In order to get clear on the topic in a conversation about Free Market Anti-Capitalism, the obvious points where clarification may be needed are going to be the meaning of capitalism, the meaning of markets, and the meaning of freedom in the market context. We left-libertarians have spent a lot of time, and raised a lot of controversy talking about the first topic — whether capitalism is really a good name for the sort of thing that we want, the importance of distinguishing markets from actually-existing capitalism, and the possibility of disentangling multiple senses of capitalism. [ ] There’s been a lot of argument about that, but here I’m happy to just defer to what my fellow panelists and other left-libertarians have already said. What I’d like to focus on is the less frequently discussed side of our distinction — not the meaning of capitalism, but the different strands of meaning within the term market. As absolutely central as this idea is to libertarian economics, I would argue that there are at least two importantly distinct senses in which the term is used:

Markets as free exchange — when libertarians talk about markets, or especially about the market, we often mean to pick out the sum of all voluntary exchanges — any economic order based, to the extent that it is based, on respect for individual property, consensual exchange, freedom of association, and the freedom to engage in entrepreneurial discovery. Markets as the cash nexus — but we often also use the term in a different sense — to refer to a particular form of acquiring and exchanging property — that is, to refer to commerce and quid pro quo exchanges, typically mediated by currency or by financial instruments denominated in units of currency.

Of course, one of the central points of libertarian economics is that these two senses are interrelated: when they takes place within the context of a system of free exchange, social relationships based on the cash nexus – producing, buying, and selling at market prices, saving money for future use, investing money in productive enterprises, and the like are positive, even essential features of a flourishing society.

But while linked, they are conceptually distinguishable, and it’s important to see, first, that markets in the first sense (the sum of all voluntary exchanges) include the cash nexus – but also much more than the cash nexus. Family sharing is part of a free market; charity is part of a free market; gifts are part of a free market; informal exchange and barter are part of a free market. Wage labor (renting labor in return for cash), rent, corporate jobs, corporate insurance and the like can be part of a free market, but so are alternative arrangements – including many arrangements that clearly have nothing to do with capitalism 3 , and fit awkwardly, at best, with any conventional usage of the term capitalism: worker co-ops and consumer co-ops are part of the market; grassroots mutual aid associations and community free clinics are part of the market; so are voluntary labor unions (based on free association and the right to protest or quit), consensual communes, narrower or broader experiments with gift economies, and other alternatives to the prevailing corporate-capitalist status quo. To focus on the specific act of exchange may even be a bit misleading; it might be more suggestive, and less misleading, to describe a fully free market, in this sense, as the space of maximal consensually-sustained social experimentation.

The question, then, is whether, when people are free to experiment with any and every peaceful means of making a living, the sort of mutualistic alternatives that I’ve mentioned might take on an increased role in the economy, or whether the prevailing capitalistic forms would continue to predominate as they currently do. To be sure, the capitalistic arrangements predominate now – but that, of course, is no reason to conclude that the market has spoken. It would be enough if the predominance of capitalistic arrangements were the product of revealed preferences in a free market; but since we don’t have at present have a free market, it will, at the very least, take some further investigation – in order to determine whether those capitalistic alternatives prevail in spite of the unfreedom of actually-existing markets, or if they prevail, in part, because of that unfreedom.

Which brings us to the market as cash nexus. It is important here to see not only that the cash nexus doesn’t exhaust the forms of voluntary exchange and economic experimentation that might emerge within a freed market, but also that a cash nexus may exist, and may be expansive and important to economic life, whether or not it operates under conditions of individual freedom. Markets in our first, voluntary-exchange sense exist only where people really are free to produce and exchange – free market, in the voluntary-exchange sense of market, is really a tautology. But a market in the cash-nexus sense may be either free or unfree; cash exchanges are still cash exchanges, whether they are regulated, restricted, subsidized, taxed, mandated, or otherwise constrained by government action.

When free marketeers turn from the formal discussion of voluntary exchange, toward a substantive discussion of actually-existing economic relationships and financial arrangements, our analysis has to discuss more than just limitations on market activity. We often speak of market exchange and government allocation as cleanly separate spheres, as if they were two balloons, set one next to the other, in a closed box, so that when you blow one of them up, the other has to shrink to the same extent. That’s true enough about markets as social experimentation, but the relationship between cash-nexus exchange and government allocation is really more like two plants growing next to each other. When one gets bigger, it may overshadow the other, and stunt its growth. But they also climb each other, shape each other, and each may even cause some parts of the other plant to grow far more than if they had not had the support.

Any discussion of the cash nexus in the real world, then, needs to take account not only of the ways in which government limits or prohibits market activity, but also the ways in which government, rather than erasing markets, creates new rigged markets – points of exchange, cash nexuses which would be smaller, or less important, or radically different in character, or simply would not exist at all, but for the intervention of the state.

Thus, the social and economic value of the cash nexus, as a social relationship, depends entirely on the context. Kinds of interaction that are positive and productive in the context of free exchange easily become instruments of alienation and exploitation when they are forced on unwilling participants, in areas of their life where they don’t need or want them, through coercive government. The growth of markets as spaces for social experimentation is always a liberating development — but these social experiments may be mediated by the cash-nexus, or may be mediated by entirely different social relationships. The growth of markets as cash-nexus exchanges, on the other hand, may be liberating or violating, depending on whether those relationships come about through the free interplay of social forces, or through the direct or indirect ripple-effects of government force and the coercive creation of rigged markets.

I’ll be turning to the analysis of that context, and the way that free market anticapitalists apply it to the real-world business-as-usual, in the next instalment.