Can libertarianism limit corporate statism?

by on November 15, 2008 at 6:17 am in Political Science | Permalink

Matt Yglesias opines (the piece is interesting throughout):

… the larger problem is that libertarianism, even at its very best, tends to suffer from an impoverished set of ideas about how
corporate domination of the public policy space might be prevented. The
political left has, by contrast, the tradition of community organizing,
a set of public interest advocacy organizations, allies in the trade
union movement, efforts to improve the quality and independence of the
civil service, and various notions about changing the methods by which
campaigns are financed in the United States. This is hardly a perfect
toolkit, and it can be enhanced in some ways by drawing on libertarian
insights, but it’s something. And libertarians tend to be either
indifferent or hostile to it, campaigning against public financing,
strong labor unions, and the civil service.

In practice, libertarianism seems to have little to say about how to
bring about political change except to work hand-in-hand with business
lobbies when the interests of business and free markets are aligned, or
else when business interests are masquerading as libertarianism.

Here is Will’s response.  In my view at the margin it would be better to have both less corporate privilege and less labor union privilege.  Maybe we have no good theory (much less a strategy) for how to get there, but surely some marginal improvements are possible and who knows maybe more.  Chile is much less corporatist than it used to be and the relatively free economy of New Zealand was never that corporatist in the first place.

"Libertarianism in practice" will be excessively pro-corporate but so are most ideologies.  Rahm Emanuel, for instance, served on the board of Freddie Mac and earned $16 million in a two-year stint at an investment bank. Wall Street has been the single biggest backer of his political career.  He won’t be pushing to destroy this sector but I don’t take those facts to be some great refutation of Obama as a President. 

Sometimes the left-wing tactics, especially supporting labor unions, are exactly what lead to greater corporatism.  Look at the forthcoming GM bailout.  Or consider France, which has strong labor unions but arguably it is also more corporatist than is the United States.

But let’s say that turning America over to the labor unions would in fact limit corporate power.  It’s still difficult to get the unions more anti-corporate power, just as limiting corporate statism is difficult.  And these two tasks are difficult for more or less the same reasons.  The bottom line is this: ultimately the "feasibility objection" may cut against very radical change, but it doesn’t cut against change in one particular direction more than the other.

j November 15, 2008 at 6:45 am

Unions and Govt. subsidies are what killed GM and GM is what killed Detroit – even though Detroit was the cause of the subsidies.

Anonymous November 15, 2008 at 8:03 am

Corporations are every bit as much government constructs as unions. … it would be denouncing corporations as vehemently as it denounces unions.

Uh, “corporations” can have many purposes and be of many sizes. Like partnerships, LLCs, non-profits, etc. All kinds of ventures are “corporations”, which are given the status of “legal person” by law.

So, what is your point? That all non-human forms of organizing activity (like corporations, LLCs, partnerships, etc.) should be denounced?

Anonymous November 15, 2008 at 8:22 am

Bigger government = bigger NGOs (corps, LLCs, non-profits, unions, etc.)

More regulation of an industry by government = more lobbyists employed by the regulated industry (see 1st Amendment)

Highly regulated industry = industry capture of regulator (eventually)

Anonymous November 15, 2008 at 9:12 am

Have the government limit the maximum size for corporations, in number of employees and also in operating capital. And the change could be done gradually.

How about if we at the same time have a maximum size for government, in number of employees and also in annual budget?

I love the whole “have the government do something” thing. Forgetting that in the US, the government gets its power and authority from its citizens, not the other way round.

And the statement that “small corporations are far less capable of government manipulation etc than large corporations, and have far less negotiating clout when dealing with individual employees.” is just naive.

Small businesses are far more susceptible to government coercion (and my local city government has demonstrated that on several occasions).

My negotiating power with individual employees is very dependent on the larger economy and who I am competing with for talent. My business’s small size has several consequences: job candidates tend to be either 1) pencil pusher / chair warmer types who seem to believe they are entitled to a job where they “work” 30 to 35 hours per week, with numerous benefits and a six-figure salary, or 2) folks who recognize that in a smaller firm they are going to get incredibly diverse experience and responsibility in a short period of time.

