TheIronFist

BehindtheInvisibleHand.

KevinCarson
2001, 2002

ANORIALISM,COMMONLY,ISRECOGNIZEDTOHAVE

beenfoundedbyrobberyandusurpation;
arulingclassestablisheditselfbyforce,
andthencompelledthepeasantrytoworkforthe
profitoftheirlords.Butnosystemofexploitation,
includingcapitalism,haseverbeencreatedbythe
actionofafreemarket.Capitalismwasfounded
onanactofrobberyasmassiveasfeudalism. It
has been sustained to the present by continual
stateinterventiontoprotectitssystemofprivi
lege,withoutwhichitssurvivalisunimaginable.

Thecurrentstructureofcapitalownershipandorganiz
ation of production in our socalled market economy,
reflectscoercivestateinterventionpriortoandextraneous
tothemarket.Fromtheoutsetoftheindustrialrevolution,
whatisnostalgicallycalledlaissezfairewasinfacta
systemofcontinuingstateinterventiontosubsidizeaccumul
ation,guaranteeprivilege,andmaintainworkdiscipline.

Mostsuchinterventionistacitlyassumedbymain
streamrightlibertariansaspartofamarketsystem.
AlthoughafewintellectuallyhonestoneslikeRothbard
andHesswerewillingtolookintotheroleofcoercionin
creating capitalism, the Chicago school and Randroids
takeexistingpropertyrelationsandclasspowerasagiven.
Theiridealfreemarketismerelythecurrentsystem
minus the progressive regulatory and welfare state
i.e.,nineteenthcenturyrobberbaroncapitalism.
Butgenuinemarketshaveavalueforthelibertarian
left,andweshouldntconcedethetermtoourenemies.
Infact,capitalismasystemofpowerinwhichownership
andcontrolaredivorcedfromlaborcouldnotsurvivein
afreemarket.Asamutualistanarchist,Ibelievethatex
propriationofsurplusvaluei.e., capitalismcannot
occurwithoutstatecoerciontomaintaintheprivilegeof
usurer, landlord, and capitalist. It was for this reason
thatthefreemarketanarchistBenjaminTuckerfrom
whom rightlibertarians selectively borrowregarded
himselfasalibertariansocialist.
Itisbeyondmyabilityorpurposeheretodescribea
worldwhereatruemarketsystemcouldhavedeveloped
withoutsuchstateintervention.Aworldinwhichpeasants
hadheldontotheirlandandpropertywaswidelydistribut
ed,capitalwasfreelyavailabletolaborersthroughmutual
banks,productivetechnologywasfreelyavailableinevery
country without patents, and every people was free to
develop locally without colonial robbery, is beyond our
imagination.Butitwouldhavebeenaworldofdecentralized,
smallscaleproductionforlocaluse,ownedandcontrol
ledbythosewho didtheworkasdif ferentfrom our
worldasdayfromnight,orfreedomfromslavery.
2

THESUBSIDYOFHISTORY.
Accordingly, the single biggest subsidy to modern
corporatecapitalismisthesubsidyofhistory,bywhich
capitalwasoriginallyaccumulatedinafewhands,and
laborwasdeprivedofaccesstothemeansofproduction
andforcedtosellitselfonthebuyersterms.Thecurrent
systemofconcentratedcapitalownershipandlargescale
corporate organization is the direct beneficiary of that
originalstructureofpowerandpropertyownership,which
hasperpetuateditselfoverthecenturies.
Forcapitalismasweknowittocomeabout,itwas
essentialfirstofallforlabortobeseparatedfromprop
erty.Marxiansand otherradical economistscommonly
refertotheprocessasprimitiveaccumulation.What
thecapitalistsystemdemandedwas...adegradedand
almost servile condition of the mass of the people, the
transformation of them into mercenaries, and of their
meansoflaborintocapital. Thatmeantexpropriating
theland,towhichthe [peasantry] hasthesamefeudal
rightsasthelordhimself.
Tograsptheenormityoftheprocess,wemustunder
standthatthenobilitysrightsinlandunderthemanor
ialeconomywereentirelyafeudallegalfictionderiving
fromconquest.Thepeasantswhocultivatedthelandof
Englandin1650weredescendantsofthosewhohadoccup
ieditsincetimeimmemorial.Byanystandardofmorality,
it was their property in every sense of the word. The
armiesofWilliamtheConqueror,bynorightotherthan
force, had compelled these peasant proprietors to pay
rentontheirownland.

Marx,Chapter27:TheExpropriation,Capitalvol.1.

J.L. and Barbara Hammond treated the sixteenth

centuryvillageandopenfieldsystemasasurvivalofthe
freepeasantsocietyofAngloSaxontimes,withlandlordism
superimposed on it.The gentry sawsurviving peasant
rightsasahindrancetoprogressandefficientfarming;
arevolutionintheirownpowerwasawayofbreaking
peasantresistance.Hencetheagriculturalcommunitywas
takentopieces...andreconstructedinthemannerin
whichadictatorreconstructsafreegovernment.
WhentheTudorsgaveexpropriatedmonasticlands
tothenobility,thelatterdroveout,enmasse,theheredi
tarysubtenantsandthrewtheirholdingsintoone. This
stolenland,aboutafifthofthearablelandofEngland,
wasthefirstlargescaleexpropriationofthepeasantry.
Anothermajortheftofpeasantlandwasthereform
oflandlawbytheseventeenthcenturyRestorationParl
iament. The aristocracy abolished feudal tenures and
convertedtheirownestateintheland,untilthenonlya
feudaltitle, into rightsofmodernprivateproperty. In
theprocess,theyabolishedthetenurerightsofcopyhold
ers.Copyholdersweredejuretenantsunderfeudallaw,
butoncetheypaidanegligiblequitrentfixedbycustom,
thelandwastheirstosellorbequeath.Insubstancecopy
hold tenurewasamanorialequivalentoffreehold;but
sinceitderivedfromcustomitwasenforceableonlyin
themanorcourts.Underthereform,tenantsincopy
hold became tenants atwill, who could be evicted or
chargedwhateverrenttheirlordsawfit.

TheVillageLabourer2728,3536.
Marx,TheExpropriation.
Marx,TheExpropriation...

Anotherformofexpropriation,whichbegan inlate
medievaltimesandincreaseddrasticallyintheeighteenth
century,wastheenclosureofcommonsinwhich,again,
thepeasantscommunallyhadasabsolutearightofproperty
asanydefendedbytodayspropertyrightsadvocates.
Notcountingenclosuresbefore1700,theHammondsesti
matedtotalenclosuresintheeighteenthandnineteenth
centuriesatasixthorafifthofthearablelandinEngland.
E.J.HobsbawmandGeorgeRudeestimatedenclosures
between1750and1850aloneastransformingsomething
likeonequarterofthecultivatedacreagefromopenfield,
commonland,meadoworwasteintoprivatefields....
Therulingclassessawthepeasantsrightincommons
asasourceofeconomicindependencefromcapitalistand
landlord,and thusathreattobe destroyed.Enclosure
eliminatedadangerouscentreofindisciplineandcom
pelledworkerstoselltheirlaboronthemastersterms.
ArthurYoung,aLincolnshiregentleman,describedthecom
monsasabreedinggroundforbarbarians,nursingup
amischievousraceofpeople.[E]veryonebutanidiot
knows, he wrote, that the lower classes must be kept
poor,ortheywillneverbeindustrious.TheCommercial
andAgriculturalMagazinewarnedin1800thatleaving
thelaborer possessedofmorelandthanhisfamilycan
cultivateintheeveningsmeantthatthefarmercanno
longer depend on him for constant work. Sir Richard
Price commented on the conversion of selfsufficient
proprietorsinto abodyofmenwhoearntheirsubsist
ence by working forothers. There would, perhaps, be

VillageLabourer42.
CaptainSwing27.
Thompson,TheMakingoftheEnglishWorkingClass,219220,358.

more labour, because there will be more compulsion to

it.
Marxcitedparliamentaryactsofenclosureasevidence
thatthecommons,farfrombeingtheprivatepropertyof
thegreatlandlordswhohavetakentheplaceofthefeud
allords,actuallyrequiredaparliamentarycoupdetat
...foritstransformationintoprivateproperty.Thepro
cessofprimitiveaccumulation,inallitsbrutality,was
summedupbythesameauthor:
[T]hesenewfreedmen[i.e.formerserfs]became
sellersofthemselvesonlyaftertheyhadbeen
robbed of all their own means of production,
andofalltheguaranteesofexistenceafforded
bytheoldfeudalarrangements.Andthehistory
of this, their expropriation, is written in the
annalsofmankindinlettersofbloodandfire.

Eventhen,theworkingclasswasnotsufficientlypower
less.Thestatehadtoregulatethemovementoflabor,
serveasalaborexchangeonbehalfofcapitalists,and
maintainorder.Thesystemofparishregulationofthe
movementofpeople,underthepoorlawsandvagrancy
laws,resembled theinternal passportsystemofSouth
Africa,orthereconstructioneraBlackCodes.Ithadthe
sameeffectontheEnglishagriculturallabourer, Marx
wrote, astheedictoftheTartarBorisGodunovonthe
Russian peasantry. Adam Smith ventured that there
wasscarceapoormaninEnglandoffortyyearsofage...
who has not in some part of his life felt himself most

Marx,TheExpropriation....
TheExpropriation....
Chapter26:TheSecretofPrimitiveAccumulation,CapitalVol.1.
TheExpropriation....

cruellyoppressedbythisillcontrivedlawofsettle ments.
Thestatemaintainedworkdisciplinebykeepinglabor
ers fromvotingwiththeirfeet.Itwashardtopersuade
parishauthoritiestograntamanacertificateentitling
himtomovetoanotherparishtoseekwork.Workerswere
forced to stay put and bargain for work in a buyers
market.
Atfirstglancethiswouldseemtobeinconvenientfor
parisheswithalaborshortage. Factorieswerebuiltat
sourcesofwaterpower,generallyremovedfromcenters
ofpopulation.Thousandsofworkerswereneededtobe
importedfromfaraway.Butthestatesavedthedayby
settingitselfupasamiddlemaninprovidinglaborpoor
parishes with cheap surplus labor from elsewhere, de
privingworkersoftheabilitytobargainforbetterterms.
Aconsiderabletradearoseinchildlaborerswhowerein
nopositiontobargaininanycase.
Reliefwasseldombestowedwithouttheparishclaim
ing theexclusiverightofdisposing,attheirpleasure,of
all the children of the person receiving relief, in the
words of the Committee on Parish Apprentices, 1815.
EvenwhenPoorLawcommissionersencouragedmigrat
iontolaborpoorparishes,theydiscouragedadultmen
andPreferencewasgiventowidowswithlargefamilies
ofchildrenorhandicraftsmen...withlargefamilies.In
addition,the availability ofcheaplabor fromthe poor
lawcommissionerswasdeliberatelyusedtodrivedown

