Abolish Antitrust!

"That there is inequality of ability or monetary income on the free market should surprise no one. As we have seen above, men are not “equal” in their tastes, interests, abilities, or locations. Resources are not distributed “equally” over the earth.16 This inequality or diversity in abilities and distribution of resources insures inequality of income on the free market. And, since a man’s monetary assets are derived from his and his ancestors’ abilities in serving consumers on the market, it is not surprising that there is inequality of monetary wealth as well.

"The term 'free competition,' then, will prove misleading unless it is interpreted to mean free action, i.e., freedom to compete or not to compete as the individual wills.

"It should be clear from the foregoing discussion that there is nothing particularly reprehensible or destructive of consumer freedom in the establishment of a 'monopoly price' or in a cartel action. A cartel action, if it is a voluntary one, cannot injure freedom of competition and, if it proves profitable, benefits rather than injures the consumers. It is perfectly consonant with a free society, with individual self-sovereignty, and with the earning of money through serving consumers.

As Benjamin R. Tucker brilliantly concluded in dealing with the problem of cartels and competition:

'That the right to cooperate is as unquestionable as the right to compete; the right to compete involves the right to refrain from competition; cooperation is often a method of competition, and competition is always, in the larger view, a method of cooperation ... each is a legitimate, orderly, non-invasive exercise of the individual will under the social law of equal liberty....

'Viewed in the light of these irrefutable propositions, the trust, then, like every other industrial combination endeavoring to do collectively nothing but what each member of the combination might fully endeavor to do individually, is, per se, an unimpeachable institution. To assail or control or deny this form of cooperation on the ground that it is itself a denial of competition is an absurdity. It is an absurdity, because it proves too much. The trust is a denial of competition in no other sense than that in which competition itself is a denial of competition. (Italics ours.) The trust denies competition only by producing and selling more cheaply than those outside of the trust can produce and sell; but in that sense every successful individual competitor also denies competition.... The fact is that there is one denial of competition which is the right of all, and that there is another denial of competition which is the right of none. All of us, whether out of a trust or in it, have a right to deny competition by competing, but none of us, whether in a trust or out of it, have a right to deny competition by arbitrary decree, by interference with voluntary effort, by forcible suppression of initiative.'

"This is not to say, of course, that joint co-operation or combination is necessarily 'better than' competition among firms. We simply conclude that the relative extent of areas within or between firms on the free market will be precisely that proportion most conducive to the well-being of consumers and producers alike. This is the same as our previous conclusion that the size of a firm will tend to be established at the level most serviceable to the consumers."

—Murray N. Rothbard, Man, Economy, and State

TGIF: Which Way -- Capitalism or Socialism or Something Else?

Big questions are being thrashed out these days. One of the biggest is this: do we want capitalism or socialism? Unfortunately, the online discussions I've witnessed have been, to put it as politely as I can, terrible. (For an example, see this one between Reason senior editor Robby Soave and political commentator Briahna Joy Gray, cohosts of The Hill's online show "Rising.")

Let's start with the words themselves. We're in a linguistic mess. It's only a slight exaggeration to say that nearly everyone has his own definition of capitalism and socialism. So when people get together to hash things out, they ought to begin by saying what they -- the discussants, not the words -- mean. That doesn't seem to be an unreasonable demand.

It's pointless to debate what words "really mean." There are no platonic definitions. Language is usage, which is what dictionaries have traditionally reported on. and word usage changes. So we should dispense with that conversation or else time will be wasted.

As I say, we're in a linguistic mess. Bernie Sanders is the country's best-known "democratic socialist." Asked during one of his campaigns what democratic socialism is, Sanders said something like, "It's an economy that works for everyone." Real informative, Bern. Thank you very much.

The fact is that most younger Americans today seem to think that socialism is just a bigger welfare state. For example, they would probably say socialism would include Medicare for all, a program in which the government would pay everyone's medical bills through taxation. But that's not what socialist ideologues have traditionally had in mind. For Marx and his socialist predecessors, socialism meant the abolition of private property, money, and hence the market: the state would own the factories, hospitals, and other means of production. I don't think most people who call themselves socialists today favor that.

