The ALLied invasion of Cato

(Via Austro Athenian Empire 2008-11-10 and a bunch of other places.)

Congratulations to Roderick for heading up a round-table discussion in the latest Cato Unbound on corporate power, with a fine introductiory essay on left-libertarianism, and left-libertarian takes on corporatism, the alliance of big government and big business, class, and vulgar libertarian conflation of freed markets with actually-existing capitalism. Our efforts to cover the world with lying, thieving mutualism proceed apace.

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

First, the no. Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.[1]

Corporate power depends crucially on government intervention in the marketplace.[2] This is obvious enough in the case of the more overt forms of government favoritism such as subsidies, bailouts,[3] and other forms of corporate welfare; protectionist tariffs; explicit grants of monopoly privilege; and the seizing of private property for corporate use via eminent domain (as in Kelo v. New London). But these direct forms of pro-business intervention are supplemented by a swarm of indirect forms whose impact is arguably greater still.

. . . So where does this idea come from that advocates of free-market libertarianism must be carrying water for big business interests? Whence the pervasive conflation of corporatist plutocracy with libertarian laissez-faire? Who is responsible for promoting this confusion?

There are three different groups that must shoulder their share of the blame. (Note: in speaking of “blame” I am not necessarily saying that the “culprits” have deliberately promulgated what they knew to be a confusion; in most cases the failing is rather one of negligence, of inadequate attention to inconsistencies in their worldview. And as we’ll see, these three groups have systematically reinforced one another’s confusions.)

Culprit #1: the left. Across the spectrum from the squishiest mainstream liberal to the bomb-throwingest radical leftist, there is widespread (though not, it should be noted, universal)[10] agreement that laissez-faire and corporate plutocracy are virtually synonymous. David Korten, for example, describes advocates of unrestricted markets, private property, and individual rights as corporate libertarians who champion a globalized free market that leaves resource allocation decisions in the hands of giant corporations[11]—as though these giant corporations were creatures of the free market rather than of the state—while Noam Chomsky, though savvy enough to recognize that the corporate elite are terrified of genuine free markets, yet in the same breath will turn around and say that we must at all costs avoid free markets lest we unduly empower the corporate elite.[12]

Culprit #2: the right. If libertarians’ left-wing opponents have conflated free markets with pro-business intervention, libertarians’ right-wing opponents have done all they can to foster precisely this confusion; for there is a widespread (though again not universal) tendency for conservatives to cloak corporatist policies in free-market rhetoric. This is how conservative politicians in their presumptuous Adam Smith neckties have managed to get themselves perceived—perhaps have even managed to perceive themselves—as proponents of tax cuts, spending cuts, and unhampered competition despite endlessly raising taxes, raising spending, and promoting government-business partnerships.

Consider the conservative virtue-term privatization, which has two distinct, indeed opposed, meanings. On the one hand, it can mean returning some service or industry from the monopolistic government sector to the competitive private sector—getting government out of it; this would be the libertarian meaning. On the other hand, it can mean contracting out, i.e., granting to some private firm a monopoly privilege in the provision some service previously provided by government directly. There is nothing free-market about privatization in this latter sense, since the monopoly power is merely transferred from one set of hands to another; this is corporatism, or pro-business intervention, not laissez-faire. (To be sure, there may be competition in the bidding for such monopoly contracts, but competition to establish a legal monopoly is no more genuine market competition than voting—one last time—to establish a dictator is genuine democracy.)

Of these two meanings, the corporatist meaning may actually be older, dating back to fascist economic policies in Nazi Germany;[13] but it was the libertarian meaning that was primarily intended when the term (coined independently, as the reverse of “nationalization”) first achieved widespread usage in recent decades. Yet conservatives have largely co-opted the term, turning it once again toward the corporatist sense.

. . .

Culprit #3: libertarians themselves. Alas, libertarians are not innocent here—which is why the answer to my opening question (as to whether it’s fair to charge libertarians with being apologists for big business) was no and yes rather than a simple no. If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing (though here, as above, there are plenty of honorable exceptions to this tendency). Consider libertarian icon Ayn Rand’s description of big business as a persecuted minority,[14] or the way libertarians defend our free-market health-care system against the alternative of socialized medicine, as though the health care system that prevails in the United States were the product of free competition rather than of systematic government intervention on behalf of insurance companies and the medical establishment at the expense of ordinary people.[15] Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about corporate libertarians they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.

— Roderick Long, Cato Unbound (2008-11-10): Corporations versus the Market; or, Whip Conflation Now

Read the whole thing. It’s great.

The post has already provoked a lot of discussion. Some of it — for example, from Wirkman 2008-11-10, Peter Klein 2008-11-10, and Will Wilkinson 2008-11-10 — is insightful and raises important issues. I’ll also be interested to see the upcoming promised replies from Steven Horwitz, Dean Baker, and the Danny Bonaduce of the Blogosphere. The commentary is a bit much to cover fully here, and is getting hashed out in comments threads, anyway; but I will say that I’m a bit puzzled about this from Will Wilkinson:

But this hints at a thicket of trickier issues. We want a system in which profit-seeking behavior creates the greatest net positive externalities (like continuously increasing the consumer’s share of the cooperative surplus from mundane purchases). But positive spillover maximization within the constraints of a sub-optimal overall system is really desirable, despite the less-than-best incentive structure.

Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.

In any case, it seems to me that whether or not Wal-Mart and its business practices ought to be regarded with admiration, contempt, or indifference is really an importantly separate question from the question of whether or not Wal-Mart would have a sustainable business model under freed markets. If Wal-Mart as we know it could not exist but for State privileges, that’s reason enough for libertarians to be wary of reflexively defending Wal-Mart’s bidniz practices as examples of the free market at work, even if it’s not yet clear whether or not libertarians ought to find Wal-Mart objectionable (as a matter of thickness from consequences, and it seems to me that Roderick’s point has to do more or less entirely with the simpler point about sustainability, not the more complicated point about how to feel about the State-dependent business in question.

Meanwhile, Jesse Walker also kindly posted a notice over at Hit and Run, which provoked a discussion in which Hit and Run commenters were fully able to live up to their reputation for fair, insightful, and thought-provoking discussion of issues in libertarianism. For example, here’s the top comment in its entirety:

joshua corning | November 10, 2008, 2:14pm | #

If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing

Fuck you Roderick Long.

I mention the Hit and Run thread, though, mainly because it contains the nicest illustration you could possibly hope for of vulgar libertarian reasoning. Roderick wrote:

In a free market, firms would be smaller and less hierarchical, more local and more numerous

To which R. C. Dean replies:

I don’t see why. Just to take one example of a market that is pretty free of overt government intervention of the kind listed above: Bookstores. Most smaller, less hierarchical local bookstores are now history, replaced by Big Box Bookstores and on-line booksellers that have huge inventories and lower prices.

So, you see:

  1. Big box bookstores are more successful than smaller, more localized bookstore in the (unfree, government-regulated, privilege-infused, development machine-driven) actually existing market.

  2. Therefore, big box bookstores will be more successful than smaller, more localized bookstores in the free market.

Far be it from me to bag on Borders and Barnes and Noble — I like them each a lot. But this notion that we can just look at their current market success, under the constrained and distorted conditions of the actually-existing unfree capitalist market, in which their business model is fundamentally dependent on the use of government highways to ship huge piles of books, on the use of the government development machine to seize huge tracts of land and lucrative subsidies to artificially encourage big box retail outlets, and, lest we forget, on government copyright laws that forcibly restrict booksellers to a limited number of centralized, monopoly-priced suppliers; without them, any jackass with a printer or a Kinko’s card could start her own local bookstore for little more than the cost of ink and paper — the notion, I say that we can just look at their current success on the unfree market and immediately infer it to be the result of processes that would continue with no noticeable reduction in a freed market, is desperately in need of a substantive argument that has not been given. Economies of scale only seem to matter here because, as usual, the costs of scale (like, the freed-market cost of consensually acquiring big blocks of contiguous land; like, the freed-market cost of competing with hyperlocal, extremely low-cost competitors that current laws force out of business) are being ignored, and while the rest of the (artificially centralized, subsidized, monopoly-protected) corporate market is assumed to remain fixed just as it is, even though the whole supply chain would in fact be radically altered by freed markets.

