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Title: Carson’s Rejoinders Author: Kevin Carson Date: 2006 Language: en Topics: a reply, anarcho-capitalism, Bob Murphy, George Reisman, Murray Rothbard, mutualism, right libertarian, Roderick Long, Walter Block Source: Retrieved 07/19/2022 from https://c4ss.org/content/39945 Notes: A series of responses to right-libertarian reviews of Studies in Mutualist Political Economy. Published in the Journal of Libertarian Studies, Volume 20, No. 1 (Winter 2006): 97–136
This is not, properly speaking, a rejoinder — obviously, since
Rothbard’s article predates my book. But since it was chosen to set the
tone for this symposium issue, and includes some comments on
individualist anarchism in general, I’ll make a few remarks anyway.
On the land issue, I reserve comment, since that is also the focus of
Roderick Long’s review. I merely observe that characterizing the
Ingalls-Tucker doctrine as a limit on the landlord’s right to dispose of
his “justly-acquired private property” begs the question of just how
property is justly acquired.
On money and banking issues, Rothbard made the mistake of interpreting
the Greene-Tucker system of mutual banking as an attempt at inflationary
expansion of the money supply. Although the Greene-Tucker doctrine is
often casually lumped together (in a broader category of “money cranks”)
with social crediters, bimetallists, etc., it is actually quite
different. Greene and Tucker did not propose inflating the money supply,
but rather eliminating the monopoly price of credit made possible by the
state’s entry barriers: licensing of banks, and large capitalization
requirements for institutions engaged in providing only secured loans.
Most libertarians are familiar with such criticisms of professional
licensing as a way of ensuring monopoly income for the providers of
medical, legal and other services. Licensing and capitalization
requirements, likewise, enable providers of credit to charge a monopoly
price for their services.
In fact, Rothbard himself made a similar analysis of the life insurance
industry, in which state reserve requirements served as market entry
barriers and thus inflated the cost of insurance far above the levels
necessary for purely actuarial requirements (Rothbard 1977, p. 59).
And Böhm-Bawerk’s originary rate of interest was by no means a complete
answer to Greene and Tucker. Aside from the monopoly premium made
possible by the state’s banking laws, over and above the originary rate
of interest, Böhm-Bawerk himself admitted that time preference might
vary in steepness with one’s economic security and independence. Since,
as the individualist anarchists argued, the state’s policies render
capital artificially inaccessible to labor and increase labor’s
dependence on the owners of capital, the time preference of laborers is
artificially steep.
My favorite part of Murphy’s review is his repeated reminder, at the
outset, that “Carson is not a crank.” I may use that as a blurb for the
next printing of my book. Recently science fiction writer Ken MacLeod,
who had bought a copy of my book not long before, mentioned in his blog
that a new collection of articles from Reason was the only libertarian
paperback on his shelves whose cover didn’t “holler of crank.” So
Murphy’s reassurance is doubly welcome.
The central area of disagreement between us concerns the importance of
the “exceptions” to the cost theory of value. We have, it seems to me, a
largely semantic disagreement on whether they are “exceptions” or simply
secondary deviations from a primary law; and the significance that
attaches to them, whether “exceptions” or “deviations,” is mainly a
matter of subjective emphasis. Unlike Murphy, I prefer to regard the
“exceptions” as second-order scarcity deviations. The validity of the
central insight of classical political economy, that price is always
tending toward a natural value determined by cost, with secondary
fluctuations caused by scarcity rent, is unimpaired. And Marshall’s
analogy of ripples on a pond, or of a swinging weight, is still
admirably suited to describing real-world phenomena. The cost factor and
scarcity rents are of entirely different orders of significance, being
(respectively) a fundamental underlying tendency and a secondary
disruption of that tendency.
Murphy writes:
a cost theory of (exchange) value entirely neglects the role of
subjective valuations in the formation of market prices. Human actors
are forward looking, and hence past expenditures and effort are
irrelevant to the present determination of the relative merits of two
different commodities. Even if all memory of previous expenditures were
suddenly lost, market prices would still form.
Entirely neglects!?? I’m flabbergasted. I specifically addressed the
issue of sunk costs in chapter one, along with the operation of the law
of value through forward-looking behavior. Even Friedrich Engels
acknowledged (in his Preface to Marx’s critique of Proudhon, The Poverty
of Philosophy) that the market price of already-produced goods informed
the producer, ex post facto, of the amount of socially necessary labor
embodied in it, and thus influenced his prospective decision of how much
to produce in the future.
In present-day capitalist society each individual capitalist produces
off his own bat what, how and as much as he likes. The social demand,
however, remains an unknown magnitude to him, both in regard to quality,
the kind of objects required, and in regard to quantity. … Nevertheless,
demand is finally satisfied in way or another, good or bad, and, taken
as a whole, production is ultimately geared towards the objects
required. How is this evening out of the contradiction effected? By
competition. And how does the competition bring about this solution?
Simply by depreciating below their labour value those commodities which
by their kind or amount are useless for immediate social requirements,
and by making the producers feel … that they have produced either
absolutely useless articles or ostensibly useful articles in unusable,
superfluous quantity.
[C]ontinual deviations of the prices of commodities from their values
are the necessary condition in and through which the value of the
commodities as such can come into existence. Only through the
fluctuations of competition, and consequently of commodity prices, does
the law of value of commodity production assert itself and the
determination of the value of the commodity by the socially necessary
labour time become a reality. (Marx and Engels 1884, pp. 286–87)
It is precisely through such subjective evaluations, in response to
market price signals, that price moves toward cost. Of course market
prices would form in Murphy’s collective amnesia scenario; but unless
the acquisition of new knowledge from experience were suppressed, the
prices of reproducible goods would again start gravitating toward
production cost, as producers responded to ongoing price signals.
Murphy writes that the cost theory applies only to the prices of
reproducible goods, and can only explain the “‘natural’ (long-run) price
of a good.” The classical political economists admitted as much.
Ricardo’s cost theory, which incorporates scarcity, can explain
“day-to-day fluctuations in market price.” Cost theories assert only
that cost is the natural equilibrium value that price always tends
toward, despite constant disruptions by the forces of supply and demand.
And those disruptions, indeed, are the mechanism by which price moves
toward cost.
He also faults me for charging Böhm-Bawerk with a straw man, over
Ricardo’s treatment of scarcity exceptions. Böhm-Bawerk specifically
referred to Ricardo’s acknowledgement of the scarcity exceptions, Murphy
writes, and therefore cannot be accused of misrepresenting Ricardo. But
where Böhm-Bawerk erred, I think, is in his view of the significance of
those scarcity deviations for the over-all validity of Ricardo’s
thought. In the passage Murphy quotes, Böhm-Bawerk wrote:
Ricardo himself only went a very little way over the proper limits. As I
have shown, he knew right well that his law of value was only a
particular law; he knew, for instance, that the value of scarce goods
rests on quite another principle. He only erred in so far as he very
much overestimated the extent to which his law is valid, and practically
ascribed to it a validity almost universal. The consequence is that,
later on, he forgot almost entirely the little exceptions he had rightly
made but too little considered at the beginning of his work.
Now I have criticized Ricardo myself, in chapter one, for greatly
underestimating the extent of scarcity deviations from the cost
principle; as Marshall later observed, most prices at any given time
deviate considerably from their cost, or equilibrium value. The
significance of cost is that it is a normal value toward which actual
prices are tending, as illustrated by Marshall’s dangling weight at the
end of a string. But one might just as well criticize Ricardo for going
too far in the other direction, as well, in treating scarcity as a twin
principle of value alongside of cost (like the “short-run” blade of
Marshall’s scissors). Although Ricardo underemphasized the extent of
scarcity deviations, in elevating scarcity to an independent force equal
to cost, he overemphasized its significance. Although actual prices
almost always differ from their “normal” values, because of scarcity,
the deviations are entirely secondary to the primary law of cost.
Murphy criticizes my use of gravitation and ballistics as metaphors to
illustrate scarcity as the cause of secondary deviations from the
primary law of cost. But in the specific sense in which I used it — that
the natural tendency of an object under the pull of gravity is to fall
toward the center of the earth, unless obstructed by secondary forces —
I still consider it an apt illustration. In fact, my intention in using
the gravity metaphor was essentially what Murphy recommends as a
“better” one: “Gravity makes everything fall,” a law which is “generally
true, but is offset by disturbing forces.” Indeed, “disturbing forces”
is an excellent phrase for describing the relative importance of
scarcity deviations from the more general tendency of cost — I wish I’d
thought of it myself. What I was trying to convey, perhaps badly, was
something like Marshall’s metaphor of the dangling weight always moving
back toward center despite disruptions.
In any case, we are left with a question that’s largely a matter of
subjective judgment. If a theory of exchange value says that “the
general tendency is toward value x, with secondary deviations caused by
y,” is it fair to treat y as an “exception” to that statement? I believe
we’ve reached the point where we must agree to disagree on that
question; there’s no appeal to objective fact that can settle it. My own
judgment is that the sacrifice of “theoretical generality,” if it in
fact exists, is necessary for adequately dealing with the complexity of
reality. But there are some practical considerations involved in
choosing one theory over the other.
Murphy himself concedes that “the long-run tendency for a reproducible
good’s price to equal the money expenditures … necessary for its
continued production is entirely compatible with the marginal utility
explanation.” And, I might add, the subjectivist marginal utility
explanation of individual behavior in a market is entirely compatible
with the framework of classical political economy. Indeed, that
explanation was implicit in classical political economy as a mechanism
for how the law of value operated through the forces of supply and
demand. The virtue of the subjectivist/marginalist paradigm is that it
made this mechanism explicit. By providing an explicit subjective
mechanism for short-term price determination, at the point of sale, the
marginalists made a great advance. But their great advance would have
been better incorporated into a higher synthesis of the classical
paradigm, rather than set up in opposition to it.
