Tag: Free Market

Libertarians and Intellectual Property

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The only thing more inconsistent than a libertarian who supports Intellectual Property (IP) is a libertarian that doesn’t but continues to support Private Property (PP).

Intellectual Property Zone
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The only thing more inconsistent than a libertarian who supports Intellectual Property (IP) is a libertarian that doesn’t but continues to support Private Property (PP).

Renunciation of IP is actually a very trendy thing to do by fledging right-libertarians. I would venture to suggest that it might be the very first dip many take in libertarian waters.

Some will do it on a purely practical grounds, such as the devolution of the Free Software concept that is Open Source, by taking out all the ethical base in order to make it more “business friendly”. Others, on the other hand will renounce it on ideological reasons, namely by claiming that the concept of IP is nothing more than a state sponsored monopoly and thus illegitimate. I’ve actually been stumbling on this type of reasoning quite a bit lately and something about sounded inconsistent.

And the other day it struck me as I was arguing with an Agorist, who was at that point defending private property. The argument he had made in another passing comment against IP was the same as above (IP is state-sanctioned monopoly blah-de-blah) so as  I was pressuring him to explain how PP would remain in a stateless society where the workers would be capable of seizing the factories without fearing state reprecursions he gave me a most underwhelming answer: “Any sensible free market court would rule against workers who tried to violently seize the factory they worked in.”

But why would any such “sensible court” side with PP? Because it is self-evident? But obviously it is not, for the workers attempting the seizure of the means of production. don’t see it. Because it is a Natural Law? Don’t make me laugh.

But lets for a moment consider that indeed the courts side with the Capital instead of labour. The question then arises of why such a “sensible free market court” would not in a similar way side with IP as well? Any possible argument one can make in defence of PP can most likely or with slight modifications be made in defence of IP as well.

The thing is, that here the anti-statists ((No, they aren’t Anarchists. That’s much more than simple anti-statism)) are blinded to the fact that PP claims are state-sanctioned in exactly the same was as IP. They assume that in a post-state world, the federation of courts (or what have-you in Agorist Libertopia) will protect private property in exactly the same way as before but for some reason refrain from doing so in regards to intellectual property.

And since their dismissal of IP is not based on an ethical argument but rather on the infantile “It’s not legitimate because the state does it”, in a stateless future where IP is still supported by the courts and enforced by those private insurance/security forces, they can only stay silent.

Of course there are the few libertarians who do dismiss IP on purely utilitarian grounds. But then they go on to support PP on ideological reasons, which is a clear sign of ideological bankrypcy. This is because from a utilitarian perspective, the abolition of PP is superior (for reasons I shan’t go through here).

And because of this, such libertarians will forever remain inconsistent, for to avoid that, they would have to look at both types of property on ideological grounds and therefore support both or to look at them from utilitarian grounds and thus reject both.

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Can market exchange create new value?

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No misconception is more common among free market proponents than the idea that simple exchange creates new value. I wish to show how this reasoning is flawed.

free lunch
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A very common argument from economists and generally free market proponents is that the only thing that creates value are market interactions.  The basic idea they try to promote is that the Capitalist system is not a zero sum game as one person’s gain does not need to come from another person’s loss. You can see an example of this argument from this latest post on Techdirt.

Too many people, it seems, assume that “there is no free lunch” means that the market is entirely static. That is, they believe it’s a zero sum game. If I do x, then y loses out. So, if I am offered free internet service or a free lunch, then whoever provided that is out the same. But that’s simply not true. Economics is not a zero sum game, but is built around economic growth — where the sum of economic activity can be greater than the parts. If I do a transaction with you, and in the end, we’re both better off (i.e., we both got more value than we gave up), then the amount of overall value in the world increased. It might not be a “free” lunch (the economic transaction cost me something), but new utility is created above and beyond what was there before.

(Emphasis mine)

I will not argue on the liberal use of vague concepts and examples that seem valid (eg Why “Free Internet” and not “Free Apples”? Because the argument sounds more plausible that way) but I will point out the black hole in the end.

