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January 13, 2016



This is a very good point. It's why privatising some services has gone badly because the government failed to create competitive markets, so that we simply went from socialism to crony capitalism. The right always claims competition would improve efficiency but in changing ownership without bringing in a market no competition is added.


"It's why privatising some services has gone badly because the government failed to create competitive markets ........ "

Actually it can be very difficult to create competitive markets in some of the services that have been privatised.

Igor Belanov

Let's get a grip please. Whatever David Bowie was, he and his work were not 'subversive'. If that was the case he would never have achieved the level and breadth of popularity he did.


I completely agree Guano, in which case those services should never have been privatised.

Paul Staines

Can you point me towards a society where free markets thrive without property rights and capital accumulation?


Getting markets without capitalism requires some pretty specific conditions - i.e. a lack of ability to store the gains of previous exchange and use it in the next exchange. Even situations like informal markets in WW2 prison camps never got like that, because even if people were getting the same allotment of aid goods they could still cache and store what they'd received if they didn't use it.

Whereas capitalism without markets is either feudalism or socialism. "Feudalism" if it's individual agents exercising monopoly powers and rights below the level of the central government, "socialism" if it's the government's agents itself doing it as a matter of state policy.


"One thing that irritates me is the tendency of many on the right to conflate capitalism and markets."

As if many (most?) Marxists don't do that as well -- see the discussion (if you can call it that!) over market socialism between Marxists...

In terms of Chartier and Johnson’s book, it is a mishmash of genuine anarchists and propertarians (like that numpty Rothbard). However, if you are interested in market socialism then I would recommend Proudhon (see my Proudhon anthology "Property is Theft!" http://www.property-is-theft.org ).

I would also recommend forgetting almost everything Marx wrote against him (particularly that terrible book "The Poverty of Philosophy") for it is almost certain to be wrong -- if not a deliberate distortion.

Deviation From The Mean

"Can you point me towards a society where free markets thrive without property rights and capital accumulation?"

If you point me to a society where free markets exist.

The argument that 'crony capitalism' is bad and 'competitive capitalism' is good is a reactionary one from a Marxist point of view.

When it comes to watching football I enjoyed the old Crony monopoly of SKY having all the games. Now I have to sign up with BT, Premier sports, Sky and god knows who else. As a consumer I am losing big style.

Markets assume that the consumer has no or little say, he is just a passive voyeur gobbling up whatever is on offer, not bothering if his consumption destroys the planet or how the goods were produced. The eradication of the market is the eradication of the passive consumer and the beginning of a concept of consumer efficiency.


«the tendency of many on the right to conflate capitalism and markets.
They are, in fact, two different things: capitalism is a system of ownership; markets a method of exchange.»

What irritates me is the tendency of many to conflate capitalism with a system of ownership (or of production for others).

It is a *political* system (or rather a class of political systems) in which the owners (or controllers) of capital (first productive, then financial) have the most political power.

Just like feudalism was not a system of ownership, but a political system in which the titulars of fiefs (secular or temporal) had the most political power.

There is quite a difference that matters significantly among :

* systems of production,
* institutional arrangements of ownership,
* political systems,
* institutions for exchange (like markets of various types),
* legal systems,
* status hierarchies,

etc.; but of course as dear old Karl argued they tend to align.

Our current political system is (as Minsky calls it) money-manager capitalism with limited democratic participation, in which the Paretian circulation of policy-making elites is among factions that are or represent the interests of money-manager capitalists, with middle class voters given at election time a right of veto as to which money-manager capital faction they object most.

A pithier summary I read somewhere else, the money-manager capitalist factions nominate, and the middle class factions elect (which is mostly about vetoing than a positive choice).

PS The supposed benefits of "capitalism" and "democracy" in first-world countries are instead the benefits given, in most important first, by:

* bankruptcy (or more precisely a culture in which bankruptcy is a thing),
* the industrial mode of production,
* the adoption of cheap, energy dense mineral fuels (coal first, oil later).

Perhaps *competitive* markets help too, but most economic activity happens wholly outside markets, and competitive ones are quite rare.

Consider countries without bankruptcy: even with an industrial mode of production and the adoption of cheap dense mineral fuels they tend to be quite poor.

Consider countries with bankruptcy and an industrial mode of production: without the adoption of cheap dense mineral fuels their "labour" productivity is bound to be very low.



"Getting markets without capitalism requires some pretty specific conditions - i.e. a lack of ability to store the gains of previous exchange and use it in the next exchange."

yup. in other words, how do you allow people to exchange capital while preventing them from accumulating it?