Murphy considers unexceptionable the subjectivists’ goal of greater
generality and elegance. As I wrote in chapter one, quoting Buchanan
from Cost and Choice (1999, p. 9), the subjectivists took the classical
political economists’ paradigm for scarce goods (like works of art and
heirlooms, or food in a besieged city), and elevated it into a paradigm
for the study of all exchange-value, by treating quantities as fixed at
the point of sale. This is, indeed, a greater formal unity. And
Böhm-Bawerk’s marginal pairs are a brilliant way of understanding the
formation of spot prices. The question, however, is whether the admitted
“greater generality” achieved by applying the rules for scarce goods to
all goods in this way, outweighs the obscurity it casts on many of the
central questions and insights of classical political economy.
The classicals’ insight that price moves toward cost, unless impeded by
secondary factors, is a vitally important one. When coupled with the
insights of the radical disciples of Ricardo, on the role of “artificial
rights of property” and other state-created scarcities, in causing
deviation from the cost principle, the conclusions are revolutionary.
And at least as usually explicated, much of the work of the early
marginalist/subjectivists in the political context of their time seems
deliberately designed to obscure these insights. Sacrificing these
insights for the sake of what is, admittedly, greater formal elegance,
would in my opinion be a great mistake.
As a minor issue, finally, Murphy mentions my use of the term
“equilibrium price” in a sense that’s no longer in current use; as I use
it, he says, it is closer in meaning to what Mises meant by final price.
In my book, I admittedly use “equilibrium price” in the archaic,
nineteenth century sense of the natural value toward which prices are
tending. But I believe I explicitly mentioned Mises’ “final price” as
something like it, in answering Austrian objections that the “long-run”
doesn’t exist.
Moving on from our main point of contention, Murphy brings up some other
points. My argument, in chapter two, is that labor is unique among the
factors of production in that it carries a positive and absolute
disutility. The “abstention,” “sacrifice,” “waiting,” or “opportunity
cost” associated by other schools with the provision of land and capital
is entirely situational, and may derive entirely from a legalistic
position from which one may refrain from obstructing access. I quote
Maurice Dobb’s example of state grants of power to obstruct roads and
set up private tolls, and the resulting “productivity” of this “factor”
when the toll-keeper allows free passage. I expand on the point, arguing
that by the very same principle a slave-owner is “contributing” a
“factor” to production by renting the labor of his slaves. Murphy
replies:
yes, Mr. Carson, that is exactly how I would explain the pricing of
slaves. … The subjective theory of value can explain prices even under
conditions that do not conform to our sense of justice. I can also
analyze the effects of, say, a tariff on cars, even though I consider
tariffs to be immoral and inefficient.
Fair enough. I have no quarrel with a theoretical mechanism to explain
the pricing of slaves, passage through private checkpoints, goods
protected by tariff, or anything else. But that does not in any way
alter the fact that such pricing reflects an artificial scarcity created
by a state grant of privilege; and the “abstention” or “sacrifice” or
“opportunity cost” involved does not carry anything like the moral
significance commonly attached to those terms (“the abstemious
capitalist”) in popular capitalist apologetics. My point was that such
“opportunity costs” were entirely relative to an artificially privileged
position of control over access, and thus differ fundamentally from the
real sacrifice involved in the disutility of labor. More importantly, I
intended to make the point (and succeeded, in my opinion) that such
artificial scarcities of “factors of production,” based on legal
privilege, are the most important cause of long-term deviations from
labor-value.
Murphy also raises a question that, I confess, I found a stumper at
first. In defending the real (and not relative) disutility involved in
opportunity cost, he gives the examples of the owner of a tract of
virgin forest who experiences real discomfort at the idea of the trees
being cut down, and of a widow “forced to pawn her wedding ring to avoid
starvation.” But after some consideration, I decided that the examples
are irrelevant to factor prices in a capitalist economy. While the
subjective pain may be real, the subjective significance of such unique
and unreproducible goods has little to do with the market prices of
inputs that are generally treated, at least on the larger scale, as
uniform and homogenous. The widow’s ring cannot be considered a factor
of production at all, except to the extent that the money from its sale
might be invested in production (as opposed to food, in Murphy’s
example). And while the sentimental value of the trees may influence the
“opportunity cost” of selling the land for Mr. Murphy, the price at
which he can find a willing buyer will be determined by what land will
generally fetch, which takes us back to the role of the state’s
“artificial right of property” in determining the price of vacant land.
The opportunity cost by which factor costs are generally set in the
broader capitalist economy reflects the standard returns which are
available to various uses of a factor given the existing legal and
institutional framework. While the sentimental value of the forest or
the ring may have a big effect on the price at which Mr. Murphy or the
widow is willing to sell them, it has little to do with the prevailing
market price of factors of production for a buyer who isn’t interested
in such unique qualities.
For that matter, the fact that the land is (as Murphy specifies) virgin
forest indicates that it has not been altered by his labor, or the labor
of anyone else in the past; and since his property claim, under these
conditions, does not even come up to Rothbard’s Lockean standards, it
amounts to a case of what Jerry Tuccille called “anarcholand grabbism”
(Tuccille 1970, p. 3). Which brings us back to my original point:
artificial scarcity, in this case from state-enforced monopoly of land
that has never been legitimately homesteaded.
Moving on, Murphy critiques my discussion of time preference in chapter
three. He objects to my treatment (actually borrowed from Maurice Dobb)
of time preference as a scarcity rent on present labor, owing to its
increased disutility, as “just another factor in the ‘haggling of the
market’ [Adam Smith], by which labor’s product is allocated among
laborers.” This, says Murphy, “will simply not do.” It is, he says,
confusing the lower utility of a future product with the higher
disutility of present labor. But in practical terms, I believe they
translate into something quite similar. I am aware of the theoretical
distinction. But we’re all familiar with the fable of the grasshopper
and the ant; and in that story, the greater unpleasantness of labor
today than labor mañana, and the lesser weight given to “jam tomorrow”
than “jam today,” amount in common sense understanding to pretty much
the same qualities of human nature. Rothbard himself sometimes blurred
the distinction between time preference and Marshallian “waiting” to an
extent that would surely have grieved Böhm-Bawerk (Rothbard 1993, pp.
294–95, 298); Roger W. Garrison argued, in his turn, that the concept of
“waiting” as a factor of production was compatible with Austrian time
preference (Block and Rockwell 1988, p. 49). Similarly, I believe
Böhm-Bawerk’s time preference theory belongs in a broader category of
closely related theories (along with Senior’s abstinence and Marshall’s
waiting), and probably represents less of a radical, qualitative break
with his predecessors than he would have wished to believe.
Finally, Murphy quotes my statement that “[i]t is only in a capitalist
(i.e., statist) economy that a propertied class … can keep itself in
idleness by lending the means of subsistence to producers in return for
a claim on future output.” He raises the question of what happens in a
mutualist society
if an industrious worker accumulates a large stockpile of consumer
goods, and sells them in exchange for future goods? Could he not live
indefinitely off the interest? Would this be forbidden, or does Carson
just deny that it would ever happen in the absence of state
intervention?
The answer, of course, is the latter. With Benjamin Tucker, I say that,
if the worker can manage to accumulate such a stockpile of goods through
his own efforts, unaided by state-enforced monopolies; and if he can
find a borrower willing to deal with him on such terms — in that case,
more power to him! But in the absence of a usurious monopoly premium on
credit brought about by the state’s market entry barriers in banking,
with the availability of cheaper credit alternatives through mutual
banks, and with far less steep time preferences in a society with wider
distribution of property ownership, I think he’ll have a much harder
time finding a taker for such a deal than do present-day lenders.
One of Mr. Murphy’s criticisms I found entirely legitimate. My book has
little to say about absolute price levels. I paid that issue little
mind, believing that relative exchange value was the main issue of
contention between the labor and subjective theories. But the work of
Mises and the later Austrians on that subject is certainly worthy of
more consideration, and if I ever publish a revised edition of Mutualist
Political Economy I hope to give it greater attention.
At the outset of his review, Walter Block remarks that “[t]his is an
infuriating book.” Shortly afterward he comments, half in jest, that the
obvious amount of effort that went into researching and writing it is
“one more indication of the weakness of the labor theory of value.” I
might respond, in the same spirit, that the extent of his frustration,
despite manifestly having put so little effort into a careful reading of
the book, is an indication of the disutility of labor.
One thing he finds especially upsetting is that, despite my showing
“great familiarity with many of the most important libertarian
contributors to the field of political economy” (including “no fewer
than nine” of Rothbard’s publications), that familiarity “seems to have
been wasted on Carson, as he adopts the labor theory of value of all
things as the basic building block of his analytic framework.” This is a
very telling comment. The appropriate response upon reading his list of
authorities, apparently, is not critical analysis, but genuflection.
Indeed, Block’s response to most of my criticisms of the Austrians
amounts to little more than talking past them, and reasserting some
dictum of Böhm-Bawerk or Mises that ”everybody knows,” without ever
directly addressing my counterarguments.
In fact, Block’s approach reminds me of the Böhm-Bawerk quote from
Capital and Interest that I use as an epigraph for my book:
I have criticized the law of Labour Value with all the severity that a
doctrine so utterly false seemed to me to deserve. It may be that my
criticism also is open to many objections. But one thing at any rate
seems to me certain: earnest writers concerned to find out the truth
will not in future venture to content themselves with asserting the law
of value as has been hitherto done.
In future anyone who thinks that he can maintain this law will first of
all be obliged to supply what his predecessors have omitted — a proof
that can be taken seriously. Not quotations from authorities; not
protesting and dogmatizing phrases; but a proof that earnestly and
conscientiously goes into the essence of the matter. On such a basis no
one will be more ready and willing to continue the discussion than
myself.
I attempted such a proof, in part one of my book. Now the shoe is on the
other foot. Some subjectivists, like Bob Murphy and Roderick Long, are
responding with the sort of thoughtful counter-arguments that
Böhm-Bawerk hoped for in vain from labor-theory proponents. But all too
many subjectivists are guilty of the same intellectual laziness of which
Böhm-Bawerk complained in his adversaries. Rather than being able to
make a coherent argument as to why goods should exchange in proportion
to embodied labor, or to elaborate a mechanism by which this was brought
about (Böhm-Bawerk complained), the labor theorists appealed to the
authority of Smith, Ricardo, or Marx, as a thirteenth century scholastic
might appeal to Aristotle.