What the author is telling us in effect is that when you and I trade commodities, new utility is created. So if I give you an apple and you give me an orange, new utility has been created out of thin air. What this utility is, the author does not deem worthy to mention so your guess is as good as mine.

We can safely assume that the author is rather talking about utility in the economic sense, which can roughly translate as satisfaction. In that case however, new utility has not been created but rather the individual utility of each person has been increased. But this kind of utility does not affect the cumulative value of the world, it only affects the individual. The amount of value in the world remains constant.

It is this kind of fallacious reasoning that leads to events such as the rise and fall of Iceland, where their “value” skyrocketed simple because the traders agreed upon themselves that their stuff was worth more. What they basically did was trade amongst themselves and with each trade, they were creating “new utility”. By the logic above, that is perfectly normal and acceptable. The result of which was that Iceland’s “wealth” ballooned to such an extraordinary degree and then popped at the slightest disturbance.

But the reality is that utility, and by that I mean objective value of any single commodity can only be created through one of two ways. Human Labour and Natural Phenomena. The only way to create a new car is to build it. The only way to create a new microchip is to build it etc. It is funny that the author quotes someone else who goes very close to this but fails to grasp it

A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects.

But of course the extra value that is created in the kitchen does not come from simply possesing lots of inexpensive ingredients. By this reasoning, the best cooks would be the ones who could trade their material best and get the biggest array of them, or trade for the ones that gives them personally the largest amount of satisfaction. After all it’s the trading that would “create new utility” and thus “value” isn’t it?

But that of course is patently absurd. The extra value that is created in the kitchen does not lie in the ingredients. It lies in the amount of labour the cook will put in his cooking. And if we take into account the skill of the cook, then we can speak about the SNLT to be more accurate. The more labour the cook puts into his cooking, the more value the end result will have.

It is understandable that economists would be avert to recognise where the value comes from, but this dooms them to simply a series of equivocations.

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What happens when Reality and the Free Markets clash?

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http://www.nlm.nih.gov/hmd/emotions/self.
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The most common theme one finds when listening to free market proponents is how they (the markets) are the only way to judge what is valuable to someone. The way to discover that is simply to see if someone is willing to pay money for something. As long as someone pays for it, it is understood that it was valuable for that person. It provided a utility.

I always found this implication flawed but I couldn’t really put my finger on the why. Until today, where a post on the growing popularity of alternative medicine came to my attention. This immediately presented me with an example of the obvious contradiction between what the markets consider as valuable or useful and what truly is.

For any skeptic, alternative medicine and other woo-woo are obviously worthless, not only do they not provide any health benefit (over the odd placebo) but they can be overall harmfull by making people avoid taking scientific medicine and reducing the funds and thus the research that would have otherwise been spent on scientific research. These effects are already obvious today, as the article above points out.

But for the free market proponent, it must be obvious that complementary and alternative medicine (CAM) provide value since people are paying for them. And the more people pay for them, so goes the thinking, the more valuable must they be. And more so than anything else, the CAM success is based on deregulation of the medicine industry, allowing the free market to define what is useful rather than the experts.

The rise of CAM popularity then aptly displays where the free market mentality directly contradicts reality. CAM do not provide any value ((This post is not going to be about proving that CAM don’t work. I assume that this is understood by skeptics and I will not argue this point. If you’re a free market AND a woo-woo proponent then all hope is likely lost for you)) and yet they are rewarded by the free market as if they did.

Ans this is the complete failing of the free markets where any and all value is decided on a truly subjective basis, lacking overview or foresight. Because they deny that objective ways to judge value exist, they can easily lead the world to become a worse place. And this is not only limited to medicine but to almost anything esle which can be decided via the markets.

Lets take another example: Coal and Oil VS renewable and clean energy. While we can objectively see that using the former types of energy creates major environmental problems, the markets judge oil and coal as more valuable. The result? (Too) Many free market proponents are Global Warming deniers.

