Tag Archives | Conflation Debate

Economic Inequality: Three Takes

[cross-posted at BHL and POT]

In June 1963, when Nathaniel Branden published a piece on “Inherited Wealth” in The Objectivist Newsletter, he was still the beloved disciple of Ayn Rand, who reprinted his piece in her 1966 collection Capitalism: The Unknown Ideal, and continued to include it in subsequent editions despite her break with Branden in 1968. As Rand famously did not allow opinions deviating even in the slightest from her own to appear in journals or books that she edited, we can assume Branden speaks for Rand when he writes:

A free, competitive economy is a constant process of improvement, innovation, progress; it does not tolerate stagnation. If an heir who lacks ability acquires a fortune and a great industrial establishment from his successful father, he will not be able to maintain it for long; he will not be equal to the competition. In a free economy, where bureaucrats and legislators would not have the power to sell or grant economic favors, all of the heir’s money would not be able to buy him protection for his incompetence; he would have to be good at his work or lose his customers to companies run by men of superior ability. There is nothing as vulnerable as a large, mismanaged company that competes with small, efficient ones. …

It is a mixed economy – such as the semi-socialist or semi-fascist variety we have today – that protects the nonproductive rich by freezing a society on a given level of development, by freezing people into classes and castes and making it increasingly more difficult for men to rise or fall or move from one caste to another; so that whoever inherited a fortune before the freeze, can keep it with little fear of competition, like an heir in a feudal society.

Here Branden, and by presumption Rand, are endorsing a crucial part of the left-libertarian idea of competition as a levelling force. The quotation makes an interesting pairing with a remark of Murray Rothbard’s in a 1966 letter:

For some time I have come to the conclusion that the grave deficiency in the current output and thinking of our libertarians and “classical liberals” is an enormous blind spot when it comes to big business. There is a tendency to worship Big Business per se … and a corollary tendency to fail to realize that while big business would indeed merit praise if they won that bigness on the purely free market, that in the contemporary world of total neo-mercantilism and what is essentially a neo-fascist “corporate state,” bigness is a priori highly suspect, because Big Business most likely got that way through an intricate and decisive network of subsidies, privileges, and direct and indirect grants of monopoly protection.

Yet if Rand, Branden, and Rothbard all accepted this crucial aspect of left-libertarian analysis, then a) where did Rothbard depart from Rand and Branden, and b) where did all three depart from left-libertarianism as we understand it today? (On the specific issue of economic inequality, I mean – not getting into the various other areas of disagreement.)

A crucial difference dividing Rothbard from Rand and Branden is that Rand and Branden do not seem to fully recognise the implication of their insight that under present circumstances the “unproductive rich” can maintain their position “with little fear of competition.” If they did, they’d have to agree with Rothbard that “bigness is a priori highly suspect” in the present-day economy, given the likelihood that it is the product of “subsidies, privileges, and direct and indirect grants of monopoly protection.” Rand, by contrast, famously declared big business a “persecuted minority,” a formulation ridiculed by Rothbard. While endorsing the premise that government controls insulate the rich from competition and make it difficult for newcomers to rise up, Rand fails to draw the logical conclusion that any firms that do manage to become enormously wealthy in the present-day economy are in most cases likely to have achieved their status at least in large part via government favoritism, and so are proper objects of suspicion, not celebration and defense.

Thus Rothbard is more consistent on this point than Rand and Branden, and so is closer to left-libertarianism. This is presumably in part because he had read and embraced the New Left historical discoveries, by thinkers like Gabriel Kolko, James Weinstein, and William Appleman Williams, of the actual historical role of big business in American history, showing that the Gilded Age magnates that Rand idolised were indeed mostly state-supported parasites too – discoveries that Rand never showed much interest in. (Later Randians eventually got around to discovering Kolko, and responded by going on the attack; see, e.g., here and here. A left-libertarian response to the contemporary Randian critique of Kolko is forthcoming in the Molinari Review.)

Where Rothbard parts company with left-libertarianism is that his suspicion of bigness is limited; while “in the contemporary world” vast concentrations of wealth are suspect, he writes that “big business would indeed merit praise if they won that bigness on the purely free market” – which seems to imply that he thinks enormous, systematic, pervasive, and longterm economic inequalities would indeed be possible in a free market – whereas left-libertarianism denies this, since it would be difficult to sustain such inequalities if producers were free to imitate what others were doing to become rich.

Of course there are differences in talent, as in Nozick’s “Wilt Chamberlain example,” that would serve as a bar to perfect imitation. But a glance at the wealthiest firms and individuals – in popular parlance, the “one percent,” a term actually coined by left-libertarian Karl Hess – shows the persistent role of government privilege in maintaining their status; they did not get there or stay there by talent alone.

