Ad hominem attacks aside, YouTuber hawanja’s video on free-market anarchists seems to make the point that people “naturally organize themselves into hierarchies” that require violence to be maintained, so anarchism runs counter to the human condition. It is left unstated why violence is needed or ethically justified to maintain these hierarchies if they were so natural. He further claims that a state is the historically necessary “institution that enforces order through violence.”

The first of hawanja’s misunderstandings has to do with his definition of “state.” A key distinction I and Barack Obama would make is that a state claims a territorial monopoly on its enforcement of order through violence. The insinuation of hawanja’s definition, which ignores the territorial monopoly claim, is that any enforced order necessarily signifies the presence of a state. Throughout the entire video, viewers are presented with this false dichotomy: statism or chaos. Anarchists do not oppose order. The etymological origin of “anarchy” means no ruler (not no rules), similarly how “monarchy” means one ruler. Regardless, statists generally insist on conflating “anarchy” to mean a conflict for rulership that takes place in a failed state. Anarchism recognizes that rulers are not justified in their actions and are counter-productive to a peaceful, productive existence.

Another unfounded assertion is that “this natural hierarchical structure to human beings” is justified in using force to maintain its power. After all, just as a good majority of people naturally like ice cream, I hardly think that would justify “natural hierarchical structures” enforcing the consumption of ice cream.

The Enemy of My Enemy

Another tried and true fallback in defense of the state is the canard that a state is necessary to protect us from corporations, which hawanja rightly pointed out are creatures of plutocratic state protections and subsidies. They are granted limited liability by governments and are under a legal obligation to pursue the interests of shareholders, not employees or the environment or the public. However, should the blame rest with corporations or also with their architects (governments) that created them and shield them from accountability?

He cites laws prohibiting discrimination and child labor and food safety and consumer protections as examples of good government. Of course, governments have historically been used to promote all sorts of racial discrimination, child labor, and made food and consumer protections harder to come by and more expensive. hawanja unintentionally, I presume, confirmed this point when he showed a picture of Rosa Parks, the civil rights heroine arrested for disobeying a segregationist city ordinance that ordered she give up her seat to a white passenger, when he mentioned government laws prohibiting discrimination.

I think it is all well and good that government-enforced slavery and Jim Crow apartheid, the more overt government measures used to uphold discrimination, have been removed. However, that does not do so much to help those past victims of discrimination. All the ways that governments prohibit wealth creation has meant that past victims of government-enforced discrimination continue to suffer at the hands of government-enforced poverty. As Charles Johnson summed up in his “How Government Creates Poverty as We Know It” essay, “The poorer you are, the more you need access to informal and flexible alternatives, and the more you need opportunities to apply some creative hustling. When the state shuts that out, it shuts poor people into ghettoized poverty.”

Governments are not responsible for ending child labor. As a thought experiment, just consider what would happen if child labor was prohibited by law in Nepal. It would have the same effect as enacting California-style building codes in Haiti: absolutely none, because there is no wealth to implement those laws. The credit for the advancement of human civilization rests with the grandest form of human cooperation, the wealth-creating division of labor.

Coincidentally, I would think the issue of discrimination would create another dilemma for supporters of the state. Historically, racism, sexism and slavery would have been considered “natural hierarchical structure[s] to human beings,” just as the state is said to be. Yet, left-liberals, as I suppose hawanja is, do not propose that the enforcement of racism, sexism or slavery was just. Based on what principle though? And how would that principle not equally apply to racism, sexism and slavery?

hawanja also appears to be under the impression that governments were responsible for the abolition (or near abolition) of child labor, neglecting the fact that child labor is still legal in the United States under some circumstances. More to the point, mass child labor was an example of a problem exacerbated by the heavy hand of government. Had it not been for mercantilist and protectionist Robber Baron economic policies of the 19th century, wealth creation for the average family would have been realized much more broadly and quickly so that parents could afford to send their children to school sooner. Many social problems, including institutional discrimination, that governments are credited with fixing were largely already successfully being addressed through direct action before legislative interventions took place.

Consider consumer protections against price fixing. Historic examples of consumer protection during the Progressive Era were done at the behest of business interests. As noted liberal historical Gabriel Kolko wrote of the implementation of the Federal Trade Commission, in “The Triumph of Conservatism”:

The provisions of the new laws attacking unfair competitors and price discrimination meant that the government would now make it possible for many trade associations to stabilize, for the first time, prices within their industries, and to make effective oligopoly a new phase of the economy.

He called it a triumph of conservatism because federal intervention into the economy was able to secure the existing economic structure, what Kolko called “political capitalism” and what we know today as “crony capitalism” and “corporatism.” In Kolko’s conclusion, he said:

The varieties of rhetoric associated with progressivism were as diverse as its followers, and one form of this rhetoric involved attacks on businessmen—attacks that were often framed in a fashion that has been misunderstood by historians as being radical. But at no point did any major political tendency dealing with the problem of big business in modern society ever try to go beyond the level of high generalization and translate theory into concrete economic programs that would conflict in a fundamental way with business supremacy over the control of wealth. It was not a coincidence that the results of progressivism were precisely what many major business interests desired.

Kolko’s book is something, documenting how nearly every aspect of the Progressive Era legislation — from food inspections, environmental conservation and banking reforms, for example — were used as covers to cement the existing cartelized trusts already in power.

The book does a great job of documenting the problem with hierarchical institutions, that the people who already have the most access to the government are going to have the most influence in shaping what solutions are offered, how they are interpreted and how they would be implemented. Regulators — like all self-interested creatures — are sure to implement solutions that preserve their power and prospects for future employment, since their interests closely align with those of the regulated. If regulators or politicians are corruptible with bribes, the powerful can leverage their influence to a greater degree than they could in a freer market. For just a fraction of the cost, favorable regulations worth millions of dollars can be bought with campaign contributions. On a free market, it would be more costly to bribe someone who did not have the luxury of using taxes, as government regulators can, to pay for the enforcement of regulatory or legislative cronyism.

Making More Trouble

Next, the video documents social problems that libertarians typically attribute to government. In the past, I might have been guilty of short-changing why those problems are a consequence of government intervention, so I will take the time below to make the points clear.

1. Food prices — Yes, governments subsidize cattle and meat production at the expense of healthier, more natural forms of food, and place restrictions on the importation of those products. It is not a market phenomenon that it costs more to purchase a salad than a hamburger. All the resources devoted to feeding cows and other animals and creating bio-fuels like corn-based ethanol could have been used to produce food for organic diets. In addition, the federal government has sealed off arable land that could be used to farm, and city ordinances often place restrictions on mixed-use property, some of which could be used for home or community gardens on abandoned property.
2. Low wages — The ways in which labor organizing is discriminated against is too long to list. Just to list some examples, I would point to the ’35 Wagner Act, which was championed by business interests and conservative unions to clip the more wildcat unions like the anarchist International Workers of the World. Typical demands, like collective bargaining and calling for limited strikes, that unions are legally permitted to make today are pretty meek by comparison. Before the era of having to get government recognition, when most of the historic gains of the labor movement were actually realized, unions could call for general strikes and indirect boycotts, opened union hiring halls, signed closed-door contracts or demanded worker management of the firm. Other government interventions are through occupational licensing laws, use-restricted zoning regulations, legal tender laws, capitalization requirements and capital-favored taxation policies that mean more people have to work for wage labor in the first place.
3. College expenses — It is not a coincidence that college tuition expenses increase at the same time that governments actively encourage people to go into debt by providing low-interest loans and restricting the establishment of new higher education options. The government and the corporate credentialism fetish is also partly to blame. One major expense of college is the cost of textbooks, which are artificially marked up do to the enforcement of artificial intellectual property claims.
4. Environmental conservation — It is also no secret that common law environmental tort protections were removed from courts in the 1900s, which is how pollution problems were handled until environmental legislation that legalized greater environmental damage took power out of the hands of property owners. That is not to mention that the largest polluter in the entire world is the United States federal government.
5. Drug safety — Yes, illicit drugs are more dangerous because of government. They cannot be made under true laboratory conditions; there is no possibility of any legal redress for fraud; and every year millions of people acting consensually are terrorized by government agents and hundreds if not thousands are killed by those government agents. The crime and escalated costs associated with drugs are a consequence of prohibition.
6. Terrorism — See “Blowback: The Costs and Consequences of American Empire” by Chalmers Johnson.

