Wednesday, March 23, 2005

Libertarianism and exploitation: The true root of the class struggle

Criticisms of capitalism and free-markets that claim exploitation occurs usually involve some assumption of monopoly. Afterall, if you make such a criticism, you are essentially saying that X is able to raise the price of p for Y to whatever level he choses. In various cases, the price is the amount of work somebody has to do in order to get a wage, or the working conditions they must accept to in order to get that wage.

But since monopoly cannot occur in a free market but only in situations where there is no free entry to an industry, you are actually criticising the absence of free markets.

Imagine the most basic example of a monopoly: Two gas companies, A and B, want to pump gas into the same area. The trouble is, as A starts laying down its pipes and pumping gas, it becomes cheaper for A to pump gas than for B, because the remaining customers become more dispersed. The cheaper it is for A, the more savings it can pass on to its customers, and so it becomes even more attractive to customers than B, and its position even stronger. Eventually all, or most, of the gas in the area is pumped by A and B is shut out entirely.

Does this mean that A has a monopoly on supplying gas? No. Webster's dictionary defines a monopoly as being a business that has "exclusive control of a commodity or service in a given market, or control that makes possible the fixing of prices and the virtual elimination of competition." Gas company A cannot fix the price of its gas. The only way it has its dominant position is because it is cheaper than B. Whenever it should cease to be, then B can set up competition. So A can only raise its prices to the a price slightly less than the minimum B could charge. Moreover, B has an incentive to contiually find ways to make itself more competitive, which means reducing its prices. So A can only raise its prices to a level B is contiually doing its best to keep reducing.

On top of this, of course, we have alternatives: People can compete with A by using generators, solar power, bio-energy, etc, etc. None of these is as effective, and so more costly. But they still present an upper limit at which A will lose business if it raises it prices higher. And in all of these, suppliers have incentives to contiually try and make them more effective and cheaper.

So monopoly cannot occur in the free-market.

If many of the types of things critics describe as occuring in the real world cannot occur in a free market, then why does it occur? The answer is obvious: Because the capitalists have seen to it that there is no free market. As Benjamin Tucker wrote:

It is not enough, however ture, to say that "if a man has labor to sell, he must find some one with money to buy it"; it is necessary to add the much more important truth that, if a man has labour to sell, he has a right to a free market in which to sell it, - a market in which no one shall be prevented by restrictive laws from honestly obtaining the money to buy it. If the man with labour to sell has not this free market, then his liberty is violated and his property virtually taken from him. Now, such a market has constantly been denied... to the laborers of the civilised world. And the men who deny it are the Andrew Carnegies. Capitalists of whom this Pittsburg forge-master is a typical representative have placed on the statute-books all sorts of prohibitions and taxes (of which the customs tariff is among the least harmful) designed to limit and effective in limiting the number of bidders for the labor of those who have labor to sell.... Now, to solemnly tell these men who are thus prevented by law from getting the wages which their labor would command in a free market that they have a right to reject any price that may be offered for their labor is undoubtedly to speak a formal truth, but it is also to utter a commonplace and a cruel impertinence.
(Benjamin Tucker, "The Lesson of Homestead, Liberty, July 23, 1892)

Sure, the relations between capitalists and workers - and often capitalists and their customers - is an exploitative one. And it is a mockery to say that because workers in this situation where free markets are denied to them chose their occupations, that they are not exploited, and their condition is a voluntary one in any meaningful sense. It's like being given a choice between punched in the arm or being kicked in the nuts! One option may indeed be far more attractive, and so being able to accept it rather than the other may be a good thing. But to pretend that this is voluntary is a joke.

On this blog I hope to bring to light cases of businesses and special interests maintaining the class system of exploitation by calling for state intervention.

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11:39 PM  

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