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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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