How about capitalism? As I wrote some years ago, as the word is used, capitalism

designates a system in which the means of production are de jure privately owned. Left open is the question of government intervention. Thus the phrases “free-market capitalism” and “laissez-faire capitalism” are typically not seen as redundant and the phrases “state capitalism” or “crony capitalism” are not seen as contradictions. If without controversy “capitalism” can take the qualifiers “free-market” and “state,” that tells us something. [I discuss the many problems with the word capitalism here.]

It tells us that the word itself is a muddle. The word capitalism has been called an "anti-concept," a term I associate with Ayn Rand, who wrote:

An anti-concept is an unnecessary and rationally unusable term designed to replace and obliterate some legitimate concept. The use of anti-concepts gives the listeners a sense of approximate understanding. But in the realm of cognition, nothing is as bad as the approximate....

But the word capitalism is worse than an anti-concept because it's not merely approximate; it contains contradictory elements. As philosopher Roderick Long writes:

Now I think the word “capitalism,” if used with the meaning most people give it, is a package-deal term. By “capitalism” most people mean neither the free market simpliciter nor the prevailing neomercantilist system simpliciter. Rather, what most people mean by “capitalism” is this free-market system that currently prevails in the western world. In short, the term “capitalism” as generally used conceals an assumption that the prevailing system is a free market. And since the prevailing system is in fact one of government favoritism toward business, the ordinary use of the term carries with it the assumption that the free market is government favoritism toward business.

And similar considerations apply to the term “socialism.”...

Ironically Rand, like Ludwig von Mises but unlike F. A. Hayek, favored the name capitalism for her "unknown ideal." But Rand, again like Mises, left no doubt about what she meant. The other day I caught a YouTube short of Rand talking about capitalism in which she said she meant "real, free, uncontrolled, unregulated, laissez-faire capitalism, not the mongrel mixed economy we have today." (I prefer self-controlling and self-regulating to uncontrolled and unregulated, but let that go. See my "Regulation Red Herring.")

If people define their terms before plunging into the debate, the time will likely be more fruitfully spent. If I were in such a discussion, I would insist that the issue is not whether we really have capitalism, but whether we, individually, are fully free, politically and legally, to produce, consume, invest, and exchange in unmolested self-regulating markets.

And I would ask the self-described socialist if he favors the abolition of property, money, and markets. If he says no but favors Medicare for all, housing subsidies, and regulatory agencies, I would say he sounds like an advocate of a mixed economy in which markets exist but are routinely manipulated by state personnel aiming to effect outcomes they believe that voluntary exchange will not achieve.

As for the actual socialist, I'd start by saying what H. L. Mencken said:

The chief difference between free capitalism and State socialism seems to be this: that under the former a man pursues his own advantage openly, frankly and honestly, whereas under the latter he does so hypocritically and under false pretenses.

People with an overwrought sense of romance love the phrase, which Marx did not originate, "From each according to his ability, to each according to  his need." But how does that not describe a nightmare world? Under socialism, would each individual freely decide what he thinks his abilities and needs are? (What is a need?) If so, central planning is out of the question. So some presumptuous person or bureaucracy with dictatorial powers would make those decisions. Oh happy days! The promised withering away of the state is about as likely as an honest politician.

I can't see that socialism has anything at all to be said in its favor. Even Benjamin Tucker, the prominent American free-market anarchist, who was seduced by the valueless labor theory of value, said, "[State] Capitalism is at least tolerable, which cannot be said of Socialism or Communism."

What the free-market advocate must not do is let his interlocutor get away with claiming that "our capitalist system" is the free market. When, for example, Briahna Joy Gray says, as she did in the discussion I linked to above, that homelessness or (undefined) inequality is capitalism, she must be called to account with a question: "But are people free in the market?" Considering how thoroughly government bureaucracies at every level encumber necessarily win-win voluntary exchange, it can't be the free-market order that's causing homelessness. Coercive corporate power, which Gray and her ilk see as the prime culprit in so many ills, derives from coercive political power and cannot exist without it -- thus, it's what I call the most dangerous derivative.

Influencing the language is like herding cats. Nevertheless, I'd love to come up with a single word ending in ism for what free-market champions favor. We could simply say, "the free market," "laissez-faire capitalism," or Adam Smith's marvelous term "the system of natural liberty," but they seem clunky in some sentences. "Individualism" has its virtues, but it's not quite on point in this context because markets are founded on social cooperation and the division of labor. "Enterpriseism" is contrived, although it makes the point. I'll keep working on it.

