Interacting in a Common World: A Replay to Wolfi Landstreicher
Landstreicher begins with a critique of my approach in defending the labor theory of value in terms of Ludwig von Mises’ a priorism:
But what if someone doesn’t accept the a priori assumption that there is an essential human nature…. [W]hy do economists choose to keep operating on fictions that they invent, claiming that economic “laws” can’t be formed from one’s observation and experience of actual trade relations, but must derive from a priori assumptions about a supposed essential human nature? It seems to me that economists practice economics (or political economy) in this way, because it’s aim is not now, nor has it ever been, to figure out how those relationships that people call economic actually operate, but rather to justify the economy as a system of relationships…. For economists, human nature is essentially economic.
I should begin by saying that, although I am not an Austrian in any way shape or form, at the time of writing (2004) — let alone now — I defined my argument using concepts relevant to Austrians simply because they were the main critics of the LTV that I was formulating. To some extent I addressed Jevons’ claims to have “refuted” Ricardo, but the most notable polemical attacks on the labor theory of value were by economists in the tradition of Menger, Bohm-Bawerk and Mises.
My intent was to show that marginal utility was not, properly speaking, a refutation of the classical political economists, but complementary to their work. Further, I aimed to show that most of the people who claimed that Bohm-Bawerk or Mises had “destroyed” Ricardo and Marx were relying on second-hand talking points rather than a careful reading of the actual points at issue in the original texts of the debate.
And my argument for the uniqueness of labor, compared to other factors of production based on its disutility (all other things being equal), is not itself a prioristic — not even to Mises. It is based on a simple observation that even pleasant or fulfilling labor reaches a point of diminishing returns until further expenditures of labor carry a positive disutility in ways that expenditures of inanimate raw materials or capital do not.
In any case Landstreicher’s equation of Mises’s a priorism to “human nature” or “economic man” reflects a serious misreading of what Mises meant by it, in my opinion.
Mises’s a priorism, rather than describing anything that could meaningfully be called “human nature,” was a much more fundamental and abstract set of rules about how any purposeful, rational mind would have to operate — things that would be true by definition, like e.g. the tendency to move from felt unease or want to a reduction in those feelings. The idea that a rational being acts to replace a less desirable situation with a more desirable one, in terms of its own internal value scales, seems incontrovertible based on the very definition of sentience and purposeful action.
What we commonly think of as “human nature,” on the other hand, is for the most part an assortment of fairly specific, second-order generalizations on things like the “propensity to truck and barter,” the comparative prevalence of selfishness versus altruism and mutual aid, the relative likelihood of defection vs cooperation in prisoner’s dilemma situations, and the like. These things all depend, not on a priori laws, but on the specific content of a rational being’s internal value scales. And they are, indeed, to be determined by observation.
If anything this understanding of a priorism, far from being the equivalent of “economic man” assumptions, is a remedy for them. Mises’s a priorism is fully compatible with observation-based models of “human nature” — for example those of Pyotr Kropotkin, Elinor Ostrom and David Graeber — that are completely at odds with economistic assumptions about human nature.
In fact Mises’s a priorism, properly understood, is entirely compatible with any number of models of human society and behavior — including a libertarian communist society based on Stirnerite egoist assumptions.
Mises’s followers, to be sure, are often guilty of quite vulgar applications of a priorism. They act as though they were entitled, not only to the most abstract and fundamental a priori axioms about human nature, but also to their own a priori factual assertions about things more properly left for inductive generalization. A good example is Austrian polemicists who assert that a higher minimum wage will result in higher unemployment — not ceteris paribus, depending on a whole host of conditions like the elasticity of demand, but as an absolute dogma.
Landstreicher’s rejection of economistic assumptions about human nature extend to a rejection of the basic economic assumptions of Marxism as well as those of liberal capitalism. As an egoist, Landstreicher rejects — presumably as a “spook” — the labor theory of value itself (or at least attempts to derive normative implications from it).
