Lark, this one goes out to you.
Romney and Obama Agree: Power is Good
Under corporatist bipartisanship, the people lose.
So the presidential campaign is shaping up as a contest between a Democrat who says we had a free market from 2001 through 2008 and a Republican who . . . agrees—he says “[w]e are only inches away from ceasing to be a free market economy.” You can’t cease to be something you never were.
Thus Barack Obama claims and Mitt Romney implicitly concedes that the free market 1) has existed and 2) therefore presumably created the housing and financial debacle. This bodes ill for advocates of liberty and voluntary exchange.
Notice what will happen if this framing is widely accepted: Genuinely freed markets won’t make the list of feasible options. That will leave us with mere variations on a statist theme, namely, corporatism. How will voters choose among them? Most of those who abhor “socialism” (however they define it) will rally round Republican corporatism because of the pro-market rhetoric, while most who abhor the cruel “free market” (“Look at the hardship it created!”) will rush to Democratic corporatism because of its anti-market rhetoric.
And the winner will be: Corporatism. (That is, the use of government force primarily to benefit the well-connected business elite.) The loser? The people, who would benefit from freedom and freed markets—markets void of privileges and arbitrary decrees. That’s what maximizes consumer and worker bargaining power and enhances general living standards.
No Fundamental Difference
Does that mean the two contenders are really on the same side? Yes and no. They each want the reins of power. But the stakes are not what they are represented to be, and the differences are not fundamental. At the most fundamental level and despite appearances, Obama the government man and Romney the business man share common ground. Romney says, “Washington has to become an ally of business, not the opposition of business” (as though those were the only alternatives), and Obama would not disagree. Ask Jeffrey Immelt of GE, Jim McNerney of Boeing, and other beneficiaries of the Export-Import Bank. Or ask the principals of Bank of America. Obama would just want government to be the more dominant voice in any dispute.
As Roderick Long wrote in his 2006 Rothbard Memorial Lecture:
Long is on to something important, and people as different as Ron Paul and Ralph Nader get it. At the rhetorical level the differences between the major parties look substantial: One side says it favors a dominant role for the central government (to promote fairness and jobs); the other, a dominant role for “the private sector” (to promote economic growth). This difference in emphasis sometimes matters at the margin. The fuzzy line between “private” and “public” sector may move slightly this way or that, depending on which side is in power. But big changes do not occur when power changes hands. Do you want recent evidence? Look at the central government’s record since 1981. If you want evidence from the more distant past, read Roy A. Childs’s 1971 libertarian classic, “Big Business and the Rise of American Statism.”We might compare the alliance between government and big business to the alliance between church and state in the Middle Ages. Of course it’s in the interest of both parties to maintain the alliance—but all the same, each side would like to be the dominant partner, so it’s no surprise that the history of such alliances will often look like a history of conflict and antipathy, as each side struggles to get the upper hand. But this struggle must be read against a common background framework of cooperation to maintain the system of control.From thefreemanonline: This article is a link from the first articleViewing History
Each side of course views recent and distant history through its own self-serving lens. To gain power each must persuade voters that its philosophy differs sharply from the other’s and that the fate of the country—indeed, the world—hangs in the balance.
It all works neatly to the advantage of the permanent regime—the ruling elite, which has elements both inside and outside the formal government apparatus. Signs of the permanent regime can be seen in the presence of high-ranking corporate personnel from Wall Street banks and other firms no matter which party is in power. The revolving door is well greased. This phenomenon is captured in various Venn diagrams illustrating the bipartisan role of corporate leaders in government. (Here are a few.)
