Property, Labor and Equality

Martin Elson

A freed market is not today’s corporate economy minus regulations. Its defenders often concede that economy is corporatism, not a free market, then defend its holdings as if markets had earned them; stripping away its rules would leave the critics’ case standing. Much existing property and most concentrated wealth were built with state help, so libertarian principles call for contesting them, empowering workers, and opposing extreme inequality.

This is the page where I part company with most right-libertarians, and with some on the left: those who accept wage labor or don’t buy the labor theory of property (more below). With the right, the reason is simple. A rule that protects property cannot tell you whose property it is. If the titles were handed out by conquest, enclosure (the fencing-off of common land into private estates) and state favor, defending them as they stand defends the state’s past decisions under another name. Unaccountable power does not stop being power when it moves from a ministry to a balance sheet.

Possession and property

Much of the confusion starts with one word doing two jobs. Possession is what you hold because you use it: the house you live in, the tools you work with, the field you farm. Property, in the sense the anarchists attacked, is a title that lets you draw an income from other people’s use without using the thing yourself: rent from the tenant, interest from the borrower, profit from the hired worker. Proudhon called this the right of increase (droit d’aubaine). Possession ends when use ends; property doesn’t.

That is the target of the most famous line in anarchism. In What Is Property? (1840) Proudhon answered his own question: “property is theft.” Nobody is coming for your toothbrush, but if the Vermin Supreme became President it seems free toothbrushes are easier possessions than free ponies. The charge is that property in the second sense takes the common inheritance, land and resources, and then takes again, every year, from the people who work it. His second conclusion is quoted less: “property is despotism,” because whoever owns what others must use to live can rule them. It is the balance-sheet power named above, described in 1840.

The slogan has an obvious objection, and I made it myself in the first piece I wrote for this site: theft assumes property, so “property is theft” can’t be literally true. Proudhon knew. The paradox was the point: property convicted by its own standard. Later, in Theory of Property (published after his death in 1866), he went further and defended property as a counterweight to the state, provided it is spread widely. The two positions don’t cancel. Concentrated, property is rule; dispersed and close to possession, it is a defense against rule.

The right-libertarian reply is fair: where does use end? How long can a house stand empty before it is abandoned? Mutualists answer with occupancy-and-use customs settled locally rather than one rule from above, and they admit the line gets argued case by case. I would rather argue over that line than pretend absentee title draws itself. The fuller case belongs to the Economics section.

Not all “private” property is legitimate

Kevin Carson argues that right-libertarians wrongly treat privatization as selling state assets to large firms. Karl Hess warned against defending everything currently labeled private, since much of it rests on theft, dubious title or state favor. Rothbard’s own homesteading rule, in the 1969 essay quoted in “Left-Libertarianism: The Case and the Controversy,” treats state property as unowned and gives it to those who use it: students and faculty, workers, peasants.

Carson’s examples:

  • Post-communist privatization. Share auctions and insider “tunnelling” handed assets to the old nomenklatura; worker collectives could have kept their enterprises.
  • Global privatization. Debt, IMF and World Bank pressure turned sell-offs into subsidies for connected firms. John Perkins, who spent the 1970s writing inflated growth forecasts for a US consulting firm, describes the machinery from inside in Confessions of an Economic Hit Man: loans sized to be unpayable, contracts that flowed back to US engineering firms, and debt later traded for votes, bases and resources. It is a memoir, and some of its claims can’t be checked, but the pattern it describes, state power and corporate leverage working as one, is the subject of this page.
  • State-made corporations. Military contractors and many large firms depend on government revenue, R&D and patents. In 1969 Rothbard noted that Columbia University, nominally private, drew nearly two-thirds of its income from government.
  • Land. Much landlordism traces back to state-backed expropriation of peasants, which Lockean, mutualist and Georgist standards all condemn.

Carson takes his motto from Karl Hess, writing in The Libertarian Forum in 1969: “Liberty means the right to shape your own institutions.”

