able to make a profitable
living in agriculture, and their families had not provided them with the
tools necessary to enter an independent trade and operate one of the
small shops that delight the distributist.
Had they not had the opportunity to work for a wage, therefore, they and
their families would simply have starved. It is as simple as that.
Capitalism, and not distributism, literally saved these people from
utter destitution and made possible the enormous growth in population,
in life expectancy, in health, and in living standards more generally
that England experienced at the time and which later spread to western
Europe at large....
To back this up, Woods quotes Mises and Hayek with variations on the
âbest available alternativeâ defense of working conditions in the early
industrial revolution. That argument was the subject of my first âVulgar
Libertarianism Watchâ piece. As I showed then, it is not âas simple as
that.â And âluckâ had nothing to do with it--the land expropriations of
the 17^(th) and 18^(th) centuries, and the âdownsizingâ of the
agricultural population, were a case of the propertied classes making
their own âluck.â And the story if this, their luck, is written in
letters of fire and blood.
Those who care to support locally based and smaller-scale agriculture
have already been doing so for two decades now by means of
community-supported agriculture, which is booming. On a purely voluntary
basis, people who wish to support local agriculture pay several hundred
dollars at the beginning of the year to provide the farmer with the
capital he needs; they then receive locally grown produce for the rest
of the year. The organizers of this movement, rather than wasting their
time and ours complaining about the need for state intervention,
actually did something: they put together a voluntary program that has
enjoyed considerable success across the country. Perhaps, if
distributists feel as strongly about their position as they claim, this
example can provide a model of how their time might be better spent.
This is one thing I agree with, sort of. Belloc strikes me as profoundly
pessimistic. He assumed that concentration of property in a few hands
was the natural tendency of a free market, and that state intervention
was needed to reverse that natural process. In fact, the concentration
of wealth is overwhelmingly owing to existing state intervention. The
working of a free market would break it up. Belloc might have been more
optimistic had he seen the free market as working in favor of
distributism rather than against it.
What wouldnât be a âwaste of time,â though, would be for the
community-supported agriculture movement to lobby for an end to the
subsidies and other competitive advantages the federal government
provides to corporate agribusiness.
To the extent that the anti-corporate Left sees state intervention as
necessary to break the present power of big business, itâs owing to the
fact (as Nock said), that vulgar libertarians and state socialists have
a common interest in obscuring the nature of the present system. Vulgar
libertarian apologists for big business like to pretend that the current
winners got that way through superior efficiency in the market. And
state socialists like to pretend, likewise, that a bureaucratic
apparatus controlled by themselves is the only way to counter the
natural outgrowth of big business from the free market.
Cato Unbound recently promoted an essay by William Easterly, âWhy Aid
Doesnât Work,â as an attempt to to âkick offâ a blogospheric
âconversationâ on the issue.
Implicit in Easterlyâs essay is the assumption that âglobalizationâ is
the result of pro-market policies, rather than state intervention on
behalf of transnational corporations:
Economic development happens, not through aid, but through the homegrown
efforts of entrepreneurs and social and political reformers. While the
West was agonizing over a few tens of billion dollars in aid, the
citizens of India and China raised their own incomes by $715 billion by
their own efforts in free markets.
Silly me. I thought China had encouraged foreign investment through
corporate welfare, like expropriating village land for industrial parks,
and sweatshop-friendly labor policies, like forcible suppression of
independent labor unions.
Easterly also implicitly assumes that the kind of âstructural
adjustmentâ demanded by the Bretton Woods agencies is equivalent to
âfree market reformâ:
Dozens of âstructural adjustmentâ loans (aid loans conditional on policy
reforms) made to Africa, the former Soviet Union, and Latin America,
only to see the failure of both policy reform and economic growth. The
evidence suggests that aid results in less democratic and honest
government, not more.
In fact, as Iâve repeatedly argued (see, for example, âThe Neoliberal
Myth of Small Governmentâ), most of the âreformsâ pushed by the IMF and
World Bank are just warmed-over state capitalism.
