5.23.2008

Capitalism Versus Fair Trade

One of the many topics for discussion among Anarchists, at least those I tend to speak with regularly, is that of Anarchism and economics. We live in a capitalistic economic system, sometimes referred to as "free trade". Although free trade is typically limited to international definitions, I hear it often in regards to national economics as well. Meaning, we are free to trade our goods and services, for a price, with few legal restrictions. The capitalist market is supposedly the last word in freedom of trade, businesses are generally free to charge whatever they deem appropriate for goods, and they allow the consumers to dictate if that price is too high, or just right. The government limits companies on pay rates, so that we, the employees aren't treated as slaves, and are able to earn a fair wage and work in safe conditions.

But is this the truth?

Capitalism may make trading free from too many restrictions, but it doesn't in fact, guarantee that said trades are fair. What I mean by this is that what we trade - our services for currency, our currency for goods - isn't equal in value, thus not a "fair trade".

Think about it like this. Let's say you work for a grocery store for $8 per hour. You collect your check at the end of the week, put it in the bank, then head right back to the grocery store to buy the food you need to survive. You spend around $80 for the basic foods you need to last you a week.

You have just purchased ten hours of your time, and hard work. The company gives you money, then takes it back at a higher rate then which they are willing to pay you, for the very products you've helped them to sell.

To make matters worse, "market conditions" can dictate inflationary costs - thus costing you more time, and more hard work, for the very same products. While your earnings stay relatively the same. There is also, of course, the illusion of a competitive market. While you may think you have the freedom to choose one store over the other, with regards to costs they are all about the same. As one store goes up in prices, so too, do all of the others. It never seems to go in the other direction, save for a large amount of promotional sales, a marketing trick that barely brings the overpriced items down to a reasonable level. Thus rendering your contribution to competitive pricing, null and void.

Is there a better option?

Yes, there is. it's called fair trade, and it is attainable. Desirable, even. Fair trade is also done freely. Some call it bartering, others, "freecycling". Whatever you'd like to call it, I call it preferable.

With fair trading you still barter your time, or your products, but instead of receiving a relatively worthless piece of paper, you get something you actually need. Our currency is rather meaningless. What is it? It's paper, with numbers on it. An IOU, essentially that has literally no backing to it. Our currency hasn't been backed by gold in a number of years, and even if it was, so what? Exactly how much is a bar of gold worth to a hungry child? Nothing. The feudalistic attempts to make rare items such as gold into something of value is a topic for another post, however. Let's suffice it to say for the moment, that you can't eat money. You can't build a house with it, you can't protect yourself with it, you can't do much with it other than trade it in for the goods you actually need, at an ever increasing rate due to it's fluctuating value. Food's intrinsic value to a human however, never fluctuates.

With that said, let's get back to fair trade. Let's say my car needs new tires. Well, what do I have? I have skills in thus and such industry. I have time, I have something of value to trade. Great! Who do I know? So and so has some tires he no longer needs, let's see if he needs what I have to offer. He does? Great! Let's trade.

Now, the capitalist market would have you believe that those tires are worth a specific price at an inflated cost (no pun intended!). But to someone who no longer needs them, they have little value, other than for trading. So, you come to an agreed upon trade, one that both folks are happy with, and viola! a fair, and free trade has just occurred sans any currency whatsoever.

This kind of trade can occur on many, many levels. Goods for goods, services for goods, goods for services. Many items for trading can be found locally, and freely, too. I went to the beach today and collected bucket fulls of shells and seaweed. Both have value to certain groups of people, some for jewelry making, others for sustenance, etc...either way, for about an hour of my time, I can now go to someone else and trade the goods for something I need.

But, but but! What about production costs?! What about imports! Exports! Taxes!! yes, yes I hear the objections already. On a large national and global scale fair trade hasn't found it's niche. But it will. Eventually, as trade deficits get too high, and taxes and tariffs become too burdensome, and all around costs skyrocket, people will become creative in getting the goods and services they need, sans currency.

It's time to ditch the dollar, my friends, and start working on a way to cooperatively get what you need without being driven into insanity trying to find a way to pay for it.

The thought of having a company pay me a marginal wage to make large profits for them so I can turn around and give them too much of my money by purchasing their over priced products is absurd.

More to come on this subject, as the inner workings of Anarchist economics is simple, yet complicated!

16 comments:

Don Lewis said...

Sorry Anok. But I can't agree with you on this one.

A medium of exchange is necessary if one wants to escape feudalism.

