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Source link: http://archive.mises.org/8541/left-anarchists-and-progressive-taxation/

Left Anarchists and Progressive Taxation

September 18, 2008 by

I previously criticized (2) the anti-market anarchists’ (“vandarchists”) breaking of Macy’s windows (and the apparent defense of this by even some left “market” anarchists).

I was reminded of this when I read Joe Biden’s obscene statements that it’s the patriotic duty of the rich–well, those who make more than $250k a year, I guess–to consent to the imposition of higher progressive income tax (so that the state can “take” their money “and put it back in the pocket of middle-class people”–put it back?). Now I would have thought libertarians are of course opposed not only to taxation, but also–especially–to progressive taxation, since the latter is punitive, redistributionist, etc.On another thread, I noted that the vandarchists–these anti-market “anarchists,” and perhaps some left anarchists–seem to assume that any “big” corporation is basically part of the state. Roderick Long replied that the problem is the “high degree of statist involvement. But under present conditions the two tend to be correlated.” I accused the vandarchists of believing that any large firm is suspect because it could not exist in a real free market.

Long offered one possible defense of the Macy’s window smashers as follows (I don’t think he necessarily agrees with it):

Maybe they do think that, but in order to think that bigness is suspect, one doesn’t have to believe that bigness couldn’t be achieved under a free market. All one has to believe is that under a system like ours, bigness can’t be achieved without statist involvement. By analogy: there’s no correlation in general between being well-fed and being a rat fink, but among concentration-camp prisoners there probably is.”

Now, while this is an interesting analogy, I don’t think it’s apt. I don’t regard our society as analogous to a concentration camp; indeed, according to Mises’s insightful test that an economy is not socialist if it has a functioning stock market, the economy, hampered and regulated though it is, is essentially free market. But consider the implications of this argument. If leftists think that “bigness can’t be achieved without statist involvement … under a system like ours,” then wouldn’t affluence also be suspect? Anyone who is wealthy presumptively must have cooperated with the state to basically expropriate the workers. Of course, this is the same old leftist tripe–the view that the west got rich by exploiting the third-world countries. But if you have this view of bigness, of corporations, of society, then you would have to regard wealthy individuals are presumptively corrupt and part of the state. And as not entitled to their ill-gotten loot. Thus, progressive taxation would have to be favored, as a way of taking stolen loot from the robber-rich and returning it to the alienated, exploited workers. Vive la revolucion!

Clarification: Several people have commented that just because an economy is not socialist does not mean it is a “free market”. Sure. I could have been a bit more clear. You can have a free market; a regulated free market; and outright socialism. My point above is not affected. Here is Rothbard’s recounting of Mises’s observation:

One time I asked Professor von Mises, the great expert on the economics of socialism, at what point on this spectrum of statism would he designate a country as “socialist” or not. At that time, I wasn’t sure that any definite criterion existed to make that sort of clear-cut judgment.

And so I was pleasantly surprised at the clarity and decisiveness of Mises’s answer. “A stock market,” he answered promptly. “A stock market is crucial to the existence of capitalism and private property. For it means that there is a functioning market in the exchange of private titles to the means of production. There can be no genuine private ownership of capital without a stock market: there can be no true socialism if such a market is allowed to exist.”

I think Mises was right: if there is a functioning stock market, you cannot have true socialism. Now I was using Mises’s point here analogously to Roderick Long’s example of how those who are fat in a concentration camp are probably collaborating with the guards. I would say that the extreme case of a “concentration camp” is analogous to the extreme case of “true socialism.” Since we have a functioning stock market, we do not have true socialism yet. Yes, our market is hampered and regulated; no, it is not totally free. Of course. But it is not such an outright socialist economy that the only way to prosper is to be part of the exploiting class. Rather, in our very productive economy, it is private enterprise that is productive, despite the shackles imposed on it by the state. There may be reason to presume that a successful corporation “plays by the state’s rules”, but not to conclude that it is part of the exploiting class.

{ 26 comments }

Brad Spangler September 18, 2008 at 10:41 am

Kinsella has apparently only thought this through half-way. No one has to support *any* state policy. All Kinsella has done is notice the contradictions inherent in statism — even “libertarian” statism.