WealthofNations61.
Smith6061.
Smith60.
TheHammonds,TheTownLabourer1:146.
TheHammonds,TownLabourer1:44,147.

wages;farmerswoulddischargetheirowndaylaborers
andinsteadapplytotheoverseerforhelp.
AlthoughtheCombinationLawstheoreticallyapplied
tomastersaswellasworkmen,inpracticetheywerenot
enforced against the latter. A Journeyman Cotton
SpinnerapamphleteerquotedbyE.P.Thompson
describedanabominablecombinationexistingamongst
themasters,inwhichworkerswhohadlefttheirmast
ersbecauseofdisagreementoverwageswereeffectively
blacklisted.TheCombinationLawsrequiredsuspectsto
answer interrogationson oath, empowered magistrates
togivesummaryjudgment,andallowedsummaryforfeit
ureoffundsaccumulatedtoaidthefamiliesofstrikers.
Andthelawssettingmaximumratesofpayamountedto
astateenforcedsystemofcombinationforthemasters.
As Adam Smith put it, [w]henever the legislature at
temptstoregulatethedifferencesbetweenthemastersand
theirworkmen,itscounsellorsarealwaysthemasters.
Theworkingclasslifestyleunderthefactorysystem,
withitsnewformsofsocialcontrol,wasaradicalbreak
withthepast.Itinvolveddrasticlossofcontrolovertheir
ownwork.Theseventeenthcenturyworkcalendarwas
still heavily influenced by medieval custom. Although
there were long days in spurts between planting and
harvest,intermittentperiodsoflightworkandthepro
liferation of saints days combined to reduce average
worktimewellbelowourown.Andthepaceofworkwas

Thompson223224.
Smith61;theHammonds,TownLabourer1:74.
Pp.199202.
TownLabourer123127.
P.61.

generallydeterminedbythesunorthebiologicalrhythms
ofthelaborer,whogotupafteradecentnightssleep,
andsatdowntorestwhenhefeltlikeit.Thecottager
whohadaccesstocommonland,evenwhenhewanted
extra income from wage labor, could take work on a
casualbasisandthenreturntoworkingforhimself.This
was an unacceptable degree of independence from a
capitaliststandpoint.
Inthemodernworldmostpeoplehavetoadapt
themselves to some kind of discipline, and to
observeotherpeoplestimetables,...orwork
underotherpeoplesorders,butwehavetore
member that the population that was flung
intothebrutalrhythmofthefactoryhadearn
editslivinginrelativefreedom,andthatthe
disciplineoftheearlyfactorywasparticularly
savage....Noeconomistoftheday,inestim
atingthegainsorlossesoffactoryemployment,
everallowedforthestrainandviolencethata
man suffered in his feelings when he passed
fromalifeinwhichhecouldsmokeoreat,or
digorsleepashepleased,tooneinwhichsome
body turnedthekeyonhim,andforfourteen
hourshehadnoteventherighttowhistle.It
waslikeenteringtheairlessandlaughterless
lifeofaprison.

Thefactorysystemcouldnothavebeenimposedon
workerswithoutfirstdeprivingthemofalternatives,and
forciblydenyingaccesstoanysourceofeconomicindepend
ence.Nounbrokenhumanbeing,withasenseoffreedom
ordignity,wouldhavesubmittedtofactorydiscipline.

TheHammonds,TownLabourer1:3334.

StephenMarglincomparedthenineteenthcenturytextile
factory,staffedbypauperchildrenboughtatthework
houseslavemarket,toRomanbrickandpotteryfactories
whichweremannedbyslaves.InRome,factoryproduction
wasexceptionalinmanufacturesdominatedbyfreemen.
Thefactorysystem,throughouthistory,hasbeenpossible
onlywithaworkforcedeprivedofanyviablealternative.
The surviving facts ... strongly suggest that
whetherworkwasorganizedalongfactorylines
wasinRomantimesdetermined,notbytechno
logicalconsiderations,butbytherelativepower
ofthetwoproducingclasses.Freedmenandcitiz
ens had sufficient power to maintain a guild
organization.Slaveshadnopowerandended
upinfactories.

Theproblemwiththeoldputtingoutsystem,inwhich
cottageworkersproducedtextilesonacontractualbasis,
wasthatitonlyeliminatedworkercontroloftheproduct.
Thefactorysystem,byeliminatingworkercontrolofthe
productionprocess,hadtheadvantageofdisciplineand
supervision,withworkersorganizedunderanoverseer.
[T]heoriginandsuccessofthefactorylaynot
intechnologicalsuperiority,butinthesubstit
utionofthecapitalistsfortheworkerscontrol
oftheworkprocessandthequantityofoutput,
inthechangeintheworkmanschoicefromone
ofhowmuchtoworkandproduce,basedonhis
preferences for leisure and goods, to one of
whetherornottoworkatall,whichofcourseis
hardlymuchofachoice.

WhatDoBossesDo?

10

Marglin took Adam Smiths classic example of the

divisionoflaborinpinmaking,andstooditonitshead.
Theincreasedefficiencyresulted,notfromthedivision
oflaborassuch,butfromdividingandsequencingthe
process into separate tasks in order to reduce setup
time.Thiscouldhavebeenaccomplishedbyasinglecot
tage workman separating the various tasks and then
performingthemsequentially(i.e.,drawingoutthewire
for an entire run of production, then straightening it,
thencuttingit,etc.).
[W]ithoutspecialization, the capitalisthadno
essentialroletoplayintheproductionprocess.
If each producer could himself integrate the
component tasks of pin manufacture into a
marketable product, he would soon discover
thathehadnoneedtodealwiththemarketfor
pinsthroughtheintermediationoftheputter
outer.Hecouldselldirectlyandappropriateto
himself the profit that the capitalist derived
frommediatingbetweentheproducerandthe
market.

Thisprincipleisatthecenterofthehistoryofindus
trial technology for the last two hundred years. Even
giventhenecessityoffactoriesforsomeformsoflarge
scale,capitalintensivemanufacturing,thereisusuallya
choicebetweenalternateproductivetechnologieswithin
thefactory.Industryhasconsistentlychosentechnolog
ieswhichdeskillworkersandshiftdecisionmakingupward
intothemanagerialhierarchy.Aslongagoas1835,Dr.
Andrew Ure (the ideological grandfather of Taylorism
and Fordism), argued that the more skilled the work
man,themoreselfwilledand...thelessfitacomponent

11

ofamechanicalsystem hebecame.Thesolutionwasto
eliminate processes which required peculiar dexterity
andsteadinessofhand...fromthecunningworkman
and replace them by a mechanism, so selfregulating,
thatachildmaysuperintendit. Andtheprinciplehas
beenfollowedthroughoutthetwentiethcentury.William
Lazonick,DavidMontgomery,DavidNoble,andKather
ine Stone have produced an excellent body of work on
thistheme.Eventhoughcorporateexperimentsinwork
er selfmanagement increase morale and productivity,
andreduceinjuriesandabsenteeism,beyondthehopes
ofmanagement,theyareusuallyabandonedoutoffear
oflossofcontrol.
ChristopherLasch,inhisforewordtoNobles Amer
icabyDesign,characterizedtheprocessofdeskillingin
thisway:
Thecapitalist,havingexpropriatedtheworkers
property, gradually expropriated his technical
knowledgeaswell,assertinghisownmastery
overproduction....
The expropriation of the workers technical
knowledge had as a logical consequence the
growthofmodernmanagement,inwhichtechnic
alknowledgecametobeconcentrated.Asthe
scientificmanagement movementsplituppro
ductionintoitscomponentprocedures,reducing
theworkertoanappendageofthemachine,a
great expansion of technical and supervisory
personneltookplaceinordertooverseethepro
ductiveprocessasawhole.

PhilosophyofManufactures,inThompson360.
Pp.xixii

12

Theexpropriationofthepeasantryandimpositionof
thefactorylaborsystemwasnotaccomplishedwithout
resistance; the workers knew exactly what was being
donetothemandwhattheyhadlost.Duringthe1790s,
when rhetoric from the Jacobins and Tom Paine were
widespread among the radicalized working class, the
rulersofthecradleoflibertylivedinterrorthatthe
country would be swept by revolution. The system of
police state controls over the population resembled an
alienoccupationregime.TheHammondsreferredtocor
respondencebetweennorthcountrymagistratesandthe
HomeOffice,inwhichthelawwasfranklytreated as
aninstrumentnotofjusticebutofrepression, andthe
workingclassesappear[ed]...conspicuouslyasahelot
population.
...[I]nthelightoftheHomeOfficepapers,. . .
noneofthepersonalrightsattachingtoEnglish
menpossessedanyrealityfortheworkingclass
es.Themagistratesandtheirclerksrecognized
nolimittotheirpowersoverthefreedomandthe
movementsofworkingmen.TheVagrancyLaws
seemed to supercede the entire charter of an
Englishmansliberties.Theywereusedtoput
intoprisonanymanorwomanoftheworking
classwhoseemedtothemagistrateanincon
venient or disturbing character. They offered
the easiest and most expeditious way of pro
ceeding against any one who tried to collect
moneyforthefamiliesoflockedoutworkmen,
ortodisseminateliteraturethatthemagistrates
thoughtundesirable.

TownLabourer72.
Ibid.80.

