Section F - Is "anarcho"-capitalism a type of anarchism?
F.1 Are "anarcho"-capitalists really anarchists?
F.1.1 Why is the failure to renounce hierarchy the Achilles Heel
of right-wing libertarianism and "anarcho"-capitalism?
F.1.2 How libertarian is right-Libertarian theory?
F.1.3 Is right-Libertarian theory scientific in nature?
F.2 What do "anarcho"-capitalists mean by "freedom?"
F.2.1 What are the implications of defining liberty in
terms of (property) rights?
F.2.2 How does private property affect freedom?
F.2.3 Can "anarcho"-capitalist theory justify the state?
F.2.4 But surely transactions on the market are voluntary?
F.2.5 But surely circumstances are the result of liberty
and so cannot be objected to?
F.2.6 Do Libertarian-capitalists support slavery?
F.2.7 But surely abolishing capitalism would restrict liberty?
F.2.8 Why should we reject the "anarcho"-capitalist definitions
of freedom and justice?
F.3 Why do "anarcho"-capitalists generally place little or no value
on "equality," and what do they mean by that term?
F.3.1 Why is this disregard for equality important?
F.3.2 But what about "anarcho"-capitalist support for charity?
F.4 What is the right-libertarian position on private property?
F.4.1 What is wrong with a "homesteading" theory of property?
F.4.2 Why is the "Lockean Proviso" important?
F.4.3 How does private property affect individualism?
F.4.4 How does private property affect relationships?
F.4.5 Does private property co-ordinate without hierarchy?
F.5 Will privatising "the commons" increase liberty?
F.6 Is "anarcho" capitalism against the state?
F.6.1 What's wrong with this "free market" justice?
F.6.2 What are the social consequences of such a system?
F.6.3 But surely Market Forces will stop abuse by the rich?
F.6.4 Why are these "defence associations" states?
F.6.5 What other effects would "free market" justice have?
F.7 What is the myth of "Natural Law"?
F.7.1 Why "Natural Law" in the first place?
F.7.2 But "Natural Law" provides protection for individual
rights from violation by the State. Those against
Natural Law desire total rule by the state.
F.7.3 Why is "Natural Law" authoritarian?
F.7.4 Does "Natural Law" actually provides protection for
individual liberty?
F.7.5 But Natural Law was discovered, not invented!
F.7.6 Why is the notion of "discovery" contradictory?
F.8 What role did the state take in the creation of capitalism?
F.8.1 What social forces lay behind the rise of capitalism?
F.8.2 What was the social context of the statement "laissez-faire"?
F.8.3 What other forms did state intervention in creating
capitalism take?
F.8.4 Aren't the enclosures a socialist myth?
F.8.5 What about the lack of enclosures in the Americas?
F.8.6 How did working people view the rise of capitalism?
F.8.7 Why is the history of capitalism important?
F.9 Is Medieval Iceland an example of "anarcho"-capitalism working in
practice?
F.10 Would laissez-faire capitalism be stable?
F.10.1 Would privatising banking make capitalism stable?
F.10.2 How does the labour market effect capitalism?
F.10.3 Was laissez-faire capitalism stable?
Section F - Is "anarcho"-capitalism a type of anarchism?
Anyone who has followed political discussion on the net has probably come
across people calling themselves libertarians but arguing from a right-wing,
pro-capitalist perspective. For most Europeans this is weird, as in Europe
the term "libertarian" is almost always used in conjunction with "socialist"
or "communist." In the US, though, the Right has partially succeeded in
appropriating this term for itself. Even stranger, however, is that a few of
these right-wingers have started calling themselves "anarchists" in what
must be one of the finest examples of an oxymoron in the English language:
'Anarcho-capitalist'!!
Arguing with fools is seldom rewarded, but to allow their foolishness to go
unchallenged risks allowing them to deceive those who are new to anarchism.
That's what this section of the anarchist FAQ is for, to show why the claims
of these "anarchist" capitalists are false. Anarchism has always been
anti-capitalist and any "anarchism" that claims otherwise cannot be part
of the anarchist tradition. So this section of the FAQ does not reflect
some kind of debate within anarchism, as many of these types like to pretend,
but a debate between anarchism and its old enemy, capitalism. In many ways
this debate mirrors the one between Peter Kropotkin and Herbert Spencer, an
English pro-capitalist, minimal statist, at the turn the 19th century
and, as such, it is hardly new.
The "anarcho"-capitalist argument hinges on using the dictionary definition
of "anarchism" and/or "anarchy" - they try to define anarchism as being
"opposition to government," and nothing else. However, dictionaries are
hardly politically sophisticated and their definitions rarely reflect the
wide range of ideas associated with political theories and their history.
Thus the dictionary "definition" is anarchism will tend to ignore its
consistent views on property, exploitation, property and capitalism (ideas
easily discovered if actual anarchist texts are read). And, of course, many
dictionaries "define" anarchy as "chaos" or "disorder" but we never see
"anarcho"-capitalists use that particular definition!
And for this strategy to work, a lot of "inconvenient" history and ideas
from all branches of anarchism must be ignored. From individualists
like Spooner and Tucker to communists like Kropotkin and Malatesta,
anarchists have always been anti-capitalist (see section G for more on
the anti-capitalist nature of individualist anarchism). Therefore
"anarcho"-capitalists are not anarchists in the same sense that
rain is not dry.
Of course, we cannot stop the "anarcho"-capitalists using the words
"anarcho", "anarchism" and "anarchy" to describe their ideas. The
democracies of the west could not stop the Chinese Stalinist state calling
itself the People's Republic of China. Nor could the social democrats
stop the fascists in Germany calling themselves "National Socialists".
Nor could the Italian anarcho-syndicalists stop the fascists using the
expression "National Syndicalism". This does not mean that any of these
movements actual name reflected their content -- China is a dictatorship,
not a democracy, the Nazi's were not socialists (capitalists made fortunes
in Nazi Germany because it crushed the labour movement), and the Italian
fascist state had nothing in common with anarcho-syndicalists ideas of
decentralised, "from the bottom top up" unions and the abolition of the
state and capitalism.
Therefore, just because someone uses a label it does not mean that they
support the ideas associated with that label. And this is the case with
"anarcho"-capitalism -- its ideas are at odds with the key ideas associated
with all forms of traditional anarchism (even individualist anarchism
which is often claimed as being a forefather of the ideology).
All we can do is indicate *why* "anarcho"-capitalism is not part of the
anarchist tradition and so has falsely appropriated the name. This section
of the FAQ aims to do just that -- present the case why "anarcho"-capitalists
are not anarchists. We do this, in part, by indicating where they differ
from genuine anarchists (on such essential issues as private property,
equality, exploitation and opposition to hierarchy) In addition, we take
the opportunity to present a general critique of right-libertarian claims
from an anarchist perspective. In this way we show up why anarchists reject
that theory as being opposed to liberty and anarchist ideals.
We are covering this topic in an anarchist FAQ for only one reason -- the
high number of "libertarian" and "anarcho"-capitalists on the net (likely
a class-based phenomenon, based on ownership of computers!) As we
have extensively documented in earlier sections, anarchist theory has
always been anti-capitalist. There is no relationship between anarchism
and capitalism, in any form. Therefore, there is a need for this section
in order to indicate exactly why "anarcho"-capitalism is not anarchist.
We have, in earlier sections (see section B in particular), indicated why
the idea of a "libertarian" capitalism is itself nonsense and will not
repeat ourselves here.
So this section of the FAQ does not, as we noted above, represent some kind
of "debate" within anarchism. It reflects the attempt by anarchists to
reclaim the history and meaning of anarchism from those who are attempting
to steal its name (just as right-wingers in America have attempted to
appropriate the name "libertarian" for their pro-capitalist views, and by
so doing ignore over 100 years of anti-capitalist usage). However, this
section also serves two other purposes. Firstly, critiquing right-libertarian
and "anarcho"-capitalist theories allows us to explain anarchist ones at
the same time and indicate why they are better. Secondly, and more
importantly, the "ideas" and "ideals" that underlie "anarcho"-capitalism
are usually identical (or, at the very least, similar) to those of
neo-liberalism (as Bob Black points outs, a "wing of the Reaganist Right
has obviously appropriated, with suspect selectivity, such libertarian
themes as deregulation and voluntarism. Ideologues indignant that Reagan
has travestied their principles. Tough shit! I notice that it's their
principles, not mine, that he found suitable to travesty" [_The Libertarian
As Conservative_]). And as neo-liberalism is being used as the ideological
basis of the current attack on the working class, critiquing "anarcho"
capitalism and right-libertarianism also allows use to build theoretical
weapons to use to resist this attack and aid the class struggle.
A few more points before beginning. When debating with "libertarian"
or "anarchist" capitalists it's necessary to remember that while they
claim "real capitalism" does not exist (because all existing forms of
capitalism are statist), they will claim that all the good things we
have -- advanced medical technology, consumer choice of products, etc.
-- are nevertheless due to "capitalism." Yet if you point out any problems
in modern life, these will be blamed on "statism." Since there has never
been and never will be a capitalist system without some sort of state,
it's hard to argue against this "logic." Many actually use the example
of the Internet as proof of the power of "capitalism," ignoring the
fact that the state paid for its development before turning it over
to companies to make a profit from it. Similar points can be made
about numerous other products of "capitalism" and the world we live
in. To artificially separate one aspect of a complex evolution fails
to understand the nature and history of the capitalist system.
In addition to this ability to be selective about the history and
results of capitalism, their theory has a great "escape clause." If
wealthy employers abuse their power or the rights of the working class
(as they have always done), then they have (according to "libertarian"
ideology) ceased to be capitalists! This is based upon the misperception
that an economic system that relies on force *cannot* be capitalistic.
This is *very* handy as it can absolve the ideology from blame for any
(excessive) oppression which results from its practice. Thus individuals
are always to blame, *not* the system that generated the opportunities for
abuse they freely used.
Anarchism has always been aware of the existence of "free market"
capitalism, particularly its extreme (minimal statist) wing, and has
always rejected it. For example, Proudhon noted that "the disciples of
Malthus and of Say, who oppose with all their might any intervention of
the State in matters commercial or industrial, do not fail to avail
themselves of this seemingly liberal attitude, and to show themselves
more revolutionary than the Revolution. More than one honest searcher
has been deceived thereby." However, this apparent "libertarian" attitude
of supporters of capitalism is false as pure free market capitalism
cannot solve the social question, which arises because of capitalism
itself. Thus "this inaction of Power in economic matters [celebrated
by the "free market" right] was the foundation of government. What
need should we have of a political organisation, if Power once
permitted us to enjoy economic order?" [_The General Idea of the
Revolution_, p. 226] Instead of capitalism, Proudhon advocated the
"constitution of Value," the "organisation of credit," the elimination
of interest, the "establishment of workingmen's associations" and
"the use of a just price." [Ibid., p. 233]
Thus anarchists have evaluated "free market" capitalism and rejected it
as non-anarchist over 150 years ago. Attempts by "anarcho"-capitalism to
say that their system is "anarchist" flies in the face of this long
history of anarchist analysis.
More generally, we must stress that most (if not all) anarchists do not
want to live in a society *just like this one* but without state coercion
and (the initiation of) force. Anarchists do not confuse "freedom" with
the "right" to govern and exploit others nor with being able to change
masters. It is not enough to say we can start our own (co-operative)
business in such a society. We want the abolition of the capitalist
system of authoritarian relationships, not just a change of bosses
or the possibility of little islands of liberty within a sea of
capitalism (islands which are always in danger of being flooded
and our activity destroyed). Thus, in this section of the FAQ,
we analysis many "anarcho"-capitalist claims on their own terms
(for example, the importance of equality in the market or why
capitalism cannot be reformed away by exchanges on the capitalist
market) but that does not mean we desire a society nearly identical
to the current one. Far from it, we want to transform this society
into one more suited for developing and enriching individuality and
freedom. But before we can achieve that we must critically evaluate
the current society and point out its basic limitations.
Finally, we dedicate this section of the FAQ to those who have seen the
real face of "free market" capitalism at work: the working men and women
(anarchist or not) murdered in the jails and concentration camps or on the
streets by the hired assassins of capitalism.
F.1 Are "anarcho"-capitalists really anarchists?
In a word, no. While "anarcho"-capitalists obviously try to associate
themselves with the anarchist tradition by using the word "anarcho",
their ideas are distinctly at odds with those associated with anarchism.
Because of this any claims that their ideas are anarchist or that they
are part of the anarchist tradition or movement are false.
"Anarcho"-capitalists claim to be anarchists because they say that they
oppose government. As such, as noted in the last section, they use
a dictionary definition of anarchism. However, this fails to appreciate
that anarchism is a *political theory*, not a dictionary definition.
As dictionaries are rarely politically sophisticated things, this means
that they fail to recognise that anarchism is more than just opposition to
government, it is also marked a opposition to capitalism (i.e. exploitation
and private property). Thus, opposition to government is a necessary
but not sufficient condition for being an anarchist -- you also need
to be opposed to exploitation and capitalist private property. As
"anarcho"-capitalists do not consider interest, rent and profits (i.e.
capitalism) to be exploitative nor oppose capitalist property rights,
they are not anarchists.
So in what ways do "anarcho"-capitalists differ from anarchists? There
are three main ones:
Firstly, unlike both Individualist and Social anarchists,
"anarcho"-capitalists support capitalism (a "pure" free market type
of capitalism). This means that they reject totally the ideas of anarchists
with regards to property and economic analysis. For example, like all
supporters of capitalists they consider rent, profit and interest as
valid incomes. In contrast, all Anarchists consider these as exploitation
and agree with the Individualist Anarchist Tucker when argued that
"*[w]hoever* contributes to production is alone entitled. *What* has no
rights that *who* is bound to respect. *What* is a thing. *Who* is a person.
Things have no claims; they exist only to be claimed. The possession of
a right cannot be predicted of dead material, but only a living person."
[quoted by Wm. Gary Kline, _The Individualist Anarchists_, p. 73] (And this,
we must note, is the fundamental critique of the capitalist theory that
capital is productive. In and of themselves, fixed costs do not create
value. Rather value is creation depends on how investments are developed
and used once in place. Because of this the Individualist Anarchists
considered non-labour derived income as usury, unlike "anarcho"-capitalists).
Similarly, anarchists reject the notion of capitalist property rights in
favour of possession (including the full fruits of one's labour). For
example, anarchists reject private ownership of land in favour of a
"occupancy and use" regime. In this we follow Proudhon's _What is
Property?_ and argue that "property is theft".
As these ideas are an *essential* part of anarchist politics, they cannot
be removed without seriously damaging the rest of the theory. This can
be seen from Tucker's comments that "*Liberty* insists. . . [on] the abolition
of the State and the abolition of usury; on no more government of man by
man, and no more exploitation of man by man." [cited by Eunice Schuster in
_Native American Anarchism_, p. 140]. He indicates that anarchism has
specific economic *and* political ideas, that it opposes capitalism along
with the state. Therefore anarchism was never purely a "political" concept,
but always combined an opposition to oppression with an opposition to
exploitation. The social anarchists made exactly the same point. Which
means that when Tucker argued that "*Liberty* insists on Socialism. . . -
true Socialism, Anarchistic Socialism: the prevalence on earth of Liberty,
Equality, and Solidarity" [_Instead of a Book_, p. 363] he knew exactly
what he was saying and meant it whole heartedly.
This combination of the political and economic is essential as they mutually
reinforce each other. Without the economic ideas, the political ideas
would be meaningless as inequality would make a mockery of them. As Kline
notes, the Individualist Anarchists' "proposals were designed to establish
true equality of opportunity . . . and they expected this would result in
a society without great wealth or poverty. In the absence of monopolistic
factors which would distort competition, they expected a society largely
of self-employed workmen with no significant disparity of wealth between
any of them since all would be required to live at their own expense and
not at the expense of exploited fellow human beings." [Op. Cit., pp. 103-4]
By removing the underlying commitment to abolish non-labour income, any
"anarchist" capitalist society would have vast differences in wealth
and so power. Instead of a government imposed monopolies in land, money
and so on, the economic power flowing from private property and capital
would ensure that the majority remained in (to use Spooner's words) "the
condition of servants" (see sections F.2 and F.3.1 for more on this).
The Individualist Anarchists were aware of this danger and so supported
economic ideas that opposed usury (i.e. rent, profit and interest) and
ensured the worker the full value of her labour. While not all of them
called these ideas "socialist" it is clear that these ideas *are* socialist
in nature and in aim (similarly, not all the Individualist Anarchists
called themselves anarchists but their ideas are clearly anarchist in
nature and in aim).
Because "anarcho"-capitalists embrace capitalism and reject socialism,
they cannot be considered anarchists or part of the anarchist tradition.
Which brings us nicely to the second point, namely a lack of concern for
equality. In stark contrast to anarchists of all schools, inequality
is not seen to be a problem with "anarcho"-capitalists (see section F.3).
However, it is a truism that not all "traders" are equally subject to the
market (i.e. have the same market power). In many cases, a few have
sufficient control of resources to influence or determine price and in
such cases, all others must submit to those terms or not buy the commodity.
When the commodity is labour power, even this option is lacking -- workers
have to accept a job in order to live. As we argue in section F.10.2,
workers are usually at a disadvantage on the labour market when compared
to capitalists, and this forces them to sell their liberty in return for
making profits for others. These profits increase inequality in society
as the property owners receive the surplus value their workers produce.
This increases inequality further, consolidating market power and so weakens
the bargaining position of workers further, ensuring that even the freest
competition possible could not eliminate class power and society (something
B. Tucker recognised as occurring with the development of trusts within
capitalism -- see section G.4). Little wonder Proudhon argued that the
law of supply and demand was a "deceitful law . . . suitable only for
assuring the victory of the strong over the weak, of those who own
property over those who own nothing." [quoted by Alan Ritter, _The
Political Thought of Pierre-Joseph Proudhon_, p. 121]
Wage labour is a key way of creating, maintaining and increasing
inequality (as well as being a source of domination and subordination,
i.e. unfreedom). Needless to say, inequalities of power and wealth do
not restrict themselves solely to workplaces nor is the damage of hierarchy
upon individuals and their liberty limited to working hours. Both have a
deep impact on the rest of society, expanding into *all* areas of life
and restricting liberty everywhere (see section F.3 for a further
discussion on this). You cannot isolate one aspect of life (i.e. work)
and believe that it will somehow not affect all others. However, the
"anarcho"-capitalist seems to believe you can.
Therefore anarchists recognise that "free exchange" in unequal circumstances
will increase inequality between individuals and classes, *not* reduce it
(and that inequality will produce social relationships which are based on
hierarchy and domination, *not* freedom). As Noam Chomsky put it:
"Anarcho-capitalism, in my opinion, is a doctrinal system which, if ever
implemented, would lead to forms of tyranny and oppression that have few
counterparts in human history. There isn't the slightest possibility that
its (in my view, horrendous) ideas would be implemented, because they would
quickly destroy any society that made this colossal error. The idea of 'free
contract' between the potentate and his starving subject is a sick joke,
perhaps worth some moments in an academic seminar exploring the consequences
of (in my view, absurd) ideas, but nowhere else." [_Noam Chomsky on
Anarchism_, interview with Tom Lane, December 23, 1996]
Because of the evil effects of inequality on freedom, both the social
and individualist anarchists desired to create an environment in which
circumstances would not drive people to sell their liberty to others
in return for wages. In other words, they desired an equalisation of
market power by opposing interest, rent and profit and capitalist
definitions of private property. Kline summarises this by saying "the
American [individualist] anarchists exposed the tension existing in
liberal thought between private property and the ideal of equal access.
The Individual Anarchists were, at least, aware that existing conditions
were far from ideal, that the system itself working against the majority
of individuals in their efforts to attain its promises. Lack of capital,
the means to creation and accumulation of wealth, usually doomed a
labourer to a life of exploitation. This the anarchists knew and they
abhorred such a system." [Op. Cit., p. 102]
And this desire for bargaining equality is reflected in their economic
ideas and by removing these underlying economic ideas of the individualist
anarchists, "anarcho"-capitalism makes a mockery of any ideas they
do appropriate. Essentially, the Individualist Anarchists agreed with
Rousseau that in order to prevent extreme inequality of fortunes you
deprive people of the means to accumulate in the first place and
*not* take away wealth from the rich. An important point which
"anarcho"-capitalism fails to understand or appreciate.
In addition, we must note that such inequalities in power and wealth
will need "defending" from those subject to them ("anarcho"-capitalists
recognise the need for private police and courts to defend property
from theft -- and, anarchists add, to defend the theft and despotism
associated with property!). Due to its support of private property (and
thus authority), "anarcho"-capitalism ends up retaining a state in its
"anarchy"; namely a *private* state whose existence its proponents
attempt to deny simply by refusing to call it a state, like an
ostrich hiding its head in the sand (see section F.6 for more
on this and why "anarcho"-capitalism is better described as
"private state" capitalism).
For anarchists, this need of capitalism for some kind of state is
unsurprising because:
"Anarchy without socialism seems equally as impossible to us [as socialism
without anarchy], for in such a case it could not be other than the
domination of the strongest, and would therefore set in motion right
away the organisation and consolidation of this domination; that is
to the constitution of government." [Errico Malatesta, _Life and Ideas_,
p. 148]
Because of this, the "anarcho"-capitalist rejection of anarchist ideas on
capitalist property economics and the need for equality, they cannot be
considered anarchists or part of the anarchist tradition.
Thirdly, unlike anarchists, "anarcho"-capitalists consider a society
of generalised wage labour as a free and non-exploitative one -- but
such a society is opposed by anarchists. Like all socialists, anarchists
desire to see workers reunited with the means of production they use and
so end the exploitation of workers by capitalists and landlords. In other
words, when the Individual anarchists called themselves "socialists" they
meant it (see section G for more details on this)!
If we look at the work of Individualist Anarchist Lysander Spooner, we
find that he considered capitalism to result in labourers becoming "mere
tools and machines in the hands of their employers" and labour "only
for the benefit of their employers." [_A Letter to Grover Cleveland_,
p. 50] He considered the Money Monopoly (a combination of specie commodity
money and a 10% tax on non-registered banks) as "the one great obstacle
to the liberation of the labouring classes all over the world", a monopoly
created by "the employers of wage labour" to ensure necessity "compel[led]
them [the great body of wealth producers] . . . - by the alternative of
starvation - to sell their labour to the money monopolists." [Op. Cit.,
p. 49, p. 48, p. 20]
Such an analysis is essentially socialist in nature, recognising that
apparently "free" markets create conditions which drive working class
people to sell their liberty on the market. Similarly, his vision of a
free society is also socialist, with wage labour no more. With the end
of the money (and land) monopolies, he considered that "with few or no
exceptions" working people would stop being wage slaves and become
self-employed workers. In stark contrast to wage labour, he considered
that free labour involved the worker "appl[ying] both his . . . head and
his hands" [Op. Cit., p. 48, p. 50]. Thus Spooner recognised that under
wage labour, there is a division of labour, with a few using their heads
(giving orders) and the many using their hands (following orders).
"Committed as they were to equality in the pursuit of property," argues
Kline, "the objective for the anarchist became the construction of a
society providing equal access to those things necessary for creating
wealth. The goal of the anarchists who extolled mutualism and the
abolition of all monopolies was, then, a society where everyone willing
to work would have the tools and raw materials necessary for production
in a non-exploitative system . . .the dominant vision of the future
society . . . [was] underpinned by individual, self-employed workers."
[Op. Cit., p. 95]
"Anarcho"-capitalists assume that generalised wage labour would remain
under their system (while paying lip-service to the possibilities of
co-operatives -- and if an "anarcho"-capitalist thinks that co-operative
will become the dominant form of workplace organisation, then they are
some kind of market socialist, *not* a capitalist). It is clear that their
end point (a pure capitalism, i.e. generalised wage labour) is directly
the opposite of that desired by anarchists. This was the case of the
Individualist Anarchists who embraced the ideal of (non-capitalist)
laissez faire competition -- they did so, as noted, to *end* wage
labour and usury, *not* to maintain them (indeed, their analysis of the
change in American society from one of mainly independent producers into
one based mainly upon wage labour has many parallels with, of all people,
Karl Marx's presented in chapter 33 of _Capital_).
"Anarcho"-capitalists, in contrast, believe that it is likely that
workplaces will remain hierarchical (i.e. capitalistic) even if the
public state has been dissolved and that this is of no concern. This
belief reveals the priority of their values: "efficiency" (the bottom
line) is considered more important than eliminating the domination,
coercion, and exploitation of workers. Similarly, they consider that
profits, interest and rent as valid sources of income while anarchists
oppose these as usury and exploitative.
Moreover, in practice, wage labour is a major source of oppression
and authoritarianism within society -- there is little or no freedom
within capitalist production (as Bakunin noted, "the worker sells his
person and his liberty for a given time"). So, in stark contrast to
anarchists, "anarcho"-capitalists have no problem with factory fascism
(i.e. wage labour), a position which seems highly illogical for a theory
calling itself libertarian. If it were truly libertarian, it would
oppose all forms of domination, not just statism. This position flows
from the "anarcho"-capitalist definition of freedom as the absence of
coercion and will be discussed in section F.2 in more detail.
Because "anarcho"-capitalism does not explicitly (or implicitly, for
that matter) call for economic arrangements that will end wage labour
and usury they cannot be considered anarchists or part of the anarchist
tradition.
To conclude.
Political theories should be identified by their actual features and
history rather than labels. Once we recognise that, we soon find out that
"anarcho"-capitalism is an oxymoron. Anarchists and "anarcho"-capitalists
are not part of the same movement or tradition. Their ideas and aims
are in direct opposition to those of all kinds of anarchists.
While anarchists have always opposed capitalism, "anarcho"-capitalists
have embraced it. And due to this embrace their "anarchy" will be marked
by extensive differences in wealth and power, differences that will show
themselves up in relationships based upon subordination and hierarchy
(such as wage labour), *not* freedom (little wonder that Proudhon
argued that "property is despotism" -- it creates authoritarian and
hierarchical relationships between people in a similar way to statism).
Their support for "free market" capitalism ignores the impact of wealth
and power on the nature and outcome of individual decisions within the
market (see sections F.2 and F.3 for further discussion). For example,
as we indicate in sections J.5.10, J.5.11 and J.5.12, wage labour is less
efficient than self-management in production but due to the structure and
dynamics of the capitalist market, "market forces" will actively discourage
self-management due to its empowering nature for workers. In other words,
a developed capitalist market will promote hierarchy and unfreedom in
production in spite of its effects on individual workers and their
wants (see also section F.10.2). Thus "free market" capitalism tends
to re-enforce inequalities of wealth and power, *not* eliminate them.
Furthermore, any such system of (economic and social) power will require
extensive force to maintain it and the "anarcho"-capitalist system of
competing "defence firms" will simply be a new state, enforcing
capitalist power, property rights and law.
Overall, the lack of concern for meaningful freedom within production and
the effects of vast differences in power and wealth within society as a
whole makes "anarcho"-capitalism little better than "anarchism for the rich."
Emma Goldman recognised this when she argued that "'Rugged individualism'
has meant all the 'individualism' for the masters . . . in whose name
political tyranny and social oppression are defended and held up as
virtues while every aspiration and attempt of man to gain freedom . . .
is denounced as . . . evil in the name of that same individualism."
[ _Red Emma Speaks_, p. 112] And, as such, is no anarchism at all.
So, unlike anarchists, "anarcho"-capitalists do not seek the "abolition
of the proletariat" (to use Proudhon's expression) via changing capitalist
property rights and institutions. Thus the "anarcho"-capitalist and the
anarchist have different starting positions and opposite ends in mind
and so they cannot be considered part of the same (anarchist) tradition.
As we discuss further in later sections, the "anarcho"-capitalist
claims to being anarchists are bogus simply because they reject so much
of the anarchist tradition as to make what they do accept non-anarchist
in theory and practice. Little wonder Peter Marshall said that "few
anarchists would accept the 'anarcho-capitalists' into the anarchist
camp since they do not share a concern for economic equality and
social justice." [_Demanding the Impossible_, p. 565]
F.1.1 Why is the failure to renounce hierarchy the Achilles Heel of
right-wing libertarianism and "anarcho"-capitalism?
Any capitalist system will produce vast differences in economic (and social)
wealth and power. As we argue in section F.3.1, such differences will
reflect themselves in the market and any "free" contracts agreed there
will create hierarchical relationships. Thus capitalism is marked by
hierarchy (see section B.1.2) and, unsurprisingly, right-libertarians
and "anarcho"-capitalists fail to oppose such "free market" generated
hierarchy.
Both groups approve of it in the capitalist workplace or rented accommodation
and the right-Libertarians also approve of it in a 'minimal' state to protect
private property ("anarcho"-capitalists, in contrast, approve of the use
of private defence firms to protect property). But the failure of these
two movements to renounce hierarchy is their weakest point. For
anti-authoritarianism has sunk deep roots into the modern psyche,
as a legacy of the sixties.
Many people who do not even know what anarchism is have been profoundly
affected by the personal liberation and counterculture movements of the
past thirty years, epitomised by the popular bumper sticker, "Question
Authority." As a result, society now tolerates much more choice than ever
before in matters of religion, sexuality, art, music, clothing, and other
components of lifestyle. We need only recall the conservatism that reigned
in such areas during the fifties to see that the idea of liberty has made
tremendous advances in just a few decades.
Although this liberatory impulse has so far been confined almost entirely
to the personal and cultural realms, it may yet be capable of spilling
over and affecting economic and political institutions, provided it
continues to grow. The Right is well aware of this, as seen in its ongoing
campaigns for "family values," school prayer, suppression of women's
rights, fundamentalist Christianity, sexual abstinence before marriage,
and other attempts to revive the Ozzie-and-Harriet mindset of the Good Old
Days. This is where the efforts of "cultural anarchists" -- artists,
musicians, poets, and others -- are important in keeping alive the ideal
of personal freedom and resistance to authority as a necessary foundation
for economic and political restructuring.
Indeed, the libertarian right (as a whole) support restrictions on freedom
*as long as its not the state that is doing it*! Their support for
capitalism means that they have no problem with bosses dictating what
workers do during working hours (nor outside working hours, if the job
requires employees to take drug tests or not be gay in order to keep it).
If a private landlord or company decrees a mandatory rule or mode of
living, workers/tenets must "love it or leave it!" Of course, that the
same argument also applies to state laws is one hotly denied by
right-Libertarians -- a definite case of not seeing the wood for the
trees (see section F.2.3).
Of course, the "anarcho"-capitalist will argue, workers and tenants can
find a more liberal boss or landlord. This, however, ignores two key facts.
Firstly, being able to move to a more liberal state hardly makes state
laws less offensive (as they themselves will be the first to point out).
Secondly, looking for a new job or home is not that easy. Just a moving
to a new state can involve drastic upheavals, so change changing jobs
and homes. Moreover, the job market is usually a buyers market (it has
to be in capitalism, otherwise profits are squeezed -- see sections C.7
and F.10.2) and this means that workers are not usually in a position
(unless they organise) to demand increased liberties at work.
It seems somewhat ironic, to say the least, that right-libertarians
place rights of property over the rights of self-ownership, even though
(according to their ideology) self-ownership is the foundational right
from which property rights are derived. Thus in right-libertarianism the
rights of property owners to discriminate and govern the property-less
are more important than the freedom from discrimination (i.e. to be
yourself) or the freedom to govern oneself at all times.
So, when it boils down to it, right-libertarians are not really bothered
about restrictions on liberty and, indeed, they will defend private
restrictions on liberty with all their might. This may seem a strange
position for self-proclaimed "libertarians" to take, but it flows
naturally from their definition of freedom (see section F.2 for a
full discussion of this). but by not attacking hierarchy beyond certain
forms of statism, the 'libertarian' right fundamentally undermines its
claim to be libertarian. Freedom cannot be compartmentalised, but is
holistic. The denial of liberty in, say, the workplace, quickly results
in its being denied elsewhere in society (due to the impact of the
inequalities it would produce) , just as the degrading effects of wage
labour and the hierarchies with which is it bound up are felt by the worker
outside work.
Neither the Libertarian Party nor so-called "anarcho"-capitalism is
*genuinely* anti-authoritarian, as those who are truly dedicated to
liberty must be.
F.1.2 How libertarian is right-Libertarian theory?
The short answer is, not very. Liberty not only implies but also requires
independent, critical thought (indeed, anarchists would argue that critical
thought requires free development and evolution and that it is precisely
*this* which capitalist hierarchy crushes). For anarchists a libertarian
theory, if it is to be worthy of the name, must be based upon critical
thought and reflect the key aspect that characterises life - change and the
ability to evolve. To hold up dogma and base "theory" upon assumptions (as
opposed to facts) is the opposite of a libertarian frame of mind. A
libertarian theory must be based upon reality and recognise the need
for change and the existence of change. Unfortunately, right-Libertarianism
is marked more by ideology than critical analysis.
Right-Libertarianism is characterised by a strong tendency of creating
theories based upon assumptions and deductions from these axioms (for a
discussion on the pre-scientific nature of this methodology and of its
dangers, see the next section). Robert Nozick, for example, in _Anarchy,
State, and Utopia_ makes no attempt to provide a justification of the
property rights his whole theory is based upon. His main assumption is
that "[i]ndividuals have rights, and there are certain things no person
or group may do to them (without violating their rights)." [_Anarchy,
State and Utopia_, p. ix] While this does have its intuitive appeal,
it is not much to base a political ideology upon. After all, what rights
people consider as valid can be pretty subjective and have constantly
evolved during history. To say that "individuals have rights" is to open up
the question "what rights?" Indeed, as we argue in greater length in section
F.2, such a rights based system as Nozick desires can and does lead to
situations developing in which people "consent" to be exploited and
oppressed and that, intuitively, many people consider supporting the
"violation" of these "certain rights" (by creating other ones) simply
because of their evil consequences.
In other words, starting from the assumption "people have [certain] rights"
Nozick constructs a theory which, when faced with the reality of unfreedom
and domination it would create for the many, justifies this unfreedom
as an expression of liberty. In other words, regardless of the outcome,
the initial assumptions are what matter. Nozick's intuitive rights system
can lead to some very non-intuitive outcomes.
And does Nozick prove the theory of property rights he assumes? He states
that "we shall not formulate [it] here." [Op. Cit., p. 150] Moreover, it
is not formulated anywhere else in his book. And if it is not formulated,
what is there to defend? Surely this means that his Libertarianism is
without foundations? As Jonathan Wolff notes, Nozick's "Libertarian property
rights remain substantially undefended." [_Robert Nozick: Property, Justice
and the Minimal State_, p. 117] Given that the right to acquire property
is critical to his whole theory you would think it important enough to go
into in some detail (or at least document). After all, unless he provides us
with a firm basis for property rights then his entitlement theory is nonsense
as no one has the right to (private) property.
It could be argued that Nozick *does* present enough information to allow
us to piece together a possible argument in favour of property rights
based on his modification of the "Lockean Proviso" (although he does
not point us to these arguments). However, assuming this is the case,
such a defence actually fails (see section B.3.4 for more on this). If individuals
*do* have rights, these rights do not include property rights
in the form Nozick assumes (but does not prove). Nozick appears initially
convincing because what he assumes with regards to property is a normal
feature of the society we are in (we would be forgiven when we note here
that feeble arguments pass for convincing when they are on the same side
as the prevailing sentiment).
Similarly, both Murray Rothbard and Ayn Rand (who is infamous for repeating
"A is A" ad infinitum) do the same - base their ideologies on assumptions
(see section F.7 for more on this).
Therefore, we see that most of the leading right-Libertarian ideologues
base themselves on assumptions about what "Man" is or the rights they
should have (usually in the form that people have (certain) rights because
they are people). From these theorems and assumptions they build their
respective ideologies, using logic to deduce the conclusions that their
assumptions imply. Such a methodology is unscientific and, indeed, a relic
of religious (pre-scientific) society (see next section) but, more
importantly, can have negative effects on maximising liberty. This is
because this "methodology" has distinct problems. Murray Bookchin
argues:
"Conventional reason rests on identity, not change; its fundamental
principle is that *A equals A,* the famous 'principle of identity,' which
means that any given phenomenon can be only itself and cannot be other than
what we immediately perceive it to be at a given moment in time. It does not
address the problem of change. A human being is an infant at one time, a
child at another, an adolescent at still another, and finally a youth and
an adult. When we analyse an infant by means of conventional reason, we
are not exploring what it is *becoming* in the process of developing into
a child." ["A Philosophical Naturalism", _Society and Nature_ No.2, p. 64]
In other words, right-Libertarian theory is based upon ignoring the
fundamental aspect of life - namely *change* and *evolution.* Perhaps
it will be argued that identity also accounts for change by including
potentiality -- which means, that we have the strange situation that
A can *potentially* be A! If A is not actually A, but only has the
potential to be A, then A is not A. Thus to include change is to
acknowledge that A does not equal A -- that individuals and humanity
evolves and so what constitutes A also changes. To maintain identity
and then to deny it seems strange.
That change is far from the "A is A" mentality can be seen from Murray
Rothbard who goes so far as to state that "one of the notable attributes
of natural law" is "its applicability to all men [sic!], regardless of
time or place. Thus ethical law takes its place alongside physical or
'scientific' natural laws." [_The Ethics of Liberty_, p. 42] Apparently
the "nature of man" is the only living thing in nature that does not evolve
or change! Of course, it could be argued that by "natural law" Rothbard is
only referring to his method of deducing his (and, we stress, they are
just his -- not natural) "ethical laws" -- but his methodology starts
by assuming certain things about "man." Whether these assumptions seem
far or not is besides the point, by using the term "natural law" Rothbard
is arguing that any actions that violate *his* ethical laws are somehow
"against nature" (but if they were against nature, they could not occur
-- see section F.7 for more on this). Deductions from assumptions is a
Procrustean bed for humanity (as Rothbard's ideology shows).
So, as can be seen, many leading right-Libertarians place great store
by the axiom "A is A" or that "man" has certain rights simply because
"he" is a "man". And as Bookchin points out, such conventional reason
"doubtless plays an indispensable role in mathematical thinking and
mathematical sciences . . . and in the nuts-and-bolts of dealing with
everyday life" and so is essential to "understand or design mechanical
entities." [Ibid., p.67] But the question arises, is such reason
useful when considering people and other forms of life?
Mechanical entities are but one (small) aspect of human life. Unfortunately
for right-Libertarians (and fortunately for the rest of humanity), human
beings are *not* mechanical entities but instead are living, breathing,
feeling, hoping, dreaming, *changing* living organisms. They are not
mechanical entities and any theory that uses reason based on such
(non-living) entities will flounder when faced with living ones. In
other words, right-Libertarian theory treats people as the capitalist
system tries to -- namely as commodities, as things. Instead of human
beings, whose ideas, ideals and ethics change, develop and grow, capitalism
and capitalist ideologues try to reduce human life to the level of corn or
iron (by emphasising the unchanging "nature" of man and their starting
assumptions/rights).
This can be seen from their support for wage labour, the reduction of
human activity to a commodity on the market. While paying lip service
to liberty and life, right-libertarianism justifies the commodification
of labour and life, which within a system of capitalist property rights
can result in the treating of people as means to an end as opposed
to an end in themselves (see sections F.2 and F.3.1).
And as Bookchin points out, "in an age of sharply conflicting values and
emotionally charges ideals, such a way of reasoning is often repellent.
Dogmatism, authoritarianism, and fear seem all-pervasive." [Ibid., p. 68]
Right-Libertarianism provides more than enough evidence for Bookchin's
summary with its support for authoritarian social relationships, hierarchy
and even slavery (see section F.2).
This mechanical viewpoint is also reflected in their lack of appreciation
that social institutions and relationships evolve over time and, sometimes,
fundamentally change. This can best be seen from property. Right-libertarians
fail to see that over time (in the words of Proudhon) property "changed
its nature." Originally, "the word *property* was synonymous with . . .
*individual possession*" but it became more "complex" and turned into
*private property* -- "the right to use it by his neighbour's labour."
The changing of use-rights to (capitalist) property rights created relations
of domination and exploitation between people absent before. For the
right-Libertarian, both the tools of the self-employed artisan and the
capital of a transnational corporation are both forms of "property" and
(so) basically identical. In practice, of course, the social relations
they create and the impact they have on society are totally different.
Thus the mechanical mind-set of right-Libertarianism fails to understand
how institutions, like property, evolve and come to replace whatever
freedom enhancing features they had with oppression (indeed, von Mises
argued that "[t]here may possibly be a difference of opinion about
whether a particular institution is socially beneficial or harmful. But
once it has been judged [by whom, we ask] beneficial, one can no longer
contend that, for some inexplicable reason, it must be condemned as
immoral" [_Liberalism_, p. 34] So much for evolution and change!).
Anarchism, in contrast, is based upon the importance of critical thought
informed by an awareness that life is in a constant process of change. This
means that our ideas on human society must be informed by the facts, not by
what we wish was true. For Bookchin, an evaluation of conventional wisdom
(as expressed in "the law of identity") is essential and its conclusions
have "enormous importance for how we behave as ethical beings, the nature
of nature, and our place in the natural world. Moreover. . . these issues
directly affect the kind of society, sensibility, and lifeways we wish to
foster." [Bookchin, Op. Cit., p. 69-70]
Bookchin is correct. While anarchists oppose hierarchy in the name of
liberty, right-libertarians support authority and hierarchy, all of which
deny freedom and restrict individual development. This is unsurprising
because the right-libertarian ideology rejects change and critical thought
based upon the scientific method and so is fundamentally *anti-life* in
its assumptions and *anti-human* in its method. Far from being a libertarian
set of ideas, right-Libertarianism is a mechanical set of dogmas that deny
the fundamental nature of life (namely change) and of individuality (namely
critical thought and freedom). Moreover, in practice their system of
(capitalist) rights would soon result in extensive restrictions on liberty
and authoritarian social relationships (see sections F.2 and F.3) -- a
strange result of a theory proclaiming itself "libertarian" but one
consistent with its methodology.
From a wider viewpoint, such a rejection of liberty by right-libertarians
is unsurprising. They do, after all, support capitalism. Capitalism
produces an inverted set of ethics, one in which capital (dead labour) is
more important that people (living labour). After all, workers are usually
easier to replace than investments in capital and the person who owns
capital commands the person who "only" owns his life and productive
abilities. And as Oscar Wilde once noted, crimes against property "are
the crimes that the English law, valuing what a man has more than what
a man is, punishes with the harshest and most horrible severity." [_The
Soul of Man Under Socialism_]
This mentality is reflected in right-libertarianism when it claims that
stealing food is a crime while starving to death (due to the action of
market forces/power and property rights) is no infringement of your rights
(see section F.4.2 for a similar argument with regards to water). It can
also be seen when right-libertarian's claim that the taxation "of earnings
from labour" (e.g. of one dollar from a millionaire) is "*on a par with*
forced labour" [Nozick, Op. Cit., p. 169] while working in a sweatshop
for 14 hours a day (enriching said millionaire) does not affect your
liberty as you "consent" to it due to market forces (although, of course,
many rich people have earned their money *without* labouring themselves --
their earnings derive from the wage labour of others so would taxing
those, non-labour, earnings be "forced labour"?) Interestingly, the
Individualist Anarchist Ben Tucker argued that an income tax was "a
recognition of the fact that industrial freedom and equality of
opportunity no longer exist here [in the USA in the 1890s] even in
the imperfect state in which they once did exist" [quoted by James
Martin, _Men Against the State_, p. 263] which suggests a somewhat
different viewpoint on this matter than Nozick or Rothbard.
That capitalism produces an inverted set of ethics can be seen when the
Ford produced the Pinto. The Pinto had a flaw in it which meant that if
it was hit in a certain way in a crash the fuel tank exploded. The Ford
company decided it was more "economically viable" to produce that car and
pay damages to those who were injured or the relatives of those who died
than pay to change the invested capital. The needs for the owners of
capital to make a profit came before the needs of the living. Similarly,
bosses often hire people to perform unsafe work in dangerous conditions
and fire them if they protest. Right-libertarian ideology is the
philosophical equivalent. Its dogma is "capital" and it comes before
life (i.e. "labour").
As Bakunin once put it, "you will always find the idealists in the very
act of practical materialism, while you will see the materialists pursuing
and realising the most grandly ideal aspirations and thoughts." [_God
and the State_, p. 49] Hence we see right "libertarians" supporting
sweat shops and opposing taxation -- for, in the end, money (and the
power that goes with it) counts far more in that ideology than ideals
such as liberty, individual dignity, empowering, creative and productive
work and so forth for all. The central flaw of right-libertarianism is
that it does not recognise that the workings of the capitalist market can
easily ensure that the majority end up becoming a resource for others in
ways far worse than that associated with taxation. The legal rights
of self-ownership supported by right-libertarians does not mean that
people have the ability to avoid what is in effect enslavement to
another (see sections F.2 and F.3).
Right-Libertarian theory is not based upon a libertarian methodology or
perspective and so it is hardly surprising it results in support for
authoritarian social relationships and, indeed, slavery (see section
F.2.6).
F.1.3 Is right-Libertarian theory scientific in nature?
Usually, no. The scientific approach is *inductive,* much of the
right-libertarian approach is *deductive.* The first draws generalisations
from the data, the second applies preconceived generalisations to the data.
A completely deductive approach is pre-scientific, however, which is why
many right-Libertarians cannot legitimately claim to use a scientific
method. Deduction does occur in science, but the generalisations are
primarily based on other data, not *a priori* assumptions, and are checked
against data to see if they are accurate. Anarchists tend to fall into the
inductive camp, as Kropotkin put it:
"Precisely this natural-scientific method applied to economic facts,
enables us to prove that the so-called 'laws' of middle-class sociology,
including also their political economy, are not laws at all, but
simply guesses, or mere assertions which have never been verified
at all." [_Kropotkin's Revolutionary Pamphlets_, p. 153]
The idea that natural-scientific methods can be applied to economic and
social life is one that many right-libertarians reject. Instead they
favour the deductive (pre-scientific) approach (this we must note is
not limited purely to Austrian economists, many more mainstream
capitalist economists also embrace deduction over induction).
The tendency for right-Libertarianism to fall into dogmatism (or *a priori*
theorems, as they call it) and its implications can best be seen from the
work of Ludwig von Mises and other economists from the right-Libertarian
"Austrian school." Of course, not all right-libertarians necessarily
subscribe to this approach (Murray Rothbard for one did) but its use by
so many leading lights of both schools of thought is significant and
worthy of comment. And as we are concentrating on *methodology* it is
not essential to discuss the starting assumptions. The assumptions (such
as, to use Rothbard's words, the Austrian's "fundamental axiom that
individual human beings act") may be correct, incorrect or incomplete --
but the method of using them advocated by von Mises ensures that such
considerations are irrelevant.
Von Mises (a leading member of the Austrian school of economics) begins by
noting that social and economic theory "is not derived from experience; it
is prior to experience..." Which is back to front. It is obvious that
experience of capitalism is necessary in order to develop a viable theory
about how it works. Without the experience, any theory is just a flight of
fantasy. The actual specific theory we develop is therefore derived from
experience, informed by it and will have to get checked against reality
to see if it is viable. This is the scientific method - any theory must
be checked against the facts.
However, von Mises goes on to argue at length that "no kind of experience
can ever force us to discard or modify *a priori* theorems; they are
logically prior to it and cannot be either proved by corroborative
experience or disproved by experience to the contrary . . ."
Von Mises makes a similar claim in his work _Human Action_, namely
that experience "can never . . . prove or disprove any particular
theorem . . . The ultimate yardstick of an economic theorem's
correctness or incorrectness is solely reason unaided by experience."
[p. 858]
And if this does not do justice to a full exposition of the phantasmagoria
of von Mises' *a priorism*, the reader may take some joy (or horror) from
the following statement:
"If a contradiction appears between a theory and experience, *we must
always assume* that a condition pre-supposed by the theory was not
present, or else there is some error in our observation. The disagreement
between the theory and the facts of experience frequently forces us to think
through the problems of the theory again. *But so long as a rethinking of
the theory uncovers no errors in our thinking, we are not entitled to doubt
its truth*" [emphasis added -- the quotes presented here are cited
in _Ideology and Method in Economics_ by Homa Katouzian, pp. 39-40]
In other words, if reality is in conflict with your ideas, do not adjust
your views because reality must be at fault! The scientific method would
be to revise the theory in light of the facts. It is not scientific to
reject the facts in light of the theory!
Von Mises rejects the scientific approach as do all Austrian Economists.
Murray Rothbard states approvingly that "Mises indeed held not only that
economic theory does not need to be 'tested' by historical fact but also
that it *cannot* be so tested." ["Praxeology: The Methodology of Austrian
Economics" in _The Foundation of Modern Austrian Economics_, p. 32]
Similarly, von Hayek wrote that economic theories can "never be verified
or falsified by reference to facts. All that we can and must verify is the
presence of our assumptions in the particular case." [_Individualism and
Economic Order_, p. 73]
This may seen somewhat strange to non-Austrians. How can we ignore reality
when deciding whether a theory is a good one or not? If we cannot evaluate
our ideas, how can we consider them anything bar dogma? The Austrian's
maintain that we cannot use historical evidence because every historical
situation is unique. Thus we cannot use "complex heterogeneous historical
facts as if they were repeatable homogeneous facts" like those in a
scientist's experiment [Rothbard, Op. Cit., p. 33]. While such a position
*does* have an element of truth about it, the extreme *a priorism* that
is drawn from this element is radically false (just as extreme empiricism
is also false, but for different reasons).
Those who hold such a position ensure that their ideas cannot be evaluated
beyond logical analysis. As Rothbard makes clear, "since praxeology begins
with a true axiom, A, all that can be deduced from this axiom must also
be true. For if A implies be, and A is true, then B must also be true."
[Op. Cit., pp. 19-20] But such an approach makes the search for truth a
game without rules. The Austrian economists (and other right-libertarians)
who use this method are free to theorise anything they want, without such
irritating constrictions as facts, statistics, data, history or experimental
confirmation. Their only guide is logic. But this is no different from what
religions do when they assert the logical existence of God. Theories
ungrounded in facts and data are easily spun into any belief a person
wants. Starting assumptions and trains of logic may contain inaccuracies
so small as to be undetectable, yet will yield entirely false conclusions.
In addition, trains of logic may miss things which are only brought
to light by actual experiences (after all, the human mind is not all
knowing or all seeing). To ignore actual experience is to loose that
input when evaluating a theory. Hence our comments on the irrelevance of
the assumptions used -- the methodology is such that incomplete or
incorrect assumptions or steps cannot be identified in light of experience.
This is because one way of discovering if a given chain of logic requires
checking is to test its conclusions against available evidence (although
von Mises did argue that the "ultimate yardstick" was "solely reason unaided
by experience"). If we *do* take experience into account and rethink a
given theory in the light of contradictory evidence, the problem
remains that a given logical chain may be correct, but incomplete
or concentrate on or stress inappropriate factors. In other words, our
logical deductions may be correct but our starting place or steps wrong
and as the facts are to be rejected in the light of the deductive method,
we cannot revise our ideas.
Indeed, this approach could result in discarding (certain forms of) human
behaviour as irrelevant (which the Austrian system claims using empirical
evidence does). For there are too many variables that can have an influence
upon individual acts to yield conclusive results explaining human behaviour.
Indeed, the deductive approach may ignore as irrelevant certain human
motivations which have a decisive impact on an outcome. There could be
a strong tendency to project "right-libertarian person" onto the rest of
society and history, for example, and draw inappropriate insights into the
way human society works or has worked. This can be seen, for example,
in attempts to claim pre-capitalist societies as examples of
"anarcho"-capitalism in action.