See also:

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  1. Tristan Mills

    Its getting some coverage in the UK too with approving coverage from Oxford Uni libertarians The Libertarian Party UK has some leading members who are increasingly open to this argument.

    Now I just need to find time to get the ALL UK moving…

  2. PintofStout

    I wondered why I stopped reading Hit and Run, and thought of canceling my subscription to the magazine. Now that election season is over it may be easier to read, and there are several writers on staff who I think are quite excellent at their craft (even if their views aren’t quite simpatico with mine).

    Your post was a helpful and insightful addition - a bunker buster in this invasion - to Roderick’s frontal assault.

  3. steven

    Perhaps I’m wrong, but I see the basis of most of the criticism of Roderick’s thinking as the belief that “some” initiation of force by the government is acceptable.

  4. Will Wilkinson

    “Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.”

    Ha. But the point, of course, was that there is nothing whatsoever about the business practices of Sam Walton’s heirs that distinguishes them from every single other large retail business in this country, other than their unusual success, which is not in fact predicated on unusual state privilege. Wal-Mart has in fact done a great deal to reduce poverty and inequality, and improve living standards in Asia, and so you think they’d get some credit for that. But acknowledging that gets in the way of the specious left-populist rhetoric you guys like to appeal to in your recruiting efforts. Fine. But thinking people don’t have reason to be impressed with this.

    I understand that argument that if everything was different then everything would be different. Of course. And so what? What I want is an intelligent discussion of what it would mean to make things a little better by making things a little different. Come the revolution, we’ll swim in lemonade oceans. But what should we do to make people freer and more prosperous until then? Shit on Wal-Mart for using roads probably isn’t it.

  5. Sergio Méndez

    Wilkison:

    But the argument against Wallmart goes beyond “they use public roads and get transportation costs. What about unfair tax cuts? What about, something roderick does not mention, the fact that wallmart obtain many of the goods it sells by cheap chinese labor, sweetshops, that exist thanks to systemic goverment cohertion against workers?

    Anyways, it seems you are more interested in defending Wallmart (when Roderick essay was about Big Buisness and corporations in general) than in “make people freer and more prosperous”.

  6. quasibill

    first and foremost - picking on RCDean is akin to picking on an autistic child in my book. Actually, it may not even be “akin” so much as “actually”. He has absolutely no capacity for introspection or self-awareness.

    Second - Wilkinson’s main argument about the assumed efficiencies of large centralized models while questioning the internal price issues of only the marginal increase from an already centralized model is question begging at its finest.

    Perhaps the critiques will increase in quality over time.

  7. Will Wilkinson

    Hi Sergio, I may be wrong, but as far as I’m aware, Wal-Mart isn’t getting advantages similar businesses don’t get. So why pick on Wal-Mart and not Home Depot or whatever? My guess is because Wal-Mart is a favorite target for the anti-market (and not just anti-corporatist) left. One could even argue that Rod and Charles are “carrying water” for those who have been using state power to forbid “big box” retailers from doing business in their jurisdictions, which in fact tends to hurt poorer consumers.

    I’ll go to the mat arguing that Wal-Mart and other such retailers buying from suppliers whose goods are manufactured in China have hugely benefited Chinese workers, and have thereby helped reduce global inequality.

  8. Will Wilkinson

    Quasibill, I agree that reducing barriers to entry will create a a proliferation of smaller businesses at the bottom. But I still don’t see the rationale for thinking that in many businesses, economies of scale do not swamp the added transactions costs of added size. I’m eager to hear an argument to this effect, rather than an assertion.

  9. quasibill

    “I’m eager to hear an argument to this effect, rather than an assertion.”

    Eh. There’s plenty of it out there, better than I can say it (starting with Carson’s works). At this point, I’ll just throw it back in your court. I’d love to see an argument that economies of scale are limitless in their progression, rather than just an assertion. Similarly, I’d love to see an argument that calculational chaos is applicable only to governments, and not firms, instead of the repeated assertions.

    Since I’ve read the actual arguments, I know that its highly unlikely that you can come up with something that hasn’t already been refuted by Carson, but I’m open to being convinced by a new argument.

  10. Rad Geek

    steven,

    Well, maybe, but I don’t know who’s making that argument. Did you have someone specific in mind?

    Will,

    You seem to be making several different claims which need to be disentangled.

    1. One claim that you make is that Wal-Mart deserves credit rather than blame for at least some specific things they do in the actually-existing (unfree) market, whether or not they deserve credit or blame on the whole.

      But I can’t see anywhere that Roderick, or I, or anyone else who’s a party to this debate has disputed that claim. Of course, Wal-Mart deserves credit for many things — for example, their skill in logistics — but they also deserve blame for many things — for example, their aggressive use of eminent domain in order to secure land and infrastructure for their facilities — and there are many facts about them which may be in some sense objectionable even if they are not morally blameworthy for them. (I wouldn’t blame Wal-Mart for inflationary monetary policy, but if their business model depends, knowingly or unknowingly, on the harms that inflationary monetary policy inflicts on market actors who are farther from the monetary spigot, that’s a reason to complain even if it’s not a reason to blame Wal-Mart’s management.)

    2. Another claim that you seem to make along the way is that Wal-Mart deserves credit rather than blame, on the whole, for what they do in the actually-existing (unfree) market.

      If you want to talk about this, I guess we can, but given the number of factors to be taken into account I doubt that it’s something we could realistically hope to hash out in the context of a blog comments thread. I will say, again, that credit and blame per se is not the only relevant consideration here (there are non-creditable virtues and non-blameworthy vices), and also that I think you’ve grossly misrepresented the objections made against Wal-Mart. (The concern has to do with a lot more than just the socialization of costs through the extensive use of government highways. Whether or not this is monetarily the most valuable subsidy in question, left-libertarians writing about Wal-Mart also, keep in mind, write a lot about Wal-Mart’s aggressive use of eminent domain and other forms of state privileges given out in the name of development.)

    3. Another is that, given the conditions of the actually-existing (unfree) market, some large group of people are better off for Wal-Mart’s existence and business practices than they would be if Wal-Mart did not exist or engaged in radically different business practices.

      This may seem identical to one of the first two claims, but it’s not, and you can only safely infer either of the first two claims from this claim by helping yourself to some auxiliary ethical premises that need to be defended rather than simply assumed.)

      As it happens, I’m perfectly happy to grant that this claim is true, and I suspect (although I can speak only for myself) that Roderick would, too. But so what? Does that constitute an objection to anything said so far about Wal-Mart? If so, what, and why? Viewing the existence of something as a net benefit under shitty circumstances may or may not be a reason to say nice things about it or about the people responsible for it, or to check the bad things you might have to say about it or the people responsible for it.

      (Suppose, for example, that I am starving to death in a refugee camp, and the only way for me to survive is to let some sleazy UN staffer (who happens to have done nothing blameworthy to create situation I’m in) fuck me in exchange for food. The exchange may be mutually consensual; it may even be mutually beneficial, relative to a baseline of not being fucked and starving to death for want of food. I certainly wouldn’t say that either of us should be, or would be better off for being, forced not to engage in the exchange. But I think it would be a bit much to insist that this means I must have a pro-attitude towards the john, or towards the fucking. It might well make sense to focus on other things if I should have call to talk about the arrangement.)

      Does that make a definitive case for not expressing pro-attitudes towards Wal-Mart? Certainly not. Maybe the situation with Wal-Mart is saliently different. But I suspect that explaining how it is saliently different, if it is, or how it’s not, will just collapse back into the complicated argument over claim 2.

    4. Another is that Wal-Mart seems to be (as you see it) picked on unfairly relative to other big-box retailers (like Home Depot or whatever) who engage in similar business practices.

      This is far from the first time that I’ve heard this complaint, but I have to say that I’m still baffled by it. Is anyone that you’re intendingto respond to with this claim making the claim that Wal-Mart is somehow uniquely bad, or worse than other big-box retailers in anything other than, possibly, degree?

