The merits of capitalism: Franc28 vs. Samuel Waite

[KnightWhoSaysNi]

This thread has been set up for a formal debate between Franc28 and Samuel Waite on the following resolution:

Resolved: Capitalism is the economic system that is most favourable to human life.

Franc28 will go first, taking the affirmative and Samuel Waite will oppose. The debate will go for 4 rounds as agreed to from the parameters (http://www.iidb.org/vbb/showthread.php?t=90546).

A Peanut Gallery (http://www.iidb.org/vbb/showthread.php?p=1698151#post1698151) is set up in the Political Discussions forum for the rest of us to comment on the debate.

Good luck to both participants!

Jason

[Francois Tremblay]

I would like to thank Mr. Waite for accepting this important debate. I would also like to thank IIDB for hosting it. The empirical and deductive evidence of politics is a vital topic, as virtually everyone emits political opinions without any evidence whatsoever. I hope this debate will help change this, however small our contribution may be.

The proposition that we must evaluate here is the following :
"Capitalism is the economic system most favourable to man's life"

This is a vast subject, and it demands that we look at all the evidence available and explain it dialectically, exploring all the ramifications. That is how I will proceed, while trying to remain as concise as possible. Here are the propositions I intend to prove in the course of this opening case :

1. Capitalism is best suited to material prosperity and growth, which is necessary for human life.
2. Capitalism is best suited to promote voluntary trade in society, as opposed to coercion, the latter being detrimental to human life.
3. Capitalism is best suited to ensure the efficient use of resources, which improves the services and production necessary for human life.
4. I will present two concrete examples of these facts (health care and the drug war).



Definition and nature of natural rights

A right is a political principle which must be respected in order to effect an optimally-constructed society, optimally being here defined by how favourable it is to man's life. It is the fundamental unit of politics.

There is only one fundamental right, the right of self-ownership. This principle tells us that man is the sole master of his own body (and consequently of his own mind). It implies all other rights. If one owns his own body, then by extension one is also free to act in the exterior world by using this body - this is the right of action. And given this, one is also free to own things as property, as ownership is merely a category of actions.

Other rights are combinations of these basic rights. The right of free speech, for example, is a combination of the right of property (owning a communications channel or access to this channel) and the right of action (being able to use it legally). This can be as simple as a person talking to someone else - he owns his own body, and he can use it to transmit sound to another person.

A person who possesses his rights to the fullest is said to be free, and a person who possesses no right (either by state or criminal force) is said to be a slave. Capitalism is that system by which men are free in the economic realm.

Since all mature human beings possess rights, we say that "the rights of one stop where the rights of another begin". This also has the consequence that rights are negative in nature. We do not have a right to coerce someone to give us their property : we only have the right to have property. The right of property is a principle against theft, not in favour of it.



Definitions of capitalism

Capitalism can be simply defined as "a social system based on the recognition of individual rights, including property rights, in which all property is privately owned de jure and de facto". This is a simple definition which gives the premises of capitalism but not its concretization.

Going at it from the point of view of the agents involved in the system, we can define it as such :
Capitalism is a system where
* the government's role is limited to ensuring individual rights,
* and private individuals are free to own, trade and act without coercion.

This is slightly more precise, in that it tells us how rights are recognized : by the government. The government is the formal coercive authority in a given society. The government ensures the existence and persistence of natural rights by protecting them from coercive action - force (physical coercion) or fraud (non-physical coercion).

This translates concretely in the economy by a lack of coercive financing such as taxes (sales taxes, personal taxes, corporate taxes, and so on), government monopolies, and corporatist measures like subsidies. Enforcement against fraud or force, on the other hand, takes forms such as a judiciary, consumer protection, fraud detection, environmental protection, and other similar areas. The implication of these is that the only existing state intervention in the economy is protective, not redistributive, and individuals trade voluntarily.




The relation between capitalism and prosperity

The first obvious question is, which system is most efficient in terms of economic progress, that is, which system permits to extend the pie of resources the fastest, and therefore give us the best level of life ? The answer to this is given to us by economic freedom vs GDP per capita studies. The only extensive studies that exist on this subject are those made by Cato Institute, Heritage Foundation, and Fraser Foundation. All three report a positive correlation between economic freedom and GDP per capita.

Cato Institute : Study done on 123 countries. "The economic freedom index is shown to correlate positively with measures of income per capita, economic growth, the United Nations Human Development Index, and longevity. It correlates negatively with indexes of corruption and poverty" (Economic Freedom of the World : Annual Report 2001). The report gives, amongst others, the following data :

Economic freedom and income, by quintile :
top - 19 846 $, 2nd - 9 607$, 3rd - 7 286$, 4th - 3 984 $, bottom - 2 210$

Economic freedom and Human Poverty Index, by quintile :
top - 14.6, 2nd - 17.17, 3rd - 21.79, 4th - 31.82, bottom - 36.62

Economic freedom and life expectancy, by quintile :
top - 76.18, 2nd - 69.19, 3rd - 68.01, 4th - 63.51, bottom - 52.18

Heritage Foundation : Study done on 156 countries. "This is particularly significant for citizens of those countries that are classified as "mostly unfree" or "repressed"—more than 50 percent of the world's countries. These people earn 30 percent as much as citizens of "mostly free" countries. In addition, the citizens of "free" countries enjoy a per capita income that is twice as high as their counterparts in these "mostly free" countries" (The 2002 Index of economic Freedom).

Fraser Foundation : "Economic Freedom of North America", done on all states and provinces of North America. This study found that the jurisdictions at the bottom quintile of economic freedom had a GDP per capita of 21 056$US, compared to 37 268$US for the top quintile.




Comparison of capitalist and statist resource-dynamics

This is necessary but insufficient. Statists could argue, on the basis of this data, that while prosperity is present, there may be crippling disparity. Is poverty more acute in capitalist countries ? It is trivially true in one sense - the higher-level incomes rise more quickly as the pie of resources grows, following a Bell curve. Indeed, we find that the richest countries are also those with a higher index of disparity. On this subject I would refer you to the OECD 1995 study "Revenue Distribution in OECD Countries" (Atkinson, Rainwater and Smeeding), which shows a linear relationship between inequality and economic freedom as defined by the Heritage study.

On that basis, one may argue that lower-level incomes do not in fact rise at all, and that only one category of citizens reap the benefits of resource expansion. This is incongruous. In a relatively free country, where people trade voluntarily, they both reap the benefits of that trade, given that there is no coercion. Everyone trades to his own perceived self-interest (I will discuss later the dynamics of trade). Furthermore, it is difficult to imagine what kind of production pattern would benefit only a minority.

The data confirms this deductive evidence. Michael Roemer and Mary Kay Gugerty (of the Harvard Institute for International Development), in "Does Economic Growth Reduce Poverty ?", conclude from statistically studying underdeveloped countries that "an increase in the rate of per capita GDP growth translates into a one-for-one increase in growth of average income of the poorest 40%" and that "For the poorest 20% the elasticity of response is 0.921". This is what we would expect, and it is stunning that it applies even to heavily statist situations.

United States data also confirms this - in "Conquest of Poverty" by Hazlitt, historical data about wages from the US Department of Commerce is discussed. Between 1939 and 1969, wages in constant prices rose by 108%. As productivity rose, corporate revenues went more and more to the workers, as we should expect : between 1955 and 1970, wages went from 85% to 91% of corporate profits.

Measures of absolute poverty (as opposed to inequality) only drive home the point. The average poverty level in the United States, for example, is higher in absolute terms than the average prosperity of the vast majority of inhabitants of this planet.

Such benefits are an important part of our issue, but not the only criteria. There are more things in society which permit or hinder the fulfillment of one's life than straightforward prosperity : political corruption, general hostility, disrespect for the environment, high prices for common goods, are various things which are dependent on economics and affect our life. This is what we will now examine.




Social dynamics and stratification


To understand the efficiency and social benefits of capitalism, that is, to get a global view of why capitalism best serves our interests, we must analyze the societal dynamics entailed by each system. This simply means to examine how individual and public action is affected by different systems.

To understand these dynamics, we need to keep in mind that everyone acts in his own perceived self-interest. Whatever our motivation is, we believe that it is favourable for us to act in a certain way. Even in altruistic action (to take an extreme example, suicide), people do what they think is best for themselves. This is trivial, of course, but it is important to point out : it is the basis of the so-called "invisible hand" of the free market, which is nothing more than each individual desiring to fulfill the most desirable role in the economy.

There are three basic categories of action in society : voluntary trade (non-coercion), political pressure (impersonal coercion, effected by the government), and crime (personal coercion). All three systems imply a different balance between these three categories.

In a capitalist system, state action is designed to protect individual rights, thru the police and judiciary. This protection tends to make crime unprofitable. The limits imposed on state action also means that it cannot regulate markets or subsidize to the profit of one or the other economic agent. This tends to make political pressure unprofitable. Because of these two restrictions, the perceived self-interest of the economic actor will tend towards voluntary trade.

In a statist system, state action can overstep its natural boundaries and coerce economic agents. Because the state is extremely powerful (being, as I have pointed out, the only formal coercive agent in the society), the benefits of political pressure become much greater than that of voluntary action - that is to say that pressuring the government to rule in our favour becomes more profitable than trade. Crime, on the other hand, is still rendered unprofitable by government protection (although more than in a capitalist system due to the sprawling black markets triggered by the illegality of various goods). Therefore the perceived self-interest of the economic actor in this case will tend towards political pressure .

Thus we get monopoly trials incited by outdated rival corporations in order to topple a productive giant, we get subsidies and protectionism, we get social laws that censor a group of people in favour of another while mollifying individual responsibility. An extreme case of this is communism, where private trade is outlawed and the state regulates all production. In this kind of system, most non-trivial societal action is political pressure (with of course the black markets, which flourish due to inadequacies of supply in any purely producer-driven economy)

These statist dynamics create stratification. In a capitalist system, everyone is equal to the law. In a statist system, the vast reach of political power creates castes - politicians at the top, "friends of the state" in the middle (generally the banking industry and other industries shielded by protectionism, pressure groups and minority groups, doctors and other professionals, stars and other visible personalities, and others), and the common people at the bottom. While this is radically expressed in communist and fascist countries, it is also visible in centrist countries such as Canada (where efficient health care is mainly a luxury of the politicians and their appointed friends). Such stratification is also reflected in politicians' immunity to the law.

In an anarchic system, there is no government by definition, and political pressure is meaningless in the sense that we understand it now. Rather, we have informal coercive agents (be it corporations, syndicates, mafias, etc) which are now unrestrained. Given their own leverage, it becomes advantageous for these agents to coerce other people instead of trading with them, just as the leverage of the government pushes people to try to turn it to their advantage in a statist system.

I have already noted that everyone acts in his own perceived self-interest. This entails that voluntary trade is an optimal means to deal with one another, since every single agent in the system is maximizing his benefit. At best a controlling agent (such as the government) can only mimic such trade patterns : at worst, disrupt them completely. Such optimality, however, is non-rational - people effect their perceived self-interest, not their actual self-interest. One may then argue that a system adjusted for rational results can return rationally optimal results : however this is undialectic thinking, since political agents are as epistemically flawed as the rest of the population.


The indirect consequences of widespread coercion as part of the economy are numerous.