Moreover, deductive reasoning cannot indicate the relative significance
of assumptions or theoretical factors. That requires empirical study. It
could be that a factor considered important in the theory actually turns
out to have little effect in practice and so the derived axioms are so
weak as to be seriously misleading.
In such a purely ideal realm, observation and experience are distrusted
(when not ignored) and instead theory is the lodestone. Given the bias
of most theorists in this tradition, it is unsurprising that this style
of economics can always be trusted to produce results proving free markets
to be the finest principle of social organisation. And, as an added
bonus, reality can be ignored as it is *never* "pure" enough according
to the assumptions required by the theory. It could be argued, because
of this, that many right-libertarians insulate their theories from
criticism by refusing to test them or acknowledge the results of such
testing (indeed, it could also be argued that much of right-libertarianism
is more a religion than a political theory as it is set-up in such a
way that it is either true or false, with this being determined not
by evaluating facts but by whether you accept the assumptions and
logical chains presented with them).
Strangely enough, while dismissing the "testability" of theories many
right-Libertarians (including Murray Rothbard) *do* investigate historical
situations and claim them as examples of how well their ideas work in
practice. But why does historical fact suddenly become useful when it
can be used to bolster the right-Libertarian argument? Any such example
is just as "complex" as any other and the good results indicated may
not be accountable to the assumptions and steps of the theory but to other
factors totally ignored by it. If economic (or other) theory is untestable
then *no* conclusions can be drawn from history, including claims for the
superiority of laissez-faire capitalism. You cannot have it both ways
-- although we doubt that right-libertarians will stop using history
as evidence that their ideas work.
Of course it is sometimes argued that it is *complex* data that is
the problem. Let use assume that this is the case. It is argued that
when dealing with complex information it is impossible to use aggregate
data without first having more simple assumptions (i.e. that "humans
act"). Due to the complexity of the situation, it is argued, it is
impossible to aggregate data because this hides the individual activities
that creates it. Thus "complex" data cannot be used to invalidate
assumptions or theories. Hence, according to Austrians, the axioms
derived from the "simple fact" that "humans act" are the only basis
for thinking about the economy.
Such a position is false in two ways.
Firstly, the aggregation of data *does* allow us to understand complex
systems. If we look at a chair, we cannot find out whether it is
comfortable, its colour, whether it is soft or hard by looking at
the atoms that make it up. To suggest that you can is to imply the
existence of green, soft, comfortable atoms. Similarly with gases.
They are composed to countless individual atoms but scientists do
not study them by looking at those atoms and their actions. Within
limits, this is also valid for human action. For example, it would
be crazy to maintain from historical data that interest rates will
be a certain percentage a week but it is valid to maintain that
interest rates are known to be related to certain variables in certain
ways. Or that certain experiences will tend to result in certain forms
of psychological damage. General tendencies and "rules of thumb" can
be evolved from such study and these can be used to *guide* current
practice and theory. By aggregating data you can produce valid
information, rules of thumb, theories and evidence which would be
lost if you concentrated on "simple data" (such as "humans act").
Therefore, empirical study produces facts which vary across time
and place, and yet underlying and important patterns can be
generated (patterns which can be evaluated against *new* data
and improved upon).
Secondly, the simple actions themselves influence and are influenced
in turn by overall (complex) facts. People act in different ways in
different circumstances (something we can agree with Austrians about,
although we refuse to take it to their extreme position of rejecting
empirical evidence as such). To use simple acts to understand
complex systems means to miss the fact that these acts are not
independent of their circumstances. For example, to claim that the
capitalist market is "just" the resultant of bilateral exchanges
ignores the fact that the market activity shapes the nature and
form of these bilateral exchanges. The "simple" data is dependent
on the "complex" system -- and so the complex system *cannot* be
understood by looking at the simple actions in isolation. To do so
would be to draw incomplete and misleading conclusions (and it is
due to these interrelations that we argue that aggregate data should
be used critically). This is particularly important when looking at
capitalism, where the "simple" acts of exchange in the labour market
are dependent upon and shaped by circumstances outside these acts.
So to claim that (complex) data cannot be used to evaluate a theory
is false. Data can be useful when seeing whether a theory is confirmed by
reality. This is the nature of the scientific method -- you compare the
results expected by your theory to the facts and if they do not match you
check your facts *and* check your theory. This may involve revising the
assumptions, methodology and theories you use if the evidence is such as
to bring them into question. For example, if you claim that capitalism is
based on freedom but that the net result of capitalism is to produce
relations of domination between people then it would be valid to revise,
for example, your definition of freedom rather than deny that domination
restricts freedom (see section F.2 on this). But if actual experience is
to be distrusted when evaluating theory, we effectively place ideology
above people -- after all, how the ideology affects people in *practice*
is irrelevant as experiences cannot be used to evaluate the (logically
sound but actually deeply flawed) theory.
As we indicated above (in section F.1.2) and will discuss in more depth
later (in section F.7) most of the leading right-Libertarian theorists
base themselves on such deductive methodologies, starting from assumptions
and "logically" drawing conclusions from them. The religious undertones
of such methodology can best be seen from the roots of right-Libertarian
"Natural law" theory.
Carole Pateman, in her analysis of Liberal contract theory, indicates
the religious nature of the "Natural Law" argument so loved by the
theorists of the "Radical Right." She notes that for Locke (the main source
of the Libertarian Right's Natural Law cult) "natural law" was equivalent
of "God's Law" and that "God's law exists externally to and independently
of individuals." [_The Problem of Political Obligation_, p. 154] No role
for critical thought there, only obedience. Most modern day "Natural Law"
supporters forget to mention this religious undercurrent and instead
talk of about "Nature" (or "the market") as the deity that creates Law,
not God, in order to appear "rational." So much for science.
Such a basis in dogma and religion can hardly be a firm foundation for
liberty and indeed "Natural Law" is marked by a deep authoritarianism:
"Locke's traditional view of natural law provided individual's with an
external standard which they could recognise, but which they did not
voluntarily choose to order their political life." [Op. Cit., p. 79]
In Section F.7 we discuss the authoritarian nature of "Natural Law" and
will not do so here. However, here we must point out the political
conclusions Locke draws from his ideas. Pateman summary is worth
repeating at length:
Locke believed that "obedience lasts only as long as protection. His
individuals are able to take action themselves to remedy their political
lot. . . but this does not mean, as is often assumed, that Locke's theory
gives direct support to present-day arguments for a right of civil
disobedience. . . His theory allows for two alternatives only: either
people go peacefully about their daily affairs under the protection of
a liberal, constitutional government, or they are in revolt against a
government which has ceased to be 'liberal' and has become arbitrary and
tyrannical, so forfeiting its right to obedience." [Op. Cit., p. 77]
Locke's "rebellion" exists purely to reform a *new* 'liberal' government, not
to change the existing socio-economic structure which the 'liberal' government
exists to protect. His theory, therefore, indicates the results of a priorism,
namely a denial of any form of social dissent which may change the "natural
law" as defined by Locke.
So, von Mises, von Hayek and most right-libertarians reject the scientific
method in favour of ideological correctness -- if the facts contradict your
theory then they can be dismissed as too "complex" or "unique". Facts,
however, should inform theory and any theory's methodology should take
this into account. To dismiss facts out of hand is to promote dogma.
This is not to suggest that a theory should be modified very time new
data comes along -- that would be crazy as unique situations *do* exist,
data can be wrong and so forth -- but it does suggest that if your theory
*continually* comes into conflict with reality, its time to rethink the
theory and not assume that facts cannot invalidate it. A true libertarian
would approach a contradiction between reality and theory by evaluating
the facts available and changing the theory is this is required, not by
ignoring reality or dismissing it as "complex".
Thus, much of right-Libertarian theory is neither libertarian nor scientific.
Much of right-libertarian thought is highly axiomatic, being logically
deduced from such starting axioms as "self-ownership" or "no one should
initiate force against another". Hence the importance of our discussion
of von Mises as this indicates the dangers of this approach, namely the
tendency to ignore/dismiss the consequences of these logical chains and,
indeed, to justify them in terms of these axioms rather than from the
facts. In addition, the methodology used is such as that it would be
fair to argue that right-libertarians get to critique reality but reality
can never be used to critique right-libertarianism -- for any empirical
data presented as evidence as be dismissed as "too complex" or "unique"
and so irrelevant (unless it can be used to support their claims, of
course).
Hence W. Duncan Reekie's argument (quoting leading Austrian economist
Israel Kirzner) that "empirical work 'has the function of establishing
the *applicability* of particular theorems, and thus *illustrating* their
operation' . . . Confirmation of theory is not possible because there is no
constants in human action, nor is it necessary because theorems themselves
describe relationships logically developed from hypothesised conditions.
Failure of a logically derived axiom to fit the facts does not render
it invalid, rather it 'might merely indicate inapplicability' to the
circumstances of the case.'" [_Markets, Entrepreneurs and Liberty_, p. 31]
So, if facts confirm your theory, your theory is right. If facts do not
confirm your theory, it is still right but just not applicable in this case!
Which has the handy side effect of ensuring that facts can *only* be used to
support the ideology, *never* to refute it (which is, according to this
perspective, impossible anyway). In other words (as we noted above), if
reality contradicts your theory, ignore reality!
Kropotkin hoped "that those who believe in [current economic doctrines]
will themselves become convinced of their error as soon as they come to
see the necessity of verifying their quantitative deductions by
quantitative investigation." [Op. Cit., p. 178] However, the Austrian
approach builds so many barriers to this that it is doubtful that
this will occur. Indeed, right-libertarianism, with its focus on exchange
rather than its consequences, seems to be based upon justifying domination
in terms of their deductions than analysing what freedom actually means
in terms of human existence (see section F.2 for a fuller discussion).
The real question is why are such theories taken seriously and arouse such
interest. Why are they not simply dismissed out of hand, given their
methodology and the authoritarian conclusions they produce? The answer is,
in part, that feeble arguments can easily pass for convincing when they
are on the same side as the prevailing sentiment and social system. And, of
course, there is the utility of such theories for ruling elites - "[a]n
ideological defence of privileges, exploitation, and private power will be
welcomed, regardless of its merits." [Noam Chomsky, _The Chomsky Reader_,
p. 188]
F.2 What do "anarcho"-capitalists mean by "freedom"?
For "anarcho"-capitalists, the concept of freedom is limited to the idea
of "freedom from." For them, freedom means simply freedom from the
"initiation of force," or the "non-aggression against anyone's person and
property." [Murray Rothbard, _For a New Liberty_, p. 23] The notion that
real freedom must combine both freedom "to" *and* freedom "from" is
missing in their ideology, as is the social context of the so-called
freedom they defend.
Before starting, it is useful to quote Alan Haworth when he notes that
"[i]n fact, it is surprising how *little* close attention the concept
of freedom receives from libertarian writers. Once again _Anarchy,
State, and Utopia_ is a case in point. The word 'freedom' doesn't
even appear in the index. The word 'liberty' appears, but only to
refer the reader to the 'Wilt Chamberlain' passage. In a supposedly
'libertarian' work, this is more than surprising. It is truly
remarkable." [_Anti-Libertarianism_, p. 95]
Why this is the case can be seen from how the "anarcho"-capitalist
defines freedom.
In a right-libertarian or "anarcho"-capitalist society, freedom is
considered to be a product of property. As Murray Rothbard puts it, "the
libertarian defines the concept of 'freedom' or 'liberty'. . .[as a]
condition in which a person's ownership rights in his body and his
legitimate material property rights are not invaded, are not aggressed
against. . . . Freedom and unrestricted property rights go hand in hand."
[Op. Cit., p.41]
This definition has some problems, however. In such a society, one cannot
(legitimately) do anything with or on another's property if the owner
prohibits it. This means that an individual's only *guaranteed* freedom
is determined by the amount of property that he or she owns. This has the
consequence that someone with no property has no guaranteed freedom at
all (beyond, of course, the freedom not to be murdered or otherwise
harmed by the deliberate acts of others). In other words, a distribution
of property is a distribution of freedom, as the right-libertarians
themselves define it. It strikes anarchists as strange that an ideology
that claims to be committed to promoting freedom entails the conclusion
that some people should be more free than others. However, this is the
logical implication of their view, which raises a serious doubt as to
whether "anarcho"-capitalists are actually interested in freedom.
Looking at Rothbard's definition of "liberty" quoted above, we can
see that freedom is actually no longer considered to be a fundamental,
independent concept. Instead, freedom is a derivative of something
more fundamental, namely the "legitimate rights" of an individual,
which are identified as property rights. In other words, given that
"anarcho"-capitalists and right libertarians in general consider the
right to property as "absolute," it follows that freedom and property
become one and the same. This suggests an alternative name for the right
Libertarian, namely "Propertarian." And, needless to say, if we do not
accept the right-libertarians' view of what constitutes "legitimate"
"rights," then their claim to be defenders of liberty is weak.
Another important implication of this "liberty as property" concept is
that it produces a strangely alienated concept of freedom. Liberty, as
we noted, is no longer considered absolute, but a derivative of property
-- which has the important consequence that you can "sell" your liberty
and still be considered free by the ideology. This concept of liberty
(namely "liberty as property") is usually termed "self-ownership." But,
to state the obvious, I do not "own" myself, as if were an object somehow
separable from my subjectivity -- I *am* myself. However, the concept of
"self-ownership" is handy for justifying various forms of domination and
oppression -- for by agreeing (usually under the force of circumstances,
we must note) to certain contracts, an individual can "sell" (or rent out)
themselves to others (for example, when workers sell their labour power to
capitalists on the "free market"). In effect, "self-ownership" becomes the
means of justifying treating people as objects -- ironically, the very thing
the concept was created to stop! As L. Susan Brown notes, "[a]t the moment
an individual 'sells' labour power to another, he/she loses self-determination
and instead is treated as a subjectless instrument for the fulfilment of
another's will." [_The Politics of Individualism_, p. 4]
Given that workers are paid to obey, you really have to wonder which planet
Murray Rothbard is on when he argues that a person's "labour service is
alienable, but his *will* is not" and that he [sic!] "cannot alienate his
*will*, more particularly his control over his own mind and body." [_The
Ethics of Liberty_, p. 40, p. 135] He contrasts private property and
self-ownership by arguing that "[a]ll physical property owned by a person
is alienable . . . I can give away or sell to another person my shoes, my
house, my car, my money, etc. But there are certain vital things which, in
natural fact and in the nature of man, are *in*alienable . . . [his] will
and control over his own person are inalienable." [Op. Cit., pp. 134-5]
But "labour services" are unlike the private possessions Rothbard lists
as being alienable. As we argued in section B.1 ("Why do anarchists oppose
hierarchy") a person's "labour services" and "will" cannot be divided -- if
you sell your labour services, you also have to give control of your body
and mind to another person! If a worker does not obey the commands of her
employer, she is fired. That Rothbard denies this indicates a total lack
of common-sense. Perhaps Rothbard will argue that as the worker can quit at
any time she does not alienate their will (this seems to be his case against
slave contracts -- see section F.2.6). But this ignores the fact that between
the signing and breaking of the contract and during work hours (and perhaps
outside work hours, if the boss has mandatory drug testing or will fire
workers who attend union or anarchist meetings or those who have an
"unnatural" sexuality and so on) the worker *does* alienate his will
and body. In the words of Rudolf Rocker, "under the realities of the
capitalist economic form . . . there can be no talk of a 'right over one's
own person,' for that ends when one is compelled to submit to the economic
dictation of another if he does not want to starve." [_Anarcho-Syndicalism_,
p. 17]
Ironically, the rights of property (which are said to flow from
an individual's self-ownership of themselves) becomes the means, under
capitalism, by which self-ownership of non-property owners is denied. The
foundational right (self-ownership) becomes denied by the derivative right
(ownership of things). Under capitalism, a lack of property can be just
as oppressive as a lack of legal rights because of the relationships of
domination and subjection this situation creates.
So Rothbard's argument (as well as being contradictory) misses the point
(and the reality of capitalism). Yes, *if* we define freedom as "the absence
of coercion" then the idea that wage labour does not restrict liberty is
unavoidable, but such a definition is useless. This is because it hides
structures of power and relations of domination and subordination. As Carole
Pateman argues, "the contract in which the worker allegedly sells his labour
power is a contract in which, since he cannot be separated from his
capacities, he sells command over the use of his body and himself. . .
To sell command over the use of oneself for a specified period . . .
is to be an unfree labourer." [_The Sexual Contract_, p. 151]
In other words, contracts about property in the person inevitably create
subordination. "Anarcho"-capitalism defines this source of unfreedom away,
but it still exists and has a major impact on people's liberty. Therefore
freedom is better described as "self-government" or "self-management" --
to be able to govern ones own actions (if alone) or to participate in the
determination of join activity (if part of a group). Freedom, to put it
another way, is not an abstract legal concept, but the vital concrete
possibility for every human being to bring to full development all their
powers, capacities, and talents which nature has endowed them. A key
aspect of this is to govern one own actions when within associations
(self-management). If we look at freedom this way, we see that coercion
is condemned but so is hierarchy (and so is capitalism for during working
hours, people are not free to make their own plans and have a say in what
affects them. They are order takers, *not* free individuals).
It is because anarchists have recognised the authoritarian nature of
capitalist firms that they have opposed wage labour and capitalist
property rights along with the state. They have desired to replace
institutions structured by subordination with institutions constituted
by free relationships (based, in other words, on self-management) in
*all* areas of life, including economic organisations. Hence Proudhon's
argument that the "workmen's associations . . . are full of hope both as a
protest against the wage system, and as an affirmation of *reciprocity*"
and that their importance lies "in their denial of the rule of capitalists,
money lenders and governments." [_The General Idea of the Revolution_,
pp. 98-99]
Unlike anarchists, the "anarcho"-capitalist account of freedom allows an
individual's freedom to be rented out to another while maintaining that the
person is still free. It may seem strange that an ideology proclaiming its
support for liberty sees nothing wrong with the alienation and denial of
liberty but, in actual fact, it is unsurprising. After all, contract theory
is a "theoretical strategy that justifies subjection by presenting it as
freedom" and nothing more. Little wonder, then, that contract "creates
a relation of subordination" and not of freedom [Carole Pateman, Op. Cit.,
p. 39, p. 59]
Any attempt to build an ethical framework starting from the abstract
individual (as Rothbard does with his "legitimate rights" method) will
result in domination and oppression between people, *not* freedom.
Indeed, Rothbard provides an example of the dangers of idealist
philosophy that Bakunin warned about when he argued that while
"[m]aterialism denies free will and ends in the establishment of
liberty; idealism, in the name of human dignity, proclaims free
will, and on the ruins of every liberty founds authority." [_God
and the State_, p. 48] This is the case with "anarcho"-capitalism
can be seen from Rothbard's wholehearted support for wage labour
and the rules imposed by property owners on those who use, but do
not own, their property. Rothbard, basing himself on abstract
individualism, cannot help but justify authority over liberty.
Overall, we can see that the logic of the right-libertarian definition of
"freedom" ends up negating itself, because it results in the creation
and encouragement of *authority,* which is an *opposite* of freedom. For
example, as Ayn Rand points out, "man has to sustain his life by his own
effort, the man who has no right to the product of his effort has no means
to sustain his life. The man who produces while others dispose of his
product, is a slave." [_The Ayn Rand Lexicon: Objectivism from A to Z_,
pp. 388-9] But, as was shown in section C, capitalism is based on, as
Proudhon put it, workers working "for an entrepreneur who pays them and
keeps their products," and so is a form of *theft.* Thus, by "libertarian"
capitalism's *own* logic, capitalism is based not on freedom, but on
(wage) slavery; for interest, profit and rent are derived from a worker's
*unpaid* labour, i.e. "others dispose of his [sic] product."
And if a society *is* run on the wage- and profit-based system suggested
by the "anarcho" and "libertarian" capitalists, freedom becomes a
commodity. The more money you have, the more freedom you get. Then, since
money is only available to those who earn it, Libertarianism is based on
that classic saying "work makes one free!" (_Arbeit macht frei!_), which
the Nazis placed on the gates of their concentration camps. Of course,
since it is capitalism, this motto is somewhat different for those at the
top. In this case it is "other people's work makes one free!" -- a truism
in any society based on private property and the authority that stems from
it.
Thus it is debatable that a libertarian or "anarcho" capitalist society
would have less unfreedom or coercion in it than "actually existing
capitalism." In contrast to anarchism, "anarcho"-capitalism, with its
narrow definitions, restricts freedom to only a few aspects of social life
and ignores domination and authority beyond those aspects. As Peter Marshall
points out, the right-libertarian's "definition of freedom is entirely
negative. It calls for the absence of coercion but cannot guarantee the
positive freedom of individual autonomy and independence." [_Demanding
the Impossible_, p. 564] By confining freedom to such a narrow range of
human action, "anarcho"-capitalism is clearly *not* a form of anarchism.
Real anarchists support freedom in every aspect of an individual's life.
F.2.1 What are the implications of defining liberty in terms of (property)
rights?
The change from defending liberty to defending (property) rights has
important implications. For one thing, it allows right libertarians to
imply that private property is similar to a "fact of nature," and so to
conclude that the restrictions on freedom produced by it can be ignored.
This can be seen in Robert Nozick's argument that decisions are voluntary
if the limitations on one's actions are not caused by human action which
infringe the rights of others. Thus, in a "pure" capitalist society the
restrictions on freedom caused by wage slavery are not really restrictions
because the worker voluntarily consents to the contract. The circumstances
that drive a worker to make the contract are irrelevant because they are
created by people exercising their rights and not violating other peoples'
ones (see the section on "Voluntary Exchange" in _Anarchy, State, and
Utopia_, pp. 262-265).
This means that within a society "[w]hether a person's actions are voluntary
depends on what limits his alternatives. If facts of nature do so, the
actions are voluntary. (I may voluntarily walk to someplace I would prefer
to fly to unaided)." [_Anarchy, State, and Utopia_, p. 262] Similarly,
the results of voluntary actions and the transference of property can
be considered alongside the "facts of nature" (they are, after all, the
resultants of "natural rights"). This means that the circumstances created
by the existence and use of property can be considered, in essence, as
a "natural" fact and so the actions we take in response to these circumstances
are therefore "voluntary" and we are "free" (Nozick presents the example
[p. 263] of someone who marries the only available person -- all the more
attractive people having already chosen others -- as a case of an action
that is voluntary despite removal of all but the least attractive alternative
through the legitimate actions of others. Needless to say, the example can
be -- and is -- extended to workers on the labour market -- although, of
course, you do not starve to death if you decide not to marry).
However, such an argument fails to notice that property is different from
gravity or biology. Of course not being able to fly does not restrict
freedom. Neither does not being able to jump 10 feet into the air. But
unlike gravity (for example), private property has to be protected by laws
and the police. No one stops you from flying, but laws and police forces
must exist to ensure that capitalist property (and the owners' authority
over it) is respected. The claim, therefore, that private property in
general, and capitalism in particular, can be considered as "facts of
nature," like gravity, ignores an important fact: namely that the
people involved in an economy must accept the rules of its operation --
rules that, for example, allow contracts to be enforced; forbid using
another's property without his or her consent ("theft," trespass, copyright
infringement, etc.); prohibit "conspiracy," unlawful assembly, rioting,
and so on; and create monopolies through regulation, licensing, charters,
patents, etc. This means that capitalism has to include the mechanisms
for deterring property crimes as well as mechanisms for compensation and
punishment should such crimes be committed. In other words, capitalism
is in fact far more than "voluntary bilateral exchange," because it *must*
include the policing, arbitration, and legislating mechanisms required
to ensure its operation. Hence, like the state, the capitalist market
is a social institution, and the distributions of goods that result
from its operation are therefore the distributions sanctioned by a
capitalist society. As Benjamin Franklin pointed out, "Private property
. . . is a Creature of Society, and is subject to the Calls of that
Society."
Thus, to claim with Sir Isaiah Berlin (the main, modern, source of the
concepts of "negative" and "positive" freedom -- although we must add that
Berlin was not a right-Libertarian), that "[i]f my poverty were a kind of
disease, which prevented me from buying bread . . . as lameness prevents
me from running, this inability would not naturally be described as a
lack of freedom" totally misses the point ["Two Concepts of Liberty",
in _Four Essays on Liberty_, p. 123]. If you are lame, police officers
do not come round to stop you running. They do not have to. However, they
*are* required to protect property against the dispossessed and those who
reject capitalist property rights.
This means that by using such concepts as "negative" liberty and ignoring
the social nature of private property, right-libertarians are trying to
turn the discussion away from liberty toward "biology" and other facts
of nature. And conveniently, by placing property rights alongside gravity
and other natural laws, they also succeed in reducing debate even about
rights.
Of course, coercion and restriction of liberty *can* be resisted, unlike
"natural forces" like gravity. So if, as Berlin argues, "negative"
freedom means that you "lack political freedom only if you are prevented
from attaining a goal by human beings," then capitalism is indeed based on
such a lack, since property rights need to be enforced by human beings ("I
am prevented by others from doing what I could otherwise do"). After all,
as Proudhon long ago noted, the market is manmade, hence any constraint
it imposes is the coercion of man by man and so economic laws are not as
inevitable as natural ones [see Alan Ritter's _The Political Thought of
Pierre-Joseph Proudhon_, p. 122]. Or, to put it slightly differently,
capitalism requires coercion in order to work, and hence, is *not*
similar to a "fact of nature," regardless of Nozick's claims (i.e.
property rights have to be defined and enforced by human beings, although
the nature of the labour market resulting from capitalist property
definitions is such that direct coercion is usually not needed). This
implication is actually recognised by right-libertarians, because they
argue that the rights-framework of society should be set up in one way
rather than another. In other words, they recognise that society is not
independent of human interaction, and so can be changed.
Perhaps, as seems the case, the "anarcho"-capitalist or right-Libertarian
will claim that it is only *deliberate* acts which violate your (libertarian
defined) rights by other humans beings that cause unfreedom ("we define
freedom . . . as the *absence of invasion* by another man of an man's
person or property" [Rothbard, _The Ethics of Liberty_, p. 41]) and so
if no-one deliberately coerces you then you are free. In this way the
workings of the capitalist market can be placed alongside the "facts of
nature" and ignored as a source of unfreedom. However, a moments thought
shows that this is not the case. Both deliberate and non-deliberate acts
can leave individuals lacking freedom.
Let us assume (in an example paraphrased from Alan Haworth's excellent
book _Anti-Libertarianism_, p. 49) that someone kidnaps you and places you
down a deep (naturally formed) pit, miles from anyway, which is impossible
to climb up. No one would deny that you are unfree. Let us further assume
that another person walks by and accidentally falls into the pit with you.
According to right-libertarianism, while you are unfree (i.e. subject to
deliberate coercion) your fellow pit-dweller is perfectly free for they
have subject to the "facts of nature" and not human action (deliberate or
otherwise). Or, perhaps, they "voluntarily choose" to stay in the pit,
after all, it is "only" the "facts of nature" limiting their actions. But,
obviously, both of you are in *exactly the same position,* have *exactly
the same choices* and so are *equally* unfree! Thus a definition of
"liberty" that maintains that only deliberate acts of others -- for
example, coercion -- reduces freedom misses the point totally.
Why is this example important? Let us consider Murray Rothbard's analysis
of the situation after the abolition of serfdom in Russia and slavery in
America. He writes:
"The *bodies* of the oppressed were freed, but the property which they
had worked and eminently deserved to own, remained in the hands of their
former oppressors. With economic power thus remaining in their hands, the
former lords soon found themselves virtual masters once more of what
were now free tenants or farm labourers. The serfs and slaves had tasted
freedom, but had been cruelly derived of its fruits." [_The Ethics of
Liberty_, p. 74]
However, contrast this with Rothbard's claims that if market forces
("voluntary exchanges") result in the creation of free tenants or labourers
then these labourers and tenants are free (see, for example, _The Ethics of
Liberty_, pp. 221-2 on why "economic power" within capitalism does not
exist). But the labourers dispossessed by market forces are in *exactly*
the same situation as the former serfs and slaves. Rothbard sees the
obvious "economic power" in the later case, but denies it in the former.
But the *conditions* of the people in question are identical and it
is these conditions that horrify us. It is only his ideology that stops
Rothbard drawing the obvious conclusion -- identical conditions produce
identical social relationships and so if the formally "free" ex-serfs are
subject to "economic power" and "masters" then so are the formally "free"
labourers within capitalism! Both sets of workers may be formally free,
but their circumstances are such that they are "free" to "consent" to
sell their freedom to others (i.e. economic power produces relationships
of domination and unfreedom between formally free individuals).
Thus Rothbard's definition of liberty in terms of rights fails to provide
us with a realistic and viable understanding of freedom. Someone can be
a virtual slave while still having her rights non-violated (conversely,
someone can have their property rights violated and still be free; for
example, the child who enters your backyard without your permission to
get her ball hardly violates your liberty -- indeed, you would never know
that she has entered your property unless you happened to see her do it).
So the idea that freedom means non-aggression against person and their
legitimate material property justifies extensive *non-freedom* for the
working class. The non-violation of property rights does *not* imply freedom,
as Rothbard's discussion of the former slaves shows. Anyone who, along with
Rothbard, defines freedom "as the *absence of invasion* by another man of
any man's person or property" in a deeply inequality society is supporting,
and justifying, capitalist and landlord domination. As anarchists have
long realised, in an unequal society, a contractarian starting point
implies an absolutist conclusion.
Why is this? Simply because freedom is a result of *social* interaction,
not the product of some isolated, abstract individual (Rothbard uses the
model of Robinson Crusoe to construct his ideology). But as Bakunin
argued, "the freedom of the individual is a function of men in society,
a necessary consequence of the collective development of mankind." He
goes on to argue that "man in isolation can have no awareness of his
liberty . . . Liberty is therefore a feature not of isolation but of
interaction, not of exclusion but rather of connection." [_Selected
Writings_, p. 146, p. 147] Right Libertarians, by building their
definition of freedom from the isolated person, end up by supporting
restrictions of liberty due to a neglect of an adequate recognition
of the actual interdependence of human beings, of the fact what each
person does is effected by and affects others. People become aware of
their humanity (liberty) in society, not outside it. It is the *social
relationships* we take part in which determine how free we are and
any definition of freedom which builds upon an individual without
social ties is doomed to create relations of domination, not freedom,
between individuals -- as Rothbard's theory does (to put it another
way, voluntary association is a necessary, but not sufficient,
condition for freedom. Which is why anarchists have always stressed
the importance of equality -- see section F.3 for details).
So while facts of nature can restrict your options and freedom, it is the
circumstances within which they act and the options they limit that are
important (a person trapped at the bottom of a pit is unfree as the options
available are so few; the lame person is free because their available options
are extensive). In the same manner, the facts of society can and do restrict
your freedom because they are the products of human action and are defined
and protected by human institutions, it is the circumstances within which
individuals make their decisions and the social relationships these decisions
produce that are important (the worker driven by poverty to accept a slave
contract in a sweat shop is unfree because the circumstances he faces have
limited his options and the relations he accepts are based upon hierarchy;
the person who decides to join an anarchist commune is free because the
commune is non-hierarchical and she has the option of joining another
commune, working alone and so forth).
All in all, the right-Libertarian concept of freedom is lacking. For an
ideology that takes the name "Libertarianism" it is seems happy to ignore
actual liberty and instead concentrate on an abstract form of liberty which
ignores so many sources of unfreedom as to narrow the concept until it
becomes little more than a justification for authoritarianism. This can be
seen from right-Libertarian attitudes about private property and its effects
on liberty (as discussed in the next section).
F.2.2 How does private property affect freedom?
The right-libertarian does not address or even acknowledge that the
(absolute) right of private property may lead to extensive control by
property owners over those who use, but do not own, property (such as
workers and tenants). Thus a free-market capitalist system leads to a
very selective and class-based protection of "rights" and "freedoms."
For example, under capitalism, the "freedom" of employers inevitably
conflicts with the "freedom" of employees. When stockholders or their
managers exercise their "freedom of enterprise" to decide how their
company will operate, they violate their employee's right to decide
how their labouring capacities will be utilised. In other words, under
capitalism, the "property rights" of employers will conflict with and
restrict the "human right" of employees to manage themselves. Capitalism
allows the right of self-management only to the few, not to all. Or,
alternatively, capitalism does not recognise certain human rights as
*universal* which anarchism does.
This can be seen from Austrian Economist W. Duncan Reekie's defence of
wage labour. While referring to "intra-firm labour markets" as "hierarchies",
Reekie (in his best *ex cathedra* tone) states that "[t]here is nothing
authoritarian, dictatorial or exploitative in the relationship. Employees
order employers to pay them amounts specified in the hiring contract just
as much as employers order employees to abide by the terms of the contract."
[_Markets, Entrepreneurs and Liberty_, p. 136, p. 137]. Given that "the
terms of contract" involve the worker agreeing to obey the employers orders
and that they will be fired if they do not, its pretty clear that the
ordering that goes on in the "intra-firm labour market" is decidedly *one
way*. Bosses have the power, workers are paid to obey. And this begs the
question, *if* the employment contract creates a free worker, why must
she abandon her liberty during work hours?
Reekie actually recognises this lack of freedom in a "round about" way
when he notes that "employees in a firm at any level in the hierarchy can
exercise an entrepreneurial role. The area within which that role can be
carried out increases the more authority the employee has." [Op. Cit.,
p. 142] Which means workers *are* subject to control from above which
restricts the activities they are allowed to do and so they are *not*
free to act, make decisions, participate in the plans of the organisation,
to create the future and so forth within working hours. And it is strange
that while recognising the firm as a hierarchy, Reekie tries to deny that
it is authoritarian or dictatorial -- as if you could have a
hierarchy without authoritarian structures or an unelected person in
authority who is not a dictator. Thus we have "free" workers within a
relationship distinctly *lacking* freedom (in the sense of self-government)
-- a strange paradox. Indeed, if your personal life were as closely
monitored and regulated as the work life of millions of people across
the world, you would rightly consider it oppression.
Perhaps he (like most right-libertarians) will maintain that workers
voluntarily agree ("consent") to be subject to the bosses dictatorship (he
writes that "each will only enter into the contractual agreement known as
a firm if each believes he will be better off thereby. The firm is simply
another example of mutually beneficial exchange" [Op. Cit., p. 137]).
However, this does not stop the relationship being authoritarian or
dictatorial (and so exploitative as it is *highly* unlikely that those
at the top will not abuse their power). And as we argue further in the
next section (and also see sections B.4, F.3.1 and F.10.2), in a capitalist
society workers have the option of finding a job or facing abject poverty
and/or starvation.
Little wonder, then, that people "voluntarily" sell their labour and
"consent" to authoritarian structures! They have little option to do
otherwise. So, *within* the labour market, workers *can* and *do* seek
out the best working conditions possible, but that does not mean that
the final contract agreed is "freely" accepted and not due to the
force of circumstances, that both parties have equal bargaining power
when drawing up the contract or that the freedom of both parties is
ensured. Which means to argue (as many right-libertarians do) that
freedom cannot be restricted by wage labour because people enter
into relationships they consider will lead to improvements over their
initial situation totally misses the points. As the initial situation
is not considered relevant, their argument fails. After all, agreeing
to work in a sweatshop 14 hours a day *is* an improvement over starving
to death -- but it does not mean that those who so agree are free
when working there or actually *want* to be there. They are not and
it is the circumstances, created and enforced by the law, that have
ensured that they "consent" to such a regime (given the chance, they
would desire to *change* that regime but cannot as this would violate
their bosses property rights and they would be repressed for trying).
So the right-wing "libertarian" right is interested only in a narrow
concept of freedom (rather than in "freedom" or "liberty" as such).
This can be seen in the argument of Ayn Rand (a leading ideologue of
"libertarian" capitalism) that "*Freedom*, in a political context, means
freedom from government coercion. It does *not* mean freedom from the
landlord, or freedom from the employer, or freedom from the laws of nature
which do not provide men with automatic prosperity. It means freedom from
the coercive power of the state -- and nothing else!" [_Capitalism: The
Unknown Ideal_, p. 192] By arguing in this way, right libertarians ignore
the vast number of authoritarian social relationships that exist in
capitalist society and, as Rand does here, imply that these social
relationships are like "the laws of nature." However, if one looks at the
world without prejudice but with an eye to maximising freedom, the major
coercive institution is seen to be not the state but capitalist social
relationships (as indicated in section B.4).
The right "libertarian," then, far from being a defender of freedom, is
in fact a keen defender of certain forms of authority and domination. As
Peter Kropotkin noted, the "modern Individualism initiated by Herbert
Spencer is, like the critical theory of Proudhon, a powerful indictment
against the dangers and wrongs of government, but its practical solution
of the social problem is miserable -- so miserable as to lead us to
inquire if the talk of 'No force' be merely an excuse for supporting
landlord and capitalist domination." [_Act For Yourselves_, p. 98]
To defend the "freedom" of property owners is to defend authority and
privilege -- in other words, statism. So, in considering the concept of
liberty as "freedom from," it is clear that by defending private property
(as opposed to possession) the "anarcho"-capitalist is defending the power
and authority of property owners to govern those who use "their" property.
And also, we must note, defending all the petty tyrannies that make the
work lives of so many people frustrating, stressful and unrewarding.
However, anarchism, by definition, is in favour of organisations and social
relationships which are non-hierarchical and non-authoritarian. Otherwise,
some people are more free than others. Failing to attack hierarchy leads
to massive contradiction. For example, since the British Army is a volunteer
one, it is an "anarchist" organisation. NOT! (see next section for a
discussion on why the "anarcho"-capitalism concept of freedom also allows
the state to appear "libertarian").
In other words, "full capitalist property rights" do not protect freedom,
in fact they actively deny it. But this lack of freedom is only inevitable
if we accept capitalist private property rights. If we reject them, we
can try and create a world based on freedom in all aspects of life,
rather than just in a few.
F.2.3 Can "anarcho"-capitalist theory justify the state?
Ironically enough, "anarcho"-capitalist ideology actually allows the state
to be justified along with capitalist hierarchy. This is because the reason
why capitalist authority is acceptable to the "anarcho"-capitalist is
because it is "voluntary" -- no one forces the worker to join or remain
within a specific company (force of circumstances are irrelevant in this
viewpoint). Thus capitalist domination is not really domination at all. But
the same can be said of all democratic states as well. Few such states bar
exit for its citizens -- they are free to leave at any time and join any
other state that will have them (exactly as employees can with companies).
Of course there *are* differences between the two kinds of authority --
anarchists do not deny that -- but the similarities are all too clear.
The "anarcho"-capitalist could argue that changing jobs is easier than
changing states and, sometimes, this is correct -- but not always. Yes,
changing states does require the moving of home and possessions over
great distances but so can changing job (indeed, if a worker has
to move half-way across a country or even the world to get a job
"anarcho"-capitalists would celebrate this as an example of the
benefits of a "flexible" labour market). Yes, states often conscript
citizens and send them into dangerous situations but bosses often force
their employees to accept dangerous working environments on pain of
firing. Yes, many states do restrict freedom of association and speech,
but so do bosses. Yes, states tax their citizens but landlords and
companies only let others use their property if they get money in
return (i.e. rent or profits). Indeed, if the employee or tenant does not
provide the employer or landlord with enough profits, they will quickly
be shown the door. Of course employees can start their own companies
but citizens can start their own state if they convince an existing state
(the owner of a set of resources) to sell/give land to them. Setting up
a company also requires existing owners to sell/give resources to those
who need them. Of course, in a democratic state citizens can influence
the nature of laws and orders they obey. In a capitalist company, this
is not the case.
This means that, logically, "anarcho"-capitalism must consider a series
of freely exitable states as "anarchist" and not a source of domination.
If consent (not leaving) is what is required to make capitalist domination
not domination then the same can be said of statist domination. Stephen
L. Newman makes the same point:
"When the price of exercising one's freedom is terribly high, what practical
difference is there between the commands of the state and those issued
by one's employer? . . . Though admittedly the circumstances are not
identical, telling disgruntled empowers that they are always free to leave
their jobs seems no different in principle from telling political dissidents
that they are free to emigrate." [_Liberalism at Wit's End_, pp. 45-46]
Murray Rothbard, in his own way, agrees:
"*If* the State may be said too properly *own* its territory, then it is
proper for it to make rules for everyone who presumes to live in that
area. It can legitimately seize or control private property because there
*is* no private property in its area, because it really owns the entire
land surface. *So long* as the State permits its subjects to leave its
territory, then, it can be said to act as does any other owner who
sets down rules for people living on his property." [_The Ethics of
Liberty_, p. 170]
Rothbard's argues that this is *not* the case simply because the state
did not acquire its property in a "just" manner and that it claims
rights over virgin land (both of which violates Rothbard's "homesteading"
theory of property -- see section F.4.1 for details and a critique).
Rothbard argues that this defence of statism (the state as property owner)
is unrealistic and ahistoric, but his account of the origins of property
is equally unrealistic and ahistoric and that does not stop him supporting
capitalism. People in glass houses should not throw stones!
Thus he claims that the state is evil and its claims to authority/power
false simply because it acquired the resources it claims to own "unjustly"
-- for example, by violence and coercion (see _The Ethics of Liberty_,
pp. 170-1, for Rothbard's attempt to explain why the state should not be
considered as the owner of land). And even *if* the state *was* the owner
of its territory, it cannot appropriate virgin land (although, as he
notes elsewhere, the "vast" US frontier no longer exists "and there
is no point crying over the fact" [Op. Cit., p. 240]).
So what makes hierarchy legitimate for Rothbard is whether the property
it derives from was acquired justly or unjustly. Which leads us to a
few *very* important points.
Firstly, Rothbard is explicitly acknowledging the similarities between
statism and capitalism. He is arguing that *if* the state had developed
in a "just" way, then it is perfectly justifiable in governing ("set[ting]
down rules") those who "consent" to live on its territory in *exactly*
the same why a property owner does. In other words, private property
can be considered as a "justly" created state! These similarities between
property and statism have long been recognised by anarchists and that
is why we reject private property along with the state (Proudhon did,
after all, note that "property is despotism" and well as "theft"). But,
according to Rothbard, something can look like a state (i.e. be a
monopoly of decision making over an area) and act like a state (i.e.
set down rules for people, govern them, impose a monopoly of force)
but not be a state. But if it looks like a duck and sounds like a duck,
it is a duck. Claiming that the origins of the thing are what counts is
irrelevant -- for example, a cloned duck is just as much a duck as
a naturally born one. A statist organisation is authoritarian whether
it comes from "just" or "unjust" origins. Does transforming the
ownership of the land from states to capitalists *really* make the
relations of domination created by the dispossession of the many
less authoritarian and unfree? Of course not.
Secondly, much property in "actually existing" capitalism is the product
(directly or indirectly) of state laws and violence ("the emergence of
both agrarian and industrial capitalism in Britain [and elsewhere, we
must add] . . . could not have got off the ground without resources
to state violence -- legal or otherwise" [Brian Morris, _Ecology &
Anarchism_, p. 190]). If state claims of ownership are invalid due to
their history, then so are many others (particularly those which claim
to own land). As the initial creation was illegitimate, so are the
transactions which have sprung from it. Thus if state claims of property
rights are invalid, so are most (if not all) capitalist claims. If the
laws of the state are illegitimate, so are the rules of the capitalist.
If taxation is illegitimate, then so are rent, interest and profit.
Rothbard's "historical" argument against the state can also be applied
to private property and if the one is unjustified, then so is the other.
Thirdly, *if* the state had evolved "justly" then Rothbard would actually
have nothing against it! A strange position for an anarchist to take.
Logically this means that if a system of corporate states evolved
from the workings of the capitalist market then the "anarcho"-capitalist
would have nothing against it. This can be seen from "anarcho"-capitalist
support for company towns even though they have correctly been described
as "industrial feudalism" (see section F.6 for more on this).
Fourthly, Rothbard's argument implies that similar circumstances producing
similar relationships of domination and unfreedom are somehow different
if they are created by "just" and "unjust" means. Rothbard claims that
because the property is "justly" acquired it means the authority a
capitalist over his employees is totally different from that of a state
over its subject. But such a claim is false -- both the subject/citizen
and the employee are in a similar relationship of domination and
authoritarianism. As we argued in section F.2.2, how a person got
into a situation is irrelevant when considering how free they are.
Thus, the person who "consents" to be governed by another because all
available resources are privately owned is in exactly the same situation
as a person who has to join a state because all available resources are
owned by one state or another. Both are unfree and are part of authoritarian
relationships based upon domination.
And, lastly, while "anarcho"-capitalism may be a "just" society, it is
definitely *not* a free one. It will be marked by extensive hierarchy,
unfreedom and government, but these restrictions of freedom will be of a
private nature. As Rothbard indicates, the property owner and the state
create/share the same authoritarian relationships. If statism is unfree,
then so is capitalism. And, we must add, how "just" is a system which
undermines liberty. Can "justice" ever be met in a society in which
one class has more power and freedom than another. If one party is in
an inferior position, then they have little choice but to agree to the
disadvantageous terms offered by the superior party (see section F.3.1).
In such a situation, a "just" outcome will be unlikely as any contract
agreed will be skewed to favour one side over the other.
The implications of these points are important. We can easily imagine
a situation within "anarcho"-capitalism where a few companies/people
start to buy up land and form company regions and towns. After all,
this *has* happened continually throughout capitalism. Thus a "natural"
process may develop where a few owners start to accumulate larger and
larger tracks of land "justly". Such a process does not need to result
in *one* company owning the world. It is likely that a few hundred,
perhaps a few thousand, could do so. But this is not a cause for
rejoicing -- after all the current "market" in "unjust" states also
has a few hundred competitors in it. And even if there is a large
multitude of property owners, the situation for the working class is
exactly the same as the citizen under current statism! Does the fact
that it is "justly" acquired property that faces the worker really
change the fact she must submit to the government and rules of another
to gain access to the means of life?
When faced with anarchist criticisms that *circumstances* force workers
to accept wage slavery the "anarcho"-capitalist claims that these are to
be considered as objective facts of nature and so wage labour is not
domination. However, the same can be said of states -- we are born into
a world where states claim to own all the available land. If states are
replaced by individuals or groups of individuals does this change the
essential nature of our dispossession? Of course not.
Rothbard argues that "[o]bviously, in a free society, Smith has
the ultimate decision-making power over his own just property, Jones
over his, etc." [Op. Cit., p. 173] and, equally obviously, this
ultimate-decision making power extends to those who *use,* but do
not own, such property. But how "free" is a free society where the
majority have to sell their liberty to another in order to live?
Rothbard (correctly) argues that the State "uses its monopoly of
force . . . to control, regulate, and coerce its hapless subjects.
Often it pushes its way into controlling the morality and the very
lives of its subjects." [Op. Cit., p. 171] However he fails to note
that employers do exactly the same thing to their employees. This,
from an anarchist perspective, is unsurprising, for (after all) the
employer *is* "the ultimate decision-making power over his just
property" just as the state is over its "unjust" property. That
similar forms of control and regulation develop is not a surprise
given the similar hierarchical relations in both structures.
That there is a choice in available states does not make statism
any less unjust and unfree. Similarly, just because we have a choice
between employers does not make wage labour any less unjust or unfree.
But trying to dismiss one form of domination as flowing from "just"
property while attacking the other because it flows from "unjust"
property is not seeing the wood for the trees. If one reduces liberty,
so does the other. Whether the situation we are in resulted from "just"
or "unjust" steps is irrelevant to the restrictions of freedom we face
because of them (and as we argue in section F.2.5, "unjust" situations
can easily flow from "just" steps).
The "anarcho"-capitalist insistence that the voluntary nature of an
association determines whether it is anarchistic is deeply flawed -- so
flawed in fact that states and state-like structures (such as capitalist
firms) can be considered anarchistic! In contrast, anarchists think that
the hierarchical nature of the associations we join is equally as
important as its voluntary nature when determining whether it is
anarchistic or statist. However this option is not available to the
"anarcho"-capitalist as it logically entails that capitalist companies
are to be opposed along with the state as sources of domination,
oppression and exploitation.
F.2.4 But surely transactions on the market are voluntary?
Of course, it is usually maintained by "anarcho"-capitalists that no-one
puts a gun to a worker's head to join a specific company. Yes, indeed,
this is true -- workers can apply for any job they like. But the point
is that the vast majority cannot avoid having to sell their liberty to
others (self-employment and co-operatives *are* an option, but they
account for less than 10% of the working population and are unlikely
to spread due to the nature of capitalist market forces -- see section
J.5.11 and J.5.12 for details). And as Bob Black pointed out, right
libertarians argue that "'one can at least change jobs.' but you can't
avoid having a job -- just as under statism one can at least change
nationalities but you can't avoid subjection to one nation-state
or another. But freedom means more than the right to change masters."
[_The Libertarian as Conservative_]
So why do workers agree to join a company? Because circumstances force
them to do so - circumstances created, we must note, by *human* actions
and institutions and not some abstract "fact of nature." And if the world
that humans create by their activity is detrimental to what we should
value most (individual liberty and individuality) then we should consider
how to *change that world for the better.* Thus "circumstances" (current
"objective reality") is a valid source of unfreedom and for human
investigation and creative activity -- regardless of the claims of
right-Libertarians.
Let us look at the circumstances created by capitalism. Capitalism is
marked by a class of dispossessed labourers who have nothing to sell by
their labour. They are legally barred from access to the means of life
and so have little option but to take part in the labour market. As
Alexander Berkman put it:
"The law says your employer does not sell anything from you, because it
is done with your consent. You have agreed to work for your boss for
certain pay, he to have all that you produce . . .
"But did you really consent?
"When the highway man holds his gun to your head, you turn your valuables
over to him. You 'consent' all right, but you do so because you cannot
help yourself, because you are *compelled* by his gun.
"Are you not *compelled* to work for an employer? Your need compels you
just as the highwayman's gun. You must live. . . You can't work for
yourself . . .The factories, machinery, and tools belong to the
employing class, so you *must* hire yourself out to that class in order
to work and live. Whatever you work at, whoever your employer may be, it
is always comes to the same: you must work *for him*. You can't help
yourself. You are *compelled*." [_What is Communist Anarchism?_, p. 9]
Due to this class monopoly over the means of life, workers (usually) are
at a disadvantage in terms of bargaining power -- there are more workers
than jobs (see section B.4.3 and F.10.2 for a discussion why this is
the normal situation on the labour market).
As was indicated in section B.4 (How does capitalism affect liberty?),
within capitalism there is no equality between owners and the dispossessed,
and so property is a source of *power.* To claim that this power should be
"left alone" or is "fair" is "to the anarchists. . . preposterous. Once a
State has been established, and most of the country's capital privatised,
the threat of physical force is no longer necessary to coerce workers
into accepting jobs, even with low pay and poor conditions. To use Ayn
Rand's term, 'initial force' has *already taken place,* by those who now
have capital against those who do not. . . . In other words, if a thief
died and willed his 'ill-gotten gain' to his children, would the children
have a right to the stolen property? Not legally. So if 'property is theft,'
to borrow Proudhon's quip, and the fruit of exploited labour is simply legal
theft, then the only factor giving the children of a deceased capitalist a
right to inherit the 'booty' is the law, the State. As Bakunin wrote,
'Ghosts should not rule and oppress this world, which belongs only to
the living'" [Jeff Draughn, _Between Anarchism and Libertarianism_].
Or, in other words, right-Libertarianism fails to "meet the charge that
normal operations of the market systematically places an entire class of
persons (wage earners) in circumstances that compel them to accept the
terms and conditions of labour dictated by those who offer work. While
it is true that individuals are formally free to seek better jobs or
withhold their labour in the hope of receiving higher wages, in the end
their position in the market works against them; they cannot live if they
do not find employment. When circumstances regularly bestow a relative
disadvantage on one class of persons in their dealings with another class,
members of the advantaged class have little need of coercive measures to
get what they want." [Stephen L. Newman, _Liberalism at Wit's End_,
p. 130]
To ignore the circumstances which drive people to seek out the most
"beneficial exchange" is to blind yourself to the power relationships
inherent within capitalism -- power relationships created by the
unequal bargaining power of the parties involved (also see section
F.3.1). And to argue that "consent" ensures freedom is false; if you
are "consenting" to be join a dictatorial organisation, you "consent"
*not* to be free (and to paraphrase Rousseau, a person who renounces
freedom renounces being human).
