“Free Market Capitalism” is an Oxymoron
Posted by Kevin Carson on Jul 17, 2010 in Commentary • 31 commentsIt’s pretty much standard for the chattering classes — both liberal and conservative — to refer to something called “our free market system,” also known as “free market capitalism.” To the extent that the right-wingers at Fox and CNBC or on the editorial page of the Wall Street Journal advocate some purer form of “free markets” in contrast to the existing economy, what they mean is essentially the present model of corporate capitalism without the regulatory or welfare state.
But the form taken by the existing capitalist system that we live under owes precious little to free markets. From its beginnings in the late Middle Ages, it has been shaped by massive and ceaseless intervention and enforcement of privilege — much of it breathtakingly brutal — by the state. To adapt a phrase from Orwell, the past has been a boot stamping on a human face.
The state played a central role in creating the defining characteristic of capitalism as we know it: the wage system. Had free markets been allowed to develop peacefully, with the peasant majorities remaining in control of their land and with free access to the means of subsistence, labor markets would likely have taken a much different form. Employers would have had to compete with the possibility of self-employment, available to the vast majority of the population. But thanks to Enclosures and similar land expropriations over a period of several centuries, the majority of the population was turned into a landless proletariat totally dependant on wage labor for its subsistence.
As if this weren’t enough, the British state imposed totalitarian social controls on the working class in the early days of the Industrial Revolution to reduce the bargaining power of labor. The Laws of Settlement, for example, acted as a sort of internal passport system, forbidding workers to leave their parish of birth in search of better terms of employment without permission. The Poor Law authorities then came to the rescue of employers in the underpopulated industrial North, by auctioning off laborers — cheaply — from the parish workhouses of London.
Over a period of several centuries the European powers brought most of the Earth under their subjection and imposed similar land expropriations and social controls on the peoples of the Third World, and looted the mineral resources and raw materials of most of the world.
A wide range of thinkers, from the free market anarchist Lysander Spooner to the Marxist Immanuel Wallerstein, have pointed out historic capitalism’s continuities with feudalism. Capitalism, as a historic system of political economy, was really just an outgrowth of feudalism with markets grafted in and allowed to operate in the interstices to a limited extent.
The state also played a central role in the rise of corporate capitalism from the late 19th century on. The railroad land grants created a single national market in the U.S., externalizing the costs of long-distance distribution on the taxpayer, and led to industrial firms and markets far larger than would otherwise have existed. Patent law and assorted regulations passed during the Progressive Era served to cartelize markets under the control of a handful of oligopoly firms.
In the twentieth century, the state played a growing role in absorbing the surplus output of overbuilt industry or guaranteeing an overseas market for it. The leading industrial sectors were state creations: the automobile-highway complex, civil aviation, the miliitary-industrial complex and outgrowths like miniaturized electronics and industrial automation.
The neoliberal economy of the past twenty years is overwhelmingly dependent on the draconian enforcement of “intellectual property” law. The dominant sectors in the corporate global economy — software, entertainment, biotech, pharma, agribusiness, electronics — are all almost entirely dependent for their profits either on “intellectual property” or direct subsidies from the state. The central function of the U.S. national security state since WWII has been to make the world safe for corporate power through the overthrow of unfriendly governments.
Both the statist right and the statist left, for their own reasons, equate the “free market” to corporate capitalism, and promote the myth that corporate capitalism as we know it is what would naturally have emerged from a free market absent state intervention to prevent it. The statist right want to defend the legitimacy of big business, and the statist left want to make you think you need them to defend you against big business.
But the exact opposite is true. Big business has been a creature of the state from the beginning. And genuinely free markets would operate as dynamite at the foundations of corporate power.
And that’s exactly what those of us on the free market left want to do.
Individualist anarchist great Lysander Spooner's classic critique of the U.S. Constitution: "No Treason No.6: The Constitution of No Authority" in the new and handy Pocket Subversion Edition. Also featuring Roderick T. Long's "Libertarian Anarchism: Responses to Ten Objections". 
Oh I get it, because you can’t be free in Capitalism?
Ha ha.
I guess it makes sense the statist left and right would be unable to see our modern situation as anything other than “free market capitalism”; I mean, not only does it allow them to ignore the interventions that they are responsible for, but also gives them a justification for increasing and prolonging these justifications. And maybe, just maybe, it’s impossible for those stuck in the statist paradigm to see anything outside of that paradigm at all.
