Class Conflict, the Jacksonians, and Exploitation

Class Conflict, the Jacksonians, and exploitation by Ryan MacMacon.

In a free market-based economy, there is no conflict

between different industries, economic interests,

or sectors of the economy.

There is no class conflict, as Marx imagined it,

because thanks to the division of labor, voluntary trade,

and competition reward consumers, producers, and asset

owners alike.

This is what Ludwig von Meises called

the Harmony of Interests.

In the presence of the state, however, things are different.

There is always class conflict as different groups

jockey with each other to gain the favor of state agents.

In this context, each interest group

understands that the state is a lucrative tool

for exploiting other groups through regulation, taxation,

and inflation.

This divides societies into two groups.

The class of exploiters allied with the state are on one side.

On the other side are the exploited classes,

the productive workers and capitalists

whose output is stolen and redistributed by the regime.

The coercive power of the state

ensures there will always be this conflict between those

who subsist through production on the one hand

and the parasitic state allied groups on the other hand.

This view of the state and economic interests

stands in stark contrast to the view of pluralism,

which was popularized in the 20th century

and presents politics as more of a benign process

of political compromises between interest groups

and which leads to a more representative democratic process.

The 19th century liberals had it right, though,

as Frederick Bastia stated.

The political system is a system of legal plunder and spoliation

and resembles more a zero-sum game

than a process of benevolent compromise.

We would do well to reconsider many of the trenchant observations

of the earlier exploitation theorists who.

It was these radical anti-state liberals

who by identifying the true nature of the state

did much to limit the growth of regime even into the 20th century.

Class conflict, true and false.

In the Marxian view of class conflict,

property owners and workers are necessarily in conflict.

That is, since capitalist employers exploit a portion

of the workers' output,

there is a natural state of conflict between the two groups.

This, we are told, is inherent to the economic system itself.

The shortcomings of this theory were described in detail

by Yugen Bohm-Bawerk in his devastating analysis,

devastating for Marxism,

on labor and exploitation found in Karl Marx

and the clothes of his system.

Nonetheless, the general idea of inescapable conflict

between economic classes has persisted.

This, however, is not at all an essential part

of economic production in modern economies.

Ludwig von Meises shows this in human action

in his discussion on the division of labor.

Meises writes,

what makes friendly relations between human beings possible

is the higher productivity of the division of labor.

It removes the natural conflict of interests.

For where there is division of labor,

there is no longer question of the distribution of a supply

that is not capable of enlargement.

Thanks to the higher productivity of labor

performed under the division of tasks,

the supply of goods multiplies,

a pre-eminent common interest.

The preservation and further intensification

of social cooperation becomes paramount

and obliterates all essential collisions.

The fact that my fellowman wants to acquire shoes as I do

does not make it harder for me to get shoes but easier.

What enhances the price of shoes is the fact

that nature does not provide a more ample supply of leather

and other raw material required,

and that one must submit to the disutility of labor

in order to transform these raw materials into shoes.

The catalactic competition of those who, like me,

are eager to have shoes make shoes cheaper,

not more expensive.

In other words, the natural tendency in modern competitive economies

is to produce more goods in lower prices,

and this benefits all market participants

when markets are allowed to function.

One states enter into the equation, however.

Various economic interests set to work

enhancing state agents to intervene in the economy

so as to limit competition

and subsequently raise prices for those groups

that gain the state's favor.

These economic interests, however,

cannot be broken down along the same lines

as they are in Marxian theories

and similar Marx-influenced ideologies.

This is why Murray Rothbard notes

because of the harmony of interests of different groups

on the free market, for example, merchants and farmers,

and be the lack of homogeneity among the interests

of members of any one social class,

it is fallacious to employ such terms

as class interests or class conflict

in discussing the market economy.

It is only in relation to state action

that the interests of different men

become welded into classes.

For state action must always privilege one or more groups

and discriminate against others.

The homogeneity emerges from the intervention

of the government in society.

We cannot say that property owners

are necessarily in conflict with wage workers

in any economic sense.

Once the political system begins its work

of exploitation, however,

we can say that some social classes,

the classes that benefit from state exploitation,

are in conflict with others.

It is in this conflict that we must read the work

of the classical liberals,

Jeffersonians and Jacksonians

who described conflicts between farmers,

merchants, industrialists, bankers, and workers.

This type of class conflict originates

with the state

and not with private property or free markets.

The conflict does not arise

because of the nature of banking or industry

or farming in and of themselves.

