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Source link: http://archive.mises.org/18777/chartier-markets-not-capitalism/

Chartier: Markets Not Capitalism

October 20, 2011 by

Markets Not CapitalismFrom Roderick Long’s blog post: A new book has been released by editors Gary Chartier and Charles Johnson, Markets Not Capitalism, that may be of interest to some here, especially as they heroically released a free scribd and PDF version. Chartier is the author of the excellent Conscience of an Anarchist. (my praise). As Long notes, “Incidentally, the official release date is – the Vth of November. Dismember, dismember.”

{ 63 comments }

Jeffrey Tucker October 20, 2011 at 2:44 pm

I don’t know, i just can’t share this opinion that we should give up the word capitalism. My real fear is that the people who advocate doing so have their own doubts about the merit of capital accumulation.

Haiti, for example, has markets everywhere but no capitalism. http://mises.org/daily/5277

Tyrone Dell October 20, 2011 at 3:58 pm

Then maybe your focus should shift from discussing the merits of “capitalism” to actually trying to get people to remember your definition of “capitalism.”

integral October 21, 2011 at 8:49 am

Welcome to the Mises institute, you must be new here.

Stephan Kinsella October 21, 2011 at 5:57 am

Agree with Jeff. Some of the left-libertarian opponents of capitalism shift their grounds. Sometimes they act like this is a semantic issue: that “capitalism” is not the best term to use to identify a free market/libertarian order, because of its origin or because of its current association with what is in substance crony-capitalism. But others explicitly oppose even “free-market capitalism”–they believe employment is exploitative by its nature, and so on. These latter are clearly wrong, IMO, and we should not give in to them. I also do not think the word “capitalism” has been lost to us.

However, I have always found it curious that Mises, Rand, et al. used “capitalism” as a synonym for a free market society, when that term really only describes one aspect of the economy of an advanced liberal/market society. Also, I used to refer to my political views as anarcho-capitalist but in the last several years tend to use “anarcho-libertarian” instead. Because of the various left-”anarchists” like anarcho-syndicalists etc.–whom I regard as faux anarchists, not real ones–we cannot just call ourselves anarchist; we need a hyphenated suffix to distinguish ourselves from these types. But I tend to think -libertarian is better than -capitalist for this purpose.

Charles Johnson October 21, 2011 at 9:57 am

Stephan,

Agree with Jeff. Some of the left-libertarian opponents of capitalism shift their grounds. Sometimes they act like this is a semantic issue: that “capitalism” is not the best term to use to identify a free market/libertarian order, because of its origin or because of its current association with what is in substance crony-capitalism. But others explicitly oppose even “free-market capitalism”–they believe employment is exploitative by its nature, and so on.

That doesn’t sound like a description of one group of people “shifting their grounds.” That sounds like a description of two groups of people with different substantive views. Why would you present that as if people are prevaricating or being dishonest, when those who (for example) have concerns about employment don’t hesitate to tell you that they have concerns about employment, and that that’s part of what they’re referring to when they say they are “anti-capitalist?”

As for the views that the book presents, there are many different authors, and each has different views, but (1) I do not think that we could possibly be clearer that we are not mainly interested in semantic or rhetorical issues, and that if we spend any time digging around in the historical and contemporary usage of the word “capitalism,” it is solely in order to clarify terms and avoid talking at cross-purposes with the people we intend to talk to. (This is repeatedly stressed in my first essay, in Gary’s first essay, etc.) And (2) we could not be clearer that the concerns are primarily substantive concerns about employment, landlordism, structural poverty, etc., not rhetorical or semantic concerns about what market anarchists choose to call themselves.

It would be a mistake, though, to say that the concerns are concerns that “employment is exploitative by its nature,” if that’s being used to say that there would be something inherently wrong with any isolated instance of an employment relationship. My view — and the view defended in the essays in the book, insofar as the issue comes up — is that employment is made exploitative by its political, social and economic context. My concern is not with the act of wage-labor but with what we call the wage-labor system — with the extent to which people are driven into wage labor relationships far more often, and on far more desperate terms, than they would be in a free society. (On which, see for example Ch. 7, de Cleyre’s “The Individualist and the Communist: A Dialogue,” and Ch. 41, my “Scratching By.”) Since we’ve talked about this before, I already know that you disagree with me both about the extent to which that is true, and also about the economic and the ethical implications of it in cases where it is true. That’s fine: we have a substantive disagreement, and you can give your arguments for your view and I can give my arguments for mine. But I think it’s important to get clear on where the argument actually is.

As for what any odd person on the Internet may have said to you, I have no control over that, and I wish that the discussion about our book could be a discussion focused on the views expressed in that book, not on other views expressed by other people in other places. However, I should note that I’m familiar with db0′s writing; he is not a market anarchist or an individualist, and as far as I know he has never claimed to be one. He’s an anarcho-communist, and his use of the term “left-libertarian” has nothing in particular to do with the use of the term by market anarchist folks like ALL; it is really unfair both to him and to us to act as if the views he expresses have much of anything to do with the views expressed in the book or in other left-wing market anarchist forums. Maybe it’s regrettable that so many people have used “left-libertarian” to describe so many different things over the course of history; but of course the only way to deal with a situation like that is to try to be clear about the sense in which you are using your terms, and the book does say that it’s specifically a defense of left-wing market anarchism, not (for example) communist anarchism or Steiner-style philosophical geolibertarianism or Cato-style low-tax liberalism or whatever. We do also try to lay out in some detail what that amounts to, and it seems to me that it would be fairly hard to confuse the views we lay out with those defended by db0 or other communist anarchists.

Stephan Kinsella October 21, 2011 at 10:47 am

Charles,

Agree with Jeff. Some of the left-libertarian opponents of capitalism shift their grounds. Sometimes they act like this is a semantic issue: that “capitalism” is not the best term to use to identify a free market/libertarian order, because of its origin or because of its current association with what is in substance crony-capitalism. But others explicitly oppose even “free-market capitalism”–they believe employment is exploitative by its nature, and so on.

That doesn’t sound like a description of one group of people “shifting their grounds.” That sounds like a description of two groups of people with different substantive views. Why would you present that as if people are prevaricating or being dishonest, when those who (for example) have concerns about employment don’t hesitate to tell you that they have concerns about employment, and that that’s part of what they’re referring to when they say they are “anti-capitalist?”

Maybe I was unclear. I described two types of left-libs: ones who have a more semantic argument about the word capitalism, but who do not oppose a private property, free market order, or what some of us might call “market capitalism.” I take it that is your and Chartier’s approach, since you specifically say on p. 2 that your version of market anarchism upholds “ownership of property, especially decentralized individual ownership, not only of personal possessions but also of land, homes, natural resources, tools, and capital goods” and “contract and voluntary exchange…”

And, secondly, those soi-disant left-libertarians who actually oppose private property ownership, especially of capital.

I did not mean to imply that the first group is dishonest. It is my impression that some members of the second group are dishonest, since they sometimes cover their opposition to private property under the cover of making a strategic or semantic argument about the term “capitalism.”

