Libertarianism

For libertarian socialists and anarchists, one of the most frustrating trends of thought in the thirty years has been the development of a new libertarian capitalist movement. This movement revolves around the ideas of thinkers such as Friedrich August von Hayek, the Austrian economist and political theorist and Ayn Rand, the founder of Objectivism and somewhat ordinary novelist. While many people may have never heard of von Hayek, most people would be familiar with the influence of his ideas.

Since the late 1970s, the ideas of people who share the view of von Hayek, have produced actions which have seen numerous attacks on the most unprivileged and disempowered members of society. In several instances, the people who propagate these ideas are backed by existing capitalist organisations and seek to discredit or deflect the criticisms of anarchists and other libertarian socialists. More recently, there has been an increase in the number of people who call themselves anarcho-capitalists.

The results of embracing this laissez-faire ideology are there for us all to see all around the world. With the demise of the Eastern bloc capitalists have felt secure in declaring that there is no alternative to capitalism and have acted accordingly. We have seen a return to the nineteenth century rhetoric of Social Darwinism. The gains made by workers' struggles of the twentieth century have been attacked; unemployment has been characterised as a result of laziness and genetic inferiority.

These attacks have been carried out in the name of ‘the market’. Those who support ‘the market’ believe that people lose their jobs because they are no good at them, not because companies or government decide to get rid of jobs. In this manner, distinctly ideological and political decisions are given authority by referring to an apparently neutral arbiter (some would argue god) called ‘the market’. ¹ 

Compassion has disappeared, as minority groups are attacked for causing economic depression, the decay of moral society and drug problems, while greed has become a common motivational tool for us, the toiling masses.²   Despite the rhetoric of establishment figures that the ‘greedy 1980s’ are behind us, our social, economic and political systems remain heavily involved in a greed culture, as can be seen by the numerous attacks on the wages and conditions of workers, while parliamentarians, bureaucrats and managers take pay increases. Apart from these outcomes, the attempt to fuse libertarian beliefs with a conservative outlook is inherently faulty and dangerous in its implications for human prosperity and perhaps even human survival.

The thesis of the right libertarians, is that capitalism is the best kind of society that humanity can live in. Indeed, the capitalist order is portrayed as the most co-operative and equitable society that can exist. Democracy and liberty are deemed to be inherent to capitalism. Only capitalism can defend and keep these values alive. In a manner characteristic of economists, who seem to have a particularly selective vision of history and anthropology, Hayek contends that:
 

…our civilization depends, not only for its origins but also for its preservation, on what can be precisely described only as the extended order of human co-operation, …known as capitalism…  ³

In an argument harking back to Social Darwinism, Hayek argues that the capitalist order has arisen spontaneously, through “evolutionary selection”. In doing so, Hayek brushes under the carpet, the outright oppression and terror carried out by capitalists and their allies in order to install capitalism, as we know it today.

Through Hayek's gloss the market is rendered neutral, superior and organic. It exists as God exists in Christian theology, a precursor to our world, unable to be challenged. The market is thus the natural order. Those disagreeing are forced on the back foot as they have to argue outside of the normal boundaries of thought, a difficult prospect. However, almost recognising the fallacy of their contentions, Hayek and the right libertarians seek to provide a rational explanation of what they call the Market.

The market is the optimal distribution system, because it informs people, via its price signals, of those activities that will maximise their contribution to the economy. ⁴  The argument that these capitalist libertarians make is that by acting self-interestedly in a money economy, people maximise the wealth of other people to a degree that no other form of society can match. ⁵   The market is, in Hayek’s words,
 

…the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention authority…it disperses with the need for conscious social control…it gives the individuals (sic) a chance to decide whether the benefits of a particular occupation are sufficient to compensate for the disadvantages and risks connected with it. ⁶  

In the typical manner of the libertarian capitalists, the state is the only source of evil and control, whereas the anarchists and other libertarian socialists realise that the state and capitalism are both enemies of freedom and that there are also older social barriers to liberty. In recognition of this an anarchist or libertarian socialist society would aim to produce a social control over all kinds of production and reproduction that is not arbitrary, nor the cause of the massive inequalities and poverty caused by capitalism in all its forms.