Take the example of foreign relations. A capitalist economy is by definition opened to the world, since freedom to trade with other countries is but another component of the right of action. The dependence between individuals (and therefore between nations) becomes stronger, as it does in a capitalist society (by opposition to a statist society, where individuals submit to a central authority). As free trade takes effect within a nation, people become specialized in order to maximize their utility to other people, and the same is true of nations within a geo-political system. This dependence makes war between nations considerably more costly, and unlikely.

On the other hand, a statist country is most likely to shield its people from the attraction of freedom, and therefore control foreign trade. This also means that such a country has much less to lose by going to war.

We do observe that most wars take place in unfree countries, that the two world wars were started by a monarchy and a dictatorship, and that most genocides are performed by statist leaders. An exception to this rule is the United States, which seems to have particularly violent and war-loving people. Such psychological anomaly is exceptional, but probably cultural.

We expect the same to be true of corruption, which is highly dependent on political power. As we have seen, political pressure becomes a mode of living in statist countries. This pressure may be formal (election funding, for example) or informal. Bribes and corruption belong to that second category.

According to the Transparency International Corruption Perceptions Index 2002, the least corrupted countries are Finland, Denmark, New Zealand, Iceland, Singapore and Sweden (please note once again the absence of the United States, which is in 16th position) - for an average economic freedom rating of 1.78. The most corrupted countries are Bangladesh, Nigeria, Paraguay, Madagascar, Angola and Kenya - for an average economic freedom rating of 3.11 (both ratings from the Heritage Foundation lists : lower is freer).

These are just a few of the effects of the dynamics I have explained at the beginning of this point. Let me now get specifically in the economic effects.



Six major problems of statist systems

Tying together the principles presented at the beginning and in the last section, we can now examine six major problems particular to statism, which are entailed by its nature, its sub-optimality and its stratification.


1. Public waste.

The lack of competition inherent to public monopolies entails waste of resources and inefficiency. While natural monopolies do exist in situations where resources or demand are scarce, the resulting high prices are a normal signal to the market that the access to the resource must be restricted, lest a situation of penury exist. However, artificial monopolies serve no such role and only make waste. The apparent superiority of monopolies in reducing costs (such as laying down one ground line instead of many, or needing only one building instead of many) is illusory because it restricts competition and consumer choice.

2. Private Interest Theory and political motivations.

Private Interest Theory is the analysis of political decision from the point of view of political motivations. It has shown that politicians naturally take decisions in their own political interest. This is perfectly natural, but also has the consequence that political actions do not serve the interest of the individuals who have to suffer those decisions - while politicians themselves often escape the consequences of those decisions.

PIT explains many of the idiosyncrasies that seem mysterious to private consumers of state services. The chronic shortages of beds in statist health care, the strange laws that tip the scales for corporations or for consumers seemingly without reason, the bad management of public forests are all manifestations of PIT. The prime motivator of political action is the private interest of the political agents, as influenced by pressure groups, corporate money, and all the other characteristics of centrist democracies.

For a nice demonstration of PIT, see the example of "The Motivations Behind Banking Reform" in Regulation Magazine vol. 24 no.2 - when there is a lot of small lenders, for example, the insurance lobby opposes itself to the opening of the insurance domain to banks, and PIT predicts correctly that delays will be present, despite the obvious benefit of such opening to the consumers.

3. Tragedy of the Commons situations.

State ownership of natural resources necessarily creates Tragedy of the Commons situations, where it is in the best interest of the state, or to individuals given access to them freely, to consume the resource before others can do the same. This is especially detrimental from an environmental point of view, and can only be solved by private ownership or laws emulating private ownership (such as systems of flexible quotas).

The Tragedy of the Commons is an established principle in economics based on the interest of agents towards a collectively-owned resource. Given a situation where no one in particular owns a given resource, and some agents are free to access the resource (regardless of any costs or penalties given for accessing the resource), it is in the best interest of those agents to get as much of the resource as possible before others do, instead of conserving it preciously as an owner would.

A good example of this is the depletion of fish reserves in the coasts and in public lakes. The ToC, however, applies to political and social situations as well.

4. Power grabs and moral deterioration of society.

The moral deterioration of society can be seen as an indirect political variant of the ToC, in terms of freedom of action. Given a certain extent of political power, this opens us a certain amount of freedom to be legislated. If it could be legislated in an agent's favour, it is in the interest of that agent to lobby for such benefits, even though it is detrimental to others. For example, Microsoft benefits from the illegality of reverse-engineering of its operating system under the Millennium Digital Copyright Act, even though this is detrimental for the consumer's freedom of choice.

Given that everyone desires the benefits of immoral legislation, society begins to align itself not towards the harmony of interests that is proper to a free society, but rather as a wrestling contest centered over politics. A good example of this is the conflict between parents as to how better legislate the education of all children, even though it would not be part of their sphere of influence if not for political power. Another, more insidious and scandalous, example is the politician who implements strong laws against drug use and then saves his children from getting prosecuted. Such things would be unconscionable in a capitalist society.

5. Imposition of individual decisions on the collectivity.

The nature of peaceful cooperation is that individual decisions stay within the sphere of action of the individuals involved. When a powerful state imposes a new law or a new institution, it overrides the freedom of action of the individual, and magnifies political motivation to the entirety of society.

The imposition of individual decisions on the collectivity is the counterpart of the moral deterioration of society. While it is the prospect of political power that makes society align itself around power grabs, the consequence of those power grabs is the imposition of the results on everyone. While in a capitalist system mistakes are constrained and large-scale error only occurs when the state is fiddling with the monetary supply, a statist law made by officials of the state has far-reaching consequences in the entirety of society.

6. Black market dynamics.

When peaceful cooperation is prevented, we obtain un-optimal patterns. These patterns are compensated in various ways, including corruption, criminality and black markets. The black market dynamics are a necessary consequence of suboptimal trade patterns imposed by the state. There are three consequences to these dynamics : as long as there is a demand for a given product, whenever legal or not, people will exchange it - if something is illegal, then by necessity, only outlaws will have it - what is hidden, and therefore unregulated, is more likely to be damageable.

In most cases an economy cannot reasonably be said to be controlled, and we observe that the more state control there is, the bigger a black market we find. In that regard, the only functional alternative to total freedom is total slavery - either we accept total freedom of action, or we justify more and more controls, which in return only create more control problems.


What is the economic consequence of these inefficiencies ? Milton Friedman's Law, which states that services cost approximately half as much to provide under a free market than they do under government. This is, of course, not a precise measure : however it seems to be supported by observation.

Examples can be seen when the government privatizes or opens to competition new markets (thanks to the Non-Non-Libertarian FAQ by Glen Raphael for these examples) : allowing multiple competing electric networks drives down utility prices and increases consumer satisfaction without noticeable additional environmental impact (Lubbock, Texas), allowing multiple competing cable companies can drastically reduce consumer costs, increase channel availability and increase consumer satisfaction (dozens of cities), big cities can exist and thrive without any zoning laws at all, using free-market mechanisms to anticipate and resolve disputes - in such a situation, housing costs are reduced, homelessness is reduced... (Houston, Texas), fire service can be provided through voluntary means, either with a nonprofit volunteer department or a for-profit subscription service (hundreds of cities), private libraries are cheap and can provide high-quality service even to people who can't afford to pay for it (in dozens of cities), security services can be provided either via contract or volunteer patrols (hundreds of cities), private services can deliver stuff faster and cheaper to more places with higher reliability than public services can (UPS, New Zealand). Statist systems are soundly defeated whenever they are put to the test alongside the private sector.

Complicating the issue is the diversity of options between private and public - for example, charter schools are a more efficient midway solution which retains a form state control. Deregulation can be complete or partial. As was seen in the case of the California power crisis, partial deregulation done badly can be worse than public systems.



Some specific issues

Two specific issues may illustrate the superiority of capitalism, health care and the drug war.

I am quite aware of the problems of socialized health care, living in Canada, where health care spending is fifth amongst OECD countries but bottom third amongst OECD countries in availability of technology. Health care in Canada is so backwards that doctors go work south of the border in droves, and a number of patients, as well as politicians (who hypocritically promote the public system), get treated in the United States. Furthermore, the socialization of health care has brought about social warfare in regards to which hospitals to finance, as well as what the health care system should be like and how it should be financed.

It is not simply a question of injecting more money in the system. In Canada, there is no correlation between health budgets of various provinces and waiting times, and waiting times in the country have ballooned while spending has risen. Between 1993 and 1998, while the health care spending per capita has risen by 77$, the average waiting time have risen from 9.95 weeks to 14.21 weeks (for a statistical study of the relation between spending and effect in Canada, see "Spend More, Wait Less ?" (http://www.fraserinstitute.ca/admin/books/chapterfiles/Introduction-aug00ff(v8).pdf#8), Martin Zelder, 2000).

Financial crisis is also the norm in the UK, where more than a million people wait on the lists and one-quarter of cardiac patients actually die before it is their turn to be called in ("The million-year wait" (http://www.adamsmith.org/cissues/waiting-list.htm), Adam Smith Institute, 2002).

Studies have demonstrated that the US' medical spending, while higher than most countries, is also more productive per dollar. Four diseases (diabetes, cholelithiasis (gallstones), breast cancer, and lung cancer) were measured for expectancy and quality of life, and the US was ahead of the UK and Germany in all except diabetes treatment in the UK (William Lewis, "The Power of Productivity", p97 - also in "The productivity of healthcare systems", The McKinsey Quarterly, 1996 no. 4). The more capitalist a system is, the more growth it fosters, because the economic agents are interested in improvement for profit.

The Drug War is probably the single most deadly democratic measure in existence. In the United States alone, the war accounts for more than 15 000 deaths every year - 6 000 due to drug impurities, 5 000 by homicides (mostly by police officers) and 4 000 due to AIDS and the laws against the financing of syringe exchanges (Dr. Mary Ruwart, Milton Friedman, and Center for AIDS Prevention Studies, University of California, San Francisco).

The cost in lives is not the whole picture. Approximately 1/4 of prisoners in the United States are serving a prison term for a drug law violation, which represents a half-million people. The influx of drug prisoners is of approximately 600 000 every year. The cost of holding all these innocent people between bars is around 9 billion dollars a year (DRCNet 07/00, Fraser Institute).

As we have seen, relegating the drug market to the black market creates all kinds of sub-optimalities, including much higher prices and, because of the inelasticity of drug demand, a rise in crime to compensate. We also see organized crime taking the market over, which then gives the government incentive to pass more and more anti-civil liberties laws in the name of the Drug War.

Without the laws against drug production and trade, they would once again fall in the hands of the pharmaceutical industry, like aspirin. There are no gang wars over aspirin. People are not selling aspirin in secret in school yards. People are not stealing in order to be able to afford aspirin. If drugs were legal again, all the black market sub-optimalities would cease to exist. The Drug War is neither an efficient use of the drug market, nor does it protect anyone.




I have presented three general lines of argument to show that capitalism is the economic system most favourable to man's life, all of which are complementary :

1. Capitalism is best suited to material prosperity and growth, which is necessary for human life.
2. Capitalism is best suited to promote voluntary trade in society, as opposed to coercion, the latter being detrimental to human life.
3. Capitalism is best suited to ensure the efficient use of resources, which improves the services and production necessary for human life.
4. I have also presented two concrete examples of these facts (health care and the drug war).