When Reality and Free Markets clash, it is the later which we are told must heed.

However one question remains. What is causing this problem? Would this be resolved if people simply followed scientific evidence? If people learned to trust in the scientific method, wouldn’t the markets represent that view? And herein lies the problem. Money.

The reason why the objective reality fails to be represented by the markets is because it is not reality that drives them. It is money. It is not reality that drives businesses. It is money. The main ingredient for the use of the free markets is the one that distorts the whole recipe.

Money is what that allows people to avoid starvation and cold. Starvation and cold are of a higher priority to humans than ideology. So when a human is faced with the choice of lying or starving, it is obvious what they will choose. Thus people will lie and misguide others in their attempt to make money. They will use scientific-looking evidence to muddle the waters for most humans. They will use the money that they make to hammer on, with more and more advertisements and misdirection. As long as there’s money to be made, it’s worth it.

It is not reality that rewards (with money) the valuable actions. It is money that distorts reality.

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Quote of the Day: Herd Instinct of the Markets

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Quoth the International Marxist Tendency

Just as the wildebeest can scent a lion, the markets can scent the imminence of a recession. The prospect of a recession is the real cause of the panic. Once this happens, nothing can stop it. All the speeches, all the interest rate cuts, and all the handouts to the banks, will have no effect on the financial markets. They will see that the governments and central banks are afraid, and they will draw the necessary conclusions.

The rest of the article is interesting to see the Marxist perspective albeit a bit too propagandistic for my tastes. Still this quote was quite insightful.

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The oasis of free slaves

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The Chebika oasis
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Mr Jones was lucky enough to have acquired his little estate and farm before the nuclear war ravaged the world’s ecosystem and made the surrounding area into a brutal desert. His land managed to survive due to his luck, being on top of an undergound river and far from any major cities.
Mr Jones and his family was however left to fend on their own. They couldn’t toil the whole farm of course but they could certainly feed themselves and raise some animals.

With civilization destroyed as we know it, along with the major productive capabilities, slavery once again become the norm. Slavers quickly rounded up people who could not defend themselves and gave them away in exchange for food and other products. Eventually some dared the desert in a caravan, losing a few slaves in the process and reached his farm. Mr Jones became the proud owner of slaves.

He didn’t have to do much to maintain them. He simply made them build a shack for themselves and every day he would send them out to the fields to work the land, tend the animals or build new items in the workshop that he could sell to the slavers. He and his family would supervise them to avoid them making weapons to attack them or conspiring with each other.

This situation was very profitable to Mr Jones and soon his little farm had become an oasis of civilization. “The last bastion” he liked to call it. He became very wealthy through trading with caravans who came to his land for food which now he had ample due to his new productive force. He got more slaves and even got some slaves who got extra benefits and policed the others. All was going perfectly.

But Mr. Jones was still distraught. Before the war, the concept of slavery was abhorent to all but now he was the owner of all these people. But what could he do? If he didn’t buy them, the slavers would have simply let them die in the desert to cut their losses. And since he bought them with wealth he produced with the sweat of his back, shouldn’t they make up for his loss? And anyway, he wasn’t a cruel master at all. Almost no whipping.

But he still did not like it, something was gnawing his conscience when the thought of slavery enterred his mind. It was at this point that he bought an old book from one of the caravans which explained a lot of nice concepts. Liberty, justice, human rights. It was written by some Von Mises person.

All of this struck a chord with Mr. Jones. This was the solution he was looking to his moral issues with slavery. He knew in his gut that liberty was a unalienable human right that he shouldn’t have taken away from those people. How could he have been so blind? If he didn’t make up for this, he wouldn’t be able to live with himself.

