The Subsidy of History

BY KEVIN CARSON

considerable number of libertarian commenta- and then that Jones came along and settled down tors have remarked on the sheer scale of subsi- near Smith, claiming by use of coercion the title to Adies and protections to big business, on their Smith’s land, and extracting payment or “rent” from structural importance to the existing form of corporate Smith for the privilege of continuing to till the soil. capitalism, and on the close intermeshing of corporate Suppose that now, centuries later, Smith’s descen- and state interests in the present state capitalist econ- dants (or, for that matter, other unrelated families) omy.We pay less attention, however, to the role of past are now tilling the soil, while Jones’s descendants, or state coercion, in previous centuries, in laying the struc- those who purchased their claims, still continue to tural foundations of the present system. The extent to exact tribute from the modern tillers. Where is the which present-day concentrations of wealth and corpo- true property right in such a case? It should be clear rate power are the legacy of past injus- that here . . . we have a case of con- tice, I call the subsidy of history. The extent to tinuing aggression against the true The first and probably the most owners—the true possessors—of the important subsidy of history is land which present-day land, the tillers, or peasants, by the theft, by which peasant majorities were illegitimate owner, the man whose deprived of their just property rights concentrations of original and continuing claim to the and turned into tenants forced to pay wealth and corporate land and its fruits has come from rent based on the artificial “property” coercion and violence. Just as the titles of state-privileged elites. power are the legacy original Jones was a continuing Of course, all such artificial titles not of past injustice, I call aggressor against the original Smith, founded on appropriation by individual so the modern peasants are being labor are completely illegitimate. the subsidy of history. aggressed against by the modern As Ludwig von Mises pointed out holder of the Jones-derived land in Socialism, the normal functioning of the market never title. In this case of what we might call “feudalism” results in a state of affairs in which most of the land of or “land monopoly,” the feudal or monopolist land- a country is “owned” by a tiny class of absentee land- lords have no legitimate claim to the property.The lords and the peasant majority pay rent for the land current “tenants,”or peasants, should be the absolute they work.Wherever it is found, it is the result of past owners of their property, and, as in the case of slav- coercion and robbery. ery, the land titles should be transferred to the peas- Murray Rothbard, in The Ethics of Liberty, explained ants, without compensation to the monopoly the injustice of feudal landlordism: landlords.

Kevin Carson ([email protected]) is the author of Studies in But suppose that centuries ago, Smith was tilling Mutualist Political Economy. He blogs at Mutualist Blog: Free Market the soil and therefore legitimately owning the land; Anti-Capitalism.

33 JUNE 2008 Kevin Carson

So rather than defending all existing land titles in by the commons as a threat, first to an adequate supply the name of the “sanctity of property” and protesting of agricultural wage labor on the landed oligarchy’s when some left-wing government institutes a land own land, and later to an adequate supply of factory reform that transfers feudal land titles to the peasantry, labor willing to work the long hours and low pay Rothbard favored 1) dividing up Southern plantations demanded by the owners.The literature of the proper- and giving freed American slaves “forty acres and a tied classes of the time was quite explicit on their moti- mule,” and 2) transferring the latifundia from Latin vation: the laboring classes would not work hard American landed oligarchies to the peasants. enough or cheaply enough so long as they had inde- In the Old World, especially Britain (where the pendent access to the means of subsistence. They had Industrial Revolution began), the expropriation of the to be made as poor and hungry as possible so that they peasant majority by a politically dominant landed oli- would be willing to accept work on whatever terms it garchy took place over several centuries in the late was offered. medieval and early modern period. It began with the A version of the same phenomenon took place in enclosure of the open fields in the late Middle Ages. the Third World. In European colonies where a large Under the Tudors, Church fiefdoms (especially monas- native peasantry already lived, states sometimes granted tic lands) were expropriated by the state and distributed quasi-feudal titles to landed elites to collect rent from among the landed aristocracy. The new those already living on and culti- “owners” evicted or rack-rented the vating the land; a good example peasants. In the Old World, the is latifundismo, which prevails in expropriation of the Latin America to the present day. Expropriating from the Peasantry Another example is British East he Restoration Parliament of the peasant majority by a Africa.The most fertile 20 percent Tseventeenth century carried out a of Kenya was stolen by the colonial series of land “reforms” that abolished politically dominant authorities, and the native peas- feudal land tenure altogether—but only landed oligarchy took antry evicted, so the land could be upward. There were two ways Parlia- used for cash-crop farming by ment could have abolished feudalism place over several white settlers (using the labor of and reformed property. It might have centuries. the evicted peasantry, of course, to treated the customary possessive rights work their own former land). As of the peasantry as genuine title to prop- for those who remained on their erty in the modern sense, and then abolished their own land, they were “encouraged” to enter the wage- rents. But what it actually did, instead, was to treat the labor market by a stiff poll tax that had to be paid in artificial “property rights” of the landed aristocracy, in cash. Multiply these examples by a hundred and you get feudal legal theory, as real property rights in the mod- a bare hint of the sheer scale of robbery over the past ern sense; the landed classes were given full legal title, 500 years. and the peasants were transformed into tenants at will Contrary to Mises’s rosy version of the Industrial with no customary restriction on the rents that could Revolution in Human Action, factory owners were not be charged. The most important component of this innocent in all of this. Mises claimed that the capital “reform” was the Statute of Frauds of 1677, which nul- investments on which the factory system was built lified rights of copyhold by making them unenforce- came largely from hard-working and thrifty workmen able in royal courts. who saved their own earnings as investment capital. In Finally, the Parliamentary Enclosures of the eigh- fact, however, they were junior partners of the landed teenth and early nineteenth century robbed the peas- elites, with much of their investment capital coming antry of their rights of common.The propertied classes either from the Whig landed oligarchy or from the of England saw the economic independence provided overseas fruits of mercantilism, slavery, and colonialism.

