Studies in Mutualist Political Economy

* Book: Studies in Mutualist Political Economy. By Kevin A. Carson.

URL = http://www.mutualist.org/id47.html

"a dialectical critique and synthesis of marxist, marginalist, rothbardian and trad anarcho economics which used to examine and critique contemporary society."

Content Summary

Part 2:

"In the chapters of this section, we will proceed in the light of the free market socialist assumption that exploitation is impossible without force, and attempt to demonstrate the extent of such force in "actually existing capitalism." Free market socialists in the Hodgskinian and individualist tradition contend that capitalism has been a radical departure from genuinely free market principles, from its very beginnings. The following chapters will demonstrate the ways in which the state has intervened in the economy from the first beginnings of capitalism. We will begin with the primitive accumulation process, largely neglected by Tucker, in which the laboring classes of the world were robbed of their rightful property in the means of production, and in which the state's coercive means were used to maintain social control over this population. We will continue with the statist features of the so-called "laissez-faire" capitalism of the nineteenth century. We will go on to study the vast expansion of state intervention from the late nineteenth century onward. Finally, we will examine the internal contradictions created by this state intervention in the free market, and the resulting crises of state capitalism." (http://mutualist.org/id58.html)

Excerpts

Excerpts from Studies in Mutualist Political Economy

Preface: Introduction to the Mutualist Tradition

From the Preface, by Kevin Carson:

In the mid-nineteenth century, a vibrant native American school of anarchism, known as individualist anarchism, existed alongside the other varieties. Like most other contemporary socialist thought, it was based on a radical interpretation of Ricardian economics. The classical individualist anarchism of Josiah Warren, Benjamin Tucker and Lysander Spooner was both a socialist movement and a subcurrent of classical liberalism. It agreed with the rest of the socialist movement that labor was the source of exchange-value, and that labor was entitled to its full product. Unlike the rest of the socialist movement, the individualist anarchists believed that the natural wage of labor in a free market was its product, and that economic exploitation could only take place when capitalists and landlords harnessed the power of the state in their interests. Thus, individualist anarchism was an alternative both to the increasing statism of the mainstream socialist movement, and to a classical liberal movement that was moving toward a mere apologetic for the power of big business.

...Had not the anarchism of Tucker been marginalized and supplanted by that of Goldman, it might have been the center of a uniquely American version of populist radicalism. It might have worked out a more elaborate economic theory that was both free market and anti-capitalist, instead of abandoning the socialist label and being co-opted by the Right....

This book is an attempt to revive individualist anarchist political economy, to incorporate the useful developments of the last hundred years, and to make it relevant to the problems of the twenty-first century. We hope this work will go at least part of the way to providing a new theoretical and practical foundation for free market socialist economics....

If there is one valuable practical insight in this entire book, it is the realization that coercive state policies are not necessary to remedy the evils of present-day capitalism. All these evils—exploitation of labor, monopoly and concentration, the energy crisis, pollution, waste—result from government intervention in the market on behalf of capitalists. The solution is not more government intervention, but to eliminate the existing government intervention from which the problems derive. A genuine free market society, in which all transactions are voluntary and all costs are internalized in price, would be a decentralized society of human-scale production, in which all of labor's product went to labor, instead of to capitalists, landlords and government bureaucrats." (http://www.mutualist.org/id112.html)

Where does profit come from? The role of political coercion by the state

Kevin Carson:

Introduction to Part II: Exploitation and the Political Means, by Kevin Carson:

The question remains: if labor is the source of normal exchange-value for reproducible goods, and the natural wage of labor in a free market is its full product, what is the explanation for profit in "actually existing capitalism"?

A central point of contention between Marx and the utopians was the extent to which the labor theory of value was a description of existing commodity exchange, or a prescription for rules of exchange in a reformed system. Marx criticized the utopians for erecting the law of value into a normative standard for a utopian society, rather than a law descriptive of existing capitalism. For him, the law of value described the process of exchange under capitalism as it was; the law of value was fully compatible with the existence of exploitation. His generalizations about exploitation assumed that commodities were exchanged according to their labor value; far from making profits impossible, exchange according to the law of value was presupposed as the foundation for surplus-value. Profit resulted from the difference in value between labor-power, as a commodity, and the labor-product; this was true even (or rather, especially) when all commodities exchanged at their value.

Some "utopians" (including Proudhon, the Owenites, and some Ricardian socialists), it is true, saw the labor theory as a call for a mandated set of rules (like Labor Notes, or modern proposals for government backing of a LETS system). For these, the law of value ruled out exploitation; but rather than seeing it as an automatically operating law of the market, they saw it as requiring the imposition of egalitarian "rules of the game."