Today, similarly, in one mainstream libertarian venue after another, I
find that any reference to the labor theory of value is dismissed with
similar appeals to the conventional wisdom that “everybody knows.” For
example, I constantly encounter arguments picked up second-or third-hand
from libertarian polemicists, or from an Econ 101 lecture, that were in
fact anticipated and answered by Ricardo or Marx 150 years ago. Hence
Block’s resurrection of the “mud pie” chestnut, which you’d think anyone
who’d ever read any Ricardo or Marx would be ashamed to recycle under
his own name. I also find a lot of “refutations” of things that the
classical political economists never said; but since the “refuters” get
their arguments second-or third-hand, they have only the vaguest idea of
what the objects of their summary dismissal actually said. “Talking
points: they’re true because they’re said a lot!”
To return to that old mud pie strawman, Block not only treats the
“socially necessary labor” argument as circular, but gives the
misleading impression that it was a lamely adopted response to some
telling subjectivist criticism. In fact, the idea that the producer is
informed of the “socially necessary labor” product, ex post facto, by
the price it fetches on the market, was put forth by Marx in his early
arguments with Proudhon (see the quote from The Poverty of Philosophy in
my rejoinder to Murphy above). So the actual case is just the reverse:
the “mud pie” argument was an exercise in intellectual laziness by those
who were too ignorant of what they were criticizing to be aware that
Marx had “answered” it before it was ever made.
Block’s second refutation considers the elements of “time, risk, and
time preference.” Block, apparently, expects me to be dumb-founded by
such arguments; rather remarkable, since I devoted an entire chapter to
time preference, and explicitly stated in the text that the Tuckerite
critique of profit concerned only net profit, or profit on capital as
such, and not risk premium. So far as I know, even the most
thorough-going mutualist has never objected to the pooling of risk by
actuarial mechanisms; and the risk premium is no different from that in
principle.
As for “time,” his treatment of it is one of many things in his review
that has me wondering how he could possibly have read my book. His
argument is nothing but a recycled version of the old labor fund
doctrine, in which the provident capitalist comes to the rescue of the
hapless laborer who has no savings to live off of during the production
process, in return receiving something for his “contribution.” That’s
all well and good, except for the question of how the worker came to be
so dependent, and how the means of production and the “labor fund” came
to be concentrated in the hands of a few people, in the first place.
The answer to this question, which Block gives such short shrift, brings
to mind Harry Browne’s quip about the government breaking your legs and
then congratulating itself for giving you crutches. A major part of my
book is devoted to the history of primitive accumulation, in which the
propertied classes (in collusion with the state) robbed the laboring
classes of their property in the land.
Regarding time preference, Block complains of the “scant nine pages”
devoted to considering it in chapter three: “Very bad form.” But he
summarizes my nine-page argument in one sentence, dismissing it without
giving his readers any independent basis for understanding what it is he
is criticizing. Here’s the sentence he quotes:
When labor abstains from present consumption to accumulate its own
capital, time-preference is simply an added form of disutility of
present labor, as opposed to future labor.
Unlike Murphy, Block doesn’t bother to answer this argument in itself.
He simply proceeds to ask:
This is singularly unhelpful. Where … does Carson think capitalist
entrepreneurs arise from, apart from the class of artisans who begin
working on their own account, reduce their consumption below income, and
use the resultant savings to finance employees on a residual income
claimant basis?
Although the reader might not realize it from reading Block’s review, I
devoted a considerable portion of my book to answering that question in
detail. First of all, despite Block’s apparent misimpression,
“capitalist entrepreneur” isn’t a single word. Contra Mises’s misleading
summary of the history of the Industrial Revolution, the entrepreneurs
who worked themselves up from the “class of artisans” by hard work and
abstention provided a minority of total investment capital. They were
decidedly junior partners of the owners of the greatest concentrations
of wealth: the Whig landed oligarchy and the great mercantile fortunes.
Block, you’d think, would be at least aware of the distinction (made by
the late Samuel Edward Konkin and other Rothbardian radicals) between
entrepreneurs and unproductive rentiers.
Block continues:
It of course cannot be denied that some capitalists get their start out
of stolen past labor, as he asserts over and over again, but this need
hardly necessarily be the case.
Block, apparently, is channelling Tweedledee: “If it was, it might be;
but it isn’t, so it ain’t. That’s logic.” Whether it is the case is a
historical question, to which I devoted two entire chapters (four and
five) and cited a great deal of evidence — hardly what I would
characterize as simply “asserting over and over.” Making unfounded
assertions, while ignoring the evidence already produced to the
contrary, is more in Mr. Block’s line.
In fact, I did indeed “[have] an answer to Böhm-Bawerk’s devastating
critique of socialism.” It’s in the rest of that nine pages, besides
that one sentence that Block quotes. This is yet another of those
passages which has me wondering whether Block actually read the book, or
simply skimmed it for material to put in sneer-quotes and answer with
the appropriate boilerplate. Here, for the benefit of the reader who
might want some independent basis for evaluation, is an extremely
condensed passage from chapter three:
Böhm-Bawerk for the most part stuck to an ahistorical treatment of the
actual origins of the distribution of wealth, taking as a given that the
propertied classes were in a position of having surplus property for
investment as a result of their past thrift or productivity. Often he
did not address the issue at all, but simply assumed the present
distribution of property as his starting point.
The propertyless laboring classes, like the capitalists, just happened
to be there.
Why the laborers might lack individual or collective property in their
means of production, or be unable through cooperative effort to mobilize
their own “labor fund” in the production interval, Böhm-Bawerk did not
say. Why the capitalists happened to be in possession of so much
superfluous wealth, he likewise did not speculate. That the bulk of a
nation’s productive resources should be concentrated in the hands of a
few people, rather than those of the laboring majority, is by no means a
self-evident necessity. Böhm-Bawerk himself accepted it as altogether
unremarkable. For the cause of such an odd situation, therefore, we will
have to look elsewhere than in his work.
The answer lies not in economic theory, but in history. The existing
distribution of property among economic classes, about which Böhm-Bawerk
was so coy, is the historic outcome of State violence. We shall examine,
in a later chapter, the process of primitive accumulation by which the
laboring majority has been forcibly robbed of its property in the means
of production, transformed into a propertyless laboring class, and since
then prevented by law and privilege from obtaining unfettered access to
capital.
It will suffice for the moment to say that, although time preference no
doubt holds true universally even when property is evenly distributed,
the present after-effects of primitive accumulation render
time-preference much steeper than it would otherwise be. Time preference
is not a constant. It is skewed much more to the present for a laborer
without independent access to the means of production, or to subsistence
or security. Even the vulgar political economists recognized that the
degree of poverty among the laboring classes determined their level of
wages, and hence the level of profit.
In an economy of distributive property ownership, as would have existed
had the free market been allowed to develop without large-scale robbery,
time-preference would affect only laborers’ calculations of their own
present consumption versus their own future consumption. All
consumption, present or future, would be beyond question the result of
labor. It is only in a capitalist (i.e., statist) economy that a
propertied class, with superfluous wealth far beyond its ability to
consume, can keep itself in idleness by lending the means of subsistence
to producers in return for a claim on future output.
The main “critic” of Böhm-Bawerk to which those nine pages are devoted,
interspersed with extensive block quotes from Böhm-Bawerk himself, is me
— which stands to reason, considering it’s my book.
Perhaps the greatest howlers in Block’s review are his comments on
employment relations:
He [Carson] … sees economics as a zero sum game wherein the capitalist
can only earn at the expense of the worker. He does not seem to realize
that all commercial interactions, particularly including the one between
employer and employee, are of necessity mutually beneficial in the ex
ante sense. … He … thinks that “profit results from unequal exchange”;
pray tell, what is that? In one sense, all exchange is equal, in that
both parties gain in the ex ante sense. … He repeats this error about
unequal exchange several times. … However, he … sees “capitalist acts
between consenting adults” in Nozick’s felicitous terminology … in a
positive manner, correctly rejecting the concept of the market as a zero
sum game. It is more than passing curious how he can be so sensible in
one section of his book, and so prone to error in others.
For an answer to his question, Block need go no further than Franz
Oppenheimer (one of his long list of libertarian authorities from whom I
failed to benefit). “Unequal exchange” and “zero-sum games” result from
state intervention in the market. Free exchange, without state
intervention, is indeed mutually beneficial, and creates a
Pareto-optimal result in which everyone benefits to some extent and
nobody is harmed. That doesn’t have much to do with employment relations
in the current economy, however. I reject the idea of the market as a
zero-sum game, consistently, in every part of my book. I argue that the
present capitalist economy is a zero-sum game because it is not a free
market.
Block seems unable to grasp my distinction between how things work under
“actually existing capitalism” and how they would work in a free market
(ironically, he later accuses me of deliberately obscuring the same
distinction — see below). In fact, his defense of existing employment
relations in terms of how things work “in a free market” is one of the
main identifying features of what I call the “vulgar libertarian.” I
quote from chapter four of my book:
Vulgar libertarian apologists for capitalism use the term “free market”
in an equivocal sense: they seem to have trouble remembering, from one
moment to the next, whether they’re defending actually existing
capitalism or free market principles. So we get the standard boilerplate
article in The Freeman arguing that the rich can’t get rich at the
expense of the poor, because “that’s not how the free market works” —
implicitly assuming that this is a free market. When prodded, they’ll
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 “free
market principles.”
Against such commentary by Block, I can do no better than to quote Bob
Murphy’s review:
I had never really considered the origins of the present distribution of
property titles, and Carson makes a strong case that the typical
libertarian defense of the modern employer/employee relationship may be
quite naïve due to ignorance of the historical development of
capitalism.
