leftlibertarian.org

Profit IS Justified By Entrepreneurial Risk

David Z — Sat, 04 Jul 2009 18:44:33 +0000

In his most recent post, Profit is not justified by entrepreneurial risk, Francois Tremblay appears to be baiting the big-tent Libertarians into defending the current economic system, which they quite wrongly describe as a “free market”. Or maybe I’m just in a particularly polemic mood (it wouldn’t be the first time). I’m not a “Libertarian”, but I’ll bite, if only to clear the air.

I have probably said it before, but in case I have not, let me make myself abundantly clear: the problem is not teh evil “profit”.

In a freed market, the return to labor is profit, when workers produce and sell products, what they receive in exchange for their production is sales revenue, not wages. Any net income (over and above their expended outlays) resulting from these sales is profit, not wages. In a truly free market, we’re all entrepreneurs. The degrees of risk we each accept in exchange for certain returns, of course, will vary widely by individual case.

since the workers take just as much risk as the owners.

The argument that “the workers” take as much risk as the entrepreneurs —in a free market— is patently false. The workers don’t take anywhere near as much risk as the entrepreneurs. The workers receive income for their production even if the ultimate product turns out to be a dud and generates 0 revenue. On the other hand, the entrepreneurs bear nearly all of the risk that others are unwilling to undertake. We know this is true, because if “society” was willing to bear these risks at a lower premium than the entrepreneur, they would’ve already done so, and we wouldn’t be talking about entrepreneurs.

Workers have to contend with losing their jobs and taking a major hit while looking for another one,

Meanwhile, entrepreneurs have to contend with losing everything, property, belongings, family-life, reputation, credit, etc. On the other hand, up until the entrepreneur closes shop, and the employees are pink-slipped, the employees benefitted (in a rather ironic reversal of the zero-sum-game) from the receipt of wage income in gross excess of their contributions’ actual value to society which may in some extremes be 0 or negative.

while the rich owners benefit from lenient bankruptcy laws.

This is a clear-cut example of “poisoning the well”. First, the assumption that the entrepreneur is rich ex ante (or some other primitive accumulation nonsense), the corollary to which of course is the use of “rich” in pejorative [1]. Whatever. Furthermore, the assumption that lenient bankruptcy laws exist to the benefit of the entrepreneur is not really a slam-dunk, and is a statement to which I could offer at least one serious objection [1].

Profit, which in a freed market may accrue to the controlling interests of any factor of production (i.e., land, labor or capital) is indeed justified by entrepreneurial risk. In a freed market, anyone who undertakes any productive endeavor is an entrepreneur. Some may choose to take the relative security of “wage” labor in lieu of pure entrepreneurialism (i.e., the net of my revenue less expenses is my “profit”), but I submit that under these conditions, these individuals are no less entrepreneurs. The only distinction is that they prefer the relative security and stability of a certain type of employment, to other arrangements.

The problem is a disparity between “profit” and “wages”, the result of a perversely unfree market.

1. Of course we know from observation that many entrepreneurs were not rich by anyone’s definition, when they began their undertakings. And we also know from observation, that many entrepreneurs (the vast majority, really) ultimately fail, and never become “rich” enough to vilify. Even if the entrepreneur is “rich” to begin with, this descriptive fact alone says nothing about the legitimacy of his earned, acquired, or found position of wealth with regards to any other.

2. Since the counter-party in any bankruptcy filing consists of either another “rich” entrepreneur, or a banking cartel, it would seem that however lenient are the bankruptcy laws, they result in a total wash. (Unless it could be demonstrated that the bankruptcy laws also are detrimental to the non-entrepreneurs. Plausible? Perhaps. But this argument was put forth, and so I’m not contesting it.)

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Glitchfix

Shawn P. Wilbur — Sat, 04 Jul 2009 17:38:00 +0000

Although nobody mentioned it, it looks like the pdf files for the Dyer Lum and Tchernychevsky booklets were not available yesterday. They should be accessible now, and I hope to have pdfs, in both pamphlet and 2-up form, up on the Corvus Shop server over the next couple of days. Sorry for any inconvenience.

