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David Friedman on the Internal Contradictions of Marxist Exploitation Theory

From Libertarianism.org‘s The Turney Collection: Never-Before-Seen Archive Tapes: George H. Smith Debates David D. Friedman: Ethics vs. Economics (1981) – The Turney Collection.

Friedman makes an interesting critique of the Marxist theory of exploitation. He says:

Part of my evidence that political disagreement stems more from disagreement about is’s than oughts comes from the following experience, which I have had and I think many of you have had.  A libertarian is arguing with a socialist, and they’re arguing about some fundamental moral question such as whether a capitalist has the right to the profits he gets from his capital. And one discovers after a while that the socialist’s idea of the history of the particular hypothetical capitalist is that the socialist got his capital by stealing it from somebody, that is, by doing things that the libertarian would regard as stealing it from somebody.  Whereas the libertarian’s idea of the history of this hypothetical capitalist is that he had a tract of land out of the jungle while the lazy worker sat by and now wishes to get some income for the use of his farmland.

And that suggests to me that both people have very similar moral intuitions and that each of them is trying to twist his vision of reality in such a way that his moral intuitions will be consistent with the set of institutions that he is in favor of.  And I would give as one more rather striking example of that the way in which Marxists use the term exploitation.  Very simply, the Marxist argument goes as follows.  All things are produced by the workers, either directly by the workers working or indirectly by the workers building machines called capital, which then help produce goods.

The capitalists consume some of it.  Therefore, the capitalists are exploiting the workers.  Now, if you think of it, you will notice that there is a hidden libertarian premise in there somewhere, namely, that things belong to the people who make them.  If the socialists really believed that the right premise was from each according to his ability to each according to his needs, it would follow that if the workers were good at working and the capitalists needed Rolls-Royces, that there would be absolutely nothing wrong with the capitalists receiving profits.  And the reason that the socialists are upset about the capitalists receiving profits is that, at base, the socialist’s moral intuition is very much like yours and mine, namely, that ownership somehow comes out of producing.

See also Hoppe: Marx was “Essentially Correct”. Now Friedman is not quite right here; ownership doesn’t come from production. Production is transformation of existing, already-owned resources into a more valuable arrangement; see “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward,” the section “Lockean Creationism” and n. 46.

David also is wrong in other places, e.g.: “Every time I light a match, photons from that match are trespassing on property for 100 miles around.  Every time I light a match, little bits of soot are trespassing on land for 20 miles around.” But stray photons going onto my neighbor’s land are not necessarily trespass, if they don’t interfere with his use of it. But this is a side point.

I had David’s entire opening talk, from 4:08 to 19:30, transcribed; it’s below:

George H. Smith Debates David Friedman: Ethics vs. Economics (1981)

00:04:14

M:  Can the color lights be cut?

00:04:17

00:04:18

DAVID FRIEDMAN:  Thank you.  Can everybody hear me?  I regard microphones as instruments invented by the devil to destroy the human voice.  Can you hear me all right from here?

00:04:28

AUDIENCE:  Yes.

00:04:29

DAVID FRIEDMAN:  Fine.  Let me begin by saying that what this debate was, at least the first time around I believe, was a debate about what sorts of arguments were most important or most useful in defending libertarianism.  There is certainly sense in which economic arguments without philosophical arguments are logically impossible or useless.  You can’t talk about what’s desirable without talking about what ultimately you want.  However, if everybody agreed about what you wanted, then you would reduce only to questions of how to get it, which would be economic questions.

00:05:11

Let me start by briefly defining what I mean by economics and economic arguments versus philosophy and philosophical arguments because I got the impression towards the end of the previous run of this debate that a good deal of what I thought was economics, George thought was philosophy, which led to a certain amount of confusion.  Economics deals with questions such as what will be the consequences of certain laws or certain institutions.  And philosophy, or at least the particular part of philosophy that is mostly used by libertarians for making arguments, deals with oughts, with statements such as it is desirable that people be happy, or you ought not to steal someone else’s property or other questions of that sort.

00:06:04

Now, there’s a good deal of overlap in these two, and that can be seen by considering one very simple philosophical position, the position called rule utilitarianism, which holds we ought to act according to that set of rules, which maximize the sum total of human happiness.  Now, in one sense, you could say that all of what I called economic arguments, which say that if you have private property, people will be happy, for example, are a part of a philosophical argument, which the rule utilitarian uses to say we ought to act in certain ways.