Igor Belanov

"Would a tightly managerialist-hierarchical capitalist record company tolerate an artist moving from folk to prog rock to glam rock to soul and to electronica within a few years? Or would it have insisted that he be more like David Cassidy?"

The first, obviously yes. Once someone gets a staunch following it is ideal for them to vary their style so they can pick up more fans who might be more attuned to the new genre. The second, no. One-track ponies might be worth a lot in the short term, but are usually easily interchangeable. It wasn't the changes in music that made Bowie popular with record promoters and the media, but his chameleon-like persona which was guaranteed to keep people interested.


This is a bit overly general and abstract. You surely need to examine the whole institutional arrangements of society to see how well or badly the economy can work under different conditions.

Markets require property rights and thus a state to enforce them; thus markets require a state. Before modern states there are other mechanisms of enforcement which constitute a state such as feudal barons. Also market failure is endemic, thus there needs to be other mechanisms to produce welfare which side steps markets, hence taxation and redistribution. Privatisation tends to be a poor deal for society at large as competition in the provision of public goods is impossible or very limited. Indeed unless the right conditions exist competition would be sub optimal for the community in this area.


Can you point me towards a society where free markets thrive without property rights and capital accumulation?

Paul Staines showing his comprehension skills here. Market socialism doesn't mean a system without "property rights" (duh, the point is the property rights are in some sense social e.g. companies owned by the workforce) or "capital accumulation" (duh, in all economic systems designed to have growth, new factories, houses or offices etc are built). The questions are - who accumulates that capital and associated profits, and who controls how it is used? Capitalism says only a small minority. Socialism says the opposite.


This post chimes with a thought I've had a for a while. One of the UK's most successful industries is television and the reason for that is the BBC. Not because the BBC is inherently wonderful and brilliant, but because it offers competition to the private sector. Does anyone really think Sky Arts would exist without BBC4 for example?

Perhaps there should be state funded alternatives in all the major industries to ensure there is always viable competition?

mike blamey

Surely several have missed the point: the only persons who believe that competition, capitalism, (even market forces and democracy) are great ideas for keeping the rest of us on our toes...are those who believe that what they offer (or actually demand society uses such)is so important, critical and essential that they alone may supply it. With all the curses to customers but advantages to the sole supplier that a monopoly provides. They have cleverly insulated themselves completely from the pressures that such market and political 'forces' apply and require. I call them the RIPs Rich, in-place and powerful, and just think about who I mean. But what else would you expect from a Grocer's daughter.

Tim Worstall

The only reason I've avoided is because I read a certain Chris Dillow making the point a few years back....


Anarcho makes a good point. If market socialism is a possibility, then Marx for one was hostile to the idea. In Capital, he strives to show that the things wishy-washy social reformers want to get rid of are actually "socially necessary" aspects of society organised on capitalist lines. And for Marx, capitalism was not specifically about ownership at all – it was an interconnected system of production and exchange. I suspect he would have been as hostile to the idea that we could have markets without capitalism as he was that you could have commodity exchange without money and money without capitalism (at least in embryo). Whether it is a capitalist or the state or "the workers" who accumulate capital is really beside the point – the point is to move beyond a system that is all about exchange and money to a system based on the communist production of use values – a society without money, markets or exchange.

At least, that was Marx's view. Market socialism is Proudhonist not Marxist. Which isn't to say that market socialism isn't therefore a possibility or preferable to communism, given the lessons of history. It just was not Marx's project.


Maybe it's not ownership (of the means of production) that is key. Perhaps it is CONTROL that s more important.

Ownership could be made irrelevant via legislation and other institutional changes that modify absolute property rights and which pass control to those who depend on their labour for income. An example of this would be elected worker directors on company management boards. This could be achieved by redrafting sections of the Companies Acts


Maybe neither ownership nor control matter so much as consumption rights. As David Graeber points out in "Debt", no actually-existing communist society (hunter-gatherers, etc) has ever had common ownership and democratic control of the means of production. But they have had a cultural expectation that needs would be met – "to each according to needs". So, basic income. (And markets!)


Not really. This is libertarian bullshit. The problem is Big Business taking over government. 'Free markets' is an argument for dictatorship.

Markets are only useful in circumstances where the loss from the inefficiency of competition (which is duplication) is less than the loss from ossification. And it can only work in a circumstance where 'no deal' is an option.

So it works for a spray tan, but not for live saving surgery.