In another passage on employment issues, Block writes:
States Carson … : “In an order of free and voluntary exchange, all
transactions are mutually beneficial to both parties. It is only when
force enters the picture that one party benefits at the expense of the
other.” This is all well and good, at least superficially. The
difficulty is encountered when we realize that for this author “force
enters the picture” whenever an employer makes an offer to an employee.
Yes — if wealth is concentrated in the hands of a small number of
employers, and employees are deprived of independent access to means of
production and subsistence, and the labor market is otherwise made a
buyer’s market, all by state action. Then it’s exploitation. Block
presents a counter-challenge: what if the employer is a former employee,
who saved up a labor-fund from his own wages, and then his fellow
employees asked him to bear the risk of a new enterprise? Would I
consider this exploitation? No, aside from the caveat that the rate of
return he demanded would be influenced by the state’s market entry
barriers for banking. And if my aunt had testicles, I’d consider her my
uncle!
Among the errors which supposedly mar my work, he accuses me of
“conflat[ing] profits (which disappear in equilibrium) with interest
(which does not).” That’s only true if you insist on using the
politically approved terminology from the Big Austrian Lexicon. In fact,
I specifically distinguished what the Austrians call “entrepreneurial
profit” from returns on capital as such, although I did not feel
obligated to restrict myself to the kewl kids’ jargon.
Another such “error”:
He … thinks there can be such a thing as “free market socialism,” not
realizing this is a contradiction in terms, if the latter phrase is
used, as per usual, as employed by this author, to strip the
capitalists, entrepreneurs, landowners, etc., of their due.
I use the term “socialism” in exactly the same sense as Benjamin Tucker
used it in “State Socialism and Anarchism,” to describe a free market in
which capital and land are subject to the same laws of competition as
labor, without state enforcement of monopoly privileges.
And another: “He … does not seem to understand that ‘monopoly’
necessarily involves government interferences with free entry into an
industry.” Considering that I explicitly say that it does, that I define
the state’s money monopoly in terms of market entry barriers for the
banking industry, and that I rely heavily in chapter six on the Gabriel
Kolko/Murray Rothbard treatment of regulatory cartelization, it’s hard
to guess why Block doubts my understanding of the principle. Considering
the way he reflexively comes to the defense of actual monopolies,
created by the state’s entry barriers, and defends them in terms of “how
the free market works,” it’s more likely that he doesn’t understand it.
I’m also accused of adopting the “mainstream neoclassical view” of
monopoly, as opposed to “the correct Austrian one”; that is, I judge the
competitiveness of an industry by the number of firms in it. But if one
reads chapter six carefully — and with Block that’s a big if — it
becomes clear that I take that position only when the number of firms is
artificially low as a result of state action. I don’t believe even
Rothbard would object in principle to the idea that prices may become
stickier or more stable, through price leadership and other forms of
tacit collusion, as the number of firms in a market decreases. But so
long as there are no market entry barriers, and no government restraints
on competition, that does not alter the fact that prices are fully
competitive. I have no quarrel with that position. When competition is
artificially restrained, on the other hand (see, e.g., Kolko’s treatment
of the effects of “unfair competition” provisions of the FTC and Clayton
Acts, and Rothbard on regulatory cartelization), or the number of
competitors artificially reduced, by state action, I think it’s fair to
refer to an “oligopoly markup” under such conditions.
Time and again, I find myself straining to put an interpretation on
Block’s review that doesn’t call either his reading comprehension or his
honesty into question. In places, his comprehension is apparently so
poor as to suggest that his obtuseness is a mere pose: disingenuousness,
in other words. For example:
Our author … approvingly cites Smith (1776) to the effect that “the
‘real price’ of a thing … what it ‘really costs to the man who wants to
acquire it’ was ‘the toil and trouble of acquiring it.’” But suppose I
am out for a stroll and see a gigantic diamond sitting on a rock. I
don’t even have to go through the ‘toil and trouble’ of bending down to
pick it up; it is right there, hand high. All I do is seize it. There is
virtually no “toil and trouble” involved. And yet this precious stone is
worth millions.
If this passage is taken at face value, Block must be almost entirely
ignorant of the actual thought of the classical political economists,
except as distilled for him in Austrian polemical literature — or at
least unwilling or unable to understand their thought on its own terms.
It is hard to imagine how anyone could come away from an honest reading
of chapter one of my book, let alone The Wealth of Nations itself,
without understanding that Smith’s quote applied only to reproducible
goods.
And — get this — Block faults me for obscuring the difference between
“corporate state monopoly capitalism” and laissez-faire. This, when time
and time again he comes to the defense of corporations in the existing
fascist economy, responding that corporations can’t exploit workers, or
engage in unfair competition, or gouge consumers, because “that’s not
how things work in the market economy!” The two systems, as Block says,
“are as different as night and day. They have nothing in common.”
Precisely my point. The present system is either one, or the other. Take
your pick, Mr. Block, and stick to it. Don’t keep jumping from one to
the other, depending on which one is most useful to a pro-corporate
apologetic. Next, he has the gall to accuse me of doing “all [I]
possibly can to bring about confusion in this regard,” and to suggest
that I’m guilty of “perhaps a purposeful and willful confusion between
the two.” A remarkable case of mirror-imaging, that!
As examples of my willful confusion, I take Mises to task for his
defense of the dark satanic mills of the Industrial Revolution, which
(he said) workers viewed as preferable to the other available
alternatives. Never mind that, as I demonstrated at length, the
employing classes were for the most part in active collusion with the
state in determining what other “alternatives” were available. But
Mises, you see, was only defending them “qua employers”!
And the land thefts I describe in chapters four and five, as central to
the creation and development of historic capitalism, are “part and
parcel of state monopoly corporate capitalism, not the laissez-faire
variety.” Ah, well, that certainly clarifies things. … Except, where has
this laissez-faire capitalism ever existed, except in the interstices of
the existing state capitalist system, to the extent that politically
capitalists and landlords have tolerated it? The central argument of my
historical chapters is that capitalism, as an actual historical
phenomenon, has been defined by statism from its very beginning; its
foundation was “written in letters of blood and fire,” and its ongoing
structural features are integrally bound up with statism. Like Ricardian
radicals who first used the term “capitalism” in the early nineteenth
century, I regard the present system as capitalistic precisely to the
extent that it differs from a free market or laissez-faire. And my
entire criticism of monopolies, labor exploitation, imperialism, etc.,
is of that real-world capitalist system. “Carson infuriatingly muddies
the waters here, even though he full well knows the difference.” It is
Block who muddies the waters; whether he full well knows the difference,
only he can say.
Likewise, I fail to distinguish between the two varieties of capitalism
in the Industrial Revolution.
Surely, there was some land and other theft, suppression, exploitation.
But because of this, our author throws out the innovation baby along
with the repression bath water. Surely, we can properly distinguish
between the entrepreneur who drags the economy into modernity, and
employs children who otherwise would have starved, even if one and the
same person were also guilty of violations of the libertarian
nonaggression act [sic].
It’s hard for me to believe anyone could intend this to be taken
seriously, let alone decide how to answer it. “Surely, we can
distinguish between the governments which provides crutches to the
cripple who otherwise would have fallen down, even if one and the same
government were also guilty of breaking his legs. We’re just defending
government qua crutch-provider.” And Block calls me a schizophrenic
Jekyll and Hyde character!
The central difference between us, I think, is over the extent to which
the present system can be taken as a proxy for the free market. I made
it clear in my book that I consider it statist to the core, and to have
been so from its very beginning, with genuine free market elements only
allowed to operate to the extent that the state capitalist ruling class
saw them as being to their interest. Block, apparently, sees the present
system as already a fairly close approximation to the free market, with
only a few statist lacunae to complicate his picture of a world run by
McDonald’s and Wal-Mart without the interference of government
regulations or labor unions.
As examples of my purported “economic illiteracy,” Block mentions my
references to “scabs,” “dumping,” “collusion,” “price leadership,” etc.
In every one of those cases, I criticize the phenomenon in question in
the context of the state capitalist system (as my very chapter titles
should be enough to tell him). “Dumping,” for example, is mentioned in
the context of Schumpeter’s “export-dependent monopoly capitalism” — in
much the same way that the Rothbardian Joseph Stromberg uses it in his
article “The Role of State Monopoly Capitalism in the American Empire”
(2001, pp. 57–93).
Another example of my economic illiteracy, according to Block, is this:
“Demobilization of the war economy after 1945 very nearly threw the
overbuilt and government-dependent industrial sector into a renewed
depression.” Again, read Stromberg’s article for a favorable Austrian
spin on the over-accumulation/under-consumption thesis. As Stromberg
shows, such analyses by J.A. Hobson and the Monthly Review group are
quite apt in the case of state monopoly capitalism. In reference to my
discussion of monopoly profit being extracted from consumers, Block
responds:
This is of course quite reasonable in the monopoly that emanates in
state monopoly corporate capitalism; here, some firms are forbidden
entry, and the privileged others can certainly exploit consumers. But
how in bloody blue blazes can this take place under laissez faire
capitalism?
Um, Mr. Block? Just read the title of chapter six, from which this is
cited: “The Rise of Monopoly Capitalism.”
As a final example of my economic illiteracy, Block mentions my
discussion of large firms that operate well above the level of optimal
efficiency, far beyond the point at which economy of scale levels off.
In our author’s view … bigness is badness. But only the market can
determine how big is too big. And, if a firm exceeds this barrier,
whatever it is, market forces will soon rein it in. Companies such as
Microsoft, Wal-Mart, Coca-Cola, and McDonald’s are truly gargantuan.
Does this mean they are too big? Not a bit of it. Were this so, they
would now be well on their way toward a reduced size.
