Kevin Carson reciprocity in an (un)free market (2): the problem of artificial scarcity

We continue the publication of Kevin Carson’s critique of capitalism from a ‘free market’ perspective. Here, in the last of the two-parter, he outlines what reciprocity can mean under unfree conditions.

Kevin Carson:

“Privilege–coercion–creates a zero-sum situation in which one party benefits at the expense of the other. There is a symmetrical relationship between one party’s gain and the other party’s loss.

A monopoly creates artificial scarcity; the holder of the monopoly privilege benefits at the expense of the public, who, forced to pay for something that is not naturally scarce, are absolute losers in the transaction.

Individualist anarchist Benjamin Tucker treated state intervention as a zero-sum game: Wealth is made by legal privilege a hook with which to filch from labor’s pockets. Every man who gets rich thereby makes his neighbor poor. The better off one is, the worse off the rest are. As Ruskin says, every grain of calculated Increment to the rich is balanced by its mathematical equivalent of Decrement to the poor. The Laborer’s Deficit is precisely equal to the Capitalist’s Efficit.

Or as Big Bill Haywood said, for every man who gets a dollar he didn’t work for, there’s another man who worked for a dollar he didn’t get.

The primary effect of privileges, as Henry George, Jr. described it, is to “empower their holders to appropriate, without compensation or adequate compensation, a large or small share of the produce of labor.”

At the root of all forms of privilege is artificial scarcity. The present global corporate economy, for instance, depends primarily on the enforcement of artificial scarcity by so-called “intellectual property” (although old-fashioned land theft and eviction of peasant subsistence farmers still deserves honorable mention for its role in promoting sweatshop labor and reducing the bargaining power of those engaged in it).

Privilege is what Franz Oppenheimer called the “political means” to wealth: the creation of artificial scarcity, by enforcement of artificial property rights, and the collection of rents on such artificial property.

For Adam Smith, as John Commons observed, the disutility of labor was the cause and regulator of value. Labor’s disutility created value by restricting output of reproducible goods, when the worker considered the income to be too low relative to the labor-pain entailed in production. It regulated value by shifting labor from employments where income was low relative to pain to employments where it was high relative to pain, and thus equalizing pain per unit of income. This was also the basis of Smith’s critique of mercantilism and other forms of privilege. Privilege resulted in an unequal distribution of labor-pain per unit of income, and imposed pain on some for the benefit of others: Having identified his automatic regulator of scarcity-value with the quantity of labor-pain, Smith proceeds to inquire why it is that, upon the labor-market, the price (exchange-value) of labor does not, under existing conditions, coincide with the quantity of labor-pain delivered in exchange for the produce. All of these discrepancies we shall find to be various aspects of artificial scarcity controlled by custom, sovereignty, or other collective action, instead of regulated automatically by quantity of labor-pain…. Among these restrictions were exclusive privileges of corporations (guilds), long apprenticeship, understandings between competitors, free education at public expense, state regulation of wages, price fixing, tariffs, bounties levied in order to maintain a favorable balance of trade, and obstructing the free circulation of labor and stock [capital] by poor laws. But even if these mercantilist interferences with liberty were eliminated, there were still two other proprietary claimants, the landlords and the capitalist employers, who, even under conditions of perfect liberty, prevented the accurate proportionment between labor-pain and wages. These other two claimants, who introduced the factor of proprietary scarcity, were examples of the Common Law of Private Property. “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.”

As most of the radical classical liberals argued, much if not most nominal “private property” in land is artificial, and thus a form of artificial scarcity created by privilege. And as individualist anarchists William Greene and Benjamin Tucker showed, much of the value of capital results from artificial scarcity created by the state’s banking laws.

Thomas Hodgskin, writing in Popular Political Economy of the illegitimate “property” rights of England’s landed oligarchy, made the crucial distinction between natural and artificial rights of property. Natural property rights are simply “a man’s right to the free use of his own mind and limbs, and to appropriate whatever he creates by his own labour….” Artificial rights, he said, are “the power of throwing the necessity to labour off [one’s] own shoulders… by the appropriation of other men’s produce,” and “[t]he power… possessed by idle men to appropriate the produce of labourers….” [Popular Political Economy, Chs.

