Libertarian Economics and Social Democracy

by Adam Young

When I wrote a reply (Social Liberty and Economics) to Bill Anderson's column “Capitalism and the State,” my hope was that I might be able to show Bill how he has gone wrong in some of his conclusions. Unfortunately, with his reply to me, “Social Economics and Liberty,” he dashed those hopes and held fast to his fables about laissez-faire. 

Now Bill, I'm really worried you, because if you persist in believing in these fables, you will waste your obvious talents on a futile crusade that can only lead to a wasted life spent in pursuit of irrational and contra-humane concepts of human organization. 

Economic Science: 

Economic science, like all other sciences, has progressed a little in the past 230 yrs or so. So to start off with, please Bill, no more Adam Smith quotes. Both Smith and Jefferson lived before the Industrial Revolution and the era of international free trade during the latter half of the 19th Century. Adam Smith is not the first and last word on free markets. In fact, Adam Smith said that he originally wanted to dedicate The Wealth of Nations to his mentor, the French Physiocrat, Francois Quesnay, but he died before the book was finished. The understanding of the economic laws of free market exchange and the property-based social order did not spring fully formed from the brow of Adam Smith like Athena from the brow of Zeus, but have been discovered and rediscovered since recorded history. 

Insightful discoveries have been made about the nature of economics throughout human history. For example, the first recorded writings of the Babylonians are records of economic transactions, and the Confucians 2,400 years ago observed which economic laws are most conducive to a prosperous society. The medieval Scholastics of the Salamanca School developed an early understanding of marginal utility theory and applied it to economic exchange, banking and currency. I noticed Bill didn't attempt to rebut my arguments about the true nature of class (caste) warfare and the benefits of corporations and the division of labor, and I suspect I know why. Please Bill, take the time to read Mises and Rothbard. Their books are big and fat and juicy, but well worth the investment of your time. It will prevent you from squandering your energy in a fruitless search for the property-less society. Don't limit yourself to that economic nonsense that they teach you in University. 

Anyway, reading Bill's reply was quite discouraging. Not only did he suggest the superiority of the collective factory, but also advocated the abolition of property itself (including money, I presume). What's next, Bill, the abolition of language, too? Why not abolish all forms of communication! 

The State: 

As to the origins of the state, or governmental monopoly, it is assuredly not based in the creation of “private” property, as Bill seems to believe. Since property is an extension of the mind and body, it is natural and inevitable, and purposeful labor will create property and wealth. A government arises out of plunder. Foreign or domestic elements will pillage the peaceful producers for their own gain. Eventually, they will realize that instead of raiding them every year, they can conquer them and exact tribute perpetually. They do not establish a monopoly to defend their already existing property, which they used to conquer the producers. Instead, just as I said, they establish the monopoly to tax, to establish a permanent source of annual income. To exploit the weak. Property isn't theft. Taxation is theft. 

It's obvious to me what Thomas Jefferson meant in the quote you included (“Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.”). The state has prevented free, that is unowned lands from being homesteaded by the labor of the poor. How could it do this? By decreeing that these lands belong to the state, or to “the people.” It is the state that has increased poverty in Jefferson's quote, which, I'm quite sure, refers to the denser urban populations of Europe, in contrast to the vast lands of America. 

Social caste, not property, defines the state, since even penniless nobles in the past didn’t cease to be nobles. The alternative to the caste system of inherited social rank is the property-based society, the natural hierarchy of property. Feudal societies are not based on property, but rather on monopoly and military rank -- on control or authority, not self-ownership. The feudal system is based on hereditary governorship of provinces (divisions) of the state, not on the ownership of legitimately acquired (via exchange of previous legitimately acquired) property. 

Bill believes “[o]nly a property-less society can be stateless.” But how can you argue against the existence of property when to do so you demonstrate ownership of your own body to argue against it? 

Laissez-Faire: 

Bill also seems confused about what ownership is. Ownership is not monopoly. Monopoly is an imitation of ownership. Under legitimate, true ownership, because it is an extension of the mind and body, ownership can only be over inanimate things, the product of the mixing of labor and unowned objects. Monopoly, however, is illegitimate precisely because it claims not ownership over its facilities and products, but ownership of its customers. Whether it’s a gas or water utility or the state's legal and protection monopolies, without having to compete for customers, they exert a control over their customers that simply is not possible under freedom. 

No “wealthy capitalists,” as Bill describes them, “own large segments of the economy.” No one owns large segments of the economy. Factories and land are worthless unless they continue to produce income. Should they become unable to produce goods for some reason, and cannot be sold for their components, their value drops to near zero. The economy is not owning property, but the production and exchange of property. 