Take so-called âprivatization,â for example. Hereâs how Sean Corrigan, a
columnist at LewRockwell.Com described the process a few years ago:
Does he [Treasury Secretary OâNeill] not know that the whole IMF-US
Treasury carpet-bagging strategy of full-spectrum dominance is based on
promoting unproductive government-led indebtedness abroad, at
increasingly usurious rates of interest, and then--either before or,
more often these days, after, the point of default--bailing out the
Western banks who have been the agents provocateurs of this financial
Operation Overlord, with newly-minted dollars, to the detriment of the
citizenry at home?
Is he not aware that, subsequent to the collapse, these latter-day
Reconstructionists must be allowed to swoop and to buy controlling
ownership stakes in resources and productive capital made ludicrously
cheap by devaluation, or outright monetary collapse?
Does he not understand that he must simultaneously coerce the target
nation into sweating its people to churn out export goods in order to
service the newly refinanced debt, in addition to piling up excess
dollar reserves as a supposed bulwark against future speculative attacks
(usually financed by the same Western banksâ lending to their Special
Forces colleagues at the macro hedge funds) â thus ensuring the reverse
mercantilism of Rubinomics is maintained?
Joseph Stromberg, another Rothbardian free marketer, characterized most
privatization as âfunny auctions, that amounted to new expropriations by
domestic and foreign investors....â
And as Nicholas Hildyard pointed out, the privatization is only nominal.
It leaves a larger share of functions under nominally private direction,
but operating within a web of protections, advantages and subsidies
largely defined by the state:
While the privatisation of state industries and assets has certainly cut
down the direct involvement of the state in the production and
distribution of many goods and services, the process has been
accompanied by new state regulations, subsidies and institutions aimed
at introducing and entrenching a âfavourable environmentâ for the
newly-privatised industries.
As on the mark as these three critics are, there are a few points Iâd
add. First, the state assets to be âprivatizedâ are often
infrastructure, built with World Bank loans, whose main purpose was to
make foreign capital investments profitable. Second, the debt acquired
to build that infrastructure is used to blackmail the local government
into adopting neoliberal structural adjustment âreformsâ that include
selling the same infrastructure, to the same politically connected
international investors, for pennies on the dollar. Third, to entice
foreign capital into buying the assets, the local government often has
to spend more money to make them saleable than they get from the
proceeds. Fourth, the new ownersâ first order of business is usually
systematic asset-stripping, resulting in far more money than they paid
for the âprivatizedâ property. In other words, what weâre really talking
about is looting.
Easterly, finally, tosses around the generic term âaidâ as though it
referred mainly to aid to the poor (as Eric Cartman might say, âa bunch
of tree-hugging hippie crapâ), when in fact the majority of Western
foreign aid and loans from multilateral financial bodies has been
corporate welfare to Western corporations. The World Bank was created,
originally, to subsidize the export of surplus capital. And the majority
of its loans have been, as we saw above, for the transportation and
utility infrastructure needed to make Western capital investments
profitable. According to Gabriel Kolkoâs 1988 estimate [Confronting the
Third World: United States Foreign Policy 1945â1980], almost two thirds
of the World Bankâs loans since its inception had gone to transportation
and power infrastructure. A laudatory Treasury Department report
referred to such infrastructure projects (comprising some 48% of lending
in FY 1980) as âexternalitiesâ to business, and spoke glowingly of the
benefits of such projects in promoting the expansion of business into
large market areas and the consolidation and commercialization of
agriculture [Dept. of the Treasury. United States Participation in the
Multilateral Development Banks in the 1980s (GPO, 1982)].