So the very next day, he gathered all his slaves and made an announcement. ‘I grant you all your freedom’ he proclaimed after a short rhetoric introduction. ‘I have looked into my heart and discovered that it is not fair that I take away your human right to liberty through force. From now on, you are free to leave at any point you wish. If you do wish to remain here, you’re welcome as I will need some workers to take the place of those who leave.’ Now it was time to show how magnanimus he had become. ‘I will first of all give all of you some extra money to repay for the time as slaves, We can use bottlecaps for that since noone can make new ones anymore. If you decide to work for me, I will pay you all 100bc per month.’

And so, Mr Jones freed his slaves and his conscience. Finally he could rest certain he was not denying anyone’s right. He of course had to make them pay rent to stay on his land and he thought that 50bc per person was a good enough price. He also made his food quite affordable to them, it came to just about 40bc per month per person which even left people 10bc to save and sometime buy one of the products of his workshop.

He know he made the right decision almost immediately. Everyone decided to stay and work for him voluntarily! Nobody decided to dare the desert and that just proves how good an offer he had made to them. He could now not worry about supervising them at all and he could simply sit in his home and enjoy life. The products and well deserved profits were coming on their own now.

Everyone was free and doing what they chose to. The free market had thriumphed at last.

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When 90% percent don't want Capitalism anymore, it has to go.

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Pro-Capitalists claim that a social revolution should not happen unless everyone agrees to it. I point out the absurdity of such a proposition.

An Industrial Worker capitalist class critique
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I was recently sucked into a conversation with Libertarians which I found after they linked to me. I know I really shouldn’t have done that but some times I can’t resist. Unfortunately I can’t really continue commenting there because the comment form they have there is slow, ugly and buggy and it generally not good for having a comfortable conversation.

As is classic, the main argument that was raised there was that the “Free Markets are the best ev4r”. Anything wrong with the world is blamed on the government and everything good on the “Free” Markets. This is based on the idea that anything that moves towards deregulation does well but anything that moves away does bad. As an example for that, the US was proposed which apparently for the last 30 years has been moving towards socialism (I kid you not, the greatest push towards neoliberalism in the history of the US and the world was actually a move toward socialism).

Other than the usual strawmen like equating communism with USSR and failing to grasp how it does not require a state another argument was put forward:

So again, you do not care what the other 10% want, you will forcefully take from them what they have earned for yourself.  You are blaming them for your own failures.  I have no desire or need to exploit anyone else in order to get what I want out of life.  I wish to treat everyone as equals while knowing full well that we are not all equal.  Some people have more desire, more ambition, more knowledge, more energy, more perseverance, and more skill than others.  I know where my faults lie and I know what I am capable of doing and I know that I am not equal to everyone else and not better than them either.  I am my own man, with my own desires, and I want to fulfill those desires without the need to force other people to shares them with me.

Indeed, I do not care what the 10% want because what they want can only be achieved by exploiting the other 90%. When the majority of the world wants to move to an egalitarian system where nobody is exploited, nobody had to starve and nobody has to work where they do not want, why should we care that we don’t spoil the party of those 10% who are living the good life?

Apparently for the Libertarian, having the vast majority of the people in abject poverty is fine and dandy as long as some of them have theoretically the chance to rise to the top. He assumes that the majority of the wealthy have risen to the top from the lower classes but that’s just just untrue. The majority of the people are born into their position and there’s a small minority that manages to rise above their class. The later examples have more to do with luck than it has to do with skill. Yes the people who become wealthy from poverty, have to have skill, but there’s much more hard-working, skillful people who cannot rise,  not because they are worse, but because there’s simply not enough room at the top.

But for a Liberatian that’s alright. As long as those 10% of humanity have absolute freedom, he can simply assume that their position is deserved. And anyone who dares to disagree must be a lazy bum who is simply not hard-working, skilful or competitive enough to achieve it. This reminds me of the common U.S. American arrogance where they assume that their position as world power was deserved because of how hard-working and skilful as a whole they are.

So yeah, I have no qualms in taking the means of production from the 10% who owns them and forces the rest of humanity to wage-slavery. I have no qualms in wishing for a better society where everyone has a chance to happiness instead of the minority who just happened to be lucky. And yes, prosperity today has much more to do with where and from which you were born than with how hard-working or talented one is.