But what is stunning is what some of my younger hires believe they are entitled to, such as: discretionary bonuses regardless of firm or their own performance; paid time off to vote (“But, it’s a civic duty!” I kid you not.); generating value for the firm, etc.

Many of the younger hires over the last decade appear to have no clue that business revenue doesn’t merely appear like manna from heaven, that the business must generate something of value to make money. So that I can pay their salaries, my taxes, their benefits, the rent, phone bill, buy new tools when needed, etc.

There is no endowment or endless stream of donors (or taxpayers) for my small business. Revenue must be earned in a competitive market. And I bear the risk of failure. Unlike the government (federal, state and local).

Fred Thompson November 15, 2008 at 9:45 am

Does big business have very much political clout absent a political alliance with organized workers, regulatory authorities, or both? Not much. Are corporate political contributions primarily bribery or extortion? The evidence suggests the latter. The vast number of ‘small’ businesses in America have far more political influence than most big businesses. Think farmers, doctors, trial lawyers, builders, etc.

Ninja Zombie November 15, 2008 at 9:59 am

J Thomas: it might be the case that employees have a hard time finding other work under a few limited circumstances.

For instance, certain types of Ph.d. chemists have extremely limited demand for their skills, and only one employer in a given geographic area.

But that’s a very atypical situation. It is certainly not the case for low skill workers. So how do you justify unions in that case? In that case, they are merely a government granted monopoly.

Anonymous November 15, 2008 at 10:42 am

Perhaps Cato, or the “Free Staters” in NH, could demonstrate their “anti-corporatism” by assisting a government (city, county, state) in lowering the barriers to free markets preferred by “big business” and “big labor”. As suggested in Roderick Long’s piece (http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/) there are many anti-free-market regulations that favor status-quo and ever-larger corporate interests over the new tiny business. Three opportunities pop to mind immediately.

First, state and local licensing barriers should be lowered. Spending 2,000 hours in training classes before you can braid hair (using IJ’s famous example) is ludicrous. Having to be a licensed private investigator to back up a hard drive in a broken computer is absurd (see Texas). A concerted effort should be made to lower these state-imposed barriers. (www.ij.org)

Second, states and localities should simplify and lower the cost of business combinations that make sense. Legal and filing fees to form “ordinary” business arrangements should be as close to $0 as possible. There are a few well-known business structures that occur in times like we are about to experience… Someone with time on their hands and a skill needs an arrangement with someone who has a bit of money and little time. There’s no reason a state can’t have a web site with a few questions that spits out a standard form requiring signatures and a de minimus filing fee that would cover the first 2 years of existance, say.

Third, all the other “annoyances” need to be reduced or eliminated. Zoning that prohibits garage shops, for example. Or having to learn employer tax law to take on a little extra help. Or elimination of the dozens of “notice” and more substantive requirements states impose on business in favor of employees. Again, a forward-looking state could host a web application that did payroll “for free” (the hope of getting the Feds to waive payroll and income taxes seems too much to hope for, even for a short time.)

The free-market, libertarian goal is to free individuals with skills to use them without having to “find a job” or learn a ton of law or otherwise incur a lot of unnecessary costs.

Whether we’re likely to have 10% unemployment soon or not, simplifying the nightmare that is establishing a business these days will greatly help both the libertarian brand and the political subdivisions that do it. It won’t give “the little guy” an advantage over “big business”, but at least it will open a few minds to the possibility starting a small business instead of looking for a job with someone whose latent skill is navigating red tape.

J Thomas November 15, 2008 at 10:53 am

So how do you justify unions in that case?

Ninja Zombie, unions are good for union members. They are not particularly good for anyone else, except that when they negotiate workplace safety and payscales for open shops etc then there is a trickle-down benefit for other employees.

