I think the sentiment of this article is quite correct though the final quote is off (just give it 5-15yrs though).

Mr. Carson, how would you respond to individuals that self-identify as capitalists and say something like: “Taxation, tariffs, trade blocs, central banking, etc — that’s not capitalism; that’s cronyism, corporatism, and socialism. What we have now is not true capitalism and frankly we have never quite had it.”? In other words, some individuals effectively hold the true meaning of the word capitalism to be synonymous with free market. How might you respond to this? Consider an entire article on the subject as, after all, right wing anarchism is on the rise.

Steve: I couldn’t very well oppose it and be consistent in principle with my opposition to expanding the state. And there’s probably some fraction of income over $250k that was really earned through hard work and enterpreneurship.

If Obama’s cutoff point were, say, extending the tax cuts for everyone below $5 million, that might be a bit less clearcut for me because at that level the probability that anyone made over that amount of money through non-political means approaches zero. But even then, it would be going to a state whose main purpose is to prop up the present state capitalist structure.

I’ll definitely say extending tax cuts to the top 2% is near the bottom of my list of things to expend effort lobbying for, however.

skunk1980: I’ve got no quarrel with those who want to use the c-word for a free market. But I think there’s some value to reserving it to the actually-existing system of historic capitalism, the same way chattel slavery and feudalism/manorialism were used in reference to actual historic social systems rather than to idealized models. That’s especially true given that “capitalism” was first used mainly by radicals who used it in the sense of a system run in the interest of capitalists, and who emphasized its continuities with earlier social systems.

Thank you for the reply. This makes sense what you say. So we might want to ditch capitalism as an identifier and affiliative term because historically it has always been bed buddies with the State. That is strangely practical for an anarchist.

I find myself in so much double talk. Depending on the crowd I either approve or disapprove of both capitalism and socialism. This is obnoxious. But even the term “free market” is tainted. What is one to do?

Kevin,

Or in Celine’s words: “There is no more Free Market here than there is on the other side of the Iron Curtain …”

With lines like this, not the first time I’ve seen equation, I’m starting to think you’ve lost the ability to meaningfully distinguish between US state-managed capitalism and Soviet communism…..

In previous systems of class rule, like chattel slavery and manorialism, the exploitative relationship between the ruling class was maintained by direct coercion. There was no doubt in the mind of the slave or serf that he was on the weak end of a power relationship with those for whom he worked.

Just one thing: before the Renaissance, those weren’t “systems of class rule”. Looking at things that way is the vulgar historical error of interpreting the past as though it actually used the current systems with which we are familiar, rather like interpreting other countries’ and cultures’ customs as analogues of our own. To be sure, we can interpret things like chattel slavery and manorialism as giving rise to classes – but they weren’t, themselves, the product of class mechanisms the way (say) US slavery was perpetuated by a framework that the slave owning class actively fostered. Rather, slavery in ancient times was generated by clan and family systems (ranging up to tribal ones), and manorialism was likewise done locally by local wealthy and/or warlike small groups (the mediaeval European aristocracy is traceable back to a fusion and synthesis of barbarian warlords and late Roman wealthy magnates) – none of which rested on any wide ranging class, though it did eventually lead to a stratification that produced one.

Kevin, speaking of tax policy, what are your thoughts on the Fair Tax proposal? It seems to me that a national sales tax would be difficult to enforce against the informal economy, which would provide an important advantage.

I have difficulty in thinking about whether such policies would be net positives in light of their effects on what you call the competitive sector of the economy. From my understanding, these are the enterprises and markets which are formal in the sense that they operate by the rules of the legal system, but which receive relatively few advantages/protections from the state (and presumably come out as net “losers” to the “house” to use your analogy).

What is the outlook for this sector? Would increasing regulatory burdens on the competitive sector be helpful in forcing more of them to go informal?

