Wednesday, June 08, 2005

S-Lib Perspective on Corporations

There are a lot of dangers answering questions about left-libertarianism, because it is such a foreign concept that there is no background for understanding the answers. It sounds basically nuts.

The best way to understand left-libertarianism is to undertake a massive reading project, to gain an understanding not only of the philosophy behind S-Libism, but much more importantly the S-Lib perspective on the way things actually operate today. This function, of describing the current system accurately, is a much more important contribution than anything that could be done in terms of describing some ideal future society.

With that in mind, let me warily provide this basic overview, from a Chomsky interview, of the S-Lib perspective on corporations. Note that this is not a critique of the idea of corporations, but a description of how they actually operate in the real world. There is much here that will seem quite foreign, and of course many objections could be raised that are not dealt with in this short exchange. But hopefully we can have a bit of dialogue on what those objections are, and how they might be met.


Q: Could you tell us in detail how the corporation became so powerful?

How it became so powerful? Well, we know it very well. There were enormous market failures, market disasters in the late 19th century. There was a brief experiment, a very brief experiment, with something more or less like capitalism, not really but partially, really free markets, and it was such a total catastrophe that business called it off because it couldn't survive, and there were moves in the late 19th century to overcome these radical market failures and they led to various forms of concentration of capital: trusts, cartels, and others, and the one that emerged was the corporation in its modern form.

And the corporations were granted rights by the courts. I mean, I know the Anglo-American history fairly well - but I think it's pretty much the same elsewhere, so I'll keep to that one - in the Anglo-American system the courts, not the legislators, gave the corporate entities extraordinary rights. They gave them the rights of persons, meaning they have the right of freedom of speech, they can propagandize freely, advertise, they run elections and so on, and they have the protection from inspection by the state authorities which means that just as the police technically can't go into your apartment and read your papers, the public can't find out what's going on inside these totalitarian entities. They're mostly unaccountable to the public. Of course they are not real persons, they are immortal, they are collectivist legal entities. In fact they are very similar to other organizational forms we know and are one of the forms of totalitarianism that developed in the 20th century. The others were destroyed, these still exist, and later they were required by law to be what we would call pathological in the case of real human beings.

So they are required legally to maximize power and profit no matter what effect that has on anyone else. They are required to externalize costs, so if they can get the public or future generations to pay their costs, they are required to do that. It would be illegal for corporate executives to do anything else.

By now, in what are called trade agreements, which have nothing much to do with trade, corporations are granted rights that go way beyond the rights of persons. They are granted the right of what's called "national treatment." Persons don't have that right. Like if a Mexican comes to New York, he can't claim national treatment, but if General Motors goes to Mexico, it can claim national treatment. In fact corporations can even sue states, which you and I can't do.

So they're granted rights way beyond persons. They are immortal, they are extraordinarily powerful, they are pathological by legal requirement, and that's the contemporary form of totalitarianism. They are not truly competitive, they are linked to one another. So Siemens and IBM and Toshiba carry out joint projects. They rely heavily on state power; the dynamism of the modern economy comes mostly out of the state sector, not the private sector. Almost every aspect of what's called the "New Economy" is developed and designed at public cost and public risk: computers, electronics generally, telecommunications, the internet, lasers, whatever...

Take radio. Radio was designed by the US Navy. Mass production, modern mass production was developed in armories. If you go back to a century ago, the major problems of electrical and mechanical engineering had to do with how to place a huge gun on a moving platform, namely a ship, designing it to be able to hit a moving object, another ship, so naval gunnery. That was the most advanced problem in metallurgy, electrical and mechanical engineering, and so on. England and Germany put huge efforts into it, the United States less so. Out of associated innovations comes the automotive industry, and so on and so forth. In fact, it's very hard to find anything in the economy that doesn't rely critically on the state sector.

After the Second World War this took a qualitative leap upward, particularly in the United States, and while Alan Greenspan and others make speeches about "entrepreneurial initiative" and "consumer choice," and things you learn about in graduate school, and so on, this has almost no resemblance to the actual working economy. In fact a striking example of all this which we see very clearly at MIT, a main technological scientific university, is a recent shift in funding. When I got to MIT 50 years ago, it was Pentagon funded, almost one hundred percent. That stayed true until about 1970. Since then, however, Pentagon funding has been declining and funding from the National Institute of Health and the other so called health-related national institutes has gone up.