Let us continue to examine the liberal or libertarian explanation of society and economics. Norman Barry argues that market societies are not zero-sum games where there are either winners or losers, but a “co-operative activity for the mutual benefit of the participants.” ⁷   While this is indeed true to an extent, Barry’s ideas are very problematic. One wonders whether unemployed people, who have lost their job because of ‘market forces’, or people forced off their land by its acquisition by a mining company, would draw any comfort from Barry’s comments, for they have gained precious little from the influence of the market. There are groups of people who win far more often than other groups and who gain a much more substantial share of the winnings than others. This is why the rich become richer and the poor comparatively poorer. As economic power is a determinant of social power and control over ones own life, this relative wealth differential produces horrible social outcomes for a large number of the Earth's population.

Hayek’s claim that economic growth benefits the poor more than the rich would provide the poor of the world little reassurance either. These platitudes do nothing to put food in the stomach of the exploited, nor do they give people control over their lives. Indeed, they are plain wrong and to accept their truth is to ignore reality. Hayek’s analysis of the world and its history is very selective. In the 1980s and 1990s, the world has seen numerous governments come to power that have presided over countries where the rich have become richer and the poor, poorer. As mentioned before, one of the major engines of capitalism is comparative poverty, something which grips the Western world as much as the Majority world.

This comparative poverty is a major contributor to ill health and depression, which shorten people's lives and lessen the enjoyment of life. In his attack on state socialism (and all other kinds of socialism as well), The Road to Serfdom, Hayek argues that it is the poor and not capitalists who benefit from large profits. ⁸  Hayek goes further by making an extremely paternalistic and insulting claim, typical of the rhetoric of nineteenth century capitalists –
 

Capitalism created the possibility of employment…the process [of the market] enabled people to live poorly, and to have children who otherwise, without the opportunity for productive work, could hardly have grown to maturity and multiplied. ⁹ 

Although industrialisation undoubtedly brought benefits to people, it also brought hardships; Hayek conveniently ignores the ills caused by the capitalist economy both historically and at the time he was writing. The Libertarian conception of history is also heavliy tainted by a focus on capital and capitalists. In Hayek's view of history, all agency is provided by capitalism, none by the workers or peasants themselves, leaving the advances in the conditions of workers and peasants to be marked down as the magnificent benefits of capitalism.

No agency is ascribed to non-market or non-capitalist elements. Also ignored is the fact that by ‘enabling’ people to have more children, capitalists provided themselves with a ready made workforce that had to accept low wages and brought capitalist products. The oppression and exploitation of workers is completely ignored by Hayek, as are the huge profits made from this oppression and exploitation. At times his arguments verge on hagiography as when he declares the market to be “the most complex structure in the universe.” ¹⁰ 

The capitalist libertarians choose to ignore the fact that many factors other than the market keep a society going. Many of these factors are social factors such as mutual aid, co-operation and socialist organisation. To end the most oppressive tactics of the capitalist class and its allies, workers had (and still do) to organise themselves against the capitalists. Those who organised were subject to intimidation, thuggery and death. In most cass, capitalists gave nothing to the exploited and oppressed unless they were pressured to.

Without unions, agitation and co-operation, locked factories would be all over the world instead of only the poorest nations. Hayek and his ilk ignore all the social frameworks that have existed (and continue to exist despite all the best efforts of  Capital and the State) in order to lessen the impact of capitalism upon ordinary people.

These unrestrained advocates for capitalism are often oblivious to the assumptions they make when advocating worship of the market order.  Hayek implies that the market contains some mechanism to remove inequality already before the institution of a market economy. Market advocates argue that the market dilutes power in society, so as to render it impossible to be wielded by individuals at the expense of others.

Any fool can see that this argument is total nonsense. The market does not come into existence from a social, economic and political vacuum. In this market mantra, the rich are revered and given qualities they don't actually possess. We are to believe that the rich and powerful did not become rich and powerful because they already possessed market power or gained access to it, but because they were either lucky, or (more likely in the 'cheerleader' version of capitalist theory) extremely skilful. ¹¹ 

The capitalist libertarian view of freedom is an extremely negative one. Quite simply put, freedom is the absence of coercion. This concept of freedom involves an intellectual and moral slight of hand, as the capitalist market has its own coercion. Consider how much freedom any self-employed contract worker has if they have to work long hours to pay off debts on equipment or a mortgage. Green and Hayek argue that this concept of freedom is not inferior to positive concepts, which stress the ability to be able to do what one wants.

