As many of our readers will know, anarchism comes in both free-market and socialist varieties. Free-market anarchists (or “anarcho-capitalists”) like Gustave de Molinari and Murray Rothbard favour replacing the monopolistic state with competing private services in a fully capitalistic social order based on private property and free exchange. By contrast, socialist anarchists like Mikhail Bakunin and Peter Kropotkin regard private property and the state as twin sources of oppression and propose to abolish both.
But what, then, could free-market socialist anarchism possibly be – other than an oxymoron?Well, a number of nineteenth-century anarchist thinkers, such as Benjamin Tucker and Lysander Spooner, were “socialists” in the sense that they by and large accepted a labor theory of value; condemned the wage system as oppressive; called for workers’ control of industry; and interpreted profit, rent, and interest as forms of exploitation – but they were “free-market” in the sense that they regarded the evils of “capitalist” society as the product not of the unhampered market but of governmental intervention, and so recommended abolishing not private property but the state.
Individualist anarchist Kevin A. Carson’s recent book Studies in Mutualist Political Economy seeks to rehabilitate the free-market socialist anarchist position – as the portrait of Benjamin Tucker gracing the cover might suggest. The latest issue http://blog.mises.org/archives/004869.asp(20.1) of the Journal of Libertarian Studies is a symposium issue devoted to an appraisal of Carson’s book from an Austro-libertarian standpoint.
The symposium begins with a reprint of Murray N. Rothbard’s 1965 article “The Spooner-Tucker Doctrine: An Economist’s View,” in which Rothbard expresses his intellectual debt to Spooner and Tucker on matters of political theory, but argues that in economic theory, especially monetary theory, they were fundamentally confused. Rothbard also expresses dissent from Tucker’s rejection of the legitimacy of absentee land ownership. (Rothbard seems to have thought that Spooner held this position also, but it now appears not.) While obviously not directed specifically at Carson’s particular statement of the position (which is in many ways more nuanced than his predecessors’), Rothbard’s discussion may serve as a useful introduction to the some of the chief commonalities and differences between the Austro-libertarian and free-market socialist anarchist traditions.
Carson defends the labor theory of value, but in a subjectivized form, holding that the price of a good tends to correspond to the subjective disutility of the labor needed to produce it – since a higher price would be whittled away by competition while at a lower price the good would not be produced at all. In “The Labor Theory of Value: A Critique of Carson’s Studies in Mutualist Political Economy,” Robert P. Murphy finds Carson’s book impressive in many ways, and concedes that Carson’s statement of the correspondence between price and disutility of labor is essentially correct; but Murphy denies that this constitutes a genuinely explanatory theory of price formation. Murphy argues for the superior explanatory power of the Austrian approach, and also defends Böhm-Bawerk’s critique of the labor theory against Carson’s objections.
In “Kevin Carson as Dr. Jekyll and Mr. Hyde,” Walter Block charges Carson with confusing laissez-faire capitalism (the absence of government interference in the market) with state monopoly capitalism (government interference on behalf of owners of capital). Block applauds Carson’s critique of state monopoly capitalism, which he finds to be excellent and properly libertarian; but in Block’s view Carson then illegitimately slides into a critique of laissez-faire capitalism as well. The result, Block concludes, is a book that alternates frustratingly between an insightful libertarian Jekyll and a confused anti-libertarian Hyde.
For George Reisman, by contrast, Carson’s book is all Hyde and no Jekyll. In “Freedom Is Slavery: Laissez Faire Capitalism Is Government Intervention: A Critique of Carson’s Studies in Mutualist Political Economy” (see the introduction here), Reisman maintains that Carson’s position is essentially Marxism with a libertarian veneer. Reisman argues that Carson’s preference for local, worker-managed industry ignores the scarcity of entrepreneurial skill and the importance of the division of labor, and that Carson’s hopes for a lowered interest rate through credit expansion in a free-banking system run afoul of Misesian monetary theory. Reisman also criticizes Carson’s historical arguments for the claim that the present-day separation between labor and capital is the result of illegitimate government intervention.
In “Land-Locked: A Critique of Carson on Property Rights,” I defend a Lockean or Rothbardian theory of land ownership against Carson’s arguments for Tucker’s proposed prohibition on absentee land ownership. Carson maintains that the principle of self-ownership alone provides no basis for choosing between the Lockean and Tuckerite positions, so that the choice must instead be based on utilitarian considerations (which he thinks favor the Tuckerite option). I argue, to the contrary, that the Lockean position can be derived from the principle of self-ownership, while the Tuckerite position cannot.
