The Revolt of the Rightful Property Owners - Or why Capitalism does not equal the free market

The equating of the free market with capitalism is one of, if not the, biggest failings of contemporary political and economic thought. It leads to the left frequently happily rejecting the free market in favour of some other managed system of distribution and to the right claiming the economy as their domain and using a (false) idea of the free market to prop up currently dominant power and ownership structures. A fuller understanding of the free market and its ideological unshackling for capitalism is crucial in uniting Western society's two traditional forms of opposition to the prevailing order, which now too often sit at odds with one another: Classical Liberalism and Marxism (within which I place a whole host of leftist traditions, from anarchism to social democracy, for heuristic ease). This process will not only provide us with a good framework for understanding the seemingly contradictory views stated in relation to political economy and the germs of a new movement for a society which better respects the Dignity of Man.

Firstly, we must reject the easy elision of the market, as it exists, with morality. The idea that a transaction is fair and legitimate if both parties agree it grossly overestimates individual agency and solidifies the position of the already dominant. Individual sovereignty exists as a virtue to prevent undue power being exercised against somebody. It is not a statement of ontological fact. If the market, as it exists, is elided with morality, then the idea of individual sovereignty is performing precisely the opposite role: it enshrines undue power being used against somebody as a natural fact, an article of theology, rather than protecting the individual. Classical Liberalism is a methodology which exists to prevent coercion against us. It is not a genuine statement of our level of agency, Will. This understanding does not undermine the basis of Classical Liberalism, but reinforces the hugely important role it has to play on the side of People against Power.

Secondly, we must remember that price, the dominant store of information, does not take into account all utility, worth, value. The free market, in its fullest form, would/will take into account all other non-price costs and benefits into the exchange value. Capitalism relies on the dominance of price, and capital, as the only measures to be taken into account during distribution. The free market is not as theoretically challenged.

Thirdly, it must be understood that there is a time lag on the equilibrium theory. Take, for example, unemployment insurance. Eventually a fully functioning market will probably develop, but this will take time. If some agency can close this gap, say by setting up the market, then this corrects a market failure, which would have been rectified at some point, sooner. Furthermore, there are examples where the market can not correct itself, but needs some form of correction to better allocate resources. The prime example is redistribution. All Capitalist societies engage in, or pay some lip service to, redistribution in one form or another. Redistribution should not be viewed as a market distorter, but as an insurance market which could not be set up by anybody but the State. This is the general principle behind Rawls' "veil of ignorance". If, before we were born, and more importantly before we knew where and to whom we'd be born, if we could choose an income distribution for society it would be much more equitable than reality. Redistribution, therefore, is the insurance scheme against the bad luck of being born poor.

Fourthly, our current systems of ownership are not based in a natural state but are contingent on the Law and the history that made it. Herein lies the most crucial difference between capitalism and the, genuine, free market. Capitalism is this system of ownership and control created and sustained mainly by force, not through competition, democracy, merit or any other method which might be viewed as legitimate. Ownership structures like the joint stock company, with its associated principal-agent problem, are not a natural occurrence of the free market. There is a huge world between the stark dichotomies of total state ownership and individual ownership. It is in this gap that the genuine statement of property ownership exists.

This split between capitalism and the free market has been made abundantly clear by the credit crunch. Non free market means have been used to prop up capitalism. One half of the ownership argument has been made. Banks and car companies argued that they needed to be propped up for the benefit of society. By implication the actions of some companies and banks affect society and therefore society has some stake in those businesses, already should own part of them as a statement of the genuine property rights.

What is required is a revolt of the rightful property owners. The People, communities, workers, and consumers must reclaim their ownership rights over capital which others illegitimately hold. Dispossession and the guillotine are NOT what is envisaged. Mutuals, cooperatives, shareholder democracy, and voting are. This revolt of rightful property owners is not without precedent. Take the example of slaves. They were held as someone else's property. This was a gross and inaccurate statement of property rights. Overthrowing slavery pushed back the tentacles of capitalism from ownership of some that did not belong to it. To have a fully functioning market, we need its constituent parts to be owned and allocated appropriately. Thus, the revolt will be anti-capitalist, but pro-market, a fuller market.

This improvement to our ownership structures is only fully possible today. A fuller description of rightful ownership requires increased cooperation between various owners and voting. Now with the internet and the rise of e-voting we can effectively manage a truer system of ownership. Perhaps this proves Marx right that technology influences power relations between people, and what is property ownership other than a power relation (c.f. Chris Dillow).

Its time for a peaceful democratic revolt to reclaim what is rightfully ours.




Image is a painting of the Haitian Revolution (a slave revolt)