Sunday, July 30, 2006

Capitalism DNE

[Friend], you're under the mistaken impression that pure capitalism exists.

Actually, I apologise. You're under the mistaken impression that pure capitalism can exist.

The fact of the matter is that every facet of a capitalistic market virtually requires a government to exist.

The term "virtually" means "almost, or seeming to, but not in fact".

In other words, a capitalistic market de facto requires government intervention to exist. I say "de facto" (in fact) rather than "de jure" (in absolute reality) because a pure capitalistic market could exist absent government intervention.

In theory. "And in theory, Marge, communism could work." - Homer Simpson

I'm delighted to reference that quote because a pure, non-governmental capitalism could exist in the exact same way a pure communism could exist. Only if all men were perfect angels, rational, deliberate, and altruistic.

Unfortunately, such men don't exist. Actually, my personal opinion is that we're fortunate that if such men do exist, then they're exceedingly rare.

In fact, in any market even marginally capitalist, the actions of every individual are toward monopoly. If you want to see multiple examples of this you need only observe American history. The nineteenth century was rife with individuals who used the very free market then extant in a manner that can only be termed "rapacious". John D. Rockefeller, a hero to libertarians, was one of the rapacious. So was Thomas Edison. He paid slave wages to workers to test numerous ideas (few of which were his), which he then patented largely by means of men armed with baseball bats.

The end goal of anyone involved in a free market is a monolopy. If a monopoly cannot be acheived (whether because of law or simple economic roadblocks), then an oligopoly (or cartel... like OPEC) is sought. As I recall, a number of airline executives came under fire for price fixing within the last few years. A free market in action.

Leaving aside the fact that every individual within a free market acts to destroy the free market, let's discuss the various factors that define a free market, shall we?

To define the market, we shall have to observe the market in action. An individual, let's call him Stanley, leaves his home and walks to market. On entering the market he walks among the various stalls searching for the product he wants to buy. Having selected a vendor and a product he offers to purchase said product. The vendor names a price. Stanley hands over the money, receives his purchase, walks home, and enjoys it.

In the eyes of the incognizant (uninformed) it would appear that the government had no place in that transaction. There were no bureaucrats, no policemen, not even a lowly meter maid. How wrong you would be, should you hold such an opinion.

1) Stanley leaves his home.
Right here we have a definition of property. Is a government required for one to hold property? In fact, realty? No! So long as you are young and healthy, you can defend your holdings against any number of menaces! Provided, of course, that they come one at a time and are weaker/less well armed than you. Stanley is fortunate to live in a governed society, one with taxes and an armed police force. He can leave his home unattended and unarmed in his person with no unreasonable fear of robbery. Lucky Stanley. A government exists to prevent a truly free market exaction; namely that someone stronger than he would take whatever he couldn't protect.

2) Stanley walks to the market.
Again, Stanley need not fear robbery. Those armed forces defend not just his home, but the roads he travels on. Wait... did we cover how those forces were paid? I believe taxation is in order. The basic and traditional form of taxation... why, governments tax trade! The original market town, from which the modern "market" takes it name comes from the medieval French villages deliberately founded by feudal lords for the purpose of developing trade so they could exact tariffs and so fund their wars! My goodness! It's almost as if the "free market" wasn't free at all!

And... those roads he was walking on. Were they free? Who paid for them? If they're constructed and defended (particularly defended), who pays for that?

Once upon a time roads were paths that existed because people walked on them. They were taken for granted.

Then someone invented "the wheel" and roads became a necessity that had to be maintained. Who maintans them? How does he recoup the cost?

Toll roads maintained by private companies can get expensive. I hear there's an argument over "freedom of the 'internet'"... I'm not sure what that's about. Apparently there are these "tubes"...

Perhaps Stanley's government has evolved in its way of thinking. Perhaps instead of taxing direct trade they feel that they'd be best off assessing wealth and taxing those who benefit most from the existence of government. Why, that would be an "income tax". My oh my. It's almost as if Stanley lives under the aegis of a kind and liberal government, one that doesn't tax the poor to benefit the rich (as was the case with, say, pre-revolutionary France, which fell shortly after the, odd... after the American Revolution, which championed individual liberties and fair government and... it would appear, a market governed by reason rather than greed).

3) Stanley selects his product (among a competition of products) from a vendor (among competing vendors).
Rockefeller is proof enough that without government intervention there would be neither competition among products nor competition among vendors. Having only one choice means having no choice. You think you live in a free market? Try changing high-speed internet vendors. It takes force to prevent others from using force.

Government is, or should be, the use of force for the common good.

4) Stanley hands over the money.
Hold the phone! What? Who? Money? Money, or "specie" or "scrip" is an artificial construct given a defined value by an outside authority! What authority?! On occasion, a non-governmental body has issued some item of value or promisory note that was so reliable that it had value as currency. Perhaps a bolt of cloth was as valuable as an amount of coinage.

Such occasions are exceedingly rare. Few and far between are the private organisations disinterested enough that they can produce a valued coinage.

Government steps in again.

Where government doesn't exist, barter rules. Individuals meet to trade goods. Malcom has barley, David has wool. They trade, both are happy.

But what if David doesn't WANT barley, and Malcom doesn't WANT wool. Well, they're fucked. Unless there exists a medium of exchange both can agree on.

Stanley can hand over coins for his product because he is certain of their value. So is the vendor. Because the value of the coins is certified by an external authority. The "gummint."

Those poor bastards.

5) Stanley purchases his product.
It's not apparent, but Stanley has written and signed a contract with the vendor. The contract is such that the vendor guarantees to hand over a product of certain quality in return for a certain value of specie. Stanley has guaranteed to hand over a certain amount of specie in return for a promised good. They've concluded a non-written contract, wherein a cerain good is promised in return for a certain value. What happens if Stanley is ripped off? What if it turns out the product he sought is not the product he got?

Once upon a time in Denver he would have had four options. a) hunt down the rat and kill him. b) pay others to hunt down the rat and kill him. c) cry and deal with it. d) try and deal with it and die. Stanley is fortunate to have a government that enforces contracts. Even unwritten ones.

Every time I go to K-Mart (as rare as I can manage), I am guaranteed to receive the product I think I'm buying. And every time you go to a shady mechanic and get ripped off, you have the option of suing his ass because there's a government around to enforce what he should have done. ie. what he said he'd do.

6) Stanley walks home.
Amazingly, he doesn't get beaten and robbed. Those cops are good at their job.

7) Stanley enjoys himself.
Ah, that Constitutional Liberty, "Pursuing Happiness". Stanley is damn lucky to have a government that prevents others from taking away that liberty. He can sit in his home, certain in the knowledge that no one will burst through his door and rob him (government thugs or private criminals). He knows that he got what he paid for because the government is on the watch for people who lie and break their word. He rests peacefully because his government watches the roads he walks on.

Stanley's entire environment is an artificial construct maintained by the government he supports. It is entirely unnatural, and wholly beneficial. Nothing about it is free; it is bought and paid for by the people who participate in it, and the only thing that maintains it is their vigilance, ensuring that no one person or group comes to dominate and control it. Because, being an artificial system, it is enitirely and easily susceptible to manipulationand abuse.