Hi Kevin,

I enjoyed the thought-provoking read. Something that bothers me about your vision of modern American capitalism is that it seems to ignore the meritocratic aspects of our system, which allow for anyone who works hard enough to become a “newly minted” member of the ruling class. So many of our business leaders come from very humble beginnings, as well as lawyers, judges, doctors, politicians, etc. To downplay or disregard this fact is to ignore something fundamental and unique about the American system, and it is contrary to your dichotomy of scheming ruling class vs enslaved producing class.

Jeff

@ skunk1980

I’ll probably catch hell for typing this, but here goes…

I have a fundamental problem with the word “capitalism” because it is fundamentally against truly free, natural, or “organic” markets. If I have a system that favors, explicitly or implicitly (even just by name) one of the economic factors of production over the other, I don’t have a true free moving market. (More modern attempts to support capitalism by defining it as a “system where the factors of production are privately held” and then including labor as one of those privately held factors included within capital are a convoluted mess as the necessary distinctions between factors are obscured).

While I enjoy much of the writing on C4SS, it tabs itself as a “market anarchist” site and I see the same problem in that. Markets don’t deserve any additional favor in an anarchist scheme. If anarchism is about getting rid of hierarchy and control, what do markets have to do with that in a fundamental way? Free markets may be a product of a functioning anarchist society, as well as an aiding factor, but markets are not more fundamental than the family, or homestead, or individual. In fact, they are the products of those. It is confusing a secondary phenomena for a primary phenomena.

Likewise, when people say that markets are the most democratic interaction, when freed, this is also confused to me. Markets are not more democratic than the other ways we encounter and interact with each other – friendship, love, concern, and laughter are more democratic and more fundamental – in fact these drive the markets as our needs that give cause to pursuing the obtainments of markets; from our base necessity needs of food, shelter, etc., to these higher level needs.

Our economic worldview has just been elevated too much.

SPBS: From the writings of Charles Johnson and Roderick Long, I would say the word market is more encompassing than what you seem to think. You should try this by Johnson:

http://radgeek.com/gt/2010/05/07/free-market-anti…

It seems like you have the cash-nexus definition in mind, whereas they think of the free exchange one.

Paul: It seems to me that, for the people actually paying it, the Fair Tax would amount to a shift of the tax burden onto the middle class. It’s part of a wider phenomenon of shifting taxes off of returns on property and onto returns on human labor.

Jeff, check out this comment re meritocracy:
http://mutualist.blogspot.com/2007/01/you-dont-ge…

Aside from the fallacies of composition I discuss in that piece, another major objection to meritocracy is that the shape of the ladder itself is unjust. See, for example, Christopher Lasch’s discussion of Lincoln on the “mudsill theory” in Revolt of the Elites. To a considerable extent, the system imposes unnecessary levels of credentialling to do anything, puts a floor under the cost of subsistence by artificially increasing the amount of effort required for a given unit of consumption–and then tells people that if they work hard enough, they can make it. The problem is, the people who are deciding how hard we have to work to make it are not accountable to us.

SPBS: What Marcel said. Left-wing market anarchists use the term “market” to include not just the cash nexus or the market as an economic institution, but the sum total of all voluntary interactions. To the extent that “market” carries primarily economic connotations for most people, this may be unfortunate. But most of us are quite friendly to the kinds of institutions that Kropotkin and Colin Ward described.

Another home run from Carson.

In my debates with economic conservatives who make these kinds of arguments, I’ve found it helpful to make a sharp distinction between meritocracy and egalitarianism, and between natural or voluntary hierarchies and artificial or coercive ones.

For instance, I agree with conservatives who emphasize individual merit over equality for its own sake, but I would agree with Kevin that present systems of state-capitalism are not genuinely meritocratic economic arrangements. Instead, the game is rigged to favor the house, i.e. vested economic interests possessing the subsidy of history and political favoritism achieved through alliance with the state.