In “Carson’s Rejoinders,” Carson offers rebuttals to the above criticisms. For example, he maintains that Rothbard’s and Reisman’s interpretation of Tuckerite monetary theory as inflationary is a misreading, and that Tucker’s banking proposals in fact resemble Rothbard’s recommendations for deregulating the insurance industry; as for Murphy’s and Block’s proffered counterexamples to the labor theory of value, Carson contends that these are in fact exceptions predicted by the theory rather than true counterexamples. To my critique of Tuckerite property theory, Carson responds that the Lockean and Tuckerite theories differ only as regards what counts as abandoning property, a difference that mere appeals to self-ownership do not appear to adjudicate.
To the charge of being Jekyll and Hyde (or just Hyde), Carson responds that it is not he but rather Block and Reisman who have confused state monopoly capitalism with laissez-faire, sliding from a proper defense of the latter to an improper defense of the former; he also charges them with downplaying the significance and/or injustice of the enclosure acts (which Carson sees as the coercive governmental origin of the separation between workers and ownership) and with a number of misinterpretations of the claims in his book.
This issue is sure to provoke debate. Don’t be the only kid on your block without one – subscribe now and receive a PDF of this symposium issue instantly!
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“By contrast, socialist anarchists like Mikhail Bakunin and Peter Kropotkin regard private property and the state as twin sources of oppression and propose to abolish both.”
Regarding the positions of Bakunin and Kropotkin and their followers, as Mises unequivocally demonstrated many years ago, abolish private property in the means of production, and economic calculation and the rational allocation of the factors of production become impossible. How society is organized then becomes a moot point, as society would be impossible. Under a worldwide socialist economy, literally the large majority of us would be dead, and those few remaining human beings would lead a primitive hand-to-mouth existence.
We can argue about the proper ethical and political organization of human interaction, but no amount of discussion can invalidate Mises’s economic insight regarding the paramount importance of economic calculation to the establishment and advancement of society and the human race. The laws and conclusions of economic science hold no matter what ethical/political system one chooses to adopt regarding human interaction.
Nine U.S. Troops Killed in Iraq; Three Missing
This is nuts!!!!!!!!!
My first point is that worker-ownership is indeed encouraged under classical free trade liberalism; in nearly all great entrepreneurial organizations. If the folks who start and own a company are not workers, then I wonder why they do so much work. Horizontally integrated, streamlined enterprises with high productivity seem to have wider ownership and incentive-based compensation.
I argue that ownership, virtual ownership, and production-centric compensation are all part of classical free trade liberalism; they are already baked into the cake. Companies that do not operate this way would likely be forced to change or be eradicated by the competition if the state and its system were abolished.
Now, my second point is that in a free society, or an “open society” as Popper calls it, there is no entity to tell people how to run their companies. Some companies may be majority-owned by employees, and others may be majority-owned by shareholders outside the firm. This seems natural to me; it gives everyone the choice to buy, own and sell at their choosing. Now, if the state is gone, then who would be around to enforce one system of ownership over another?
The site appears to be developing an obsession with Dr Carson.
That the economic value of a good or service is a matter of what people think it is (i.e. is not a matter of the cost of production) is true by DEFINITION (it is not a matter of proving it).
Different people put different values on the same good – and the prices they offer for it will be less than or equal to the value they place upon it (unless they are offering a higher price as a way of giving the seller money – as hidden charity).
If this is less than the cost of production (not just labour costs) the seller has the choice of selling at a loss or not selling.
As for lending out money for people to build factories.
Lending (for any purpose) must be from real savings (i.e. income people have chosen not to consume).
Trying to finance borrowing by printing money (or book keeping tricks) in order to “reduce interest rates”, sets in motion a boom-bust cycle.
In short both the “labour theory of value” and the credit expansion way of getting rid of “monopoly capitalists” are nonsense.
I know we are supposed to be polite on this site.
But, as I have written before, I am irritated (to put it mildly) that people can earn a living by writing nonsense and other people waste time writing formal examinations of this nonsense.
Some of us do not have such an easy time in life.