      Left-libertarians typically talk about Wal-Mart specifically for one of two reasons: either because some other libertarian brought Wal-Mart up as an example of free market capitalism at work (in which case it makes sense to use the same example that your interlocutor brought up while disputing their claims), or else because Wal-Mart is an example that’s convenient because of it’s unique size, scope, and name recognition. If I intend to talk about a certain kind of business model and its relationship with state power, then I hardly think it’s unfair to pick a specific example to talk about, and leave the extension of the analysisas an exercise for the reader. And I hardly think it’s weird or wrong to pick the most prominent and largest example of that particular business model as my specific example.

      For what it’s worth, some specific left-libertarians also have specific personal reasons for talking about Wal-Mart rather than other big-box stores. Kevin Carson, for example, lives in northwest Arkansas, so Wal-Mart’s domination of local politics, and its (very aggressive) use of the local political apparatus in Kevin’s stomping grounds for its own profit, is a matter of some special concern.

    5. Another is that Wal-Mart seems to be (as you see it) picked on unfairly relative to other users of the same state-provided or state-subsidized resources (like everybody else who drives or ships things on government roads).

      But surely this is a question where degree of use matters. Wal-Mart’s socialization of costs for its warehouses on wheels may not differ in kind from my socialization of costs when I used interstate trucking to ship my possessions from Michigan to Nevada. But the interesting question here is how much a given actor profits from the subsidy, and whether the profit they gain from that subsidy outweighs the total costs that are inflicted on them by the larger redistributive system of which the subsidy is a part, and in that case a difference of degree matters as much as a difference in kind. Since Wal-Mart is far and away one of the largest socializers of cost through the use of government roads, if it is indeed true that their business model substantially depends on that socialization of cost, then it makes sense to pay some special attention to them, as opposed to less successful exploiters of government subsidies to long-distance trucking, and it makes no sense to lump them together with all road-users generally, when most road-users end up with a net cost rather than a net subsidy. (Of course, you might disagree — as your comment about dirigibles suggests — that Wal-Mart’s business model substantially depends on the socialization of cost through government highways. But I’m, as you say, eager to hear an argument to that effect. Given how Wal-Mart actually does operate, I’d say that there’s little reason so far to think that Wal-Mart would survive in anything like its present form if it actually were dependent on forms of shipping that require it to pay its own way in full.)

    Will:

    But I still don’t see the rationale for thinking that in many businesses, economies of scale do not swamp the added transactions costs of added size. I’m eager to hear an argument to this effect, rather than an assertion.

    Roderick cites several sources for this part of his argument in note 4, including some other articles of his own and a couple of Kevin Carson’s book-length treatments. Of course, you may not have the time just now to go chasing every source that Roderick cites, but there are arguments provided, by reference if not in-line, and given the existence of the endnote and the fact that Roderick had a number of different things to talk about in the space of that one article, I do think it’s unfair of you to characterize it as simply an unargued assertion. You can hear the argument simply by following the guide to it that Roderick has already offered.

    Will:

    I understand that argument that if everything was different then everything would be different. Of course. And so what? What I want is an intelligent discussion of what it would mean to make things a little better by making things a little different. Come the revolution, we’ll swim in lemonade oceans. But what should we do to make people freer and more prosperous until then? Shit on Wal-Mart for using roads probably isn’t it.

    I’m a bit puzzled as to what the complaint is supposed to be here. You present left-libertarian claims about the unsustainability of Wal-Mart’s business model, on a freed market, as if they had no relevance to making changes on the margin. But why? If some of the changes that we should like to make on the margin (for example, by ending eminent domain seizures and other corporate welfare giveaways for development purposes, which is, if I recall correctly, a pretty popular libertarian cause, even among gradualists and reformists) are likely to substantially affect Wal-Mart’s business model, then it may make some sense to talk about that — particulary if the debate so far is caught up in a false alternative between statist lefties, who intend to use statist interventions to try to fortify the town against big-box chain stores, and statist pro-business Growth Machine flunkies, who fraudulently portray their privateering programs as the operation of the free market. To point out that both of them are wrong is not especially similar to Fourier’s lemonade oceans; it’s an important point at which to intervene, and clarify the terms of the debate, in a real ongoing debate about markets and private property rights, which comes up repeatedly in just about every city in the U.S.

  11. Stephan Kinsella

    Some of Roderick’s comments:

    “corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare.”

    This comment seems to equate “big business” and even “corporate power” with illegitimate corporatism. But in a free market, there would be corporations, with “corporate power” (whatever that means), and “big business”. (The libertarian criticisms of the corporate form per se are confused—see my post In Defense of the Corporation.)

    “Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries;”

    Isn’t this true of not just corporations, but all market actors?

    “It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market.”

    I take it “corporation” is used here as a proxy for “big business”… Of course small businesses and even non-profits may be organized legally as a corporation, without this hostility.

    “In a free market, firms would be smaller and less hierarchical, more local and more numerous (and many would probably be employee-owned); prices would be lower and wages higher; and corporate power would be in shambles”

    Again—this is speculation, and driven by perhaps esthetic preference, as Klein notes in his comment:

    “From this they conclude that smaller, more “egalitarian” enterprises, such as worker-owned cooperatives, would tend to flourish under the free market. … The problem is that their argument cuts both ways. …. Decentralization within the firm has both advantages and disadvantages. On the free market firms will tend to balance these at the margin. By no means would we expect all firms to shrink to small, flat, egalitarian teams. … I’m baffled by the left-libertarian fascination with worker-owned and -managed cooperatives. As I mentioned in my post, this strikes me as a purely aesthetic preference — power to the workers, down with cubicles and pointy-headed bosses! — without much basis in the theory or historical practice of actual cooperatives. …. “

    Roderick again:

    “There are three different groups that must shoulder their share of the blame. Culprit #3: libertarians themselves. .. note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about “corporate libertarians” they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.”

    What is wrong with defending Wal-Mart as an exemplar of the free market? They are! This is despite state interventions. And it is indeed true that criticisms of corporate power are usually anti-market ideology, and should be dismissed as such. Critics of corporations are in the grip of anti-market ideology, as Roderick notes. When left-wingers complain about corporate libertarians, they are confused. They are not responding sincerely or honestly to a genine tendency. Proper libertarianism does not engage in the vulgarism Carson notes—it is selective. We libertarians are of course opposed to state involvement in business, and to corporate influence over the state. We’re against individual human beings voting the wrong way or endorsing or pushing for bad laws too-but we are not against people. There’s nothing wrong with pointing out imperfections in our system—subsidies etc. As far as I am concerned, most libertarians do NOT fall prey to the “vulgar libertariansim” of Carson—it’s just a straw man. Vulgar liberalism is very real however, so I think it’s unjust to equate them.

    Onto Charles’s comments:

    “Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.”

    If this is the case then we non-mutualist libertarians and you have no disagreement. We also want Wal-Mart to stop doing this. That is one reason we oppose the state—because it is one means people employ to rob each their fellow men.

    In any case, it seems to me that whether or not Wal-Mart and its business practices ought to be regarded with admiration, contempt, or indifference is really an importantly separate question from the question of whether or not Wal-Mart would have a sustainable business model under freed markets. If Wal-Mart as we know it could not exist but for State privileges, that’s reason enough for libertarians to be wary of reflexively defending Wal-Mart’s bidniz practices as examples of the free market at work, even if it’s not yet clear whether or not libertarians ought to find Wal-Mart objectionable

    I would agree with this, but it depends on that “If” condition being fulfilled.

    Roderick wrote: “In a free market, firms would be smaller and less hierarchical, more local and more numerous”

    Again—I agree with Klein’s reply to this assertion.

    Far be it from me to bag on Borders and Barnes and Noble — I like them each a lot. But this notion that we can just look at their current market success, under the constrained and distorted conditions of the actually-existing unfree capitalist market, in which their business model is fundamentally dependent on the use of government highways to ship huge piles of books, on the use of the government “development” machine to seize huge tracts of land and lucrative subsidies to artificially encourage big box retail outlets, and, lest we forget, on government copyright laws that forcibly restrict booksellers to a limited number of centralized, monopoly-priced suppliers; without them, any jackass with a printer or a Kinko’s card could start her own local bookstore for little more than the cost of ink and paper — the notion, I say that we can just look at their current success on the unfree market and immediately infer it to be the result of processes that would continue with no noticeable reduction in a freed market, is desperately in need of a substantive argument that has not been given.