But besides these two opposing theories, there was a possible third alternative that differed significantly from the first two. This third alternative considered all exploitation to be based on force; and the exploitative features of existing society to result from the intrusion of the element of coercion. Unlike utopianism, the third theory treated the law of value as something that operated automatically when not subject to interference. Unlike Marxism, it believed the unfettered operation of the law of value to be incompatible with exploitation. This school included, especially, the market-oriented Ricardian socialist Thomas Hodgskin, and the later individualist anarchists in America; they saw capitalism as exploitative to the extent that unequal exchange prevailed, under the influence of the State. Without such intervention, the normal operation of the law of value would automatically result in labor receiving its full product. For them, exploitation was not the natural outcome of a free market; the difference between the value of labor power as a commodity and the value of labor's product resulted, not from the existence of wage labor itself, but from state-imposed unequal exchange in the labor market. For them, the law of value was both the automatic mechanism by which a truly free market operated, and at the same time incompatible with exploitation.

It followed that the law of value was not something to be surpassed. Unlike the Marxists, who looked forward to an economy of abundance based on a principle of "from each according to his ability, etc.," the individualists and market Ricardians saw the link between effort and reward as fundamental to distributive justice. The defining feature of exploitation was the benefit of one party at the expense of another's labor. As Benjamin Tucker wrote in "Should Labor Be Paid or Not?"

[Johann] Most being a Communist, he must, to be consistent, object to the purchase or sale of anything whatever; but why he should particularly object to the purchase and sale of labor is more than I can understand. Really, in the last analysis, labor is the only thing that has any title to be bought or sold. Is there any just basis of price except cost? And is there anything that costs except labor or suffering (another name for labor)? Labor should be paid! Horrible, isn't it? Why, I thought the fact that is not paid was the whole grievance. "Unpaid labor" has been the chief complaint of all Socialists, and that labor should get its reward has been their chief contention. Suppose I had said to Kropotkin that the real question is whether Communism will permit individuals to exchange their labor or products on their own terms. Would then Most have been as shocked? ....Yet in another form I said precisely that.1

Given the moral basis of the labor theory of value, as understood by the petty bourgeois socialists, in the principle of self-ownership and ownership of one's labor product, it followed that payment according to work was not a holdover from capitalist society, but the rightful basis of a future socialist order. It was no more acceptable for the collective to appropriate the product of the individual's labor for general use, than for the landlord and capitalist to appropriate it for their own use.

Maurice Dobb, in his introduction to A Contribution to the Critique of Political Economy, pointed to the strategic difficulties presented to Marxists by this position. As exemplified by Marx's assertion in Value, Price and Profit, Marxists recoiled from the idea that profit was the result of unequal exchange:

To explain the general nature of profits, you must start from the theorem that, on an average, commodities are sold at their real value, and that profits are derived from selling them at their values, that is, in proportion to the quantity of labour realised in them. If you cannot explain profit upon this supposition, you cannot explain it at all.2

"The point of this can the better be appreciated," Dobb said,

if it is remembered that the school of writers to whom the name of the Ricardian Socialists has been given..., who can be said to have held a "primitive" theory of exploitation, explained profit on capital as the product of superior bargaining power, lack of competition and "unequal exchanges between Capital and Labour" (this bearing analogy with Eugen Dühring's "force theory" which was castigated by Engels). This was the kind of explanation that Marx was avoiding rather than seeking. It did not make exploitation consistent with the law of value and with market competition, but explained it by departures from, or imperfections in, the latter. To it there was an easy answer from the liberal economists and free traders: namely, "join with us in demanding really free trade and then there can be no "unequal exchanges" and exploitation".3

This "easy answer" was exactly the approach taken by Thomas Hodgskin and the individualist anarchists of America. The greatest of the latter, Benjamin Tucker, reproached as merely a "consistent Manchester man," wore that label as a badge of honor." (http://www.mutualist.org/id58.html)

The Legacy of the High Middle Ages

From Chapter Four, Conclusion: The World We Have Lost and Will Regain , by Kevin Carson:

"Capitalism was not, by any means, a "free market" evolving naturally or peacefully from the civilization of the high Middle Ages. As Oppenheimer argued, capitalism as a system of class exploitation was a direct successor to feudalism, and still displays the birth scars of its origins in late feudalism.