For Further Study

Sheldon Richman, "Capitalism versus the Free Market" (video), Future of Freedom Foundation, 2010.

Sheldon Richman, "Capitalism and the Free Market, Part 1 and Part 2, Future of Freedom Foundation, 2010.

Sheldon Richman, "Is Capitalism Something Good?" Foundation for Economic Education, 2010.

Sheldon Richman, "Wall Street Couldn't Have Done It Alone," Counterpunch, 2011.

Roderick T. Long, "Corporations Versus the Free Market, Or Whip Conflation Now," Cato Institute.

Roderick T. Long, "Rothbard's 'Left and Right': Forty Years Later," 2006.

The Sin of Herbert Spencer

Benjamin R. Tucker

Guest blogger

Liberty welcomes and criticises in the same breath the series of papers by Herbert Spencer on “The New Toryism,” “The Coming Slavery,” “The Sins of Legislators,” etc., now running in the Popular Science Monthly and the English Contemporary Review. They are very true, very important, and very misleading. They are true for the most part in what they say, and false and misleading in what they fail to say. Mr. Spencer convicts legislators of undeniable and enormous sins in meddling with and curtailing and destroying the people’s rights. Their sins are sins of commission. But Mr. Spencer’s sin of omission is quite as grave. He is one of those persons who are making a wholesale onslaught on Socialism as the incarnation of the doctrine of State omnipotence carried to its highest power. And I am not sure that he is quite honest in this. I begin to be a little suspicious of him. It seems as if he had forgotten the teachings of his earlier writings, and had become a champion of the capitalistic class. It will be noticed that in these later articles, amid his multitudinous illustrations (of which he is as prodigal as ever) of the evils of legislation, he in every instance cites some law passed, ostensibly at least, to protect labor, alleviate suffering, or promote the people’s welfare. He demonstrates beyond dispute the lamentable failure in this direction. But never once does he call attention to the far more deadly and deep-seated evils growing out of the innumerable laws creating privilege and sustaining monopoly. You must not protect the weak against the strong, he seems to say, but freely supply all the weapons needed by the strong to oppress the weak. He is greatly shocked that the rich should be directly taxed to support the poor, but that the poor should be indirectly taxed and bled to make the rich richer does not outrage his delicate sensibilities in the least. Poverty is increased by the poor laws, says Mr. Spencer. Granted; but what about the rich laws that caused and still cause the poverty to which the poor laws add? That is by far the more important question; yet Mr. Spencer tries to blink it out of sight.

A very acute criticism of Mr. Spencer’s position has been made recently before the Manhattan Liberal Club by Stephen Pearl Andrews. He shows that Mr. Spencer is not the radical laissez faire philosopher which he pretends to be; that the only true believers in laissez faire are the Anarchists; that individualism must be supplemented by the doctrines of equity and courtesy; and that, while State Socialism is just as dangerous and tyrannical as Mr. Spencer pictures it, “there is a higher and nobler form of Socialism which is not only not slavery, but which is our only means of rescue from all sorts and degrees of slavery.” All this is straight to the mark,—telling thrusts, which Mr. Spencer can never parry.

But the English philosopher is doing good, after all. His disciples are men of independent mind, more numerous every day, who accept his fundamental truths and carry them to their logical conclusions. A notable instance is Auberon Herbert, formerly a member of the House of Commons, but now retired from political life. While an enthusiastic adherent of the Spencerian philosophy, he is fast outstripping his master. In a recent essay entitled “A Politician in Sight of Haven,” written, as the London Spectator says, with an unsurpassable charm of style, Mr. Herbert explodes the majority lie, ridicules physical force as a solution of social problems, strips government of every function except the police, and recognizes even that only as an evil of brief necessity, and in conclusion proposes the adoption of voluntary taxation with a calmness and confidence which must have taken Mr. Spencer’s breath away. To be sure, Mr. Herbert is as violent as his master against Socialism, but in his case only because he honestly supposes that compulsory Socialism is the only Socialism, and not at all from any sympathy with legal monopoly or capitalistic privilege in any form.