This debate therefore clearly pits an optimal, economically and socially sound system against people (from right and left wings alike) who would reverse a century of human progress and the dignity of the third-world in the name of personal comfort and antiquated prejudice. While there is a lot of emotional investment in statist ideas, they are proven by no economic research or statistical research, and resulted in a great number of failures, including notably the fall of communism and fascism in the 20th century.

Please note that this opening post is a quick overview of the case for capitalism as most favourable to man's life. Entire tomes have been written about the philosophical and economic details of this issue (most recently, "Capitalism"), and I'm sure a lot of clarification will be needed in the course of this debate.

[KnightWhoSaysNi]

Samuel,

I'm afraid that we've declined your recent statement. Your statement exceeded the word limit by more than 3000 words (5000 words was the limit agreed to from the FDP thread). Please re-submit your statement so that it is under 5000 words. Please take into account that quoting your opponent is included in the word limit.

Thank you for your consideration,

Jason

[Samuel Waite]

I would also like to thank IIDB, and of course Franc28. I welcome the opportunity to participate in such a thoughtful exchange in an atmosphere of mutual respect.

In his introductory remarks, Franc states that:

1. Capitalism is best suited to material prosperity and growth, which is necessary for human life.
2. Capitalism is best suited to promote voluntary trade in society, as opposed to coercion, the latter being detrimental to human life.
3. Capitalism is best suited to ensure the efficient use of resources, which improves the services and production necessary for human life.
4. I will present two concrete examples of these facts (health care and the drug war).

It is my contention that, on the contrary, only a strongly regulated capitalism – social democracy – can guarantee any of the above, and only socialism can guarantee all of them. In this particular debate, however, I do not intend to defend a blueprint for either kind of society. I intend only to open minds to the possibility by offering a critique of the laissez-faire vision advocated by Franc and many others.

There is only one fundamental right, the right of self-ownership. This principle tells us that man is the sole master of his own body (and consequently of his own mind). It implies all other rights. If one owns his own body, then by extension one is also free to act in the exterior world by using this body - this is the right of action. And given this, one is also free to own things as property, as ownership is merely a category of actions.

Here we find the fundamental source of our disagreement.

Individuals have the right to the fruits of their labors. They can exchange these fruits with others for something they deem to be of equal value. On this point, most everyone agrees.

But the land is the fruit of no one’s labors. It therefore cannot be owned. All individuals thus have an equal right to the land. Indeed, the modern principle of land ownership is a fairly recent invention, having developed in the last 500 years or so. Foragers had no such concept, nor pastoralists, horticulturalists, agriculturalists, nor even feudalists. The basis of property is thus violence and coercion (indeed, establishing it in Europe required forcing vast numbers of peasants off their land). As Proudhon famously put it, “Property is theft.�

If property is theft, then profits can only be seen as a privately levied tax on labor. Profits are thus the rightful property of workers. But these are the same profits that are used to create new enterprises and expand existing one. So all property is the rightful property of workers collectively.

At this point, it is appropriate to make a few points about human nature. What is it that makes us human? There are only a few things that we can say for sure. One is that we are social animals. Another – more relevant here, and often neglected – is that we laboring animals. Only humans consciously create tools, machines, and art. Only we appreciate them and want others to appreciate them. Our labor – just as much as language or abstract thought – is what makes us human.

Most of us under capitalism are forced to sell our labor, and so sell something integral to ourselves. This fact does not say something positive about the nature of self-ownership under capitalism.

Other rights are combinations of these basic rights. The right of free speech, for example, is a combination of the right of property (owning a communications channel or access to this channel) and the right of action (being able to use it legally). This can be as simple as a person talking to someone else - he owns his own body, and he can use it to transmit sound to another person.

But such political rights cease to apply in a work setting. Indeed, if corporations were countries, they could only be described as fascistic. For example, Wal-Mart, the largest employer in the United States, requires routine drug testing for its employees. They are tested only for marijuana, and fired regardless of whether or not it was used on the job.

Similarly, labor unions are frequently repressed in capitalist countries (provide examples and reference freedom of association and such). The Bill of Rights largely stops at the company gate.

And even political rights are unequally protected. After all, it costs money to defend one’s rights in court. And when the state is in the service of capitalists, enforcement (in the form of bureaucratic regulations and the like) will tend to favor their interests.

There are at least four problems with the doctrine of purely negative rights under capitalism:
1.) As I have argued, property is theft. As such, the state can and should demand that profits and wealth be redistributed.
2.) As the citizen of a state, you are party to a social contract. Your parents signed it for you when you were born. Current laws are the terms of that contract. You can try to modify the contract through the democratic process. You can try to exit it through revolt, renouncing your citizenship, or moving to another country.
3.) Humans are social animals. Rights therefore should be guaranteed not just to individuals, but also to the community.
4.) Negative rights are simply meaningless without positive rights. Freedom of religion means very little to someone who’s starving to death or living in a car.

Most of what Franc brings up in the next section are addressed above, so I’ll skip ahead to “The relation between capitalism and prosperity.�

The system that results in the size of the pie increasing the fastest isn’t necessarily that which provides the best level of life. The size of the pie can increase while at the same time decreasing the size of the slice given to certain sectors. And of course, there is no necessary correlation between wealth and happiness. One could also make the case that increasing commercialization, less leisure time, and so on has taken a psychological toll. But Franc has framed his argument in material terms, and because space is limited, so will I.

First, it is worth noting that Cato, Fraser, and Heritage are all right-wing think tanks. They lack the checks and balances of academia – for example, peer review. They are funded by corporations and wealthy conservatives seeking to influence public opinion. They enter research with a conclusion and mind and seek to justify it. Consequently, they demonstrably produce highly biased and flawed studies.

Still, it would be unproductive to dismiss them as such, and better to show why these particular studies are flawed.

The most obvious problem is that GDP is not a good measure of overall prosperity, for two reasons:
1.) It can tell us that wealth is being created, but not that it is benefiting the majority of the population.
2.) Many things that can contribute to the GDP are bad for the public – for example, environmental destruction.

More importantly, these studies confuse correlation with causation. There are a great number of factors besides “economic freedom� which contribute to growth. Further, are countries poor because they are “economically un-free� or does the fact that they are poor make them demand such a system?

The case of Cuba is instructive. “Economically un-free� by these groups’ standards, Cuba nonetheless has roughly the same infant mortality rate, death rate, literacy rate, and life expectancy as the United States, according to the 2004 CIA World Factbook. Similarly, the U.S. has for many years been growing more slowly than First World countries with significantly higher taxes and more regulation, as a look at the most recent OECD revenue statistics reveals.

Many of the countries currently embracing deregulating and “free trade� are countries that were relatively prosperous well before the breakdown of the post-war Keynesian consensus in the ‘70s. So the question isn’t whether income is increasing, but whether it is increasing more or less than when these countries embraced Keynesian policies, and whether or not the same can be said about the Third World.

Do poor states seek regulation, or do unregulated states do better? It’s also worth noting here that Southern states are on average poorer than Northern ones – and less unionized. So it’s worth asking if perhaps there’s a disparity in enforcement.

Inequality matters. For one, it leads to unequal enforcement and utility of rights, as argued above. It also tends to mean – as Paul Krugman writes in “The Death of Horatio Alger� (The Nation, Dec. 18, 2003) – that social mobility decreases.

At least two independent studies have found a strong correlation between inequality and crime, incarceration, unemployment, health problems, and negative educational outcomes, one published in the British Medical Journal (Vol. 312), the other in American Journal of Public Health (Vol. 86, No. 4).

It is also important to remember that needs aren’t just innate, but are also socially determined. To live in the United States today, most people “need� a car, multiple sets of clothing, and so on. It isn’t much comfort to the American working poor to tell them that they have it better than Third World peasants.

And over the long term, inequality is bad for growth, for reasons explained below. Indeed, the period immediately preceding the Great Depression was characterized by a greater degree of inequality than any other in American history.

Moreover, workers in “free� countries have been getting less and less of the pie. In the United States, for instance, real wages have been declining steadily since 1973.

Absolute poverty has also increased. The current poverty threshold was formulated in (find date). It was found that food accounted for a third of what families spent on basic needs (give examples). Today, other costs have increased a great deal, so this threshold is outdated. If it were altered to reflect the current situation, it would show that around one-third of the population lives in poverty. Millions of people can’t make end’s meet.

It is true that GDP growth tend to alleviate poverty. It is not true, however, that laissez-faire policies tend to produce higher growth. This is evidenced by (among other things) the fact that all of the Asian Tigers implemented stiff tariffs and regulation. At one point, South Korea mandated capital punishment as a penalty for capital flight. "Free market" reforms, on the other hand, have been tremendous failures in Eastern Europe and throughout Latin America.

The period from 1955-1970 was characterized by a higher degree of state intervention than any other in U.S. history. Taxes much higher (the top marginal rate was at least 88 percent until 1963, when it was lowered to 70 percent), military spending soared, and the social safety net was still largely untouched. Clearly, these figures come closer to vindicating Keynesianism than laissez-faire.

Measures of absolute poverty (as opposed to inequality) only drive home the point. The average poverty level in the United States, for example, is higher in absolute terms than the average prosperity of the vast majority of inhabitants of this planet.

Yes and no. As I’ve already argued, needs are socially defined. But there’s more.

In his essay “The Original Affluent Society�, eminent anthropologist Marshall Sahlins showed that foragers enjoyed significantly more leisure time than modern humans, yet were very able to satisfy basic needs. They also enjoyed a reasonable life expectancy and of course didn’t suffer from modern diseases and a host of other ills endemic to civilization. So if we define prosperity only in terms of cars and television sets, then yes, you’re right. But that needn’t be the case.

In any case, current neoliberal policies have allowed companies to easily invest abroad, creating a “race to the bottom� in which countries try to “bid down� one another by guaranteeing lower wages and less regulation. We may yet see First World workers working for Third World wages.

Sahlins characterized foragers and “uneconomic man�, and with good reason. As John Gowdy writes in The Cambridge Encyclopedia of Hunters and Gatherers, “The view of human nature embedded neo-classical economic theory is an anomaly among human culture.� He continues:

The most important challenges to economic orthodoxy that come from descriptions of life in hunter-gatherer societies is that (1) the economic notion of scarcity is a social construct, not an inherent property of human existence, (2) the separation of work from social life is not a necessary characteristic of economic production, (3) the linking of individual well-being to individual production is not a necessary characteristic of economic organization, (4) selfishness and acquisitiveness are aspects of human nature, but not necessarily the dominant ones, and (5) inequality based on class and gender is not a necessary characteristic of human society.

Of course, one could argue that people in capitalist society better fit this description. And to some degree, I agree. But not entirely. You note that people are often not well-informed, which is correct. In addition, humans frequently make decisions that are emotional rather than rational.

In a capitalist system, state action is designed to protect individual rights, thru the police and judiciary. This protection tends to make crime unprofitable. The limits imposed on state action also means that it cannot regulate markets or subsidize to the profit of one or the other economic agent. This tends to make political pressure unprofitable. Because of these two restrictions, the perceived self-interest of the economic actor will tend towards voluntary trade.