At the beginning of the video, hawanja criticized the favoritism that governments grant corporations, only later to praise the cronyism of farm subsidies for multimillion dollar farm conglomerates. He said that government protection has led to stable food prices in the United States, which is not so true of late. However, the relative stability has only come because Americans already pay much higher prices for foods like sugar than do residents of developing nations. In terms of dollars, the average American family transfers an additional $146 to large agribusinesses every year because of these policies, which do not include the approximate $300 per family given directly to mostly multimillionaires through the federal budget. The costs of milk, butter and meat products would be deflated if trade restrictions on international markets were abolished, helping to reduce poverty overseas.

Looking at the unintended consequences of those subsidies, the abundance of corn, some of which is used to sweeten sodas, has been linked to increased obesity in Americans. There is also the problem that developing nations wanting to compete in farm production are constantly being underpriced by subsidized farmers, leading developing nations to become dependent on subsidized farmers for food. That is something developed nations hold over developing nations as part of “Open Door Imperialism,” but it is not a fact I would cheer. Without government protectionism, land use could become more environmentally friendly, as well. A Reason magazine article said:

The distortions and perverse incentives of U.S. agricultural policies have encouraged practices that damage the environment. Trade barriers and subsidies stimulate production on marginal land, leading to overuse of pesticides, fertilizers, and other effluents. A central if unstated purpose of American farm policy is to promote production of commodities that would not be economical under competitive, free market conditions. This often means emphasizing crops better grown elsewhere, requiring more chemical assistance.

The conclusion of the video makes a laundry list of mandates that hawanja thinks the free market could not provide, like affordable housing and health care, public transportation, environmental and consumer protections, expanded broadband internet coverage, protection for the homeless, protection of endangered species, food and medical safety and national security. He said that the free market cannot do these things; “we do these things because we need them to survive.” His unstated argument is that these are public goods that markets cannot provide for.

I have argued in the past that with a little creativity, public goods can be provided, assuming there is public support for those goods, which would also have to be the case in a democratic government. To quote Kevin Carson, “As always, it’s not a question of what we’ll do when the state stops solving the problem. It’s a question of how to stop the state from creating the problem.”

The problem becomes that regardless of the possibility of providing those public goods on an open market, those goods become harder to achieve with a government in place, which creates an entirely new set of obstacles for achieving those original public goods governments were purportedly created to solve in the first place. Public goods, like security and safety, are not impossible for governments to provide, just costlier and more difficult than they would be on a free market. The first new public good created by the presence of a democratic government would be an informed electorate. It is not in the average person’s economic interest to know much about the issues at hand or the candidates running for office. That is because a single individual’s vote has almost no significance in the outcome of an election, and even if a single vote could turn an election, a voter has no method of holding a politician to his or her campaign pledges. It gets worse. A single politician in Washington, D.C., is one of 535 votes in the legislature. The idea that a citizen’s vote would make any noticeable difference to the his or her life is almost inconceivable.

The second public good that must be provided for in order to solve the original public goods problems is the creation of just laws. When thinking about it, there are thousands and thousands of pages of legislation and regulation under discussion. It would be next to impossible and meaningless to read every line of every bill introduced or regulation proposed in order to find out if some special benefit is being given to this or that special interest lobbyists. Even if we could decipher what the legislation or proposed regulation meant and its impact in the future, which would be difficult enough, contacting a congressman or regulator is going to have a negligible impact on influencing policy. Even if we could change the policy, it most likely only means a savings of a few dollars or cents per voter. Special interests who stand to gain millions or billions are always going to have the time and money to devote to gaining special favors.

Since human beings are not perfect or all-knowing, market failure is possible, but as David Friedman notes, “In the political system, market failure is the norm. If you think of the political system as a marketplace, we cannot expect individual rationality to produce group-rational results.” So the idea that government would work if we could only get the right people in charge is a failed strategy in practice and beyond naïve in theory.

When a government does try to address public goods that allegedly cannot be provided by the market, policies are going to serve the powerful and wealthy. Seeing how I would actually like to see those public goods provided to people, I cannot support a government, because a government makes those products less attainable for the people who most desperately need them.

Insofar as we live in a statist society, where some gain the reigns of power for the explicit purpose of lording over others and depriving them of their wealth, Tremblay is certainly right. I would go so as to agree that (state) capitalism does suffer from the anti-social consequences he cited, such as encouraging conformity, causing artificial scarcity, and raising dysfunctional children who perpetuate the existing failed system.

Statism is the negation of society.

Society, naturally though, is chiefly an outcome of cooperation. Society is spontaneously formed, not out a sense of brotherhood, but for the purpose of attaining higher levels of productivity that otherwise would not be possible by isolated individuals. The friendship and benevolence experienced within society, then, is the fruit of that materialistic benefit, not its antecedent. In the absence of the increased productive power of a division of labor, there would be no place for cooperation. Survival would mercilessly consist of all-out competition.

For a logical proof of this, we can recognize that even the most asocial individuals would not want their actions to become the norm, for that would leave them with fewer riches to plunder. Even in warfare, the bloodiest form of competition, people find it in their interests to cooperate somewhat with the enemy. It even became recognized that enslavement was a superior form of victory than the outright killing of hostiles. Over time, more people have come to accept that peace is preferably to war.

Foremost, Ludwig von Mises said, “Catallactic competition, one of the characteristic features of the market economy, is a social phenomenon.” The fact that people generally strive for the same ends transforms what otherwise would be a biological conflict into a fortunate harmony of what Mises called “rightly understood interests.”

Mises continued,

The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier. What enhances the price of shoes is the fact that nature does not provide a more ample supply of leather and other raw materials required, and that one must submit to the disutility of labor in order to transform these raw materials into shoes. The catallactic competition of those who, like me, are eager to have shoes makes shoes cheaper, not more expensive.

Similarly to the variations of the tit-for-tat cooperative game strategy, the cooperative framework of catallactic (or market) competition insures that all players benefit, unlike games of winner takes all. While there are certainly instances in which someone forgoes certain advantages of living as an isolated individual, those are passing and insignificant compared to the overall benefit of social cooperation. The fault with thinking of market competition in the same manner as conventional zero-sum competition like sporting events is that it gives the impression there can only be one winner with each interaction. When in life, our interactions are cumulative; they carry forward from one experience to the next. As variations of the tit-for-tat strategies have demonstrated, it is not even necessary to be the most successful partner in each interaction. To be successful, what matters is the cumulative results of one’s efforts.

Tremblay did offer a definition for competition, calling it “an activity which is done for the sake of some external reward.” By this thinking, nearly all human interaction, including cooperation, would be a form of competition. In contrast, I think a better explanation of competition is a condition in which people strive for a goal that cannot be shared.

In that sense, market competition provides for distinct indivisible goods to be divided among people. However, in doing, all parties share in the wider benefit of cooperation that permitted competition to take place. Cooperation and market competition are not antithetical to one another, but part and parcel. Only from pre-existing cooperation can market competition take hold. From an economic perspective, the function of competition is to identify who is best suited, given a set of economic particulars, to provide for the consumer. If anything, market competition could aptly be described as the process of discovering mutually beneficial prices, which takes place with a pre-existing commitment to cooperation.

