Beware the Alternatives to Capitalism and Socialism

When it comes to production, capitalism and socialism are often presented as constituting extremes of a spectrum of economic organization, where control over the means of production is either entirely in the hands of profit-seeking private owners (the capitalists) at one extreme or in the hands central planners (supposedly acting for the benefit of society according to socialists) at the other extreme.

Framing the question with such terminology implicitly smears capitalists as profiting at the expense of society; a sordid linguistic trick that pretends that coercive centralization is more “social” than the capitalist alternative. This conceptual fog blinds one to the inherently anti-social totalitarian tyranny of the collectivist abrogation of profits and losses, which occurs in spite of the best intentions of many well-meaning socialists.

Apart from the framing problem, there is also the problem that central planning isn’t the only type of deviation from capitalism. The individualist/capitalist alternative is founded on the libertarian principle that each individual is at liberty to do anything that doesn’t transgress against the private ownership rights of others, where each individual has the right to exclusive control over the use and disposition of oneself and of one’s legitimately-acquired property. In a strict application of this libertarian principle, coercion can only be used to defend these rights, deter transgressions of them, or make restitution to rights-holders.

We can immediately deduce from this that central planning must deviate from libertarian principle by requiring rights violations to usurp control over all property that has been peacefully-acquired by non-central planners. Likewise, socialism must curtail the liberty of workers to deviate from the central plans with respect to how they use their labor and their leisure time. In essence, the socialist ideal requires a powerful centralized state to coercively centralize all ownership and stamp out all liberty apart from the liberty of the tyrant who exclusively controls both the economic planning process and the state’s means of destruction.

There are, however, at least two other conceivable deviations from libertarian principle that result in economic systems that are distinct from both capitalism and socialism. Posing a false dichotomy between capitalism and socialism breeds confusion in that the evils of these other economic systems can get falsely conflated with either socialism or capitalism, and it understates the challenges of achieving a free and prosperous society by regarding only central planning as the problem.

One possible non-socialist deviation from libertarian principle is the case where the coercive usurpation of private ownership and of curtailment of liberty is not carried out by a powerful centralized state, but rather by a decentralized warrior caste where small bands of warriors can easily dominate non-warriors by virtue of their relatively costly weapons, armor, training, and defensive works, but can in turn resist domination by larger bands of warriors due to the defensive bias of prevailing military techniques (examples being a noble and his knights defying a king and his much larger retinue from within the lord’s castle, or armed guildsmen defying lords and kings alike from within their walled towns).

Under this sort of feudal system, no central planning is possible, but it is equally far from a situation where everyone is free to work, produce, and compete as in a profit-and-loss directed division of labor, and where violence doesn’t dictate who owns what. Instead, everyone is stuck in whatever role they were born into by feudalism’s power-based social stratification, what Ludwig von Mises described in a 1959 lecture described as a non-progressing society of status:

Two hundred years ago, before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. If he was born poor, he always remained poor, and if he was born rich—a lord or a duke—he kept his dukedom and the property that went with it for the rest of his life.

As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people (ninety percent or more of the European population) worked the land and did not come in contact with the city-oriented processing industries. This rigid system of feudal society prevailed in the most developed areas of Europe for many hundreds of years.

Mises contrasts this static, caste-ridden situation under feudalism to that under capitalism, where much greater social mobility and material progress is made possible by the liberty of everyone to change occupations and enter into new businesses, acquire new skills, easily move labor and goods to distant locations, and engage in entrepreneurship that gains greater profits by producing for the masses rather than just for elites.

What is perhaps the defining feature of feudalism is that agricultural workers are legally bound to the land, which is controlled by a lord who owes only limited, precisely defined military obligations to serve higher authorities (a king or a higher-ranking lord) in exchange for the recognition and protection of their land tenure by those higher authorities.

The conscription of supposedly free Roman citizens to non-military jobs was originally instituted by a declining empire and maintained in the west by a tax-supported bureaucracy run by Latin-speaking aristocrats even in the early barbarian kingdoms after the western half of the empire had officially fallen. Local warlords soon discovered though that they could defy the bureaucracy and extort the royal share of the loot for themselves while continuing to exploit their serfs. A similar trend unfolded in Japan around the same time, where an attempt to copy a Chinese-style imperial absolutism was undermined by the inability of whomever controlled the emperor to keep nominal imperial subordinates and their clans and armed retainers in line. In essence, feudalism is what happens when the systematic usurpation of individual rights is decentralized—perhaps less totalitarian than a socialist state, but still characterized by mass poverty and lack of freedom and material progress.

There is yet another non-socialist deviation from libertarian principle. In brief, ownership rights can become unenforceable, so that everyone is equally free to plunder whatever stuff is available at any time. Instead of planning for one’s future well-being, “production” in this case consists of opportunistically grabbing whatever present goods one can find immediately available in the environment before anyone else does—that is, foraging from nature or scavenging from the wreckage of whatever civilization formerly existed. Such was the lot of primitive hunter-gatherers for hundreds of thousands of years before civilizations existed.

Murray Rothbard labeled an overt rejection of ownership primitivism, and extensively engaged in sharp discourse against its supporters like egalitarians, anarcho-communists, and certain sociologists who deny elementary praxeological facts about human action like Karl Polyani. Rothbard noted that primitivism is fundamentally opposed to the use of reason in advancing one’s well-being and is thus profoundly anti-human. As he explains in his analysis of Polanyi:

Man is born a tabula rasa; he must learn and learn how to choose the ends that are proper for him, and the means which he must adopt to attain them. All this must be done by his reason.

Civilization is precisely the record by which man has used his reason, to discover the natural laws on which his environment rests, and to use these laws to alter his environment so as to suit and advance his needs and desires. Therefore, worship of the primitive is necessarily corollary to, and based upon, an attack on intellect. It is this deep-seated “anti-intellectualism” that leads these people to proclaim that civilization is “opposed to nature” and [that] the primitive tribes are closer to it. . . . And because man is supremely the “rational animal,” as Aristotle put it, this worship of the primitive is a profoundly anti-human doctrine.

Anti-human, anti-rational doctrine, then, goes eagerly to illiterate, savage, fear-ridden primitives as people on whom we—the heirs of 2000 years of the finest products of civilization and the human race—are supposed to model ourselves. If an existing primitive tribe has no private property, or engages in indiscriminate promiscuity, this should be all the more reason for us to do the reverse.

While overt advocacy of feudalism and primitivism is rare, it is important to understand that feudalism can emerge as an unintended consequence of the disproportionate destructive abilities of a decentralized warrior caste, and a primitivist collapse of civilization can emerge as an unintended consequence of a general failure to defend ownership rights. Indeed, many enemies of capitalism who sincerely think of themselves as socialists or even as anti-socialist environmentalists or conservatives unwittingly promote dangerously destructive principles leading to feudal or primitivist outcomes.

Simply opposing socialism is not sufficient for defending a free and prosperous civilization; those who—at the expense of individual rights—celebrate a lust for conquest or romanticize the “noble savage” unwittingly work to sabotage civilization and threaten mankind’s existence just as surely as card-carrying Nazis and Communists do.