“Inclusive Capitalism”: A Contradiction in Terms

by David S. D’Amato

“Inclusive Capitalism”: A Contradiction in Terms

Business Week columnist Diane Brady wonders, whether business leaders might be able to “promote inclusive capitalism.” The premise underlying the question is that if faith in the capitalist system “were to falter, the result could be policies that truly sabotage growth.”

Brady considers the problem of “eroded trust” in terms of restoring the possibility of upward mobility — thereby making capitalism “truly inclusive.” Ultimately, though, she concludes that business “can lobby all it wants, what happens on the policy front is largely out of business leaders’ hands.”

I have to say, that’s news to me. The political-economic reality in this country, confirmed by recent studies as well as well-nigh everything we can observe about the political process, is that big capital keeps American policymakers comfortably and securely in its pockets. And, sad to say, an “inclusive” kind of capitalism — oxymoron that it is — is not and never has been the order of the day.

We should not, however, confuse free markets with capitalism, as Brady does. In his 1825 tract “Labor Defended Against the Claims of Capital,” free market radical and political economist Thomas Hodgskin knew better, and attempted to vindicate the worker on the grounds of economic freedom. In this way, Hodgskin was a precursor to market anarchists (such as myself) who see a stateless free market as the means of liberating and empowering labor.

A libertarian and free marketer, Hodgskin, building from the ideas of classical economists like Adam Smith and David Ricardo, contended that the state’s interventions into the economic realm were harmful to labor and advantageous to capital. Today, many of the so-called libertarians advocating for complete economic freedom (particularly in the United States) have forgotten or consciously disavowed this part of the libertarian tradition.

In its stead, they have taken free market ideas to be the basis of an apology for Big Business, indeed of an ever-growing corporate domination of the world, its natural resources, and of ordinary, working people. And this is a shame, especially so because the older libertarian tradition of people like Hodgskin and market anarchists like Lysander Spooner is more durable in terms of theory, the historical record and economic data.

Contemporary political candidates shy away from talking a whole lot (or at all) about an actual contest between labor and capital. But why should they talk about it? After all, virtually all of our “statesmen” are enthralled to the interests of Big Business, and the few who would ever dare to speak up about the plight of the poor and working class are accused straightaway of “class warfare.”

Well, here’s to the introduction of a bit of well-reasoned, thoughtful class warfare into the public discourse then, something in the vein of Hodgskin’s Defense of Labor. By feeding the mythologies of the God known as Capital, many American libertarians have (probably mostly) unwittingly retarded or decelerated the movement for genuine, consistent liberty, serving rather the opposite by making cases for capitalism.

In conditions of economic freedom — meaning circumstances in which land and opportunities are no coercively monopolized — labor would simply enjoy far more bargaining power, able to maintain self-sufficiency apart from the Big Business economy.

Indeed, the way to fabricate a system wherein the vast majority of individuals are inclined to work for a pittance of a wage at huge, faceless organization is to use the power of legal and regulatory authority to foreclose other options. Calling that a genuine free market is akin to calling Mao’s China or Stalin’s Soviet Union a genuine workers’ paradise. If I were Joe Biden, I might call it “malarkey.”

Politics is a losing game for people who want freedom, and “inclusion” is a chimera when it comes to capitalism. Market anarchists ask for equal freedom and opportunity, and for voluntary trade free from legal privilege, a truly inclusive system that is at once for free markets and against capitalism.

5 responses to ““Inclusive Capitalism”: A Contradiction in Terms

  1. Something I’ve pointed out before, and may as well point out again, is how stuck in the past all this type of argumentation is. We’re currently argued at from the authority of early 19th century writers, and it’s like there has been no progress on economic theory since Smith and Ricardo, as here. Taking that latter point, it seems to be largely because of Ricardo’s “not even wrong” approach to economics based on a struggle between different classes- see Rothbard for many excellent takedowns of this flawed analytical paradigm, not least his History Of Economic Thought.

    RIcardo was writing at a particular instant in time when it seemed sensible, or at least credible (if you were a bit thick, anyway) to divide society into three grand classes; the landowners, the new industrial capitalists, and the labourers. Ricardo then wondered which class would win and he used some of his not even wrong theory to conclude that it would be the landowners, stealing the bread from the labourers and the profits from the capitalists via rent.

    Whatever. It was all nearly 200 years ago. Economics since has much improved in its analysis. Well, except for the Keynesians, heh.

    But this curious breed of American “anarchists” and “mutualists” are still stuck back there; I often imagine them typing at their computers wearing powdered wigs and white hose, and saying these new “trousers” will never catch on. The challenge for libertarians is to show how liberty is the best operating system for modernity, not to try to undo modernity itself. As such, I cannot see much merit in all this past-ist utopianism; though to be fair, D’Amato does deserve one gold star for not quoting the usually obligatory Benjamin bloody Tucker.