Later in his post, Tremblay noted that “A common excuse for competition is that resources are scarce and that competition tells us who ‘deserves’ more resources than others.” As I stated above, it is because resources are scarce that cooperation (a division of labor) is needed to organize production. Economization (pricing) is necessary to calculate the realized and opportunity costs of production. The function of market competition is to reveal mutually beneficial prices.

That is not to say that all forms of interaction to be monetized either. I am eager to participate in mutual aid programs or to provide a helping hand to those in need. In order to do so, though, there has to be some mechanism to know how my resources can be used to provide the greatest benefit. The pricing system is able to in a decentralized, non-hierarchical way provide that information for no overt cost to me.

Even if we lived in a society of abundance, economization (pricing) would still be present, because there is one thing that could never be made more abundant, time. Living in the Garden of Eden, we still would be subjected to the dilemma of “sooner or later.” Also, nonscarce goods (like ideas) could be the subject to pricing if their means of distribution (a book) were limited.

As far as “who ‘deserves’ more resources,” economics cannot tell us who was actually a worthy recipient of another’s resource in any normative sense. A study of economics can reveal if an individual’s decisions were conducive to the ends pursued, but not whether the ends deserved pursuing.

Tremblay continued, “There isn’t enough for everyone because any monetary system is a rationing system, and if the rationing system bars millions of people from getting what they need, then they won’t get what they need.”

I agree with his criticism as it relates to the existing economic conditions. A consensual monetary system (if one existed), which would have the intention of facilitating trade, has nothing to do with restricting access to products and everything to do with securing the most productive use for those resource, according to consumer demand. The primary quest in economics is not to find out how to disperse already produced goods; it has to do with answering how those goods should be produced in the first place.

In honor of Labor Day, I want to talk about how a genuinely free market could eliminate wage slavery and other more general forms of exploitation. The market forces I will talk about are in play now but are obviously hampered by government aggression.

Taking it as a given that wage slavery existed, it easy to see how the free market could do away with wage slavery over the course of several years. If a wealthy land owner had a group of laborers whom he exploited, we could imagine that the laborers made some contract with the owner that bound them to his land for a fixed number of years. Under natural law principles, a promise to work is not an enforceable contract. It only requires that a worker pay back any wages advanced for services not performed and pay the cost for any performance bond lost by the owner. Nevertheless, we can add the burden and assume for the sake of argument that enforceable labor contract were in place in this scenario.

First off, it would make sense that workers would not have much of an incentive to become more productive and would tend to decrease productivity relative to non-wage slaves. Since wage slaves do not derive much of any benefit, if any at all, from increased productivity, it would appear reasonable that their level of work would tend to be closer toward the minimum production required to fulfil their contract and remain employed. Each worker might have a different production quota, but no one would have an incentive to go much beyond that.

So comes along another wealthy owner looking for labor to exploit. After all, labor is the most desired form of capital. Since without it, tools and other forms of capital are useless. The second land owner makes an offer to the first. He offers to rent the workers from the first owner but request that the workers choose among themselves who will take his offer. For meeting a certain production schedule, the second owner will pay a bonus above their normal rate of pay. Some of the workers might even reluctantly agree to give a portion of the bonus to the first owner. In any case, both owners expect to benefit, and workers are receiving higher pay, possibly even a greater percentage of their market value. Over time, workers could save enough money to buy out their labor contracts.

You could then argue that the first land owner would just increase his production quota for all his wage slaves. The problem is that future wage slaves would decide to work somewhere with a lower quota, better working conditions, or whatever it is they value (maybe not being bound to arbitrary labor contracts). As the competition for laborer was bid up, land owners would continue to offer better conditions until the point where they paid the market rate of labor. Without the government intervention I mention below, land and rent costs of capital and credit would fall drastically, enabling newly liberated wage slaves to begin their own enterprises. It would definitely decentralize production and further increase competition for labor.

Someone could also raise the point that exploitation of labor exists today, so the free market either cannot eliminate wage slavery or perpetuates it. The problem is that there is no free market that exists, but to the extent that free market principles have been practiced, working conditions have improved. Some of the ways in which governments have stymied a genuine free market are by giving privileges of immunity from liability, raising the regulatory barrier to entry and exit to the benefit of large corporations, and by subsidizing the transportation of goods.

Under state capitalism, intellectual property laws increase the cost of living, central banking discourages savings and gives an advantage to banks with early access to newly created fiat currency, anti-labor laws discourage collective bargaining, government control of vast tracks of natural resources, and the boom-bust cycle of centralized government planning cause additional insecurities to give some people an upper-hand at the negotiating table. Restrictions on mutual banking, legal tender laws, credit monopoly laws, and government deficit financing cause banks to be able to charge higher premiums for loaning credit.

All this leads me to believe we do not live in a free market.

Another objection to this process might be that justice delayed is justice denied. We should demand an immediate end to exploitation. I completely agree. Where there are communities supportive of ending injustice, I support people seizing property they have a moral right to. Like I said, even in a stateless society with widespread despicable authoritarian tendencies, one which basically enforced slaver labor, the free exchange of ownership rights can make egalitarian solutions more palatable. A cultural shift would be needed, and a free market system could play a part in that solution. We would still have to educate and agitate others into taking actions to correct injustice. This can be sped along by upholding market economics so that more come to recognize the dignity of each individual’s life.

These subsidies and privileges I described above come at the expense of other people’s labor. It is slavery in a very real sense. The way to abolish this slavery is not to give power to the same group of people who orchestrated its enforcement.

• “How I Bamboozled Thousands of Conservatives into Thinking Like Anarchists” by Robert P. Murphy
• “Property Rights and the Theory of Contract,” “The Ethics of Liberty” by Murray Rothbard
• “Wage Slavery is a Symptom of Unfree Markets“
• “Wage slavery” on Wikipedia
• “Austrian Economics and Wage Slavery” by Brad Spangler
• “Economic Development Without the State” by Kevin Carson

But the anti-market conception of freedom is only recognizing the “yoke of external nature,” as anarcho-communist Mikhail Bakunin called it. Or like Wesley Bertrand on a recent “Complete Liberty” podcast said, “Life is the freedom to starve.” This yoke cannot be removed so long as we are alive. It is the everlasting condition underlying every action we make: to live or die, to improve our material condition or suffer. To say that a starving man is not free is to reverse cause and effect. Consumption only becomes possible after production. It is only through production that an individual can provide for his well-being. A starving man has fewer opportunities to take advantage of his freedom, but also at no other time is his freedom of more value. Without it, his mind would be paralyzed to think, ensuring his destruction.

The root conflict between my understanding of liberty and someone like Bakunin, for example, is I believe that indirect and direct physical force are the only means of violating someone’s rights. All libertarians committed to non-aggression would agree that if a starving man is prevented by physical force from engaging in productive action, then he is not free. Bakunin is correct that the right to liberty is only of significance in the realm of interpersonal relationships, but I contend that that the only way of impeding someone’s rights is by force. We can be victims of our neighbor’s irrationality or bigotry. But so long as that injustice is not manifested in the unauthorized use or abuse of another’s rightly controlled property or person, the damage is psychological and not physical. We remain free to use our minds and the products of our mind as we see fit. We remain free to use the property in question to inform others of the injustice we received.

For those of political power, freedom is an outright threat to the existence of their power. That is because its origin is vested in violence and sought through favoritism, so the static quantity of its influence must increasingly become cartelized into fewer and fewer hands. That system can distribute wealth, but it cannot create it. Their power extents only so far as they can project authority over others or convince others they too can benefit from that power. For those of economic power, they are insulated from the harsh realities of tyrannical governments and can position themselves to profit from partnering with the state. So it is natural for the two to protect each of their interests. One has a legal monopoly on coercion, but not the ability to create wealth of its own. The other has wealth, but not supposed the authority to initiate the use of physical force.

