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Objections to capitalism, liberty and anarcho-capitalism

This page can start by listing common objections and concerns, and link to more detailed sections to analyze and answer the problem.

As far as addressing such objections in discussions, it is often useful to start with definitions.

Merriam-Webster's definition of capitalism is perfectly serviceable, but less formal definitions (capitalism: the system of property rights and voluntary cooperation) can be useful in lay discussions.

Liberty or freedom also often deserves some clarification. There are two distinct concept: un-coerced exercise of free-will (negative conception of freedom) and access (positive conception of freedom, as in freedom from hunger, need, etc). The same distinction also exists in discussions about rights (negative rights, as the right not to be coerced, and positive rights, as the right to healthcare).

It is also often useful to clarify the person's conception of government: voluntary (on the basis of a Social Contract and such) or coercive (but necessary). All criticisms of capitalism rest on a baseline (capitalism compared to what) and it is a mistake to assume a perfect but unrealistic alternative (nirvana fallacy). If the person thinks government is voluntary, they are not objecting to capitalism (property rights and voluntary cooperation), so the discussion should focus on whether government is truly legitimate and voluntary. But if the person thinks government an exercise of coercion, then a different set of arguments open up (does allowing coercion in society improve ethics and outcomes?).

Other terms worth clarifying include self-interest, altruism, greed, public or social good, society, and rational/irrational.

Capitalism does not produce public goods

See Public goods.

The case of science. Terence Kealey offers three arguments: The first one is a recent OECD comparative analysis of growth between countries with regards to the amount of government funding of science. It shows no positive effect in countries with heavier government funding, whereas it shows positive effects when there is more private R&D investment. The second one is that economic growth trends historically did not improve when government become involved (before/after comparison). The third is the disappearance of "secret publication" of science in favor of the current open model well before governments became involved in science (ie. scientists themselves find it advantageous to share, it is not a disincentive as suggested by the "public goods" argument).

Also, anyone can say that any nonrivalrous, non-excludable good is a public good. That doesn't mean it should be produced at taxpayer expense. If, say, the Republicans want Ronald Reagan's signature to appear in skywriting over Washington, DC on President's Day, they can't prevent members of the public who made no contribution to a private skywriting fund from seeing it. But that is a far cry from demonstrating that society will benefit more from that use of resources than it would from alternative uses.

On the other hand, sometimes what people think are public goods actually are not. An example would be lighthouses. If a harbor is privately owned, and those who use the harbor can be required to pay a fee, then the lighthouse that guides ships safely to the harbor, and is paid for by the harbor owner, can be considered a private good. The free market will tend to cause such situations to come to pass.

Fred Folvary on Tom Woods on how public goods have been provided: http://tomwoods.com/ep-94-public-goods-private-communities/

Note that the public goods conception of government ("public goods are undersupplied under free exchange and voluntary association so we need government to rectify this form of market failure") implies that government is based on coercion rather than voluntary association.

Capitalism does not deal with negative externalities

satirized by Ryan Faulk: https://youtu.be/KNuNngiyf4A

taken on more seriously by Peter G. Klein, Externalities, Public Goods, and the Role of Government: https://www.youtube.com/watch?v=0ORLOIBPizs

Antony Sammeroff "There was a time where the courts ruled by common law and were held separately and above the government. When an industrialist polluted a stream or the air in a way that caused physical or financial harm to his neighbors, the courts would force them to pay reparations and a penalty. This in itself did a pretty good job of deterring people from polluting,

Until the latter part of the nineteenth century this form of law, where the right of every individual were considered, was successful, it stated that if you caused harm or law to another person it was your duty to restore them to their original condition and compensate them. Then, as documented by Morton J. Horowitz in his two-volume treatise named The Transformation of American Law, the legal system began to change. Industrialists went to the government to have it changed.to a more collectivist philosophy where lawyers and law makers became increasingly concerned with what was termed “the common good."