Many of you will likely disagree with me on this, but I would argue the purpose of libertarianism/anarchism should be to strip away systems of artificial economic privilege imposed by the state in favor of a genuine meritocracy. The (ostensible) ideal of the classical liberal tradition and The American Way was for such systems of caste-privilege to be replaced with a fluid system where everyone rises or falls by his own merits. In a contemporary context, this would mean eliminating the systems of monopoly Kevin writes about like central banking from the top or local zoning laws from the bottom, which are more or less the modern equivalent of eliminating titles of primogeniture or systems of enclosure.

However, I think that to ever get anywhere with mainstream conservatives or libertarians who claim to be free market, it is necessary to concede that in such a genuine meritocracy, there would still be plenty of un-meritorious people. On an individual level, I don’t think there can ever be equality between the wise and the foolish, the intelligent and the stupid, the creative and the dull, the strong and the weak, the healthy and the sick, the educated and the ignorant, the responsible and the reckless, the sober and the drunk or addicted, etc. This is the most serious deficiency of egalitarianism, in my opinion. I know plenty of people whom I’m sure would be deadbeats and losers in any kind of society or economic system.

Also, I think there would still be winners and losers among economic enterprises in a genuine free market as well. Some businesses would be successful, and others would fail. Some would endure for a long time, others would have a shorter lifespan. That would be true of enterprises regardless of their ideological foundations or specific structures. Some anarcho-communist communes might be successful. I know of one about an hour from my residence. Others might fail. Some of the Israeli kibbutzim are more successful than others, and some of you would likely be very dismayed to know that the more successful ones tend to have a strong sense of religious or ethnic identity. Some mutual banks would succeed, some would fail, etc.

As a consequence, some people would have more wealth than others, as would certain businesses or social groups. We might not have the super-rich of the present plutocratic order, and there may be fewer desperately poor, and a larger petite bourgeoisie class and all that, but I still think there would be an elite class, an intellectual class, a professional class, a merchant class, a working class, an agricultural farming class, a lumpen proletarian class, and so forth. Every functional society since Aristotle’s time (or before) has been organized that way.

There would also be a hierarchy according to ability and training. A hospital is still going to rank neurosurgeons over candystripers and janitors. A university is going to (hopefully) rank professors over freshmen. There would also be inequality among social groups. For instance, in my view at least, males and females have different biological destinies and therefore different social destinies. Both sexes should have the same
ights in a legal and political sense, but the idea of equality (which is really just a synonym for sameness) that modern leftists dream of is an impossibility. As Rothbard said, egalitarianism is a revolt against nature.

Right-libertarians and conservatives recognize these facts, and that is their strongest point, in my opinion. The way to reach them with left-libertarian ideas on economics is to point out the anti-meritocratic rather than the anti-egalitarian nature of the present system.

Keith, I agree with all your points about income differentials based on skill and effort. But a system in which income really did reflect merit or effort would be so radically egalitarian, after the present system, as to seem almost Maoist in contrast.

Re businesses going out of business, though, I think the distinction between being “in business” and “out of business” would be a lot less meaningful in cases where capital outlays required for production were minimal, production tools were individually affordable, and minimal levels of overhead made it possible to ride out long periods of slow business without going further in the hole. In such areas of the economy, I suspect the model would be less one of discrete businesses arising and failing, than a lot of independent contractors constantly joining and leaving projects, or temporarily falling back on other paid work, on the model of the free software community or the construction industry.

Kevin:

“there’s probably some fraction of income over $250k that was really earned through hard work and enterpreneurship.”

Only *probably*? and only “a fraction”? You apparently suspect or believe that most if not all of income over $250k is somehow illegitimate. This is mind-boggling to me, that you actually think this. And it doesn’t have to be thru hard work or entrepreneurship to be legitimate–it can also be through smart work in some profession–say, acting, medicine, some profession, smart trading or investing, etc.

“If Obama’s cutoff point were, say, extending the tax cuts for everyone below $5 million, that might be a bit less clearcut for me because at that level the probability that anyone made over that amount of money through non-political means approaches zero.”

How can you say this? I know lots of people who make that kind of money legitimately.

“I’ll definitely say extending tax cuts to the top 2% is near the bottom of my list of things to expend effort lobbying for, however.”