It is important not to forget that political and economic interests acquire power from fundamentally different sources. The former confiscates wealth and subjugates individuals as a matter of course, while the latter serves to disperse power through mutually beneficial exchange (to the degree it does not cling to political power). Economic power, when not acquired by physical force, is a product of the limitless creative process, consensual regulation, market competition, and organized labor.

Confusing the two as one in the same leads to the support for less liberty and less opportunity. An example of this is the famed anarchist Noam Chomsky, who actively supports the expansion of state control. While justly viewing the state as a tool of domination and privilege, he looks to the state for protection from the same interests he believes are manipulating it in their favor.

In an interview, he said:

I’m not in favour of people being in cages. On the other hand I think people ought to be in cages if there’s a sabre-toothed tiger wandering around outside and if they go out of the cage the sabre-toothed tiger will kill them. … And there is a cage, namely the state, which to some extent is under popular control. The cage is protecting people from predatory tyrannies so there is a temporary need to maintain the cage, and even to extend the cage.

Under a banner of protecting people from the infringement of political privilege, Chomsky has become a tool of entrenched political interests. It is also not lost on me that economic power disparities can be seized upon and manipulated in favor of one side of an exchange more than another. No political model can guarantee that people will act justly. But one can minimize the consequences of injustice and promote the occurrence of mutually positive interactions. To do this, a just society would need a widespread recognition for private property rights, but that is not sufficient to ensure that freedom would have much meaning. Here, I agree with Bakunin that individuals are only capable of achieving emancipation once they have recognized their same humanity in others. As Mary Ruwart said in “Healing Our World,” when we seek to control others, we find ourself the one controlled.

As a practical matter, a lasting libertarian society would more likely come about by a widespread cultural shift of accepting the choices of others, treating others equally as individuals, and becoming less obedient to oppressors. Most people do not become libertarians out of a duty to the non-aggression principle. They are attracted to the sense of justice and fairness inherent in equal liberty.

A free market would be a more abundant society and would radically expand the scope of economic opportunity. It would also be more efficient at helping the disabled and poor, who are often the most devastated victims of political favoritism. Without the expense of tax collection and tax compliance, together which gobble up two-thirds of welfare revenue received, those in need would experience dramatic increases in charity. It should go without saying that when I am talking about the free market, I am not apologizing for economic conditions as they exists now in America or elsewhere. I am working analytically to explain the economic consequences of an unhampered market process. To the extent that an unhampered market existed, one could expect these consequences to follow.

A practiced and still principled way of promoting a libertarian society is by addressing people’s legitimate concerns of what would happen to the less fortunate in a free society. Direct action, like mutual aid, social ostracism, and counter-economics, should be potent models to demonstrate the validity of equal liberty while also challenging the status quo. The downside of charity is that it tends to be a short-lived solution, so I do believe mutual aid would be a better way of promoting social harmony and overcoming the root cause of despair — if we are going to be free, not by vote, but as a matter of virtue.

The alienation of man from his labor, which Marx contended was the result of treating labor as a commodity of production, no longer played such an explicit role as it had in the above quotes from his then-unpublished “The German Ideology.” Instead, the theme of his work began to analyze class struggle as the moving force behind history, and he extended his continuum of thoughts on alienation with his critique of the division of labor. It was these early manuscripts that would become unified in the first volume of “Capital.” His thesis was that private property had an inborn tendency to become more and more centrally managed due to the antagonistic relationship between capital owners and propertyless laborers, who were left with no option but to sell the only commodity they had — labor power. Marx reasoned that like any commodity, the average price of labor would fall to the average cost of its production, which for the laborer meant the cost of a subsistence living in society.

It was an ingenious revelation, and one on its face that was perfectly plausible according to the prevailing theory of value at that time. The capitalist could appropriate labor for the cost of maintaining a subsistence living and then sell the products of that labor for the market value set by supply and demand, reaping the “surplus value” of labor without doing additional work. Marx was not content with just ensuring higher wages for labor; he believed wage labor itself was abominable.

Except, Marx acknowledged that contrary to his theory, by historical records, the “surplus value” of production was in direct proportion to the total capital invested, not just the labor power invested in production. He said, “It appears therefore that here the theory of value is irreconcilable with the actual movement of things, irreconcilable with the actual phenomena of production, and that, on this account, the attempt to understand the latter must be given up.”

A Libertarian Theory of Exploitation

Communists are right in viewing the state as exploitative, but not because it upholds property rights, but because the state exists only by systematically usurping those rights. What would prevail in a stateless society — one without government propaganda championing that “taxation is voluntary,” “voting is freedom,” and “government is security” — is a strengthened sense of property rights and individual autonomy.

Despite the obstacles of state coercion, we create society anew each day for the mutual benefit of all; what makes this social cooperation possible is the existence of a medium of exchange. I do not mean to say that the desire for monetary gain should be the focus of our social relationships either. My point is that you cannot have meaningful and enduring fraternity without private property, firsthand, and an independent means of economic calculation, secondly.

Without money, sunk is a division of labor, which more easily enables seemingly opposing economic interests to become complementary to one another for the benefit of the whole of society and themselves. Competition within a market framework has to do with excelling to the utmost and providing an understanding of who best serve at any particular position. Without such a division of labor, there would be no society, and mankind would exist in a literal Hobbesian war of all against all. Yet, our productive capacity allows us to transform less valuable resources into more valuable resources for consumption and savings (later consumption). This means that life does not require the sacrifice of others. This understanding allows us to plan for long-range goals to achieve prosperity. A secured sense of private property rights permits such long-range thinking.

Please note that this is not an apology for the current economic model. I am calling for a radical break with statism and collectivism. In fact, I agree with Marx’s major historical tenets describing the development of economic history, yet his explanation for class exploitation, the rise of class privilege, the cartelization of power within the state and business, and the imperialist conquest to stifle foreign competition all fall short because he falsely pinpoints “wage slavery” as the culprit for those evils.

This is partly forgivable since his economic model was based on the labor theory of value, which predated other classical economics as far back as Adam Smith. Marx failed to account for the time dimension in the relationship between the capitalist and laborer. In theory, Marx should witnessed that the laborer is receiving a present good (his wages) at a discounted rate of interest for the time until the capitalist is able to bring the product to market in the future. Wages are in effect an advanced payment on future revenues.

In practice, today’s “capitalists” are able to create greater demand for their services through legal tender laws and restrictions on the availability of cooperative credit. Existing anti-labor laws, direct and indirect corporate subsidizes, monetary inflation by the central bank, and the general insecurity caused by government manipulation of the consumer and employment markets also put employees in less of a bargaining position to their bosses. In a genuine free market, one without government privilege and artificial barriers to entry, fewer large businesses would undoubtedly exist and we would be far wealthier. So employees who chose wage labor as an occupation would be in a greater position to demand better wages and benefits.

I think part of Marx’s confusion came about because of his conflicting views of the function of the state. On one hand, he viewed it as the tool of the ruling class, who he hoped might be the proletariats one day. In other writings of his and Engels’, he also saw it as always working against the interest of the society (and it does). All in all, the classical liberal theories including, but not limited to, Adolphe Blanqui offer clearer insights into the problematic entanglement of capitalism and the state and how the two together promote conflict for the purpose of exploitation.

On Thursday, Feb. 25, Rockwell published three anti-state articles on his own site. I wouldn’t go so far to call them pro-anarchism articles, but they do undercut some false rhetoric about the beloved republic.

The first article, “Doomed from the Start,” is from Thomas DiLorenzo, who explores some of the misbeliefs that the framers of federal constitution ever meant to limit the powers of the national government. He writes how the Jeffersonian notions of state secession and nullification were deliberately attacked by the nationalists to ensure an expansionist government. Alexander Hamilton and his “disciple” John Marshall, who served as the chief justice of the Supreme Court for three decades, worked to undermine the any constitutional restraints.