Happy 4th of July

Sheldon Richman — Sat, 04 Jul 2009 16:04:00 +0000

The 4th of July is the appropriate time to contemplate what has happened to America. I've always thought this song by the band Steppenwolf did a great job of laying out the case. The song is really worth listening to.

"Monster/Suicide/America"

Words and music by John Kay, Jerry Edmonton,
Nick St. Nicholas and Larry Byrom

(Monster)
Once the religious, the hunted and weary
Chasing the promise of freedom and hope
Came to this country to build a new vision
Far from the reaches of kingdom and pope
Like good Christians, some would burn the witches
Later some got slaves to gather riches

But still from near and far to seek America
They came by thousands to court the wild
And she just patiently smiled and bore a child
To be their spirit and guiding light

And once the ties with the crown had been broken
Westward in saddle and wagon it went
And 'til the railroad linked ocean to ocean
Many the lives which had come to an end
While we bullied, stole and bought our a homeland
We began the slaughter of the red man

But still from near and far to seek America
They came by thousands to court the wild
And she just patiently smiled and bore a child
To be their spirit and guiding light

The blue and grey they stomped it
They kicked it just like a dog
And when the war over
They stuffed it just like a hog

And though the past has it's share of injustice
Kind was the spirit in many a way
But it's protectors and friends have been sleeping
Now it's a monster and will not obey

(Suicide)
The spirit was freedom and justice
And it's keepers seem generous and kind
It's leaders were supposed to serve the country
But now they won't pay it no mind
'Cause the people grew fat and got lazy
And now their vote is a meaningless joke
They babble about law and order
But it's all just an echo of what they've been told
Yeah, there's a monster on the loose
It's got our heads into a noose
And it just sits there watchin'

Our cities have turned into jungles
And corruption is stranglin' the land
The police force is watching the people
And the people just can't understand
We don't know how to mind our own business
'Cause the whole worlds got to be just like us
Now we are fighting a war over there
No matter who's the winner
We can't pay the cost
'Cause there's a monster on the loose
It's got our heads into a noose
And it just sits there watching

(America)
America where are you now?
Don't you care about your sons and daughters?
Don't you know we need you now
We can't fight alone against the monster

Entrepreneurs in everything: NYC vendors getting by behind the state

Sat, 04 Jul 2009 07:43:34 +0000

In NYC, where food vendors are a common site on the streets, vendors are combating government abridgments on their strides to make a living for their families with forged permits.

Unfortunately, the state is fighting back against otherwise defenseless people, most of whom are immigrants with little means to get by any other way. How do people justify this? A free market is more than enough to hold people accountable for the safety of their foods. Besides, is it really worth destroying thousands of lives to make sure one moron who can’t smell his food before he bites into it doesn’t get a case of minor salmonella?

This Week at C4SS: Barter Networks and the Counter-Economy

Kevin Carson — Sat, 04 Jul 2009 05:46:00 +0000

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On Leviathan and Public Reason: A Reply to Chartier

Danny Shahar — Sat, 04 Jul 2009 04:58:00 +0000

So I've been having a discussion with Dr. Chartier over at the LiberaLaw blog about the role of the sovereign as a source of public reason in Hobbes' political philosophy, in response to an interesting post in which he discussed how a Hobbesian account might be consistent with market anarchism. Because I am a horribly verbose person, I wrote more in response to Dr. Chartier's last comments than the comments system would allow, and I am therefore posting my thoughts here. Hopefully this is of some interest to someone!

In order to understand this, it would probably be a good idea to read Dr. Chartier's post and the comments that have already been published on it, particularly this one (since this post is directly a response to that comment).

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If I understand correctly, Hobbes sees the sovereign as existing to settle conflicts. In Dr. Chartier's post and comments, he's seemed to somewhat equated this to a notion of "preserving civil peace." And to an extent, this makes sense. With property disputes, for example, what the sovereign is being asked to do is to merely uphold some exogenous system of justice: the sovereign is just acting to make sure we maintain a peaceful environment, where we get our idea of "civil peace" from somewhere else.