13

Peels bobbiesprofessional law enforcement

replacedthepossecomitatussystembecausethelatter
was inadequate to control a population of increasingly
disaffected workmen. In the time of the Luddite and
otherdisturbances,crownofficialswarnedthattoapply
theWatchandWardActwouldbetoputarmsintothe
handsofthemostpowerfullydisaffected.Attheoutsetof
thewarswithFrance,Pittendedthepracticeofquartering
thearmyinalehouses,mixedwiththegeneralpopulation.
Instead,themanufacturingdistrictswerecoveredwith
barracks,aspurelyamatterofpolice.Themanufactur
ing areas came to resemble a country under military
occupation.
Pittspolicestatewassupplementedbyquasiprivate
vigilantism,inthetimehonoredtraditionofblackshirts
anddeathsquadseversince.ForexampletheAssociation
fortheProtectionofPropertyagainstRepublicansand
Levellersan antiJacobin association of gentry and
millownersconductedhousetohousesearchesandorg
anizedGuyFawkesstyleeffigyburningsagainstPaine;
ChurchandKingmobsterrorisedsuspectedradicals.
Thompson characterized this system of control as
politicalandsocialapartheid,andarguedthattherev
olutionwhichdidnothappeninEnglandwasfullyas
devastatingastheonethatdidhappeninFrance.
Finally,thestateaidedthegrowthofmanufactures
through mercantilism. Modern exponentsof thefree
market generally treat mercantilism as a misguided

Ibid.9192.
ChapterFive,PlantingtheLibertyTree,inThompson.
Pp.197198

14

attempt to promote some unified national interest,

adoptedoutofsincereignoranceofeconomicprinciples.
Infact,thearchitectsofmercantilismknewexactlywhat
theyweredoing.Mercantilismwasextremetlyefficient
foritsrealpurpose:makingwealthymanufacturingin
terestsrichattheexpenseofeveryoneelse.AdamSmith
consistentlyattackedmercantilism,notasaproductof
economicerror,butasaquiteintelligentattemptbypow
erfulintereststoenrichthemselvesthroughthecoercive
powerofthestate.
Britishmanufacturingwascreatedbystateinter
ventiontoshutoutforeigngoods,giveBritishshippinga
monopoly of foreign commerce, and stamp out foreign
competitionbyforce.Asanexampleofthelatter,British
authoritiesinIndiadestroyedtheBengalesetextilein
dustry,makersofthehighestqualityfabricintheworld.
Althoughtheyhadnotadoptedsteamdrivenmethodsof
production, there is a real possibility that they would
havedoneso,hadIndiaremainedpoliticallyandecon
omicallyindependent.Theonceprosperousterritoryof
BengalistodayoccupiedbyBangladeshandtheCalcutta
area.
The American, German and Japanese industrial
systems werecreatedbythesamemercantilistpolicies,
with massive tariffs on industrial goods. Free trade
wasadoptedbysafelyestablishedindustrialpowers,who
used laissezfaire asanideologicalweapontoprevent
potentialrivalsfromfollowingthesamepathofindustrial
ization.Capitalismhasneverbeenestablishedbymeans
ofthefreemarket,orevenbytheprimaryactionofthe

Chomsky,WorldOrdersOldandNew.

15

bourgeoisie.Ithasalwaysbeenestablishedbyarevolution
fromabove,imposedbyaprecapitalistrulingclass.In
England, it was the landed aristocracy; in France,
NapoleonI I I sbureaucracy;inGermany,theJunkers;in
Japan,theMeiji.InAmerica,theclosestapproachtoa
naturalbourgeoisevolution,industrializationwascarried
outbyamercantilistaristocracyofFederalistshipping
magnatesandlandlords.
Romantic medievalists like Chesterton and Belloc
describedtheprocessinthehighmiddleagesbywhich
serfdomhadgraduallywitheredaway,andthepeasants
had transformed themselves into de facto freeholders
whopaidanominalquitrent.Thefeudalclasssystem
wasdisintegratingandbeingreplacedbyamuchmore
libertarianandlessexploitativeone.ImmanuelWaller
steinarguedthatthelikelyoutcomewouldhavebeena
systemofrelativelyequalsmallscaleproducers,further
flattening out the aristocracies and decentralizing the
politicalstructures.By1650thetrendhadbeenrevers
ed,andtherewas areasonablyhighlevelofcontinuity
betweenthefamiliesthathadbeenhighstrata in1450
and1650.Capitalism,farfrombeingtheoverthrowofa
backwardaristocracybyaprogressivebourgeoisie,was
brought into existence by a landed aristocracy which
transformed itself into a bourgeoisie because the old
system was disintegrating. This is echoed in part by
Arno Mayer, who argued for continuity between the
landedaristocracyandthecapitalistrulingclass.

Harrington,TwilightofCapitalism.
HistoricalCapitalism4142,105106.
ThePersistenceoftheOldRegime.

16

Theprocessbywhichthehighmedievalcivilization
ofpeasant proprietors,craft guilds and free cities was
overthrown,wasvividlydescribedbyKropotkin. Before
theinventionofgunpowder,thefreecitiesrepelledroyal
armiesmoreoftenthannot,andwontheirindependence
fromfeudaldues.Andthesecitiesoftenmadecommon
causewithpeasantsintheirstrugglestocontroltheland.
Theabsolutiststateandthecapitalistrevolutionitim
posedbecamepossibleonlywhenartillerycouldreduce
fortifiedcitieswithahighdegreeofefficiency,andthe
kingcouldmakewaronhisownpeople.Andintheafter
mathofthisconquest,theEuropeofWilliamMorriswas
leftdevastated,depopulated,andmiserable.
PeterToshhadasongcalledFourHundredYears.
Althoughthewhiteworkingclasshassufferednothing
likethebrutalityofblackslavery,therehasnevertheless
beenafourhundredyearsofoppressionforallofus
underthesystemofstatecapitalismestablishedinthe
seventeenthcentury.Eversincethebirthofthefirststates
six thousand years ago, political coercion has allowed
one ruling class or another to live off other peoples
labor. But since the seventeenth century the systemof
power has become increasingly conscious, unified, and
globalinscale.Thecurrentsystemoftransnationalstate
capitalism,withoutrivalsincethecollapseofthesoviet
bureaucraticclasssystem,isa directoutgrowthof the
seizureofpowerfourhundredyearsago.Orwellhad it
backwards.Thepastisabootsmashingahumanface.
Whetherthefutureismoreofthesamedependsonwhat
wedonow.

MutualAid225.

17

IDEOLOGICALHEGEMONY.
Ideological hegemony is the process by which the
exploitedcometoviewtheworldthroughaconceptual
frameworkprovidedtothembytheirexploiters.Itactsfirst
ofalltoconcealclassconflictand exploitationbehind a
smokescreen of national unity or general welfare.
Thosewhopointtotheroleofthestateasguarantorof
classprivilegearedenounced,intheatricaltonesofmoral
outrage,forclasswarfare.Ifanyoneissounpardonably
extremistastodescribethemassivefoundationofstate
interventionandsubsidyuponwhichcorporatecapitalism
rests, he is sure to be rebuked for Marxist class war
rhetoric(BobNovak),orrobberbaronrhetoric(Treasury
SecretaryONeill).
The ideological framework of national unity is
takentothepointthatthiscountry,society,orour
systemofgovernmentissetupasanobjectofgratitude
forthe freedomsweenjoy.Only themostunpatriotic
noticethatourliberties,farfrombeinggrantedtousby
a generous and benevolent government, were won by
pastresistanceagainstthestate.Chartersandbillsof
rightswerenotgrantsfromthestate,butwereforcedon
thestatefrombelow.
If our liberties belong to us by right of birth, as a
moralfactofnature,itfollowsthatweowethestateno
debtofgratitudefornotviolatingthem,anymorethan
weoweourthankstoanotherindividualforrefraining
from robbing or killing us. Simple logic implies that,
rather than being grateful to the freest country on
earth,weshouldraisehelleverytimeitinfringesonour
liberty.Afterall,thatshowwegotourlibertyinthefirst

18

place. When another individual puts his hand in our

pocket to enrich himself at our expense, our natural
instinctistoresist.Butthankstopatriotism,theruling
classisabletotransformtheirhandinourpocketinto
societyorourcountry.
Thereligionofnationalunityismostpathologicalin
regardtodefenseandforeignpolicy.Themanufacture
offoreigncrisisandwarhysteriahasbeenusedsincethe
beginning of history to suppress threats to class rule.
Thecrookedpoliticiansmayworkforthespecialinterests
domestically,butwhenthosesamepoliticiansengineera
waritisamatterofloyaltytoourcountry.
TheChairmanoftheJC S ,indiscussingthedefense
posture,willreferwithastraightfacetonationalsecur
itythreatsfacedbythe U.S.,and describethearmed
forces of some official enemy likeChina as far beyond
legitimatedefensiverequirements.Thequickestwayto
putoneselfbeyondthepaleistopointoutthatallthese
threatsinvolvewhatsomecountryontheothersideof
the world is doing within a hundred miles of its own
border.Anotheroffenseagainstfatherlandworshipisto
judgetheactionsoftheUnitedStates,initsglobaloperat
ionstokeeptheThirdWorldsafeforI T T andUnitedFruit
Company,bythesamestandardoflegitimatedefensive
requirementsappliedtoChina.
Intheofficialideology,Americaswarsbydefinition
are always fought for our liberties, to defend our
country,orinthesmarmyworldofMaudlinAlbright,a
selfless desire to promote peace and freedom in the
world.Tosuggestthattherealdefendersofourliberties
took up arms against the government, or that the
nationalsecuritystateisagreaterthreattoourliberties
19

thananyforeignenemywehaveeverfaced,isunforgiv
able. Above all, good Americans dont notice all those
militaryadvisersteachingdeathsquadshowtohackoff
thefacesofunionorganizersandleavetheminditches,
ortoproperlyusepliersonadissidentstesticles.War
crimesareonlycommittedbydefeatedpowers.(Butas
the Nazis learned in 1945, unemployed war criminals
canusuallyfindworkwiththenewhegemonicpower.)
Afteracenturyandahalfofpatrioticindoctrination
bythestatisteducationsystem,Americanshavethorough
ly internalized the little red schoolhouse version of
Americanhistory.Thisauthoritarianpietyissodiamet
ricallyopposedtothebeliefsofthosewhotookuparms
intheRevolutionthatthecitizenryhaslargelyforgotten
what it means to be American. In fact, the authentic
principles of Americanism have been stood on their
head. Two hundred years ago, standing armies were
fearedasathreattolibertyandabreedinggroundfor
authoritarianpersonalities;conscriptionwasassociated
withthetyrannyofCromwell;wagelaborwasthoughtto
beinconsistentwiththeindependentspiritofafreeciti
zen. Today, two hundred years later, Americans have
beensoPrussianizedbysixtyyearsofagarrisonstate
andwarsagainstoneinternalenemyoranother,that
theyareconditionedtogenuflectatthesightofauni
form. Draft dodgers are equivalent to child molesters.
Mostpeopleworkforsomecentralizedcorporateorstate
bureaucracy,whereasamatterofcoursetheyareexpected
toobeyordersfromsuperiors,workunderconstantsur
veillance,andevenpissinacuponcommand.
Duringwartime,itbecomesunpatriotictocriticizeor
questionthegovernmentanddissentisidentifiedwith
20