I actually believe that the former group are in favor of what I would call capitalism, or market-capitalism perhaps, because if you have private property respected in capital, then I believe in any advanced free market economy you will have what we might described as (market) capitalism, and probably more concentration of it in companies and firms than you might *like* or *predict* but I view the *preferences* and *predictions* of libertarians as being mostly orthogonal to their libertarianism (I’m less of a thicker than you are, I think). It’s fine with me if you guys have a *preferences* or *predictions* differently than me about how you’d like the market to work or how you think it might look like–as long as we all agree on private property in the means of production that’s sufficient libertarian consensus; if we got lucky enough to try it out then we could see whose predictions are right.

As for the views that the book presents, there are many different authors, and each has different views, but (1) I do not think that we could possibly be clearer that we are not mainly interested in semantic or rhetorical issues, and that if we spend any time digging around in the historical and contemporary usage of the word “capitalism,” it is solely in order to clarify terms and avoid talking at cross-purposes with the people we intend to talk to. (This is repeatedly stressed in my first essay, in Gary’s first essay, etc.) And (2) we could not be clearer that the concerns are primarily substantive concerns about employment, landlordism, structural poverty, etc., not rhetorical or semantic concerns about what market anarchists choose to call themselves.

Well I think it is in a sense a semantic issue because we non-hyphenated libertarians also oppose state intrusions and any distortions they create. But in any case, I am distinguishing between left-libertarians who are opposed to property rights, from those who are not. I don’t even think the former are properly called libertarians.

It would be a mistake, though, to say that the concerns are concerns that “employment is exploitative by its nature,” if that’s being used to say that there would be something inherently wrong with any isolated instance of an employment relationship. My view — and the view defended in the essays in the book, insofar as the issue comes up — is that employment is made exploitative by its political, social and economic context.

I realize this. But if I am not mistaken some of your fellow left-libs think it IS exploitative by its nature, necessarily, even in a “freed market”.

My concern is not with the act of wage-labor but with what we call the wage-labor system — with the extent to which people are driven into wage labor relationships far more often, and on far more desperate terms, than they would be in a free society.

I know, and I don’t disagree with you on this (maybe on the extent, but not the basic principle). I did not mean to imply I did. I am well aware of problems in this area, as are many Rothbardian non-left libertarians. We do not need leftists or a leftist perspective to realize that big business is in bed with the state, that regulations ostensibly designed to help the little guy or the consumer are in truth ways of propping up big business and protecting it from competition, such as pro-union laws, minimum wage, taxes, other regulations, IP law, etc. I have even argued that the army is not really volunteer because the state impoverishes the lower classes, forcing or economically coercing some people to sign up for the military just to survive. So that it’s like a type of economic conscription. I’ve argued before that just as the state has an obligation to feed its prisoners, you could argue that welfare programs are somewhat justified since the state is impoverishing people and causing poverty in the first place. Rothbardians do not ignore this nor are they under the delusion that our current order is a genuine free market, or, as some say, “capitalist”. The state has taken over and uses our own terms to describe its bastardized system; but people regard the modern US mixed system as “capitalist” and also as “free market”. So if you argue to drop “capitalism” because it’s associated with the current instead of ideal system, you could make a similar argument for the term free market. IT is this obsession with tactics and semantics that I find tiresome and tedious, and distracting from substance.

As for substance, as I’ve indicated, we may disagree on less than you think.

(On which, see for example Ch. 7, de Cleyre’s “The Individualist and the Communist: A Dialogue,” and Ch. 41, my “Scratching By.”) Since we’ve talked about this before, I already know that you disagree with me both about the extent to which that is true, and also about the economic and the ethical implications of it in cases where it is true. That’s fine: we have a substantive disagreement, and you can give your arguments for your view and I can give my arguments for mine. But I think it’s important to get clear on where the argument actually is.

Sure. And I think a large share of that burden is on the soi-disant “left-libertarians” especially given that some of your number seem hostile to actual private property itself. So it’s good that you did this book. That’s why I blogged it.

What I want to register is that I think you pro-property left-libertarians, while I think you are confused in your thickism and insistence on “left” as part of your libertarian identity, have many valuable insights and points and that as far as I can see, most are at least in principle (if not extent) compatible with how non-left radical libertarians see things. (Which is one reason I see little value in the “left-” prefix. You don’t need it to grok these things.) But I strongly disagree with your fellow left-libs who oppose property, or who attack people like me as being “right-libertarians” merely for being in favor of private property rights.

As for what any odd person on the Internet may have said to you, I have no control over that, and I wish that the discussion about our book could be a discussion focused on the views expressed in that book, not on other views expressed by other people in other places.

I’m perplexed at what your criticism is. There are no limits on what we can talk about here. I haven’t read you book yet, so how could I discuss it? I blogged it to call it to people’s attention, and people started talking about related issues here. I see no problem with this.

However, I should note that I’m familiar with db0′s writing; he is not a market anarchist or an individualist, and as far as I know he has never claimed to be one. He’s an anarcho-communist, and his use of the term “left-libertarian” has nothing in particular to do with the use of the term by market anarchist folks like ALL; it is really unfair both to him and to us to act as if the views he expresses have much of anything to do with the views expressed in the book or in other left-wing market anarchist forums.

I’m not so sure the concern about whether a commie receives “fairness” is high on the list. But I wonder if I did not express myself properly. I have not read your book yet but my criticisms of some left-libs was not meant to apply to your book–I had not reason to think yoru book contained such since you expressly championed on p. 2 your defense of private property in capital and other goods. How is it unfair to you, for me to criticize some “bad” left-libertarians that you apparently are not representing in your book

Maybe it’s regrettable that so many people have used “left-libertarian” to describe so many different things over the course of history; but of course the only way to deal with a situation like that is to try to be clear about the sense in which you are using your terms,

Yes, like we are clear that when we defend “capitalism” we mean minimal state or stateless society with a pure free market and an advanced economic order characterized by private owernship and accumulation of capital (where some of that ownership is by private firms–however they are organized).

and the book does say that it’s specifically a defense of left-wing market anarchism, not (for example) communist anarchism or Steiner-style philosophical geolibertarianism or Cato-style low-tax liberalism or whatever.

Right. Which is why I’m a bit confused why you seem to be taking my comments as critical of your book.

Charles Johnson October 21, 2011 at 12:13 pm

Stephan:

I have not read your book yet but my criticisms of some left-libs was not meant to apply to your book …

O.K., fair enough. I had taken your comments about db0′s views as more directly aimed at the book because of the broader context of the discussion in this post, and the way that people were discussing different rhetorical strategies (“market-capitalism,” “capitalism” vs. “corporatism,” etc. etc. as alternatives to the “markets, not capitalism” approach of the book). It sounds like I jumped the gun on that, and if so, I apologize.

As for communists and fairness, well, I am not a communist, but I hardly think that anarchist communists have nothing to say that’s worth understanding (how much or little there is depends on how much they lean on the “anarchist” part, and how much they lean on the other); and in any case I do think that it’s quite as important to clearly understand the details of ideas you oppose as it is to clearly understand the details of ideas you feel more sympathy for. The best defenses of private property, as I see it, come from a clear understanding of what rival proposals offer, and what they threaten.

