Bits & Pieces on Free Market Anti-Capitalism: two meanings of “markets”

In order to get clear on the topic in a conversation about Free Market Anti-Capitalism, the obvious points where clarification may be needed are going to be the meaning of capitalism, the meaning of markets, and the meaning of freedom in the market context. We left-libertarians have spent a lot of time, and raised a lot of controversy talking about the first topic — whether capitalism is really a good name for the sort of thing that we want, the importance of distinguishing markets from actually-existing capitalism, and the possibility of disentangling multiple senses of capitalism.[1] There’s been a lot of argument about that, but here I’m happy to just defer to what my fellow panelists and other left-libertarians have already said. What I’d like to focus on is the less frequently discussed side of our distinction — not the meaning of capitalism, but the different strands of meaning within the term market. As absolutely central as this idea is to libertarian economics, I would argue that there are at least two importantly distinct senses in which the term is used:

  1. Markets as free exchange — when libertarians talk about markets, or especially about the market, we often mean to pick out the sum of all voluntary exchanges — any economic order based, to the extent that it is based, on respect for individual property, consensual exchange, freedom of association, and the freedom to engage in entrepreneurial discovery.

  2. Markets as the cash nexus — but we often also use the term in a different sense — to refer to a particular form of acquiring and exchanging property — that is, to refer to commerce and quid pro quo exchanges, typically mediated by currency or by financial instruments denominated in units of currency.

Of course, one of the central points of libertarian economics is that these two senses are interrelated: when they takes place within the context of a system of free exchange, social relationships based on the cash nexus – producing, buying, and selling at market prices, saving money for future use, investing money in productive enterprises, and the like are positive, even essential features of a flourishing society.

But while linked, they are conceptually distinguishable, and it’s important to see, first, that markets in the first sense (the sum of all voluntary exchanges) include the cash nexus – but also much more than the cash nexus. Family sharing is part of a free market; charity is part of a free market; gifts are part of a free market; informal exchange and barter are part of a free market. Wage labor (renting labor in return for cash), rent, corporate jobs, corporate insurance and the like can be part of a free market, but so are alternative arrangements – including many arrangements that clearly have nothing to do with capitalism3, and fit awkwardly, at best, with any conventional usage of the term capitalism: worker co-ops and consumer co-ops are part of the market; grassroots mutual aid associations and community free clinics are part of the market; so are voluntary labor unions (based on free association and the right to protest or quit), consensual communes, narrower or broader experiments with gift economies, and other alternatives to the prevailing corporate-capitalist status quo. To focus on the specific act of exchange may even be a bit misleading; it might be more suggestive, and less misleading, to describe a fully free market, in this sense, as the space of maximal consensually-sustained social experimentation.

The question, then, is whether, when people are free to experiment with any and every peaceful means of making a living, the sort of mutualistic alternatives that I’ve mentioned might take on an increased role in the economy, or whether the prevailing capitalistic forms would continue to predominate as they currently do. To be sure, the capitalistic arrangements predominate now – but that, of course, is no reason to conclude that the market has spoken. It would be enough if the predominance of capitalistic arrangements were the product of revealed preferences in a free market; but since we don’t have at present have a free market, it will, at the very least, take some further investigation – in order to determine whether those capitalistic alternatives prevail in spite of the unfreedom of actually-existing markets, or if they prevail, in part, because of that unfreedom.

Which brings us to the market as cash nexus. It is important here to see not only that the cash nexus doesn’t exhaust the forms of voluntary exchange and economic experimentation that might emerge within a freed market, but also that a cash nexus may exist, and may be expansive and important to economic life, whether or not it operates under conditions of individual freedom. Markets in our first, voluntary-exchange sense exist only where people really are free to produce and exchange – free market, in the voluntary-exchange sense of market, is really a tautology. But a market in the cash-nexus sense may be either free or unfree; cash exchanges are still cash exchanges, whether they are regulated, restricted, subsidized, taxed, mandated, or otherwise constrained by government action.

