Bailouts and Capitalism

The G-20 protesters in Pittsburgh seem to have some interesting political views:

The marchers included small groups of self-described anarchists, some wearing dark clothes and bandanas and carrying black flags. Others wore helmets and safety goggles.

One banner read, “No borders, no banks,” another, “No hope in capitalism.” A few minutes into the march, protesters unfurled a large banner reading “NO BAILOUT NO CAPITALISM” with an encircled “A,” a recognized sign of anarchists.

The “NO BAILOUT NO CAPITALISM” sign raises some interesting questions about the word “capitalism.” Many self-described leftists (some of whom I come very close to agreeing with) see bailouts and other forms of corporate privilege as part and parcel of capitalism. Many non-left libertarians see bailouts as antithetical to capitalism. Both groups are wrong.

The only useful definition of capitalism in line with its historical and contemporary usage is a system which allows the private ownership and alienation of property. This definition can accommodate a wide variety of institutional arrangements, from a market-anarchism to fascism: there are both good and bad forms of capitalism (full book here!).

By that definition, I am completely and utterly pro-capitalist in the sense that I think any system without private property would be irredeemably awful. History hasn’t exhausted the design-space of propertyless social systems (and I, for one, hope it never does), but it teaches some valuable lessons.  At the same time, I’m completely and utterly opposed to some forms of capitalism. Government funds lining the pockets of well-connecting firms is neither essential to nor inconsistent with capitalism. It is essential to some kinds of capitalism and inconsistent with others.

Roger Douglas Supports Competitive Government

The architect of New Zealand’s free-market reforms of the 1980s now advoctates an end to the geographic monopoly of local councils:

Sir Roger Douglas wants ratepayers to be able to shop around for the best local council, saying that being able to defect to one nearby even if they do not live there will invoke the spirit of competition.

Sir Roger told a parliamentary select committee considering legislation setting up Auckland’s Super City that there should be a flexible community council structure with ratepayers able to decide its size and even set up their own councils.

Groups of ratepayers who lived next to another community council should also be able to opt out and join another council.

“The capacity to change council will create competition for ratepayers, which is likely to see value for money being delivered by local government,” Sir Roger said.

If choice is a good thing, why not open the market to new entrants competing with existing councils and central government? A truly free market in governance replaces coercion with choice (i.e. government in the Weberian sense ceases to exist).

Come on, Roger. Admit you’re an anarchist.