Making happiness and life-fulfillment a lottery is simply selling humanity short.

The thing that is telling about Libertarians is how little they understand the system they support. The “Free” market is equated with Capitalism and all together is provided as a panacea.

I answered for you because I knew you couldn’t. You proved it too. “Seizing the means of production” is that not force? You still fail to understand free markets. I do not support coercion by force of the state, that is not a free market and it is not capitalism. On the other hand you support the idea of force, workers forcefully taking over the means of production from the owners of that production.

The “Free” Markets you’re wishing for cannot work without a government force behind them. Otherwise there would be nothing to stop criminals or enforce contracts. It is this state force that the Capitalists who controls all the wealth and power will seize and increase, for their own interests. It is this state force that the Capitalist will use to bust unions who “illegally go on a strike”. The idea of Libertarianism is simply Government protection only for the rich (more than it is now that is). It is not a problem to force starving people in brutal “voluntary” contracts and then use the government to enforce them. That is the coercive force that the “Free” Markets use.

When this force is rejected by the majority of the human wage-slaves, they will revolt and attempt to seize the means of production. The “non-coercive” Libertarians will immediately claim that they are assaulted, even though what is simply happening is the majority rejecting the minority’s rules, and will send the state to intervene. This, for the Libertarian is fair game for they are only protecting their “rightful property” after all.

This has been the history of revolution everywhere however. The oppressed majority rising up, without force and demanding equality, and the minority using the state machine to put them into their place. First it was the slaves, then it was the peasants, and now it’s the proletariat. And in every case, the minority was, in their own minds, in the right.

But when the vast majority wants to play a new game, there is not reason to keep playing the old one, simply because the ones who were winning already don’t like it. When there is a difference on what is “right” between the vast majority of the working class and the small minority of the bourgeoisie, I do not see why the small minority must have its way.

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Dissecting the Libertarian mind

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Right-Libertarians tend to use to most misguided way of perceiving reality. Starting from their morals and denying all facts which do not agree with them.

There Is No Alternative to global free-market ...
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Disclaimer: When in this post I write about Libertarians, I mean Right-Libertarian

My recent posts on Capitalism, “Free Market” and the subsequent heated discussions with Libertarian ((or possibly Objectivist, I can never be sure but I think it was mostly the former as they weren’t arrogant or rude enough)) stormtroopers let me to an insight which you all now have to suffer through.

The thing is this: Libertarians are staunch supporters of unregulated Capitalism along with unrestricted personal freedom. They insist on non-aggression and only on specific government intervention, generally only enough to protect the basis of Capitalism: Private Property.

And here we reach our first problem. Every time I’ve discussed with Libertarians, they explain these wonderful concepts,  they drill me on my freedom-loving, and eventually we get to arguing economics.

Now a peculiar difference in methodology appears.

My Way

I am a (far) left-libertarian. I’ve reached this position by at some point in my life wondering “How can the world become better?” ((I can already hear the questions coming to ask me how I define what is better and why should it be my opinion that counts. *Sigh*)). This question coloured the research I did and the answers I sought.

I moved gradually to the left because I noticed that Capitalism is the only economic force in the world and yet it’s totally incapable of solving even the worst of our problems. Indeed, our situation is only deteriorating. My opinion is more nuanced than that of course but this is what I’ve discovered from looking at a broken capitalistic socioeconomic system and continuously asking the same question.

Once I figure out a few ways with which the world can become better, I modify my morality to be compatible with them.

The Libertarian Way

The Libertarian starts from the premise: “(Negative) Freedom is good” and then builds his whole belief system with ways to achieve more of this freedom. For it naturally follows, if freedom is good, then when the largest amount of humans have the maximum amount of freedom, the world will be the best it can be. Thus anything that is compatible with more freedom, must be good as well.