"Under the individualist view the law should protect everyone's right to life, liberty and property – which includes the right not to have your body or property damaged by the pollution of others. The new legal system however argued that no individual or group of individuals should stand in the way of the economic progress of the entire community. Therefore a few victims of pollution should not interfere with economic development prospects that would benefit "The greater good.”" (Tom Dilorenzo)

The government came back and told the people that while the factories were polluting and there would be some victims the industry served 'the common good' and therefore people just had to accept the pollution as a fact of life 'in the greater interests of society as a whole' and all those high minded phrases the left have since appropriated. When you consider history you will see that it is government that made the way for industry inflicting damage on others." http://seeingnotseen.blogspot.co.uk/2016/12/government-trojan-horse-of.html

Capitalism does not account for market failures

See "Is Market Failure an argument against government? by David Friedman

See "Myths of Market Failure by Thomas J. DiLorenzo

All free market theories rely on a situation of "Perfect Competition" which does not exist in the real world

Asymmetric Information and Market Failure: A Market Process Perspective | Glenn Fox: https://www.youtube.com/watch?v=yaJxggstlYA

Game Theory shows that markets produce negative outcomes

Lucas M. Engelhardt debunks: https://www.youtube.com/watch?v=Ldn34TxmGKE

Capitalism under-produces what society needs

More details TBD

Capitalism exploits workers

"It is true that workers do get paid less than the total value of what they produce, but that is because what they produce is made with other resources which have to be bought, and in a factory or work place which has a price and requires overheads to operate. The capitalist is responsible for paying for marketing and advertising to link the product to potential buyers - and at the end of the day, if the product doesn't sell, everyone else has already been paid but the capitalist walks away with the loss.

The capitalist lays out a vision of what he thinks will meet people's needs better than they are being met at present. This requires a particular expertise which is in itself a labour contribution over and above that of the other employees which is unique to the entrepreneur. If his vision is clear, indeed he will make a profit. If it is faulty he will make a loss. This is not a necessary risk, absent the profit motive a rich person is more likely to buy a bigger house or go on a cruise. But the capitalist takes a risk now, and foregoes consumption, in hope that he will reap the benefit later. That is part of what he is being paid for.

Another part of what he is being paid for is the time between making the investment and getting paid for that investment. We would all rather have resources in the here-and-now than some time in the future, because the future is uncertain, that is why lenders can charge interest on money that they borrow. They are choosing to forgo a smaller amount of consumption now for a larger one in future. The workers get paid now, the capitalist gets paid later only after the product has sold, and only IF it is sold, after everyone else has been paid. Austrian Economist, Eugen von Böhm-Bawerk explained that far from exploiting labour, the capitalist removes the burden of waiting for income from the workers. If they wanted to produce the goods themselves they would also have to wait until they could find a buyer before gaining a stable wage, and first save or borrow in order to accumulate the resources to buy a factory or workshop without the help of the capitalist.

Finally, it's worth mentioning that the capitalist is increasing the value of the workers labour! If a man decides to try out the same manoeuvres which might get them somewhere in a factory out in a field it will not produce much of value to anyone else. Clearly workers can earn more working for their employer than for themselves otherwise they would simply declare themselves self-employed and get on with making a higher income. Perhaps some of them can earn more working for themselves but do not want to take on the responsibilities entailed which are currently met by the firm which employs them. This too is evidence that capitalists are providing value.

Marxists hold that capitalists simply skim their profits off the top while providing no value of their own. That they are "extracting surplus value" from their workers. But if that was true, non-profit organisations would just swoop in and undercut profit-making firms by eliminating the "dead weight" costs of paying a capitalist. They do not because they cannot. Capitalists are clearly providing some competence or vision which benefits their workers. Each benefits from the mutual exchange, as evidence by the fact that if the worker could get a better deal s/he would take it, and if the employer could find a better worker s/he would hire them instead.

Ultimately, wages are not an arbitrary figure but a reflection of how much value an employee is able to provide to a customer. If a person wants to do away with an employer they can do so by learning skills, either on the job or on the side, which will allow them to work for themselves. Likewise, profits are not arbitrary but a reflection of how much value a company is providing on the marketplace. Provided - of course - that they are drawing their profits from serving the market place rather than lobbying or appealing to the state" - Sammeroff, A. (2017) "Surplus Value" http://seeingnotseen.blogspot.co.uk/2017/09/surplus-value.html