But to Hobbes, this will treat too much as settled. He would likely want to say that we may disagree on what it is that even constitutes "civil peace." One person might have a desire to see all homosexuals put to death. Another person might have a desire to see his homosexual compatriots protected from this fate, and is willing to fight to defend them. Another person might want to see the bigoted guy put in the stockades for being such a jerk. Hobbes thinks that this kind of conflict is a serious problem. In the absence of any external norms and institutions to tell us who is right and who will get their way, and in the absence of any enforceable agreement between them, Hobbes thinks that the three people in our story will have no reasonable choice but to prepare for violence. So long as each relies on his private reason, they will be condemned to a state of war.

The liberal solution to this problem is the one which gives us the notion of "civil peace" that I imagine Dr. Chartier has in mind: this approach typically seeks to independently define some conception of right-of-way, so that we have a way of adjudicating disputes according to these independent norms. But Hobbes doesn't have this machinery in his system. He could say that there may be no standard of right-of-way that each of the three people in our story would accept if each relied on his private reason. The system of rights and duties that will appeal to the bigot will be seen as oppressive by the defender of the homosexuals, and vice versa. And even if they could strike an agreement, there's no guarantee that some new issue won't arise in the future to drive them apart. The only way for them to avoid the state of war, Hobbes thinks, would be to give some third party the authority to choose what constitutes the appropriate conception of "civil peace" that will underpin their society.

The problem with the limits Dr. Chartier seems to want to place on the sovereign, I think, is that it seems to be in conflict with Hobbes' desire that the sovereign have the authority to decide basically everything about how a society is going to function. If this authority is denied in areas where there could potentially be legitimate disagreements between people, then Hobbes is going to worry that conflicts will arise, where each side believes that his own private reasons are the right reasons. Hobbes wants to eliminate this possibility by giving the sovereign absolute authority to decide what's right and fair.

But all of this is drilling way further into Hobbes than I think Dr. Chartier was seeking to do. If all he wants to take from Hobbes is the idea that a government is necessary to adjudicate disputes, then none of these issues are going to be a big deal. In this case it seems to me that he's actually moving away from the substance of Hobbes' argument and actually moving closer to the sort of thing Locke was saying in chapter 9 of the Second Treatise. As Locke writes:

Thus mankind, notwithstanding all the privileges of the state of nature, being but in an ill condition, while they remain in it, are quickly driven into society. Hence it comes to pass, that we seldom find any number of men live any time together in this state. The inconveniencies that they are therein exposed to, by the irregular and uncertain exercise of the power every man has of punishing the transgressions of others, make them take sanctuary under the established laws of government, and therein seek the preservation of their property. It is this makes them so willingly give up every one his single power of punishing, to be exercised by such alone, as shall be appointed to it amongst them; and by such rules as the community, or those authorized by them to that purpose, shall agree on. And in this we have the original right and rise of both the legislative and executive power, as well as of the governments and societies themselves.

If Dr. Chartier is considering this sort of approach to thinking about government, then yes: I agree that it don't establish a whole lot about exactly what a government is supposed to do or how big it needs to be. As long as it addresses the "inconveniencies" of the state of nature, any system of government will seem to do, and insofar as a stateless, decentralized, or pluralistic system can address them, that would be fine too. But this shouldn't surprise us: this Lockean position is what underpins a great deal of the modern libertarian tradition, including Rothbard's market anarchism and Nozick's decentralized, pluralistic vision of Utopia. I should add, though, that it also shouldn't surprise us to find that we're led to conclusions very different from those that Hobbes professed.

Child sexual abuse legalized for school administrators…

Francois Tremblay — Sat, 04 Jul 2009 00:22:44 +0000

Mises.org reports that a recent court decision has legalized child sexual abuse.

And, it should go out without saying, but if you are a parent, the Supreme Court has just given you fair warning to pull your kids out of government institutions today.

They’re right, you know. It’s only gonna get worse.

Thanks to lowercase liberty.

Region Three Is Number One!

Roderick — Fri, 03 Jul 2009 23:49:57 +0000

In my new role as LPA Regional Rep for Region 3 (the Selma-Montgomery-Auburn tier), I’ve created a webpage and Yahoo group; check them out.