This argument rests on a number of faulty assumptions. Here are two:

First, as I’ve argued above, in a system characterized by significant inequalities of wealth, the rights of some will inevitably be protected more than others.

Second, the state in capitalist society is always beholden to private interests, for at least three reasons:
1.) Those individuals with the most money will be able to contribute the most to political campaigns. In the U.S., as of 2000, business contributions outnumbered labor contributions by a 14-to-1 ratio, according to the Center for Responsive Politics.
2.) The “economic veto�. If the state begins to enact laws that are unfavorable to the interests of wealth individuals, they will withdraw investment, wrecking the economy. These “capital strikes� are what wrecked Scandinavian social democracy.
3.) The wealthy control the media, the publishing houses, the think tanks, and the foundations. In short, they shape the boundaries of acceptable discourse.

We can vote for our political representatives. Try voting for a CEO.

Governments are not as epistemically flawed as the rest of the population, for the simple reason that they act on macro-level information, whereas individuals do not.

Take the example of foreign relations. A capitalist economy is by definition opened to the world, since freedom to trade with other countries is but another component of the right of action. The dependence between individuals (and therefore between nations) becomes stronger, as it does in a capitalist society (by opposition to a statist society, where individuals submit to a central authority). As free trade takes effect within a nation, people become specialized in order to maximize their utility to other people, and the same is true of nations within a geo-political system. This dependence makes war between nations considerably more costly, and unlikely.

This line of reasoning neglects a few important facts. First, the increasing globalization of capital is accompanied by an increasing degree of monopolization. Consequently, competition between capitalists takes the form of competition between states. And of course, there are innumerable examples of capitalist states waging war (both covert and overt) to open what Franc would call statist countries to foreign investment and control.

We do observe that most wars take place in unfree countries, that the two world wars were started by a monarchy and a dictatorship, and that most genocides are performed by statist leaders. An exception to this rule is the United States, which seems to have particularly violent and war-loving people. Such psychological anomaly is exceptional, but probably cultural.

It just won’t do to arbitrarily exempt the United States. The U.S. has been a hegemonic power for half a century and is closer to laissez-faire than most any other advanced capitalist country. If people really are as rationally self-interested as Franc describes, and if interdependence does tend to discourage it, then any emotional investment in warmongering should make little difference. But it’s really a moot point. How can one seriously argue that the U.S. is traditionally more violent than, say, Germany? And Canada also pursued its fair share of genocidal policies against indigenous peoples.

But even if we’re going to play that game, one can easily think of many examples of “free� countries starting wars and committing atrocities: the French in Algeria, the Israelis in Lebanon, the Russians in Chechnya, and the British in Ireland and also in the Boer War, just to name a few.

As its title would indicate, the Corruptions Perceptions Index measures mainly perceptions of corruption rather than actual corruption, which is hard to measure. Thus, while it can provide some general indicator of how corrupt nations are, it is not the be-all and end-all of the matter.

Further, “corruption� in this context tends to be a measure of outright bribery, usually as it applies to public officials. In advanced capitalists countries, such activity is usually not necessary, for reasons I’ve outlined above.

Tying together the principles presented at the beginning and in the last section, we can now examine six major problems particular to statism, which are entailed by its nature, its sub-optimality and its stratification.

1. Public waste.

There is a tendency toward monopoly regardless of whether or not resources are scarce. In advanced capitalist countries such as the United States, concentration of capital is hardly limited just to natural monopolies. Consequently, consumers are of course made to pay more for less.

Public monopolies can provide goods and services without having to worry about how to create enough profit to maintain a CEO's million-dollar Christmas bonus. They don't have to worry about advertising, marketing, or any of the other socially useless functions of private enterprise. These factors allow public monopolies to provide goods and services at a lower cost than private industry.

Do public monopolies restrict consumer choice? The answer frequently is yes. But I would question the priorities of anyone who thinks that it's more important that there should be, say, 30 more or less identical brands of bottled water than that some should go without any water at all.

Further, a bewildering degree of variety in commodities is liberatory only if we assume that the sole purpose of human life is to acquire material wealth. But we love, form friendships, play, fight, laugh, cry, debate on message boards -- and none of it necessarily has anything to do with material wealth.

It therefore isn't an intrinsic evil if some consumer choice is done away with for a great good. Further, endless consumer choice can be -- is -- ecologically devastating, as well as socially and psychologically alienating.

2. Private Interest Theory and political motivations.

Of course, this is at some level a perfectly valid observation. However, I don't see how it acts as an argument against all state intervention at all times and in all places. Don't capitalists act in their own interest at well? Adam Smith realized that they did. As he wrote in The Wealth of Nations:

[Businessmen are] an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who have, upon many occasions, both deceived and oppressed it.

3. Tragedy of the Commons situations.

Interestingly, Garret Hardin said that he regretted coining the term "tragedy of the commons", saying that it should instead have been the tragedy of the unmanaged commons. But historically, the commons have been managed. For example, shepherds made agreements regarding pasture use.

4. Power grabs and moral deterioration of society.

So a social system based in the idea that people are entirely self-interested is supposed to discourage self-interested behavior...?

5. Imposition of individual decisions on the collectivity.

I don't really understand the point Franc is trying to make here and so don't entirely know how to respond, other than to point out that a.) private industry is more than capable of making "large-scale" errors and b.) state control of money is not a cause of such errors. I shall address each in turn.

Regarding the first point:

Let's start at the beginning. What determines prices? To hear neoclassical economists tell it, just supply and demand. But that's circular reasoning. People have to know a product's price before they can determine its marginal utility (which, of course, transaltes into effective demand).

So price must measure something other than supply and demand. They must measure the only other thing they all have in common: they are all products of human labor.

Price, then, is a measure of the average amount of labor-time required to produce a commodity. This isn't to say that people don't subjectively evaluate an item's marginal utility and that this doesn't affect price; but it isn't the essential determinant.

If price reflects the average amount of labor-time embodied in an object, then it must be the case that workers don't get paid for all their labor-time. If they did, there would be no profit. They rather spend some time producing for themselves, then produce lots of surplus for their bosses. They are wage slaves, forced to produce lots for free in exchange for the right to produce a little for themselves -- with the means of production and exchange that are rightfully theirs anyway.

During economic downturns, workers have less bargaining power, and so wages suffer. During booms, they're in a better position, and their wages rise -- but so do inflation and interest rates. So firms lay off workers, drive down wages, and so on. And then we have another downturn.

In order to compete, companies continually introduce labor-saving machinery. But because human labor is the source of profit, the rate of profit tends to fall over time. That is, investment grows faster than the labor force. Consequently, economic downturns tend to get worse over time. Indeed, rising unemployment has been plaguing the West for some time now.

To fight falling profit rates, capitalists will a.) try to increase productivity by invading workers' privacy, allowing less vacation time, and so on, and b.) attacking wages, benefits, etc. In other words, war on workers' personal liberty.

In order to maintain profits, firms will also a.) tend towards monopoly, consolidating more and more, and b.) resort to imperialism and neocolonialism.

There are at least five other things that this argument neglects:

1. Externalities. Firms pass costs onto the public whenever possible.

2. In order to compete, firms must grow. In order to grow, firms must use up resources. And unlike communities are (at least potentially) governments, firms have only profits in mind. Theirs is a recipe for resource depletion and environmental destruction.

3. Price signals can only tell firms what is wanted before production, not what will be wanted when production is finished.

4. Big business is obviously much less responsive to demand.

5. Biased price signals resulting from the extra pressure exerted by the demands of the rich.

Regarding the second point:

The reasoning behind this argument is that interest rates provide information on how price changes will affect future production, and so inform firms of the responses of their competitors. But they don't. They reflect the general aggregate demand for credit, not the level of demand among a company's competitors specifically. State control of money can encourage overinvestment, but it does not cause it. It can only exaggerate already-existing tendencies. One alternative -- monetarism -- is clearly discredited. The other, free banking, would be just as disastrous.

6. Black market dynamics.

For the most part, I agree. I can't think of any product that I think should be outlawed outright. But such is not necessitated by "statism".

It is worth noting, though, that while I favor decriminalizing things like hard drugs and prostitution, I don't favor legalizing them.

Friedman's Law doesn't logically follow. If the state monopoly can provide a service satisfactorily, then there's no reason to think that it should.

Raphael doesn’t cite any sources for these claims, so obviously it’s impossible for me to address many of them directly. I can address the New Zealand question, however.

New Zealand’s experiment is a success story only in the imaginations of its promoters on the Right. From 1985-1992, OECD economies grew by an average 20 percent. During that same period, New Zealand’s economy shrank by 1 percent, productivity growth averaged only 0.9 percent, inflation grew at 9 percent per year, interest rates and unemployment rose a great deal, net migration flows were negative, foreign debt quadrupled, the country’s credit rating was downgraded twice, investment as a percentage of GDP halved, and R&D spending fell to 50 percent of the OECD average. There was a brief recovery in the mid-‘90s, but by the end of the decade, the economy had begun another downturn.

The privatization that took place under Thatcher was similarly disastrous. Public ownership is ultimately better in dealing with natural monopolies than private ownership.

Healthcare in Canada is ranked 30th in the world by the World Health Organization. The United States is ranked 37th. Canadians also have a longer life expectancy and lower infant mortality rates. Many Canadian residents of the U.S. refuse to become American citizens so that they can retain access to Canadian healthcare.

A 1993 poll found that only 2 percent of Canadians prefer the American system to their own (UPI, 9/13/93). A 1998 Zogby poll found that 51 percent of Americans would favor single-payer healthcare in the U.S. In addition, a 2004 Harvard study found that two-thirds of American physicians favor instituting such a program (McCormick D, Himmelstein, DU, Woolhandler S, Bor DH, “Single-Payer National Health Insurance: Physicians’ Views�, Archives of Internal Medicine. 2004 February 9; 164:300-304).

Currently, 43 million Americans have no health insurance – and as many as 18,000 die because of it, according to a 2002 National Academy of the Sciences report. Millions more are underinsured.

In a 2000 Washington Monthly article, Yale Professor Theodore Marmor and health writer Kip Sullivan reviewed a great number of studies published since Canada phased in single-payer, finding the quality of care in that country “as good or better� than that in the U.S. Among other things, they found that:

· Canadian mortality rates are lower for eight of ten types of surgery.
· Canadians are five percent more likely to survive lung cancer.
· Canadians are more than twice as likely to receive kidney transplants.

Now, it is true that the U.S. has some of the best hospitals in the world – but only if you have deep pockets.

The WHO ranks the UK 18th and Germany 25th.

I favor at least decriminalizing all drugs. That said, I see the Drug War (at least in the U.S.) as a product of capitalism. It was encouraged by racism (which didn’t exist in the modern sense prior to capitalism) and by industries such as those competing with the hemp industry. Today, it serves to benefit the pharmaceuticals, prison, and military industries, and serves to maintain and impoverished, super-exploited underclass.

In my responses above, I have frame my responses in such a manner as to assume a perfectly libertarian capitalism, in which industry and the state are separate. In reality, I think, such an arrangement could never exist for long. For reasons I’ve argued above, the state in capitalist society always ultimately does the bidding of capitalists. Political competition reflects competition between different sectors of that class. There is an inherent tendency towards monopoly and centralization. The more concentrated capital becomes, the more the peculiar interests of large corporations are promoted and defended in various ways. So the arguments I made have been made against the “best� possible version of capitalism that can be imagined. But it is just an ideal type.

