Archives for category: Property/Ownership

Why isn’t corporatism talked about as an alternative to capitalism and socialism?

…an answer on Quora by Ethan Lee:

‘Corporatism’ is not an alternative to capitalism, it is capitalism. Albeit not free market capitalism, it is capitalism none the less. Calling X corporatist is just a cop out to avoid admitting that is in fact capitalism.

Capitalism = Private ownership over the means of production

Socialism = Worker ownership over the means of production

Is that exactly right? Workers can own the means of production in capitalism. 

I own my small business. There do exist workers’ cooperatives. And laborers’ pensions often own stock in companies, though most often not majority stock in any one company, and not in their own — which, since they invest at their own discretion, suggests that workers, generally, do not want to own the means of production. Only a few exceptional people do.

And, interestingly, under several of the socialist societies that have existed — the most prominent one, anyway, that called itself socialist, explicitly — small business was not exactly tolerated, was it? And workers did not own their factories, etc., the State did. And, further, it was industrial workers that were focused on: agricultural workers were despised, expropriated, and killed en masse. For “workers” owning “the means of production” was not the point of socialism, historically. Not really. It was “everybody” owning the means of production through a central planning office, through the State. Which in practice just means tyranny.

And I note that the socialists I know personally, and the ones I see on TV, do not seem much interested in workers as such, or the means of production as such. They are concerned with consumers, making sure that everyone can consume about the same amount of goods: equal access to healthcare, equal access to housing, equal access to iPhones, complete financial security for all, etc. Which suggests, once again, that “workers” is the reddest of red herrings. Socialism always comes back to a form of consumerism. State-supported and -enabled consumerism.

What “corporatism” means is not always clear, either. We have a lot of publicly* traded stockholders’ corporations in these United States, and they sure look like market institutions, and not a few are even basically operating within something like a free market. But many — though, once again, certainly not all — of the most successful are dependent for their success on government contracts (some of the biggest corporations are those within the ambit of the military-industrial complex) and, when the biggest fail (most recently in the financial sector) they are bailed out, at taxpayer expense. Further they are regulated in such a way that “just so happens” to protect established businesses from upstart competitors. This system is certainly not laissez faire, as stated in the answer, above. But its capitalist nature, while being there, is certainly open to some interrogation. What it looks like to me might best be called “producerism.” A form of it. Producerist arguments were dominant in 19th century support for protective tariffs, and they now dominate the government practice of regulation and bailouts.

Which should indicate my approach to free-market capitalism: it is consumerist-producerist . . . both. We produce to consumer, sure, but no consumer and no producer should really be given special favors. “Workers” and “business” do not compete so much as cooperate, and foisting a class narrative on their relations is a bad idea. They are just two special interests, and our rule of law should serve the general interest, not any specifically identified class or group. Neither consumer-oriented socialism nor worker-oriented socialism make sense, and corporatisms that focus on bolstering up specific industries for the sake of stability are not much better.

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* Note that we call publicly traded stock companies “private” — our nomenclature sure must confuse the young.

yet another attempt at a coherent answer:

I run hot and cold on the word “capitalism.” The institutional system? Fine with it. Would want more of it. But the word itself is less than perfect. (Like capitalism itself!)

AdamSmithA “capitalist” is not an advocate of “capitalism.” When I see the word used that way I flinch. A capitalist is someone who invests capital, specifically someone for whom such investment is a major source of income. Not all that many people are really capitalists.

But “capitalism” seems inapt for a more profound reason: the major institutional features of the capitalist system are

  1. extensive private property holdings
  2. self-ownership in one’s actions, meaning, especially
  3. free labor (not “free” in terms of price or fantasy, of course)
  4. free trade (unencumbered by prohibitions, regulations, etc)
  5. private markets in capital goods

Now, that last point might justify the term. It’s a profound concept that most people have no idea about. Even economists have balled it up.

But we traditionally note three factors of production: land, labor, and capital. And yet, when we use the word capitalism we identify the lack of criminal and governmental interference in the management of these factors by only one factor. That’s prejudicial. It’s rather lame.

There are huge demarcation problems associated with the word, too.

The economists of France and Britain began developing the science of the study of this set of institutions with the critique of a particular form of government policy, which Adam Smith called “mercantilism.” That’s a good term, an apt term, since it refers to the close relationship between some merchants and the State. It seems an apt moniker for the policy.