    It is of course true that it is possible that state interference makes some otherwise-viable businesses impossible (bordellos, say), and makes some otherwise non-viable businesses viable (marijuana police; military contractors; NASA). But this does not mean that a given company’s prosperity in a semi-free market is NO evidence of the (free-market) viability of its business plan. In fact I would think the burden is on the person asserting that an existing business exists only because of state favors. As Klein has noted, state action both hurts and hampers most market actors, in a variety of ways. All we know, in general, is that a given existing company presumably is profitable, that is satisfies enough consumer demand efficiently enough to turn a profit—in a hampered market in which the firm may be harmed, and benefitted, in some ways. There is no apriori reason to think that the net effect of the state intervention is positive. In fact, because the state can never create wealth on net and only destroy it, the safe presumption is that most market actors are on net harmed by state intervention—thus without further evidence, if a firm is prosperous despite the presumptive net cost of state action, that implies it would be even more prosperous in a free market.

    Now if someone wants to mount a careful case that a Wal-Mart or (for Heaven’s sake) Macy’s is in fact a net recipient of state aid and not a net victim, and that it would be unable to change its business model in a free market to prosper even if it’s a net beneficiary now—fine. I’m sure libertarians would then agree that this tax-eating business model is not a libertarian ideal. But it seems rather that these leftist coop aesthetic preferences are coloring not only what is favored here by the left-libertarians but their predictions and analyses.

  12. Will Wilkinson

    Charles,

    (1) OK (2) I don’t think I claimed that. (3) Great. (4) Don’t be baffled! Rod specifically picks on Wal-Mart in his essay in a pretty clearly unfair and rhetorically opportunistic way. (5) This just doesn’t make any sense to me. So you’re saying that fact that (a) roads are subsidized for everyone who can afford to use them, (b) that Wal-Mart is so successful in making a profit from buying things from one place and selling them in another, and so (c) ships more things in trucks than anyone else (d) especially implicates Wal-Mart in the injustice of the American transportation infrastructure? It seems like you’re saying that the more you succeed according to less-than-best rules of the game, the worse you are. So success should be condemned in non-ideal (i.e., all) circumstances? I doubt you’re saying that, but then why do you sound like you’re saying that?

    About scale, I think we’re familiar with different bodies of literature. Possibly I should read more Kevin Carson and less Coase and Hayek-inspired transactions cost economics.

    Just to clarify, I’m 90% sold on Rod’s essay. I was already convinced of arguments against eminent domain and tax giveaways. I’m just not seeing the distinctively left libertarian value-added. I can see why painting a bona fide free market society as one of smallholding economic democracy would be sort of tactically/rhetorically useful, but I guess I’m simply not grasping the theoretical argument for why we would actually expect it to work out this way. And I’m probably as sympathetic an audience as you guys are likely to get.

  13. Rad Geek

    Will,

    Since you clarify that you didn’t intend to make claim (2), and apparently there’s no disagreement worth remarking on on claim (1) and (3), let’s move on to (4) and (5).

    On (4), you assert that Rod specifically picks on Wal-Mart in his essay in a pretty clearly unfair and rhetorically opportunistic way. But I can’t see how you’ve responded to anything at all that I had to say by way of explanation of reasons why someone might focus on Wal-Mart specifically in an article like the article that Roderick was writing. Here’s everything Roderick has to say about Wal-Mart in his essay. Boldface added:

    Vast corporate empires like Wal-Mart are often either hailed or condemned (depending on the speaker’s perspective) as products of the free market. But not only is Wal-Mart a direct beneficiary of (usually local) government intervention in the form of such measures as eminent domain and tax breaks, but it also reaps less obvious benefits from policies of wider application. The funding of public highways through tax revenues, for example, constitutes a de facto transportation subsidy, allowing Wal-Mart and similar chains to socialize the costs of shipping and so enabling them to compete more successfully against local businesses; the low prices we enjoy at Wal-Mart in our capacity as consumers are thus made possible in part by our having already indirectly subsidized Wal-Mart’s operating costs in our capacity as taxpayers.

    Wal-Mart also keeps its costs low by paying low salaries; but what makes those low salaries possible is the absence of more lucrative alternatives for its employees—and that fact in turn owes much to government intervention. The existence of regulations, fees, licensure requirements, et cetera does not affect all market participants equally; it’s much easier for wealthy, well-established companies to jump through these hoops than it is for new firms just starting up. Hence such regulations both decrease the number of employers bidding for employees’ services (thus keeping salaries low) and make it harder for the less affluent to start enterprises of their own.[8] Legal restrictions on labor organizing also make it harder for such workers to organize collectively on their own behalf.[9]

    I don’t mean to suggest that Wal-Mart and similar firms owe their success solely to governmental privilege; genuine entrepreneurial talent has doubtless been involved as well. But given the enormous governmental contribution to that success, it’s doubtful that in the absence of government intervention such firms would be in anything like the position they are today.

    […]

    Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about “corporate libertarians” they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.

    Of course, Roderick specifically mentions Wal-Mart, and leaves others (Home Depot, Circuit City, whatever) lumped under the like, similar chains, etc. But he’s quite explicit that he is mentioning Wal-Mart only as one prominent example of a broader tendency. And why wouldn’t he do so? When you write about bad things the the New York City government does, do you feel compelled to mention every other large city government in the world that does similarly bad things? If you write about a trend in economics, politics, pop culture, or whatever you like, do you never pick one especially prominent example of the trend to focus your discussion? Do you consider that picking on your example, or being unfair, or being rhetorically opportunistic? If so, hy?

    If he had written, Vast corporate empires like Target, Best Buy, Borders, Barnes and Noble, Whole Foods, Safeway, Costco, REI, [etc., etc., etc.] would you no longer have the same objection? If so, then what’s the real problem here? If not, what really makes the difference?

    Or, on the other hand, if your complaint is actually that is unfair for him to single out big box retail business models for special attention (as opposed to using Wal-Mart, in particular, as an example of them), then this really just reduces to the discussion over claim (5), as to whether big box retail business models are especially dependent on State privilege, or dependent on State privilege in an especially remarkable way, than other market actors taken as a whole.

    On claim (5), the point here is that if you have a system of wealth redistribution (1) in which all market agents participate to some degree, (2) from which all market agents receive some non-zero degree of benefit, and (3) from which all market agents also face some non-zero degree of cost, then surely it matters whether the balance of (2) and (3) is positive or negative, on net, when you’re discussing whether or not an anti-statist ought (as a matter of thickness from consequences) to criticize that market agent. The point is not that success should be condemned in non-ideal … circumstances; it’s that, when, and to the extent that, success in non-ideal circumstances comes from exploiting the non-ideality of the circumstances, it’s at least not obviously unfair to focus the most fire on those who exploit that non-ideality most successfully.

    (Note that that involves at least two differences from the claim you were worried I was making. The first is that not all market success under non-ideal conditions is causally dependent on the non-ideality of the conditions. To the extent that Wal-Mart’s is successful in spite of, or at least not because of government privileges — because of skillful negotiations with manufacturers or good computer networks or whatever — it’s not objectionable on any grounds we’ve discussed so far. But the claim is specifically that they are successful because of what’s wrong.