Well, I’m tempted to speculate that some form of illiteracy is at work
here, at any rate. How he could have got that from reading the actual
text is beyond me. In fact, he stands my position on my head. I don’t
believe any form of intervention by the state or any other coercive body
is necessary to impose a limit on size. As Block says, that’s a job for
the free market; but unlike Block, I think a description of the
functioning of a free market calls for the subjunctive case, not the
indicative. Wal-Mart, McDonald’s, etc., would indeed be on their way
toward reduced size, in a free market. Does Block honestly assert that
they currently function in a free market? If so, he should cheerfully
retract, with an apology, his accusation that I blur the distinction
between laissez-faire and state capitalism. In the passage in question,
I argued that the present size of most (if not all) large corporations
reflects existing state intervention in the economy, either to cartelize
industry through regulations, to subsidize accumulation, or to
externalize the inefficiency costs of large size. My argument is that
the size of McDonald’s, et al., reflects the nature of the state
capitalist system, and that a genuinely free market would break them
down into much smaller, more efficient firms. Once again, as a vulgar
libertarian, Block seems to forget from one moment to the next just what
it is he’s defending.
But, perplexingly, he goes on immediately afterward to comment: “Nor is
it easy to see how the government presently props them up.” Now, if he
acknowledges that that is my argument — that corporations are able to
grow beyond the point of peak efficiency because the government props
them up — then his previous insinuation that I want “outsiders” to
impose a maximum size on firms must be pure disingenuousness. Either
that, or he can’t remember from one minute to the next what he has
written. As for the myriad ways in which the government props them up,
whether they’re easy for Block to see or not, I describe them at great
length in chapter six.
Unlike Walter Block, Mr. Reisman is too exercised to make even a
half-hearted attempt at good humor or to acknowledge, pro forma, my
well-meaning efforts in writing my book. He immediately goes in for the
kill. As the editor warned me ahead of time, the reviews ranged from “we
must enlighten our well-meaning and often insightful but at important
points misguided comrade,” to “kill the commie!” Reisman, I find, is
anchoring the right end of that spectrum.
Reisman’s very title is an exercise in question-begging. And he
continues that question-begging in his first paragraph, saying that my
book “centers on the incredible claim, self-contradictory on its face,
that capitalism, including laissez-faire capitalism, is a system based
on state intervention, in violation of the free market.” By the way: if
Reisman’s subordinate clause, “including laissez-faire capitalism,” has
any meaning at all, it implies that Reisman regards claims of state
intervention even in non-laissez-faire capitalism as incredible and
self-contradictory.
I deliberately chose to resurrect the original, Hodgskinian sense of the
term “capitalism” for the same reason that some twentieth century free
market advocates chose to rehabilitate it as a god-term: to make a
point. The term “capitalism,” as it was originally used, did not refer
to a free market, but to a type of statist class system in which
capitalists controlled the state and the state intervened in the market
on their behalf. It is still used in this sense by some prominent
libertarians. R.A. Wilson, for example:
FREE MARKET: That condition of society in which all economic
transactions result from voluntary choice without coercion.
THE STATE: That institution which interferes with the Free Market
through the direct exercise of coercion or the granting of privileges
(backed by coercion).
PRIVILEGE: From the Latin privi, private, and lege, law. An advantage
granted by the State and protected by its powers of coercion. A law for
private benefit.
USURY: That form of privilege or interference with the Free Market in
which one State-supported group monopolizes the coinage and thereby
takes tribute (interest), direct or indirect, on all or most economic
transactions.
LANDLORDISM: That form of privilege or interference with the Free Market
in which one State-supported group “owns” the land and thereby takes
tribute (rent) from those who live, work, or produce on the land.
CAPITALISM: That organization of society, incorporating elements of tax,
usury, landlordism, and tariff, which thus denies the Free Market while
pretending to exemplify it. (Shea and Wilson 1975, pp 622–23)
As I explained in the book, in these very words, I distinguish
“capitalism” from the “free market” precisely to the extent that it is
not “laissez-faire.” The point is that “laissez-faire capitalism,”
historically speaking, is an oxymoron. “Actually existing capitalism”
has been characterized by massive state intervention since its very
beginnings. Like Benjamin Tucker, writing in “State Socialism and
Anarchism,” I advocate an end to capitalism by means of laissez-faire
and free markets.
I have no quarrel with those who deliberately use the term
“laissez-faire capitalism” and distinguish it from “actually existing
capitalism.” Many self-styled anarcho-capitalists, for their part, have
no problem with my usage, so long as we understand each other’s meaning.
For a discussion on the nuanced nature of the term “capitalism,” and its
history, I recommend Chris Sciabarra’s blog post “Capitalism: The Known
Reality” (Sciabarra 2005, Notablog). I do, however, have a quarrel with
historical illiterates who are so mired in temporal provincialism as to
be unaware that such terms have a history. Reisman, evidently, is among
the latter, since he puts “individualist anarchism” in sneer-quotes (as
though I’d invented the term), and refers to the labor theory of value
as a “Marxist” doctrine.
Reisman also refers to me on virtually every page of his review as a
“Marxist,” to the point that it is not only tedious but seems forced.
Perhaps he believes that enough repetitions will make the lie stick; but
the main effect of such childishness is to highlight his own historical
ignorance.
Reisman accuses me of disingenuousness in my treatment of Ricardo’s
labor theory of value, since I supposedly ignore his recognition of time
and the rate of profit as complicating factors. I am, he says, a labor
theory “absolutist,” like Marx, who “recognizes nothing but the quantity
of labor expended in production as the source of exchange value.” First
of all, there are precious few labor theory “absolutists” in Reisman’s
sense. Considering the importance of the general rate of profit and the
associated transformation problem in Marxian economics, it should be
evident that the rate of profit complicates things as much for Marx as
for Ricardo. And the implication in Ricardo himself that profit was
deducted from labor-value was picked up by a whole school of Ricardian
socialists, who derived radical conclusions from his economics well
before Marx came along.
As Reisman later says himself,
Carson, along with all other Marxists, and, it must be said, along with
almost all other economists of every persuasion, including Böhm-Bawerk,
follows Adam Smith in regarding profit as a deduction from what would
otherwise be wages.
In any case, since I not only distinguish entrepreneurial profit and
risk premium from return on capital as such, but devote an entire
chapter to time preference, it is a stretch to call my labor theory
“absolutist.”
In his comments on my treatment of the land monopoly, Reisman again
resorts to question-begging:
if I, a legitimate owner of a piece of property, decide to rent it out
to a tenant who agrees to pay the rent, the property, according to
Carson, becomes that of the tenant, and my attempt to collect the
mutually-agreed-upon rent is regarded as a violent invasion of his [the
tenant’s] “absolute right of property.” In effect, Carson considers as
government intervention the government’s upholding the rights of a
landlord against a thief. He believes he has the right to prohibit me
and the tenant from entering into an enforceable contract respecting the
payment of rent and that such action is somehow not a violation of our
freedom of contract and not government intervention.
Since the rules for determining the “legitimate owner of a piece of
property” versus the “thief” are the point at issue between the Locke
and the Ingalls-Tucker property doctrines, it does Reisman no good
simply to assume the matter in contention. Reisman’s critique is only
valid if one accepts the Lockean ownership rules as self-evident. Unlike
Long, who makes a good effort to argue the case, Reisman simply begs the
question. Who is the initiator of force, and who is the defender,
depends on how the prior question of ownership rules is resolved. The
enforcement of any property rights rules, whether Lockean,
Ingalls-Tucker, or Georgist, depends on a local consensus on what
constitutes a valid ownership claim. And the enforcement of any such set
of rules by a local community will be perceived as legitimate
self-defense by the adherents of that property rights regime, and as
aggression by adherents of rival philosophies.
Reisman makes the same mistake as Rothbard in characterizing the
Greene-Tucker system of mutual banking as one of easy money. The purpose
of mutual banks is not “unlimited credit expansion,” but the elimination
of entry barriers to the credit market which enable privileged lenders
to charge a monopoly price for secured loans. In fact, Reisman goes so
far as to say that I seem “totally unaware” of this argument by Rothbard
in his article on the Spooner-Tucker doctrine. Unaware, or just
unconvinced? Reisman, like Block, reminds me of the labor theory
advocates who provoked Böhm-Bawerk’s ire. He, like they, substitutes
appeals to authority for reasoned argument.
Next, Reisman enters into an extended discussion of why, apparently, he
regards capitalist ownership and wage labor as the only possible way of
organizing large-scale production. Although some forms of production
require “the assembly of a large aggregate of capital goods and the
presence of a large number of workers,” and “cannot be conducted by
individual workers each employing his own capital goods,” it does not
follow that capitalist ownership and wage labor are the sole means by
which labor and productive resources can be aggregated. Reisman objects
to my denial of “the necessity of the separation of wage earners from
the ownership of the capital goods with which they work”; not only do I
deny it, but, in my stiff-neckedness, “[m]ore than once … [depict] the
separation as utterly unnecessary.”
So are we to take it that Reisman regards the separation of wage labor
from ownership of the means of production as a “necessity” for
large-scale production? If so, he doesn’t make himself very clear as to
why it’s necessary. He seems to assume, without making any real
argument, that the only alternative to the capitalist-owned enterprise
is cottage industry and artisan labor.
This theme is coupled with another: my “naïveté” in allegedly yearning
for an economy of nothing but cottage industry and artisan labor. It
seems that I must agree with Reisman, whether I want to or not, that
artisan labor is the only viable form of producer ownership and control
of production. Although I have argued that the factory system replaced
cottage industry in part for reasons other than technical efficiency, I
have never argued that mass production is unnecessary under all
circumstances. But what I have actually written can’t stand in the way
of Reisman’s effort to pigeonhole me as a romantic medievalist.
He manages to incorporate virtually every point I make about the
industrial revolution into this leitmotif of his: my citations of
Kirkpatrick Sale and Steven Marglin, for example, proving my
pathological nostalgia for the world of William Morris. Thus, Reisman
dismisses as a “virtual fairy tale” Sale’s claims about the legal
suppression of the tools of cottage industry — without, of course, any
regard to whether or not such laws actually existed. “Carson and Sale,”
he remarks, “apparently never heard of such things as the Luddites and
the later attacks on machinery in 1826, both occasioned by the inability
of cottage producers to meet the competition of factories.” Well, that’s
certainly an interesting observation, considering that Sale wrote a book
about the Luddites (Sale 1995). In any case, the question is not whether
cottage producers could “meet the competition of factories,” but what
the nature of that competition was — statist or market. It’s hard, after
all, to compete with the Godfather.