Franc’s contention was that capitalism is the best of all possible systems. I pointed out what I think are its flaws. But in order to fully respond to Franc’s claim, I must present an outline of a system I think would fare better.

We cannot return to the past reforms of social Keynesianism. I’ve already explained why in my discussion of the economic veto. Two options remain:

1. Globalize reform. Resurrect social Keynesianism at the international level with things like an international minimum wage. Place a small tax on foreign investments, devoting the revenues to a fund for Third World development.

2. Real socialism. Abolish private property, replacing ownership rights with use rights. Organize production and exchange via federations of directly democratic workers’ councils at every level of organization, from the local to the global. Replace corporate hierarchy with workers’ self-management – elect managers where necessary. Employ technology to minimize unpleasant labor, allowing for the synthesis of work and play, the withering away of the state, and production from each according to her ability, to each according to her need.

[Francois Tremblay]

Human rights


Mr. Waite agrees that individuals have the right to their labour. But he argues that people do not have the right to own land. This is incongruous : land is necessary for human existence, and some form ownership is necessary. Given this, is it better for individuals to possess land, or for the government to possess it ? His only argument against the former is to claim that property is theft, based on previous examples of violence and coercion. One can easily reply that Mr. Waite seems to be very unfamiliar with eminent domain land-grabs. At any rate, he has to demonstrate that private property demands coercion, which is quite unclear, and why government ownership is not subject to the same problems, which is also quite unclear.

He also argues that most people are forced to sell their labour, and that is a problem, since labour is a part of our lives. Of course, Mr. Waite is quite conscious that everyone could simply go back to farm life and work for themselves, but that this is clearly unacceptable for most people also. As such, history has demonstrated which option is considered most in accordance with human nature, regardless of Mr. Waite's assertions about it.

He also states that human rights do not apply to corporations. Since he seems to be arguing against government blindness to corporate infringement on worker's rights, thus corporatism, he will find me in agreement about the spirit of his words. Indeed I agree that corporations should not have special permission to infringe rights which belong properly to the individual. Why he thought this was an argument against my position, is a mystery.

At any rate, he outlines four reasons to reject the negative nature of rights :

"1.) As I have argued, property is theft. As such, the state can and should demand that profits and wealth be redistributed.
2.) As the citizen of a state, you are party to a social contract. Your parents signed it for you when you were born. Current laws are the terms of that contract. You can try to modify the contract through the democratic process. You can try to exit it through revolt, renouncing your citizenship, or moving to another country.
3.) Humans are social animals. Rights therefore should be guaranteed not just to individuals, but also to the community.
4.) Negative rights are simply meaningless without positive rights. Freedom of religion means very little to someone who’s starving to death or living in a car."

I have already discussed point 1. He has failed to demonstrate that private property implies theft, and that public property does not.

In point 2, we see the "social contract" bromide rear its ugly head. In real life, Mr. Waite would surely not accept to be bound to a contract that someone else signed for him, unless he was incapacitated in some way. But even in this sense, there is no contract being signed between parents and the state, only an assertion of such contract. Living in society does not imply any contractual obligation, but it does imply the acceptance of the power of the state over one's life. We properly call this "mafia protection", not "legal contract".

Point 3 is mysterious. Why should the fact that we are social animals indicate that rights belong to "community" ? Communities do not act, benefit or suffer, individuals do. Organizations and "communities" arise from individuals acting in harmony of interests and values, with possession of their rights, not from some kind of biological collectivism.

Finally, point 4 is even more mysterious. Of course starving to death is extremely negative. And I do not disagree per se that a starving person is justified in stealing food for his own survival, as long as he can repay it later. I do not see what this has to do with the notion of rights at all. The starving person still has the right to pursue his own happiness, although he is prevented to do so by starvation. And by helping society progress and grow in terms of resources, and taking away charity from politically-motivated hands, the capitalist can be proud to help prevent such states of affairs

In view of his failure so far to demonstrate points 1 to 4, I must conclude that Mr. Waite has not adequately answered to the rights-based nature of capitalism.



Capitalism and prosperity


Mr. Waite seems to be slightly confused about my sources, or he is being disingenuous. Cato and Fraser are explicitly libertarian organizations, not right-wing. By using the term "right-wing", he is using loaded terms to try to set the liberal contingent against the data, poisoning the well so to speak. Readers will come to their own conclusions. As for Heritage Foundation, yes it is indeed right-wing.

I offer Mr. Waite to present his own data from sources he prefers : until then, he has little ground to complain about my sources. He has shown no ground to claim flaws in the studies, or any bias in the approach. His complaint is about as ridiculous as rejecting a study of the DNA similarities between man and monkey because the researchers have a pro-evolution bias.

Mr. Waite gives us two more reasons to reject the correlation :

"1.) It can tell us that wealth is being created, but not that it is benefiting the majority of the population.
2.) Many things that can contribute to the GDP are bad for the public – for example, environmental destruction."

Point 1 is demonstrably false, and I demonstrate it with both good sense and the Roemer-Gugerty study. Once again, Mr. Waite is free to present his own evidence. He has the burden of proof of disproving the evidence I presented, and simple nay-saying is insufficient.

As for point 2, we must ask what kinds of environmental destruction Mr. Waite is referring to. It is not obvious at all how environmental destruction contributes to the GDP. Yes, many economic activities do have externalities like pollution, but that is what the state should protect us from.

Mr. Waite seems at this point to adopt a shotgun approach and give us facts which seem relevant, but in fact do not seem to have any relevance. He tells us :

"So the question isn’t whether income is increasing, but whether it is increasing more or less than when these countries embraced Keynesian policies, and whether or not the same can be said about the Third World."

and

"It’s also worth noting here that Southern states are on average poorer than Northern ones – and less unionized. So it’s worth asking if perhaps there’s a disparity in enforcement."

and

"Absolute poverty has also increased."

So where is the evidence for these claims ?

He then makes other bizarre claims :

"Inequality matters. For one, it leads to unequal enforcement and utility of rights, as argued above."

Yet he has made no such argument. Furthermore, the enforcement of rights depends on the institutions in place, and utility of rights depends on the resources available to use : neither have anything to do with inequality per se.

"It also tends to mean – as Paul Krugman writes in “The Death of Horatio Alger� (The Nation, Dec. 18, 2003) – that social mobility decreases."

"The Correlation of Wealth Across Generations," in the December 2003 Journal of Political Economy, disproves Krugman's unscientific assertion. In the US, at least, vertical mobility is as alive as ever. Age-adjusted parental wealth, by itself, explains less than 10 percent of the variation in age-adjusted child wealth, and the age-adjusted intergenerational wealth elasticity is 0.37, telling us that 63% of people's wealth is the result of work and savings, not "class". We are majoritarily self-made people. The same cannot be said for statist systems, which put barriers to private enterprise, and thus undercuts the very basis of vertical mobility.

He also makes a lot of other claims, in similar shotgun fashion. Let me examine them briefly, for the interest of completeness.

* He claims that inequality was greater before the Great Depression. Of course it was, since there was an investment bubble. We should expect most prosperous situations to be accompanied by greater inequality, since inequality (that more meritorious individuals should have more resources than less meritorious individuals) is one of the motors of progress.

* Real wages in the US have been "declining steadily" since 1973. I do not know where Mr. Waite got this canard. It is well-known that real wages fluctuate cyclically. Indeed, according to the Left Business Observer (so that Mr. Waite cannot blame me for using sources he does not like), they have been doing so from 1965 to 2000, with an average yearly growth of 0.2%. In fact, the truth is that real wages have been increasing steadily ! (see http://www.leftbusinessobserver.com/Stats_earns.html ).

* All Asian Tigers have stiff tariffs and regulations, and Eastern European countries failed to grow. The latter is true, and does demonstrate that enforcement of the law is as important as privatization. Without correct law enforcement and property protection, there is no stable basis for an economy to grow. As for tariffs and regulations, this may be the case, but those are not the only factors in economic policy. South Korea, for instance, experiences strong growth because of the export market, which represents 70% of its GDP. So its 9.2% tariff average, while horrible and attacking the right of consumers, is not as detrimental to South Korean economy as it would be otherwise.

* Globalization creates third-world country wages in first-world countries. Mr. Waite surely knows that this is not how economists describe the effect of globalization, and not what the evidence presents either. Globalization effects a specialization of work within countries. Lower-paying jobs are exported to third-world countries, permitting them to raise up their level of life, while more sophisticated jobs stay in first-world countries.

I must apologize for the disjointed narrative of this post, but it mirrors that of Mr. Waite's post. I hope to have made my point nevertheless. Mr. Waite's complaints and shotgunning of facts fails to demonstrate that capitalism is not correlated with prosperity.



Social dynamics and statist problems

In answer to my analysis of capitalist systems, he gives two answers. The first is that inequality entails disparity in rights, a point he has not made. His second answers consists of three points :

"1.) Those individuals with the most money will be able to contribute the most to political campaigns. In the U.S., as of 2000, business contributions outnumbered labor contributions by a 14-to-1 ratio, according to the Center for Responsive Politics.
2.) The “economic veto�. If the state begins to enact laws that are unfavorable to the interests of wealth individuals, they will withdraw investment, wrecking the economy. These “capital strikes� are what wrecked Scandinavian social democracy.
3.) The wealthy control the media, the publishing houses, the think tanks, and the foundations. In short, they shape the boundaries of acceptable discourse."

I agree with all these points, and fail to see what they have to do with voluntary trade. Any discussion of the influence of private conglomerates presumes that the government has enough power to stop upholding individual rights, and this is a mark of statist systems, as I discuss in my analysis. In a capitalist country, that is to say one defined by unalienable individual rights, the demands of corporations, contributors and the media should have no influence on public decision.

At any rate, they are all the result of voluntary action, not coercion. For instance, we should not be surprised that the wealthy fled the socialist systems of Scandinavia, given the latter countries' sinister anti-wealth, pro-control bias. Most socialism is born out of hatred and insecurity, emotions which are not grounded in fact.

He also states :
"First, the increasing globalization of capital is accompanied by an increasing degree of monopolization."

This is a common bromide amongst statists, but I have yet to see any evidence for it. Indeed we should expect inequality between businesses to grow in a globalized system, but it is unclear why this should result in monopolization.

In answer to my six problems of statist dynamics, he gives various replies.

1. Public waste . He does not address at all the main point, which is that public monopolies entails lack of competition (and therefore inefficiency and higher prices) and lack of choice (apart from mocking consumers for wanting "30 identical brands of bottled water", when in fact those brands form the total offer of the given product). He also makes a red herring about other factors such as human relationships, which have nothing to do with the issue of whether capitalist or statist systems are most efficient. Furthermore, Mr. Waite's implicit support of poverty and social warfare makes his appeal to human relationships little more than another attempt to poison the well.

2. Private Interest Theory. Mr. Waite does not see how it applies to all government intervention. Unless he thinks that some government interventions are not taken by some agent with his own private, political interests in mind, his point is irrelevant.

3. Tragedy of the Commons. He claims that historically, these situations do not happen. Perhaps so : but that does not disprove my point that statist systems are vulnerable to them.