When free marketeers turn from the formal discussion of voluntary exchange, toward a substantive discussion of actually-existing economic relationships and financial arrangements, our analysis has to discuss more than just limitations on market activity. We often speak of market exchange and government allocation as cleanly separate spheres, as if they were two balloons, set one next to the other, in a closed box, so that when you blow one of them up, the other has to shrink to the same extent. That’s true enough about markets as social experimentation, but the relationship between cash-nexus exchange and government allocation is really more like two plants growing next to each other. When one gets bigger, it may overshadow the other, and stunt its growth. But they also climb each other, shape each other, and each may even cause some parts of the other plant to grow far more than if they had not had the support.

Any discussion of the cash nexus in the real world, then, needs to take account not only of the ways in which government limits or prohibits market activity, but also the ways in which government, rather than erasing markets, creates new rigged markets – points of exchange, cash nexuses which would be smaller, or less important, or radically different in character, or simply would not exist at all, but for the intervention of the state.

Thus, the social and economic value of the cash nexus, as a social relationship, depends entirely on the context. Kinds of interaction that are positive and productive in the context of free exchange easily become instruments of alienation and exploitation when they are forced on unwilling participants, in areas of their life where they don’t need or want them, through coercive government. The growth of markets as spaces for social experimentation is always a liberating development — but these social experiments may be mediated by the cash-nexus, or may be mediated by entirely different social relationships. The growth of markets as cash-nexus exchanges, on the other hand, may be liberating or violating, depending on whether those relationships come about through the free interplay of social forces, or through the direct or indirect ripple-effects of government force and the coercive creation of rigged markets.

I’ll be turning to the analysis of that context, and the way that free market anticapitalists apply it to the real-world business-as-usual, in the next instalment.

  1. [1] For examples, see my Anarquistas por La Causa and What’s in a name?, Roderick Long 2006-04-08 and 2008-06-27, Steve Horwitz 2009-12-31 and 2010-01-07, Gary Chartier 2010-01-19, Kevin Carson 2010-03-06, Sheldon Richman 2010-03-02 and 2010-04-16, etc.

19 replies to Bits & Pieces on Free Market Anti-Capitalism: two meanings of “markets” Use a feed to Follow replies to this article · TrackBack URI

  1. Shawn P. Wilbur

    A word like “commerce” has well-established senses that include all sorts of human interaction and communication. But I wonder if “market” logically stretches to “the sum of all voluntary exchanges,” or whether it tends to sneak in quite a number of assumptions about how voluntary exchange works. It’s hard to imagine a “market” without something like price signals, comparative valuation. But it’s also hard to think about “the market” without attributing to it some sort of power to decide, a collective efficacy that’s more than just some aggregate of individual actions, and which is to be contrasted with “artificial” attempts at social planning. How different can this “entirely different social relationships” be before the elements of comparative valuation and exchange are no longer the primary mechanisms at play?

  2. Rad Geek


    Thanks. This was really helpful. The upcoming instalments are of course already composed, so they can’t directly respond, but I hope they’ll be of some interest in connection with the questions you raise here.

    I like your point about the word commerce. Of course, this can get complicated as we branch out into other parts of speech — if someone talks about commerce among men [sic—ugh, but historical usage] that might have all kinds of meanings, but if you get to the adjective and start talking about commercial relationships that has a much more narrow scope (probably more narrow even than the narrower scope meanings of market).

    On the meanings of market, my main goal here is to disentangle and set out the existing uses of the term, and one of those uses (especially important for the audience at APEE) is the technical usage that laissez-faire economists have tended to stipulate — which is extremely broad. (My phrasing was an off-the-cuff reference to Rothbard; the exact quote would be The free market is the name for the array of all the voluntary exchanges that take place in the world, from “Toward a Reconstruction of Utility and Welfare Economics,” and close variations on it in a number of later works. Of course, the word “exchange” is there, but Rothbard is a praxeologist, so he thinks of literally every human action as an “exchange.” Von Mises has some similarly broad things to say about the concept of a market economy, although he does add that the concept of a market ought to include a division of labor.) Taking these usages at face value, apparently it does include basically everything as long as it’s peaceful.

