Governments, Markets and Class (and Libertarians)

The libertarian confusion from me citing evidence that the Chinese government forced peasants off land (and hence de facto into factories) as a criticism of the capitalist mode of production is evidence of a broader problem with libertarian methodology. For while libertarian methodology is supposedly about individuals satisfying their utility maximising preferences, you could argue that, more frequently, libertarians approach things from the perspective of two institutions: ‘governments’ and ‘markets’.

This leads to a lot of problems, not just because governments and markets are regularly framed as opposed to each other, when in fact they are mutually reinforcing when managed right. No, the problem is that, through their governments versus markets lens, libertarians see states throughout history as roughly equivalent. So when I criticise Commie China in an argument against capitalism, how can that work? I’m criticising capitalism, and hence advocating statism, which is synonymous with ‘communism’, which is the opposite of capitalism. So I’ve refuted myself!

For me, this is where marxist class analysis offers the most rich and appealing methodological starting point. We are able to understand the actions of states in their historical context and as distinct from each other. The Social Democratic Scandinavian states have highly successful high tax, high spend policies. On the contrary, the EZ project is an example of massive unrepresentative bureuacracy failing, spectacularly. Now, if we approach this from a ‘governments versus markets’ perspective we’re sort of stuck. Libertarians resort to insisting that Sweden isn’t really that social democratic and does well because of low corporate tax rates and lack of regulation*. Leftists often find themselves trapped on the ‘governments’ side of the equation and as such find themselves reluctant to criticise the state.

But if we approach it from a class perspective, and see the state – slightly glibly, admittedly – as simply advancing the interests of a particular class at any one time, then things make a lot more sense. In the case of Scandinavia, the lower/middle class are exercising their democratic preferences for the distribution income/goods and services, and in the case of the EZ  the political elite/creditor class are trying to allocate as much income as possible to themselves.

There are plenty more examples of governments and markets failing to analyse situations properly – for example, libertarians often cite the fact that the state is in bed with financial institutions as evidence that the crisis was not caused by true capitalism but by the ‘government’ side of governments and markets. Of course this is incoherent; financial institutions neither represent the state or the market, and the best way to describe them is as the elite class – which can include elected politicians, landlords, financiers, and whoever else – rigging the system in their favour.

Another example is the fact that American peasants were not, AFAIK, forced into factories, whilst British ones were. What libertarians might consider two conflicting pieces of evidence are better understood in terms of class: a legitimate democratic state founded on the idea of capitalism in the case of the former, and collusion between the landlords/merchant class imposing capitalism on an unwilling peasantry in the latter. Governments and markets would have trouble dealing with historical events like this.

Libertarians, naturally, have an objection to class because of its association with marxism, collectivism and ‘envy’. But really class is just a far superior tool for analysis. For whilst class representations are inherently collectivist, they are not incompatible with individualist analysis; they can simply be thought of an emergent property, and we can analyse the economy on two different levels, which Libertarians already do with governments and markets. And governments and markets glosses over the institutions required to sustain them, but class is a straight representation of people and so doesn’t take existing legal structures for granted, leading to a less hamstrung analysis. Furthermore, class analysis quickly highlights unjust hierarchies and structures that have been created by current institutions, things that should be rejected by anyone who purports to be in favour of liberty.

*If you follow those links neither of those claims stand up to much scrutiny.



  1. #1 by Surreptitious Evil on January 22, 2012 - 2:24 pm

    For while libertarian methodology is supposedly about individuals satisfying their utility maximising preferences

    Nope. It’s about people being allowed to do what they want to do, no matter how irrational, within the necessary limits for a stable society. Which is less deterministic than you have stated.

    libertarians approach things from the perspective of two institutions: ‘governments’ and ‘markets’.

    Not all free-marketeers are libertarians. Not all libertarians are free-marketeers. Some believe, emphatically, that the existence of corporations is an evil distortion.

    If you follow those links neither of those claims stand up to much scrutiny.

    So the only Nordic countries which has a higher corporate tax regime than any of the G7 is Norway versus Italy? Remember “margins”.

    • #2 by Unlearningecon on January 22, 2012 - 2:32 pm

      ‘Nope. It’s about people being allowed to do what they want to do, no matter how irrational,’

      Ern, that’s pretty much the same as them satisfying their individual utility maximising preferences.

      ‘within the necessary limits for a stable society. Which is less deterministic than you have stated.’

      Which libertarians tend to think are private property, contracts and force fraud and theft, as if they are somehow determined by god.

      ‘Not all free-marketeers are libertarians. Not all libertarians are free-marketeers. Some believe, emphatically, that the existence of corporations is an evil distortion.’

      I don’t really understand the point you’re trying to make here. I didn’t even mention corporations? Unless you conflate them with markets.

      ‘So the only Nordic countries which has a higher corporate tax regime than any of the G7 is Norway versus Italy? Remember “margins”.’

      1-2% isn’t going to make a significant amount of companies move. It’s a complete myth that capital has no nationality:

      Also, very selective there with the G7. Anyway, if corporations are such marginalist thinkers I expect we’ll see a mass immigration into the UK as the Tories reduce the corporate tax rate. In fact, if they have rational expectations it should be starting about now.

