Four questions for “anti-capitalist” libertarians

(Austrian) Economics, Libertarian Theory, Political Correctness, The Left
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Sheldon Richman, one of the best libertarian writers of the last decade and an all around excellent human being (I’m a grateful person and as my teacher at FEE in 2003, I must say he was by far the most fun and persuasive of the lecturers in an already very good set of speakers) has jumped on the wagon of the Left-‘libertarians’ latest initiative to decry and abandon the use of “Capitalism” as a term by our movement.

Hereby I would like to address his post at The Freeman but also his subsequent retorts on Facebook to my objections on such a linguistic and strategic initiative, by asking him and others including Gary Chartier, Roderick Long and Kevin Carson these four questions:

Since words are not doomed to be deformed when born deformed in the same way they are not free from bad usage even if their origin is noble (see “Liberalism”).

  1. Well then, what do we want it to mean from now on?
  2. Is there another word that describes the full and complex system that is the real promise (and hope) behind a free society?
  3. Yet another unanswered question is: why won´t the next term be hijacked or deformed by the (socialist/statist/authentic) Left?
  4. And the last question Sheldon, Chartier, Carson and others haven’t addressed is: how will be keep a word pure when no social system is pure nowadays (if ever) unless we coin a term only when we have a pure system so it corresponds to a pure reality and cannot be misconstrued? Of course we need a term for an ideal so we walk towards it, unless I’m missing something here.

Stephan Kinsella keenly added to the discussion:

“What some left-“libertarians” oppose is the economic order most standard libertarians favor and expect to accompany an advanced free society–whatever word you slap on it. Thus they go on about mutual aid, wildcat strikes, the workers, localism, self-sufficiency, they condemn the division of labor, mass production, factories,employment, firms, corporations, “hierarchy,” international trade, not to mention “distant” ownership, landlordism, “alienation,” industrialism, and the like. Their agenda is not required by libertarianism–most of it is not even compatible with it, I’d say, so is unlibertarian. But this is a debate we can have–it’s on substance. I think this is a large motivation for their hostility to the word “capitalism”–they mean capitalism like we do, and dislike it. I don’t mean crony capitalism–but actual libertarian-compatible laissez-faire capitalism. They want libertarians to stop saying capitalism because they want us to adopt their substantive unlibertarian, Marxian agenda. Yet they pretend it’s just for strategical or lexical concerns–which it’s not. This is yet another reason I think we should dig our heels in and not give in: they will then count it as a substantive victory for unlibertarian, leftist ideas.”

This bit of course is completely relevant when an attempt (some bona fide would be a requisite for it) to answer these four questions is made.

Anti-capitalists: the ball is now on your side of the court.

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Capitalism is the Greatest Achievement of Human History — Praise It

(Austrian) Economics
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I am grateful that we have capitalism to the extent that we in fact do have it — and although we certainly don’t have enough capitalism, I am grateful for how much we actually do have. Everything we have in the modern civilized world is only possible due to capitalism and the accumulation of capital. It is the natural expression of free markets whenever there is a sufficient level of civilization. The accumulation of capital is essential for the progress of civilization in all aspects. Technological progress alone is insufficient. While capital accumulation has occurred to various extents throughout history, the system of capitalism is a more recent development allowing for much more efficient capital accumulation and development.

It is actually quite incredible to think of how much prior civilization, technological progress, and accumulated capital are necessary to make something as simple as a screw. Even with the instructions and all relevant knowledge, primitive people wouldn’t be able to make them for at least decades, possibly centuries. When you think about the precise dimensions of something as simple as a screw, you realize it obviously required something very precise to make it (e.g., precise casting). And that thing required something precise to make it, and so-on and so-forth. It is a process of building up more and more sophisticated tools from simpler ones, which requires significant capital accumulation.

It is also doubtful that many people, if any, know the entire production process — from raw earth materials to finished product — for even something as simple as a screw. Its production requires the voluntarily cooperative interactions of numerous people. Furthermore, as my friend Juan Fernando Carpio has argued in a forthcoming paper, the human mind and body are both capital goods, which require development. The entirety of human knowledge, considered in the abstract, is akin to the accumulation of capital goods. To the extent that we have civilization, such is only possible because of the accumulation of different kinds of capital.

This is something ignored by socialists of every variety, be they anarchist or Statist socialists. (I would argue that an anarchist socialist will, when faced with the reality of how free people actually act, either have to at least tacitly endorse private property and capitalism, or will become a Statist). The various systems advocated by socialist anarchists all hinder or make impossible capital accumulation. For example, various flavors of anarchist socialism might attempt to ban — how can they do this while remaining anarchist? — absentee ownership or the separation of ownership and control (i.e., corporations). The banning of either would result in rising time-preferences and thus greatly decrease incentives for saving and capital accumulation.

Some Suggested Readings

Ludwig von Mises, 2008 [1956]. The Anti-Capitalistic Mentality. Ludwig von Mises Institute, Auburn, AL.
Reisman, George. 2002. “Some Fundamental Insights Into the Benevolent Nature of Capitalism“. Mises Daily. October 24.
Rothbard, Murray N. 2009. “Capitalism versus Statism“. Mises Daily. September 29.
Leonard E. Read, “I, Pencil,” The Freeman, December 1958.

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Government Action Means Violence

(Austrian) Economics, Health Care
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The economy gained 162,000 jobs for the month of March and the President, of course, has attributed this success to his stimulus package. He was in Charlotte, North Carolina today discussing the economy at a manufacturing company that received $50 billion in stimulus money to expand one of its facilities and open another elsewhere in the State. Regarding the future of the economy, the President said:

Government can’t reverse the toll of this recession overnight, and government on its own can’t replace the 8 million jobs that have been lost….The true engine of job growth in this country has always been the private sector. What government can do is create the conditions…for companies to hire again.

Just how government can create these conditions for companies to hire again is left unsaid. I seriously doubt the nationalization of the banking sector and the government takeover of GM are favorable conditions for the private sector. In fact, if Robert Higgs is correct about regime uncertainty, these government actions create unfavorable circumstances for investors. Investors who are unsure that their private property rights are going to be respected in the future are loathe to invest in any long term-projects. If the government is willing to take over an entire sector of the economy by passing such legislation over a weekend, clearly investors would be fearful that the government might takeover any sector it wishes in the future. This lack of real investment means that there will be less jobs in the future and ultimately less consumer and producer goods. Our standard of living will fall. …

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Libertarians regressing to unsound, and thus, unfair Economics

(Austrian) Economics, Mercantilism, Protectionism, The Basics
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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. …

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