More Things, Horatio

April 22, 2010

I was asked by a few interested people to expand on my last post. There was also some discussion that took place on Facebook around Stephan Kinsella’s reply. At one point in that discussion, Stephan asked me a question that I think gets at the heart of the matter. I thought I would answer it here (with Stephan’s blessing) to kill two birds with one stone.

When we are careful to define capitalism in a non-crony, non-corporatist way, to refer to private ownership of the means of production — and you say you are STILL against it, how can this not be construed as unlibertarian? Please explain.

-Stephan Kinsella, in conversation on Facebook

The short answer is that it should be obvious from the fact that I call myself a “free market anti-capitalist” that I’m not against “private ownership of the means of production,” assuming it entails what I think it entails.  What I’m against are some of the things that you think it entails. But rather than this meaning that we have two different visions of capitalism, I’m assuming that you wouldn’t call my vision capitalism at all.

Imagine a private property market economy where everyone is self-employed (individually or jointly) in their workplace; absolutely no one rents their labor to owners of capital (even though there are still owners of capital who sell and rent their goods, i.e. there is still technically “private ownership of the means”); and labor “(in the sense of all the people, managers and blue-collar workers, who work in the firm) receive the profits left from the revenues after the costs are covered.” Would you still call such a society “capitalist”?

If you would, then I have not given you enough credit. I’ve obviously misjudged how committed you are to your proposed definition. I will no longer make that mistake with you. I would still think you are making a rather extraordinary claim. I don’t expect many anarcho-capitalists would follow you down that path and I think there is a good reason for that. As David Ellerman put it, “When…the suppliers of capital…are not hiring the workers…it would be odd to call that arrangement a variant of ‘capital-ism.’” For that reason, I wouldn’t start calling myself a capitalist on your account unless I wanted to be widely misunderstood by other anarcho-libertarian capitalists.

If I’m correct that you would balk at calling this economy “capitalist,” then it will turn out that your definition is only necessary and not sufficient to capture what you mean by “capitalism.” What I think you mean by “capitalism” is private ownership of the means of production and certain “features…that would…accompany” it, e.g.

the various catallactic aspects of a libertarian society, such as: division and specialization of labor, firms, (non-state-chartered) “corporations,” bosses, hierarchies, private ownership of the means of production (whatever label you guys will finally let us use for this), international and long-distance trade, industrialism, commerce, profit motive, “absentee ownership,” and the like…

Stephan Kinsella, comment on “Should Libetarians Oppose ‘Capitalism’?”

Even here, “private ownership of the means of production” is one thing in the list. This makes plenty of sense because the phrase is simply too static and one-dimensional to do the work you want it to do. It’s like the tip of an iceberg. You have to unpack a lot of stuff about contract theory, legal theory, ethics etc. Only then do you have the picture of a full-blown system. By accepting this reduction, you create a false choice for the left-libertarian:

We need some word for “private ownership of the means of production”. What would you propose?…I think “capitalism” suffices…But the only reason I can think of for a left-libertarian to be reluctant to come up with a term we can use is (a) he thinks “private ownership of the means of production” is not a crucial aspect of any advanced free market order; or (b) he thinks, with the anti-private-property leftish “anarchists” that “private ownership of the means of production” (whatever you call it) is incompatible with libertarian-anarchism.

Stephan Kinsella, comment on “Should Libetarians Oppose ‘Capitalism’?”

Why can’t the left-libertarian simply refuse to let you smuggle in assumptions about the kinds of economies that are compatible with private ownership? Why can’t they think that “private ownership of the means of production” is a crucial aspect of any advanced free market order while at the same time rejecting some or all of the “various catallactic aspects” you listed? The example society above has private ownership as the only kind of ownership yet it doesn’t have the traditional employee-employer relationship or “capitalist” firm. Doesn’t this mean that I can say I’m anti-capitalist without thereby committing myself to rejecting private ownership?

There are at least three ways a left-libertarian might come to reject these other aspects:

  • Efficiency grounds – that certain options faced in a private property market economy, if chosen over others, are likely to be more efficient or beneficial, though none are strictly unlibertarian.
  • Ethical grounds – that certain options faced in a private property market economy, while strictly compatible with non-aggression, should be chosen over others for moral reasons.
  • Theoretical grounds  – that certain options assumed to be compatible with non-aggression by one analysis are are not compatible with non-aggression in another analysis.