If you’re employed by a corporation that has 10,000 employees, and you negotiate over your compensation, usually the company has a whole lot more leverage than you do. It’s usually a lot easier for them to find somebody who can do your work than it is for you to find another 10,000-employee company that needs you. The corporation usually has the advantage.

I regard unions as a punishment for corporations that drive too hard a bargain. Treat your employees right and you are far less likely to be burdened with a union. Treat them too bad and you’ll get a confrontational union and in the long term you’ll suffer (and so will your employees, but they were suffering already).

Rather than reduce the number of sellers to match the number of buyers — one against one — I think it would be better to reduce the discrepancy other ways. If you’re one of a team of twenty that together provides a service, you have far more bargaining power to get your share of the money the group brings in. Unless they think you aren’t contributing much.

Your corporation with 20 employees can bargain with some other group or groups to provide services that your corporation gets paid for. If you’re doing something that would otherwise be done by 20 employees, you have more bargaining power than any one of those 20 would have. But you could get swapped out as a group, too.

Say your group contracts with somebody that’s organising 20 groups like yours. They bargain to do the functions that 400+ people do. They have more clout than 400 employees would have individually. Etc.

It might be possible to do away with employees altogether. This would interfere with the stability that employment provides, though. Employees get a stable income and stable jobs. They get the assurance that they will not be fired without good cause, if the corporation can afford to keep them. Employees get the same security that slaves used to get, but less so. Contractors have none of that, officially. Traditionally employment gave the sort of stability that people needed to raise families. One parent has a job, one parent manages the home and nurtures the children. It would be a shame if a new-style economy failed to provide long-term security for those who need it.

ScentOfViolets November 15, 2008 at 11:34 am

So, what is your point? That all non-human forms of organizing activity (like corporations, LLCs, partnerships, etc.) should be denounced?

The point, since you need it to be said, is one of consistency. If libertarians want to denounce unions, fine. But in the interests of consistency, they must also then be prepared to denounce corporations.

They don’t, and for a ‘philosophy’ that is touted for its axiomatic approach and logical consistency, this is doubly damning. Of course, CATO is known to be completely untrustworthy; most people know by now that it’s primary function is as a propaganda mill.

I’ve asked this question many times and have yet to receive a good answer. Many years ago, in the mid-70′s, I was very sympathetic to Libertarianism. Back then, it was much more philosophical, and the discussions were oriented around personal freedoms vs government intrusions like spying, obtaining credit reports, etc. But something happened somewhere between 1975 and 1980. The old guard of theorists vanished (graduated mainly) and were replaced by people much more concerned with corporate freedoms and ‘free enterprise’, unrestrained capitalism, etc. My question, is, does anyone have any idea what happened, and can anyone recommend good source material on the (actual) history of libertarianism? I’ve heard it said, for example, that the deliberate injection of institutions like CATO were the cause of this very abrupt rightward shift.

mk November 15, 2008 at 12:04 pm

It would be good to have threaded conversations. There’s a lot of text here which might just be one or two threads.

But overall, it seems like there are two basic viewpoints on this question:

1) Governance is like a pool with a lot of sharks swimming around (unions, women’s rights groups, pro-life lobbies, big corporations, etc.) Theory #1 about effecting change is: feed the sharks that want some approximation of what you want. The sharks will get more than that, because they’re sharks, and it might be something you don’t care about, or even something you don’t want them to have, but you’ll get something out of it too.

2) Theory #2 says you should yell at the sharks and not feed them until they do what you want. The risk is that they never listen to you because enough others will feed them. But if enough people want the same thing, they can all agree to withhold feed until their conditions are met. In this way you can tame the sharks.

Theory #2 may be becoming increasingly possible due to the internet.

The risk is that the collaborating humans become just like another shark. After all, labor unions probably started off as a very noble idea.

Is there such thing as a non-corruptible interest group? Or is corruption indistinguishable from the self-interest that drives all politics? Hard to say.

J Thomas November 15, 2008 at 12:48 pm

“Corporations approach the ideal size to match their economy of scale.”

No. Corporations approach the ideal size to maximize CEO salary.

