Thursday, June 26, 2008

Anti-Capitalism, Distopia and the Absense of the State

Once, in the days before this blog, I ended up in an email argument with an economics professor. My reward for daring to ponder the political impacts of trade liberalisation was a diagnosis. I suffered, I was told, from a latent hostility to capitalism. The only cure, apparently, was a regular dose of Hayek and Freidman.

Now I've spent a fair bit of time with doctors over the years and been told some pretty strange things about my auto-destructing body. So I'm well aware that it's natural, when on the receiving end of bad medical news, to think "no! that's not right! that's not me!" But, even taking this into account, I still think he was off the mark.

Certainly his prescription seemed unlikely to cure me of anything. Hayek and Freidman are very smart and Hayek not quite the libertarian his followers claim, but their utopian vision of unfettered markets strikes me now, as it did then, as completely unconvincing.

On the other hand, the social democracy of economists as diverse as Paul Krugman and John Kenneth Galbraith, seems like a capitalism that could and, indeed, almost does, work.

Krugman also has the best argument in capitalism's favour that I've read. This is simply a paraphrase of Churchill. Capitalism is "the worst system we've tried except every other system we've ever tried". Private property and markets, tempered by democracy and the welfare state aren't always pretty but we've lived through an awfully ugly century and maybe it's time to settle for second best.

And yet: "ever tried" and "might ever try" are two completely different things. So, at the same time time, I'm still interested in alternatives even if I'm not convinced that they exist.

In this fascinating paper on utopias and the left Erik Olin Wright provides an excellent system for evaluating leftwing alternatives to the status quo.

We should evaluate utopian projects he argues in terms of desirability, viability and achievablility.

Desirability - is the proposed world one we'd really want to live in an ethical sense?
Viability - could the proposed world ever actually work?
Achievability - could we get there from here?

One alternative to capitalism that has been proposed but never put into practice over long periods of time on a large scale (and which, therefore, emerges unscathed from the last 100 years) is Anarchism.

Anarchism certainly, I think, passes the desirability test; in an ethical sense a world free of coercion and held together by cooperation sounds beautiful, if it could work.

But could it? Is it, to use Wright's terms, viable? Maybe, if you believe in entirely altruistic human beings, but I don't. I don't believe in the opposite either (in the solely self-interested individuals of some economic theory). But surely there's enough self-interest in our psyches to necessitate some formalised coercion to prevent injustice? Maybe we could call this instrument of coercion something other than the state but that's what it would be.

One counter argument I've heard is that an anarchist world would also be a localist one. In it we would all live in units small enough that our impulse to care for our neighbours would be sufficient to hold society together. And maybe it would. But units that small, unless they traded heavily, would also be deprived of all the economic benefits scale and specialisation can bring. We might, in other words, be wealthy ethically, but materially we would be dirt poor. Maybe, then these communities could trade together? But who would regulate such trade? who would make sure it was fair? The state?

Finally, we have the issue of achievability. Even if such a world could work, could we ever create it from the one we have at present? This isn't an issue just for anarchism of course, but any major reforms, including plenty I am in favour of. And Wright's thoughts on achievability, and its relationship to viability are definitely worth reading.

Now in saying all this I am most definitely not attacking anarchists. All the anarchists I've met (admittedly a small sub group) have been kind, smart, committed people. I'm also aware in writing this that I'm no expert on anarchism so it may well be the case that I'm missing something. And I know my objections above aren't new, so maybe there are some good counter arguments. If this is the case I'd be really interested in reading about them.

Finally, I do think that there are some important insights in some anarchist thought, too. Particularly about the de-hierarchialisation of power. Insights which could provide all sorts of ideas for deepening democracy, if not actually replacing capitalism. Those thoughts, though, are for another post.


Anonymous said...

Here's an idea I put forward ages ago in a kiwiblog thread, not exactly what you're talking about.

Within New Zealand, and every other Western democracy, the government has a monopoly, the result is a tyranny of the majority. However New Zealanders do have an alternative to submission to the NZ government, they can move and be submissive to the Australian government instead (or for some the British, or American governments.

In this respect, in principle, the New Zealand government is in competition with other western governments for its citizens, especially its most productive citizens. Unfortunately, this can hardly be considered laissez faire competition as the cost and dislocation involved in the move, for many people, is considerable. Even so, it is enough for business, economists, and the population in general, to take note of what the relative tax rates and other laws between the two nations are.

Imagine a situation (think of the confederates winning in the US civil war) in which the effort to people to switch states within a nation is minor, and in which federal tax, and other legislation was also minor compared to the individual state taxes and legislation. In this situation, in principle, we could hope for there to be enough competition between the states to result in much more substantial efforts by individual states to attract those people that make a positive contribution to society, and also to discourage these people leaving. Assume that borders remain open, and that an agent, something like the Commerce Commission (also, ironically, known as the Communist Commission by some free market advocates) acts to prevent the establishment of interstate government cartels to reduce this competition.

The result is governments actually competing in a free market.

Now, we can actually take this scenario much further, and go outside the square in terms of how we view the boundaries of governance. There are several market situations, Free market, Oligopoly, Natural monopoly.
“A natural monopoly occurs when an industry in which advantages of large-scale production make it possible for a single firm to produce the entire output of the market at lower average cost than a number of firms each producing a smaller quantity.”

Examples of natural monopolies are reticulation systems, physical networks. In our society these are often managed by local government (in effect it becomes a co-operative of ratepayers/residents) to minimize the exploitation that would occur if it were privately owned.

Most of the services provided by central and state governments are not natural monopolies THEY ARE NOT GEOGRAPHICALLY BASED so once we recognize the separate roles of state and local government there is no logical reason for states within a confederation to be contiguous!
Effectively you could in switch your membership, assets and income from one state to another without physically changing address! As easily as Maori can move from between the Maori and General roles.

So we have a democratic system that frees people from the tyranny of the majority in the same way as the free market frees us from the tyranny of a market monopoly.

People, from both the left, and conservative right, who believe governments need the power to tell us what is best for us would not like such a system.

Andrew W

Terence said...

Hi Andrew,

Thanks for a very interesting comment. Funnily enough, I've pondered this line of thinking before, too

I gotta start working but might hopefully comment on it some more over the weekend.

In the meantime 5 quick points.

1. What you suggest isn't that far removed from anarcho-capitalism (at least as I understand it) where there is no state but rather competing firms who contract to provide individuals with the services they require to protect their private property. It certainly sounds nicer the way you propose, though.

2. I don't know if you've ever read about Albert Hirschman's work on exit and voice. You might find it interesting. Wikipedia is here.

3. What happens when you call your government's police force out because I'm playing my stereo loud and I call my government's police force out because your police are stealing my stereo? Or do we accept that some things, such as police and roads do need to exist as spatial monopolies?

4. How do we deal with people who choose to live as low tax payers when they are young but then move to a high tax political party when they are older and need health care cover etc?

5. Government's may be monopolies, but we temper this not only with elections but also a whole legal system of checks and balances.

6. Just, in general, I think it's definitely worth thinking over your idea in light of Wright's 3 points.