4. Power grabs and moral deterioration. He states that I want to "discourage self-interested behaviour". Nowhere do I make such claims, and if he read my explanations of dynamics more closely, he would know that I state that all behaviour is self-interested. So his point is completely moot, and his position still implicitly supports social warfare.

5. Imposition of individual decisions on the community. He states that private industry also makes large-scale errors. This is correct. However, free market errors are self-corrective (or if they are illegal, corrected by the state). The state is not self-corrective.

This is where my opponent enters into full-blown Marxist rhetoric, with the "price=labour" bromide and "wage slave".

He begins with a total misunderstanding of microeconomics 101 : the curve of demand does not depend on any specific price, rather it plots product demand with potential price. From this, he concludes that this model is incorrect and that price represents labour-time. But we can easily make counter-examples to this view. One may take years to make a piece of art that no one except himself will ever like. Prices are partly dependent on labour-time, insofar as they influence production costs, but many other factors intervene to form a price.

Furthermore, the expression "wage slave" confirms Mr. Waite's anti-progressist bent. People freely decide to trade their labour for a wage. The only "wage slavery" is in communist systems, where people's freedom of work is completely regulated by the state, where everyone must work regardless of merit, and where all possibility of prosperity is sapped by the government's extreme inefficiency and private interests.

6. Black market dynamics. Mr. Waite argues that he is not in favour of banning entire markets. It is hard to understand how Mr. Waite expects a statist system to not ban markets when it is in its interests, but I will overlook this flaw.



Health care and the drug war

Mr. Waite presents evidence that Canadian health care is in fact better. I reject the WHO ranking because it includes indicators such as "fairness of financial contribution" and the "distribution of financing", which indicate absolutely nothing about the quality of the health care system itself. Is Mr. Waite seriously suggesting that Morocco, Columbia, Greece, Oman, and Djibouti have more efficient and more technically advanced health care systems than the US or Canada ?

I agree that health care insurance in the US is unduly manipulated by the state to favour corporations over individuals, creating a detrimental situation for millions of people, but I do not see this as a capitalist problem. I am interested, on the other hand, by the health care data provided from the Washington Monthly. I would invite Mr. Waite to present more of this data for our benefit.

As for the drug war, Mr. Waite argues that the drug war was caused by capitalism ! This is patently absurd, since capitalism is incompatible with the banning of entire markets. I agree that the drug war benefits some markets, but this is nothing more than an accusation of corporatism. I certainly do not support favoring some corporations by creating a gigantic black market problem and banning an entire market, not to mention raising a country's imprisonment level to the highest in the entire world.



Mr. Waite's argument rests on the premise that a capitalist country would be at the mercy of private interests, just as statist countries are at the mercy of public interests. But this is a complete red herring, since as I stated clearly in my opening case, a capitalist country is one which protects individual rights against coercion.

We can interpret Mr. Waite's argument generously and assume that he means that a capitalist system is impossible. But this is not a viable position in this debate, as we are comparing capitalism to statism. As such, all I need to demonstrate is that more economic freedom and rights-protection is better than less. I do not have the burden of proof of demonstrating that a "pure" capitalist system is possible.

My own underlying argument is that people left free to trade with each other will seek an optimal state of affairs for themselves, the best way to ensure their own happiness, and that government intervention only undermines this process. That it is self-evident, if one looks at the data, that capitalism is correlated with prosperity, greater social benefits, and efficiency.

In reply, Mr. Waite has presented a great number of facts and assertions which do not amount to a coherent case. He has rejected my data outright and failed to present alternative sources. He has failed to show that my analysis of social dynamics is flawed, instead giving us red herrings. I must conclude that Mr. Waite's refutation is still unjustified.

[Samuel Waite]

Mr. Waite agrees that individuals have the right to their labour. But he argues that people do not have the right to own land. This is incongruous : land is necessary for human existence, and some form ownership is necessary. Given this, is it better for individuals to possess land, or for the government to possess it ? His only argument against the former is to claim that property is theft, based on previous examples of violence and coercion. One can easily reply that Mr. Waite seems to be very unfamiliar with eminent domain land-grabs. At any rate, he has to demonstrate that private property demands coercion, which is quite unclear, and why government ownership is not subject to the same problems, which is also quite unclear.

People own what they produce. They exchange these products for products that they deem to be of equal value. But the land is no one's product. Therefore, no one can own land, at least initially. Land ownership by definition requires an individual to mark off a section of territory and threaten to hurt or kill anyone who uses it without his permission. There's no way around it.

The modern concept of land ownership has only been around for a few centuries. In foraging societies, there's no land ownership. Gathering and hunting are largely cooperative activities. In early agricultural societies, land was generally allocated for use to individual households, but still considered the property of the community as a whole.

As these societies developed into feudalism, different use-rights were granted according to a person's social class, which was almost always determined by one's family. Peasants had a definite right to their land. Establishing capitalist land ownership required the state seizing this land and giving it to capitalists. The most (in)famous instance was the British enclosure laws, but the same process occurred throughout Europe and eventually, throughout the world.

Thus, seize of property by the state cannot be theft, because the institution of property itself exists only because the state protects it.

Abolishing private property would not necessitate a return to farming or foraging. It merely necessitates the extension of democracy to the economy. The groundwork for such a transformation has already been laid in the widespread cooperation required of employees in capitalist enterprises, the ideology of liberal democracy, and technological innovations that allow for the elimination of unpleasant work (like various forms of automation) and increasingly conflict with capitalist property forms (like open-source projects and file sharing).

He also states that human rights do not apply to corporations. Since he seems to be arguing against government blindness to corporate infringement on worker's rights, thus corporatism, he will find me in agreement about the spirit of his words. Indeed I agree that corporations should not have special permission to infringe rights which belong properly to the individual. Why he thought this was an argument against my position, is a mystery.

The difference, though, is in how we define "human rights". Francois would probably say, for example, that although racism is morally wrong, it is not the state's place to prevent businesses from participating in racial discrimination. I would argue that because the right to private property exists only because the state defends it, the state should have the right to regulate business in any manner that benefits the public.

Francois sees employees as entering into a voluntary relationship with their employer. Thus, they have the right to require of their employees anything that an individual could require of another individual. If a person can allow only people who don't use marijuana to enter his or her house, and require a test to make sure, then he or she can. After all, people aren't forced to enter the house. Francois would apply the same standard to Wal-Mart.

I, on the other hand, would argue that the state should intervene to prevent unnecessary employee drug testing, for the same reasons stated above.

In Francois’s libertopian world, most everything would be left to unaccountable private tyrannies.

Next, Mr. Tremblay addresses my other three arguments for rejecting purely negative rights. He argues, first, against the validity of the social contract.

Tremblay seems to accept the idea that parents can and do sign contracts for their children. But, he writes, parents aren't explicity given the opportunity to accept or decline this contract. But parents do have several opportunities to agree explicitly to this contract -- by choosing their child's residence and citizenship.

Next, he argues for a kind of Thatcheresque atomistic individualism. But most everything humans do is done in groups. The success of any individual depends on the contributions of others. Further, it can't be said with great certainty that there's no "biological collectivism" in humans. The restatement of group selection by Elliott Sober and D.S. Wilson has thrown this idea into serious question. Anthropologist Bruce Knauft has likewise devised a theory of how the potential for genuine collectivism could evolve in humans (see The Anthropology of Peace and Nonviolence by Gregor and Sponsel). And it would be possible for some altruism to be inherited as a spandrel. And even if you ignored all these points, you'd still have to deal with kin selection.

Lastly, Francois seems to imply that we can replace the social safety net with charity. But could we?

Where did social programs come from? In most cases, states decided to enact them in response to social unrest. For example, FDR formulated the New Deal largely because he was concerned about the growth of both far Left and far Right forces during the Depression. So safety net acts as a social wage. The state redistributes some surplus value in order to allow the most exploited workers to live at subsistence level. Struggles for social program funding are thus forms of class struggle.

If unemployed workers can live comfortably, then there won't be as large a labor pool, and they can demand higher wages. So employers want misery for the unemployed. If social unrest occurs, they might consent to increasing the social wage. But if prison or brutality is cheaper (or even profitable), they'll go with those options instead.

Assuming there was still poverty and unemployment in a society free of social programs and regulation, employers would have a few options. One is that they could pool their resources to provide their own social wage. But because they wouldn't be regulated at all, they could inflict all kinds of human rights abuses that governments cannot.

If providing for the poor were relegated to a duty of religious organizations and the like, we would see the same thing. Convert or starve -- is that humane? In any case, in an unregulated capitalism, workers would have to put in more and more hours -- and so wouldn't have the time or the will to provide for the less fortunate.

Mr. Waite seems to be slightly confused about my sources, or he is being disingenuous. Cato and Fraser are explicitly libertarian organizations, not right-wing. By using the term "right-wing", he is using loaded terms to try to set the liberal contingent against the data, poisoning the well so to speak. Readers will come to their own conclusions. As for Heritage Foundation, yes it is indeed right-wing.

The point is that they're ideologically motivated organizations. And "right-wing", at least in the sense that I mean it, encompasses a number of positions, including Tremblay's brand of libertarianism. I'm hesitant to use the term libertarianism because it is also used to refer to anarcho-syndicalists and the like. Cato surely is closer to Heritage than to the IWW.

...His complaint is about as ridiculous as rejecting a study of the DNA similarities between man and monkey because the researchers have a pro-evolution bias.

Not at all. It's like rejecting a study of the harmful effects of smoking because it’s funded entirely by tobacco companies and published in a PR brochure. Anyone who's ever taken a logic class should know that it's inappropriate to cite sources with vested interests.

Next, Tremblay takes issue with my remarks about GDP.

Later in my post, I concurred that GDP is a good indicator of material well-being. Why I don't think it's conducive to other for other forms of well-being should be obvious.

More to the point, GDP does not measure genuine progress. It records every monetary transaction as positive. Thus, crime, divorce, pollution, depletion of natural resources, psychotherapy, and natural disasters all contribute to the GDP.

Tremblay writes, "I offer Mr. Waite to present his own data from sources he prefers..." But there's no need to do so, for Francois has not presented any data that support his position. I don't take issues with these studies' conclusions that there is a correlation between "economic freedom" and GDP. I take issue only with their (or at least his) apparent conflation of correlation with causation.

He provides three quotations, writing that no evidence has been provided for them. In the first and second cases, no evidence is required. I was simply expanding on the point that correlation is not causation. Further, I've provided that counter-examples of Cuba, the Asian Tigers, and the post-war U.S. State unionization rates can be found here (http://www.economy.okstate.edu/search/union.asp).

In the third case, he takes issue with my claim that absolute poverty has increased in the U.S. Historical poverty rates in that country can be seen here (http://www.census.gov/hhes/poverty/histpov/hstpov13.html).

Poverty began to climb after 1973. Going by this data, though, one would conclude that the poverty rate is still lower than it was in the 1950s-60s. But this is inaccurate, because the current poverty threshold us outdated.

