Self-ownership and Teeth-ownership in Communist China: A Lesson for Confused Libertarians

Libertarian Theory, Statism
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A recent NPR feature, The Secret Document That Transformed China (h/t Vijay Boyapati), tells the fascinating story about one of seminal events at the dawn of the modern Chinese experiment in their version of capitalism.

In 1978, the farmers in a small Chinese village called Xiaogang gathered in a mud hut to sign a secret contract. They thought it might get them executed. Instead, it wound up transforming China’s economy in ways that are still reverberating today.

The contract was so risky — and such a big deal — because it was created at the height of communism in China. Everyone worked on the village’s collective farm; there was no personal property.

“Back then, even one straw belonged to the group,” says Yen Jingchang, who was a farmer in Xiaogang in 1978. “No one owned anything.”

At one meeting with communist party officials, a farmer asked: “What about the teeth in my head? Do I own those?” Answer: No. Your teeth belong to the collective.

Because of communism, “In Xiaogang there was never enough food, and the farmers often had to go to other villages to beg. Their children were going hungry. They were desperate.”

So the farmers agreed to a form of personal property, where each farmer could keep some of his own crop, above a certain threshold. This would give them incentives to work harder and the ability to keep some of the fruits of their labor. However,So, in the winter of 1978, after another terrible harvest, they came up with an idea: Rather than farm as a collective, each family would get to farm its own plot of land. If a family grew a lot of food, that family could keep some of the harvest.

This was done in secret for fear of reprisal by the state. Their agreement “recognized the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would care for their children until age 18.”

Their new pact was a success: “At the end of the season, they had an enormous harvest: more, Yen Hongchang says, than in the previous five years combined.”
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Corporate Personhood, Limited Liability, and Double Taxation

Anti-Statism, Business, Corporatism, Libertarian Theory
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The politics of the left-oriented Occupy Wall Street (OWS) movement, like that of the right-oriented modern Tea Party movement, is not very well defined. But one of the things some of the OWS participants are calling for in their list of “demands” is an end to “corporate personhood.” In this they echo the views of left-libertarians who contend that state-chartered “corporations” are the source of grave social ills. [ See vol. 20, no. 1 and vol. 19, nos 3-4, of the Journal of Libertarian Studies, focusing on these and related issues, in particular articles by, and in response to, Piet-Hein van Eeghen’s anti-corporation views, and Kevin Carson’s views on mutualism. ]

Some of these issues were recently debated on the pages of Roderick Long’s blog, in the comments to his post “Double Standard.” Left-libertarians who oppose incorporation, and usually also “capitalism,” argue that firms derive some great benefit from the state by the privilege of incorporation. The standard leftist critique of the corporation is the “concession” theory outlined by Robert Hessen in his seminal study In Defense of the Corporation (see a key excerpt from Hessen corporation tort liability excerpts). They argue that the state grants to corporations three features: entity status, perpetual duration, and limited liability to shareholders, all of which are artificial and would not exist absent state intervention. Left-libertarians maintain that these privileges grant corporations more power than they otherwise would have, which distorts the market, nay, society in general. This gives rise to more “hierarchy” and “authoritarianism” than would prevail in what Hans-Hermann Hoppe calls a private law society, and indeed, to “exploitation” of the workers by the bourgeoisie.

The Alleged “Privileges” of Incorporation

Labor Theory of Value

There are several problems with the left-libertarian and leftist critiques of corporations. One is the acceptance of a Marxian-type labor theory of value—the idea that employers per se “steal” or exploit from workers the “social surplus product”—a discredited, hoary, unscientific view based on deeply flawed economics.

Entity Status

And as Hessen has pointed out, each of the three corporate features pointed to as a state-granted privilege—entity status, perpetual duration, and limited liability for shareholders—can be created purely by private contract. As for entity status (being able to represent the firm in lawsuits or for property ownership purposes, in the firm’s name) this is just a convenient legal fiction that could be created by means of trustees, or other contractual techniques (including agreements with private defense agencies, insurance companies, arbitral agencies, and the like). In any case, even stripped of this procedural convenience, firms could still organize themselves as joint stock companies or “corporations”.

Perpetual Duration

Hessen also easily disposes of the myth that perpetual duration is a privilege granted by the state; this can be achieved easily by means of continuity agreements and the like.

Limited Liability

The big objection to corporations is usually limited liability for shareholders. …

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Anders Behring Breivik and Norwegian Prisons

Legal System, Libertarian Theory, Nanny Statism, Private Crime, Private Security & Law
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The latest news from Norway is the prison that might, for the next 21 years, be a home for Anders Behring Breivik. After reviewing the videos and photos, I must say, Ohio State offered me no better when I went there on scholarship some years ago (and my scholarship was only good for four years). My dorm mates were generally more presentable, perhaps, but I never got a hot blonde personal trainer. Halden Prison almost seems designed to entice the vacillating young psychopath, who has not yet worked up the gumption, to go ahead and follow through on his dreams.

