Capitalism an Inherently Statist system?

It has been alleged by persons on the left that capitalism is an inherently statist system. That there has never existed any kind of stateless capitalism or "free market" in any real sense, and that therefore 'to contrast the state with "the market" is just silly.' That under capitalism, statism and the market economy are just two facets of the same hierarchical, totalising system of class rule.

I have heard those propositions put forwards before and I would urge you to reconsider: are the actually - or necessarily - true?

Firstly, I agree that "there are not free markets," but to say there never existed any kind of stateless capitalism or "free market" in any real sense is of no substance really. There had, perhaps, once never been a slave-free statist society, or one where women had the same rights and responsibilities under the law, or one that was not feudal, or a monarchy. So what? Society is a garden where we reap what we sow.

What is silly is not to contrast the state with "the market" but define the free market and the complete opposite of the free market capitalism at the same time! I point, naturally, to corporate welfare, legislations that offer preferential treatment to one service provider over another, subsidisation of domestic producers or protectionist tariffs – all interventions in the market that are not based on the market forces of supply and demand. The state is responsible for almost 50% of the spending in the economy in the UK, and 19% of the population is employed in the public sector. The state controls the money supply, sets the interest rates, and is responsible for regulating each and every facet of the economy from the provision of energy, to the conditions under which someone can employ another person. The state runs the schools, and a great deal of the hospitals. It decides when a road is to be built, and when we are to build a railway. It hands subsidies to tobacco farmers, then taxes the tobacco we smoke. It hands welfare to the wealthy in the form of contracts and preferential legislation, and to the poor in the form of entitlements, free services and food stamps.

The state does not exist because of capitalism, but because the state exists then capitalists are going to exploit it - it would be irrational for them not to do so if it provided more value than serving their customers, just as it would be irrational not to claim housing benefit if you were eligible - but to define the free market (the voluntary exchange of goods and services) and the complete opposite of the free market (state interference in the market) is simply rhetorical sophistry.

It is fallacious to conflate economic power with political power, they are not the same thing. Economic power does not equate to the ability to use force with impunity to achieve your goals. Otherwise Starbucks would lobby McDonalds, and McDonalds would lobby Coca Cola, who were at the same time lobbying Microsoft and Apple. They do not do this. Why? Because the state is the only institution that is able to pass preferential legislations, hand out subsidies and use force and the tax system to enforce them.

If you have a lot of economic power, then even absent the state you can buy a lot things from voluntary sellers: property, factories, machines, natural resources, products, services... but you will soon run low on assets if you are not also creating things that other people want to voluntarily purchase from you. If people are voluntarily purchasing things you produce then you are providing value to them. You are making them better off. Otherwise they would not purchase your goods voluntarily, you would have to coerce them to do so. This is one of the reasons why we voluntarists, anarcho-capitalists, or libertarians (call us what you will) do not want the state. In the market, if you don't like a service you have the power to simply stop buying that service: you don't have to vote for anyone, you don't need to get everyone to agree with you - you just buy something else instead. Not so with government - because you've already bought it. You don't have any choice in the matter. The state it has the power to violate your conscience and force you to pay for it through the tax system, while claiming that you tacitly consent to this violation of your free will to support those causes that you support and divest from those that you do not simply by virtue of living in a particular geographical area.

Exploiting the State

 The state is not an effect of capitalism, but because the state exists capitalists will exploit it because the state is the only institution that can pass regulations. Were this not the case, Starbucks would lobby McDonalds, and McDonalds would lobby Coca Cola who were lobbying Microsoft. None of these companies are allowed the use of force, but because of this unique trait - the ability to regulate - it would be the end of any capitalist who had the capacity not to make use of this privilege so long as they had competitors who were willing to do so. These conflicts of interest are foundational to the system in place.

Supposing I am the CEO of a rich corporation and I have $1,000,000 to spend developing my business,

One of my options is to spend that money doing R&D, improving the product, employing highly trained staff, bringing our a better version, or something related which amounts to offering a better service to the consumer. I could also try to advertise it to people I hope will be willing to buy it.

Supposing as a consequence of whatever one of these things I choose to do, then my revenues rise by $1,200,000 then, ok, great! My customers are happier and I have made $200,000

But...

Supposing I can use the $1,000,000 to lobby the state, and they will pass preferential regulations to favour my company, or they will give me other kickbacks or benefits worth - lets say- $1,500,000, then this poisons the whole economy because now I have MORE incentive to engage in bribery and corruption than on pleasing my customers.

I would do this, not because I was evil, but because I was rational. In fact, if I failed to do it I might well be competed out of the market by an actor who did not. Poorer or less established companies cannot do what I just did and so they are a disadvantage against the giants in industry so long as there is a state and the state can be lobbied.

