Seducing Socialists

¹Markets not Capitalism: Individualist anarchism against bosses, inequality, corporate power, and structural poverty² (hereafter MnC) presents a form of left libertarianism that descends from the ideas of 19^th century anarchists who self-identified as individualist socialists in contrast to state socialists such as Marxists, writers such as Benjamin Tucker and Pierre-Joseph Proudhon.³ The left libertarians whose views are represented in MnC would like to reclaim the socialist label. They refuse to call what they support “capitalism” on the not unreasonable grounds that, to most people, the term describes a mixed economy in which governments play a large role. They reject the term “free market” on similar grounds — the existing market is not free — in favor of “freed market,” what would exist after government and its interventions were eliminated. They argue that most of the things socialists dislike about present societies would not exist, at least be much less common, in a freed market, hence that socialists should be libertarians.

The problem is that there is no good reason to believe it is true.

For example:

The funding of public highways through tax revenues, for example, constitutes a de facto transportation subsidy, allowing Wal-Mart and similar chains to socialize the costs of shipping and so enabling them to compete more successfully against local businesses; the low prices we enjoy at Wal-Mart in our capacity as consumers are thus made possible in part by our having already indirectly subsidized Wal-Mart’s operating costs in our capacity as taxpayers. (MnC Chapter 20).

The author does not mention that, during the period of Walmart’s initial expansion, federal regulation made transport more expensive by cartelizing the trucking industry, as demonstrated by the sharp drop in costs after the industry was deregulated.⁴ Nor does he mention that libertarians expect governments to produce goods and services, including highways, less efficiently than private firms, making costs higher and quality lower. That gives us one government activity that made transportation cheaper, two that made it more expensive. The author mentions the one that pushes in the direction he wants, ignores the other two, and concludes that transport was less expensive due to government.

A good analogy is subsidies to freeways and urban sprawl, which make our feet less usable and raise living expenses by enforcing artificial dependence on cars. (MnC Chapter 40).

Subsidies to mass transit, the alternative to cars pushed by opponents of urban sprawl, are about a hundred times as large per passenger mile as the subsidy to highways.

Walmart and urban sprawl are not the only things socialists dislike about the modern world so not the only things left libertarians would like to claim that a freed market would reduce or eliminate. Others include large corporations, wage labor, the cash nexus and income inequality. Things they would like to see replace them include workers’ cooperatives, self-employment, gift economies.

In each case there may well be ways in which government intervention in the economy pushes things in the direction they claim. But in each case, as with highway costs, there are effects in the opposite direction as well. To demonstrate that point, here are arguments for the opposite of the conclusions offered by left libertarians:⁵

Corporate Size

A large hierarchical organization has to pass a lot of information up and down the hierarchy in order that the people at the top can know what those at the bottom are doing and those at the bottom know what those at the top want them to do. The more such information there is and the more hands it passes through, the more legible the firm’s activities are to the government, making it easier to collect taxes and enforce regulations. At the other end of the scale, in the limiting case of a one man firm, the boss cum worker does not have to trust anyone but himself to keep his secrets, which makes it easier to evade taxes — for instance by classifying consumption expenditures as business expenditures or not reporting payments in cash — or regulations. So one effect of a government that taxes and regulates is to increase the advantage of smaller firms over larger.

Another way in which the existence of government discourages hierarchical organizations is by the structure of taxation. Corporate profits pay taxes twice, once in corporate income tax and a second time as income to the stockholders, although the second may, depending on the details of tax law, be diluted by special treatment for dividends or capital gains. The same activity done in an unincorporated form, as by a doctor in private practice, pays taxes only once.

Another effect is to encourage gift economies, informal transactions more generally. If I do my friend’s taxes for her and she babysits my kids, neither transaction ever shows up on our income tax forms. That is one way in which the existence of government makes gift economies more, not less, common.