    The second difference is that not all success that’s causally dependent on the non-ideality of the conditions constitutes exploiting those conditions. (Presumably tax accountants wouldn’t exist if the government stopped imposing taxes, but that doesn’t mean that they’re exploiting the tax system, or the people taxed by it.) Parsing out which cases do count as exploitative and which do not is no doubt tricky, and no doubt beyond the scope of the thread. But for a start, see Matt MacKenzie’s essay on the topic.) If it helps, suppose we were talking about eminent domain seizures. Now, it may be true that most people have, at at least some point in their life, gotten some concrete benefit as a result of an eminent domain seizure — because they were able to drive on a road that would not otherwise have existed, or to shop at a store that would not otherwise have gone up, or whatever. But if you’re looking at the effects of eminent domain as a whole it is clear that some market actors get much more net benefit from eminent domain than others; that those who lose the most from it also tend to come from a fairly predictable set of market segments — poor people, people of color, people who have homes or businesses in poor neighborhoods; that those who gain the most tend to come from a fairly predictable set of market segments — politically-connected developers, road builders, airport builders, big-box retailers, auto factory owners; and also that, among those who tend to get a net gain, the most commercially successful are often those who do the best job of extracting land through the city government. So, as an anti-statist, it may well make sense to say that, in a market where there are no eminent domain seizures (and similar means of political redistribution of land, like tax-funded, quasi-governmental redevelopment corporations and the like), you would tend to see the market shift much more towards the uses typical of those who had been losing out, and to drop the bottom out from under those uses which had been supported by the use of coercive market distortions. And the more that market actors had been depending on those coercive market distortions, or their economic ripple effects, to get things done, the more you would expect to see their current business model imperiled, or simply destroyed, by freed markets. I think it would make no sense at all to go around saying, Well, everyone makes beneficial use of land stolen through eminent domain to some extent, so why are you singling out politically-connected real estate developers for making the most efficient use of it?

    I can see why painting a bona fide free market society as one of smallholding economic democracy would be sort of tactically/rhetorically useful, but I guess I’m simply not grasping the theoretical argument for why we would actually expect it to work out this way.

    Well, O.K.; so there are a couple of separate questions here. The first is normative, i.e. whether or not Wal-Mart’s (or whoever’s) business model on the unfree market is or is not a legitimate object of criticism.

    The other is predictive, i.e. whether or not Wal-Mart’s (or whoever’s) business model on the unfree market is or is not likely to be sustainable more or less intact on a freed market.

    I’ve largely been devoting attention to the first one, rather than the second one. As I said, on the second one, the best place to go is probably to the longer works on the topic that Roderick refers to. But I’d be interested to know which specific parts of the claim you are unsure of, and why. For example, you agree pretty readily that reducing barriers to entry will create a a proliferation of smaller businesses at the bottom. (I think this is actually the most important part of the claim, for most left-libertarians; I certainly care much more that flourishing of alternatives to Wal-Mart than I do about the extinction of Wal-Mart.) But, if we grant that this is true, that there will be a proliferation of smaller and more localized businesses, doesn’t that give at least a ceteris paribus reason for thinking that competing big businesses like Wal-Mart will tend to do less well for themselves than they do in a market where such competitors are artificially driven out of the market?

    If so, you might be able to come up with a reason for thinking that ceteris is not paribus. (For example, Klein suggests that measures like antitrust laws and other regulatory interventions tend to hurt big consolidated business more than they gain from corporatist intervention, so that, while they would be put under pressure by competition from the bottom, the removal of limits on the top might well allow them to sustain themselves or even grow even bigger. But I think that this involves a pretty skewed picture of how Progressive regulations like antitrust laws have actually been used, and who they have historically benefited. For more on why, see Kolko’s The Triumph of Conservatism, Butler Shaffer’s In Restraint of Trade, Roy Childs’s Big Business and the Rise of American Statism, etc.) But, in any case, it seems like, if you accept the basis for that ceteris paribus case, the burden of proof is on you to demonstrate that flourishing competition from the bottom would not have the to-be-expected centrifugal effects on wealth and market activity, not on the left-libertarian to prove that ceteris will tend to be paribus after all.

  14. Araglin

    Hey Charles,

    Great post. In response, I thought I’d repost my comment from the Mises post on Professor Long’s article, to see what your thoughts were. Here goes:

    “For what it’s worth, I think it’s important to keep the issue of (i) whether libertarianism should (non-coercively) promote ‘artisans and small shopkeeps’ over against Big Business on what Charles Johnson has called ‘consequential thickness’ grounds, separate from the issue of (ii) whether supra-individual legal personhood (i.e. entity status for corporations or other organizations - allowing such organizations to own property in their own name, enter into binding contracts, sue and be sued, etc.) can be justified under ideal libertarian law.

    “While it may be the case that most people who agree with the overall left-libertarian (Long-Johnson-Carson) story about the ‘subsidy of history’ and the like (as I do) also happen to be against the corporate form per se (because legal personhood itself is supposedly a privilege granted by the state, or because of some worry related vaguely to the strictures of Methodological Individualism), it’s not obvious that these two positions have to go together.

    “In fact, once one drops the ‘concession theory’ of corporate existence (for reasons to drop this theory, see Otto von Gierke, F.W. Maitland, Robert Nisbet, etc.), there’s no reason to think that the legal-personality of groups requires some sort of ‘privilege’ or contravention of libertarian rights in order to arise. Even cooperatives, labor unions, guilds, and traditional villages are corporations in the etymological sense that they are legal bodies made up of members, and that once constituted, the body as a whole has certain legal rights and duties both as to its members and as to others with whom it may deal.

    “For this reason, I think it’s important that in reacting against the very real dangers of vulgar libertarianism that one take certain precautions against the dangers of what one might call vulgar anti-corporatism.

    “Cheers, Araglin

    “P.S. The question of entity status should be further distinguished from the issues of (i) limited liability of shareholders for torts committed by or on behalf of a corporation and (ii) whether officers, managers, employees, and the like should be granted ‘immunity’ from liability from liability arising from their bad acts so long as they respect the corporate form, don’t treat the corporation as their alter ego, commingle funds, etc. I don’t know the Law of Corporations in all fifty states, but I think that certain features of actually-existing corporate law (regarding (i) and (ii)) likely cannot be squared with libertarian rights. To the extent this is so, these features should be condemned. However, in so doing, I don’t think it’s a good idea to simply assume the position that only ‘natural persons’ could conceivably be legal persons in the eyes of libertarian law.”

  15. Jeremy

    Here’s my comment from H&R:

    In the essay, Dr Long writes:

    This is especially true if, as some libertarians argue, the corporate form itself (involving legal personality and limited liability) is inconsistent with free-market principles. … For the purposes of the present discussion, however, let us assume the legitimacy of the corporation.

    I think Dr Long does a marvelous job of making his case without bringing this point into the equation. But my view is that you really can’t directly attack the privileged structure of our economy without discussing entity status.

    In a voluntary society, it’s possible that people will, of their own free will, agree to perceive, for instance, the thousands of employees of GE as comprising one “entity”. But it’s not at all guaranteed. The state provides an enormous stabilizing force for business merely by allowing them to form organizations, the integrity and identity of which are not subject to our voluntary consent. The state forces us to recognize the abstract constructs other people dream up in their head.

    Limited liability is a huge privilege, too, but I think entity status - and the corporate personhood doctrine that accompanies it - is the root. There was once a time when the state was ok with calling whole sectors of the population less than human, turning people into property. Now the state turns property into people - magically.

    Granted, I can’t prove people wouldn’t of their own free will treat corporations as if they had equal rights with flesh and blood humans in a totally voluntary society. But I don’t see any reason why they would, and I don’t see how the corporation can do business as an entity without expressly getting the voluntary consent of even most people, which is dubious. There might be some industries where people are willing to acknowledge the identity and integrity of firms, but in most cases people want to do business and live around other people, not abstractions of contracts and assets.

  16. Araglin

    Hey Jeremy,

    Very interesting comment. I definitely think that you’re on to something in suggesting that state-promulgated procedures for incorporating may in some way lower the transaction costs associated with a group assuming a corporate form, and would thus be expected to distort the market in various ways.

    I also agree that there’s something very sinister and dangerous about the fact that the state is in a position to set out the requisites for recognizing some legal-status or other (corporations, unions, marriages, etc.), and then mandating that the people at large also recognize that status. To me, though, this point simply argues in favor of polycentric law. Afterall, the state also makes trouble by getting to definitively decide who owns what property…

    However, I think it’s a mistake to characterize incorporation as a process of ‘turning property into people.’ Or that, alternatively, its continued existence depends upon a sustained, more or less unanimous act of imagination.