Things are not so different from the days of Thomas Hodgskin, the great English libertarian author and editor, who wrote, among other works, The Natural and Artificial Right of Property Contrasted (1832). (See another article about him here.) Hodgskin was one of many classical liberals who understood that one cannot adequately analyze government without employing class analysis. (Others included Thomas Paine, Thomas Jefferson, J. B. Say, Frédéric Bastiat, Ludwig von Mises, Albert Jay Nock, and Murray Rothbard. Marx didn’t invent class analysis; he inherited it, before mangling it.) Hodgskin wrote:When Obama and Romney argue over whether taxes should be raised on the rich, bear in mind that such disagreements are nothing new among factions of the ruling elite. (Besides, the rich can always find ways around higher rates). No matter which faction wins, the people will lose.And this law, founded on oppression, upheld by force and fraud, intended solely to preserve ill-gotten power, or ill-gotten wealth, to maintain the dominion of an aristocracy, and the supremacy of a priesthood, to perpetuate the slavery, ignorance, and poverty of the great body of the people, the political writers of our day, call on all mankind to obey, as the only means of social salvation.
Class Struggle Rightly Conceived
Karl Marx is famous for drawing attention to the idea of class struggle. Yet remarkably in 1852, historian David Hart recounts, Marx wrote, “[A]s far as I am concerned, the credit for having discovered the existence and the conflict of classes in modern society does not belong to me. Bourgeois historians presented the historical development of this class struggle, and the economists showed its economic anatomy long before I did.”
By bourgeois historians and economists Marx meant laissez-faire liberals such as Charles Comte, Charles Dunoyer, and other early nineteenth-century French writers. According to Hart, “Marx plundered what he could from their work to assist him in this project, or … apparently misread them in his haste to move onto more important matters.”
In light of Marx’s words, it’s worth exploring the historical development of this class struggle as seen from the perspective of the classical liberals. At first this analysis of class may seem paradoxical. Free-market advocates have long emphasized that trade brings increasingly elaborate forms social cooperation through the division of labor and free exchange. As Ludwig von Mises pointed out, the realization that specialization and trade allow unlimited mutual benefits induces people to put aside their differences and to cooperate in the productive process. How could the classical liberals of the early nineteenth century have been interested in class struggle?
Comte and Dunoyer, along with Augustin Thierry, whose publication, Le Censeur europeacute;en, was a hotbed of radical free-market thought, were influenced by the important, but underappreciated, French free-market economist Jean-Baptiste Say, whom Murray Rothbard lauded as “brilliantly innovative and the superior of Adam Smith.” The seeds of early classical-liberal class theory can be found in the second and subsequent editions of Say’s Treatise on Political Economy (first published in 1803), which reflected his response to Napoleon’s military spending and intervention in the French economy. For Say, government’s power to tax the fruits of labor and to distribute largess and jobs is the source of class division and exploitation. As he wrote in another work, “The huge rewards and the advantages which are generally attached to public employment greatly excite ambition and cupidity. They create a violent struggle between those who possess positions and those who want them.” Of course someone has to provide the largess.
Comte and Dunoyer took that seed and nurtured it into a full-blown class analysis. At issue was who, exactly, comprises the classes. Say’s view that services provided in the marketplace are immaterial goods and that the entrepreneur, like the laborer, is a producer made an impression on Comte and Dunoyer. Hart writes, “A consequence of Say’s view is that there were many productive contributors to the new industrialism, including factory owners, entrepreneurs, engineers and other technologists as well as those in the knowledge industry such as teachers, scientists and other ‘savants’ or intellectuals.”Exploiter and Exploited
Getting the members of the classes straight is important if we are to accurately distinguish the exploiters and exploited. Marx thought only members of the proletariat were creators of value, with owners of capital belonging to the exploiting class (and the state as its “executive committee”). He placed owners of capital among the exploiters because of his labor theory of value (inherited from Adam Smith and David Ricardo): since the value of goods was equivalent to the socially necessary labor required to produce them, the profit and interest collected by “capitalists” must be extracted from workers’ just rewards — hence their exploitation. (N.B: For Marx this was true whether or not an owner of capital received favors from government.) But if Marx’s labor theory of value falls and if exchange is fully voluntary and void of state privilege, then no exploitation occurs. (Marx’s exploitation theory was later systematically refuted by the Austrian economist Eugen von Bohm-Bawerk, who showed that some of what we call profit is in fact interest arising from employers’ advancing wages to workers before the final product is sold.)
So the theorists whom Marx credits with teaching him class analysis placed in the productive class all who create value through the transformation of resources and voluntary exchange. The “capitalist” (meaning in this context the owner of capital goods who is unconnected to the state) belongs in the industrious class along with workers. Marx didn’t learn this part of the lesson.