Romantic medievalists like Chesterton and Belloc recounted a process in the high Middle Ages by which serfdom had gradually withered away, and the peasants had transformed themselves into de facto freeholders who paid a nominal quit-rent. The feudal class system was disintegrating and being replaced by a much more libertarian and less exploitative one. Immanuel Wallerstein argued that the likely outcome would have been "a system of relatively equal small-scale producers, further flattening out the aristocracies and decentralizing the political structures."

Although such medievalists no doubt idealized that world considerably, it was still far superior to the world of the sixteenth and seventeenth centuries. Kropotkin described, in terms evocative of William Morris, the rich life of the High Middle Ages, "with its virile affirmation of the individual, and which succeeded in creating a society through the free federation of men, of villages and of towns. "In those cities, sheltered by their conquered liberties, inspired by the spirit of free agreement and of free initiative, a whole new civilization grew up and flourished in a way unparalleled to this day." The free cities were virtually independent; although the crown "granted" them a charter in theory, in reality the charter was typically presented to the king and to the bishop of the surrounding diocese as a fait accompli, when "the inhabitants of a particular borough felt themselves to be sufficiently protected by their walls...."

The technical prerequisites of the industrial revolution had been anticipated by skilled craftsmen in the urban communes, scholars in the universities, and researchers in the monasteries;8 but the atmosphere of barbarism following the triumph of the centralized state set technical progress back by centuries. The nineteenth century was, in a sense, a technical and industrial "renaissance," built atop the achievements of the High Middle Ages after a prolonged hiatus; but because of the intervening centuries of warfare on society, industrial technology was introduced into a society based on brutal exploitation and privilege, instead of flowering in a society where it might have benefited all.

The Renaissance as it happened, G.K. Chesterton argued, was only an anemic ghost of what it might have been had it taken place under a democracy of guilds and peasant proprietors. Had Wat Tyler and John Ball been successful, Chesterton speculated,

our country would probably have had as happy a history as is possible to human nature. The Renascence, when it came, would have come as popular education and not the culture of a club of aesthetics. The New Learning might have been as democratic as the old learning in the old days of mediaeval Paris and Oxford. The exquisite artistry of Cellini might have been but the highest grade of the craft of a guild. The Shakespearean drama might have been acted by workmen on wooden stages set up in the street like Punch and Judy, the finer fulfillment of the miracle play as it was acted by a guild.

The real advancement, the real humanism and progress of the High Middle Ages, has been neglected, and the barbarism and regression of the age of the absolute state disguised as a rebirth of civilization. In short, history has been not only rewritten, but stood on its head by the victors.

How many lies have been accumulated by Statist historians, in the pay of the State, in that period!

Indeed have we not all learned at school for instance that the State had performed the great service of creating, out of the ruins of feudal society, national unions which had previously been made impossible by the rivalries between cities?....

And yet, now we learn that in spite of all the rivalries, medieval cities had already worked for four centuries toward building those unions, through federation, freely consented, and that they had succeeded.

By 1650 the earlier egalitarian trend Wallerstein remarked on had been reversed. In the meantime, what he calls the "capitalist world-system" had been established in response to the crisis of feudalism and rising wages.

The socio-economic crisis weakened the nobility such that the peasants steadily increased their share of the surplus from 1250 to 1450 or 1500.... It was the increase in the standard of living of the lower strata moving in the direction of relative equalization of incomes... that for the upper strata represented the real crisis....

There was no way out of it without drastic social change. This way... was the creation of a capitalist world-system, a new form of surplus appropriation. The replacement of the feudal mode by the capitalist mode was what constituted the seigniorial reaction; it was a great sociopolitical effort by the ruling strata to retain their collective privileges, even if they had to accept a fundamental reorganization of the economy.... There would be some families, it was clear, who would lose out by such a shift; but many would not. Additionally, and most importantly, the principle of stratification was not merely preserved; it was to be reinforced as well.

Does not the discovery that the standard of living of the European lower strata went down from 1500 to at least 1800... demonstrate how successful was the strategy, if such it could be called, of economic transformation?

On this latter point, according to Maurice Dobb, the strategy was successful indeed. In the two centuries before the Tudor dynasty, wages had doubled in terms of wheat. After 1500, they fell more than enough to reverse that gain. Part of this fall in real wages was the result of the price revolution of the 1500s, which amounted to a program of forced investment: "To the extent that money-wages failed to rise as the commodity price-level rose, all employers and owners of capital were abnormally enriched at the expense of the standard of life of the labouring class."

