Saturday, January 08, 2011

Take It to the Limit

As I see it, the early American free-market anarchists -- I'm thinking of Benjamin Tucker and the people around his magazine, Liberty -- erred when they attributed profit, rent, and interest per se to the State, rather than argue that the amount of profit, rent, and interest collected is magnified through government privilege and monopoly.

But I'd rather have a thinker go too far in attributing evil to the State than not far enough. After all, Tucker et al. did not call on government to abolish profit, rent, and interest. They merely predicted their disappearance when the market is freed.


Troy Camplin said...

One must be careful. Those I know who go too far in attributing evil to the government are those conspiracy theorists who, rather than beleiving in spontaneous order, believe that everything is in fact ordered by evil people behind the scenes.

steven said...

That's pretty much the way it is, Troy. Although I wouldn't call those people evil, but self-interested.

Gary Chartier said...

The state begins in robbery; some patterns of robbery are doubtless spontaneously ordered, but surely others are planned by groups of robbers.

Once the state has been established and mechanisms for obtaining power have been regularized, it will surely be unsurprising if people who do obtain power are people who like power: typical office-holders are not representative of the population as a whole; rather, they're more ambitious and almost certainly less principled. So they're more likely, on average, to want to abuse their power. And since they've got power to abuse, they're more likely to do so. Further, because they have power, they're constantly under pressure from those in a position to grant them favors in exchange for formal and informal privileges. Some of them will act on their own to benefit themselves or their cronies using their power. Others will cooperate. The ones who cooperate are reasonably described as conspiring. That all seems fairly prosaic and mundane.

Greybird said...

I'm the last to decry the enthusiasm of, and about, Tucker and associates. Yet a movement built on the foundations of anything less than the best possible take on knowledge is built on quicksand.

Opponents can cite such error, even if they don't endorse the correct take themselves, merely to tactically dismiss their opponents in The Media of the time.

Even in the 19th Century, it was clear that profit, interest, and rent weren't inherently linked to the existence of the State. I fear that too many took the exaggeration of a Tucker to help paint him as a wild-eyed eccentric, unworthy of further consideration.

Building movements for change on the best possible knowledge, rhetoric, and tactics — that one knows at the time, and which are open to revision with new knowledge and results — is far sounder.

N. Joseph Potts said...

Those who've studied economics are aware of the widely accepted theory that, under perfect competition, profit, and therefore borrowing for investment, disappear (borrowing for consumption and rent would not disappear, so that source of interest would not disappear).

I wonder if Tucker might have been sensing this, and conflated innovation (the source of true profit and investment returns) with government-enforced monopolies. He may also have been sensing that no real monopoly lasts more than a day or so without government enforcement.

I can almost sense these ideas lurking in the mists just ahead of the farthest point of advance of his thinking.

ToryII said...

Profit, rent, and interest:

All three are revenues (incomes).

Profit: Amounts (rewards) that exceed the costs and expenses.

Rent: Revenue that includes costs, expenses and hopefully profit. The noun 'Rent' is typically used to describe income from the use or lending of something, usually physical property.

Interest: Revenue that includes costs, expenses and hopefully profit. 'Interest' is a noun used to describe revenue from the use/lending of money (ie, the lending of money).

The first merchants were viewed/perceived as undesirable people. The typical con-artist is nearly always a merchant (a business person).

Because we are no longer hunters and gatherers, we are forced to be business people, making business (merchantilism) socially acceptable. But to this day, a lender may be perceived with contempt for charging a fee (interest) for lending his money to a borrower. And today, a borrower can be perceived with as much contempt as a lender, especially if he fails to pay both principal and interest on schedule. So goes evolution.

The retail store that lends money at high fees is considered shady or criminal by govt, but these outlets were devised to compete with the deadly and illegal 'loan sharks'. Because usury is still considered shady the legal lender may require some collateral to guarantee the borrower repay both the principal and the interest (on schedule).

Lenders have a moral and legal right to charge fees. Without the fees (income) they could not exist and borrowers would not have additional choices.

Sheldon Richman said...

"I protest that when I criticized... the complex of institutions of which property is the foundation stone, I never meant to... forbid or supress [sic], by sovereign decree, ground rent and interest on capital. I believe that all these forms of human activity should remain free and optional for all." --Proudhon, Solution of the Social Problem, 1848-49