Wage Labor

One way of getting things is by paying someone else, another by producing them yourself — cooking your own dinner, growing tomatoes in your back yard. One way of making a living is to work for someone else for pay, another is to work for yourself, make jewelry or art to sell at art fairs, write books. Here again, one advantage of making your living that way is that your activities are less legible to tax collectors and regulators. Arguably the shift from self-employment to wage labor over the past hundred and fifty years was one of the causes of the growth of government expenditure from about ten percent of national income in the U.S. in the Nineteenth Century to about forty percent currently. Hence government taxes and regulation should result in fewer people working for wages, more self-employed, the opposite of the left-libertarian claim.

Income Inequality

Most high income people at present get their income either as highly skilled workers, such as physicians, or successful entrepreneurs, both roles that would continue to exist in a freed market. While government activities result in some people being richer, some poorer, than they would otherwise be, their least ambiguous effect on the income distribution is through taxation. Taxing capital gains makes it more difficult to accumulate wealth. Income taxation in the U.S. at present is heavily biased against the rich: The top one percent of taxpayers pay about 31% of their income in federal taxes, the bottom quintile about 4%.⁶

The Advantage of Ignorance

The 19^th century individualist anarchists were in a better position than their modern successors to claim to offer what socialists wanted because they knew less economics. They seem to have believed that if anyone could open his own bank and print his own money, loans would be freely available — according to Tucker at an interest rate of less than one percent. They were confusing money with capital. In a system of private issue anyone can invent his own money and print it but that does not mean that people will give him things in exchange.

At least some of them seem to have viewed rent as well as interest as a government creation:

It was obvious to Warren and Proudhon that, as soon as individualists should no longer be protected by their fellows in anything but personal occupancy and cultivation of land, ground rent would disappear, and so usury have one less leg to stand on. Their followers of today are disposed to modify this claim to the extent of admitting that the very small fraction of ground rent which rests, not on monopoly, but on superiority of soil or site, will continue to exist for a time and perhaps forever, though tending constantly to a minimum under conditions of freedom. (Benjamin Tucker, MnC Chapter 2)

A world where anyone who wanted to work for himself could get an almost interest-free loan and anyone who wanted to farm could get almost rent-free land would look to a 19^th century socialist more like what he wanted than anything twenty-first left libertarians can believably promise.

Right and Wrong

I agree with the left libertarians that most socialists would get more of what they want from a libertarian society than from a socialist society.⁷ But the reason is not that libertarianism will give them everything they want but that socialism won’t, will, on the evidence of state socialist societies past and present, give them less of what they want than the mixed economies they now live in.

The proper rebuttal to the claims of a snake oil salesman is not to claim that your snake oil is even better than his.

---

Past posts, sorted by topic

My web page, with the full text of multiple books and articles and much else

A search bar for text in past posts and much of my other writing

1. This essay owes a good deal to Gary Chartier, who was generous in his time and effort responding to my questions about and criticism of his, and other left anarchists’, views.

2. Edited by Gary Chartier & Charles W. Johnson, Released by Minor Compositions, London / New York / Port Watson.

3. A conveniently webbed summary of left libertarian positions is “The Distinctiveness of Left-Libertarianism” by Gary Chartier, one of the compilers of Markets not Capitalism.

4. The industry was deregulated in 1980. “By 1985, deregulation saved shippers $7.8 billion annually due to lower common carrier rates, $6 billion due to lower private carrier costs, and $1.6 billion annually due to more rapid service. By 1998, real operating costs per vehicle-mile fell by 75 percent for truckload carriers and by 35 percent for less-than-truckload carriers.” “Forty Years After Surface Freight Deregulation,” The Regulatory Review.

“The Walmart chain proper was founded in 1962 with a single store in Rogers, expanding outside Arkansas by 1968 and throughout the rest of the Southern United States by the 1980s” (Wikipedia, “History of Walmart”).

5. The BHL forum that contained Gary Chartier’s account of left libertarian views contained criticisms, along similar lines to mine, by Daniel Shapiro, Steve Horwitz and David Gordon.

6. https://www.pgpf.org/budget-basics/who-pays-taxes

7. "Socialist” has multiple meanings. I use it here for the state socialism supported by the 19th century state socialists whose modern descendants the book’s argument is targeted at.