There was, as Wallerstein wrote, "a reasonably high level of continuity between the families that had been high strata" in 1450 and 1650. Capitalism, far from being "the overthrow of a backward aristocracy by a progressive bourgeoisie," "was brought into existence by a landed aristocracy which transformed itself into a bourgeoisie because the old system was disintegrating."13 In The Modern World-System, he described the process as one of "embourgeoisment" of the nobility14—especially in England, where "the aristocracy to survive had to learn the ways of and partially fuse with the bourgeoisie."

As Wallerstein suggested above, some families in the old landed aristocracy lost out; those adaptable elements who survived absorbed large elements of the bourgeoisie into their ranks. The new agricultural class arose in the fifteenth century as a result of the fact that the landed aristocracy had failed to become a caste, and the gentry had failed to become a lesser nobility. In this new class, the old distinction between aristocracy between aristocracy and gentry was losing its significance. Wallerstein cited Perez Zagorin on the tendency for men "in a position to deploy capital in agriculture, trade, and industry" to acquire "the command of social life." This combined class, which also included the old merchant oligarchs who were canny enough to invest in modern methods of production, enriched itself at the expense of the increasingly proletarianized peasantry.

Christopher Hill's analysis of the transformation of the landed class parallels that of Wallerstein to a large degree. The great landowners who thrived in the new economy were those who adapted to "the new society in which money was king." The took less interest in court affairs, ostentatious expenditure, and hospitality, and instead turned their attention toward estate management, rack-renting, the leasing of mining rights, etc. By the seventeenth century, the elements of the old landed aristocracy who had been unable to make this transition had largely disappeared. The surviving aristocracy consisted almost entirely of those "capable of taking advantage of the intellectual and technical revolution in estate management."

The Civil War, as Wallerstein understood it, was between the old and the new landed class. The former, the decadent rentier class that infested the royal court, was defeated; the latter went on, as the Whig oligarchy, to achieve political supremacy in 1689.17 Although the Civil War was followed by a resurgence of the landed interest, this interest consisted of the new capitalist agricultural class: those elements of the old landed aristocracy who had adopted capitalist methods of agricultural production and learned to thrive in a capitalist economy, along with merchant-capitalists, yeomen, and gentry who had had sufficient capital to invest in the capitalist revolution. Wallerstein contrasted this to France, in which the old court aristocracy had retained its supremacy. These points are echoed in part by Arno Mayer, who argued for continuity between the landed aristocracy and the capitalist ruling class." (http://www.mutualist.org/id65.html)

Neoliberalism and its emerging resistance

Chapter Eight, Section D: “Neoliberal Reaction and Political Repression”, by Kevin Carson:

The American corporate elite reacted in the 1970s to the combination of fiscal, accumulation and legitimation crises by adopting a neoliberal agenda of curtailing consumption and subsidizing new accumulation. Along with these new policies, it adopted the forms of political control necessary to force them on a recalcitrant population.

Until the late 1960s, the elite perspective was governed by the New Deal social compact. The corporate state would buy stability and popular acquiescence in imperialist exploitation abroad by guaranteeing a level of prosperity and security to the middle class. In return for higher wages, unions would enforce management control of the workplace. As Richard K. Moore put it, prosperity would guarantee public passivity.20 But starting in the Vietnam era, the elite's thinking underwent a profound change.

They concluded from the 1960s experience that the social contract had failed. Besides unprecedented levels of activism in the civil rights and antiwar movements, and the general turn toward radicalism among youth, the citizenry at large also became less manageable. There was a proliferation of activist organizations, alternative media, welfare-rights organizations, community activism, etc.

Elite intellectuals like Samuel P. Huntington lamented the drastic decrease in the level of trust of government and other leading institutions among the general public. In The Crisis of Democracy, written by Huntington and others as an inagural paper for the Trilateral Institution (an excellent barometer of elite thinking), the authors argued that the system was collapsing from demand overload, because of an excess of democracy. Huntington's analysis is so illustrative of elite thinking at that time that we will quote it at length.

For Huntington, America's role in maintaining the global state capitalist system depended on a domestic system of power; this system of power, variously referred to in this work as corporate liberalism, Cold War liberalism, and the welfare-warfare state, assumed a general public willingness to stay out of government affairs. For the first two decades or so after WWII, the U.S. had functioned as "the hegemonic power in a system of world order."21 And this was only possible because of a domestic structure of political authority in which the country "was governed by the president acting with the support and cooperation of key individuals and groups in the Executive office, the federal bureaucracy, Congress, and the more important businesses, banks, law firms, foundations, and media, which constitute the private establishment."