A variation of this objection is that people in difficult situation cannot afford to exercise choice. Employer can take advantage of people when there is unemployment. A counter-argument is that in many cases, workers have a great deal of bargaining power. Consider, for example, the voice actors for The Simpsons, who receive millions of dollars a year for 22 weeks' worth of work. They can shut down the show by refusing to accept what is offered.[1] That is an extreme example, but there are many types of employees who are, to some degree or another, difficult to replace and therefore in a good position to drive a hard bargain on salary. It is not for nothing that the Hacker Test contains these two items:[2]

0241 Is your job secure?
0242 ... Do you have code to prove it?

Those who aren't in a good bargaining position probably need the "exploitative" job that is offered, because the whole reason they are in such a bad bargaining position is that they don't have better options they can point to and say, "Look, this employer is offering me $x. Can I have a raise up to what the market is paying someone with my knowledge, skills and abilities?" Those employees need a job that will keep body and soul together while they seek education, training, experience, or whatever else will make them more productive (in the consumer's opinion, as expressed by his willingness to pay a certain amount for the work product) per unit of labor invested, and therefore more valuable in the job market. If those opportunities for self-improvement are not available to that worker, then he will probably need that job on a more permanent basis, and it would more permanently diminish his standard of living to take it away.

Admittedly so-called sweatshops are not ideal, but they provide much better conditions and typically 3-6 times the pay of the alternatives are a stepping stone out of poverty. The options of sweatshop workers are limited largely because the “employing classes” (Kevin Carson’s term) have colluded with governments in the developing world to limit them by engaging in the unjust seizure of land, restricting unionization, enforcing intellectual property rights, erecting barriers to trade, and so on.

Some like Peter Joseph go as far as calling the free-market coercive. Because exchange and division of labor offer such great benefits, then workers have no choice but to participate. The choice of living in the woods may be literally true and available, and exchange may be voluntary, but the system overall is coercive (by a stretch of the word).

In Abolishing OSHA, Thomas J. Kniesner and John D. Leeth offer a thorough analysis of whether this agency has protected workers. In particular, figure 1 (based on National Satety Council. Accident Facts, 1994 Edition, ltasca, III: Author, 1994), which depicts work fatalities before and after OSHA was created, is pretty striking.

Capitalists Pay Workers Less Than The Value of their Labour

Jeff Herbiner debunks: https://youtu.be/l-kM_F4XRuk?t=40m46s

Yes Workers get paid less than the total value of what they produce, but that is because what they produce is made with other resources which had to be bought and in a factory or work place which requires overheads to operate. The capitalist is responsible for paying for marketing and advertising, linking the product to buyers. And acquiring all the resources his employees use to manufacture the goods. At the end of the day if the product doesn't sell everyone else has already been paid and it's the capitalist that takes the loss.

In fact the capitalist is increasing the value of the workers labour! If he wasn't giving them a job they would be getting paid LESS! That's why they take the job. Try doing the same manoeuvres you do in a factory out in a field somewhere and see how far it gets you! He is increasing their productivity and therefore earning them a higher wage.

So let's take an inventory of the services the capitalist provides: Organising production Guessing what consumers want Taking the risk with his resources Deferring gratification because he could buy a yacht or country house instead Providing a service by guessing that a consumer demand could be better facilitated Increasing workers productivity and wages compared to what they would get if he wasn't hiring them Getting paid last only if his risk is successful, if the business fails everyone else has already been paid Being ultimately responsible in the case of litigation Time preference of money- entrepreneur delays current consumption for future consumption in the hope of a greater return better than the alternatives linking several suppliers to a consumer who can need their goods combined spending money on advertising to help people to know of something that might benefit them

Capitalism plunders the environment

Murray Rothbard: https://www.youtube.com/watch?v=0WNMiOjt49A

Antony Sammeroff on 15 points: https://youtu.be/pZbtbhkfaPA

Timothy D. Terrell explains why gov can't help properly with pollution: https://youtu.be/PYZx8FaWaps?t=30m

Capitalism doesn't protect consumers from ruthless businessmen

Market-based regulatory systems:

Market Competition. Consumers provide a large degree of regulation over markets by not repeatedly buying poor services and advising other customers of what to buy and what not to buy.

Consumer Watchdogs. Customers want to know which services offer the best value for money and are quick to consult experts in magazines or online for good information before they choose a provider.

Employer Discretion. Employers do not want to take on a poorly qualified civil engineer or plastic surgeon.

