Friday, July 26, 2013

The Violence Inherent in the System

Defenders of free-market capitalism, such as Adam Smith and Friedrich Hayek, have argued that capitalism is both an economic and a moral system, whose moral superiority to other forms of economic organization comes from its strictly voluntary nature. Coercion and violence, they assert, have no place in economies based on the voluntary exchange of goods and the solemnity of freely-negotiated contracts. In my recent entry on Corey Robin's “Nietzche's Marginal Children,” however, I noted that it is very easy to challenge this rose-tinted view. Capitalism, as I've observed before, is an economic system in which capitalists can commodify economic inputs, such as labor and land, and mobilize them through markets to generate profitable returns. Contracts and voluntary exchanges are important to capitalists, providing them with security and flexibility, but they are only means to the ultimate end, which is the maximization of profits. If coercion and force will serve the same end, capitalists are willing to employ them, and as both Prof. Robin and David Graeber have observed, they have in the past proven happy to do so. Indeed, military and legal violence have proven essential to capitalists because some of their economic inputs, notably workers, tend to resist being turned into commodities, and because the most efficient way to mobilize inputs was often through violence. More recently, capitalist states have found violence a useful way to neutralize the “counter-measures,” like labor unions and social-insurance laws, that workers and political reformers created in the nineteenth century to mitigate some of the worst effects of capitalism.

One can easily appreciate the important role that violence played in early capitalism when one realizes that Atlantic slavery, arguably the most important economic institution of the early-modern era, was actually a capitalist form of labor mobilization. Modern historians like Stephanie Smallwood and Walter Johnson have made this point quite eloquently, noting that commodification was key to the success of capitalism and that African-American slavery, unlike many Old World variants of slavery, involved converting people and their labor into wholly fungible commodities. This was a necessarily violent process, in which African and European slavers ripped people from their communities and families and converted them into disposable units of labor. Slavery might appear to be an inflexible labor system, insofar as slave owners had to buy an entire person rather than merely hiring their labor, but in practice masters found ways to maximize the flexibility and profitability of the system: they minimized their labor costs (the average 19th-century American master spent $2.50 a month on the upkeep of each bondsman), hired out slaves to other masters when the owner had less use for their labor, and sold them when this proved more profitable than continuing to employ them.

Early modern slavery was both capitalistic itself and essential to capitalists in other sectors of the world economy. Native American slaves produced the silver that supplied merchants with much of their actual circulating capital. Indian and African slaves produced the sugar, coffee, and tobacco that built some of the great European mercantile fortunes, as well as the cheap cotton that was the feedstock for the British industrial revolution. Slavery also indirectly justified the harsh treatment of wage laborers, on the grounds that no matter how bad wage labor became, it could never become as bad as slavery. Early wage labor was in fact much harsher than celebrants of 19th-century liberalism would have us believe: collective bargaining was difficult in some industrial countries and illegal in others, workplace safety was non-existent, and the ability of workers to quit one job for a better one was impeded by employers' practice (backed by law) of requiring “testimonial letters” from workers' previous bosses, who could thereby deny their employees the right to quit.

I've spent a lot of time here on slavery, but there were other ways in which early modern capitalism depended on violence, notably during the creation of a global free market in land. English and Scottish landlords drove their peasants off the land with enclosure laws, high rents, and anti-poaching statutes, replacing them with more profitable herds of sheep and with recreational hunting preserves. British and European colonists elsewhere in the world seized indigenous lands by force, claiming them by right of discovery, or took them with treaties when they could not immediately overwhelm indigenes' resistance, as in New Zealand and North America. (These treaties were technically voluntary, but usually rested on fraud, bribery, and the threat of force.)

Those who believe the Violent Era of primitive capitalism ended in the nineteenth century need to think again, according to Corey Robin and Naomi Klein. The threat of revolutionary violence in the 1800s and the apparent success of communism in the early twentieth century forced capitalist governments to enact reform measures, such as legalizing labor unions or partially nationalizing some industries, in order to take the edge off capitalism. However, many capitalists bitterly opposed these reforms – witness, for example, the long-smoldering anger of American conservatives toward the otherwise popular New Deal – and when they had the chance they gladly aligned themselves with repressive governments in order to bring back the Golden Age of violent capitalism. American and British corporations gladly aided Francisco Franco in the hopes that he would crush Spain's labor unions and make the country safe for foreign investment; he cheerfully did the former (killing several hundred thousand people in the process) though he held off on the latter until the 1960s. In Spanish America, free-market reactionaries found a better ally in Chile's Augusto Pinochet: after Pinochet seized power in 1973, his army surgically excised the supporters of the previous socialist administration, killing 3,000, torturing tens of thousands more, and terrorizing the rest of the population into passivity. Pinochet then brought in economic advisers from the University of Chicago to create a new capitalist regime, free of unions, social subsidies, and other impediments to exploitation of the nation's resources. Similar “shock-therapy” measures, including the end of food and energy subsidies, were imposed on Iraq by President George W. Bush's viceroys, leading to the displacement of much of the country's farming population and to increased chaos in the cities.

In the cases of Chile and Iraq, free-market reformers had the opportunity to treat ordinary citizens as conquered peoples. When Chicago-school economists tried “shock therapy” in Poland (1989) and Russia (1992), they enjoyed the sponsorship of popularly elected governments, but the circumstances were unusual: in both countries communist regimes had just collapsed, leaving behind huge debts, and the new democracies could not secure the IMF loans they needed to function without embracing austerity and privatization. In both cases the governments in question became deeply unpopular, and Poland's Solidarity Party lost free elections to the communists in 1994, while Boris Yeltsin suspended the constitution and bombarded the Russian Parliament building in order to hold onto power. Indonesia, which had opened up its economy to foreign business after Suharto's 1965 coup, adopted a new round of free-market reforms in 1997 under pressure from the IMF. The IMF did what dictator Suharto's own brutality and corruption could not accomplish: they instigated an internal rebellion which ousted Suharto and instituted a democratic government. Policies that promote free-market capitalism are no more popular today than they were in the eighteenth or nineteenth centuries, and democratic governments that pursue them are likely to find themselves voted or thrown out of office. This may help explain why the most devout American defenders of capitalism aren't very big supporters of voting, or of democracy. More important to them is the right of a few people to become very rich and of everyone else to go hungry or go to prison.

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