And again it is not capitalism that is the problem, but the Corporatism that has taken root.


"Which isn't to say that market socialism isn't therefore a possibility or preferable to communism"

Are those really the only two options?

The 'benefits' of privatisation are largely to do with running down capital stocks over longer amortisation periods than would be sensible and spending a lot of time cutting corners and playing the probability game, with the account manager doing the smooching when anything goes wrong.

We would be better off concentrating on a co-operative model that finds a way of avoiding the problems of ossification and capture - possibly by giving the operational institutions finite lives. Is that 'market socialism'?


It is control over resources, that is important, as all resources (even human) are natural, although overpopulation is a factor with the tragedy of the commons.
Your participation in society and access to it's resources are a birth right, (via parental participation in society).

But some goods are non-exclusive, non-rival and intangible. David Bowies music is an example of this.

Given the fixed costs of ownership a computer (for copying and playback), and access to the internet, and the marginal cost of a copy falls to (almost) zero. Everyone who has a computer and internet access (costs are still falling) should have access to what music they desire, as participants in popular culture and society.

Increasingly this applies to physical goods as well as intangibles, with technology, machines (robots) performing most (all) of the production and distribution.

A market can exist to determine what should be produced, but accumulation of goods is pointless as they are available on demand, or resources limited and therefore controlled collectively.

This is the Star Trek economy (Utopia), vs the Star Wars economy. (Dystopia)

I prefer the Asimovian vision, where robots are available in excess of any reasonable demand. Robots used as props for buildings.


"The questions are - who accumulates that capital and associated profits, and who controls how it is used? Capitalism says only a small minority. Socialism says the opposite."

so socialism = capitalism with a relatively equal distribution of capital?

imagine a hypothetical one-time, large-scale expropriation and redistribution of capital ownership. we are now in socialism, according to the above. everyone owns a little piece of capital, and pockets the returns. now allow people to trade their titles to capital. assume that, after some years of trading, we return to an unequal distribution of capital ownership. no one's saying that's necessarily what's going to happen, but a socialist should accept the possibility. now we are back in capitalism. what happened? what do we do now? do we re-expropriate and re-redistribute?



It's hard to imagine anyone voluntarily trading their right to life supporting resources (food and shelter). What would someone exchange them for?


it's not a right to food and shelter, it's just a little piece of capital. they have still their labour, and everyone now makes ~2/3 of their earnings from their labour

plenty of reasons people might conceivably exchange a little piece of capital. here are a few
- they are impatient; capital pays you a little return for a long time. someone else offers you cash that you can use to consume now in exchange for your small piece of capital
- they are risk averse; owning capital is risky because the return on it can be volatile. may want to trade for something with lower payoff but less volatility (cash or a bond)
- they get hit by some shock (laid off, house burns down) and suddenly short on cash

also note that in order to stay in socialism (as defined above) you not only would have to prevent people from buying more capital but prevent them from using their labour earnings to buy capital (or mandate that everyone spends the same amount of labour earnings on new capital). otherwise some would choose to use more of their labour earnings to buy capital, and others less, leading eventually to capital concentration, ie back to capitalism.

ALSO, since different types of capital (K) have different rates of return (r), and ultimately you care about how much rK people get and not just how much K, so you would have to mandate that everyone who buys capital buy the same mix of rates of returns. or else some people would end up with high yielding capital and others would end up with low yielding capital, leading to inequality of capital income.

it's very difficult to imagine a mechanism satisfying these criteria AND producing an efficient allocation of capital.

i think there is merit to the SWF idea: the state invests and pays out the returns (as Mazzucato points out, right now the state does the former but not the latter). but i struggle to see how we can have markets without capitalism in any reasonable definition of the latter



If you define capital as the present value of a future income stream, then giving everyone the right to receive a Basic Income is a way of allocating capital to everyone.

It would be easy for the government, who would hold the register of basic income recipients, to make the right to receive a Basic Income non-transferable. Hence your point about people selling their capital to others becomes void.


a basic income transfer system and capital concentration are not mutually incompatible. unless the revenue stream from the BI is the only capital that now exists, people can still trade other transferable forms of capital, which allows some people to accumulate a lot of it.

if the definition of socialism is relaxed from the above to "everyone has a non-zero amount of capital" where capital includes welfare payments, that includes many currently existing countries that have universal welfare systems

my point is there is no market mechanism that guarantees an equitable distribution of capital; as long as people are allowed to trade it some people may end up accumulating most of it.

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