I’m glad you just finally outright said it Mr. Carson, bravo.
Excellent work, again!
Toovagoo: nope, you can’t—not if you define “capitalism” the way Carson does here, and certainly not if “capitalism” means “the economic system we have now,” which is distorted both by past acts of large-scale aggression and by the ongoing maintenance of privileges for the well-connected.
Western thought defines economic progress as an increase in the standard of living. According to one of the most effective reformers alive today, Hernando De Soto of the Institute for Liberty and Democracy the ability to own land does the most good in raising families from poverty.
Capitalism is a term coined by Marx to contrast his utopia with the rich west. The free market implies a state of laissez faire economics impossible in an egalitarian state without population control and politically correct liberals with political power.
I just finished reading Chomsky’s Profit Over People, and this piece dovetails nicely. Surprisingly, while abusing the term “free market”, Chomsky does eventually admit that the current system is nothing of the sort and Washington’s support for said system is merely an illusion; “free market doctrine for you, protectionism for the US corporate elite”. If anybody is interested, and can stomach Chomsky, I would highly recommend Profit Over People for more insight into US neoliberal policies.
“As if this weren’t enough, the British state imposed totalitarian social controls on the working class in the early days of the Industrial Revolution to reduce the bargaining power of labor [sic]“.
That would be more accurate as “… social controls typical of totalitarianism on the working class in the early days of the Industrial Revolution that reduced the bargaining power of labour”. It wasn’t totalitarian, in that it did not attempt to bring everything within the scope of the state – although totalitarian states typically have similar controls, as part of bringing everything within their scope. And, it wasn’t “to”, since that wasn’t the object of the exercise but an incidental effect; the actual purpose, in which it succeeded, was to reduce the burdens spilling onto successful regions from the poor moving there and some of them needing to be supported on the local rates.
“…looted the mineral resources and raw materials of most of the world”. Well, those were mostly not being used; under first user notions, those that weren’t being used were properly acquired.
“A wide range of thinkers, from the free market anarchist Lysander Spooner to the Marxist Immanuel Wallerstein, have pointed out historic capitalism’s continuities with feudalism. Capitalism, as a historic system of political economy, was really just an outgrowth of feudalism with markets grafted in and allowed to operate in the interstices to a limited extent.”
That’s plain wrong – because it rests on the common confusion between feudalism and the post-feudal arrangements that were used to buy out feudalism and get support on side for the regimes that grew up after the Middle Ages and lasted into the Age of Revolutions. What revolutionaries called feudalism was actually not, and it was actually that ersatz version that connected to privileged capitalism. It’s as wrong and misleading to call that feudalism as it is to call what is around now capitalism.
“And genuinely free markets would operate as dynamite at the foundations of corporate power”.
Personally, I suspect it would not act so abruptly but rather after the manner of ringbarking a tree. There would be a die off, but some organisations might maintain a level of de facto function for decades.
Free market capitalism is only an oxymoron insofar as you accept the statist definition of capitalism. What you are really saying is that “free market state capitalism” is an oxymoron, which is perfectly correct, since anything connected to the state is by definition incompatible with the free market. However, capitalism in it’s purest form only means a system in which the appropriation, formation and investment in capital goods is done by individuals or private organizations. By this definition, the real oxymoron here is “state capitalism”, since a state by definition is a monopolist organization which forcefully and violently interferes with the capitalist actions of private individuals; so capitalism and the free market are explicitly dependent on eachother. Capitalism without a free market (such as state capitalism) is only faux capitalism, and a free market without private appropriation, formation and investment in capital goods (i.e capitalism) is only a faux free market.
[...] Beating the statists with Carson-ogens. I repost this, in full, something I’m not in the habit of doing, but will make an exception here purely because it’s one of the best things I’ve ever seen on C4SS. [...]
Between the main article and Christian’s comment above — these really highlight the lack of regularity in how terms are used in politics and economics. These also highlight how Agorism is sometimes thought of as right wing, sometimes as left. Very strange indeed.
I like Agorism as a term because it is fresher and cleaner, and not nearly as muddled as the terms capitalism, socialism, free trade, free market, democracy, liberalism, conservatism. Nominal usage, real usage, your usage, your enemy’s usage — it really makes a mess of things.
