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Guest Column | by Charles Johnson

Is the Problem Really Too Little Trust in Government?

Posted August 23, 2010

There is one point where I can unequivocally agree with E.J. Dionne's column "Can We Reverse the Tide on Government Distrust" (Washington Post, May 6, 2010) – when he tells us that So far, the Obama administration has missed the opportunity to demonstrate ... how it is changing the way government works. How is its approach to ... regulations different from what was done before? ... How are its priorities different?

How indeed?

Two years in, if there's any noticeable difference between Bush's policies of corporate privilege, endless warfare, bailouts, executive power, and bureaucratic expansion, and Obama's policies of corporate privilege, endless warfare, bailouts, executive power, and bureaucratic expansion, I'd like to know where to find it. The difference between me and E.J. Dionne is that Dionne is apparently surprised by this outcome — why hasn't Obama done better? At issue is what used to be called Good Government – the problem of ensuring that a centralized managerial State, with expansive powers to intervene in all matters economic, social, or hygienic, will be run cleanly, and competently, by qualified experts. Dionne insists that financial market meltdowns, oil spills, and coal-mine disasters reveal the catastrophic results of a few years of Bush-era government neglect. Those of us who remember the Bush administration may have a hard time accepting the claim that it was an era in which government was not doing enough; and we see these headline-grabbing catastrophes as only the tail end of a decades-long crisis – a bipartisan, politically created crisis of institutional incentives and industry best practice-ism, created, nurtured, and protected by government itself.

. . .

Dionne may present his article as a commentary on recent news, but the headlines are only carelessly chosen illustrations for a message that seems copied out of a children's civics textbook circa 1948. Elected government's task is to stand up for the many against the few, to make sure that corporations are properly supervised, and to protect those with weaker bargaining positions ... against the harm that those in stronger bargaining positions might inflict. Our problem is simply that we do not trust the political means enough. According to Dionne, if we are ever to solve these politically created crises, we need to know that government in a free society is not a distant force but, rather, something that all of us influence and shape.

To be sure, government is not very distant from the downtown offices of the Washington Post.^[1] For the rest of us, though, access is somewhat more limited, and not "all of us" have the same influence in shaping government policy. That is done by political insiders and economic incumbents: As scholars like Gabriel Kolko and Butler Shafer have repeatedly shown, government regulatory bodies from the FTC to the MSHA to the SEC have consistently been captured by the incumbents in the industries they are supposed to regulate, systematically rigging government regulations in such a way as to build up cartels, exclude competition, and protect businessmen from liability for harmful practices.

Even with the record of regulatory capture and industry-driven policy, Dionne, like many Progressives, simply insists that politicians need even more trust and fewer restraints on action to give them the independence to do the right thing. You might call this kind of Progressivism a theory of trickle-down politics: When government devotes the overwhelming majority of its power and resources to foolish or destructive programs directed by concentrated interests – subsidies, bailouts, anticompetitive regulations, or an ever-growing military-industrial "National Security" complex – the proposed solution is to give that same government even more strength and greater resources to dispose of, on the hope that some of the surplus will eventually make it through the net of insider control to reach programs that offer a pittance to the little guy.

Individualists know that when you reward the institutions that created crisis, you are going to get more crises. Greater regulatory powers will only make government more attractive to industry incumbents; the more politics is involved in industry, the more that political pull pays off for the industrialists. The root causes of the crises we've faced in recent years are not problems of competence or corruption. They are problems of cartelization and capture. The solution is not more trust in government; it's to realize there are things the political means just cannot accomplish, which should instead be addressed through decentralized, peaceful social cooperation. . . .

— Charles Johnson, The Freeman Online (23 August 2010): Is the Problem Really Too Little Trust in Government?

The article also includes some brief recapitulations of the Money Monopoly, the Land and Natural Resource monopolies, and the recent history of BP, Massey Energy, and the MSHA. You can read the whole thing at The Freeman Online to-day.

Thanks to Sheldon Richman, again, for making this possible, and for his invaluable aid as an editor. My only complaint is that I think The Freeman really should have chosen a better author photo for me than the one they have at the top of the story. In that one the camera adds about 20 years, and a lot of corporate liberalism.

1. ^[1][Less than a mile from the Executive Branch! Check it out on Google Maps! –R.G.]↩

A. We will.

Context-Keeping and Community Organizing. Cato Unbound (2010-06-18):

David Bernstein makes the strongest libertarian case I can imagine for Title II of the Civil Rights Act of 1964. His key point—which I fully embrace—is that the Southern states operated the equivalent of a "white supremacist cartel" in public accommodations….

But as Sheldon ultimately argues, there’s more than one way to break a cartel, and starting out with the notion that the *only* options are one kind of federal law or another kind of federal law, is simply to beg the question. We can't dismiss [direct action by nonviolent social movements] as impractical because it had been working several years before Title II was enacted. … Title II, in other words, was unnecessary. But worse, it was detrimental…. [W]hat is given like a gift can be more easily taken away, while what one secures for oneself by facing down power is less easily lost. … The libertarian answer to bigotry is community organizing.