It was Hamilton who first invented the expansive interpretations of the General Welfare and Commerce Clauses of the Constitution, which have been used for generations to grant totalitarian powers to the central state. He literally set the template for the destruction of constitutional liberty in America the moment it became apparent at the constitutional convention that he and his fellow nationalists would not get their way and create a “monarchy bottomed on corruption,” as Thomas Jefferson described the Hamiltonian system.

Hamilton’s devoted disciple, John Marshall, was appointed chief justice of the United States in 1801 and served in that post for more than three decades. His career was a crusade to rewrite the Constitution so that it would become a nationalist document that destroyed states’ rights and most other limitations on the powers of the centralized state. He essentially declared in Marbury vs. Madison that he, John Marshall, would be the arbiter of constitutionality via “judicial review.”

The second article is titled “The Government Is Just a Referee? Hardly.” It is probably the least informative with new thoughts, but it does provide a good quote.

Given the government’s failure at its refereeing role, it seems fair to ask: Is it better to have a biased, powerful referee who helps his friends win, or is it better to have no referee at all? Obviously the optimum situation would be to have an impartial and competent referee; but it seems that fewer and fewer people still believe that it is possible for the government to play this role. History has shown us that the impartial arbiter inevitably evolves into the protector and benefactor of certain players in the game. And because the government as referee can use guns, fines and imprisonment to enforce its will, it is indeed a formidable benefactor for its favored ones, and a formidable oppressor for its disfavored ones.

The third anti-state article, “Romans 13 and Anarcho-Capitalism,” deals with who constitutes “the governing authority,” according to the Christian belief. The Bible’s “Romans 13″ reads:

Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. Consequently, he who rebels against the authority is rebelling against what God has instituted, and those who do so will bring judgment on themselves.

This sound pretty authoritarian to me, and has been used by those in power to justify their assault. I don’t know much about The Bible, but it’s my guess that passage and the “turn the other cheek” verse were written and or preached after Christianity became the dominant religion. Just a hunch.

The author, Jim Fedako, said, “As Christians, we are to obey the legitimate governing authority, but it does not follow that the authority must be the state. Paul’s instructions are the same no matter who is in charge. And in an anarcho-capitalist world, we would only be forced to obey the governing authorities whose properties we chose to enter.”

I don’t call myself an anarcho-capitalist for the reason Fedako believes property defense is a Lockean absolute demand rather than a Rothbardian degree of proportionality.

Empirically, violence has always bred more government and more taxes. Contrary to the popular notion, Americans actually paid more in taxes after the revolution than they had as British colonists. When the hidden tax of inflation is calculated, Americans were burdened far more greatly by government than they had before. The so-called Civil War is another history of this. The first income tax was imposed to pay for the war, and the federal government’s first fully fiat, non-redeemable currency was issued. In ever conflict since then, government has grown and liberty has waned. This is not something libertarians don’t already know.

Robert Higgs attributes this predictable growth to the “Rachet Effect.” When an emergency or crisis ensues, the government seizes additional powers until the threat is neutralized. After which, only a portion of those new powers are relinquished. It sets a precedent for future, presumably legal, actions that the government can then build on. It’s called the statism jig. Go three steps forward and take one step back. It doesn’t always have to be a war that leads to the ratcheting. Times of severe economic turmoil also provide an excuse for government to expand. It is just as important to remember that not all the expansions can occur simultaneously. Each precedent builds on the past and then justifies the next expansion to correct some new dilemma created by previous government meddling. Again, libertarians already know this.

I understand the sentiment that government is in a constant act of coercion against us, so it would be just to reciprocate in kind. The fault I see is on the exaggerated importance of the self-defense principle. In everyday practice, self-defense is of almost no importance in most people’s lives. If you’ve got someone bearing down on you with the intent to do harm, OK, I see how someone might react to defend him- or herself. When violence is taken against someone who has a perceived sense of legitimacy, that person is going to attract the sympathy of his or her supporters. When terrorists attack the government, no one who believes in the legitimacy of the government is going to side with the attackers, even if their grievance is legitimate. The government can justify garnering more power in order to protect against “the extremists.” Power will increase and liberty folds. For illustration, imagine a scenario where a family is killed by armed intruders. Everyone would recognize that is wrong. Just recall how that feels to hear about a story like that and how justified you think the family would be to act in self-defense. But what if I said those who broke into the home were police officers there to enforce a law that violated their rights? I do not think that the vast majority of people would support that family firing back at the police even if the law they were enforcing was unjust. I think that is because the vast majority of the population views the government, and by extension the police, as legitimate. The thought of firing back at the police makes even me uneasy, a regular reader of William N. Grigg’s blog on the abuses of the police state. So if war is the health of the state, then police shootouts are its recommended daily allowance of credibility.

But what if we could smash the state entirely with a swift uprising? That will take leadership and a command structure. Odds are, that leadership would just take command of the existing government infrastructure and enact even tighter controls.

If the revolution comes by violence, and in advance of light, the old struggle will have to be begun again. — Benjamin R. Tucker

Force cannot solve problems. It can delay the inevitable, like another hit of heroin delays an addiction withdraw. The longer one waits to address the root of the problem, the more costly — and dangerous — it will be to correct course. What it does is entrench opinions and create animosity for future conflicts. This is electoral politics. Ludwig von Mises proved axiomatically of the vital importance of individual liberty in “Human Action” in 1940. Conventional politics could not deliver when government was 20 percent this size. Inadvertently, electoral politics spreads the state. It corrupts its supporters and softens their impact because their ends and means are in conflict.

If Voting and Violence Have Failed, What Are We Left?

We have to be willing to make the hard choices to live in liberty — today. That begins by correcting the mentality that made authoritarianism possible. Then we will begin to see those changes in philosophy reflected in those currently hegemonic institutions. That is the hard work before us, removing the veneer of legitimacy. It does not offer quick gains like a revolution. We have to evolve past the cycle of violence of regurgitating inadequate solutions.

I recall a story from Brian Doherty’s “Radicals for Capitalism,” which I deeply recommend reading. I think it was William F. Buckley who would criticize libertarians for sitting around discussing the deontological conclusions of libertarianism, like why sanitation disposal should be marketized. He asked what good their philosophizing did in a time when the nation is staring down the Soviet Union in the Cold War, which he compared to a close combat gun battle. Someone responded, I don’t recall who, that you can’t make mistake after mistake and avoid negative consequences by just making one correct decision by following your principles. But nevertheless, it is important to know why sanitation disposal should be marketized so that everyone else in the future doesn’t make those same mistakes. That’s how I remember the story, anyway.

Libertarians are already considered “out there” for believing in the silly idea of individual autonomy. Don’t make it easier to marginalize us. Uphold your agreements, honor your peaceful neighbor’s choices, and provide restitution for any damages you inflict.

Here is an excerpt from Mary J. Ruwart’s “Healing Our World,” to reinforce the point.

Like our country’s founders, we don’t need to choose between the ideal and the practical. Since the means used dictate the ends attained, only non-aggression can give us a peaceful and prosperous world. Since aggression results in poverty and strife, it is neither ideal nor practical. Non-aggression will eventually become the norm because thankfully it is both ideal and practical.

Division of labor

Capitalists do not claim that specialization should be forced on anyone. To the contrary, we claim that the division of labor, the highest form of cooperation, is naturally occurring and cannot be centrally planned. I don’t know how I logically could claim to support free trade and then turn around saying that someone shouldn’t be able to freely trade his or her labor.