Richie September 18, 2008 at 10:46 am

Unfortunately, most people view the wealthy as sitting around a pool sipping on champagne and eating caviar all day while “exploiting” workers. Most wealthy people are small-business owners. It’s not the “evil” CEOs earning “exorbitant” salaries.

Inquisitor September 18, 2008 at 10:54 am

If you’re writing in French, it’s Revolution, no “c”. Anyway funny blogpost. :)

fundamentalist September 18, 2008 at 11:10 am

Stephan: “…an economy is not socialist if it has a functioning stock market…”

I see the logic in this, but did Mises mean that a stock market is the test of a totally socialist state? It seams that economies are usually mixed and reside on a continuum from absolute capitalist to absolute socialist. States are either mostly socialist or mostly capitalist. I think European countries would be highly offended to be called capitalists because they have stock markets.

And how does this square with Mises’s two varieties of socialism, the German and the Russian? German socialism allowed private property on paper, but the state controlled all aspects of business. Did Germany under the Kaizer and under Hitler have stock markets?

August September 18, 2008 at 11:13 am

I think government interference in markets tends to increase the size of corporations because government interference represents a cost. So companies grow larger than they would in a free market in order handle this cost most effeciently. Notice this is a blame free observation that in no way justifies leftist-anarchists breaking windows that they wouldn’t own even in a completely state-free environment.

It is reasonable to see corporations as the children of the state, but it’s possible to have a future in which they are neither punished for, nor perform, the sins of their father.

Brian Drum September 18, 2008 at 11:31 am

Stephan: “…the economy, hampered and regulated though it is, is essentially free market.”

No, the “hampered and regulated” part is exactly what makes a market essentially unfree. How can a market be both hampered and free at the same time?

Calling the US economy a ‘free market’ serves only to confuse people. It makes the term meaningless.

jp September 18, 2008 at 11:49 am

Zimbabwe has a functioning stock market. According to Kinsella, Zimbabwe would therefore have a free market. But that would be a pretty silly conclusion to make as we all know that Zimbabwe has one of the most oppressive governments in the world.

I agree with fundamentalist that differentiation between capitalist/socialist is more about shades of gray than absolutes.

Richie September 18, 2008 at 12:05 pm

Brian Drum: “No, the “hampered and regulated” part is exactly what makes a market essentially unfree”

Exactly. The U.S. market is not “free”.

Geoffrey Allan Plauche September 18, 2008 at 12:13 pm

I agree that the US does not currently have a free market. What we have is a regulated market, a mixed economy. A free market is one that is free of, or at least largely free of, government intervention.

Walt D. September 18, 2008 at 6:12 pm

I think New York State and New York City are going to find out why progressive taxation is a bad way to raise revenue. This year, they are going to be short all the windfall they get from Wall Street. California is still in trouble from basing their budget on revenues from the dot.com boom going on for ever.

Walt D. September 18, 2008 at 6:13 pm

I think New York State and New York City are going to find out why progressive taxation is a bad way to raise revenue. This year, they are going to be short all the windfall they get from Wall Street. California is still in trouble from basing their budget on revenues from the dot.com boom going on for ever.

Walt D. September 18, 2008 at 6:13 pm

I think New York State and New York City are going to find out why progressive taxation is a bad way to raise revenue. This year, they are going to be short all the windfall they get from Wall Street. California is still in trouble from basing their budget on revenues from the dot.com boom going on for ever.

Walt D. September 18, 2008 at 6:17 pm

I think New York State and New York City are going to find out why progressive taxation is a bad way to raise revenue. This year, they are going to be short all the windfall they get from Wall Street. California is still in trouble from basing their budget on revenues from the dot.com boom going on for ever.

Walt D. September 18, 2008 at 6:18 pm

I think New York State and New York City are going to find out why progressive taxation is a bad way to raise revenue. This year, they are going to be short all the windfall they get from Wall Street. California is still in trouble from basing their budget on revenues from the dot.com boom going on for ever.

nick Gray September 18, 2008 at 7:53 pm

Walt- I think we got the message!

Walt- I think we got the message!

Walt- I think we got the message!

Walt- I think we got the message!