It was the lack of such a mechanism that was partly responsible for keeping the serf on the farm. And it was the creation of an acceptable currency which allowed him or her to purchase goods and services and to bid out his labor to others.

I make wooden cups. I'm also a fair woodworker. But I don't have the time to go to each seller of food, or power, or clothing and ask them if they care to trade. And the market for my products is limited: unless I can ship them to my customers around the country. The shipping companies have no need of wooden cups. My customers can't send me food, or electricity, or clothing.

It would be the same if I were a..oh lets say an electrician. Would I only be willing to work only for those who can pay me in food or art or what have you? Money as a concept allows me to work for anyone that has this universally acceptable medium of exchange.

I don't have to take a product I may not want in exchange for my time. And I don't have to waste more of my time hunting for suppliers who do want what I make.

When I want a new supply of lumber, I can simply pay for it. My lumber dealer has no use for what I make either, but the person who does want my product has already paid me with a means of exchange that my lumber dealer will accept.

I do barter, but only in a very limited way. I couldn't possibly maintain the lifestyle I enjoy without a representative and exchangeable substitute for my time and expertise. Read: Money.

Alex Mcone said...

Don just said the same thing I have to say.

Barter and free trade existed before money. I think money was created to cover up the disadvantages barter created.

The tyre example you mentioned. Suppose I'm a software engineer. The mechanic does not have a computer. How could we possibly barter ? This is where money is extremely useful.

As you know by now, I'm in favor of business but only if its healthy. I just dont see barter working.

Sorry ? :(

Alex Mcone said...
This comment has been removed by a blog administrator.
Brad Spangler said...

Personally, I don't see why getting rid of capitalism as a system of oppression would require getting rid of money.

Proudhon, Tucker and others believed the principal sources of economic oppression were simply state granted privilege (i.e. favoritism) and "usury" -- a term that generally, as they used it, meant state subsidization of capital accumulation (creating a vast disparity in bargaining power between labor and capital).

I've never seen a convincing argument about why they might have been wrong.

See also...

"THE IRON FIST BEHIND THE INVISIBLE HAND: Corporate Capitalism As a State-Guaranteed System of Privilege" by Kevin A. Carson

Daniel Owen said...

I just want to agree with Don, Alex and Brad. Exchange is here to stay, as is money.

Also, capitalism is neither FREE nor FAIR -- the latter stemming from the former. The capitalist method of production is characterised by state intervention in the economy on the side of monopoly, as that excellant Kevin Carson piece Brad linked to demonstrates. Proudhon, Bakunin and Marx (except when he was being silly) all said the same.

Cheers

an average patriot said...

capitalism once touted and I thought there was a place for seems like to be the end of free trade, America, and any semblance of world order it is right now running amok and bring us down!

Anok said...

Thanks for the comments so far, you've given me something substantial to chew on - Alex, I removed a comment from you 'coz it was a duplicate - not because I don't like you. (Just in case you were wondering :D )

As I told Don a bit earlier, I have responses to address all of your comments, but it'll be in a new post - as you all know I'm brevity challenged, anyway.

Besides, this was going to be a series of posts, but your comments have encouraged me to up the time line a bit.

Renegade Eye said...

Admitting there has to be a transitional period, before getting rid of currency, acknowledges that until classes don't exist, you can't have anarchy. The transition period is called socialism.

Anok said...

Perhaps, Ren, perhaps.

Don Lewis said...

Ren, the transition period to true communism was called the dictatorship of the proletariat.

Unfortunately, but perfectly predictably, once in power, the proponents of communism decided to keep the dictatorship part and dump the proletariat part.

The same thing will happen with an anarchic movement that uses socialism as its intermediate step. Socialism requires a strong central government to function at all.

It will be just "the new boss, same as the old boss". (Special thanks to The Who, 1972)

Daniel Owen said...

Yes, Don. As Michael Bakunin once said, It don't matter if the stick that the rulers use to beat the people is called "the people's stick."

Anonymous said...

The US Government is run by Globalists. They do not care about America or its middleclass workers. Look at NAFTA, corporate tax structures that make it BENEFICIAL to offshore production and jobs. Today Ford announced they chose Mexico over the US to build their new world car. Most people will probably never read about that. Nearly 30,000 created....in MEXICO. Go here and vote yourself a better job maybe:
www.AmericansForJobsAndEnergy.org
JoanJet

Blabrmouth said...

this type of barter worked when the scope of an economy was inside the city walls. The butcher needs knives, so he trades chickens with the iron smith.