Registration. Third parties or groups of experienced practitioners can create registries of bonafide service providers. If a complaint is lodged against someone on the registry the administrators can investigate the case and strike them off if they are guilty or give them a warning. Private Certification. In the absence of mandatory government licensing consumers will often want assurance from credible sources that the services they are going to pay for are of high quality - and more importantly - safe. Third parties can offer to certify practitioners that meet their standards.

Litigation. Customers already have protection under the law against faulty products or false advertising even in the absence of mandatory occupational licensing. The threat of being sued for causing damages is enough to deter most companies from releasing harmful products, if the threat of killing off their customers is not enough already.

Contracts. Customers can make explicit contacts with service providers to ensure they have recourse if they don't get what they think they are getting. If a company says the customer is getting x but gives them y the contract clearly delineates who is in the right and who is in the wrong.

Bonding. Individuals can engage in agreements in advance that involve third parties to ensure that payment is transferred when it is supposed to be.

Insurance. Customers can insure themselves against receiving faulty goods or receiving harm from services. In some cases the insurer will be able to bring litigation against the service providers for damages incurred offering a deterrent against providing poor services.

Jail. If the fact that it is not profitable in the long-term to kill of your customers is not enough to deter greedy capitalists from selling products that are physically harmful, the prospect of a jail term just might be.

- Source, Antony Sammeroff: http://seeingnotseen.blogspot.co.uk/2017/03/occupational-licensing.html

Capitalism leads to monopolies and cartels

It is important to understand what constitutes a monopoly and under what conditions it leads to monopolistic effects (lower quality and higher prices). What are the forces which encourage concentration? What are the forces which encourage fragmentation? How does one define an "industry" or "sector"? What are substitution effects?

Also, it is interesting to look at historical data on monopolies, in light of the above analysis. Which problems occurred? Which forces actually came into play?

For one, identifying a monopoly requires defining the scope of the market. If defined arbitrarily narrowly, it will apparently lack adequate substitutes. Is the iPhones in the market for large-screen touch-based smartphones, consumer smartphones, cellphones, communication devices, or social networking tool?

But more importantly, competitive forces (both actual competition, potential competition, and indirect competition) are sufficient to regulate how much control a company (or a cartel of colluding companies) can get over the market. Despite its dominance of a market, the company will always feel the pressure to perform well or else it will lose customers to rival companies. Anti-competitive conditions can only arise legally from the government (and illegally through other kinds of force, like the mafia). Such government-granted monopolies are indeed harmful to consumers and the market.

Mainstream economists have this theory of so-called "natural monopolies", whereby if a company manages to get far ahead in a capital intensive business with economies of scale, it creates a very difficult situation for competitors and allowing a long-term monopoly (which has bad effects on prices and quality). This theory is often used to justify government stepping in with anti-trust regulations, to "fix the market" and regulate the "unavoidable" monopoly (therefore actually sustains the monopoly). But as Thomas DiLorenzo explains in this presentation, another presentation, and paper, and history shows that such sustained natural monopolies do not exist in practice. All sustained monopolies to date can be traced back to some unfair advantage secured through government (diamonds, cable TV, phone service, railroads, ...). Also, he explains that the supposed problem of "excessive duplication" is also a consequence of a pre-existing public utility. Because of their lack of pricing, economic calculation is impossible so trade-off cannot be made on a rational basis. Even so, this can be mitigated with "competition for the field", whereby utility companies bid for a monopoly contract which is open on auction again every few years.

Capitalism may have worked in the past, but modern society is different

This argument came up in different forms in Milton Friedman's Free to Choose video program for instance, by opponents of the free-market. The argument is usually not very specific, but posits that capitalism is not applicable due to changed circumstances. For examples, more population, more complex inter-dependencies, more industrialization.

Individuals make predictable mistakes

Individuals lack information and expertise

Objections to anarchy

Roderick Long has a good paper(pdf) and talk which address top objections.

Government is voluntary, there is an implicit social contract

See Lysander Spooner.

“Social Contract: A Critique,” by Williamson M. Evers (PDF)

Tom Woods on the Social Contract

Government is voluntary, people can migrate

This argument states that by staying in a country, the individuals consent, if only implicitly, to the government.

But this suffers from logical leap; the fact that "people can leave" does not allow one to conclude that a system is voluntary. If people choose A over B, we can only conclude that they prefer A over B.