00:06:41

But I would separate out the philosophical part of the argument, which is what says, for example, you ought to make people happy for in economics what’s discussed as what the consequences of certain acts will be.  So that then when I’m saying that we ought to use primarily—not entirely but primarily—economic arguments, I mean we ought to be arguing with people about what are the consequences of certain acts?

00:07:06

What are the consequences of certain institutions?  How does socialism work?  How does capitalism work?  Rather than arguing with them primarily about whether taxation is immoral, whether private property is an actual right and so forth.  And my reason is not that I believe that is statements without ought statements can tell you what you should do.  Obviously, they can’t.  But that I believe that most of the disagreement in the world comes from just—most of the disagreement on, things libertarians are interested in comes from disagreements about how institutions work, about consequences, and only a relatively small part from disagreement about ands.

00:07:53

One could see that, in the extreme case, if I persuaded a socialist that socialism would lead to everybody being poor and miserable and enslaved, and capitalism would lead to everybody being happy and wealthy and wise, we might have many, many remaining disagreements on what was desirable, and yet he would almost certainly be in favor of capitalism.  Therefore, even though the statement, it is desirable that people be healthy and wealthy and wise, which is a philosophical statement, would be logically necessary for the argument, it would not, in practice, be necessary.

00:08:30

Now, George objected last time, and I’m sorry if this seems like a rerun but it is, second time for me, the third time for him, which I may explain some time.  He objected that I seemed to be including an awful lot of economics, and for those of you who are perfectionists, I would say economics is that particular approach to understanding what is, which starts out with the premise that individuals have objectives, which they rationally pursue and draws conclusions from that.  However, it would take much more than 15 minutes to expand on that subject, so I won’t.

00:09:12

Part of my evidence that political disagreement stems more from disagreement about is’s than oughts comes from the following experience, which I have had and I think many of you have had.  A libertarian is arguing with a socialist, and they’re arguing about some fundamental moral question such as whether a capitalist has the right to the profits he gets from his capital.  And one discovers after a while that the socialist’s idea of the history of the particular hypothetical capitalist is that the socialist got his capital by stealing it from somebody, that is, by doing things that the libertarian would regard as stealing it from somebody.  Whereas the libertarian’s idea of the history of this hypothetical capitalist is that he had a tract of land out of the jungle while the lazy worker sat by and now wishes to get some income for the use of his farmland.

00:10:08

And that suggests to me that both people have very similar moral intuitions and that each of them is trying to twist his vision of reality in such a way that his moral intuitions will be consistent with the set of institutions that he is in favor of.  And I would give as one more rather striking example of that the way in which Marxists use the term exploitation.  Very simply, the Marxist argument goes as follows.  All things are produced by the workers, either directly by the workers working or indirectly by the workers building machines called capital, which then help produce goods.

00:10:49

The capitalists consume some of it.  Therefore, the capitalists are exploiting the workers.  Now, if you think of it, you will notice that there is a hidden libertarian premise in there somewhere, namely, that things belong to the people who make them.  If the socialists really believed that the right premise was from each according to his ability to each according to his needs, it would follow that if the workers were good at working and the capitalists needed Rolls-Royces, that there would be absolutely nothing wrong with the capitalists receiving profits.  And the reason that the socialists are upset about the capitalists receiving profits is that, at base, the socialist’s moral intuition is very much like yours and mine, namely, that ownership somehow comes out of producing.

00:11:35

Wrong side of the 3×5 card.  Sorry about that.

00:11:40

00:11:45

Now, I think that—I’m not asserting that there are no disagreements at all, of course.  Certainly, there are a lot of socialists who think that taking from the rich to give to the poor is a good and meritorious activity and very few libertarians who believe that, although I can think of perhaps one example if I work at it, a philosopher I met recently.  But the reason that we don’t have to argue about philosophical points I believe is that our—George, can you tell them to turn it off?  Is that our economic arguments are sufficiently strong that we can reach our conclusions over any of a wide range of views about what is desirable.

00:12:35

That is to say, since capitalism happens to be the best system for the poor as well as for the rich, since redistribution in practice means taxing the average Californian to support the people who are going to UCLA who will then have high incomes, we can, and I think should, argue that whether or not you believe that redistribution is theft, you should be against.  And I’m taking to redistribution because that’s the case where I think the economic argument is weakest and that in many other issues in the simplest sense, the things we are opposing are bad for all concerned.

