How Covid-19 Illustrates the Difference Between Markets and Capitalism
What a Break in the System Reveals About it
The coronavirus is causing firms to go out of business.
That is an obvious statement. Let’s pick that obviousness apart, though — the “obvious” is where all of our greatest assumptions about the world hide from us.
First off, it isn’t the coronavirus itself that is causing firms to go out of business. It is the lockdown being instituted to fight off the deadly disease — a society’s version of a body deliberately raising its own temperature to fight off infection. It hurts us — but, hopefully, it will hurt the virus more.
Regardless, that statement isn’t exactly true either — the lockdown doesn’t cause firms to go out of business. The lack of income due to the lockdown causes that. But no — that isn’t quite right, either. The lack of income isn’t what causes the firms to go out of business — it’s the lack of the ability to pay rents and interest on debts that are causing these firms to go out of business during the coronacrash.
Let’s rephrase that: it is the requirement that these firms pay rents and interest on debts that are causing them to go out of business.
“Requirement”: let’s investigate that word. Why is it a “requirement”? What would happen if they simply shrugged and ceased paying rents and interests, while remaining open and paying all other costs that they normally would? Why, the police would (eventually) come to enforce those rents and interests, of course. They would do this through evicting the business or foreclosing on its property, of course — and so, to avoid paying this greater cost later, the business must shut down now.
So, let’s rephrase that: these firms must pay rents and interests, to avoid the loss of even further value due to the actions of the police — and because they now know that they will not be able to continue to pay these tithes, they are choosing to cut their losses and go out of business now — before they can incur these further costs.
And who are the police, after all? They are merely the armed component of the state, and should be addressed as such for clarity. And how, after all, are the police paid? Through taxation, of course. From this perspective, it begins to feel as though the rents and debts are merely a form of tax farming — the state collects taxes from those who hold property or financial capital, and those who hold those use the enforcement of the state to collect rents or interests on them.
Rents and interests are, ultimately, merely tithes being paid to agents of the state. From this perspective, any bail-out that the state might offer to firms that would otherwise go out of business is faintly ridiculous: here is money from me, so that you can pay (me and) them, so that they can pay me.
Something like this reveals that it is not “the market” that is killing itself — it is capitalism that is killing the market. And capitalism is itself a creation of the state.
(This is, in my mind, the absolute dividing line between the ambiguous fringes of Marxism and the ambiguous fringes of anarchism: if you think that the state creates capitalism, you are an anarchist — if you think that capitalism creates the state, you are a Marxist)
This is why I laugh at anyone who advocates anarcho-capitalism, or even thinks that it would be possible.
The state is the method through which the ruling class is able to extract revenue (and, on a more psychologically significant level, control) from their mere claims of ownership. I use the word “claims” because claims is all that they are, without enforcement — the difference between ownership and claims of ownership is the vigorous application of structural violence. And I say “the ruling class” and not “the owning class” because the ruling class is not necessarily identical to or even created by the capitalist class — economics is downstream of politics, after all, and it is through political action that the capitalist class can even have private property to own.
The state operates as this method by providing guard labor for the owners against the workers. Without that guard labor, the workers would happily ignore the ownership claims of the owners. To more efficiently supply this guard labor, the state does four things to/for the bourgeois:
- it provides the maximum possible economy of scale
- it eliminates competition in the guard-labor market
- it prevents free riders
- it internalizes positive externalities
- it externalizes costs onto the workers
Imagine the AnCap scenario: if everyone in an area has to buy their own guard labor, in a competitive guard labor market, then the prices will be significantly higher.
Partially: because each firm hiring its own guard very likely has its guard guarding a smaller area and a smaller value than they do in our world of state-provided guard labor, where a police force provides all the guard labor for an area — and partially because if the guards can set their own prices, rather than having the state set their prices for them, they would make the owners pay the guards more to guard the same value/area. The lack of economies of scale, and rising prices in a competitive market for guard labor, would cut deeply into profits in an AnCap system.
But also partially: because the owners, if they could, might opt not to purchase guard labor, or to simply only purchase cheaper and incidental guard labor which could be called upon to provide emergency help, rather than continuous patrols and quick response times — which, for small enough firms that their owners worked at and could guard them, might be viable.
If every other firm is guarded, the more peripheral uses for guard-labor (such as mere one-time theft rather than ongoing expropriation by the workers) are likely already covered — other, larger, owners purchasing guard labor would lead to benefits for the small owners — benefits that they had not paid for.
A state that provides police to all owners, and funds them through mandatory and forced payments from both all the owners and the workers, not only prevents the small owners from escaping paying for the value that the guard labor of the state provides them, but also allows the large owners to pay less than the value of guard labor that they receive — the state disconnects the value that you receive from it in guard labor from the value that you pay to it in taxation, whether direct or indirect. In other words, the state forces the workers to pay for part of the costs of their own exploitation.
I wrote about this — and, especially, its practical applications — elsewhere, nearly a year ago:
I sometimes like to accuse Marxists of basically being AnCaps. Partially, because it confuses them deeply for me to accuse them of being the real anarcho-capitalists — but, also, because so much of Marxist or even AnCom analysis forgets these crucial facts. There is no possibility of Anarcho-Capitalism ever existing. Not even the bourgeois want it to happen. And, even if it somehow did, any firm that obtained enough clients in a given area would violently drive out all of its minor competitors and require all within its area to pay it for its services, recreating the state.
Rhetoric that conflates “markets” with “capitalism” ignores the true nature of both — as well as producing a very confused idea of what the state is.
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