no third solution

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Category Archives: Left Libertarian

Profit IS Justified By Entrepreneurial Risk

July 4th, 2009

In his most recent post, Profit is not justified by entrepreneurial risk, Francois Tremblay appears to be baiting the big-tent Libertarians into defending the current economic system, which they quite wrongly describe as a “free market”. Or maybe I’m just in a particularly polemic mood (it wouldn’t be the first time). I’m not a “Libertarian”, but I’ll bite, if only to clear the air.

I have probably said it before, but in case I have not, let me make myself abundantly clear: the problem is not teh evil “profit”.

In a freed market, the return to labor is profit, when workers produce and sell products, what they receive in exchange for their production is sales revenue, not wages. Any net income (over and above their expended outlays) resulting from these sales is profit, not wages. In a truly free market, we’re all entrepreneurs. The degrees of risk we each accept in exchange for certain returns, of course, will vary widely by individual case.

since the workers take just as much risk as the owners.

The argument that “the workers” take as much risk as the entrepreneurs —in a free market— is patently false. The workers don’t take anywhere near as much risk as the entrepreneurs. The workers receive income for their production even if the ultimate product turns out to be a dud and generates 0 revenue. On the other hand, the entrepreneurs bear nearly all of the risk that others are unwilling to undertake. We know this is true, because if “society” was willing to bear these risks at a lower premium than the entrepreneur, they would’ve already done so, and we wouldn’t be talking about entrepreneurs.

Workers have to contend with losing their jobs and taking a major hit while looking for another one,

Meanwhile, entrepreneurs have to contend with losing everything, property, belongings, family-life, reputation, credit, etc. On the other hand, up until the entrepreneur closes shop, and the employees are pink-slipped, the employees benefitted (in a rather ironic reversal of the zero-sum-game) from the receipt of wage income in gross excess of their contributions’ actual value to society which may in some extremes be 0 or negative.

while the rich owners benefit from lenient bankruptcy laws.

This is a clear-cut example of “poisoning the well”. First, the assumption that the entrepreneur is rich ex ante (or some other primitive accumulation nonsense), the corollary to which of course is the use of “rich” in pejorative [1]. Whatever. Furthermore, the assumption that lenient bankruptcy laws exist to the benefit of the entrepreneur is not really a slam-dunk, and is a statement to which I could offer at least one serious objection [1].

Profit, which in a freed market may accrue to the controlling interests of any factor of production (i.e., land, labor or capital) is indeed justified by entrepreneurial risk. In a freed market, anyone who undertakes any productive endeavor is an entrepreneur. Some may choose to take the relative security of “wage” labor in lieu of pure entrepreneurialism (i.e., the net of my revenue less expenses is my “profit”), but I submit that under these conditions, these individuals are no less entrepreneurs. The only distinction is that they prefer the relative security and stability of a certain type of employment, to other arrangements.

The problem is a disparity between “profit” and “wages”, the result of a perversely unfree market.


1. Of course we know from observation that many entrepreneurs were not rich by anyone’s definition, when they began their undertakings. And we also know from observation, that many entrepreneurs (the vast majority, really) ultimately fail, and never become “rich” enough to vilify. Even if the entrepreneur is “rich” to begin with, this descriptive fact alone says nothing about the legitimacy of his earned, acquired, or found position of wealth with regards to any other.

2. Since the counter-party in any bankruptcy filing consists of either another “rich” entrepreneur, or a banking cartel, it would seem that however lenient are the bankruptcy laws, they result in a total wash. (Unless it could be demonstrated that the bankruptcy laws also are detrimental to the non-entrepreneurs. Plausible? Perhaps. But this argument was put forth, and so I’m not contesting it.)

Saving the Economy: Agorism to the Rescue

June 27th, 2009

Perhaps the most striking paradox of modern economics is the existence of near-record levels of involuntary unemployment.

Consider: there are millions of people who have bills and obligations to pay, for things that they want to keep (but are in danger of losing to their creditors). Among these millions (and their creditors, perhaps), to dig up an antiquated term, you’d think there would be some double-coincidence of wants. That is, couldn’t they help themselves by helping each other?

In Michigan, something like 14% of the work-force is currently unemployed. These people are losing their homes, their cars, their families — their lives. Nationally, I believe the figure is currently around 9% which is a 25-year high. But few, if any of these people want to be unemployed. They didn’t quit their jobs. They didn’t stop paying their obligations because they are deadbeats, scofflaws, or criminals. They were essentially forced out of work, into their current condition, by a grossly perverted economic system.

Couldn’t they help themselves? Yes. And no.

I’ve been pondering this paradox for a while now:

As long as needs and wants remain unsatisfied, it doesn’t make sense that people are losing jobs left and right.

