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A Political Economy for Libertarian Socialism

"Libertarian socialism" is a political position that seeks to provide increasingly optimal levels of equality and freedom. In the Nolan chart (a predecessor appeared in The Floodgates of Anarchy) it fits the left-liberal or left side of the diamond. In the Political Compasss it fits in the bottom-left quadrant. In the Dixon chart (forthcoming) it is in the upper-right of the radius of possibility. No matter which chart is used, however, the position and relationship remain the same; inclusive, at the borders, with social democrats, democratic socialists, liberals, distributivists, syndicalists, anarcho-socialists, and anarcho-communists. It is diametrically opposed to the authoritarian right, the political perspective that concentrates power and wealth in the hands of the few instead of the many and enforces traditional aesthetic standards under the guise of "morality". It finds itself in favour of socialist and Marxist approaches that seek greater positive freedoms and equality but is equally opposed to the authoritarianism and loss of individual and civil liberties prevalent among such ideologies. Likewise, it supports the commitment to the negative freedoms espoused by libertarian-capitalists but abhors their excuses for corporatism and inequality.

This positional description is easily understood and well-known, but it requires further elaboration especially on where various trajectories meet and are potentially in conflict. What is the libertarian left's position on the state and government? What is the preferred decision-making process? Where does the freedom of one individual end and another's begin? What about externalities? How does one enhance positive freedoms without harming negative freedoms? Is the ethical system based on rigid principles or an evaluation of consequences? What are individual rights, anyway? Do they include destructive rights? Are there criteria for responsibility? What about non-sapient beings? How are rights and responsibilities enforced by threats both internal and external? What are the limits of free speech? What about defamation and libel? It is these sorts of questions that this essay applies some tentative grounding, based around the principles of our ten-point plan. One essential component that is unfortunately unusual in the Isocracy Network is our dedication to approaches that are positive and normative. If an approach doesn't work, we discard it, if it is unjust we seek alternatives. The world would be a better place if others did not cling so tight to ideological commitments that simply did not work, or applied social systems without consideration of just outcomes.

The State and Government

It is not unusual for anarchists and libertarians of various stripes to conflate the state with government. However, as examined previously, the two are distinct. The state is a monopoly of legally legitimated violence over a geographical area to enforce a class rule from external threats (via the army) and internal threats (via the police). In contrast, government is a system for managing resources and the conduct of behaviour between people within a jurisdiction The difference can certainly be subtle, but as Murray Bookchin quipped: "All states are governments, but not all governments are states." Every society, that is anywhere where two or more people interact, will have some system of government. Some will be good and make decisions through with the equal access of all parties and a sense of proportionality and reason. Others will less democratic, more arbitrary, superstitious, etc. Presumably one should seek the most beneficial system of governance, the optimal allocation of scarce resources. As a result, unlike many well-intentioned people of anarchist leanings, we actively encourage "political anarchism", the participation in parliamentary and extra-parliamentary activity in advanced democracies with a view to reducing the "state" and increasing "governance" using an approach of revolutionary reformism.

It is helpful to achieve the abolition of the state and the improvement of governance by incorporating the classic distinction between Res Publica and Res Privata, that there are public things and private things, sometimes clearly distinct, sometimes as a phenomenological continuum, and sometimes with more challenging border cases. The wealth of investigation from classical liberalism is worthwhile here that respects individual rights to self-regarding and consensual other-regarding acts above the prejudices of even an overwhelming social majority. It is a particularly backward and regressive culture and poor governance, rather than the State, as such, that leads to such a situation. In contrast there is enormous value in seeing self-ownership as an inalienable right which neither government, nor even the individual in question, can overturn. But by the same token, where individual acts have external consequences (e.g., a carrier of an infectious disease) then the public may ensure its own protection.

Economic Land and Monopoly Profits

Land, as a factor of production, is perhaps the most significant social aspect of this distinction, with particular characteristics well recognised in economics. Ontologically, economic land is a priori to labour and capital. Locations, by definition, are fixed in supply and a necessity. The private acquisition of land causes significant economic and human damage, subtracting from the total stock and increasing price. It encourages further rent-seeking behaviour, redirecting financial capital away from production and to further speculation, reducing aggregate wealth and increasing inequality. Study after study illustrates the benefits of land-value taxation, the public acquisition of site values and resource rents, in terms of the highest level of effectiveness and efficiency, not to mention justness. There is simply no better means to way to raise public finance and never has been.

It is curious to witness how classical pro-capitalist economists recognised that the landlord class was a fetter to development in general, and capitalist development in particular. Smith, Ricardo, and Mill, for example, all condemned landlordism in no uncertain terms ("When the sacredness of property is talked of, it should always be remembered that any such sacredness does not belong in the same degree to landed property", opined Mill), whilst equally being advocates of individual rights. Martineau, insightfully, even compared private property in land with slavery. Their views are shared, usually in my formal terms, by contemporary economists of which the open letter to Mikhail Gorbachev illustrates, along with a run of Nobel Prize recipients, and have even been expressed as laws of public finance (e.g., Stiglitz's "Henry George theorem". The views of the best minds in political economy often seem to stand in contrast to many vulgar Marxists who lump capital and land together, as do many of contemporary libertarian-capitalist ideology. For what it's worth when Marx wrote that communism could be described in a single sentence as "the abolition of private property", this was at a time when "property" referred to "land", as distinct to chattels and personal property, and the first objective was listed as the socialisation of land-rents for public income. In that regard, Marx was little different to the aforementioned pro-capitalist predecessors and the tradition of radical liberalism.