disloyalty.Absolutefaithandobediencetoauthorityisa
litmustestofAmericanism.Foreignwarisaveryuse
fultoolformanipulatingthepopularmindandkeeping
thedomesticpopulationundercontrol.Waristheeasiest
waytoshiftvast,unaccountablenewpowerstotheState.
People are most uncritically obedient at the very time
theyneedtobemostvigilant.
Thegreatestironyisthat,inacountryfoundedby
revolution,Americanismisdefinedasrespectingauthority
andresistingsubversion.TheRevolutionwasarevolut
ionindeed,inwhichthedomesticpoliticalinstitutionsof
the colonies were forcibly overthrown. It was,in many
times and places, a civil war between classes. But as
VoltairinedeCleyrewroteacenturyagoinAnarchism
and American Traditions, the version in the history
booksisapatrioticconflictbetweenourFoundingFathers
andaforeignenemy.ThosewhocanstillquoteJefferson
ontherightofrevolutionarerelegatedtotheextremist
fringe,toberoundedupinthenextwarhysteriaorred
scare.
This ideological construct of a unified national
interestincludesthefictionofaneutralsetoflaws,
whichconcealstheexploitativenatureofthesystemof
powerweliveunder.Undercorporatecapitalismtherelat
ionships of exploitation are mediated by the political
systemtoanextentunknownunderpreviousclasssystems.
Under chattel slavery and feudalism, exploitation was
concreteandpersonalizedintheproducersrelationship
with his master. The slave and peasant knew exactly
who was screwing them. The modern worker, on the
otherhand,feelsapainfulpoundingsensation,buthas
onlyavagueideawhereitiscomingfrom.
21

Besides its function of masking the ruling class

interestsbehindafacadeofgeneralwelfare,ideological
hegemonyalsomanufacturesdivisionsbetweentheruled.
Throughcampaignsagainstwelfarecheatsanddead
beats,anddemandstogettoughoncrime,theruling
classisabletochannelthehostilityofthemiddleand
workingclassesagainsttheunderclass.
Especiallynauseatingisthephenomenonofbillionaire
populism. Calls for bankruptcy and welfare reform,
andforwarsoncrime,aredressedupinpseudopopulist
rhetoric,identifyingtheunderclassasthechiefparasites
whofeedofftheproducerslabor.Intheiraw,shucks
symbolicuniverse,youd thinkAmerica was aReaders
Digest/NormanRockwellworldwithnothingbuthard
workingsmallbusinessmenandfamilyfarmers,onthe
onehand,andwelfarecheats,deadbeats,union bosses
andbureaucratsontheother.From listeningto them,
youdneversuspectthatmultibillionairesorglobalcor
porationsevenexist,letalonethattheymightstandto
benefitfromsuchpopulism.
Intherealworld,corporationsarethebiggestclients
ofthewelfarestate,thebiggestbankruptciesarecorpor
ate chapter eleven filings, and the worst crimes are
committedincorporatesuitesratherthanonthestreets.
Therealrobberyoftheaverageproducerconsistsofprofit
andusury,extortedonlywiththehelpofthestate the
realbiggovernmentonourbacks.Butaslongasthe
workingclassandtheunderclassarebusyfightingeach
other,theywontnoticewhoisreallyrobbingthem.
AsStephenBikosaid,Theoppressorsmostpowerful
weaponisthemindoftheoppressed.

22

THEMONEYMONOPOLY.
Ineverysystemofclassexploitation,arulingclass
controls access to the means of production in order to
extract tribute from labor. Under capitalism, access to
capitalisrestrictedbythemoneymonopoly,bywhichthe
state or banking system is given a monopoly on the
mediumofexchange,andalternativemediaofexchange
areprohibited.Themoneymonopolyalsoincludesentry
barriers against cooperative banks and prohibitions
againstprivateissuanceofbanknotes,bywhichaccessto
financecapitalisrestrictedandinterestratesarekept
artificiallyhigh.
Justinpassing,wemightmentionthemonumental
hypocrisyoftheregulationofcreditunionsintheUnited
States,whichrequirethattheirmembershipmustshare
somecommonbond,likeworkingforthesameemployer.
Imaginetheoutrageif IG A andSafewaylobbied fora
nationallawtoprohibitgrocerycoopsunlessthemem
bersallworkedforthesamecompany!Oneofthemost
notable supporters of these laws is Phil Gramm, that
renownedfreemarketeerandeconomicsprofessorand
foremostamongthebankingindustryswhoresinCongress.
Individualistand mutualist anarchistslikeWilliam
Greene(MutualBanking),BenjaminTucker(Insteadof
aBook), andJ.B.Robinson(TheEconomicsofLiberty)
viewedthemoneymonopolyascentraltothecapitalist
systemofprivilege.Inagenuinelyfreebankingmarket,

[Sic.Theeditoropposestheuseofprostitutionmetaphorsasinsultsand
wishestosaythat,whateveronethinksofprostitutionasanindustry,sex
workers,are,unlikeU.S.Senators,makinganhonestlivingproviding
aconsensualservicetowillingcustomers.CallingSen.PhilGramma
prostituteisaneedlessinsulttoprostitutes.CJ.]

23

anygroupofindividualscouldformamutualbankand
issuemonetizedcreditintheformofbanknotesagainst
any form of collateral they chose, with acceptance of
thesenotesastenderbeingaconditionofmembership.
Greenespeculatedthatamutualbankmightchooseto
honornotonlymarketablepropertyascollateral,butthe
pledging...[of]futureproduction.Theresultwouldbe
areductionininterestrates,throughcompetition,tothe
costofadministrativeoverheadlessthanonepercent.
Abundant cheap credit would drastically alter the
balanceofpowerbetweencapitalandlabor,andreturns
onlaborwouldreplacereturnsoncapitalasthedomin
antformofeconomicactivity.AccordingtoRobinson,
Uponthemonopolyrateofinterestformoney
thatis...forceduponusbylaw,isbasedthe
wholesystemofinterestuponcapital,thatper
meatesallmodernbusiness.
With free banking, interest upon bonds ofall
kinds and dividends upon stock would fall to
theminimumbankinterestcharge.Thesocall
edrentofhouses...wouldfalltothecostof
maintenanceandreplacement.
Allthatpartoftheproductwhichisnowtaken
byinterestwouldbelongtotheproducer.Capital,
however...defined,wouldpracticallyceaseto
existasanincomeproducingfund,forthesimple
reasonthatifmoney,wherewithtobuycapital,
couldbeobtainedforonehalfofonepercent,
capitalitselfcouldcommandnohigherprice.

P.73.
Pp.8081.

24

Andtheresultwouldbeadrasticallyimprovedbar
gaining position for tenants and workers against the
owners oflandandcapital. Accordingto Gary Elkin,
Tuckersfreemarketanarchismcarriedcertaininherent
libertariansocialistimplications:
ItsimportanttonotethatbecauseofTuckers
proposal to increase the bargaining power of
workers through access to mutual credit, his
socalled Individualist anarchism is not only
compatiblewithworkerscontrolbutwouldin
factpromoteit.Forifaccesstomutualcredit
weretoincreasethebargainingpowerofwork
erstotheextentthatTuckerclaimeditwould,
theywouldthenbeableto(1)demandandget
workplacedemocracy,and(2)pooltheircredit
buyandowncompaniescollectively.

The banking monopoly was not only the lynchpin of

capitalism,butalsotheseedfromwhichthelandlords
monopolygrew.Withoutamoneymonopoly,thepriceof
landwouldbemuchlower,andpromotetheprocessof
reducingrentstowardzero.
Given the workers improved bargaining position,
capitalistsabilitytoextractsurplusvaluefromthelabor
ofemployeeswouldbeeliminatedoratleastgreatlyreduc
ed.Ascompensationforlaborapproachedvalueadded,
returnsoncapitalweredrivendownbymarketcompetition,
andthevalueofcorporatestockconsequentlyplummet
ed,theworkerwouldbecomea defacto coownerofhis
workplace,evenifthecompanyremainednominallystock
holderowned.

GaryElkin,BenjaminTuckerAnarchistorCapitalist?
GaryElkin,MutualBanking.

25

Nearzerointerestrateswouldincreasetheindepend
ence of labor in all sorts of interesting ways. For one
thing,anyonewithatwentyyearmortgage at 8%now
could, in theabsenceofusury, pay it off in ten years.
Mostpeopleintheir30swouldhavetheirhousespaid
off.Betweenthisandthenonexistenceofhighinterest
creditcarddebt,twoofthegreatestsourcesofanxietyto
keeponesjobatanycostwoulddisappear.Inaddition,
many workers would have large savings (go to hell
money).Significantnumberswouldretireintheirforti
esorfifties,cutbacktoparttime,orstartbusinesses;
withjobscompetingforworkers,theeffectonbargaining
powerwouldberevolutionary.
Ourhypotheticalworldoffreecreditinmanyways
resemblesthesituationincolonialsocieties.E.G.Wakefield,
inViewoftheArtofColonization,wroteoftheunaccept
ablyweakpositionoftheemployingclasswhenselfem
ploymentwithonesownpropertywasreadilyavailable.
Incolonies,therewasatightlabormarketandpoorlabor
disciplinebecauseoftheabundanceofcheapland. Not
onlydoesthedegreeofexploitationofthewagelabourer
remainindecentlylow.Thewagelabourerlosesintothe
bargain,alongwiththerelationofdependence,alsothe
sentimentofdependenceontheabstemiouscapitalist.
Wherelandischeapandallmenarefree,where
everyonewhosopleasescanobtainapieceof
landforhimself,notonlyislabourverydear,as
respects the labourers share of the product,
butthedifficultyistoobtaincombinedlabour
atanyprice.

