Is Capitalism a Political rather than an Economic system?

As I keep thinking about capitalism and socialism, and keeping in mind Max Weber’s characterization that the necessary condition for capitalism is the presence of a proletariat (= people who are deprived of access to means of production), it strikes me that the existence of a market economy is not essential (i.e., not necessary). Using John Searle’s insights about institutional facts, capitalism as a market system is a consequence of a law which forbids people from free access to subsistence land. And the law making power is the result of the government structures which are in existence. The market economy is, thus, the result of having governments which pass such laws. Capitalism is then rightly to be understood as a market economy which is created as a byproduct of a law which bars people from a free access to subsistence land.

The only one who focused on this political fact was Bernard Shaw, who said the following: “To begin with, the word Capitalism is misleading. The proper name of our system is Proletarianism.” [See Capitalism = Proletarianism] Barring people from doing whatever, can be called a political or coercive act. In that case Proletarianism [aka Capitalism) is a political system.

I know that people who defend Capitalism focus of the market transactions between a employers and employees, pointing out the benefits to the economy — technological innovations, mass production, and better living conditions. And this is true, except for the existence of the unemployed, the underemployed, and poverty.

I tried to understand the characteristics of capitalism (=proletarianism) by the model of two persons marooned on an island. [See Three forms of slavery: chattel slavery, serfdom, and wage-slavery]

There was one transaction between Crusoe and Friday which has bothered me. This is the situation in which Crusoe and Friday share the island equally, but Crusoe has a rifle and bullets, and the island if full of wild animals which can easily be hunted with the rifle. Crusoe offers Friday the use of the rifle on the condition that Friday is to provide to Crusoe half of all his kills. Friday agrees because he will be better off hunting with a rifle rather than by some more primitive mode. He will have more food with less effort, and more leisure. Here we have a situation in which Crusoe reaps a profit from Friday without doing any work himself. We can also call this an employer-employee relationship.

My point here is that you can have a market economy without slavery, serfdom, or wage-slavery. Or, put otherwise, a market economy can exist without Proletarianism (aka Capitalism).

What prevents Friday from making his own rifle and bullets?

On the island, nothing.

On the mainland, a government with a patent law!

Labor Theory of Value

Dr. Richard Wolff debates libertarian Antony Sammeroff on the Labor Theory of Value on the Lions of Liberty Podcast, hosted by Marc Clair. This is a Marxist economist debating a free market libertarian.

I admire Richard Wolff, and his efforts to bring Marx’s views into the evaluation of capitalism. I also use Marx for this purpose. But we approach Marx from different perspectives. Wolff focuses on the labor theory of values, and defines exploitation as the surplus value obtained from an employee by the employer. I cannot dispute the meaning of “exploitation” in this technical, stipulated sense. But the word “exploitation” also carries a negative sense of injustice. Libertarians object to this additional sense of injustice, by pointing out that the employer-employee relation is based on an agreement — a contract. And, as long as both abide by the agreement, no injustice has been done.

There is an injustice, but, in my view, it does not come from the employer and his profits; it comes from the political system which bars people from free access to subsistence land — making land into a sellable and taxable commodity. This forces people into a market economy, and there is no choice here — everyone has to enter the market economy. Both employer and employee are victims from this perspective. Compare this with two gladiators thrown into the arena. One is strong; the other weaker. One wins; the other loses. One is an employer; the other an employee. The injustice is in the fact that both gladiators have been forced into the arena.

I see no reason to bring into considerations anything other than the principle of supply and demand to account for a labor market and wages. For example, in my field of philosophy, there was and is an oversupply of eligible teachers — as there is in most fields of learning; consequently, colleges have found that it is more economical to hire “adjunct” teachers than full-time teachers. Let’s take a look at the salaries at City Colleges in Chicago, where I worked as an adjunct. Full-time teacher salaries range from roughly $60,000 to $100,000 per year. So, let’s say, an average full-time teacher gets $40,000 for teaching four 3-credit courses per semester. From one perspective, this is $10,000 per 3-credit course; while the adjunct will get at most $3,000 for teaching the same course. Furthermore, an adjunct cannot teach more than 3 such courses per semester at this school; so, for 2 semesters, he can make at most, at this rate, $18,000, as contrasted with a full-time teacher who will get $80,000. Is this just? Is this a case of exploitation?

