Peter Joseph MailBin: QUESTION: Joseph, I am writing regarding the foundation of The State. I am confused on your views about how the state is an “outgrowth of the market.” I am a Ron Paul type libertarian and I see the state as a system of force/coercion and it seems to me (and the growing libertarian community) that reducing or even removing state power will stop the war violence and state oppression and open up free trade so more people can gain from the open market. It seems really random for you to equate a true free-market that is based on open competition without coercion>>to the “state” institution which is one huge system of force. The problem today is not capitalism. It is crony capitalism! Melaine>>> ANSWER: Given I used to be a Ron Paul libertarian I think I have learned a lot from the libertarian mindset… and how naive and truncated it is when it comes to economic/social reality and the causality set in motion by the market itself. The confusion you have is very simple to overcome… If you throw off the shackles of the biased, necessarily narrow-minded frame of reference inherent to your understanding of free-market theory and how it applies/extends in the real world. As I explain in this video youtube/watch?v=9F0AtKeExOA the state is nothing more, in its core framework, than (1) a property protection/acquisition institution and (2) a means of legal organization to assure all actors on the economic stage adhere to basic rules. (1) When settlements occurred in early times, armed forces naturally existed to protect the tribe/village/town/city/country from “foreign” invaders who would threaten the material wealth of that settlement. Likewise, those armed forces would act necessarily in an “imperial” manner (offensively rather than defensively) if resources ran scarce in their settlements, motivating violence against other settlements. Not pretty… but this is/was the nature of survival. Today, examples such as the Western invasion of Iraq for energy resources and geopolitical reinforcement for future assurance of resource security continue this obvious trend. Nearly all wars in history have an undercurrent around property and material gain. (2) As far as a rule structure of market economics, it needs to be pointed out that all governments exist as they do; with the preferences and platforms they do - because of the presupposed economic basis of the society. Feudalism’s legal structure was based around land relationships and a set social hierarchy; Mercantilism’s legal structure was based around royal/state power moving traders for their own purposes in near total regulation from the top down; Capitalism’s legal structure is based around property rights and organizing trade freedoms/limitations with a focus on open competition overall from the bottom up; Communism’s legal structure - as it existed - organized around general Marxist principles regarding ‘means of production’ control and other derived values/assumptions contrary to capitalism too complex to list here. The disagreement you pose isolates the market’s theoretical behavior from the very manifestation/existence of state power itself and denies why the state is there at all. The market is based around respect for property rights. If don’t have property rights – you don’t have a market system. Since this respect most certainly does not come naturally (it isn’t positively reinforced) due to the scarcity encouraged, self interest-based, competitive and advantage seeking individuals and institutions “battling” to “earn a living” and ”gain profit”, the “state” forces a legal structure that says “all you people must adhere to this game board in your market dealings so we can assure some degree of fair play.” Now, I will pause for a moment and ask you: How do you keep sanity in a “warring” mentality system based upon winners and losers; a system that prefers scarcity for increased profits; a system that prefers the cheapest possible labor and the highest possible prices; a system that has little incentive not to induce fraud to one degree or another- without a legal structure? I have heard some argue that the legal arrangement could exist by private companies/lawyers and not the state. That’s interesting… but worthless. You can’t have private legal firms make up the rules and assume everyone will simply agree to those terms. There has to be a universal set of laws in a nation that force competing interests to adhere. So, one way or another, some kind of legal (or state) system with a mutually accepted (imposed) set of rules must be in order. Anything less is total insanity (I’m winking at you Anarcho-Capitalists!). I also hear people speak of moral principles to self regulate the market, as though everyone would just “play nice” if they learned as such. This is crazy absurd since that value system is not structurally reinforced at all. Nothing in the market system promotes “fairness” since it is based on advantage. This assumption is just pointless moral relativism and 100% subjective. So, if the free-market needs property rights to be respected (and it does), a larger order force must assure this… and from the market comes the state. And what is the great flaw you ask? Simple: In the theory of true capitalism, the market is assumed to be able to mediate all decisions. One should be able to use money for any purpose and, in the context of Ayn Rand theory; a kind of “competitive self-regulation” will be the “invisible hand” of the money god to assure everything comes out in a balanced and optimized way – just as long as everyone is free to compete without coercion. But wait…. Why can’t I buy coercion? If we accept that some kind of legal system of mutually accepted rules must exist to assure some sanity in the game – why can’t I use money to influence those rules? Seems like a great means of competitive advantage and it is totally acceptable in the theory of a true free-market So, how do you try and stop the “free-market” from hurting the “free-market”? You use laws. Can laws be changed by the free market? Yes. Conclusion: (a)There is no possibility for a free market OR (b) the market is totally free as it is and doing exactly what it is intended to do. Either way you define it, there is no other permutation. Libertarian economics simply can’t win. Money rules the world. I say we have the most free-market we ever will have… ever: The freedom to inhibit the freedom of others. There is no such thing as crony capitalism… there is only capitalism. Crony capitalism is a continuum fallacy. Free Market = Need for Laws = State power = Corruptible State Power = Free Market! (or something like that...)
Posted on: Tue, 23 Sep 2014 04:27:03 +0000
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