Wednesday, April 12, 2006

Capitalism versus Capitalism

While reading the symposium on Kevin Carson's book, Studies in Mutualist Political Economy, in the latest Journal of Libertarian Studies, I was struck by how upset people can get when someone uses a term differently from how they use it -- even if he makes his usage perfectly clear and explicitly draws on legitimate historical precedent. This comes up on at least two occasions in the commentary on Carson. I've read Carson's book, and I had no trouble seeing how he uses the word "capitalism." Much of the book is devoted to showing that historical capitalism -- the real-life mercantilist political-economic system that most people attach that word to -- bears only superficial resemblance to the laissez-faire free market, which he favors. Indeed anyone who does not quickly see this in Carson's work is not paying attention. It is not some obscure point buried under other material. It is the point! Moreover, Carson shows the historical precedent -- in the work of Thomas Hodgskin and Benjamin Tucker, for example -- for such usage. It shouldn't be hard to grasp.

Yet two critics can't or won't see it. Drs. Walter Block and George Reisman go for Carson's jugular in retaliation for his alleged confusion of laissez faire with (state) capitalism. Carson handily disposes of the criticism and needs no help from me, but I can't restrain myself from jumping into the fray.

Let's start with Professor Block. Missing Carson's point, Block lectures the author on the difference between corporate state monopoly capitalism, or economic fascism, and laissez-faire capitalism. "The point is, these two systems are as different as night and day. They have nothing in common except for this highly unfortunate terminology that labels both 'capitalism.' . . . As might be expected by now, this author does all he possibly can to bring about confusion in this regard." This is astounding in its sheer obliviousness to what Carson has written. In fact, Carson could have written this about Block.

Block continues, "He [Carson] thinks that there can be such as thing as 'free market socialism,' not realizing this is a contradiction in terms, if the latter is used, as per usual, as employed by this author, to strip capitalists, entrepreneurs, landowners, etc., of their due." But it's not a contradiction in terms to anyone who carefully reads Carson's book. Carson is making the point that the historical system called capitalism consists in state intervention on behalf of owners of capital, a system that exploits workers-consumers. That is also how nineteenth-century free-market individualist anarchists used the term. "Socialism" for these folks meant the alternative to a system that exploits workers, thus a system of pure laissez faire, or "consistent Manchesterism." (Carson notes that Benjamin Tucker proudly embraced that description.) In light of historical definitions and real-world systems, there is nothing incoherent about free-market socialism or free-market anti-capitalism (as long as one defines one's terms). Indeed, in historical terms, free-market, or laissez-faire, capitalism makes as much sense as free-market Bolshevism.

The missing of the obvious continues. Carson is concerned with history as well as political economy. He judges the industrial revolution and such things in terms of what actually happened, not rationalistically or in an a prior manner. Block has problems with this. He points out that Carson takes issue with Ludwig von Mises's favorable view of the industrial revolution and the factory owners. Writes Block, Carson "does so on grounds that these employers were guilty of various and sundry crimes. Maybe they were. But this is all beside the point."

Beside what point? Block asserts that Carson condemns industrialization per se. But he does not. He condemns it as it actually developed, which is to say largely on the backs of people dispossessed of their historical property rights. (See my earlier post on this subject.) Considering how sensitive Murray Rothbard was to feudalistic land theft and land monopoly, and the case for land reform, Block's criticism is odd, considering he's a promoter of Rothbard's "plumb line."

Strangely, Block writes this: "Of course there has been land theft, as Carson charges. But it should not be necessary to remind this author that this is part and parcel of state monopoly corporate capitalism, not the laissez-faire variety." Who said it was part of the laissez-faire variety? Block's bulletin will hardly be news to Carson. It almost sounds as though Block is arguing Carson's case for him.

It gets funnier. Block chides Carson for putting the development of the "world market" into historical context. Carson writes, "The modern 'world market' was not created by free market forces . . . . [I]t was an artificial creation of the state, imposed by a revolution from above." This is hardly controversial for a libertarian.

Block replies, ". . . [B]ut so what?[!] Yes, there was an admixture of the two types of capitalism in the development of world trade. Does this mean we toss it [the world market] out. . . ?" No, and Carson doesn't say we should. For him it means we should end (state) capitalism and embrace laissez faire. Anyone got a problem with that?

Again, Block goes after Carson for condemning actual historical monopoly for its abuse of workers and consumers. "This," writes Block, "is quite reasonable in the monopoly that emanates in state monopoly corporate capitalism; here, some firms are forbidden entry, and the privileged others can certainly exploit consumers. But how in bloody blue blazes can this take place under laissez-faire capitalism . . . ?" (Emphasis added.)