I am not an egoist, so I operate from certain basic assumptions about what is just and what is unjust. In the individualist tradition I adhere to, the labor theory of value is an empirical generalization about the normal equilibrium price of commodities exchanged on the market. It says that, absent monopolies and entry barriers, commodities will tend towards a natural rate of exchange based on the amounts of effort or disutility embedded in them. Further, absent monopolies and artificial property rights in land and capital, and other forms of intervention to reduce the bargaining power of labor, laborers will exchange their goods and services at a rate (as Hodgskin observed) corresponding to the ratio of felt disutility. And if they sell their labor for wages, the same will be true of their pay; it will fully equal their disutility, unless classes of state-privileged landlords and capitalists are able to extract a portion of their natural wage as rent, profit and interest.
An individualist in the natural law tradition would add that the state of affairs based on voluntary interaction and exchange, with no state-enforced monopolies or artificial property rights, in which labor’s wage is its full product, is a just one. And a state of affairs in which state-enforced privilege transfers part of this wage to landlords and capitalists is an unjust one.
As an egoist, Landstreicher argues instead that,
Since labor is an activity, something that people do, it can’t be entitled to anything. Only individuals can, and this raises the question of where any entitlement comes from. Outside of the realm of ideals and abstractions, in actual practice, I am entitled to what I have the will and the capacity to take as my own.
Although I am not an egoist, Landstreicher’s starting assumptions are fully compatible with the economic argument for the labor theory of value. If we posit a society in which individuals are of roughly equal power, and agree to deal with each other on terms of voluntary interaction because an attempt by one to impose their will on the other would result in violent conflict that left everyone worse off, whatever market exchange takes place will result in exchange ratios based on subjective disutility for the reasons Adam Smith stated in his illustration of the exchange of beaver for deer. So long as members of society are in a situation where they are able to enforce rough equality against each other, it is not in anybody’s interest to try to impose their will on another, and some members choose to conduct some portion of their economic affairs through exchange, Buchanan’s explanation of Smith’s beaver and deer illustration will hold true:
If the individual hunter knows that he is able, on an outlay of one day’s labor, to kill two deer or one beaver, he will not choose to kill deer if the price of a beaver is three deer.
This is not to say that a society organized around the cash nexus, in particular, is the “natural” outcome of utility maximizing behavior. The same utility maximization, coupled with different individual value judgements and strategic calculations, might instead result in individuals of roughly equal power choosing to organize their relations on any number of different bases. For example, they might wind up with the libertarian communist Union of “neighbours,” based on the Stirnerite “true knowledge,” in Ken MacLeod’s The Cassini Division.
Interestingly, Landstreicher comes back to defend something like subjectivism against the labor theory of value on egoist grounds:
When I free value from all its economic trappings, and bring it down to myself, and the question of what I value and why I value it, Jevons has, in fact, stated the obvious. I value something because I have a use for it.
Indeed. All of which I acknowledged in Studies in Mutualist Political Economy. My burden in that book was not to disprove subjective valuation, or to argue for “objective” value based on labor, but to attack the very misconception by which marginalists misconstrue the labor theory or classical cost theory of value as one of innate, objective value. My argument throughout Part I of Mutualist Political Economy is that individual decisions to buy or sell, based entirely on their own subjective valuation of utility, result in an equilibrium price that reflects cost.
When Jevons, Menger, Bohm-Bawerk, et al, say that the price of a good is determined by its marginal utility, they mean that its price at any given time is determined by the utility of the last item available given the number of buyers and the number of goods available under the spot conditions of the market at any point in time. But Jevons himself and the other marginalists admitted that, when we add in the dynamic factor of changes in supply and demand over time, and when goods are reproducible without entry barriers, the quantities supplied and demanded will fluctuate until the marginal utility of the last good produced equals its production cost.
My argument in Mutualist Political Economy was that this — the changes in supply and demand based on individuals’ subjective judgments of utility — was the process by which the law of value operated. Those who caricatured the labor theory as a law of “objective” or “innate” value, and treated it as at odds with subjective value, fundamentally misunderstood it.
And Landstreicher puts himself squarely in the camp of those who misunderstand it: “…neither Jevons nor Carson intends to examine how and why individuals value what they do, but how an allegedly objective, universal value functions.”
