Chris Berg’s libertarian dreaming. Or, when ‘liberty’ for the few means tyranny for the many

Do you remember 1989? That was the year that a series of East European Communist regimes fell in the context of a wave of popular protest. It was a tremendously inspiring time, a real indication that ordinary people could be the subjects, rather than objects, of history.

But the collapse of Communism also presaged a new era of capitalist triumphalism, perhaps infamously summarised in Francis Fukuyama’s assertion that we were witnessing “the end of history” — the victory of liberal democratic capitalism as the highest possible achievement of human social organisation. The rapid shift of the Eastern bloc to various kinds of democratic political systems combined with harsh neoliberal restructuring (or, as it was called at the time, “shock therapy”) seemed to provide material evidence that the outcome of struggles against tyranny and dictatorship could only end in market democracy at best. Even countries like China, despite officially going under the name “socialist” have rapidly moved towards market capitalism.

Yet something strange has been happening lately, exemplified by Chris Berg’s latest op-ed — on North Korea — in the Fairfax papers on Sunday: The capitalist triumphalists have become very concerned that people, especially those on the Left, might think there is something good about Communism. You know, that thing that died in 1989-91. Berg writes, in opposition to what he sees as a trend to downplaying the North Korean regime’s crimes, that, “The romanticisation of communism survives.” He argues:

Sure, no 20th-century dictatorship has been without its defenders. Stalin’s Russia, Mao’s China, Pol Pot’s Cambodia, Castro’s Cuba, Ho Chi Minh’s Vietnam: they’ve all been praised by Western socialists looking for a model of the good society.

Recently he wrote what may be considered a companion piece to the North Korea article, a barely coherent account of the “socialist calculation debate” for The Drum, which also concluded with a denunciation of Stalinism.

Berg is from a right-wing libertarian think-tank, the Institute of Public Affairs. His libertarian “anti-statism” even leads him to some positions with which the Left can agree (free movement of people across borders, opposition to censorship, etc).

Distracting from capitalism’s horrors

So if capitalism won, why is Berg worried about the “romanticisation of communism”? It is not because there has been a sudden upsurge of pro North Korean sentiment in the wider community. We have not seen thousands weeping on the streets over the death of Kim Jong-Il. Neither has there been a revival of Stalinist organising on the radical Left. The Occupy movement, for example, has been mercifully free of nostalgia for the Communist bloc. Yes, there have been a few fringe Western Stalinist tendencies trying to defend the North Korean dictatorship, but they have hardly managed to gain mass appeal for their views (see here for an excellent takedown from the US)*.

The real problem, that one that Berg and like-minded ideologues scuttle to avoid at every turn, is that most of the richest capitalist countries have fallen into the system’s biggest crisis since the Great Depression. More than three years on from the GFC, there is not only no sign of a resolution, the Eurozone appears to be on the brink of a deep recession and possible break-up. Many millions of people have lost their jobs and poverty has skyrocketed, including in the country that has been the centre of the free market project, the United States. Inequality has grown worse And, despite the bleatings of defenders of capitalism that ordinary people were “living beyond their means” thanks to bloated welfare states, the main reason for the sudden emergence of sovereign debt crises has been a combination of government bailouts of private companies (most notoriously banks) and decreased taxation receipts because of private sector recession.

What Berg and co are really warning is that, no matter how bad the crisis is, even the thought of collective alternatives would be much, much worse. This is the “tyranny” he is really railing against, not some imaginary threat of popular pressure for the introduction of Stalinist dictatorship. Unlike Margaret Thatcher, who confidently asserted that “there is no alternative” to the neoliberal revolution she led, Berg more defensively implies that there is an alternative but we dare not go down that road or we’ll all end up enslaved.

There are many things to say about right-wing pro-market libertarians denouncing “tyranny”. But the one I want to focus on here is their notion of tyranny as a phenomenon tied up with states that stands opposed to the free flow of market exchange that provides true liberty. As liz_beths has previously pointed out at Left Flank, the “freedom” implied by capitalism is one that rests on property rights that conveniently ignore the deep injustices that underlie apparently fair exchange in the marketplace. The secret birthplace of inequality under capitalism doesn’t lie in unequal exchange but in the extraction of unpaid labour from workers at the point of production; what Marx called “exploitation”.

State and capital

But the issue I want to concentrate on is the relationship between markets and states. For Berg, the greatest problem with states is that they stand in the way of relatively unfettered individual rights, here seen through the lens of private individuals being able to engage unhindered in exchange of commodities. Libertarians seem to fall into two camps about such individual rights; either they believe that such exchange relations represent the fulfilment of humanity’s essential nature or, like Hayek, they see them as the highest possible form of society even if they believe they are not natural and so must be won or imposed.

Such views utterly mystify how markets — the matrices of social relationships in which such generalised exchange relations are possible — are created, recreated and enforced. As Canadian historian Henry Heller powerfully argues in his recent book, The Birth of Capitalism, the “spontaneous” development of capitalist social relations within the pre-capitalist feudal mode of production could only proceed so far without finding itself butting up against the entrenched, state-directed structures of feudalism (or its late “absolutist” variation). It took bourgeois revolutions in countries like Holland, England and France to take state power and restructure society to maximise the potential for capitalist development based on exploitation of workers and competitive accumulation. Whereas under feudalism and earlier class societies exchange was relatively peripheral to economic activity (agricultural production was mainly for peasant subsistence and the tribute demanded by the feudal lords and/or the state machine), under capitalism few things are made without the explicit aim of being exchanged in the marketplace. So, for example, car workers have to buy cars with wages rather than simply take them home from the factory where they built them. Those who do the work are alienated from the right to directly benefit from the fruits of their labour.

