Saturday, 25 November 2017

Brief comparison of Kevin Carson and Karl Marx on capitalism

Recently a couple of people that are newer to radical politics asked me for suggestions on what to read as a starting point for understanding capitalism. I suggested Kevin Carson’s Studies in Mutualist Political Economy (SMPE).[1] Here I explain why I suggested this book instead of what some consider the standard critical text on capitalism: Marx’s Capital (or one of the summaries of Capital by Marxist academics).[2] The basic difference is that Marx mainly looks at the workings of ‘capital’ (property used to make profit) whilst Carson looks at ‘capitalism’ – the political system which creates the conditions for capital to exist and function. Below are a few notes on this difference and why I think Carson’s book is more useful for socialists.  

In the first seven sections of Capital (volume one – the only one completed by Marx), Marx considers how profit is made from commodity production, assuming a fair marketplace. He argues that workers only get a part of the value of what they produce and a part goes to the investors that employ workers (he accepts the labour theory of value, which we discuss further below). Marx says this is unfair on the workers. Marx also argues that without regulation, working conditions for the working class should not theoretically improve under capitalism despite technological development because most profit can be made by getting as much work out of as few workers as possible. And capitalists only employ people to make as much profit as possible out of them. He also argues that technological development should increase unemployment and poverty for the working class, as machines take jobs from people. He backs his arguments up with case studies from 1860s England.

Marx raises some interesting points but there are problems. The most significant, I think, is that in response to his arguments, pro-capitalists can, and regularly do, make responses such as ‘capitalists are actually benefiting workers by employing them at all’, or ‘If workers don’t like the offer being made to them, tough - capitalists don’t owe workers their hard-earned property.’ This brings Marx into a moral dispute with pro-capitalists. If you think people should be able to keep property they gained through free exchange or work, despite the poverty of others (seemingly a popular position, including amongst working class people), then Marx’s arguments will do little to shake your view that capitalism is justified.

It is perhaps for this reason that in the last section of the book, section eight, Marx introduces the idea that in reality, capitalist profit is based on violent state coercion rather than work and free exchange. This section is indispensable for understanding how capital came into existence as a historical phenomenon. Marx documents how in the early 15th century the English feudal system was mostly broken down, leaving a fairly libertarian, egalitarian system of peasant proprietors with improving standards of living. However, then began a multiple-century long aristocratic project of violent expropriation of land from the peasantry, which turned the population into a landless proletariat. Marx makes this argument with excellent historical documentation which has been backed up by multiple subsequent historians (see Carson’s book for details). The ex-peasant population was now at the mercy of property owners for food, shelter and other necessities of life, and only by working for them in a way which would make them as much profit as possible, could they earn the required wages to pay for such necessities. The property of the property owners could now be used to generate profit and therefore could be called ‘capital’. This is the secret of the origins of capital and capitalist exploitation. Really, this is the most important thesis of the book by far. It should have been made the foundation of the whole book as without this background the other arguments fall somewhat flat. Instead it is implied in the first seven sections that bad jobs and poverty are simply a natural outcome of free market exchanges, which is both misleading and leaves open the possibility of the responses we mentioned above.

Carson takes an approach closer to Marx in section eight of Capital rather than sections one to seven. He is attempting to critique capitalism as a political system for the benefit of capital, rather than looking at how capitalist investments function. Furthermore, Carson is fine with the morality of free market exchange itself, being an enthusiast for mutualist market socialism at the time of writing SMPE. (This means a market system where producers individually or collectively possess their own means of subsistence and/or workplaces. Carson now takes an ‘anarchist without adjectives’ approach, favouring free experimentation with economic organisation methods). Thus Carson’s whole critique of capitalism is a laser-like focus on the market-distorting violence and state privilege aimed at shaping property distribution and wealth accumulation in favour of capital. He therefore avoids a moral clash with those that support the right of private property gained through work or free exchange.  

He makes his argument in an interesting way. Carson starts by defending the classical labour theory of value, first outlined by pro-capitalist economists such as Adam Smith and David Ricardo, but put to radical uses by market socialists and then later, Marx. Carson argues, following the nineteenth century market socialists, but contra to Marx (although this is actually implied from a careful reading of Marx), that the implication of the theory is that in a free market workers should get the full value of the product of their labour as wages. Carson thus explains that if the theory is correct, which he convincingly argues it is (by addressing the major critiques from neo-classical and Austrian school economists), then systematic profit for capitalists can only be a result of non-market interference - that is state support on behalf of capital. Rent is treated separately by Carson. As a mutualist, he believes rent to be largely immoral, but even on traditional Lockean property grounds he argues most land owned by landlords in his case studies, the UK and United States, is illegitimate as it was originally acquired through violence or legal privilege, not by owners labouring on it.

After laying out the theoretical foundation for the book Carson systematically identifies market-distorting forms of historical violence and continued state support for capitalists, starting where Marx finished, with expropriation of the peasants in England, land-theft in the colonies, various forms of forced labour, and suppression of labour organising. Carson also discusses banking monopoly laws, patents, tariffs, infrastructure subsidies, state media and education (propaganda), state procurement, support for oppressive regimes in the Third World, structural adjustment programs in the Third World, and a host of other forms of state support for capital. Without such state support, Carson argues, systematic capitalist profits would not exist. Not only would it not have started in the first place, but the system is vulnerable to various breakdowns which require further intervention to counteract. Whilst maintaining the system in the short term, the interventions cannot stop, and also contribute to, further breakdowns requiring further intervention, and the pattern repeats. The argument is largely clear, coherent, and more relevant to understanding the capitalist system as a whole than Marx’s book.

One benefit of Carson’s approach is that because he sees capitalism as an artificial distortion of markets, he takes a far more critical approach than Marx to centralised urban capitalist development. Marx presents such developments as more of a natural and progressive process, which has ‘rescued’ people from rural life (Communist Manifesto). Marx’s enthusiasm for centralised industry perhaps inspired some of the greatest crimes in the Marx-influenced Soviet Union and China as they bled the peasants dry to fuel large-scale industrial development, attempting to emulate capitalism. It is also not uncommon for followers of Marx to fall into apologism for brutal forms of global capitalist development, as there is a tendency to see it as both innately progressive and a prelude to the post-scarcity socialist utopia. Carson falls into no such trap, instead seeing promise in freely developing, more decentralised small-scale technological advancement – taking inspiration from historical rural-based cottage industries. Carson builds on this theme in later publications arguing that modern hi-tech home-based industries could be the basis of a sustainable future socialist society. These ideas should be of interest not only to people in industrialised countries but also more rural countries with the possibility of alternative technological development paths. 

Like any book, Carson’s is not free of problems but with regards to his analysis of capitalism, these are relatively minor so I won’t discuss them here (e.g. there are question marks over his analysis of how banking laws impact interest rates). There are also other issues people may have with his book which don’t relate to his analysis of capitalism (e.g. his mutualist approach), which we won’t consider here. To conclude, Carson is more helpful than Marx when it comes to understanding the dynamics of capitalism as a whole. He also suggests some thought-provoking ideas for how to tackle it.

[1]  Keven Carson, Studies in Mutualist Political Economy:  I also recommend Carson’s blog:

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