I posted a question on LRC, Is it inherent in the nature of free market capitalism for the most wealthy individuals and/or corporations to capture government power? I received several interesting comments via email. The great Bionic Mosquito has answered the question in a 3-part post (part 2 part 3). L. On LRC L. Reichard White has posted in response a magisterial piece on the Sociobiology of Liberty. I am honored and informed by these responses, but to be honest I had my own sense of an answer somewhat making this a rhetorical question. I imagined the question in conversation with both progressives, conservatives and hard core libertarians as a means to formulate limited agreement in today’s divisive political environment. Anyway, My Answer is ‘Yes,’ But Keep Capitalism. I will explain.
In a recent podcast James Corbett and Keith Knight discussed “red pill moments” in their lives. Knight described reading an eye opening 1990 essay by Hans Hoppe titled Marxist and Austrian Class Analysis. In this essay Hoppe notes that Marxists can be correct on their historical observations but false in their reasoning. Now, virtually all people from all political factions can observe the evil intentions of some of the most wealthy individuals and/or corporations even if their reasoning about what to do about it differ and are faulty. I quote Hoppe at length for this directly pertinent passage on the subject at hand.
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And finally, Marxists are also correct in noticing the close association between the state elite-even though their explanation for it is faulty. The reason is not that the bourgeois establishment sees and supports the state as the guarantor of private property rights and contractualism. On the contrary, the establishment correctly perceives the state as the very antithesis to private property that it is and takes a close interest in it for this reason. The more successful a business, the larger the potential danger of governmental exploitation, but the larger also the potential gains that can be achieved if it can come under government’s special protection and is exempt from the full weight of capitalist competition. This is why the business establishment is interested in the state and its infiltration. The ruling elite in turn is interested in close cooperation with the business establishment because of its financial powers. In particular, the banking elite is of interest because as an exploitative firm the state naturally wishes to possess complete autonomy for counterfeiting. By offering to cut the banking elite in on its own counterfeiting machinations and allowing them to counterfeit in addition to its own counterfeited notes under a regime of fractional reserve banking, the state can easily reach this goal and establish a system of state monopolized money and cartelied banking controlled by the central bank. And through this direct counterfeiting connection with the banking system and by extension the banks’ major clients, the ruling class in fact extends far beyond the state apparatus to the very nerve centers of civil society-not that much different, at least in appearance, from the picture that Marxists like to paint of the cooperation between banking, business elites, and the state.
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Not only does Hoppe exactly affirm the danger stated in my question; but the rhetorical move that he employs, to first recognize agreement before critiquing, is the pretext to my question as an approach to dialogue. For example, progressives typically suggest more and more government regulation and higher taxes to combat the evil influence we agree on. But perhaps some of these progressives can be persuaded that any government power created will eventually be captured, sooner rather than later, by the very entities to be regulated. For conservatives and libertarians there is a tendency to give bad corporate behavior a pass as the free market in action. But perhaps they can be persuaded that these corporate entities are in practice one and the same as the government. Thus there could be agreement across the political spectrum.
Capitalism (Hoppe uses the term ‘free capitalism,’ White uses ‘voluntary exchange’) consists specifically and only of respect for property rights and free and voluntary exchange. As defined, capitalism is absolutely necessary for a free society. Thus, in spite of the dangers of government capture we must keep capitalism. But is capitalism sufficient, and is it stable? According to Hoppe in 1990 perhaps. He ends his essay “….the end of exploitation and the beginning of liberty and unheard of economic prosperity, means the establishment of a pure private property society regulated by nothing but private law.” I think such well known libertarians as Walter Block and Robert Wenzel would wholeheartedly agree with Hoppe’s statement. My original question and my answer imply that I do not believe so.
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Can there be a virtuous government without a virtuous people? Can a virtuous government coerce (or be nudged by the Cass Sustiens of the world) people to be virtuous? This is where the Bionic Mosquito’s response is relevant. He states that “If we are after free market capitalism and liberty – to say nothing of living the best of human possibilities – there must be something of a value held in common, something higher than free market capitalism or the non-aggression principle (or equality, or diversity, or inclusion); something outside of human reach, and something that only becomes less tainted the better we climb the hierarchy.” Or in other words, something that leads to virtue. I agree with one of his commentators who notes, “This series of posts is a beautiful summation of all the exhaustive work you’ve done on this site that I personally have benefitted so much from.” The “something outside of human reach” Bionic advocates is Christianity and I for one agree. But I also do not preclude the possibility of other belief systems meeting this need. Hoppe’s solution largely consists of a vanishingly small government. I concur with his solution. But even if remotely possible today, returning to my original question, would the pure private property society be stable?
I posit without proof here that our current overlords located in government or corporations are at work to create a society of deracinated, atomized individuals to allow for easy control. Why? Because they know organized resistance is the greatest threat to their plans. Thus, what we need are people who live in, act in, and nourish communities of all kinds that they enter by inheritance or by free choice. They can be religious communities, families, neighborhood communities, intellectual communities like the writers and readers of LRC, freedom cells, internet communities, professional societies, craft guilds; maybe even local governments; the list is endless.
So, to conclude, it is inherent in the nature of free market capitalism for the most wealthy individuals and/or corporations to capture government power. Thus, I advocate capitalism, but populated by virtuous people, cultivated in a matrix of virtuous communities that are jealous of their rights to obtain and maintain a free society.