“There is a misconception that capitalism and free markets are the same things. This is not the case. Capitalism relies heavily on state protection and state intervention. Capitalism and the state are twin pillars of control that have developed in tandem, supporting and reinforcing one another both deriving their power from private property (not to be confused with personal property).”
The Bewildered Herd on Apr 3, 2021
“Capitalism is not, as its defenders like to claim, defined by “free” or “private” enterprises. Likewise, “free” or “unregulated” markets do not define capitalism. Politics and ideology drive its defenders to choose those definitions over clearly better, different definitions. The causes and consequences of conflicts over definition are part of today’s mounting battles over capitalism.” — Richard Wolff
There is a misconception that capitalism and free markets are the same things. This is not the case. Capitalism relies heavily on state protection and state intervention. Capitalism and the state are twin pillars of control that have developed in tandem, supporting and reinforcing one another both deriving their power from private property (not to be confused with personal property).
To start, let’s look at the way capitalists define capitalism.
“An economic system with its defining components being private property, market exchange, wage labor, commodity production, credit and finance, profit, interests, and rent. All elements denominated in money and combined in such a way as to institutionalize economic growth as a system imperative.”
We can already see, by their own definition, private property is the key component of capitalism. In the 16th century, during the infant stages of the nation-state, governments implemented Enclosure. The act of Enclosure was a state-backed practice that barred common people from common land and made them pay a fee or tax to a landlord. This robbed people of their own means of survival, forcing them to subordinate themselves to someone given special property rights by the state.
This was later used and scientifically intensified in both industrial revolutions to deny people their own means of production and create slums in order to drive them into factories with excruciating hours, unsafe working conditions, and poor compensation. It is the same system that exploits us today, forcing us to produce more wealth for those who already hold most of it.
But notice the assumption by those who claim capitalism is a free exchange of fair work for fair wages; that workers just happen to be put in a terrible predicament that the capitalist class has nothing to do with. For a market to free, both sides would have equal bargaining power. Otherwise, the agreement would favor the powerful at the expense of the powerless, thus tipping the scales in an even more unequal direction.
In terms of the state, it derives its power from a centralized authority. That is why the power-elite, also known as the military, political, and monied interests, are concentrated in Washington D.C. Capitalists prefer centralized authority because it is easier to bribe and control. The government rigs the game by constantly skewing the market to favor the ruling class. As I.F. Stone said: “The rich march on Washington every day.”
As we determined, capitalism is based on private property. Private property is only possible if there is a state because the only way to protect private property is through state violence. The state has been called on by the capitalist class throughout history to intervene in the market any time it does not favor the private property of the ruling class.
From Andrew Carnegie calling upon state violence against his employees who had used the free market to form a union and collectively demand better working conditions and compensation, to Amazon calling on the state to change traffic patterns to stop workers from handing out pro-union literature.
The state and capital are also intertwined because the political regime is always an expression of the economic regime which exists at the heart of society. This means the state can always change its form to protect the economic system it is an expression of. This is how democracies turn into dictatorships and how capitalism turns into fascism. As Vladimir Lenin said, “Fascism is capitalism in decay.”
In order for the owning class to exploit the working class, capitalism needs to legalize its methods of robbery. They do this through social murder. The state creates poverty by monopolizing resources. Poverty in turn creates crime. Crime then requires the intervention of the state. The state justifies its existence and authority by pointing to the social evils it itself creates.
“Laws are created to be followed by the poor. Laws are made by the rich to bring some order to exploitation. The poor are the only law abiders in history. When the poor make the laws, the rich will be no more.” — Roque Dalton Garcia
The state is the tool of the capitalist class and is seen as functioning correctly when it is protecting their private property. When it is actually used by working people to improve their lives, such as spending on social programs, worker rights, infrastructure, healthcare, vacation or maternity leave it is seen as Big Government, wasteful, authoritarian and anti-free market.
The ruling class despise the state when it serves the will of working people, yet remain strangely silent when the state intervenes on their behalf in terms of property rights, subsidies, no-bid contracts, copyrights, tax breaks procurement, bailouts, 0 interest loans, and legal protection. Morton Horwitz said,
“By the middle of the 19th Century the legal system had been reshaped to the advantage of men of commerce and industry at the expense of farmers, workers, consumers, and other less powerful groups in society.” — Morton Horwitz
In the 19th century, workers began to even the bargaining power by forming unions and going on strike. However, the capitalists, who claim to love the free market, immediately called on the state to intervene. With state backing, they had the capability to employ scabs, break picket lines, bust unions, round up ring-leaders and imprison dissidents. The irony is, the working class pays the taxes which fund the state, who then undermines the worker’s efforts using their own money against them.
Capitalism is inseparable from a centralized state and is pure coercion. With state-backed property laws denying you the right to your own means of survival, capitalism gives you the choice to rent yourself to a boss or starve. Capitalists use the state to deny people basic human rights in order to create an artificial scarcity that drives us into low-wage work where our only systemic goal is to increase the profits for the ruling class while we’re given just enough to survive.
“It is the impossibility of living by any other means that compels our farm laborers to till the soil whose fruits they will not eat and our masons to construct buildings in which they will not live. It is want that drags them to those markets where they await masters who will do them the kindness of buying them. It is want that compels them to go down on their knees to the rich man in order to get from him permission to enrich him… These men, it is said, have no master — they have one, and the most terrible, the most imperious of masters that is need. It is this that reduces them to the most cruel dependence. They must therefore find someone to hire them or die of hunger. Is that to be free?” — Simon-Nicholas Henri Linguet (1767)
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