Libertarians regressing to unsound, and thus, unfair Economics

Capitalism (by George Reisman) There is a trend among young and “eternally rebel” types to try and conflate Capitalism and Interventionism and call the mix “Corporatism” at best or just call it “Capitalism.” This of course is not only a conceptual, but also an strategic mistake.

Behind this trend one can find a myriad of economic and ethical fallacies that make up a supposedly unique and original corpus of ideas named Left-“libertarianism”. The problem with this ideology is not with its undoubtedly libertarian leanings. The problem is that it ignores the role that Murray N. Rothbard and others played in advancing Libertarianism by providing Austrian insights to the fundamental issue of value, and thus of ethics and justice; an International Relations analysis of the key role of war as a destructive force abroad and at home; and other key elements. The self-identified “Leftists of libertarianism” do individual liberty no favor — and sow terribly destructive notions — when they “discover” or regress to pre-Austrian individualist authors; this is precisely the opposite of what the Whig Theory of Ideas suggests, i.e. eternal regression

Two typical left-libertarian terminological and conceptual errors

1. The Resurgence of “Labor”, as a phantasmagorical drive behind wealth creation and distributive justice

Industrialization took all thinkers by surprise, and this had to be so insofar it was a process led by entrepreneurs and capitalists, not by intellectuals and activists. Any subsequent  classification and arrangement of facts, concepts, and causes-effects had to be plagued with errors by necessity. Take for example the ultimate refutation to Marxist “surplus” exploitation. Professor George Reisman provides this refutation in his magnum opus Capitalism (1996); while the original mistake was committed by Adam Smith, supposed founder of “bourgeois” Economics (the latter being a myth in-and-of itself, as demonstrated by Murray N. Rothbard), it was taken to perverse depths of equivocation by Karl Marx in Das Capital. In any case, even Adam Smith had a clear distinction of a free economy vs. a privilege-ridden economy. That distinction — contra-Karl Marx — was identified as one of Capitalism vs. Mercantilism by several thinkers, including two of the most influential classic liberal thinkers of the 1900s:  Ludwig von Mises and Ayn Rand. As path-breaking thinkers, both could easily devise new or old-new terms for what they were describing, yet they both advocated Capitalism. And by Capitalism they meant a system of private property in the means of production, as opposed to Socialism (a system of public or State-owned property in the means of production). Mercantilism was spotted and denounced centuries ago by Adam Smith, and Interventionism by Ludwig von Mises. The exploitative nature of the State and the redistributive issues with money and taxing were discussed to great length by Rothbard. Hans-Hermann Hoppe has demonstrated that a State is neither necessary nor favorable in order for Capitalism to emerge. To go by as if these authors hadn’t provided Libertarianism with a sounder (although unfinished and far from error-free) grounding, can only derail our efforts towards understanding and social change.

In any case, neither privileges nor labor are the source of wealth, but exchanges. That’s why Mises preferred the term Catallactics to what we all know as “Economics”. It is exchange — not labor but products accepted in the marketplace, not privileges for companies or individuals but sales — that drives value creation, socially speaking. Of course, left-libertarians noticed and criticize privileges for companies, but not for individuals. Never are individuals or small- to mid-sized companies accused of having success thanks to State policies. This alone is very telling. Libertarianism needs a bigger dose of Rothbard and Reisman and far less of Marxist or other muddled socialist authors.

2. The aforementioned conflating of Capitalism proper and Interventionism into a hybrid concept, “Corporatism” or worse yet, “Capitalism”

So, if even Adam Smith had a clear distinction between a free and a privilege-ridden economy, why do the left-libertarians insist on conflating them again? Because they are taking from pre-Austrian authors on value and pre-Rothbardian authors on the ethics of property. This of course can only produce a mess of an analysis. It leads to deep suspicion or outright hatred of big — here, left-libertarians read successful — companies, as if Mises, Rothbard, and Rand hadn’t identified the unfair effect of the State on their growth via subsidies, eminent domain, and other corporate welfare policies. But it is also true that these privileges distract these companies from focusing on the consumer and thus render them less effective to deal with a changing world. All the talk about the “strong” vs. the “weak” in the entrepreneurial arena will never change the fact that the top 25 companies in any given country are never the same for the next generation. The left-libertarian assumption of the State being a purely benign force towards corporations and big companies in general is terribly wrong. The effect is corruption: these companies are to some degree corrupted into serving two masters, the corporate welfare provider and the consumer. Only the latter’s purchases (again, the exchange principle) can put some brand at the top in any market with low politico-legal barriers to entry. No amount of roads, seized lands, easy credit, etc. can change this.