THE FREEMAN: Ideas on Liberty 34 The Subsidy of History

In addition, factory employers depended on harsh barter among the unemployed, or the societies’ benefits authoritarian measures by the government to keep labor cross the line and function as de facto unemployment under control and reduce its bargaining power. In Eng- insurance for striking workers. The Corresponding land the Laws of Settlement acted as a sort of internal Societies Act, passed around the same time, prohibited passport system, preventing workers from traveling out- all societies that administered secret oaths or were fed- side the parish of their birth without government per- erated on a national scale. mission. Thus workers were prevented from “voting So the Industrial Revolution was, in fact, built on a with their feet” in search of better-paying jobs. You system of legal peonage in which employers were might think this would have worked to the disadvantage directly implicated. The form taken by the factory sys- of employers in underpopulated areas, like Manchester tem surely reflects this history.In a Britain composed of and other areas of the industrial north. But never fear: peasant smallholders, with no restraints on free associa- the state came to the employers’ rescue. Because work- tion, workers would have been free to mobilize their ers were forbidden to migrate on their own in search of own properties as capital through mutual credit institu- better pay, employers were freed from tions. Absentee ownership and hier- the necessity of offering high enough archy would likely have been far, far wages to attract free agents; instead, In a Britain less prevalent, and the factory system they were able to “hire” workers auc- composed of peasant where it existed far less oppressive tioned off by the parish Poor Law and authoritarian. authorities on terms set by collusion smallholders, with no A similar process occurred in the between the authorities and employers. restraints on free colonization of settler societies like America and Australia, by which the Legalized Discrimination association, workers colonial powers and their landed Against Laborers would have been free elites attempted to replicate feudal he Combination Laws, which patterns of property ownership. In Tprevented workers from freely to mobilize their own such colonies, the state preempted associating to bargain with employers, ownership of vacant land and were enforced entirely by administra- properties as capital restricted working people’s access to tive law without any protections of through mutual credit it. Sometimes they gave title to common-law due process. And they vacant land to privileged land specu- were only enforced against combina- institutions. lators, who were able to charge rent tion by workers, not against com- to those who homesteaded it (the bination by employers (such as blacklisting “trouble- legitimate owners). makers” and collusive setting of wages). The Riot Act E. G.Wakefield, an early nineteenth-century British (1714) and other police-state legislation during the theorist of colonialism, advocated just such preemption Napoleonic Wars were used to stem the threat of on the same grounds that the propertied and employing domestic revolution, essentially turning the English classes of Britain had supported Enclosure: it was easier working class into an occupied enemy population. Such to hire labor on favorable terms to the employer. In legislation criminalized most forms of association. England and America, he wrote: Even fraternal associations for mutual aid, burial and sick benefits, and the like operated in the face of hostil- In colonies, labourers for hire are scarce. The ity from the state, according to historians of the scarcity of labourers for hire is the universal com- friendly-society movement such as Bob James and plaint of colonies. It is the one cause, both of the Peter Gray. Under the terms of the Combination Act, high wages which put the colonial labourer at his friendly societies were subjected to close judicial super- ease, and of the exorbitant wages which sometimes vision lest direct craft production be organized for harass the capitalist. . . .