[...] 17 July 2010 | C4SS [...]
You mention enclosures, but you leave out the violence, state sponsored or spontaneous crowd but incited by ruling elites using pulpits for example. This is a bigger sadder part of your story.
The Congo situation to day is also about created a new class of wage slaves, de-racinated from generations of village and family life to be miners now for conflict metals for Chinese electronics factories.
You leave out what the Brits did to the Irish for 500 years? Closed down schools and churches and made the oldest literate society in Europe illiterate for generations. That ultimately got all our industrial infrastructure tunnels and canals built in the USA for folks like Vanderbilt, JP Morgan, Rockefeller, Carnegie.
What Bismarck did to rural Catholics after the social collapse of 1840s? All to create wage slaves in the Prussian Industrial Miracle? The social collapse of Austro-Hungary or the collapse of Italian principalities sent millions off the land to these shores to enable US capitalism.
Look at what they’re doing to our own people today, financial terrorism that will make people desperate in a few more years and prepare them for more war that benefits nobody but oil company shareholders.
Add to that Jim Crow in the American south to keep the Northern Mills, Shippers and Bankers in addition to the Southern Aristocrats in a profitable Cotton business. Add Anti-Semitism which conveniently relegated European Jews to the job of banker/money changer, putting them in the hot seat to blame for the natural market booms/busts of unregulated capitalist cycles. That effect of market bubbles was known since Babylonian times, and is encoded on stone somewhere in Iraq (if we didn’t conveniently allow that history to be looted or destroyed, that is).
Look at what our government has been doing in Afghanistan for 30 yrs so that place is ripe and rife for the taking. And the funding of Wahhabism in Pakistan by Saudi rulers so that country is hobbled and torn by sectarian religious strife. Weapons provided by USA of course. Diddo Kashmir.
There is a lot more insidious in all this than just British Enclosure laws. We should probably look forward to more of this hear as our capitalists need cheap unskilled non-organized workers to do more extraction in the 50 states. They’ve dismembered all our environmental and labor laws. Undermined our courts, and now hobbled our economy. So, the set up is there. 100M Gen Y kids under the age of 24 will need a lifetime of jobs. The AZ Anti-Latino thing is just the start of the violence they can seed since they own the media.
Can you look into the role of the Fed Reserve in enabling WWI perhaps? That was really good for American business, the fortunes from which are still playing with the campaign finance and 501c3s to keep this violence game going around the world, and now increasingly here.
@Christian – Thank you for your comment; my feelings exactly. Let the pseudo-conservatives twist and warp our language all they want, but “free market capitalism” is not an oxymoron–it’s the goal of liberty-loving constitutionalists.
As to the phrase, “our free market system”–well, that’s just plain ignorant. One of my favorite articles is Walter Williams’ “Laissez-faire Economy? You’ve Got to Be Kidding.” (http://www.deseretnews.com/article/1,5143,705260502,00.html?pg=1)
Thanks again.
[...] “Free Market Capitalism” is an Oxymoron Posted on 19th July 2010 by Mike Powers http://c4ss.org/content/3202 [...]
[...] Bureaucracy http://c4ss.org/content/3202 [...]
How can big capitalist business survive in a free market without all the protection cost of so many minority privileges in the expense of the majority (which will be a very expensive protection cost) ? I mean how likely is it the majority to work for the minority of population, since in a truly free market (free from massive coercive monopolies of ownership and control) most would be able to own and run their own business? Wouldn’t cooperatives and collectives practically dominate? Besides is capitalism the only type of firm of a market?
Christain said:”Free market capitalism is only an oxymoron insofar as you accept the statist definition of capitalism.”
You’re starting off with a false premise, there’s not just a statist definition of capitalism but a history of it as well, accepting that the current system is capitalism means one must be anti-capitalist in that sense. Though not completely anti-capitalist as there are other senses of the word.
“What you are really saying is that “free market state capitalism” is an oxymoron, which is perfectly correct, since anything connected to the state is by definition incompatible with the free market.”
You’re spot on here at the very least, Carson is saying historically that capitalism has been an added feature of statism and in that sense it has nothing compatible with it with the free market.