Thisenvironmentalsopreventedtheconcentrationofwealth,
asWakefieldcommented:Few,evenofthosewhoselives
26

are unusually long, can accumulate great masses of

wealth.Asaresult,colonialelitespetitionedthemother
countryforimportedlaborandforrestrictionsonland
forsettlement.AccordingtoWakefieldsdiscipleHerman
Merivale, there was an urgent desire for cheaper and
moresubservientlabourersforaclasstowhomthecapi
talistmightdictateterms,insteadofbeingdictatedtoby
them.
Inadditiontoallthis,centralbankingsystemsper
formadditionalservicetotheinterestsofcapital.First
ofall,thechiefrequirementoffinancecapitalistsisto
avoidinflation,inordertoallowpredictablereturnson
investment.Thisisostensiblytheprimarypurposeofthe
FederalReserveandothercentralbanks.Butatleastas
importantistheroleofthecentralbanksinpromoting
whattheyconsideranaturallevelofunemployment
untilthe1990saroundsixpercent.Thereasonisthat
whenunemploymentgoesmuchbelowthisfigure,labor
becomesincreasinglyuppityandpressesforbetterpay
andworkingconditionsandmoreautonomy.Workersare
willing to take a lot less crap off the boss when they
knowtheycanfindajobatleastasgoodthenextday.
On the other hand, nothing is so effective in getting
yourmindrightastheknowledgethatpeoplearelined
uptotakeyourjob.
The Clinton prosperity is a seeming exception to
thisprinciple.Asunemploymentthreatenedtodropbelow
the four per cent mark, some members of the Federal
Reserveagitatedtoraiseinterestratesandtakeoffthe

Maurice Dobb, Studies in the Development of Capitalism; Marx,

Chapter33:TheNewTheoryofColonialism,inCapitalVol.1.

27

inflationarypressurebythrowingafewmillionworkers
onthestreet.ButasGreenspantestifiedbeforetheSen
ateBankingCommittee,thesituationwasunique.Given
the degree of job insecurity in the hightech economy,
therewas[a]typicalrestraintoncompensationincreases.
In1996,evenwithatightlabormarket,46%ofworkers
atlargefirmswerefearfuloflayoffscomparedtoonly
25%in1991,whenunemploymentwasmuchhigher.
Thereluctanceofworkerstoleavetheirjobs
toseek otheremploymentasthelabormarket
tightenedhasprovidedfurtherevidenceofsuch
concern,ashasthetendencytowardlongerlabor
unioncontracts.Formanydecades,contracts
rarelyexceededthreeyears.Today,onecanpoint
tofiveandsixyearcontractscontractsthat
arecommonlycharacterizedbyanemphasison
jobsecurityandthatinvolveonlymodestwage
increases. The low level of work stoppages of
recentyears alsoatteststoconcern about job
security.

Thusthewillingnessofworkersinrecentyearstotrade
off smaller increases in wages for greater job security
seemstobereasonablywelldocumented.Forthebosses,
thehightecheconomyisthenextbestthingtohighunem
ploymentforkeepingourmindsright.Fightinginflation
translatesoperationallytoincreasingjobinsecurityand
makingworkerslesslikelytostrikeortolookfornewjobs.

TestimonyofChairmanAlanGreenspan.

28

PATENTS.
Thepatentprivilegehasbeenusedonamassivescale
topromoteconcentrationofcapital,erectentrybarriers,
andmaintainamonopolyofadvancedtechnologyinthe
handsofwesterncorporations.Itishardeventoimagine
how much more decentralized the economy would be
withoutit.RightlibertarianMurrayRothbardconsidered
patentsafundamentalviolationoffreemarketprinciples.
The man who hasnot boughta machine and
who arrives at the same invention independ
ently,will,onthefreemarket,beperfectlyable
touseandsellhisinvention.Patentspreventa
manfromusinghisinventioneventhoughall
the propertyishis andhe hasnotstolenthe
invention, either explicitly or implicitly, from
thefirstinventor.Patents,therefore,aregrants
of exclusive monopoly privilege by the State
and are invasions of property rights on the
market.

Patentsmakeanastronomicalpricedifference.Until
theearly1970s,forexample,Italydidnotrecognizedrug
patents.Asaresult,RocheProductschargedtheBritish
nationalhealthapriceover40timesgreaterforpatent
edcomponentsofLibriumandValiumthanchargedby
competitorsinItaly.
Patentssuppressinnovationasmuchastheyencourage
it. Chakravarthi Raghavan pointed out that research
scientistswhoactuallydotheworkofinventingarerequired
tosignoverpatentrightsasaconditionofemployment,

Man,Economy,andState,vol.2p.655.
Raghavan,Recolonization,p.124.

29

whilepatentsandindustrialsecurityprogramsprevent
sharing of information, and suppress competition in
furtherimprovementofpatented inventions. Rothbard
likewisearguedthatpatentseliminate thecompetitive
spurforfurtherresearch becauseincrementalinnovat
ionbasedonotherspatentsisprohibited,andbecause
theholdercanrestonhislaurelsfortheentireperiodof
thepatent,withnofearofacompetitorimprovinghisin
vention. And they hamper technical progress because
mechanicalinventionsarediscoveriesofnaturallawrather
thanindividualcreations,andhencesimilarindependent
inventionsoccurallthetime.Thesimultaneityofinvent
ionsisafamiliarhistoricalfact.
TheintellectualpropertyregimeundertheUruguay
RoundofGAT T goesfarbeyondtraditionalpatentlawin
suppressinginnovation.Onebenefitoftraditionalpatent
law, at least, was that it required an invention under
patent to be published. Under U.S. pressure, however,
tradesecretswereincludedinGAT T. Asaresult,gov
ernmentswillberequiredtohelpsuppressinformation
notformallyprotectedbypatents.
Andpatentsarenotnecessaryasanincentivetoin
novate.AccordingtoRothbard,inventionisrewardedby
thecompetitiveadvantageaccruingtothefirstdeveloper
ofanidea.ThisisborneoutbyF.M.Schererstestimony
beforetheF T C in1995.Schererspokeofasurveyof91
companiesinwhichonlysevenaccordedhighsignificance
topatentprotectionasafactorintheir R &D investments.

Op.cit.p.118.
Op.cit.pp.655,658659
Raghavan,op.cit.p.122
HearingsonGlobalandInnovationBasedCompetition.

30

Mostofthemdescribedpatentsastheleastimportantof
considerations. Mostcompaniesconsideredtheirchief
motivationin R & D decisionstobe thenecessityofre
mainingcompetitive,thedesireforefficientproduction,
andthedesiretoexpandanddiversifytheirsales.Inan
other study, Scherer found no negative effect on R& D
spendingasaresultofcompulsorylicensingofpatents.
A survey of U.S. firms found that 86% of inventions
wouldhavebeendevelopedwithoutpatents.Inthecase
ofautomobiles,officeequipment, rubber products, and
textiles,thefigurewas100%.
Theoneexceptionwasdrugs,inwhich60%supposedly
wouldnothavebeeninvented.Isuspectdisingenuousness
onthepartoftherespondants,however.Foronething,
drugcompaniesgetanunusuallyhighportion oftheir
R& D fundingfromthegovernment,andmanyoftheir
mostlucrativeproductsweredevelopedentirelyatgovern
mentexpense.AndSchererhimselfcitedevidencetothe
contrary. The reputation advantage for being the first
into amarket is considerable. For example in the late
1970s,thestructureoftheindustryandpricingbehavior
was found to be very similar between drugs with and
thosewithoutpatents.Beingthefirstmoverwithanon
patented drug allowed a company to maintain a 30%
marketshareandtochargepremiumprices.
Theinjusticeofpatentmonopoliesisexacerbatedby
government funding of research and innovation, with
privateindustryreapingmonopolyprofitsfromtechnology
itdidntspendapennytodevelop.In1999,extendingthe
researchandexperimentationtaxcreditwas,alongwith
extensions of a number of other corporate tax prefer
ences,consideredthemosturgentbusinessoftheCon
31

gressionalleadership.Hastert,whenaskedifanyelem
entsofthetaxbillwereessential,said:Ithinkthe[tax
preference] extendersaresomethingweregoingtohave
toworkon. WaysandMeansChairBillArcheradded,
beforetheyearisout...wewilldotheextendersina
very stripped down bill that doesnt include anything
else. Afiveyearextensionoftheresearchandexperiment
ationcredit(retroactiveto1July1999)wasexpectedtocost
$13.1billion.(Thatcreditmakestheeffectivetaxrateon
R & D spendinglessthanzero.)
TheGovernmentPatentPolicyActof1980,with1984
and1986amendments,allowedprivateindustrytokeep
patentsonproductsdevelopedwithgovernment R& D
moneyandthentochargeten,twenty,orfortytimes
thecostofproduction.Forexample,A Z T wasdeveloped
withgovernmentmoneyandinthepublicdomainsince
1964.ThepatentwasgivenawaytoBurroughsWellcome
Corp.
Asifthedeckwerenotsufficientlystackedalready,
thepharmaceuticalcompaniesin1999actuallylobbied
Congress to extend certain patents by two years by a
specialactofprivatelaw.
Patentshavebeenusedthroughoutthetwentiethcent
ury to circumvent antitrutst laws, according to David
Noble.Theywereboughtupinlargenumberstosuppress
competition, whichalsoresultedin thesuppressionof
inventionitself.EdwinPrindle,acorporatepatentlaw
yer,wrotein1906:

CitizensforTaxJustice,GOPLeadersDistillEssenceofTaxPlan.
ChrisLewis,PublicAssets,PrivateProfits
BenjaminGrove,Gibbonsbacksdrugmonopolybill
AmericabyDesign,pp.84109

32

Patentsarethebestandmosteffectivemeans
of controlling competition. They occasionally
giveabsolutecommandofthemarket,enabling
theirownertonamethepricewithoutregard
tothecostofproduction....Patentsaretheonly
legalformofabsolutemonopoly.

Patentsplayedakeyroleintheformationoftheelectrical
appliance,communications,andchemicalindustries.G . E.
and Westinghouse expanded todominate the electrical
manufacturingmarketattheturnofthecenturylargely
throughpatentcontrol.In1906theycurtailedthepatent
litigationbetweenthembypoolingtheirpatents. AT & T
also expanded primarily through strategies of patent
monopoly.TheAmericanchemicalindustrywasmarginal
until1917,whenAttorneyGeneralMitchellPalmerseized
Germanpatentsanddistributedthemamongthemajor
American chemical companies. DuPont got licenses on
300ofthe735patents.
Patentsarealsobeingusedonaglobalscaletolock
thetransnationalcorporationsintoapermanentmonopoly
of productive technology. The single most totalitarian
provisionoftheUruguayRoundisprobablyitsintellect
ual propertyprovisions. GAT T hasextendedboththe
scopeanddurationofpatentsfarbeyondanythingever
envisioned in original patent law. In England, patents
wereoriginallyforfourteenyearsthetimeneededto
traintwojourneymeninsuccession(andbyanalogy,the
timenecessarytogointoproductionandreaptheinitial
profitfororiginality).Bythatstandard,giventheshorter
trainingtimesrequiredtoday,andtheshorterlifespanof

AmericabyDesign,p.90
AmericabyDesign,pp.10,16.