Walt- I think we got the message!

Read the fine print next to the ‘Submit’ button.

Read the fine print next to the ‘Submit’ button.

Read the fine print next to the ‘Submit’ button.

Read the fine print next to the ‘Submit’ button.

Read the fine print next to the ‘Submit’ button.

P.M.Lawrence September 18, 2008 at 9:52 pm

“There can be no genuine private ownership of capital without a stock market”.

Rubbish. You could easily have a system with no corporations in which capital was owned individually or by partnerships.

Inquisitor September 18, 2008 at 10:22 pm

Yep, I believe Mises said capitalism is characterized by a stock market – not necessarily laissez-faire capitalism, though.

Peter September 18, 2008 at 11:20 pm

Rubbish. You could easily have a system with no corporations in which capital was owned individually or by partnerships.

And the owners can’t buy and sell their shares? What kind of “ownership” is that?

P.M.Lawrence September 19, 2008 at 1:57 am

A solen proprietorship can always sell out, and a partner can always sell his stake (usually to people who were already partners). Nothing stops people in this system from having ownership of businesses, and there is nothing necessary about a stock market to make such ownership possible.

But even if none of that selling up could be done, owners would still be owners.

Peter September 19, 2008 at 6:44 am

If they can sell, a “place” where offers to buy and sell can be made will spring up…and that’s a “stock market”

Bill September 19, 2008 at 11:34 am

Anybody else subscribe to the position that progressive taxation is fair because access to infrastructure is proportional to wealth?

That is, the wealthy receive more benefit from the government so they should pay more for it. If I can’t afford a car, what good is a road? If I can’t afford stock, what good is the regulation of the stock market that ensures fairness and transparency? Doesn’t a wealthy person benefit more from a police force than someone who has nothing (or very little) to steal?

P.M.Lawrence September 19, 2008 at 8:53 pm

Peter wrote ‘If they can sell, a “place” where offers to buy and sell can be made will spring up…and that’s a “stock market”‘.

No, any more than a place where you can buy and sell fruit is a bread market. A stock market is a market where you can buy and sell stocks, and if business ownership is not corporate, there are no stocks.

It is also not necessarily true that any such place would spring up, since the businesses wouldn’t necessarily be fungible and/or liquid enough; all sales might need to be too hands on and sui generis. For instance, when a sole proprietor wishes to retire, the most practical way to transfer the business as a going concern is for the owner to take on the buyer as a junior partner for a couple of years or so, then be bought out. This both allows the transfer of specialist skills and business goodwill, and allows the necessary capital to be brought together more conveniently. This also applies to intergenerational transfers, particularly in regard to getting the capital together.

And, of course, you could still have business ownership even if it were impractical to trade in businesses, just as you can own a house even when the market for house sales has collapsed.

Try googling for Meir Kohn on mediaeval capital markets (“capital markets before 1600″).

newson September 20, 2008 at 8:07 am

fundamentalist & jp are right.

fascist germany certainly had a stock market, though hitler purged it of jewish brokers in 1933.

saddam hussein’s national socialist iraq had a functioning stock market. there was a strong rally just before the 2003 allied invasion.

cuba has no bourse, north korea likewise. can’t think of any others off the top of my head.

Rob Biddle November 17, 2008 at 11:34 am

It all depends on what is meant by “Capitalism”.

If the word is used to merely refer to private ownership of capital then you could call a Slave who was allowed to maintain ownership of his shoes a Capitalist.

The United States represents a Capitalist economy in that way; the Slaves are even allowed to trade their shoes.

Private ownership of Capital is not the only thing necessary to qualify as a “Free Market”.

Andy von Guerard November 25, 2008 at 2:11 am

Bill,

In a state a fairer way to tax the rich is through usage fees and a sales tax that way they are directly taxed for what they use and people who don’t use said government serive (or who don’t buy luxery items that would taxed with sales tax) wouldn’t have to pay the tax.

In a perfect free market system everyone would just pay the fair price for what they use, no more no less. But since the state exists it should at least replicate this idea the best it can, and a progressive income tax does NOT do that.

Matt November 25, 2008 at 2:22 am

What if the state regulates the stock market?

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