  2. #3 by christopher whalen (@rcwhalen) on January 22, 2012 - 4:37 pm

    I think you misunderstand the libertarian ethic, especially the American variety. Many people who pretend to be libertarians do get stuck in the markets vs. govt rut true enough, buy the real point is individuals vs the corporate state. Marx has nothing to add here. Neither do dead Austrians, much as I love Hayek. Try Jefferson (and Adams), Jackson, Teddy Roosevelt and Ronald Reagan instead. These are real libertarians.

    • #4 by Unlearningecon on January 22, 2012 - 6:51 pm

      Firstly, this is a sort of ‘no true scotsman’ definition of libertarianism. I’d say the average libertarian gets stuck in the governments versus markets routine, so if you don’t you should perhaps consider yourself something separate.

      Secondly, you’ve asserted that marx has nothing to add without much qualification. I think class analysis is a great way to analyse individuals versus the corporate state.

  3. #5 by BenP on February 6, 2012 - 9:50 pm

    “It appears there are some libertarians who are so extreme with their principles that it almost seems as though they would prefer anarchy.”

    Sigh. Libertarians, real Libertarians, are anarchists and proud of it!. Propertarians or ‘anarcho-capitalists’ stole the term “libertarian” from the left. Here’s Rothbard talking about the 50’s:

    “One gratifying aspect of our rise to some prominence is that, for the first time in my memory, we, “our side,” had captured a crucial word from the enemy. Other words, such as “liberal,” had been originally identified with laissez-faire libertarians, but had been captured by left-wing statists, forcing us in the 1940s to call ourselves rather feebly “true” or “classical” liberals.15 “Libertarians,” in contrast, had long been simply a polite word for left-wing anarchists, that is for anti-private property anarchists, either of the communist or syndicalist variety. ”

    Good blog, keep up the good work.

    • #6 by Unlearningecon on February 7, 2012 - 1:22 pm

      Rothbard passages are so full of spite and vitrol that I don’t know how anyone can take him seriously as a scholar. When somebody links me to him I have a rule that I read until the third insult then give up. So far I haven’t finished anything.

      Anyway, yes, ‘libertarian’ of course initially referred to anarchists, who have a respectable and coherent political belief system. Anarcho-capitalism, on the other hand, is the logical conclusion of weird anti government ‘free market’ arguments and makes absolutely 0 sense whatsoever.

      Thanks for your comment.

  4. #7 by asdf on February 8, 2012 - 4:08 am

    Government tends towards centralizing power in the hands of elites. There are pretty simple political economy reasons for this (I suppose I can spell them out if that’s necessary). The larger more complex government gets, the easier it gets for elites to manipulate it (I don’t want to have a talk about Scandinavia here, but I suppose I can if its necessary).

    I’m with you on class being an important political economy concept. However, I caution that you really think through the idea of class. We are the 99% was a great slogan and political concept, but in practice I really doubt the 99% has similar enough interests and the ability to coordinate for concrete political gain.

    The crisis probably killed off my believe that they can accomplish any substantial action against misbehaving elites (if we can’t put banksters in jail, what can we do?). On more complex issues I don’t think there is enough political unity and common interest to get anything done.

    My Dad was in a union when I was growing up. One need only look at the dynamic of migrant workers crossing picket lines to understand that “workers” are not some monolithic class. People have many class markers: ethnic, religious, philosophical, intellectual, economic, biological, etc. The issue is more complicated then people like it to be.

    • #8 by Unlearningecon on February 8, 2012 - 10:05 am

      Thanks for your comment.

      I admitted my characterisation was slightly (or very) glib but the main thrust of the post was to try and get libertarians to realise that just because the ‘government’ is involved in something it doesn’t make it ‘not capitalism’ as the government is intertwined with the capitalist elites. It was also for them to understand that ‘the government’ is not some ubiquitous entity across space and time and comparing democratic states to communist ones is silly.

      Of course, these arguments are obvious to most.

      And whilst I agree that the interests of the 99% are not perfectly aligned I don’t think that undermines thinking of them as a class at all. I am very interested in class as a methodological starting point, do you know of any papers/essays that explore this?

      • #9 by asdf on February 8, 2012 - 1:11 pm

        Like the music I listen to, I know what I like but I couldn’t tell you the name of the band. The same applies to most papers/essays I read on topics, I remember the ideas but rarely the source.

        Capitalism is an idealogical concept. Its probably pretty accurate to describe capitalism as a specific set of governing principals and laws. So its not entirely inaccurate to describe government action beyond those principals as “not capitalism”.

        However, it also misses the point. Capitalism has never existed in anything approaching a pure form. Talking about idealogical ideas is a fun intellectual pastime, but in the real world if your ideology is not supported by a solid political economy background its a non starter for useful debate. Personally, I think pure capitalism is fundamentally at odds with human nature, but then again I have some views on human nature that probably fall outside of most mainstream idealogies. This may apply to your views as well, and is part of our differing opinion on how class can be used as a political concept.