The threshold was developed in the 1960s by the Social Security Administration. At the time, a budget restricted only to basic needs cost about three times as much as the minimum amount needed for food. Mollie Orshansky, who developed the formula, commented that even then it was just an estimate that somewhat underestimated the amount a family would need to survive. Since then, other costs like housing have far outpaced food costs. Consequently, official poverty rates don't nearly match actual poverty rates. In fact, if they were updated to account for current costs, around a third of the American population would be shown to be living in poverty (from: Poverty and Single Parent Families: A Study of Minimal Subsistence Households).

"The Correlation of Wealth Across Generations," in the December 2003 Journal of Political Economy, disproves Krugman's unscientific assertion. In the US, at least, vertical mobility is as alive as ever. Age-adjusted parental wealth, by itself, explains less than 10 percent of the variation in age-adjusted child wealth, and the age-adjusted intergenerational wealth elasticity is 0.37, telling us that 63% of people's wealth is the result of work and savings, not "class". We are majoritarily self-made people. The same cannot be said for statist systems, which put barriers to private enterprise, and thus undercuts the very basis of vertical mobility.

Well, I commend Francois for citing an academic study. But I’m not speaking only of direct transfers of wealth. Rich people also have access to superior schools, legal defense, healthcare, as well as economically advantageous contacts and connections,

He claims that inequality was greater before the Great Depression. Of course it was, since there was an investment bubble. We should expect most prosperous situations to be accompanied by greater inequality, since inequality (that more meritorious individuals should have more resources than less meritorious individuals) is one of the motors of progress.

Inequality contributed to the Depression by creating a maldistribution of purchasing power, and thus overinvestment. And the post-war boom was characterized by nowhere near the level of inequality that currently exists in most Western countries.

Real wages in the US have been "declining steadily" since 1973. I do not know where Mr. Waite got this canard. It is well-known that real wages fluctuate cyclically. Indeed, according to the Left Business Observer (so that Mr. Waite cannot blame me for using sources he does not like), they have been doing so from 1965 to 2000, with an average yearly growth of 0.2%. In fact, the truth is that real wages have been increasing steadily ! (see http://www.leftbusinessobserver.com/Stats_earns.html ).

There has been a downward trend since 1973. Wages began to recover during ‘90s boom (though never reaching 1973 levels), but have recently begun declining yet again. This fact is not seriously disputed by anyone familiar with the data. Indeed, it’s difficult to find an American sociology book authored in recent years in which it is not referenced.

All Asian Tigers have stiff tariffs and regulations, and Eastern European countries failed to grow. The latter is true, and does demonstrate that enforcement of the law is as important as privatization. Without correct law enforcement and property protection, there is no stable basis for an economy to grow. As for tariffs and regulations, this may be the case, but those are not the only factors in economic policy. South Korea, for instance, experiences strong growth because of the export market, which represents 70% of its GDP. So its 9.2% tariff average, while horrible and attacking the right of consumers, is not as detrimental to South Korean economy as it would be otherwise.

Also, the annual average rate of GDP growth in the neoliberal era has been less than it was from 1950-1973. In the U.S., Canada, Australia, and New Zealand, it was 2.4 percent in the latter and only 1.2 percent in the former. In Western Europe, it fell from 3.8 percent to 1.8 percent. In Africa, it fell from 1.8 percent to –0.4 percent.

Next, Francois addresses my contention that capitalism entails political inequality. I have made the point that inequality entails disparity in rights, first because in the workplace, an individual has only those rights which his or her employers grants him or her; and second, because the wealthy can afford superior legal defense. He then says that the control of the wealthy exercise over means of communication and political power are fine, since they don’t come about as a result of “force�. But of course they do – force is the foundation of property. Once again, we see that liberal democracy is democracy in form but not in content.

We are also expected to believe that there’s no tendency toward monopolization. But clearly there is. The fact that there are no capitalist economies completely free of state intervention prohibits me from citing any real-world examples; these would merely be dismissed as the result of state favoritism. But because of the power wielded by business (dismissed by Tremblay as “voluntary�), such favoritism is itself inevitable. And even if it weren’t, the fact is that people with little capital, entering competition is limited to small markets with low start-up costs. Weaker competitors fail, stronger ones grow, and capital costs increase. The increasing ratio of capital to worker allows only other large competitors to enter the market. Why would there not be a tendency towards monopolization?

Tremblay proceeds to address my various objections to his objections to state intervention:

1. Public waste. My opponent fails to address my initial point: public monopolies are not profit-driven, and therefore are in fact capable of supplying goods at a significantly lower cost than their private counterparts. Private enterprise is frequently less efficient because of the pervasiveness of externalities (a point which Francois has completely ignored), the tendency towards monopoly (resulting in predatory pricing, among other unsavory practices), and the incentive to cut corners. “Consumer choice� under capitalism is illusory, as it is often the case that demand itself is manufactured, not innate. Mr. Tremblay also seems to believe that the spheres of economics and human relationships are completely separate; such a statement’s absurdity speaks for itself.

2. Private Interest Theory. The problem with PIT is that it rests on a misunderstanding of social dynamics in a capitalist society – on a mistaken pluralist model of governance. As I’ve argued above, the struggle for a social safety net is a form of class struggle. But ultimate control in a capitalist society always rests in the hands of capitalists. Thus, it is generally the case that welfare bureaucrats are rewarded with funding in exchange for administering the welfare system in a manner favorable to their interests. For example, under the Reagan administration, social spending increased while at the same time actual welfare benefits were slashed.

There are, of course, exceptions to this rule. But so what? Private enterprise is not immune to politics. And even the most streamlined government would be subject to the same pressures.

3. Tragedy of the Commons. Here Tremblay resorts to the evasion that I “do not disprove [his] point that statist systems are vulnerable to them.� In fact, such situations were almost unheard of before capitalism, which created them by upsetting traditional means of resource management, as explained above. And private industry has no more motivation to take care of such things than does the public. It is possible and desirable to establish widespread, democratic management of the commons.

4. Power grabs and moral deterioration. What is moral? Anything that occurs in a capitalist society. What occurs in a capitalist society? Anything that is moral.

5. Imposition of individual decisions on the community. Francois predictably skips over the reasons I’ve given that markets are not self-corrective (biased price signals, externalities, and monopolization) and gets right to the red-baiting.

Poor ol’ Karl. So maligned for the only economist that’s been proven right again and again. In 1997, an investment banker told the New Yorker, “The longer I spend on Wall Street, the more convinced I am that Marx was right.� But I digress.

Price depends on marginal utility, which depends on supply, which depends on the cost of production – an objective measurement. This objective measurement reflects the average amount of labor-time embodied in a commodity.

Tremblay provides the counterexample of a piece of art that a person works on for years but no one wants. There are two problems with this example. The first is that the labor theory of value does not deny that people subjectively evaluate a product’s usefulness. A product cannot have an exchange-value if it doesn’t first have a use-value. But it isn’t the essential determinant. Labor-time is the point towards which prices tend to gravitate. Second, the vast majority of economic activity in a society is not comparable to creating art.

Francois’ remarks about communist systems are incorrect for the simple reason that no communist systems have ever existed for very long – only nationalistic state-capitalist that called themselves communist. A communist state would be characterized by workers’ self-management and directly democratic control of the means of production and exchange.

6. Black market dynamics. The state has no interests independent of the social class that controls it. In a capitalist society, entire markets will be banned, as the state mediates conflicts between competitors. But in a socialist state, there is no need to ban entire markets, as socially harmful production isn’t undertaken in the first place.

Then, Francois responds to my statements on healthcare:

Mr. Waite presents evidence that Canadian health care is in fact better. I reject the WHO ranking because it includes indicators such as "fairness of financial contribution" and the "distribution of financing", which indicate absolutely nothing about the quality of the health care system itself. Is Mr. Waite seriously suggesting that Morocco, Columbia, Greece, Oman, and Djibouti have more efficient and more technically advanced health care systems than the US or Canada?

The above criteria absolutely should be considered. What good is great healthcare that no one can afford? And according to the CIA World Factbook, Greece’s life expectancy is longer than that of the U.S. Those of Morocco, Colombia, and Oman are on average only about 4 years less than the United States, despite considerably higher poverty rates. Djibouti is ranked 157.

After conceding the point that the drug war is favored by certain powerful moneyed interests, Franc makes his closing remarks:

Mr. Waite's argument rests on the premise that a capitalist country would be at the mercy of private interests, just as statist countries are at the mercy of public interests. But this is a complete red herring, since as I stated clearly in my opening case, a capitalist country is one which protects individual rights against coercion.

We can interpret Mr. Waite's argument generously and assume that he means that a capitalist system is impossible. But this is not a viable position in this debate, as we are comparing capitalism to statism. As such, all I need to demonstrate is that more economic freedom and rights-protection is better than less. I do not have the burden of proof of demonstrating that a "pure" capitalist system is possible.

But as I have argued, because of the power of private wealth in a capitalist society, the state will inevitably favor the rich. State intervention will exist as long as private property exists, simply because private interests will always be able to pressure the state into taking action on its behalf, both against the propertyless class and against their propertied competitors.

These remarks make something else apparent that I’ve been hinting at all along: Francois has an easy out. He can say, on one hand, that alleged successes in states that he sees as “more capitalist� than others prove his point. But then when I (or anyone else debating with right-libertarians) use these states to point to its flaws, he shouts, “No true Scotsman!� and only some none-existent ideal type will do.

[Francois Tremblay]

Human rights

Once again Mr. Waite ignores the basic issue, in that he simply posits that the state has the right to seize land, and individuals do not. I have already explained that the right to property is a necessary part of self-ownership. Our work, our survival, necessitates tools, including the land to use them on. Therefore, his claim that state property is not theft is based on a false assumption.

It is correct that the state helps us protect property, and that this is an important part of capitalism. However, a good state also helps us protect our lives, our freedom of movement, our free speech, our freedom of religion, and so on. Does that mean that the state owns all of these things also ? Obviously not. The only consistent consequence of Mr. Waite's argument is a completely totalitarian state.

He insists again that I am a corporatist by saying that in my system, we would have "unaccountable" private "tyrannies". He seems to be hell-bent on portraying me as a corporatist, because it would fit his political scheme, where the only opinion you are allowed to have is whether you are against corporations or against social organization, economy or society. Capitalism does not support making corporations "unaccountable", since doing so would be an infringement on the individual's human rights. Once again, why he thinks he is making a point against my case, is unknown.

Mr. Waite re-examines his three other arguments for "positive rights" - i.e. license for state coercion :

* Should we accept that we are bound by "social contracts" ? He merely uses the vulgar argument that "if you don't like it, you can leave", but in slightly less brutal words. Yet he does not explain how staying in a country makes his imaginary contract pop into existence. As I said before, living in society only implies the acceptance of the power of the state over one's life. We properly call this "mafia protection", not "legal contract".

* Should we accept that rights belong to communities ? He uses another common argument, that we work and accomplish things in groups. He probably does not realize that he is only making my point. Groups of what ? Of individual human beings, of course. How does that justify his bizarre claim that communities are biological units ?

* Finally, he tries to argue for emergency situations by arguing against private charity. He denies statist inefficiency by using class warfare and religious interests as arguments - while class warfare is precisely what we have under statist systems, because of the inequality of ruling and citizen classes, and religious interests are not by far the only source of private enterprise. I find it quite risible that an atheist would be so taken by his statism as to use an omnipresent Church as an argument !