Charles Johnson October 21, 2011 at 9:07 am

Jeff,

I can speak only for myself here, not for everyone who’s voiced doubts about the word “capitalism,” but I can say that my worries have nothing to do with worries about “the merit of capital accumulation.” They have to do with worries about the merit of capital concentration, i.e., the extent to which capital ownership is concentrated in artificially few hands, rather than being widely dispersed. (*)

So, when you refer to Haiti, I think you make a perfectly good point about the importance not only of exchange, but also of capital goods. But what we take issue with in the book is not the existence of capital goods (!) or individual property rights in capital goods; it’s the political misdirection and destruction of capital goods — specifically, the concentration of capital goods in the hands of a select business class, and the destruction of those capital goods which otherwise would be dispersed outside of their hands. (**) And in the case of Haiti, what you describe isn’t an enforced absence of “capitalism,” in the sense that we use it, but an enforced absence of what our introduction describes as the first of four distinctive features of “the market form,” i.e., secure ownership of individual property. Which I certainly agree has a lot to do with the political regime (including the U.S. Empire’s long record of trashing Haitian property, incinerating Haitian wealth, and murdering Haitian people, from 1806 to present).

So, the question at stake in the book, as I see it, is not primarily a question about capital accumulation but about who has access to and control over accumulated capital, and the claim we make (for the purposes of this blog comment, of course, this is just going to be a claim — we have an argument, but the argument is made in the book) is that a lot of facts about statist-quo economic relationships can be explained by the extent to which that has been politically determined — by the extent to which capital has been concentrated by a cluster of political privileges and the economic ripple-effects of those privileges. If you want to know why wage labor and debt so pervasive and so predominant as ways of “making a living,” then (we argue) part of the explanation for that has to do with the means by which the state has privileged incumbent capitalists, at the expense of, and while actively destroying, the capital of ordinary workers and would-be competitors.

-C

(* You might worry: well, if it’s dispersed, then you have a million people with hand tools; which is admittedly better than a million people without, but the real advantages of civilization come about specifically from large-scale combinations of whole arrays of capital. But widely dispersed capital doesn’t really mean that the capital cannot be combined or coordinated, any more than widely dispersed labor power — every one has only so many hours they can work in a day — means that labor cannot be combined or coordinated on a large scale. It just means that the coordination happens by means of cooperation and contract rather than by means of concentrated ownership.)

(** This can mean either its physical destruction — as when Urban Renewal and other forms of socioeconomic cleansing simply bulldozed people’s livelihoods — or its praxeological destruction, i.e., disabling a good’s its potential functions as capital and forcing it into the category of a pure consumer good — e.g. when people’s existing resources are forced into involuntary idleness by licensure schemes, zoning regulations, subsidized competition — including the massive subsidy to companies at or near the inflation spigot — and all the other ways in which the regulatory and monetary state does its dirty business.)

David October 25, 2011 at 10:57 pm

And the U.S. has capitalism (i.e., capital) everywhere—but no FREE market. I don’t like the word “capitalism.” One could just as easily say “laborism” or “landism.” Supposedly, Karl Marx made up the word capitalism. If that is true, that should tell you something about it already.

I call myself a free marketer, not a capitalist.

Charles Johnson October 25, 2011 at 11:45 pm

The term “capitalism” was introduced by anti-capitalists but not by Marx. Its most notable early appearance is in Louis Blanc’s Organisation du Travail (1840), published while Marx was still a grad student in Berlin.

Fun fact: Marx himself actually hardly ever uses the word — “capitalism” (Kapitalismus) appears all of about 2 or 3 times in the whole three volumes of Das Kapital, and hardly anywhere else in all of his work. But he does talk about “capitalists” and the “capitalistic mode of production” all over the place, and when later Marxist writers took up the term “capitalism” from Blanc, Proudhon, and other early adopters (mostly French), it was fairly straightforward to treat the term as more or less equivalent in meaning to Marx’s “capitalistic mode of production” (i.e. a mode of production based on concentrated absentee ownership of capital and the hiring of employees to work it).

None of these folks, incidentally, understood the term to mean “a free market in land and means of production.” Some (Blanc, Marx) believed that a free market in land and the means of production would inevitably tend to produce capitalistic patterns of ownership and control. Others (Proudhon, Warren, Tucker) dissented, and argued explicitly that a free market in land and the means of production could possibly, or even would naturally tend to, undermine capitalistic patterns of ownership and control (in the sense that large-scale inequalities of wealth would tend to dissipate, absolute poverty would largely disappear, and the working class would become the owning class, no longer subject to perpetual rent or debt, and no longer dependent on relationships with absentee owners of capital in order to make a living); hence (they held) if you were serious about being an anti-capitalist, then you ought to be serious about freeing markets and abolishing the state. On this one, I side with the Anarchists.

Jenner October 20, 2011 at 3:11 pm

Perhaps we can synthesize the two terms, e.g., “market-capitalism,” as to distinguish it from what so many (falsely) associate it with, crony-capitalism.

Bailey October 20, 2011 at 11:23 pm

Perhaps we can call Capitalism, Capitalism. Then we can drop the usage of crony-capitalism and call it what it really is: Corporatism. I’ve had good luck with talking to people and getting them to understand the difference. People *are* starting to get it.

Stephan Kinsella October 21, 2011 at 6:08 am

Problem with using corporatism to describe crony-capitalism is that it focuses on an incidental feature–the form of organization of the firm. The cause of crony-capitalism is not the form of organization the firms have; if we had limited liabilit partnerships in wider use instead, they could still be state cronies. If we get rid of state incorporation laws tomorrow, all the corporations would re-form into some new entity structure, and their relationship to the state would not change. The problem is not the corporate form of organization. It’s the relationship between private firms of all types (corporations and partnerships etc.), and the state.

Michel Santos October 22, 2011 at 9:41 am

“The problem is not the corporate form of organization. It’s the relationship between private firms of all types (corporations and partnerships etc.), and the state.”

Very interesting clarification, thanks

feudalredux October 20, 2011 at 11:25 pm

What’s wrong with anarchocapitalism? Too edgy? “Markets” sound more comfortable because no one will notice the man behind the curtain?

Charles Johnson October 21, 2011 at 9:10 am

You got it. The reason we called the book “Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty” is because we are afraid of “edgy” terms, and only want to describe ourselves with comfortable, milquetoast terms, which alarm no-one. Like “Anarchist.”

feudalredux October 22, 2011 at 10:09 am

I wasn’t talking to you. And I don’t know why you are telling me a whole bunch of irrelevant stuff.

My critical observation was comparing the term “market-capitalism” vs. “anarchocapitalism”. One of these terms obscures the role of coercive involuntary governmental intervention in a capitalistic system. I was pointing out (indirectly) that eschewing the use of the word “anarchy” was a bad idea, especially if the stated goal is to contrast the term against “crony-capitalism”

Comprende?

Charles Hanes October 20, 2011 at 3:31 pm

I downloaded the book to read, but I agree with Jeff — just as Mises decided to not give up the term liberalism, even though its meaning in the US shifted almost into the opposite of its original meaning, we should also not give up the term capitalism. I am for markets, and for capitalism as well.

chad October 21, 2011 at 2:33 pm

Ahahaha that made me laugh….