35 JUNE 2008 Kevin Carson

Where land is cheap and all men are free, where free homesteading. In addition, in cases where current every one who so pleases can obtain a piece of land mortgage holders and landlords trace their title to state for himself, not only is labour very dear, as respects grants of land, the proper claim lies with those who first the labourers’ share of the product, but the difficulty homesteaded the land, or their heirs and assigns. is to obtain combined labour at any price. The Homestead Act of 1862, an apparent exception to this general trend, was really just another illustration Consequently,“[f]ew, even of those whose lives are of it. The majority of land, rather than being claimed unusually long, can accumulate great masses of wealth.” under the terms of the Homestead Act, was auctioned Wakefield’s disciple, Thomas Merivale, wrote of the to the highest bidder. Even for land covered by the Act, “urgent desire for cheaper and more subservient according to Howard Zinn, the $200 fee was beyond labourers—for a class to whom the capitalist might dic- the reach of many. As a result, much of the land was not tate terms, instead of being dictated to by them.” homesteaded on Lockean principles at all, but initially Land preemption was a major element of colonial went to speculators before being partitioned and resold policy in early American history. Gary Nash, in Class to homesteaders. And compared to the 50 million acres and Society in Early America, described land grants in covered by homestead legislation, 100 million acres colonial America comparable to those of William I in were given away as railroad land grants during the England after the Conquest. In New York, for example, Civil War—free of charge! In other words, the privi- the largest estates granted by the leged classes got the gravy, and ordi- British colonial administration (after Once the system was nary homesteaders got the bone. the New Netherlands was acquired in the Dutch Wars) ranged from the up and running, it Keeping the System Going hundreds of thousands to over a mil- depended on the hat I have described here are lion acres. Governors continued to Wonly the initial acts of coercion grant tracts of land in the hundreds of state’s ongoing efforts and robbery on which our existing thousands of acres to their favorites, form of industrial capitalism was well into the eighteenth century. to maintain a legal founded. Of course it didn’t stop there. Under Governor Fletcher, some structure of privilege. Once the system was up and running, three-quarters of available land was it depended on the state’s ongoing granted to 30 persons. efforts to maintain a legal structure of Albert Jay Nock, in Our Enemy,the State, argued that privilege, based on artificial property rights and artifi- “from the time of the first colonial settlement to the cial scarcity: enforcement of absentee titles to vacant present day,America has been regarded as a practically and unimproved land; entry barriers for the banking limitless field for speculation in rental values.” Many industry to make credit artificially expensive and scarce; leading figures in the late colonial and early republican the artificial property rights of patent and copyright; period were prominent investors in the great land com- and more. And starting in the late nineteenth century panies, including George Washington in the Ohio, Mis- the modern form of corporate capitalism depended on sissippi, and Potomac Companies; Patrick Henry in the even more massive state intervention: subsidies to long- Yazoo Company; Benjamin Franklin in the Vandalia distance shipping to make market areas and firm size Company, and so forth. artificially large; the cartelizing effects of patents and In The Ethics of Liberty Rothbard condemned such tariffs; regulatory cartelization; and entire industries and preemption (“land-engrossing, where arbitrary claims sectors of the economy either brought into existence or to virgin land are used to keep first-transformers out of guaranteed a taxpayer-funded market by the post-1941 that land”) on the same grounds that he criticized feu- perpetual war economy. dal landlordism. He called for voiding all current titles Contrary to popular mythology, the New Deal was to vacant and unimproved land, and opening it up to not a departure from some preexisting idyllic state of