Rather, the conflict arises

because generally speaking,

banking has tended to be an industry

that lobbies for state intervention

and which succeeds in doing so

at the expense of others.

The Jeffersonians and Jacksonians.

This was the view of one of the earliest American

political economists, John Taylor of Caroline.

Taylor, like Bastia, 20 years later,

saw governments as tools of legal plunder

and sought to identify how some groups

used the power of the state to exploit other groups.

Taylor broke this up into a dichotomy

of small enterprise, artisans, farmers,

and small merchants,

against the financiers, banks,

and large manufacturers

who lobbied for protectionism

and monetary inflation.

Taylor was also an early critic

of the American Central Bank

viewing it as a tool

against true market competition

and private property.

Perhaps his sharpest rebukes

of the class conflict created by state power

can be found in his 1822 essay,

Tyranny Unmasked.

In it, Taylor lays out how government power

is employed as an enormous wealth transfer scheme.

He describes how the productive classes

of farmers and petite bourgeois property owners,

which he here calls labor,

but not in a Marxist sense,

are the victims of the privileged classes

that enjoy the benefits of government protection.

No species of property transferring policy

past or existing, foreign or domestic

ever did or ever can enrich the laboring classes

of any society, whatever,

it universally impoverishes them.

To this fact, not a single exception

appears in the whole history of mankind.

What then can be more absurd

than that the agricultural

and mechanical classes

or either of them should conceive

that they will be benefited

by such a policy.

The mercantile class, as merchants only,

must be impoverished by this policy.

But a few individuals of this class,

more frequently evade its oppression

than of other laboring classes

by blending the capitalist

with the mercantile character

and becoming bankers

lenders to government or factory owners.

So far also as the agricultural

and mechanical classes

are interspersed with individuals

endowed with pecuniary privileges.

Such individuals derive a monument

from the property transferring policy,

not as mechanics or agriculturists,

but in their privileged characters.

Those who gain more by banking,

by the protecting duty monopoly,

or by loaning to the government,

then they lose by these property transferring machines,

constitute no exception to the fact

that the property transferring policy invariably

impoverishes all laboring

and productive classes.

Here we find the basic foundation

of what would become

the Jacksonian view of class conflict

throughout the 19th century.

This class conflict focused on two areas,

protectionism and the central bank.

Both reviewed as tools for subsidizing

and protecting the interests of large finance years

and manufacturing interests.

In the political arena,

this state-fueled class conflict

was expressed by the Jacksonians

as support for certain social classes.

As summarized by historian Sean Wylands,

Jackson himself focused especially

on disestablishing the central bank

and he described the bank war

in the broadest way as a struggle

of virtuous farmers and mechanics

against corrupt financier aristocrats.

He provided a common ground

on which entrepreneurs seeking more banks

or an end to legislative control over banking

could unite with wage earners

and small producers

who sought to abolish banks

or to remove bank control of the currency.

Again, though, it is important to note

that the opposition to bankers

and financiers was grounded

on the fact that the banker financier sector

was so often found to be in support

of government allied banking.

A truly free market could provide

a fair and level playing field

so long as government favors were not at play

and different economic interests

were equal in terms of law and policy.

The presence of protectionism

and central banking destroyed this equality.

John Ashworth describes the Jacksonian opposition

to the banks as means of creating

artificial political and economic inequality.

A still more glaring evil

than the protective tariff was the banking system.

For the banking system violated

Jacksonian conceptions of equality at every turn.

The power of certain banks

to determine who qualified for credit

and by printing money to set the price level

within the economy was a clear violation

of the equality of power.

The an cycle of boom and contraction

which followed from the bank's ability

to print notes which did not have adequate

species backing threatened to destroy

the equality of conditions.

For at the end of every cycle,

the chasm between rich and poor

is wider and deeper.

In an inflated economy,

the prospects of sudden windfall gains

would seduce individuals away

from honest industry

and introspective enterprises.

The large gains or losses

which would follow would create

unacceptable inequalities within society.

It is interesting that here we find a description

of central banking

that would sound very familiar

to the Austrian school economists

of later generations

complete with condemnations

of credit-fueled male investment

and the boom bus cycle.

Certainly the neat and tidy division

of economic interests

into the financial sector on one hand

and farmers and artisans on the other

is too crude to be fully accurate.

But within the context of political debate,

broad generalizations are sometimes necessary.

The problem at the core

of these class designations

was not in the economic system

but in the political system.

The goal was not to abolish bankers

or manufacturers,

but to force them out of their cosy relationship

with the state.