Add to this a distrust of the vertical division of labor (here some key insights by Frederic Bastiat and Ayn Rand come to mind), management (“bossism”), international investments, and any mention whatsoever of the role of individual responsibility and thrift in the social and economic process, and the picture is one full of errors and misplaced antagonism.

To conclude, we can say that all individualists, anarchists, and libertarians (these being synonyms to a high degree thanks to Rothbard) will profit much more from Mises, Rand, Rothbard, Reisman, and their heirs than from pre-Rothbardian and pre-Randian authors on the Economics and Ethics of a free society.

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  • In my opinion, the “exchange theory” is being tampered with. “It is exchange (not labor but products accepted in the marketplace) Key Word products ACCEPTED in the market. And what exactly is accepted? Whatever is encouraged and recommended through the media? Who controls the Media? “these companies are to some degree corrupted into serving two masters, the corporate welfare provider and the consumer.” Whether you realize it or not, or whether you agree with it or not, the consumer is NOT a master. The consumer is also a slave to the corporate welfare master. The consumer is coerced into buying and selling the “products accepted in the marketplace” by the Corporate Welfare. Just look at the fast food industry. Is meat healthy? Is animal products healthy? Is milk healthy? Tests have proven that no, they are not, yet “Corporate Welfare” still sells the lie to the world. Farmers are no longer selling what they want. They are no longer farming animals.. they are factorizing them under the conditions of “Corporate Welfare.” And if they refuse to abide by these conditions.. they are toast! Just look at America’s addiction to fast food. Something so extremely unhealthy.. something that can and probably will lead to their demise.. Is the fast food industry benefiting the Consumers? NO. The only people it is benefiting is Corporate Welfare.

    Thanks for the tag. I enjoyed your note. Hopefully I helped you see a little more from a Left-“Libertarian” point of view.

  • I think “corporatism” is a fine word to use. Rothbard certainly didn’t shy away from it:

    Plenty of plumbliners use it, as do plenty of capitalists and non-left-libertarians. It is a suitable and useful word to describe a type of interventionism, and also an implication of interventionism, that is not encapsulated by any other word I know of.

  • Juan, how much did Exxon pay you to write this post? 🙂

  • Juan mentions was that left-libertarians have “a distrust of the vertical division of labor”. I think that this is worth emphasizing. They think that the entire process of say, making a finished chair, ought to be undertaken by one individual, from start to finish. They also tend to rely on idealist assumptions that free people, when given the chance to act of their own free will, never affirm as their preferences. A typical case of this is the anarcho-syndicalists, who want to abolish private property, and only have possession. Despite my disagreements with him, I must applaud Bryan Caplan’s excellent article discussion this and other flaws of the anarcho-syndicalist position, The Anarcho-Statists of Spain.

    • I don’t think that’s all they mean in opposing vertical integration. They might be okay with many people working on the chair, but they don’t want anyone to have a hierarchical position over anyone else.

      I don’t agree with them, but we must be fair. Anarcho-syndicalists are different from mutualists, who are different from left-Rothbardians.

  • I’m sorry, but this is not an analysis. You demonstrate no knowledge of any argument by any modern or classical libsoc, left-libertarian, or even just standard anarchist, thinker. (no, Marx was not an anarchist) You merely describe the capitalist arguments for exploiting the workers. Yes, we get that you don’t believe in exploitation and that you’re ok with usury as long as it’s an “exchange.” This is nothing new, just the same old.