By this process of "unnatural selection" the most successful firms become, not those who are able to best serve their customers, but those who are best able to play the system to get privileges from the government.  And it's not necessarily for the evil of all would-be congressmen or parliamentarians either! Even a somewhat integerous politician, who wants to hold office to push through the "least-bad" legislations can only get away with so much before industries begin to back a more complicit candidate to replace them. They really will go to any lengths to retain their special privileges, however unjust, because their livelihoods depend on them.

Perhaps the only solution is making it impossible for politicians to dish out public funds to special interest groups from the public purse, but for this to even be achievable people must be aware of this problem of incentives.

According to The Sunlight Foundation $5.8 billion were spent on federal lobbying and campaign contributions by America’s 200 most politically active corporations between 2007 and 2012.  For every dollar they spent buying politicians they got $741 in return.



If someone in a business commits a crime they don't get arrested for it because they have this thing called a corporation which takes the blame.

The corporation gets sued, which  means the customers pay more and potentially the employees get paid less.

Making the corporation culpable instead of the individuals responsible for making the decisions
removes the moral hazard from the individuals  implicated in the unlawful or anti-social behaviour. That's why we see corporation getting away with doing all these horrible things: oil spills, bad bank loans, environmental hazards,

If the individuals personally responsible were at risk of losing their own assets, including their houses - the way an individual who gets sued or fined is - we would ind them far less likely to take these risks.

What is the Difference between Left and Right Anarchism?

 Left anarchism, which was the common usage of the term up until recently, is a political philosophy very closely related to communism, with the central socialist principle that workers should own the means of production. Having bosses run businesses or capitalists own the means of production is considered to be exploitative and hierarchical, whereas right anarchists see these relationships as acceptable so long as they are voluntary: if employees can agree to contractual terms, quit any time they like, unionise except where prohibited by voluntary agreements, etc. it is considered that the bosses are providing value by organising the work force, and capitalists are providing value by anticipating the market, organising production in terms of demand, and risking their investment (and also their property where uninsured, as the state would not exist to give them limited liability in the form of a Ltd. corporation  or Plc.) Right anarchists are not opposed to workers owning their own workplaces as long as this is organised by mutual agreements and voluntary interactions rather than imposed by violations of property rights (eg. workers getting a loan from the bank to buy out bosses and owners.)

Right anarchism is a more recent development but it can also be traced back to Baukunin who is seen as influential to both schools as an anarchist. It's more of an extension of American libertarianism, with the central principle being the NAP - ie. Thou shalt not initiate the use of force - no violence or theft, including taxation, as a rule, although levies for public goods could be extracted through a system of social pressure, ostracism, and refusal to engage in collective buying for people who did not pay their share (eg. If you don't pay your share for street lights you can expect to have to make your own arrangements for garbage collection as well.) Government regulation would similarly be be replaced by a system of insurance companies or cooperatives (often referred to as DROs - dispute resolution organisations) who were financially incentivized to solve problems before they occurred instead of being called upon to respond after the fact (like police, government fines, universal sick care, fire fighters, climate taxes etc. and all government services which are called upon only when a problem has all ready arisen.) These companies would lose money through payouts when they failed to protect their clients from harm or loss of property, which would encourage them to develop preventative measures and disincentives to criminals which would be constantly optimised through competition on the free market - whichever organisation was most effective as preventing harm or loss would gain the greatest market share, if someone advanced on their developments they would become lucrative, and if any such company got "too big for its boots," or abused its authority, its clients would have the option to pick another service provider, rather than remain at the behest of a state monopoly for provision of this service.

Left anarchism tends to focus more on problems of capital and capitalism, much like state socialists do. Right anarchists tend to talk primarily about the problems of statism, those which are created or exacerbated by governemnt, and they therefor tend to have the most convincing arguments for the abolition of states.


Despite coming from different angles, both agree that the state is based on force or the threat of force for its existence, that the state is a tool wielded by the ruling class for unfair advantage over everyone else, and that corporations and corporatism are products of statism which allow the rich to privilege from privatizing gains and socialising losses, which is immoral.

All forms of anarchists acknowledge that where there are rulers there can be no rules, as rulers by their very nature, make themselves the exception to the rule. Anarchists are egalitarians, no special privileges for law-makers or corporations. If you kill, harm, steal, or damage someone else's property, you are to be held personally liable for it - not the state (tax payer) or corporation (consumer/share-holder) - you personally. There is to be no hiding behind institutions which are mere abstractions of the mind in anarchy. This implementation of this moral hazard for the privileged is meant to do away with much of the corruption, cronyism, and war crimes which are part and parcel of statist societies.

So some common ground between the two despite philosophical difference on very key points.