Words fail me at this point.

Finally, he savages Carson for criticizing corporate bigness, pointing out that only the free market can determine when big is too big. Fine -- except that's Carson's point! What he objects to is the mercantilist corporate state, which destroys the free market's mechanism for keeping firms from growing beyond what is economically justified.

To Carson's well-documented Nockian contention that deep and pervasive pro-business intervention stretches back more than 200 years and has serious anti-competitive consequences in the present, Block responds, "Nor is it easy to see how the government currently props them [corporations] up." It's not easy if you don't look, or read. But that is not the Rothbardian plumb line as I understand it.

Block makes the same faulty point over and over. He takes issue with no factual statements. Instead he asks why Carson is so critical of world trade, sweatshops, the employer-employee relationship, the industrial revolution. Sure, he says, each of these things was nurtured in an environment, not of freedom, but of monopolistic state coercion, sure each exploited workers and consumers on behalf of business -- but none of them had to develop that way. No, none had to. But each did. Block is caught in a hopelessly rationalistic loop. As Carson points out, Block, like other libertarians, can't make up his mind if he is defending the concept of the free market or what exists now. You can't do both.

Read Block's review and Carson's rejoinder. They're great fun. Before closing, I must quote one line from Carson because it sums things up perfectly:
[U]nlike Block, I think a description of the functioning of a free market calls for the subjunctive case, not the indicative.
Who said Carson isn't a subjunctivist?

I've gone on too long. I'll take up Dr. Reisman's critique in the next day or so.

21 comments:

Manuel Lora said...

Walter Block asked me to post this on his behalf as he's not very familiar with blogging:

An interesting and well written review of my review of Carson's book by Richman. I was looking in it for four words. I read the piece twice. I couldn't find them. I used word search. No luck.

What are the four words? They are "labor theory of value."

Carson really believes in this theory, which I see as the economic equivalent to the flat earth or the phlogistan theory.

Richman never once mentions these four words. But these four words are
crucial!

I certainly do not defend businessmen who are theives. But, Carson condemns them for theft on the ground that the wages they pay are not consistent with the labor theory of value.

In my book Defending the Undefendable, I defend those such as the pimp. I do so on the ground that even though each and every pimp may be guilty of violations of the non aggression act, this is not necessary. We can IMAGINE a pimp who does not initiate violence.

Carson's problem is that he cannot even IMAGINE a businessman paying a
market wage that does not amount to theft. Why not? Because Carson is a
believer in the labor theory of value.

Richman is entirely silent on this point. I urge him to weigh in on this crucial matter, perhaps in a subsequent letter, lest he and I pass each other as ships in the night, exactly the charge he levels at me for missing Carson's point. I didn't miss Carson's point. Richman did.

Kevin Carson said...

Thanks a lot, Sheldon. I've already made enough critical remarks about those two reviews, that anything more from me would just look like obsessively giving a few more whacks to a dead horse. But such a comment from the editor of The Freeman means a great deal.

And from his remarks relayed here, Block still doesn't get it. He is conflating the issues in Part One (value theory) and Part Two (the history of state monopoly capitalism) of my book. My analysis of state monopoly capitalism in chapters six through eight, for the most part, can stand independently of the treatment of value theory in Part One. Most of it has to do with direct state subsidies and regulatory cartelization, and could be defended on a purely Rothbardian (or Strombergian, if that's a word) basis.

Block's comments on those chapters, in turn, have little or nothing to do with the labor theory of value. Most of his specific criticisms of those chapters involve my claims about subsidies and regulation, and are entirely separate from his criticisms of my writing on value theory and employment relations in Part One. And his criticism of my analysis in chapters six through eight could apply just as well to Rothbard's and Stromberg's analysis of state capitalism; he essentially rejects all the areas in which Rothbardian analysis so fruitfully dovetails with the corporate liberal histories of the New Left. In context, it is clear that Block's problem with my analysis of the history of state capitalism has little to do with the labor theory of value, and that most of the points where he differs with me are points where I agree with Rothbard.

Once again, it is Block who is incoherent and can't remember from one minute to the next what it is he's supposed to be arguing against.

Kevin Carson said...
This comment has been removed by a blog administrator.
Kevin Carson said...

