Capitalism and the State

In his article 'Mobocracy,' Mike Wasdin displays perfectly the flaws in anarcho-capitalism. From his characterization of 'the mob' to his assumption that Wal-Mart is a person, thus entitling it to human rights, Mike has provided me the perfect opportunity to demonstrate the statist nature of the capitalist system.

To begin with, let's talk about the US Constitution. While I completely agree with Mike's opposition to it, we must first understand what was going on at the time the Constitution was signed. Everything from the Whiskey Rebellion to Shay's rebellion, and other types of 'mobs' that were rebelling against those trampling on their rights, the Constitution was actually a consolidation of state power on the part of the early American ruling class--Alexander Hamilton being the epitome of this.

Why? Because the institutions of the ruling merchant class needed to be upheld, with none other than the iron fist of the state. And that institution that was central to the rise of capitalism? Answer: The corporation. Allow me to share this quote from Thomas Jefferson, who as Mike pointed out, was an early skeptic of the Constitution.

'The country is headed toward a single and splendid government of an aristocracy founded on banking institutions and monied incorporations and if this tendency continues it will be the end of freedom and democracy, the few will be ruling and riding over the plundered plowman and the beggar . . . I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country.'

Of course, Jefferson was only a liberal, not an anarchist, so it's important to understand that his opposition to the 'aristocracy of the moneyed corporations' was merely an attempt to save the state from its own excesses, making it just bearable enough so the people don't overthrow it, something which liberals continue to be quite successful at doing. This can be set in contrast to our beloved Thomas Paine, perhaps the closest we can find to an anarchist from this time period. Paine was the fiercest opponent of the Constitution, and the inventor of social welfare economics, the bane of modern right-wing libertarianism.

But all the anecdotal evidence aside, one must understand capitalism's central institution--the corporation, such as Mike's example of Wal-Mart. The term 'corporation' originates from the word 'corpus,' meaning a body sharing common purpose in common name. In other words, not only are corporations statist, they are also 'collectivist,' a term which I know the anarcho-capitalists despise.

Early corporations were charted by state legislatures to perform specific tasks in the public interest. They were granted special privileges, but also limited in what they could do. It was not until after the American Civil War that corporations were granted 'personhood' or legal standing of a human being by the court system.

And this gets back to a central flaw in Mike's opinion. As he states, 'Most people would think I was crazy if I were to come to their house and start making decisions on their furniture, appliances, decorating choices or children, but these same people see nothing wrong with telling the proprietor of a business how he or she should be able to run their business.' So Mike, I must ask you, who is the proprietor of Wal-Mart? In case you weren't sure, I'll give you a hint: IT'S THE STATE.

Most leftist anarchists will tell you that the refusal on the part of right-wing capitalist libertarians to denounce all forms of hierarchy is its Achilles' heel, but I disagree. The real problem with capitalist libertarianism is, in fact, the same problem with Marxism--they define social or personal liberty in terms of (their own definition of) economic liberty. In other words, they define economic liberation first, and then define social freedom in terms of that economic freedom.

For those not familiar with Marxist theory, its essence is that the state represents one economic class oppressing another economic class, and that all social relationships of domination are linked to the economic means of production. Marxists called this view materialism, which in philosophy means that all understanding is based upon matter and the realities of the material world. This is not much unlike right-wing libertarians who preach against taxation, and believe that private property is the root of all liberty, sometimes describing themselves as champions of reason or 'Objectivists.' It is interesting to note is that both of these theories authorize the use of force (read: statism) to protect what they deem economic liberty.

Real anarchism, not 'anarcho'-capitalism, is just the opposite. Anarchists define freedom in terms of the social context of the individual, and will never defend the state just because it suits their economic interests. The state is bad, whether it be used for socialist or capitalist ends, it is still the state.

As for Mike's characterization of 'the mob,' how can he really consider himself some type of anarchist if he holds such a deep-seated mistrust of the people? My only guess is that he really must be seeking to control them. Indeed, democracy is the enemy of the state--rule by the people, not by an elite class or institution (read: capitalists and corporations). So long as it requires the use of force to protect ones' economic interests from 'the mob,' it is clear that those advocating that economic system are simply defending the state.

Which gets to my final point about the right-wing libertarian use of the term 'collectivism.' Seeing as I have explained how corporations are collectivist, I wish to point out something else: Anytime a group of people work towards a common goal, that is 'collectivism.' Ever worked in a factory or on an assembly line before? That's collectivism. Indeed, the very basis of capitalist economics, the division of labor, is upon collectivism.

So what's the difference? Under capitalism, that collective effort is privately owned by the capitalist, who as I have already shown is a statist. Under libertarian socialism, it is owned by those who actually made the products. Meaning that the fundamental difference between neo-liberal 'libertarians' and real libertarians (anarchists) is that the anarchists actually acknowledge a collective effort when there is one because they define individual liberty first in social terms, not economic ones, whereas the reactionary capitalist 'libertarian' just wants to claim this product as his own since he defines all freedom in terms of his views about private property. Thus the expression, 'Property is theft.'

With that in mind, I leave you with this excerpt from Adam Smith.

The Wealth of Nations, Book One, Chapter 8 THE produce of labour constitutes the natural recompense or wages of labour. In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him


As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land


What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.

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