America's position as defender of global capitalism required that its government have the ability "to mobilize its citizens for the achievement of social and political goals and to impose discipline and sacrifice upon its citizens in order to achieve these goals." Most importantly, this ability required that democracy be largely nominal, and that citizens be willing to leave major substantive decisions about the nature of American society to qualified authorities. It required, in other words, "some measure of apathy and non-involvement on the part of some individuals and groups."

Unfortunately, these requirements were being gravely undermined by "a breakdown of traditional means of social control, a delegitimation of political and other means of authority, and an overload of demands on government, exceeding its capacity to respond."

The essence of the democratic surge of the 1960s was a general challenge to existing systems of authority, public and private.... Within most organizations, discipline eased and differences in status became blurred. Each group claimed is right to participate equally--and perhaps more than equally--in the decisions which affected itself....

The questioning of authority pervaded society. In politics, it manifested itself in a decline in public confidence and trust in political leaders and institutions, a reduction in the power and effectiveness of political institutions..., a new importance for the "adversary" media and "critical" intelligentsia in public affairs, and a weakening of the coherence, purpose, and self-confidence of political leadership.

The task of traditional state capitalist elites, in the face of this crisis of democracy, was to restore that "measure of apathy and noninvolvement," and thus to render the system once again "governable."....

The New Deal social compact with organized labor was reassessed in the light of new events. The country was swept by a wave of wildcat strikes in the early 1970s, in coal mining, auto manufacturing, and the post office. These disruptions indicated that the business unions could no longer keep their rank and file under control, and that the Fordist system was no longer serving its purpose of maintaining social control in the workplace.

At the same time, the business press was flooded with articles on the impending "capital shortage," and calls for shifting resources from consumption to capital accumulation, by radically scaling back the welfare state and hamstringing organized labor. This shift was reflected in traditionally corporate liberal think tanks like Brookings and the CED, which both produced studies acknowledging the need to impose limits on consumption in the interest of accumulation; for example, the Brookings Institution's 1976 study Setting National Priorities: The Next Ten Years.

Business journals predicted frankly that a cap on real wages would be hard to force on the public in the existing political environment. For example, an article in the October 12, 1974 issue of Business Week warned that

Some people will obviously have to do with less.... [I]ndeed, cities and states, the home mortgage market, small business and the consumer will all get less than they want.... [I]t will be a hard pill for many Americans to swallow--the idea of doing with less so that big business can have more.... Nothing that this nation, or any other nation has done in modern history compares in difficulty with the selling job that must now be done to make people accept the new reality.

This only heightened the imperative to curb the excess of democracy and make the state less vulnerable to popular pressure.

Corporations embraced the full range of union-busting possibilities in Taft-Hartley, risking only token fines from the NLRB. They drastically increased management resources devoted to workplace surveillance and control, a necessity because of discontent from stagnant wages and mounting workloads (aka increased "productivity").31 Not surprisingly, workplace violence ("going postal") escalated along with general levels of employee disgruntlement. The use of internal surveillance systems and personality profiling to detect disgruntlement and weed out those with bad attitudes toward authority, not to mention to track down those guilty of quiet and unobtrusive sabotage, became a central preoccupation with the new Chekists in Human Resources departments.

Wages as a percentage of value added have declined drastically since the 1970s, and real wages have been virtually flat. Virtually all increases in labor productivity have been channeled into profit and investment, rather than wages. The new Cold War military buildup, from the late '70s on, still further transferred public resources to industry.

A series of events like the fall of Saigon, the nonaligned movement, and the New International Economic Order were taken as signs that the transnational corporate empire was losing control. The national security community saw America's "system of world order" coming under increasing pressure from national liberation movements. An excellent example of foreign policy elites' view of the near future is the work of RAND analyst Guy Pauker, who wrote in 1977 of a "possible world order crisis in the 1980s."32

Reagan's escalating intervention in Central America was a partial response to this perception. But more importantly, the collapse of the USSR ended all external restraints on the global system designed during WWII, and deprived internal resistance to that system of the Soviet Union's patronage. In the aftermath of this snatching of total victory from the jaws of defeat, the Uruguay Round of GATT ended all barriers to TNCs buying up entire economies, locked the west into monopoly control of modern technology, and created a world government on behalf of global corporations." (http://www.mutualist.org/id90.html)

More Information

• Condensed version of chapter 6 and 7:

"Nothing Like a Free Market." http://www.libertarian.co.uk/lapubs/econn/econn106.pdf