That is the very type of state planing the classical economist railed against. And it’s the very reason that free traders consider these agreements (NAFTA, ect.) as nothing more than impersonations of the real thing. They attempt to gain controls over imports and exports, exchange rates, and any number of regulations. They’re a start, but genuine free trade wouldn’t be in the form of international agreements. It would look like the trade that exists among the 50 states.

I’m interested in reading McNally’s book, although I suspect I won’t agree with his conclusions. We can both agree (I think) that prosperity and peace are unattainable without the corresponding protection of private property and the rule of law. If nothing else, McNally’s book could go to show just how meaningful and often overlooked those last two are in developing countries.

Child labor

DarkStar, you’re right that the 40-hour work week is a new phenomenon. For thousands of years, people had faced starvation even during the good times. Now critics blame laissez-faire capitalism for giving people more than they need. And this is with only a partial adoption of capitalism for some of its citizens.

And if you look to history of labor unions, they have been the biggest supporters of discrimination, and not only in terms of race. That is because it is in their best interest to keep the labor supply very small in skill jobs. A business faces the exact opposite incentive. They want to have the largest, most open work supply possible.

Capitalism

The core principle of laissez-faire capitalism is political freedom, not competition. Sure, competition may result (depending on the nature of the product), but it comes only as the result of the freedom to produce and consume.

But the more important lesson is that Darwinism does not say the weak are eliminated through competition.

Instead, they are eliminated by force, one killing the next. That is far different than a third party, a consumer, voluntarily picking among competitor for his favorite slice of pizza. And as for saying someone is irrational because they work for less money, that is nonsense.

Even as an outsider, I can see that people working for SW have a lot more going for them than just salary: namely, more job security than any other airline can offer.

One last thing, laissez-faire capitalism doesn’t seek to drive emotion out of human beings. In fact, the emotion of motivation is one of the prime factors for the material and aesthetic pleasures enjoyed today.

No competition

Are you saying that companies should be “forced” to compete? If so, I’m impressed by how you got around from saying just that. But unfortunately, you’re not advocating laissez-faire capitalism, but some form of mercantilism, which Republicans and Democrats seem to agree with. Capitalism allows for people to flourish, but also fail. And consumers decide who does which.

Capitalism causes war

One of my favorite economic fallacies is that laissez-faire capitalism promotes and is dependent on warmongering or an interventionist foreign policy. But on the contrary, war (and the preparation for it) is wasteful and would only be done when absolutely necessary in a capitalist country to defend the nation from attack or an imminent attack. But still in that case, the country would still be worse off even if it won.

During a war, the productive sector of an economy is devoted to things precisely designed for the destruction of society. For sure there are war profiteers (defense contractors, for example), but the majority of people are worse off, if not killed, no matter what the reason for conflict.

But the ones who control whether or not war takes place are politicians, the biggest winners in all this. They turn laissez-faire capitalism on its head, with merchantilist policies (devaluation of money, protective tariffs, corporate welfare) that only antagonize other countries.

But you also said that laissez-faire capitalism destroys “basic values,” which I assume to mean yours. But people are free under laissez-faire capitalism to do what they want and screw what others think, aren’t they?

What is freedom?

We seem to be having a disagreement over the meaning of freedom. I take it that you mean freedom from want, when it actually means freedom from the initiation of force.

Laissez-faire capitalism is, ultimately, an expression of freedom, protecting the weak against the strong, granting choice and opportunity to those who once had no choice but to live in a state of dependency on the politicos and their enforcers. The high value placed on women, children, the disabled, and the aged- unknown in the ancient world-owes so much to laissez-faire capitalism’s productivity and distribution of power.

Ethics and fraud

“All people want to be loved and needed and respected.” I generally agree. But they have to deserve to be loved, needed or respected. They don’t have it by default. They gain it or lose it by there actions.

Further, you are criticizing how people are treated. It is a question of ethics — would exist no matter what economic/political system was in place. I’ll tell you why.

Every society experiences fraud and theft. But let them rear their head under socialism and it goes unnoticed or is attributed to the capitalist thinking. Let these vices appear in a largely free economy, and the cry goes out: punish us all and put the state in charge!

Yet, I’m still more interested in what alternatives to laissez-faire capitalism you endorse. I doubt it will be socialism, probably something about making capitalism transparent — saving it from itself. Oh, how thoughtful?

Soldier’s sacrifice

Mr. Bishop, I whole heartedly disagree with some premises in the article “Peace and Sacrifice are One In The Same.” From the reading, you were saying that the soldiers should consider it a sacrifice to end a brutal, tyrannical regime. There is no question that Americans and Iraqis are better off now that Saddam is out of power.

But that is also no reason to consider those actions a sacrifice. After all, what does it say about a soldier who considers it a personal sacrifice to save his family by taking a threat out of power?

Just because something is difficult and a victory is not guaranteed, that does not mean it is a sacrifice. The liberation of Iraq and the broader war on terror is in every moral American’s best interest. You shouldn’t be afraid to defend those people and things you love.

Contradictions of capitalism

Laissez-faire capitalism is built on the principle of individual rights. And one of the corollaries of owning your own body is the freedom of speech — and yes, even for speech that seeks to undermine that freedom altogether. You can’t stomp out an idea; it has to be refuted on the intellectual battlefield.

Inequality

Jak, you think laissez-faire capitalism created inequality? It inherited it.

In feudal Europe, what separated people was who ate and who starved. Now the divide is who drives a Benz and who drives a used Ford, who eats steak and who eats quarter-pounders.

It is a mistake to look at income as the measuring stick for equality. Instead look for what you can actually buy with that income. When ever you find a an high-priced product, there is bound to be a much cheaper alternative.

But you are right in one regard. There are two sets of people: those who serve the needs of consumer and those who don’t.

And if you wish to discuss slavery, then understand that it was the mechanization of agriculture under capitalism that exposed the inefficiencies and wastefullness of involuntary servitude.

Capitalism leads to discrimination

I don’t get it. How is capitalism tied to patriarchy and racism? Capitalism increases the costs of discriminating on any factors that’s unrelated to productivity. Strip clubs are one exception, I guess, but the overwhelming number of times race and sex aren’t related to productivity.

Show me a business discriminating on the basis of race and sex, and I’ll show you a business down the street with a competitive advantage over its competition.

Eminent Domain

In a legitimate capitalist economy, businesses make their profits by voluntary market dealings. “Public-private partnerships” in which the government gives some businesses special benefits by violating the rights of other people are characteristic of a corrupt economy, not a free one.

Socialism great in theory?

“Socialism is great in theory, but in practice it cripples the main incentives for productivity, innovation, and trade.”

Socialism is doomed because without the private ownership over the means of production, economic calculations are impossible to make. Socialism can still provide incentives, but its planners cannot know how much to give.

That is not to say errors and judgment can’t occur under capitalism. Prices can only provide a tool for deciding on means and ends. That would not be possible if not for their origin in private property.

Balance of power

“However, it [capitalism] can lead to destructive imbalances of power such as monopolies.” So how does a company become so powerful that it controls the market? In an unhampered market, they do it by satisfying the most consumers, by meeting people’s needs better than anyone else.

But in the overwhelming number of times, this is not how monopolies are formed. In most cases, a company is issued protective privileges (guaranteed loans, bailouts, import restrictions, or bans of competition all together, for example). So the solution to prevent monopolies is to keep the government from handing out special favors.

And under capitalism, powers are divided much more evenly. The richest man in America controls less than one-half of one percent of the total wealth. In Eastern Europe, the divide that split the poorest and the richest was deciding who ate and who starved. Today, we ask who drives Mercedes Benz and who drives a used Chevy, and who eats prime ribs and who eats a quarter-pounder?

Is capitalism the enemy?

What most people don’t distinguish is that it wasn’t capitalism that was the danger, but instead the intervention of government, the mixed economy, that encouraged all the trouble.

The multinational wasn’t trying to develop goods and services to sell to consumers, but giving political contributions and gaining governmental influence to get its way.

