"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." ~ Lord Acton
Social Liberty and Economics
I was disappointed to read Bill Anderson's column yesterday that reissued long-dead misconceptions and romantic ideals regarding the economic and social self-organization of society.
Anderson believes that we anarcho-libertarians define liberty, i.e., individual liberty, solely in economic terms, rather than in social terms, and furthermore use that economic conception of liberty to define social liberty, presumably meaning the liberty of individuals to interact with one another. However, this is a misconception. The two are inseparable. There are no 'social freedoms' and other 'economic freedoms.'
Freedom or liberty is having control over one's life, destiny and activities, i.e., over how he spends his time on earth and to what uses he puts his body, mind and energy. All individuals live in a world of scarcity. In order to act, each individual must choose between a range of possible actions. By acting, the individual chooses to expend energy, but also to spend his only irreplaceable and nonrenewable capital--TIME. Everyone stands equally naked before the face of time. By choosing one action, he foregoes the others at that moment.
In order to experience his freedom, an individual must choose among the existing possibilities. He must weigh the subjective marginal costs of different actions and inactions. Whether it is to read the newspaper, to write his thoughts, to create art, to denounce the regime and its works, to assemble, whether it is all of the classical liberal freedoms we cherish and strive for (thought, speech, press, assembly, etc.), every individual must weigh the costs of engaging in it. To write this column, I choose to forego the benefits of spending my time and energy on something else. Anderson, too, chose to do this as well. We both economically calculated the costs and benefits of writing our thoughts on this issue, because we both subjectively preferred the psychic benefits (profit) from writing our thoughts and offering them to others. By choosing which is the best (i.e., most profitable) expense of his time, Anderson was calculating, albeit perhaps subconsciously, profit and loss. Anderson chose to invest his time into writing. Mr. Anderson, you, too, are a capitalist.
Incidentally, I don't know if Mr. Anderson knows this, so I'll include it anyway. He offered a shorthand description of Marxist class theory:
'For those not familiar with Marxist theory, its essence is that the state represents one economic class oppressing another economic class, and that all social relationships of domination are linked to the economic means of production.'
But Marx, of course, got it wrong. What Marx garbled was transmitted to him through Saint-Simon, before Marx broke with that theorist. Saint-Simon adulturated the 'theory of class struggle' from the original French classical liberals, Charles Dunoyer, Charles Comte and Augustin Thierry. Here's Lenin on the subject: 'The theory of the class struggle was not created by Marx, but by the bourgeoisie before Marx.' [Italics in the original] V.I. Lenin, State and Revolution, (1917), pg. 30.
The original and correct understanding of 'classes' was one of 'castes'--state-produced and protected groups that enjoy the monopoly of the state to exploit those who do not enjoy that monopoly. Examples of these protected groups are the landed aristocracy, the craft Guilds, the military orders, and the priesthood. The monopoly called the state enforces a system of political plunder against the economic classes of society. The political caste does not produce; it consumes the wealth of the economically productive. The original liberal theory of caste warfare was a theory of justice, to establish equality under the law for all groups and the abolition of political privileges, such as subsidies, tariffs, etc. The Marxian misunderstanding is a theory of civilizational destruction because it targets the system of social voluntary productive economic cooperation for the destruction of politically directed production and consumption.
The origin of the state is in the desire to tax. State founders do not tax to establish a monopoly to secure the lives and property of those of society, rather they establish a monopoly in order to tax. But being a corporate entity is not the same as being a monopoly. Earning income and profit through production and voluntary exchange is not the same as taxation.
Of course, corporations are collective entities, but they are voluntary collectives. The point of corporations is to establish a single name to operate under through time, unlike the medieval bankers like the Fuggers or the Medici for instance, or John Smith & Sons. Operating as an entity that is distinct from the owners or founders allows for a wider, more dispersed ownership of property(!) and increased production and employment. The separation of owners, managers and labor is what makes industrial mass production and modern living standards possible.
The romantic, but impractical ideal of workers owning and managing their 'employer' would instead of liberating the worker, enslave him. By being the joint owner with all the other employees, his freedom of action is curtailed and his risk increased. He cannot diversify his property and reduce his risk by selling some of his ownership and investing in other enterprises. Furthermore, employment becomes more like a feudal guild system, rather than the individualist freedom we desire. Instead of being bound to the land, workers would be bound to the company. How could they sell their ownership without the approval of the other owners since this new owner must also be a capable worker and fit into the existing social relationships among the worker-owners? How would new workers be hired, anyway? What if the wrong person is sold ownership and becomes a problem for the company, causing it to lose money? Can the others expel him? Can they force him to sell? What if there are no other buyers? What sort of individual independence is this? Instead, everyone becomes dependent on the coercive whims of others. This is not liberty, but slavery to the majority. Their ownership of the company would be reduced to merely the status of the voting privilege in today's state-run democracy. Hardly an improvement.
Separating the roles of owner, manager and worker in a productive organization allows the best utilization of human individual differences and specialization. And with the increasing diversification of the division of labor comes the increase in competition and production and wealth.
As Bohm-Bawerk discovered over a century ago, yes, employers do retain a surplus capital or profit derived from the labor of the employees, but this the employees agree to forego to reduce their risk and to place the risk of production onto the back of the entrepreneur, who has demonstrated by his choices that he has a lower time preference than his employees.
I really must ask where is the oppression in giving a group of people a name for the body (corpus) of them when they are spending their time producing for that organization in exchange for wages? We already label them, as a group, as people, as 731 or whatever men and women, as employees, as mothers and fathers, sons and daughters and a hundred other categories. Is it so oppressive to call them IBM or Ferrari or ABC Importers when they join that organization voluntarily? Is the Book-of-the-Month Club oppressive (where members both save money and gain psychic profits)?
The problem with the state is not that it is a corporation (a voluntary collective), but that it is a monopoly: an involuntary collective. The "aristocracy" of bankers, producers, etc. mentioned by Jefferson are only possible through the existence of a monopoly, not because they own productive organizations. Without the state, banking would be a very different affair, and probably resembling more the warehousing and safekeeping of property rather than the mad scramble for credit. Genuine free-market banking would earn the majority of their profits from their actual business--warehousing commodity money.
Liberty is undivided. For an individual to express his freedom socially, he must calculate the costs and benefits between different potential actions and uses of his time and energy.
The state is the great enemy because it restricts the ability of individuals to cooperate voluntarily and because it introduces misconceptions that only mislead and divide. Monopoly, not voluntary hierarchy, is the enemy of liberty.