    As for whether this usage is legitimate — well, I’m trying to play it where it lies; to an extent people can stipulate whatever they want for a technical term, and there’s some analytical value in just taking the definition at face value and seeing where it leads you. But I do absolutely agree with you that choosing the word market in this technical sense to describe a broadly-conceived consensual economics, when the same word *also* has all these other shades of meaning directly related to the specific relationships clustered around the cash nexus, does tend to have some powerful effects on what kind of activity we think of us as paradigmatic. (Which is no small part of the reason that I want to raise this distinction in the first place — to tip my cards a bit, I think that the linking of the two distinct concepts under a common term tends to make a lot of free-marketeers think first and foremost of the cash nexus, commercial motives, monetary profits, quid pro quo exchange, etc. when they start looking for examples of consensual economic experimentation, that when that biasing goes unrecognized it does tend to lead to a lot being snuck in without acknowledging it, that this can badly obscure analysis, and that that (even moreso than the more commonly-discussed ambiguities of the term capitalism) goes a long way toward explaining the mistakes behind vulgar libertarian apologetics. Anyway, part of all that should form a significant part of what I’ll be briefly sketching out in the upcoming Bits & Pieces, and hopefully what I’ll be coming back to fill in at some greater length in the follow-up.

    For what it’s worth, to tip my cards even more, I actually think that the biasing of the paradigmatic examples towards commercial exchange has obvious negative effects, but also some positive effects for inquiry. (Paradigm cases are tricky. The selection of paradigm cases has to be biased towards some set of instances or another, or else what you’ve got is just examples, not paradigms. Part of the question is how broad or narrow the set of paradigms you consider is. Another part is whether your choice facilitates or obscures your ability to apply the concept outside of the paradigmatic instances.) Unfortunately, I didn’t have time during the talk to get into this dialectical sort of stuff about what the positive effects might be, or what conditions might tend to tip the balance toward an overall positive or negative verdict. As you might guess, I think a lot is tied up in how far those paradigm cases are bound to or free from actually-existing capitalist business-as-usual; with whether cash-nexus exchanges are treated as a prominent paradigm or as the sole paradigm, with how much the focus on the paradigm cases does or does not obscure the ability to conceive or recognize non-cash-nexus consensual alternatives, yada yada yada. A lot of details I’d love to dig into as all this goes on, and also once I have the chance to loop back on it all.

    On the market — I agree that this tends to suggest the kind of collective efficacy you mention, as well as, basically, the balloon model of The Market on one side and Government Intervention on the other. Part of the reason why I really fundamentally dislike talking about The Market in the aggregate just like that. Specifically, I think that this tends to obscure just how prevalent and how important government-juiced cash exchanges and rigged markets are to the structure of state capitalism. (That’s a big part of what I think is so deep as to be invisible in conventional talk about political economy — because it is so prevalent and ordinary, and because the ordinary conceptual viewpoint obscures it so much, that the ripple-effects of absolutely pervasive government force are taken, not as anything political, but simply as everyday life.)

    Anyway, more to come.

  3. Jeremy Weiland

    An excellent parcelling out of the different senses of “market”, Charles.

    I have no wish to engage in another pointless semantic debate, but I must admit that I find it unlikely that anybody, even agorists, really use the term “market” to include family sharing, gifts, or charity - at least on the same level as other more formal exchanges. Of course I cannot demonstrate this, but I have my suspicions based on my dialogues with agorists. While I appreciate their flexibility in accommodating different kinds of exchange, it’s clear that formal cash transactions hold the greatest legitimacy and explanatory power for them. Think of solutions to defense, arbitration, and other problems they’ve suggested; have you ever heard an agorist suggest anything but highly structured institutions involved formal exchange?