I wonder if Bill would allow me to behave as I wished in his home without him “trying to tell me that I have to do what he says or leave 'his' building?” Is it really because the state says that I should respect your property the only reason to do so? If the state didn't attempt to justify its existence by persecuting assaults against civilizational decency, and instead promoted and abetted social destruction, like it did in the Soviet Union during the period of War Communism, would that stop most people from choosing to respect the lives and property of others, whether in their own home or places of business? Bill asks why wouldn't people use their employer's “machines and goods in any factory for their own ends . . . in the absence of such a police force?” 

Could it be because, unlike Bill apparently, their time preference rate is significantly lower and they take the future into account before they act. Such self-indulgent behavior would leave them unemployable, and not just unemployable, but a danger to any potential customers they might be able to attract using their purloined property from their employer. Companies do not need “reactionary” hierarchies that “act as an iron fist” because most mature adults understand that it is in their own self-interest to be responsible, respectful of others, enterprising and honest. Unlike the state, the laissez-faire society is a naturally “self-policing” one because high time preference behavioral choices have immediate, negative sanctions. There is no coercion or violence involved. There is no coercion involved in cooperating by taking consideration of others into account before you act, just as you aren't coerced by nature to continue breathing or eating. 

Just as Bill agreed with me that liberty is all of one tapestry; that there are not separate social freedoms, and other economic freedoms, I hope he'll agree that economics is a similar single tapestry, with no separate scheme of social economics and political economics. Economic science is universal and true, and what we call the state or government is a perversion of economic law, the same perversion that any attempt to realize economics without property entails. The state rather than being an instrument for the creation and enforcement of property, is itself the negation of property. 

Mercantilism: 

Regarding today’s economy, yes, today's economy is what should be called mercantilist, i.e., the alliance of the state and established producers (big business). Ironically, it was this system that Marx dubbed capitalism, unaware that he did not understand the true free society of laissez-faire individualism. Today's economy is in no sense “free-markets.” Its clear from his writing that Bill misconstrues mercantilism for laissez-faire, the same as Marx did when he coined the term capitalism, which, like Queer and other words used for denigration, have been adopted by its intended targets. When we anarcho-capitalists refer to capitalism, we mean absolute free trade, not mercantilism. Mercantilism is a form of oligarchy, but oligarchy is an inherent feature of syndicalism as well, indeed it is syndicalism's very purpose! 

When Bill complains that "it is no more or less difficult to move to the middle of nowhere, invent one’s own currency, protect one’s own property, and start one’s own society, than it is to remove ourselves from the existing capitalist order in our society today," he is forgetting that the features of society require more than one person. In laissez-faire, you must cooperate with others to achieve your ends. One cannot “invent one's own currency” if there were no others willing to accept it in exchange for goods and services. Absent the state monopoly, businesses would be free to offer their services, including property protection, competing currencies and other services, which have existed in the past free from state control. 

Hierarchy: 

After denouncing hierarchy, Bill suggests we need to unite, presumably in some sort of organization to work towards the common purpose of abolishing the state. But how would this be done without hierarchy or strategic authority and planning? Without a system of costing and expenditure control? How would you organize presumably thousands or even millions of people without the division of labor? Without establishing a hierarchy of specialized organizations? Hierarchy is inevitable. It is inevitable because of the limitations of time and space on the human person. 

Presumably, Bill desires the perfectly static egalitarian society, which he probably believes is realized in the many student organizations he belongs to on campus, and falsely believes that it is natural. But under a regime of equality there can be, obviously, no social mobility, and if individual progress cannot be measured against the gains or decline or stasis of others, how can you know your standard of living is increasing? The quality of life can go down, as well as up. And under Bill's imagined production system, it will surely decline greatly. 

Syndicalism: 

Bill is a member of several political action organizations which unlike productive business, produce little or nothing of value to anyone, except perhaps to their members, which of course is their purpose, because unlike profit-based enterprises, which are created to serve customers, these organizations exist to propagandize the views of their membership with little to demonstrate profit or loss. And since Bill is so scornful of the role of the enterprising individual and his hierarchical organization, I'd like to ask him to reflect on who originated the idea to form these groups he's a member of. Surely several individuals didn't all suddenly suggest the idea all at once in the same instant. Instead one person suggested it and others agreed. 