The reason is obvious to everybody except maybe some highly theoretical economists. The reason is that the cutting edge of the economy in the fifties and the sixties was electronics-based, so therefore it made sense for the public to pay for it under the pretext of defense. By now the cutting edge of the economy is becoming biology-based. Biotechnology, genetic engineering and so on, and pharmaceuticals, so it makes sense for the public to pay for that and to take the risks for it under the pretext of, you know, finding a cure for cancer or something. Actually what's happening is just developing the infrastructure and insights for the biological-based private industries of the future. They are happy to let the public pay the costs and take the risks, and then transfer the results to private corporations to make the profits. From the point of view of corporate elites it is a perfect system, this interaction between state and private power. There's plenty of other interactions as well. For example, the Pentagon isn't just for developing the economy, it's also for making sure that the world follows corporate friendly rules. So the linkages are quite complex.


Traveller said...

What is interesting about the process of the development of corporatism, akin to the process of the development of an authoritarian society, is the extent of a society's collaboration in the process. Shuffling off the coils of corp-gov authoritarianism is increasingly difficult because we find "going along to get along" so... comfortable. People were writing about this in the fifties, aware of what was happening here, pretty sure we'd wind up in the pickle we're in right now, and called it different names -- "conformity," "the authoritarian personality," etc.etc. Libertarian doesn't mean what it used to. The enemies have changed -- they are bigger and better organized and far more sure of themselves! And they are made up of the vast majority of Americans and others in "developed" countries.

Adam P. Short said...

That's true, though there was a very sophisticated PR effort throughout the last several decades to make it appear as if all of that "conformity" and authoritarianism was left behind.

A great description of this process can be found in Thomas Frank's One Market Under God, which is actually the book, together with "Human Action" by Ludwig von Mises, that caused me to reexamine my faith in R-Libism.

One Market Under God intentionally critiques so-called "free market economics" and is one of the best-written nonfiction books I've ever read, while Human Action is actually a treatise extolling the virtues of R-Libism, but one whose arguments are so clearly (to me at least) fantastic that the book did much to turn me away from the ideas that it purports to support.

Anonymous said...

A few silly questions, I think I must be missing something. First, why is left libertarianism S-Lib and not L-Lib?

Second, why are corporations legally required to maximize power and profit? The quote says for them not to do so would be illegal - but which law is this referring to?

Third, why are corporations "collectivist legal entities"? Collectivism can mean (pulled from WordNet) "subscribing to the socialistic doctrine of ownership by the people collectively" or "collectivized, state-controlled". I can't see how either is the case. Corporations are owned. They are property, like a car, or a computer.

That they are property is in itself enough reason for me that they shouldn't have the rights of individuals. My carpet doesn't have an inherent right (separate from my ownership of it) not to be searched by the cops. But the premises of legal motiviation and existence as a collectivized entity seem a bit out of place here.

Traveller said...

You're right, Adam. Franks is one of the best commentators we have these days. Kansas was a triumph. Haven't read the earlier book. Must.

As for maximizing profit, see how the importance of shareholders is elevated above the importance of the workers in this week's talk about GM. Shareholders -- why, that's all of us, no? How that plays into the problem is part of the "PR effort." (I have seen the enemy...)

Adam, what right, in your view, about R-Lib'ism? Not an easy question, I realize!

Adam P. Short said...

Herr gokmop:

It's organic chemistry terminology. The "S" is for "sinister," or left. So when you talk about an enantiomer (a molecule that has a non-superimposable mirror image) you call it, for example, R-carvone (right-handed carvone) or S-carvone (left-handed carvone).

As for the more theoretical questions, more on that later.

Adam P. Short said...

Wassamatta Kansas was really good. I was amazed at the number of people who criticized it who immediately made it obvious from their criticism that they hadn't read it. Richard Cohen was the most inexcusable example.

Anonymous said...

I'm not sure why you want to label your chosen position as "sinister", but I admire the attempt at unbiased nomenclature. S/R it is.