Often the most profitable corporation approaches the ideal size to squelch competition. And that size *is* their economy of scale.

Occasionally that size may approximate their economy of scale for production of whatever it is they officially produce. But there’s no particular reason it should.

People tend to assume that in free competition businesses optimise some function of quality and price of their official product.

But compare with ecology. A population of any species survives in an ecological niche. There is usually some limiting factor that determines the population size. For birds that limiting factor might be nesting sites, or food supply, or predation, or in some seasons the number of mites in the nests or the relative toxicity of their food or other species which compete for the same kind of nesting site or the same kind of food etc.

When an individual bird competes with other birds, it’s competing over its ability to deal with whatever the limiting factor is. The limiting factor doesn’t have to be any one thing.

Similarly, corporations only occasionally must compete on price, quality, or quantity of product. They can compete on advertising, kickbacks, chokepoints in the distribution chain, subsidies and other legislation, employees (particularly great salesmen), prestige (companies can compete for prestige with projects that tend to drive all competitors into the ground — the survivors win), etc. They can compete for changing market niches.

So for example there’s been a repeated pattern for motels. There’s always room for a big motel chain that offers cheap moderate-quality rooms to travelers. Each chain that does so then tends to find that it can make a lot more money if it also caters to business conferences and such. Some businesses like a nice cheap motely that supplies their minimal needs. The more extras it adds the better it competes for the high-paying business, which many other chains already compete for, until it finds it has left its original niche and another motel chain takes that niche away.

One of the most important tasks for CEOs is to notice just what they’re competing over. It might likely turn out that what works for corporate survival and prosperity does not involve anything that an outside observer would think contributes to the economy.

Keith November 15, 2008 at 1:39 pm

I offer this competing vision: Extreme transparency in government, combined with very informed and intrinsically bloggers like the good folks at calculated risk, can give us effective goverment that isn’t as captured. Some day, our modern communication system could enable us to replace large parts of representative democracy with a hybrid of direct democratic and market mechanisms.

To get the ball rolling on transparency, Democrats should take the following steps:

1. Make public the reports from the Treasury regulators that were at AIG all those years. I’ll ber dollars to doughnuts that those regulators saw a big disaster a brewin’.

2. Make all gpovernment agencies involved in these financial bailouts our another reveal all of the specifics on what assets they’re buying at what price from what banks, and what positions they’re taking at what price in what businesses.

Bob Murphy November 15, 2008 at 2:03 pm

In my view at the margin it would be better to have both less corporate privilege and less labor union privilege. Maybe we have no good theory (much less a strategy) for how to get there, but surely some marginal improvements are possible and who knows maybe more.

Here’s a suggestion on strategy: When the former CEO of Goldman Sachs asks for $700 billion to dish out as he pleases, in light of an alleged disaster that he had no idea was coming just two months prior to the request, then all libertarians say “HECK NO!”

Keith November 15, 2008 at 2:36 pm

“Here’s a suggestion on strategy: When the former CEO of Goldman Sachs asks for $700 billion to dish out as he pleases, in light of an alleged disaster that he had no idea was coming just two months prior to the request, then all libertarians say “HECK NO!””

The HECK NO position you advocate certainly looked like it had the strongest support among libertarians, so we executed your suggested strategy as well as possible. Tyler was an outlier, and even he seemed amenable to a Luigi Zingales style Chappter 11 proceeding.

assman November 15, 2008 at 5:36 pm

“Even individual wealth is a government construct: without coercive protection, nobody would be able to accumulate much wealth, and all would be much more equal (albeit very much poorer.) In general, libertarians want to overlook government action and (their term) coercion when it supports their preferences, and condemn it for others.”

People would still accumulate wealth without government protection and people wouldn’t be more equal. If anything there would be far far greater inequality since without government protection you would have something like Russia or Iran…an oligarchy where rich powerful criminals syndicates control large parts of the economy and societal institutions and are easily able to exclude competitors. Rich powerful people don’t need governments to provide protection.

Democratic capitalism is probably the most egalitarian large scale system in actual practice.