I consider myself an anarchist in the Bakuninist tradition, though I agree some of his economic views are archaic. I would qualify any criticisms I would have of Bakunin and Kropotkin in this regard by adding that their economic views can only be understood within the context of their times. Both of them originated from feudal Russia where a type of peasant-based communitarian, agrarian anarchism was the virtual norm among the rural population, although the rule of the landlords and the czars were superimposed on top of it. Here’s an interesting article by M. Raphael Johnson describing this situation:
http://rosenoire.org/articles/Peasant_Commune.php
So within the context of their times and social environment, the economic ideas of Bakunin and Kropotkin made a lot of sense. They simply wanted to eliminated the parasitical class of feudal exploiters and leave the peasant communes be. This approach might still have merit in those parts of the world where a traditional peasantry is still strong or where similar communal traditions still exist (Africa, for example).
I think Bakunin’s most important contributions to anarchist theory are in the realms of class theory, his criticisms of Marxism and his approach to revolutionary theory. Kropotkin’s main contributions are as a sociologist and historian. I would particularly recommend his book “The State: Its Historic Role”, a history of the development of the state that parallels the work of his contemporary Max Weber as well as modern scholars like Martin Van Creveld.
On the major economic questions, I generally agree with what Bradford Cross says in his above post.
That the economic value of a good or service is a matter of what people think it is (i.e. is not a matter of the cost of production) is true by DEFINITION (it is not a matter of proving it).
Marks, you need to read Carson’s book before you talk any more about what you think the labour theory of value is. Hell, you need to read the blog post to which you’re responding. Prof. Long says:
Carson defends the labor theory of value, but in a subjectivized form, holding that the price of a good tends to correspond to the subjective disutility of the labor needed to produce it… (emphasis his)
- Josh
“Carson defends the labor theory of value, but in a subjectivized form, holding that the price of a good tends to correspond to the subjective disutility of the labor needed to produce it… (emphasis his)”
So this is still wrong. Why does it matter?
“So this is still wrong. Why does it matter?”
Insofar as it IS wrong, it is important to demonstrate why and to defend what we take to be the correct view against his theory. There is also the argument Mill made that full understanding of one’s own position can’t be had without confrontation with the differing views of others…complacency, dogmatism, and rote memorization are the likely results otherwise. Additionally, maybe we have something to learn from Carson; even if he turns out to be wrong on most things, he may not be wrong on everything and we won’t know unless we read him, attempt to understand his work, and determine what is right and what is wrong in it.
The definition put forward by Carson is almost exactly alike to the one associated with Marx and Engels. Karl Marx wrote about diamonds losing most of their value if they could be found everywhere beneath the top soil, but if a few diamonds were found easily that would not correspond to dramatic decreases in value and price. We see something like this concerning coal. There is coal in Australia and the UK, but companies in the UK will actually import the exact same type of coal from Australia just because it’s easier to mine.
I think there indeed is some merit to that conclusion and the labor theory of value should not be tossed out so easily by some. I’ve been playing with the labor theory for quite sometime now and I have yet to hear one argument that blows it up. But please, do provide.
I haven’t read Murphy’s critique, and let me qualify, that I’ve only read parts of Carson’s work.
My preliminary assessment, (like Gene Costa, I’ve been wrestling with this topic internally for a while now) is that, of course labor is the ultimate “creator of exchange-value in its own right,” but again I think it’s imperative to remember that labor is paid throughout the productive process and prior to realization or recognition of any revenue whatsoever. Labor certainly assists in the creation of all things valuable, but value (at the terminus of the process) is not determined by the past labor embodied during the production of such valuable things. Now an objection might be that the labor costs are determined by labor’s opportunity costs, and so in a free market the labor-theory still holds. But the opportunity costs are also appraisals of the potential future values of whatever else may be produced by labor, and these values are no more certain than the anticipated value of what labor chooses to produce. No matter which course of action taken by labor, labor will continue to receive compensation during the productive processes regardless of whether the final product is deemed sufficiently “valuable” on the market to cover the costs incurred during its production.
“There is also the argument Mill made that full understanding of one’s own position can’t be had without confrontation with the differing views of others” Mill’s argument has rather inane implications, such as that we need to argue with people who argue that contradictory things exist. No, we don’t. We only need to argue with coherent claims, not nonsense.
Also, given that we have limited time to be alive, we can make reasonable assessments as to what is stupid gibberish not worth looking at.
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