Posts tagged Wirkman Virkkala

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:

Come out, my people, come out…

Here’s something I wrote a little more than a month ago about principled libertarians who have thrown in for the Ron Paul campaign:

As for rising libertarian consciousness, or openness to libertarian ideas, I’d like to believe that it’s true, but I’m not especially convinced. If it is true, though, I would suggest that absolutely the most urgent thing to do is to start those conversations and unhitch them as quickly and as thoroughly as possible from the Ron Paul train, because we have a very short window of time — somewhere in the vicinity of 1-3 months, depending on the breaks — before Ron Paul’s prospects in the primaries are completely decided. If nothing significant happens in that direction between now and then, then I think that a lot of money and a lot of organizational energy will disappear right into the same dark, lonely station where the Clark train, the Buchanan train, the Perot train, the Nader train, and the Dean train are sitting idle after all these election cycles. That’d be a shame, because, as much as I dislike some of what they’re producing, they are certainly showing a lot of genuine organizational intelligence.

I’d say that recent news — Ron Paul’s next-to-last performances in early primaries, and the rippling effects of the recent brouhaha over the newsletters published under his imprimatur — is as good a reason as you could hope for for believing that time is up. Either the Paulistas unhitch themselves now or they will be carried far away from their intended destination.

Yes, yes, the New Republic article is a sloppy hatchet piece, which mixes genuinely fucked-up shit (such as the vile racism and authoritarianism of the law-n-order pieces that appeared in the early 1990s) together with bogus smears (such as the attempt to use longstanding criticism of U.S. military support for the Israeli government as evidence for a charge of anti-Semitism). And yes, yes, Ron Paul’s relationship to the newsletters was weird and there is some complicated and ongoing movement history that makes the full story much less straightforward than Kirchick’s narrative would imply. But that genuinely fucked-up shit is genuinely fucked-up shit. If you’re interested in an overview of the authorship question and of some of the salient movement history, you can see the article and comments at Kn@ppster (2007-01-08), and also Wirkman Netizen (2007-01-09). As I see it the full story, once told tends to make Ron Paul a little less guilty than Kirchick claims, but much more guilty than his kneejerk defenders claim.

That’s a conversation well worth having, and perhaps I’ll join in in the future. But for the time being, the point that I’d like to stress is this: whatever the full, nuanced, correct understanding of the matter may be, there is no realistic chance whatsoever that the necessary nuance will fit into either person-to-person electoral outreach or political media commentary within the amount of time that remains. News media and politicking in the critical months of primary season just don’t provide a medium for that kind of nuanced discussion to happen. It just doesn’t have the bandwidth to get through anything much more complex than Google Ron Paul, Ron Paul’s a crazy racist, Is not, Is so, Your moms! etc.

So Ron Paul’s chances in the Republican primaries, if he ever had any to begin with, are on death’s doorstep, and all that remains on this point are a number of damning associations with his name that radical libertarians will not be able to dispel or to dissociate within the electoral forum. Those radical libertarians who have tried to use Ron Paul’s personality and campaign, warts and all, as an indirect means for educating people about and persuading them of anti-war and radical libertarian views had best give it up. Those radical libertarians who have tried to use mix with Ron Paul’s other supporters as a source for new recruits had best give up on trying to work together with the Paulistas within the context of Ron Paul’s campaign, and start working on poaching them from the campaign into other projects. Any further effort at bolstering the campaign is, as far as I can see, going to be wasted effort. The campaign is just about dead in the water, and ongoing libertarian efforts to talk it up are, as far as I can tell, very unlikely to educate anyone about the real nature of libertarianism. What they are far more likely to do is undermine any efforts to educate people about what genuine radical libertarianism entails. If these efforts are not simply ignored, then what they will accomplish is not mainly to push more anti-libertarians and not-yet-libertarians towards libertarianism, but rather to push them towards associating radical libertarianism with the reactionary bigotry of the hard Right. What would be far more productive is a concerted effort to break that association, by publicly dissociating from and criticizing the Ron Paul campaign, on the grounds of clear, public, and unapologetic statements of radical libertarian principles.

Now, I believe firmly in honesty, and in open radicalism, and I think that if an extreme position is correct, then public indignation at it, or smears of it, are ever a good reason to abandon, or moderate, or dissemble about your position. You just keep at it, against wind and tide, until your intransigence and the rightness of your position have succeeded in shifting the debate. But when we move away from the moral question of fidelity to principle, and to the strategic question of supporting a particular candidate warts and all, the issue is no longer one of honesty but rather one of whether your chosen means are actually well-suited to your ends. If the hope is to convince non-libertarians through education and persuasion, then you’re not likely to promote that goal through boosterism for Ron Paul’s good name and electoral prospects, after his electoral campaign has become moribund and his name is no longer especially good. If Ron Paul boosterism ever was an effective way to get things done, it no longer is, and it’s time to find a better way.