In Man, Economy, and State, Rothbard does recognise that a single large firm dominating the entire economy would be impossible in a free market, owing to its insulation from market feedback:

In order to calculate the profits and losses of each branch, a firm must be able to refer its internal operations to external markets for each of the various factors and intermediate products. When any of these external markets disappears, because all are absorbed within the province of a single firm, calculability disappears, and there is no way for the firm rationally to allocate factors to that specific area. The more these limits are encroached upon, the greater and greater will be the sphere of irrationality, and the more difficult it will be to avoid losses. One big cartel would not be able rationally to allocate producers’ goods at all and hence could not avoid severe losses.

But Rothbard does not take the further step of recognising that insulation from market feedback is a matter of degree, so that in a free market diseconomies of scale would begin to kick in well before a single firm dominated the entire market. That is why left-libertarians expect a much flatter free-market landscape than the ones envisioned by Rand, Branden, and even Rothbard.


Who Said This?

I want to do the following in this paper: First to present the theses that constitute the hard core of the Marxist theory of history. I claim that all of them are essentially correct. …

Marx … gives a historical account of the emergence of capitalism that makes the point that much or even most of the initial capitalist property is the result of plunder, enclosure, and conquest. Similarly … the role of force and violence in exporting capitalism to the – as we would now say – Third World is heavily emphasized. Admittedly, all this is generally correct, and insofar as it is there can be no quarrel with labeling such capitalism exploitative.

See the answer.


Class Act

[cross-posted at BHL]

Karl Marx once wrote:

I do not claim to have discovered either the existence of classes in modern society or the struggle between them. Long before me, bourgeois historians had described the historical development of this struggle between the classes, as had bourgeois economists their economic anatomy. My own contribution was

1. to show that the existence of classes is merely bound up with certain historical phases in the development of production;

2. that the class struggle necessarily leads to the dictatorship of the proletariat;

3. that this dictatorship itself constitutes no more than a transition to the abolition of all classes and to a classless society.

Marx is certainly right that class analysis was a central feature of classical liberalism long before he picked it up. He’s fibbing a bit, though, about (1) and (3); many of his bourgeois predecessors (for example, the Censeur triumvirate of Charles Comte, Charles Dunoyer, and Augustin Thierry) most emphatically thought that class society as they understood it was a temporary phenomenon destined to be displaced. Thierry, for example, announces:

Federations will replace states; the loose but indissoluble chains of interest will replace the despotism of men and of laws; the tendency towards government, the first passion of the human race, will cede to the free community. The era of empire is over, the era of association begins.

The main difference between Marx and the liberals was that Marx took the differentiation between ruling and ruled classes to be grounded in differential access to the means of production, whereas the liberals took the differentiation between ruling and ruled classes to be grounded in differential access to predatory power, and in particular to the power of the state. (To be sure, Marx acknowledged and indeed insisted on the important role of the state in maintaining class division when examining the details of history or current events; but the state quickly receded in importance when he turned to abstract theory.)

All this is by way of noting that I just received in the mail my author’s copy of Social Class and State Power: Exploring an Alternative Radical Tradition, an anthology of libertarian and classical liberal writings on class analysis that I co-edited with David Hart, Gary Chartier, and Ross Kenyon.

The volume includes material by a rather heterogeneous collection of authors:

  • from the 17th century, Richard Overton;
  • from the 18th century, Adam Smith, Thomas Paine, Vicesimus Knox, and William Godwin;
  • from the 19th century, Jeremy Bentham, James Mill, Thomas Hodgskin, John Wade, William Leggett, Richard Cobden, John C. Calhoun, Adolphe Blanqui, Frédéric Bastiat, Charles Renouard, Augustin Thierry, Gustave de Molinari, Herbert Spencer, William Graham Sumner, Lysander Spooner, and Benjamin Tucker;
  • and from the 20th century, Franz Oppenheimer, Albert J. Nock, Ludwig von Mises, Murray Rothbard, Roy Childs, Walter Grinder, John Hagel, Hans Hoppe, and your humble correspondent.

I would urge you to go out and buy a copy; but in light of the book’s $100 pricetag, I’ll just urge you to go out and suggest to your local research library that they buy a copy.


Two New Publications

[cross-posted at C4SS and BHL]

My chapter on “Anarchism and Libertarianism” is forthcoming in Nathan Jun, ed., Brill’s Companion to Anarchism and Philosophy (Leiden: Brill, 2017), at the usual insane Brill price. In the chapter I explore the relationship between libertarianism (in the free-market sense) and the anarchist movement, including the question whether anarcho-capitalism counts as a genuine form of anarchism. (My C4SS colleague Kevin Carson has a chapter in the book as well.)

According to the publisher, I’m only allowed to make 25 hard copies of the chapter – but I’m also allowed to post a copy online, so long as it’s on my personal website. That seems to me a bit like saying “No smoking allowed in this room, but it’s okay to set the bed on fire.” But okay, here’s a link to the chapter.