John November 15, 2008 at 6:13 pm

I have trouble understanding why Prof. Cowen and others quote Matt Y so often, particularly about libertarianism or economics in general. I read his blog for some time, and it became obvious during that time that he did not understand libertarianism or much about economics. He seems to be a brilliant political theorist who hasn’t read enough about either topic, and substitutes analysis for knowledge.

boqueronman November 15, 2008 at 7:40 pm

Yglesias apparently knows nothing of the inherent divergence of interest between large corporations and small business. If he had looked at the polls of super millionaires [net worth in excess of $10 million] he would know that they intended, by 67 percent, to vote for Obama. This analysis currently available at the Eternity Road blog lays out the issue. The only thing missing here is that large corporations, and those benefiting from them, will logically migrate to either political party to protect their interests. They’ll pledge allegiance to the apparent, and afterward, actual winner.

“The Republican party, with one exception, is still largely what it was in the late 1800s, though with a ideological twist. In fact, the Republican party is pretty simple, structurally, with few of the fringe groups that characterize the Democrats (exceptions would include the libertarian gays of the Log Cabin Republicans). Essentially, there are three major factions in the current Republican party: the big-business faction, which promotes the needs of large merchants above all others; the small-government faction, which promotes freedom, and thus small government, above all else; and the social conservative faction, which promotes Christian values above all else…

But one interesting ideological twist occurred in the Republican party since the late 1800s: the idea of fascism [economic fascists want to see nominal private property ownership essentially under government control via regulation and taxation] took deep hold among the big-business faction. There are a couple of reasons for this. First, large businesses are well served by limits to their competition, particularly by raised barriers to entry and by protectionism. Second, large businesses are well served by government growth generally, as the more regulations that must be complied with and the more taxes applied, the higher the costs to be passed on to consumers; and since profit is charges as a percentage, the more absolute profit that accrues to the owners of the businesses, and thus the more control the owners will grant the business’s executives. This combination of interests made the big-business faction quite welcoming of ever-expanding government control of business, which removes the executives’ responsibility and the possibility of failure while increasing their monetary and social rewards.”

Kevin Carson November 16, 2008 at 12:34 am

Actually, the privileges of unions under the present system are not privileges of unions as such, but privileges for bureaucratic unionism on the AFL-CIO model, centered on the enforcement of contracts against the rank and file. The Wagner regime was created to domesticate a labor movement organized around direct action, and it was created because corporate employers were begging for a regime of enforcible contract to enforce stability on the job.

Although CIO-style industrial unionism went beyond the company unions of “welfare capitalism” to the extent that it allowed collective bargaining on wages and benefits, it accomplished the central objectives of the earlier company unions: (1) it eliminated the endless jurisdictional confusion of AFL-style craft unions, and (2) it guaranteed the right of management to manage.

It answered a crying need of the largest, most capital-intensive oligopoly firms: the need of what Galbraith called the “technostructure” for the predictability and stability required for long-term planning. Compared to the disruptions of sitdowns, sympathy and boycott strikes, the productivity wage raises secured by union bureaucrats were relatively minor. According to Thomas Ferguson (Golden Rule) and G. William Domhoff (The Power Elite and the State), the central coalition behind FDR’s economic agenda (represented by GE’s Gerard Swope) was made up of capital-intensive industries for which labor costs were a relatively minor part of the total cost package, but whose long-term planning processes were extremely vulnerable to disruption.

All I want is to repeal Taft-Hartley’s prohibitions on sympathy and boycott strikes, its provisions (and those of the various transportation industry LRAs) mandating arbitration and cooling off periods, and state right-to-work laws impairing the freedom to make union shop contracts. And while we’re at it, we’ll repeal the Norris-LaGuardia prohibitions of yellow dog contracts. Just leave in place the part that takes federal troops and court injunctions out of the picture, and I’ll be satisfied.

Labor needs to abandon Wagner and adopt an asymmetric warfare model of labor struggle based on open-mouth sabotage and networked resistance.