What is truly disconcerting is that Bill, while denouncing mercantilism, which he mistakenly assumes to be laissez-faire, as a regime of oligarchy and oppression, fails to see that this is the same regime that he advocates in his desire for economic syndicalism to replace both competitive corporations and the state monopoly. To illustrate this, I'll quote from Bill's favorite economist Adam Smith: under mercantilism, Smith wrote in The Wealth of Nations, “the interest of the consumer is almost constantly sacrificed to that of the producer.” 

And under Bill's preferred organization of production, who are the producers? The workers who then “own” the firm or whatever they work in. In such an organization, where members cannot be fired or hired and labor is not specialized, the interests of the customer and competition between producers are surely the last thing to be considered by the workers-owners, who will no doubt feel the need to cartelize production to prevent economic losses to competing workers collectives. Under syndicalism, the workers form an oligarchy, since the purpose of expropriating the owners is so the workers may enjoy the full income of the firm. Ironically, by attempting to avoid the tyranny of monopoly, Bill would impose on labor the evil of monopsony! And under syndicalism, unlike genuine free markets, it will be the producers vs. the consumers. 

I fear that Bill doesn't have a clear vision of how these syndicalist workers collectives would actually operate day-to-day. How would these democratic production collectives actually conduct business without having a name? Without being able to market over large areas? Forcing this upon society would lead to social regression by reversing the division of labor, and cause standards of living to decline to a more primitive level. Creating a society so fearful of hierarchy would produce a rampant suspicion and distrust of those with obvious talents for organization and planning, and enthrone fear of others as its guiding principle, should any one be placed out of necessity in the position of making decisions for the entire group. 

Perhaps Bill merely misunderstands the use of the word corporation, meaning corpus, or body, i.e., a body of men, but owning a corporation does not mean owning its members who cannot be owned, but rather the name and tools and housings. 

Corporations: 

Bill refuses to understand the nature and purpose of the corporation, which is to act as a gatherer and organizer of knowledge and resources by an entrepreneur to produce a good or service. Essentially, a corporation is a little daily market, where a buyer of labor services and supplies (the company) purchases every day the services and goods produced by its supplier of labor: employees. The company is the customer of its employees, who are selling their services to the company every day. And because a company is this little marketplace for goods and services every day, it can calculate profit and loss. Being able to calculate profit and loss is absolutely vital to any enterprise, indeed any endeavor, including Bill's syndicalism. Because what if the worker's firm loses money? What then? Does Bill assume that these syndicates will never lose money, or whatever he proposes to replace money with? And without prices for things, which money provides as a standard of comparison between goods and services, how will these firms know what needs to be produced? Will they produce their wares without regard for consumer demand? Or will they force consumers to accept their goods? Without free exchange, the alternative is coercion, violence and oppression. But Bill makes these assertions towards the system of laissez-faire. Unfortunately, Bill is unfamiliar with economic science and the calculation problem of socialism, which also exists in his syndicalism. And if the worker-owners can't sell their shares of their company or whatever, how is this better than public ownership, where taxpayers are told they own the Grand Canyon, the Statue of Liberty and the White House, yet can't sell their ownership in them? 

What Bill doesn't understand is that while the purpose of labor is to work in the company to produce its products, that the goods and services (the commodities) sold by the company are their product, the product of the entrepreneur is the company itself. The workers produce products/commodities that compete with other commodities on store shelves. But the entrepreneur's product (the company) competes with other companies for "shelf space" in the mind of potential customers. A company competes against other companies for a place in customers’ minds as a source for that particular good or service. To operate a successful enterprise through time requires a specialization of talent on different functions within the overall enterprise, such as strategic planning, marketing, production and so on, which requires the division of labor, which creates the hierarchy. Once tasks are organized, immediately a hierarchy is formed as the tasks are assigned and managed. Without this specialization on different responsibilities within the organization, and authority over the organization and its production, and the hierarchy that the limitations of time and space impose, mutually beneficial, large-scale cooperation cannot be possible. 

Unless, maybe, Bill has found some way to counteract the physical limitations of time and space on the human body? 

Conclusion: 

Bill, if you decide to reply again, please describe to us how a property-less economy would actually function without organizations, money, managerial hierarchy, the division of labor and profit and loss. This is the least you can do, since you want others to follow you into this bold vision of the future of human social organization. If you sincerely wish to mobilize the masses to rise up against the state, don’t you think that you need to convince them how their daily needs for food, clothing and shelter, as well as the modern standards of living they demand, such as electricity, refrigeration, electronics, air conditioning, etc. will be provided for?