Capitalism is Statism
Capitalism depends on state intervention in the market to enforce artificial property rights, to provide subsidies, to erect barriers to entry, and to maintain regulatory cartels — all so privileged holders of artificial property rights can live off artificial scarcity rents. Hence the most profitable players in the global corporate economy are those whose business models depend heavily on direct government subsidies, draconian “intellectual property” law, or both: The military-industrial complex, agribusiness, biotech, pharmaceuticals, software, entertainment, electronics.
The Free Market is Socialism
A totally free market, on the other hand, is the ultimate in socialism. Genuine freed market competition makes capitalism impossible. Free competition socializes the benefits of capital, land, and innovation, and makes it impossible to enclose them as sources of rents.
It’s sometimes asked whether new technologies can be engines of economic growth. Skeptics point to the Dotcom crash as evidence against it. But from the standpoint of the consumer and maker, the main benefits come after such bubbles collapse. It’s the cheapness of a new technology, in terms of its capital outlay requirements, and the resulting ubiquity, that make it impossible to maintain entry barriers or to maintain profit in the face of exploding competition driving down the cost to zero. It’s when the new developments become ubiquitous and free that their greatest social benefits occur.
For example, Web 1.0 and the Dotcom bubble occurred under the shadow of the original, misbegotten “Information Superhighway” vision: A glorified Cable TV system with walled-garden, streaming proprietary content and institutional websites full of corporate/government happy talk. The Dotcom bust killed off this hideous vision (although Apple is still trying to reanimate parts of its corpse). Unemployed tech workers from the Dotcom crash created Web 2.0, turning it into a medium that ordinary people use to network horizontally and take on the power of giant organizations.
In Cory Doctorow’s novel Makers, decaying mass production companies start putting their surplus capital — which they have nowhere else to invest — into garage manufacturing startups. The first such ventures have enormous ROIs, but their capital outlay costs (what with cheap CNC tools) are too small to absorb more than a small fraction of the available capital sitting around. The new technology is adopted so quickly, given the lack of entry barriers, that the initial wave of entrepreneurial profit crashes. In the aftermath, though, every favelah in every abandoned shopping mall in America had its own microfactories, churning out consumer goods and medical equipment.
Unfettered market competition socializes the benefits of technical innovation, so that an ever-growing share of consumption needs become “too cheap to meter” — as opposed to proprietary business models enclosing innovation as a source of rents.
The beauty of the new digital technologies is that they’re impossible to enclose, as traditonal rent-extraction mechanisms like patents and copyrights become impossible to enforce.
Statism is Exploitation
Although “socialism” is commonly equated with state ownership or control of the economy, such forms of organization result not in socialism, but in some new form of class exploitation. Orwell, as “Emanuel Goldstein,” wrote of the eternal struggle between the High, the Middle, and the Low. The typical pattern of a revolution was for the Middle to contest control of the state with the High, and to enlist the help of the Low under a popular banner. Once they seized control of the state, the Middle became the new High and took their own turn at oppressing the Low.
This is inevitable, so long as the goal of a justice movement is to capture the state. The state, by its nature, is not amenable to control by a majority. It is a machine that can only be controlled by a minority. The Iron Law of Oligarchy guarantees it will inevitably become an instrument of exploitation by the class that controls it.
The only way to achieve economic justice is to focus our efforts on building a different kind of society outside the state.
The real significance of the Occupy movement is not its effectiveness in pressuring either the 1% or their state to enact any changes, but its effectiveness in letting the 99% see our own strength and realize that we’re an entire society in ourselves. We’re the producers, and we don’t need the 1% — it’s the 1% who would starve without us. And the imploding cost of new production technologies means their precious land and capital is becoming more superfluous by the day.
Those involved in developing the techniques of self-organized, low-cost production — the free software movement, the micromanufacturing and permaculture movements, etc. — should engage in educational outreach on just how many aspects of subsistence can be provided with tools affordable to the average person, or through trade with other working people.