THE FREEMAN: Ideas on Liberty 36 The Subsidy of History

“laissez faire.” There never was anything remotely From a libertarian ethical standpoint, the standard approaching laissez faire. Capitalism—that is, the exist- model of “privatization” (selling off state property to a ing historical system as it actually developed—has had large, politically connected private corporation, on very little to do with free markets and a great deal to do terms most advantageous to the corporation) is there- with robbery and coercion. fore highly dubious. That’s especially true considering This is not to say that all avenues to economic that much of the property was created in the first advancement through independent entrepreneurship place—at taxpayer expense—for the primary purpose have been closed off. But it’s much more of an uphill of subsidizing the operating costs of big business. Much struggle than it would be in a free market, and the field of the state-owned utility and transportation infrastruc- is unfairly tilted in favor of the big players. ture in the Third World was created, at the behest of In seeking to institute a genuine free market, liber- transnational financial elites, as a precondition for prof- tarians shouldn’t lose sight of these facts. What lessons itable Western capital investment. And the odious debt are libertarians to learn from the previous historical thus incurred, often by corrupt dictatorships acting in account? collusion with global finance, is then used by the World First, there is nothing “libertarian” Bank to blackmail those countries about the instinctive tendency to rally into selling off their infrastructure to to the defense of existing property Rothbard’s model of the very same transnational corpora- titles without regard to justice. As privatization is far tions it was created to benefit—usu- Karl Hess said in The Libertarian ally at pennies on the dollar. Forum, back in 1969, superior: to void state An Appropriate Model for [L]ibertarianism wants to titles to property and Privatization advance principles of property but treat it as unowned, othbard’s model of privatization . . . it in no way wishes to defend Ris far superior: to void state titles . . . all property which now is subject to immediate to property and treat it as unowned, called private. homesteading by subject to immediate homesteading Much of that property is stolen. by those actually mixing their labor Much is of dubious title. All of those actually mixing with it. That would mean that state it is deeply intertwined with an their labor with it. universities would be transformed immoral, coercive state system into the property of their students or which has condoned, built on, and faculty, as consumer or producer profited from slavery; has expanded through and cooperatives. Government-owned utilities would exploited a brutal and aggressive imperial and colo- become consumer cooperatives owned by ratepayers, nial foreign policy, and continues to hold the people and state-owned factories would be handed over to the in a roughly serf-master relationship to political- work force and reorganized as worker cooperatives. economic power concentrations. We must also be wary of pseudo-Coasean arguments that it “doesn’t matter” who the property was originally Second, in advocating free-market reform, we must stolen from, because it will end up in the hands of the consider the role of this historical legacy of injustice “most efficient” owner.That’s essentially the same argu- (the subsidy of history) in determining the winners ment used for eminent domain. Regardless of whose under the present system. A “free-market reform” that hands the property winds up in, the rightful owners simply locks in the beneficiaries of past robbery and and their descendants—who never received compensa- privilege, and ratifies the past theft from which they tion—are out the value of what was stolen from them. benefit, will merely reward injustice and secure its ill- And even the most inefficient ways of organizing pro- gotten gains. duction are pretty “efficient,” comparatively speaking,

37 JUNE 2008 Kevin Carson when you have the competitive advantage of working doubt find it far more “efficient” to be feeding himself with stolen property. on his own land, than starving in a shantytown because Besides, there is no such thing as generic “effi- he can’t afford to buy even the cheapest food from those ciency”; efficiency depends on the owner’s purpose. “efficient” plantations occupying his stolen land. The most efficient technique for subsistence farming on The actual system of political economy that so many a small plot—economizing on land by building soil and corporate apologists refer to as “our free market sys- adding intensive labor inputs—is entirely different from tem” has in fact been characterized from the beginning that for a feudal oligarch producing cash crops with by robbery.We must beware of “free market reforms” access to more stolen land than he could possibly use, carried out by the robbers. They amount in practice and often holding a majority of his stolen land out of to allowing the robbers—hands still full of loot—to say: use altogether. In any case, the rightful owner would no “All right, no more stealing, starting . . . now!”

Tyranny Unmasked By John Taylor of Caroline Edited by F. Thornton Miller

In keeping with his lifelong mission as a “minority man,” John Tay- lor wrote Tyranny Unmasked not only to assault the protective tariff and the mercantilist policies of the times but also “to examine general principles in relation to commerce, political economy, and a free gov- ernment.” Originally published in 1822, this edition was published in 1993 by Liberty Fund. As an early discussion of the principles of governmental power and their relationship to political economy and liberty, Tyranny Unmasked is an important primary source in the study of American history and political thought. As F. Thornton Miller wrote in his foreword to this edition, “[W]ith the continued increase of the power of the federal government and the pursuit of policies that benefit specific constituencies, the principles set out in Tyranny Unmasked are as relevant today as they were in 1822. Taylor admonished us to watch government, to inform the people when it encroached upon liberty and rights, and, like him, to be ready to unmask the tyrant for the public to see.”

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THE FREEMAN: Ideas on Liberty 38