Take other cases of popular entertainers and sports stars. Such people can earn millions — and it has nothing to do with the hours of labor; it has to do with the willingness of a large number of fans and audiences to pay large amounts to view and hear them. Let me cite a recent case. Jordan Peterson recently refused to participate in a debate with Richard Wolff at Boise State University in Idaho. His reason for refusal to participate is that he wanted a minimum of $50,000 for a 1-hour debate, which the students could not pay. Apparently, this is the minimum which he gets for his public appearances. Is this just? By the principle of supply and demand, this is what he can get; and so he takes advantage of his popularity to demand whatever he can get. If he is exploiting, he is exploiting his popularity.

I see employers in this same light of trying to get the most compensation within the market system. They will pay their employees the least they can; so that they can garner the maximum profit. I find it incoherent to think here of injustice. The concept of justice makes sense only relative to a free agreement. But when considering agreements, we must also take note of the circumstances. If there is no access to free subsistence land, what alternative does a person have? Starve, beg, steal, or work at whatever is available. Both the employer and the employee have been thrust into the arena of the market, just like gladiators, and they must do the best in the circumstances. The injustice is that both employers and employees have been forced into the market economy against their will. We have all been barred from a free access to subsistence land by governments.

So, unlike Wolff who focuses on the labor theory of values, I focus in Marx on his discussion of “Primitive Accumulation” (chapter 26) in Part VIII of Capital, where he talks about the conquest and forceful eviction of people from land. It is this barring of people from a free access to land which creates a proletariat class which must work for wages — a class of wage-slaves.

Richard Wolff keeps repeating that most economists celebrate capitalism, and that one must also take into account the critics of capitalism, especially Karl Marx. This reminds me of al-Ghazali who wrote The Incoherence of the Philosophers (Tahafut al-Falasifa) which was critized by Averroes in his The Incoherence of the Incoherence (Tahafut al-Tahafut). If Marx is al-Ghazli, then we have a slew of Averroeses who have criticized portions of Marx.

And the portion of Marx which Richard Wolff emphasizes is the labor theory of values, this is also the portion of Marx which has received the most criticism. I will cite three sources for this criticism. The first is Bertrand Russell in his German Social Democracy (p. 15). The second is Karl Popper in the second volume of his Open Society and Its Enemies (chapter 20, p. 170), the third is Alexander Gray, The Socialist Tradition (chapter 12, p. 310.)

Are worker-owned enterprises antithetical to capitalism?

Richard Wolff objects to capitalism because of the employer-employee relationship which has “exploitation” — meaning that the employer gets more money than the employee. His alternative is to have worker-owned businesses.

From my perspective, although such a co-op as Mondragon makes for a democratic workplace and a desirable place to work at, it does not constitute an antithesis to capitalism — even if all businesses are co-ops. Why? If other things are left as they are (ceteris paribus), then presumably these co-ops will compete as do all businesses for markets, with the resulting consolidation of successful enterprises as occurs now.

But the crucial question which is not answered by a system of co-ops is what happens to the unemployed? Where is the safety-valve? In the United States in mid-nineteenth century, the north-eastern coast of the United States was overpopulated with immigrants. The Homestead Act of 1862 was enacted as such a safety-valve. [Whether it worked or not, is a separate issue.] The point was that giving people a free access to subsistence land was the right solution. And not giving the freed slaves access to 40 acres and a mule in 1865 was the wrong solution.

Richard Wolff, apparently does not see that the necessary condition for capitalism — of whatever form — is the deprivation to people of free access to subsistence land.

If people have access to free subsistence land, they can bargain with employers or co-ops for living conditions preferable to a self-sufficient life on a piece of land

Bertrand Russell: “. . . the fundamental concept in social science is Power, in the same sense in which Energy is the fundamental concept in physics.”

Bertrand Russell, Power: A New Social Analysis, 1938.

Socialism or Primitivism?

Socialism, as understood by Karl Marx, is the organization of industrial production for the benefit of all. And a book like that of Peter Joseph, The New Human Rights Movement: Reinventing the Economy to End Oppression, 2017, is fundamentally making the claim that we already have the industrial capacity and technological capability for a free maintenance of the whole world. What is needed is a new organization of these productive forces.

I agree, but how are we to get there?

The governments and economy are in the hands of capitalistic corporate oligarchs who are not interested in moving towards this or any other utopia.

The other consideration is that a great portion of the world is presently living off subsistence farming, and the incessant wars and impending ecological collapse may force us to devolve to a primitive subsistence mode of survival, and the best advice is to prepare for an eventual collapse (as, for example, in the Middle East, parts of Africa, etc.), and to learn basic survival skills:

Is the United States really interested in a liberal (democracy) hegemony?