Under mercantilism, governments favors some over others, engages in various forms of protectionist trade restriction policies, and generally tries to keep production within a nation rather than outsource it (“free international trade” being the thing established, well-connected merchants most fear) while aiming to increase the supply of money (in the early cases, gold and silver) within the boundaries of a nation, and especially into the coffers of the king.

But mercantilism is not a bad term for what we have today, in many ways. Sure, international trade has been encouraged — but in a rather regulated way. The amount of regulations in America and Europe is astounding. The secular trend regarding this has been growth. And this hardly seems very “capitalistic,” if you mean it in the robust sense. And it certainly favors some capitalists and entrepreneurs and managers over their competitors, immediate and possible.

And yes, this feature makes a difference. The general effect of government regulation of markets — what Mises called “interventionism” and what Pareto called “restrictionism,” but which everybody else calls progressivism, fascism, democratic socialism, or the Administrative State — is to favor established business over upstarts. This is known. There is no real way around this. Current trends in hollowing out the upper-working class economy is largely a result of mechanization in combination with the suppression of small business by the regulatory state.*

So, while we certainly now live under “capitalism,” it is nothing like the laissez faire that economists dreamed up to regulate not business and market life, but the State itself (limited government being the flip side of laissez faire, with the constitutional limits it establishes being a form of anti-corruption regulation).

Recently, folks have been using the term “crony capitalism” to refer to the regulated/subsidized (“bailed out”) nature of current American economic policy. This reflects the old mercantilist practice of favoring well-connected insiders (“cronies”) at the expense of the masses of workers and entrepreneurs.

Anthony de Jasay calls the current form of governance/policy “the churning state,” since there is so much forced wealth distribution that we cannot really keep track of net winners  — instead, the interests and the transfers are merely “churned.”

I tend to dub the current mode of capitalism “neo-mercantilism,” but an adjective is in order: technocratic neo-mercantilism. The technocracy is important to this, for it gives college graduates cushy jobs while they pretend to manage “the economy.” Which doesn’t exist . . . but that’s another issue.

The crucial thing to understand about capitalism is that it rests on rights to private property (including one’s own body and person) and mostly unencumbered trade.

Destutt_de_TracyAnd trade, or market exchange, is pretty much what Thomas Jefferson’s favorite economist said it was, “a transaction in which the two contracting parties both gain. Whenever I make an exchange freely, and without constraint, it is because I desire the thing I receive more than that I give; and, on the contrary, he with whom I bargain desires what I offer more than that which he renders me. When I give my labour for wages it is because I esteem the wages more than what I should have been able to produce by labouring for myself; and he who pays me prizes more the services I render him than what he gives me in return.”

This is an elaboration of Condillac’s chief notion in his 1776 treatise. How this made sense in terms of value and distribution — how to think about it precisely — took another century of stumbling by economists. The work of Carl Menger and William Stanley Jevons, especially, clarified the exact nature of mutual benefit through exchange.

And it is indeed this concept, of ex ante mutual benefit in trade, that is the most essential feature of “capitalism.” The mutual benefit aspect is the core aspect. And it is why freedom — a division of responsibility and a general lack of coercive bullying — is the key concept, the entelechy, of the very idea of capitalism.

And it is what politicians of nearly all parties — and their supporters — attack daily, to the hobbling of civilization.

twv

 

* John Kenneth Galbraith’s notion of “countervailing powers” gets it exactly wrong. Big Government to adjudicate between Big Business and Big Labor is a nice model, and all. Nice and technocratic. But it ignores how things really work. These powers do not countervail, they reinforce each other. It just so happens that the Reinforcing Powers of the major institutional forces bolster each other up, at the expense of the masses. Which is why technocracy is anti-democratic and would only have a chance of working without free access to government bureaus and power centers. Only by setting up a caste of trained technocrats could government really ride herd over business in general. And only by prohibiting the right to petition one’s government — lobbying — and the revolving door between government and the private sector, could Galbraith’s vision even have a hope of a chance. And still, I hazard, the outcomes would likely be horrific, for reason described in The Road to Serfdom: the worst would get on top, because giving some people unchecked power of control over others cannot be a recipe for civilized life.

img_2320This morning I disengaged from the closed-but-unmoderated Libertarian Facebook group that my friend James Littleton Gill has promoted in the past. Why? It mostly consisted of posts about how libertarians are racist and really like or approve of Nazis. Yikes.

Apparently, if you set the cost of joining a group at FREE, and don’t vet anything, then, why, your enemies will ruin it!

Wow. Who would have thought!

It is almost as if private property and the legitimate threat of expulsion serve a function. In a free society. Read the rest of this entry »