Reisman takes exception to Stephen Marglin’s claim (in “What Do Bosses
Do?”, 1974) that increased efficiency results not from division of labor
as such, but from separation of tasks. Marglin argued that a cottage
laborer could achieve most of the increased efficiencies of Adam Smith’s
pin factory by simply dividing and sequencing the tasks: first drawing
out all the wire, then cutting the entire production run, then
sharpening it, etc. Reisman’s “disproof”?
It [saving of time from division of labor] would normally not be present
in the case of an individual attempting to perform by himself all of the
steps involved in the production of a product. For example, if I am
assembling, say, a table for my own use. … I would almost certainly be
assembling only one such table, and would experience all of the wasted
motion entailed in having to pass numerous times from one distinct
operation to another. … There would be no room at all for “sequencing”
in the sense used by Carson, in such a case. If I were to attempt to
produce pins for my own use, I would have need for only a relatively
modest quantity, and there would accordingly be only very limited scope
for sequencing in Carson’s sense and thus in reducing the motion wasted
in passing from task to task.
Marglin was referring to cottage production of pins for the market, with
production runs large enough to allow the division and sequencing of
tasks. To prove the impracticality of this method, Reisman provides the
examples of assembling a single table, and a few pins — in both cases
for one’s own use. Apparently, he does not grasp the distinction between
cottage production for a commodity market, and production for the
household subsistence economy.
Matters are different only when the division of labor has been carried
to the point at which there is a regular production of large quantities
of a given item for the market. In such a case there is real scope for
sequencing in Carson’s sense, and it would save a great deal of wasted
motion compared with an individual performing all of the steps in
sequence one unit at a time.
Egad! In other words, it would “only” work in the very circumstances I
was talking about.
As just pointed out, however, the very existence of this possibility
already presupposes the existence of considerable division of labor. It
is only a question of whether or not it pays to carry the division of
labor further, within the production of the item: i.e., to substitute
the greater division of labor present in factory production for the
lesser division of labor entailed in cottage production.
Unfortunately, for Carson and Marglin, it very clearly does pay. … It
pays because, if for no other reason, factory production is far more
efficient in terms of the use of capital goods, and thus of the labor
required to produce them, than is cottage production. It avoids the
enormous wastes in the form of unnecessary duplication of equipment and
idle inventory that would be present in cottage production.
Maybe, yes, but not “very clearly.” As I have already pointed out, I
nowhere argued that factory production was never more efficient than
cottage production — only that such technical efficiencies were not
enough, by themselves, to explain the extent of the “competitive
advantage” Reisman writes of, without additional tilting of the playing
field in the factories’ direction.
As for the scale of production necessary to make full use of a capital
good, that is the textbook definition of internal economy of scale. But
the level of output at which that is achieved is an empirical question
that varies from one industry to another. Reisman’s a priori ruling out
of household production is, therefore, unjustified. In addition, that
great fantasist Kirkpatrick Sale devotes a considerable portion of his
book Human Scale (1980) to a detailed technical consideration of the
possibility that small factories, using multiple-purpose production
machinery, could serve local markets of a few tens of thousands with at
most only minor increases in unit cost of production.
And please bear in mind that Reisman’s economies of scale are only one
side of a coin. There are also diseconomies of scale. There are the
increasing internal transaction costs and inefficiencies from added
layers of bureaucracy that Oliver Williamson wrote about (1985). There
is the internal character of a corporation as a planned economy, with
internal pricing of factors separated ever further from external market
prices, as its size increases. There is the irrationality involved in
the increased difficulty of tracking the costs and benefits of each
individual action, so that administrative incentives have to be
substituted for market incentives in dealing with personnel (with, of
course, all sorts of attendant moral hazard problems). Perhaps most
importantly, there are the costs of long-distance distribution. As Ralph
Borsodi pointed out decades ago, increased distribution costs offset
economies of scale at fairly low levels of output. And further, as Barry
Stein showed in Size, Efficiency, and Community Enterprise, (1974) a
factory can operate considerably below peak economy of scale (perhaps
only a third of optimal output) with only a 5 percent or 10 percent
increase in unit cost, which is more than offset by the reduced cost of
distribution.
So putting the work of Sale, Borsodi, and Stein together, we find that a
decentralized economy of diversified, small-scale production for local
use, is quite feasible, with little or no reduction in overall
efficiency. And without the state’s subsidies to long-distance shipping,
and many of the other diseconomies of large size, that is the likely
direction in which a free market would be pushing us. What’s more, the
modest scale of the factories required for such local markets would be
well within the means of the worker cooperatives that Reisman finds so
ludicrous.
Reisman also ridicules me for, in his words, “extolling the virtues of
spade cultivation over that of using the plow.” Well, whether Reisman
likes it or not, raised bed production with spade cultivation is more
productive than mechanized row crop agriculture in terms output per
acre, at least in growing vegetables. See, for example, Michael
Perelman’s The Myth of Agricultural Efficiency (1977). And the
biointensive farming techniques of John Jeavons are, compared to the
spade horticulture Perelman writes about, like a Ferrari compared to a
Stanley Steamer. Raised bed farming requires higher labor inputs; but
mechanized agribusiness, having preferential access to large tracts of
land, prefers to economize on man-hours rather than space. On the other
hand, the destitute beggars on the streets of Third World cities would
no doubt prefer such labor-intensive cultivation of the land that was
stolen from them, to their present fate. Further, as counter-intuitive
as Reisman may find it, the economies of mechanized farming and food
processing are not that great even over the ordinary techniques of the
average backyard gardener. Borsodi did a careful study of all the costs
(including labor time and supplies) involved in growing and canning
vegetables at home, and found that it was cheaper overall to grow one’s
own. As I said above, the increased overhead and distribution costs of
large scale production offset many of the economies that Reisman is so
enamored of.
Another alleged claim Reisman dismisses is that
to induce subsistence farmers to earn money, it is first necessary to
impose taxes on them payable in cash, as though the goods available for
purchase with cash, which they both desire and would have no means of
producing by themselves, would not constitute a sufficient inducement.
Straw man. I did not say that no farmers would be willing to participate
in the cash economy without imposing taxes on them — only that state
policies forced them to do so on a larger scale than they otherwise
would. Or perhaps Reisman does not believe state taxation has any effect
on behavior — an odd position for a libertarian. Again, whether Reisman
likes it or not, this was the motivation of the British authorities in
East Africa and numerous other colonies in imposing poll taxes: to force
subsistence farmers into the wage labor market. And those notorious
Marxists, the propertied classes of industrial England, were pretty
frank in their own assessment of the situation. The literature of the
period is full of statements by the landed gentry that enclosures were
necessary to get laborers to work for whatever they were offered,
because it was impossible to impose proper discipline on a man who
wasn’t destitute. Mr. Reisman might profit from reading the work of E.G.
Wakefield (1969 and 1834) who advocated limiting colonists’ access to
vacant land; the reason, he said, was that it was impossible to make an
acceptable level of profit off of labor when workers had independent
access to cheap land.
I’ve complained that Reisman never answers the question of why capital
might not have been aggregated for large-scale production by laborers
themselves, in a free market where the producing classes had not been
robbed of their means of production and the state had not preempted the
channels of association between them. But in a way, he does provide an
answer, in response to this offending passage of mine:
Why could not an artisans’ guild function as a means of mobilizing
capital for large-scale production, the same as a corporation? Why could
not the peasants of a village cooperate in the purchase and use of
mechanized farming equipment: Perhaps because, in the absence of a
“progressive” ruling class, they just couldn’t get their minds right. Or
maybe just because.
The outraged Reisman accuses me of the great crime of “attributing to
the average person qualities of independent thought and judgment that
are found only in exceptional individuals.” And again: “Carson is simply
unaware that innovation is the product of exceptional, dedicated
individuals who must overcome the uncomprehending dullness of most of
their fellows, and often their hostility as well.”
Well! So much for Karl Hess’s statement that “libertarianism is a
people’s movement”! Uh, shouldn’t Reisman be out defacing a fireplace,
or blowing up a copper mine, or something?
It’s especially odd to have Reisman using this passage as evidence of my
“collectivism,” since I wrote it to criticize the Marxist dogma that
historic capitalism was a necessary “progressive” force that overcome
the backward, “petty bourgeois” instincts of peasants and artisans by
driving them into the factories like beasts. In his odes to economy of
scale and centralization, on the need for one-man management, etc., he
sounds like Friedrich Engels. So apparently he is more sympathetic to
the collectivists than I am; indeed, he seems to be a Galbraithian
technocrat at heart. Perhaps the irony escapes Reisman, who is so fond
of calling me a “Marxist”; but I find it delicious.
Reisman constantly repeats, in one form or another, that an economy of
simple circulation and self-employed artisan labor would be “one of the
most extreme poverty.” He echoes the Marxists in denying that any
significant pooling of resources or accumulation of capital could take
place outside of the wage system — the separation of ownership from
labor. But he produces no evidence for this assertion, aside from his a
priori assumption that innovation is the sole preserve of square-jawed,
sharp-cheekboned, cigarette-puffing Übermenschen of Galt’s Gulch.
On the subject of innovation, Reisman should read Stein’s Size,
Efficiency, and Community Enterprise, mentioned above. Stein found that
the overwhelming bulk of productivity-enhancing innovations involved
incremental changes in the work process, and that increased productivity
was mainly the cumulative effect of such incremental changes. And guess
what? The people actually engaged in the work process are most likely to
notice ways it might be improved. In my experience, the main reason
things get done so irrationally in large organizations is that those who
have the most direct knowledge of what’s wrong have the least power to
fix it — another example of the poor internalization of consequences of
actions in a hierarchy. The simplest change must be submitted to a
“suggestion box,” and gestate through seventeen levels of management; if
it’s ever heard from again, it comes back down in barely recognizable
form like an ukaz from a Soviet industrial ministry. The literature on
worker self-management is full of countless studies and volume upon
volume on the increased productivity resulting from it. Maybe Reisman
could skip his next rereading of Atlas Shrugged and take a look at it.