“However, capitalism in it’s purest form only means a system in which the appropriation, formation and investment in capital goods is done by individuals or private organizations.”
Why does capitalism have a “pure” form? Do other ideologies have pure forms? And if so what are they? Is socialism just pure governmental oppression? I thought that was the systems of nazism, fascism, totalitarianism and the state in general is about as oppressive as you can get.
Private organizations are not neccessarily capitalistic, the workers can have complete control over a private organization and there doesn’t need to be any boss or managerial board either nor a board of directors, all of that is in a private group and it certainly is not “capitalistic”.
“By this definition, the real oxymoron here is “state capitalism”, since a state by definition is a monopolist organization which forcefully and violently interferes with the capitalist actions of private individuals; so capitalism and the free market are explicitly dependent on eachother.”
Huh…how does that work? Just because the state may get in the way of individuals and their private affairs does not necessitate that capitalism is the friend of any freedom loving person. In fact the state also gets in the way of public affairs such as marriages, protests, requiring licensees for both and many other public things such as driving or in some cases doing drugs for medical reasons.
Is socialism then also dependent on the free market if we’re to throw out that the private sphere=capitalism and the public sphere equals socialism?
“Capitalism without a free market (such as state capitalism) is only faux capitalism, and a free market without private appropriation, formation and investment in capital goods (i.e capitalism) is only a faux free market.”
You’ve yet to really coherently defined capitalism such as Carson did here or has explained it before.
I don’t think “state capitalism” is an oxymoron at all. capitalism is the accumulation of capital. i don’t see why whoever collects it determines its nature? The kings bounty was a form of capitalism. The more important issue is the use of force. What difference does it make who collects or enables the collection of capital if force is used? The determining factor is whether we have “forced” capitalism or unforced or free capitalism.
free market capitalism may be an oxymoron, we don’t really know. since we have never had the two existing together, we don’t even know if they would. in a true free market, capital may not even collect at all, certainly not as it does at present. most capital today is “preserved” by state laws and force. capital in the hands of the true producers might go away quickly.
how long can a guy keep his surplus apples around when he has too many trees for his own use? better to trade them out before they rot!
A quick look at a decent dictionary will clear up most of this confusion.
“Capitalism: An economic system based on the private ownership of the means of production, distribution, and exchange, characterized by the freedom of capitalists to operate or manage their property for profit in competitive conditions.” (Collins English Dictionary)
Hopefully, that’s clear. “State capitalism” is indeed an oxymoron. Of course the state can confiscate capital and use it, so in some extremely broad, twisted sense, that might be called capitalism. In a discussion forum, though, sticking to generally accepted definitions will make the exchange of ideas easier.
@Karen: Thank you for the definition; hopefully that will help clarify the discussion.
@Nick:
“… there’s not just a statist definition of capitalism but a history of it as well, accepting that the current system is capitalism means one must be anti-capitalist in that sense.
That argument his inconsistent. Yes, there is a history of statist capitalism, but it seems you are then equating that with capitalism, and claiming that the current system is capitalist. It is true that the current system has many capitalist characteristics, but it is still a system of state capitalism which, while similar, has several differentiating characteristics – most prominently that the state can trample private property rights.
“You’re spot on here at the very least, Carson is saying historically that capitalism has been an added feature of statism and in that sense it has nothing compatible with it with the free market.”
I agree, but again you are equating capitalism as used by the state with capitalism, which is an equivocation. The defining characteristic which makes state capitalism incompatible with the free market is the state, not capitalism.
“Why does capitalism have a “pure” form? Do other ideologies have pure forms? And if so what are they? Is socialism just pure governmental oppression? I thought that was the systems of nazism, fascism, totalitarianism and the state in general is about as oppressive as you can get.”
I suppose “pure” might not be a proper term for this. In any case, what I mean by capitalism in it’s “pure” form is the defining characteristics of capitalism, namely property rights. State capitalism is not “pure” because it is capitalist to the extent that citizens are allowed to hold property, but with the added characteristic that the state has the right to interfere with those rights. A more proper term of the current system would rather be capitalist statism, which is actually not an oxymoron as opposed to state capitalism.
Regarding your last question, yes and no. Socialism, nazism, fascism and totalitarianism are all oppressive systems, because they are all different variations of statism.