33

technology,theperiodofmonopolyshouldbeshorter.
Instead,the U.S. seekstoextendthemtofiftyyears.
AccordingtoMartinKhorKokPeng,theU.S.isbyfarthe
mostabsolutistoftheparticipantsintheUruguayRound.
UnliketheEuropeanCommunity,lobbiedtoexpandpatent
protectionforbiologicalprocessesforanimalandplant
protection.
Theprovisionsforbiotecharereallyawayofincreas
ing trade barriers, and forcing consumers to subsidize
the T NC s engaged in agribusiness. The U.S. seeks to
applypatentstogeneticallymodifiedorganisms,effectively
piratingtheworkofgenerationsofThirdWorldbreedersby
isolating beneficial genes in traditonal varieties and
incorporatingtheminnewGM O sandmaybeevenen
forcingpatentrightsagainstthetraditionalvarietywhich
was the source of the genetic material. For example
Monsanto has attempted to use the presence of their
D NA inacropasprimafacieevidenceofpiratingwhen
itismuchmorelikelythattheirvarietycrosspollinated
andcontaminatedthefarmerscropagainsthiswill.The
Pinkertonagency,bytheway,playsaleadingroleinin
vestigating such chargesthats right, the same folks
whohavebeenbreakingstrikesandkickingorganizers
downstairsforthepastcentury.Evenjackbootedthugs
havetodiversifytomakeitintheglobaleconomy.
Thedevelopedworldhaspushedparticularlyhardto
protectindustriesrelyingonorproducinggenerictechno
logies,andtorestrictdiffusionofdualusetechnologies.

Raghavan,Recolonizationpp.119120.
The Uruguay Round and Third World Sovereignty p. 28. [Kevin
Carsonsuppliedacorrectiontoatypographicalerrorinthissentence
intheoriginaltext.Personalcorrespondence,December2012.CJ.]

34

TheU.S.Japanesetradeagreementonsemiconductors,
forexample,isacartellike,managedtradeagreement.
Somuchforfreetrade.
Patentlawtraditionallyrequiredaholdertoworkthe
inventioninacountryinordertoreceivepatentprotection.
U.K.lawallowedcompulsorylicensingafterthreeyears
ifaninventionwasnotbeingworked,orbeingworked
fully,anddemandwasbeingmettoasubstantialextent
byimportation;orwheretheexportmarketwasnotbe
ingsuppliedbecauseofthepatenteesrefusaltogrant
licensesonreasonableterms.
ThecentralmotivationintheGATT intellectualproperty
regime,however,istopermanentlylockinthecollective
monopolyofadvancedtechnologyby T NC s,andprevent
independentcompetitionfromeverarisingintheThird
World.Itwould,asMartinKhorKokPengwrites,effect
ivelypreventthediffusionoftechnologytotheThirdWorld,
andwouldtremendouslyincreasemonopolyroyaltiesofthe
T NC swhilstcurbingthepotentialdevelopmentofThird
World technology. Only one percent of patents world
wideareownedintheThirdWorld.Ofpatentsgranted
inthe1970sbyThirdWorldcountries,84%wereforeign
owned.Butfewerthan5%offoreignownedpatentswere
actuallyusedinproduction.Aswesawbefore,thepur
poseofowningapatentisnotnecessarilytouseit,butto
preventanyoneelsefromusingit.
RaghavansummedupnicelytheeffectontheThird
World:

Dieter Ernst, Technology, Economic Security and Latecomer

Idustrialization,inRaghavanpp.3940.
Raghavanpp.120,138.
Op.cit.pp.2930.

35

GiventhevastoutlaysinRandDandinvest
ments,aswellastheshortlifecycleofsomeof
theseproducts,theleadingIndustrialNations
aretryingtopreventemergenceofcompetitionby
controlling...theflowsoftechnologytoothers.
TheUruguayroundisbeingsoughttobeused
tocreateexportmonopoliesfortheproductsof
IndustrialNations,andblockorslowdownthe
rise of competitive rivals, particularly in the
newlyindustrializingThirdWorldcountries.At
thesametimethetechnologiesofsenescentin
dustriesofthenortharesoughttobeexported
totheSouthunderconditionsofassuredrentier
income.

Corporatepropagandistspiouslydenounceantiglobal
istsasenemiesoftheThirdWorld,seekingtousetrade
barrierstomaintainanaffluentWesternlifestyleatthe
expenseofthepoornations.Theabovemeasurestrade
barrierstopermanentlysuppressThirdWorldtechnology
andkeeptheSouthasabigsweatshop,givethelieto
thishumanitarianconcern.Thisisnotacaseofdiffer
ingopinions,orofsincerelymistakenunderstandingof
thefacts.Settingasidefalsesubtleties,whatweseehere
ispureevilatworkOrwellsbootstampingonahuman
faceforever.Ifanyarchitectsofthispolicybelieveittobe
forgeneralhumanwellbeing,itonlyshowsthecapacity
ofideologytojustifytheoppressortohimselfandenable
himtosleepatnight.

Op.cit.p.96.

36

INFRASTRUCTURE.
Spendingontransportationandcommunicationsnet
worksfromgeneralrevenues,ratherthanfromtaxesand
userfees,allowsbigbusinesstoexternalizeitscostsonthe
public,andconcealitstrueoperatingexpenses.Chomsky
describedthisstatecapitalistunderwritingofshipping
costsquiteaccurately:
One wellknown fact about trade is that its
highlysubsidizedwithhugemarketdistorting
factors....Themostobviousisthateveryform
oftransportishighlysubsidized....Sincetrade
naturallyrequirestransport,thecostsoftrans
portenterintothecalculationoftheefficiency
oftrade.Buttherearehugesubsidiestoreduce
thecostsoftransport,throughmanipulationof
energycostsandallsortsofmarketdistorting
functions.

Everywaveofconcentrationofcapitalhasfollowedapub
licly subsidizedinfrastructuresystemofsomesort.The
nationalrailroadsystem,builtlargelyonfreeorbelowcost
landdonatedbythegovernment,wasfollowedbyconcen
trationin heavyindustry, petrochemicals, and finance.
Thenextmajorinfrastructureprojectswerethenational
highwaysystem,startingwiththesystemofdesignated
nationalhighwaysinthe1920sandculminatingwithEis
enhowersinterstatesystem;andthecivilaviationsystem,
builtalmostentirelywithfederalmoney.Theresultwas
massive concentration in retail, agriculture, and food
processing.

HowFreeistheFreeMarket?

37

Thethirdsuchprojectwastheinfrastructureofthe
worldwideweb,originallybuiltbythePentagon.Itpermits,
forthefirsttime,directionofglobaloperationsinreal
timefromasinglecorporateheadquarters,andisaccel
eratingtheconcentrationofcapitalonaglobalscale.To
quoteChomskyagain, Thetelecommunicationsrevolut
ion...is...anotherstatecomponentoftheinternation
aleconomythatdidntdevelopthroughprivatecapital,
butthroughthepublicpayingtodestroythemselves....
The centralized corporate economy depends for its
existenceonashippingpricesystemwhichisartificially
distortedbygovernmentintervention.Tofullygrasphow
dependentthecorporateeconomyisonsocializingtrans
portationandcommunicationscosts,imaginewhatwould
happeniftruckandaircraftfuelweretaxedenoughto
paythefullcostofmaintenanceandnewbuildingcostson
highwaysandairports;andiffossilfuelsdepletionallow
anceswereremoved.Theresultwouldbeamassiveincrease
inshippingcosts.DoesanyoneseriouslybelievethatWal
Martcouldcontinuetounderselllocalretailers,orcorpor
ateagribusinesscoulddestroythefamilyfarm?
Intellectuallyhonestrightlibertariansfreelyadmitas
much.Forexample,TiborMachanwroteinTheFreeman
that
Somepeoplewillsaythatstringentprotectionof
rights [against eminent domain] wouldleadto
smallairports,atbest,andmanyconstraintson
construction.Ofcoursebutwhatssowrongwith
that?

ClassWarfare,p.40.

38

Perhapstheworstthingaboutmodernindustrial
lifehasbeenthepowerofpoliticalauthorities
tograntspecialprivilegestosomeenterprisesto
violatetherightsofthirdpartieswhosepermiss
ionwouldbetooexpensivetoobtain.Theneedto
obtainthatpermissionwouldindeedseriously
impedewhatmostenvironmentalistsseeasram
pantindeedrecklessindustrialization.
Thesystemofprivatepropertyrightsinwhich
...all...kindsof...humanactivitymustbe
conductedwithinonesownrealmexceptwhere
cooperationfromothershasbeengainedvolunt
arilyisthegreatestmoderatorofhumanaspir
ations....Inshort,peoplemayreachgoalsthey
arentabletoreachwiththeirownresourcesonly
byconvincingothers,throughargumentsandfair
exchanges,tocooperate.

The logjams and bottlenecks in the transportation

systemareaninevitableresultofsubsidies. Thosewho
debatethereasonforplanesstackedupatOHareairport,
ordecrythefactthathighwaysandbridgesaredeteriorating
severaltimesfasterthanrepairsarebeingbudgeted,need
onlyreadaneconomics101text.Marketpricesaresignals
thatrelatesupplytodemand.Whensubsidiesdistortthese
signals,theconsumerdoesnotperceivetherealcostof
producingthegoodsheconsumes.Thefeedbackloopis
broken,anddemandsonthesystemoverwhelmitbeyond
itsabilitytorespond.Whenpeopledonthavetopaythe
real cost of something they consume, they arent very
carefulaboutonlyusingwhattheyneed.
Itisinterestingthateverymajorantitrustactionin

OnAirportsandIndividualRights.

39

this century has involved either some basic energy re

source,orsomeformofinfrastructure,onwhichtheoverall
economy depends. Standard Oil, AT & T , and Microsoft
wereallcasesin whichmonopolypricegouging wasa
dangertotheeconomyasawhole.Thisbringstomind
Engels observation that advanced capitalism would
reachastagewherethestatetheofficialrepresentat
iveofcapitalistsocietywouldhavetoconvertthegreat
institutions for intercourse and communication into
stateproperty.Engelsdidnotforeseetheuseofantitrust
actionstoachievethesameend.