I meant to add: Block's reference to the phlogiston and flat earth theories is very telling. As I have pointed out more than once, Bohm-Bawerk welcomed any future attempts by labor theory advocates to continue the debats, so long as it was on some basis other than appeals to authorities. I attempted to take up that challenge, actually addressing his criticisms on their own terms. Now it is subjectivists who are guilty of the sins that B-B criticized in Rodbertus and other labor theory advocates: appealing to authority, repeating cliches without directly addressing any of my counterarguments.

I know it is possible to write a reasoned, thoughtful criticism of my value theory that addresses what I actually wrote instead of talking past it, because Robert Murphy managed to do so.

I invite any independent reviewer to compare Murphy's criticism of my writing on value theory, with the criticisms of Block and Reisman. Murphy actually understood what I wrote and responded to it with his mind engaged. Block and Reisman simply played James Taggart, appealing to what "all right-thinking people know." Whether or not the labor theory of value is the equivalent of the phlogiston or flat earth theories, Block at least has not demonstrated. To refute anything requires paying attention and understanding what you're criticizing, and addressing it with reasoned counterarguments. What we got from him, instead, was the same appeals to authority and dogmatic cliches that Bohm-Bawerk complained of in his critics.

Brad Spangler said...

Kevin,

Although I've had your book for weeks now, I must confess to not having gotten very far in it due to time constraints from all the other stuff on my plate. However, I believe I have a firm enough grasp of where you're coming from that the following suggests itself to me as a point to be made...

Where Block said:

But, Carson condemns them for theft on the ground that the wages they pay are not consistent with the labor theory of value.

...that's inaccurate of Block because you mostly put forward a descriptive Labor Theory of Value as a proposed way of understanding how markets operate, when they are free. Block confuses that with the historical State Socialist understanding of a Labor Theory of Value as a prescriptive moral principle.

Would you agree?

Brad Spangler said...

I should have added -- excellent post, Sheldon! That's what I originally intended to first say, but then I got sidetracked responding to the above comments.

Sheldon Richman said...

Carson's criticism of the history of (state) capitalism is entirely separable from his (subjectivized) labor theory of value. One can be an Austro-subjectivist (as I am) and agree with his historical outlook and the distinctions he makes. As he points out, one can find a similar critique in Rothbard and Joseph Stromberg, no LTV theorists. LTV is a red-herring in this context. The fact is that Carson clearly distinguishes laissez faire (voluntary association), which he favors, from historical mercantilist capitalism, which he opposes. He simply insists on keeping the distinction in mind when he analyzes today's political-economic system.

This is not to say no criticism of the book is possible. See Murphy and Long. I'm just saying that Block's is off target.

Brad: I can't speak for Kevin, but that sounds valid to me. As I see it, he is making predictions about what would arise and not arise in a truly competitive economy. He proposes no interference with voluntary exchange.

Sheldon Richman said...

I'd like to amplify my final point, which built on Brad's. Kevin is simiply being a good praxeologist. He's making predictions about what people will do in a fully free and competitive market, where the state and its favored interests have not foreclosed alternatives through land monopoly and legal barriers to entry in banking and industry. Just as we know that a seller will prefer a higher to a lower price, so a worker will prefer a higher to a lower return on his labor. We can then trace out the consequences for the return on labor services of free competition and freedom of entry. Someone may disagree with Kevin's predictions of what would happen under voluntary exchange, but the critic should at least be clear on what Kevin is saying.

Sheldon Richman said...

A final, final thought: Even if one has good theoretical grounds for doubting Carson's predictions, that would not invalidate his historical critique of (state) capitalism. After all, Carson does not say, "Labor did not get its full product, therefore there must have been state coercion." On the contrary, he argues, "There was state coercion, therefore labor did not get its full product."

Joe Abbate said...

Sheldon Richman wrote ...

"I was struck by how upset people can get when someone uses a term differently from how they use it -- even if he makes his usage perfectly clear and explicitly draws on legitimate historical precedent. This comes up on at least two occasions in the commentary on Carson. I've read Carson's book, and I had no trouble seeing how he uses the word "capitalism." Much of the book is devoted to showing that historical capitalism -- the real-life mercantilist political-economic system that most people attach that word to -- bears only superficial resemblance to the laissez-faire free market, which he favors."

Coincidentally, Roderick Long made the point in his Rothbard Memorial Lecture that "capitalism" (and "socialism") are what Ayn Rand would call "package deal" anti-concepts. Not having read Carson's book, and based solely on the title of the book, I was under the impression that he was anti-"free market".

Sheldon Richman said...

Joe, nope, just anti-capitalist. I plan to discuss Roderick Long's point in a future post.

Joe Abbate said...