Given that it funds the state, and amounts to massive, unjust theft of most of those taxed, it’s shockingly unlibertarian to have such a low priority on this, IMO.

Yo Stephan,

If your wealth is earned by taking more money for a thing than that thing cost, your wealth is illegitimate. If your wealth is earned by paying people less money than they make for you, your wealth is illegitimate. If your wealth is earned by actions which do not benefit society, your wealth is illegitimate.

“it’s shockingly unlibertarian to have such a low priority on [tax cuts for the richest 2%], IMO.” If you had a time machine and could go back in time, how often would you make out with Ayn Rand?

You seem to have missed (or disagree with) the point of the article, which is that the ruling (and managerial) classes only appear useful because they have forced their way into useful positions. If they were gone tomorrow, having turned everything they ordered to be built to rubble, the working classes could rebuild it all within a year, because we have done it all before.

Stephan: You’re not reading very carefully. I didn’t say “income around $250k.” I said “income over $250k.” That extends from $250k upward to infinity, and includes all incomes up to that of Bill Gates. So I’d say “probably” and “some fraction” is quite fair. And getting “if not all” out of “some fraction… probably” is really a stretch.

“Unjust theft” of “most of those taxed” implies that “most” income over $250k is justly acquired, which would include multibillionaires and the commanding heights of the plutocracy. And “given that it funds the state” is something that *I* mentioned, if you recall.

As for the “shockingly unlibertarian” part, this comes from someone who dismisses thick libertarianism on the grounds that no authoritarian personal behavior is unlibertarian, and libertarianism per se has nothing to say about it, so long as no formal rights violations take place. So if you’re unwilling to condemn personal authoritarian behavior toward other people within workplace hierarchies, racism and sexism, etc., as unlibertarian if no formal rights violations have taken place, it’s a bit odd for you to condemn as “shockingly unlibertarian” my own choice of what to expend my own personal effort worrying about and advocating for.

Bones wrote:-

If your wealth is earned by taking more money for a thing than that thing cost, your wealth is illegitimate. If your wealth is earned by paying people less money than they make for you, your wealth is illegitimate. If your wealth is earned by actions which do not benefit society, your wealth is illegitimate.

All of that is wrong, and most of all the first and last sentences.

The first sentence means that taking a cash profit is always wrong. It means that any viable cash based activity is wrong.

The second sentence means that any cash activity that takes two people, say an electrician and his apprentice, is wrong unless the apprentice makes at least as much money as the trained electrician. (And the same goes for many other activities.)

The third sentence means that anyone who makes wealth (not necessarily money) by simply minding his own business is wrong, that only people who benefit others are allowable. That would rule out the biblical patriarchs, with their wealth in flocks and herds and owing nothing to any man, yet it would allow the brothers of Joseph who sold him into slavery (since everybody gained, as it turned out in the end – even the Egyptian peasants who had to give up their land for food, since the alternative would have been their starving).

Kinsella may have the wrong end of the stick, but it won’t do to throw red herrings at him.

@Stephan Kinsella I usually agree with you, but I think this time you are looking for disagreement out of habit.

@Kevin Carsson I liked this piece so much that I am going to take the time to translate it to spanish for my blog.

Kevin:

Stephan: You’re not reading very carefully. I didn’t say “income around $250k.” I said “income over $250k.”

I didn’t refer to income “around” $250k; I said, “You apparently suspect or believe that most if not all of income over $250k is somehow illegitimate.”

That extends from $250k upward to infinity, and includes all incomes up to that of Bill Gates. So I’d say “probably” and “some fraction” is quite fair. And getting “if not all” out of “some fraction… probably” is really a stretch.

“Unjust theft” of “most of those taxed” implies that “most” income over $250k is justly acquired, which would include multibillionaires and the commanding heights of the plutocracy.