Enforcement of capitalist relations is not only not “spontaneous”, it has also rarely been benign. Marx famously described (Capital Volume One, Part VIII) the brutal period of “primitive accumulation” of capital in England as involving the forcible, state-driven expulsion of people from the land on which they lived and subsisted, thus providing not just newly acquired land for private capitalist use but a workforce free from means of production with which to subsist and therefore dependent on employment to survive. This is the nuts and bolts of how a capitalist labour market is created, by coercing the majority of people to lose their means of subsistence and have their productive capacities subordinated to the needs of capital. Such a process has been repeated in China in recent decades through a state policy of immiserating the rural workforce to help “encourage” them to enter horrific sweatshop conditions in the booming industrial zones.

The dictatorship of the bourgeoisie

Direct state violence is not just a thing of the distant past, either. It has happened repeatedly in order to enforce the individual rights of those who control capital — the type of property that matters most in cementing wealth, power and influence. Milton Friedman took the line that Pinochet’s bloody coup against the Allende government in Chile in 1973, and subsequent repressive rule, did wonders for economic freedom in that country. This is how he endorsed it in 2000:

It was important on the political side, not so much on the economic side. Here was the first case in which you had a movement toward communism that was replaced by a movement toward free markets. See, the really extraordinary thing about the Chilean case was that a military government followed the opposite of military policies. The military is distinguished from the ordinary economy by the fact that it’s a top-down organization. The general tells the colonel, the colonel tells the captain, and so on down, whereas a market is a bottom-up organization. The customer goes into the store and tells the retailer what he wants; the retailer sends it back up the line to the manufacturer and so on. So the basic organizational principles in the military are almost the opposite of the basic organizational principles of a free market and a free society. And the really remarkable thing about Chile is that the military adopted the free-market arrangements instead of the military arrangements.

It is true that Friedman did on occasion criticise Pinochet’s regime, but it is hard to see his argument as being anything other than a justification of centralised political tyranny in the service of “decentralised” market liberty.

Austrian market libertarian Friedrich von Hayek was even clearer about the need for state coercion to create his preferred kind of liberty:

Well, I would say that, as long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression — and this is valid for South America — is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement. 

Then there’s Egypt, which Berg discussed after the uprising that overthrew Mubarak last year. While criticising Mubarak’s restriction of political freedoms, he praised the regime for its neoliberal restructuring efforts, which by his account created economic opportunities that then led to increasing aspirations for democracy. Yet Berg’s economic case was paper-thin, resting on a drop in unemployment from 2003 to 2011 while ignoring the overall rise in unemployment since 1990 when neoliberal reforms really got under way, as well as the spiralling inflation, growing inequality, poverty and extreme concentration of wealth at the top of society that developed under Mubarak. In the same article he points to even greater “economic freedoms” in Bahrain, where a democracy movement was soon to be brutally crushed by thestate with the help of Saudi Arabia and with the tacit approval of the United States. Strangely I have been unable to find Berg’s critique of this particular form of market-supporting tyranny. But he was quick to warn that the Arab Spring must stick to the “liberal” path or risk squandering economic opportunities.

Similarly, he has little to say about the plethora of dictatorships in Africa that have studiously pursued neoliberal policies under the eye of the World Bank and IMF only to deliver economic stagnation and greater suffering for their people (while enriching a tiny elite).

Berg — like most right-wing libertarians — implies that the state is some kind of parasitic or obstructive force in relation to the pure world of market relations he fantasises about. Yet capitalist markets have always required extra-economic coercion to work, precisely because they systematically benefit a tiny minority — capitalists. If there were no states then individual capitalists would need to rely on other (private) forms of repressive machinery to maintain their advantageous social position, wealth and power — their right to exploit and accumulate capital. But nation states provide a number of advantages to the capitalist class, not least of which is their apparent autonomy from class relations. The state appears to stand for the “general interest” of society when in fact it operates in the interests of the dominant class in that society. And therefore it is essential to creating and perpetuating the social relations from which that class gains its riches and power.

It is little wonder that Berg’s employers are funded by rapacious capitalists — like those in the mining industry — who have shown little compunction in running to the state for subsidies or to squash mild increases in taxation. We should not be fooled that these companies’ support for ideologues who decry state interference in their rights are really about a general opposition to the meddling of governments in private activities. Rather, they are big fans of state action, just as long as it is on their behalf.

The secret core of the libertarian argument is that debates over the scope and nature of state action are always predicated on there being a coercive state apparatus systematically operating for that very capitalist “liberty” more appropriately called the “freedom to exploit the many by the very few”. By any means necessary.

* This is not the place to discuss the nature of the Stalinist countries as bureaucratic state capitalisms in detail. For those who are interested, the application of this view to North Korean state capitalism is well covered by South Korean Marxists here, here and here. For an analysis of the implications of Kim Il-Sung’s death from the same perspective see this.

NOTE: This post has been edited to omit a brief reference to Berg’s theoretical influences, which it appears I may have misremembered from a Twitter exchange last July. My apologies for that oversight.