Studies in Mutualist Political Economy II: Primitive Accumulation. And Karl Popper.

In Part I of this series, I critiqued Kevin Carson’s labor theory of value, saying that I did not find it to be a labor theory in the strict sense of the term. Once we accept that the socially necessary part of labor is its product, and once we accept that the product of labor is both variable and only subjectively evaluated by consumers, we have departed the realm of labor theories altogether. Instead, we’re looking at something a lot like Austrian marginal utility theory, albeit with a detour through labor that contributes nothing relevant in the final analysis.

In this post, I will explain why I found the remainder of Carson’s Studies in Mutualist Political Economy to be both fascinating and often quite correct. With, granted, a further exception or two along the way. First though, I need to explain why the labor theory of value is extraneous to the moral claims Carson would make in favor of labor.

A famous proponent of a somewhat different labor theory of value was of course Karl Marx. One of Marx’s greatest critics was Karl Popper. Surprisingly, Popper viewed the labor theory of value as extraneous to the rest of Marx’s system, a view Marx himself clearly did not share. Writes Popper:

The fundamental law of the theory of value is the law that the prices of practically all commodities, including wages, are determined by their values, or more precisely, that they are at least in a first approximation proportional to the labor hours necessary for their production. Now this “law of value,” as I may call it, at once raises a problem. Why does it hold? Obviously, neither the buyer nor the seller of the commodity can see, at a glance, how many hours are necessary for its production; and even if they could, it would not explain the law of value. For it is clear that the buyer simply buys as cheaply as he can, and that the seller charges as much as he can get… In order to explain the law of value, it would be our task to show why the buyer is unlikely to succeed in buying below, and the seller in selling above, the “value” of a commodity (The Open Society and Its Enemies,, vol II pp 190-91).

Popper went on to note that Marx was keenly aware of the problem and that Marx even addressed it directly. He quotes Marx as follows:

The industrial reserve army keeps up its pressure upon the ranks of the employed workers; … thus surplus population is the background in front of which there operates the law of supply and demand of labor. Surplus population restricts the range within which this law is permitted to operate to such limits as best suit the capitalist greed for exploitation and domination (ibid, p 192, citing Capital, though in an edition I don’t have access to[1]).

Popper comments:

Now this passage shows that Marx himself realized the necessity of backing up the law of value [i.e., the labor theory] by a more concrete theory; a theory which shows, in any particular case, how the laws of supply and demand bring about the effect which has to be explained; for instance, starvation wages. But if these laws are sufficient to explain these effects, then we do not need the labor theory of value at all (ibid, p 192). […]

After eliminating Marx,’s labour theory of value and his theory of surplus value, we can, of course, still retain his analysis… of the pressure exerted by the surplus population upon the wages of the employed workers… I think that, even if Marx’s analysis was defective, his effort to explain the phenomenon of “exploitation” deserves the greatest respect… It must be said, of course, that Marx was wrong when he prophesied that the conditions which he observed were to be permanent if not changed by a revolution, and even more when he prophesied that they would get worse. (ibid, pp 194-95)

I’m proposing a parallel move here. Just as Popper viewed the labor theory of value as extraneous to Marxism, I view the labor theory of value as extraneous to Carson’s normative claims for mutualism. It’s still entirely possible, even in a world of subjective marginal utility, that corporations and capital have worked together to co-opt the government. It’s still possible that they have used their concentrated resources and interests to reap benefits at the expense of laborers. It’s still possible that we should want to do something about it, and that we should have good reasons for doing so.

In both Carson and Marx, the labor theory is made to do normative work, although many other claims might pull the same weight. We may oppose starvation wages even without a labor theory of value. We may find it deplorable, even without a labor theory, that many people work both earnestly and hard, only to see the rewards go to others. We may very well want to make changes in our social system that will minimize or eliminate these outcomes. And we may do so within any number of other normative frameworks — deontology, which says that people should not be treated as means to the ends of others; utilitarianism, which observes needless suffering and tries to correct it; even a revealed religious tradition might get us where we’re going, because laborers are also made in the image of God, and as such it is wrong to abuse them. Heck, even Randian Objectivism works just fine here. (Isn’t that what Atlas Shrugged was about — the idea that laborers should receive a just reward?)

In our search for a morality that opposes exploitation, we have an embarrassment of riches. And come to think of it, a labor theory of market prices doesn’t even necessarily do the normative work we want it to do. We could invoke a labor theory in the attempt to explain market prices — but then deny that this explanation has anything to do with what laborers should receive. The labor theory of value could merely be a descriptive law, like the law of gravity. Some further move is needed to claim that the workers — rather than an overlord — should receive the product of labor that happens to determine market price. After all, everyone knows that slaves should not be paid. (I am not aware of any system that makes quite this move, but I can’t say there’s anything wrong with the logic as far as it goes.)

Aaaaanyway. Let’s talk about primitive accumulation.