Sheldon,

I should correct my earlier post: it was based on simply visiting Kevin's site and not the title of his book that I thought he was anti-free market. His blog title "Free Market Anti-Capitalism" appears to be a contradiction in terms if one thinks of capitalism as that "unknown ideal" of a laissez-faire, free market society. And maybe it was the red/black cover on his book that I subconsciously associated with anti-private property anarchists. I do realize where he is coming from now.

Brad Spangler said...

Thanks again, Sheldon. This post inspired yet another bat-shit crazy anarchist rant from me -- "Rothbard's Reds Redux".

Sheldon Richman said...

Good post, Brad. But I don’t want my use of the term “free-market Bolshevism” to be misunderstood. I was not embracing the term or using it as a short-hand for an attitude of any kind. What I wrote is this: “In light of historical definitions and real-world systems, there is nothing incoherent about free-market socialism or free-market anti-capitalism (as long as one defines one’s terms). Indeed, in historical terms, free-market, or laissez-faire, capitalism makes as much sense as free-market Bolshevism.” In other words both terms, historically speaking, are contradictions in terms.

Brad Spangler said...

Right. I referred to what you *might call* something. I made no statement about what you do or don't advocate and I linked to your article again right there at that point (even though I had also earlier in the post) specifically so people could see the context.

Kevin Carson said...

Brad,

I think that's about right. The Marxists see the exploitation of labor as something that results from "economic power," even in a free market. The Tuckerites see it as the result of unequal exchange caused by the state.

Technically, though, the Marxists didn't see the LTV as an ideal to be achieved, but as a description of how price actually functioned under capitalism, and fully consistent with exploitation of labor. And their ultimate goal was to transcend the law of value and make all goods free.

Sheldon,

Block would have been more accurate if he'd focused his critique on my treatement of the Tucker big four monopolies alone (or at least the land and money ones) because, from his perspective, a society with those forms of privilege would be pretty much laissez-faire. (He'd probably object to the state-enforced money monopoly, but not see it as having the same effects I do).

Even then, though, Rothbard would have objected to most property in vacant land on Lockean property alone, and emphasized primitive accumulation much more than Tucker did (whih was hardly at all). And it's possible to argue on purely Rothbardian principles that banking market entry barriers raise interest rates on secured loans. For that matter, it would probably be possible to argue from purely Misesian principles that the state's enforcement of artificial scarcity of land and capital makes labor artificially abundant and cheap in terms of land and capital.

PintofStout said...

About the flat earth assumption: I read in a back issue of Science magazine that cosmologists are pretty certain that the whole universe is flat! Why bother with just the Earth when we know the entire Shebang is flat?

Adam B. Ricketson said...

I read George Reisman's essay in Journal of Libertarian Studies and was surprized and kinda disgusted by his (Randist) definition of "individualism"

He writes:
"Here Carson, the “individualist” anarchist shows himself to be
quite the collectivist, attributing to the average person qualities of
independent thought and judgment that are found only in exceptional
individuals."

I side with Carson's definition of individualism, and can only see Reisman's view as socialism or collectivism. Individualism means that, as a rule, each individual is capable of directing his own life. If most individuals are incapable of directing their own lives and must be subsumed into an unthinking mass (for their own good), then we have collectivism...whether it is run by a benevolent dictatorship of market selected (meaning "self-selected") "meritocrats" or by an elected aristocracy.

Sheldon Richman said...

Adam--
I too think that is one of the odd things that Dr. Reisman had to say in his critique, although he made some other interesting points. I'll have more to say in due course.

Anton said...

The bit about free-market "socialism" reminded me of this from Jerome Jerome: What a wonderful piece of Socialism modern civilisation has become! – not the Socialism of the so-called Socialists – a system modelled apparently upon the methods of the convict prison – a system under which each miserable sinner is to be compelled to labour, like a beast of burden, for no personal benefit to himself, but only for the good of the community – a world where there are to be no men, but only numbers – where there is to be no ambition and no hope and no fear, – but the Socialism of free men, working side by side in the common workshop, each one for the wage to which his skill and energy entitle him; the Socialism of responsible, thinking individuals, not of State-directed automata. . . .

Jeremy said...

Wow, I wrote about exactly the same distinction between prescription and prediction (with regard to Carson's mutualism) a while ago here:

http://blog.6thdensity.net/?p=436

I followed up on that idea applied to anarchism in general here:

http://blog.6thdensity.net/?p=461

It may not be strictly individualist of me, but I take comfort knowing that others are coming to the same conclusions I am when reading such dense and complex material. :-)