MILITARYKEYNSIANISM.
Theleadingsectorsoftheeconomy,includingcybernet
ics, communications, and military industry, have their
salesandprofitsvirtuallyguaranteedbythestate.The
entiremanufacturingsector,asawhole,waspermanent
lyexpandedbeyondrecognitionbyaninfusionoffederal
moneyduringWorldWar I I . In1939theentiremanu
facturingplantoftheU.S.wasvaluedat$40billion.By
1945,another$26billionworthofplantandequipment
had been built, two thirds ofit paid fordirectly from
government funds. The top 250 corporations in 1939
owned65%ofplantandequipment,butduringthewar
operated79%ofallnewfacilitiesbuiltwithgovernment
funds.
Machine toolswerevastlyexpanded bythewar.In

AntiDhring.
Mills,ThePowerElite,p.101.

40

1940,23%ofmachinetoolsinusewerelessthan10years
old.By1945,thefigurehadgrownto62%.Theindustry
contractedrapidlyafter1945,andwouldprobably have
goneintoadepression,haditnotreturnedtowartimelevels
ofoutputduringKoreaandremainedthatwaythrough
outtheColdWar.TheR & D complex,likewise,wasacreat
ionofthewar.Between1939and1945,theshareofAT & T
researchexpendituresmadeupofgovernmentcontracts
expandedfrom1%to83%.Over90%ofthepatentsresult
ingfromgovernmentfundedwartimeresearchweregiven
awaytoindustry. Themodernelectronicsindustrywas
largelyaproductofWorldWarI I andColdWarspending
(e.g.,miniaturizationofcircuitsforbombproximityfuses,
highcapacitycomputersforcommandandcontrol,etc.)
Thejumbojetindustrywouldneverhavecomeabout
withoutcontinuousColdWarlevelsofmilitaryspending.
The machine tools needed for producing large aircraft
weresocomplexandexpensivethatnosmallpeacetime
orderswouldhaveprovidedasufficientproductionrun
topayforthem.Withoutlargemilitaryorders,theywould
simply not have existed. The aircraft industry quickly
spiraledintoredinkafter1945,andwasnearbankruptcy
atthebeginningofthe1948warscare,afterwhichTruman
restoredittolifewithmassivespending.By1964,90%
ofaerospace R & D wasfundedbythegovernment,with
massivespilloverintotheelectronics,machinetool,and
otherindustries.

Noble,ForcesofProduction,pp.816.
Noble,Forcesof Production,pp.67;Kofsky, HarryS.Trumanand
theWarScareof1948.

41

OTHERSUBSIDIES.
Infrastructureandmilitaryspendingarenottheonly
examples of the process by which cost and risk are
socialized,andprofitisprivatizedor,asRothbardput
it,bywhichourcorporatestateusesthecoercivetaxing
powereithertoaccumulatecorporatecapitalortolower
corporatecosts.Someofthesegovernmentassumptions
ofriskandcostareadhocandtargetedtowardspecific
industries.
Amongthegreatestbeneficiariesofsuchunderwrit
ingareelectricalutilities.Closeto100%ofallresearch
anddevelopmentfornuclearpoweriseitherperformed
bythegovernmentitself,initsmilitaryreactorprogram,
orbylumpsumR & D grants;thegovernmentwaivesuse
chargesfornuclearfuels,subsidizesuraniumproduction,
providesaccesstogovernmentlandbelowmarket price
(andbuildshundredsofmilesofaccessroadsattaxpayer
expense),enrichesuranium,anddisposesofwasteatsweet
heartprices.ThePriceAndersonActof1957limitedthe
liabilityofthenuclearpowerindustry,andassumedgov
ernmentliabilityabovethatlevel.AWestinghouseofficial
admittedin1953,
IfyouweretoinquirewhetherWestinghousemight
considerputtingupitsownmoney...,wewould
havetosayNo.Thecostoftheplantwouldbe
aquestionmarkuntilafterwebuiltitand, by
thatsolemeans,foundouttheanswer.Wewould
notbesureofsuccessfulplantoperationuntil

ConfessionsofaRightWingLiberal.
AdamsandBrock,pp.279281.

42

after we had done all the work and operated

successfully....Thisisstillasituationofpyr
amidinguncertainties....Thereisadistinction
betweenrisktakingandrecklessness.

Somuchforprofitasarewardfortheentrepreneursrisk.
These entrepreneurs make their profits in the same
wayasaseventeenthcenturycourtier,byobtainingthe
favoroftheking.ToquoteChomsky,
thesectorsoftheeconomythatremaincompet
itivearethosethatfeedfromthepublictrough.
. . . The glories of Free Enterprise provide a
usefulweaponagainstgovernmentpoliciesthat
mightbenefitthegeneralpopulation....Butthe
richandpowerful...havelongappreciatedthe
needtoprotectthemselvesfromthedestructive
forcesoffreemarketcapitalism,whichmaypro
vide suitable themes for rousing oratory, but
onlysolongasthepublichandoutandthereg
ulatoryandprotectionistapparatusaresecure,
andstatepowerisoncallwhenneeded.

DwayneAndreas,the C E O ofArcherDanielsMidland,
admittedthat[t]hereisnotonegrainofanythinginthe
worldthatissoldinthefreemarket.Notone.Theonly
placeyouseeafreemarketisinthespeechesofpolitic
ians.
Big business also enjoys financial support through
the taxcode.Itis likelythatmostoftheFortune500
would go bankrupt without corporate welfare. Direct
federaltaxbreakstobusinessin1996werecloseto$350

Ibid.pp.278279.
Chomsky,DeterringDemocracy,p.144.
DonCarney,DwaynesWorld.

43

billion. Thisfigure,forfederalcorporatewelfarealone,
is over twothirds of annual corporate profits for 1996
($460billion).
Estimatesofstateandlocaltaxbreaksisfairlyim
pressionistic,sincetheyvarynotonlywitheachcritics
subjective definition of corporate welfare, but involve
thetaxcodesoffiftystatesandthepublicrecordsofthous
andsofmunicipalities.Besidesmoneypimpsinthestate
andlocalgovernmentsareembarassedbythesweetdeals
theygivetheircorporatejohns.InmyownstateofArkansas,
theincorruptibleBaptistpreacherwhoservesasgovernor
opposedabilltorequirequarterlypublicreportsfromthe
DepartmentofEconomicDevelopmentonitsspecialtax
breakstobusinesses. [K]eepingincentiverecordsfrom
publicscrutinyisimportantinattractingbusiness,and
releasing proprietary information could have a chill
ingeffect. Butstateandlocalcorporatewelfarecould
easilyamounttoafigurecomparabletofederal.
Takenasawhole,directtaxbreakstobusinessatall
levelsofgovernmentareprobablyonthesameorderof
magnitudeascorporateprofits.Andthisunderstatesthe
effectofcorporatewelfare,sinceitdisproportionatelygoes
toahandfulofgiantfirmsineachindustry.Forexample,
accelerateddepreciationfavorsexpansionbyexistingfirms.
Newfirmsfinditoflittlebenefit,sincetheyarelikelyto
lose money their first few years. An established firm,
however,canrunalossinanewventureandchargethe

BasedonmycrunchingonnumbersinZepezauerandNaiman,Take
theRichOffWelfare.
StatisticalAbstractoftheUnitedStates1996.
ArkansasDemocratGazette,3Feb.2001.

44

accelerateddepreciationagainstitsprofitsonoldfacilities.
Themostoutrageousofthesetaxexpendituresisthe
subsidy to the actual financial transactions by which
capitalisconcentrated.Theinterestdeductiononcorpor
atedebt,mostofwhichwasrunuponleveragedbuyouts
andacquisitions,coststhetreasuryover$200billiona
year.Withoutthisdeduction,thewaveofmergersinthe
1980s,orthemegamergersofthe1990s,couldneverhave
taken place. On top of everything else, this acts as a
massivedirectsubsidytobanking,increasingthepower
of finance capital in the corporate economy to a level
greaterthanithasbeensincetheAgeofMorgan.
Acloselyrelatedsubsidyistheexemptionfromcapit
algainsofsecuritiestransactionsinvolvedincorporate
mergers(i.e.stockswaps)eventhoughpremiumsare
usuallypaidwelloverthemarketvalueofthestock. The
1986 tax reform included a provision which prevented
corporations from deducting fees for investment banks
and advisers involved in leveraged buyouts. The 1996
minimum wage increase repealed this provision, with
one exception: interest deductions were removed for
employeebuyouts.
RightlibertarianslikeRothbardobjecttoclassifying
taxexpendituresassubsidies.Itpresumesthattaxmoney
rightfullybelongstothegovernment,wheninfactthe
governmentisonlylettingthemkeepwhatisrightfully
theirs.Thetaxcodeisindeedunfair,butthesolutionis
toeliminatethetaxesforeveryone,nottolevelthecode

Baratz,CorporateGiantsandthePowerStructure.
Zepezauer,p.122123.
Greenp.11.
Judis,BareMinimum.

45

up. Thisisaveryshakyargument.Supportersoftax
codereforminthe1980sinsistedthatthesolelegitimate
purposeoftaxationwastoraiserevenue,nottoprovide
carrotsandsticksforsocialengineeringpurposes.And,
semanticquibblingaside,thecurrenttaxsystemwould
beexactlythesameifwestartedoutwithzerotaxrates
andthenimposedapunitivetaxonlyonthosenotengag
edinfavoredactivities.Eitherway,theuneventaxpolicy
givesacompetitiveadvantagetoprivilegedindustries.

POLITICALREPRESSION.
Intimesofunusualpopularconsciousnessandmobil
ization,whenthecapitalistsystemfacesgravepolitical
threats,thestateresortstorepressionuntilthedanger
ispast.ThemajorsuchwavesinthiscountrytheHay
marketreaction,andtheredscaresaftertheworldwars
are recounted by Goldstein (Political Repression in
Modern America). But the wave of repression which
beganinthe1970s,thoughlessintense,hasbeenperm
anentlyinstitutionalizedtoauniqueextent.
Untilthelate1960s,eliteperspectivewasgoverned
bytheNewDealsocialcontract.Thecorporatestatewould
buystabilityandpopularacquiescenceinimperialistex
ploitationabroadbyguaranteeingalevelofprosperityand
securitytothemiddleclass.Inreturnforhigherwages,
unionswouldenforcemanagementcontrolofthework
place.Butstarting during theVietnam era,theelites
thinkingunderwentaprofoundchange.