Hayek argues that positive conceptions of freedom have led government to become too powerful and individual rights to be ignored. ¹²  While this may be debatable, in many cases these attacks on freedom by governments have been in 'defence of the market' as much as the actions of ruthless authoritarian socialist dictators. By asking us to embrace the market, Hayek ignores the fact that if you do not have a job in the market economy, then you are frequently not free in any real sense, as your actions are increasingly dictated by a lack of money. While unemployment is not necessarily debilitating, unemployed people are confronted with a lack of status, lack of mobility and discrimination because they have no money and no job. Hayek’s version of freedom is freedom for those with money and power.

The connection between capitalist self-interest and social well being is highly questionable. In a capitalist society, self-interest may entail that you do not gain what is in your best interest, but what capitalism allows you. It is only when you accept capitalism as the best of all possible systems, that you accept that self-interested actions in a capitalist society bring about the best ends for individuals and society as a whole.

While it is true enough that self-interested action can and often do lead to socially acceptable ends, Hayek and those like him take a great leap of faith. Hayek asserts that “…money is one of the greatest instruments of freedom ever invented by man”, and that it is “money which is existing society opens an astounding range of choices to the poor man, a range greater than that which not many generations ago was open to the wealthy…” ¹³  This conception of money is highly inaccurate and distinctly patronising.

Firstly, a lack of money can be, as noted above, a great barrier to freedom in a money economy, as there is a privileging of capitalist labour forms above all others and non-monetary compensation is discouraged by an all pervasive money economy. Priviliging money ignores the fact that, it may have been possible for non monetary forms of organisation and non-capitalist and non-hierarchical forms of organisation to develop a standard of living for poor people way and above that given to them by the capitalist society.

Indeed, we can see how many people have been disadvantaged by a switch to an economy where money is not only the most common form of exchange but its form is more and more often a form of electronic funds transfer. The continuation of this libertarian capitalist mantra of the market has seen an increase in dislocation all over the world, as the capitalist money economy fails to provide for the mass of humanity.

The choice that is apparently provided by the market economy provides little reward for those not valued by the market economy. The young, pensioners, the poor, peasants, workers and the environments which support life on the earth do not benefit from having the choice between ten equally poor brands of breakfast cereal, nor do they benefit from having to choose between one polluting car that costs hours to purchase or another.

The fact is that under a market economy, the majority of the world's population has experienced little more freedom than they had previously. Indeed, the freedoms they have attained have often been despite the market and due to vigorous social activism to gain various freedoms. The market often offers a choice between distinctly bad options, doing so in opposition to other proposed forms of social organisation, which would seek to offer less damaging, and more libertarian outcomes.

In any case, the market Hayek talks about offers choices that are highly dependent upon politics, with workers having little choice of whether they work in a collective manner in a worker owned workplace, or a capitalist enterprise. In many areas of the world, employees cannot even choose to exercise freedom of association, even in the most ‘market driven’ of economies, the United States.

By focussing on economics, which is largely a matter of mathematics divorced from historical, anthropoligical and political considerations, the libertarian capitalists keep from having to address the unpalatable elements of capitalism. Any problems with capitalism are deemed to be 'political' problems, as if it is possible to separate economics from other elements of society.

This separation also allows economic disparities to be discounted. While the economic aspects of our lives do not determine everything that we do, it is ridiculous to claim that “…economic loss will always deprive us only of what we regard as the least important of the choices we are able to satisfy.” How reassuring to know that the inability to pay for medical services is a mere “least important” choice. Is facing imprisonment because of a debt a ‘less important’ choice too, along with life itself? The words of Hayek, and the arguments of the current libertarian capitalists lack an understanding of what it means to live in poverty or anything approaching poverty.

A lack of money, even with welfare benefits being paid, means one has to go without essential goods and services. The libertarian capitalist rhetoric provides a convenient sop for the elites of the world, portraying poverty, hunger, illness and suffering as choices made in a rational market environment. The elites can also sleep well knowing it was not they who caused such misfortune, but the rational and impartial ‘market.’