Worker empowerment

Roderick Long and others have shown that free-market thinkers and labor were once allies. Hodgskin, Spencer, Spooner, Tucker, de Cleyre and Lum backed labor activism and hoped cooperatives would replace wage labor. They saw state and business power as one system. Nor was this only theory. New England mill workers walked out singing that they would not be slaves, and “wage slavery” became a common charge. Orestes Brownson pushed it furthest in 1840, arguing that the wage worker was in some ways worse off than the slave, a comparison that slavery’s defenders, George Fitzhugh among them, soon turned to their own use. Even Lincoln’s free-labor creed treated hired work as a stage a man passes through on the way to working for himself, not a place to stay. A generation later the Knights of Labor set out to replace the wage system with cooperatives. Workplace hierarchy isn’t competition failing; it is competition blocked by rules that favor big firms. Regulation tends to be captured by the regulated, so the fix is more alternatives to employment, not more oversight. Carson calls the position “free-market anti-capitalism”: markets kept, privileged returns and the permanent wage class gone.

Equality is a libertarian value

Brainpolice argues that libertarians attack a caricature of egalitarianism — the claim that people are identical — which almost no one holds. Real egalitarianism, as against that caricature, is narrower: it opposes extreme concentrations of power and wealth. Disparities are shaped by law, custom and institutions, not just talent, and appeals to IQ or merit often excuse existing power. The link runs both ways: states create inequality, and extreme inequality breeds states. Libertarians, he concludes, should reclaim the egalitarian roots of their own tradition.

My own view is close to his. Egalitarianism, as I use the word, is not equal pay or equal rewards. It is equal access to power: the same freedom of choice in the decisions that shape your life, and the same freedom from bearing the fallout of other people’s choices. People differ in needs and abilities, and always will; what a society does about those differences decides how equal it is. Bobby Seale, co-founder of the Black Panther Party and a self-described revolutionary humanist, has said for decades that the Panthers stood for “all power to all the people”: not one group’s power but everyone’s, everywhere. Power over someone is a difference: what I can do to you minus what you can do to me. Make the two equal and the difference is zero. All power to all people leaves no power over anyone. I call that equaliberty.

Who owns what labor makes

David Ellerman gives this page its deepest argument, and he takes it from a premise libertarians claim as their own, older than any of them and at least as old as Locke’s Second Treatise (1689): people should own the fruits of their labor. Whatever a firm produces is made jointly by the people who work there, managers included. Machines and money are used in production, but only persons can be responsible for it. Yet the law hands the whole product, and every liability that comes with it, to whoever hired the labor. Owning the factory does not do that; a landlord who rents out a building does not own the tenant’s business. The employment contract does it. Ellerman calls the belief that capital ownership carries ownership of the product the fundamental myth of capitalism. His remedy follows from libertarian premises: firms whose members are the people who work in them, which may own, lease or borrow their capital but never rent people.

He makes the same case from inside classical liberalism. James Buchanan, a Nobel laureate of the free-market right, held that individuals must remain sovereigns or principals in every social arrangement: they may delegate authority to agents, never hand it over. Ellerman takes him at his word. The employer does not manage in the workers’ name, as their delegate; he manages in his own. By Buchanan’s own test, the employment firm fails. That is also where Ellerman parts from Elizabeth Anderson. Her Private Government (2017) indicts what employers do with their power over workers’ days and lives. He indicts the relationship itself. A kinder boss is still a boss nobody delegated.

The strongest case against

The defender of today’s property has two serious arguments, and they deserve their best form. A third objection comes from the left, and it deserves the same.

The first is about titles. Rothbard made it himself in 1974, five years after the confiscation essay: where the victims of an old theft or their heirs cannot be identified, the current holder is the rightful owner. Nearly every title on earth has a crime somewhere in its past. If all of them are open to challenge, none are secure, least of all the small holdings of the poor. On this view a libertarian should prosecute specific, provable wrongs and otherwise leave titles alone.