Rothbard,PowerandMarket,p.104.

46

Theyconcludedfromthe1960sexperiencethatthesocial
contracthadfailed.Inresponsetotheantiwarprotests
andraceriots,L B J andNixonbegantocreateaninstitut
ional frameworkformartiallaw,tomakesurethatany
suchdisorderinthefuturecouldbedealtwithdifferently.
Johnsons operation GARDEN PLOT involved domestic
surveillancebythemilitary,contingencyplansformili
tarycooperationwithlocalpoliceinsuppressingdisorder
inallfiftystates,plansformasspreventivedetention,and
jointexercisesofpoliceandtheregularmilitary.Governor
Reagan and his National Guard chief Louis Giuffrida
wereenthusiasticsupportersofGARDENPLOTexercis
esinCalifornia.Reaganwasalsoapioneerincreating
quasimilitary SWAT teams, which now exist in every
majortown.
Thewaveofwildcatstrikesintheearly1970sshowed
thatorganizedlaborcouldnolongerkeepitspartofthe
bargain,andthatthesocialcontractshouldbereassessed.
Atthesametime,thebusinesspresswasfloodedwith
articles on the impending capital shortage, and calls
forshiftingresourcesfromconsumptiontocapitalaccumul
ation. Theypredictedfranklythatacaponrealwages
would be hard to force on the public in the existing
politicalenvironment.Thissentimentwasexpressedby
Huntingtonetal.inTheCrisisofDemocracy(apaperfor
theTrilateralInstitutionagoodproxyforelitethink
ing); they argued that the system was collapsing from
demandoverload,becauseofanexcessofdemocracy.
Corporationsembracedthefullrangeofunionbusting

Morales,U.S.MilitaryCivilDisturbancePlanning
Boyte,BackyardRevolution,pp.1316.

47

possibilitiesinTaftHartley,riskingonlytokenfinesfrom
the N L R B. Theydrasticallyincreasedmanagementre
sourcesdevotedtoworkplacesurveillanceandcontrol,a
necessitybecauseofdiscontentfromstagnantwagesand
mountingworkloads.Wagesasapercentageofvalueadd
edhavedeclineddrasticallysincethe1970s;allincreases
in labor productivity have been channelled into profit
and investment, rather than wages. A new Cold War
militarybuildupfurthertransferredpublicresourcesto
industry.
A series of events like the fall of Saigon, the non
alignedmovement,andtheNewInternationalEconomic
Orderweretakenassignsthatthetransnationalcorpor
ateempirewaslosingcontrol.Reagansescalatinginter
vention in Central America was a partial response to
thisperception.ButmoreimportantlytheUruguayRound
ofGAT T snatchedtotalvictoryfromthejawsofdefeat;it
endedallbarrierstoT NC sbuyingupentireeconomies,
lockedthewestintomonopolycontrolofmoderntechno
logy,andcreatedaworldgovernmentonbehalfofglobal
corporations.
InthemeantimetheU.S.was,inthewordsofRichard
K.Moore,importingtechniquesofsocialcontrolfromthe
imperialperipherytothecorearea.Withthehelpofthe
DrugWarandtheNationalSecurityState,theapparat
usofrepressioncontinuedtogrow.TheDrugWarhas
turned the Fourth Amendment into toilet paper; civil
forfeiture,withtheaidofjailhousesnitches,givespolice
thepowertostealpropertywithouteverfilingcharges
alucrativesourceoffundsforhelicoptersandkevlarvests.

FatandMean.

48

SWAT teamshaveledtothemilitarizationoflocalpolice

forces,andcrosstrainingwiththemilitaryhasledmany
urbanpolicedepartmentstoviewthelocalpopulationas
anoccupiedenemy.
Reagans crony Giuffrida resurfaced as head of
F EM A ,whereheworkedwithOliverNorthtofinetune
GARDENPLOT.North,astheN SC liaisonwithF EM A
from198284,developedaplantosuspendtheconstitut
ionintheeventofanationalcrisis,suchasnuclearwar,
violentandwidespreadinternaldissentornationalop
positiontoa U.S. militaryinvasionabroad. GARDEN
PLOT, interestingly,wasimplementedduringtheRod
neyKingRiotsandinrecentantiglobalizationprotests.
Delta Force provided intelligence and advice in those
placesandatWaco.
Anotherinnnovationistoturneveryonewedealwith
into a police agent. Banksroutinelyreportsuspicious
movementsofcash;underknowyourcustomerprograms,
retailersreportpurchasesofitemswhichcanconceivably
beusedincombinationtomanufacturedrugs;libraries
comeunderpressuretoreportonreadersofsubversive
material;DAR E programsturnkidsintopoliceinformers.
Computertechnologyhasincreasedthepotentialfor
surveillancetoOrwellianlevels.Pentium I I I processors
wererevealedtoembedidentitycodesineverydocument
written on them. Police forces are experimenting with
combinationsofpubliccameras,digitalfacerecognition
technology,anddatabasesofdigitalphotos.ImageData

Weber,WarriorCops.
Chardy,ReaganAidesandtheSecretGovernment.
Rosenberg, The Empire Strikes Back; Cockburn, The Jackboot
State.

49

L L C ,acompanyintheprocessofbuyingdigitaldrivers

licencephotosfromallfiftystates,wasexposedasafront
fortheSecretService.

CONCLUSION.
It isalmosttooeasytobringbackBob Novakand
Secretary ONeill for another kickbut I cant resist.
Marxistclasswarfare?Robberbaronrhetoric?Well,
thepagesaboverecounttheclasswarfarewagedbythe
robber barons themselves. If their kind tend tosqueal
likepigswhenwetalkaboutclass,itsbecausetheyve
been stuck. But all the squealing in the world wont
changethefacts.
Butwhataretheimplicationsoftheabovefactsfor
our movement? It is commonly acknowledged that the
manorial economy wasfoundedonforce.Althoughyou
willneverseetheissueaddressedbyMiltonFriedman,
intellectually honest right libertarians like Rothbard
acknowledgetheroleofthestateincreatingEuropean
feudalismandAmerianslavery.Rothbard,drawingthe
obviousconclusionfromthisfact,acknowledgedtheright
ofpeasantsorfreedslavestotakeovertheirfortyacres
andamulewithoutcompensationtothelandlord.
Butwehaveseenthatindustrialcapitalism,tothe
sameextentasmanorialismorslavery,wasfoundedon
force. Like its predecessors, capitalism could not have
survivedatanypointinitshistorywithoutstateinter
vention. Coercive state measures at every step have
deniedworkersaccesstocapital,forcedthemtoselltheir

50

laborinabuyersmarket,andprotectedthecentersof
economicpowerfromthedangersofthefreemarket.To
quoteBenjaminTuckeragain,landlordsandcapitalists
cannotextractsurplusvaluefromlaborwithoutthehelp
of the state. The modern worker, like the slave or the
serf, is the victim of ongoing robbery; he works in an
enterprise built from past stolen labor. By the same
principles that Rothbard recognized in the agrarian
realm, the modern worker is justified in taking direct
controlofproduction,andkeepingtheentireproductof
hislabor.
Inaveryrealsense,everysubsidyandprivilegede
scribedaboveisaformofslavery.Slavery,simplyput,is
theuseofcoerciontoliveoffofsomeoneelseslabor.For
example,considertheworkerwhopays$300amonthfor
adrugunderpatent,thatwouldcost$30inafreemark
et.Ifheispaid$15anhour,theeighteenhoursheworks
every month to pay the difference are slavery. Every
hourworkedtopayusuryonacreditcardormortgageis
slavery.Thehoursworkedtopayunnecessarydistribut
ionandmarketingcosts(comprisinghalfofretailprices),
becauseofsubsidiestoeconomiccentralization,isslav
ery. Every additional hour someone works to meet his
basicneeds,becausethestatetiltsthefieldinfavorof
thebossesandforceshimtosellhislaborforlessthanit
isworth,isslavery.
Alltheseformsofslaverytogetherprobablyamount
tohalfourworkinghours.Ifwekeptthefullvalueofour
labor,wecouldprobablymaintaincurrentlevelsofcon
sumption with a work week of twenty hours. As Bill
Haywoodsaid,foreverymanwhogetsadollarhedidnt
sweatfor,someoneelsesweatedtoproduceadollarhe
51

neverreceived.
Oursurveyalsocastsdoubtonthepositionofan
archistsocialdemocratNoamChomsky,whoisnotori
ousforhisdistinctionbetweenvisionsandgoals.His
longtermvisionisadecentralizedsocietyofselfgoverning
communitiesandworkplaces,looselyfederatedtogether
the traditional anarchist vision. His immediate goal,
however,istostrengthentheregulatorystateinorderto
break up private concentrations of power, before an
archismcanbeachieved.Butif,aswehaveseen,capital
ismisdependentonthestatetoguaranteeitsurvival,it
followsthatitissufficienttoeliminatethestatistprops
to capitalism. In a letter of 4 September 1867, Engels
aptlysummedupthedifferencebetweenanarchistsand
statesocialists: Theysayabolishthestateandcapital
willgotothedevil.Weproposethereverse.Exactly.

PUBLISHEDBYREDLIONPRESS,2001.
REVISEDJANUARY2002

52

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ImmanuelWallerstein.HistoricalCapitalism(N.Y.:Verso,1983).
Diane Cecilia Weber. Warrior Cops: The Ominous Growth of
ParamilitarisminAmericanPoliceDepartmentsCatoBriefingPaper
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MarkZepezauerandArthurNaiman.TaketheRichOffWelfare(Odonian
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55

This booklet was prepared by Charles Johnson of

the Alliance of the Libertarian Left, as a new
edition of a booklet originally prepared in 2008
by William Gillis for the Invisible Molotov
distro. The new edition, with new typesetting,
was released by ALL Distro in Dec. 2012.
The text is based on the text of The Iron Fist Be
hind the Invisible Hand as found online at Kevin
Carsons website,
mutualist.org/id4.html

with some corrections added in cases of obvious

typographical errors. The web edition is a revision
of the original article, which was first published in
2001 by Red Lion Press, and then revised by
Carson in 2002.
The booklet was laid out and typeset entirely using
free software: LibreOffice Writer running atop
Ubuntu GNU/Linux. The text is set in Century
Schoolbook, an early 20 th century typeface.