The libertarian capitalist agenda draws heavily from the fantasy world of the classical and neo-classical economists. Whereas religious practitioners, weather forecasters, and used car sales assistants are generally regarded with some scepticism in our society, these economists continue to be accorded an undeserved and uncritical respect by all arms of the media. This is despite many of their claims and models failing to make any connection to real experience and common sense.

For instance, it is claimed that under market conditions, people are always free to take their business to another person, and that prices are not controlled by anyone. ¹⁴   This argument is completely ahistorical and ignores all evidence of monopolisation under market conditions, where ‘competition’ often ends in either monopoly, duopoly or severe oligopoly and thus price fixing. It is pretty obvious to most people that there those who seek to operate enterprises under non-capitalist organisation face a great battle. The world of perfect competition, widespread information and production mirroring demand is a fantasy, as is the notion of the supposedly intrinsic relation between capitalism and freedom.

The capitalist libertarians have a distinct allergy to anything that might be regarded as socialist. Hayek falsely described all socialists as ‘virulently nationalist’ and anti-humanists. In the mind of the capitalist libertarian, internationalism and humanism are the products of individualist thought and have nothing to do with collectivist doctrines.¹⁵  

The claims of the capitalist libertarians do not stand up when one makes only a cursory examination of the various strands of anarchist and libertarian socialist thought. Despite Hayek’s argument to the contrary, ¹⁶  anarchists and libertarian socialists do not condemn human activities done for their own sake. The stereotype of socialist as party pooper just does not stand up when one considers the emphasis upon enjoyment, sexual liberation and social freedoms made in the anarchist, situationist and other libertarian socialist arguments.

Indeed, the libertarian capitalists, in their desire to paint themselves as the only true libertarians, frequently refuse to make any acknowledgement of a libertarian ethos not based in capitalism but socialism. This sophistry is carried out by the deliberate confusing of socialism with the state capitalism or authoritarian statism of the Soviet Union, China et al.

Even in 1979, Hayek argued that “…the various socialist movements are the only large organised bodies which appeal to many, wanting to impose upon society, a preconceived design…” ¹⁷  This argument lacks any integrity when one considers the construction of capitalist society and the nature of the anarchist and collectivist libertarian movements throughout their history.

Firstly, Hayek ignores the massive mobilisation of people by conservative sources of authority, such as the Church, business and racist groups. In addition, even if the libertarian capitalist purports to be socially progressive, the truth is that capitalism involves the inherently oppressive manipulation of workers, and the extraction of value from workers by capitalists who seek to benefit from the misery of others.

Capitalism cannot function without hierarchy, or it is no longer capitalism. Profit cannot be extracted without a hierarchy that means workers are unable to control the means of production. The ‘free’ market has been, and is, frequently shown to be reliant upon the oppression of workers by the police and armed forces, and the imposition of laws upon ordinary people that benefit the elites of society. Given that multinational corporations, governments and non-government bureaucracies of this world are all intertwined and frequently co-operate to carry out ‘preconceived designs’, one can only assume that ‘preconceived designs’ are ok, so long as they work in the favour of capitalists.

It is the ultimately dishonest approach of the libertarian capitalists that must be resisted. In many cases, the libertarian capitalist argues that corporations and capitalists do not have the same powers that labour has. The anarchist would agree with this argument if it were talking about potential power, rather than about power in the capitalist society. However, the argument of the libertarian capitalists, frequently takes the Thatcherite and Reaganite form of union bashing. Hayek’s comments are most helpful:
 

It is inexcusable to pretend that …in particular the pressure which can be brought about by the large firms or corporations is comparable to that of the organisation of labour which in most countries have been authorised by the law or jurisdiction to gain support for their policies. ¹⁸ 

These are the words of a true reactionary, rather than that of a libertarian, and reveal capitalist libertarianism for what it is – mere capitalist apologetics. Since the Second World War, labour organisations have found themselves under constant attack from business and government, as the gains made by organised labour are deemed too much. The living standards of the United States in particular, are heavily dependent on oppression in the Majority world.