In particular, even if situation A involves some downsides (very low risk of being murdered, low risk of being mugged or burglarized, or almost certainty of being taxed), demonstrating a preference of A over B does not mean that those interactions are voluntary. We can only conclude that all things considered (loss of social network, cost of moving, loss of employment, and coercive violations of property rights such as crime and taxation), moving to situation B is not worthwhile.

Let me stimulate your thinking on this problem:

  • If the state is voluntary because you can move, then the mafia is voluntary too since you can change neighborhood or city.
Counter argument: So then why do you stay in a mafia-infested neighborhood or city, if you have other options? At what point might your acquiescence to the situation, when you have other options, be reasonably deemed voluntary? What about personal responsibility to remove oneself and one's property from harm's way? Libertarians, after all, advocate competition and consumer choice as safeguards against abuse, and believe that each person has a responsibility to provide for his own defense. That means that it is the libertarian's responsibility to either escape or fend off aggression when the means are available. To fail to exercise a preferable option that was available is to voluntarily acquiesce to a worse situation.
To clarify, do you mean that the mafia in a neighborhood is indeed voluntary for the people who stay there? Do you believe that the victims of mafias do not take any steps to hide or protect their property? What is the minimal action (short of leaving) which demonstrates in your mind that the mafia is coercive?
  • Similarly, if the state is voluntary because you can move, then monarchy is voluntary (farmers were not prevented from moving).
  • If the state is voluntary, then are there limits to the state?
Was the confiscation of Jew property in Germany voluntary?
Counter argument: Why did the Jews live in Germany, rather than in a country like the U.S. with stronger protections for property rights? The libertarian position is that when you travel abroad, you do so at your own risk.[3] Why would the logic behind that principle not apply also to Jews who choose to live in Germany?
Can you clarify? Do you mean the confiscation was indeed voluntary and there are no limits to the state?
  • If the state is voluntary, like a club, then where is the evidence that it was formed unanimous consent?
No state demonstrates this feature. On the other hand, plenty of voluntary associations do: clubs, homeowners associations, ... Therefore the monopoly that a state exercises on a given territory is not justified.

Government is voluntary, people can vote

That's a simple non-sequitur. The mode of decision does not affect whether joining this "club" is voluntary or not.

Imagine that your co-workers decide to start a union, but you are not interested in joining. They decide on a democratic mode of elections and decide that every employee should pay union dues, including you.

More generally, the feedback and incentives provided by vote are much weaker than that provided by freedom of association (choosing which club you join, choosing which product to purchase). This is especially visible with government, being that it offers such a wide bundle of unrelated "services" (currency, law-making, arbitration, police, army, education, postal service, unemployment aid, low-income aid, old-age aid, sickness aid, deposit insurance, ...). The votes are not even on individual services. Furthermore the votes are on promises, whereas purchases are on finished products and services, or on contracts (pre-order).

It is often assumed that politicians have a right to break their promises if their ideology changes or it is necessary to make political compromises. Certainly there is no means provided for in law by which a citizen can sue his representative for breach of contract if he violates campaign promises. The only remedy provided by the system is to vote him out of office. This would be like if a McDonald's manager could accept a consumer's money for a hamburger, refuse to provide the hamburger (or, instead of giving the hamburger to the customer, giving it to a friend of the manager), and then say that the consumer has no right to complain because, after all, he can choose a different restaurant next time.

In the private sector, the consumer is also entitled to a refund for agreed-upon products not being provided; in the public sector, he is not. There is nothing to prevent a consumer from getting repeatedly ripped off as he bounces back and forth between two different restaurants, each of which keep taking his money without providing what was promised. In the U.S. electoral system, those two restaurants are the two major parties. The third parties are like small restaurants that, after receiving the customer's money, later say, "Sorry, we invested the money as best we could in producing a meal, but ultimately didn't have enough cash to succeed, and now the money is gone. However, if enough people buy hamburgers from us the next time around, we might have enough money to succeed."

A quick answer for knee-jerk internet comments, is "Which vote of yours led to the NSA tapping major internet companies and spying on citizens?". Another one is "If the government represent voters, then certainly voters should be responsible for their government's choices, such as a foreign policy killing in the order of a million innocent Iraqis. Are you ready to stand trial for your role in this crime?"

