The League

In Defense of Capitalism

by Will · October 12, 2009

Will

Will writes from Washington, D.C. (well, Arlington, Virginia). You can reach him at willblogcorrespondence at gmail dot com.

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Clay Barham says:

October 13, 2009 at 1:44 pm

No one can defend Marx’s term Capitalism, as that was his reaction to Old World European mercantilism. The free market represents what grew in the New World, America, and delivered so much prosperity to the many not ruled by the few. It was based on individual freedom, not the Old World idea of a small elite ruling the many. Check http://www.claysamerica.com for more.Report
Kevin Carson says:

October 13, 2009 at 9:11 pm

Whenever I hear a neoliberal like Bhagwati equating globalization to “free trade,” I reach for my gun. The neoliberal regime has almost nothing to do with free trade. The current corporate global economy is arguably more statist and protectionist than the higher-tariffed econoomy of forty years ago. The difference is that “intellectual property” plays the same protectionist role for global corporations that tariffs did for the old national industrial economies.

And Clay Barnham, I have to ask WHAT “free market” grew in the New World? The New World didn’t have feudal land ownership on the European model, but it had massive state preemption of vacant land and engrossment of it by privileged land speculators. My God, about as much public domain land was given away to the railroads as was claimed by individuals under the Homestead Act.

The whole mass-production industrial model that emerged in the late 19th century was almost entirely a top-down creation of the state. Without the railroad land grants, there wouldn’t have even been the high-volume national transportation system that a national industrial economy required; we’d have developed into a hundred industrial districts on the Emilia-Romagna pattern, instead. Patent law played a central role in the cartelization of industry (e.g. GE’s and Westinghouse’s pooling of patents, the Bell System’s hedge of secondary patents to maintain a monopoly of telephony technology, etc.). All the major new industries of the 20th century, as described by David Noble, were virtual creations of the state.

A genuine free market would result in most of what’s currently transported in container ships being produced in small factories close to where we live, and a free market economy would look a lot more like the vision of Lewis Mumford and Ralph Borsodi than that of Alfred Chandler.Report
- North in reply to Kevin Carson says:
  
  October 14, 2009 at 7:24 am
  
  A quibble:
  “A genuine free market would result in most of what’s currently transported in container ships being produced in small factories close to where we live, and a free market economy would look a lot more like the vision of Lewis Mumford and Ralph Borsodi than that of Alfred Chandler.”
  Maybe it would be that way one day, but not until all of the third world economies have developed out of the stage where their workers will manufacture things for a buck an hour and still be better off than they were before. So it’s a long way off.Report
James says:

October 14, 2009 at 5:35 am

What a load of tired, desperate, worn-out bullshit.Report
- North in reply to James says:
  
  October 14, 2009 at 9:18 am
  
  I liked it. But then I am a neoliberal so that’s to be expected.Report
Clay Barham says:

October 14, 2009 at 7:11 am

So, all the industrial revolution creations and pebbles dropped into the placid ponds of America, the Colts, Edisons, all those fictitious folks, and all the small businesses, some of which grew into big corporations without the hand of government, all that Reagan promoted as entrepreneurial activities that employed so many and generated enormous prosperity, never existed? Is that what Kevin is trying to tell us? We were no different than the Old World, that Jamestown set the pace and the Pilgrims didn’t really exist, and individuals have never been free to make their own decisions without some government master looking over their shoulder? Is America a fiction? Hmmmm, I am so confused. So, what I outline in http://www.claysamerica.com is all wet?Report
Kevin Carson says:

October 14, 2009 at 8:12 am

i dispute that small businesses grew into big ones without the hand of government. Big business exists in a structural ecology defined by government.

Genuine entrepreneurship and innovation exist at lower levels, but function within the interstices of a statist system. Crossing the threshold from small to big generally requires some form of privilege (government subsidies to operating costs and the inefficiencies of large size, or protection from the competitive consequences from the inefficiencies of large size), because the largest firms are many times beyond the point at which genuine economies of scale max out.

Edison’s entrepreneurship was genuine, but the natural course of affairs in a free market would have been for him to reap a few years’ producer rents from being first-mover, after which widespread adoption of his innovations would have arbitraged those rents down to zero–not for him to live off the patents for years and control diffusion of new techniques. In a free market, user interface innovations like those of Steve Wozniak and Bill Gates would similarly have led to a brief period of entrepreneurial rents, followed by universal adoption on the same open-source model as Linux.

The defining feature of the American economy for the past 150 years has been collusion between big government and big business.

Your citation of St. Reagan as an authority on entrepreneurship is telling. Reagan and Thatcher are the patron saints of what I call “vulgar libertarianism,” coopting the rhetoric and symbolism of genuine free market libertarianism to legitimize the corporate state. It’s about like Stalin coopting the symbolism of the classic soocialist movement of the International Workingmen’s Association.

Next you’ll be quoting Dick Army from FreedomWorks.