But their premise is unargued for. They never turn to ask: Why is Freedom good? Or, if they do, they start running around in circles with their rest of their beliefs. For example:

  • The “Free Market” is good because it can create a lot of wealth for some people and that should be allowed because to do otherwise would be to restrict one’s freedom which is not good because it is not compatible with the only thing that is works in the world, the “Free Market”.
  • Capitalism is good because it is the only thing that is compatible with the human nature of greed which is good because Capitalism requires it to work.

I think you get the point.

This was made especially clear in my recent discussion with a member of the audience who, while arguing that current mainstream economics are based on the scientific method (they’re not), informed me that Libertarians do not base their morality upon the superiority of those but rather, their belief is simply reinforced by them working (theoretically).

Thus, the Libertarians simply start from the conclusion and then finds beliefs to reinforce it. They have formed their morality and are choosing to believe whichever data are compatible with it.

Needless to say, such a take on reality and morality is not only misguided but it is diametrically opposite to the scientific and sceptical thought. The human mind’s ability to see the hits and ignore the misses is well known and understood, and this is why in order to even have a chance of finding the correct position, we need to start from the observation.

So Libertarians, I implore you. Ask yourself: Why is (negative) freedom good? Try to answer this question without running around in circles with the “Free Market” and the like. You will eventually discover that the only philosophy which attempted to truly base this moral grounding is Ayn Rand’s Objectivism. And she has failed miserably.

If you do believe you can defend a morality  centered around negative freedom, by all means jump in and let me know why I’m wrong.

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The Free Market is your God

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Your God has revealed itself and its name is Free Market. Consumerism is its Holy Religion and consumption your daily prayer.

Illustrates the intersection of supply and dem...
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Your God has revealed itself and its name is Free Market. Consumerism is its Holy Religion and consumption your daily prayer.

Do not seek to understand your god, only to serve it and its prophets. It works in mysterious ways but you, its chosen people, will always live and prosper, as long as you respect and fear it.

Listen to the prophets of your God, for they know better than you. They have received its holy blessing through the mentoring of prophets that came before them, all the way back to the first ones who heard its call.  Be assured when they all sing the same tunes, for that is the one true song.

Do not listen to the false prophets, for they have spurned your God and will lead you astray. There is no higher God than the Free Market and no matter what they promise you, it is false. Your God will not allow it.

Do not anger your God by challenging its Holy Religion. There is no higher honour for your God than spending your money on More Stuff®. Hear its higher calling and follow it. When you can’t keep up anymore, your God is most wise, most benevolent and has foreseen it. It has given you…Credit!

Your God will occasionally become enraged and turn against you. Know that this is because you were unfaithful to your God and you let false prophets to lead you astray. Do not seek to understand its anger but only to appease it. Its prophets will show you how.

When your God demands sacrifice, do not falter, do not bulk. Lay the bodies of the worthless to its altar of prosperity so that their blood may oil the gears of wealth. Your God sees all, knows all and is most benevolent. When enough souls have perished, its blessings will return once more.

Do not pity the poor, for this is just punishment from your God. They deserve their place for they have not been chosen by birth. However your God is most wise, most merciful and its invisible hand will ocassionaly raise new disciples from even the lowest of the low. The faithful enough can even become its new prophets and spread it’s blessed song.

Do not pity the worker for their life has become better through its touch. It has created new desires for him that only it can fulfill and he is now truly happy. Some workers will end up as offerings when It becomes enraged but the rest will live to enjoy its new blessings.

When the going gets rough, admit that you did not believe enough in your God. You were unfaithful and doubting. Use your blessed Credit to follow the Holy Religion and do your prayers. If that is denied of you, understand that you were not faithful enough and spend the rest of your life atoning for your sins.

Do not seek to control your God, for you will only end up enraging him sooner. Trust in its Wisdom and let it decide what is good for you.

For it is the Free Market. Most Benevolent. Most Merciful. Most Wise. And it is your God.

And this is basically what I understand when discussing with Libertarians

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