Yes, we could help ourselves by helping each other. But no, unfortunately, there are decades and decades of interference contributing to unsustainable growth, unsustainable structures of production, and unsustainable levels of debt, which all need to be undone. Undoing it will be painful. The political choice is to slap a band-aid on it, grant everyone a reprieve of uncertain duration, and attempt to restore faith in the zombieconomy, which as John Robb succinctly states,

When authorities resort to propaganda confidence building instead of substantive action in response to an actual crisis, you know you are in real trouble

This band-aid, “confidence building” course of action may appear to “fix” the economy. Until the next crisis, crises of course being endemic to the system. In reality, restoring faith in a system which deserves none, only serves to perpetuate a system which will only continue to suck the life out of humanity until it is slain, or until it takes us all down with it.

What we need is a sustainable economy, and the degree to which we can wrest ourselves free of the crushing and now insatiable debt burdens, foist upon us by the zombieconomy is extremely limited. The zombieconomy is unsustainable, because it thrives on the perpetuation of debt, which itself thrives upon mere faith. I submit that no viable system can survive on faith alone. I sustainable economy must (in accordance with Say’s Law) be erected upon a foundation of production and free exchange.

All that needs to be done is nothing! Let people produce wealth unimpeded, let them be free in order that they may propser.

The zombieconomy needs to be broken. Some good old-fashioned, well-timed revolts won’t hurt. Revolts against the status quo. Revolts against a broken monetary system which is the foundation of our shell-game, rat-race economy.

Agorism is the weapon of choice.

Agorism is the non-violent, free-market-based means by which individuals, acting in their own best interests (in order to satisfy the interests of other individuals), may achieve lasting prosperity. When the white market refuses to employ you (and one-in-seven of your neighbors) for wage or salary, you and your neighbors need to ask yourselves, “What can we do for one another, which previously required our dependence upon the zombieconomy that utterly failed to provide for us? What can we do to reduce our reliance on this system?”

Here we are, one-in-ten or one-in-seven unemployed but with needs yet unmet. Isn’t there a way for us to meet one another’s needs?

Answer those questions, and break the chains that bind.

Belief in Government Means Ignoring the Evidence

June 23rd, 2009

According to popular lore, men are not angels and therefore need a government to constrain them. As Madison famously wrote in Federalist No. 51:

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

Lots of people subscribe to some variant of this belief.  Many people see at least some evil in government and therefore seek to reform it.  Satisfied with the evil they do see, they believe that the rest of it is just fine; if only they could excise the evil…

I can’t fault them for trying. At the end of this tract, however, what I want you to understand is this: reform is not possible, and “goodness” is simply not in the nature of this beast.

Anyone who doesn’t go through a “reluctant” phase is probably not a serious libertarian, and certainly not a serious anarchist: arriving at the conclusion that most of the ideologies and theories with which one has been indoctrinated from childhood, on, are misguided (at best) or manifestly and malevolently false (at worst) is quite understandably a tough pill to swallow. It takes a lot of time, effort, reason and examination, to finally make the plunge.

This “reluctant” phase might be characterized by the pipe-dream of a small, limited, and benevolent government; the idea that if only the powers of government were restored to some ideally limited scope (e.g., the Constitution of the United States), that all would be dandy. Of course, I’m speaking from experience and your mileage may vary, but many others seem to have followed a similarly reluctant path:

the last thing I expected to become was an anarchist. For many years I didn’t even know that serious philosophical anarchists existed. I’d never heard of Lysander Spooner or Murray Rothbard. How could society survive at all without a state?

…“But what would you replace the state with?”

One wonders why questions like the one posed above are so often ignored, or as the writer inquires, even asked in the first place! especially by those who claim a disposition towards liberty and human freedom.  As the writer comments,

The question reveals an inability to imagine human society without the state. Yet it would seem that an institution that can take 200,000,000 lives within a century hardly needs to be “replaced.”

The only plausible argument for failing or refusing to address this particular grievance, is if one believes the course of human events could have been—nay—would’ve been worse without the State. But the argument that a few bad people would be even worse than they are now, were we to eliminate their financing, their control, their veil of legitimacy, and lift the protection afforded by myths and militaries, is as inconceivable as going in against a Sicilian, when death is on the line.

If one believes that a sufficient proportion of humanity is so depraved as to carry out injustices of a greater magnitude than all the combined barbarism perpetrated by their governments throughout history—paying particular attention to the last 100 years or so—one would be compelled by logic to conclude that no government, indeed no peaceful arrangement whatsoever could be instituted among such a population. The evil ones would never accept it, (or worse, and possibly more likely) they would embrace the institution of government as a source of power and legitimacy.

The belief that regular people—like you and I—would’ve have (could have?) done these things, is certifiably insane.

no third solution

Blogging about liberty, anarchy, economics and politics