Revisiting Capitalism and Markets

I made a post a few days ago questioning whether or not what we consider capitalism is actually the result of the free market.  In it I mentioned a political-theorist named Kevin Carson, who has done extensive work in this area.  The post has received over 50 comments, so I felt I should do a bit of follow-up.  I unfortunately do not have the time to write a complete summary of Carson’s work and a response to every comment, but I can point to two pieces of writing by Carson that hopefully can give a bit more insight into what I am referring to.

Firstly, there is this article which simply deals with the use of the word capitalism.  While this might seem trivial, it is something we should be careful to understand when talking to people who do not consider themselves libertarian and do not necessarily give capitalism the same definition that we do.  Carson writes:

The Freeman editor Sheldon Richman, speaking at George Mason University, raised the question of just what mainstream libertarians mean when they call a country “capitalist.”  What qualifies a country as “capitalist”?

A lot of countries with relatively low indices of economic freedom (including those ranked as “mostly unfree”) are conventionally regarded as “capitalist,” and referred to as such in neoliberal agitprop comparing them favorably to non-capitalist countries like Cuba.  And the talking heads at CNBC and scribblers in the business press commonly refer to “our capitalist system,” even though it’s doesn’t even remotely approximate a free market.

Now, on a more serious note, many people have been asking me to explain exactly what Carson’s theory of value is, as mentioning the words “labor theory of value” tends to bring down a hailstorm in libertarian circles.  Again, this would be a several hundred word essay at least, which I simply cannot do at the moment.  But, I can point those interested in the right direction.

Before stating what this theory of value is, Carson summarizes what he plans to do in his book Studies in Mutualist Political Economy, which focuses largely on this point.  He was quite aware of the already exposed problems with the labor theory when writing this book, as he begins his work with the following quote from Bohm-Bawerk:

I have criticized the law of Labour Value with all the severity that a doctrine so utterly false seemed to me to deserve. It may be that my criticism also is open to many objections. But one thing at any rate seems to me certain: earnest writers concerned to find out the truth will not in future venture to content themselves with asserting the law of value as has been hitherto done. In future any one who thinks that he can maintain this law will first of all be obliged to supply what his predecessors have omitted–a proof that can be taken seriously. Not quotations from authorities; not protesting and dogmatising phrases; but a proof that earnestly and conscientiously goes into the essence of the matter. On such a basis no one will be more ready and willing to continue the discussion than myself.

–Eugen von Bohm-Bawerk. Capital and Interest p. 389.

It was in fact the placement of this quote that truly piqued my interest in Caron’s work, because it made it plain that he knew what he was up against.  One could say that Studies in Mutualist Political Economy is a direct response to this quote, as Carson writes in the preface:

This book is an attempt to revive individualist anarchist political economy, to incorporate the useful developments of the last hundred years, and to make it relevant to the problems of the twenty-first century. We hope this work will go at least part of the way to providing a new theoretical and practical foundation for free market socialist economics.

In Part One, which concerns value theory, we construct the theoretical apparatus for our later analysis. In this section, we attempt to resurrect the classical labor theory of value, to answer the attacks of its marginalist and subjectivist critics, and at the same time to reformulate the theory in a way that both addresses their valid criticisms and incorporates their useful innovations. Part One starts with an assessment of the marginalist revolution and its claims to have demolished the labor theory of value, and then proceeds either to refute these criticisms or to incorporate them.

I hope that this makes it plain that in not responding to every comment on my last post, I am not trying to be rude or dismissive, I simply do not know how to briefly summarize what is done in this book.  Regardless of whether or not you end up agreeing with Carson, it still is a great lesson in the history of economics, as Carson draws from sources ranging from Mises to Marx.

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