I won’t bother discussing efficiency grounds here. Even if they are successful, it’s not the normative type of objection I’m interested in. An example of an ethical argument that could lead to the kind of economy above is described by Gary Chartier in Economic Justice and Natural Law:

There is a very strong case to be made, from the perspective of natural law theory, for participatory governance structures, in which workers have meaningful opportunities to voice their convictions and influence decisions. Providing support for, at minimum, extensive participation by workers in decision making are factors including workers’ equal dignity and their status as members of the community that is the firm; the lack of any natural right to govern on the part of investors, executives, or managers; the unfairness of subordination; the value of participatory structures in securing protection for workers’ well being; the efficiency of worker self-management and the positive impact of participatory structures on productivity; the principle of subsidiarity’s requirement that workers be able to govern themselves when they are capable of doing so; and the positive impact of workplace participation on participation by workers in other communities. Failing to afford substantial opportunities for participation would be inconsistent with the demands of practical reason…

A democratically organized, worker governed firm could hire money or capital goods from investors who could in turn be entitled either to fixed returns or to suitable shares of a worker-governed firm’s profits….

Presuming that workers held a residual claim on the firm’s assets, they would qualify as the firm’s owners. But even if investors held such a claim by contract, workers would still be responsible for the governance of the firm. Ownership is a bundle of rights, the elements of which can be disaggregated; a genuine right to an income stream from a firm’s activities would not entail a further right to direct the activities of the firm’s workers.

The last part of that quote is a good segue into an example of a theoretical argument, given by David Ellerman in Property and Contract in Economics:

At the heart of the system of private employment is a “property right” that is not a property right. It is only a specific contractual arrangement protected by barriers of high transactions costs. This “property right” is the so-called “ownership of the firm.” … The importance of the non-existence of the “ownership of the firm” may not at first be obvious. One clear consequence is that going from an employment system to self-employment does not mean abolishing “sacred property rights”; it means a different contractual arrangement…There is always a mismatch between the legal contract for the sale of labor and the factual non-transferability of labor. If the contracts were rewritten to match the facts, then all business enterprises (like all criminal conspiracies) would be legally constituted as jointly self-employed partnerships… To arrive at the natural system of property and contract, the contract to de jure transfer that which is de facto non-transferable would have to be abolished. That is, the whole system of renting human beings in the employer-employee relation would have to be replaced by a system where everyone was (individually or jointly) working for themselves in the workplace.

That’s not “abolished” in the sense of state interference with the market or unlibertarian force but “abolished” in the sense of “deemed incompatible with libertarian legal theory.” It’s meant in the same sense that you think IP should be “abolished.” In other words, without rejecting a libertarian’s unique theory of aggression or even Lockean property rights, Ellerman draws theoretical conclusions diametrically opposed to any capitalism the LvMI is likely to recognize.

Either or both of these approaches, or others like them, show how someone could argue against capitalism (in the non-crony libertarian sense) without arguing against private ownership, markets or libertarian rights.

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5 Responses to “More Things, Horatio”

  1. Brainpolice Says:

    Excellent breakdown of a portion of the issue at stake.

    While you’re specifically tackling the issue more in terms of organization theory, I would want to go further and say that one can have ethical and theoretical grounds for placing contraints on the concept of private property rights without formally violating the notion of non-aggression or property rights in a more general sense.

    For example, I can believe that property rights (particularly in land) as plainly stated by Rothbard contains an ambiguity that can still leave room for a justification of violating someone else’s autonomy, as well as function as a potential precondition for a state, without me condoning any sort of initiatory aggression.

    At an ethical level, I could propose that property rights have contextual side-constraints in which they could be provisionally suspended in the name of life while still requiring restitution ex-post-facto. In other words, I could reject property rights *as an absolute* or a deontological rule, while still favoring them in general, and still be a libertarian.

    If the anarcho-capitalist responds to this by accusing me of supporting aggression and statism, they have engaged in a non-sequitor based on package dealing non-aggression with Rothbard’s views on property rights, as well as taking a deontological formulation of libertarianism for granted.

  2. PirateRothbard Says:

    “Imagine a private property market economy where everyone is self-employed (individually or jointly) in their workplace; absolutely no one rents their labor to owners of capital (even though there are still owners of capital who sell and rent their goods, i.e. there is still technically “private ownership of the means”); and labor “(in the sense of all the people, managers and blue-collar workers, who work in the firm) receive the profits left from the revenues after the costs are covered.” Would you still call such a society “capitalist”?”

    Makes sense. But two points.

    1. Such a world would look very much like capitalism on the retail side, because there would b e a dynamic market for goods that would be responsive to supply and demand. So I personally would still call it capitalism.

    2. To be understood, such a person should be careful to seperate their respect for free markets with their preferred production arrangements in an ideal world before discussing the word capitalism.

    Why not just say:
    “I believe in free markets, but I’d like to live in a world where everyone was self-employed or working in some kind of worker cooperative. Of course I wouldn’t stop people from becoming workers if that is what they wanted to do.”

    And then launch into a discussion on the word capitalism.

  3. My reply was too long and had too much formatting for your comments section. I put it here:

  4. [...] initially disagreeing with me (by defending the idea that capitalism is fundamentally about “private ownership of the means [...]

  5. […] for one think it is very much possible to argue against capitalism while also supporting private ownership but obviously it depends on definitions. In the […]

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