In the later parts of Studies in Mutualist Political Economy, Kevin Carson argues that much of what we experience as the modern industrialized world is the product of theft, corporate favoritism, and a relatively smooth transition between old, feudal forms of oppression and newer, industrial forms of the same. Capital accumulation took place not peacefully, but brutally, and it mostly served to augment old-money fortunes by stealing from workers, native peoples, and small landowners.

It is often forgotten that while the British were fighting Napoleon, they had even more armed men deployed against the Luddites in the north country. The steel fist has since acquired a velvet glove, but it has hardly disappeared. In this, Carson is absolutely correct. I might moderate his view, personally, by noting that real wages rose tremendously during the nineteenth century and also the twentieth. This seems not an insignificant development in the history of the world.

I readily agree, though, that capitalism as we now know it is emphatically not a free market. Politically influential megacorporations, regulatory capture, and state subsidy for industry aren’t bugs in the capitalist system. They are the capitalist system.[2] Carson’s remedy is as radical as his diagnosis: Because the broad distribution of property in society is illegitimate, held in place only by state power, it ought to be radically altered.

There is a good deal of truth to this picture, even if some claims are surely overdrawn, and even if Carson’s idyllic picture of industry and agriculture outside of capitalist production often shades into the absurd. “One [18th-century] Paris gardener produced 44 tons of vegetables per acre,” he quotes, as if it proved anything about production in the aggregate. Were all of Old Regime farming so productive, the caloric surplus would have brought on a population boom, a decrease in the number of farmers, and a massive labor surplus, none of which we see until the beginning of the next century. Here, the plural of anecdote is fantasy; the reality of the eighteenth century for most people was bare subsistence and nothing more.

Just as I have some troubles with Carson’s pre-capitalism, I am a bit suspicious of his post-capitalism. But in the later parts of his book, my anti-utopian tendencies run into a pretty appealing utopia. The result is uncertainty.

Following 19th-century anarchist Benjamin Tucker, Carson proposes to get rid of intellectual property, state-run money, tariffs, and absentee landownership, and from there — I infer, because the outlines here are a bit fuzzy — the power of the corporatist state will be substantially broken.

Doing away with patents and copyrights appeals to me quite strongly. At the very least, they should be a lot shorter than they are. Carson’s problem with state-run money is, somewhat strangely, the opposite of the Austrians’ problem with it — where the Austrian critique of central banking is that political pressure produces easy money (and credit crises like the one we just saw), Carson seems to think that state-run money is too tight, making it difficult for laborers to accumulate capital. I can’t say I agree, but I’d put in a good word for privatized banking anyway. The same with abolishing tariffs, which seems an unalloyed good to me.

As to abolishing absentee landlords, this strikes me as the most vexed of the four proposals. What exactly is an absentee landlord, anyway? How absent do you have to be to count as one? Are we talking only about agricultural land, or do we mean city apartments, too? What if I want to rent a room in my house, and what if the tenant is willing? What if I rent the whole house, and only visit every few months to inspect and do maintenance? What if my tenant is happy with that arrangement?

What if I don’t know anything about farming, and I inherit a farm? You mean I can’t hire people to work on it, while also housing them on the land, even if that’s what they really want to do? (And in an anarchy, who’s going to stop us, anyway?) See, I thought this was a free market, but maybe I was wrong. I genuinely don’t understand this part of the book.

I am strongly tempted to agree, however, that what little we can say about the world Carson envisions is very, very encouraging. Carson seems to imagine a world of small-scale industry and small-scale farming, but one as prosperous or even more than today’s world, at least as regards the genuine material needs of human beings. Wealth would be more evenly distributed. More production would likely be local. People would likely work shorter hours. More people would be their own bosses. Wars would be fewer.

Presumably many industries would go undeveloped, but it’s not clear that losing them would represent such a great loss anyway — there would be fewer arms merchants, fewer lawyers, and fewer shipping and transportation concerns. People would travel less and live closer together. Many more of us would farm. Very large firms of all kinds would cease to exist, because economies of scale, in Carson’s view, do not extend as far as the modern megacorporation, not unless we’re talking about economies of scale that owe to regulatory capture alone. This I found to be one of the most interesting and valuable parts of the book, as it was an aspect of political economy I had really never considered before.

Now, all of this is of course very appealing to me, but the utopian temptation is not one I submit to easily. As a general rule, whenever a libertarian of any stripe strings together two or more sentences using the word “would,” he is on shaky ground. Carson is no exception here, and I can’t say that I am confident that he is correctly imagining the future. Still, as a diagnosis of what’s wrong with the modern state, there is a lot to like here, and even the parts I didn’t agree with were at the very least challenging and original.

[1] At any rate, Marx often writes of the law of supply and demand of labor, including here and here. Each seems sufficient to carry the argument, even if neither is the passage Popper cites.

[2] Terminology becomes difficult hereabouts. Although it has not been my usage everywhere, in this post I use “capitalism” to denote more or less what we have right now, and “the free market” to denote an ideal system of minimal state action and maximal private action, one whose precise outlines are often, but not always, matters of conjecture.