Unlike the impractical anarchist wings of both groups, I'm inclined to agree with Nozick that authoritarian positions are something that grow out of human interaction by nature -- that even if we wanted to, we couldn't avoid a state-like entity developing. Some cowardly part of the human spirit (or just call it an inability for any one person to see the whole picture if you don't want to cast it moral terms) pretty much requires that we have an institution we can blame. In that regard, it's not at all surprising that we have corporations as legal persons. The whole point of the cherade is to create a property so complex in design that it takes on certain aspects of intentionality. And once it does, everyone but the CEO can claim that they had nothing to do with it. Maybe it was just limited liability that got us here -- maybe if shareholders of a corporation had to pay a pro-rated share of fines for corporate wrongdoing, there'd be less of this going on? Are there other things we could do to castrate corporations?

R-libs (who often start as anarcho-capitalist Rand fanboys, including myself, Alan Greenspan, and presumably Cato) have been inclined to consider the options and decide that it's better to side with business. The rationale behind this position is as long as we must deal with a power structure, it might as be one that we have the power to *unilaterally* opt out of. Whereas if the power structure is the state, there's precious little we can do *ourselves* to stop it, though we could convince our fellow citizens to change the laws. But in the system we have, the two have been allowed to be each other's best friends, and that's something R-libs (they say) want to change.

Okay, enough musing, but I have a question about Chomsky's position in the interview. He claims that the public sector has really been the engine of new technology, no doubt reserving such success for S-lib. But he also argues that corporations and governments have worked hand in hand during all that time. How can he claim S-libs would produce X (X being any Good Thing) in the absence of corporations, if all he has to point to is evidence of products coming from the co-evolution of power structures, neither of which is as "ethical" as S-lib? I think there's a case to be made that an R-lib system would make these things, too, ethical or not. I think there's also a case to be made that some flavors of S-lib systems would not make such things, because they don't think they are Good Things.


heatkernel said...

The anarcho-syndacalist position, as you have outlined it, is not exactly incorrect, but in a certain sense, too shallow. It seeks to treat the problem of "dehumanizing authoritarianism", whether on the part of coercive and secretive government, or corporations, as a political (in the broad sense of the word) problem, whereas the problem of dehumanizing authoritarianism is merely the political manifestation of a deeper problem of human evolution. The problem is that those fantastic gifts of language and technology that early mankind developed--and indeed, that allowed man to rise above the other animals--also have a tendency to become perverted into a "megatechnics". Forgive this technical term: it is necessary to coin the word "megatechnics" to describe a system of technology which subordinates the human ends of creativity, knowledge and happiness to the development of technological tools, instead of the reverse, that is, instead of a system in which the technology is evaluated for its contribution to human ends.

In its purest and most pernicious form, megatechnics gives rise to a "megamachine", a social system that functions as a machine, with living human beings (necessarily stripped of most or all of their autonomy) functioning as the megamachine's moving parts. The paradigmatic examples of megamchines in history are, in ancient times, the pyramid-building apparatus of Pharaonic Egypt, and in modern times the Pentagon and the bevy of transnational corporations that serve it and are in turn served by it. Throughout history, one can find megamachines which in various countries and civilizations rose and then fell in isolation from one another; what distinguishes the current megamachine from these earlier megamachines is its planet-wide scope.

It goes without saying that what I have outlined here is only the barest bones of a theory, which, in its fully fleshed-out form, would have to embrace the fields of psychology, philosophy, antrhopology, archaeology, parts of biology, as well as some fields currently too underdeveloped to merit a name. The two existing works that, as far as I know, develop this theory (and to which I owe all the above ideas and terminlogy) are Aristotle's _Nichomachaean Ethics_ (including certain parts of his _Politics_) and Lewis Mumford's _The Myth of the Machine_, vols. I and II. The latter writer was one of the universal geniuses of the 20th century, quite well-known in his day to the literate public, but neglected nowadays, except by the architectural community, for reasons I cannot fully understand.

Adam P. Short said...


Certainly there are many layers of possibility that cannot be explored on a blog. We include what can be included, and exclude, necessarily, deeper questions such as the ones you raise.

I would suggest you are looking at a small slice of a much larger stream of teaching that indeed stretches from before Socrates through Aristotle, Ptolemy, Descartes, all the way down to the present day.

Unfortunately the examination of these sorts of things is beyond the scope of this blog.

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