Well, no. The actual — detailed, non-dumbed-down — arguments of Jevons, Menger and Bohm-Bawerk were pretty much exactly what I said above. Their polemical summaries of the political and ideological significance of those arguments, on the other hand, were much closer to the simplistic assertions made by commenters at Mises.org, based on third-hand talking points — as well as the one made by Landstreicher.
Further, Landstreicher misinterprets my subjective labor theory of value as requiring some objective, quantifiable standard for making inter-subjective comparisons of disutility, which he is entirely correct in saying would be impossible. But the whole point of arguments like Thomas Hodgskin’s and Franz Oppenheimer’s, that the value of the product is distributed among labor in a ratio that corresponds to their respectively felt subjective disutilities, is that it does not require any objective standard of measure by a third party. It works automatically, in a situation where the individuals are equal and no force-backed monopoly or robbery comes into play, by the ability of individuals to contribute or withdraw their labor from the joint effort. The whole point of my argument was that the labor theory of value is something that works automatically through the market, through an invisible hand effort, without requiring any philosopher-kings to discern the objective amount of labor embedded in commodities like an Aristotelian form.
Landstreicher has much kinder things to say about Part II of my book, albeit in a backhanded way. He likes it better because he sees me as abandoning the theoretical assumptions of Part I. In fact the theoretical assumption of Part I — that the natural tendency of market exchange is to apportion output among laborers according to their product, unless the state intervenes to transfer part of the product to propertied classes through coercively enforced monopoly — is the foundation of my analysis in Part II. If the central thesis of Part I is that exploitation is possible only through force, then Part II is an account of the ways in which the state has enabled economic exploitation in the actual history of capitalism.
Landstreicher is generally favorable to my argument against the Marxist theory of history, that there is a linear path that must pass through capitalism in order to develop the forces of production, and that pre-capitalist and early capitalist stages of capitalist abundance required class exploitation as a side-effect of scarcity. Landstreicher’s problem with me is based on my claim that “technology is neutral” — the only problem being that this isn’t anything I actually said. In fact, in his refutation of this thing I never said, he marshalls evidence that economic ruling classes have chosen between alternative technologies based on their conduciveness to work discipline and exploitation — which I did in fact argue myself, to the point of quoting Steven Marglin’s “What Do Bosses Do?”
He also criticizes my treatment of the land monopoly as “quaint” and “anachronistic” in today’s world because the issues “hark back to a time when fairly easy access to land was a reality for a large number of people…” This isn’t just wildly missing the point. It’s such a perverse missing of the point that it makes me wonder if Landstreicher is capable of grasping the point of anything, even wearing velcro mittens. The land monopoly was subject to criticism and debate in the nineteenth century, not because access to land was “fairly easy,” but because the Enclosures in Britain and the large-scale engrossment of land and its parcelling out to the great land barons in America were still a living memory. And the word “perverse” doesn’t even begin to do justice to treating the lack of “fairly easy access to land” in the present day as some sort of point against the relevance of the land monopoly in our time.
Good God almighty! Land is artificially scarce today, as ever, because of the land monopoly. Untold millions of acres of vacant land are held out of use because of the land monopoly. Small producers make ultra-efficient use of small tracts of land while giant agribusiness operations get paid by the USDA to keep major parts of their land fallow, for the same reason that 80% of land on Latin American haciendas is undeveloped while the surrounding land-poor peasants hire themselves out as laborers to the patron.
Similarly perverse is Landstreicher’s argument that a free market has never existed, pointing to the historical origins of capitalism and the emergence of its corporate form in the late 19th century — when I devote an entire chapter of the book to the structural continuities between capitalism and the bastard feudalism it emerged from, and another chapter to the role of the state in the 20th century model of corporate capitalism. Or criticizing my “reliance” on Tucker’s Four Monopolies because they “didn’t go far enough” — when I said myself that they didn’t go far enough, and ignored the institutional relationship between the state and corporation emerging in the late 19th century.