Which is why circumstances are important -- if someone truly wants to
join an authoritarian organisation, then so be it. It is their life. But
if circumstances ensure their "consent" then they are not free. The
danger is, of course, that people become *accustomed* to authoritarian
relationships and end up viewing them as forms of freedom. This can be
seen from the state, which the vast majority support and "consent" to.
And this also applies to wage labour, which many workers today accept
as a "necessary evil" (like the state) but, as we indicate in section
F.8.6, the first wave of workers viewed with horror as a form of (wage)
slavery and did all that they could to avoid. In such situations all
we can do is argue with them and convince them that certain forms of
organisations (such as the state and capitalist firms) are an evil
and urge them to change society to ensure their extinction.
So due to this lack of appreciation of circumstances (and the fact that
people become accustomed to certain ways of life) "anarcho"-capitalism
actively supports structures that restrict freedom for the many. And how
is "anarcho"-capitalism *anarchist* if it generates extensive amounts of
archy? It is for this reason that all anarchists support self-management
within free association -- that way we maximise freedom both inside *and*
outside organisations. But only stressing freedom outside organisations,
"anarcho"-capitalism ends up denying freedom as such (after all, we
spend most of our waking hours at work). If "anarcho"-capitalists
*really* desired freedom, they would reject capitalism and become
anarchists -- only in a libertarian socialist society would agreements
to become a wage worker be truly voluntary as they would not be driven
by circumstances to sell their liberty.
This means that while right-Libertarianism appears to make "choice" an ideal
(which sounds good, liberating and positive) in practice it has become a
"dismal politics," a politics of choice where most of the choices are bad.
And, to state the obvious, the choices we are "free" to make are shaped by
the differences in wealth and power in society (see section F.3.1) as
well as such things as "isolation paradoxes" (see section B.6) and the
laws and other human institutions that exist. If we ignore the context
within which people make their choices then we glorify abstract processes
at the expense of real people. And, as importantly, we must add that many
of the choices we make under capitalism (shaped as they are by the
circumstances within which they are made), such as employment contracts,
result in our "choice" being narrowed to "love it or leave it" in the
organisations we create/join as a result of these "free" choices.
This ideological blind spot flows from the "anarcho"-capitalist definition
of "freedom" as "absence of coercion" -- as workers "freely consent" to
joining a specific workplace, their freedom is unrestricted. But to
defend *only* "freedom from" in a capitalist society means to defend
the power and authority of the few against the attempts of the many to
claim their freedom and rights. To requote Emma Goldman, "'Rugged
individualism' has meant all the 'individualism' for the masters . . . ,
in whose name political tyranny and social oppression are defended and
held up as virtues' while every aspiration and attempt of man to gain
freedom . . . is denounced as . . . evil in the name of that same
individualism." [_Red Emma Speaks_, p. 112]
In other words, its all fine and well saying (as right-libertarians do)
that you aim to abolish force from human relationships but if you support
an economic system which creates hierarchy (and so domination and oppression)
by its very workings, "defensive" force will always be required to maintain
and enforce that domination. Moreover, if one class has extensive power
over another due to the systematic (and normal) workings of the market,
any force used to defend that power is *automatically* "defensive". Thus
to argue against the use of force and ignore the power relationships that
exist within and shape a society (and so also shape the individuals within
it) is to defend and justify capitalist and landlord domination and
denounce any attempts to resist that domination as "initiation of
force."
Anarchists, in contrast, oppose *hierarchy* (and so domination
within relationships -- bar S&M personal relationships, which are a
totally different thing altogether; they are truly voluntary and they
also do not attempt to hide the power relationships involved by using
economic jargon). This opposition, while also including opposition to
the use of force against equals (for example, anarchists are opposed
to forcing workers and peasants to join a self-managed commune or
syndicate), also includes support for the attempts of those subject
to domination to end it (for example, workers striking for union
recognition are not "initiating force", they are fighting for their
freedom).
In other words, apparently "voluntary" agreements can and do limit
freedom and so the circumstances that drive people into them *must* be
considered when deciding whether any such limitation is valid. By
ignoring circumstances, "anarcho"-capitalism ends up by failing to
deliver what it promises -- a society of free individuals -- and
instead presents us with a society of masters and servants. The question
is, what do we feel moved to insist that people enjoy? Formal, abstract
(bourgeois) self-ownership ("freedom") or a more substantive control
over one's life (i.e. autonomy)?
F.2.5 But surely circumstances are the result of liberty and so cannot
be objected to?
It is often argued by right-libertarians that the circumstances we face
within capitalism are the result of individual decisions (i.e. individual
liberty) and so we must accept them as the expressions of these acts (the
most famous example of this argument is in Nozick's _Anarchy, State, and
Utopia_ pp. 161-163 where he maintains that "liberty upsets patterns").
This is because whatever situation evolves from a just situation by just
(i.e. non-coercive steps) is also (by definition) just.
However, it is not apparent that adding just steps to a just situation
will result in a just society. We will illustrate with a couple of
banal examples. If you add chemicals which are non-combustible together
you can create a new, combustible, chemical (i.e. X becomes not-X by
adding new X to it). Similarly, if you have an odd number and add another
odd number to it, it becomes even (again, X becomes not-X by adding a new
X to it). So it *is* very possible to go from an just state to an unjust
state by just step (and it is possible to remain in an unjust state by
just acts; for example if we tried to implement "anarcho"-capitalism
on the existing -- unjustly created -- situation of "actually existing"
capitalism it would be like having an odd number and adding even numbers
to it). In other words, the outcome of "just" steps can increase inequality
within society and so ensure that some acquire an unacceptable amount of
power over others, via their control over resources. Such an inequality of
power would create an "unjust" situation where the major are free to
sell their liberty to others due to inequality in power and resources
on the "free" market.
Ignoring this objection, we could argue (as many "anarcho"-capitalists
and right-libertarians do) that the unforeseen results of human action
are fine unless we assume that these human actions are in themselves bad
(i.e. that individual choice is evil).
Such an argument is false for three reasons.
First, when we make our choices the aggregate impact of these choices are
unknown to us -- and not on offer when we make our choices. Thus we cannot
be said to "choose" these outcomes, outcomes which we may consider deeply
undesirable, and so the fact that these outcomes are the result of
individual choices is besides the point (if we knew the outcome
we could refrain from doing them). The choices themselves, therefore,
do not validate the outcome as the outcome was not part of the choices
when they where made (i.e. the means do not justify the ends). In other
words, private acts often have important public consequences (and
"bilateral exchanges" often involve externalities for third parties).
Secondly, if the outcome of individual choices is to deny or restrict
individual choice on a wider scale at a later stage, then we are hardly
arguing that individual choice is a bad thing. We want to arrange it so
that the decisions we make now do not result in them restricting our
ability to make choices in important areas of life at a latter stage.
Which means we are in favour of individual choices and so liberty, not
against them. Thirdly, the unforeseen or unplanned results of individual
actions are not necessarily a good thing. If the aggregate outcome of
individual choices harms individuals then we have a right to modify the
circumstances within which choices are made and/or the aggregate results
of these choices.
An example will show what we mean (again drawn from Haworth's excellent
_Anti-Libertarianism_, p. 35). Millions of people across the world bought
deodorants which caused a hole to occur in the ozone layer surrounding
the Earth. The resultant of these acts created a situation in which
individuals and the eco-system they inhabited were in great danger.
The actual acts themselves were by no means wrong, but the aggregate
impact was. A similar argument can apply to any form of pollution.
Now, unless the right-Libertarian argues that skin cancer or other
forms of pollution related illness are fine, its clear that the
resultant of individual acts can be harmful to individuals.
The right-Libertarian could argue that pollution is an "initiation of
force" against an individual's property-rights in their person and so
individuals can sue the polluters. But hierarchy also harms the individual
(see section B.1) -- and so can be considered as an infringement of
their "property-rights" (i.e. liberty, to get away from the insane
property fetish of right-Libertarianism). The loss of autonomy can be
just as harmful to an individual as lung cancer although very different
in form. And the differences in wealth resulting from hierarchy is
well known to have serious impacts on life-span and health.
As noted in section F.2.1, the market is just as man-made as pollution. This
means that the "circumstances" we face are due to aggregate of millions of
individual acts and these acts occur within a specific framework of rights,
institutions and ethics. Anarchists think that a transformation of our
society and its rights and ideals is required so that the resultant of
individual choices does not have the ironic effect of limiting individual
choice (freedom) in many important ways (such as in work, for example).
In other words, the *circumstances* created by capitalist rights and
institutions requires a *transformation* of these rights and institutions
in such a way as to maximise individual choice for all -- namely, to abolish
these rights and replace them with new ones (for example, replace property
rights with use rights). Thus Nozick's claims that "Z does choose voluntarily
if the other individuals A through Y each acted voluntarily and within their
rights" [Op. Cit., p. 263] misses the point -- it is these rights that are
in question (given that Nozick *assumes* these rights then his whole thesis
is begging the question).
And we must add (before anyone points it out) that, yes, we are aware that
many decisions will unavoidably limit current and future choices. For
example, the decision to build a factory on a green-belt area will make
it impossible for people to walk through the woods that are no longer
there. But such "limitations" (if they can be called that) of choice are
different from the limitations we are highlighting here, namely the lose
of freedom that accompanies the circumstances created via exchange in the
market. The human actions which build the factory modify reality but
do not generate social relationships of domination between people in
so doing. The human actions of market exchange, in contrast, modify the
relative strengths of everyone in society and so has a distinct impact
on the social relationships we "voluntarily" agree to create. Or, to put
it another way, the decision to build on the green-belt site does "limit"
choice in the abstract but it does *not* limit choice in the kind of
relationships we form with other people nor create authoritarian
relationships between people due to inequality influencing the content
of the associations we form. However, the profits produced from using the
factory increases inequality (and so market/economic power) and so weakens
the position of the working class in respect to the capitalist class within
society. This increased inequality will be reflected in the "free"
contracts and working regimes that are created, with the weaker "trader"
having to compromise far more than before.
So, to try and defend wage slavery and other forms of hierarchy by arguing
that "circumstances" are created by individual liberty runs aground on its
own logic. If the circumstances created by individual liberty results in
pollution then the right-Libertarian will be the first to seek to change
those circumstances. They recognise that the right to pollute while producing
is secondary to our right to be healthy. Similarly, if the circumstances
created by individual liberty results in hierarchy (pollution of the mind
and our relationships with others as opposed to the body, although it
affects that to) then we are entitled to change these circumstances too
and the means by which we get there (namely the institutional and rights
framework of society). Our right to liberty is more important than the
rights of property -- sadly, the right-Libertarian refuses to recognise
this.
F.2.6 Do Libertarian-capitalists support slavery?
Yes. It may come as a surprise to many people, but right-Libertarianism is
one of the few political theories that justifies slavery. For example, Robert
Nozick asks whether "a free system would allow [the individual] to sell
himself into slavery" and he answers "I believe that it would." [_Anarchy,
State and Utopia_, p. 371] While some right-Libertarians do not agree with
Nozick, there is no logical basis in their ideology for such disagreement.
The logic is simple, you cannot really own something unless you can sell
it. Self-ownership is one of the cornerstones of laissez-faire capitalist
ideology. Therefore, since you own yourself you can sell yourself.
(For Murray Rothbard's claims of the "unenforceability, in libertarian
theory, of voluntary slave contracts" see _The Ethics of Liberty_, pp.
134-135 -- of course, *other* libertarian theorists claim the exact
opposite so "libertarian theory" makes no such claims, but nevermind!
Essentially, his point revolves around the assertion that a person
"cannot, in nature, sell himself into slavery and have this sale enforced
- for this would mean that his future will over his own body was being
surrendered in advance" and that if a "labourer remains totally subservient
to his master's will voluntarily, he is not yet a slave since his submission
is voluntary." [p. 40] However, as we noted in section F.2, Rothbard
emphasis on quitting fails to recognise that actual denial of will and
control over ones own body that is explicit in wage labour. It is this
failure that pro-slave contract "libertarians" stress -- as we will
see, they consider the slave contract as an extended wage contract.
Moreover, a modern slave contract would likely take the form of a
"performance bond" [Op. Cit., p. 136] in which the slave agrees to
perform X years labour or pay their master substantial damages. The
threat of damages that enforces the contract and such a "contract"
Rothbard does agree is enforceable -- along with "conditional exchange"
[p. 141] which could be another way of creating slave contracts.)
The right-Libertarian J. Philmore argues there is a "fundamental contradiction"
in a modern liberal society for the state to prohibit slave contracts. Lets,
however, not do these arguers for slavery an injustice. They are arguing for
a "*civilised* form of contractual slavery" (our emphasis). [J. Philmore,
"The Libertarian Case for Slavery", _The Philosophical Forum_, xiv, 1982,
p. 55, p. 58] Such a "civilised" form of slavery could occur when an
individual would "agree" to sell themselves to themselves to another (as
when a starving worker would "agree" to become a slave in return for food).
In addition, the contract would be able to be broken under certain conditions
(perhaps in return for breaking the contract, the former slave would have
pay damages to his or her master for the labour their master would lose -
a sizeable amount no doubt and such a payment could result in debt slavery,
which is the most common form of "civilised" slavery. Such damages
may be agreed in the contract as a "performance bond" or "conditional
exchange").
So, right-Libertarians are talking about "civilised" slavery (or, in
other words, civil slavery) and not forced slavery.
We must stress that this is no academic debate. "Voluntary" slavery has
been a problem in many societies and still exists in many countries today
(particularly third world ones where bonded labour -- i.e. where debt is
used to enslave people -- is the most common form). With the rise of sweat
shops and child labour in many "developed" countries such as the USA,
"voluntary" slavery (perhaps via debt and bonded labour) may become
common in all parts of the world -- an ironic (if not surprising) result
of "freeing" the market and being indifferent to the actual freedom of
those within it.
And it is interesting to note that even Murray Rothbard is not against
the selling of humans. He argued that children are the property of their
parents. They can (bar actually murdering them by violence) do whatever
they please with them, even sell them on a "flourishing free child market."
[_The Ethics of Liberty_, p. 102] Combined with a whole hearted support
for child labour (after all, the child can leave its parents if it objects
to working for them) such a "free child market" could easily become a
"child slave market" -- with entrepreneurs making a healthy profit selling
infants to other entrepreneurs who could make profits from the toil of
"their" children (and such a process did occur in 19th century Britain).
Unsurprisingly, Rothbard ignores the possible nasty aspects of such a
market in human flesh (such as children being sold to work in factories,
homes and brothels). And, of course, such a market could see women
"specialising" in producing children for it (the use of child labour
during the Industrial Revolution actually made it economically sensible
for families to have more children) and, perhaps, gluts and scarcities
of babies due to changing market conditions. But this is besides the
point.
Of course, this theoretical justification for slavery at the heart of an
ideology calling itself "libertarianism" is hard for many right-Libertarians
to accept. Some of the "anarcho"-capitalist type argue that such contracts
would be very hard to enforce in their system of capitalism. This attempt
to get out of the contradiction fails simply because it ignores the nature
of the capitalist market. If there is a demand for slave contracts to be
enforced, then companies will develop to provide that "service" (and it would
be interesting to see how two "protection" firms, one defending slave contracts
and another not, could compromise and reach a peaceful agreement over whether
slave contracts were valid). Thus we could see a so-called "anarchist" or
"free" society producing companies whose specific purpose was to hunt down
escaped slaves (i.e. individuals in slave contracts who have not paid
damages to their owners for freedom). Of course, perhaps Rothbard would
claim that such slave contracts would be "outlawed" under his "general
libertarian law code" but this is a denial of market "freedom". If slave
contracts *are* "banned" then surely this is paternalism, stopping
individuals from contracting out their "labour services" to whom and
however long they "desire". You cannot have it both ways.
So, ironically, an ideology proclaiming itself to support "liberty" ends
up justifying and defending slavery. Indeed, for the right-libertarian the
slave contract is an exemplification, not the denial, of the individual's
liberty! How is this possible? How can slavery be supported as an expression
of liberty? Simple, right-Libertarian support for slavery is a symptom of
a *deeper* authoritarianism, namely their uncritical acceptance of contract
theory. The central claim of contract theory is that contract is the means
to secure and enhance individual freedom. Slavery is the antithesis to freedom
and so, in theory, contract and slavery must be mutually exclusive. However,
as indicated above, some contract theorists (past and present) have included
slave contracts among legitimate contracts. This suggests that contract
theory cannot provide the theoretical support needed to secure and enhance
individual freedom. Why is this?
As Carole Pateman argues, "contract theory is primarily about a way of
creating social relations constituted by subordination, not about exchange."
[_The Sexual Contract_, p. 40] Rather than undermining subordination, contract
theorists justify modern subjection - "contract doctrine has proclaimed that
subjection to a master - a boss, a husband - is freedom." [Op. Cit., p. 146]
The question central to contract theory (and so right-Libertarianism) is
not "are people free" (as one would expect) but "are people free to
subordinate themselves in any manner they please." A radically different
question and one only fitting to someone who does not know what liberty
means.
Anarchists argue that not all contracts are legitimate and no free individual
can make a contract that denies his or her own freedom. If an individual
is able to express themselves by making free agreements then those free
agreements must also be based upon freedom internally as well. Any agreement
that creates domination or hierarchy negates the assumptions underlying the
agreement and makes itself null and void.
This is most easily seen in the extreme case of the slave contract. John
Stuart Mill stated that such a contract would be "null and void." He argued
that an individual may voluntarily choose to enter such a contract but
in so doing "he abdicates his liberty; he foregoes any future use of it
beyond that single act. He therefore defeats, in his own case, the
very purpose which is the justification of allowing him to dispose of
himself. . .The principle of freedom cannot require that he should be
free not to be free. It is not freedom, to be allowed to alienate his
freedom." He adds that "these reasons, the force of which is so
conspicuous in this particular case, are evidently of far wider
application." [cited by Pateman, Op. Cit., pp. 171-2]
And it is such an application that defenders of capitalism fear (Mill did
in fact apply these reasons wider and unsurprisingly became a supporter of
a market syndicalist form of socialism). If we reject slave contracts as
illegitimate then, logically, we must also reject *all* contracts that
express qualities similar to slavery (i.e. deny freedom) including wage
slavery.
The right Libertarian J. Philmore sees what is at stake and argues that
"contractual slavery [is] . . . [an] extension of the employer-employee
contract." He asserts (correctly) that "any thorough and decisive critique
of voluntary slavery. . . would carry over to the employment contract. . .
Such a critique would thus be a *reductio ad absurdum.*" [Philmore, Op. Cit.,
p. 55] In other words, the difference between wage labour and slavery is
the time scale, a slave contract is "merely" an extended employment contract.
It is rare to find a supporter of capitalism being so honest! (And as
Carole Pateman notes, "[t]here is a nice historical irony here. In the
American South, slaves were emancipated and turned into wage labourers,
and now American contractarians argue that all workers should have the
opportunity to turn themselves into civil slaves." [Ibid., p. 63]).
All this does not mean that we must reject free agreement. Far from it! Free
agreement is *essential* for a society based upon individual dignity and
liberty. There are a variety of forms of free agreement and anarchists
support those based upon co-operation and self-management (i.e. individuals
working together as equals). Anarchists desire to create relationships
which reflect (and so express) the liberty that is the basis of free
agreement. Capitalism creates relationships that deny liberty. The opposition
between autonomy and subjection can only be maintained by modifying or
rejecting contract theory, something that capitalism cannot do and so the
right-wing Libertarian rejects autonomy in favour of subjection (and so
rejects socialism in favour of capitalism).
The real contrast between anarchism and right-Libertarianism is best
expressed in their respective opinions on slavery. Anarchism is based
upon the individual whose individuality depends upon the maintenance of
free relationships with other individuals. If individuals deny their
capacities for self-government from themselves through a contract
the individuals bring about a qualitative change in their relationship
to others - freedom is turned into mastery and subordination. For the
anarchist, slavery is thus the paradigm of what freedom is *not*, instead
of an exemplification of what it is (as right-Libertarians state).
As Proudhon argued "[i]f I were asked to answer the following question: What
is slavery? and I should answer in one word, It is murder, my meaning would
be understood at once. No extended argument would be required to show that
the power to take from a man his thought, his will, his personality, is a
power of life and death; and that to enslave a man is to kill him." [_What
is Property?_, p. 37]
In contrast, the right-Libertarian effectively argues that "I support slavery
because I believe in liberty." It is a sad reflection of the ethical and
intellectual bankruptcy of our society that such an "argument" is actually
taken seriously by (some) people. The concept of "slavery as freedom" is
far too Orwellian to warrant a critique - we will leave it up to right
Libertarians to corrupt our language and ethical standards with an attempt
to prove it.
From the basic insight that slavery is the opposite of freedom, the anarchist
rejection of authoritarian social relations quickly follows (the rejection
that Philmore and other right-Libertarians fear):
"Liberty is inviolable. I can neither sell nor alienate my liberty; every
contract, every condition of a contract, which has in view the alienation or
suspension of liberty, is null: the slave, when he plants his foot upon the
soil of liberty, at that moment becomes a free man. . . Liberty is the original
condition of man; to renounce liberty is to renounce the nature of man: after
that, how could we perform the acts of man?" [P.J. Proudhon, Op. Cit., p. 67]
The employment contract (i.e. wage slavery) abrogates liberty. It is based
upon inequality of power and "exploitation is a consequence of the fact
that the sale of labour power entails the worker's subordination." [Carole
Pateman, Op. Cit., P. 149] Hence Proudhon's (and Mill's) support of
self-management and opposition to capitalism - any relationship that
resembles slavery is illegitimate and no contract that creates a
relationship of subordination is valid. Thus in a truly anarchistic
society, slave contracts would be unenforceable -- people in a truly
free (i.e. non-capitalist) society would *never* tolerate such a
horrible institution or consider it a valid agreement. If someone was
silly enough to sign such a contract, they would simply have to
say they now rejected it in order to be free -- such contracts are
made to be broken and without the force of a law system (and private
defence firms) to back it up, such contracts will stay broken.
The right-Libertarian support for slave contracts (and wage slavery)
indicates that their ideology has little to do with liberty and far more
to do with justifying property and the oppression and exploitation it
produces. Their support and theoretical support for slavery indicates
a deeper authoritarianism which negates their claims to be libertarians.
F.2.7 But surely abolishing capitalism would restrict liberty?
Many "anarcho"-capitalists and other supporters of capitalism argue that
it would be "authoritarian" to restrict the number of alternatives that
people can choose between by abolishing capitalism. If workers become wage
labourers, so it is argued, it is because they "value" other things more --
otherwise they would not agree to the exchange. But such an argument
ignores that reality of capitalism.
By *maintaining* capitalist private property, the options available
to people *are* restricted. In a fully developed capitalist economy the
vast majority have the "option" of selling their labour or starving/living
in poverty -- self-employed workers account for less than 10% of the working
population. Usually, workers are at a disadvantage on the labour market
due to the existence of unemployment and so accept wage labour because
otherwise they would starve (see section F.10.2 for a discussion on why
this is the case). And as we argue in sections J.5.11 and J.5.12,
even *if* the majority of the working population desired co-operative
workplaces, a capitalist market will not provide them with that outcome
due to the nature of the capitalist workplace (also see Juliet C. Schor's
excellent book _The Overworked American_ for a discussion of why workers
desire for more free time is not reflected in the labour market). In other
words, it is a myth to claim that wage labour exists or that workplaces are
hierarchical because workers value other things -- they are hierarchical
because bosses have more clout on the market than workers and, to use
Schor's expression, workers end up wanting what they get rather than
getting what they want.
Looking at the reality of capitalism we find that because of inequality
in resources (protected by the full might of the legal system, we should
note) those with property get to govern those without it during working
hours (and beyond in many cases). If the supporters of capitalism were
actually concerned about liberty (as opposed to property) that situation
would be abhorrent to them -- after all, individuals can no longer exercise
their ability to make decisions, choices, and are reduced to being order
takers. If choice and liberty are the things we value, then the ability
to make choices in all aspects of life automatically follows (including
during work hours). However, the authoritarian relationships and the
continual violation of autonomy wage labour implies are irrelevant to
"anarcho"-capitalists (indeed, attempts to change this situation are
denounced as violations of the autonomy of the property owner!). By
purely concentrating on the moment that a contract is signed they
blind themselves to the restricts of liberty that wage contracts create.
Of course, anarchists have no desire to *ban* wage labour -- we aim to
create a society within which people are not forced by circumstances
to sell their liberty to others. In order to do this, anarchists propose
a modification of property and property rights to ensure true freedom of
choice (a freedom of choice denied to us by capitalism). As we have
noted many times, "bilateral exchanges" can and do adversely effect the
position of third parties if they result in the build-up of power/money
in the hands of a few. And one of these adverse effects can be the
restriction of workers options due to economic power. Therefore it is
the supporter of capitalist who restricts options by supporting an economic
system and rights framework that by their very workings reduce the options
available to the majority, who then are "free to choose" between those
that remain (see also section B.4). Anarchists, in contrast, desire
to expand the available options by abolishing capitalist private property
rights and removing inequalities in wealth and power that help restrict
our options and liberties artificially.
So does an anarchist society have much to fear from the spread of
wage labour within it? Probably not. If we look at societies such as
the early United States or the beginnings of the Industrial Revolution
in Britain, for example, we find that, given the choice, most people
preferred to work for themselves. Capitalists found it hard to find
enough workers to employ and the amount of wages that had to be offered
to hire workers were so high as to destroy any profit margins. Moreover,
the mobility of workers and their "laziness" was frequently commented
upon, with employers despairing at the fact workers would just work
enough to make end meet and then disappear. Thus, left to the actions
of the "free market," it is doubtful that wage labour would have spread.
But it was not left to the "free market".
In response to these "problems", the capitalists turned to the state
and enforced various restrictions on society (the most important being
the land, tariff and money monopolies -- see section B.3 and F.8). In
free competition between artisan and wage labour, wage labour only
succeeded due to the use of state action to create the required
circumstances to discipline the labour force and to accumulate
enough capital to give capitalists an edge over artisan production
(see section F.8 for more details).
Thus an anarchist society would not have to fear the spreading of
wage labour within it. This is simply because would-be capitalists
(like those in the early United States) would have to offer such
excellent conditions, workers' control and high wages as to make
the possibility of extensive profits from workers' labour nearly
impossible. Without the state to support them, they will not be
able to accumulate enough capital to give them an advantage within
a free society. Moreover, it is somewhat ironic to hear capitalists
talking about anarchism denying choice when we oppose wage labour
considering the fact workers were not given any choice when the
capitalists used the state to develop wage labour in the first place!
F.2.8 Why should we reject the "anarcho"-capitalist definitions of freedom
and justice?
Simply because they lead to the creation of authoritarian social relationships
and so to restrictions on liberty. A political theory which, when consistently
followed, has evil or iniquitous consequences, is a bad theory.
For example, any theory that can justify slavery is obviously a bad theory
- slavery does not cease to stink the moment it is seen to follow your
theory. As right-Libertarians can justify slave contracts as a type of wage
labour (see section F.2.6) as well as numerous other authoritarian social
relationships, it is obviously a bad theory.
It is worth quoting Noam Chomsky at length on this subject:
"Consider, for example, the 'entitlement theory of justice'. . . [a]ccording
to this theory, a person has a right to whatever he has acquired by means
that are just. If, by luck or labour or ingenuity, a person acquires
such and such, then he is entitled to keep it and dispose of it as he
wills, and a just society will not infringe on this right.
"One can easily determine where such a principle might lead. It is entirely
possible that by legitimate means - say, luck supplemented by contractual
arrangements 'freely undertaken' under pressure of need - one person
might gain control of the necessities of life. Others are then free to
sell themselves to this person as slaves, if he is willing to accept
them. Otherwise, they are free to perish. Without extra question-begging
conditions, the society is just.
"The argument has all the merits of a proof that 2 + 2 = 5. . . Suppose
that some concept of a 'just society' is advanced that fails to characterise
the situation just described as unjust. . . Then one of two conclusions
is in order. We may conclude that the concept is simply unimportant and
of no interest as a guide to thought or action, since it fails to
apply properly even in such an elementary case as this. Or we may conclude
that the concept advanced is to be dismissed in that it fails to correspond
to the pretheorectical notion that it intends to capture in clear cases.
If our intuitive concept of justice is clear enough to rule social
arrangements of the sort described as grossly unjust, then the sole interest
of a demonstration that this outcome might be 'just' under a given 'theory
of justice' lies in the inference by *reductio ad absurdum* to the
conclusion that the theory is hopelessly inadequate. While it may capture
some partial intuition regarding justice, it evidently neglects others.
"The real question to be raised about theories that fail so completely
to capture the concept of justice in its significant and intuitive
sense is why they arouse such interest. Why are they not simply dismissed
out of hand on the grounds of this failure, which is striking in
clear cases? Perhaps the answer is, in part, the one given by Edward
Greenberg in a discussion of some recent work on the entitlement theory
of justice. After reviewing empirical and conceptual shortcomings, he
observes that such work 'plays an important function in the process of
. . . 'blaming the victim,' and of protecting property against egalitarian
onslaughts by various non-propertied groups.' An ideological defence of
privileges, exploitation, and private power will be welcomed, regardless
of its merits.
"These matters are of no small importance to poor and oppressed people
here and elsewhere." [_The Chomsky Reader_, pp. 187-188]
It may be argued that the reductions in liberty associated with capitalism
is not really an iniquitous outcome, but such an argument is hardly fitting
for a theory proclaiming itself "libertarian." And the results of these
authoritarian social relationships? To quote Adam Smith, under the capitalist
division of labour the worker "has no occasion to exert his understanding, or
exercise his invention" and "he naturally loses, therefore, the habit of such
exercise and generally becomes as stupid and ignorant as it is possible for
a human creature to become." The worker's mind falls "into that drowsy
stupidity, which, in a civilised society, seems to benumb the understanding
of almost all of the inferior [sic!] ranks of people." [cited by Chomsky,
Op. Cit., p. 186]
Of course, it may be argued that these evil effects of capitalist authority
relations on individuals are also not iniquitous (or that the very real
domination of workers by bosses is not really domination) but that suggests
a desire to sacrifice real individuals, their hopes and dreams and lives to
an abstract concept of liberty, the accumulative effect of which would be
to impoverish all our lives. The kind of relationships we create *within*
the organisations we join are of as great an importance as their
voluntary nature. Social relations *shape* the individual in many
ways, restricting their freedom, their perceptions of what freedom
is and what their interests actually are. This means that, in order not
to be farcical, any relationships we create must reflect in their internal
workings the critical evaluation and self-government that created them
in the first place. Sadly capitalist individualism masks structures of
power and relations of domination and subordination within seemingly
"voluntary" associations -- it fails to note the relations of domination
resulting from private property and so "what has been called 'individualism'
up to now has been only a foolish egoism which belittles the individual.
Foolish because it was not individualism at all. It did not lead to what
was established as a goal; that is the complete, broad, and most perfectly
attainable development of individuality." [Peter Kropotkin, _Selected
Writings_, p. 297]
This right-Libertarian lack of concern for concrete individual freedom
and individuality is a reflection of their support for "free markets" (or
"economic liberty" as they sometimes phrase it). However, as Max Stirner
noted, this fails to understand that "[p]olitical liberty means that the
*polis,* the State, is free; . . . not, therefore, that I am free of the
State. . . It does not mean *my* liberty, but the liberty of a power that
rules and subjugates me; it means that one of my *despots* . . . is free."
[_The Ego and Its Own_, p. 107] Thus the desire for "free markets" results
in a blindness that while the market may be "free" the individuals within
it may not be (as Stirner was well aware, "[u]nder the *regime* of the
commonality the labourers always fall into the hands of the possessors
. . . of the capitalists, therefore." [Op. Cit., p. 115])
In other words, right-libertarians give the greatest importance to an
abstract concept of freedom and fail to take into account the fact that
real, concrete freedom is the outcome of self-managed activity, solidarity
and voluntary co-operation. For liberty to be real it must exist in all
aspects of our daily life and cannot be contracted away without seriously
effecting our minds, bodies and lives. Thus, the right-Libertarian's
"defence of freedom is undermined by their insistence on the concept of
negative liberty, which all too easily translates in experience as the
negation of liberty." [Stephan L. Newman, _Liberalism as Wit's End_,
p. 161]
Thus right-Libertarian's fundamental fallacy is that "contract" does not
result in the end of power or domination (particularly when the bargaining
power or wealth of the would-be contractors is not equal). As Carole
Pateman notes, "[i]ronically, the contractarian ideal cannot encompass
capitalist employment. Employment is not a continual series of discrete
contracts between employer and worker, but . . . one contract in which a
worker binds himself to enter an enterprise and follow the directions
of the employer for the duration of the contract. As Huw Benyon has
bluntly stated, 'workers are paid to obey.'" [_The Sexual Contract_,
p. 148] This means that "the employment contract (like the marriage
contract) is not an exchange; both contracts create social relations
that endure over time - social relations of subordination." [Ibid.]
Authority impoverishes us all and must, therefore, be combated wherever
it appears. That is why anarchists oppose capitalism, so that there shall
be "no more government of man by man, by means of accumulation of capital."
[P-J Proudhon, cited by Woodcock in _Anarchism_, p. 110] If, as Murray
Bookchin point it, "the object of anarchism is to increase choice" [_The
Ecology of Freedom_, p. 70] then this applies both to when we are creating
associations/relationships with others and when we are *within* these
associations/relationships -- i.e. that they are consistent with the
liberty of all, and that implies participation and self-management *not*
hierarchy. "Anarcho"-capitalism fails to understand this essential point
and by concentrating purely on the first condition for liberty ensures a
society based upon domination, oppression and hierarchy and not freedom.
It is unsurprising, therefore, to find that the basic unit of analysis
of the "anarcho"-capitalist/right-libertarian is the transaction (the
"trade," the "contract"). The freedom of the individual is seen as
revolving around an act, the contract, and *not* in our relations with
others. All the social facts and mechanisms that precede, surround and
result from the transaction are omitted. In particular, the social
relations that result from the transaction are ignored (those, and
the circumstances that make people contract, are the two unmentionables
of right-libertarianism).
For anarchists it seems strange to concentrate on the moment that a
contract is signed and ignore the far longer time the contract is
active for (as we noted in section A.2.14, if the worker is free when
they sign a contract, slavery soon overtakes them). Yes, the voluntary
nature of a decision is important, but so are the social relationships
we experience due to those decisions.
For the anarchist, freedom is based upon the insight that other people,
apart from (indeed, *because* of) having their own intrinsic value, also
are "means to my end", that it is through their freedom that I gain my
own -- so enriching my life. As Bakunin put it:
"I who want to be free cannot be because all the men around me do not yet
want to be free, and consequently they become tools of oppression against
me." [quoted by Errico Malatesta in _Anarchy_, p. 27]
Therefore anarchists argue that we must reject the right-Libertarian
theories of freedom and justice because they end up supporting the
denial of liberty as the expression of liberty. What this fails to
recognise is that freedom is a product of social life and that (in
Bakunin's words) "[n]o man can achieve his own emancipation without
at the same time working for the emancipation of all men around him.
My freedom is the freedom of all since I am not truly free in thought
and in fact, except when my freedom and my rights are confirmed and
approved in the freedom and rights of all men who are my equals."
[Ibid.]
Other people give us the possibilities to develop our full human potentiality
and thereby our freedom, so when we destroy the freedom of others we limit
our own. "To treat others and oneself as property," argues anarchist L. Susan
Brown, "objectifies the human individual, denies the unity of subject and
object and is a negation of individual will . . . even the freedom gained
by the other is compromised by this relationship, for to negate the will
of another to achieve one's own freedom destroys the very freedom one
sought in the first place." [_The Politics of Individualism_, p. 3]
Fundamentally, it is for this reason that anarchists reject the
right-Libertarian theories of freedom and justice -- it just does
not ensure individual freedom or individuality.
F.3 Why do anarcho"-capitalists generally place little or no value
on "equality," and what do they mean by that term?
Murray Rothbard argues that "the 'rightist' libertarian is not opposed
to inequality." [_For a New Liberty_, p. 47]In contrast, "leftist"
libertarians oppose inequality because it has harmful effects on
individual liberty.
Part of the reason "anarcho"-capitalism places little or no value on
"equality" derives from their definition of that term. Murray Rothbard
defines equality as:
"A and B are 'equal' if they are identical to each other with respect to a
given attribute... There is one and only one way, then, in which any two
people can really be 'equal' in the fullest sense: they must be identical
in *all* their attributes." He then points out the obvious fact that "men
are not uniform,. . . . the species, mankind, is uniquely characterised by a
high degree of variety, diversity, differentiation: in short, inequality."
[_Egalitarianism as a Revolt against Nature and Other Essays_, p. 4, p.5]
In others words, every individual is unique. Something no egalitarian
has ever denied. On the basis of this amazing insight, he concludes that
equality is impossible (except "equality of rights") and that the attempt
to achieve "equality" is a "revolt against nature" -- as if any anarchist
had ever advocated such a notion of equality as being identical!
And so, because we are all unique, the outcome of our actions will not
be identical and so social inequality flows from natural differences
and not due to the economic system we live under. Inequality of
endowment implies inequality of outcome and so social inequality.
As individual differences are a fact of nature, attempts to create
a society based on "equality" (i.e. making everyone identical in terms
of possessions and so forth) is impossible and "unnatural."
Before continuing, we must note that Rothbard is destroying language to
make his point and that he is not the first to abuse language in this
particular way. In George Orwell's _1984_, the expression "all men are
created equal" could be translated into Newspeak, but it would make as
much sense as saying "all men have red hair," an obvious falsehood
(see "The Principles of Newspeak" Appendix). It's nice to know that
"Mr. Libertarian" is stealing ideas from Big Brother, and for the same
reason: to make critical thought impossible by restricting the meaning
of words.
"Equality," in the context of political discussion, does not mean
"identical," it usually means equality of rights, respect, worth, power
and so forth. It does not imply treating everyone identically (for example,
expecting an eighty year old man to do identical work to an eighteen
violates treating both with respect as unique individuals). For anarchists,
as Alexander Berkman writes, "equality does not mean an equal amount but
equal *opportunity*. . . Do not make the mistake of identifying equality
in liberty with the forced equality of the convict camp. True anarchist
equality implies freedom, not quantity. It does not mean that every one
must eat, drink, or wear the same things, do the same work, or live in
the same manner. Far from it: the very reverse, in fact. Individual needs
and tastes differ, as appetites differ. It is *equal* opportunity to satisfy
them that constitutes true equality. Far from levelling, such equality opens
the door for the greatest possible variety of activity and development. For
human character is diverse, and only the repression of this free diversity
results in levelling, in uniformity and sameness. Free opportunity and
acting out your individuality means development of natural dissimilarities
and variations. . . . Life in freedom, in anarchy will do more than liberate
man merely from his present political and economic bondage. That will be
only the first step, the preliminary to a truly human existence."
[_The ABC of Anarchism_, p. 25]
Thus anarchists reject the Rothbardian-Newspeak definition of equality
as meaningless within political discussion. No two people are identical
and so imposing "identical" equality between them would mean treating
them as *unequals*, i.e. not having equal worth or giving them equal
respect as befits them as human beings and fellow unique individuals.
So what should we make of Rothbard's claim? It is tempting just to quote
Rousseau when he argued "it is . . . useless to inquire whether there is any
essential connection between the two inequalities [social and natural];
for this would be only asking, in other words, whether those who command
are necessarily better than those who obey, and if strength of body or
of mind, wisdom, or virtue are always found in particular individuals,
in proportion to their power or wealth: a question fit perhaps to be
discussed by slaves in the hearing of their masters, but highly unbecoming
to reasonable and free men in search of the truth." [_The Social Contract
and Discourses_, p. 49] But a few more points should be raised.
The uniqueness of individuals has always existed but for the vast majority
of human history we have lived in very egalitarian societies. If social
inequality did, indeed, flow from natural inequalities then *all*
societies would be marked by it. This is not the case. Indeed, taking
a relatively recent example, many visitors to the early United States
noted its egalitarian nature, something that soon changed with the rise
of wage labour and industrial capitalism (a rise dependent upon state
action, we must add, -- see section F.8). This implies that the society
we live in (its rights framework, the social relationships it generates
and so forth) has a far more of a decisive impact on inequality than
individual differences. Thus certain rights frameworks will tend to
magnify "natural" inequalities (assuming that is the source of the
initial inequality, rather than, say, violence and force). As Noam
Chomsky argues:
"Presumably it is the case that in our 'real world' some combination of
attributes is conducive to success in responding to 'the demands of the
economic system' . . . One might suppose that some mixture of avarice,
selfishness, lack of concern for others, aggressiveness, and similar
characteristics play a part in getting ahead [in capitalism]. . . Whatever
the correct collection of attributes may be, we may ask what follows
from the fact, if it is a fact, that some partially inherited combination
of attributes tends to material success? All that follows . . . is a
comment on our particular social and economic arrangements . . . The
egalitarian might responds, in all such cases, that the social order
should be changes so that the collection of attributes that tends to
bring success no longer do so . . . " [_The Chomsky Reader_, p. 190]
So, perhaps, if we change society then the social inequalities we see today
would disappear. It is more than probable that natural difference has been
long ago been replaced with *social* inequalities, especially inequalities
of property (which will tend to increase, rather than decrease, inequality).
And as we argue in section F.8 these inequalities of property were initially
the result of force, *not* differences in ability. Thus to claim that social
inequality flows from natural differences is false as most social inequality
has flown from violence and force. This initial inequality has been magnified
by the framework of capitalist property rights and so the inequality within
capitalism is far more dependent upon, say, the existence of wage labour,
rather than "natural" differences between individuals.
If we look at capitalism, we see that in workplaces and across industries
many, if not most, unique individuals receive identical wages for identical
work (although this often is not the case for women and blacks, who receive
less wages than male, white workers). Similarly, capitalists have
deliberately introduced wage inequalities and hierarchies for no other
reason that to divide (and so rule) the workforce (see section D.10).
Thus, if we assume egalitarianism *is* a revolt against nature, then
much of capitalist economic life is in such a revolt (and when it is
not, the "natural" inequalities have been imposed artificially by those
in power).
Thus "natural" differences do not necessarily result in inequality as such.
Given a different social system, "natural" differences would be encouraged
and celebrated far wider than they are under capitalism (where, as we
argued in section B.1, hierarchy ensures the crushing of individuality
rather than its encouragement) without any change in social equality.
The claim that "natural" differences generates social inequalities is
question begging in the extreme -- it takes the rights framework of
society as a given and ignores the initial source of inequality in
property and power. Indeed, inequality of outcome or reward is more
likely to be influenced by social conditions rather than individual
differences (as would be the case in a society based on wage labour
or other forms of exploitation).
Another reason for "anarcho"-capitalist lack of concern for equality is
that they think that "liberty upsets patterns" (see section F.2.5, for
example). It is argued that equality can only be maintained by
restricting individual freedom to make exchanges or by taxation of
income. However, what this argument fails to acknowledge is that
inequality also restricts individual freedom (see next section, for
example) and that the capitalist property rights framework is not
the only one possible. After all, money is power and inequalities
in terms of power easily result in restrictions of liberty and the
transformation of the majority into order takers rather than free
producers. In other words, once a certain level of inequality is
reached, property does not promote, but actually conflicts with,
the ends which render private property legitimate. Moreover, Nozick
(in his "liberty upsets patterns" argument) "has produced . . . an
argument for unrestricted private property using unrestricted private
property, and thus he begs the question he tries to answer." [Andrew
Kerhohan, "Capitalism and Self-Ownership", from _Capitalism_, p. 71]
For example, a worker employed by a capitalist cannot freely exchange
the machines or raw materials they have been provided with to use but
Nozick does not class this distribution of "restricted" property rights
as infringing liberty (nor does he argue that wage slavery itself
restricts freedom, of course).
So in response to the claim that equality could only be maintained by
continuously interfering with people's lives, anarchists would say that
the inequalities produced by capitalist property rights also involve
extensive and continuous interference with people's lives. After all, as
Bob Black notes "[y]our foreman or supervisor gives you more or-else
orders in a week than the police do in a decade" nevermind the other
effects of inequality such as stress, ill health and so on [_Libertarian
as Conservative_]. Thus claims that equality involves infringing liberty
ignores the fact that inequality also infringes liberty. A reorganisation
of society could effectively minimise inequalities by eliminating the
major source of such inequalities (wage labour) by self-management (see
section I.5.11 for a discussion of "capitalistic acts" within an anarchist
society). We have no desire to restrict free exchanges (after all, most
anarchists desire to see the "gift economy" become a reality sooner or
later) but we argue that free exchanges need not involve the unrestricted
property rights Nozick assumes. As we argue in sections F.2 and F.3.1,
inequality can easily led to the situation where self-ownership is used
to justify its own negation and so unrestricted property rights may
undermine the meaningful self-determination (what anarchists would
usually call "freedom" rather than self-ownership) which many people
intuitively understand by the term "self-ownership".
Thus, for anarchists, the "anarcho"-capitalist opposition to equality
misses the point and is extremely question begging. Anarchists do not
desire to make humanity "identical" (which would be impossible and a
total denial of liberty *and* equality) but to make the social
relationships between individuals equal in *power.* In other words,
they desire a situation where people interact together without
institutionalised power or hierarchy and are influenced by each other
"naturally," in proportion to how the (individual) *differences*
between (social) *equals* are applicable in a given context. To quote
Michael Bakunin, "[t]he greatest intelligence would not be equal to a
comprehension of the whole. Thence results. . . the necessity of the
division and association of labour. I receive and I give -- such is human
life. Each directs and is directed in his turn. Therefore there is no
fixed and constant authority, but a continual exchange of mutual,
temporary, and, above all, voluntary authority and subordination."
[_God and the State_, p. 33]
Such an environment can only exist within self-managed associations,
for capitalism (i.e. wage labour) creates very specific relations
and institutions of authority. It is for this reason anarchists are
socialists (i.e. opposed to wage labour, the existence of a proletariat
or working class). In other words, anarchists support equality precisely
*because* we recognise that everyone is unique. If we are serious about
"equality of rights" or "equal freedom" then conditions must be such
that people can enjoy these rights and liberties. If we assume the right
to develop one's capacities to the fullest, for example, then inequality
of resources and so power within society destroys that right simply because
people do not have the means to freely exercise their capacities (they
are subject to the authority of the boss, for example, during work hours).
So, in direct contrast to anarchism, right-Libertarianism is unconcerned
about any form of equality except "equality of rights". This blinds
them to the realities of life; in particular, the impact of economic and
social power on individuals within society and the social relationships
of domination they create. Individuals may be "equal" before the law and
in rights, but they may not be free due to the influence of social
inequality, the relationships it creates and how it affects the law and
the ability of the oppressed to use it. Because of this, all anarchists
insist that equality is essential for freedom, including those in the
Individualist Anarchist tradition the "anarcho"-capitalist tries to
co-opt -- "Spooner and Godwin insist that inequality corrupts freedom.
Their anarchism is directed as much against inequality as against tyranny"
and "[w]hile sympathetic to Spooner's individualist anarchism, they
[Rothbard and David Friedman] fail to notice or conveniently overlook
its egalitarian implications." [Stephen L. Newman, _Liberalism at Wit's
End_, p. 74, p. 76]
Why equality is important is discussed more fully in the next section.
Here we just stress that without social equality, individual freedom is
so restricted that it becomes a mockery (essentially limiting freedom
of the majority to choosing *which* employer will govern them rather
than being free within and outside work).
Of course, by defining "equality" in such a restrictive manner, Rothbard's
own ideology is proved to be nonsense. As L.A. Rollins notes, "Libertarianism,
the advocacy of 'free society' in which people enjoy 'equal freedom' and
'equal rights,' is actually a specific form of egalitarianism. As such,
Libertarianism itself is a revolt against nature. If people, by their very
biological nature, are unequal in all the attributes necessary to achieving,
and preserving 'freedom' and 'rights'. . . then there is no way that people
can enjoy 'equal freedom' or 'equal rights'. If a free society is conceived
as a society of 'equal freedom,' then there ain't no such thing as 'a
free society'." [_The Myth of Natural Law_, p. 36]
Under capitalism, freedom is a commodity like everything else. The more
money you have, the greater your freedom. "Equal" freedom, in the
Newspeak-Rothbardian sense, *cannot* exist! As for "equality before the
law", its clear that such a hope is always dashed against the rocks of
wealth and market power (see next section for more on this). As far as
rights go, of course, both the rich and the poor have an "equal right" to
sleep under a bridge (assuming the bridge's owner agrees of course!); but
the owner of the bridge and the homeless have *different* rights, and so
they cannot be said to have "equal rights" in the Newspeak-Rothbardian
sense either. Needless to say, poor and rich will not "equally" use the
"right" to sleep under a bridge, either.
Bob Black observes in _The Libertarian as Conservative_ that "[t]he
time of your life is the one commodity you can sell but never buy
back. Murray Rothbard thinks egalitarianism is a revolt against
nature, but his day is 24 hours long, just like everybody else's."
By twisting the language of political debate, the vast differences
in power in capitalist society can be "blamed" not on an unjust
and authoritarian system but on "biology" (we are all unique
individuals, after all). Unlike genes (although biotechnology
corporations are working on this, too!), human society *can* be
changed, by the individuals who comprise it, to reflect the basic
features we all share in common -- our humanity, our ability to
think and feel, and our need for freedom.
F.3.1 Why is this disregard for equality important?
Simply because a disregard for equality soon ends with liberty for the
majority being negated in many important ways. Most "anarcho"-capitalists
and right-Libertarians deny (or at best ignore) market power. Rothbard,
for example, claims that economic power does not exist; what people
call "economic power" is "simply the right under freedom to refuse to
make an exchange" [_The Ethics of Liberty_, p. 222] and so the concept
is meaningless.
However, the fact is that there are substantial power centres in
society (and so are the source of hierarchical power and authoritarian
social relations) which are *not the state.* The central fallacy of
"anarcho"-capitalism is the (unstated) assumption that the various
actors within an economy have relatively equal power. This assumption
has been noted by many readers of their works. For example, Peter Marshall
notes that "'anarcho-capitalists' like Murray Rothbard assume individuals
would have equal bargaining power in a [capitalist] market-based society"
[_Demanding the Impossible_, p. 46] George Walford also makes this clear
in his comments on David Friedman's _The Machinery of Freedom_:
"The private ownership envisages by the anarcho-capitalists would be very
different from that which we know. It is hardly going too far to say that
while the one is nasty, the other would be nice. In anarcho-capitalism there
would be no National Insurance, no Social Security, no National Health
Service and not even anything corresponding to the Poor Laws; there would be
no public safety-nets at all. It would be a rigorously competitive society:
work, beg or die. But as one reads on, learning that each individual would
have to buy, personally, all goods and services needed, not only food,
clothing and shelter but also education, medicine, sanitation, justice,
police, all forms of security and insurance, even permission to use the
streets (for these also would be privately owned), as one reads about all
this a curious feature emerges: everybody always has enough money to buy
all these things.
"There are no public casual wards or hospitals or hospices, but neither is
there anybody dying in the streets. There is no public educational system
but no uneducated children, no public police service but nobody unable to
buy the services of an efficient security firm, no public law but nobody
unable to buy the use of a private legal system. Neither is there anybody
able to buy much more than anybody else; no person or group possesses
economic power over others.