Reprinted from Liberty, May 17, 1884

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.

Should Labor be Paid or Not?

Good stuff from Benjamin Tucker, Liberty, April 28, 1888; reprinted in Instead of a Book, by a Man Too Busy to Write One (1893/1897):

In No. 121 of Liberty, criticising an attempt of Kropotkine to identify Communism and Individualism, I charged him with ignoring the real question whether Communism will permit the individual to labor independently, own tools, sell his labor or his products, and buy the labor or products of others. In Herr Most’s eyes this is so outrageous that, in reprinting it, he puts the words the labor of others in large black type. Most being a Communist, he must, to be consistent, object to the purchase and sale of anything whatever; but why he should particularly object to the purchase and sale of labor is more than I can understand. Really, in the last analysis, labor is the only thing that has any title to be bought or sold. Is there any just basis of price except cost? And is there anything that costs except labor or suffering (another name for labor)? Labor should be paid! Horrible, isn’t it? Why, I thought that the fact that it is not paid was the whole grievance. Unpaid labor has been the chief complaint of all Socialists, and that labor should get its reward has been their chief contention. Suppose I had said to Kropotkine that the real question is whether Communism will permit individuals to exchange their labor or products on their own terms. Would Herr Most have been so shocked? Would he have printed that in black type? Yet in another form I said precisely that.(131 ¶ 1)

If the men who oppose wages—that is, the purchase and sale of labor—were capable of analyzing their thought and feelings, they would see that what really excites their anger is not the fact that labor is bought and sold, but the fact that one class of men are dependent for their living upon the sale of their labor, while another class of men are relieved of the necessity of labor by being legally privileged to sell something that is not labor, and that, but for the privilege, would be enjoyed by all gratuitously. And to such a state of things I am as much opposed as any one. But the minute you remove privilege, the class that now enjoy it will be forced to sell their labor, and then, when there will be nothing but labor with which to buy labor, the distinction between wage-payers and wage-receivers will be wiped out, and every man will be a laborer exchanging with fellow-laborers. Not to abolish wages, but to make every man dependent upon wages and to secure to every man his whole wages is the aim of Anarchistic Socialism. What Anarchistic Socialism aims to abolish is usury. It does not want to deprive labor of its reward; it wants to deprive capital of its reward. It does not hold that labor should not be sold; it holds that capital should not be hired at usury.

But, says Herr Most, this idea of a free labor market from which privilege is eliminated is nothing but consistent Manchesterism. Well, what better can a man who professes Anarchism want than that? For the principle of Manchesterism is liberty, and consistent Manchesterism is consistent adherence to liberty. The only inconsistency of the Manchester men lies in their infidelity to liberty in some of its phases. And this infidelity to liberty in some of its phases is precisely the fatal inconsistency of the Freiheit school,—the only difference between its adherents and the Manchester men being that in many of the phases in which the latter are infidel the former are faithful, while in many of those in which the latter are faithful the former are infidel. Yes, genuine Anarchism is consistent Manchesterism, and Communistic or pseudo-Anarchism is inconsistent Manchesterism. "I thank thee, Jew, for teaching me that word."

What Anarchists Are

"The Anarchists are simply unterrified Jeffersonian Democrats."

--Benjamin Tucker, "State Socialism and Anarchism"

Libertarians Against Capitalism

I've started a group by that name on Facebook. Thomas Hodgskin, mentor to Herbert Spencer, is the inspiration. Here's the official description:

We are a group of libertarians who understand that historically the word "capitalism" has meant, not the free market, but crony capitalism -- that is, collusion between business and State at the expense of consumers/workers. Thus we refuse to use the word "capitalism" to describe what we favor: individual liberty in all respects and free, competitive markets. We believe that what we have today IS capitalism -- and we oppose it.

I like what Brad Spangler said in a comment:

Which is more direct, a two-step process or a one-step process?

A: 1) Convince people the status quo is not capitalism & 2) Convince people that "capitalism" in the sense of a freed market is the remedy to the status quo?

-or-

B: 1) Convince people that a freed market is the remedy to the capitalist status quo?

No, that's not Thomas Hodgskin up there. Apparently there are no pictures of him. Instead, I've used Benjamin Tucker, who's a darned good stand-in.