So to sum it up; the defining characteristics of statism is oppression; the defining characteristic of capitalism is private property; since oppression necessarily interferes with private property, capitalism is logically incompatible with statism; thus, so called state capitalism is in fact not a variation of capitalism, but a variation of statism.
Karen: The problem is that definition is ahistorical and fairly recent. “Capitalism” was used much more straightforwardly by the classical political economists (i.e. through Ricardo and Mill) to describe the actually existing system of their day–the historic system which had emerged from the Old Regime at the end of the Middle Ages. And the term was used by radicals of the same period (including radical free marketers like Hodgskin) to describe a system of political economy dominated by capitalists, in the same way that the Old Regime was a system dominated by landlords. “Capitalism” was later adopted as a synonym for “free market” in the polemics of people like Mises, Lane and Rand because of its in-your-face value.
I think “capitalism” is a poor term for the free market because it names the system after one factor of production in particular. To the extent that the Right refers to the free market as “capitalism,” I think it reveals an unconscious bias toward the owners of capital as a disproportionately virtuous interest. Think of the implications if the free market were referred to as “laborism” because, after all, in a free market labor would be free and entitled to its full returns. The idea that anything that benefits capitalists is “capitalistic” is arguably a justifiable inference from the very choice of the name.
And it doesn’t help matters that mainstream “libertarianism” is widely identified in public consciousness with groups like Heritage and the ASI, which do in fact take that very position: that contracting government functions to nominally “private” corporations with government protection and guaranteed taxpayer revenue streams is some sort of bold step toward “privatization.”
P.M. Lawrence: The ref. to “feudalism” was simply the use of conventional popular terminology for the Old Regime and domination by the landed classes (as in Marx’s chattel slavery -> feudalism -> capitalism sequence). I’ll stipulate to your critique on grounds of strict historical accuracy.
Re extraction of natural resources, owing to word limit constraints I tend to make one phrase do a lot of work. Into the reference to “looting of natural resources,” you can also read the use of political coercion in securing privileged access to extraction rights, the use of forced labor and other native concessions, the imposition of colonial and neocolonial policies forcing TW countries to export natural resources as their primary source of foreign exchange for buying manufactured goods from foreign capitalists, etc.
Probably the author of dictionary is a capitalist, as it denies the statist history of the use of word of capitalism.
Wow…spinnin’ our wheels here. I think I’ll bow out of this site, but thanks for the chat, everyone!
Christain said:
“That argument his inconsistent. Yes, there is a history of statist capitalism, but it seems you are then equating that with capitalism, and claiming that the current system is capitalist. It is true that the current system has many capitalist characteristics, but it is still a system of state capitalism which, while similar, has several differentiating characteristics – most prominently that the state can trample private property rights.”
I’d concede that the current system is a collusion of state guided accumulation of capital while workers are given privileges as well by the state and society is as well, it’s a mix of state-capitalism and socialism, not strictly one or the other. Private property rights does not equate to capitalism, an individual theory is not equal to an economic system it may be more prevalent under a certain economic scheme but that does not make it equal to or should be used synonymously.
“I agree, but again you are equating capitalism as used by the state with capitalism, which is an equivocation. The defining characteristic which makes state capitalism incompatible with the free market is the state, not capitalism.”
It’s not capitalism as used by the state but capitalism as it has always existed.
“I suppose “pure” might not be a proper term for this. In any case, what I mean by capitalism in it’s “pure” form is the defining characteristics of capitalism, namely property rights.”
Why is the mainstay of capitalism private property? Everyone believes in private property this is nothing central to just capitalism, socialists believe in private property as do communists they both just call it something else like everyone else does. So I don’t think private property is useful distinction for capitalism in any sort of sense, free market or otherwise.
“State capitalism is not “pure” because it is capitalist to the extent that citizens are allowed to hold property, but with the added characteristic that the state has the right to interfere with those rights.”
No form of state is “pure” in fact the goal isn’t purity to begin with so let’s trash that term. The goal is to come as close to as much equal freedom for all as much as possible.
“A more proper term of the current system would rather be capitalist statism, which is actually not an oxymoron as opposed to state capitalism.”
They both sound like the same to me, so I guess you’d have to elaborate on this one.
“Regarding your last question, yes and no. Socialism, nazism, fascism and totalitarianism are all oppressive systems, because they are all different variations of statism.”