"No explanation is offered. The anarcho-capitalists simply take it for
granted that in their favoured society, although it possesses no machinery
for restraining competition (for this would need to exercise authority over
the competitors and it is an *anarcho*- capitalist society) competition
would not be carried to the point where anybody actually suffered from it.
While proclaiming their system to be a competitive one, in which private
interest rules unchecked, they show it operating as a co-operative one,
in which no person or group profits at the cost of another." [_On the
Capitalist Anarchists_]
This assumption of (relative) equality comes to the fore in Murray
Rothbard's "Homesteading" concept of property (discussed in section
F.4.1). "Homesteading" paints a picture of individuals and families
doing into the wilderness to make a home for themselves, fighting
against the elements and so forth. It does *not* invoke the idea
of transnational corporations employing tens of thousands of people
or a population without land, resources and selling their labour to
others. Indeed, Rothbard argues that economic power does not exist
(at least under capitalism; as we saw in section F.2.1 he does make
-- highly illogical -- exceptions). Similarly, David Friedman's example
of a pro-death penalty and anti-death penalty "defence" firm coming
to an agreement (see section F.6.3) assumes that the firms have equal
bargaining powers and resources -- if not, then the bargaining process
would be very one-sided and the smaller company would think twice before
taking on the larger one in battle (the likely outcome if they cannot
come to an agreement on this issue) and so compromise.
However, the right-libertarian denial of market power is unsurprising. The
necessity, not the redundancy, of equality is required if the inherent
problems of contract are not to become too obvious. If some individuals
*are* assumed to have significantly more power than others, and if they
are always self-interested, then a contract that creates equal partners
is impossible -- the pact will establish an association of masters and
servants. Needless to say, the strong will present the contract as being
to the advantage of both: the strong no longer have to labour (and become
rich, i.e. even stronger) and the weak receive an income and so do not
starve.
If freedom is considered as a function of ownership then it is very
clear that individuals lacking property (outside their own body, of
course) loses effective control over their own person and labour (which
was, lets not forget, the basis of their equal natural rights). When
ones bargaining power is weak (which is typically the case in the
labour market) exchanges tend to magnify inequalities of wealth
and power over time rather than working towards an equalisation.
In other words, "contract" need not replace power if the bargaining
position and wealth of the would-be contractors are not equal (for, if
the bargainers had equal power it is doubtful they would agree to sell
control of their liberty/time to another). This means that "power" and
"market" are not antithetical terms. While, in an abstract sense, all
market relations are voluntary in practice this is not the case within
a capitalist market. For example, a large company has a comparative
advantage over small ones and communities which will definitely shape
the outcome of any contract. For example, a large company or rich person
will have access to more funds and so stretch out litigations and strikes
until their opponents resources are exhausted. Or, if a local company is
polluting the environment, the local community may put up with the damage
caused out of fear that the industry (which it depends upon) would relocate
to another area. If members of the community *did* sue, then the company
would be merely exercising its property rights when it threatened to move
to another location. In such circumstances, the community would "freely"
consent to its conditions or face massive economic and social disruption.
And, similarly, "the landlords' agents who threaten to discharge agricultural
workers and tenants who failed to vote the reactionary ticket" in the 1936
Spanish election were just exercising their legitimate property rights
when they threatened working people and their families with economic
uncertainty and distress. [Murray Bookchin, _The Spanish Anarchists_,
p. 260]
If we take the labour market, it is clear that the "buyers" and "sellers"
of labour power are rarely on an equal footing (if they were, then
capitalism would soon go into crisis -- see section F.10.2). In fact,
competition "in labour markets is typically skewed in favour of
employers: it is a buyer's market. And in a buyer's, it is the
sellers who compromise." [Juliet B. Schor, _The Overworked American_,
p. 129] Thus the ability to refuse an exchange weights most heavily on
one class than another and so ensures that "free exchange" works to
ensure the domination (and so exploitation) of one party by the other.
Inequality in the market ensures that the decisions of the majority
of within it are shaped in accordance with that needs of the powerful,
not the needs of all. It was for this reason that the Individual Anarchist
J.K. Ingalls opposed Henry George's proposal of nationalising the land.
Ingalls was well aware that the rich could outbid the poor for leases
on land and so the dispossession of the working classes would continue.
The market, therefore, does not end power or unfreedom -- they are still
there, but in different forms. And for an exchange to be truly voluntary,
both parties must have equal power to accept, reject, or influence its
terms. Unfortunately, these conditions are rarely meet on the labour market
or within the capitalist market in general. Thus Rothbard's argument that
economic power does not exist fails to acknowledge that the rich can
out-bid the poor for resources and that a corporation generally has
greater ability to refuse a contract (with an individual, union or
community) than vice versa (and that the impact of such a refusal is
such that it will encourage the others involved to "compromise" far
sooner). And in such circumstances, formally free individuals will
have to "consent" to be unfree in order to survive.
As Max Stirner pointed out in the 1840s, free competition "is not 'free,'
because I lack the *things* for competition." [_The Ego and Its Own_,
p. 262] Due to this basic inequality of wealth (of "things") we find
that "[u]nder the *regime* of the commonality the labourers always fall
into the hands of the possessors . . . of the capitalists, therefore. The
labourer cannot *realise* on his labour to the extent of the value that
it has for the customer." [Op. Cit., p. 115] Its interesting to note that
even Stirner recognises that capitalism results in exploitation. And we
may add that value the labourer does not "realise" goes into the hands of
the capitalists, who invest it in more "things" and which consolidates and
increases their advantage in "free" competition.
To quote Stephan L. Newman:
"Another disquieting aspect of the libertarians' refusal to acknowledge
power in the market is their failure to confront the tension between freedom
and autonomy. . . Wage labour under capitalism is, of course, formally free
labour. No one is forced to work at gun point. Economic circumstance, however,
often has the effect of force; it compels the relatively poor to accept work
under conditions dictated by owners and managers. The individual worker
retains freedom [i.e. negative liberty] but loses autonomy [positive
liberty]." [_Liberalism at Wit's End_, pp. 122-123]
(As an aside, we should point out that the full Stirner quote cited above
is "[u]nder the *regime* of the commonality the labourers always fall
into the hands of the possessors, of those who have at their disposal some
bit of the state domains (and everything possessible in State domain belongs
to the State and is only a fief of the individual), especially money and
land; of the capitalists, therefore. The labourer cannot *realise* on his
labour to the extent of the value that it has for the customer."
It could be argued that we misrepresenting Stirner by truncating the quote,
but we feel that such a claim this is incorrect. Its clear from his book that
Stirner is considering the "minimal" state ("The State is a - commoners'
State . . . It protects man . . .according to whether the rights entrusted
to him by the State are enjoyed and managed in accordance with the will,
that is, laws, of the State." The State "looks on indifferently as one grows
poor and the other rich, unruffled by this alternation. As *individuals*
they are really equal before its face." [Op. Cit., p. 115, p. 252]). As
"anarcho"-capitalists consider their system to be one of rights and
laws (particularly property rights), we feel that its fair to generalise
Stirner's comments into capitalism *as such* as opposed to "minimum state"
capitalism. If we replace "State" by "libertarian law code" you will see
what we mean. We have included this aside before any right-libertarians
claim that we are misrepresenting Stirner' argument.)
If we consider "equality before the law" it is obvious that this also
has limitations in an (materially) unequal society. Brian Morris notes
that for Ayn Rand, "[u]nder capitalism . . . politics (state) and economics
(capitalism) are separated . . . This, of course, is pure ideology, for
Rand's justification of the state is that it 'protects' private property,
that is, it supports and upholds the economic power of capitalists by
coercive means." [_Ecology & Anarchism_, p. 189] The same can be said
of "anarcho"-capitalism and its "protection agencies" and "general
libertarian law code." If within a society a few own all the resources
and the majority are dispossessed, then any law code which protects
private property *automatically* empowers the owning class. Workers
will *always* be initiating force if act against the code and so
"equality before the law" reinforces inequality of power and wealth.
This means that a system of property rights protects the liberties of
some people in a way which gives them an unacceptable degree of power
over others. And this cannot be met merely by reaffirming the rights
in question, we have to assess the relative importance of various kinds
of liberty and other values we how dear.
Therefore right-libertarian disregard for equality is important because
it allows "anarcho"-capitalism to ignore many important restrictions of
freedom in society. In addition, it allows them to brush over the negative
effects of their system by painting an unreal picture of a capitalist
society without vast extremes of wealth and power (indeed, they often
construe capitalist society in terms of an ideal -- namely artisan
production -- that is really *pre*-capitalist and whose social
basis has been eroded by capitalist development). Inequality shapes
the decisions we have available and what ones we make -- "An 'incentive'
is always available in conditions of substantial social inequality that
ensure that the 'weak' enter into a contract. When social inequality
prevails, questions arises about what counts as voluntary entry into
a contract . . . Men and women . . . are now juridically free and equal
citizens, but, in unequal social conditions, the possibility cannot be
ruled out that some or many contracts create relationships that bear
uncomfortable resemblances to a slave contract." [Carole Pateman,
_The Sexual Contract_, p. 62]
This ideological confusion of right-libertarianism can also be seen from
their opposition to taxation. On the one hand, they argue that taxation
is wrong because it takes money from those who "earn" it and gives it to
the poor. On the other hand, "free market" capitalism is assumed to be
a more equal society! If taxation takes from the rich and gives to the
poor, how will "anarcho"-capitalism be more egalitarian? That equalisation
mechanism would be gone (of course, it could be claimed that all great
riches are purely the result of state intervention skewing the "free
market" but that places all their "rags to riches" stories in a strange
position). Thus we have a problem, either we have relative equality or
we do not. Either we have riches, and so market power, or we do not.
And its clear from the likes of Rothbard, "anarcho"-capitalism will
not be without its millionaires (there is, after all, apparently nothing
un-libertarian about "organisation, hierarchy, wage-work, granting of
funds by libertarian millionaires, and a libertarian party"). And so
we are left with market power and so extensive unfreedom.
Thus, for a ideology that denounces egalitarianism as a "revolt against
nature" it is pretty funny that they paint a picture of "anarcho"-capitalism
as a society of (relative) equals. In other words, their propaganda is
based on something that has never existed, and never will, namely an
egalitarian capitalist society.
F.3.2 But what about "anarcho"-capitalist support for charity?
Yes, while being blind to impact of inequality in terms of economic and
social power and influence, most right-libertarians *do* argue that the
very poor could depend on charity in their system. But such a recognition
of poverty does not reflect an awareness of the need for equality or the
impact of inequality on the agreements we make. Quite the reverse in
fact, as the existence of extensive inequality is assumed -- after all,
in a society of relative equals, poverty would not exist, nor would
charity be needed.
Ignoring the fact that their ideology hardly promotes a charitable
perspective, we will raise four points. Firstly, charity will not
be enough to countermand the existence and impact of vast inequalities
of wealth (and so power). Secondly, it will be likely that charities
will be concerned with "improving" the moral quality of the poor and
so will divide them into the "deserving" (i.e. obedient) and "undeserving"
(i.e. rebellious) poor. Charity will be forthcoming to the former, those
who agree to busy-bodies sticking their noses into their lives. In this
way charity could become another tool of economic and social power (see
Oscar Wilde's _The Soul of Man Under Socialism_ for more on charity).
Thirdly, it is unlikely that charity will be able to replace all the
social spending conducted by the state -- to do so would require a
ten-fold increase in charitable donations (and given that most
right-libertarians denounce the government for making them pay taxes
to help the poor, it seems unlikely that they will turn round and
*increase* the amount they give). And, lastly, charity is an implicate
recognition that, under capitalism, no one has the right of life -- its
a privilege you have to pay for. That in itself is enough to reject the
charity option. And, of course, in a system designed to secure the life
and liberty of each person, how can it be deemed acceptable to leave the
life and protection of even one individual to the charitable whims of
others? (Perhaps it will be argued that individual's have the right to
life, but not a right to be a parasite. This ignores the fact some people
*cannot* work -- babies and some handicapped people -- and that, in a
functioning capitalist economy, many people cannot find work all the
time. Is it this recognition of that babies cannot work that prompts many
right-libertarians to turn them into property? Of course, rich folk
who have never done a days work in their lives are never classed as
parasites, even if they inherited all their money). All things
considered, little wonder that Proudhon argued that:
"Even charitable institutions serve the ends of those in authority
marvellously well.
"Charity is the strongest chain by which privilege and the Government,
bound to protect them, holds down the lower classes. With charity,
sweeter to the heart of men, more intelligible to the poor man than
the abstruse laws of Political Economy, one may dispense with justice."
[_The General Idea of the Revolution_, pp. 69-70]
As noted, the right-libertarian (passing) acknowledgement of poverty does
not mean that they recognise the existence of market power. They never
ask themselves how can someone be free if their social situation is such
that they are drowning in a see of usury and have to sell their labour
(and so liberty) to survive.
F.4 What is the right-libertarian position on private property?
Right libertarians are not interested in eliminating capitalist
private property and thus the authority, oppression and exploitation
which goes with it. It is true that they call for an end to the state,
but this is not because they are concerned about workers being exploited
or oppressed but because they don't want the state to impede capitalists'
"freedom" to exploit and oppress workers even more than is the case now!
They make an idol of private property and claim to defend absolute,
"unrestricted" property rights (i.e. that property owners can do anything
they like with their property, as long as it does not damage the property
of others. In particular, taxation and theft are among the greatest evils
possible as they involve coercion against "justly held" property). They
agree with John Adams that "[t]he moment that idea is admitted into
society that property is not as sacred as the Laws of God, and that
there is not a force of law and public justice to protect it, anarchy
and tyranny commence. Property must be sacred or liberty cannot exist."
But in their celebration of property as the source of liberty they
ignore the fact that private property is a source of "tyranny" in itself
(see sections B.1 and B.4, for example -- and please note that anarchists
only object to private property, *not* individual possession, see section
B.3.1). However, as much anarchists may disagree about other matters,
they are united in condemning private property. Thus Proudhon argued
that property was "theft" and "despotism" while Stirner indicated the
religious and statist nature of private property and its impact on
individual liberty when he wrote :
"Property in the civic sense means *sacred* property, such that I must
*respect* your property... Be it ever so little, if one only has somewhat
of his own - to wit, a *respected* property: The more such owners... the
more 'free people and good patriots' has the State.
"Political liberalism, like everything religious, counts on *respect,*
humaneness, the virtues of love. . . . For in practice people respect
nothing, and everyday the small possessions are bought up again by greater
proprietors, and the 'free people' change into day labourers." [_The Ego
and Its Own_, p. 248]
Thus "anarcho"-capitalists reject totally one of the common (and so
defining) features of all anarchist traditions -- the opposition to
capitalist property. From Individualist Anarchists like Tucker to
Communist-Anarchists like Bookchin, anarchists have been opposed to
what Godwin termed "accumulated property." This was because it was in
"direct contradiction" to property in the form of "the produce of his
[the worker's] own industry" and so it allows "one man. . . [to] dispos[e]
of the produce of another man's industry." [_The Anarchist Reader_,
pp. 129-131] Thus, for anarchists, capitalist property is a source
exploitation and domination, *not* freedom (it undermines the freedom
associated with possession by created relations of domination between
owner and employee).
Hardly surprising then the fact that, according to Murray Bookchin, Murray
Rothbard "attacked me [Bookchin] as an anarchist with vigour because, as
he put it, I am opposed to private property." [_The Raven_, no. 29, p. 343]
We will discuss Rothbard's "homesteading" justification of property in
the next section. However, we will note here one aspect of right-libertarian
defence of "unrestricted" property rights, namely that it easily generates
evil side effects such as hierarchy and starvation. As famine expert Amartya
Sen notes:
"Take a theory of entitlements based on a set of rights of 'ownership,
transfer and rectification.' In this system a set of holdings of
different people are judged to be just (or unjust) by looking at past
history, and not by checking the consequences of that set of holdings.
But what if the consequences are recognisably terrible? . . .[R]efer[ing]
to some empirical findings in a work on famines . . . evidence [is
presented] to indicate that in many large famines in the recent past,
in which millions of people have died, there was no over-all decline
in food availability at all, and the famines occurred precisely because
of shifts in entitlement resulting from exercises of rights that are
perfectly legitimate. . . . [Can] famines . . . occur with a system of
rights of the kind morally defended in various ethical theories, including
Nozick's. I believe the answer is straightforwardly yes, since for many
people the only resource that they legitimately possess, viz. their
labour-power, may well turn out to be unsaleable in the market, giving
the person no command over food . . . [i]f results such as starvations
and famines were to occur, would the distribution of holdings still
be morally acceptable despite their disastrous consequences? There is
something deeply implausible in the affirmative answer." [_Resources,
Values and Development_, pp. 311-2]
Thus "unrestricted" property rights can have seriously bad consequences
and so the existence of "justly held" property need not imply a just
or free society -- far from it. The inequalities property can generate
can have a serious on individual freedom (see section F.3.1). Indeed,
Murray Rothbard argued that the state was evil not because it restricted
individual freedom but because the resources it claimed to own were
not "justly" acquired. Thus right-libertarian theory judges property
*not* on its impact on current freedom but by looking at past history.
This has the interesting side effect of allowing its supporters to
look at capitalist and statist hierarchies, acknowledge their similar
negative effects on the liberty of those subjected to them but argue
that one is legitimate and the other is not simply because of their
history! As if this changed the domination and unfreedom that both
inflict on people living today (see section F.2.3 for further
discussion and sections F.2.8 and F.4.2 for other examples of
"justly acquired" property producing terrible consequences).
The defence of capitalist property does have one interesting side
effect, namely the need arises to defend inequality and the authoritarian
relationships inequality creates. In order to protect the private property
needed by capitalists in order to continue exploiting the working class,
"anarcho"-capitalists propose private security forces rather than state
security forces (police and military) -- a proposal that is equivalent
to bringing back the state under another name.
Due to (capitalist) private property, wage labour would still exist under
"anarcho"-capitalism (it is capitalism after all). This means that "defensive"
force, a state, is required to "defend" exploitation, oppression, hierarchy
and authority from those who suffer them. Inequality makes a mockery of
free agreement and "consent" (see section F.3.1). As Peter Kropotkin
pointed out long ago:
"When a workman sells his labour to an employer . . . it is a mockery to
call that a free contract. Modern economists may call it free, but the
father of political economy -- Adam Smith -- was never guilty of such
a misrepresentation. As long as three-quarters of humanity are compelled
to enter into agreements of that description, force is, of course,
necessary, both to enforce the supposed agreements and to maintain such
a state of things. Force -- and a good deal of force -- is necessary to
prevent the labourers from taking possession of what they consider unjustly
appropriated by the few. . . . The Spencerian party [proto-right-libertarians]
perfectly well understand that; and while they advocate no force for changing
the existing conditions, they advocate still more force than is now used
for maintaining them. As to Anarchy, it is obviously as incompatible with
plutocracy as with any other kind of -cracy." [_Anarchism and Anarchist
Communism_, pp. 52-53]
Because of this need to defend privilege and power, "anarcho"-capitalism
is best called "private-state" capitalism. This will be discussed in more
detail in section F.6.
By advocating private property, right libertarians contradict many of
their other claims. For example, they say that they support the right of
individuals to travel where they like. They make this claim because they
assume that only the state limits free travel. But this is a false
assumption. Owners must agree to let you on their land or property
("people only have the right to move to those properties and lands where
the owners desire to rent or sell to them." [Murray Rothbard, _The Ethics
of Liberty_, p. 119]. There is no "freedom of travel" onto private property
(including private roads). Therefore immigration may be just as hard under
"anarcho"-capitalism as it is under statism (after all, the state, like
the property owner, only lets people in whom it wants to let in). People
will still have to get another property owner to agree to let them in
before they can travel -- exactly as now (and, of course, they also have
to get the owners of the road to let them in as well). Private property,
as can be seen from this simple example, is the state writ small.
One last point, this ignoring of ("politically incorrect") economic and
other views of dead political thinkers and activists while claiming them
as "libertarians" seems to be commonplace in right-Libertarian circles. For
example, Aristotle (beloved by Ayn Rand) "thought that only living things
could bear fruit. Money, not a living thing, was by its nature barren, and
any attempt to make it bear fruit (*tokos*, in Greek, the same word used
for interest) was a crime against nature." [Marcello de Cecco, quoted
by Doug Henwood, _Wall Street_, p. 41] Such opposition to interest hardly
fits well into capitalism, and so either goes unmentioned or gets classed
as an "error" (although we could ask why Aristotle is in error while Rand is
not). Similarly, individualist anarchist opposition to capitalist property
and rent, interest and profits is ignored or dismissed as "bad economics"
without realising that these ideas played a key role in their politics
and in ensuring that an anarchy would not see freedom corrupted by
inequality. To ignore such an important concept in a person's ideas is
to distort the remainder into something it is not.
F.4.1 What is wrong with a "homesteading" theory of property?
So how do "anarcho"-capitalists justify property? Looking at Murray
Rothbard, we find that he proposes a "homesteading theory of property".
In this theory it is argued that property comes from occupancy and mixing
labour with natural resources (which are assumed to be unowned). Thus the
world is transformed into private property, for "title to an unowned
resource (such as land) comes properly only from the expenditure of
labour to transform that resource into use." [_The Ethics of Liberty_,
p. 63]
Rothbard paints a conceptual history of individuals and families
forging a home in the wilderness by the sweat of their labour (its
tempting to rename his theory the "immaculate conception of property"
as his conceptual theory is somewhat at odds with actual historical
fact).
Sadly for Murray Rothbard, his "homesteading" theory was refuted
by Proudhon in _What is Property?_ in 1840 (along with many other
justifications of property). Proudhon rightly argues that "if the
liberty of man is sacred, it is equally sacred in all individuals;
that, if it needs property for its objective action, that is, for its
life, the appropriation of material is equally necessary for all . . .
Does it not follow that if one individual cannot prevent another . . .
from appropriating an amount of material equal to his own, no more can
he prevent individuals to come." And if all the available resources
are appropriated, and the owner "draws boundaries, fences himself in
. . . Here, then, is a piece of land upon which, henceforth, no one
has a right to step, save the proprietor and his friends . . . Let
[this]. . . multiply, and soon the people . . . will have nowhere
to rest, no place to shelter, no ground to till. They will die at
the proprietor's door, on the edge of that property which was their
birthright." [_What is Property?_, pp. 84-85, p. 118]
As Rothbard himself noted in respect to the aftermath of slavery
(see section F.2.2), not having access to the means of life places
one the position of unjust dependency on those who do. Rothbard's
theory fails because for "[w]e who belong to the proletaire class,
property excommunicates us!" [P-J Proudhon, Op. Cit., p. 105] and so
the vast majority of the population experience property as theft and
despotism rather than as a source of liberty and empowerment (which
possession gives). Thus, Rothbard's account fails to take into account
the Lockean Proviso (see section B.3.4) and so, for all its intuitive
appeal, ends up justifying capitalist and landlord domination (see
next section on why the Lockean Proviso is important).
It also seems strange that while (correctly) attacking social contract
theories of the state as invalid (because "no past generation can bind
later generations" [Op. Cit., p. 145]) he fails to see he is doing
*exactly that* with his support of private property (similarly, Ayn
Rand argued that "[a]ny alleged 'right' of one man, which necessitates
the violation of the right of another, is not and cannot be a right"
[_Capitalism: The Unknown Ideal_, p. 325] but obviously appropriating
land does violate the rights of others to walk, use or appropriate that
land). Due to his support for appropriation and inheritance, he is
clearly ensuring that future generations are *not* born as free as
the first settlers were (after all, they cannot appropriate any land,
it is all taken!). If future generations cannot be bound by past ones,
this applies equally to resources and property rights. Something
anarchists have long realised -- there is no defensible reason why
those who first acquired property should control its use by future
generations.
However, if we take Rothbard's theory at face value we find numerous
problems with it. If title to unowned resources comes via the "expenditure
of labour" on it, how can rivers, lakes and the oceans be appropriated?
The banks of the rivers can be transformed, but can the river itself? How
can you mix your labour with water? "Anarcho"-capitalists usually blame
pollution on the fact that rivers, oceans, and so forth are unowned, but
how can an individual "transform" water by their labour? Also, does fencing
in land mean you have "mixed labour" with it? If so then transnational
corporations can pay workers to fence in vast tracks of virgin land
(such as rainforest) and so come to "own" it. Rothbard argues that this
is not the case (he expresses opposition to "arbitrary claims"). He notes
that it is *not* the case that "the first discoverer . . . could properly
lay claim to [a piece of land] . . . [by] laying out a boundary for the
area. He thinks that "their claim would still be no more than the boundary
*itself*, and not to any of the land within, for only the boundary will
have been transformed and used by men" [Op. Cit., p. 50f]
However, if the boundary *is* private property and the owner refuses others
permission to cross it, then the enclosed land is inaccessible to others! If
an "enterprising" right-libertarian builds a fence around the only oasis in
a desert and refuses permission to cross it to travellers unless they pay
his price (which is everything they own) then the person *has* appropriated
the oasis without "transforming" it by his labour. The travellers have the
choice of paying the price or dying (and the oasis owner is well within his
rights letting them die). Given Rothbard's comments, it is probable that
he will claim that such a boundary is null and void as it allows "arbitrary"
claims -- although this position is not at all clear. After all, the fence
builder *has* transformed the boundary and "unrestricted" property rights
is what right-libertarianism is all about.
And, of course, Rothbard ignores the fact of economic power -- a transnational
corporation can "transform" far more virgin resources in a day than a family
could in a year. Transnational's "mixing their labour" with the land does
not spring into mind reading Rothbard's account of property growth, but in
the real world that is what will happen.
If we take the question of wilderness (a topic close to many eco-anarchists'
and deep ecologists' hearts) we run into similar problems. Rothbard states
clearly that "libertarian theory must invalidate [any] claim to ownership"
of land that has "never been transformed from its natural state" (he
presents an example of an owner who has left a piece of his "legally owned"
land untouched). If another person appears who *does* transform the land,
it becomes "justly owned by another" and the original owner cannot stop her
(and should the original owner "use violence to prevent another settler from
entering this never-used land and transforming it into use" they also become
a "criminal aggressor"). Rothbard also stresses that he is *not* saying that
land must continually be in use to be valid property [Op. Cit., pp. 63-64]
(after all, that would justify landless workers seizing the land from
landowners during a depression and working it themselves).
Now, where does that leave wilderness? In response to ecologists who oppose
the destruction of the rainforest, "anarcho"-capitalists suggest that they
put their money where their mouth is and *buy* rainforest land. In this way,
it is claimed, rainforest will be protected (see section B.5 for why such
arguments are nonsense). As ecologists desire the rainforest *because it
is wilderness* they are unlikely to "transform" it by human labour (its
precisely that they want to stop). From Rothbard's arguments it is fair
to ask whether logging companies have a right to "transform" the virgin
wilderness owned by ecologists, after all it meets Rothbard's criteria
(it is still wilderness). Perhaps it will be claimed that fencing off
land "transforms" it (hardly what you imagine "mixing labour" with to
mean, but nevermind) -- but that allows large companies and rich
individuals to hire workers to fence in vast tracks of land (and
recreate the land monopoly by a "libertarian" route). But as we noted
above, fencing off land does not seem to imply that it becomes property
in Rothbard's theory. And, of course, fencing in areas of rainforest
disrupts the local eco-system -- animals cannot freely travel, for example --
which, again, is what ecologists desire to stop. Would Rothbard accept a
piece of paper as "transforming" land? We doubt it (after all, in his
example the wilderness owner *did* legally own it) -- and so most
ecologists will have a hard time in "anarcho"-capitalism (wilderness
is just not an option).
As an aside, we must note that Rothbard fails to realise -- and this comes
from his worship of the market and his "Austrian economics" -- is that people
value many things which do not appear on the market. He claims that wilderness
is "valueless unused natural objects" (for it people valued them, they would
use -- i.e. appropriate -- them). But unused things may be of *considerable*
value to people, wilderness being a classic example. And if something *cannot*
be transformed into private property, does that mean people do not value it?
For example, people value community, stress free working environments,
meaningful work -- if the market cannot provide these, does that mean they
do not value them? Of course not (see Juliet Schor's _The Overworked American_
on how working people's desire for shorter working hours was not transformed
into options on the market).
Moreover, Rothbard's "homesteading" theory actually violates his support
for unrestricted property rights. What if a property owner *wants* part
of her land to remain wilderness? Their desires are violated by the
"homesteading" theory (unless, of course, fencing things off equals
"transforming" them, which it apparently does not). How can companies
provide wilderness holidays to people if they have no right to stop
settlers (including large companies) "homesteading" that wilderness?
And, of course, where does Rothbard's theory leave hunter-gather or
nomad societies. They *use* the resources of the wilderness, but they
do not "transform" them (in this case you cannot easily tell if virgin
land is empty or being used as a resource). If a troop of nomads find
its traditionally used, but natural, oasis appropriated by a homesteader
what are they to do? If they ignore the homesteaders claims he can call
upon his "defence" firm to stop them -- and then, in true Rothbardian
fashion, the homesteader can refuse to supply water to them unless they
hand over all their possessions (see section F.4.2 on this). And if
the history of the United States (which is obviously the model for
Rothbard's theory) is anything to go by, such people will become
"criminal aggressors" and removed from the picture.
Which is another problem with Rothbard's account. It is completely
ahistoric (and so, as we noted above, is more like an "immaculate
conception of property"). He has transported "capitalist man" into
the dawn of time and constructed a history of property based upon
what he is trying to justify (not surprising, as he does this with
his "Natural Law" theory too - see section F.7). What *is* interesting
to note, though, is that the *actual* experience of life on the US
frontier (the historic example Rothbard seems to want to claim) was
far from the individualistic framework he builds upon it and (ironically
enough) it was destroyed by the development of capitalism.
As Murray Bookchin notes, "the independence that the New England yeomanry
enjoyed was itself a function of the co-operative social base from which
it emerged. To barter home-grown goods and objects, to share tools and
implements, to engage in common labour during harvesting time in a
system of mutual aid, indeed, to help new-comers in barn-raising,
corn-husking, log-rolling, and the like, was the indispensable cement
that bound scattered farmsteads into a united community." [_The Third
Revolution_, vol. 1, p. 233] Bookchin quotes David P. Szatmary (author
of a book on Shay' Rebellion) stating that it was a society based
upon "co-operative, community orientated interchanges" and not a
"basically competitive society." [Ibid.]
Into this non-capitalist society came capitalist elements. Market forces
and economic power soon resulted in the transformation of this society.
Merchants asked for payment in specie which (and along with taxes)
soon resulted in indebtedness and the dispossession of the homesteaders
from their land and goods. In response Shay's rebellion started,
a rebellion which was an important factor in the centralisation of
state power in America to ensure that popular input and control over
government were marginalised and that the wealthy elite and their
property rights were protected against the many (see Bookchin, Op.
Cit., for details). Thus the homestead system was undermined,
essentially, by the need to pay for services in specie (as demanded
by merchants).
So while Rothbard's theory as a certain appeal (reinforced by watching
too many Westerns, we imagine) it fails to justify the "unrestricted"
property rights theory (and the theory of freedom Rothbard derives
from it). All it does is to end up justifying capitalist and landlord
domination (which is probably what it was intended to do).
F.4.2 Why is the "Lockean Proviso" important?
Robert Nozick, in his work _Anarchy, State, and Utopia_ presented a
case for private property rights that was based on what he termed
the "Lockean Proviso" -- namely that common (or unowned) land and
resources could be appropriated by individuals as long as the position
of others is not worsen by so doing. However, if we *do* take this
Proviso seriously private property rights cannot be defined (see
section B.3.4 for details). Thus Nozick's arguments in favour of
property rights fail.
Some right-libertarians, particularly those associated with the
Austrian school of economics argue that we must reject the Lockean
Proviso (probably due to the fact it can be used to undermine the
case for absolute property rights). Their argument goes as follows:
if an individual appropriates and uses a previously unused resource,
it is because it has value to him/her, as an individual, to engage in
such action. The individual has stolen nothing because it was previously
unowned and we cannot know if other people are better or worse off, all
we know is that, for whatever reason, they did not appropriate the
resource ("If latecomers are worse off, well then that is their proper
assumption of risk in this free and uncertain world. There is no longer
a vast frontier in the United States, and there is no point crying
over the fact." [Murray Rothbard, _The Ethics of Liberty_, p. 240]).
Hence the appropriation of resources is an essentially individualistic,
asocial act -- the requirements of others are either irrelevant or
unknown. However, such an argument fails to take into account *why*
the Lockean Proviso has such an appeal. When we do this we see that
rejecting it leads to massive injustice, even slavery.
However, let us start with a defence of rejecting the Proviso from a
leading Austrian economist:
"Consider . . . the case . . . of the unheld sole water hole in the
desert (which *everyone* in a group of travellers knows about), which
one of the travellers, by racing ahead of the others, succeeds in
appropriating . . . [This] clearly and unjustly violates the Lockean
proviso. . . For use, however, this view is by no means the only one
possible. We notice that the energetic traveller who appropriated
all the water was not doing anything which (always ignoring, of course,
prohibitions resting on the Lockean proviso itself) the other travellers
were not equally free to do. The other travellers, too, could have
raced ahead . . . [they] did *not* bother to race for the water . . .
It does not seem obvious that these other travellers can claim that
they were *hurt* by an action which they could themselves have easily
taken" [Israel M. Kirzner, "Entrepreneurship, Entitlement, and Economic
Justice", pp. 385-413, in _Reading Nozick_, p. 406]
Murray Rothbard, we should note, takes a similar position in a similar
example, arguing that "the owner [of the sole oasis] is scarcely being
'coercive'; in fact he is supplying a vital service, and should have
the right to refuse a sale or charge whatever the customers will pay.
The situation may be unfortunate for the customers, as are many situations
in life." [_The Ethics of Liberty_, p. 221] (Rothbard, we should note,
is relying to the right-libertarian von Hayek who -- to his credit --
does maintain that this is a coercive situation; but as others, including
other right-libertarians, point out, he has to change his definition
of coercion/freedom to do so -- see Stephan L. Newman's _Liberalism at
Wit's End_, pp. 130-134 for an excellent summary of this debate).
Now, we could be tempted just to rant about the evils of the right
libertarian mind-frame but we will try to present a clam analysis
of this position. Now, what Kirzner (and Rothbard et al) fails to note is
that without the water the other travellers will die in a matter of days.
The monopolist has the power of life and death over his fellow travellers.
Perhaps he hates one of them and so raced ahead to ensure their death.
Perhaps he just recognised the vast power that his appropriation would
give him and so, correctly, sees that the other travellers would give
up all their possessions and property to him in return for enough water
to survive.
Either way, its clear that perhaps the other travellers did not "race
ahead" because they were ethical people -- they would not desire to
inflict such tyranny on others because they would not like it inflicted
upon them.
Thus we can answer Kirzner's question -- "What . . . is so obviously
acceptable about the Lockean proviso. . . ?" [Ibid.]
It is the means by which human actions are held accountable to social
standards and ethics. It is the means by which the greediest, most
evil and debased humans are stopped from dragging the rest of humanity
down to their level (via a "race to the bottom") and inflicting untold
tyranny and domination on their fellow humans. An ideology that could
consider the oppression which could result from such an appropriation
as "supplying a vital service" and any act to remove this tyranny as
"coercion" is obviously a very sick ideology. And we may note that
the right-libertarian position on this example is a good illustration
of the dangers of deductive logic from assumptions (see section F.1.3
for more on this right-libertarian methodology) -- after all W. Duncan
Reekie, in his introduction to Austrian Economics, states that "[t]o be
intellectually consistent one must concede his absolute right to the
oasis." [_Markets, Entrepreneurs and Liberty_, p. 181] To place ideology
before people is to ensure humanity is placed on a Procrustean bed.
Which brings us to another point. Often right-libertarians say that
anarchists and other socialists are "lazy" or "do not want to work".
You could interpret Kirzner's example as saying that the other
travellers are "lazy" for not rushing ahead and appropriating the
oasis. But this is false. For under capitalism you can only get rich
by exploiting the labour of others via wage slavery or, within a
company, get better pay by taking "positions of responsibility"
(i.e. management positions). If you have an ethical objection to
treating others as objects ("means to an end") then these options
are unavailable to you. Thus anarchists and other socialists are
not "lazy" because they are not rich -- they just have no desire to
get rich off the labour and liberty of others (as expressed in their
opposition to private property and the relations of domination it
creates). In other words, Anarchism is not the "politics of envy";
it is the politics of liberty and the desire to treat others as
"ends in themselves".
Rothbard is aware of what is involved in accepting the Lockean Proviso
-- namely the existence of private property ("Locke's proviso may lead
to the outlawry of *all* private property of land, since one can always
say that the reduction of available land leaves everyone else . . .
worse off", _The Ethics of Liberty_, p. 240 -- see section B.3.4 for
a discussion on why the Proviso *does* imply the end of capitalist
property rights). Which is why he, and other right-libertarians, reject
it. Its simple. Either you reject the Proviso and embrace capitalist
property rights (and so allow one class of people to be dispossessed
and another empowered at their expense) or you reject private property
in favour of possession and liberty. Anarchists, obviously, favour
the latter option.
As an aside, we should point out that (following Stirner) the would-be
monopolist is doing nothing wrong (as such) in attempting to monopolise
the oasis. He is, after all, following his self-interest. However, what
is objectionable is the right-libertarian attempt to turn thus act into
a "right" which must be respected by the other travellers. Simply put,
if the other travellers gang up and dispose of this would be tyrant
then they are right to do so -- to argue that this is a violation of
the monopolists "rights" is insane and an indication of a slave
mentality (or, following Rousseau, that the others are "simple").
Of course, if the would-be monopolist has the necessary *force* to
withstand the other travellers then his property then the matter is
closed -- might makes right. But to worship rights, even when they
obviously result in despotism, is definitely a case of "spooks in
the head" and "man is created for the Sabbath" not "the Sabbath
is created for man."
F.4.3 How does private property effect individualism?
Private property is usually associated by "anarcho"-capitalism with
individualism. Usually private property is seen as the key way of
ensuring individualism and individual freedom (and that private
property is the expression of individualism). Therefore it is useful
to indicate how private property can have a serious impact on
individualism.
Usually right-libertarians contrast the joys of "individualism" with
the evils of "collectivism" in which the individual is sub-merged into
the group or collective and is made to work for the benefit of the
group (see any Ayn Rand book or essay on the evils of collectivism).
But what is ironic is that right-libertarian ideology creates a view
of industry which would (perhaps) shame even the most die-hard fan of
Stalin. What do we mean? Simply that right-libertarians stress the
abilities of the people at the top of the company, the owner, the
entrepreneur, and tend to ignore the very real subordination of those
lower down the hierarchy (see, again, any Ayn Rand book on the worship
of business leaders). In the Austrian school of economics, for example,
the entrepreneur is considered the driving force of the market process
and tend to abstract away from the organisations they govern. This
approach is usually followed by right-libertarians. Often you get the
impression that the accomplishments of a firm are the personal triumphs
of the capitalists, as though their subordinates are merely tools not
unlike the machines on which they labour.
We should not, of course, interpret this to mean that right-libertarians
believe that entrepreneurs run their companies single-handedly (although
you do get that impression sometimes!). But these abstractions help hide
the fact that the economy is overwhelmingly interdependent and organised
hierarchically within industry. Even in their primary role as organisers,
entrepreneurs depend on the group. A company president can only issue
general guidelines to his managers, who must inevitably organise and
direct much of their departments on their own. The larger a company gets,
the less personal and direct control an entrepreneur has over it. They must
delegate out an increasing share of authority and responsibility, and is
more dependent than ever on others to help him run things, investigate
conditions, inform policy, and make recommendations. Moreover, the authority
structures are from the "top-down" -- indeed the firm is essentially a
command economy, with all members part of a collective working on a common
plan to achieve a common goal (i.e. it is essentially collectivist in
nature -- which means it is not too unsurprising that Lenin argued that
state socialism could be considered as one big firm or office and why
the system he built on that model was so horrific).
So the firm (the key component of the capitalist economy) is marked by
a distinct *lack* of individualism, a lack usually ignored by right
libertarians (or, at best, considered as "unavoidable"). As these firms
are hierarchical structures and workers are paid to obey, it does make
*some* sense -- in a capitalist environment -- to assume that the
entrepreneur is the main actor, but as an individualistic model of
activity it fails totally. Perhaps it would not be unfair to say that
capitalist individualism celebrates the entrepreneur because this
reflects a hierarchical system in which for the one to flourish, the
many must obey? (Also see section F.1.1).
Capitalist individualism does not recognise the power structures that
exist within capitalism and how they affect individuals. In Brian
Morris' words, what they fail "to recognise is that most productive
relations under capitalism allow little scope for creativity and
self-expression on the part of workers; that such relationships
are not equitable; nor are they freely engaged in for the mutual
benefit of both parties, for workers have no control over the
production process or over the product of their labour. Rand [like
other right-libertarians] misleadingly equates trade, artistic
production and wage-slavery. . . [but] wage-slavery . . . is quite
different from the trade principle" as it is a form of "exploitation"
[_Ecology & Anarchism_, p. 190]
He further notes that "[s]o called trade relations involving human
labour are contrary to the egoist values Rand [and other capitalist
individualists] espouses - they involve little in the way of
independence, freedom, integrity or justice." [Ibid., p. 191]
Moreover, capitalist individualism actually *supports* authority and
hierarchy. As Joshua Chen and Joel Rogers point out, the "achievement
of short-run material satisfaction often makes it irrational [from
an individualist perspective] to engage in more radical struggle, since
that struggle is by definition against those institutions which
provide one's current gain." In other words, to rise up the company
structure, to "better oneself," (or even get a good reference) you
cannot be a pain in the side of management -- obedient workers do
well, rebel workers do not.
Thus the hierarchical structures help develop an "individualistic"
perspective which actually reinforces those authority structures.
This, as Cohn and Rogers notes, means that "the structure in which
[workers] find themselves yields less than optimal social results
from their isolated but economically rational decisions." [quoted
by Alfie Kohn, _No Contest_, p. 67, p. 260f]
Steve Biko, a black activist murdered by the South African police
in the 1970s, argued that "the most potent weapon of the oppressor
is the mind of the oppressed." And this is something capitalists
have long recognised. Their investment in "Public Relations" and
"education" programmes for their employees shows this clearly,
as does the hierarchical nature of the firm. By having a ladder
to climb, the firm rewards obedience and penalises rebellion. This
aims at creating a mind-set which views hierarchy as good and so
helps produce servile people.
This is why anarchists would agree with Alfie Kohn when he argues that
"the individualist worldview is a profoundly conservative doctrine: it
inherently stifles change." [Ibid., p. 67] So, what is the best way
for a boss to maintain his or her power? Create a hierarchical workplace
and encourage capitalist individualism (as capitalist individualism
actually works *against* attempts to increase freedom from hierarchy).
Needless to say, such a technique cannot work forever -- hierarchy
also encourages revolt -- but such divide and conquer can be *very*
effective.
And as anarchist author Michael Moorcock put it, "Rugged individualism
also goes hand in hand with a strong faith in paternalism -- albeit a
tolerant and somewhat distant paternalism -- and many otherwise
sharp-witted libertarians seem to see nothing in the morality of a
John Wayne Western to conflict with their views. Heinlein's paternalism
is at heart the same as Wayne's. . . To be an anarchist, surely, is
to reject authority but to accept self-discipline and community
responsibility. To be a rugged individualist a la Heinlein and
others is to be forever a child who must obey, charm and cajole
to be tolerated by some benign, omniscient father: Rooster Coburn
shuffling his feet in front of a judge he respects for his office
(but not necessarily himself) in True Grit." [_Starship Stormtroopers_]
One last thing, don't be fooled into thinking that individualism or concern
about individuality -- not *quite* the same thing -- is restricted to the
right, they are not. For example, the "individualist theory of society . . .
might be advanced in a capitalist or in an anti-capitalist form . . . the
theory as developed by critics of capitalism such as Hodgskin and the
anarchist Tucker saw ownership of capital by a few as an obstacle to
genuine individualism, and the individualist ideal was realisable only
through the free association of labourers (Hodgskin) or independent
proprietorship (Tucker)." [David Miller, _Social Justice_, pp. 290-1]
And the reason why social anarchists oppose capitalism is that it creates
a *false* individualism, an abstract one which crushes the individuality
of the many and justifies (and supports) hierarchical and authoritarian
social relations. In Kropotkin's words, "what has been called 'individualism'
up to now has been only a foolish egoism which belittles the individual.
It did not led to what it was established as a goal: that is the complete,
broad, and most perfectly attainable development of individuality." The
new individualism desired by Kropotkin "will not consist . . . in the
oppression of one's neighbour . . . [as this] reduced the [individualist]
. . .to the level of an animal in a herd." [_Selected Writings_, p, 295,
p. 296]
F.4.4 How does private property affect relationships?
Obviously, capitalist private property affects relationships between people
by creating structures of power. Property, as we have argued all through
this FAQ, creates relationships based upon domination -- and this cannot
help but produce servile tendencies within those subject to them (it also
produces rebellious tendencies as well, the actual ratio between the two
tendencies dependent on the individual in question and the community they
are in). As anarchists have long recognised, power corrupts -- both those
subjected to it and those who exercise it.
While few, if any, anarchists would fail to recognise the importance of
possession -- which creates the necessary space all individuals need to
be themselves -- they all agree that private property corrupts this
liberatory aspect of "property" by allowing relationships of domination
and oppression to be built up on top of it. Because of this recognition,
all anarchists have tried to equalise property and turn it back into
possession.
Also, capitalist individualism actively builds barriers between people.
Under capitalism, money rules and individuality is expressed via
consumption choices (i.e. money). But money does not encourage an
empathy with others. As Frank Stronach (chair of Magna International, a
Canadian auto-parts maker that shifted its production to Mexico) put
it, "[t]o be in business your first mandate is to make money, and
money has no heart, no soul, conscience, homeland." [cited by Doug
Henwood, _Wall Street_, p. 113] And for those who study economics,
it seems that this dehumanising effect also strikes them as well:
"Studying economics also seems to make you a nastier person. Psychological
studies have shown that economics graduate students are more likely to
'free ride' -- shirk contributions to an experimental 'public goods'
account in the pursuit of higher private returns -- than the general
public. Economists also are less generous that other academics in
charitable giving. Undergraduate economics majors are more likely to
defect in the classic prisoner's dilemma game that are other majors.
And on other tests, students grow less honest -- expressing less of
a tendency, for example, to return found money -- after studying
economics, but not studying a control subject like astronomy.
"This is no surprise, really. Mainstream economics is built entirely
on a notion of self-interested individuals, rational self-maximisers
who can order their wants and spend accordingly. There's little room
for sentiment, uncertainty, selflessness, and social institutions.
Whether this is an accurate picture of the average human is open to
question, but there's no question that capitalism as a system and
economics as a discipline both reward people who conform to the
model." [Doug Henwood, Op. Cit., p, 143]
Which, of course, highlights the problems within the "trader" model
advocated by Ayn Rand. According to her, the trader is *the* example
of moral behaviour -- you have something I want, I have something you
want, we trade and we both benefit and so our activity is self-interested
and no-one sacrifices themselves for another. While this has *some*
intuitive appeal it fails to note that in the real world it is a pure
fantasy. The trader wants to get the best deal possible for themselves
and if the bargaining positions are unequal then one person will gain
at the expense of the other (if the "commodity" being traded is labour,
the seller may not even have the option of not trading at all). The
trader is only involved in economic exchange, and has no concern for
the welfare of the person they are trading with. They are a bearer of
things, *not* an individual with a wide range of interests, concerns,
hopes and dreams. These are irrelevant, unless you can make money out
of them of course! Thus the trader is often a manipulator and outside
novels it most definitely is a case of "buyer beware!"
If the trader model is taken as the basis of interpersonal relationships,
economic gain replaces respect and empathy for others. It replaces human
relationships with relationships based on things -- and such a mentality
does not encompass how interpersonal relationships affect both you and
the society you life in. In the end, it impoverishes society and
individuality. Yes, any relationship must be based upon self-interest
(mutual aid is, after all, something we do because we benefit from it
in some way) but the trader model presents such a *narrow* self-interest
that it is useless and actively impoverishes the very things it should be
protecting -- individuality and interpersonal relationships (see section
I.7.4 on how capitalism does not protect individuality).
F.4.5 Does private property co-ordinate without hierarchy?
It is usually to find right-libertarians maintain that private property
(i.e. capitalism) allows economic activity to be co-ordinated by
non-hierarchical means. In other words, they maintain that capitalism
is a system of large scale co-ordination without hierarchy. These
claims follow the argument of noted right-wing, "free market"
economist Milton Friedman who contrasts "central planning involving
the use of coercion - the technique of the army or the modern
totalitarian state" with "voluntary co-operation between
individuals - the technique of the marketplace" as two distinct
ways of co-ordinating the economic activity of large groups
("millions") of people. [_Capitalism and Freedom_, p. 13].
However, this is just playing with words. As they themselves point
out the internal structure of a corporation or capitalist company
is *not* a "market" (i.e. non-hierarchical) structure, it is a
"non-market" (hierarchical) structure of a market participant
(see section F.2.2). However "market participants" are part of
the market. In other words, capitalism is *not* a system of
co-ordination without hierarchy because it does contain hierarchical
organisations which *are an essential part of the system*!
Indeed, the capitalist company *is* a form of central planning and
shares the same "technique" as the army. As the pro-capitalist writer
Peter Drucker noted in his history of General Motors, "[t]here is a
remarkably close parallel between General Motors' scheme of organisation
and those of the two institutions most renowned for administrative
efficiency: that of the Catholic Church and that of the modern army . . ."
[quoted by David Enger, _Apostles of Greed_, p. 66]. And so capitalism
is marked by a series of totalitarian organisations -- and since when
was totalitarianism liberty enhancing? Indeed, many "anarcho"-capitalists
actually celebrate the command economy of the capitalist firm as being
more "efficient" than self-managed firms (usually because democracy
stops action with debate). The same argument is applied by the Fascists
to the political sphere. It does not change much -- nor does it become
less fascistic -- when applied to economic structures. To state the
obvious, such glorification of workplace dictatorship seems somewhat
at odds with an ideology calling itself "libertarian" or "anarchist".
Is dictatorship more liberty enhancing to those subject to it than
democracy? Anarchists doubt it (see section A.2.11 for details).
In order to claim that capitalism co-ordinates individual activity
without hierarchy right-libertarians have to abstract from individuals
and how they interact *within* companies and concentrate purely on
relationships *between* companies. This is pure sophistry. Like markets,
companies require at least two or more people to work - both are forms
of social co-operation. If co-ordination within companies is hierarchical,
then the system they work within is based upon hierarchy. To claim that
capitalism co-ordinates without hierarchy is simply false - its based
on hierarchy and authoritarianism. Capitalist companies are based upon
denying workers self-government (i.e. freedom) during work hours. The
boss tells workers what to do, when to do, how to do and for how long.
This denial of freedom is discussed in greater depth in sections B.1
and B.4.
Because of the relations of power it creates, opposition to capitalist
private property (and so wage labour) and the desire to see it ended
is an essential aspect of anarchist theory. Due to its ideological
blind spot with regards to apparently "voluntary" relations of
domination and oppression created by the force of circumstances
(see section F.2 for details), "anarcho"-capitalism considers
wage labour as a form of freedom and ignore its fascistic aspects
(when not celebrating those aspects). Thus "anarcho"-capitalism is not
anarchist. By concentrating on the moment the contract is signed, they
ignore that freedom is restricted during the contract itself. While
denouncing (correctly) the totalitarianism of the army, they ignore
it in the workplace. But factory fascism is just as freedom destroying
as the army or political fascism.