  2. A very insightful post. Free enterprise does not seek to exclude anybody. Those who seek to profit in the marketplace would like as many people as possible to have money. The more money potential customers have, the better it may ultimately be for those who hope to attract their business.

    The notion many Leftists try to promote, that it must somehow be desirable to “the rich” if there are a lot of poor people, is insane. People cannot become wealthy unless a lot of other folks have money to spend on the goods or services that generate wealth.

  3. The main free trade supporting economist in the United States in the 19th century was Arthur Latham Perry (1830-1905). He sold more books than any other American econmist of the time – and carried on the work of such French economists as J.B. Say and Bastiat and such English economists Richard Whately.

    If the “libertarian” left knew that Perry even existed they would just quote him wildly out of context (as they do Mises, Hayek….) in order to twist the meaning of his ideas by 180 degrees.

    As for talk of “capital”,”the corporations” (as if an enterprise that was owned by a single rich person would be better liked by Mr D’Amato) and “the rights of labor” (and on and on)…. – please go learn some economics Mr D’Amato. For example the labour theory of value was refuted (along with the rest of David Ricardo’s ideas) a very long time ago.

    On the modern United States.

    Backin 1887 railroad companies may well have taken advantage of government regulation (which was going to happen anyway) to enforce their cartel against companies who wanted to charge lower prices. However, by the 1960s the railroads were being destroyed by ICC price and service regulations – being forced to run trains that were no economically viable (with all the regs imposed).

    It is true of most industries (modern regulations are a savage attack on productive economic activity – i.e. on business). Companies (or individuals) may try and make deals with government – so that the regulations do not hurt them so much, or hurt their competitors (keeping them out of the market). But the idea that “business” (still less “the corporations”) is the primary source of regulations is false – it is more than false, it is B.S.

    One might as well claim that because some companies (such as General Electric) manage to make special sweet heart deals with the government, means that the United States having the highest taxes on business (State and Federal) in the Western world does not matter.

    When Karl Marx argued that business controlled government he was wrong – but his theory seemed plausible when looking at the influence of business on such new “liberal” nations as Italy (for example how the higher taxes in places like Sicily ended up paying for “infrastructure” and so on provided by private contrators). However, for someone today, at modern levels of taxation (with the vast majority of government spending being on the Welfare State – the entitlement programs and so on) and regulation, to argue that “capital” (business) controls government does not pass the smell test.

    No honest person could make such a claim, not wih the background of modern levels of taxation (with the vast majority of modern government spending going on the Welfare State – entitlement programs and so on) and regulation, so I am forced to conclude that Mr D’Amato is not making an honest mistake – he is lying.

    Indeed, I suspect, that even the name is a lie.

  4. You are right Paul, however I would argue it is less to do with Direct links to ‘government’ and corps and more to do with party affiliations, like for instance the companies that get goodies from political projects – green energy, and also those companies that get bailed out (American auto industry, many companies were campaign contributers to Obama).
    Not to mention the so called ‘voluntary’ sector.

  5. Agreed JFen – all these “Green” (and other subsdies) should be abolished at once. Many of the companies that took the money are going bankrupt in any case.

    Of course the “Green” policy would have been followed anyway (it is very popular in leftist circles – under the packaging of Social Justice known as “Environmental Justice”, Van Jones of STORM was just the tip of the iceberg on this, and it is international – Agenda 21 and so on).

    Just as a young Barack Obama, and older Comrades such as Bill Ayers, looted the Woods Fund (and various charities set up by “dead, white, Republicans”) to create the Chicago Climate (Carbon) Exchange. Goldman Sachs (and so on) came in later – but the looting (the “carbon trading” scam) would have happened anyway.

    But there is a broader problem……

    Let us say that Mitt Romney is sincere about getting rid of the Green subsides and so on (yes I know – look at all those flying pigs…..) it would still save only about 1% of the deficit (if that).

    As I (and many others) keep saying…..

    There is a trillion Dollar deficit. A trillion Dollars – every year (not counting State and local problems – or the endless unfunded mandates of Social Security, Medicare, SCHIP……..) .

    What is the Republic going to have?

    Some nonenity like Cameron – making tough speeches about a “cut” in government spending (whilst, in the real world, government spending remains out of control)?

    The West can survive without Britain – so, it could be argued, Cameron and co do not matter that much.

    But can the West survive without the United States?

    And the Republic can not afford a Cameron.

    Oh well if it is the Republic of Texas (and the Republic of South Dakota and…..) in the future – we will have to make do (although I rather doubt I will be around – Britain is a incredibly overpopulated country, if international trade is greatly disrupted I end up dead).

    However, those future people (I suspect) will find knowledge of Chinese a useful skill.