Reisman objects to my characterization of the historical events of the
early modern period, in which the new absolute states of Western Europe
used their gunpowder to conquer their own territories and reduce the
free cities, and delayed the further development of the intellectual and
technical innovations of the High Middle Ages. Whether Reisman likes it
or not, the Renaissance did indeed build on the prior cultural
achievements of the free cities and monasteries of the thirteenth and
fourteenth centuries; and the technical prerequisites for
steam-poweredproduction had indeed been developed by that civilization.
Much of the industrial revolution in the textbooks involved reinventing
the wheel, or taking these earlier developments up again after a
prolonged hiatus. On this subject, I recommend Jean Gimpel’s The
Medieval Machine: The Industrial Revolution of the Middle Ages (1977).
Reisman describes the late Middle Ages, “along with all the other
portions of the Middle Ages,” as “an era ruled by fear and
superstition,” and “characterized by such phenomena as famines, plagues,
dungeons and torture chambers, burning at the stake, and periodic
outbreaks of mass psychosis.” Mercy! I’m glad none of these things ever
happened in the early modern period! Dungeons and torture chambers have
been associated with states throughout history, limited mainly by the
extent of their reach. The reach of the new absolute monarchs being so
much greater than that of their medieval predecessors, I doubt the
Middle Ages had anything on Henry VIII or Louis XIV in that regard. One
of the virtues of the free cities, before the rise of absolutist
government, is that they existed largely beyond the reach of central
states. Reisman’s picture of the Middle Ages is a cartoonish parody.
Reisman’s disparagement of the Middle Ages is certainly a departure from
Rothbard’s position, by the way — especially his contempt for the
Scholastics (1998, p. 6). Rothbard devoted over a hundred pages to them
in his treatise on the history of economic thought, and referred to them
elsewhere as “remarkable and prescient economists” (Rothbard 1995,
chaps. 2–4 and 1997, p. 174).
Reisman finds issues of primitive accumulation especially vexing. He
mocks Oppenheimer’s thesis of political appropriation of the land, not
only denying that it has an effect on the wages laborers are willing to
accept, but attempting to minimize the extent to which such land theft
even occurred.
But he need go no further than that old “Marxist” Rothbard (heavily
influenced by Oppenheimer, by the way), for a treatment of the issue as
radical as anyone could want. Rothbard’s view was that artificial
scarcity of land raises its marginal value product, and thus lowers wage
rates (Rothbard 1977, pp. 132–33).
Reisman denies that the movement of agricultural laborers to the
factories had anything to do with “people having been driven from the
land or being denied access to it,” insisting instead that it came about
solely through their preference for wage labor. And this “choice” was
made available by “private ownership of land and respect for the
property rights of landowners.” By landowners, of course, Reisman means,
not the cultivators who were forced to pay rent on their own land by
feudal conquerors, but the heirs of the political appropriators.
Reisman has little respect for the customary property rights of peasants
when they come into conflict with the landlord’s need to make a buck. He
shows abysmal ignorance of the property rights issues involved in the
Stuart land “reform” — going so far as to accuse me of sympathy for the
feudal system. The Stuart “reform” did, indeed, replace feudal land
tenure with the principle of “private ownership.” But Reisman seems to
be unaware that there were two possible ways to transform feudal
property into modern private property. One would have been to nullify
the “property” claims of the landed aristocracy, which existed only in
feudal legal theory, and regularize the de facto title of the peasants
cultivators who had been in occupation since before the Conquest. The
other would have been to transform the feudal landlords’ nominal
property claims into a modern right of private property, and in the
process transform the peasants into tenants-at-will.
On this issue, it’s clear where Murray Rothbard’s sympathies lay. Here
is his take, in chapters 10 and 11 of The Ethics of Liberty, on
feudalism, by which he meant “continuing aggression by titleholders of
land against peasants engaged in transforming the soil”:
But suppose that centuries ago, Smith was tilling the soil and therefore
legitimately owning the land; and then that Jones came along and settled
down near Smith, claiming by use of coercion the title to Smith’s land,
and extracting payment or “rent” from Smith for the privilege of
continuing to till the soil. Suppose that now, centuries later, Smith’s
descendants (or, for that matter, other unrelated families) are now
tilling the soil, while Jones’s descendants, or those who purchased
their claims, still continue to exact tribute from the modern tillers.
Where is the true property right in such a case? It should be clear that
here, just as in the case of slavery, we have a case of continuing
aggression against the true owners — the true possessors — of the land,
the tillers, or peasants, by the illegitimate owner, the man whose
original and continuing claim to the land and its fruits has come from
coercion and violence. Just as the original Jones was a continuing
aggressor against the original Smith, so the modern peasants are being
aggressed against by the modern holder of the Jones-derived land title.
In this case of what we might call “feudalism” or “land monopoly,” the
feudal or monopolist landlords have no legitimate claim to the property.
The current “tenants,” or peasants, should be the absolute owners of
their property, and, as in the case of slavery, the land titles should
be transferred to the peasants, without compensation to the monopoly
landlords. (1998, pp. 66, 69)
Even Mises, surely more conventionally right-wing than Rothbard, had
this to say on the land question:
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. (1951,
p. 375)
But Reisman’s sympathies are four-square on the side of the feudal
landlords. He defends the enclosures, for example, as a mere exercise of
“the right of landowners to fire unnecessary workers” — a matter-of-fact
assertion comparable to the one in 1066 and All That that the Pope and
all his bishops seceded from the Church of England. The commons were the
joint property of the villagers; enclosure was theft, pure and simple.
But Reisman is not above justifying such theft on pragmatic grounds, for
the effect of land consolidation in making possible the rise of
scientific farming. Apparently, for Reisman the violation of property
rights is perfectly all right so long as it promotes “progress.” If a
piece of stolen property can be put to more productive use by the thief,
the theft is justified by the verdict of history. I’d be interested in
Reisman’s take on Kelo.
Even when Reisman admits that expropriations of peasant land took place,
he asserts, incredibly, that “there is no reason for thinking that the
basic pattern of the economic system in terms of the preponderance of
employment as a wage earner versus self-employment would be
significantly different” without such expropriations. Of course, he
makes (once again) the implicit assumption that wage labor and
separation of labor from ownership is the only way of accumulating
capital and organizing mass production — a nation of peasant proprietors
and self-employed artisans being unable to voluntarily organize
cooperative labor without John Galt as overseer.
In concluding his treatment of my account of primitive accumulation,
Reisman repeats his assertion that it is “simply groundless.”
As we have seen, what has led to the separation of labor from the land
is not any injustices that may have been committed in connection with
enclosures or anything else, but the rise in the productivity of labor
in agriculture and mining.
No; what “we have seen” is Reisman’s repeated assertion of that claim,
in the process ignoring the great bulk of my specific evidence to the
contrary, as to how the state in fact did expropriate the land from the
laboring classes, and then intervened through such social controls as
the Laws of Settlement and the Combination Laws to reduce the bargaining
power of workers in the labor market. His modus operandi is to
summarize, badly, my general line of argument (when he does not utterly
misrepresent it), while ignoring the supporting evidence, and then make
facile, sweeping counter-claims with little or no evidence. He concludes
by repeating his unsubstantiated assertion, with a rhetorical flourish,
as evidence (“we have seen”). Still more incredibly, he asserts that his
version of events is “implied by economic science” — certainly the most
amazing feat of a priori deduction that I’ve ever seen.
It makes no difference whatsoever to the present “pattern of
organization of a capitalist economy” whether capital was accumulated by
laboring classes pooling their own resources, or the resources were
pooled by thieves who then hired the laboring classes to work the
accumulated means of production. No difference except to those doing the
work, perhaps.
Reisman also argues that it doesn’t really matter whether the laboring
classes were robbed of their property in the past, because even without
such robbery it would have wound up concentrated in the most efficient
hands, anyway. Although Reisman doesn’t actually invoke the name of
Coase, his specter hovers over this passage nonetheless.
On the matter of primitive accumulation, there is an amazing parallel
between Reisman and that most vulgar of vulgar Marxists, Friedrich
Engels. Engels, in Anti-Dühring, argued that the process of primitive
accumulation would have taken place in exactly the same way without any
state expropriation whatsoever, solely through the effects of success
and failure in the free market. Essentially, Engels retreated from
Marx’s entire body of work on primitive accumulation, in which he
described the massive expropriation of the peasantry, “written in fire
and blood.” Engels, in effect, embraced the “bourgeois nursery tale” of
primitive accumulation, ridiculed by Marx and Oppenheimer alike, in
which the present distribution of property reflects an endless series of
victories by the industrious ant over the lazy grasshopper. Marx
himself, for that matter, was on the defensive about the logical
implications of his history of primitive accumulation. Why? There was an
entire school of radical classical liberals and market-oriented
Ricardian socialists who argued that state robbery and state-enforced
unequal exchange were the causes of economic exploitation. As Maurice
Dobb wrote in his introduction to Marx’s Contribution to the Critique of
Political Economy:
the school of writers to whom the name of the Ricardian Socialists has
been given … who can be said to have held a “primitive” theory of
exploitation, explained profit on capital as the product of superior
bargaining power, lack of competition and “unequal exchanges between
Capital and Labour.” … This was the kind of explanation that Marx was
avoiding rather than seeking. It did not make exploitation consistent
with the law of value and with market competition, but explained it by
departures from, or imperfections in, the latter. To it there was an
easy answer from the liberal economists and free traders: namely, “join
with us in demanding really free trade and then there can be no ‘unequal
exchanges’ and exploitation.” (Marx 1970, p. 13)
And as I commented in my book, this “easy answer” was exactly the
approach taken by Thomas Hodgskin and the individualist anarchists of
America. The greatest of the latter, Benjamin Tucker, reproached as
merely a “consistent Manchester man,” wore that label as a badge of
honor. Engels was facing something similar, in Eugen Dühring’s “force
theory” of economic exploitation. He was forced to retreat from Marx’s
history of primitive accumulation, because he found the implications of
that history politically and strategically intolerable. I suspect
Reisman is forced to repudiate it for similar reasons.