Artificial property rights in land–namely absentee titles to vacant and unimproved land–are paradigmatic of all privilege. Oppenheimer distinguished political appropriation of the land from actual appropriation, and Albert Jay Nock distinguished “labour-made” from “law-made” property. The same distinction in principle is made, in analogous manner, between natural and artificial property rights in all other areas. The same principle applies to patents and copyrights, business and occupational licenses, and every other form of privilege. In every case, the distinction is the same: natural property rights reflect scarcity, while artificial property rights create it; natural property rights secure the individual’s right to his own labor-product, while artificial property rights entitle the holder to collect tribute on the labor-product of others; natural property rights entitle the holder to a return for his contributions to production, while artificial property rights entitle the holder to collect a toll for not impeding production.

Because of the near-universal appropriation of land, most of it vacant and unimproved land held out of use, labor’s ability to create wealth for the laborer is impeded, and instead becomes a means of creating wealth for the proprietor. Artificial property rights in land give the proprietor, as a result, property rights in the labor of others

Privilege enables the holder of property rights to appropriate the productivity of nature or society for himself, and to stand in for “society” or “nature” in charging users according to their benefit from the improved land and technology that make increased productivity possible–despite the proprietor’s having done nothing to provide that benefit. The “value” of the service, the price he is able to charge for access, depends entirely on its positive utility to the buyer; so he is able to follow the standard method of monopoly pricing and target his price to the buyer’s ability to pay.

Proudhon, in What is Property?, quotes J. B. Say’s assertion that “the land is also an instrument whose service must be paid for…,” and responds: Did [the proprietor], by the efficacious virtue of the right of property, by this moral quality infused into the soil, endow it with vigour and fertility? The monopoly of the proprietor lies just in the fact that, though he did not make the implement, he requires payment for its use….

The land is productive, in the sense of creating use-value; but its productive forces are freely given by nature. They can contribute to exchange value only when the free gift of nature is monopolized. The landlord’s only “contribution” to value is that he sits atop the free gift of nature, without using it himself, and charges others a fee for access to it.

As Benjamin Tucker pointed out, “[w]here there is free competition in the manufacture and sale of spades, the price of a spade will be governed by the cost of its production, and not by the value of the extra potatoes which the spade will enable its purchaser to dig.” Only when someone has a monopoly on the supply of spades, can he charge according to utility to the user rather than cost of production.

The normal effect of market competition is for the productivity benefits of new technology to translate directly into lower consumer prices. It is only through artificial property rights that privileged sellers can charge the consumer in proportion to his increased utility, regardless of the cost of supplying the good. Patents, for example, impede the normal process of market competition by which technological innovation translates directly into lower consumer cost.

Benjamin Tucker, in “State Socialism and Anarchism,” argued on the same principle that opening up the supply of capital and land to free competition would result in their benefits being socialized. Likewise, eliminating patents and other barriers to the free adoption of innovations will result in the socialization of the fruits of increased productivity.

So artificial property rights enable the privileged to appropriate productivity gains for themselves, rather than allowing their benefits to be socialized through market competition. But they do more than that: they make it possible to collect tribute for the “service” of not obstructing production. As Commons observed, the alleged “service” performed by the holder of artificial property rights, in “contributing” some factor to production, is defined entirely by his ability to obstruct access to it.

Marginalist economics treats existing property rights over “factors” as a given, and then proceeds to show how the product is distributed among these “factors” according to their “marginal contribution.” By this method, if slavery were still extant, a marginalist might with a straight face write of the marginal contribution of the slave to the product (imputed, of course, to the slave-owner).

By the circular reasoning of marginalist economics, forbearing to impede production is a “contribution” to production, for which “service” the holder of an artificial property right is entitled to compensation from the productive labor which he helpfully refrained from impeding. And whatever the value of this “capitalized disserviceablity,” whatever the amount this tribute for not obstructing production, adds to the price of the final product, is regarded by marginalist economics as the “marginal contribution” of the privilege-holder.

Capitalism, as opposed to the free market, could not exist without artificial property rights.”

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