The second is about wages. John Bates Clark argued in 1899 that in a competitive market every factor of production is paid what its last unit adds to output, its marginal product. If workers are paid what they add, nothing is taken from them. Capital is paid for waiting and bearing risk. The entrepreneur is paid for seeing what others missed. Everyone agreed to the bargain freely. Where is the exploitation?

I take both seriously, and neither closes the case. The titles argument works where the victims are lost and the holdings are small. It works badly where the source is known. State property, and the fortunes built on contracts, patents and bailouts, came from the state, and the taxpayers and users who paid for them are still alive. Much privilege is not old theft at all but ongoing subsidy: tax breaks, bailouts, cheap state-backed credit, patents, tariffs, licensing rules. And ending a subsidy takes nothing from anyone; it only stops the taking.

Clark’s theory is about prices, not about who owns the product. Grant that every worker is paid exactly what the last hour adds. Ellerman’s question is still open: why does the whole product, with every liability, go to the party who hired the labor rather than to those who made it? Marginal productivity explains what labor costs; it cannot explain why a person’s labor is the kind of thing that can be rented. Even the Austrian Friedrich von Wieser granted that if the question is moral, only the laborer can be named: land and capital are “dead tools in the hand of man.” And the markets Clark described are not the ones we have. Where state privilege props up the employer’s side, the wage is a privileged price too.

The third comes from my own side, in three voices. First, left-libertarians of the Steiner–Vallentyne school keep full self-ownership and ask only that land and natural resources be shared fairly; on their view, whoever owns themselves may rent themselves out. Second, Marxists hold to the labor theory of value and read Ellerman’s legal framing as a liberal half-measure that leaves the system standing; some dismiss worker cooperatives as petty-bourgeois, small owners competing in the same old market. Third, many market anarchists, Kevin Carson among them, expect a freed market to shrink wage labor without calling the employment contract itself invalid: a free person may choose a boss, so long as quitting is real.

I take the market anarchists most seriously, because exit matters and a “freed” market, as William Gillis first called it, would change the bargain. But leaving one boss for another does not touch Ellerman’s question. Following Albert Hirschman, he notes that markets run on exit while organizations run on voice, and a firm is an organization; a worker whose only voice is the door has been given a market answer to a political question. And the self-ownership answer proves too much: the same reasoning would let a person sell themselves, which nearly all of us refuse. Ellerman’s claim is not about value or about the size of the paycheck. It is that responsible agency cannot in fact be handed over, which is why the law still holds a hired criminal responsible for a crime. The Marxists are right that pay is not the whole story. They are wrong to rest the case on a theory of value rather than on who answers for what was done. Ellerman builds the new society within the shell of the old, one cooperative at a time, but his argument aims to crack the shell: like the slave contract before it, the rental should be void.

The petty-bourgeois charge against abolishing human rentals misses what a cooperative is. It is not a smaller boss but no boss at all: a firm run by the people who work in it hires no one, because its members are the firm. Nor does it need the quarrel over value settled first. Ending the rental rests on agency not moving, whatever one concludes about interest, rent and price. I make the full case in The Unfinished Exclusions and A Module.

Where I land

I don’t want to seize anyone’s house, and I don’t want a state to do it for me. What I want is narrower and harder: stop propping up the old titles, let the people who use state property have it, and build firms run by the people who do the work. Property is a tool of freedom when it is spread out and earned, and a tool of rule when it is concentrated and granted.