Afghanarchy

Roderick — Fri, 03 Jul 2009 18:40:02 +0000

I received an email today asking why the anarchic situation in Afghanistan hasn’t evolved toward a peaceful system of protection agencies as market anarchist theory predicts. Here’s the answer I sent back:

For one thing, anarchy doesn’t fully exist in Afghanistan; the u.s. is desperately trying to prop up a government, and they’re importing plenty of money and guns to make it happen. (Ditto for Somalia, mutatis mutandis; though Somalia’s been working out better because the population has a longer history of polycentric law.) For another, so long as everyone shares the default assumption that there’s going to be a monopoly state sooner or later, then everyone strives mightily to make sure their gang rather than some rival gang is in position to control that state once it materialises. Now a relatively peaceful anarchy can sometimes emerge even from a situation like that (there are some medieval examples), but it’s a lot easier when that assumption is given up.

A good analogy is the wars of religion that ripped Europe apart during the 16th and 17th centuries. The common assumption that fueled those wars was the assumption that every territory had to have a single monopoly religion. Obviously that generates a zero-sum game where everyone strives to make their religion the monopoly one – since if one religion is going to have the monopoly, everyone would rather have that be their own rather than the other guy’s. What brought religious peace to Europe was the idea of religious toleration – or in other words, the realisation that something other than a single victorious monopoly religion might count as a peaceful resolution of religious differences. Once people realise that the same thing applies to political toleration, it’ll be a lot easier to develop and maintain a polycentric legal order. (This is also a good example of how politics depends on culture. Just as governments end up better or worse depending on the prevailing cultural assumptions, so do anarchies.)

Any further suggestions, O readership? If so, I’ll send my questioner to the comments section here.

Corvine Call #2 Liberty2.0 and Dyer D. Lum

Shawn P. Wilbur — Fri, 03 Jul 2009 06:55:00 +0000

The breadth of my interests is probably no surprise to anyone reading this blog, so nobody will be surprised that the archive I have accumulated is pretty diverse. But, given the really limited popularity of even the best-known of the figures that have been the special objects of my interest, it's been a real question whether there was much point in pamphleting a lot of these folks. At the Portland Bookfair, I said a number of times that I would know I was on the right track if someone actually bought a copy of William Henry Channing's "The Call of the Present," a fascinating but fairly alien mix of pre-1848 radicalisms. Nobody bit at the bookfair, but the first order placed at the online shop included a copy! I'm sort of committed to republishing quite a bit of that stuff anyway, since it is the immediate context for the first wave of explicit mutualism, but it's nice to get some encouragement, and so quickly.

I mentioned all of this to Neverfox, who responded: "Swedenborg, eh? Does he show up much in other mutualist (or fellow-traveler) lit?" And the answer to that is, of course, no, not much. But he does show up a number of times in Greene's work, with the winner for Best Use of Swedenborg in an Unlikely Context almost certainly going to Greene's An Expository Sketch of a New Theory of the Calculus (Paris, 1859). And then a little research reminds us that there was very little that Swedenborg did not himself write about: the language of the angels, determining latitudes and longitudes, standards for coinage, and weights and measures. . .

Anyway, I've been spending much of my time for the last week or so digging back into the files of Liberty. One of my goals is to get as much of the transcription of the archive done as possible. A few volumes have appeared on Google Books, giving me multiple sources for scanning and some usable OCR text. The later volumes were all formatted so that even my somewhat sketchy pdfs are pretty easy to turn into clean text. So maybe half of the archive will go pretty fast, and some of the rest will be like pulling teeth. But it should be worth it. I waded into Volume 4 last week, in search of a Bakunin translation rumored to be serialized there, and found quite a number of things I didn't expect. You'll get to see a number of those in the next week or so. For today, the offerings in this Liberty2.0 collection and re-presentation project are Tchernychewski's Life and Trial, translated by Victor Yarros, and Dyer D. Lum's Eighteen Christian Centuries. I've been reading a lot of Lum for my own research, so I also added a couple of other short pamphlets, Labor's Atitudes to Non-Unionists and the posthumously published The Basis of Morals. Enjoy!

The Basis of Morals - (1897; 16 pages)
- download pdf
- purchase pamphlet
Eighteen Christian Centuries
- download pdf
- purchase pamphlet
Labor's Attitude to Non-Unionists - (4 pages)
- download pdf
- purchase pamphlet
Tchernychewsky's Life and Trial - (1886; 20 pages)
- download pdf
- purchase pamphlet