So what kinds of genuinely free market policies could the West undertake
to promote prosperity in the Third World? Here are a few, for starters:
1. Western governments should support genuine property rights in the
land. That is, they should stop siding with the Latifundistas and other
landed oligarchies against land reform, and support strengthening of the
peasantryâs traditional tenure rights in the land. The history of
American foreign policy in the Third World, unfortunately, is pretty
accurately symbolized by its intervention on behalf of United Fruit
Company in Guatemala: decades of collusion between landlord and general
oligarchies, American agribusiness interests, and the U.S. national
security establishment. Murray Rothbard, a libertarian considerably less
prone than the Catoids to confuse âproperty rightsâ and the âfree
marketâ with plutocratic interests, acknowledged that most âproperty
rightsâ in the Third World were really what Thomas Hodgskin called
âartificialâ and Albert Jay Nock called âlaw-madeâ (see âRothbard on
Feudalism and Land Reformâ) Such property claims, descended largely from
state grants of land under colonial regimes, came at the expense of the
legitimate property rights of the peasants who had appropriated the land
through their own labor.
One reason Third World labor is willing to work in sweatshops as their
âbest available alternativeâ is that theyâve been forcibly deprived of
any better alternative. If the countless land expropriations of recent
decades had not taken place, if the property rights of peasant
cultivators had been upheld against quasi-feudal property rights based
on state land grants to absentee landlords, if hundreds of millions of
now landless laborers still had independent access to subsistence
farming, the bargaining position of labor against Wal-Martâs suppliers
would be considerably different. As was the case with the enclosures in
Britain, employers find it a lot harder to get cheap labor when workers
have independent access to the means of production. Some factual
questions were recently raised about Ellennita Muetze Hellmerâs JLS
article âEstablishing Government Accountability in the Anti-Sweatshop
Campaign,â but that shouldnât obscure the validity of her central point:
itâs disingenuous for sweatshop employers to congratulate themselves on
providing crutches to destitute Third World laborers when theyâve
colluded with government in breaking their legs in the first place.
2. Repudiate international âintellectual propertyâ accords. The central
motivation behind the GATT intellectual property regime was to
permanently lock in the collective monopoly of advanced production
technology by TNCs, and impede the rise of independent competition in
the Third World. It would, as Martin Khor wrote, âeffectively prevent
the diffusion of technology to the Third World, and would tremendously
increase monopoly royalties of the TNCs whilst curbing the potential
development of Third World technology.â The developed world pushed
particularly hard to protect industries relying on or producing âgeneric
technologies,â and to restrict diffusion of âdual useâ technologies. Not
to put too fine a point on it, the aim of international âintellectual
propertyâ law is to lock the Third World into a permanent status of
global sweatshop, hewers of wood and drawers of water for Western
capital [Martin Khor, The Uruguay Round and Third World Sovereignty
(Penang, Malaysia: Third World Network, 1990); Chakravarthi Raghavan,
Recolonization: GATT, the Uruguay Round & the Third World (Penang,
Malaysia: Third World Network, 1990)].
3. Replace the phony neoliberal version of âprivatizationâ with the real
thing--that is, privatization based on respect for the property rights
of the taxpayers whose sweat equity is embodied in the assets. Murray
Rothbard argued that state property should be treated as âunownedâ in
the Lockean sense, and subject to homesteading by those actually mixing
their labor with it [âConfiscation and the Homestead Principle,â
Libertarian Forum June 15, 1969]. In the case of public utilities, that
means organizing them either as producersâ co-ops under the control of
workersâ syndicates, or consumer cooperatives owned by the ratepayers.
All state property and services should, in some similar fashion, be
returned directly to the people. The state has no right to sell, to its
favored cronies, property that was originally paid for with money looted
from the taxpayers.
4. More generally, the U.S. should abandon the Palmerstonian model of
fake âfree tradeâ for the genuine article, as conceived by Cobden.
According to Oliver MacDonough [âThe Anti-Imperialism of Free Trade,â
The Economic History Review (Second Series) 14:3 (1962)], the
Palmerstonian system was utterly loathed by the Cobdenites. The sort of
thing Cobden objected to included the âdispatch of a fleet âto protect
British interestsâ in Portugal,â to the âloan-mongering and
debt-collecting operations in which our Government engaged either as
principal or agent,â and generally, all âintervention on behalf of
British creditors overseasâ and all forcible opening of foreign markets.