    I’m not suggesting deception or dishonesty on their part; rather, I think this is a function of an earnest desire to emphasize voluntariness while simultaneously desiring as full and complete an explanation as possible. As we seek a systemic model of society to serve as a vehicle for our agenda, we gravitate towards those that are easiest to understand and clearest to demonstrate. Formal economic exchange provides the most precise form of explanation because the voluntary consent is most expressly represented within the system. Quick and clean, with all competing interests addressed and balanced.

    However, I think expanding the term “market” to include everything voluntary - especially when the term is then used to promote relationships that are then quite transactional and impersonal - glosses over and deemphasizes key aspects of the human social condition that anarchists must address in order to approach the full context of voluntary society. Formal economic transactions are an important concept, and I think the term “market” is the best term for them. But subsuming all exchange and interaction into “market” for the sake of simplicity is a mistake. It presents our agenda as a solution to the messiness of social dynamic, when I suspect it is this very messiness - the informality, the emotional bonds, the dilemmas and paradoxes of human relationships - that makes it human.

  4. Discussed at

    Free Market Anti-Capitalism?:

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  5. Darian

    Great work, Charles! I had been intending to explore the different uses of the word market, and it’s great that you attempt to make people aware of what they’re actually talking about.

    I did pick up an apparent typo: “when they takes place within the context of a system of free exchange, social relationships based on the cash nexus” I think it should be “take place” there. Sorry, but it was really all I could think to add besides affirmation.

  6. Roderick T. Long

    I did pick up an apparent typo

    Don’t lay your opressive kapitalistik orthografik rulez on us, man.

  7. Darian

    You mean “victory through superior pretentiousness” is not our strategy? Confound it! The movement of which we speak does not contain a proper place for such an intellectual powerhouse as myself!

· November 2010 ·

— 2011 —

  1. Discussed at

    I’m Against Free Trade Agreements Because I’m For Free Trade | Bleeding Heart Libertarians:

    […] entirely), it’s also important to remember that — on a sufficiently rich conception of what’s in a market — a freed market is an individualist social order, not an antisocial one. What I mean is […]

— 2012 —

  1. Discussed at

    Markets Not Capitalism: An Interview with Charles W. Johnson and Gary Chartier « Symptomatic Redness:

    […] in my essay “Markets Freed From Capitalism,” and glossed in fairly similar terms here. (1) Markets as free exchange, a broad sense which encompasses literally any sort of voluntary […]

  2. Discussed at

    Markets Not Capitalism: An Interview with Charles W. Johnson and Gary Chartier « Bradley Coufal:

    […] in my essay “Markets Freed From Capitalism,” and glossed in fairly similar terms here. (1) Markets as free exchange, a broad sense which encompasses literally any sort of voluntary […]

  3. Discussed at

    The Distinctiveness of Left-Libertarianism | Bleeding Heart Libertarians:

    […] can distort markets and constrain traders’ options. They also note that commercial exchange does not exhaust the sphere of peaceful, voluntary cooperation and that people can and should cooperate in multiple ways—playful, solidaristic, […]

— 2013 —

  1. Discussed at

    Rad Geek People's Daily 2013-08-17 – Pigs as a Paradigm:

    […] If self-organizing markets are going to be worth anything at all, they have to mean more than a cash-nexus yoked to human relations by any means necessary and kept on there no matter the cost to the […]

— 2014 —

  1. Discussed at

    The Use of the Word Capitalism (Or, My Follow up Notes to “Introduction” Part 2) | Abolish Work:

    […] goes beyond the meaning that some designate to markets, that they are just measures of profit or measures of commodity exchange and nothing more. FMACs are calling for a “wide open space” where anything and everything can be tried […]

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