Anti-capitalism Economy Ideas

Why Libertarian Socialists Reject Free Market Liberalism

By Geoff R

Libertarian socialists’ political goals are both radical and ambitious: we seek to replace capitalism in its entirety with libertarian socialism. As a result, libertarian socialists do not just stand against capitalism as it exists today but also against positions in favor of increasing liberalism of markets; positions to reduce regulation of markets by external actors, including the government. This is largely because there is more evidence that increased market liberalism worsens problems of markets rather than improving or resolving them.

A fundamental promise of free market liberalism is that market share becomes more equitable among competing firms due to increased competition. This means firms are both created and go out of business at a higher rate than that which currently exists. Assuming this is true, it would mean that both employers and workers would face extreme economic uncertainty and therefore have trouble planning economically for the future. It’d be harder for workers to plan personal economic decisions and harder for employers to make business decisions regarding their firms. Meeting the demand economic actors have for stability is one of the many areas where markets particularly fail.

But this argument – that market share would be more equitable among competing firms due to increased competition – lacks evidence. All firms seek to increase their market share to compete and often firms end up dominating and even monopolizing markets simply by buying up their competition. Early industrialists in the U.S. were known for doing this and that was a time where there was far less regulation in markets by the government than there is today.

Early American industrialism is also known for company towns where one company owned nearly everything; from stores to housing to the local government. As a result, all law and public policy in these towns was solely for the benefit of the employer and kept the rest of the town under complete subjugation. Such was famously the case in West Virginia, the site of the mine wars including the Battle of Blair Mountain which was the largest insurrection in the United States since the American Civil War.

The Battle of Blair Mountain was a period of mass labor unrest where workers in West Virginia organized militantly and fought against private security agents employed by the mine company for control over their own lives and town. In early American industrialism, this was largely how control by employers over towns was broken; from the bottom-up via mass organized working-class resistance. This is because the ordinary town people needed to meet their own needs for economic stability and freedom to control their own lives. Early American industrialism is noted for its particularly brutal class violence and the Battle of Blair Mountain is but one of many examples. Many of these are detailed in the book “Dynamite: The Story of Class Violence in America” by Louis Adamic.

Of course, a state of affairs where workers are free to organize in grassroots and militant ways is undesirable for employers and it led to their demanding of all sorts of labor laws, from the Railway Labor Act to the Wagner Act and Taft-Hartley. While employers lost economic control in company towns and elsewhere due to powerful labor organizing, they needed to make sure workers couldn’t continue to organize in powerful ways that threatened their profit margins and ability to gain market share. This meant they needed to make sure unions were controlled from the top down by bureaucrats and that all unions had to be legally recognized by a national board to file grievances among other things. This was how employers fought back against the working-class’ previous powerful organizing and actions.

In addition to evidence of worsened economic conditions, evidence also suggests that other fundamental problems of markets like social costs including negative externalities would be worsened as well by increased market liberalism. Negative externalities are external costs employers subject onto everyone else such as air pollution from burning fossil fuels, climate change, water and noise pollution and systemic risk like economic crashes. Markets do not provide any internal mechanisms to control these costs or put them back onto employers. Worse, employers ensure areas most subject to these costs, such as areas where major industrial production happens, are in other countries or poorer areas of the country, while executives live in luxurious homes in areas where no one will ever see an oil refinery, a factory, a mine or a mill.

Libertarian socialists are against capitalism as well as free market liberalism because evidence suggests the latter worsens existing problems of markets and makes our economic lives more difficult. We instead seek to completely replace capitalism and markets with a planned political economy and society that meets our needs for liberty, solidarity and equality. Concrete proposals for such economies have come from various libertarian socialists like Cornelius Castoriadis, Peter Kropotkin, and Robin Hahnel, among many others.

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