“The Ethics of Labor Struggle: A Free Market Perspective”

Russell Nelson November 16, 2008 at 1:15 am

As long as there are people who think that government power can be controlled, and there should be more of it, there will be corporations who will succeed in directing that power to their ends. So as long as Matt continues to think that libertarians will have no tools to control corporations, libertarians will not have the tools to control governments.

Andrew November 16, 2008 at 3:37 am

First, corporations are socialist, but you don’t HAVE to work for any particular one, which makes them better than governments.

A word on brands. They don’t get them. Sure they aid in competition to crush the other guy. But why? Naomi Klein berates Disney’s two-facedness in “The Corporation” because when they want to profit from family entertainment they put out a “Disney” movie, but when they want to trick us by profiting from salacious product, they put out a “Miramax” movie. They don’t get it! Us not quite rational consumers have a lot of choices to make. Brands help us make the right choices. If I go to the movie store to grab a video for the kids, I can grab a Disney movie and be 99% sure it’s the right choice knowing NOTHING else. Of course this helps Disney crush the competition. But we still have many movie studios, so corporations are still more tolerant of competition than governments. Still preferable.

Sometimes big is good. I’ve heard stories of people coming over from previously communist countries and not being able to handle all the choices available in our society. We can’t either. We create these branded behemoths.

Governments don’t allow competition, so they can do whatever they want. Corporations can only do what all the other ones can get away with, and they can’t get away with anything that hinders them competitively, for long.

Andrew November 16, 2008 at 4:05 am

Lest ye think I’m dodging, the point is we should focus on undoing those government actions we know cause bigness and ignore those instances of bigness that are unavoidable or not a problem. And of course, the biggest problem is the government itself, so I’m not to concerned about critiques from the left. They might claim that “hey, at least WE are TRYING” but they aren’t, really.

To get further down the road to practical specifics, or at least a good toolbox for adding tools, here’s as good a place to start as I know of right now.

http://www.holisticpolitics.org/Corporations/

meter November 16, 2008 at 10:33 am

“Why is anyone surprised that the growth in scope and power of corporations is highly correlated with the growth in scope and power of governments?”

I could argue that you have that backwards. Even under what libertarians would call heavy regulation, the financial services sector managed to screw up the global economy with excessive risk-taking and questionable investment vehicles. The libertarian solution would be to reduce regulation under some misguided faith that corporations when left to their own devices are stewards of good will and have a long history of altruism. And that they are “free market” proponents (which is a load of bunk as others have pointed out).

If libertarians ever want to be taken seriously, there needs to be a better answer than “Let the foxes guard the henhouses – that always works.”

assman November 16, 2008 at 3:35 pm

What Matt Yglesias says about the Left is total bullshit. From the beginning progressives have complained about monopolies and corporate power and always said that competition is nonexistent. And from the beginning they have created regulations that increased the power of monopolies and decreased competition. A few examples of how progressive created monopolies:

* Universal service obligations and concepts of natural monopoly were used to create telecom monopolies
* Physician licensing created the doctor monopoly in medicine
* FCC created monopolies on the airwaves
* Regulations were used to create the electricity generation/distribution monopoly

The real truth is that monopolies are far easier to control then other forms of economic organization. This is why the Left has always favored them and encouraged them(read the communist manifesto). Its much easier to control a single organization then many organizations. It is also easier to implement central planning. For this reason I think Matt Yglesia is a liar. His complaints about corporate power are about increasing governmental power which well then be used to further enhance corporate power. He isn’t at all interested in reducing corporate power. Just complaining about it so as to justify increasing governmental power. The history of the Democratic party, communists, European socialists, Fascists all testify to this fact. There is nothing new about this tactic.

J Thomas November 16, 2008 at 8:45 pm

“But if someone lost money, someone must have received that money.”
“Zero-sum thinking is wrong.”

One time I needed two wisdom teeth extracted. I went to an oral surgeon. His assistant injected an anesthetic into my jaw and left me alone for awhile. Then the assistant came back and confirmed that the anesthetic was working. The dentist came in. He picked up some sort of instrument and put it in my mouth and made some sort of motion. Then he did it again. “OK, you’re done.”