Cobden opposed, above all, the confusion of âfree tradeâ with âmere
increases of commerce or with the forcible âopening upâ of markets.â
Real free trade policy, on the other hand, doesnât require multilateral
bureaucracies like the WTO. It simply requires eliminating U.S. trade
barriers, and allowing Americans to trade or invest anywhere they want
to in the world on whatever terms they can negotiate--provided that they
also internalize all costs and risks of doing business overseas, without
the U.S. government subsidizing their operating costs, insuring them
against nationalization by hostile governments, and suchlike. Itâs that
simple.
n absolutely awful article by--who else--Madsen Pirie of the Adam Smith
Institute: âBig business â itâs mankindâs biggest boon.â
The article attempts a sleight of hand, jumping back and forth from a
defense of âbusinessâ and voluntary exchange in general, and a critique
of the zero-sum assumptions of collectivists, to a defense of the giant
corporation--for the most part the creature of the stateâs zero-sum
intervention in the economy.
It is all very well for film-makers and NGO zealots to sneer at
business, but it is businesses that bring the food to their tables and
make the drugs available when they are sick. It is the large
corporations that add cultural richness to our lives by enabling, say, a
recording of folk-singers from Mali to be downloaded on to an iPod in
Sydney. It is big business that liberates people to widen their horizons
by jumping on a jumbo jet to a far-flung part of the world. It is the
large corporations that have diminished domestic drudgery by providing
vacuum cleaners, microwaves and refrigerators. For that matter, it is
large corporations that help to finance, produce, distribute and market
anti-corporation movies, watched on TV screens or cut on to DVDs made by
big businesses.
Whether these things are currently done by large corporations is beside
the point. An apologist for the old state-owned and -planned economy in
the USSR might just as easily have said, âit is state industry that
brings you your food and medicine.â The proper question is whether the
large corporation is necessary to provide them, and whether it acts in
collusion with the state to crowd out other ways of providing them.
Most of Pirieâs choices of examples are unfortunate, not to say comical,
from the standpoint of his âfree marketâ rhetoric. Consider, for
example, the origins of the jumbo jet in the Cold War
military-industrial complex. The aircraft industry was spiralling into
the red after WWII, until Trumanâs heavy bomber program breathed life
into it. The jumbo jet itself would have been impossible without
taxpayer-funded heavy bombers, because the production runs for jumbo
jets alone were too short to pay for the expensive machine tools
required to build them. The aircraft industry is the most
state-dependent welfare bum of any industry in America--well, except
perhaps the drug industry, another one of Pirieâs examples. Consider,
again, the extent of government funding of drug research, the
governmentâs patent system, and the governmentâs reimportation bans. A
major part of the development costs that patents were supposedly
intended to recoup are actually the costs of gaming the patent system:
developing âme, tooâ versions of drugs about to go off-patent, or
establishing patent lock-down on alternative forms of a drug. The
entertainment industry is also an unfortunate choice for an example,
given the RIAA and MPAA lips firmly clamped around the nipples of
Congress.
And I wonder why Pirie puts so much emphasis on âlarge corporations.â
Most consumer goods like microwaves, vacuum cleaners and refrigerators
could be made more efficiently by smaller factories producing for local
markets. The problem is that the state subsidizes so many of the
inefficiency costs of large size, and so restrains competition, that
inefficiency doesnât carry the competitive disadvantages it would in a
free market.
The constant reference to large corporations, and not just to business
as such, gives away Pirieâs real agenda. This little puff piece was
designed, not to defend business as such, but as propaganda on behalf of
some of the most powerful institutions in the world. Anyone with the
gall to use language about âthe spontaneous nature of economic activity,
and the free trade and choices that it bringsâ in a defense of the state
capitalist corporation (that includes the aircraft, drug and
entertainment industries, no less) is a master of disingenuity. But itâs
no surprise, coming from the ASI. The ASIâs mission is to defend, not
the principles of the free market as such, but the interests of the
large corporation. The âfree marketâ language is just protective
coloring.