Book of the Week: Kevin Carson on the Mutualist Political Economy, excerpts

We continue our publication of excerpts from Kevin Carson‘s significant book, which we have read, and strongly recommend.

SELECTION THREE, From Chapter Three, “Time Preference and the Labor Theory of Value

Böhm-Bawerk for the most part stuck to an ahistorical treatment of the actual origins of the distribution of wealth, taking as a given that the propertied classes were in a position of having surplus property for investment as a result of their past thrift or productivity. Often he did not address the issue at all, but simply assumed the present distribution of property as his starting point. What, then, are the capitalists as regards the community?–In a word, they are merchants who have present goods to sell. They are the fortunate possessors of a stock of goods which they do not require for the personal needs of the moment. They exchange their stock, therefore, into future goods of some form or another….

 What, then, are the capitalists as regards the community?–In a word, they are merchants who have present goods to sell. They are the fortunate possessors of a stock of goods which they do not require for the personal needs of the moment. They exchange their stock, therefore, into future goods of some form or another….

Böhm-Bawerk was far too modest on their behalf, in ascribing this possession of present goods to “fortune.” Far from being, as a class, the passive recipients of mere good luck, the capitalists have MADE their own luck. And the history of this, their good fortune, is written in letters of blood and fire….[But as Böhm-Bawerk portrayed it], the propertyless laboring classes, like the capitalists, just happened to be there; perhaps, like Topsy, they “just growed.”….

Why the laborers might lack individual or collective property in their means of production, or be unable through cooperative effort to mobilize their own “labor fund” in the production interval, Böhm-Bawerk did not say. Why the capitalists happened to be in possession of so much superfluous wealth, he likewise did not speculate. That the bulk of a nation’s productive resources should be concentrated in the hands of a few people, rather than those of the laboring majority, is by no means a self-evident necessity. Böhm-Bawerk himself accepted it as altogether unremarkable. For the cause of such an odd situation, therefore, we will have to look elsewhere than in his work.

The answer lies not in economic theory, but in history. The existing distribution of property among economic classes, about which Böhm-Bawerk was so coy, is the historic outcome of State violence.
SELECTION FOUR, Introduction to Chapter Four, “Primitive Accumulation and the Rise of Capitalism”

This school of libertarianism [i.e., vulgar libertarianism] has inscribed of its banner the reactionary watchword: “Them pore ole bosses need all the help they can get.” For every imaginable policy issue, the good guys and bad guys can be predicted with ease, by simply inverting the slogan of Animal Farm: “Two legs good, four legs baaaad.” In every case, the good guys, the sacrificial victims of the Progressive State, are the rich and powerful. The bad guys are the consumer and the worker, acting to enrich themselves from the public treasury. As one of the most egregious examples of this tendency,
consider Ayn Rand’s characterization of big business as an “oppressed minority,” and of the Military-Industrial Complex as a “myth or worse.”
The ideal “free market” society of such people, it seems, is simply actually existing capitalism, minus the regulatory and welfare state: a hyper-thyroidal version of nineteenth century robber baron capitalism, perhaps; or better yet, a society “reformed” by the likes of Pinochet….

Vulgar libertarian apologists for capitalism use the term “free market” in an equivocal sense: they seem to have trouble remembering, from one moment to the next, whether they’re defending actually existing capitalism or free market principles. So we get the standard boilerplate article… arguing that the rich can’t get rich at the expense of the poor, because “that’s not how the free market works”–implicitly assuming that this is a free market.
When prodded, they’ll grudgingly admit that the present system is not a free market, and that it includes a lot of state intervention on behalf of the rich. But as soon as they think they can get away with it, they go right back to defending the wealth of existing corporations on the basis of “free market principles.”

SELECTION 5, Chapter Nine.  “Ends and Means”  Section A–Organizing Principles

The Cost Principle


The cost principle is central to mutualist economics. That means that all costs and benefits of an action should be internalized in the actor responsible for it–or in other words, that the person consuming goods and services should pay the full cost of producing
them. The cost principle does not require an authoritarian government to apportion costs in accordance with benefits. It requires only a non-coercive marketplace, in which all transactions are voluntary. Given that, the market actors themselves will engage only in transactions where the benefits are sufficient to pay for the real costs. The most important thing is to avoid hidden costs, or externalities, not reflected in price.
Every single evil of capitalism we examined in Part Two of this book can be traced, in a sense, to a violation of the cost principle. In every case, the benefits of the action were divorced from the cost, so that the person benefiting from a particular form of action did not bear the costs associated with it.

Government, in its essence, is a mechanism for externalizing costs. By externalizing costs, government enables the privileged to live at the expense of the non-privileged. But every such intervention leads toirrationality and social cost.

For example:Because labor does not keep its own product, and the disutility and the output of labor are not internalized by the same individual, there is a crisis of overproduction and under-consumption and a need for further state intervention to dispose of the surplus product.

Because labor does not own its means of production, the process of capital accumulation works against labor instead of for it. Instead of investment being the decision of a worker to consume less of his own product today in order to work less or consume more tomorrow, it is the decision of a boss to invest some of the worker’s product today so he can receive even less of his product tomorrow. Instead of an improved standard of living for the worker-owner, increased productivity results in unearned wealth for the owner and unemployment for the worker.

Because large corporations do not pay the full cost of the factors they consume, they consume irrationally and inefficiently; because the inefficiency costs of large size are externalized on the taxpayer, they are able to grow beyond the point of maximum efficiency. At the same time that American goods are produced at many times the energy and transportation costs actually needed, the country faces chronic energy shortages and
transportation bottlenecks.

It is only through the free market, organized on the basis of voluntary exchange, that the cost principle can be realized. The law of cost operates through the competitive mechanism, by which producers enter the market when price is less than cost and leave it in the opposite case. In a free market, the price of a good or service is a signal of the cost entailed in providing it. Because costs are on the table, reflected in price rather than hidden, people (including business firms) will only consume goods and services that
they are willing to pay for.

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