In any case these gains are rapidly being lost. In reality, real wages and conditions have declined in most of the world, shattering the myth of a future ‘golden age’ of a shorter working week and jobs for all. In Australia, at the times of the highest profit margins, employment and real wages have been lower than at times of less economic prosperity.

What Hayek neglects to tell us reveals that the free market as framed by him is about business being allowed to use labour as it wishes, without workers receiving, or being allowed to use any form of protection. While unions may considerable power, one would have to search long and hard for a country where it could be argued that business and government are dominated by unions. In Australia, successive Labor and Liberal governments have overseen legislation that has taken away the power of workers to collectively organise and take action against employers.

While Australia may be represented as a union stronghold, the reality is that big business and multinational corporations and their non-government lackeys, such as the IMF and the OECD, have far greater control over life in Australia than the union movement. In many cases, right wing labour leaders have overseen and encouraged the weakening of labour power, with the resultant loss in real wages and conditions and general loss of power for the rank and file of union membership.

It is clear that corporate interests have more and more control over the world. While the libertarian capitalists may welcome this as conducive to freedom from government, the anarchist and libertarian socialists reject both the state and capitalism as being against freedom.

When the Mabo decision was handed down by the Australian High Court, multinational mining (and other) companies threatened to cripple the Australian economy if the Keating government codified the Mabo decision. While there are several multinational corporations in the world’s biggest 100 economies, there are no unions that possess a Gross National Product that exceeds that of an entire country. Claims that African famines are the result of socialism, fail to recognise that the capitalist system rewards those who exploit the Third or Majority World. ¹⁹   It is hard to see how following a genuinely socialist philosophy could make the Third World much worse off as the libertarian capitalists would argue. ²⁰ 

Many of Hayek’s arguments do not produce the classical liberalism he purports to represent. Even Barry, an admirer of Hayek, admits that “Hayek has produced a persuasive case for liberal conservatism rather than philosophically justified classical liberalism.” ²¹   Like many libertarians, when push comes to shove, Hayek is not a libertarian at all, but merely an apologist for capitalism. As Samuel Brittan points out, the final volume of Law, Legislation and Liberty contains an epilogue that condemns permissiveness, contradicting Hayek’s self-professed social liberalism. ²²  Brittain comments that “…his [Hayek’s] ethical position is highly conservative.²³

As mentioned earlier, Hayek believes social institutions are not in any way influenced by conscious human actions. Forsyth argues that “Hayek’s conception of human society is founded on…the analogy between it and a natural order such as a biological organism.” All in all, this argument seeks to legitimate capitalism as a ‘natural’ order, that is not in any way ‘unnatural’. Hayek’s ‘liberalism’ places humans in a position where they must recognise and submit to the “quasi-biological processes of human society.” The Hayek and libertarian capitalist view of human society allows and encourages human society to remain controlled and dominated by small groups, particularly wealthy groups.

Thus in real terms, the libertarian capitalist ethos is inherently conservative. Libertarian capitalism accepts the existing conditions of capitalism as the foundation for a capitalist order where racial, social, political and other hierarchies will remain unless they are compatible with the interests of the wealthy few with the power to hire their own private police force and army.

The argument for libertarian capitalism from a ‘natural order’ is nothing more than a dressed up apologetics for the rich and the aspiring rich, who care only for the liberty to make money and profit and the ability for themselves to have the ‘freedom’ to exploit others. The freedom of the Libertarians is the freedom of the slave owner, not the freedom of the slave. By arguing from a ‘natural law’ position, the Libertarians seek to naturalise exploitative relationships by removing moral scrutiny from the operation of the ‘free market.’ They also add a moral element to social relations suggesting that changing things is an offence to the 'natural' order. However, the ‘free market’ is anything but natural and certainly undermines many of the professed moral virtues that the Libertarians argue are inherent to its operation.

The sheer fakery of the libertarian capitalist argument is revealed when it comes to their attitudes towards the rich as opposed to their attitudes towards the poor. In The Constitution of Liberty, Hayek argues that the rich advance society by “experimenting with new styles of living not yet accessible to the poor, they perform a service without which the advance of the poor would become much slower.” ²⁴ 

This is outright brown-nosing and self-interest at its best. Hayek’s argument is that the rich are actually noble because they are rich. The poor, who give the rich their profits through their labour are to be glad that they have masters, for if they did not they would not be in so good a situation.