    Rather, when people come together or associate for some common purpose, the resulting ‘body’ will then become the bearer of certain rights and duties. For example, when me and my friends get together and form a chess club, and we adopt a certain charter and bylaws (which provide for membership in the club, various leadership positions and the authority pertaining thereto), and the like, the chess-club arises as a real entity (whose personality should be recognized by the law). Accordingly, if I donate a couple of chess boards to the club, or if the members all pay their respective dues to the club’s treasurer, the chessboards and dues really belong to the club (and our rights as members to use the property of the club are determined by reference to the charter and bylaws and any resolutions or decisions by its duly-elected officers).

    The treasurer can’t say as he is receiving the dues, “I’m tired of pretending that there is a chess-club ‘entity’ of which I am the mere treasurer. Instead, being the real flesh and bones recipient of the dues, I’ll just keep the money for myself!”

    Hope this makes some sort of sense (I’m still on coffee-cup #1 and a bit groggy).

  17. Will Wilkinson

    Charles, Great stuff. Thanks for your thoughtful replies. And I see today that I was for some reason a bit snippy yesterday, which I think has to do with the fact that I had somehow ended up in about six different taxing blog thread arguments. Sorry about that. I’d like to go another round, but I’ve some other things I have to get to. For now I’ll just mull over your replies and links, and perhaps write a longer blog post in a week or so. Again, really stimulating discussion, so thanks for that.

  18. Rad Geek

    Araglin,

    I certainly agree that the question about corporate status can be distinguished from the question about the size and scope of firms. There’s plenty to make that case with or without a particular view on the legal status of corporations. As you may have noticed, my own writing on government-fueled centralization, formalization, and hierarchy in the market doesn’t rest very much on the question of corporate status, although I do have my own views (i.e., I’m against non-contractual limitations of liability and against any robust sort of non-contractual corporate veil in legal proceedings). Not for any deep reason; it’s just that that issue is not really where my passions lie.

    I’m a bit curious about your discussion of separating corporate personhood from limited liability and the corporate veil for management. My understanding, which might well be mistaken, is that legal personhood has largely been stressed precisely to justify those two features of corporate status — the idea being that you can’t go after shareholders’ or managers’ personal assets for a debt or a tort because it was, in some sense, the corporation (as a separate entity with a separate set of assets) that contracted the debt or committed the tort, not the shareholder or the manager. But if you get rid of those two features of corporations, what, really, is left to the claim that a corporation is an rights-and-duties-bearing entity, legally distinct from its members?

    It’s true that there are many things other than joint-stock companies (unions, city governments, universities, etc.) which are treated legally as corporate entities under the current law. But there are other joint enterprises that are not: partnerships, marriages, informal clubs, and so on. The historical reasons for this distinction are fairly clear: it’s because the law of incorporation arose out of government chartering and the concession theory, which you (rightly) propose to do away with. But, once it’s done away with, when you claim that corporate entity status is legitimate, do you mean something that could include these kind of (currently legally non-corporate) joint enterprises as well as the things currently counted as corporate entities? Or do you mean something peculiar to the joint enterprises that are currently counted as corporate entities, other than the other features (limited liability and the corporate veil) that you suggest include at least some features that ought to be abolished?

    If the latter, what are the distinctive features that you have in mind?

    If the former, is there really any need for creating a special legal category of corporate entities in order to accomplish the things you think need to be accomplished? Would the legitimate functions of corporate entity status not be reducible to functions of joint property ownership and contractual obligations among the members?

    (E.g., you mention a club treasurer pocketing the dues for her own personal use. But surely that can be categorized as a violation of rights just by treating it as a damaging breach of contractual obligations she has chosen to take on toward the other individual members of the club; presumably as Treasurer she has agreed that incoming dues will be the joint property of the members, not her personal property, and that the joint property is to be disbursed only under the conditions specified by contractually agreed-to charter and bylaws, not at her sole discretion. I can’t see how this needs any special treatment different from, say, a scholarship set up to disburse money to an individual student only on the condition that she use it for certain things — books, tuition, whatever.)

    So, do you think that there is a space for rights and duties by corporate entities which are not simply reducible to an account of joint ownership and contractual obligations among the several individual members? Or are you happy to accept the reducibility, and just regard corporate entity status as a convenient sort of short-hand for certain arrangements of interlocking individual rights claims?

  19. Araglin

    Hey Charles,

    Thanks for your thoughtful reply. I’ve got to run off to lunch, so I will have to wait a couple of hours before answering your specific questions, but let me go ahead and say this:

    -The entity is an emergent reality, and as such, I think that properties can be predicated of it that are not simply a short hand way of predicating those same properties of its members. For exactly why on that question, I will have to pull out the article by Princeton political philosophy Philip Pettit (sp?), and also an article by Maitland called “Moral Personality and Legal Personality,” which I think it set forth in full here:

    http://books.google.com/books?id=FUgBAAAAYAAJ&pg=PA192&dq=%22maitland%22+and+%22moral+personality+and+legal+personality%22

    Basically the point is that, once constituted the members may have dealing with one another, but also with the group qua group. So, if there are N members, to exhaustively categorize the possible relations arising from their activities, one has to recognize N+1 legal persons. I realize that this is a controversial claim, and one that I have yet to adequately defend but I will be happy to try to do so later on.

    I think that it is indeed problematic when the state (even rightly) recognizes some groups as corporations while refusing to also recognize others (the features of which would justify their recognition).

    Specifically, though, the Revised Uniform Partnership Act treats the partnership as an entity, without conferring limited liability on the partners, so there can indeed be reasons for acknoledging the existence of another person besides the members (even when the goal isn’t to shield the members from liability). On the liability question I would want to insist that individual members and the entity could be ‘jointly and severally’ liable for certain acts of omissions.

    As a historical point (to paraphrase from John Milbank’s chapter on “Gothic Space” in his Word Made Strange):

    “It should be noted that one germ of right-wing corporatism lay in the legal incorporation of capitalist firms on the one hand, often involving sem-official monopoly and a quasi-governmental status, and the non-recognition of trade unions and the immunity of its [the capitalist firm’s?] individual members from personal responsibility for the acts of the association on the other.”

    Hope this begins to clarify my position.

    Thanks, Araglin

  20. Araglin

    I take it to be fairly uncontroversial that limited liability for contracts (as opposed to torts) can be completely squared with libertarian theory.

    To my lights, so long as the corporation has put those with whom it deals ‘on notice’ of its limited-liability status (and in the absence of ‘fraudulent conveyances’ of corporate assets), only the corporation’s assets may be reached to satisfy any damages resulting from a breach of contract by the corporation. The reason for this, as you suggested, is that it is the corporation that is party to the contract, not the shareholders (and also not the particular agent of the corporation that signed on the corporation’s behalf).

    If a prospective creditor or trading-party is unhappy with the thought of being limited to this pool of assets in the event of a breach (whether because the corporation is too thinly capitalized or not sufficiently creditworthy), then that party can simply refuse to deal with the corporation or else insist that others sign continuing personal guaranties or surety agreements.

  21. Rad Geek

    Araglin,

    Sure. I have no problem in principle with contractual limitations of liability to the limits of a particular pool of joint property, just with limitation of liability being imposed on nonconsenting parties (e.g. victims of torts, who presumably didn’t make any contract at all, and thus could not have incurred a contractual obligation to limit the reach of their claims for damages).

  22. Jeremy

    However, I think it’s a mistake to characterize incorporation as a process of ‘turning property into people.’

    Well, right there I’m attacking corporate personhood, of course. It’s possible, I suppose, to have incorporation without legal personality and so-called “constitutional rights”. But I don’t understand why real humans would voluntarily decide to treat corporations as their own.

    Rather, when people come together or associate for some common purpose, the resulting ‘body’ will then become the bearer of certain rights and duties.

    Well, we disagree on that. Whatever the body is, and whatever rights and duties it has, this is an abstraction of particular individuals in particular relationships. I’d recommend Butler Shaffer’s “Calculated Chaos” on this matter, where he discusses the phenomenon of these groups. At first, they are simply conveniences of people coming together for their own purposes. But over time, many begin to adopt purposes of their own, independent of the people involved. It is here that you start getting, in the case of the corporation, the incentives for typical Dilbert-like behavior.