It doesn’t seem like a stretch to me. Your view does seem to be that, of those making more than $250k, there may be (“probably”) a fraction (usually this indicates a small percent) of them that earned it “legitimately.” Reading this, I take you to be saying something like this: “Maybe 5%, if any, of people making more than $250k earn it legitimately.” You were not explicit but this is an implication. The “if any” is warranted b/c you said “probably.” Thus, my interpretation “You apparently suspect or believe that most if not all of income over $250k is somehow illegitimate” seems warranted to me, and you have said nothing here to gainsay it. You could simply have clarified but you still haven’t done so. I can only guess at what your actual view is. I don’t myself know, of course, what the right percentage is, but if I were to guess it would be more like 50% to 75% is legitimate. Your view, I suspect, is down in the 10% or less range. So then, we just disagree.

My interpretation here can also be understood in light of typical and expected comments from leftists like “Bones,” who wrote:

If your wealth is earned by taking more money for a thing than that thing cost, your wealth is illegitimate. If your wealth is earned by paying people less money than they make for you, your wealth is illegitimate. If your wealth is earned by actions which do not benefit society, your wealth is illegitimate.

This kind of outrageous Marxoid economic illiteracy pops up quite often in left-libertarian discussions. Of course it’s going to color how your words are construed, especially when you are not very explicit. Some of your comrades apparently do think that it’s almost impossible to make more than $250k legitimately, and your comments seemed compatible with this. In any case, our different economic perspectives apparently lead to radically different assessments of the current order.

This is a good example of what has concerned me in the past in left-libertarian paeans to localism, etc.–that their preferences are colored by their economics, and vice-versa. That if you envision an ideal order with radically reduced division of labor and employment, more self-sufficiency etc., more humble incomes, etc., then if you espy high income, employment, etc. in the real world then you have to assume something fishy is at work to produce these artificial results. One’s preferences color one’s view of an ideal world, and then this determines what ones sees as deviations now.

I think a free society would of course be heavily capitalistic, but it would very likely be extremely diverse. Sure there would be more opportunity for self-sufficiency, calling versus career, localism, etc., but in my view there would still be corporations and capitalism, employment and the division of labor, and wildly successful hyper-rich people. When I see the modern landscape I think there are not enough rich people; you (apparently) see conspicuously too many. Thus, where I realize that some of the current rich did so through state connections and artificial arrangements, I see most current successful people as being wealthy despite the state, and realize that there are unseen millions of “would have been millionaires” if not for the state’s hampering the market; whereas you (apparently) assume the vast bulk of the rich only got that way because of the state.

And “given that it funds the state” is something that *I* mentioned, if you recall.

Yes, which is why it seems to me that putting tax cuts at such a low priority seems wrong to me. But I grant that this is more of a strategy issue to me–so long as you acknowledge that taxing someone is theft. The problem is I am not sure you do–if you believe 90% (say) of those earning more than $250k a year get their money illegitimately, then it is not in fact theft to tax them. Sure, you can still object to the state getting that money because it will misuse it–but so will the rich–they’ll use it to acquire more capital or hire more people etc. than they otherwise could. Now I would actually be sympathetic to an argument that most people, when taxed, are not actually stolen from, because they consent to the state–not because of their social class. In this perspective most workers, poor, and “managerial class” members all consent to the state and thus it’s hard to argue it’s outright theft when the state they support does what states do. But this is a consent-based argument, not a classist or economic one.

As for the “shockingly unlibertarian” part, this comes from someone who dismisses thick libertarianism on the grounds that no authoritarian personal behavior is unlibertarian, and libertarianism per se has nothing to say about it, so long as no formal rights violations take place. So if you’re unwilling to condemn personal authoritarian behavior toward other people within workplace hierarchies, racism and sexism, etc., as unlibertarian if no formal rights violations have taken place, it’s a bit odd for you to condemn as “shockingly unlibertarian” my own choice of what to expend my own personal effort worrying about and advocating for.