This is the classic ‘the rich must have more, the poor must have less’ argument used to drive down wages, keep taxation low on the rich and in general keep those who aren't rich from claiming their right to the full fruits of their labour. Its an argument commonly heard from both conservatives and liberals. One struggles to think how over-eating, high disposable incomes and numerous skiing holidays can be considered noble, productive and progressive, while billions fail to live up to their human potential and starve, die, rot away in dead-end jobs or commit suicide due to unemployment.

In these times of severe environmental degradation, which threatens the integrity of human civilisation, it is also interesting to note that the attitudes of the capitalist libertarians towards environmental matters. For their arguments are heavily steeped in consumerism and place little regard to environmental integrity unless it can be sold in the marketplace. Hayek claims that:
 

To use up a free gift of nature once and for all is in such circumstances no more wasteful or reprehensible than a similar exploitation of a stock resource…. We are concerned solely with examining the belief that; wherever possible the flow of services from any natural resources should be kept at the highest level attainable.

From a social, as well as from an individual point of view, any natural resource represents just one item of our total endowment of exhaustible resources and our problem is not to preserve this stock in any particular form, but to always preserve it in a form that will make the most desirable contribution to total income. ²⁵ 

Consider for a moment the general calculation of Gross National Products. Under the definition of such calculations, the creation of pollution is considered to boost total product and increases total income where externalities such as pollution are not included in calculation. In this view of economic and environmental progress, pollution and the ultimate exhaustion of a resource is deemed preferable to conservation and alternative less polluting, but more expensive strategies. Other species and indeed we poor plebs, should rejoice and give ourselves over to industrial production for ‘the most desirable contribution to total income.’

Hayek also views human beings as an exhaustible resource. Like many economists, Hayek sees humans as a ‘labour input’, rather than actual sentient, feeling beings who can feel pain. More precisely, the average worker is merely someone who is at the whim of the market, someone who must sacrifice as ‘market forces’ decree. The rhetoric of the free marketeers is akin to that of priests demanding blood sacrifices for their hungry gods.

When we consider the ‘free market’ approach to the environment, we can see that it almost totally ignores people and animals as sentient, feeling beings whose lives depend on healthy environments. Hayek scorns the notion that unchecked economic growth could produce harm, instead arguing that combining current economic growth rates with increased populations will result in increased productivity.²⁶ 

As the libertarian capitalists make little analysis of cultural and power relations, there is no consideration of the many negative pathways that result from attempting to emulate the United States and follow the doctrines of the ‘free market’. There is no recognition that increased pollution, decreased living space, land degradation and labour exploitation will increase if something is not done to address the considerable and damaging results of surrendering to the dogmas of the libertarian capitalists.

The reasoning of Hayek and his ilk is deluded, dangerous and distinctly undemocratic. The libertarian capitalists believe that by selling our planet today that we can make a better future tomorrow. We are promised a great future, where by letting the rich pursue their goals without any restrictions, we will all benefit and enter a Golden Age of ‘liberated’ capital.

However, despite the rhetoric, the ‘libertarian’ element of libertarian capitalism is merely a smokescreen that is heavily based upon deliberate misrepresentation of what liberty really is. When the arguments of the libertarian capitalists are examined closely, the conclusion can only be that their arguments are as great a threat to human liberty as the State socialism the libertarian capitalists see as their great enemy is.

When we closely examine the ideas of the libertarian capitalists, we see clearly the problem with the argument that 'the enemy of my enemy if my friend.' In this case, anarchists and other libertarian socialists cannot really consider authoritarian socialists or libertarian capitalists their friends, for both are fundamentally opposed to the freedoms that we fight for.

For all their claims, the ideology of Hayek and those who think like him threatens to undermine any democratic and egalitarian gains that have been made in the course of human history.  The promise of the libertarian capitalist is a society of plenty without the interference of ‘big government’.

The likely reality is a world of private police forces, private armies, increased poverty, environmental devastation and a world that few people who value notions of equality, freedom and democracy could think worthy of their support.