(My reference to capitalist labour markets as “oligopolistic” was supposed to be “oligopsonistic.” The editors changed it to “oligopolistic,” which of course has the opposite meaning; I changed it back in galleys, but it ended up “oligopolistic” in the final published text nonetheless. Sigh.)

I also have a chapter on “Minarchism on Seasteads” in Victor Tiberius, ed., Seasteads: Opportunities and Challenges for Small New Societies (Zurich: VDF, 2017). I explore options for constraining a seastead minarchy (essentially by incorporating as many anarchist features as possible; those who remember my articles from the FNF/LNF days will find my proposals familiar). Here’s the link.

(The version I’ve posted is the galley proofs with my corrections. No, of course the corrections did not make it into the final published text. Sigh again.)


Left-Libertarian Economic Anthology Published

[cross-posted at BHL]

I’m pleased to announce (belatedly) a new anthology from the Center for a Stateless Society (C4SS): Free Markets & Capitalism?: Do Free Markets Always Produce a Corporate Economy?, edited by Cory Massimino and James Tuttle.

One third of Free Markets & Capitalism? (not to be confused with C4SS’s earlier anthology Markets Not Capitalism) reproduces an online exchange from last year among Kevin Carson, Derek Wall, and Steve Horwitz on the question of whether corporate capitalism would indeed wither away in a genuinely freed market, as left-libertarians contend, or whether instead, as both capitalist and socialist critics of left-libertarianism maintain (whether cheerfully or gloomily), market incentives would tend to reproduce much of the structure of corporate capitalism even without state intervention to support the process.

The other two-thirds of the book are devoted to background readings (most by Kevin Carson – including his classic, The Iron Fist Behind the Invisible Hand – but also a couple by me, and one by the late Roy Childs) expounding the left-libertarian position on the issue.

Buy a copy today! Buy two copies tomorrow! Buy four copies the next day, and eight the day after that, and so on ….


Molinari Review 1.1: What Lies Within?

[cross-posted at C4SS and BHL]

The Molinari Institute (the parent organization of the Center for a Stateless Society) is proud to announce the publication of the first issue of our new interdisciplinary, open-access, libertarian academic journal, the Molinari Review, edited by yours truly, and dedicated to publishing scholarship, sympathetic or critical, in and on the libertarian tradition, very broadly understood. (See our original call for papers.)

You can order a copy here:

Print Kindle
Amazon US Amazon US
Amazon UK Amazon UK
CreateSpace Store

It should also be available, now or shortly, on other regional versions of Amazon. And later on it’ll be available from our website as a free PDF download (because copyright restrictions are evil).

mr1-1-coverphaze

So what’s in it?

In “The Right to Privacy Is Tocquevillean, Not Lockean: Why It MattersJulio Rodman argues that traditional libertarian concerns with non-aggression, property rights, and negative liberty fail to capture the nature of our concern with privacy. Drawing on insights from Tocqueville and Foucault, Rodman suggests that privacy is primarily a matter, not of freedom from interference, but of freedom from observation, particularly accusatory observation.

In “Libertarianism and Privilege,” Billy Christmas charges that right-wing libertarians underestimate the extent and significance of harmful relations of privilege in society (including, but not limited to, class and gender privilege) because they misapply their own principles in focusing on proximate coercion to the exclusion of more indirect forms of coercion; but, he argues, broadening the lens of libertarian inquiry reveals that libertarian principles are more powerful tools for the analysis of privilege than privilege theorists generally suppose.

In “Capitalism, Free Enterprise, and Progress: Partners or Adversaries?,” Darian Nayfeld Worden interrogates traditional narratives of the Industrial Revolution. Distinguishing between capitalism (understood as a separation between labour and ownership/management) and free enterprise, Nayfeld Worden maintains that the rise of capitalism historically was in large part the result of a suppression of free enterprise, and that thanks to state intervention, the working-class benefited far less from industrialisation and technological innovation than they might otherwise have done.

In “Turning the Tables: The Pathologies and Unrealized Promise of Libertarianism,” Gus diZerega contends that libertarians misunderstand and misapply their own key concepts, leading them to embrace an atomistic vision of society, and to overvalue the market while undervaluing empathy and democracy. (Look for a reply or two in our next issue.)

Finally, Nathan Goodman reviews Queering Anarchism: Addressing and Undressing Power and Desire, an anthology edited by C. B. Daring, J. Rogue, Deric Shannon, and Abbey Volcano. Goodman praises the book for its illumination of many aspects of the intersection between anarchist tradition and the LGBTQ community, with particular emphasis on the tension between LGBTQ activists who seek to dismantle oppressive institutions and those who merely seek inclusion within them; but in the area of economics, he finds its authors to be too quick to dismiss the free market or to equate it with the prevailing regime of corporatist privilege.

Want to order a copy? See the ordering information above.

Want to contribute an article to an upcoming issue? Head to the journal’s webpage.

Want to support this project financially? Make a donation to the Molinari Institute General Fund.


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