The standard libertarian narrative of capitalism goes something like this: once various feudal restrictions were lifted and property rights were fully defined, people indulged in their ‘natural propensity to truck, barter and exchange’ and economic freedom fuelled growth. Conditions were poor for workers, but were better than the alternative. To tamper with capitalism and the free market is to tamper with the nature of man.
It is first worth considering the existence of an entity called the ‘free market’. But the fact is that people simply see the ‘free market’ where they want to, ignoring certain rules and regulations. To start, the workings of an economy are massively affected by the definition of property; what types of property are deemed private, as well as the definition of fraud and the workings of the criminal justice system. Secondly, laws like limited liability, immigration restrictions and laws that protect shareholders are often swept under the rug.
I feel the idea of a ‘free market’ greatly skews the views of its proponents, as they see something as complicated as the transition in China as simply them ‘unleashing’ the free market, and also write catch-all sentences like this:
It is worth remembering that the epicentre of the 2008 disaster was American property, hardly a free market undistorted by government.
Which, to me, simply makes no sense. I mean, the crisis was undeniably focused on private institutions, and if you’re going to start blaming government laws then you’ll logically have to end up blaming ones like limited liability laws, laws that define corporations, and possibly even private property itself.
I believe some have tried to argue that the black market represents a type of free market, but I’m not sure how possible that is given the amount of customs and arbitrary rules you often find there, not to mention the considerable amount of force.
Furthermore, the idea that trade springs up wherever man is and money initially arose as a solution to the ‘spot trade’ problem created by mankind’s natural propensity to ‘barter, truck and exchange’ has been falsified spectacularly by the anthropologist David Graeber, who revealed that there are 0 examples of barter arising spontaneously; money first arose primarily as a form of debt, and ultimately was a social relation.
On top of this, the historical origins of capitalism, at least in places, are hardly as magical as its defenders would have you believe. The industrial revolution involved large amounts of collusion between landlords and capitalists, and produced a surge in game laws, designed to limit peasant’s ability to subsist and hence create a workforce dependent on wages. The emergence of capitalism and the wage system was also closely intertwined with slavery and colonialism, and the facilitation of trade has required strong political institutions, rather than simple property rights and contracts.
Not only this, but almost every developed country had to use protectionist policies to get rich. This has been extensively documented by many scholars – the only potential examples of countries that got rich without much protectionism are the Netherlands and Hong Kong (which is effectively the London of a country currently using highly protectionist policies, anyway). I have attempted to offer a theoretical grounding for this here, but whether or not my argument convinces you does not change the historical facts.
My inclination towards capitalism is still ‘the worst system except all others that have been tried’, but the fact is that capitalism is a highly planned system with a questionable history – there is nothing ‘natural’ about it. Now this doesn’t tell us much about whether we should accept it here and now, but it makes statements such as “Capitalism is what people do if you leave them alone” rather questionable.