The argument that “free markets have never existed” — and, Landstreicher continues, that “what has never existed is neither genuine nor real; it is an ideal, a concept” — sounds an awful lot like mainstream liberal critiques of both libertarianism and anarchism at places like Salon and Alternet. If it proves anything, it proves too much. It is just as valid as an attack on the idea of anarchism as such, or of any social model free from coercion or class exploitation.
We still haven’t arrived at the worst of Landstreicher’s misconstructions though.
In the end, for Carson, the only choice is between the market and the state. He assumes that the human being is, by nature, homo economicus, an essentially commercial being, and that therefore freedom lies in unhampered market relationships.
He goes on to reproduce my quote of Samuel Konkin III’s definition of the market as “the sum of all voluntary interaction,” which Landstreicher inverts to say that for market anarchists “the sum of all voluntary interaction” is the market — in the sense of the cash nexus. That is, he accuses me of equating “all non-coercive relationships with institutionalized market exchange.”
So Landstreicher has managed to read into the statement that “the sum of all voluntary interaction” the exact opposite of its meaning. The statement was intended to deny that the market anarchist idea of the “free market” implied a society organized around the cash nexus, and to argue that all forms of non-coercive interaction — including non-cash-nexus forms of interaction — were compatible with the free market.
I can understand why this happened. The equation of a free market society to the cash nexus is fairly standard among anagoric anarchists — i.e. those favoring a form of anarchist society that is moneyless and propertyless as a matter of principle. It doesn’t help that the most vocal, most visible, and most personally obnoxious self-professed market anarchists — the anarcho-capitalists — tend to lionize the “business firm” as the primary means of organizing most functions currently carried out by the state. Frankly, it doesn’t take much interaction with those people to make me want to burn a black-and-gold flag.
But I have never meant by the “free market” or by “market anarchy” a society organized primarily around market exchange. Looking back, I would guess that probably at any time since I first began to identify as a Tuckerite market anarchist in the late ’90s, I’ve envisioned an anarchist society in which money exchange and business firms comprised a much smaller portion of total economic activity than at present. When I use the term “market anarchism,” I simply mean I favor a society in which markets are a legitimate, permissible element in the mix. How much of production and distribution is carried out through market exchange, how much is done through gift economies, how much through communistic self-provisioning in the informal economy or multi-family cohousing and coliving units, how much organized through p2p networks, is up to the preferences of the people concerned.
In recent years I have increasingly disassociated myself from the “market anarchist” label and identified as an anarchist without adjectives in the tradition of de Cleyre, Labadie and Lum, precisely because of the misleading cash nexus baggage “market anarchism” carries with it. And based on research I’ve done on cheapening small-scale production machinery, commons-based peer production and Elinor Ostrom’s common pool resources, I see market exchange if anything as playing a significantly smaller role than I did when I wrote Mutualist Political Economy.
Like David Graeber, I don’t rule out market exchange. I basically want a society in which people organize social functions and solve problems by dealing with each other as equals, without anybody having the ability to bring in men with guns to impose their will on anybody else. Whatever mixture of expedients emerges from that situation — markets, communism or anything else — is fine with me.
I’ll largely set aside Landstreicher’s treatment of Part III, in which he criticizes my proposals for anarchist praxis based on counter-institutions and the devolution of state functions into society, because in my opinion at eleven years’ distance it’s the weakest part of the book. Since then I’ve done considerably better analysis of the structural crises of capitalism and the state, and of the technological trends that are rendering state-enforced monopolies either unenforceable or irrelevant and pushing a transition from a society organized around hierarchies to one centered on self-organized networks.
Landsreicher’s review concludes with a rather odd Stirnerite rant about individual insubordination and rebellion being the only real path to anarchy, not wanting individuals to have to conform to the requirements of a shared world, and preferring a multiplicity of individual worlds. This sounds a lot like right-wing libertarians’ cliched appeals to “methodological individualism” to hand-wave away the facts that individuals’ actions affect each other, individuals are shaped by their mutual interactions, and those interactions follow complex, abiding patterns for which “society” is as good a term as any. When one egoist in their personal world encounters another such egoist and wants to carry out a project that requires cooperation between them, they must resort to persuasion — at which point they’re interacting in a common world with its own emergent set of rules.