Walter Block included Oppenheimer and some other leftish free market
radicals in his list of libertarian luminaries from association with
whom I failed to benefit. Reisman, on the contrary, is satisfied with a
brief snarl at Oppenheimer’s theory of political appropriation of land
as the necessary basis for economic exploitation. In repudiating him, of
course, he repudiates not only Albert Nock, whom most of even the
conventional free market milieu regards as something of a demigod; he
also repudiates Rothbard. In short, Reisman circles his wagons much more
closely than Block, in his single-minded obsession with defending the
distribution of property under actually existing capitalism. Reisman is
willing to cut himself off from a huge part of the free market
libertarian tradition, as one might amputate a gangrenous limb, in order
to save what he views as its heart: the defense of that last and best of
oppressed minorities, Big Business. He cuts himself off from the entire
radical legacy of early classical liberalism, and its transmitters like
Oppenheimer and Nock (who had such a profound influence on Rothbard
himself), in order to make common cause with the rich and powerful. He
is forced to repudiate an entire strand of Rothbard’s thought, on which
(as Long says in his review article) the socialist strand of
individualist anarchism had such a formative influence.
Reisman also devotes a considerable portion of his review to promoting a
novel idea of his own: that wages are a deduction from what would
otherwise be profit. In this view, the net sales revenue of artisan
laborers after expenses was profit; the rise of the wage system meant
the deduction of wages from this profit for the first time. Of course,
the net revenue after expenses was the reason the artisan was expending
effort: income to support himself. And if this income weren’t enough to
compensate him for his effort, he’d cease to work. In Reisman’s own
words, profits, not wages, are the original and primary form of labor
income. So call it what you will, even Reisman admits that the original
form of income was labor income. The remuneration of labor, beyond a
repayment of cost outlays on raw materials and tools, is what motivates
self-employed laborers to work; whether Reisman calls it “wages” or
“profit” is beside the point. So, novelty notwithstanding, Reisman’s
argument strikes me as a distinction without a difference.
Reisman, like Block, shows the vulgar libertarian tendency to forget
from one minute to the next what it is he’s defending: the winners in
the existing system, or free market principles as such. He repeatedly
argues that small-scale farming and manufacture couldn’t be more
efficient than the large corporations, because if they were the large
corporations would be losing out in competition. He effortlessly shifts
back and forth from the indicative to the subjunctive in his description
of how a free market either does, or would, operate, depending on its
strategic usefulness for the defense of big business:
In those instances in which larger-scale production or larger-scale
ownership … is in fact relatively inefficient, a free market operates to
replace it with more efficient smaller-scale operation or ownership.
Well, yes, a free market would do so. Is this a free market? Yes or no?
If yes, then the present size of big business reflects superior
performance. If no, then the real isn’t necessarily rational.
Like Block, Reisman objects to my treatment of over-accumulation and
under-consumption, under twentieth century state capitalism, and the
resulting drive to imperialism. Like Block, he shows some confusion as
to just what he’s defending, at one point conceding that state
capitalism exists to some extent — but then later denying, on the basis
of free market principles, that tendencies toward over-accumulation and
under-consumption can exist. Again, I refer him (like Block) to
Stromberg’s ground-breaking article, “The Role of State Monopoly
Capitalism in the American Empire” (see previous citation) for an
Austrian treatment of those phenomena. As I said before, Reisman is
forced to cut himself off from the best of his own tradition, because it
might compromise his attempt to out-Mises Mises in defense of big
business. And he is forced to abandon the entire New Left analysis of
state capitalism — Weinstein,Kolko, Williams, etc. — that Rothbard made
such productive use of, because it undermines his strategic position.
Finally, I readily concede the accuracy of one of Reisman’s criticisms:
that my analysis of Böhm-Bawerk was based on Smart’s translation of the
first German edition, rather than the third German edition. If I publish
a new edition of the book, I will remedy that defect.
First, a clarification: Since I used the phrase “common patrimony” in my
book to characterize both the Georgist and the Ingalls-Tucker view of
land, I’ve learned that some Georgists regard the “common” right as
several, rather than collective: that each individual has, as a
birth-right, an equal and independent right of access to land. And since
favorably situated sites are not a reproducible commodity, something
like the “law of equal liberty” implies the payment of compensation to
the excluded. The community is not the collective owner, but simply the
agent of all individual human beings, severally, in guaranteeing their
individual rights of access to the commons.
Tucker, similarly, deduced this right of access, via the “equal liberty”
principle, from self-ownership.
So, technically speaking, the mutualists and Georgists do not erect
mankind’s common patrimony in the land into a separate and independent
principle apart from self-ownership. But it follows so directly from the
latter as to approach the status of an independent axiom.
Long challenges the common patrimony claim on the grounds that mankind
has never established a legitimate claim to the Earth by collective
labor-homesteading. (It strikes me that this objection would apply just
as well to the several rights of equal access described above.) As
ingenious as this argument is, I must counter that mankind’s collective
(or “common”) right in the land as a patrimony, and the individual
property right established by labor-homesteading, are two entirely
different sets of rules for entirely different classes of “ownership.”
Long is arguing apples and oranges. The rules for individual
appropriation by labor exist in the light of the broader and more
fundamental principles of mankind’s common access rights to the land,
and are a way of implementing this common right in accordance with the
principle of equal liberty.
Although Long goes on to anticipate my possible argument that mankind’s
common right of access, and individual property rights established by
labor-appropriation, are two separate classes of rights, he argues that
the former is a violation of the right of self-ownership. The
individual, in mixing his labor with natural resources, makes it an
inalienable adjunct to his person in exactly the same sense as his body.
As ingenious (again) as this theory is, I don’t believe it stands up to
scrutiny any more than Long’s first argument. As Nozick pointed out, a
property rights theory includes not only rules of initial acquisition,
but rules for transfer and abandonment. As Bill Orton argued (quoted in
chapter five of my book), all property rights theories, including
Lockean, make provision for adverse possession and constructive
abandonment of property. They differ only in degree, rather than kind:
in the “stickiness” of property, as Orton puts it. There is a large
element of convention in any property rights system — Georgist,
mutualist, and both proviso and nonproviso Lockeanism — in determining
what constitutes transfer and abandonment. And labor homesteading of
land entails such an element of convention even in ascertaining how much
land is actually appropriated, with a resulting degree of uncertainty as
to the boundary between self and nonself that does not arise as to the
body. These considerations, taken together, would seem to indicate that
the acquisition of land does not bring it into the same intimate and
inalienable association with one’s ego as does ownership over one’s own
body.
In response to Long’s final challenge, as to the extent of common
patrimony (e.g., an alien race’s hypothetical claim on the entire
universe as the common patrimony of all intelligent life), I can only
reply that it would come into play under exactly the same circumstances
as Locke’s proviso: when more than one being desires the same parcel of
land, and possession by one excludes competing access claims by others.
Land monopoly is a moot point until the local demand for locations
exceeds their supply.
Of course, Tucker’s understanding of the law of equal liberty ignored
all these considerations, and was established on purely Stirnerite
grounds: in a stateless society, an invisible hand mechanism would
eventually lead to such a mutual recognition of equal access rights as a
way to minimize conflict. Per Bylund also has a couple of interesting
new pieces on these issues, by the way. In one of them, his master’s
thesis, he presents a novel argument reassessing the basis of the
self-ownership principle (Bylund 2005a). In the other, he attempts to
resolve the conflict between Lockean and possessory theories of property
(2005b).
I do welcome Long’s position on collective homesteading, and on the
commons as a form of joint private property. It would go a long way
toward remedying the atomistic excesses of some vulgar libertarians, who
deny that collective rights can exist — and have used such arguments to
justify the nullification of tribal claims to hunting grounds, villagers
rights to the common (see Reisman’s review, for example), etc. Even this
proposal, of course, requires a set of conventional rules as to how much
common labor is needed to appropriate how much surrounding land and
resources.
Long’s allowance for collective homesteading may also provide more
eirenic possibilities than even he envisioned, by making much of the
dispute between us a moot issue. Arguably, the only criterion for
determining whether common ownership of land exists in a given
community, and the extent of those common rights, is the local
conventions of property ownership, written or unwritten, that have grown
up over time. So whether a given community possesses common rights in
accordance with Georgist or mutualist or Lockean principles, essentially
depends on what a majority of the local population says the rules are.
We are left, as a result, with a panarchy in which competing local
property systems exist side by side — peacefully, let us hope.
As a practical matter, it would be prohibitively expensive to enforce
the mutualist, Georgist, or Lockean property claims of dissidents in a
community which is predominantly of another persuasion.
Soanarcho-capitalist protection agencies would have exclusionary clauses
for absentee landlord claims in a neighboring Tuckerite community,
mutualists would refrain from invading the neighboring Rothbardian
community to defend the cultivator against his landlord, and so forth.
And sparsely populated areas, in practice, would be governed by de facto
possessory ownership, because in most cases the free market cost of
hiring enforcers of an absentee ownership claim against squatters would
probably outweigh the value of the land. In the end, a peaceful panarchy
would evolve in the absence of the state, because war simply wouldn’t
pay.
Block, Walter, and Llewellyn H. Rockwell, Jr. 1988. “Professor Rothbard
and the Theory of Interest.” In Man, Economy and Liberty: Essays in
Honor of Murray N. Rothbard. Walter Block and Llewellyn H. Rockwell,
Jr., eds. Auburn, Ala.: Auburn University Press.
Buchanan, James. 1999. Cost and Choice: An Inquiry in Economic Theory.
Vol. 6, Collected Works. Indianapolis: Liberty Fund.
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