Who are the exploiters? All who live off of the industrious class. Besides common crime, there is only one way to do that: state privilege financed by taxation. The conclusions drawn from this by Comte and Dunoyer (and Thierry) is that there existed an “expanded class of ‘industrials’ (which included manual labourers and the above mentioned entrepreneurs and savants) who struggled against others who wished to hinder their activity or live unproductively off it,” Hart writes. “The theorists of industrialism concluded from their theory of production that it was the state and the privileged classes allied to or making up the state … which were essentially nonproductive. They also believed that throughout history there had been conflict between these two antagonistic classes which could only be brought to end with the radical separation of peaceful and productive civil society from the inefficiencies and privileges of the state and its favourites” (emphasis added).
In this view, political-economic history is the record of conflict between producers, no matter their station, and the parasitic and predatory political class, both inside and outside of government. Or to use terms of a later, British subscriber to this view, John Bright, it was a clash between the tax-payers and tax-eaters.
Comte and Dunoyer’s work advanced Say’s analysis in important respects, Hart notes. “Where Say regarded economics and politics as separate disciplines, with the latter having little effect on the former, the liberal class analysts saw that Say’s own work had more radical implications. The science of political economy was ‘value laden’ as we might say and implied quite specific policies on property, government intervention in the economy and individual liberty, something Say did not appreciate but which Dunoyer and Comte incorporated into their work,” Hart writes.
As both Hart and historian Ralph Raico (pdf) point out, Comte and Dunoyer also absorbed much from another great liberal, Benjamin Constant, who had penned important essays showing that an era of commerce had replaced the era of war and that the modern notion of liberty — centering on personal freedom and private property– is poles apart from the ancient notion of liberty — which exclusively meant participation in politics. As Hart puts it, “Dunoyer was interested in [Constant's] sentence ‘[t]he unique end of modern nations is peace (repos), and with peace comes comfort (aisance), and the source of comfort is industry,’ which nicely summed up his own thoughts on the true aim of social organisation.”
Liberal class analysis is also to be found in the writings of the Manchester peace and free-trade activists Richard Cobden and John Bright and of Herbert Spencer, as Raico points out. He quotes Bright on the struggle against the Corn Laws (grain import tariffs): “I doubt that it can have any other character [than that of] … a war of classes. I believe this to be a movement of the commercial and industrial classes against the Lords and the great proprietors of the soil.”An interesting way to look at the class divide.War and Big-Power Politics
Raico emphasizes that the Manchester school understood that war and big-power politics were key elements of the political class’s quest for more unearned wealth. Nothing was better at quieting a population tired of taxes than a foreign threat. Similar ideas were present among other liberal thinkers, including Thomas Paine, John Taylor of Caroline, John C. Calhoun, Albert Jay Nock, and Ludwig von Mises. (See Mises’s The Clash of Group Interests. For more on liberal class analysis, see Hart and Walter Grinder’s The Basic Tenets of Classical Liberalism [pdf].) I can’t resist quoting Paine, from The Rights of Man:In summary, the taxing power necessarily produces two classes: those who create wealth and those who take and receive it. The producers of wealth naturally want to keep it and use it for their own purposes. Those who wish to expropriate it look for clever ways to get it without unduly upsetting its creators. One way is to teach people that they are the state and that paying ever-more in taxes benefits themselves. The public schools have been particularly useful in that mission.War is the common harvest of all those who participate in the division and expenditure of public money, in all countries. It is the art of conquering at home; the object of it is an increase of revenue; and as revenue cannot be increased without taxes, a pretence must be made for expenditure. In reviewing the history of the English Government, its wars and its taxes, a bystander, not blinded by prejudice nor warped by interest, would declare that taxes were not raised to carry on wars, but that wars were raised to carry on taxes. [Emphasis added.]
As long as government is in the wealth-transfer business, class conflict will persist. Class in this sense is an important tool of political analysis. It’s time that advocates of individual liberty and free markets reclaimed it from the Marxists.