For example, left wing ideals such as workers running their workplaces are thought by some to be more likely under right anarchism that statism, since the public education system trains children for individualism and competition, but the evidence on how individuals learn best is in favour of a cooperative learning environment. Without the kind of schooling which is prevalent and imposed by the state (which right anarchists are strongly opposed to) children would be raised with lots of experience of cooperation and mutualism, and so would more likely to create workplaces that capitalised on those skills than top-down hierarchies which follow the prevalent pattern of schooling and parenting.

The "Free Rider" Problem is NOT a Problem for Anarchy.

When you say you disagree with states as a concept people very often say something like "How will you get streetlights?????" Of course, you can substitute for street lights any other thing that the government happens to have a monopoly on doing at the moment, and you really have to wonder, if government provided ball bearings and had a monopoly on that would statists be saying, "How would we get steering wheels without government? That's maaaaaadness."

This is called the free-rider problem, and it's one of the most basic problems in economics. If you have a public good that many people benefit from, how do you stop people who don't pay from benefitting?

What I find most frustrating is people raise these objections as though all of the anarchists suddenly have to go have to go "Bah dub a duh duh good point I have never thought of that before, you're right, boo for anarchism, that's insurmountable, I'm now a statist... yup, giving all the guns to a single central authority who are allowed to violently extract income for everyone and distribute it as they might to whoever bribes them, or whomever they want to bribe to vote for them, sounds like a muuuuuch better solution. How very rational."

Such a basic objections, when they are presented with accompanying smugness rather than genuine curiosity, are  kind of insulting to your intelligence, because you'd have to be an idiot not to have thought of these problems. You get to wishing people would just pick up a book and learn a little about a theory before assuming they can knock it down in one blow.

Their argument basically goes ... "I get such-and-such for free and don't have to raise a finger, therefore the system in place is adequate."

But that does not logically follow. Just because there is a system in place does not meant is good, efficient, cheap, practical, suitable long term, preferable to what could be in it's place,  etc.

What is in effect being argued, is that the combined ingenuity of every individual in society who may have a vested interest in solving the free-rider problem when it comes to street lighting say, or quite frankly anything, is going to be inferior to the central dictat of a bunch of bureaucrats who are not even spending their own resources, and have less vested interest in solving any given problem than of bribing people to vote for them.

The make a "state of the gaps" argument and will forever point to this hole or that hole which is something which the state has monopolised and therefore cannot be met by another institution, be it a business, charity, consumer or worker cooperative, community project, or any other institution which is voluntary. They want you to say how exactly an endless list of things will be provided without a state, if you can't answer even one of them they go "Ha! See! Anarchism, doomed to fail."

The unreasonably biased nature of this line of questioning, which does not subject an ideology which has been responsible for killing 2-300 million of it's own people in the last hundred years not including the wars,  to the same scrutiny and need for evidence of the ideology they oppose, is only eclipsed by it's irrationality.

Firstly, if the free rider problem is a serious problem, then the government is the worst culprit, because they can grant themselves and their buddies special privileges with public money which isn't theirs like no other institution in society, and everyone else would have to pay for it. Not only can they, they do.

And more, asking me, or any other anarchist, how exactly this or that would be done in a stateless society is no different from asking an abolitionist how cotton will be picked once slavery is abolished. It would have been literally impossible for anyone to accurately predict that the abolition of slavery would make human labour uneconomic and lead to the invention of great big heaving robots that run on dinosaur juice from thousands of years ago, but that's what happens. When you remove the arbitrary dictates of how things should be done by force, something better rushes in to fill the place, it's compelled to by trial and error. Statism is not trial and error, it's "lets do it this way and ban anyone from doing it any other way." That is why when you look at statist institution they seem frozen in time, but there is a new smartphone with better features every couple of years. How will street lights be provided? In whatever way optimises through trial and error - banning people from trying alternatives by making the government option mandatory certainly can't help in any way. How could it? 

We must note that the free rider problem is only a problem in cases where people consider it to be a problem. For example, if I mow my lawn my neighbour may benefit from his house having a higher value due to the aesthetics of the community, but I am very unlikely to demand remuneration for it. So we can conclude that our discussion of solutions is limited to cases where people receive external benefits from other peoples time or resources in ways which bother payers.

In such cases, maybe people who paid would get stickers on their doors and people who could pay but didn't would get dirty looks and prying questions from their neighbours who wouldn't have any business with them. Or maybe the lighting organisation would offer special privileges to people who did pay like cheaper electricity for their house. Or maybe people who didn't pay would have to pay more for insurance because they weren't paying in to the safety of their community. Who can tell?

Personally I'd rather not be forced on threat of being put in a cage with murderers and rapists to pay for these things, I'd take my chances with someone being able to see all the solutions offered to me by people who have a real incentive to organise the best system and present the options to the people in my street, or the company that built the roads, or the one who built the houses, or whoever is responsible for making these decisions, so we can choose for ourselves.