It is a subject that, for the modern American, is begging for ridicule and parody. I myself nearly dipped into it in the first paragraph, and I admit that the idea of a man murdering so many innocents and thereby earning an all-expenses-paid stay at the Halden Resort rankles a bit. The fact that the descendants of the Vikings are responsible adds another fascinatingly perverse element to it.

And yet… does the modern American, currently occupied with mocking Scandinavia, not have a closer target for his contempt? Is the prison system that he is forced to subsidize any less perverse and appalling? Might one not even argue — I almost hesitate to type the words — that the Norwegian way, though indisputably stupid, is superior to the American way? Not if one is running for office, of course, but those of us not connected to politics, i.e., those of us who can still afford to use our thinking organ, might wish to examine things with a critical eye.
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Re-Imagining Marketopia: A Reply to Terence Ball

Drug Policy, Libertarian Theory, Private Security & Law, The Basics
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A decade ago Terence Ball wrote a critique of some Frankenstein-like creature meant to represent free market ideology. He robbed the graves of men and women as diverse as Murray Rothbard, Margaret Thatcher, Robert Nozick and Ayn Rand to put it together and came up with something that no libertarian would endorse, I suspect, but which nevertheless is recognizable as libertarian(ish). It may not be the same species, but it is in the same genus. Or at least the same family.

He imagined a country called Marketopia and described how life would be there, with the purpose of showing us that while markets are good for some things, there are areas where they are inappropriate. As he wrote, “why do some (or perhaps all) Marketopian practices make many – perhaps most – of us uneasy or queasy, or worse?” The great problem with his essay is that he never demonstrates to the reader’s satisfaction that he understands what his own argument is. He claims to be interested in three questions: Why do people get queasy at the practices of Marketopia, what distortions of the language would Marketopia produce and are we already headed towards Marketopia.

About the second question I care nothing at all, and about the third… well, watching a statist fretting over how close we are to a Free Market is a bit like listening to a neocon quaking that Iran presents a military threat to the United States. It would be less embarrassing to watch a grown man sleep with a night light to protect him from the Bogey Man in his closet. The first question bears some scrutiny, however, but I wish I could do it knowing what exactly Dr. Ball had in mind.

Is this Marketopia supposed to be what would always happen if libertarianism ever won the day, or is he just demonstrating how market activity is inappropriate for some relationships? If the latter is his point, I would say he came up with a handful of examples where I agree with him, but what does he propose to do about it? If the former, it should be pointed out that many of these activities are legal now but do not occur.

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Published: “Immanent Politics, Participatory Democracy, and the Pursuit of Eudaimonia”

Anti-Statism, Libertarian Theory, Private Security & Law, Statism
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I just had an article published in Libertarian Papers:

“Immanent Politics, Participatory Democracy, and the Pursuit of Eudaimonia,” Libertarian Papers 3, 16 (2011).

Here’s the abstract:

This paper builds on the burgeoning tradition of Aristotelian liberalism. It identifies and critiques a fundamental inequality inherent in the nature of the state and, in particular, the liberal representative-democratic state: namely, an institutionalized inequality in authority. The analysis draws on and synthesizes disparate philosophical and political traditions: Aristotle’s virtue ethics and politics, Locke’s natural rights and idea of equality in authority in the state of nature (sans state of nature), the New Left’s conception of participatory democracy (particularly as described in a number of under-utilized essays by Murray Rothbard and Don Lavoie), and philosophical anarchism. The deleterious consequences of this fundamental institutionalized inequality are explored, including on social justice and economic progress, on individual autonomy, on direct and meaningful civic and political participation, and the creation and maintenance of other artificial inequalities as well as the exacerbation of natural inequalities (economic and others). In the process, the paper briefly sketches a neo-Aristotelian theory of virtue ethics and natural individual rights, for which the principle of equal and total liberty for all is of fundamental political importance. And, finally, a non-statist conception of politics is developed, with politics defined as discourse and deliberation between equals (in authority) in joint pursuit of eudaimonia (flourishing, well-being).

Follow the link above for the pdf and MS Word files as well as discussion of the article on the Libertarian Papers website. You can also download the pdf from my Mises.org Literature archive.

Older versions of this article were presented at the Austrian Scholars Conference 2008 and appeared in my doctoral dissertation (May 2009) as chapters six and seven.

[Cross-posted at Is-Ought GAP.]

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