As an alternative to the pious account in Clay’s America, you might consider this:
http://www.libertarian.co.uk/lapubs/econn/econn106.pdfReport
Kevin Carson says:

October 14, 2009 at 8:21 am

North: But WHY are workers in Asia better off working for a buck? The Chinese govt. is reenacting the Enclosures for the 21st century, transforming village communal lands into industrial parks. And the Nike model of “outsourcing everything” is possible only with subsidies to long-distance shipping and corporate control of “intellectual property.” Do away with those things, and those flexible manufacturing networks in China would simply eliminate the corporate brand-name markups and sell the same goods to the local population for a fraction of the price.Report
- North in reply to Kevin Carson says:
  
  October 14, 2009 at 8:53 am
  
  Kevin, you may have to elaborate for me. Are you saying that strong Chinese support for intellectual property rights are subsidizing large corporate name brands? Are we talking about the same Chinese here? I don’t think that the Chinese as a market are developed enough to even want to buy the things they’re making… yet. But you can be sure the Chinese Government is working very hard to try and get them up to that level. A domestic market capable of helping to support their industrial output is vital to their long term development. They can’t depend on exports and dollars for too much longer.
  
  As for why they’re better off working for a buck an hour; Judging by the armies of Chinese trying to migrate into the coastal manufacturing cities from the farming interior
  I gather that the Chinese think it’s better to work for a buck and hour than to slave away in a rice field for slightly less than subsistence food every day. The Americans and Europeans followed a similar pattern back in the 1800-1900’s.Report
- Will in reply to Kevin Carson says:
  
  October 14, 2009 at 12:15 pm
  
  Kevin Carson –
  
  I put up a longer post addressing some of your comments:
  
  http://www.ordinary-gentlemen.com/2009/10/big-is-beautiful-and-inevitable/Report
Clay Barham says:

October 14, 2009 at 9:39 am

Kevin, I checked out the Wobbly source you mentioned and it looks like an interpretation of individual freedom by those whose traditions are, and have been, in opposition to individual freedom. These so-called libertarians of the Rousseau school see the world through Old World lenses and will never be able to buy the notion that, we poor maggots can ever rise above the elite-hood of our rulers. There must always be an Old World explanation for the simplicity of free men and women living under a new tradition where individual inequalities are pursued and held in high esteem, without the few elite rulers accepted in the rest of the world. I apologize for my website’s simplistic arguments for what you see as a complex world that requires guidance from only the most intelligent and arrogant people.Report
Kevin Carson says:

October 14, 2009 at 12:27 pm

North: Not at all. I’m arguing that TNCs’ business model depends on *international* IP regime (the TRIPS provisions of the Uruguay Round, WIPO Copyright Treaty, DMCA, etc.). I think this regime (and with it the current corporate economy) is unsustainable precisely because technology is making it unenforceabie. And networked manufacturing has the increasing tendency to reduce the old corporate HQs to redundant nodes that can be bypassed; when we reach the tipping point, networked manufacturers (like GM’s and Toyota’s supplier network, the job-shops in Shenzhen, etc.) will disregard the old corporate IP rights and begin producing in their own right. I entirely agree that China’s future prosperity depends on reorienting to the domestic market.

Clay: It’s a “Wobbly source” to the extent that I’m a Wobbly. I’m also very much a free market fundamentalist who sees government intervention in the market as the source of all privilege and exploitation–a position most Wobs would probably take strong exception to. The I.W.W. as an organization does not define my opinions, nor I theirs. You might also notice the paper was published by the British Libertarian Alliance, the organization of Sean Gabb and the late Christopher Tame, but oddly enough you didn’t see fit to pigeonhole the document in terms of that organization.

Your characterization of my position as elitist is the most fundamentally cowardly and intellectually dishonest thing I’ve ever seen. So it’s “elitist” to deny the Reaganite version of American history, and to argue that it’s in fact been characterized by a high degree of elitism? Even though my actual sympathies are entirely for the Jeffersonians, for the small farmers and artisans, for localism, against the giant corporate and state organizations and the Hamiltonian project? The fact is, I think the entrepreneurship and individualism you pay lip-service to are really the best things about America. I think it’s a BAD THING that they’ve so often been defeated or coopted into a statist system of privilege. I’d like to defeat the forces of centralization and hierarchy and let America live up to its promise–the promise that has so often been defeated, since the Federalists first routed Shays’ militias and installed a new royal government. If you disagree with me as to whether the American system has in fact been dominated by elites and privileged classes at the expense of markets and entrepreneurship, then well and good–we disagree, and it’s an honest disagreement. If you resort to fake poor-mouth demagogy and disingenuously accuse me of elitism, then you’re a cowardly dishonest DOG.Report
Kevin Carson says:

October 14, 2009 at 12:38 pm

Thanks for the thoughtful comments, Will. I’ll comment at length later on that thread. For now, I’ll just mention that Wilkinson’s post (are you that Will?) in the conflation debate was strenuously contested at the time by me and by Roderick Long (who initiated the debate).Report
- Will in reply to Kevin Carson says:
  
  October 14, 2009 at 3:40 pm
  
  No, I’m not that Will, but I look forward to your response. I hope my arguments aren’t too redundant – I realize some of this is well-trod ground.Report