    Not forcing people to recognize an organization that exists only for the convenience of people involved would be one step in breaking the illusion.

    The treasurer can’t say as he is receiving the dues, “I’m tired of pretending that there is a chess-club ‘entity’ of which I am the mere treasurer. Instead, being the real flesh and bones recipient of the dues, I’ll just keep the money for myself!”

    Sure he can. This is the classic “agent-principle” problem, and individuals gaming the institution happens all the time, especially in corporate America.

  23. Rad Geek

    Araglin:

    The treasurer can’t say as he is receiving the dues, I’m tired of pretending that there is a chess-club entity of which I am the mere treasurer. Instead, being the real flesh and bones recipient of the dues, I’ll just keep the money for myself!

    Jeremy:

    Sure he can. This is the classic agent-principle problem, and individuals gaming the institution happens all the time, especially in corporate America.

    Well, come on now. Of course the Treasurer can do any number of things, if you’re using that word to indicate mere physical possibility, but Araglin’s point was a normative point. If the Treasurer just pockets the dues rather than duly assigning them to the club and disposing of them, if at all, according to the agreed-upon rules for the club treasury, then the claim is that she’s stealing, not merely featherbedding or gaming (which may be irresponsible or exploitative, but not morally criminal). Do you disagree?

  24. "Nick Manley" - The Curious "Deviant"

    Stephen,

    Left-libertarians and libertarian socialists often promote worker cooperatives, because they see them as more conducive to individual freedom and economic equality. I admit I haven’t read as much as say a Kevin Carson on the topic, but there have been studies showing worker cooperatives to function quite well — in terms of productivity and whatnot.

  25. Rad Geek

    Roderick:

    corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare.

    Kinsella:

    This comment seems to equate big business and even corporate power with illegitimate corporatism.

    I don’t think that’s a fair reading of Roderick’s comment. He’s not equating the two phenomena; he’s saying that one phenomenon is causally dependent on the other — that free markets with genuine competition systematically tend to undermine the concentration of economic activity in large-scale, consolidated corporations. Maybe you agree and maybe you disagree, but in any case it is certainly not enough to say something like this as a response:

    But in a free market, there would be corporations, with corporate power (whatever that means), and big business.

    It’s unclear what the force of the would be is supposed to be. If this is a predictive comment (to the effect that there would be at least some big businesses, somewhere, in a truly free market), then I don’t know what your basis for making that empirical prediction is. (Maybe that kind of business model would be sustainable in a free market, and maybe it wouldn’t be; what makes you confident that it would be?) But in any case, it also doesn’t constitute an objection to Roderick’s point. (What he says is that genuine competition tends to make large corporations more unstable, and hence will make them less prevalent. Not that it makes them impossible, or that it will render them nonexistent.

    If you’re just making the normative point, that a free market would in principle allow for people to form big businesses and joint stock companies and the like, well, fine. But who denied that?

    Roderick:

    In a free market, firms would be smaller and less hierarchical, more local and more numerous (and many would probably be employee-owned); prices would be lower and wages higher; and corporate power would be in shambles

    Kinsella:

    Again—this is speculation, and driven by perhaps esthetic preference …

    Stephan, maybe it would help if we broke down the claim at issue into some component parts. Roderick makes the following claims about business in a free market:

    1. That firms will tend to be smaller;

    2. That firms will tend to be less hierarchical;

    3. That firms will tend to be more local;

    4. That firms will be more numerous;

    5. That many firms will probably be employee-owned;

    6. That prices will generally tend to be lower;

    7. That wages will generally tend to be higher; and

    8. That corporate power would be in shambles.

    Which of these specific claims do you disagree with?

    I think claims 6 and 7, for example, are utterly uncontroversial amongst free marketeers, aren’t they? Genuinely free markets tend to benefit everyone, and typically they benefit the least well-off the most.

    Claim 4 — that firms will become more numerous — seems like the obvious direction of change, ceteris paribus, given the existing barriers to entry posed by the corporatist measures that Roderick mentions, as well as by the general tax-and-inflation drain on entrepreneurship and productivity. Do you disagree? If so, what makes you think that ceteris is not paribus and that the number of firms is kept artificially high? (Klein mentions anti-trust law. But I have trouble believing that, at least on the question of the number of firms, he seriously means to suggest that the effects of antitrust law at the top overwhelm the effects of State-imposed barriers to entry at the bottom. I suspect that he is mainly thinking in terms of the size of firms here, not in terms of the number. Do you disagree?)

    So, anyway, is the disagreement limited to claims 1, 2, 3, 5, and 8? If so, it might help to discuss them separately and in more detail. For example, do you disagree with Roderick that in a genuinely free market, firms would tend to be more local than they currently are? If so, why?

    What is wrong with defending Wal-Mart as an exemplar of the free market? They are! This is despite state interventions.

    Well, O.K., but I’d like to hear an argument for this assertion, and in particular an argument that’s responsive to left-libertarian’s specific claims about Wal-Mart and its business model. For example, how do you figure your analysis is affected by the fact that Wal-Mart substantially depends on eminent domain seizures and other government seizure and allocation of land titles to build its big-box stores? Do you think that this is a small enough matter that it shouldn’t affect the overall judgment of Wal-Mart as an exemplar of the free market? Or do you think that it does affect the overall judgment, but that libertarians should be praising the various other respects in which Wal-Mart does exemplify free market success? Or is it something else again?

    It is of course true that it is possible that state interference makes some otherwise-viable businesses impossible (bordellos, say), and makes some otherwise non-viable businesses viable (marijuana police; military contractors; NASA). But this does not mean that a given company’s prosperity in a semi-free market is NO evidence of the (free-market) viability of its business plan. In fact I would think the burden is on the person asserting that an existing business exists only because of state favors.

    The degree to which success on a semi-free market counts as evidence for the likelihood of success on a truly free market surely depends on the degree to which the market in question is unfree — since the more unfree it is, the more Misesian and Hayekian calculation problems there are involved in trying to figure out whether or not the same business plan would still be successful in a market with a freely operating voluntary price mechanism.

    It also depends on the degree to which the success is due to or in spite of the unfreedom of the market. If there are important sections of the business plan that depend on specific government programs, or on economic conditions that only exist because of specific government programs, that’s obviously a strong reason to think that current exist offers no evidence for likelihood of success in a free market. And, given that, I will add:

    1. It’s not as if left-libertarians haven’t done anything by way of discharging their burden of pointing out specific points at which the business plans of big block businesses (for example, Wal-Mart, Borders, whatever) are dependent on specific government privileges. I mentioned at least three specific very important privileges in the case of Borders, which, as far as I can tell, you didn’t respond to at all.

    2. If there are (as left-libertarians argue) government market distortions that tend to systematically tilt market resources towards particular market segments, and also towards particular forms of doing business — for example, the way in which government IP monopoly artificially channels a lot of money into a small handful of large incumbent software and media companies, or the way in which government regulatory bureaucracy, licensing, etc. artificially channels money away from informal-sector market actors and towards larger, more professionalized and formalized outfits — then I think that’s a pretty good reason for refusing to take success in those specific segments or through those specific forms of doing business as prima facie evidence of viability on a freed market. If I already know that all these potential competitors are being excluded, or that an awful lot of their revenue stream depends on government-created captive markets, then I think the burden is on the person who is insisting that ceteris will not be paribus to give some clear and specific reasons for thinking it won’t be.

    As a general thing, my problem with the kind of vulgar libertarian reasoning that I complained about isn’t that it’s not Leftist enough. It’s that it’s not libertarian enough, because that kind of lazy defense of actually-existing business models fails to take into account how utterly pervasive government intervention in the economy is, and how far specific forms of business are affected by its distorting influence.

    Kinsella:

    There is no apriori reason to think that the net effect of the state intervention is positive. In fact, because the state can never create wealth on net and only destroy it, the safe presumption is that most market actors are on net harmed by state intervention—thus without further evidence, if a firm is prosperous despite the presumptive net cost of state action, that implies it would be even more prosperous in a free market.