I said, “In my line of work I’m supposed to estimate how many hours it will take me to do a job, and then I multiply that by my base rate, and that’s how much I get paid if I get the contract. I wish I could do it your way. I needed it done, and you had the expertise and the tools and all to do it, and you did it in five seconds. $900. I wish I could bill like that.”

He misunderstood and thought I was complaining about him. He said, “I wish you’d told me ahead of time. I could have done it slower.”

The ways we choose how to charge for stuff are basicly arbitrary. But when the work is worth what it cost to the buyer, and the money is worth the work to the seller, it’s OK. What about fraud? People do fraud sometimes.

What about counterfeiting? Somebody thinks they receive money, and nobody lost that money. Not zero-sum. There’s more money than before. All it takes is a really good counterfeiter and we could all be millionaires, right? And chain letters. Ponzi schemes. If nobody breaks the chain we can all be millionaires. How horrid that somebody always breaks the chain, it’s all their fault.

Banking is a regulated ponzi scheme. You put your gold in the bank where it will be safe. The banker lends your gold to somebody else, but of course they put it in the bank where it’s safe. He lends it again to somebody else who puts it in the bank where it’s safe. The guy he loaned your gold to buys something from you and pays you your gold. You put it in the bank where it’s safe, and the banker lends it to somebody else. As long as everybody puts their gold in the bank it doesn’t matter how much gold there is, the banker can lend it over and over and over again. But if people get worried and think their money might not be safe in the bank and come to take it out, only the first one in line gets any.

It used to be, bankers printed their own money too. You go to the bank to withdraw your gold and they give you convenient banknotes instead. You spend them just like gold because anybody can take them to the bank and deposit them to his account. But the government shut that down. Only governments can print money.

All this fraud actually did have a good effect. When people were ready to work hard and grow the economy, having a fixed supply of gold made that harder. They needed to have more money in circulation. And banks provided that service, at a high price.

Whether it’s governments or libertarian societies doing it, somehow the fraud has to get regulated. Somebody has to shut down the banks and keep them shut down. I’m not clear how to do it in either case.

Kevin Carson November 27, 2008 at 1:35 am

It’s a mistake to contrast the privileges of existing establishment unions with the privileges of big business. The Wagner regime was created, to a large extent, with the needs of big business in mind. It also replaced a much more libertarian model of unionism based on rank-and-file activism.

The main support for the Wagner regime was the a particular wing of organized capital: the capital-intensive, export-oriented industry that supported the New Deal agenda in general. Such industry had long-term capital commitments and long-term planning horizons, so they needed stability and predictability on the job. At the same time, labor was a relatively minor part of their total cost package, so they were willing to guarantee fairly high wages and benefits in return for secure management control of the workplace.

The Wagner Regime replaced a model of struggle based on wildcats, boycott and sympathy strikes, sit-ins, etc., with a model in which both union bureaucrats and the NLRB were in the primary business of enforcing contracts against the rank and file.

I’m all in favor of eliminating special privileges for unions. But they’re not privileges for unions as such. They privilege a particular bureaucratic model of organization against genuine radicalism by the rank-and-file.

So let’s eliminate both Wagner *and* Taft-Hartley, and throw in the state right-to-work laws (which impair freedom of contract) as well. While we’re at it, repeal the Railroad Labor Relations Act and similar laws for other industries, which prevent the expansion of general strikes.

I’d love to see labor return to a model of activism based on the tactics in the Wobbly pamphlet “How to Fire Your Boss”: open-mouth sabotage, slowdowns, unannounced one-day strikes at random intervals, working to rule, good work, etc.

My guess is if labor adopted such a model outside the current statist framework, and the legal barriers to sympathy and boycott strikes up and down the production chain (devilishly effective in a just-in-time economy) were eliminated, it would soon be the *bosses* begging for a return to the regime of contract. Just like they did seventy years ago.

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