Tyrone Dell October 20, 2011 at 4:03 pm

You guys who are still caught playing this game of “they’re not taking my word away from me!” are doomed to fail.

If you talk to the average person today and say you’re a liberal, but not really today’s liberal, but classical liberal, meaning not really a Democrat, but more like a 19th Century liberal, which is sort of like today’s libertarian, which is basically a proponent of capitalism, but thats not to say you’re a Republican, because its not that type of capitalism, its more like…. — you get the point. You’ll just be considered cheeky and might as well be speaking in Shakespearean English for all they care.

Language is dynamic (as you all may know from reading Shakespeare), just like the market. “Capitalism” is a lost word. So is “liberalism”. Just deal with it, its not even like it matters.

…granted, “market-capitalism” does have a nice ring to it.

The irony here is that when you claim that your opponent is a Socialist they’ll think you’re nuts since they themselves don’t identify with Socialism at all. “Socialism” is another lost word. Just deal with it.

Dagnytg October 20, 2011 at 4:48 pm

Tyrone well said!

As I often remind myself, it’s not what you say…it’s what people hear.

Inquisitor October 20, 2011 at 5:15 pm

The effort to alter these words into anti-concepts/package deal was concerted and conscious. It is reversible. Simply because the meaning of a word has been corrupted does not mean it cannot go the other way entirely.

Tyrone Dell October 20, 2011 at 6:36 pm

>The effort to alter these words into anti-concepts/package deal was concerted and conscious.

Source?

Was it also a concerted and conscious effort to redefine the word “amazed” (which used to mean bewildered, as like to be in a maze) to something more along the lines of “wonder”?

feudalredux October 20, 2011 at 11:28 pm

Well, if the change in meaning was accidental, why can’t the same thing happen with the word “liberal” today? And if it wasn’t accidental, then maybe it will be just as non-accidental for the word “liberal” to return to its classical flavor.

In either case, I think you have no sound basis for your claim that
“You guys who are still caught playing this game of “they’re not taking my word away from me!” are doomed to fail.”

Marissa October 21, 2011 at 9:04 am

Also, from what I understand liberal still means what it used to mean outside of the U.S.

Kevin B October 20, 2011 at 9:22 pm

Agreed. It doesn’t help to sound, to borrow from Idiocracy, “pompous and faggy”.

nate-m October 20, 2011 at 9:44 pm

The irony here is that when you claim that your opponent is a Socialist they’ll think you’re nuts since they themselves don’t identify with Socialism at all. “Socialism” is another lost word. Just deal with it.

One of the major problems is that you are not going to win friends and influence enemies by playing word games.

You tell the leftists that your ‘pro-market’ and not ‘pro-capitalist’ they may, if your lucky, as ‘what the fuck does that mean’ (normally they will just dismiss you completely). When you explain that you are pro-private property and pro-free markets they will tell you, “f-you, who are you trying to fool? your a capitalist!”

They don’t hate the _word_. They hate what it is and what it represents. They hate the very idea of people seeking profit from other people and people seeking advantage for themselves. Property is theft. The owner steals the wealth from the laborer and all the rest of the marxist crap that has invaded their subconsciousness. They don’t understand that there is a difference between the ‘state’ and ‘private ownership of property’… they think it’s all the same thing. That without the state there is no private property.

Maybe you might get through to a few and get them to open up by tricking them into thinking since your using unfamiliar phrases. But it’s only going to last for a short while before ‘pro-market’ means exactly the same as ‘pro-capitalist’. (which it already pretty much does. I don’t mind what the author did and it might work for a few people, but it’s mostly a waste of time) Then you will not only have their anti-market and anti-private property bias to deal with, you will have their contempt .

The other thing to keep in mind that is that this is _English_ we are talking about. Words have multiple meanings all the time. This is not sort of stupid computer language were we are assigning variables to strings of letters and all variables are global in scope. Context matters… Context defines words. If people can’t wrap their heads around that then they are not going to be able to understand anything we are talking about anyways completely regardless of the sounds coming out of your mouth. Without understanding the context of the discussion then they will not be able to understand anything you are talking about. They will just assign their own meanings and either come away confused and dismissive or just contemptuous.

And there is a crapload of people that are pro-socialist and they mean exactly that:
THEY ARE PRO-SOCIALIST.

They are democratic socialists and believe beyond a doubt that the key to achieving human happiness is a strong state ran by elected people that can use violence to defeat the evils of a open and free market.

This is not something that is deluded or changed over time for many people. In the USA people do not tend to use in the traditional sense, but quite often in Europe they do. They are very pro-socialist, pro-socialist government. When we, in the USA, talk about socialist healthcare with derision, they scream ‘Hell yes socialized healthcare is a great idea! People seeking to excessively profit from such necessities are evil and we need the government to step in and regulate. Viva la price controls! Viva la licensing requirements and drug restrictions!’

Again, it’s all about context. Context defines words.

The primary and #1 most important thing to get across is:

* If your for freedom then you are for the same things we are for.
* If you are for peace and prosperity then you are for the same things we are for.
* If you believe that it’s completely reprehensible, in almost all cases, that people use violence against people who did not initiate the violence, then you are for what we stand for.

In a free society, a truly free society, things are going to change and evolve. People are going to do what they want and how they want to do it. If it means they will keep private property, then that is how it is going to be. If it means that they go collectively then that is how it’s going to be. It does not really matter.. what matters is the ability to act freely of your own volatility without fear of violent reprisals for non-violent acts.

When we talk about ‘anti-state’ and ‘non-violence’ and ‘freedom’ then we have to be talking about the same things. As long as our definitions for those phrases are the same then we have to be talking about the same ideas and concepts even if other words are different. Any differences in opinions are either semantic trivia or are simply just minor differences in opinion.

Kevin B October 20, 2011 at 10:43 pm

the benefit of the distinction is that it allows blame to be placed on government. without the distinction between government-capitalism and free-market-capitalism, government doesn’t take the blame for its faults.

we need to be able to blame government for its doing, without taking a half-hour to explain it.

even if someone hates the idea of total freedom, we can at least pull the rug of good-government out from under them.

Stephan Kinsella October 21, 2011 at 6:05 am

The problem is that some left-libertarians pretend that this is about semantics as a cover for their substantive hostility for “market-capitalism”. And I think they exaggerate the semantic problems for this reason. Capitalism is still largely identified with a vigorous free market system, even if it can also connote aspects of the current crony capitalist order.

As an example of what I mean about the left-libs who actually reject even a free-market-capitalist order, see my reply to one “division by zero” here; in the comments on his blog post that I was commenting on, in replying on my own post, he explicitly writes that he opposes us “right” libertarians because w support “free markets and capitalism.” You can find such statements all over the left-libersphere, including comments derisive of property itself.

Of course many left-libertarians have no problem with employment, profit, property, the free market, and even “market-capitalism”.