But more importantly, his objection is absolutely irrelevant, since the original point was about emergency situations justifying "positive rights". As I pointed out, there is no relation between the two. In capitalism, we still desire to help the poor, and more efficiently thanks to competition and accountability, but we do not sanction state coercion in the name of the less fortunate. Holding a gun to the heads of others to demand the product of their work is not a right, whether done by a mafia or a government.



Capitalism and prosperity

He really tries to hammer the point in that I am a corporatist enemy, by associating me with right-wingers. I am not a statist, do not promote corporate unaccountability or financial support, and do not support the melding of religion and politics - in fact, quite the reverse, since libertarianism is the only system which consistently supports the separation of church and state. So why would Mr. Waite say things like :

"And "right-wing", at least in the sense that I mean it, encompasses a number of positions, including Tremblay's brand of libertarianism."

If he was not trying to poison the well for his liberal friends ? Of course, he needs to reduce every political issue to "right vs left", so that we do not question his statist assumptions. I will get back to this ardent desire to stamp out libertarianism in my conclusion.

He still has no answer to my sources, except to say that they have vested interests. By doing so, he is committing the genetic fallacy. If he cannot point out flaws in those studies, or present opposing studies, then we must reject his argument as illogical. Of course he harps on this point over and over in the rest of his post, using his silly genetic fallacy to try to poison the well of everything I say.[invective removed]

He also argues that I have not shown a correlation between economic freedom and GDP, when I have devoted an entire section of my opening case to the dynamics of freedom. His [invective removed] evading is noted, although perhaps he answered to my presentation of dynamics in an irrefutable way. We will see.

In answer to my proof that social mobility decreases, he concedes the point entirely, but points out that rich people have access to better schools, legal defense, health care, and "connections". I didn't know statists were against having many acquaintances too. At any rate, I agree with him on most of these points, and once again I am surprised that he is arguing against himself. Of course rich people have access to better schools, legal defense, and health care - because statism brings everyone else down by implementing wasteful and unworkable public schools, legal systems, and socialized health care.

I find it interesting that Mr. Waite denies the data I provided for him from a liberal organization about real wages, and fails to provide rebutting data, and that he provides data for my cause in other areas as well. Thank you for confirming that inequality is a necessary part of growth, and that neo-liberal policies engender inefficiency.



Social dynamics and statist problems


He still tries to prove that capitalism entails disparity in rights. In reply, he answers that property is force - a point which he has not yet proven, and to which I agree to a certain extent, as government seizure of property indeed is force. But he has not proven that the right to property is force. He also claims that capitalism would lead to monopoly, which betrays a lack of understanding of microeconomics 101. Monopolies can only survive if the government enforces barriers to entry, or if the product is in very low supply or demand in some way. I would have to invite him to take a microeconomics class : as for most people, it would do him a lot of good.

Let's examine again the six problems of statist systems that I pointed out, and his new answers :

1. Public waste. He fails to address once again my main point, which was that public systems imply lack of competition and lack of choice. Of course private enterprise, just like public action, entails externalities. But corporations are accountable for them, and the government is not.

I have also never claimed that "the spheres of economics and human relationships are completely separate". Indeed, the fact that economics and social relations are inter-related explains why liberalism fails, because it tries to enslave man economically while claiming to pursue his social welfare. Furthermore, statist control of the economy entails social warfare, black markets, and all sorts of negative social effects. All I said was that human relationships had nothing to do per se with economic efficiency, which was the point of my examination of public waste.

2. Private Interest Theory. Once again, he tries desperately to paint me as a corporatist by claiming that "ultimate control in a capitalist society always rests in the hands of capitalists", and that therefore the private interests of bureaucrats will still win over individual rights. His objection is wholly irrelevant, since capitalism is a position against political power. Only in a capitalist system is man protected from the effects of Private Interest Theory. Certainly not in Mr. Waite's omnipotent land-grabbing state.

3. Tragedy of the Commons. He makes many absurd claims in a very short span of words. First, he claims that Tragedy of the Commons situations never existed before capitalism. Apparently, there was no wholesale exploitation of resources before capitalism, no devastating grazing, no extinction of animal species by predation, and no tyrannies taking over people's rights. Mr. Waite must think the past was a very idyllic place indeed !

He then claims that private management has no more interest in preventing such situations than public interests. What landowner would not like to keep the resources on his land active, instead of taking them all at once ? Does he seriously think farmers do not try to keep their soil rich for future plantings, for instance ? Once again, what bizarre place does Mr. Waite live in ?

Finally, he claims, in good liberal fashion, that "democratic" management of commons is desirable. How does he think one thousand voices clamoring for wholesale cutting of all trees are better than one ? It is still in the interest of such democratic agents to reap the resource as much as possible before everyone else does.

4. Power grabs and moral deterioration. He claims that :

"What is moral? Anything that occurs in a capitalist society. What occurs in a capitalist society? Anything that is moral."

Although I commend your newfound commitment to capitalism, you have a bizarre sense of morality. People murder other people, whatever society they are in, and that does not make it any more moral. But social warfare is one thing that capitalism does reduce and eliminate, that does cause moral deterioration of society. When a man is turned against his brother, because both disagree on "correct public policy", you will indeed get social problems.

5. Imposition of individual decisions on the community. Once again, Mr. Waite repeats his bromide of "price=labour", but with a caveat that it is only one factor. On this I agree completely, since he is only making my point. As anyone who goes to the grocery store knows, labour-time is not the main factor on which price is based. To give a simple example, some meats cost twice as much, some five times as much, as other meats, not because of labour-time but because of consumer preference.

He did not address my point that "wage slavery" can only exist in statism. I thought he would have a pat answer to that too.

6. Black market dynamics. Mr. Waite says :

"In a capitalist society, entire markets will be banned, as the state mediates conflicts between competitors."

Once again, he tries desperately to paint me as a corporatist. Obviously, in a capitalist system, the state has no reason to "mediate conflicts between competitors", only to ensure that it takes place within the realm of individual rights, instead of fraud or coercion. Once again, why he thinks he is rebutting me, is a mystery.



Health care and the drug war


Mr. Waite asks us "what good is great healthcare that no one can afford?". I agree absolutely with his question. I would like to return the question to him and ask "what good is horrible health care that everyone can afford ?". Of course, he is trying to set a false dichotomy between quality and price. As I said, I agree that the American management of health insurance is bad, but one should be careful not to confuse the United States with a perfect country, or even a very good country. If the American government managed its policy about health care insurance better, and vigorously encouraged private insurance instead of corporate insurance, who knows where it would be today.

He also says that I "concede the point" that the Drug War was motivated by moneyed interests. Of course I concede it, because it is the truth ! Moneyed interests have always moved the state to outlaw their opposition. Once again, Mr. Waite thinks that this makes me look bad because he tries very hard to paint me as a corporatist, who believes that "rich people" should have a hand in the establishment of laws. Nothing is further from the truth. Of course, [invective removed] and misrepresent my position over and over, because his case is based on that "Big Lie".




The fact is that, as I explain in my opening case about dynamics, only individuals working together towards their own interest and happiness can create an efficient society. Not public interests working to get elected, or interest groups trying to manipulate those interests to stifle innovation and growth for other interest groups. Furthermore, the individual can only be free if he owns himself, his actions, his property, and can use them to work towards the fulfillment of his desires.

The idea of freedom is not a complicated idea, but statists like Mr. Waite will always try to keep your gaze away from it by misdirection. He asks you to look to his right hand, where he is disproving corporatism, so that you do not see the call of self-ownership he crushes in his left hand.

He slanders economic studies so that you do not draw the inevitable conclusion, even though he cannot argue against them and has no opposing data.

He attacks the idea of social equality by trying to get you to hate your fellow human beings, "the enemy" being the fortunate, those who have helped society with their work - the capitalist who makes companies and fulfills needs, the artist who provides us with the entertainment we need, the doctor who cures disease. Like his idol Karl Marx, what he seeks is social warfare, and the only resolution he will accept is coercion.

The government is not your friend, and government-lovers do not have your best interests at heart. We all know that government does not work, and that the government does not help us pursue our own interests, but people like Mr. Waite will always try to obscure the issue so that you forget those truths. Instead, like Christians who call everything Satanic, they will try to label such opinions as anti-social and dangerous. Do not be fooled.

[KnightWhoSaysNi]

Franc28,

I've removed a few of your comments in your recent statement. Please keep the discourse to a civil tone, refrain from using invectives, and speculating on your opponent's motivations.

Thank you for your consideration,

Jason

[KnightWhoSaysNi]

Samuel,

Please note that the one week deadline for your next statement has passed. However, the rules permit a grace period, extending the deadline to Aug. 4.

Thank you for your consideration,

Jason

[Samuel Waite]

Apparently believing that incessantly repeating something will somehow make it true, Francois begins by restating his argument for property rights. Capitalist property, he suggests, is necessary to self-ownership. That’s right – people in stateless societies are owned by states. What’s more, Francois – who previously expounded on the negative nature of rights – goes on to advocate positive rights in right to tools and property.

People do own themselves. The self includes an individual’s time and labor-power. By extension, they own what they create. Land is created by no one, and therefore owned by no one. Every individual has an equal right to land. And indeed, up until a few centuries ago, land was not bought and sold. It is of course no longer feasible to give everyone his or her own plot. Instead, land (and property generally) should be managed democratically.

Property was allocated according to use rather than ownership until a few centuries ago. For various reasons, peasants were forced off their land and left to starve. Many of them went to the cities, becoming wage laborers. This new supply of wage labor enabled this capitalist class to grow in wealth and power, eventually backing revolutions throughout Europe. Francois’ bogeyman, the modern nation-state, was a product of capitalism. It established by force the institution of property by seizing land from peasants and redistributing it to capitalists.

Thus, state property is theft, but it was stolen on behalf of capitalists, and currently protects it on behalf of capitalists. The state can stipulate the conditions under which it will or will not protect property. And if workers can pressure the state into stipulating conditions that are favorable to them – well, good.

Tremblay ignores the examples I’ve given of the unaccountability of private enterprise and merely asserts that he’s not a “corporatist� (no true Scotsman!). So, Francois: do you favor outlawing unnecessary employee drug testing? Racial and sexual discrimination? Unsafe working conditions? Do you favor legally requiring employers to treat gay unions the same as heterosexual marriages? Minimum wage? None of the above? Then surely you do favor unaccountable private tyranny.

Then Tremblay parrots a Libertarian talking point, again likening the social contract to “Mafia protection� and ignoring my initial points. Your parents agreed to the contract when you were born. You can try to change the contract or you can exit it.

Next, verging on naturalistic fallacy, he remarks that since groups aren’t “biological entities�, they can’t have rights. Why is it necessary to be such an entity in order to have rights? Rights themselves are socially defined. The rights that one was thought to have in primitive society are different from those in feudal society and capitalist society. And apart from society, individuals would have no concept of rights. Animals certainly have no concept of rights. People are among the most social of animals. It is therefore more suitable to the way of life of humankind that rights granted be of a social character.

Tremblay’s remarks on charity don’t affect my original argument at all. The Church was just an example. The point is that private charity givers usually have their own agenda.

He again accuses me of trying to “poison the well� by calling him and his ilk right-wing. Sorry, but I’m not going to waste a lot of space on accusations that have already been refuted. It seems Tremblay’s inability to present anythi