00:13:16

There is, for instance, a rather elegant argument on the subject of freedom of contract, which shows that if you make laws making it illegal for landlords to write lease contracts in which the tenant can be thrown out on a week’s notice, the consequences to make both landlords and tenants worse off.  And this is often, although, of course, not always, true about interferences in the free market.  So that I would argue that we don’t have to argue about what we ought to want because, first, what people actually do want, although not identical, is fairly similar across people.

00:13:58

And second, because our economic arguments are strong enough that the same system, which maximizes freedom also fortunately, maximizes happiness or utility or any of quite a number of other things or comes very close to it.  And we can therefore argue essentially pick your objective.  There are certainly hypothetical objectives that capitalism is not best for, making people poor, for example.  But that over any reasonable objectives, ones that say we’ll cover 98% of the world’s population, we can demonstrate that our system is the one to produce those objectives.

00:14:35

Now, I think it’s fortunate that our economic position is so strong because, unfortunately, our philosophic position is very weak, much weaker than we wish it were.  And I think one way of seeing that is to look at the position that we are, I think, often in, and I think often unjustly in.  You’re arguing with a socialist, and the socialist—or, for that matter, a conservative.  In fact, maybe the conservative is a better case.  And the conservative says we need a draft, and you say, no, no.  The draft is slavery.  And he says, yes, but we need it to defend ourselves, and you demonstrate to them that we don’t need it to defend ourselves.

00:15:14

And you then say the reason that he is in favor of a draft and I’m not is because he is a wicked man who doesn’t mind slavery.  And before you say that, you want to ask yourself if you agreed with him about the positive questions, about the economic questions, if your only disagreement were moral, would you still be that sure you are against the draft?  If you really believed, as you don’t, that without a draft, the Russians would conquer us, and we’d all be slaves, you might start trying to figure out some libertarian excuses for a draft.

00:15:48

In general, I think, that we put ourselves in the false position—let me go back to arguing with socialists for a moment, where the socialist really honestly believes that capitalism won’t work, that it will lead to enormous inequalities, to misery, to great depressions, to bread lines, to dictatorship, and all sorts of horrible things.  And he also believes socialism will work.  And we say to him, you’re an immoral person.  As a matter of principle, I’m against socialism, and I would be against it even if you were right.

00:16:21

Now, that’s usually a lie.  Usually, the reason we’re willing to say that is that we’re sure he’s wrong.  And if he says to us, yeah, but just suppose for a minute that you believed that capitalism led to these horrible things, then I think we would be in a much harder position.  And I’ll give you some evidence, and the evidence I’ll give you is that there are places where a straightforward application of what we believe to be libertarian principles does lead to horrible results.  And the result is that none of us believe in them, and we think up complicated excuses for not believing in them.

00:16:53

I’ll be talking more about that I think tomorrow or Sunday or whenever I’m giving a speech, but the simplest example is that we like to say that you cannot trespass on a person’s land without his permission, however small a trespass is, that it should be up to him to decide whether you’re injuring him, not up to you.  Every time I light a match, photons from that match are trespassing on property for 100 miles around.  Every time I light a match, little bits of soot are trespassing on land for 20 miles around.

00:17:29

And therefore, if we really took seriously sort of a lot of the simple a prioristic arguments that we sometimes like to make in order to prove things we do believe are true, if we took those things seriously, we would conclude that you couldn’t light a match without permission from every landowner within sight.  Every landowner with a sufficiently powerful telescope would see your match, thus demonstrating your photons are trespassing on his property.  We don’t believe that.  When these simple, hard, and fast arguments lead to conclusions we don’t like, somehow we ignore them.

00:18:03

And I suggest that that is a good reason why, instead of saying to the socialist the reason you ought to agree with us is we’re morally right, we ought to say to him the reason you ought to agree with us is that your system leads to results you wouldn’t like.  And we can give you quite a lot of evidence for that, both empirical and theoretical.  And our system leads to results you would like, and therefore, you should be in favor of our system.

00:18:29

Now, having said that, I don’t want to argue that there is no place for philosophy.  There are two places for philosophy.  One of them is that the philosophers should work at doing a better job than I, from my biased position, believe they have so far done in giving coherent, clear, persuasive explanations of oughts.  And maybe then eventually we will all agree on that.  Maybe that will help a little.

00:18:58

Second, the philosophers can and do serve a useful defensive function in trying to make people willing to consider our ideas by making it plausible that what we want is morally attractive as well as functional, and that what they thought they wanted is morally unattractive as well as nonfunctional, and that, I think, is a useful and valuable function, and I’ve got seven seconds left.  So it’s George’s turn.

00:19:25

 

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