Due to this basic lack of concern for freedom, "anarcho"-capitalists
cannot be considered as anarchists. Their total lack of concern
about factory fascism (i.e. wage labour) places them totally outside
the anarchist tradition. Real anarchists have always been aware of that
private property and wage labour restriction freedom and desired to
create a society in which people would be able to avoid it. In other
words, where *all* relations are non-hierarchical and truly co-operative.
To conclude, to claim that private property eliminates hierarchy is false.
Nor does capitalism co-ordinate economic activities without hierarchical
structures. For this reason anarchists support co-operative forms of
production rather than capitalistic forms.
F.5 Will privatising "the commons" increase liberty?
"Anarcho"-capitalists claim that privatising "the commons" (e.g. roads,
parks, etc.) which are now freely available to all will increase liberty.
Is this true? We have shown before why the claim that privatisation can
protect the environment is highly implausible (see section E.2). Here we
will concern ourselves with private ownership of commonly used "property"
which we all take for granted and pay for with taxes.
Its clear from even a brief consideration of a hypothetical society based
on "privatised" roads (as suggested by Murray Rothbard in _For a New
Liberty_, pp. 202-203 and David Friedman in _The Machinery of Freedom_,
pp. 98-101) that the only increase of liberty will be for the ruling elite.
As "anarcho"-capitalism is based on paying for what one uses, privatisation
of roads would require some method of tracking individuals to ensure that
they pay for the roads they use. In the UK, for example, during the 1980s
the British Tory government looked into the idea of toll-based motorways.
Obviously having toll-booths on motorways would hinder their use and restrict
"freedom," and so they came up with the idea of tracking cars by satellite.
Every vehicle would have a tracking device installed in it and a satellite
would record where people went and which roads they used. They would then
be sent a bill or have their bank balances debited based on this information
(in the fascist city-state/company town of Singapore such a scheme *has*
been introduced).
If we extrapolate from this example to a system of *fully* privatised
"commons," it would clearly require all individuals to have tracking
devices on them so they could be properly billed for use of roads,
pavements, etc. Obviously being tracked by private firms would be a
serious threat to individual liberty. Another, less costly, option would
be for private guards to randomly stop and question car-owners and
individuals to make sure they had paid for the use of the road or pavement
in question. "Parasites" would be arrested and fined or locked up. Again,
however, being stopped and questioned by uniformed individuals has more
in common with police states than liberty. Toll-boothing *every* street
would be highly unfeasible due to the costs involved and difficulties for
use that it implies. Thus the idea of privatising roads and charging
drivers to gain access seems impractical at best and distinctly freedom
endangering if implemented at worse.
Of course, the option of owners letting users have free access to the
roads and pavements they construct and run would be difficult for a
profit-based company. No one could make a profit in that case. If
companies paid to construct roads for their customers/employees to use,
they would be financially hindered in competition with other companies
that did not, and thus would be unlikely to do so. If they restricted
use purely to their own customers, the tracking problem appears again.
And, of course, these privatisation suggestions ignore differences in
income and market power. If, for example, variable pricing is used to
discourage road use at times of peak demand (to eliminate traffic jams
at rush-hour) as is suggested both by Murray Rothbard and David Friedman,
then the rich will have far more "freedom" to travel than the rest of
the population. And we may even see people having to go into debt just
to get to work or move to look for work.
One last problem with the idea of privatising the roads is that some
"libertarian" capitalists think that "right of passage" would be encoded
into the "general libertarian law code." This means that road owners
would be required, by law, to let anyone use them. But where are
"absolute" property rights in this case? Are the owners of roads not to
have the same rights as other owners? And if "right of passage" is
enforced, what would this mean for road owners when people sue them for
car-pollution related illnesses? (The right of those injured by pollution
to sue polluters is the main way "anarcho"-capitalists propose to protect
the environment. See sections E.2 and E.3). It is unlikely that those
wishing to bring suit could find, never mind sue, the millions of individual
car owners who could have potentially caused their illness. Hence the
road-owners would be sued for letting polluting (or unsafe) cars onto "their"
roads. The road-owners would therefore desire to restrict pollution levels
by restricting the right to use their property, and so would resist the
"right of passage" as an "attack" on their "absolute" property rights. If
the road-owners got their way (which would be highly likely given the
need for "absolute" property rights and is suggested by the variable
pricing way to avoid traffic jams mentioned above) and were able to control
who used their property, freedom to travel would be *very* restricted and
limited to those whom the owner considered "desirable." Indeed, Murray
Rothbard supports such a regime ("In the free [sic!] society, they
[travellers] would, in the first instance, have the right to travel
only on those streets whose owners agree to have them there" [_The
Ethics of Liberty_, p. 119]). The threat to liberty in such a system
is obvious -- to all but Rothbard and other right-libertarians, of
course.
To take another example, let us consider the privatisation of parks,
streets and other public areas. Currently, individuals can use these areas
to hold political demonstrations, hand out leaflets, picket and so on.
However, under "anarcho"-capitalism the owners of such property can
restrict such liberties if they desire, calling such activities "initiation
of force" (although they cannot explain how speaking your mind is an
example of "force"). Therefore, freedom of speech, assembly and a host
of other liberties we take for granted would be reduced (if not eliminated)
under a right-"libertarian" regime. Or, taking the case of pickets and
other forms of social struggle, its clear that privatising "the commons"
would only benefit the bosses. Strikers or other activists picketing or
handing out leaflets in shopping centre's are quickly ejected by private
security even today. Think about how much worse it would become under
"anarcho"-capitalism when the whole world becomes a series of malls -- it
would be impossible to hold a picket when the owner of the pavement objects,
for example (as Rothbard himself argues, Op. Cit., p. 132) and if the owner
of the pavement also happens to be the boss being picketed, then workers'
rights would be zero. Perhaps we could also see capitalists suing working
class organisations for littering their property if they do hand out
leaflets (so placing even greater stress on limited resources).
The I.W.W. went down in history for its rigorous defence of freedom of
speech because of its rightly famous "free speech" fights in numerous
American cities and towns. Repression was inflicted upon wobblies who
joined the struggle by "private citizens," but in the end the IWW won.
Consider the case under "anarcho"-capitalism. The wobblies would have been
"criminal aggressors" as the owners of the streets have refused to allow
"undesirables" to use them to argue their case. If they refused to
acknowledge the decree of the property owners, private cops would have
taken them away. Given that those who controlled city government in
the historical example were the wealthiest citizens in town, its likely
that the same people would have been involved in the fictional
("anarcho"-capitalist) account. Is it a good thing that in the real
account the wobblies are hailed as heroes of freedom but in the fictional
one they are "criminal aggressors"? Does converting public spaces into
private property *really* stop restrictions on free speech being a
bad thing?
These examples can hardly be said to be increasing liberty for society as
a whole, although "anarcho" capitalists seem to think they would. So far
from *increasing* liberty for all, then, privatising the commons would
only increase it for the ruling elite, by giving them yet another monopoly
from which to collect income and exercise their power over. It would
*reduce* freedom for everyone else. As Peter Marshall notes, "[i]n the name
of freedom, the anarcho-capitalists would like to turn public spaces into
private property, but freedom does not flourish behind high fences protected
by private companies but expands in the open air when it is enjoyed by all"
[_Demanding the Impossible_, p. 564].
Little wonder Proudhon argued that "if the public highway is nothing but
an accessory of private property; if the communal lands are converted into
private property; if the public domain, in short, is guarded, exploited,
leased, and sold like private property -- what remains for the proletaire?
Of what advantage is it to him that society has left the state of war to
enter the regime of police?" [_System of Economic Contradictions_, p. 371]
F.6 Is "anarcho"-capitalism against the state?
No. Due to its basis in private property, "anarcho"-capitalism implies a
class division of society into bosses and workers. Any such division
will require a state to maintain it. However, it need not be the same
state as exists now. Regarding this point, "anarcho"-capitalism plainly
advocates "defence associations" to protect property. For the
"anarcho"-capitalist, however, these private companies are not
states. For anarchists, they most definitely are.
According to Murray Rothbard ["Society Without A State", in _Nomos XIX_,
Pennock and Chapman, eds., p. 192.], a state must have one or both of the
following characteristics:
1) The ability to tax those who live within it.
2) It asserts and usually obtains a coerced monopoly of the
provision of defence over a given area.
He makes the same point in _The Ethics of Liberty_ [p. 171].
Instead of this, the "anarcho"-capitalist thinks that people should be
able to select their own "defence companies" (which would provide the
needed police) and courts from the free market in "defence" which would
spring up after the state monopoly has been eliminated. These companies
"all. . . would have to abide by the basic law code" ["Society Without
A State", p. 206]. Thus a "general libertarian law code" would govern the
actions of these companies. This "law code" would prohibit coercive
aggression at the very least, although to do so it would have to specify
what counted as legitimate property, how said can be owned and what
actually constitutes aggression. Thus the law code would be quite
extensive.
How is this law code to be actually specified? Would these laws be
democratically decided? Would they reflect common usage (i.e. custom)?
"supply and demand"? "Natural law"? Given the strong dislike of
democracy shown by "anarcho"-capitalists, we think we can safely say
that some combination of the last two options would be used. Murray
Rothbard argued that judges would "not [be] making the law but
finding it on the basis of agreed-upon principles derived either
from custom or reason" [Rothbard, Op. Cit., p. 206] while David
Friedman argues in _The Machinery of Freedom_ that different defence
firms would sell their own laws [p. 116]. It is sometimes acknowledged
that non-libertarian laws may be demanded (and supplied) in such a
market.
Around this system of "defence companies" is a free market in "arbitrators"
and "appeal judges" to administer justice and the "basic law code." Rothbard
believes that such a system would see "arbitrators with the best reputation
for efficiency and probity. . .[being] chosen by the various parties in the
market. . .[and] will come to be given an increasing amount of business."
[Rothbard, Op. Cit., p.199] Judges "will prosper on the market in proportion
to their reputation for efficiency and impartiality." [Op. Cit., p. 204]
Therefore, like any other company, arbitrators would strive for profits and
wealth, with the most successful ones becoming "prosperous." Of course, such
wealth would have no impact on the decisions of the judges, and if it did,
the population (in theory) are free to select any other judge (although, of
course, they would also "strive for profits and wealth" -- which means the
choice of character may be somewhat limited! -- and the laws which they
were using to guide their judgements would be enforcing capitalist rights).
Whether or not this system would work as desired is discussed in the
following sections. We think that it will not. Moreover, we will argue that
"anarcho"-capitalist "defence companies" meet not only the criteria of
statehood we outlined in section B.2, but also Rothbard's own criteria
for the state, quoted above.
As regards the anarchist criterion, it is clear that "defence companies"
exist to defend private property; that they are hierarchical (in that
they are capitalist companies which defend the power of those who employ
them); that they are professional coercive bodies; and that they exercise
a monopoly of force over a given area (the area, initially, being the
property of the person or company who is employing the "association").
If, as Ayn Rand noted (using a Weberian definition of the state) a government
is an institution "that holds the exclusive power to *enforce* certain rules
of conduct in a given geographical area" [_Capitalism: The Unknown Ideal_,
p. 239] then these "defence companies" are the means by which the property
owner (who exercises a monopoly to determine the rules governing their
property) enforce their rules.
For this (and other reasons), we should call the "anarcho"-capitalist
defence firms "private states" -- that is what they are -- and
"anarcho"-capitalism "private state" capitalism.
Before discussing these points further, it is necessary to point out a
relatively common fallacy of "anarcho"-capitalists. This is the idea that
"defence" under the system they advocate means defending people, not
territorial areas. This, for some, means that defence companies are not
"states." However, as people and their property and possessions do not
exist merely in thought but on the Earth, it is obvious that these
companies will be administering "justice" over a given area of the
planet. It is also obvious, therefore, that these "defence associations"
will operate over a (property-owner defined) area of land and enforce
the property-owner's laws, rules and regulations. The deeply
anti-libertarian, indeed fascistic, aspects of this "arrangement"
will be examined in the following sections.
F.6.1 What's wrong with this "free market" justice?
It does not take much imagination to figure out whose interests "prosperous"
arbitrators, judges and defence companies would defend: their own, as well
as those who pay their wages -- which is to say, other members of the rich
elite. As the law exists to defend property, then it (by definition) exists
to defend the power of capitalists against their workers.
Rothbard argues that the "judges" would "not [be] making the law but
finding it on the basis of agreed-upon principles derived either from
custom or reason" [Rothbard, Op. Cit., p. 206]. However, this begs the
question: *whose* reason? *whose* customs? Do individuals in different
classes share the same customs? The same ideas of right and wrong? Would
rich and poor desire the same from a "basic law code"? Obviously not. The
rich would only support a code which defended their power over the poor.
Although only "finding" the law, the arbitrators and judges still exert
an influence in the "justice" process, an influence not impartial or
neutral. As the arbitrators themselves would be part of a profession, with
specific companies developing within the market, it does not take a
genius to realise that when "interpreting" the "basic law code," such
companies would hardly act against their own interests as companies. In
addition, if the "justice" system was based on "one dollar, one vote," the
"law" would best defend those with the most "votes" (the question of
market forces will be discussed in section F.6.3). Moreover, even if
"market forces" would ensure that "impartial" judges were dominant, all
judges would be enforcing a *very* partial law code (namely one that
defended *capitalist* property rights). Impartiality when enforcing
partial laws hardly makes judgements less unfair.
Thus, due to these three pressures -- the interests of arbitrators/judges,
the influence of money and the nature of the law -- the terms of "free
agreements" under such a law system would be tilted in favour of lenders
over debtors, landlords over tenants, employers over employees, and in
general, the rich over the poor, just as we have today. This is what one
would expect in a system based on "unrestricted" property rights and a
(capitalist) free market. A similar tendency towards the standardisation
of output in an industry in response to influences of wealth can be seen
from the current media system (see section D.3 -- How does wealth
influence the mass media?)
Some "anarcho"-capitalists, however, claim that just as cheaper cars were
developed to meet demand, so cheaper defence associations and "people's
arbitrators" would develop on the market for the working class. In this
way impartiality will be ensured. This argument overlooks a few key points:
Firstly, the general "libertarian" law code would be applicable to *all*
associations, so they would have to operate within a system determined
by the power of money and of capital. The law code would reflect,
therefore, property *not* labour and so "socialistic" law codes would
be classed as "outlaw" ones. The options then facing working people
is to select a firm which best enforced the *capitalist* law in their
favour. And as noted above, the impartial enforcement of a biased law
code will hardly ensure freedom or justice for all.
Secondly, in a race between a Jaguar and a Volkswagen Beetle, who is more
likely to win? The rich would have "the best justice money can buy," as
they do now. Members of the capitalist class would be able to select the
firms with the best lawyers, best private cops and most resources. Those
without the financial clout to purchase quality "justice" would simply be
out of luck - such is the "magic" of the marketplace.
Thirdly, because of the tendency toward concentration, centralisation,
and oligopoly under capitalism (due to increasing capital costs for new
firms entering the market, as discussed in section C.4), a few companies
would soon dominate the market -- with obvious implications for "justice."
Different firms will have different resources. In other words, in a
conflict between a small firm and a larger one, the smaller one is at a
disadvantage in terms of resources. They may not be in a position to fight
the larger company if it rejects arbitration and so may give in simply
because, as the "anarcho"-capitalists so rightly point out, conflict and
violence will push up a company's costs and so they would have to be avoided
by smaller companies. It is ironic that the "anarcho"-capitalist implicitly
assumes that every "defence company" is approximately of the same size, with
the same resources behind it. In real life, this is clearly *not* the case.
Fourthly, it is *very* likely that many companies would make subscription to
a specific "defence" firm or court a requirement of employment. Just as today
many (most?) workers have to sign no-union contracts (and face being fired
if they change their minds), it does not take much imagination to see that
the same could apply to "defence" firms and courts. This was/is the case
in company towns (indeed, you can consider unions as a form of "defence"
firm and these companies refused to recognise them). As the labour market
is almost always a buyer's market, it is not enough to argue that workers
can find a new job without this condition. They may not and so have to put
up with this situation. And if (as seems likely) the laws and rules of the
property-owner will take precedence in any conflict, then workers and tenants
will be at a disadvantage no matter how "impartial" the judges.
Ironically, some "anarcho"-capitalists point to current day company/union
negotiations as an example of how different defence firms would work
out their differences peacefully. Sadly for this argument, union rights
under "actually existing capitalism" were created and enforced by the
state in direct opposition to capitalist "freedom of contract." Before
the law was changed, unions were often crushed by force -- the companies
were better armed, had more resources and had the law on their side.
Today, with the "downsizing" of companies we can see what happens to
"peaceful negotiation" and "co-operation" between unions and companies
when it is no longer required (i.e. when the resources of both sides
are unequal). The market power of companies far exceeds those of the
unions and the law, by definition, favours the companies. As an example
of how competing "protection agencies" will work in an "anarcho"-capitalist
society, it is far more insightful than originally intended!
Now let us consider the "basic law code" itself. How the laws in the
"general libertarian law code" would actually be selected is anyone's
guess, although many "anarcho"-capitalists support the myth of "natural
law," and this would suggest an unchangeable law code selected by those
considered as "the voice of nature" (see section F.7. for a discussion of
its authoritarian implications). David Friedman argues that as well as a
market in defence companies, there will also be a market in laws and rights.
However, there will be extensive market pressure to unify these differing
law codes into one standard one (imagine what would happen if ever CD
manufacturer created a unique CD player, or every computer manufacturer
different sized floppy-disk drivers -- little wonder, then, that over
time companies standardise their products). Friedman himself acknowledges
that this process is likely (and uses the example of standard paper sizes
to indicate such a process).
In any event, the laws would not be decided on the basis of "one person, one
vote"; hence, as market forces worked their magic, the "general" law code
would reflect vested interests and so be very hard to change. As rights and
laws would be a commodity like everything else in capitalism, they would soon
reflect the interests of the rich -- particularly if those interpreting the
law are wealthy professionals and companies with vested interests of their
own. Little wonder that the individualist anarchists proposed "trial by jury"
as the only basis for real justice in a free society. For, unlike professional
"arbitrators," juries are ad hoc, made up of ordinary people and do not
reflect power, authority, or the influence of wealth. And by being able
to judge the law as well as a conflict, they can ensure a populist revision
of laws as society progresses.
Thus a system of "defence" on the market will continue to reflect the
influence and power of property owners and wealth and not be subject to
popular control beyond choosing between companies to enforce the capitalist
laws.
F.6.2 What are the social consequences of such a system?
The "anarcho" capitalist imagines that there will be police agencies,
"defence associations," courts, and appeals courts all organised on a
free-market basis and available for hire. As David Weick points out,
however, the major problem with such a system would not be the corruption
of "private" courts and police forces (although, as suggested above, this
could indeed be a problem):
"There is something more serious than the 'Mafia danger', and this other
problem concerns the role of such 'defence' institutions in a given social
and economic context.
"[The] context. . . is one of a free-market economy with no restraints
upon accumulation of property. Now, we had an American experience,
roughly from the end of the Civil War to the 1930's, in what were in
effect private courts, private police, indeed private governments. We
had the experience of the (private) Pinkerton police which, by its spies,
by its *agents provocateurs,* and by methods that included violence and
kidnapping, was one of the most powerful tools of large corporations
and an instrument of oppression of working people. We had the experience
as well of the police forces established to the same end, within
corporations, by numerous companies. . . . (The automobile companies
drew upon additional covert instruments of a private nature, usually
termed vigilante, such as the Black Legion). These were, in effect,
private armies, and were sometimes described as such. The territories
owned by coal companies, which frequently included entire towns and their
environs, the stores the miners were obliged by economic coercion to
patronise, the houses they lived in, were commonly policed by the private
police of the United States Steel Corporation or whatever company owned
the properties. The chief practical function of these police was, of
course, to prevent labour organisation and preserve a certain balance of
'bargaining.'
"These complexes were a law unto themselves, powerful enough to ignore,
when they did not purchase, the governments of various jurisdictions of
the American federal system. This industrial system was, at the time,
often characterised as feudalism. . . ." ["Anarchist Justice", Op. Cit.,
pp. 223-224]
For a description of the weaponry and activities of these private armies,
the economic historian Maurice Dobbs presents an excellent summary in
_Studies in Capitalist Development_ [pp. 353-357]. According to a report on
"Private Police Systems" cited by Dobbs, in a town dominated by Republican
Steel, the "civil liberties and the rights of labour were suppressed by
company police. Union organisers were driven out of town." Company towns
had their own (company-run) money, stores, houses and jails and many
corporations had machine-guns and tear-gas along with the usual shot-guns,
rifles and revolvers. The "usurpation of police powers by privately paid
'guards and 'deputies', often hired from detective agencies, many with
criminal records" was "a general practice in many parts of the country."
The local (state-run) law enforcement agencies turned a blind-eye to what
was going on (after all, the workers *had* broken their contracts and
so were "criminal aggressors" against the companies) even when union
members and strikers were beaten and killed. The workers own defence
organisations were the only ones willing to help them, and if the workers
seemed to be winning then troops were called in to "restore the peace"
(as happened in the Ludlow strike, when strikers originally cheered
the troops as they thought they would defend their civil rights; needless
to say, they were wrong).
Here we have a society which is claimed by many "anarcho"-capitalists
as one of the closest examples to their "ideal," with limited state
intervention, free reign for property owners, etc. What happened? The
rich reduced the working class to a serf-like existence, capitalist
production undermined independent producers (much to the annoyance of
individualist anarchists at the time), and the result was the emergence
of the corporate America that "anarcho"-capitalists say they oppose.
Are we to expect that "anarcho"-capitalism will be different? That, unlike
before, "defence" firms will intervene on behalf of strikers? Given that
the "general libertarian law code" will be enforcing capitalist property
rights, workers will be in exactly the same situation as they were then.
Support of strikers violating property rights would be a violation of
the "general libertarian law code" and be costly for profit making firms
to do (if not dangerous as they could be "outlawed" by the rest). Thus
"anarcho"-capitalism will extend extensive rights and powers to bosses,
but few if any rights to rebellious workers. And this difference in power
is enshrined within the fundamental institutions of the system.
In evaluating "anarcho"-capitalism's claim to be a form of anarchism,
Peter Marshall notes that "private protection agencies would merely serve
the interests of their paymasters." [_Demanding the Impossible_, p. 653]
With the increase of private "defence associations" under "really existing
capitalism" today (associations that many "anarcho"-capitalists point to
as examples of their ideas), we see a vindication of Marshall's claim.
There have been many documented experiences of protesters being badly
beaten by private security guards. As far as market theory goes, the
companies are only supplying what the buyer is demanding. The rights of
others are *not a factor* (yet more "externalities," obviously). Even
if the victims successfully sue the company, the message is clear --
social activism can seriously damage your health. With a reversion
to "a general libertarian law code" enforced by private companies,
this form of "defence" of "absolute" property rights can only increase,
perhaps to the levels previously attained in the heyday of US capitalism,
as described above by Weick.
F.6.3 But surely market forces will stop abuses by the rich?
Unlikely. The rise of corporations within America indicates exactly how a
"general libertarian law code" would reflect the interests of the rich and
powerful. The laws recognising corporations as "legal persons" were *not*
primarily a product of "the state" but of private lawyers hired by the
rich -- a result with which Rothbard would have no problem. As Howard
Zinn notes:
"the American Bar Association, organised by lawyers accustomed to
serving the wealthy, began a national campaign of education to reverse
the [Supreme] Court decision [that companies could not be considered as
a person]. . . . By 1886. . . the Supreme Court had accepted the argument
that corporations were 'persons' and their money was property protected by
the process clause of the Fourteenth Amendment. . . . The justices of the
Supreme Court were not simply interpreters of the Constitution. They were
men of certain backgrounds, of certain [class] interests." [_A People's
History of the United States_, p. 255]
Of course it will be argued that the Supreme Court is a monopoly and so
our analysis is flawed. In "anarcho"-capitalism there is no monopoly.
But the corporate laws came about because there was a demand for them.
That demand would still have existed in "anarcho"-capitalism. Now, while
there may be no Supreme Court, Rothbard does maintain that "the basic
Law Code . . .would have to be agreed upon by all the judicial agencies"
but he maintains that this "would imply no unified legal system"! Even
though "[a]ny agencies that transgressed the basic libertarian law
code would be open outlaws" and soon crushed this is *not*, apparently,
a monopoly. [_The Ethics of Liberty_, p. 234] So, you either agree to
the law code or you go out of business. And that is *not* a monopoly!
Therefore, we think, our comments on the Supreme Court decision are
valid.
If all the available defence firms enforce the same laws, then it can
hardly be called "competitive"! And if this is the case (and it is)
"when private wealth is uncontrolled, then a police-judicial complex
enjoying a clientele of wealthy corporations whose motto is self-interest
is hardly an innocuous social force controllable by the possibility of
forming or affiliating with competing 'companies.'" [Weick, Op. Cit.,
p. 225]
This is particularly true if these companies are themselves Big Business
and so have a large impact on the laws they are enforcing. If the law
code recognises and protects capitalist power, property and wealth as
fundamental *any* attempt to change this is "initiation of force" and
so the power of the rich is written into the system from the start!
(And, we must add, if there is a general libertarian law code to which
all must subscribe, where does that put customer demand? If people demand
a non-libertarian law code, will defence firms refuse to supply it? If so,
will not new firms, looking for profit, spring up that will supply what
is being demanded? And will that not put them in direct conflict with the
existing, pro-general law code ones? And will a market in law codes not
just reflect economic power and wealth? David Friedman, who is for a market
in law codes, argues that "[i]f almost everyone believes strongly that
heroin addiction is so horrible that it should not be permitted anywhere
under any circumstances anarcho-capitalist institutions will produce laws
against heroin. Laws are being produced on the market, and that is what the
market wants." And he adds that "market demands are in dollars, not votes.
The legality of heroin will be determined, not by how many are for or against
but how high a cost each side is willing to bear in order to get its way."
[_The Machinery of Freedom_, p. 127] And, as the market is less than equal
in terms of income and wealth, such a position will mean that the capitalist
class will have a higher effective demand than the working class, and more
resources to pay for any conflicts that arise. Thus any law codes that
develop will tend to reflect the interests of the wealthy.)
Which brings us nicely on to the next problem regarding market forces.
As well as the obvious influence of economic interests and differences
in wealth, another problem faces the "free market" justice of
"anarcho"-capitalism. This is the "general libertarian law code" itself.
Even if we assume that the system actually works like it should in theory,
the simple fact remains that these "defence companies" are enforcing laws
which explicitly defend capitalist property (and so social relations).
Capitalists own the means of production upon which they hire wage-labourers
to work and this is an inequality established *prior* to any specific
transaction in the labour market. This inequality reflects itself in
terms of differences in power within (and outside) the company and
in the "law code" of "anarcho"-capitalism which protects that power
against the dispossessed.
In other words, the law code within which the defence companies work
assumes that capitalist property is legitimate and that force can
legitimately be used to defend it. This means that, in effect,
"anarcho"-capitalism is based on a monopoly of law, a monopoly which
explicitly exists to defend the power and capital of the wealthy.
The major difference is that the agencies used to protect that
wealth will be in a weaker position to act independently of their
pay-masters. Unlike the state, the "defence" firm is not remotely
accountable to the general population and cannot be used to equalise
even slightly the power relationships between worker and capitalist.
And, needless to say, it is very likely that the private police forces
*will* give preferential treatment to their wealthier customers (what
business does not?) and that the law code will reflect the interests of the
wealthier sectors of society (particularly if "prosperous" judges administer
that code) in reality, even if not in theory. Since, in capitalist practice,
"the customer is always right," the best-paying customers will get their
way in "anarcho"-capitalist society.
For example, in chapter 29 of _The Machinery of Freedom_, David Friedman
presents an example of how a clash of different law codes could be resolved
by a bargaining process (the law in question is the death penalty). This
process would involve one defence firm giving a sum of money to the other
for them accepting the appropriate (anti/pro capital punishment) court.
Friedman claims that "[a]s in any good trade, everyone gains" but this
is obviously not true. Assuming the anti-capital punishment defence firm
pays the pro one to accept an anti-capital punishment court, then, yes,
both defence firms have made money and so are happy, so are the anti-capital
punishment consumers but the pro-death penalty customers have only (perhaps)
received a cut in their bills. Their desire to see criminals hanged (for
whatever reason) has been ignored (if they were not in favour of the
death penalty, they would not have subscribed to that company). Friedman
claims that the deal, by allowing the anti-death penalty firm to cut its
costs, will ensure that it "keep its customers and even get more" but
this is just an assumption. It is just as likely to loose customers to a
defence firm that refuses to compromise (and has the resources to back it
up). Friedman's assumption that lower costs will automatically win over
people's passions is unfounded. As is the assumption that both firms have
equal resources and bargaining power. If the pro-capital punishment firm
demands more than the anti can provide and has larger weaponry and troops,
then the anti defence firm may have to agree to let the pro one have its
way.
So, all in all, it is *not* clear that "everyone gains" -- there may be a
sizeable percentage of those involved who do not "gain" as their desire for
capital punishment is traded away by those who claimed they would enforce
it.
In other words, a system of competing law codes and privatised rights
does not ensure that *all* consumers interests are meet. Given unequal
resources within society, it is also clear that the "effective demand"
of the parties involved to see their law codes enforced is drastically
different. The wealthy head of a transnational corporation will have far
more resources available to him to pay for *his* laws to be enforced than
one of his employees on the assembly line. Moreover, as we argue in sections
F.3.1 and F.10.2, the labour market is usually skewed in favour of capitalists.
This means that workers have to compromise to get work and such compromises
may involve agreeing to join a specific "defence" firm or not join one
at all (just as workers are often forced to sign non-union contracts
today in order to get work). In other words, a privatised law system
is very likely to skew the enforcement of laws in line with the skewing
of income and wealth in society. At the very least, unlike every other
market, the customer is *not* guaranteed to get exactly what they demand
simply because the product they "consume" is dependent on other within
the same market to ensure its supply. The unique workings of the
law/defence market are such as to deny customer choice (we will
discuss other aspects of this unique market shortly).
Weick sums up by saying "any judicial system is going to exist in the
context of economic institutions. If there are gross inequalities of
power in the economic and social domains, one has to imagine society as
strangely compartmentalised in order to believe that those inequalities
will fail to reflect themselves in the judicial and legal domain, and that
the economically powerful will be unable to manipulate the legal and
judicial system to their advantage. To abstract from such influences of
context, and then consider the merits of an abstract judicial system. . .
is to follow a method that is not likely to take us far. This, by the
way, is a criticism that applies. . .to any theory that relies on a rule
of law to override the tendencies inherent in a given social and economic
system" [Weick, Op. Cit., p. 225] (For a discussion of this problem
as it would surface in attempts to protect the environment under
"anarcho"-capitalism, see sections E.2 and E.3.)
There is another reason why "market forces" will not stop abuse by the rich,
or indeed stop the system from turning from private to public statism. This
is due to the nature of the "defence" market. In "anarcho"-capitalist theory
it is assumed that the competing "defence companies" have a vested interest
in peacefully settling differences between themselves by means of arbitration.
In order to be competitive on the market, companies will have to co-operate
via contractual relations otherwise the higher price associated with conflict
will make the company uncompetitive and it will go under. Those companies
that ignore decisions made in arbitration would be outlawed by others,
ostracised and their rulings ignored. By this process, it is argued, a
system of competing "defence" companies will be stable and not turn into
a civil war between agencies with each enforcing the interests of their
clients against others by force.
However, there is a catch. Unlike every other business in competition,
the private state *must* co-operate with its fellows in order to provide its
services for its customers. They need to be able to agree to courts and
judges, agree to abide by decisions and law codes and so forth. This means
that collusion (where companies in a market agree to work together to
restrict competition and reap the benefits of monopoly) is built into the
system. In other words, the necessary contractual relations between agencies
in the "protection" market require that firms co-operate and, by so doing,
to behave (effectively) as one large firm.
For example, it does not matter to me if Safeway has good relations with
Tesco if I shop there. The goods I buy are independent of the relationships
that exist between competing companies. However, in the case of private
states, this is *not* the case. If a specific "defence" company has bad
relationships with other companies in the market then it's against my
self-interest to subscribe to it. Why join a private state if its judgements
are ignored by the others and it has to resort to violence to be heard?
This, as well as being potentially dangerous, will also push up the prices
I have to pay. Arbitration is one of the most important services a defence
firm can offer its customers and its market share is based upon being able
to settle interagency disputes without risk of war or uncertainty that the
final outcome will not be accepted by all parties.
Therefore, the market set-up within the "anarcho"-capitalist "defence" market
is such that private states *have to co-operate* with the others (or go out
of business fast) and this means collusion can take place. In other words,
a system of private states will have to agree to work together in order to
provide the service of "law enforcement" to their customers and the result
of such co-operation is to create a cartel. However, unlike cartels in other
industries, the "defence" cartel will be a stable body simply because its
members *have* to work with their competitors in order to survive.
Let us look at what would happen after such a cartel is formed in a specific
area and a new "defence company" desired to enter the market. This new
company will have to work with the members of the cartel in order to provide
its services to its customers (note that "anarcho"-capitalists already
assume that they "will have to" subscribe to the same law code). If the
new defence firm tries to under-cut the cartel's monopoly prices, the other
companies would refuse to work with it. Having to face constant conflict or
the possibility of conflict, seeing its decisions being ignored by other
agencies and being uncertain what the results of a dispute would be, few
would patronise the new "defence company." The new company's prices would
go up and so face either folding or joining the cartel. Unlike every other
market, if a "defence company" does not have friendly, co-operative relations
with other firms in the same industry then it will go out of business.
This means that the firms that are co-operating have but to agree not to
deal with new firms which are attempting to undermine the cartel in order
for them to fail. A "cartel busting" firm goes out of business in the same
way an outlaw one does - the higher costs associated with having to solve
all its conflicts by force, not arbitration, increases its production
costs much higher than the competitors and the firm faces insurmountable
difficulties selling its products at a profit (ignoring any drop of
demand due to fears of conflict by actual and potential customers).
Even if we assume that many people will happily join the new firm in spite
of the dangers to protect themselves against the cartel and its taxation
(i.e. monopoly profits), enough will remain members of the cartel (perhaps
they will be fired if they change, perhaps they dislike change and think
the extra money is worth peace, perhaps they fear that by joining the
new company their peace will be disrupted or the outcomes of their problems
with others too unsure to be worth it, perhaps they are shareholders and
want to maintain their income) so that co-operation will still be needed
and conflict unprofitable and dangerous (and as the cartel will have more
resources than the new firm, it could usually hold out longer than the new
firm could). In effect, breaking the cartel may take the form of an
armed revolution -- as it would with any state.
The forces that break up cartels and monopolies in other industries (such as
free entry -- although, of course the "defence" market will be subject to
oligopolistic tendencies as any other and this will create barriers to entry,
see section C.4) do not work here and so new firms have to co-operate or loose
market share and/or profits. This means that "defence companies" will reap
monopoly profits and, more importantly, have a monopoly of force over a given
area.
Hence a monopoly of private states will develop in addition to the existing
monopoly of law and this is a de facto monopoly of force over a given
area (i.e. some kind of public state run by share holders). New companies
attempting to enter the "defence" industry will have to work with the
existing cartel in order to provide the services it offers to its customers.
The cartel is in a dominant position and new entries into the market either
become part of it or fail. This is exactly the position with the state,
with "private agencies" free to operate as long as they work to the state's
guidelines. As with the monopolist "general libertarian law code", if
you do not toe the line, you go out of business fast.
It is also likely that a multitude of cartels would develop, with a given
cartel operating in a given locality. This is because law enforcement
would be localised in given areas as most crime occurs where the criminal
lives. Few criminals would live in New York and commit crimes in Portland.
However, as defence companies have to co-operate to provide their services,
so would the cartels. Few people live all their lives in one area and so
firms from different cartels would come into contact, so forming a
cartel of cartels.
A cartel of cartels may (perhaps) be less powerful than a local cartel, but
it would still be required and for exactly the same reasons a local one
is. Therefore "anarcho"-capitalism would, like "actually existing capitalism,"
be marked by a series of public states covering given areas, co-ordinated by
larger states at higher levels. Such a set up would parallel the United States
in many ways except it would be run directly by wealthy shareholders without
the sham of "democratic" elections. Moreover, as in the USA and other states
there will still be a monopoly of rules and laws (the "general libertarian
law code").
Some "anarcho"-capitalists claim that this will not occur, but that the
co-operation needed to provide the service of law enforcement will somehow
*not* turn into collusion between companies. However, they are quick to
argue that renegade "agencies" (for example, the so-called "Mafia
problem" or those who reject judgements) will go out of business because
of the higher costs associated with conflict and not arbitration. However,
these higher costs are ensured because the firms in question do not
co-operate with others. If other agencies boycott a firm but co-operate with
all the others, then the boycotted firm will be at the same disadvantage
-- regardless of whether it is a cartel buster or a renegade.
The "anarcho"-capitalist is trying to have it both ways. If the punishment
of non-conforming firms cannot occur, then "anarcho"-capitalism will turn
into a war of all against all or, at the very least, the service of social
peace and law enforcement cannot be provided. If firms cannot deter others
from disrupting the social peace (one service the firm provides) then
"anarcho"-capitalism is not stable and will not remain orderly as agencies
develop which favour the interests of their own customers and enforce their
own law codes at the expense of others. If collusion cannot occur (or is
too costly) then neither can the punishment of non-conforming firms and
"anarcho"-capitalism will prove to be unstable.
So, to sum up, the "defence" market of private states has powerful forces
within it to turn it into a monopoly of force over a given area. From a
privately chosen monopoly of force over a specific (privately owned) area,
the market of private states will turn into a monopoly of force over a
general area. This is due to the need for peaceful relations between
companies, relations which are required for a firm to secure market
share. The unique market forces that exist within this market ensure
collusion and monopoly.
In other words, the system of private states will become a cartel and so a
public state - unaccountable to all but its shareholders, a state of the
wealthy, by the wealthy, for the wealthy. In other words, fascism.
F.6.4 Why are these "defence associations" states?
It is clear that "anarcho"-capitalist defence associations meet the
criteria of statehood outlined in section B.2 ("Why are anarchists
against the state"). They defend property and preserve authority
relationships, they practice coercion, and are hierarchical
institutions which govern those under them on behalf of a
"ruling elite," i.e. those who employ both the governing forces
and those they govern. Thus, from an anarchist perspective, these
"defence associations" as most definitely states.
What is interesting, however, is that by their own definitions a very
good case can be made that these "defence associations" as states
in the "anarcho"-capitalist sense too. Capitalist apologists usually
define a "government" (or state) as those who have a monopoly of force
and coercion within a given area. Relative to the rest of the society,
these defence associations would have a monopoly of force and coercion
of a given piece of property; thus, by the "anarcho"-capitalists'
*own definition* of statehood, these associations would qualify!
If we look at Rothbard's definition of statehood, which requires (a) the
power to tax and/or (b) a "coerced monopoly of the provision of defence
over a given area", "anarcho"-capitalism runs into trouble.
In the first place, the costs of hiring defence associations will be
deducted from the wealth created by those who use, but do not own, the
property of capitalists and landlords. Let not forget that a capitalist
will only employ a worker or rent out land and housing if they make a
profit from so doing. Without the labour of the worker, there would be
nothing to sell and no wages to pay for rent. Thus a company's or
landlord's "defence" firm will be paid from the revenue gathered from
the capitalists power to extract a tribute from those who use, but do
not own, a property. In other words, workers would pay for the agencies
that enforce their employers' authority over them via the wage system
and rent -- taxation in a more insidious form.
In the second, under capitalism most people spend a large part of their
day on other people's property -- that is, they work for capitalists
and/or live in rented accommodation. Hence if property owners select a
"defence association" to protect their factories, farms, rental housing,
etc., their employees and tenants will view it as a "coerced monopoly of
the provision of defence over a given area." For certainly the employees
and tenants will not be able to hire their own defence companies to
expropriate the capitalists and landlords. So, from the standpoint of
the employees and tenants, the owners do have a monopoly of "defence"
over the areas in question. Of course, the "anarcho"-capitalist will
argue that the tenants and workers "consent" to *all* the rules and
conditions of a contract when they sign it and so the property owner's
monopoly is not "coerced." However, the "consent" argument is so weak
in conditions of inequality as to be useless (see sections F.2.4 and
F.3.1, for example) and, moreover, it can and has been used to justify
the state. In other words, "consent" in and of itself does not ensure
that a given regime is not statist (see section F.2.3 for more on this).
So an argument along these lines is deeply flawed and can be used to
justify regimes which are little better than "industrial feudalism"
(such as company towns, for example -- an institution which
"anarcho"-capitalism has no problem with). Even the "general
libertarian law code," could be considered a "monopoly of government
over a particular area," particularly if ordinary people have no
real means of affecting the law code, either because it is
market-driven and so is money-determined, or because it will
be "natural" law and so unchangeable by mere mortals.
In other words, *if* the state "arrogates to itself a monopoly of force,
of ultimate decision-making power, over a given area territorial area"
[Rothbard, _The Ethics of Liberty_, p. 170] then its pretty clear that the
property owner shares this power. The owner is, after all, the "ultimate
decision-making power" in their workplace or on their land. If the boss takes
a dislike to you (for example, you do not follow their orders) then you
get fired. If you cannot get a job or rent the land without agreeing
to certain conditions (such as not joining a union or subscribing
to the "defence firm" approved by your employer) then you either
sign the contract or look for something else. Of course Rothbard fails
to note that bosses have this monopoly of power and is instead referring
to "prohibiting the voluntary purchase and sale of defence and judicial
services." [Op. Cit., p. 171] But just as surely as the law of contract
allows the banning of unions from a property, it can just as surely
ban the sale and purchase of defence and judicial services (it could
be argued that market forces will stop this happening, but this is
unlikely as bosses usually have the advantage on the labour market
and workers have to compromise to get a job -- see section F.10.2 on
why this is the case). After all, in the company towns, only company
money was legal tender and company police the only law enforcers.
Therefore, it is obvious that the "anarcho"-capitalist system meets
the Weberian criteria of a monopoly to enforce certain rules in a
given area of land. The "general libertarian law code" is a monopoly
and property owners determine the rules that apply to their property.
Moreover, if the rules that property owners enforce are subject to
rules contained in the monopolistic "general libertarian law code" (for
example, that they cannot ban the sale and purchase of certain products
-- such as defence -- on their own territory) then "anarcho"-capitalism
*definitely* meets the Weberian definition of the state (as described by
Ayn Rand as an institution "that holds the exclusive power to *enforce*
certain rules of conduct in a given geographical area" [_Capitalism: The
Unknown Ideal_, p. 239]) as its "law code" overrides the desires of
property owners to do what they like on their own property.
Therefore, no matter how you look at it, "anarcho"-capitalism and its
"defence" market promotes a "monopoly of ultimate decision making power"
over a "given territorial area". It is obvious that for anarchists, the
"anarcho"-capitalist system is a state system. As, as we note, a reasonable
case can be made for it also being a state in "anarcho"-capitalist theory
as well.
So, in effect, "anarcho"-capitalism has a *different* sort of state, one
in which bosses hire and fire the policeman. As Peter Sabatini notes [in
_Libertarianism: Bogus Anarchy_], "[w]ithin Libertarianism, Rothbard
represents a minority perspective that actually argues for the total
elimination of the state. However Rothbard's claim as an anarchist is
quickly voided when it is shown that he only wants an end to the public
state. In its place he allows countless private states, with each person
supplying their own police force, army, and law, or else purchasing these
services from capitalist vendors. . . Rothbard sees nothing at all wrong
with the amassing of wealth, therefore those with more capital will
inevitably have greater coercive force at their disposal, just as
they do now."
Far from wanting to abolish the state, then, "anarcho"-capitalists only
desire to privatise it - to make it solely accountable to capitalist wealth.
Their "companies" perform the same services as the state, for the same
people, in the same manner. However, there is one slight difference.
Property owners would be able to select between competing companies
for their "services." Because such "companies" are employed by the boss,
they would be used to reinforce the totalitarian nature of capitalist firms
by ensuring that the police and the law they enforce are not even slightly
accountable to ordinary people.
Looking beyond the "defence association" to the defence market itself (as
we argued in the last section), this will become a cartel and so become
some kind of public state. The very nature of the private state, its need
to co-operate with others in the same industry, push it towards a
monopoly network of firms and so a monopoly of force over a given
area. Given the assumptions used to defend "anarcho"-capitalism, its
system of private statism will develop into public statism - a state
run by managers accountable only to the share-holding elite.
To quote Peter Marshall again, the "anarcho"-capitalists "claim that
all would benefit from a free exchange on the market, it is by no means
certain; any unfettered market system would most likely sponsor a
reversion to an unequal society with defence associations perpetuating
exploitation and privilege." [_Demanding the Impossible_, p. 565]
History, and current practice, prove this point.
In short, "anarcho"-capitalists are not anarchists at all, they are just
capitalists who desire to see private states develop -- states which are
strictly accountable to their paymasters without even the sham of
democracy we have today. Hence a far better name for "anarcho"-capitalism
would be "private-state" capitalism. At least that way we get a fairer
idea of what they are trying to sell us. As Bob Black writes in _The
Libertarian as Conservative_, "To my mind a right-wing anarchist is just a
minarchist who'd abolish the state to his own satisfaction by calling it
something else. . . . They don't denounce what the state does, they just
object to who's doing it."
F.6.5 What other effects would "free market" justice have?
Such a system would be dangerous simply because of the power it places
in the hands of companies. As Michael Taylor notes, "whether the [protection]
market is competitive or not, it must be remembered that the product
is a peculiar one: when we buy cars or shoes or telephone services we
do not give the firm power based on force, but armed protection agencies,
like the state, make customers (their own and others') vulnerable, and
having given them power we cannot be sure that they will use it only for
our protection." [_Community, Anarchy and Liberty_, p. 65]
As we argued above, there are many reasons to believe that a "protection"
market will place most of society (bar the wealthy elite) in a "vulnerable"
position. One such reason is the assumptions of the "anarcho"-capitalists
themselves. As they note, capitalism is marked by an extreme division of
labour. Instead of everyone having all the skills they need, these skills
are distributed throughout society and all (so it is claimed) benefit.
This applies equally to the "defence" market. People subscribe to a
"defence firm" because they either cannot or do not want the labour of
having to protect their own property and person. The skills of defence,
therefore, are concentrated in these companies and so these firms will
have an advantage in terms of experience and mental state (they are trained
to fight) as well as, as seems likely, weaponry. This means that most normal
people will be somewhat at a disadvantage if a cartel of defence firms
decides to act coercively. The division of labour society will discourage
the spread of skills required for sustained warfare throughout society
and so, perhaps, ensure that customers remain "vulnerable." The price
of liberty may be eternal vigilance, but are most people willing to
include eternal preparation of war as well? For modern society, the
answer seems to be no, they prefer to let others do that (namely the
state and its armed forces). And, we should note, an armed society may be
a polite one, but its politeness comes from fear, *not* mutual respect
and so totally phoney and soul destroying.
If we look at inequality within society, this may produce a ghettoisation
effect within "anarcho"-capitalism. As David Friedman notes, conflict
between defence firms is bad for business. Conflict costs money both
in terms of weaponry used and increased ("danger money") wages. For this
reason he thinks that peaceful co-operation will exist between firms.
However, if we look at poor areas with high crime rates then its clear
that such an area will be a dangerous place. In other words, it is very
likely to be high in conflict. But conflict increases costs, and so
prices. Does this mean that those areas which need police most will
also have the highest prices for law enforcement? That is the case
with insurance now, so perhaps we will see whole areas turning into
Hobbesian anarchy simply because the high costs associated with
dangerous areas will make the effective demand for their services
approach zero.
In a system based on "private statism," police and justice would be
determined by "free market" forces. As indicated in section B.4.1,
right-libertarians maintain that one would have few rights on other
peoples' property, and so the owner's will would be the law (possibly
restricted somewhat by a "general libertarian law code", perhaps not
-- see last section). In this situation, those who could not afford
police protection would become victims of roving bandits and rampant
crime, resulting in a society where the wealthy are securely protected
in their bastions by their own armed forces, with a bunch of poor
crowded around them for protection. This would be very similar to
feudal Europe.
The competing police forces would also be attempting to execute the laws
of their sponsors in areas that may not be theirs to begin with, which
would lead to conflicts unless everyone agreed to follow a "general
libertarian law code" (as Rothbard, for one, wants). If there were
competing law codes, the problem of whose "laws" to select and enforce
would arise, with each of the wealthy security sponsors desiring that
their law control all of the land. And, as noted earlier, if there
were *one* "libertarian law code," this would be a "monopoly of
government" over a given area, and therefore statist.
In addition, it should be noted that the right-libertarian claim that
under their system anarchistic associations would be allowed as long as
they are formed voluntarily just reflects their usual vacuous concept of
freedom. This is because such associations would exist within and be
subject to the "general libertarian law code" of "anarcho"-capitalist
society. These laws would reflect and protect the interests and power of
those with capitalist property, meaning that unless these owners agree,
trying to live an anarchist life would be nearly impossible (its all
fine and well to say that those with property can do what they like, if
you do not have property then experimentation could prove difficult --
not to mention, of course, few areas are completely self-sufficient meaning
that anarchistic associations will be subject to market forces, market
forces which stress and reward the opposite of the values these communes
were set up to create). Thus we must *buy* the right to be free!
If, as anarchists desire, most people refuse to recognise or defend the
rights of private property and freely associate accordingly to organise
their own lives and ignore their bosses, this would still be classed as
"initiation of force" under "anarcho"-capitalism, and thus repressed.
In other words, like any authoritarian system, the "rules" within
"anarcho"-capitalism do not evolve with society and its changing
concepts (this can be seen from the popularity of "natural law" with
right-libertarians, the authoritarian nature of which is discussed
in section F.7).
Therefore, in "anarcho"-capitalism you are free to follow the (capitalist)
laws and to act within the limits of these laws. It is only within this
context that you can experiment (if you can afford to). If you act outside
these laws, then you will be subject to coercion. The amount of coercion
required to prevent such actions depends on how willing people are to
respect the laws. Hence it is not the case that an "anarcho"-capitalist
society is particularly conducive to social experimentation and free
evolution, as its advocates like to claim. Indeed, the opposite may be the
case, as any capitalist system will have vast differences of wealth and
power within it, thus ensuring that the ability to experiment is limited
to those who can afford it. As Jonathan Wolff points out, the "image of
people freely moving from one utopia to another until they find their
heaven, ignores the thought that certain choices may be irreversible. . .
This thought may lead to speculation about whether a law of evolution
would apply to the plural utopias. Perhaps, in the long run, we may find
the framework regulated by the law of survival of the economically most
fit, and so we would expect to see a development not of diversity but of
homogeneity. Those communities with great market power would eventually
soak up all but the most resistant of those communities around them."
[_Robert Nozick: Property, Justice and the Minimal State_, p. 135]
And if the initial distribution of resources is similar to that already
existing then the "economically most fit" will be capitalistic (as argued
in section J.5.12, the capitalist market actively selects against
co-operatives even though they are more productive). Given the head
start provided by statism, it seems likely that explicitly capitalist
utopia's would remain the dominant type (particularly as the rights
framework is such as to protect capitalist property rights). Moreover,
we doubt that most "anarcho"-capitalists would embrace the ideology if
it was more than likely that non-capitalist utopias would overcome
the capitalist ones (after all, they *are* self-proclaimed capitalists).
So, given that "anarcho"-capitalists who follow Murray Rothbard's ideas and
minimal-statist right-libertarians agree that *all* must follow the basic
"general libertarian law code" which defends capitalist property rights,
we can safely say that the economically "most fit" would be capitalist ones.