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.↩

It’s been a while since the APEE panel on Free Market Anti-Capitalism. I said, a few Sundays ago, that I’d have more to say, soon. I’ve been meaning to publish my remarks, but it’s taken me a while to think about how I want to present them. I have a prepared text that I used for most of the talk (with the usual ad-libbing and skipping), and then a minimal set of notes that I used to speak off the cuff at the end of the talk. But the more I thought about it, the less I wanted to post the whole text as a long blob of text on the general topic of Free Market Anti-Capitalism. I’m happy with how the talk turned out — but talks are one thing, and blogs are another. There’s something to be said for the long essay (at least, given my own output, I sure hope that there is), but there’s already a number of long essays and lectures on left-libertarian economics and free-market anti-capitalism that are already out there. And looking back over my talk, as a general thing, what I was aiming to do was to anchor on the (really excellent) overviews of the salient issues which were provided by Steve, Gary, and Sheldon in their (excellent) earlier talks, and then drill down a bit — to get into some specifics about the mechanisms of political economy that free market anti-capitalists want to call attention to when they say that they are against actually-existing capitalism, and also to get into some moderate meta-discussion about why we feel the need to take the approach we do, and what the important upshot of a seemingly semantic point (like whether to use the letters c-a-p-i-t-a-l-i-s-m to identify what you’re for, or what you’re against) might really be. The points that I made along these lines were structured in such a way that, while a lecture is all of a piece, the material easily divides into a series of smaller, interrelated, but distinct remarks on a series of smaller, interrelated, but distinct questions. Smaller questions which might help separate out issues in the telling; smaller questions which might be a bit more digestible for reading and a bit more useful for referencing in future discussions; and, perhaps most importantly, smaller questions which might do more to help inspire some conversations in the comments.

So instead of simply posting my prepared text, or a reconstruction of my talk from the notes, as one big blob, what I’m going to do over the next several days is to split things up a bit, and publish a series of bits & pieces, ad seriatim. I’ll be covering ground that a lot of us have scouted before; some of the pieces (or bits?) will be nothing more than a quick attempt to clearly mark out something that just about every left-libertarian already knows or has read or has written herself. I can only say that I’m trying to accurately represent the ground that I covered in my talk, even if I am serializing and subdividing it. And I do also think there’s something to be said for clear maps, even if the territory has already been surveyed elsewhere. I hope that a survey of the landscape might help to make some journeys more pleasant, to help collect some thoughts, and to move along some conversations.

After I’ve finished serializing the remarks that I made at the panel itself, I hope also to follow up with a few remarks on points that were raised by my co-panelists, which I didn’t have the time to get into at the event itself. And I look forward to seeing how the conversation goes on from there.

Anyway, all this is by way of introduction, or apology, and that’s enough of that.

The first bit (or piece) will be coming out tomorrow.

• this thought experiment just got way too awesome. Dinosaur Comics (2010-04-20). archive – contact – sexy exciting merchandise – what happened – search – about!!!@@e2;2020;90; previousApril 20th, 2010nextApril 20th, 2010: I just found out that Stanford’s marching band turned their tubas into Dinosaur Comics to help win a Battle of the Bands and this is what I have to say to… (Linked Wednesday 2010-04-21.)

• Help Corvus help the Kate Sharpley Library. Shawn P. Wilbur, Out of the Libertarian Labyrinth (2010-04-16). I’ve got a lot to say, sometime soon, about mutual-aid economies and the power of small, periodic support for small projects, but, for once, let’s get the practice out there in front of the theory. Despite my tendency to be into a bit of everything all the time, the heart… (Linked Thursday 2010-04-22.)

• !!!@@e2;20ac;2dc;Infographic', by Phil Gyford. John Gruber, Daring Fireball (2010-04-09). Zing.  â˜…  (Linked Thursday 2010-04-22.)

• Malfunction ... Malfunction ... Roderick, Austro-Athenian Empire (2010-04-22). Mary Matalin on CNN's Campbell Brown show just now, on the subject of marijuana: My libertarian sense says let's regulate it. (Linked Friday 2010-04-23.)

• The Washington-Wall Street Kabuki Dance. The Freeman | Ideas On Liberty (2010-04-23). Excellent work in the latest from Sheldon Richman: “When I watch the public furor over the ruling party's attempt to ‘toughen’ regulations on the financial industry, I get the same feeling I often have in a theater: Good show but it's not real. … If you have doubts about any of this, imagine some top Wall Street operator calling for elimination of the Federal Reserve System and the banking cartel it administers. Imagine him endorsing repeal of all federal and state banking regulations and their replacement with free banking and market-based money. Imagine him testifying on behalf of an end to all implicit guarantees, bailout promises, and the "too big to fail" doctrine. If you can't imagine it you have begun to grasp the nature of the actual political economy in which we live.” Sheldon’s column has also been reprinted in this weekend’s CounterPunch. (Congrats!) (Linked Friday 2010-04-23.)

• The Palinites and the Paulians. Jesse Walker, Jesse Walker: Reason Magazine articles and blog posts. (2010-04-20). The biggest (though not the only) limit to last week's CBS/New York Times Tea Party survey is that it didn't distinguish the movement's armchair sympathizers from the people who actually go out and join the rallies. Politico and Edison Research have filled part of that gap by polling the participants… (Linked Friday 2010-04-23.)