Monday, May 21, 2007

Actually Existing Capitalism

I'm going to address some socialist ideas about the market and hopefully this can be illuminating for both socialists and libertarians.

Here, I am not using "Capitalism" to mean a free market of private property. I am using it in the sense of "Actually Existing Capitalism" or the market as we see it today. Because that is usually what socialists are talking about when they say capitalism, and this is about socialist ideas. Any mention of the free market from them is rarely if ever an attack on a truly free market, but an attack upon the "free market" that libertarians help them to conflate with "capitalism" which to them means what they see around them. So let's use their definition of "capitalism" and use the free market to mean something different.

It can properly be said that the capitalism is exploitative. Let's take the socialists' definition of exploitation, so that everyone can understand each other.

Exploitation - n.
1. The expropriation of value by a person in a position of power from a person in a position of subjection

The common socialist cry of "exploiting the workers" is often met by libertarians with the response along the lines of "they are like peers meeting and trading money for labor, it is not involuntary as it would have to be to be exploitation." Now, who is right here?

The socialist is talking about actually existing capitalism, that to which they are opposed. The libertarian is talking about the free market, that which they are actually supportive of. And so in the confusion of the vocabulary, communication breaks down.

It's important that neither the libertarian nor the socialist conflate the free market and actually existing capitalism. Kevin Carson, a mutualist, has noted the issue in his formation of the term "vulgar libertarianism", pointing out that libertarians often forget from one moment to the next whether they are defending the state capitalist system or the free market, two very different things, and that they often end up defending state capitalism unwittingly.

It must be conceded to the socialist that under actually existing capitalism, exploitation is taking place. For under this statist system, where licensing and regulation make it unduly difficult to actually be entrepreneurial, a disproportionate number of those who would otherwise be entrepreneurs become wage labor. This creates an oversupply of wage labor as opposed to entrepreneurial activity.

This gives the capitalist class an unfair advantage in two ways. First, it reduces the amount of competition on the market, increasing the capitalist's market share and prices with little effort on the part of the capitalist. Second, it reduces the amount of bargaining power the wage labor has. Because there is an oversupply of wage labor, wage labor is more easily replaced than it would be on a real free market, and wages are depressed. This amounts to an effective expropriation of value by the capitalists (who are in a state-created position of power) from the consumers on the one hand (through reduced competition and higher prices) and from the workers on the other (who are underpaid and have less than their fair amount of inflence) and even doubly due to the fact that the workers ARE consumers when they are not on the job.

In a free market, where more gain-oriented thought was present, where more entrepreneurs were around seeking to take from the reduced supply of voluntary wage labor workers, the capitalists would no longer have this unfair advantage. The workers, being scarcer, will thus command higher wages and more influence upon the employer, making it a much more fair system, the libertarian's view of it as an interaction between peers would be true.

Libertarians should recognize immediately the common theme that libertarians always love to discover as it proves correct their eternal theme: The state is at the heart of this particular form of oppression which manifests in the market. But they should and often do not recognize that it's manifestation in the market does not make the statism causing it something to defend, even implicitly. Socialists should recognize that any libertarians who defend the current setup should not be considered representative of the consistent libertarian position, but what Carson calls "vulgar libertarians", who are confused by the socialist vocabulary into attempting to defend actually existing capitalism.

Personally, I favor that the word capitalism just be gotten rid of. That would be wonderful. Every usage of the word "Capitalism" can be replaced by "Free market", "Mixed economy", "Fascism", or something else.

3 Comments:

Blogger Francois Tremblay said...

I definitely agree that we should eliminate the word "capitalism" from common discourse. It is far, far too confusing and used in too many ways, to have any usefulness.

4:35 PM  
Blogger Zhwazi said...

A number of definitions of capitalism have other words that would be better substitues. I can't find another word than "capitalism" to accurately describe "actually existing capitalism", so alas, I'm basically bound to using it.

5:09 PM  
Blogger Alex Ramos said...

Along with "liberal", "left", and "right" in the political senses, I've been trying to rid the word "capitalism" from my language. I use State Capitalism or Mercantilism and Free Market to designate the socialist's capitalism and the libertarian's capitalism respectively.

4:52 PM  

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