Hardly surprising if the law code reflects capitalist ideas of right and
wrong. In addition, as George Reitzer has argued (see _The McDonaldization
of Society_), capitalism is driven towards standardisation and conformity
by its own logic. This suggests that plurality of communities would soon
be replaced by a series of "communities" which share the same features
of hierarchy and ruling elites. ("Anarcho"-capitalists who follow David
Friedman's ideas consider it possible, perhaps likely, that a free market
in laws will result in one standard law code and so this also applies to
that school as well)
So, in the end, the "anarcho" capitalists argue that in their system you
are free to follow the (capitalist) law and work in the (capitalist)
economy, and if you are lucky, take part in a "commune" as a collective
capitalist. How *very* generous of them! Of course, any attempt to
change said rules or economy are illegal and would be stopped by private
states.
As well as indicating the falsity of "anarcho"-capitalist claims to
support "experimentation," this discussion has also indicated that
coercion would not be absent from "anarcho"-capitalism. This would be the
case only if everyone voluntarily respected private property rights and
abided by the law (i.e. acted in a capitalist-approved way). As long as
you follow the law, you will be fine -- which is exactly the same as under
public statism. Moreover, if the citizens of a society do not want a
capitalist order, it may require a lot of coercion to impose it. This
can be seen from the experiences of the Italian factory occupations
in 1920 (see section A.5.5), in which workers refused to accept capitalist
property or authority as valid and ignored it. In response to this
change of thought within a large part of society, the capitalists
backed fascism in order to stop the evolutionary process within society.
The socialist economic historian Maurice Dobbs, after reviewing the private
armies in 1920s and 1930s America made much the same point: "When business
policy takes the step of financing and arming a mass political movement
to capture the machinery of government, to outlaw opposing forms of
organisation and suppress hostile opinions we have merely a further and
more logical stage beyond [private armies]" [Op, Cit., p. 357]
(Noted Austrian Economist Ludwig von Mises whose extreme free market
liberal political and economic ideas inspired right-libertarianism in
many ways had this to say about fascism: "It cannot be denied that Fascism
and similar movements aiming at the establishment of dictatorships are full
of the best intentions and that their intervention has, for the moment,
saved European civilisation. The merit that Fascism has thereby won for
itself will live eternally in history." [_Liberalism_, p. 51])
This example illustrates the fact that capitalism *per se* is essentially
authoritarian, because it is necessarily based on coercion and hierarchy,
which explains why capitalists have resorted to the most extreme forms of
authoritarianism -- including totalitarian dictatorship -- during crises
that threatened the fundamental rules of the system itself. There is no
reason to think that "anarcho"-capitalism would be any different.
Since "anarcho"-capitalism, with its private states, does not actually
want to get rid of hierarchical forms of authority, the need for one
government to unify the enforcement activities of the various defence
companies becomes apparent. In the end, that is what "anarcho"-capitalism
recognises with its "general libertarian law code" (based either on market
forces or "natural law"). Thus it appears that one government/hierarchy
over a given territory is inevitable under any form of capitalism. That
being the case, it is obvious that a democratic form of statism, with
its checks and balances, is preferable to a dictatorship that imposes
"absolute" property rights and so "absolute" power.
Of course, we do have another option than either private or public
statism. This is anarchism, the end of hierarchical authority and its
replacement by the "natural" authority of communal and workplace
self-management.
F.7 What is the myth of "Natural Law"?
Natural Law, and the related concept of Natural Rights, play an important
part in Libertarian and "anarcho"-capitalist ideology. Right-libertarians
are not alone in claiming that their particular ideology is based on the
"law of nature". Hitler, for one, claimed the same thing for Nazi ideology.
So do numerous other demagogues, religious fanatics, and political
philosophers. However, each likes to claim that only *their* "natural
law" is the "real" one, all the others being subjective impositions. We
will ignore these assertions (they are not arguments) and concentrate
on explaining why natural law, in all its forms, is a myth. In addition,
we will indicate its authoritarian implications.
Instead of such myths anarchists urge people to "work it out for themselves"
and realise that any ethical code is subjective and not a law of nature.
If its a good "code", then others will become convinced of it by your
arguments and their intellect. There is no need to claim its a function
of "man's nature"!
The following books discuss the subject of "Natural Law" in greater depth
and are recommended for a fuller discussion of the issues raised in this
section:
Robert Anton Wilson, _Natural Law_ and L.A. Rollins, _The Myth of
Natural Law_.
We should note that these books are written by people associated, to some
degree, with right-libertarianism and, of course, we should point out that
not all right-libertarians subscribe to "natural law" theories (David
Friedman, for example, does not). However, such a position seems to be
the minority in right-Libertarianism (Ayn Rand, Robert Nozick and Murray
Rothbard, among others, did subscribe to it). We should also point out that
the Individualist Anarchist Lysander Spooner also subscribed to "natural
laws" (which shows that, as we noted above, the concept is not limited to
one particular theory or ideology). We present a short critique of Spooner's
ideas on this subject in section G.7.
Lastly, it could be maintained that it is a common "straw man" to maintain
that supporters of Natural Law argue that their Laws are like the laws of
physics (and so are capable of stopping people's actions just as the law
of gravity automatically stops people flying from the Earth). But that is
the whole point -- using the term "Natural Law" implies that the moral
rights and laws that its supporters argue for are to be considered just
like the law of gravity (although they acknowledge, of course, that unlike
gravity, *their* "natural laws" *can be violated in nature*). Far from
saying that the rights they support are just that (i.e. rights *they* think
are good) they try to associate them with universal facts. For example,
Lysander Spooner (who, we must stress, used the concept of "Natural law"
to *oppose* the transformation of America into a capitalist society, unlike
Rand, Nozick and Rothbard who use it to defend capitalism) stated that:
"the true definition of law is, that it is a fixed, immutable, natural
principle; and not anything that man ever made, or can make, unmake, or
alter. Thus we speak of the laws of matter, and the laws of mind; of the
laws of gravitation, the laws of light, heat, and electricity. . .etc.,
etc. . . . The law of justice is just as supreme and universal in the moral
world, as these others are in the mental or physical world; and is as
unalterable as are these by any human power. And it is just as false
and absurd to talk of anybody's having the power to abolish the law of
justice, and set up their own in its stead, as it would be to talk of
their having the power to abolish the law of gravitation, or any other
natural laws of the universe, and set up their own will in the place of
them." [_A Letter to Grover Cleveland_, p. 88]
Rothbard and other capitalist supporters of "Natural Law" make the same sort
of claims (as we will see). Now, why, if they are aware of the fact that
unlike gravity their "Natural Laws" can be violated, do they use the term
at all? Benjamin Tucker said that "Natural Law" was a "religious" concept
-- and this provides a clue. To say "Do not violate these rights, otherwise
I will get cross" does not have *quite* the same power as "Do not violate
these rights, they are facts of natural and you are violating nature"
(compare to "Do not violate these laws, or you will go to hell"). So to
point out that "Natural Law" is *not* the same as the law of gravity
(because it has to be enforced by humans) is not attacking some kind of
"straw man" -- it is exposing the fact that these "Natural Laws" are just
the personal prejudices of those who hold them. If they do not want then
to be exposed as such then they should call their laws what they are
-- personal ethical laws -- rather than compare them to the facts
of nature.
F.7.1 Why the term "Natural Law" in the first place?
Murray Rothbard claims that "Natural Law theory rests on the insight. . .
that each entity has distinct and specific properties, a distinct 'nature,'
which can be investigated by man's reason" [_For a New Liberty_, p. 25]
and that "man has rights because they are *natural* rights. They are
grounded in the nature of man." [_The Ethics of Liberty_, p. 155]
To put it bluntly, this form of "analysis" was originated by Aristotle
and has not been used by science for centuries. Science investigates by
proposing theories and hypotheses to explain empirical observations,
testing and refining them by experiment. In stark contrast, Rothbard
*invents* definitions ("distinct" "natures") and then draws conclusions
from them. Such a method was last used by the medieval Church and is
devoid of any scientific method. It is, of course, a fiction. It
attempts to deduce the nature of a "natural" society from a priori
considerations of the "innate" nature of human beings, which just means
that the assumptions necessary to reach the desired conclusions have been
built into the definition of "human nature." In other words, Rothbard
defines humans as having the "distinct and specific properties" that,
given his assumptions, will allow his dogma (private state capitalism)
to be inferred as the "natural" society for humans.
Rothbard claims that "if A, B, C, etc., have differing attributes, it
follows that they have different *natures.*" [_The Ethics of Liberty_,
p. 9] Does this means that as every individual is unique (have different
attributes), they have different natures? Skin and hair colour are
different attributes, does this mean that red haired people have
different natures than blondes? That black people have different natures
than white (and such a "theory" of "natural law" was used to justify slavery
-- yes, slaves *are* human but they have "different natures" than their
masters and so slavery is okay). Of course Rothbard aggregates "attributes"
to species level, but why not higher? Humans are primates, does that mean
we have the same natures are monkeys or gorillas? We are also mammals as
well, we share many of the same attributes as whales and dogs. Do we
have similar natures?
But this is by the way. To continue we find that after defining certain
"natures," Rothbard attempts to derive "Natural Rights and Laws" from
them. However, these "Natural Laws" are quite strange, as they can be
violated in nature! Real natural laws (like the law of gravity) *cannot*
be violated and therefore do not need to be enforced. The "Natural Laws"
the "Libertarian" desires to foist upon us are not like this. They need
to be enforced by humans and the institutions they create. Hence, Libertarian
"Natural Laws" are more akin to moral prescriptions or juridical laws.
However, this does not stop Rothbard explicitly "plac[ing]" his "Natural
Laws" "alongside physical or 'scientific' natural laws." [_The Ethics of
Liberty_, p. 42]
So why do so many Libertarians use the term "Natural Law?" Simply, it gives
them the means by which to elevate their opinions, dogmas, and prejudices to
a metaphysical level where nobody will dare to criticise or even think about
them. The term smacks of religion, where "Natural Law" has replaced
"God's Law." The latter fiction gave the priest power over believers.
"Natural Law" is designed to give the Libertarian ideologist power over
the people that he or she wants to rule.
How can one be against a "Natural Law" or a "Natural Right"? It is
impossible. How can one argue against gravity? If private property,
for example, is elevated to such a level, who would dare argue against
it? Ayn Rand listed having landlords and employers along with "the laws
of nature." They are *not* similar: the first two are social relationships
which have to be imposed by the state; the "laws of nature" (like gravity,
needing food, etc.) are *facts* which do not need to be imposed. Rothbard
claims that "the natural fact is that labour service *is* indeed a
commodity." [Op. Cit., p. 40] However, this is complete nonsense --
labour service as a commodity is a *social* fact, dependent on the
distribution of property within society, its social customs and so
forth. It is only "natural" in the sense that it exists within a given
society (the state is also "natural" as it also exists within nature at
a given time). But neither wage slavery or the state is "natural" in
the sense that gravity is natural or a human having two arms is. Indeed,
workers at the dawn of capitalism, faced with selling their labour services
to another, considered it as decidedly "unnatural" and used the term
"wage slavery" to describe it!
Thus, where and when a "fact" appears is essential. For example, Rothbard
claims that "[a]n apple, let fall, will drop to the ground; this we all
observe and acknowledge to be *in the nature* of the apple." [_The Ethics
of Liberty_, p. 9] Actually, we do not "acknowledge" anything of the kind.
We acknowledge that the apple was subject to the force of gravity and that is
why it fell. The same apple, "let fall" in a space ship would *not* drop
to the floor. Has the "nature" of the apple changed? No, but the situation
it is in has. Thus any attempt to generate abstract "natures" requires
you to ignore reality in favour of ideals.
Because of the confusion its usage creates, we are tempted to think
that the use of "Natural Law" dogma is an attempt to *stop* thinking,
to restrict analysis, to force certain aspects of society off the
political agenda by giving them a divine, everlasting quality.
Moreover, such an "individualist" account of the origins of rights will
always turn on a muddled distinction between individual rationality and
some vague notion of rationality associated with membership of the
human species. How are we to determine what is rational for an individual
*as and individual* and what is rational for that same individual *as a
human being*? It is hard to see that we can make such a distinction for
"[i]f I violently interfere with Murray Rothbard's freedom, this may
violate the 'natural law' of Murray Rothbard's needs, but it doesn't
violate the 'natural law' of *my* needs." [L.A. Rollins, _The Myth of
Natural Rights_, p. 28] Both parties, after all, are human and if such
interference is, as Rothbard claims, "antihuman" then why? "If it helps
me, a human, to advance my life, then how can it be unequivocally
'antihuman'?" [L. A. Rollins, Op. Cit., p. 27] Thus "natural law" is
contradictory as it is well within the bounds of human nature to violate
it.
This means that in order to support the dogma of "Natural Law," the cultists
*must* ignore reality. Ayn Rand claims that "the source of man's rights
is. . .the law of identity. A is A -- and Man is Man." But Rand (like
Rothbard) *defines* "Man" as an "entity of a specific kind -- a rational
being" [_The Virtue of Selfishness_, pp. 94-95]. Therefore she cannot
account for *irrational* human behaviours (such as those that violate
"Natural Laws"), which are also products of our "nature." To assert that
such behaviours are not human is to assert that A can be not-A, thus
contradicting the law of identity. Her ideology cannot even meet its
own test.
F.7.2 But "Natural Law" provides protection for individual rights from
violation by the State. Those who are against Natural Law desire
total rule by the state.
The second statement represents a common "Libertarian" tactic. Instead of
addressing the issues, they accuse an opponent of being a "totalitarian"
(or the less sinister "statist"). In this way, they hope to distract
attention from, and so avoid discussing, the issue at hand (while at the
same time smearing their opponent). We can therefore ignore the second
statement.
Regarding the first, "Natural Law" has *never* stopped the rights of
individuals from being violated by the state. Such "laws" are as much use
as a chocolate fire-guard. If "Natural Rights" could protect one from the
power of the state, the Nazis would not have been able to murder six
million Jews. The only thing that stops the state from attacking people's
rights is individual (and social) power -- the ability and desire to
protect oneself and what one considers to be right and fair. As the
anarchist Rudolf Rocker pointed out, "Political [or individual] rights
do not exist because they have been legally set down on a piece of paper,
but only when they have become the ingrown habit of a people, and when any
attempt to impair them will be meet with the violent resistance of the
populace. . . .One compels respect from others when he knows how to
defend his dignity as a human being. . . .The people owe all the
political rights and privileges which we enjoy today, in greater or
lesser measure, not to the good will of their governments, but to their
own strength." [_Anarcho-Syndicalism_, p. 64]
Of course, if is there are no "Natural Rights," then the state has no
"right" to murder you or otherwise take away what are commonly regarded as
human rights. One can object to state power without believing in "Natural
Law."
F.7.3 Why is "Natural Law" authoritarian?
Rights, far from being fixed, are the product of social evolution and
human action, thought and emotions. What is acceptable now may become
unacceptable in the future. Slavery, for example, was long considered
"natural." In fact, John Locke, the "father" of "Natural Rights," was
heavily involved in the slave trade. He made a fortune in violating what
is today regarded as a basic human right: not to be enslaved. Many in
Locke's day claimed that slavery was a "Natural Law." Few would say so
now.
Thomas Jefferson indicates exactly why "Natural Law" is authoritarian
when he wrote "[s]ome men look at constitutions with sanctimonious
reverence, and deem them like the ark of the Covenant, too sacred to be
touched. They ascribe to the men of the preceding age a wisdom more
than human, and suppose what they did to be beyond amendment. . .laws and
institutions must go hand in hand with the progress of the human mind. . .
as that becomes more developed, more enlightened, as new discoveries are
made, institutions must advance also, to keep pace with the times. . .
We might as well require a man to wear still the coat which fitted him
when a boy as civilised society to remain forever under the regimen
of their barbarous ancestors."
The "Natural Law" cult desires to stop the evolutionary process by which
new rights are recognised. Instead they wish to fix social life into
what *they* think is good and right, using a form of argument that tries
to raise their ideology above critique or thought. Such a wish is opposed
to the fundamental feature of liberty: the ability to think for oneself.
Michael Bakunin writes "the liberty of man consists solely in this: that
he obeys natural laws because he has *himself* recognised them as such,
and not because they have been externally imposed upon him by any
extrinsic will whatever, divine or human, collective or individual."
[_Bakunin on Anarchism_, p. 227]
Thus anarchism, in contrast to the "natural law" cult, recognises that
"natural laws" (like society) are the product of individual evaluation of
reality and social life and are, therefore, subject to change in the light
of new information and ideas (Society "progresses slowly through the moving
power of individual initiative" [Bakunin, _The Political Philosophy of
Bakunin_, p. 166] and so, obviously, do social rights and customs). Ethical
or moral "laws" (which is what the "Natural Law" cult is actually about)
is not a product of "human nature" or abstract individuals. Rather, it is
a *social* fact, a creation of society and human interaction. In Bakunin's
words, "moral law is not an individual but a social fact, a creation of
society" and any "natural laws" are "inherent in the social body" (and so,
we must add, not floating abstractions existing in "man's nature"). [Ibid.,
p. 125, p. 166]
The case for liberty and a free society is based on the argument that,
since every individual is unique, everyone can contribute something that
no one else has noticed or thought about. It is the free interaction of
individuals which allows them, along with society and its customs and
rights, to evolve, change and develop. "Natural Law," like the state,
tries to arrest this evolution. It replaces creative inquiry with dogma,
making people subject to yet another god, destroying critical thought with
a new rule book.
In addition, if these "Natural Laws" are really what they are claimed
to be, they are necessarily applicable to *all* of humanity (Rothbard
explicitly acknowledges this when he wrote that "one of the notable
attributes of natural law" is "its applicability to all men, regardless
of time or place" [_The Ethics of Liberty_, p. 42]). In other words,
every other law code *must* (by definition) be "against nature" and
there exists *one* way of life (the "natural" one). The authoritarian
implications of such arrogance is clear. That the Dogma of Natural Law was
only invented a few hundred years ago, in one part of the planet, does not
seem to bother its advocates. Nor does the fact that for the vast majority
of human existence, people have lived in societies which violated almost
*all* of their so-called "Natural Laws" To take one example, before the
late Neolithic, most societies were based on usufruct, or free access
to communally held land and other resources [see Murray Bookchin, _The
Ecology of Freedom_]. Thus for millennia, all human beings lived in
violation of the supposed "Natural Law" of private property -- perhaps
the chief "law" in the "Libertarian" universe.
If "Natural Law" did exist, then all people would have discovered these
"true" laws years ago. To the contrary, however, the debate is still
going on, with (for example) fascists and "Libertarians" each claiming
"the laws of nature" (and socio-biology) as their own.
F.7.4 Does "Natural Law" actually provides protection for individual liberty?
But, it seems fair to ask, does "natural law" actually respect individuals
and their rights (i.e. liberty)? We think not. Why?
According to Rothbard, "the natural law ethic states that for man, goodness
or badness can be determined by what fulfils or thwarts what is best for
man's nature." [_The Ethics of Liberty_, p. 10] But, of course, what may
be "good" for "man" may be decidedly *bad* for men (and women). If we take
the example of the sole oasis in a desert (see section F.4.2) then,
according to Rothbard, the property owner having the power of life and
death over others is "good" while, if the dispossessed revolt and refuse
to recognise his "property", this is "bad"! In other words, Rothbard's
"natural law" is good for *some* people (namely property owners) while
it can be bad for others (namely the working class). In more general
terms, this means that a system which results in extensive hierarchy
(i.e. *archy*, power) is "good" (even though it restricts liberty for
the many) while attempts to *remove* power (such as revolution and the
democratisation of property rights) is "bad". Somewhat strange logic,
we feel.
However such a position fails to understand *why* we consider coercion to
be wrong/unethical. Coercion is wrong because it subjects an individual
to the will of another. It is clear that the victim of coercion is lacking
the freedom that the philosopher Isaiah Berlin describes in the following
terms:
"I wish my life and decisions to depend on myself, not on external forces
of whatever kind. I wish to be an instrument of my own, not of other
men's, acts of will. I wish to be a subject, not an object; to be moved
by reasons, by conscious purposes, which are my own, not by causes which
affect me, as it were, from outside. I wish to be somebody, not nobody; a
doer -- deciding, not being decided for, self-directed and not acted upon
by external nature or by other mean as if I were a thing, or an animal, or
a slave incapable of playing a human role, that is, of conceiving goals
and policies of my own and realising them." [_Four Essays on Liberty_,
p. 131]
Or, as Alan Haworth points out, "we have to view coercion as a violation
of what Berlin calls *positive* freedom." [_Anti-Libertarianism_, p. 48]
Thus, if a system results in the violation of (positive) liberty by its
very nature -- namely, subject a class of people to the will of another
class (the worker is subject to the will of their boss and is turned
into an order-taker) -- then it is justified to end that system. Yes,
it is "coercion" is dispossess the property owner -- but "coercion" exists
only for as long as they desire to exercise power over others. In other
words, it is not domination to remove domination! And remember it is
the domination that exists in coercion which fuels our hatred of it,
thus "coercion" to free ourselves from domination is a necessary evil
in order to stop far greater evils occurring (as, for example, in the
clear-cut case of the oasis monopoliser).
Perhaps it will be argued that domination is only bad when it is involuntary,
which means that it is only the involuntary nature of coercion that makes
it bad, not the domination it involves. By this argument wage slavery is
not domination as workers voluntarily agree to work for a capitalist (after
all, no one puts a gun to their heads) and any attempt to overthrow
capitalist domination is coercion and so wrong. However, this argument
ignores that fact that *circumstances* force workers to sell their liberty
and so violence on behalf of property owners is not (usually) required --
market forces ensure that physical force is purely "defensive" in nature.
And as we argued in section F.2.2, even Rothbard recognised that the
economic power associated with one class of people being dispossessed
and another empowered by this fact results in relations of domination
which cannot be considered "voluntary" by any stretch of the imagination
(although, of course, Rothbard refuses to see the economic power associated
with capitalism -- when its capitalism, he cannot see the wood for the trees
-- and we are ignoring the fact that capitalism was created by extensive
use of coercion and violence -- see section F.8).
Thus, "Natural law" and attempts to protect individuals rights/liberty and
see a world in which people are free to shape their own lives are fatally
flawed if they do not recognise that private property is incompatible with
these goals. This is because the existence of capitalist property smuggles
in power and so domination (the restriction of liberty, the conversion of
some into order-givers and the many into order-takers) and so Natural Law
does not fulfil its promise that each person is free to pursue their own
goals. The unqualified right of property will lead to the domination and
degradation of large numbers of people (as the oasis monopoliser so
graphically illustrates).
And we stress that anarchists have no desire to harm individuals, only to
change institutions. If a workplace is taken over by its workers, the owners
are not harmed physically. If the oasis is taken from the monopoliser, the
ex-monopoliser becomes like other users of the oasis (although probably
*disliked* by others). Thus anarchists desire to treat people as fairly as
possible and not replace one form of coercion and domination with another --
individuals must *never* be treated as abstractions (if they have
power over you, destroy what creates the relation of domination, *not*
the individual, in other words! And if this power can be removed without
resorting to force, so much the better -- a point which social and
individualist anarchists disagree on, namely whether capitalism can
be reformed away or not comes directly from this. As the Individualists
think it can, they oppose the use of force. Most social anarchists think
it cannot, and so support revolution).
This argument may be considered as "utilitarian" (the greatest good for
the greatest number) and so treats people not as "ends in themselves"
but as "means to an end". Thus, it could be argued, "natural law" is
required to ensure that *all* (as opposed to some, or many, or the
majority of) individuals are free and have their rights protected.
However, it is clear that "natural law" can easily result in a minority
having their freedom and rights respected, while the majority are
forced by circumstances (created by the rights/laws produced by applying
"natural law" we must note) to sell their liberty and rights in order
to survive. If it is wrong to treat anyone as a "means to an end",
then it is equally wrong to support a theory or economic system that
results in people having to negate themselves in order to live. A respect
for persons -- to treat them as ends and never as means -- is not compatible
with private property.
The simple fact is that *there are no easy answers* -- we need to weight
up our options and act on what we think is best. Yes, such subjectivism
lacks the "elegance" and simplicity of "natural law" but it reflects
real life and freedom far better. All in all, we must always remember
that what is "good" for man need not be good for people. "Natural law"
fails to do this and stands condemned.
F.7.5 But Natural Law was discovered, not invented!
This statement truly shows the religious nature of the Natural Law cult.
To see why its notion of "discovery" is confused, let us consider the Law
of Gravity. Newton did not "discover" the law of gravity, he invented a
theory which explained certain observed phenomena in the physical world.
Later Einstein updated Newton's theories in ways that allowed for a better
explanation of physical reality. Thus, unlike "Natural Law," scientific
laws can be updated and changed as our knowledge changes and grows. As
we have already noted, however, "Natural Laws" cannot be updated because
they are derived from fixed definitions (Rothbard is pretty clear on this,
he states that it is "[v]ery true" that natural law is "universal, fixed and
immutable" and so are "'absolute'" principles of justice" and that they are
"independent of time and place" [_The Ethics of Liberty_, p. 19]). However,
what he fails to understand is that what the "Natural Law" cultists are
"discovering" are simply the implications of their own definitions, which
in turn simply reflect their own prejudices and preferences.
Since "Natural Laws" are thus "unchanging" and are said to have been
"discovered" centuries ago, it's no wonder that many of its followers look
for support in socio-biology, claiming that their "laws" are part of the
genetic structure of humanity. But socio-biology has dubious scientific
credentials for many of its claims. Also, it has authoritarian implications
*exactly* like Natural Law. Murray Bookchin rightly characterises
socio-biology as "suffocatingly rigid; it not only impedes action with the
autocracy of a genetic tyrant but it closes the door to any action that is
not biochemically defined by its own configuration. When freedom is
nothing more than the recognition of necessity. . .we discover the gene's
tyranny over the greater totality of life. . .when knowledge becomes
dogma (and few movements are more dogmatic than socio-biology) freedom is
ultimately denied." ["Socio-biology or Social Ecology", in _Which way for
the Ecology Movement?_ pp. 49 - 75, p. 60]
In conclusion the doctrine of Natural Law, far from supporting individual
freedom, is one of its greatest enemies. By locating individual rights
within "Man's Nature," it becomes an unchanging set of dogmas. Do we really
know enough about humanity to say what are "Natural" and universal Laws,
applicable forever? Is it not a rejection of critical thinking and thus
individual freedom to do so?
F.7.6 Why is the notion of "discovery" contradictory?
Ayn Rand indicates the illogical and contradictory nature of the concepts
of "discovering" "natural law" and the "natural rights" this "discovery"
argument creates when she stated that her theory was "objective." Her
"Objectivist" political theory "holds that good is neither an attribute of
'things in themselves' nor man's emotional state, but *an evaluation* of
the facts of reality by man's consciousness according to a rational standard
of value. . . The objective theory holds that *the good is an aspect of
reality in relation to man* - and that it must be discovered, not invented,
by man." [_Capitalism: The Unknown Ideal_, p. 22]
However, this is playing with words. If something is "discovered" then it
has always been there and so is an intrinsic part of it. If "good" *is*
"discovered" by "man" then "good" exists independently of people -- it
is waiting to be "discovered." In other words, "good" is an attribute of
"man as man," of "things in themselves" (in addition, such a theory also
implies that there is just *one* possible interpretation of what is "good"
for all humanity). This can be seen when Rand talks about her system of
"objective" values and rights.
When discussing the difference between "subjective," "intrinsic" and
"objective" values Rand noted that "intrinsic" and "subjective" theories
"make it possible for a man to believe what is good is independent of man's
mind and can be achieved by physical force." [Op. Cit., p. 22] In other
words, intrinsic and subjective values justify tyranny. However, her
"objective" values are placed squarely in "Man's Nature" -- she states that
"[i]ndividual rights are the means of subordinating society to moral law"
and that "the source of man's rights is man's nature." [Op. Cit., p. 320,
p. 322]
She argues that the "*intrinsic* theory holds that the good is inherent
in certain things or actions, as such, regardless of their context and
consequences, regardless of any benefit or injury they may cause to the
actors and subjects involved." [Op. Cit., p. 21] According to the _Concise
Oxford Dictionary_, "intrinsic" is defined as "inherent," "essential,"
"belonging naturally" and defines "nature" as "a thing's, or person's,
innate or essential qualities or character." In other words, if, as
Rand maintains, man's rights *are* the product of "man's nature" then
such rights are *intrinsic*! And if, as Rand maintains, such rights
are the "extension of morality into the social system" then morality
itself is also intrinsic.
Again, her ideology fails to meet its own tests -- and opens the way for
tyranny. This can be seen by her whole hearted support for wage slavery and
her total lack of concern how it, and concentrations of wealth and power,
affect the individuals subjected to them. For, after all, what is "good"
is "inherent" in capitalism, regardless of the context, consequences,
benefits or injuries it may cause to the actors and subjects involved.
The key to understanding her contradictory and illogical ideology lies in
her contradictory use of the word "man." Sometimes she uses it to describe
individuals but usually it is used to describe the human race collectively
("man's nature," "man's consciousness"). But "Man" does not have a
consciousness, only individuals do. Man is an abstraction, it is individuals
who live and think, not "Man." Such "Man worship" -- like Natural Law -- has
all the markings of a religion.
As Max Stirner argues "liberalism is a religion because it separates my
essence from me and sets it above me, because it exalts 'Man' to the same
extent as any other religion does to God. . . it sets me beneath Man."
[_The Ego and Its Own_, p. 176] Indeed, he "who is infatuated with *Man*
leaves persons out of account so far as that infatuation extends, and floats
in an ideal, sacred interest. *Man*, you see, is not a person, but an ideal,
a spook." [Op. Cit., p.79]
Rand argues that we must evaluate "the facts of reality by man's consciousness
according to a rational standard of value" but who determines that value?
She states that "[v]alues are not determined by fiat nor by majority vote"
[p. 24] but, however, neither can they be determined by "man" or "man's
consciousness" because "man" does not exist. Individuals exist and have
consciousness and because they are unique have different values (but as we
argued in section A.2.19, being social creatures these values are generalised
across individuals into social, i.e. objective, values). So, the abstraction
"man" does not exist and because of this we see the healthy sight of
different individuals convincing others of their ideas and theories
by discussion, presenting facts and rational debate. This can be best
seen in scientific debate.
The aim of the scientific method is to invent theories that explain facts,
the theories are not part of the facts but created by the individual's mind
in order to explain those facts. Such scientific "laws" can and do change
in light of new information and new thought. In other words, the scientific
method is the creation of subjective theories that explain the objective
facts. Rand's method is the opposite - she assumes "man's nature," "discovers"
what is "good" from those assumptions and draws her theories by deduction
from that. This is the *exact* opposite of the scientific method and, as we
noted above, comes to us straight from the Roman Catholic church.
It is the subjective revolt by individuals against what is considered
"objective" fact or "common sense" which creates progress and develops
ethics (what is considered "good" and "right") and society. This, in
turn, becomes "accepted fact" until the next free thinker comes along and
changes how we view the world by presenting *new* evidence, re-evaluating
old ideas and facts or exposing the evil effects associated with certain
ideas (and the social relationships they reflect) by argument, fact and
passion. Attempts to impose "an evaluation of the facts of reality by man's
consciousness" would be a death blow to this process of critical thought,
development and evaluation of the facts of reality by individual's
consciousness. Human thought would be subsumed by dogma.
F.8 What role did the state take in the creation of capitalism?
If the "anarcho"-capitalist is to claim with any plausibility that "real"
capitalism is non-statist or that it can exist without a state, it must
be shown that capitalism evolved naturally, in opposition to state
intervention. However, in reality, the opposite is the case. Capitalism
was born from state intervention and, in the words of Kropotkin, "the State
. . . and capitalism . . . developed side by side, mutually supporting and
re-enforcing each other." [_Kropotkin's Revolutionary Pamphlets_, p. 181]
Numerous writers have made this point. For example, in Karl Polyani's
flawed masterpiece _The Great Transformation_ we read that "the road to
the free market was opened and kept open by an enormous increase in
continuous, centrally organised and controlled interventionism" by the
state [p. 140]. This intervention took many forms -- for example, state
support during "mercantilism," which allowed the "manufactures" (i.e.
industry) to survive and develop, enclosures of common land, and so forth.
In addition, the slave trade, the invasion and brutal conquest of the
Americas and other "primitive" nations, and the looting of gold, slaves,
and raw materials from abroad also enriched the European economy, giving
the development of capitalism an added boost. Thus Kropotkin:
"The history of the genesis of capital has already been told by socialists
many times. They have described how it was born of war and pillage, of
slavery and serfdom, of modern fraud and exploitation. They have shown
how it is nourished by the blood of the worker, and how little by little
it has conquered the whole world." [Op. Cit., p. 207]
Or, if Kropotkin seems too committed to be fair, we have John Stuart Mill
statement that:
"The social arrangements of modern Europe commenced from a distribution
of property which was the result, not of just partition, or acquisition
by industry, but of conquest and violence. . . " [_Principle of Political
Economy_, p. 15]
Therefore, when supporters of "libertarian" capitalism say they are
against the "initiation of force," they mean only *new* initiations
of force; for the system they support was born from numerous initiations
of force in the past. And, as can be seen from the history of the last
100 years, it also requires state intervention to keep it going (section
D.1, "Why does state intervention occur?," addresses this point in some
detail). Indeed, many thinkers have argued that it was precisely this
state support and coercion (particularly the separation of people from
the land) that played the *key* role in allowing capitalism to develop
rather than the theory that "previous savings" did so. As the noted
German thinker Franz Oppenheimer argued, "the concept of a 'primitive
accumulation,' or an original store of wealth, in land and in movable
property, brought about by means of purely economic forces" while
"seem[ing] quite plausible" is in fact "utterly mistaken; it is a
'fairly tale,' or it is a class theory used to justify the privileges
of the upper classes." [_The State_, pp. 5-6]
This thesis will be discussed in the following sections. It is, of course,
ironic to hear right-wing libertarians sing the praises of a capitalism
that never existed and urge its adoption by all nations, in spite of the
historical evidence suggesting that only state intervention made
capitalist economies viable -- even in that Mecca of "free enterprise,"
the United States. As Noam Chomsky argues, "who but a lunatic could have
opposed the development of a textile industry in New England in the early
nineteenth century, when British textile production was so much more
efficient that half the New England industrial sector would have gone
bankrupt without very high protective tariffs, thus terminating industrial
development in the United States? Or the high tariffs that radically
undermined economic efficiency to allow the United States to develop steel
and other manufacturing capacities? Or the gross distortions of the
market that created modern electronics?" [_World Orders, Old and New_,
p. 168]. To claim, therefore, that "mercantilism" is not capitalism
makes little sense. Without mercantilism, "proper" capitalism would never
have developed, and any attempt to divorce a social system from its roots
is ahistoric and makes a mockery of critical thought.
Similarly, it is somewhat ironic when "anarcho"-capitalists and right
libertarians claim that they support the freedom of individuals to
choose how to live. After all, the working class was not given *that*
particular choice when capitalism was developing. Indeed, their right
to choose their own way of life was constantly violated and denied. So
to claim that *now* (after capitalism has been created) we get the
chance to try and live as we like is insulting in the extreme. The
available options we have are not independent of the society we live
in and are decisively shaped by the past. To claim we are "free" to
live as we like (within the laws of capitalism) is basically to argue
that we are able to "buy" the freedom that every individual is due from
those who have stolen it from us in the first place!
Needless to say, some right-libertarians recognise that the state played
a massive role in encouraging industrialisation (more correct to say
"proletarianisation" as it created a working class which did not own
the tools they used, although we stress that this process started on
the land and not in industry). So they contrast "bad" business people
(who took state aid) and "good" ones. Thus Rothbard's comment that
Marxists have "made no particular distinction between 'bourgeoisie'
who made use of the state, and bourgeoisie who acted on the free
market." [_The Ethics of Liberty_, p. 72]
But such an argument is nonsense as it ignores the fact that the "free
market" is a network (and defined by the state by the property rights
it enforces). For example, the owners of the American steel and other
companies who grew rich and their companies big behind protectionist
walls are obviously "bad" bourgeoisie. But are the bourgeoisie who supplied
the steel companies with coal, machinery, food, "defence" and so on not also
benefiting from state action? And the suppliers of the luxury goods to the
wealthy steel company owners, did they not benefit from state action? Or the
suppliers of commodities to the workers that laboured in the steel factories
that the tariffs made possible, did they not benefit? And the suppliers to
these suppliers? And the suppliers to these suppliers? Did not the users of
technology first introduced into industry by companies protected by state
orders also not benefit? Did not the capitalists who had a large and landless
working class to select from benefit from the "land monopoly" even though
they may not have, unlike other capitalists, directly advocated it? It
increased the pool of wage labour for *all* capitalists and increased their
bargaining position/power in the labour market at the expense of the working
class. In other words, such a policy helped maintain capitalist market power,
irrespective of whether individual capitalists encouraged politicians to
vote to create/maintain it. And, similarly, *all* capitalists benefited
from the changes in common law to recognise and protect capitalist private
property and rights that the state enforced during the 19th century (see
section B.2.5).
It appears that, for Rothbard, the collusion between state and business
is the fault, not of capitalism, but of particular capitalists. The system
is pure; only individuals are corrupt. But, for anarchists, the origins
of the modern state-capitalist system lies not in the individual qualities
of capitalists as such but in the dynamic and evolution of capitalism itself
-- a complex interaction of class interest, class struggle, social defence
against the destructive actions of the market, individual qualities and
so forth. In other words, Rothbard's claims are flawed -- they fail to
understand capitalism as a *system* and its dynamic nature.
Indeed, if we look at the role of the state in creating capitalism we
could be tempted to rename "anarcho"-capitalism "marxian-capitalism".
This is because, given the historical evidence, a political theory
can be developed by which the "dictatorship of the bourgeoisie" is
created and that this capitalist state "withers away" into anarchy.
That this means rejecting the economic and social ideas of Marxism
and their replacement by their direct opposite should not mean that
we should reject the idea (after all, that is what "anarcho"-capitalism
has done to Individualist Anarchism!). But we doubt that many
"anarcho"-capitalists will accept such a name change (even though
this would reflect their politics far better; after all they do not
object to past initiations of force, just current ones and many do
seem to think that the modern state *will* wither away due to market
forces).
But this is beside the point. The fact remains that state action was
required to create and maintain capitalism. Without state support it
is doubtful that capitalism would have developed at all.
So, when the right suggests that "we" be "left alone," what they mean by
"we" comes into clear focus when we consider how capitalism developed.
Artisans and peasants were only "left alone" to starve, and the working
classes of industrial capitalism were only "left alone" outside work and
for only as long as they respected the rules of their "betters." As for
the other side of the class divide, they desire to be "left alone" to
exercise their power over others, as we will see. That modern "capitalism"
is, in effect, a kind of "corporate mercantilism," with states providing
the conditions that allow corporations to flourish (e.g. tax breaks,
subsidies, bailouts, anti-labour laws, etc.) says more about the statist
roots of capitalism than the ideologically correct definition of capitalism
used by its supporters.
F.8.1 What social forces lay behind the rise of capitalism?
Capitalist society is a relatively recent development. As Murray Bookchin
points out, for a "long era, perhaps spanning more than five centuries,"
capitalism "coexisted with feudal and simple commodity relationships"
in Europe. He argues that this period "simply cannot be treated as
'transitional' without reading back the present into the past." [_From
Urbanisation to Cities_, p. 179] In other words, capitalism was not
a inevitable outcome of "history" or social evolution.
He goes on to note that capitalism existed "with growing significance
in the mixed economy of the West from the fourteenth century up to the
seventeenth" but that it "literally exploded into being in Europe,
particularly England, during the eighteenth and especially nineteenth
centuries." [Op. Cit., p. 181] The question arises, what lay behind
this "growing significance"? Did capitalism "explode" due to its
inherently more efficient nature or where there other, non-economic,
forces at work? As we will show, it was most definitely the later one --
capitalism was born not from economic forces but from the political
actions of the social elites which its usury enriched. Unlike artisan
(simple commodity) production, wage labour generates inequalities
and wealth for the few and so will be selected, protected and encouraged
by those who control the state in their own economic and social interests.
The development of capitalism in Europe was favoured by two social elites,
the rising capitalist class within the degenerating medieval cities and
the absolutist state. The medieval city was "thoroughly changed by the
gradual increase in the power of commercial capital, due primarily to
foreign trade. . . By this the inner unity of the commune was loosened,
giving place to a growing caste system and leading necessarily to a
progressive inequality of social interests. The privileged minorities
pressed ever more definitely towards a centralisation of the political
forces of the community. . . Mercantilism in the perishing city republics
led logically to a demand for larger economic units [i.e. to nationalise
the market]; and by this the desire for stronger political forms was
greatly strengthened. . . . Thus the city gradually became a small
state, paving the way for the coming national state." [Rudolf Rocker,
_Nationalism and Culture_, p. 94]
The rising economic power of the proto-capitalists conflicted with that of
the feudal lords, which meant that the former required help to consolidate
their position. That aid came in the form of the monarchical state. With
the force of absolutism behind it, capital could start the process of
increasing its power and influence by expanding the "market" through
state action.
As far as the absolutist state was concerned, it "was dependent upon the
help of these new economic forces, and vice versa. . . ." "The absolutist
state, whose coffers the expansion of commerce filled. . ., at first
furthered the plans of commercial capital. Its armies and fleets. . .
contributed to the expansion of industrial production because they
demanded a number of things for whose large-scale production the shops
of small tradesmen were no longer adapted. Thus gradually arose the
so-called manufactures, the forerunners of the later large industries."
[Op. Cit., p. 117-8]
Some of the most important state actions from the standpoint of early
industry were the so-called Enclosure Acts, by which the "commons" -- the
free farmland shared communally by the peasants in most rural villages --
was "enclosed" or incorporated into the estates of various landlords as
private property (see section F.8.3). This ensured a pool of landless
workers who had no option but to sell their labour to capitalists. Indeed,
the widespread independence caused by the possession of the majority of
households of land caused the rising class of merchants to complain
"that men who should work as wage-labourers cling to the soil, and in
the naughtiness of their hearts prefer independence as squatters to
employment by a master." [R.H Tawney, cited by Allan Elgar in _The
Apostles of Greed_, p. 12]
In addition, other forms of state aid ensured that capitalist firms got
a head start, so ensuring their dominance over other forms of work (such
as co-operatives). A major way of creating a pool of resources that
could be used for investment was the use of mercantilist policies which
used protectionist measures to enrich capitalists and landlords at the
expense of consumers and their workers. For example, one of most common
complaints of early capitalists was that workers could not turn up to
work regularly. Once they had worked a few days, they disappeared as
they had earned enough money to live on. With higher prices for food,
caused by protectionist measures, workers had to work longer and harder
and so became accustomed to factory labour. In addition, mercantilism
allowed native industry to develop by barring foreign competition and
so allowed industrialists to reap excess profits which they could then
use to increase their investments. In the words of Marian-socialist
economic historian Maurice Dobbs:
"In short, the Mercantile System was a system of State-regulated exploitation
through trade which played a highly important rule in the adolescence of
capitalist industry: it was essentially the economic policy of an age of
primitive accumulation." [_Studies in Capitalism Development_, p. 209]
This process of state aid in capitalist development was also seen in the
United States of America. As Edward Herman points out, the "level of
government involvement in business in the United States from the late
eighteenth century to the present has followed a U-shaped pattern: There
was extensive government intervention in the pre-Civil War period (major
subsidies, joint ventures with active government participation and direct
government production), then a quasi-laissez faire period between the
Civil War and the end of the nineteenth century [a period marked by
"the aggressive use of tariff protection" and state supported railway
construction, a key factor in capitalist expansion in the USA], followed
by a gradual upswing of government intervention in the twentieth century,
which accelerated after 1930." [_Corporate Control, Corporate Power_,
p. 162]
Such intervention ensured that income was transferred from workers to
capitalists. Under state protection, America industrialised by forcing
the consumer to enrich the capitalists and increase their capital stock.
"According to one study, of the tariff had been removed in the 1830s
'about half the industrial sector of New England would have been
bankrupted' . . . the tariff became a near-permanent political
institution representing government assistance to manufacturing. It
kept price levels from being driven down by foreign competition and
thereby shifted the distribution of income in favour of owners of
industrial property to the disadvantage of workers and customers."
[Richard B. Du Boff, _Accumulation and Power_, p. 56]
This protection was essential, for as Du Boff notes, the "end of the
European wars in 1814 . . . reopened the United States to a flood of
British imports that drove many American competitors out of business.
Large portions of the newly expanded manufacturing base were wiped out,
bringing a decade of near-stagnation." Unsurprisingly, the "era of
protectionism began in 1816, with northern agitation for higher
tariffs. . . " [Op. Cit., p. 14, p. 55]
Combined with ready repression of the labour movement and government
"homesteading" acts (see section F.8.5), tariffs were the American
equivalent of mercantilism (which, after all, was above all else a
policy of protectionism, i.e. the use of government to stimulate
the growth of native industry). Only once America was at the top
of the economic pile did it renounce state intervention (just as
Britain did, we must note).
This is *not* to suggest that government aid was limited to tariffs.
The state played a key role in the development of industry and
manufacturing. As John Zerzan notes, the "role of the State is
tellingly reflected by the fact that the 'armoury system' now rivals
the older 'American system of manufactures' term as the more
accurate to describe the new system of production methods" developed
in the early 1800s. [_Elements of Refusal_, p. 100] Moreover, the
"lead in technological innovation [during the US Industrial
Revolution] came in armaments where assured government orders
justified high fixed-cost investments in special-pursue machinery
and managerial personnel. Indeed, some of the pioneering effects
occurred in government-owned armouries." [William Lazonick, _Competitive
Advantage on the Shop Floor_, p. 218] The government also "actively
furthered this process [of "commercial revolution"] with public
works in transportation and communication." [Richard B. Du Boff,
Op. Cit., p. 15]
In addition to this "physical" aid, "state government provided critical
help, with devices like the chartered corporation" [Ibid.] and,
as we noted in section B.2.5, changes in the legal system which
favoured capitalist interests over the rest of society.
Interestingly, there was increasing inequality between 1840 and 1860 in
the USA This coincided with the victory of wage labour and industrial
capitalism -- the 1820s "constituted a watershed in U.S. life. By
the end of that decade . . .industrialism assured its decisive American
victory, by the end of the 1830s all of its cardinal features were
definitely present." [John Zerzan, Op. Cit., p. 99] This is unsurprising,
for as we have argued many times, the capitalist market tends to
increase, not reduce, inequalities between individuals and classes.
Little wonder the Individualist Anarchists at the time denounced the
way that property had been transformed into "a power [with which] to
accumulate an income" (to use the words of J.K. Ingalls).
Over all, as Paul Ormerod puts it, the "advice to follow pure free-market
polices seems . . . to be contrary to the lessons of virtually the whole
of economic history since the Industrial Revolution . . . every country
which has moved into . . . strong sustained growth . . . has done so
in outright violation of pure, free-market principles." "The model of
entrepreneurial activity in the product market, with judicious state
support plus repression in the labour market, seems to be a good model
of economic development." [_The Death of Economics_, p. 63]
Thus the social forces at work creating capitalism was a combination of
capitalist activity and state action. But without the support of the
state, it is doubtful that capitalist activity would have been enough
to generate the initial accumulation required to start the economic
ball rolling. Hence the necessity of Mercantilism in Europe and its
modified cousin of state aid, tariffs and "homestead acts" in America.
F.8.2 What was the social context of the statement "laissez-faire?"
The honeymoon of interests between the early capitalists and autocratic
kings did not last long. "This selfsame monarchy, which for weighty
reasons sought to further the aims of commercial capital and was. . .
itself aided in its development by capital, grew at last into a
crippling obstacle to any further development of European industry."
[Rudolf Rocker, Op. Cit., p. 117]
This is the social context of the expression "laissez-faire" -- a
system which has outgrown the supports that protected it in its
early stages of growth. Just as children eventually rebel against
the protection and rules of their parents, so the capitalists rebelled
against the over-bearing support of the absolutist state. Mercantilist
policies favoured some industries and harmed the growth of industrial
capitalism in others. The rules and regulations imposed upon those
it did favour reduced the flexibility of capitalists to changing
environments. All in all, mercantilism became more of a hindrance
than a help and so had to be replaced. With the growth of economic
power by the capitalist class, this replacement was made easier.
Errico Malatesta notes, "[t]he development of production, the vast expansion
of commerce, the immeasurable power assumed by money . . . have guaranteed
this supremacy [of economic power over the political power] to the
capitalist class which, no longer content with enjoying the support of
the government, demanded that government arise from its own ranks. A
government which owed its origin to the right of conquest . . . though
subject by existing circumstances to the capitalist class, went on
maintaining a proud and contemptuous attitude towards its now wealthy
former slaves, and had pretensions to independence of domination. That
government was indeed the defender, the property owners' gendarme, but
the kind of gendarmes who think they are somebody, and behave in an
arrogant manner towards the people they have to escort and defend, when
they don't rob or kill them at the next street corner; and the capitalist
class got rid of it . . . [and replaced it] by a government [and state] . . .
at all times under its control and specifically organised to defend that
class against any possible demands by the disinherited." [_Anarchy_,
pp. 19-20]
Malatesta here indicates the true meaning of "leave us alone," or
"laissez-faire." The *absolutist* state (not "the state" per se) began
to interfere with capitalists' profit-making activities and authority,
so they determined that it had to go -- as happened, for example, in the
English, French and American revolutions. However, in other ways, state
intervention in society was encouraged and applauded by capitalists. "It
is ironic that the main protagonists of the State, in its political and
administrative authority, were the middle-class Utilitarians, on the other
side of whose Statist banner were inscribed the doctrines of economic
Laissez Faire" [E.P. Thompson, _The Making of the English Working Class_,
p. 90]. Capitalists simply wanted *capitalist* states to replace
monarchical states, so that heads of government would follow state
economic policies regarded by capitalists as beneficial to their
class as a whole. And as development economist Lance Taylor argues:
"In the long run, there are no laissez-faire transitions to modern
economic growth. The state has always intervened to create a capitalist
class, and then it has to regulate the capitalist class, and then the
state has to worry about being taken over by the capitalist class,
but the state has always been there." [quoted by Noam Chomsky, _Year
501_, p. 104]
In order to attack mercantilism, the early capitalists had to ignore
the successful impact of its policies in developing industry and
a "store of wealth" for future economic activity. As William Lazonick
points out, "the political purpose of [Adam Smith's] the _Wealth of
Nations_ was to attack the mercantilist institutions that the British
economy had built up over the previous two hundred years. . . In
his attack on these institutions, Smith might have asked why the
extent of the world market available to Britain in the late eighteenth
century was *so uniquely under British control.* If Smith had
asked this 'big question,' he might have been forced to grant credit
for [it] . . . to the very mercantilist institutions he was
attacking . . ." Moreover, he "might have recognised the integral
relation between economic and political power in the rise of Britain
to international dominance." Overall, "[w]hate the British advocates
of laissez-faire neglected to talk about was the role that a system
of national power had played in creating conditions for Britain to
embark on its dynamic development path . . . They did not bother to
ask how Britain had attained th[e] position [of 'workshop of the
world'], while they conveniently ignored the on going system of
national power - the British Empire -- that . . . continued to
support Britain's position." [_Business Organisation and the Myth
of the Market Economy_, p. 2, p. 3, p.5]
Similar comments are applicable to American supporters of laissez
faire who fail to notice that the "traditional" American support for
world-wide free trade is quite a recent phenomenon. It started only
at the end of the Second World War (although, of course, *within*
America military Keynesian policies were utilised). While American
industry was developing, the country had no time for laissez-faire.