Jeremy Weiland October 25, 2011 at 9:49 pm

It must confound the right libertarians (I know, I know you don’t like left/right, but you’re right of me) that we are a broad milieu with many different approaches to the legitimacy of markets, business, corporations, capital, etc. One of the reasons why a book like this could come out from the work we’ve been doing over the last (at least) ten years is because we’ve been engaged in dissecting and debating these matters — we’re not content just to settle on arbitrary definitions and then beat others over the head when they define differently. This is about getting at something deep and complicated.

As somebody who has an essay in this book (Let the Free Market Eat the Rich!) I’d have to say my fundamentalism about markets has degraded quite substantially. I think there’s ample evidence to show that our ways of thinking about meeting our needs are pretty narrow and often unimaginative. Markets are a tool, a social construct; they are not some sort of heroic ideal separate and apart from the culture they exist in. As such, left libertarians place equal emphasis on the surrounding context of market economics as we do on the rote economics itself.

This is actually what I tried to hint towards in my essay: that even completely free markets might lead to an egalitarian world noticeably lacking in the capitalist or even market-oriented trappings so prevalent in this day and age. So you are right, Stephan — some of us do not fetishize the market, and some of us even prefer different modalities and cultural means of meeting the needs of peaceful people. Our vision of what is possible, to say it the way it’s been said so well before, is not Walmart minus the state.

Stephan Kinsella October 25, 2011 at 10:32 pm

It must confound the right libertarians (I know, I know you don’t like left/right, but you’re right of me)

I reject the left-right spectrum so disagree with you on this. I am anti-state, anti-war, anti-drug war, not religious, pro-gay marriage, anti-IP.

that we are a broad milieu with many different approaches to the legitimacy of markets, business, corporations, capital, etc.

This is vague language. I mean a commie or fascist could say this too–they just have a different “approach” to the “legitimacy” of markets. So this says little.

One of the reasons why a book like this could come out from the work we’ve been doing over the last (at least) ten years is because we’ve been engaged in dissecting and debating these matters — we’re not content just to settle on arbitrary definitions and then beat others over the head when they define differently.

Anarcho-libertarians, e.g. Rothbardians and Misesian austro-libertarians, do not just “settle” on “arbitrary definitions” nor “beat others over they head” for “defining differenlty.” So this seems to be irrelevant, or a straw man.

I’d have to say my fundamentalism about markets has degraded quite substantially.

This is indirect language. All the anarcho-libertarian qua libertarian is concerned with is whether you respect property rights–period. Respecting property rights does not mean you are a “fundamentalist” about “markets” (whatever that means anyway).

I think there’s ample evidence to show that our ways of thinking about meeting our needs are pretty narrow and often unimaginative. Markets are a tool, a social construct;

I disagree. Markets are not a tool or a “social construct.” A market is what results when you have freedom and property rights.

they are not some sort of heroic ideal separate and apart from the culture they exist in.

So? Straw man.

As such, left libertarians place equal emphasis on the surrounding context of market economics as we do on the rote economics itself.

“Place” “equal emphasis” (whatever that means) on whatever you like. As long as you do not commit or condone aggression against private property claims, go ahead and “place” “emphasis” all you like.

This is actually what I tried to hint towards in my essay: that even completely free markets might lead to an egalitarian world noticeably lacking in the capitalist or even market-oriented trappings so prevalent in this day and age.

“trappings”? Any advanced industrialized society that has private property will have seen money emerge and the division and specialization of labor, and the private accumulation of capital. the rest is degrees and details. And predictions.

So you are right, Stephan — some of us do not fetishize the market, and some of us even prefer different modalities and cultural means of meeting the needs of peaceful people.

We Rothbardians do not “fetishize” “the market”. We revere individual freedom and justice and propety rights, and we have enough consistency, honesty, and economic literacy to realize what this means for a social order–it means a free market order with private ownership of capital, with profit and loss, with employment, with firms, with division and specialization of labor.

bitbutter October 21, 2011 at 7:52 am

@Tyrone

“Language is dynamic (as you all may know from reading Shakespeare), just like the market. “Capitalism” is a lost word. So is “liberalism”. Just deal with it, its not even like it matters. ”

The reason it does matter is that there’s currently no other term that expresses ‘an economic social order based on the the private ownership of the means of production’. And if capitalism ceases to mean that, without a serviceable substitute, then our language has become impoverished–certain ideas become much harder to express–to the advantage of our ideological opponents.

Yetanotherlibertarian October 21, 2011 at 8:58 am

“You’ll just be considered cheeky and might as well be speaking in Shakespearean English for all they care. ”

LOL!

Thx for that, made me really laugh!

Also I tend to agree: Terms like “liberal” and “capitalism” are used in many different ways all over the world.

I prefer terms like “free market”, “individualism” and “libertarianism”.

Michel Santos October 22, 2011 at 9:36 am

I agree with Tyrone on his point on debating words. I appreciate all of the discussions here that seek to clarify what people are speaking about. But, so, so, so often these debates both within and outside of the libertarian community are preoccupied with talking past one another on presumed definitions that I believe waste time, effort, and interest. These discussions are so frequently distracting from what is often intended to be discussed.

Rather, if attempting to be persuasive, I would humbly suggest to either define your terms upfront, or alternatively discuss ideas without using labels/terms which are known to be interpreted differently.

PS Discussions about historical definitions of words and ideas are slightly interesting but I believe that they should be separated from attempts at persuasion.

Jonathan M.F. Catalan October 20, 2011 at 7:18 pm

The problem is that people have as much of a problem with the word “capitalism” than they do with “unfettered markets”. The problem isn’t the word; it’s the definition. The only way you can get around it is by obscuring the definition.

K. Chris C. October 20, 2011 at 10:36 pm

Generally, those that live off the productive in society will give what ever system they use a neat little name. Their selected name is just what they call their ownership and control of the capital within that society. So capitalism as “instituted” in the US is Democratic-Socialism–”do what ever you want so long as we get a piece and we will define and control the commons.” Now that has morphed into outright Corporatism(Fascism).

It always involves capital, it is just who owns and controls it and its fruits.

Ohhh Henry October 20, 2011 at 11:05 pm

I don’t know, i just can’t share this opinion that we should give up the word capitalism.

Go ahead and keep the word capitalism if you want. If you’re looking to change some terminology then I recommend “time preference”. I can never remember which brand of time preference means “likes to save” and which one means “likes to consume”, and I’ll bet that a lot of people are in the same boat. Too bad, because it’s an extremely important concept and it’s very difficult to explain it to anyone when the preferred terminology is so hard to remember.

Roderick T. Long October 21, 2011 at 12:51 am

Thanks for the mention!

P.S. — the book is edited by Gary Chartier and Charles Johnson, not just by Gary.

Stephan Kinsella October 21, 2011 at 6:10 am

fixed.

Roderick T. Long October 21, 2011 at 12:54 am

Btw, if you want to know why we don’t like the word “capitalism,” see chapter 9. It has nothing to do with disliking capital accumulation!

Stephan Kinsella October 21, 2011 at 6:12 am

Roderick, do you agree there is a segment of left-libertarians whose problem with capitalism is not the word, but even what we mean by it–that is, they oppose even free market capitalism. They view it as exploitative, etc. Perhaps the left-libertarians who merely oppose the word but not the substance ought to make this clearer and distance themselves from the left-libertarians who oppose the substance.