This opposition to government favors

is what made the Democratic Party,

the Party of the Jeffersonians

and Jacksonians into the laissez-faire party

in this period,

or as described by

Graham Summoner,

late in the 19th century.

The Democratic Party was for a generation

by tradition,

a party of hard money,

free trade,

the non-interference theory

of government,

and no special legislation.

Rothbard put it this way,

the Jacksonians were libertarians,

plain and simple.

Their program and ideology

were libertarian.

They strongly favored free enterprise

and free markets,

but they just as strongly opposed

special subsidies

and monopoly privileges conveyed

by government to business

or to any other group.

The Jacksonian laissez-faire position

continued well

into the late 19th century,

and we find Grover Cleveland

in his 1893 inaugural address

making a statement

against what we would call

corporate welfare today.

Cleveland announced the principle

that the functions

of the federal government

should include the support

of the people,

by which he meant the welfare state

for pensioners

and also subsidies

for big business.

He stated that once we refused

to exploit the taxpayers

to support certain political interests,

this leads to a refusal

of bounties and subsidies,

which burden the labor

and thrift of a portion of our citizens

to aid ill-advised

or languishing enterprises

in which they have no stake.

These languishing enterprises

were the politically favored,

large corporate interests

that Cleveland believed

could not survive

in a truly competitive market,

but relied on protectionism

and other anti-competitive measures

to stay afloat.

Nor can we say this view

was even peculiar

to the American backers

of laissez-faire,

everywhere that the old classical

liberalism still held sway

at the dawn of the 20th century.

Opposition to plutocracy

in the form of protectionism

and central banking was common.

Thus, in 1912,

Gustave de Molinari,

the grand old man of radical liberalism,

libertarianism, in Europe,

effectively agreed with Cleveland

and the Jacksonians writing,

in America,

the Civil War,

which had ruined the defeated provinces,

led to a resurgence of protectionism

in the northern provinces

and among the victorious industrials

of the East,

resulting in the trust system

and the creation of billionaires.

As much as the free traders

have faith in the usefulness

of your competition

and strive to extend it,

the protection is treated

as an enemy and work actively

to prohibit it.

After having confined themselves

to prohibiting external competition,

they are now striving

to suppress inferior competition,

and for this purpose,

they are setting up trust

in the United States

in Germany, cartels.

Note the concern

over the creation of billionaires,

which Molinari viewed

as a byproduct of state intervention.

In this,

Molinari echoes his contemporary

and fellow radical,

William Graham Sumner,

who gave us the terms

plutocrat and plutocracy.

When the ultra-rich

campaigned by central banks

or special favors found

in tax policy,

this is not a sign

of economic progress,

but of economic regression

back to the days

of mercantilism

and absolutism.

In all this,

we find what could

de-described as a darker view

of politics

to which modern-day Americans

are not accustomed.

In the view espoused by

Taylor and Sumner

and the Jacksonians,

intervention in the market

is exploitation

pure and simple,

who gets exploited

depends on which group

is victimized

by government policy.

The point, however,

is that there is a class

of victims

just as there is a class

of those who benefit

from the state's coercive power.

Pluralism

versus exploitation.

During the 20th century, however,

these liberal insights

on the true nature

of state-fueled exploitation

were eclipsed

by a more naïve view

of politics called pluralism.

Pluralism holds

that diverse interest groups

compete for voice

within a democratic

political system,

and this participation

by various interests

leads to more

representative governance.

In this way of thinking,

repetition among interests

does not lead to exploitation,

but to broader representation.

Pluralists often tend

to insist that a balanced

and fair political system

can be achieved

through political compromise,

negotiation, and bargaining.

Moreover, pluralism tells

that the process ensures

that no single interest

can dominate the political system

without cooperation

from a broad spectrum of society.

And finally, pluralism holds

that the state itself

is merely a neutral third party

that seeks to balance

various interests

and ensure peaceful negotiation.

In this view,

there is no ruling elite

with its own agenda.

This happy-go-lucky

pie-in-the-sky view

of the political process

still popular among

high school social studies teachers,

and US-focused political scientists,

helped to pave the way

for unprecedented expansion

of state power

in the 20th century.

Out was the old idea

that state power is coercive

and exploitive.

In was a new pluralist view

of participation and inclusion,

with pluralism

as a foundation

of their political education,

American voters were easily hoodwinked

into believing

that no matter the political problem

at hand, compromise

and political participation

could lead to an agreeable

and fair solution for all.

The old theorists of exploitation,

where they are around today,

would not be so easily fooled.

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