After it had grown strong, the United States began preaching laissez-faire
to the rest of the world -- and began to kid itself about its own
history, believing its slogans about laissez-faire as the secret of
its success. In addition to the tariff, nineteenth-century America
went in heavily for industrial planning--occasionally under that name
but more often in the name of national defence. The military was the
excuse for what is today termed rebuilding infrastructure, picking
winners, promoting research, and co-ordinating industrial growth (as
it still is, we should add).
As Richard B. Du Boff points out, the "anti-state" backlash of the
1840s onwards in America was highly selective, as the general
opinion was that "[h]enceforth, if governments wished to subsidise
private business operations, there would be no objection. But if
public power were to be used to control business actions or if
the public sector were to undertake economic initiatives on its
own, it would run up against the determined opposition of private
capital." [_Accumulation and Power_, p. 26] In other words, the
state could aid capitalists indirectly (via tariffs, land policy,
repression of the labour movement, infrastructure subsidy and so
on) and it would "leave them alone" to oppress and exploit workers,
exploit consumers, build their industrial empires and so forth.
So, the expression "laissez-faire" dates from the period when
capitalists were objecting to the restrictions that helped create
them in the first place. It has little to do with freedom as such and
far more to do with the needs of capitalist power and profits (as Murray
Bookchin argues, it is an error to depict this "revolutionary era and its
democratic aspirations as 'bourgeois,' an imagery that makes capitalism
a system more committed to freedom, or even ordinary civil liberties,
than it was historically" [_From Urbanisation to Cities_, p. 180f]).
Takis Fotopoules, in his essay "The Nation-state and the Market",
indicates that the social forces at work in "freeing" the market
did not represent a "natural" evolution towards freedom:
"Contrary to what liberals and Marxists assert, marketisation of the
economy was not just an evolutionary process, following the expansion of
trade under mercantilism . . . modern [i.e. capitalist] markets did not
evolve out of local markets and/or markets for foreign goods . . . the
nation-state, which was just emerging at the end of the Middle Ages,
played a crucial role creating the conditions for the 'nationalisation'
of the market . . . and . . . by freeing the market [i.e. the rich and
proto-capitalists] from effective social control." [_Society and Nature_,
Vol. 3, pp. 44-45]
The "freeing" of the market thus means freeing those who "own" most of
the market (i.e. the wealthy elite) from "effective social control," but
the rest of society was not as lucky. Peter Kropotkin makes a similar point
in _Modern Science and Anarchism_, "[w]hile giving the capitalist any
degree of free scope to amass his wealth at the expense of the helpless
labourers, the government has *nowhere* and *never*. . .afforded the
labourers the opportunity 'to do as they pleased'." [_Kropotkin's
Revolutionary Pamphlets_, p. 182]
The one essential form of support the "Libertarian" right wants the state
(or "defence" firms) to provide capitalism is the enforcement of property
rights -- the right of property owners to "do as they like" on their own
property, which can have obvious and extensive social impacts. What
"libertarian" capitalists object to is attempts by others -- workers,
society as a whole, the state, etc. -- to interfere with the authority
of bosses. That this is just the defence of privilege and power (and
*not* freedom) has been discussed in section B and elsewhere in
section F, so we will not repeat ourselves here.
Samuel Johnson once observed that "we hear the loudest *yelps* for
liberty among the drivers of Negroes." Our modern "libertarian"
capitalist drivers of wage-slaves are yelping for exactly the
same kind of "liberty" [Johnson quoted in Noam Chomsky,
_Year 501_, p. 141].
F.8.3 What other forms did state intervention in creating capitalism take?
Beyond being a paymaster for new forms of production and social relations
and defending the owners' power, the state intervened economically in
other ways as well. As we noted in section B.2.5, the state played a key
role in transforming the law codes of society in a capitalistic fashion,
ignoring custom and common law to do so. Similarly, the use of tariffs
and the granting of monopolies to companies played an important role
in accumulating capital at the expense of working people, as did the
breaking of unions and strikes by force.
However, one of the most blatant of these acts was the enclosure of
common land. In Britain, by means of the Enclosure Acts, land that
had been freely used by poor peasants for farming their small family
plots was claimed by large landlords as private property. As E.P. Thompson
notes, "Parliament and law imposed capitalist definitions to exclusive
property in land" [_Customs in Common_, p. 163]. Property rights, which
exclusively favoured the rich, replaced the use rights and free agreement
that had governed peasant's use of the commons. Unlike use rights, which
rest in the individual, property rights require state intervention to
create and maintain.
This stealing of the land should not be under estimated. Without land,
you cannot live and have to sell your liberty to others. This places
those with capital at an advantage, which will tend to increase,
rather than decrease, the inequalities in society (and so place the
landless workers at an increasing disadvantage over time). This
process can be seen from early stages of capitalism. With the
enclosure of the land, an agricultural workforce was created which
had to travel where the work was. This influx of landless ex-peasants
into the towns ensured that the traditional guild system crumbled
and was transformed into capitalistic industry with bosses and wage
slaves rather than master craftsmen and their journeymen. Hence the
enclosure of land played a key role, for "it is clear that economic
inequalities are unlikely to create a division of society into an
employing master class and a subject wage-earning class, unless
access to the mans of production, including land, is by some means
or another barred to a substantial section of the community."
[Maurice Dobbs, _Studies in Capitalist Development_, p. 253]
The importance of access to land is summarised by this limerick
by the followers of Henry George (a 19th century writer who argued
for a "single tax" and the nationalisation of land). The Georgites
got their basic argument on the importance of land down these few,
excellent lines:
A college economist planned
To live without access to land
He would have succeeded
But found that he needed
Food, shelter and somewhere to stand.
Thus the Individualist (and other) anarchists' concern over the
"land monopoly" of which the Enclosure Acts were but one part.
The land monopoly, to use Tucker's words, "consists in the
enforcement by government of land titles which do not rest upon
personal occupancy and cultivation." [_The Anarchist Reader_,
p. 150] It is important to remember that wage labour first
developed on the land and it was the protection of land titles
of landlords and nobility, combined with enclosure, that meant
people could not just work their own land.
In other words, the circumstances so created by enclosing the land
and enforcing property rights to large estates ensured that capitalists
did not have to point a gun at workers head to get them to work long hours
in authoritarian, dehumanising conditions. In such circumstances,
when the majority are dispossessed and face the threat of starvation,
poverty, homelessness and so on, "initiation of force" is *not required.*
But guns *were* required to enforce the system of private property that
created the labour market in the first place, to enforce the enclosure
of common land and protect the estates of the nobility and wealthy.
In addition to increasing the availability of land on the market, the
enclosures also had the effect of destroying working-class independence.
Through these Acts, innumerable peasants were excluded from access to
their former means of livelihood, forcing them to migrate to the cities
to seek work in the newly emerging factories of the budding capitalist
class, who were thus provided with a ready source of cheap labour. The
capitalists, of course, did not describe the results this way, but
attempted to obfuscate the issue with their usual rhetoric about
civilisation and progress. Thus John Bellers, a 17th-century supporter
of enclosures, claimed that commons were "a hindrance to Industry, and .
. . Nurseries of Idleness and Insolence." The "forests and great Commons
make the Poor that are upon them too much like the *indians.*" [quoted by
Thompson, Op. Cit., p. 163] Elsewhere Thompson argues that the commons
"were now seen as a dangerous centre of indiscipline . . . Ideology was
added to self-interest. It became a matter of public-spirited policy
for gentlemen to remove cottagers from the commons, reduce his labourers
to dependence . . ." [_The Making of the English Working Class_,
pp. 242-3]
The commons gave working-class people a degree of independence which
allowed them to be "insolent" to their betters. This had to be stopped,
as it undermined to the very roots of authority relationships within
society. The commons *increased* freedom for ordinary people and made
them less willing to follow orders and accept wage labour. The reference
to "Indians" is important, as the independence and freedom of Native
Americans is well documented. The common feature of both cultures was
communal ownership of the means of production and free access to it
(usufruct). This is discussed further in section I.7 (Won't Libertarian
Socialism destroy individuality?)
As the early American economist Edward Wakefield noted in 1833, "where
land is cheap and all are free, where every one who so pleases can easily
obtain a piece of land for himself, not only is labour dear, as respects
the labourer's share of the product, but the difficulty is to obtain
combined labour at any price." [_England and America_, quoted by Jeremy
Brecher and Tim Costello, _Commonsense for Hard Times_, p. 24]
The enclosure of the commons (in whatever form it took -- see section
F.8.5 for the US equivalent) solved both problems -- the high cost of
labour, and the freedom and dignity of the worker. The enclosures
perfectly illustrate the principle that capitalism requires a state to
ensure that the majority of people do not have free access to any means
of livelihood and so must sell themselves to capitalists in order to
survive. There is no doubt that if the state had "left alone" the European
peasantry, allowing them to continue their collective farming practices
("collective farming" because, as Kropotkin shows in _Mutual Aid_, the
peasants not only shared the land but much of the farm labour as well),
capitalism could not have taken hold (see _Mutual Aid_, pp. 184-189,
for more on the European enclosures). As Kropotkin notes, "[i]nstances
of commoners themselves dividing their lands were rare, everywhere the
State coerced them to enforce the division, or simply favoured the
private appropriation of their lands" by the nobles and wealthy.
[_Mutual Aid_, p. 188]
Thus Kropotkin's statement that "to speak of the natural death of the
village community [or the commons] in virtue of economical law is as
grim a joke as to speak of the natural death of soldiers slaughtered
on a battlefield." [Op. Cit., p. 189]
Like the more recent case of fascist Chile, "free market" capitalism was
imposed on the majority of society by an elite using the authoritarian
state. This was recognised by Adam Smith when he opposed state
intervention in _The Wealth of Nations_. In Smith's day, the government
was openly and unashamedly an instrument of wealth owners. Less than
10 per cent of British men (and no women) had the right to vote. When
Smith opposed state interference, he was opposing the imposition of
wealth owners' interests on everybody else (and, of course, how "liberal",
nevermind "libertarian", is a political system in which the many follow
the rules and laws set-down in the so-called interests of all by the
few? As history shows, any minority given, or who take, such power *will*
abuse it in their own interests). Today, the situation is reversed, with
neo-liberals and right libertarians opposing state interference in the
economy (e.g. regulation of Big Business) so as to prevent the public
from having even a minor impact on the power or interests of the elite.
The fact that "free market" capitalism always requires introduction by an
authoritarian state should make all honest "Libertarians" ask: How "free"
is the "free market"? And why, when it is introduced, do the rich get
richer and the poor poorer? This was the case in Chile (see Section
C.11). For the poverty associated with the rise of capitalism in England
200 years ago, E.P. Thompson's _The Making of the English Working Class_
provides a detailed discussion. Howard Zinn's _A People's History of the
United States_ describes the poverty associated with 19th-century US
capitalism.
F.8.4 Aren't the enclosures a socialist myth?
The short answer is no, they are not. While a lot of historical analysis
has been spent in trying to deny the extent and impact of the enclosures,
the simple fact is (in the words of noted historian E.P. Thompson)
enclosure "was a plain enough case of class robbery, played according
to the fair rules of property and law laid down by a parliament of
property-owners and lawyers." [_The Making of the English Working Class_,
pp. 237-8]
The enclosures were one of the ways that the "land monopoly" was created.
The land monopoly was used to refer to capitalist property rights and
ownership of land by (among others) the Individualist Anarchists. Instead
of an "occupancy and use" regime advocated by anarchists, the land monopoly
allowed a few to bar the many from the land -- so creating a class of
people with nothing to sell but their labour. While this monopoly is less
important these days in developed nations (few people know how to farm)
it was essential as a means of consolidating capitalism. Given the choice,
most people preferred to become independent farmers rather than wage workers
(see next section).
However, the importance of the enclosure movement is downplayed by
supporters of capitalism. Little wonder, for it is something of an
embarrassment for them to acknowledge that the creation of capitalism
was somewhat less than "immaculate" -- after all, capitalism is portrayed
as an almost ideal society of freedom. To find out that an idol has
feet of clay and that we are still living with the impact of its
origins is something pro-capitalists must deny. So *is* the enclosures
a socialist myth? Most claims that it is flow from the work of the
historian J.D. Chambers' famous essay "Enclosures and the Labour Supply
in the Industrial Revolution." [_Economic History Review_, 2nd series,
no. 5, August 1953] In this essay, Chambers attempts to refute Karl
Marx's account of the enclosures and the role it played in what Marx
called "primitive accumulation."
We cannot be expected to provide an extensive account of the debate
that has raged over this issue. All we can do is provide a summary
of the work of William Lazonick who presented an excellent reply to
those who claim that the enclosures were an unimportant historical
event. We are drawing upon his summary of his excellent essay "Karl
Marx and Enclosures in England" [_Review of Radical Political Economy_,
no. 6, Summer, 1974] which can be found in his books _Competitive
Advantage on the Shop Floor_ and _Business Organisation and the Myth
of the Market Economy_. There are three main claims against the socialist
account of the enclosures. We will cover each in turn.
Firstly, it is often claimed that the enclosures drove the uprooted
cottager and small peasant into industry. However, this was never
claimed. It is correct that the agricultural revolution associated
with the enclosures *increased* the demand for farm labour as claimed
by Chambers and others. And this is the whole point - enclosures
created a pool of dispossessed labourers who had to sell their
time/liberty to survive. The "critical transformation was not the
level of agricultural employment before and after enclosure but
the changes in employment relations caused by the reorganisation
of landholdings and the reallocation of access to land." [_Competitive
Advantage on the Shop Floor_, p. 30] Thus the key feature of the
enclosures was that it created a supply for farm labour, a supply
that had no choice but to work for another. This would drive down
wages and increase demand. Moreover, freed from the land, these
workers could later move to the towns in search for better work.
Secondly, it is argued that the number of small farm owners increased,
or at least did not greatly decline, and so the enclosure movement was
unimportant. Again, this misses the point. Small farm owners can still
employ wage workers (i.e. become capitalist farmers as opposed to
"yeomen" -- independent peasant proprietor). As Lazonick notes, "[i]t
is true that after 1750 some petty proprietors continued to occupy
and work their own land. But in a world of capitalist agriculture,
the yeomanry no longer played an important role in determining the
course of capitalist agriculture. As a social class that could
influence the evolution of British economy society, the yeomanry
had disappeared." [Op. Cit., p. 32]
Thirdly, it is often claimed that it was population growth, rather than
enclosures, that caused the supply of wage workers. So was population
growth more important that enclosures? Maurice Dobbs argues that "the
centuries in which a proletariat was most rapidly recruited were apt to
be those of slow rather than of rapid natural increase of population,
and the paucity or plenitude of a labour reserve in different countries
was not correlated with comparable difference in their rates of
population-growth." [Maurice Dobbs, _Studies in Capitalist Development_,
p. 223] Moreover, the population argument ignores the question of
whether the changes in society caused by enclosures and the rise
of capitalism have an impact on the observed trends towards
earlier marriage and larger families after 1750. Lazonick argues
that "[t]here is reason to believe that they did." [Op. Cit., p. 33]
Also, of course, the use of child labour in the factories created
an economic incentive to have more children, an incentive created
by the developing capitalist system. Overall, Lazonick notes that
"[t]o argue that population growth created the industrial labour
supply is to ignore these momentous social transformations" associated
with the rise of capitalism [_Business Organisation and the Myth
of the Market Economy_, p. 273].
In other words, there is good reason to think that the enclosures, far
from being some kind of socialist myth, in fact played a key role in
the development of capitalism. As Lazonick himself notes, "Chambers
misunderstood" "the argument concerning the 'institutional creation'
of a proletarianised (i.e. landless) workforce. Indeed, Chamber's
own evidence and logic tend to support the Marxian [and anarchist!]
argument, when it is properly understood." [Op. Cit., p. 273]
F.8.5 What about the lack of enclosures in the Americas?
The enclosure movement was but one way of creating the "land monopoly"
which ensured the creation of a working class. The circumstances facing
the ruling class in the Americas were distinctly different than in
the Old World and so the "land monopoly" took a different form there.
In the Americas, enclosures were unimportant as customary land rights
did not really exist. Here the problem was that (after the original
users of the land were eliminated, of course) there were vast tracks
of land were available for people to use.
Unsurprisingly, there was a movement towards independent farming and
this pushed up the price of labour, by reducing the supply. Capitalists
found it difficult to find workers willing to work for them at wages
low enough to provide them with sufficient profits. It was due the
difficulty in finding cheap enough labour that capitalists in America
turned to slavery. All things being equal, wage labour *is* more
productive than slavery. But in early America all things were *not*
equal. Having access to cheap (indeed, free) land meant that working
people had a choice, and few desired to become wage slaves. Because
of this, capitalists turned to slavery in the South and the "land
monopoly" in the North and West.
This was because, in the words of Maurice Dobbs, it "became clear to
those who wished to reproduce capitalist relations of production in
the new country that the foundation-stone of their endeavour must be
the restriction of land-ownership to a minority and the exclusion of
the majority from any share in [productive] property." [_Studies in
Capitalist Development_, pp. 221-2] As one radical historian puts
it, "[w]hen land is 'free' or 'cheap'. as it was in different regions
of the United States before the 1830s, there was no compulsion for
farmers to introduce labour-saving technology. As a result,
'independent household production' . . . hindered the development
of capitalism . . . [by] allowing large portions of the population
to escape wage labour." [Charlie Post, "The 'Agricultural Revolution'
in the United States", pp. 216-228, _Science and Society_, vol. 61,
no. 2, p. 221]
It was precisely this option (i.e. of independent production) that
had to be destroyed in order for capitalist industry to develop.
The state had to violate the holy laws of "supply and demand"
by controlling the access to land in order to ensure the normal
workings of "supply and demand" in the labour market (i.e. that
the bargaining position on the labour market favoured employer
over employee). Once this situation became the typical one (i.e.
when the option of self-employment was effectively eliminated)
a (protectionist based) "laissez-faire" approach could be adopted
and state action used only to protect private property from the
actions of the dispossessed.
So how was this transformation of land ownership achieved?
Instead of allowing settlers to appropriate their own farms as was
the case before the 1830s, the state stepped in once the army had
cleared out the original users. Its first major role was to enforce
legal rights of property on unused land. Land stolen from the Native
Americans was sold at auction to the highest bidders, namely speculators,
who then sold it on to farmers. This process started right "after
the revolution, [when] huge sections of land were bought up by rich
speculators" and their claims supported by the law [Howard Zinn, _A
People's History of the United States_, p. 125] Thus land which should
have been free was sold to land-hungry farmers and the few enriched
themselves at the expense of the many. Not only did this increase
inequality within society, it also encouraged the development of wage
labour -- having to pay for land would have ensured that many immigrants
remained on the East Coast until they had enough money. Thus a pool of
people with little option but to sell their labour was increased due to
state protection of unoccupied land. That the land usually ended up in
the hands of farmers did not (could not) countermand the shift in class
forces that this policy created.
This was also the essential role of the various "Homesteading Acts" and,
in general, the "Federal land law in the 19th century provided for the
sale of most of the public domain at public auction to the higher bidder
. . . Actual settlers were forced to buy land from speculators, at
prices considerably above the federal minimal price" (which few people
could afford anyway) [Charlie Post, Op. Cit., p. 222]. Little wonder
the Individualist Anarchists supported an "occupancy and use" system
of land ownership as a key way of stopping capitalist and landlord
usury as well as the development of capitalism itself.
This change in the appropriation of land had significant effects on
agriculture and the desirability of taking up farming for immigrants.
As Post notes, "[w]hen the social conditions for obtaining and maintaining
possession of land change, as they did in the midwest between 1830 and
1840, pursuing the goal of preserving [family ownership and control] . . .
produced very different results. In order to pay growing mortgages,
debts and taxes, family farmers were compelled to specialise production
toward cash crops and to market more and more of their output."
[Op. Cit., p. 221-2]
So, in order to pay for land which was formerly free, farmers got
themselves into debt and increasingly turned to the market to pay it
off. Thus, the "Federal land system, by transforming land into a commodity
and stimulating land speculation, made the midwestern farmers dependent
upon markets for the continual possession of their farms." [Charlie
Post, Op. Cit., p. 223] Once on the market, farmers had to invest in
new machinery and this also got them into debt. In the face of a bad
harvest or market glut, they could not repay their loans and their
farms had to be sold to so do so. By 1880, 25% of all farms were
rented by tenants, and the numbers kept rising.
This means that Murray Rothbard's comments that "once the land was
purchased by the settler, the injustice disappeared" are nonsense -- the
injustice was transmitted to other parts of society and this, along
with the legacy of the original injustice, lived on and helped transform
society towards capitalism [_The Ethics of Liberty_, p. 73]. In
addition, his comments about "the establishment in North America
of a truly libertarian land system" would be one the Individualist
Anarchists would have seriously disagreed with! [Ibid.]
Thus state action, in restricting free access to the land, ensured that
workers were dependent on wage labour. In addition, the "transformation
of social property relations in northern agriculture set the stage for
the 'agricultural revolution' of the 1840s and 1850s . . . [R]ising
debts and taxes forced midwestern family farmers to compete as
commodity producers in order to maintain their land-holding . . .
The transformation . . . was the central precondition for the
development of industrial capitalism in the United States."
[Ibid., p. 226]
In addition to seizing the land and distributing it in such a way
as to benefit capitalist industry, the "government played its part
in helping the bankers and hurting the farmers; it kept the amount
of money - based in the gold supply - steady while the population
rose, so there was less and less money in circulation. The farmer
had to pay off his debts in dollars that were harder to get. The
bankers, getting loans back, were getting dollars worth more than
when they loaned them out - a kind of interest on top of interest.
That was why . . . farmers' movements [like the Individualist
Anarchists, we must add] . . . [talked about] putting more money
in circulation." [Howard Zinn, Op. Cit., p. 278]
Overall, therefore, state action ensured the transformation of
America from a society of independent workers to a capitalist one.
By creating and enforcing the "land monopoly" (of which state
ownership of unoccupied land and its enforcement of landlord
rights were the most important) the state ensured that the
balance of class forces tipped in favour of the capitalist
class. By removing the option of farming your own land, the
US government created its own form of enclosure and the creation
of a landless workforce with little option but to sell its
liberty on the "free market". This, combined with protectionism,
ensured the transformation of American society from a pre-capitalist
one into a capitalist one. They was nothing "natural" about it.
Little wonder the Individualist Anarchist J.K. Ingalls attacked
the "land monopoly" in the following words:
"The earth, with its vast resources of mineral wealth, its spontaneous
productions and its fertile soil, the free gift of God and the common
patrimony of mankind, has for long centuries been held in the grasp of
one set of oppressors by right of conquest or right of discovery; and
it is now held by another, through the right of purchase from them.
All of man's natural possessions . . . have been claimed as property;
nor has man himself escaped the insatiate jaws of greed. The invasion
of his rights and possessions has resulted . . . in clothing property
with a power to accumulate an income." [quoted by James Martin, _Men
Against the State_, p. 142]
F.8.6 How did working people view the rise of capitalism?
The best example of how hated capitalism was can be seen by the rise
and spread of the socialist movement, in all its many forms, across the
world. It is no coincidence that the development of capitalism also saw
the rise of socialist theories. However, in order to fully understand how
different capitalism was from previous economic systems, we will consider
early capitalism in the US, which for many "Libertarians" is *the* example
of the "capitalism-equals-freedom" argument.
Early America was pervaded by artisan production -- individual ownership
of the means of production. Unlike capitalism, this system is *not*
marked by the separation of the worker from the means of life. Most
people did not have to work for another, and so did not. As Jeremy
Brecher notes, in 1831 the "great majority of Americans were farmers
working their own land, primarily for their own needs. Most of the rest
were self-employed artisans, merchants, traders, and professionals.
Other classes - employees and industrialists in the North, slaves and
planters in the South - were relatively small. The great majority of
Americans were independent and free from anybody's command." [_Strike!_,
p. xxi] These conditions created the high cost of combined (wage)
labour which ensured the practice of slavery existed.
However, toward the middle of the 19th century the economy began to
change. Capitalism began to be imported into American society as the
infrastructure was improved, which allowed markets for manufactured
goods to grow. Soon, due to (state-supported) capitalist competition,
artisan production was replaced by wage labour. Thus "evolved" modern
capitalism. Many workers understood, resented, and opposed their
increasing subjugation to their employers ("the masters", to use Adam
Smith's expression), which could not be reconciled with the principles
of freedom and economic independence that had marked American life and
sunk deeply into mass consciousness during the days of the early economy.
In 1854, for example, a group of skilled piano makers wrote that "the day
is far distant when they [wage earners] will so far forget what is due to
manhood as to glory in a system forced upon them by their necessity and in
opposition to their feelings of independence and self-respect. May the
piano trade be spared such exhibitions of the degrading power of the day
[wage] system." [quoted by Brecher and Costello, _Common Sense for Hard
Times_, p. 26]
Clearly the working class did not consider working for a daily wage, in
contrast to working for themselves and selling their own product, to be
a step forward for liberty or individual dignity. The difference between
selling the product of one's labour and selling one's labour (i.e.
oneself) was seen and condemned ("[w]hen the producer . . . sold his
product, he retained himself. But when he came to sell his labour, he
sold himself . . . the extension [of wage labour] to the skilled
worker was regarded by him as a symbol of a deeper change" [Norman
Ware, _The Industrial Worker, 1840-1860_, p. xiv]). Indeed, one group
of workers argued that they were "slaves in the strictest sense of
the word" as they had "to toil from the rising of the sun to the going
down of the same for our masters - aye, masters, and for our daily
bread" [Quoted by Ware, Op. Cit., p. 42] and another argued that "the
factory system contains in itself the elements of slavery, we think
no sound reasoning can deny, and everyday continues to add power to
its incorporate sovereignty, while the sovereignty of the working
people decreases in the same degree." [quoted by Brecher and Costello,
Op. Cit., p. 29]
Almost as soon as there were wage workers, there were strikes, machine
breaking, riots, unions and many other forms of resistance. John Zerzan's
argument that there was a "relentless assault on the worker's historical
rights to free time, self-education, craftsmanship, and play was at
the heart of the rise of the factory system" is extremely accurate
[_Elements of Refusal_, p. 105]. And it was an assault that workers
resisted with all their might. In response to being subjected to the
"law of value," workers rebelled and tried to organise themselves to
fight the powers that be and to replace the system with a co-operative
one. As the printer's union argued, "[we] regard such an organisation
[a union] not only as an agent of immediate relief, but also as an
essential to the ultimate destruction of those unnatural relations at
present subsisting between the interests of the employing and the
employed classes. . . .[W]hen labour determines to sell itself no
longer to speculators, but to become its own employer, to own and
enjoy itself and the fruit thereof, the necessity for scales of prices
will have passed away and labour will be forever rescued from the
control of the capitalist." [quoted by Brecher and Costello, Op. Cit.,
pp. 27-28]
Little wonder, then, why wage labourers considered capitalism as a form
of "slavery" and why the term "wage slavery" became so popular
in the anarchist movement. It was just reflecting the feelings of those
who experienced the wages system at first hand and joined the socialist
and anarchist movements. As labour historian Norman Ware notes, the
"term 'wage slave' had a much better standing in the forties [of the
19th century] then it has today. It was not then regarded as an empty
shibboleth of the soap-box orator. This would suggest that it has
suffered only the normal degradation of language, has become a *cliche*,
not that it is a grossly misleading characterisation." [Op. Cit., p. xvf]
These responses of workers to the experience of wage labour is important
to show that capitalism is by no means "natural." The fact is the first
generation of workers tried to avoid wage labour is at all possible as
they hated the restrictions of freedom it imposed upon them. They were
perfectly aware that wage labour was wage slavery -- that they were
decidedly *unfree* during working hours and subjected to the will of
another. While many working people now are accustomed to wage labour
(while often hating their job) the actual process of resistance to
the development of capitalism indicates well its inherently authoritarian
nature. Only once other options were closed off and capitalists given
an edge in the "free" market by state action did people accept and
become accustomed to wage labour.
Opposition to wage labour and factory fascism was/is widespread and seems
to occur wherever it is encountered. "Research has shown", summarises
William Lazonick, "that the 'free-born Englishman' of the eighteenth
century - even those who, by force of circumstance, had to submit to
agricultural wage labour - tenaciously resisted entry into the
capitalist workshop." [_Business Organisation and the Myth of the
Market Economy_, p. 37]
Far from being a "natural" development, then, capitalism was imposed on
a society of free and independent people by state action. Those workers
alive at the time viewed it as "unnatural relations" and organised to
overcome it. These feelings and hopes still exist, and will continue to
exist until such time as we organise and "abolish the wage system" (to
quote the IWW preamble) and the state that supports it.
F.8.7 Why is the history of capitalism important?
Simply because it provides us with an understanding of whether that system
is "natural" and whether it can be considered as just and free. If the
system was created by violence, state action and other unjust means then
the apparent "freedom" which we currently face within it is a fraud, a
fraud masking unnecessary and harmful relations of domination, oppression
and exploitation. Moreover, by seeing how capitalist relationships were
viewed by the first generation of wage slaves reminds us that just because
many people have adjusted to this regime and consider it as normal (or
even natural) it is nothing of the kind.
Murray Rothbard is well aware of the importance of history. He considered
the "moral indignation" of socialism arises from the argument "that the
capitalists have stolen the rightful property of the workers, and therefore
that existing titles to accumulated capital are unjust." He argues that
given "this hypothesis, the remainder of the impetus for both Marxism and
anarchosyndicalism follow quote logically." [_The Ethics of Liberty_,
p. 52]
So some right-libertarians are aware that the current property owners
have benefited extensively from violence and state action in the past.
Murray Rothbard argues (in _The Ethics of Liberty_, p. 57) that if the
just owners cannot be found for a property, then the property simply
becomes again unowned and will belong to the first person to appropriate
and utilise it. If the current owners are not the actual criminals then
there is no reason at all to dispossess them of their property; if the
just owners cannot be found then they may keep the property as the
first people to use it (of course, those who own capital and those who
use it are usually different people, but we will ignore this obvious
point).
Thus, since all original owners and the originally dispossessed are long
dead nearly all current title owners are in just possession of their
property except for recently stolen property. The principle is simple,
dispossess the criminals, restore property to the dispossessed if they
can be found otherwise leave titles where they are (as Native American
tribes owned the land *collectively* this could have an interesting effect
on such a policy in the USA. Obviously tribes that were wiped out need
not apply, but would such right-libertarian policy recognise such
collective, non-capitalist ownership claims? We doubt it, but we could
be wrong -- the Libertarian Party Manifesto states that their "just"
property rights will be restored. And who defines "just"? And given
that unclaimed federal land will be given to Native Americans, its
seems pretty likely that the *original* land will be left alone).
Of course, that this instantly gives an advantage to the wealthy on the
new "pure" market is not mentioned. The large corporations that, via
state protection and support, built their empires and industrial base
will still be in an excellent position to continue to dominate the
market. Wealthy land owners, benefiting from the effects of state
taxation and rents caused by the "land monopoly" on farmstead failures,
will keep their property. The rich will have a great initial advantage
and this may be more than enough to maintain them in there place. After
all, exchanges between worker and owner tend to reinforce existing
inequalities, *not* reduce them (and as the owners can move their
capital elsewhere or import new, lower waged, workers from across the
world, its likely to stay that way).
So Rothbard's "solution" to the problem of past force seems to be
(essentially) a justification of existing property titles and not
a serious attempt to understand or correct past initiations of force
that have shaped society into a capitalist one and still shape it today.
The end result of his theory is to leave things pretty much as they are,
for the past criminals are dead and so are their victims.
However, what Rothbard fails to note is that the *results* of this state
action and coercion are still with us. He totally fails to consider
that the theft of productive wealth has a greater impact on society
than the theft itself. The theft of *productive* wealth shapes
society in so many ways that *all* suffer from it (including current
generations). This (the externalities generated by theft) cannot be
easily undone by individualistic "solutions".
Let us take an example somewhat more useful that the one Rothbard uses
(namely, a stolen watch). A watch cannot really be used to generate
wealth (although if I steal a watch, sell it and buy a winning lottery
ticket, does that mean I can keep the prize after returning the money
value of your watch to you? Without the initial theft, I would not have
won the prize but obviously the prize money far exceeds the amount
stolen. Is the prize money mine?). Let us take a tool of production
rather than a watch.
Let assume a ship sinks and 50 people get washed ashore on an island. One
woman has foresight to take a knife from the ship and falls unconscious
on the beach. A man comes along and steals her knife. When the woman
awakes she cannot remember if she had managed to bring the knife ashore
with her or not. The man maintains that he brought it with him and no one
else saw anything. The survivors decide to split the island equally
between them and work it separately, exchanging goods via barter.
However, the man with the knife has the advantage and soon carves
himself a house and fields from the wilderness. Seeing that they need
the knife and the tools created by the knife to go beyond mere existing,
some of the other survivors hire themselves to the knife owner. Soon
he is running a surplus of goods, including houses and equipment which
he decides to hire out to others. This surplus is then used to tempt
more and more of the other islanders to work for him, exchanging their
land in return for the goods he provides. Soon he owns the whole island
and never has to work again. His hut is well stocked and extremely
luxurious. His workers face the option of following his orders or
being fired (i.e. expelled from the island and so back into the water
and certain death). Later, he dies and leaves his knife to his son.
The woman whose knife it originally was had died long before, childless.
Note that the theft did not involve taking any land. All had equal access
to it. It was the initial theft of the knife which provided the man with
market power, an edge which allowed him to offer the others a choice
between working by themselves or working for him. By working for him
they did "benefit" in terms of increased material wealth (and also
made the thief better off) but the accumulate impact of unequal
exchanges turned them into the effective slaves of the thief.
Now, would it *really* be enough to turn the knife over to the whoever
happened to be using it once the theft was discovered (perhaps the
thief made a death-bed confession). Even if the woman who had originally
taken it from the ship been alive, would the return of the knife *really*
make up for the years of work the survivors had put in enriching the
the thief or the "voluntary exchanges" which had resulted in the thief
owning all the island? The equipment people use, the houses they life
in and the food they eat are all the product of many hours of collective
work. Does this mean that the transformation of nature which the knife
allowed remain in the hands of the descendants of the thief or become
the collective property of all? Would dividing it equally between all
be fair? Not everyone worked equally hard to produce it. So we have a
problem -- the result of the initial theft is far greater than the
theft considered in isolation due to the productive nature of what was
stolen.
In other words, what Rothbard ignores in his attempt to undermine
anarchist use of history is that when the property stolen is of a
productive nature, the accumulative effect of its use is such as to
affect all of society. Productive assets produce *new* property, *new*
values, create a *new* balance of class forces, *new* income and wealth
inequalities and so on. This is because of the *dynamic* nature of
production and human life. When the theft is such that it creates
accumulative effects after the initial act, it is hardly enough to say
that it does not really matter any more. If a nobleman invests in a
capitalist firm with the tribute he extracted from his peasants, then
(once the firm starts doing well) sells the land to the peasants and
uses that money to expand his capitalist holdings, does that *really*
make everything all right? Does not the crime transmit with the cash?
After all, the factory would not exist without the prior exploitation
of the peasants.
In the case of actually existing capitalism, born as it was of extensive
coercive acts, the resultant of these acts have come to shape the *whole*
society. For example, the theft of common land (plus the enforcement of
property rights -- the land monopoly -- to vast estates owned by the
aristocracy) ensured that working people had no option to sell their
labour to the capitalists (rural or urban). The terms of these contracts
reflected the weak position of the workers and so capitalists extracted
surplus value from workers and used it to consolidate their market
position and economic power. Similarly, the effect of mercantilist
policies (and protectionism) was to enrich the capitalists at the
expense of workers and allow them to build industrial empires.
The accumulative effect of these acts of violation of a "free" market
was to create a class society wherein most people "consent" to be
wage slaves and enrich the few. While those who suffered the impositions
are long gone and the results of the specific acts have multiplied and
magnified well beyond their initial form. And we are still living with
them. In other words, the initial acts of coercion have been transmitted
and transformed by collective activity (wage labour) into society-wide
affects.
Rothbard argues in the situation where the descendants (or others) of
those who initially tilled the soil and their aggressors ("or those who
purchased their claims") still extract "tribute from the modern tillers"
that this is a case of "*continuing* aggression against the true owners".
This means that "the land titles should be transferred to the peasants,
without compensation to the monopoly landlords." [Op. Cit., p. 65] But
what he fails to note is that the extracted "tribute" could have been
used to invest in industry and transform society. Why ignore what the
"tribute" has been used for? Does stolen property not remain stolen
property after it has been transferred to another? And if the stolen
property is used to create a society in which one class has to sell
their liberty to another, then surely any surplus coming from those
exchanges are also stolen (as it was generated directly and indirectly
by the theft).
Yes, anarchist agree with Rothbard -- peasants should take the land they
use but which is owned by another. But this logic can equally be applied to
capitalism. Workers are still living with the effects of past initiations
of force and capitalists still extract "tribute" from workers due to
the unequal bargaining powers within the labour market that this has
created. The labour market, after all, was created by state action
(directly or indirectly) and is maintained by state action (to protect
property rights and new initiations of force by working people). The
accumulative effects of stealing productive resources as been to
increase the economic power of one class compared to another. As the
victims of these past abuses are long gone and attempts to find their
descendants meaningless (because of the generalised effects the thefts in question), anarchists feel we are justified in demanding the "expropriation
of the expropriators".
Due to Rothbard's failure to understand the dynamic and generalising
effects that result from the theft of productive resources (i.e. externalities
that occur from coercion of one person against a specific set of others) and
the creation of a labour market, his attempt to refute anarchist analysis
of the history of "actually existing capitalism" also fails. Society is
the product of collective activity and should belong to us all (although
whether and how we divide it up is another question).
F.9 Is Medieval Iceland an example of "anarcho"-capitalism working in
practice?
Ironically, medieval Iceland is a good example of why "anarcho"-capitalism
will *not* work, degenerating into de facto rule by the rich. It should be
pointed out first that Iceland, nearly 1,000 years ago, was not a capitalistic
system. In fact, like most cultures claimed by "anarcho"-capitalists as
examples of their "utopia," it was a communal, not individualistic, society,
based on artisan production, with extensive communal institutions as well as
individual "ownership" (i.e. use) and a form of social self-administration,
the *thing* -- both local and Iceland-wide -- which can be considered a
"primitive" form of the anarchist communal assembly.
As William Ian Miller points out "[p]eople of a communitarian nature. . .
have reason to be attracted [to Medieval Iceland]. . . the limited role
of lordship, the active participation of large numbers of free people . . .
in decision making within and without the homestead. The economy barely
knew the existence of markets. Social relations preceded economic
relations. The nexus of household, kin, Thing, even enmity, more than the
nexus of cash, bound people to each other. The lack of extensive economic
differentiation supported a weakly differentiated class system . . . [and
material] deprivations were more evenly distributed than they would be
once state institutions also had to be maintained." [_Bloodtaking and
Peacemaking: Feud, Law and Society in Saga Iceland_, p. 306]
Kropotkin in _Mutual Aid_ indicates that Norse society, from which the
settlers in Iceland came, had various "mutual aid" institutions, including
communal land ownership (based around what he called the "village community")
and the *thing* (see also Kropotkin's _The State: Its Historic Role_ for a
discussion of the "village community"). It is reasonable to think that
the first settlers in Iceland would have brought such institutions with
them and Iceland did indeed have its equivalent of the commune or "village
community," the *Hreppar*, which developed early in the country's history.
Like the early local assemblies, it is not much discussed in the Sagas but
is mentioned in the law book, the Gr�g�s, and was composed of a minimum of
twenty farms and had a five member commission. The Hreppar was self-governing
and, among other things, was responsible for seeing that orphans and the
poor within the area were fed and housed. The Hreppar also served as a
property insurance agency and assisted in case of fire and losses due to
diseased livestock. The Hreppar may have also have organised and controlled
summer grazing lands (which in turn suggests "commons" -- i.e. common
land -- of some kind).
Thus Icelandic society had a network of solidarity, based upon communal life.
In practice this meant that "each commune was a mutual insurance company, or
a miniature welfare state. And membership in the commune was not voluntary.
Each farmer had to belong to the commune in which his farm was located and
to contribute to its needs." [Gissurarson quoted by Birgit T. Runolfsson
Solvason, _Ordered Anarchy, State and Rent-Seeking: The Icelandic Commonwealth,
930-1262_] However, unlike an anarchist society, the Icelandic Commonwealth
did not allow farmers *not* to join its communes.
Therefore, the Icelandic Commonwealth can hardly be claimed in any
significant way as an example of "anarcho"-capitalism in practice. This
can also be seen from the early economy, where prices were subject to popular
judgement at the *skuldaping* ("payment-thing") *not* supply and demand.
[Kirsten Hastrup, _Culture and History in Medieval Iceland_, p. 125]
Indeed, with its communal price setting system in local assemblies, the
early Icelandic commonwealth was more similar to Guild Socialism (which
was based upon guild's negotiating "just prices" for goods and services)
than capitalism. Therefore Miller correctly argues that it would be wrong
to impose capitalist ideas and assumptions onto Icelandic society:
"Inevitably the attempt was made to add early Iceland to the number of
regions that socialised people in nuclear families within simple
households. . . what the sources tell us about the shape of Icelandic
householding must compel a different conclusion." [Op. Cit., p. 112]
In other words, Kropotkin's analysis of communal society is far closer
to the reality of Medieval Iceland than David Friedman's attempt in
_The Machinery of Freedom_ to turn it into a capitalist utopia.
However, the communal nature of Icelandic society also co-existed (as
in most such cultures) with hierarchical institutions, including some with
capitalistic elements, namely private property and "private states" around
the local *godar.* The godar were local chiefs who also took the role of
religious leaders. As the _Encyclopaedia Britannica_ explains, "a kind of
local government was evolved [in Iceland] by which the people of a
district who had most dealings together formed groups under the leadership
of the most important or influential man in the district" (the godi).
The godi "acted as judge and mediator" and "took a lead in communal
activities" such as building places of worship. These "local assemblies.
. . are heard of before the establishment of the althing" (the national
thing). This althing led to co-operation between the local assemblies.
Therefore we see communal self-management in a basic form, *plus*
co-operation between communities as well. These communistic, mutual-aid
features exist in many non-capitalist cultures and are often essential for
ensuring the people's continued freedom within those cultures (section
B.2.5 on why the wealthy undermine these popular "folk-motes" in favour
of centralisation). Usually, the existence of private property (and
so inequality) soon led to the destruction of communal forms of
self-management (with participation by all male members of the
community as in Iceland), which are replaced by the rule of the
rich.
While such developments are a commonplace in most "primitive" cultures,
the Icelandic case has an unusual feature which explains the interest
it provokes in "anarcho"-capitalist circles. This feature was that
individuals could seek protection from any godi. As the _Encyclopaedia
Britannica_ puts it, "the extent of the godord [chieftancy] was not fixed
by territorial boundaries. Those who were dissatisfied with their chief
could attach themselves to another godi. . . As a result rivalry arose
between the godar [chiefs]; as may be seen from the Icelandic Sagas." It
is these Sagas on which David Friedman (in _The Machinery of Freedom_)
bases his claim that Medieval Iceland is a working example of "anarcho"
capitalism.
Hence we can see that artisans and farmers would seek the "protection" of
a godi, providing their labour in return. These godi would be subject to
"market forces," as dissatisfied individuals could affiliate themselves
to other godi. This system, however, had an obvious (and fatal) flaw. As
the _Encyclopaedia Britannica_ points out:
"The position of the godi could be bought and sold, as well as inherited;
consequently, with the passing of time, the godord for large areas of the
country became concentrated in the hands of one man or a few men. This was
the principal weakness of the old form of government: it led to a struggle
of power and was the chief reason for the ending of the commonwealth and
for the country's submission to the King of Norway."
It was the existence of these hierarchical elements in Icelandic society
that explain its fall from anarchistic to statist society. As Kropotkin
argued "from chieftainship sprang on the one hand the State and on the
other *private* property." [_Act for Yourselves_, p. 85] Kropotkin's
insight that chieftainship is a transitional system has been confirmed
by anthropologists studying "primitive" societies. They have come to the
conclusion that societies made up of chieftainships or chiefdoms are
not states: "Chiefdoms are neither stateless nor state societies in the
fullest sense of either term: they are on the borderline between the two.
Having emerged out of stateless systems, they give the impression of being
on their way to centralised states and exhibit characteristics of both."
[Y. Cohen quoted by Birgit T. Runolfsson Solvason, Op. Cit.] Since the
Commonwealth was made up of chiefdoms, this explains the contradictory
nature of the society - it was in the process of transition, from anarchy
to statism, from a communal economy to one based on private property.
The *political* transition within Icelandic society went hand in hand with
an *economic* transition (both tendencies being mutually reinforcing).
Initially, when Iceland was settled, large-scale farming based on extended
households with kinsmen was the dominant economic mode. This semi-communal
mode of production changed as the land was divided up (mostly through
inheritance claims) between the 10th and 11th centuries. This new economic
system based upon individual *possession* and artisan production was then
slowly displaced by tenant farming, in which the farmer worked for a
landlord, starting in the late 11th century. This economic system (based
on a form of wage labour, i.e. capitalistic production) ensured that
"great variants of property and power emerged." [Kirsten Hastrup, _Culture
and History in Medieval Iceland_, pp. 172-173] During the 12th
century wealth concentrated into fewer and fewer hands and by its
end an elite of around 6 wealthy and powerful families had emerged.
During this evolution in ownership patterns and the concentration of wealth
and power into the hands of a few, we should note that the godi's and wealthy
landowners' attitude to profit making also changed, with market values
starting to replace those associated with honour, kin, and so on. Social
relations became replaced by economic relations and the nexus of household,
kin and Thing was replaced by the nexus of cash and profit. The rise of
capitalistic social relationships in production and values within society
was also reflected in exchange, with the local marketplace, with its
pricing "subject to popular judgement" being "subsumed under central
markets." [Ibid., p. 225]
With a form of wage labour being dominant within society, it is not surprising
that great differences in wealth started to appear. Also, as protection did
not come free, it is not surprising that a godi tended to become rich also.
This would enable him to enlist more warriors, which gave him even more
social power (in Kropotkin's words, "the individual accumulation of wealth
and power"). Powerful godi would be useful for wealthy landowners when
disputes over land and rent appeared, and wealthy landowners would be
useful for a godi when feeding his warriors. Production became the means
of enriching the already wealthy, with concentrations of wealth producing
concentrations of social and political power (and vice versa). Kropotkin's
general summary of the collapse of "barbarian" society into statism seems
applicable here - "after a hard fight with bad crops, inundations and
pestilences, [farmers]. . . began to repay their debts, they fell into
servile obligations towards the protector of the territory. Wealth
undoubtedly did accumulate in this way, and power always follows wealth."
[_Mutual Aid_, p. 131]
The transformation of *possession* into *property* and the resulting rise
of hired labour was a *key* element in the accumulation of wealth and power,
and the corresponding decline in liberty among the farmers. Moreover, with
hired labour springs dependency -- the worker is now dependent on good
relations with their landlord in order to have access to the land they need.
With such reductions in the independence of part of Icelandic society, the
undermining of self-management in the various Things was also likely as
labourers could not vote freely as they could be subject to sanctions from
their landlord for voting the "wrong" way. Thus hierarchy within the
economy would spread into the rest of society, and in particular its
social institutions, reinforcing the effects of the accumulation of
wealth and power.
The resulting classification of Icelandic society played a key role in its
move from relative equality and anarchy to a class society and statism.
As Millar points out:
"as long as the social organisation of the economy did not allow for
people to maintain retinues, the basic egalitarian assumptions of the
honour system. . . were reflected reasonably well in reality. . . the
mentality of hierarchy never fully extricated itself from the egalitarian
ethos of a frontier society created and recreated by juridically equal
farmers. Much of the egalitarian ethic maintained itself even though it
accorded less and less with economic realities. . . by the end of the
commonwealth period certain assumptions about class privilege and
expectations of deference were already well enough established to have
become part of the lexicon of self-congratulation and self-justification."
[Op. Cit., pp. 33-4]
This process in turn accelerated the destruction of communal life and the
emergence of statism, focused around the godord. In effect, the godi and
wealthy farmers became rulers of the country and "the old form of government
became modified in the course of time." This change from a communalistic,
anarchistic society to a statist, propertarian one can also be seen from
this quote from an article on Iceland by Hallberg Hallmundsson in the
_Encyclopaedia Americana_, which identifies wealth concentration in fewer
and fewer hands as having been responsible for undermining Icelandic
society:
"During the 12th century, wealth and power began to accumulate in the
hands of a few chiefs, and by 1220, six prominent families ruled the
entire country. It was the internecine power struggle among these
families, shrewdly exploited by King Haakon IV of Norway, that finally
brought the old republic to an end."
This process, wherein the concentration of wealth leads to the destruction
of communal life and so the anarchistic aspects of a given society, can be
seen elsewhere, for example, in the history of the United States after the
Revolution or in the degeneration of the free cities of Medieval Europe.
Peter Kropotkin, in his classic work _Mutual Aid_, documents this process
in some detail, in many cultures and time periods. However, that this
process occurred in a society which is used by "anarcho"-capitalists as an
example of their system in action reinforces the anarchist analysis of the
statist nature of "anarcho"-capitalism and the deep flaws in its theory,
as discussed in section F.6.
As Miller argues, "[i]t is not the have-nots, after all, who invented the
state. The first steps toward state formation in Iceland were made by
churchmen. . . and by the big men content with imitating Norwegian
royal style. Early state formation, I would guess, tended to involve
redistributions, not from rich to poor, but from poor to rich, from
weak to strong." [Op. Cit., p. 306]
David Friedman is aware of how the Icelandic Republic degenerated and its
causes. He states in a footnote in his 1979 essay "Private Creation and
Enforcement of Law: A Historical Case" that the "question of why the system
eventually broke down is both interesting and difficult. I believe that two
of the proximate causes were increased concentration of wealth, and hence
power, and the introduction into Iceland of a foreign ideology -- kingship.
The former meant that in many areas all or most of the godord were held by
one family and the latter that by the end of the Sturlung period the
chieftains were no longer fighting over the traditional quarrels of who
owed what to whom, but over who should eventually rule Iceland. The
ultimate reasons for those changes are beyond the scope of this paper."
However, from an anarchist point of view, the "foreign" ideology of kingship
would be the *product* of changing socio-economic conditions that were
expressed in the increasing concentration of wealth and not its cause.
The settlers of Iceland were well aware of the "ideology" of kingship
for the 300 years during which the Republic existed. However, only
the concentration of wealth allowed would-be Kings the opportunity to
develop and act and the creation of boss-worker social relationships on
the land made the poor subject to, and familiar with, the concept of
authority. Such familiarity would spread into all aspects of life and,
combined with the existence of "prosperous" (and so powerful) godi to
enforce the appropriate servile responses, ensured the end of the relative
equality that fostered Iceland's anarchistic tendencies in the first place.
In addition, as private property is a monopoly of rulership over a given
area, the conflict between chieftains for power was, at its most basic, a
conflict of who would *own* Iceland, and so rule it. The attempt to ignore
the facts that private property creates rulership (i.e. a monopoly of
government over a given area) and that monarchies are privately owned
states does Friedman's case no good. In other words, the system of private
property has a built in tendency to produce both the ideology and fact of
Kingship - the power structures implied by Kingship are reflected in the
social relations which are produced by private property.