But I think you said it. “… the real culprits seem to be in the corporate boardrooms and legislative cloakrooms.”

War good for the economy

War is the destruction of capital? be it human or mechanical. In a war, the resource of a country are diverted to destruction, not production.

Take it from William Sumner during the Civil War: “The mills, forges, and factories were active in working for the government, while the men who ate the grain and wore the clothing were active in destroying, and not in creating capital. This, to be sure, was war. It is what war means, but it cannot bring prosperity.”

Trade agreements like NAFTA are, in fact, nothing more than mercantilist policies. Free trade wouldn’t require 14,000 pages of regulation. And it cannot exist until the government ends farm subsidies and the like.

Mutual trade is the best recipe for peace and prosperity. People don’t kill their customers (on purpose).

Adam Smith

The case for free markets didn’t begin and end with Smith.

If you read “The Wealth of Nations,” then you’ll find some faults with his ideas: the labor theory of value, especially. He also gives little importance to uncertainty and the role of the entrepreneur. And yes, he did consider tax redistribution a means to benefit the public. But that is nonsense. Taxes are taken by force. The hidden costs (lost opportunities) of taxes weren’t considered by Smith.

Richard Cantillon is more aptly the founding father of modern economics, not Smith. If you want to get “up to date,” then read “Capitalism” by George Reisman. That will give the best ideas behind it.

But if you propose that there is a “third way” (a mix of capitalism and socialism), then read FA Hayek’s “The Road to Serfdom.”

Road to serfdom

It is about explaining why the best people “get on top” under capitalist and the worst “get on top” under socialism.

Corporations

A corporation, or any other entity formed by individuals, has rights on the basis of the individuals who make up the corporation. True of a corporation, a marriage, or a social club, they have freedom of speech, association and ownership of private property whether a government recognizes it or not. They are inalienable rights.

People have the inalienable right to form a marriage with any consenting adult who wishes to join. The government may restrict that right or may not recognize it. But it cannot be taken away, much less granted.

And if you dislike the corrupt people who run corporations, then understand that under capitalism those people are punished financially and criminally. But in the absence of corporations, those same people would most likely enlist in government and then have the police power at their calling and be exempt of prosecution.

The overwhelming amount corporate corruption that takes place exists because they are granted privileges by government at the expense of restricting the rights of others. So precisely because laissez-faire capitalism does not exist, what under normal circumstances would be considered criminal action (like using eminent domain to seize property and build a casino, Donald Trump, or a superstore, Wal-Mart) is condoned.

Consumerism

What you’re calling consumerism is one of the most unappreciated aspects of capitalism. It’s even criticized.

In precapitalists societies, it would take decades or centuries for the luxuries kings had come to enjoy to be used by the poorest subjects. Now, with only a partial adoption of capitalism, that time span is almost non-existent.

In a short amount of time, luxuries limited to the richest soon become adopted by the majority. You would think people who call themselves progressive would like that.

Conservatives not capitalists

It’s a mistake to call the religious right in fact capitalists. They support statism as much as their opponent on the left.

Both sides are nuts. Walter Williams puts in best: “Republicans and right-wingers support taking the earnings of one American and giving them to farmers, banks, airlines and other failing businesses. Democrats and left-wingers support taking the earnings of one American and giving them to poor people, cities and artists. Both agree on taking one American’s earnings to give to another; they simply differ on the recipients.”

Consumerism

I was reacting to an overall message of consumerism in the original post, so I could have missed some other points you made. Anyhow, consumerism is not a problem. I told why in the first post. This criticism stems from contempt for the independent actions others.

When I said, “In a short amount of time, luxuries soon become adopted by the majority,” I had actual physical consumer goods in mind.

I sometimes don’t like what’s on TV too. You may not like the outcome, but blame the consumer?who is in charge?not the system. When someone says commercialism decreases our sense of community, what they mean is it decreases our control over others. Some people don’t like that. And those are who commercialism is at the expense of.

Capitalism and slavery

Regarding slavery, capitalism and involuntary servitude of any kind is incompatible with the social system of capitalism for denying the rights of individuals held in bondage. Understand that despite what Marx said, capitalism has only existed as an economic model since the late 1700s. It was after mercantilism and feudalism, just to name a few. The point is, slavery had long existed even before the age of modern civilization.

Meanwhile, capitalism exposed the wastefulness and inefficiencies of bandage for various reasons, including a lack of incentive for a slave to improve production. The mechanization of agriculture, which couldn’t have happened without entrepreneurs and capital accumulation, made slavery unworkable. Capitalism killed slavery.
Regarding the environment, the human nature is that people care more about what is theirs than what is not. That is perfectly fine. From the lessons of public property, this bears out. Former Soviet natural resources are some of the most polluted in the world.

I readily admit that a free-market solution is not as successful when unaccounted externalizes enter the picture. But the lessons of capitalist economics has something to say about how to solve the problem.

Benefits of outsourcing

The best real world example is in every commuter’s home. Each day at work, most Americans companies outsource at least some of their labor from different cities. Now, this is what happens, only on a larger scale, among each city, each county, each state, each country. They are all political borders. An even more micro-study could be made of the outsourcing and trade deficit in each person’s home. (Chevron’s trade deficit with me is very lopsided, for example, but I don’t propose making my own gasoline because of the opportunity costs of doing such).

Think what would happen if you were restricted to only working in your own city. Your options would be severely restricted to what occupations you could take up. And if any businesses activity still existed in the city, how much less power would you have in setting the terms of employment? And with a smaller pool of qualified employees, how many high-skill jobs would go unfulfilled?

One of the greatest ideas of the Founding Fathers was to set up this free trade zone in America, the largest in the world and as a result the riches as well. And if actual free trade existed among nations, America is what it would look like. There would be no need for the 10,000 pages NAFTA and GATT regulations. The government would simply drop all restrictions and declare any agreements null and void.

But Tom, you’re glossing over the point of why people work in the first place. For example, we all would like to own a car, but not all of us would enjoy the actual job of building a car. In fact, we (happily) pay others to do that. We’re after the fruits of the labor, not the labor itself. It’s important to keep this in mind because without outsourcing, your dollar wouldn’t go as far.

The hard facts: According to the Bureau of Labor Statistics, professional jobs will grow by 30% by 2012. In the past 20 years, manufacturing has increased 93%. Superior productivity by employees has been the reason for a decreased base in manufacturing workers. Output in manufacturing has increased over 100% in 20 years. So goods are getting cheaper and better for the consumer. Despite outsourcing, IT jobs are expected to grow by 30% by 2012. The technology that allows for outsourcing to India also proves for increased productivity and growth. The result: wealth and health.

A wealthier nation can more afford to fight a global war on terror. And remember free trade promotes peace; people don’t bomb their customers.

Censorship

No. Sorry. Wrong.

Censorship is the use of force (or the threat of it) to prevent free expression. Governments have done this all the time. In some cases, individuals have censored others by threatening someone’s property or self.

It is not censorship when that free expression harms a person’s status or when a person looses his job. That is the free expression of the person doing the firing.

Export jobs

Your question stems from your own misunderstanding of what a commodity is. In the most basic sense, they are goods. And because of that, people pay for them. Just because something has demand and supply does not make it a commodity.

In the case of a job, the person doing the demanding is who gets paid. With a commodity, the person demanding is who pays. In the case of a job, the person doing the supplying is who pays. With a commodity, the person supplying is who gets paid. Simple enough.

As for infinite needs, you are discounting the needs of future generations.

Having established that jobs are not goods, it is proper to say that a job is the act of creating a good. Only goods and services (labor) can be exported.

You should really consider getting off that Keynesian booster seat before you hurt somebody.

Waste

You forget that waste is in the mind of the individual.