Capital and Labour

Ricardo wrote, backed with his theory of Rent, along with the bitter experience of the Corn Laws and the starvation in Ireland, "the interest of the landlord is always opposed to the interest of every other class in the community. His situation is never so prosperous as when food is scarce and dear". This was a period where the progressive industrial capitalists were in conflict with the vestigial remains of the reactionary feudal landlord class. But with the increased monetarisation of the factors of the production, the rise of economic classes over birth-rank, in the 20th and 21st centuries CE, increasingly there has been an institutional mixing of resource capitalists (from mining to real estate) who wish to acquire economic profit in addition to normal profit. Added to this, for the information economy, are those who seek monopoly profits through various forms of intellectual property, from scum-sucking bottom-feeding patent-trolls and upwards. At the very least, however, there is a difference between "Ricardian rent", monopoly profits from a natural resource, and "Schumpeterian rent", where at least some production and innovation was initially required, which includes artificial infrastructure and patents on physical goods. It is from institutional economics, that wry discipline which has the temerity to suggest institutions exist and act in their own interest, that the warning is offered not to provide even temporary monopolies for innovative products, but rather keep the ideas in the public domain, and reward the discovery.

Just as individuals can acquire income through interest, wages, and rents, institutions can derive theirs through rent or interest; institutions do not labour, and labour is the activity of living subjects. The class conflict and scope of a class reflects the diversity of income and activity. A libertarian socialist perspective would argue, as Smith and Marx both did, that in reality the small business owner, the petite bourgeoisie, effectively lives on wages from their labour, even if they were historically particularly prone to the most reactionary and nationalistic version of capitalist ideology, but also the most progressive and internationalist (as well-noted by Scott's Two Cheers for Anarchism). Taking all this into account, a perspective that respects civil freedoms equally with social democracy will draw the continuum from one to the other. The closer the enterprise is to the individual the more "libertarian" the approach, as this encourages initiative, innovation, and takes the advantages of the "diseconomies of scale", and operates in a market structure that is closer to perfect competition. The larger the enterprise, the more "socialist" the approach, whereby large investments, economies of scale, and where oligopolistic competition dominates as a market structure, thus requiring additional public regulation and public ownership of "the controlling heights".

Labour markets are a particular example of a reverse oligopoly, which Robinson described as tending towards monopsony; many sellers of labour, and few buyers, putting great advantage to the buyers of labour and clearing at a rate below what a freed market would provide. People tend to be underpaid in capitalism because of this market structure, of which basic income, welfare measures, minimum wages, and especially collective bargaining, can provide some alleviation.

Whilst one can advocate, following the slogan of Industrial Workers of the World, "the abolition of the wages system" through workplace democracy, industrial unionism, and worker's cooperatives, there is still a need for such protections whilst a wage-system exists. Indeed, it is a matter of reality that as capital becomes more automated that increasingly labour becomes more specialised, skilled, and more creative, but also less requisite for core productive activities; everything that can be automated will be automated over time. Socialised income and socialised wealth are increasingly necessary, as technology advances, to avoid a situation where increasingly production and wealth is owned and controlled by an increasingly centralised private capital.

Central or Local? Market or Plan?

The precise form of optimal ownership is contextually dependent, as is the mode of exchange. General principles can be elaborated as follows; economic land and natural resources are more optimal as a source of central public income; increases in site-rents from infrastructure improvements for local public income (allowing for a competitive mix of local provisioning using the Tiebout Hypothesis. On the other hand, the deadweight loss and inefficiencies of the onerous taxing burden on wages must be relieved in proportion. Management of production depends on scale; centralised production for those all-of-community goods, services, and standards, whereas local ventures (cooperatives and small business) for those that are most optimal for local variance (sometimes, such as health and education, both can apply e.g., national standards and local implementations). Where the production of a good or service is relatively simple, planning mechanisms (including more complex input-output analysis) has efficiencies, and where complexity and ex-ante choices are dominant, market mechanism should prevail.

Advocating ever-increasing improvements in the liberty of individuals, coupled with increasing civil and democratic input of social institutions, is a normative proposition backed by positive results. This should not be such a surprise, for as much as "rights" are socially established, and "natural rights" is a modal error, there is a very real sense that there are optimal and natural levels of relevant experience and input. This sensitivity to context and a determination to respect reality is what gives the consequentialist outlook a moral imperative; so many millions have suffered, have been persecuted, have died, and continue to die, needlessly, due to various suboptimal social systems and ideologies. It very well may be that the political economy of libertarian socialism lacks the simplicity of more rigid ideological perspectives. But a complex truth is preferable to a simple lie.

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