Friedman is also aware that an "objection [to his system] is that the rich
(or powerful) could commit crimes with impunity, since nobody would be able
to enforce judgement against them. Where power is sufficiently concentrated
this might be true; this was one of the problems which led to the eventual
breakdown of the Icelandic legal system in the thirteenth century. But so
long as power was reasonably dispersed, as it seem to have been for the
first two centuries after the system was established, this was a less
serious problem." [Op. Cit.]
Which is quite ironic. Firstly, because the first two centuries of Icelandic
society was marked by *non-capitalist* economic relations (communal pricing
and family/individual possession of land). Only when capitalistic social
relationships developed (hired labour and property replacing possession
and market values replacing social ones) in the 12th century did power
become concentrated, leading to the breakdown of the system in the 13th
century.
Secondly, because Friedman is claiming that "anarcho"-capitalism will
only work if there is an approximate equality within society! But this
state of affairs is one most "anarcho"-capitalists claim is impossible
and undesirable!
They claim there will *always* be rich and poor. But inequality in wealth
will also become inequality of power. When "actually existing" capitalism
has become more free market the rich have got richer and the poor poorer.
Apparently, according to the "anarcho"-capitalists, in an even "purer"
capitalism this process will be reversed! It is ironic that an ideology
that denounces egalitarianism as a revolt against nature implicitly
requires an egalitarian society in order to work.
In reality, wealth concentration is a fact of life in *any* system based
upon hierarchy and private property. Friedman is aware of the reasons why
"anarcho"-capitalism will become rule by the rich but prefers to believe
that "pure" capitalism will produce an egalitarian society! In the case of
the commonwealth of Iceland this did not happen - the rise in private
property was accompanied by a rise in inequality and this lead to the
breakdown of the Republic into statism.
In short, Medieval Iceland nicely illustrates David Weick's comments (as
quoted in section F.6.3) that "when private wealth is uncontrolled, then
a police-judicial complex enjoying a clientele of wealthy corporations
whose motto is self-interest is hardly an innocuous social force controllable
by the possibility of forming or affiliating with competing 'companies.'"
This is to say that "free market" justice soon results in rule by the rich,
and being able to affiliate with "competing" "defence companies" is
insufficient to stop or change that process.
This is simply because any defence-judicial system does not exist in a
social vacuum. The concentration of wealth -- a natural process under
the "free market" (particularly one marked by private property and wage
labour) -- has an impact on the surrounding society. Private property,
i.e. monopolisation of the means of production, allows the monopolists to
become a ruling elite by exploiting, and so accumulating vastly more
wealth than, the workers. This elite then uses its wealth to control the
coercive mechanisms of society (military, police, "private security
forces," etc.), which it employs to protect its monopoly and thus its
ability to accumulate ever more wealth and power. Thus, private property,
far from increasing the freedom of the individual, has always been the
necessary precondition for the rise of the state and rule by the rich.
Medieval Iceland is a classic example of this process at work.
F.10 Would laissez-faire capitalism be stable?
Unsurprisingly, right-libertarians combine their support for "absolute
property rights" with a whole-hearted support for laissez-faire capitalism.
In such a system (which they maintain, to quote Ayn Rand, is an "unknown
ideal") everything would be private property and there would be few (if
any) restrictions on "voluntary exchanges." "Anarcho"-capitalists are
the most extreme of defenders of pure capitalism, urging that the state
itself be privatised and no voluntary exchange made illegal (for example,
children would be considered the property of their parents and it would
be morally right to turn them into child prostitutes -- the child has
the option of leaving home if they object).
As there have been no example of "pure" capitalism it is difficult to
say whether their claims about are true (for a discussion of a close
approximation see the section F.10.3). This section of the FAQ is an
attempt to discover whether such a system would be stable or whether
it would be subject to the usual booms and slumps. Before starting we
should note that there is some disagreement within the right-libertarian
camp itself on this subject (although instead of stability they usually
refer to "equilibrium" -- which is an economics term meaning that all
of a societies resources are fully utilised).
In general terms, most right-Libertarians' reject the concept of
equilibrium as such and instead stress that the economy is inherently
a dynamic (this is a key aspect of the Austrian school of economics).
Such a position is correct, of course, as such noted socialists as
Karl Marx and Michal Kalecki and capitalist economists as Keynes
recognised long ago. There seems to be two main schools of thought
on the nature of disequilibrium. One, inspired by von Mises, maintains
that the actions of the entrepreneur/capitalist results in the market
co-ordinating supply and demand and another, inspired by Joseph Schumpeter,
who question whether markets co-ordinate because entrepreneurs are
constantly innovating and creating new markets, products and techniques.
Of course both actions happen and we suspect that the differences in
the two approaches are not important. The important thing to remember
is that "anarcho"-capitalists and right-libertarians in general reject
the notion of equilibrium -- but when discussing their utopia they
do not actually indicate this! For example, most "anarcho"-capitalists
will maintain that the existence of government (and/or unions) causes
unemployment by either stopping capitalists investing in new lines
of industry or forcing up the price of labour above its market clearing
level (by, perhaps, restricting immigration, minimum wages, taxing
profits). Thus, we are assured, the worker will be better off in
"pure" capitalism because of the unprecedented demand for labour
it will create. However, full employment of labour is an equilibrium
in economic terms and that, remember, is impossible due to the
dynamic nature of the system. When pressed, they will usually admit
there will be periods of unemployment as the market adjusts or that
full unemployment actually means under a certain percentage of
unemployment. Thus, if you (rightly) reject the notion of equilibrium
you also reject the idea of full employment and so the labour market
becomes a buyers market and labour is at a massive disadvantage.
The right-libertarian case is based upon logical deduction, and the
premises required to show that laissez-faire will be stable are somewhat
incredible. If banks do not set the wrong interest rate, if companies
do not extend too much trade credit, if workers are willing to accept
(real wage related) pay cuts, if workers altruistically do not abuse their
market power in a fully employed society, if interest rates provide
the correct information, if capitalists predict the future relatively
well, if banks and companies do not suffer from isolation paradoxes,
then, perhaps, laissez-faire will be stable.
So, will laissez-faire capitalism be stable? Let us see by analysing
the assumptions of right-libertarianism -- namely that there will be
full employment and that a system of private banks will stop the
business cycle. We will start on the banking system first (in section
F.10.1) followed by the effects of the labour market on economic stability
(in section F.10.2). Then we will indicate, using the example of 19th
century America, that actually existing ("impure") laissez-faire was
very unstable.
Explaining booms and busts by state action plays an ideological convenience
as it exonerates market processes as the source of instability within
capitalism. We hope to indicate in the next two sections why the business
cycle is inherent in the system (see also sections C.7, C.8 and C.9).
F.10.1 Would privatising banking make capitalism stable?
It is claimed that the existence of the state (or, for minimal statists,
government policy) is the cause of the business cycle (recurring economic
booms and slumps). This is because the government either sets interest
rates too low or expands the money supply (usually by easing credit
restrictions and lending rates, sometimes by just printing fiat money).
This artificially increases investment as capitalists take advantage of
the artificially low interest rates. The real balance between savings and
investment is broken, leading to over-investment, a drop in the
rate of profit and so a slump (which is quite socialist in a way, as
many socialists also see over-investment as the key to understanding
the business cycle, although they obviously attribute the slump to
different causes -- namely the nature of capitalist production, not
that the credit system does not play its part -- see section C.7).
In the words of Austrian Economist W. Duncan Reekie, "[t]he business
cycle is generated by monetary expansion and contraction . . . When
new money is printed it appears as if the supply of savings has
increased. Interest rates fall and businessmen are misled into
borrowing additional founds to finance extra investment activity . . .
This would be of no consequence if it had been the outcome of [genuine
saving] . . . -but the change was government induced. The new money
reaches factor owners in the form of wages, rent and interest . . .
the factor owners will then spend the higher money incomes in their
existing consumption:investment proportions . . . Capital goods
industries will find their expansion has been in error and malinvestments
have been inoccured." [_Markets, Entrepreneurs and Liberty_, pp. 68-9]
In other words, there has been "wasteful mis-investment due to government
interference with the market." [Op. Cit., p. 69] In response to this
(negative) influence in the workings of the market, it is suggested
by right-libertarians that a system of private banks should be used and
that interest rates are set by them, via market forces. In this way an
interest rate that matches the demand and supply for savings will
be reached and the business cycle will be no more. By truly privatising
the credit market, it is hoped by the business cycle will finally stop.
Unsurprisingly, this particular argument has its weak points and in this
section of the FAQ we will try to show exactly why this theory is wrong.
Let us start with Reckie's starting point. He states that the "main problem"
of the slump is "why is there suddenly a '*cluster*' of business errors?
Businessmen and entrepreneurs are market experts (otherwise they would
not survive) and why should they all make mistakes simultaneously?"
[Op. Cit., p. 68] It is this "cluster" of mistakes that the Austrians'
take as evidence that the business cycle comes from outside the workings
of the market (i.e. is exogenous in nature). Reekie argues that an "error
cluster only occurs when all entrepreneurs have received the wrong signals
on potential profitability, and all have received the signals simultaneously
through government interference with the money supply." [Op. Cit., p. 74]
But is this *really* the case?
The simple fact is that groups of (rational) individuals can act in the
same way based on the same information and this can lead to a collective
problem. For example, we do not consider it irrational that everyone in a
building leaves it when the fire alarm goes off and that the flow of
people can cause hold-ups at exits. Neither do we think that its unusual
that traffic jams occur, after all those involved are all trying to get
to work (i.e. they are reacting to the same desire). Now, is it so
strange to think that capitalists who all see the same opportunity for
profit in a specific market decide to invest in it? Or that the aggregate
outcome of these individually rational decisions may be irrational (i.e.
cause a glut in the market)?
In other words, a "cluster" of business failures may come about because
a group of capitalists, acting in isolation, over-invest in a given
market. They react to the same information (namely super profits in
market X), arrange loans, invest and produce commodities to meet demand
in that market. However, the aggregate result of these individually
rational actions is that the aggregate supply far exceeds demand, causing
a slump in that market and, perhaps, business failures. The slump in this
market (and the potential failure of some firms) has an impact on the
companies that supplied them, the companies that are dependent on
their employees wages/demand, the banks that supplied the credit and so
forth. The accumulative impact of this slump (or failures) on the chain of
financial commitments of which they are but one link can be large and,
perhaps, push an economy into general depression. Thus the claim that
it is something external to the system that causes depression is flawed.
It could be claimed the interest rate is the problem, that it does
not accurately reflect the demand for investment or relate it to the
supply of savings. But, as we argued in section C.8, it is not at all
clear that the interest rate provides the necessary information to
capitalists. They need investment information for their specific
industry, but the interest rate is cross-industry. Thus capitalists in
market X do not know if the investment in market X is increasing and
so this lack of information can easily cause "mal-investment" as
over-investment (and so over-production) occurs. As they have no way
of knowing what the investment decisions of their competitors are
or now these decisions will affect an already unknown future, capitalists
may over-invest in certain markets and the net effects of this aggregate
mistake can expand throughout the whole economy and cause a general slump.
In other words, a cluster of business failures can be accounted for by
the workings of the market itself and *not* the (existence of) government.
This is *one* possible reason for an internally generated business cycle
but that is not the only one. Another is the role of class struggle which
we discuss in the next section and yet another is the endogenous nature
of the money supply itself. This account of money (proposed strongly by,
among others, the post-Keynesian school) argues that the money supply
is a function of the demand for credit, which itself is a function of the
level of economic activity. In other words, the banking system creates
as much money as people need and any attempt to control that creation
will cause economic problems and, perhaps, crisis (interestingly, this
analysis has strong parallels with mutualist and individualist anarchist
theories on the causes of capitalist exploitation and the business
cycle). Money, in other words, emerges from *within* the system and
so the right-libertarian attempt to "blame the state" is simply wrong.
Thus what is termed "credit money" (created by banks) is an essential
part of capitalism and would exist without a system of central banks.
This is because money is created from within the system, in response
to the needs of capitalists. In a word, money is endogenous and credit
money an essential part of capitalism.
Right-libertarians do not agree. Reekie argues that "[o]nce fractional
reserve banking is introduced, however, the supply of money substitutes
will include fiduciary media. The ingenuity of bankers, other financial
intermediaries and the endorsement and *guaranteeing of their activities
by governments and central banks* has ensured that the quantity of fiat
money is immense." [Op. Cit., p. 73]
Therefore, what "anarcho"-capitalists and other right-libertarians seem
to be actually complaining about when they argue that "state action" creates
the business cycle by creating excess money is that the state *allows*
bankers to meet the demand for credit by creating it. This makes sense,
for the first fallacy of this sort of claim is how could the state *force*
bankers to expand credit by loaning more money than they have savings.
And this seems to be the normal case within capitalism -- the central
banks accommodate bankers activity, they do not force them to do it. Alan
Holmes, a senior vice president at the New York Federal Reserve, stated
that:
"In the real world, banks extend credit, creating deposits in the
process, and look for the reserves later. The question then becomes
one of whether and how the Federal Reserve will accommodate the demand
for reserves. In the very short run, the Federal Reserve has little or
no choice about accommodating that demand, over time, its influence
can obviously be felt." [quoted by Doug Henwood, _Wall Street_, p. 220]
(Although we must stress that central banks are *not* passive and do have
many tools for affecting the supply of money. For example, central banks
can operate "tight" money policies which can have significant impact on
an economy and, via creating high enough interest rates, the demand for
money.)
It could be argued that because central banks exist, the state
creates an "environment" which bankers take advantage off. By not
being subject to "free market" pressures, bankers could be tempted to
make more loans than they would otherwise in a "pure" capitalist system
(i.e. create credit money). The question arises, would "pure" capitalism
generate sufficient market controls to stop banks loaning in excess of
available savings (i.e. eliminate the creation of credit money/fiduciary
media).
It is to this question we now turn.
As noted above, the demand for credit is generated from *within* the system
and the comments by Holmes reinforce this. Capitalists seek credit in order
to make money and banks create it precisely because they are also seeking
profit. What right-libertarians actually object to is the government (via
the central bank) *accommodating* this creation of credit. If only the
banks could be forced to maintain a savings to loans ration of one, then
the business cycle would stop. But is this likely? Could market forces
ensure that bankers pursue such a policy? We think not -- simply because
the banks are profit making institutions. As post-Keynesianist Hyman Minsky
argues, "[b]ecause bankers live in the same expectational climate as
businessmen, profit-seeking bankers will find ways of accommodating their
customers. . . Banks and bankers are not passive managers of money to
lend or to invest; they are in business to maximise profits. . ." [quoted
by L. Randall Wray, _Money and Credit in Capitalist Economies_, p. 85]
This is recognised by Reekie, in passing at least (he notes that "fiduciary
media could still exist if bankers offered them and clients accepted them"
[Op. Cit., p. 73]). Bankers will tend to try and accommodate their customers
and earn as much money as possible. Thus Charles P. Kindleberger comments
that monetary expansion "is systematic and endogenous rather than random
and exogenous" seem to fit far better the reality of capitalism that the
Austrian and right-libertarian viewpoint [_Manias, Panics, and Crashes_,
p. 59] and post-Keynesian L. Randall Wray argues that "the money supply
. . . is more obviously endogenous in the monetary systems which predate
the development of a central bank." [Op. Cit., p. 150]
In other words, the money supply cannot be directly controlled by the
central bank since it is determined by private decisions to enter into
debt commitments to finance spending. Given that money is generated
from *within* the system, can market forces ensure the non-expansion
of credit (i.e. that the demand for loans equals the supply of savings)?
To begin to answer this question we must note that investment is
"essentially determined by expected profitability." [Philip Arestis,
_The Post-Keynesian Approach to Economics_, p. 103] This means that
the actions of the banks cannot be taken in isolation from the rest
of the economy. Money, credit and banks are an essential part of
the capitalist system and they cannot be artificially isolated from
the expectations, pressures and influences of that system.
Let us assume that the banks desire to maintain a loans to savings ratio
of one and try to adjust their interest rates accordingly. Firstly,
changes in the rate of interest "produce only a very small, if any,
movement in business investment" according to empirical evidence
[Op. Cit., pp. 82-83] and that "the demand for credit is extremely
inelastic with respect to interest rates." [L. Randall Wray, Op. Cit.,
p. 245] Thus, to keep the supply of savings in line with the demand
for loans, interest rates would have to increase greatly (indeed,
trying to control the money supply by controlling the monetary bases
in this way will only lead to very big fluctuations in interest rates).
And increasing interest rates has a couple of paradoxical effects.
According to economists Joseph Stiglitz and Andrew Weiss (in "Credit
Rationing in Markets with Imperfect Knowledge", _American Economic Review_,
no. 71, pp. 393-410) interest rates are subject to what is called the
"lemon problem" (asymmetrical information between buyer and seller). Stiglitz
and Weiss applied the "lemons problem" to the credit market and argued
(and unknowingly repeated Adam Smith) that at a given interest rate, lenders
will earn lower return by lending to bad borrowers (because of defaults)
than to good ones. If lenders try to increase interest rates to compensate
for this risk, they may chase away good borrowers, who are unwilling to
pay a higher rate, while perversely not chasing away incompetent, criminal,
or malignantly optimistic borrowers. This means that an increase in interest
rates may actually increase the possibilities of crisis, as more loans may
end up in the hands of defaulters.
This gives banks a strong incentive to keep interest rates lower than
they otherwise could be. Moreover, "increases in interest rates make
it more difficult for economic agents to meet their debt repayments"
[Philip Arestis, Op. Cit., pp. 237-8] which means when interest rates
*are* raised, defaults will increase and place pressures on the banking
system. At high enough short-term interest rates, firms find it hard to
pay their interest bills, which cause/increase cash flow problems and
so "[s]harp increases in short term interest rates . . .leads to a fall
in the present value of gross profits after taxes (quasi-rents) that
capital assets are expected to earn." [Hyman Minsky, _Post-Keynesian
Economic Theory_, p. 45]
In addition, "production of most investment goods is undertaken on order
and requires time for completion. A rise in interest rates is not
likely to cause firms to abandon projects in the process of production
. . . This does not mean . . . that investment is completely unresponsive
to interest rates. A large increase in interest rates causes a 'present
value reversal', forcing the marginal efficiency of capital to fall
below the interest rate. If the long term interest rate is also
pushed above the marginal efficiency of capital, the project may be
abandoned." [Wray, Op. Cit., pp. 172-3] In other words, investment
takes *time* and there is a lag between investment decisions and actual
fixed capital investment. So if interest rates vary during this lag
period, initially profitable investments may become white elephants.
As Michal Kalecki argued, the rate of interest must be lower than the
rate of profit otherwise investment becomes pointless. The incentive for
a firm to own and operate capital is dependent on the prospective rate
of profit on that capital relative to the rate of interest at which the
firm can borrow at. The higher the interest rate, the less promising
investment becomes.
If investment is unresponsive to all but very high interest rates (as
we indicated above), then a privatised banking system will be under intense
pressure to keep rates low enough to maintain a boom (by, perhaps, creating
credit above the amount available as savings). And if it does this,
over-investment and crisis is the eventual outcome. If it does not do
this and increases interest rates then consumption and investment will
dry up as interest rates rise and the defaulters (honest and dishonest)
increase and a crisis will eventually occur.
This is because increasing interest rates may increase savings *but*
it also reduce consumption ("high interest rates also deter both consumers
and companies from spending, so that the domestic economy is weakened
and unemployment rises" [Paul Ormerod, _The Death of Economics_, p. 70]).
This means that firms can face a drop off in demand, causing them problems
and (perhaps) leading to a lack of profits, debt repayment problems and
failure. An increase in interest rates also reduces demand for investment
goods, which also can cause firms problems, increase unemployment and
so on. So an increase in interest rates (particularly a sharp rise) could
reduce consumption and investment (i.e. reduce aggregate demand) and have
a ripple effect throughout the economy which could cause a slump to occur.
In other words, interest rates and the supply and demand of savings/loans
they are meant to reflect may not necessarily move an economy towards
equilibrium (if such a concept is useful). Indeed, the workings of a
"pure" banking system without credit money may increase unemployment
as demand falls in both investment and consumption in response to
high interest rates and a general shortage of money due to lack of
(credit) money resulting from the "tight" money regime implied by
such a regime (i.e. the business cycle would still exist). This was
the case of the failed Monetarist experiments on the early 1980s when
central banks in America and Britain tried to pursue a "tight" money
policy. The "tight" money policy did not, in fact, control the money
supply. All it did do was increase interest rates and lead to a serious
financial crisis and a deep recession (as Wray notes, "the central
bank uses tight money polices to raise interest rates" [Op. Cit.,
p. 262]). This recession, we must note, also broke the backbone of
working class resistance and the unions in both countries due to the
high levels of unemployment it generated. As intended, we are sure.
Such an outcome would not surprise anarchists, as this was a key feature
of the Individualist and Mutualist Anarchists' arguments against the
"money monopoly" associated with specie money. They argued that
the "money monopoly" created a "tight" money regime which reduced
the demand for labour by restricting money and credit and so
allowed the exploitation of labour (i.e. encouraged wage labour)
and stopped the development of non-capitalist forms of production.
Thus Lysander Spooner's comments that workers need "*money capital*
to enable them to buy the raw materials upon which to bestow their
labour, the implements and machinery with which to labour . . . Unless
they get this capital, they must all either work at a disadvantage,
or not work at all. A very large portion of them, to save themselves
from starvation, have no alternative but to sell their labour to
others . . ." [_A Letter to Grover Cleveland_, p. 39] It is interesting
to note that workers *did* do well during the 1950s and 1960s under
a "liberal" money regime than they did under the "tighter" regimes of
the 1980s and 1990s.
We should also note that an extended period of boom will encourage banks
to make loans more freely. According to Minsky's "financial instability
model" crisis (see "The Financial Instability Hypothesis" in _Post-Keynesian
Economic Theory_ for example) is essentially caused by risky financial
practices during periods of financial tranquillity. In other words,
"stability is destabilising." In a period of boom, banks are happy and
the increased profits from companies are flowing into their vaults.
Over time, bankers note that they can use a reserve system to increase
their income and, due to the general upward swing of the economy,
consider it safe to do so (and given that they are in competition
with other banks, they may provide loans simply because they are
afraid of losing customers to more flexible competitors). This
increases the instability within the system (as firms increase
their debts due to the flexibility of the banks) and produces the
possibility of crisis if interest rates are increased (because
the ability of business to fulfil their financial commitments
embedded in debts deteriorates).
Even if we assume that interest rates *do* work as predicted in
theory, it is false to maintain that there is one interest rate. This
is not the case. "Concentration of capital leads to unequal access to
investment funds, which obstructs further the possibility of smooth
transitions in industrial activity. Because of their past record of
profitability, large enterprises have higher credit ratings and easier
access to credit facilities, and they are able to put up larger collateral
for a loan." [Michael A. Bernstein, _The Great Depression_, p. 106] As
we noted in section C.5.1, the larger the firm, the lower the interest
rate they have to pay. Thus banks routinely lower their interest rates
to their best clients even though the future is uncertain and past
performance cannot and does not indicate future returns. Therefore
it seems a bit strange to maintain that the interest rate will bring
savings and loans into line if there are different rates being offered.
And, of course, private banks cannot affect the underlying fundamentals
that drive the economy -- like productivity, working class power and
political stability -- any more than central banks (although central
banks can influence the speed and gentleness of adjustment to a crisis).
Indeed, given a period of full employment a system of private banks may
actually speed up the coming of a slump. As we argue in the next section,
full employment results in a profits squeeze as firms face a tight labour
market (which drives up costs) and, therefore, increased workers' power
at the point of production and in their power of exit. In a central bank
system, capitalists can pass on these increasing costs to consumers and
so maintain their profit margins for longer. This option is restricted
in a private banking system as banks would be less inclined to devalue
their money. This means that firms will face a profits squeeze sooner
rather than later, which will cause a slump as firms cannot make ends
meet. As Reekie notes, inflation "can temporarily reduce employment
by postponing the time when misdirected labour will be laid off" but
as Austrian's (like Monetarists) think "inflation is a monetary
phenomenon" he does not understand the real causes of inflation
and what they imply for a "pure" capitalist system [Op. Cit., p. 67,
p. 74]. As Paul Ormerod points out "the claim that inflation is always
and everywhere purely caused by increases in the money supply, and
that there the rate of inflation bears a stable, predictable relationship
to increases in the money supply is ridiculous." And he notes that
"[i]ncreases in the rate of inflation tend to be linked to falls in
unemployment, and vice versa" which indicates its *real* causes --
namely in the balance of class power and in the class struggle.
[_The Death of Economics_, p. 96, p. 131]
Moreover, if we do take the Austrian theory of the business cycle at
face value we are drawn to conclusion that in order to finance investment
savings must be increased. But to maintain or increase the stock of
loanable savings, inequality must be increased. This is because,
unsurprisingly, rich people save a larger proportion of their income
than poor people and the proportion of profits saved are higher than
the proportion of wages. But increasing inequality (as we argued in
section F.3.1) makes a mockery of right-libertarian claims that their
system is based on freedom or justice.
This means that the preferred banking system of "anarcho"-capitalism
implies increasing, not decreasing, inequality within society. Moreover,
most firms (as we indicated in section C.5.1) fund their investments
with their own savings which would make it hard for banks to loan
these savings out as they could be withdrawn at any time. This could
have serious implications for the economy, as banks refuse to fund
new investment simply because of the uncertainty they face when
accessing if their available savings can be loaned to others (after all,
they can hardly loan out the savings of a customer who is likely to
demand them at any time). And by refusing to fund new investment, a
boom could falter and turn to slump as firms do not find the necessary
orders to keep going.
So, would market forces create "sound banking"? The answer is probably
not. The pressures on banks to make profits come into conflict with
the need to maintain their savings to loans ration (and so the
confidence of their customers). As Wray argues, "as banks are profit
seeking firms, they find ways to increase their liabilities which
don't entail increases in reserve requirements" and "[i]f banks share
the profit expectations of prospective borrowers, they can create
credit to allow [projects/investments] to proceed." [Op. Cit., p. 295,
p. 283] This can be seen from the historical record. As Kindleberger
notes, "the market will create new forms of money in periods of
boom to get around the limit" imposed on the money supply [Op. Cit.,
p. 63]. Trade credit is one way, for example. Under the Monetarist
experiments of 1980s, there was "deregulation and central bank
constraints raised interest rates and created a moral hazard --
banks made increasingly risky loans to cover rising costs of issuing
liabilities. Rising competition from nonbanks and tight money
policy forced banks to lower standards and increase rates of growth
in an attempt to 'grow their way to profitability'" [Op. Cit., p. 293]
Thus credit money ("fiduciary media") is an attempt to overcome the
scarcity of money within capitalism, particularly the scarcity of
specie money. The pressures that banks face within "actually
existing" capitalism would still be faced under "pure" capitalism.
It is likely (as Reekie acknowledges) that credit money would still
be created in response to the demands of business people (although
not at the same level as is currently the case, we imagine). The
banks, seeking profits themselves and in competition for customers,
would be caught between maintaining the value of their business
(i.e. their money) and the needs to maximise profits. As a boom
develops, banks would be tempted to introduce credit money to
maintain it as increasing the interest rate would be difficult
and potentially dangerous (for reasons we noted above). Thus, if
credit money is not forth coming (i.e. the banks stick to the
Austrian claims that loans must equal savings) then the rise in
interest rates required will generate a slump. If it is forthcoming,
then the danger of over-investment becomes increasingly likely.
All in all, the business cycle is part of capitalism and *not*
caused by "external" factors like the existence of government.
As Reekie notes, to Austrians "ignorance of the future is endemic"
[Op. Cit., p. 117] but you would be forgiven for thinking that this
is not the case when it comes to investment. An individual firm
cannot know whether its investment project will generate the stream
of returns necessary to meet the stream of payment commitments
undertaken to finance the project. And neither can the banks who
fund those projects. Even *if* a bank does not get tempted into
providing credit money in excess of savings, it cannot predict
whether other banks will do the same or whether the projects it
funds will be successful. Firms, looking for credit, may turn to
more flexible competitors (who practice reserve banking to some
degree) and the inflexible bank may see its market share and
profits decrease. After all, commercial banks "typically establish
relations with customers to reduce the uncertainty involved in
making loans. Once a bank has entered into a relationship with
a customer, it has strong incentives to meet the demands of
that customer." [Wray, Op. Cit., p. 85]
There are example of fully privatised banks. For example, in the
United States "which was without a central bank after 1837" "the
major banks in New York were in a bind between their roles as
profit seekers, which made them contributors to the instability
of credit, and as possessors of country deposits against whose
instability they had to guard." [Kindleberger, Op. Cit., p. 85]
In Scotland, the banks were unregulated between 1772 and 1845
but "the leading commercial banks accumulated the notes of lessor
ones, as the Second Bank of the United States did contemporaneously
in [the USA], ready to convert them to specie if they thought
they were getting out of line. They served, that is, as an
informal controller of the money supply. For the rest, as so
often, historical evidence runs against strong theory, as
demonstrated by the country banks in England from 1745 to 1835,
wildcat banking in Michigan in the 1830s, and the latest
experience with bank deregulation in Latin America." [Op. Cit.,
p. 82] And we should note there were a few banking "wars" during
the period of deregulation in Scotland which forced a few of the
smaller banks to fail as the bigger ones refused their money
and that there was a major bank failure in the Ayr Bank.
Kendleberger argues that central banking "arose to impose control
on the instability of credit" and did not cause the instability
which right-libertarians maintain it does. And as we note in
section F.10.3, the USA suffered massive economic instability
during its period without central banking. Thus, *if* credit
money *is* the cause of the business cycle, it is likely that
a "pure" capitalism will still suffer from it just as much as
"actually existing" capitalism (either due to high interest rates
or over-investment).
In general, as the failed Monetarist experiments of the 1980s prove,
trying to control the money supply is impossible. The demand for money
is dependent on the needs of the economy and any attempt to control
it will fail (and cause a deep depression, usually via high interest
rates). The business cycle, therefore, is an endogenous phenomenon caused
by the normal functioning of the capitalist economic system. Austrian
and right-libertarian claims that "slump flows boom, but for a totally
unnecessary reason: government inspired mal-investment" [Reekie, Op.
Cit., p. 74] are simply wrong. Over-investment *does* occur, but it
is *not* "inspired" by the government. It is "inspired" by the banks
need to make profits from loans and from businesses need for investment
funds which the banks accommodate. In other words, by the nature of
the capitalist system.
F.10.2 How does the labour market effect capitalism?
In many ways, the labour market is the one that affects capitalism the
most. The right-libertarian assumption (like that of mainstream economics)
is that markets clear and, therefore, the labour market will also clear.
As this assumption has rarely been proven to be true in actuality (i.e.
periods of full employment within capitalism are few and far between),
this leaves its supporters with a problem -- reality contradicts the
theory.
The theory predicts full employment but reality shows that this is not
the case. Since we are dealing with logical deductions from assumptions,
obviously the theory cannot be wrong and so we must identify external
factors which cause the business cycle (and so unemployment). In this
way attention is diverted away from the market and its workings --
after all, it is assumed that the capitalist market works -- and onto
something else. This "something else" has been quite a few different
things (most ridiculously, sun spots in the case of one of the founders of
marginalist economics, William Stanley Jevons). However, these days most
pro-free market capitalist economists and right-libertarians have now
decided it is the state.
In this section of the FAQ we will present a case that maintains that
the assumption that markets clear is false at least for one, unique,
market -- namely, the market for labour. As the fundamental assumption
underlying "free market" capitalism is false, the logically consistent
superstructure built upon comes crashing down. Part of the reason why
capitalism is unstable is due to the commodification of labour (i.e.
people) and the problems this creates. The state itself can have
positive and negative impacts on the economy, but removing it or
its influence will not solve the business cycle.
Why is this? Simply due to the nature of the labour market.
Anarchists have long realised that the capitalist market is based upon
inequalities and changes in power. Proudhon argued that "[t]he manufacturer
says to the labourer, 'You are as free to go elsewhere with your services
as I am to receive them. I offer you so much.' The merchant says to the
customer, 'Take it or leave it; you are master of your money, as I am
of my goods. I want so much.' Who will yield? The weaker." He, like all
anarchists, saw that domination, oppression and exploitation flow from
inequalities of market/economic power and that the "power of invasion
lies in superior strength." [_What is Property?_, p. 216, p. 215]
This applies with greatest force to the labour market. While mainstream
economics and right-libertarian variations of it refuse to acknowledge
that the capitalist market is a based upon hierarchy and power, anarchists
(and other socialists) do not share this opinion. And because they do
not share this understanding with anarchists, right-libertarians will
never be able to understand capitalism or its dynamics and development.
Thus, when it comes to the labour market, it is essential to remember
that the balance of power within it is the key to understanding the
business cycle. Thus the economy must be understood as a system of
power.
So how does the labour market effect capitalism? Let us consider a
growing economy, on that is coming out of a recession. Such a growing
economy stimulates demand for employment and as unemployment falls, the
costs of finding workers increase and wage and condition demands of
existing workers intensify. As the economy is growing and labour is
scare, the threat associated with the hardship of unemployment is
weakened. The share of profits is squeezed and in reaction to this
companies begin to cut costs (by reducing inventories, postponing
investment plans and laying off workers). As a result, the economy
moves into a downturn. Unemployment rises and wage demands are moderated.
Eventually, this enables the share of profits first of all to stabilise,
and then rise. Such an "interplay between profits and unemployment as
the key determinant of business cycles" is "observed in the empirical
data." [Paul Ormerod, _The Death of Economics_, p. 188]
Thus, as an economy approaches full employment the balance of power on
the labour market changes. The sack is no longer that great a threat
as people see that they can get a job elsewhere easily. Thus wages
and working conditions increase as companies try to get new (and
keep) existing employees and output is harder to maintain. In the
words of economist William Lazonick, labour "that is able to command
a higher price than previously because of the appearance of tighter
labour markets is, by definition, labour that is highly mobile via
the market. And labour that is highly mobile via the market is labour
whose supply of effort is difficult for managers to control in the
production process. Hence, the advent of tight labour markets generally
results in more rapidly rising average costs . . .as well as upward
shifts in the average cost curve. . ." [_Business Organisation and
the Myth of the Market Economy_, p. 106]
In other words, under conditions of full-employment "employers are
in danger of losing the upper hand." [Juliet B. Schor, _The Overworked
American_, p. 75] Schor argues that "employers have a structural advantage
in the labour market, because there are typically more candidates ready
and willing to endure this work marathon [of long hours] than jobs
for them to fill." [p. 71] Thus the labour market is usually a buyers
market, and so the sellers have to compromise. In the end, workers
adapt to this inequality of power and instead of getting what they
want, they want what they get.
But under full employment this changes. As we argued in section B.4.4
and section C.7, in such a situation it is the bosses who have to
start compromising. And they do not like it. As Schor notes, America
"has never experienced a sustained period of full employment. The
closest we have gotten is the late 1960s, when the overall unemployment
rate was under 4 percent for four years. But that experience does
more to prove the point than any other example. The trauma caused
to business by those years of a tight labour market was considerable.
Since then, there has been a powerful consensus that the nation cannot
withstand such a low rate of unemployment." [Op. Cit., pp. 75-76]
So, in other words, full employment is not good for the capitalist
system due to the power full employment provides workers. Thus
unemployment is a necessary requirement for a successful capitalist
economy and not some kind of aberration in an otherwise healthy system.
Thus "anarcho"-capitalist claims that "pure" capitalism will soon result
in permanent full employment are false. Any moves towards full employment
will result in a slump as capitalists see their profits squeezed from below
by either collective class struggle or by individual mobility in the
labour market.
This was recognised by Individualist Anarchists like Benjamin Tucker, who
argued that mutual banking would "give an unheard of impetus to business,
and consequently create an unprecedented demand for labour, -- a demand
which would always be in excess of the supply, directly contrary of the
present condition of the labour market." [_The Anarchist Reader_, pp.
149-150] In other words, full employment would end capitalist exploitation,
drive non-labour income to zero and ensure the worker the full value of
her labour -- in other words, end capitalism. Thus, for most (if not all)
anarchists the exploitation of labour is only possible when unemployment
exists and the supply of labour exceeds the demand for it. Any move
towards unemployment will result in a profits squeeze and either the
end of capitalism or an economic slump.
Indeed, as we argued in the last section, the extended periods of
(approximately) full employment until the 1960s had the advantage that
any profit squeeze could (in the short run anyway) be passed onto working
class people in the shape of inflation. As prices rise, labour is made
cheaper and profits margins supported. This option is restricted under
a "pure" capitalism (for reasons we discussed in the last section) and
so "pure" capitalism will be affected by full employment faster than
"impure" capitalism.
As an economy approaches full employment, "hiring new workers suddenly
becomes much more difficult. They are harder to find, cost more, and
are less experiences. Such shortages are extremely costly for a firm."
[Schor, Op. Cit., p. 75] This encourages a firm to pass on these rises
to society in the form of price rises, so creating inflation. Workers,
in turn, try to maintain their standard of living. "Every general
increase in labour costs in recent years," note J. Brecher and J.
Costello in the late 1970s, "has followed, rather than preceded, an
increase in consumer prices. Wage increases have been the result of
workers' efforts to catch up after their incomes have already been
eroded by inflation. Nor could it easily be otherwise. All a businessman
has to do to raise a price . . . [is to] make an announcement. . . Wage
rates . . . are primarily determined by contracts" and so cannot be
easily adjusted in the short term. [_Common Sense for Bad Times_,
p, 120]
These full employment pressures will still exist with "pure" capitalism
(and due to the nature of the banking system will not have the safety
value of inflation). This means that periodic profit squeezes will occur,
due to the nature of a tight labour market and the increased power of
workers this generates. This in turn means that a "pure" capitalism will
be subject to periods of unemployment (as we argued in section C.9)
and so still have a business cycle. This is usually acknowledged by
right-libertarians in passing, although they seem to think that this
is purely a "short-term" problem (it seems a strange "short-term"
problem that continually occurs).
But such an analysis is denied by right-libertarians. For them government
action, combined with the habit of many labour unions to obtain higher
than market wage rates for their members, creates and exacerbates mass
unemployment. This flows from the deductive logic of much capitalist
economics. The basic assumption of capitalism is that markets clear. So
if unemployment exists then it can only be because the price of labour
(wages) is too high (Austrian Economist W. Duncan Reekie argues
that unemployment will "disappear provided real wages are not
artificially high" [_Markets, Entrepreneurs and Liberty_, p. 72]).
Thus the assumption provokes the conclusion -- unemployment is caused
by an unclearing market as markets always clear. And the cause for
this is either the state or unions. But what if the labour market
*cannot* clear without seriously damaging the power and profits of
capitalists? What if unemployment is required to maximise profits
by weakening labours' bargaining position on the market and so
maximising the capitalists power? In that case unemployment is
caused by capitalism, not by forces external to it.
However, let us assume that the right-libertarian theory is correct.
Let us assume that unemployment is all the fault of the selfish unions
and that a job-seeker "who does not want to wait will always get a job
in the unhampered market economy." [von Mises, _Human Action_, p. 595]
Would crushing the unions reduce unemployment? Let us assume that the
unions have been crushed and government has been abolished (or, at the
very least, become a minimum state). The aim of the capitalist class is
to maximise their profits and to do this they invest in labour saving
machinery and otherwise attempt to increase productivity. But increasing
productivity means that the prices of goods fall and falling prices
mean increasing real wages. It is high real wages that, according to
right-libertarians, that cause unemployment. So as a reward for increasing
productivity, workers will have to have their money wages cut in order
to stop unemployment occurring! For this reason some employers might
refrain from cutting wages in order to avoid damage to morale - potentially
an important concern.
Moreover, wage contracts involve *time* -- a contract will usually agree a
certain wage for a certain period. This builds in rigidity into the market,
wages cannot be adjusted as quickly as other commodity prices. Of course,
it could be argued that reducing the period of the contract and/or allowing
the wage to be adjusted could overcome this problem. However, if we reduce
the period of the contract then workers are at a suffer disadvantage as they
will not know if they have a job tomorrow and so they will not be able to
easily plan their future (an evil situation for anyone to be in). Moreover,
even without formal contracts, wage renegotiation can be expensive. After all,
it takes time to bargain (and time is money under capitalism) and wage
cutting can involve the risk of the loss of mutual good will between
employer and employee. And would *you* give your boss the power to
"adjust" your wages as he/she thought was necessary? To do so would
imply an altruistic trust in others not to abuse their power.
Thus a "pure" capitalism would be constantly seeing employment
increase and decrease as productivity levels change. There exist
important reasons why the labour market need not clear which revolve
around the avoidance/delaying of wage cuts by the actions of capitalists
themselves. Thus, given a choice between cutting wages for all workers
and laying off some workers without cutting the wages of the remaining
employees, it is unsurprising that capitalists usually go for the later.
After all, the sack is an important disciplining device and firing workers
can make the remaining employees more inclined to work harder and be
more obedient.
And, of course, many employers are not inclined to hire over-qualified
workers. This is because, once the economy picks up again, their worker
has a tendency to move elsewhere and so it can cost them time and money
finding a replacement and training them. This means that involuntary
unemployment can easily occur, so reducing tendencies towards full
employment even more. In addition, one of the assumptions of the
standard marginalist economic model is one of decreasing returns
to scale. This means that as employment increases, costs rise and so
prices also rise (and so real wages fall). But in reality many industries
have *increasing* returns to scale, which means that as production increases
unit costs fall, prices fall and so real wages rise. Thus in such an
economy unemployment would increase simply because of the nature of
the production process!
Moreover, as we argued in-depth in section C.9, a cut in money wages is
not a neutral act. A cut in money wages means a reduction in demand for
certain industries, which may have to reduce the wages of its employees
(or fire them) to make ends meet. This could produce a accumulative
effect and actually *increase* unemployment rather than reduce it.
In addition, there are no "self-correcting" forces at work in the
labour market which will quickly bring employment back to full levels.
This is for a few reasons. Firstly, the supply of labour cannot be
reduced by cutting back production as in other markets. All we can
do is move to other areas and hope to find work there. Secondly, the
supply of labour can sometimes adjust to wage decreases in the
wrong direction. Low wages might drive workers to offer a greater
amount of labour (i.e. longer hours) to make up for any short
fall (or to keep their job). This is usually termed the "efficiency
wage" effect. Similarly, another family member may seek employment
in order to maintain a given standard of living. Falling wages may
cause the number of workers seeking employment to *increase*, causing
a full further fall in wages and so on (and this is ignoring the
effects of lowering wages on demand discussed in section C.9).
The paradox of piece work is an important example of this effect.
As Schor argues, "piece-rate workers were caught in a viscous
downward spiral of poverty and overwork. . . When rates were
low, they found themselves compelled to make up in extra output
what they were losing on each piece. But the extra output produced
glutted the market and drove rates down further." [Juliet C. Schor,
_The Overworked American_, p, 58]
Thus, in the face of reducing wages, the labour market may see an
accumulative move away from (rather than towards) full employment,
The right-libertarian argument is that unemployment is caused by real
wages being too high which in turn flows from the assumption that markets
clear. If there is unemployment, then the price of the commodity labour
is too high -- otherwise supply and demand would meet and the market
clear. But if, as we argued above, unemployment is essential to
discipline workers then the labour market *cannot* clear except for
short periods. If the labour market clears, profits are squeezed. Thus
the claim that unemployment is caused by "too high" real wages is false
(and as we argue in section C.9, cutting these wages will result in
deepening any slump and making recovery longer to come about).
In other words, the assumption that the labour market must clear
is false, as is any assumption that reducing wages will tend to push
the economy quickly back to full employment. The nature of wage labour
and the "commodity" being sold (i.e. human labour/time/liberty) ensure
that it can never be the same as others. This has important implications
for economic theory and the claims of right-libertarians, implications
that they fail to see due to their vision of labour as a commodity
like any other.
The question arises, of course, of whether, during periods of full
employment, workers could not take advantage of their market power
and gain increased workers' control, create co-operatives and so
reform away capitalism. This was the argument of the Mutualist and
Individualist anarchists and it does have its merits. However, it
is clear (see section J.5.12) that bosses hate to have their authority
reduced and so combat workers' control whenever they can. The logic
is simple, if workers increase their control within the workplace
the manager and bosses may soon be out of a job and (more importantly)
they may start to control the allocation of profits. Any increase
in working class militancy may provoke capitalists to stop/reduce
investment and credit and so create the economic environment (i.e.
increasing unemployment) necessary to undercut working class power.
In other words, a period of full unemployment is not sufficient to
reform capitalism away. Full employment (nevermind any struggle over
workers' control) will reduce profits and if profits are reduced
then firms find it hard to repay debts, fund investment and provide
profits for shareholders. This profits squeeze would be enough to
force capitalism into a slump and any attempts at gaining workers'
self-management in periods of high employment will help push it
over the edge (after all, workers' control without control over the
allocation of any surplus is distinctly phoney). Moreover, even if
we ignore the effects of full employment may not last due to problems
associated with over-investment (see section C.7.2), credit and interest
rate problems (see section F.10.1) and realisation/aggregate demand
disjoints. Full employment adds to the problems associated with the
capitalist business cycle and so, if class struggle and workers power
did not exist or cost problem, capitalism would still not be stable.
If equilibrium is a myth, then so is full employment. It seems somewhat
ironic that "anarcho"-capitalists and other right-libertarians
maintain that there will be equilibrium (full employment) in the one
market within capitalism it can never actually exist in! This is
usually quietly acknowledged by most right-libertarians, who mention
in passing that some "temporary" unemployment *will* exist in their
system -- but "temporary" unemployment is not full employment. Of course,
you could maintain that all unemployment is "voluntary" and get round
the problem by denying it, but that will not get us very far.
So it is all fine and well saying that "libertarian" capitalism would be
based upon the maxim "From each as they choose, to each as they are chosen."
[Robert Nozick, _Anarchy, State, and Utopia_, p. 160] But if the labour
market is such that workers have little option about what they "choose"
to give and fear that they will *not* be chosen, then they are at a
disadvantage when compared to their bosses and so "consent" to being
treated as a resource from the capitalist can make a profit from. And
so this will result in any "free" contract on the labour market favouring
one party at the expense of the other -- as can be seen from "actually
existing capitalism".
Thus any "free exchange" on the labour market will usually *not* reflect
the true desires of working people (and who will make all the "adjusting"
and end up wanting what they get). Only when the economy is approaching
full employment will the labour market start to reflect the true desires
of working people and their wage start to approach its full product.
And when this happens, profits are squeezed and capitalism goes into
slump and the resulting unemployment disciplines the working class and
restores profit margins. Thus full employment will be the exception
rather than the rule within capitalism (and that is a conclusion which
the historical record indicates).
In other words, in a normally working capitalist economy any labour
contracts will not create relationships based upon freedom due to
the inequalities in power between workers and capitalists. Instead,
any contracts will be based upon domination, *not* freedom. Which
prompts the question, how is libertarian capitalism *libertarian* if
it erodes the liberty of a large class of people?
F.10.3 Was laissez-faire capitalism stable?
Firstly, we must state that a pure laissez-faire capitalist system has
not existed. This means that any evidence we present in this section
can be dismissed by right-libertarians for precisely this fact -- it
was not "pure" enough. Of course, if they were consistent, you would
expect them to shun all historical and current examples of capitalism
or activity within capitalism, but this they do not. The logic is
simple -- if X is good, then it is permissible to use it. If X is
bad, the system is not pure enough.
However, as right-libertarians *do* use historical examples so shall
we. According to Murray Rothbard, there was "quasi-laissez-faire
industrialisation [in] the nineteenth century" [_The Ethics of Liberty_,
p. 264] and so we will use the example of nineteenth century America --
as this is usually taken as being the closest to pure laissez-faire --
in order to see if laissez-faire is stable or not.
Yes, we are well aware that 19th century USA was far from laissez-faire
-- there was a state, protectionism, government economic activity and
so on -- but as this example has been often used by right-Libertarians'
themselves (for example, Ayn Rand) we think that we can gain a lot from
looking at this imperfect approximation of "pure" capitalism (and as
we argued in section F.8, it is the "quasi" aspects of the system that
counted in industrialisation, *not* the laissez-faire ones).
So, was 19th century America stable? No, it most definitely was not.
Firstly, throughout that century there were a continual economic booms
and slumps. The last third of the 19th century (often considered
as a heyday of private enterprise) was a period of profound instability
and anxiety. Between 1867 and 1900 there were 8 complete business
cycles. Over these 396 months, the economy expanded during 199 months
and contracted during 197. Hardly a sign of great stability (since the
end of world war II, only about a fifth of the time has spent in periods
of recession or depression, by way of comparison). Overall, the
economy went into a slump, panic or crisis in 1807, 1817, 1828,
1834, 1837, 1854, 1857, 1873, 1882, and 1893 (in addition, 1903
and 1907 were also crisis years).
Part of this instability came from the eras banking system. "Lack of
a central banking system," writes Richard Du Boff, "until the Federal
Reserve act of 1913 made financial panics worse and business cycle
swings more severe" [_Accumulation and Power_, p. 177] It was in
response to this instability that the Federal Reserve system was
created; and as Doug Henwood notes "the campaign for a more rational
system of money and credit was not a movement of Wall Street vs. industry
or regional finance, but a broad movement of elite bankers and the
managers of the new corporations as well as academics and business
journalists. The emergence of the Fed was the culmination of attempts
to define a standard of value that began in the 1890s with the emergence
of the modern professionally managed corporation owned not by its managers
but dispersed public shareholders." [_Wall Street_, p. 93] Indeed,
the Bank of England was often forced to act as lender of last resort
to the US, which had no central bank.
In the decentralised banking system of the 19th century, during panics
thousands of banks would hoard resources, so starving the system for
liquidity precisely at the moment it was most badly needed. The creation
of trusts was one way in which capitalists tried to manage the system's
instabilities (at the expense of consumers) and the corporation was a
response to the outlawing of trusts. "By internalising lots of the
competitive system's gaps -- by bring more transactions within the same
institutional walls -- corporations greatly stabilised the economy."
[Henwood, Op. Cit., p. 94]
All during the hey-day of laissez faire we also find popular protests
against the money system used, namely specie (in particular gold), which
was considered as a hindrance to economic activity and expansion (as well
as being a tool for the rich). The Individualist Anarchists, for example,
considered the money monopoly (which included the use of specie as money)
as the means by which capitalists ensured that "the labourers . . . [are]
kept in the condition of wage labourers," and reduced "to the conditions
of servants; and subject to all such extortions as their employers . . .
may choose to practice upon them", indeed they became the "mere tools
and machines in the hands of their employers". With the end of this
monopoly, "[t]he amount of money, capable of being furnished . . .
[would assure that all would] be under no necessity to act as a servant,
or sell his or her labour to others." [Lysander Spooner, _A Letter to
Grover Cleveland_, p. 47, p. 39, p. 50, p. 41] In other words, a specie
based system (as desired by many "anarcho"-capitalists) was considered
a key way of maintaining wage labour and exploitation.
Interestingly, since the end of the era of the Gold Standard (and so
commodity money) popular debate, protest and concern about money has
disappeared. The debate and protest was in response to the *effects* of
commodity money on the economy -- with many people correctly viewing
the seriously restrictive monetary regime of the time responsible for
economic problems and crisis as well as increasing inequalities. Instead
radicals across the political spectrum urged a more flexible regime,
one that did not cause wage slavery and crisis by reducing the amount
of money in circulation when it could be used to expand production and
reduce the impact of slumps. Needless to say, the Federal Reserve system
in the USA was far from the institution these populists wanted (after all,
it is run by and for the elite interests who desired its creation).
That the laissez-faire system was so volatile and panic-ridden suggests
that "anarcho"-capitalist dreams of privatising everything, including
banking, and everything will be fine are very optimistic at best (and,
ironically, it was members of the capitalist class who lead the movement
towards state-managed capitalism in the name of "sound money").