Charles Johnson October 21, 2011 at 10:01 am

Stephan,

Roderick didn’t say that we “merely oppose the word but not the substance.” He said that the “substance” we’re opposed to is not “capital accumulation,” but rather something else.

Stephan Kinsella October 21, 2011 at 10:49 am

I think I follow you. I may be mangling my explanations (I am at an airport and in a rush). I primarily mean to express my disagreement as a libertarian, with those people who oppose private ownership of capital, and who think that the employment relationship is *inherently* exploitative. And I realize this is (apparently) not what you, Roderick, Chartier and presumably others in your book, believe.

Danny Sanchez October 21, 2011 at 2:13 am

Austro-libertarians who are giving up on the word “capitalism” are giving up on the prospect of getting other thought leaders to read, make sense of, and absorb the lessons of Human Action and Mises’ corpus in general. That is supremely foolish.

DixieFlatline October 21, 2011 at 8:01 pm

The need to appeal to people of a supposed social status is a flaw based in a delusion.

tonik October 21, 2011 at 6:30 am

“Voluntaryism” is the word I use to explain myself. It even has a do-gooder quality in it. Live and let live, who can opose that without sounding like tyrant?

http://en.wikipedia.org/wiki/Voluntaryism

Yetanotherlibertarian October 21, 2011 at 9:03 am

“Live and let live, who can opose that without sounding like tyrant?”

1) Everyone who thinks that what Hobbes said is true.

2) Everyone who wants to profit from the people in 1).

brian October 21, 2011 at 8:25 am

do the anti-capitalist, freed-market proponents have a term lined up to run to after this terminology is co-opted? what about after the replacement term is co-opted? what about after the replacement replacement term is co-opted?

it’s basically laziness in not wanting to defend the terminology because it’s difficult. is the task of defending terminology difficult? no problem! just give up and create a new term! when that term becomes to hard to defend, no problem! just give up and create a new term!

i can’t think of a better way to leave an absurdly confusing history of terminology. want to kill a movement, long term? then confuse the crap out of people with constantly changing terminology, all representing the same ideas and constantly being co-opted by the opposition.

pick a term and stick to it!

Topher October 21, 2011 at 9:50 am

This is a great point that I had never thought of before. It comes off as a bit harsh, but I think you’re right on. Right up until I read your post I would have said that even though I’m all for private property and voluntary exchange, I don’t like the term ‘Capitalism’ describing it, because the average twentysomething starts to foam at the mouth as soon as it’s mentioned, and stops listening to anything that’s said afterward.

But, the more truly capitalist solution to this problem is to invest time and thought into more succintly defining what we mean when we say the word ‘capitalism’ rather than creating a labyrinth of terms for posterity to navigate.

Charles Johnson October 21, 2011 at 10:40 am

You seem to think that the argument of the book is “people have used the word capitalism to mean nasty things, so we are not going to use the word ‘capitalism’ anymore, even though we advocate the same things that people used to call ‘capitalism.”” But that’s not the argument of the book. It is not primarily a book about political rhetoric. And the main point of the book is that market anarchists do not need to advocate all of the same things that people used to call “capitalism.” The point of a slogan like “Markets Not Capitalism” is that some of those things (individual ownership, free exchange, entrepreneurial discovery…) are worth defending, while others (the wage-labor system, the corporate economy) are not. It has often been claimed that the latter sort of thing is the inevitable or the natural result of the former sort of thing (both by people who intended to defend both markets and capitalism, and by people who intended to attack both markets and capitalism). But the argument of the book is that the underlying causal claim is wrong — that the wage-labor system, the corporate economy, etc. are not the result of free-market dynamics but rather of political privilege. And that freed markets could, or would naturally tend, to look quite different.

You also seem to think that the use of “capitalism” to refer to a free market economy is traditional meaning, and our use of it to refer to (for example) the wage-labor system is some “new” meaning we have assigned to it for dubious rhetorical purposes. But I don’t know what evidence you have for this philological claim. Certainly, you haven’t presented any of it here. Gary Chartier’s essay in Ch. 9 distinguishes three common historical and contemporary meanings of the term “capitalism” — capitalism-1, meaning simply the free market; capitalism-2, meaning state privileges to business; and capitalism-3, meaning economic and social domination of the employer class. The term “capitalisme” in French (and cognate terms “capitalism” in English and “Kapitalismus” in German) first started being used to describe a social or economic system in the early 19th century. When Louis Blanc wrote about “capitalisme” in the 1840s (in his Organisation du Travail) he said that it meant “the appropriation of capital by some to the exclusion of others,” and when Proudhon wrote about “capitalisme” in the 1860s (in his La Guerre et la Paix), he said that it meant “Economic and social regime in which capital, the source of income, does not generally belong to those who make it work through their labour.” Neither is clearly identical with capitalism-1. Blanc’s definition may be capitalism-2, or it may be capitalism-3, depending on what sort of “appropriation” and “exclusion” he has in mind. (Certainly, a lot of the appropriating and excluding that was going on in France in the 1840s had nothing to do with free markets and everything to do with state privilege.) Proudhon’s definition is simply capitalism-3. Now, maybe you think the word shifting in meaning from these early uses; lots of words do. “Silly” used to mean holy, and “snob” used to mean a member of the working class. The fact that a word was traditionally used one way is no argument for continuing to use it that way. But the claim that we are simply coining “new” terms because we don’t like what became of the “old” ones, and we are somehow too “lazy” to make our arguments according to the old usages, is misleading, under-argued, and completely uncharitable, not to mention being pretty close to completely the opposite of the actual history of the words involved.

brian October 24, 2011 at 11:44 am

this is what i’m talking about. i haven’t read the book and don’t think anything about what it’s about. i’m referring to the arguments made like yours above. most of us can agree that capitalism, for everyday purposes (the ones that matter) means “the private ownership of the means of production”.

if you want to start over educating people from scratch, because an etymology book says something 99.9% of people will never know about, go ahead. i, on the other hand am going to clarify existing terms and promote the movement from there.

there wasn’t a terminology problem and there still isn’t. this is, in my opinion, a ruse by some to gain recognition for advances in a philosophy that is, by and large, already sorted out. i appreciate chartier’s (and much of the other c4ss folks) contributions, in general, but this terminology debate is holy…um, i meant silly.

Charles Johnson October 26, 2011 at 12:29 am

this is what i’m talking about. i haven’t read the book and don’t think anything about what it’s about. i’m referring to the arguments made like yours above.