Wastefulness

To most, a leaky faucet is wasteful. But to someone who can’t afford a plumber, it would be more wasteful to hire someone to fix it. They conclude that they could spend the time and money in a better fashion.

In fact, it is private ownership that allows for someone to judge the cost/benefit problem. But to someone who doesn’t own that property, it is impossible to figure costs. However, benefits can be estimated somewhat.

Wealthy

I read your “Vote Anti-Capitalist Sam For Mayor” press release on the web. And I was surprised to learn that for all the work they do, the wealthiest 187 in the country increased their bank accounts by less than $5 billion in the past year.

That is a sign that people like what they have to sell. I only wish this year they can do better. Their wealth is the result of the buying power of the masses at work. And I say good job.

I think back to precapitalist times and see that the divide separating the richest and the poorest was who at and who starved. Now with only a partial adoption of capitalism, the divide is who eats steak and who eats hamburgers. Not so dramatic after all.

Your mistake is measuring how much people take home after work. But you’ve failed to look at what they can actually buy with their income. And capitalism has done more to provide even the poorest people a low cost alternatives to what the wealthiest enjoy.

Export jobs

Yes, it does undermine his argument. The assumption in his argument is that more jobs create more wealth. He had said, “One easy solution to fix a sluggish economy is to give people descent jobs that pay a living wage.” I was trying to show that it is not a job in and of itself that creates wealth, but the results of a job. If there the cost of providing that job does not outmatch the benefits, then it has done nothing but waste resources.

Carried to the end conclusion of what he said?that more jobs creates more wealth?then politicians should pass a law demanding the destruction of all bridges, for example.

Just imagine all the new jobs that would spring up to ferry people across rivers. But would the nation as a whole be better off than before. Frederic Bastiat satirically petitioned to outlaw the sun because all the good-paying candlemaker jobs that the sun had put out of business.

Now if these laws were passed, some people would be better off. But it would be the poor who didn’t get those jobs that suffered most because of those laws. They would lose out on all the jobs that weren’t created or vanished altogether.

But then again, I would be satisfied if Brian had just used the term “shifted” instead of “exported.” But that would spring up a whole new set of questions about how the government has artificially increased the cost of employing someone in America.

Recession

Brian, my above critique applies for when creating any job through government intervention. Though, there are cases that jobs created to protect citizens from danger can be helpful.

Spending doesn’t stimulate the economy anymore than a shot of caffeine gets you through a day. The initial shock is seen, but the crash from that high is much worse. You’ll find that even New Keynesians agree with that.

What increases wealth is increased productivity by way of well-timed capital investment. New Keynesians won’t agree with that.

The problem is the Federal Reserve. As it is now, savings rates are artificially lowered, so credit expands to build capital-intensive goods. But the artificial rates also encourage consumers not to save. All is fine until the Fed slows down credit expansion due to the increased inflation, and businesses find that consumers don’t have the money or the credit to afford the big-ticket items.

Credit is tapped out from before, and there is a mismatch of supply and demand. More and more business fail and more and more people lose their jobs. That is why manufacturing is hit the hardest, and light consumer goods are always strong.

Bailing out airlines or extending unemployment increases the recession’s impact. Tax cuts makes the opportunity costs of investing cheaper, but we still face the same Fed problems as before.

Private property rights/Hernando de Soto

On balance, de Soto has a good book. But he uses a circular utilitarian/social contract argument for his defense of private property, which he not once offers a formal definition of.

This leads him into some errors, especially those half-dozen pages of praise on Marxist class conflict theory. I also disagree with him that prosperity will naturally follow from respect for private property. What it does do is allow for the best possible chance of growth.

Wealth creations only possible with mind

Mr Krugman, I understand that there is not much physical labor in investing money, yet investment income is no less earned. Choosing where to invest, for how long, and for how much are all decisions that each investor must answer. And this requires the use of the mind, or at least enough intelligence to know who to hire on your behalf.

Writing and teaching — your professions — are by themselves no more exhausting than digging ditches, yet they can be much more valuable. The same is true of investing.

So by downplaying the importance of the mind in creating wealth, you’ve done a disservice to you colleagues and yourself. So go get a shovel.

Voluntary association

Well, good news. You can form any voluntary association you wish under capitalism, which is what is taking place at the Olympics. The only reason I can think you must hate that is if you have your own plan for how to run the world.

From the line “we can do a much better job of organizing humanities endeavors,” I think you do. Please, just don’t implicate me with the use of “we,” as if though I would have a choice.

Creation of property rights

He talks about why they are important in the case of distribution of resources, with labor being one of them. But he has the best explanation for the creation of property rights. He said that if you own your own labor, then you should also own whatever you combine it with. So when Neil Armstrong landed on the Moon, he couldn’t claim ownership for himself or on behalf of the United States. Only the portions on which he applied his labor (purposefully altered the land for some benefit) and defined a property line (fenced off) is what he could claim.

If you sell your labor, then the person buying the labor gets the property. Therefore, people claiming to sell land on the moon are illegitimate. To make a long story short, that is why the world is not shared.

LLCs

Even if limited liability were eliminated as a characteristic of a corporations by government. A business could still take up contracts with its debtors and creditors to allow for limited liability. It would just be more costly. That’s not even addressing the overwhelming merits of LLCs.

As for the shareholder idea, employees are already stakeholders. Considering an employees aversion to risk and other preference, wanting a company to do good now is much more rewarding than a claim on future profits. And combined with your first idea, I can’t see how anyone would even consider going to work for the majority of American business if they face such downsides. But then again, maybe that’s your goal.

I could go on, but those three suggestions aren’t trying to free people from the coercion of government. Instead they are binding them to it.

Social Contract

Phil says “society has the right.” But let’s get one thing straight, for starters. The concept of society is a metaphor, not an actual acting entity. Only individuals act, independently or in cooperation. Now to the major point:

If rights can be given and then taken away by the whims of society, based on a false collective conscience or for any excuse, then those are no rights at all. Instead they are permission slips. His claim is that a majority can rescind the rights of an opposing minority. Yet that is precisely what the political functions of rights are meant to prevent. As for myself, my existence is not up for public debate or compromise.

Jean-Jacques Rousseau, who wrote “The Social Contract,” said, “Whoever refuses to obey the general will shall be compelled to do so by the whole body. This means nothing less than that he will be forced to be free.”

He didn’t consider freedom to be independence from the state, rather a complete obedience to it. I contend that rights are provable requirements (actions that must be protected by the government) for a person to live among other people. I have the same rights as any Iraqi or Iranian, and as any man or woman, whether a government recognizes them or not. The purpose of forming this government was to see that it does.

If nothing else, Phil has exposed his true intentions with the line “Of course we will not all agree, so we need a mechanism to reach a compromise.” Yea, a firing squad; that’s the mechanism. The only debate will be over which caliber to use.

Origin of Property Rights

To clarify, this is Rothbard’s ethical argument for the origins of property rights, not his economic argument for their use.

I would agree that Rothbard uses too many assertions in the argument. Nonetheless, it is the best starting point I know of.

The one mistake I see you’ve made is starting from a belief that labor or anything for that matter has intrinsic value. The labor theory of value is an intrinsic theory.

Coal buried in the side of a mountain has no value if no one knows it’s there, for example. It only achieves value once someone attempts of retain it or claim it. In the case of labor, it may have no value if it is used improperly. In fact, it could possibly have a disvalue when used in error. If I go digging for gold in my backyard knowing full well that there is none, then that labor is useless.

Also, value is a subjective, not objective as an intrinsic theory would state. To say something has value, assumes then that there is a valuer and the valuer’s goals. To say otherwise is to claim that a good has value and more must be better, no matter the context. On its face this is not true. The right amount of oxygen (about 20% in the atmosphere) is good, but too much oxygen in the environment can be deadly.