Sources

  • William Gillis, “The Freed Market” (2007). The market without state privilege, as distinct from today’s corporatism. original · Anarchist Library copy
  • Pierre-Joseph Proudhon, What Is Property? An Inquiry into the Principle of Right and of Government (1840; trans. Benjamin R. Tucker, 1876). Property is theft; possession vs. property; the right of increase.
  • Iain McKay (ed.), Property Is Theft! A Pierre-Joseph Proudhon Anthology (AK Press, 2011). “Property is despotism,” and selections from Theory of Property (1866): property as a counterweight to the state.
  • Martin Elson, “Self-Ownership is Bad Logic, Not Just Bad Grammar” (2012). Theft assumes property: the objection to the slogan.
  • Kevin A. Carson, “Libertarian Property and Privatization: An Alternative Paradigm” (Mutualist.org, August 2004). Homesteading state property; privatization as state capitalism. original · copy here
  • Karl Hess, “Letter from Washington: Where Are the Specifics?” (The Libertarian Forum, 15 June 1969). “Liberty means the right to shape your own institutions”; quoted by Carson.
  • Murray N. Rothbard, “Confiscation and the Homestead Principle” (The Libertarian Forum 1, no. 6, 15 June 1969). State property to those who use it; Columbia’s two-thirds. quoted in “Left-Libertarianism: The Case and the Controversy” · Kinsella on Rothbard, 1969 vs. 1974
  • John Perkins, Confessions of an Economic Hit Man (Berrett-Koehler, 2004). Debt, aid and corporate leverage as state power abroad; a memoir, some claims unverified.
  • Roderick T. Long, “Libertarianism Means Worker Empowerment” (Bleeding Heart Libertarians, 2012). Free markets and labor as old allies. original · copy here
  • Orestes A. Brownson, “The Laboring Classes” (Boston Quarterly Review, July 1840). The wage worker as in some ways worse off than the slave.
  • Kevin A. Carson, Studies in Mutualist Political Economy (BookSurge, 2007). Privilege as the source of wage labor and profit; a freed market shrinks both.
  • Kevin A. Carson, The Homebrew Industrial Revolution: A Low-Overhead Manifesto (BookSurge, 2010). Cheap tools and small-scale production as the road out of employment.
  • brainpolice, “In Defense of Egalitarianism” (Polycentric Order, 2010). Equality and liberty, each a reason for the other. archived · copy here
  • Bobby Seale, interview for Vibe (Oakland, 17 March 1999; unedited transcript in Arthur, 2010). “All power to all the people”; “cooperational humanism.” transcript · Daily Pennsylvanian, 1994 · Daily Pennsylvanian, 2000 · “revolutionary humanist”
  • John Locke, Second Treatise of Government (1689), ch. 5, “Of Property.” Labor mixed with what was common makes it one’s own; the premise Ellerman reclaims.
  • David Ellerman, Property and Contract in Economics: The Case for Economic Democracy (Blackwell, 1992). The labor theory of property; the “fundamental myth” that owning capital means owning the product. copy here (PDF)
  • David Ellerman, “Classical Liberalism and the Firm: A Troubled Relationship,” in Robert F. Garnett Jr., Paul Lewis and Lenore T. Ealy (eds.), Commerce and Community: Ecologies of Social Cooperation (Routledge, 2015). Buchanan’s sovereigns-or-principals test turned on the employment firm; Hirschman’s exit and voice; Wieser on moral imputation. original (PDF)
  • Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States(Harvard University Press, 1970). Markets run on exit, organizations on voice.
  • Elizabeth Anderson, Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It)(Princeton University Press, 2017). The workplace as an unaccountable government. Q&A with the author
  • David Ellerman, “Rethinking Libertarianism: Elizabeth Anderson’s Private Government” (Challenge 61, no. 2, 2018). A principled critique of the employment relation set against Anderson’s pragmatic critique of its abuses. original
  • David Ellerman, Neo-Abolitionism: Abolishing Human Rentals in Favor of Workplace Democracy (Springer, 2021). The employment contract as the rental of persons. publisher
  • Murray N. Rothbard, “Justice and Property Rights” (1974), in Egalitarianism as a Revolt Against Nature and Other Essays. Current holders keep titles whose victims can’t be identified. Kinsella on Rothbard, 1969 vs. 1974
  • John Bates Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (Macmillan, 1899). Marginal productivity theory of distribution.
  • Peter Vallentyne and Hillel Steiner (eds.), Left-Libertarianism and Its Critics: The Contemporary Debate(Palgrave, 2000). Self-ownership plus equal shares of natural resources.