You may be referring to it, but you don’t seem to have understood it. The argument that I made above has nothing essentially to do with whether you should choose to call market freedom or individual property “capitalism” or whether you should choose to call them something else. That was your argument (that “we” should not be so hasty, or so lazy). I have my own views and I’ve made my own choices on that, but neither the main argument of the book, nor the argument I just posted above has anything to do with that rhetorical choice. The primary argument I’m making above is that whatever you call market exchange, individual ownership, entrepreneurial discovery, etc., those things do not necessarily produce the set of substantive economic outcomes (large inequalities of wealth, the concentration of capital in the hands of a few highly centralized corporations, the predominance of rent and wage-labor, the corporate economy, etc. etc.) that many people (both pro-”capitalist” and anti-”capitalist”) have traditionally said that they produce. You can signal the distinction by distinguishing “the market form” from “capitalistic patterns of ownership” (as we do), or you can signal it with some completely different set of terms (“laissez-faire” vs. “corporatism,” “clean” capitalism vs. “crony” capitalism, “zaxlebax” vs. “brabubrabu”, whatever). What I care about is the capacity to clearly see and explain the difference between the market form and stereotypically “corporate” or “capitalist” outcomes in the patterns of ownership and employment. Use whatever set of terms makes it easiest for you to see that and explain it.

most of us can agree that capitalism, for everyday purposes (the ones that matter) means “the private ownership of the means of production”.

I entered into the “terminology debate” about what “capitalism” means and where the term comes from only because you brought it up, in the course of making the completely unsourced and factually mistaken claim that we were introducing a “replacement term” for the traditional term “capitalism,” apparently because we are too lazy to defend a meaning that is “already sorted out.” Actually, the meaning of the term “capitalism” is very much more complicated than that, and your terminological dispute against our usage — is, as far as I can tell, a matter of completely unsourced, and factually mistaken claims about the way the term has been, and is currently, used.

… most of us can agree that capitalism, for everyday purposes (the ones that matter) means “the private ownership of the means of production”.

Well, I’m glad that most of you can agree. But the point of mentioning actual sources was to provide evidence that actually a lot of people have used the term in different ways from the way you think “most of us can agree” on. In any case, your proposed definition doesn’t actually solve the problem of conflating market forms with the wage-labor system and the corporate economy. You could use it to mean the former, or you could use it to mean the latter, or you could do what most people do, which is to simply jumble both together as if they were the same thing. My main interest, again, is to un-jumble the mess, and to defend the claim that the one part (market process) does not necessarily produce the other part (concentrated control of ownership and employment). If our particular set of terminological distinctions don’t help you out in getting clear on that point, but some other set does, that’s fine. I’m interested mainly in the economic argument, not in the language that is used to express it.

Phinn October 21, 2011 at 10:01 am

Part of the root problem is the stain on the term “profit.”

Profit simply means benefit. It means something is improving. It means being better off than you were before. Somehow, “profit” became something bad and “non-profit” became virtuous. It’s insane, but in the popular mind, profit is wrong. How can not-improving be considered good? It’s bad by definition.

The confusion, of course, is focused on the use of the term “profit” in the context of business, specifically when it’s used to describe the portion of an enterprise’s revenue that goes to the entrepreneur.

All the other revenue of a business flows into paying overhead, which are typically (but not always) fixed prices paid in advance. This includes the price paid to employees who do the physical labor. They typically get paid a fixed amount regardless of whether the entrepreneur gets paid anything.

But the entrepreneur takes his share last, and at a variable rate depending on the unpredictable success or failure of the enterprise. He is first in line for taking the risk of not getting paid.

People usually have no trouble seeing that wages are the market price for employees. That price is affected by the contribution he makes to the business, and how rare his skills are. A guy who can write custom-designed software is more rare than a guy who can stamp out widget parts. They see that surgeons make more than janitors.

But for some strange reason, people have trouble understanding that profit is really just the market price that the entrepreneur gets paid for his contribution to the business.

This is probably because most people have no real clue what entrepreneurs do, or what they contribute, or why they succeed or fail. First and foremost, an entrepreneur’s job is to identify unmet wants. They calculate and predict the overhead costs of catering to those wants. They manage, supervise and marshal resources. They organize. These tasks require skill and experience. These services have a market price, just like programmers, surgeons and janitors.

The market price of entrepreneurship is the profit a business makes. In conventional business arrangements, that portion of revenue goes to the owner of the business.

Why should laborers be paid but entrepreneurs should not? They both profit. They are both better off than they were before, or better than they would have been if they hadn’t done productive work. Why is the profit motive bad? Why is catering to unmet needs, and doing it more efficiently than others, a moral outrage?

This is the root. The Left despises entrepreneurial profit. They want to destroy entrepreneurship by putting the State in charge of every business and industry, so that the State’s replacement-entrepreneurs get paid a fixed amount, like laborers do.

This, of course, destroys the signals needed to know when one’s entrepreneurship is succeeding or failing, which is why PBS and NPR are so damned boring.

When the Left can’t destroy entrepreneurship by socializing an industry, they tax the crap out of profit. After all, the tax euphemistically called the “corporate income tax” is really just a business profit tax. The overhead is not taxed. Only the entrepreneur’s portion of revenue is taxed.

Capital is what entrepreneurs work with. The Left hates capital and capitalism because they hate it when entrepreneurs get paid.

We’re not going to rescue “capitalism” until we rescue “profit.”

Zeno Izen October 21, 2011 at 2:53 pm

Aye to this. The disdain of capitalism is really the disdain for profit… and the general lack of understanding that profit goes to both sides of a profitable transaction.

I could go on… and on. But I’ll tl;dr on my own time. Suffice it to say that WE GOTTA REHAB PROFIT. Not just the word but the concept of it. The collectivists have demonized profit and only by undoing that are we going to break the hypnosis of the masses and reverse the slow crawl toward neofeudalism.

L.A.Bloxham October 21, 2011 at 10:19 pm

To Phinn
Excellent. I had recently blogged the same thing but not nearly so adequatley and succinctly.
Thanks!

Charles Johnson October 21, 2011 at 10:46 am

Stephan,

Thank you, by the way, for this (very generous) mention, and for the kind words about how we and our publisher are distributing the book (Minor Compositions does the same thing with everything they publish — part of the reason I am so glad that we have been able to work with them as a publisher). I know that you (not to mention others here) deeply disagree with a lot of what we argue, but I hope that folks here may find a lot of interest to raise some questions and provoke conversation in it, whatever side of those conversations they may be on.

Coreleone October 23, 2011 at 7:59 pm

I prefer to read books printed on paper, not computer screens, so I look forward to the release of your new book and intend to purchase it. Hopefully, the book will clarify the essential differences between “left” and “right” libertarians.

Charles Johnson wrote above: “…including the massive subsidy to companies at or near the inflation spigot….” What companies are at or near the inflation spigot?

Charles Johnson October 24, 2011 at 4:28 am

Thanks! I hope you’ll enjoy.

The reference to the “inflation spigot” is a reference to the streams of fiat-currency purchasing power proceeding from central banks outward to their clients. The companies immediately at the spigot are almost all banks and financial corporations like CitiGroup, Chase, Bank of America, Goldman Sachs, et al. Those “near” the spigot are the companies that receive the most significant influx of loans and investment from the financiers who are right at the spigot. (So, for example, Fortune 500 companies as a group tend to be pretty close — due to their reliable access to, and constant dependence on, heavy external financing, institutional investment, and very big lines of cheap credit from big international banks. Capital-intensive heavy industry, for example. Smaller companies tend to be somewhat further away. Wage-workers and consumers tend to be furthest away (although bubble-money can always reach some segment of wage-workers — e.g., homeowners, during the mortgage-financing bubble — it comes at the expense of all the other segments, through ratcheted-up costs of living, relative declines in real wages and the purchasing power of savings, etc.).