Government is needed to define the law

Here are some points to stimulate thought on this problem:

  • Languages (for the most part) emerge without centralized government definition
  • Governments are in a state of anarchy with regards to each other (no "super-government" defining international law). There is more strife and violence within countries these days (e.g. the bloody civil wars in Africa) than between countries.
  • Counter-argument: International relations are to some extent dominated by a few great powers that impose their will on the rest of the world. The countries that have been willing to engage in free trade with one another, such as the Benelux or World Trade Organization members, have tended to also form supranational federations to establish and enforce rules governing trade. One might argue that this means they found such federations necessary in order to pursue their goals of freer trade.
  • There are already multiple sets of law (from country to country, state to state, city to city), what is the optimal number and how would we know that number?
  • Counter-argument: Theoretically, if the voters become discontent with their current number of sets of laws, they will require their elected officials to change the number or impose tighter central control over local governments.

Government is needed to provide law enforcement services

Bob Murphy Does a Great Job on this: https://www.youtube.com/watch?v=gphKVhnwREc&list=WL&index=20

Government is needed to provide national defense services

See The Myth of National Defense.

As a side note, isn't it inefficient and risky to get your national defense services from a geographically compact provider? As a comparison, you wouldn't want earthquake insurance to be provided by a local company with all its assets in the same area.

Government is needed to provide ultimate arbitration and resolve conflicts

The existence of international courts (which countries join) and arbitrators (which parties agree to when contracting) seem to refute this claim. Although countries are in a state of anarchy relative to each other, solutions emerge to enable international commerce (between a quarter and a third of world GDP stems from international commerce). Those same solutions can apply at lower scales.

Government does not actually provide independent arbitration even within a nation. For instance consider conflicts between two branches or two members of government (president starting war not supported by Congress, Congress passing law incompatible with Constitution, ...), or between a citizen and government. If the ultimate enforcer of the Constitution is the People themselves, then we are back to anarchy (distributed order).

In Do we really ever get out of anarchy? Alfred G. Cuzan points out that the notion of the State as an impartial arbitrator who is "above the rest" is a unicorn. It does not and cannot exist. There are conflicts between members of the State and civilians, and there are conflicts among members of the State (for example, the executive branch vs. the legislative branch, or the heads of two departments). So the State as it can be implemented in reality is only trading one form of anarchy (market anarchy) for another (political anarchy).

Without government, we would kill each other (Hobbesian world)

The emergence of arbitration services and norms is more likely, as it is less costly. See historical examples of arbitration in ancient Greece, in modern black markets for drugs. TODO: provide references.

As Peter Leeson points out in this lecture on anarcho-capitalism, the world today is already in a state of anarchy, with nations interacting without a common ruler. This does not prevent a quarter of world GDP being tied to international trade.

Government is needed to control and protect the national borders

Actually, the State provokes foreigners to want to retaliate against it for its acts of aggression (including propping up tyrannical regimes to serve as puppet governments that will do domestic politicians' bidding), and the citizens get caught in the crossfire as they are hit by terrorist attacks, taxed to pay for foreign wars, subjected to intrusive searches at airports, etc. We would do well to heed what Morris and Linda Tannehill wrote in The Market for Liberty:[4]

Government can't defend its citizens, and it is foolish and sacri­ficial for the citizens to defend a coercive monopoly which not only enslaves them but makes a practice of provoking conflicts with other coercive monopolies-i.e., with other governments. In the matter of foreign aggression, government is far more of a liability than an asset, and people would be much better off with a free-market system of defense.

Typical examples

Here are a few essays which illustrate many of the objections to capitalism:

Like unicorns, the 'free market' doesn't exist


  1. "Deadline Near in ‘The Simpsons’ Pay Cut Standoff". ABC News. 7 October 2011. 
  2. "The Hacker Test - Version 1.0". http://www-users.cs.york.ac.uk/susan/joke/hacker.htm. 
  3. "National Platform of the Libertarian Party". May 2004. http://www.lewrockwell.com/orig7/platform.html. "We call upon the United States government to adhere rigidly to the principle that all U.S. citizens travel, live, and own property abroad at their own risk." 
  4. Tannehill, Morris and Linda. "Foreign Aggression". The Market for Liberty. pp. 128.