In the videos below, John J. Mearsheimer claims that the United States is interested in promoting liberal democracies in the world (i.e., liberal hegemony). I would qualify this in the following way. Promoting liberal democracy is a sufficient — though not a necessary condition — for promoting an American capitalist hegemony. Why? Because the sort of “liberal democracy” which the capitalists want is where there is a president or a prime minister — a single individual who can be bribed or threatened, and who can be helped to be elected. The United States is not interested in promoting Swiss style democracy, for example. And, moreover, for capitalist interests, promoting dictatorships is also a sufficient — though not a necessary condition — for promoting an American capitalist hegemony, as long as the dictator cooperates with the American capitalist hegemony.

The rhetoric of liberal democracy as promoting individualism, inalienable rights, tolerance, community, and peace is a rationalization (a smoke screen) for promoting capitalist interests.

John Mearsheimer assumes that countries like the United States operate on the basis of ideologies. On the contrary, countries like the United States reflect the interests of a President and his friends. Ideology is a propaganda rationalization or smoke screen for economic reasons.

Bush’s invasion of Iraq was for control of oil and for a depletion of United States’ surplus of armaments; not for liberal democracy. And Trump’s saber rattling over Venezuela and Iran has nothing to do with promoting liberal democracy. It may be just a strategy for securing his reelection. I find it odd that Mearsheimer ignores the deeds of single leaders with their private interests.

Origins of the State, Land and Population

In order to determine the origins of a State, one must have some conception of the nature of a State. Let us start with the Wikipedia entry for “State (polity).”

“A state is a compulsory political organization with a centralized government that maintains a monopoly on the legitimate use of force within a certain geographical territory.”

For my purposes, this definition will do. However, from my individual perspective, what is important to me and to everyone else, is the fact that we cannot occupy a piece of subsistence land for free, but must submit to the dictates of a centralized government.

How is the “State” different from a tribe, which also may prevent me from occupying a piece of land? Let us express the difference in the following way. If I am a member of a tribe, then I will be allowed to occupy a piece of land for free. But, if I am a member of a State, I will not be allowed to occupy a piece of land for free.

From this perspective, the question is: how is this transition from tribal free occupancy to a State non-free occupancy possible? This is the problem which has been labeled the problem of “primitive accumulation.”

One approach is to point out the difference in human natures. Some are gifted (i.e., intelligent, diligent, thrifty, etc.); others are not. OK, so the gifted will do better with their land holding than the less-gifted. Still, the less gifted will not work for the gifted unless their reward is equal or better than what they can accomplish on their own piece of land.

But the situation in a State is that many would be better off if they had access to free subsistence land; but they do not.

Despite the different theories of “State formation,”, only one is, for me, convincing. This is the conquest theory, which has been best formulated by Franz Oppenheimer in his book The State.

I urge the reader to read the book himself. The author is clear, brief, reasonable, and convincing. I will only focus on what to me is the convincing, deductive argument.

He starts with the following assumption:

“No one will work for another if he can do as well or better by living off subsistence land. All teachers of natural law, etc., have unanimously declared that the differentiation into income-receiving classes and propertyless classes can only take place when all fertile lands have been occupied. For so long as man has ample opportunity to take up unoccupied land, "no one," says Turgot, "would think of entering the service of another"; we may add, "at least for wages, which are not apt to be higher than the earnings of an independent peasant working an unmortgaged and sufficiently large property"; while mortgaging is not possible as long as land is yet free for the working or taking, as free as air and water. Matter that is obtainable for the taking has no value that enables it to be pledged, since no one loans on things that can be had for nothing.”

  1. Person x will not work for person y, if x can do as well or better on his own.
  2. x can do as well or better on his own, if he has free access to subsistence land
  3. There are z acres of available fertile land in the world.
  4. There are m number of people in the world
  5. z/m = g,
  6. In order to subsist, x must have access to h acres of land
  7. g > h
  8. Therefore, there is enough subsistence land for each person

Oppenheimer gives us the statistics for available land in Germany as well as in the world, at the time when he wrote (1914); concluding that there is ample land for everyone. But despite this, we are prevented from taking free occupancy by States.

The rest of the book is a narrative of conquests of one group of people by another. I need no further convincing, since the history of man is a history of war and conquest.

I want to conclude with the observation that since Oppenheimer wrote, we have a massive increase in populations and a decrease in available subsistence land. When Oppenheimer wrote, he gave 1.8 billion people in the world, and estimated 181 billion acres of available land, which would give each person roughly 100 acres. We have now 9 billion people, which, if that same amount of land were available, would give each person 20 acres, which is still sufficient for subsistence.

But this amount of land is not available. How much is available? Is there enough for subsistence for each person? If not, then this is my criterion for determining that we have an overpopulation problem. [That the problem can be solved by, let us say, vertical farming, is another matter.]