In a global market economy, the easy transfer of goods and services for payment rendered only works if the payment instrument is accepted without hesitation throughout.

But, conceptually, I like the fairness part.

isonomist said...

Another distinction that deserves to be made, is that between "Capitalism" and the Free Market. Although now the two terms are used synonomously, the Free Market was intended to allow individuals to trade freely with one another through through a STABLE medium of exchange. Although the ability to gain capital was seen as essential as a reward to ones endeavors, those advocates of the free market among our nations founders--the most prominent being Jefferson and Madison (Hamilton and his allies were Mercantilists)--realised that the same abuses inherent to feudalism and imperial capitalism would occur within such a system as well if concentrations of wealth were not constrained. The now nearly defunct Rule Against Perpetuities was one such reform. Jefferson's suggestion that monopolies be forbidden by constitutional amendment never passed. Despite this, the admittedly imperfect early statesmen of our nation--even until the 1830's--believed that corporations had no place in an American economy except where they served an obvious public good. That the laws have been perverted since that time, to let wealth accumulate in the hands of the few, and to allow corporations that know no national allegiance nor any purpose than to enrich its officers even to its own would-be demise, and to further enrich the said officers in defiance of the natural operation of marketplace, and to stifle any actual market interaction between individuals in favor of an economy collectivized and organized for the sake of an elite oligopoly--the American equivelent of the 'Party Member'-- seems little edictment of market, but rather one upon those who have annointed themselves as elite and entitled beings, and who distort the meaning of both the words "market" and "democracy"

Halatir said...

A medium of exchange is not necessary for society or even "advanced" society to exist. No matter what rules or "reforms" are passed, nothing will keep monopolies from eventually forming as they have today and as they continue to do. We see price fixing, artificial scarcity (destroying surplus in order to keep prices higher), planned obsolescence (just go to a trade school in design and it's even included in lessons).

Point being, everything regresses and nothing lasts forever. What you have to decide is whether you want to try and go for something better than what we have now, or if you want to wait until we look like Benito Mussolini's Italy which we seem to be getting closer and closer to.

In fact this "impossible" society has existed in the past, as recently as 1918 in fact. The Free Territory of Ukraine is rather good example and Peter Kropotkin's economic principles of free trade were implemented successfully. Admittedly there's very little information, the Bolsheviks were rather threatened by Nestor Makhno's Anarchist experiment and so they did everything they could to wipe it from history, kinda like they did with people or "unpersons".

Anyway a democracy doesn't even exist at the moment. We are a Republic modeled after Rome. You might call this being "specific" but trust me, democracy was something to be avoided by our founding fathers. Back in the old days democracy was another name for what we today call "anarchism".

John Adams once wrote, "There was never a democracy that didn't commit suicide" and Hamilton justified the system of checks and balances by insisting that it was necessary to to create a permanent body of the "rich and well-born" to check the "imprudence" of democracy. To them a democracy meant the madness of crowds.

But I digress. Anyway money is a problem because it is inherently unequal. When I say equal or unequal, I don't mean "uniform" with everything the same. If anything Anarchism is the most individualistic ideology out there. What I mean is equal opportunity, equal access to necessities, etc.

It is inherently unequal because you create a pool of wealth that has to be distributed. You can try printing more but it'll just make every other bit of currency worth less than it was. It would be a logistical night-mare to make sure everyone has the same amount of money madly unfair to say the least. That's the problem economists and bureaucrats face, how to distribute their funds and where.

Halatir said...

Now someone above said that trading wooden cups for example wouldn't be fair for someone else. In the Free Territory of Ukraine there were township councils or congresses that the community went to and hammer out who was to do what. People aren't "forced" to work, it was more mass "volunteerism" than anything else, after all people back then already plowed the earth just to feed themselves and gave a shitton to the state so to them it seemed reasonable to grow your own food and say trade the surplus for a rocking chair or what have you.

And this is what they did, the rural communities traded agricultural products and such for machinery and commodities with the cities.

You might say "how do you organize all this???" or "truckers won't do this shit for free!" well when you realize that money is just a worthless piece of paper, (in America it's green) that doesn't even burn well to keep you warm (it just smolders to be honest) and you realize you can live a lot easier and better because there is more of everything and nothing breaks down a few months after procurement (planned obsolescence is a bitch) you won't mind sitting on your ass and driving a truck a few hundred miles. Hell that's easy work compared to construction work isn't it?

It has happened and can happen, people just need to quit asking "what do I get?" and being selfish (which you can't blame them for because they're taught this, after-all you don't want to give your hard earned cash away do you!)