Well, this is a fair point; if you are talking only about strategy. But I was not sure you were, as noted above. My objection to “thickism” is not in its actual contentions, most of which are common sense (there are connections, etc.), but in its coherence and rigor as a doctrine–and also in some of the leftish flavors of it. Of course there is nothing wrong with “authority” or “hierarchies” per se–and “authoritarian” is used in too fuzzy ways or even in incorrect ways by leftists to say that it’s some kind of proxy for injustice. Racism is of course immoral (sexism can be but it’s more complicated), but even racism in the workplace is not unlibertarian. ²

Bones:

You seem to have missed (or disagree with) the point of the article, which is that the ruling (and managerial) classes only appear useful because they have forced their way into useful positions. If they were gone tomorrow, having turned everything they ordered to be built to rubble, the working classes could rebuild it all within a year, because we have done it all before.

I would not contrast “the working classes” with the state and its cronies. If you were to eliminate the state and the Wesley Mouches, then what would be left would be the private, productive class, which includes workers as well as others such as entrepreneurs, capitalists, employers, professionals, managers, what have you. And as for *this* group, these “classes,” if one insists on thinking of them this way, are symbiotic. But to assert that absent the “managerial class” the workers could rebuild it all is ridiculous.

Kevin,

Excellent article. It’s funny because I usually have these types of discussions with “liberals” who will go to another country see ridiculous poverty and come back and say those in the projects “have it easy” because they receive government benefits and/or have access to very low wage jobs. In debates like those, I recall Malcolm X’s field negro Vs. house negro speech. The “corporations provide jobs” argument in defending the current state capitalist system to benefit certain developed countries’ poor populations is like telling the house slave to be thankful for their master since they’re not one of the ones working in the fields.

Stephan,

I agree with you that the main problem with capitalism is that there’s too few holders of wealth, not too many. However, I believe that’s what most left-libertarians argue… a distribution of productive property rather than a state-backed distribution of resources. (Welfare, etc.)

Hugo: Thanks much for the kind words and for translating my piece!

Stephan: Here you are conflating most *income* over $250k with most *people* making over $250k, which is quite sloppy. Two very different things. And there’s a very big difference between incomes *around* $250k and incomes *over* that amount. As my argument that “over $250 k” is an income bracket extending upward to infinity, not only do I not gainsay your argument, I’m quite willing to stipulate to an estimate that most money earned over $250k is illegitimate. Do you really believe the majority of the money in that bracket is earned by people at the lower end? I repeat, income *over* $250k includes *everything* up to and including Bill Gates and other corporatist billionaires.

You managed to get from a fraction of the *income* over $250k to a fraction “of them” (the earners), and from there to the very specific fraction of 5%. So you’re not even very clear about what concepts you’re talking about or bothering to make apples-to-apples comparisons to what I actually wrote. So all these numbers are something you pulled out of–well, you didn’t pull them out of anything I wrote. I don’t believe by any means that so small a fraction of the income of the median *earner* over $250k is illegitimate. I wouldn’t be suprised if so small a fraction of *total income* over that amount is illegitimate; but then I suspect that the great majority of the income over $250k is concentrated in the hands of a much smaller number of people than the total population of earners over $250k.

As for your judging me by Bones’ comments, you yourself have made it clear by your own actions that anyone can read anything into anything, if they want to badly enough. I have written what I have written. What you or Bones read into it is between you and Bones.

I remind you of the way you jumped all over me because of my reading of Lew Rockwell’s assorted comments on BP and the environment–a reading of Rockwell’s comments which I consider to have been far more justifiable based on what he actually wrote. So how come you’re not blaming Rockwell for what I read into his commentary, and arguing that the widespread backlash against it for sounding like cheap apologetics for the poor, poor victims in the BP C-suite and like so much know-nothingism about “the environment” must indicate there was something of that sort in his writing there to be found?

I really think Hugo is right. Most of your criticism is just silly, based on a knee-jerk reaction. Your need to go off half-cocked with visceral outrage is such that you’re conflating entirely different statistical categories. I think this entire exchange has just been silly and unproductive. Maybe you should just stipulate, for the record, that you disagree with all of my future assessments of the degree of corporatism vs. market in the economy, and leave it at that.