    But Stephan, the problem here is that we’re not talking about just any old market actors. Market actors aren’t just firms; they’re also individual workers, free associations of workers, independent contractors, tenants, homesteaders, subsistence farmers, street-corner hustlers, bums, tramps, hoboes, and a million other sorts of economic roles that people can play. Nobody in this debate denies that most market actors are harmed by state intervention. But what left-libertarians argue is that not everyone is harmed equally by it; that the State has a particular structure which tends to direct the most harm against some specific subgroups of market actors, and that others are either harmed less or subsidized at the expense of those who are harmed most; that those who are harmed most tend to be those who are poor, not well-connected, participating in small-scale, local, informal-sector, etc. forms of economic action; that those who are harmed least or actively subsidized are almost universally those engaged in certain forms of doing business (in particular, large, professionalized, consolidated firms); and so, if you look at one particular subgroup of market actors — like, say, the subgroup of big-box retail businesses — it may very well be the case that most market actors within that particular subgroup are less-harmed, or actively subsidized, by State coercion, and so there is no presumptive net cost of state action for that particular form of economic activity, relative to other forms of economic activity that they might be engaged in.

    Now, maybe you disagree about how much the State hurts small, informal actors; or maybe you disagree about how much it privileges big, more formalized actors; or maybe you disagree about both. But if so, that’s the debate we need to have, not a debate about some kind of statistical average of net harm for all economic actors everywhere.

    As for Macy’s specifically, well, I don’t care. I don’t have much of a dog in that fight and I’m not much interested in rehashing it here. In any case this debate is more or less strictly about predicted economic outcomes, not about the normative question of whose claims of property rights are or are not legitimate in the actually-existing unfree market.

  26. "Nick Manley" - The Curious "Deviant"

    Bush is going to imagine he’s a defender of the free market in his speech to the G-20 — what’s up with keeping the failed banking-state nexus then?. Marja and I might go to the protest of the meeting here in D.C. I came up with the idea of a sign reading No Bailouts! No Borders! ( :

    See story below on Bush:

    http://english.aljazeera.net/news/americas/2008/11/20081113143631564989.html

  27. Marja

    That was my idea! Anyway, the upcoming protest is the same day as Schaler’s lecture, which you mentioned on another thread.

  28. Nick Manley

    I thought you said the protest was Saturday. I went to Schaler’s class last night.

  29. Bob Kaercher

    Stephan, maybe it would help if we broke down the claim at issue into some component parts. Roderick makes the following claims about business in a free market:

    1. That firms will tend to be smaller;

    2. That firms will tend to be less hierarchical;

    3. That firms will tend to be more local;

    4. That firms will be more numerous;

    5. That many firms will probably be employee-owned;

    6. That prices will generally tend to be lower;

    7. That wages will generally tend to be higher; and

    8. That corporate power would be in shambles.

    Charles, I’m convinced of every point above except #5. (Though I would even qualify #3 with “perhaps that would be true in some cases for some industries and businesses, but that depends on a lot of variables.”)

    I certainly don’t find anything objectionable about the concept of worker-owned businesses and companies—and worker ownership may in fact be conducive to certain values that are worth promoting in and of themselves. And a very good case can be made that in many instances turning ownership of businesses over to their employees after abolishing the state would be a matter of simple justice, a la Murray Rothbard’s suggestion that ownership of Russian firms and factories should have been turned over to their workers after the collapse of the Soviet regime, based on the Lockean homesteading principle (though that was only one of several options that he pondered when considering how the Russians could “de-socialize”). Boeing comes to mind as a possible candidate for post-state worker ownership as a matter of justice, due to the numerous gov’t subsidies and war contracts they receive in the currently existing plutocracy.

    But whenever I see left-libertarians write that a system of (at least “many”) worker-owned businesses would (at least “probably”) follow the abolition of all the currently existing state-enforced privileges, they don’t show how that bridge is built.

    1.) There are a lot of businesses and companies that wouldn’t qualify as being a Boeingesque beneficiary of state privilege, and so there are no compelling reasons on grounds of justice to hand over ownership of those companies to their workers; 2.) The desires of workers themselves certainly vary—how many of them even want co-ownership of a company?

    As far as I can see right now, the best case that can be made for workers’ prospects in a post-state era is that they would have a freedom to choose what, where, how, and when to produce that they lack at present (a worthy enough goal in and of itself, I think), and sure, I don’t see why that wouldn’t include making a go of worker-owned enterprises (sneering cultural prejudices of certain right-libertarians notwithstanding). But at the end of the day, the viability of any business depends upon how well they serve their customers, regardless of the ownership structure. Even if Boeing is turned over to the workers following the death of the state, whether or not it remains worker-owned will depend on how much their customers value their products and services over those of other competing producers.

    Am I overlooking something? Is there something I’m just not taking into account?

  30. Discussed at radgeek.com

    Rad Geek People’s Daily 2008-11-25 – In reply to a reply by J.H. Huebert and Walter Block:

    […] J.H. Huebert and Walter Block have recently published an essay which claims to be a reply to Roderick Long’s essay on left-libertarianism for Cato Unbound. Huebert and Block insist that they are going to set the record straight on the correct libertarian view of these matters. But it’s not clear that they have succeeded in even setting the record straight on Roderick’s view of these matters. For example, I think they have clearly and grossly misread him on the question of selective tax breaks for politically-connected big businesses. (Roderick never claimed that getting selective tax breaks are morally equivalent to receiving a government subsidy; only that firms or practices that get a comparative advantage from government taxes on their competitors are, like firms or practices that get a comparative advantage from government subsidies, not good examples of the free market at work.) Similarly, their attempt at a response to Roderick’s claims about big-box retailers like Wal-Mart, and the importance of using government-subsidized roads to the success of their business model, wavers between an attack on a claim that Roderick never made — that Wal-Mart deserves blame for their successful exploitation of government-subsidized roads — and willfully obtuse replies to the claim that he did make — that Wal-Mart’s road-dependent business model shouldn’t be counted as an example of the free market at work, and that if Wal-Mart had to pay the full costs of its business model, without government subsidies to cross-country freight trucking, it would lose some or all of the comparative advantage that it currently holds over smaller and more local competitors. (Did you know that, since we all use government roads sometimes, that means we are all getting a subsidy like Wal-Mart? Hey, you know, back in May I got a $600 check from the U.S. Department of the Treasury, which was supposed to be for economic stimulus. Just like how AIG gets $85,000,000,000 checks from the U.S. Department of the Treasury, for the sake of economic stimulus! So how could I possibly claim that AIG gets government privileges that I don’t enjoy? Well. See my discussion with Will Wilkinson in a comment thread about the original article.) […]

— 2009 —

  1. Discussed at radgeek.com

    Rad Geek People’s Daily 2009-04-25 – Three notes for the critics of the critics of apologists for Wal-Mart:

    […] Second, this article will also have very little to do with whether or not Wal-Mart deserves the Nobel Peace Prize, or sainthood, or praise, or censure, or some mixture or combination of the two. The arguments that I’ll be discussing might feed into a larger discussion about how to parcel out praise and blame, but that’s not my concern here. My concern has specifically to do with the extent to which Wal-Mart ought to be regarded as an example of free-market entrepreneurial success. (That’s related to but distinct from the question of whether Wal-Mart ought to be praised or blamed or neither by free-marketeers. If you’re curious about that topic, this post will disappoint, but you might get something out of my exchange with Will Wilkinson in the post and comments at GT 2008-11-10: The ALLied invasion of Cato.) […]

  2. Discussed at radgeek.com

    Rad Geek People’s Daily 2009-10-09 – From right-on to WTF? in three easy steps:

    […] on, I say. Exactly. (Although, as a libertarian socialist, I can’t work up much surprise at finding libertarians […]

— 2010 —

  1. Discussed at radgeek.com

    Rad Geek People’s Daily 2010-01-22 – Somebody’s gotta say it.:

    […] it can’t top that thread in which the very first entry consisted entirely of Fuck you Roderick Long, I have to say that my current favorite is this […]

— 2014 —

  1. Discussed at www.blagnet.net

    Blagnet.net » Did he do a billion dollars’ worth of work?:

    […] Johnson has written, "I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as f… and, "The centrifugal tendency of markets: market anarchists see freed markets, under conditions of […]

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