Stephan Kinsella October 24, 2011 at 10:57 am

One odd thing I’ve noticed is that often when Austrian-aware types talk about the inflation ripple effect, they tend to focus on how the early-recipients of the money benefit compared to the later-recipients, since the early recipients get the money before it’s caused prices to rise. But often in such an observation, the state is ignored–it is what gets the true advantage by printing and then spending the money on desired goods or services: in effect it gets these things for free, and they are paid for by everyone in society in general by a diminution in their money’s purchasing power. The first recipient of the money only has a tiny advantage. For example if the state prints $1M and buys a building, it gets teh building for free. But the seller presumably paid say $800k for the land and to construct the building, and took risks etc., and so made a profit similar to what he normally would have made, although yes, he got the money earlier before it’s had a chance to inflate price. but that’s not a huge advantage to him. The real advantage is not to the early recipients of money, but to the initial counterfeiter who gets to spend it. I am often surprised that people focus on the slight advantage of the first recipient of the money, instead of on the creator of the money.

Jake Barnett October 24, 2011 at 11:53 am

I see the value in your point, Stephen, but is the Government always the first beneficiary of expanding credit? What about the instances where the Federal Reserve is creating credit and handing it out to preferred investment banks or corporations like McDonald’s or Ford Motor? Aren’t they able to spend that money to pay debts before the inevitable inflation? The Fed Printed 15T last year in “commercial paper” that was handed out here at home and overseas, and unless all of that money was used immediately to buy treasuries, I don’t think your point applies in all cases. There are some cases where the “first to touch the money” criticism is valid. I could be missing something, though.

Charles Johnson October 24, 2011 at 10:05 pm

Stephan,

Well, I don’t think I was denying that government benefits from inflation…. The claim that some companies also benefit, and do so at the expense of other economic actors, is hardly rivalrous with the claim that government benefits too. But it came up in this thread specifically in connection to a question about ways in which large corporations are subsidized; so it seems relevant to point out that early receipt of inflationary money-surges is one of those ways. The benefits which the state derives, while perhaps larger and certainly morally worse (since e.g. they pay for murdering Afghans and other noble projects), are somewhat less relevant to that particular topic of conversation, and hence less likely to get mentioned….

As for how “real” the “real advantage” is, well, it depends on the line of business you are in, and where you are in the queue. In any case the state does not simply print up money and use it to buy durable goods; rather, what happens is that one branch of government invents balance-sheet money, loans it out to banks in the Federal Reserve system, and then those banks turn around and purchase up a number of investments, very prominently including bonds from other branches of government. Then, downstream, the state uses that money to buy buildings, bombers, prison-camps, etc. The state gets these things for “free,” but not (directly) because of the invented balance-sheet money (which they have to pay back with interest), but rather because they can “pay it back” by taxing the rest of us. The bond-buyers essentially benefit (in part) by having one branch of government lay out artificially cheap financing by which they can buy into a share of tax farming from another branch of government. This is a rather different position to be in than your hypothetical builder. Unlike in a Greenbacker scheme, they are in fact upstream from state fiscal policy, not downstream from it, and the issue is not so much that their line of business would be less profitable as that it would simply be impossible. First recipients like Chase (say) essentially have no line of business at all except for the manipulation of sources of artificially easy credit, and have repeatedly shown that the main consequence of credit tightening up to reflect market realities is that they suffer from catastrophic cascading business failures, and would be bankrupt if not for literally trillions of dollars of assistance from both fiscal and monetary policy-makers.

Stephan Kinsella October 25, 2011 at 10:52 am

Charles,

Well, I don’t think I was denying that government benefits from inflation…. The claim that some companies also benefit, and do so at the expense of other economic actors, is hardly rivalrous with the claim that government benefits too.

Right. YOu were not denying it. I just find it odd that those aware of the baleful effects of this kind of money supply inflation always focus on this early-recipient advantage, and often leave out the much more major advantage that the state as money creator has.

Suppose an individual A gains the ability to counterfeit US dollar bills. So let’s say he prints up $10 million a year, and spends them on houses, yachts, partying. Now he is basically receiving these goods and services from people in the economy, for free. Is he “stealing” it from the people he pays the money too? No, he steals it from everyone in the economy in general, by eroding the purchasing power of their money. YEs the price increase ripples spread out like the ripples from honey that you pour into a jar, and yes, the early recipients get the money and are able to re-spend it before its power is eroded. But is this a huge advantage, really? Suppose B has his house for sale for $500k. Now A prints the money and buys B’s house. B probably could have sold his house to some third party C if A had not come along. So B is not much better off than he would have been. Yes, he had one extra customer bidding for his house–so maybe he sold it for slightly more than otherwise. Maybe he would have sold it for $480k to C. So he is $20k better off. And yes, now he has the $500k to spend, at current prices, before they get micro-inflated and the price inflation spreads to the rest of the economy. So if he spends the $500k now, he gets $500k worth of products at current prices. If he got the $500k a year later, it might only be worth $499k because of price inflation. So he is $1k better off.

I mean, the early recipients are really not that much better off, IMO. Or the “benefit” seems trivial to me–for inflation/early money purposes. A more significant benefit to them is that now they have a guaranteed or more customers/demand, letting them charge higher prices in the first place–as my example above gave it, the hosue was sold for $20k more than otherwise, while the early-inflation advantage was only $1k. (I am admittedly making these numbers up, but to illustrate my point.)

But the $21k of benefit receives by B is dwarfed by the $500k of benefit received by A.

But it came up in this thread specifically in connection to a question about ways in which large corporations are subsidized; so it seems relevant to point out that early receipt of inflationary money-surges is one of those ways.

I agree; I just view this advantage as relatively trivial in the scheme of things, compared to a host of other ways state actions and policies benefit them.

The benefits which the state derives, while perhaps larger and certainly morally worse (since e.g. they pay for murdering Afghans and other noble projects), are somewhat less relevant to that particular topic of conversation, and hence less likely to get mentioned….

Agreeed, but I was making a general point as, as I said, almost every time I see this early-inflation advantage mentioned, it’s odd that the much huger advantage to being the first SPENDER (as opposed to first “recipient”) seems to be ignored. The first recipient still has to provide some good or service to the buyer, to get the money, so at most they make a profit: the difference between their cost basis, and what they are paid. But the first SPENDER is printing the money for free so he captures a 100% gain of the money printed, by stealing that much from society-at-large in the form of money-clipping.

libertyvini October 25, 2011 at 11:09 pm

Yes Stephan, but many of the sellers to the government of goods and services purchased by “free” money would not even exist except for said “free” money. In that instance, modest benefit or no, 100% of the PROFIT made by selling such an inverted-marginal good or service would simply not exist without the inflation. The contractors that infest DC like flies around a garbage can, to the extent that they are paid money that was simply printed, should not even exist, else they should by making an honest living on the market. But even the contractors who are paid in confiscated funds from a solvent government (I am thinking about the clouds of flies around the statehouses, and the county courthouses, and the town meeting halls) are still benefitting insofar as they are being paid monies that they would otherwise have had to shift for on the market.

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