I don’t agree that socialism is necessarily oppressive, socialsim is an ideology that benefits society at large through the principles of certain kinds of organization usually marked by democratic influences, worker control, greater cultural freedoms and less state control on the economy. This sort of socialism was basterdized by the Bolsheviks because they KNEW socialism had such positive connotations and exploited the masses (And everyone else) by saying the USSR was “socialist” but it certainly was not in the classical sense that Josiah Warren, Benjamin Tucker, Thomas Hodgeskin used it.
“So to sum it up; the defining characteristics of statism is oppression; the defining characteristic of capitalism is private property; since oppression necessarily interferes with private property, capitalism is logically incompatible with statism; thus, so called state capitalism is in fact not a variation of capitalism, but a variation of statism.”
I don’t see that as working and I’ve explained this elsewhere on my responses so you’d have to explain to me how only people who advocate capitalism advocate private property because I don’t see that as being true in the least.
Kevin:
Exactly right, the problem is that Rand, Mises and others tried to bring back capitalism as a “good thing” when it never was one for the peasants, the workers, or the poor in general.
In a true free market, the wage system would be replaced with… what exactly, Mr. Carson? Are you really gonna expect me to believe having to work for wages wouldn’t be inevitable? Dude, we have 300 million people in this country! China has almost 1.5 billion. There’s just not enough land or resources for them to all be agrarian. I mean, how would an advanced economy possibly develop without some kind of money or exchange system? It sounds like theoretical pie-in-the-sky bullshit to me, this mutualism nonsense. I’m all for getting rid of statist capitalism, but why should we replace it with anarchist socialism or Marxist dogma? That’s no alternative.
The labor theory of value is fallacious. Value of a product is SUBJECTIVE, dependent mainly and/or only on what customers will pay for it. Labor by itself has little value, only insofar as you can increase or add to productivity. Productivity, however, is something that CAN be measured objectively. If someone spends their whole life and works their ass off making something, but then society doesn’t want that product, why would their work matter? It would be like their work didn’t happen at all, so where’s the value?? Or how about if your parents give you an allowance for doing the chores? No parent is gonna say, “Well, you worked your ass off, even though you screwed up, so I’m gonna give you the money anyway.” So why should that fly in business? It sounds like immature, spoiled-child nonsense.
Labor is and always will be a MEANS of production, not production itself. It is but one out of many factors, and to treat it as the god of an economy is idiocy. Labor doesn’t mean shit unless it actually produces stuff society wants.
Brandon: Re the labor theory of value, I suggest you address the actual theory and not strawman caricatures of it. You might start with chapters 1-3, here:
http://www.mutualist.org/id47.html
There’s a difference between the existence of wage labor and the existence of a wage *system*. I believe that absent artificial property rights and artificial scarcity, the labor market would tend to be a seller’s market rather than — as it is at present — a buyer’s market. Workers, even when they worked for wages, would be able to meet a larger share of their total consumption needs in the informal and household economy, to retire earlier, to work fewer hours, and to ride out longer periods of unemployment in search of more acceptable employment opportunities. And in their workplaces, as a result, they would have increased bargaining power regarding the terms of employment and the conditions under which they worked.
I’m not sure where you got the idea that I’m opposed to money or exchange as such.
“Surprisingly, while abusing the term “free market”, Chomsky does eventually admit that the current system is nothing of the sort.”
john “goodiemonster”
Err…that’s not something Chomsky’s admitting. It’s one of his main points, repeated over and over. It’s like saying, “Marx does eventually admit that labor is sometimes exploited” or “Newton does eventually admit that gravity plays a role…”
“Labor is and always will be a MEANS of production, not production itself. It is but one out of many factors, and to treat it as the god of an economy is idiocy.”
One out of many factors? There’s human labor and nature — that’s about it. Capital is the result of labor — so I’m not sure why it wouldn’t be subject to the exact same “critique”. I sincerely have no idea how you could possibly create a defense of historical capitalism — or even capitalism in general– based on this.
Otherwise, how exactly does this relate to the essay, which is a historical analysis of the rise of capitalism, and the state’s involvement in it? Who was treating labor as the “god of an economy”? What in god’s name does that have to do with anything?
What exactly in the essay do you disagree with?