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Title: The Economics of Anarchism
Author: Anarcho
Date: 4th of September 2009 / 24th of November 2012
Language: en
Topics: economics, libertarian socialism, libertarian communism
Source: Retrieved on 4th of September 2009 from http://www.anarchism.pageabode.com/anarcho/the-economics-of-anarchy Retrieved on 24th of November 2012 http://anarchism.pageabode.com/anarcho/anarchist-economics
Notes: Two texts put together (The Economics of Anarchy and Anarchist Economics)

Anarcho

The Economics of Anarchism

The Economics of Anarchy

To quote someone who sums up the intellectual times in which we live,

Sarah Palin: “now is not the time to experiment with socialism” This,

during the worse crisis since the 1930s! Anarchists would say that is

precisely the time – but only as long as we are talking about

libertarian socialism!

Capitalism in crisis (again!) and the failure of state socialism could

not be more clear. Social democracy has become neo-liberal (New Labour?

New Thatcherites!) while this year also marks the 20th anniversary of

the collapse of Stalinism in Eastern Europe. With its state capitalism

and party dictatorship, Stalinism made the disease (capitalism) more

appealing than the cure (socialism)! In this anarchists should be feel

vindicated – the likes of Bakunin predicted both these outcomes decades

before they became reality.

So there is an opening for a real alternative. For we must not forget

that capitalism is but the latest form of economy. To Proudhon: “the

radical vice of political economy, consists ... in affirming as a

definitive state a transitory condition, – namely, the division of

society into patricians [a wealthy elite] and proletaires.” So we have

seen slave labour, followed by serfdom, followed by capitalism. What is

capitalism? As Proudhon put it, the “period through which we are now

passing ... is distinguished by a special characteristic: WAGE LABOUR”

(“la salariat”, to use the Frenchman’s favourite term for it).

So capitalism is an economic system based on hired labour, that is

selling your labour (liberty) piecemeal to a boss. For anarchists, this

is best called “wage slavery”

Anarchism aims for associated labour, free labour in other words – the

situation where those who do the work manage it. In the longer term, the

aim is for abolition of work (work/play becoming the same thing). To

quote Kropotkin, we aim to “create the situation where each person may

live by working freely, without being forced to sell [their] work and

[their] liberty to others who accumulate wealth by the labour of their

serfs.”

Origins of anarchism

Anarchism was not thought-up by thinkers in a library. Its origins, as

Kropotkin stressed in his classic work “Modern Science and Anarchism”,

lie in the struggle and self-activity of working class people against

exploitation and oppression.

We do not abstractly compare capitalism to a better society, rather we

see the structures of new world being created in struggle within, but

against, capitalism. Thus the assemblies and committees created to

conduct a strike are seen as the workplace organisations which will

organise production in a free society. To quote the Industrial Workers

of the World: Building the new world in the shell of the old.

Different schools of anarchism

There are generally three different schools of anarchism (or libertarian

socialism): Mutualism, Collectivism and Communism. Anarcho-Syndicalism

more a tactic than a goal and so its adherents aim for one of these

three (usually, anarcho-communism although Bakunin, who first formulated

anarcho-syndicalist tactics, called himself a collectivist). In

practice, of course, different areas will experiment in different

schemes depending on what people desire and the objective circumstances

they face. Free experimentation is a basic libertarian principle.

While these three schools differ on certain issues, they share certain

key principles. In fact, if someone claims something as “anarchism” and

it rejects any one of these then we can safely say it is not anarchism

at all.

The first principle is possession, not private property. Following

Proudhon’s “What is Property?”, use rights replace property rights in a

free society. This automatically implies an egalitarian distribution of

wealth. The second is socialisation. This means free access to

workplaces and land, so the end of landlords and bosses (this is

sometimes called “occupancy and use”). The third is voluntary

association, in other words self-management of production by those who

do it. While the name given to these worker associations vary

(co-operatives, syndicates, collectives, workers companies are just

four), the principle is the same: one person, one vote. The last key

principle is free federation. This is based on free association, which

is essential for any dynamic economy, and so horizontal links between

producers as well as federations for co-ordination of joint interests.

It would be rooted in decentralisation (as both capitalist firms and the

Stalinist economies prove, centralisation does not work). It would be

organised from the bottom-up, by means of mandated and recallable

delegates

Bakunin summarised this kind of economy well when he stated that the

“land belongs to only those who cultivate it with their own hands; to

the agricultural communes ... the tools of production belong to the

workers; to the workers’ associations.” The rationale for decision

making by these self-managed workplaces would be as different from

capitalism as their structure. To quote Kropotkin, economics in a sane

society should be the “study of the needs of mankind, and the means of

satisfying them with the least possible waste of human energy.” These

days we would need to add ecological considerations – and it is almost

certain Kropotkin would have agreed (his classic Fields, Factories and

Workshops has an obvious ecological perspective even if he does not use

the term).

Critique of Property

To understand anarchist visions of a free economy, you need to

understand the anarchist critique of capitalism. As is well known,

Proudhon proclaimed that “property is theft”. By that he meant two

things. First, that landlords charged tenants for access to the means of

life. Thus rent is exploitative. Second, that wage labour results in

exploitation. Workers are expected to produce more than their wages. To

quote Proudhon:

“Whoever labours becomes a proprietor – this is an inevitable deduction

from the principles of political economy and jurisprudence. And when I

say proprietor, I do not mean simply (as do our hypocritical economists)

proprietor of his allowance, his salary, his wages, – I mean proprietor

of the value his creates, and by which the master alone profits ... The

labourer retains, even after he has received his wages, a natural right

in the thing he was produced.”

This feeds into Proudhon’s “property is despotism.” In other words, that

it produces hierarchical social relationships and this authority

structure allows them to boss workers around, ensuring that they are

exploited. To quote Proudhon again:

“Do you know what it is to be a wage-worker? It is to labour under

another, watchful for his prejudices even more than for his orders ...

It is to have no mind of your own ... to know no stimulus save your

daily bread and the fear of losing your job. The wage-worker is a man to

whom the property owner who hires him says: What you are to do is to be

none of your business; you have nothing to control in it.”

To achieve this, as noted above, use rights replace property rights.

Personal possession remains only in the things you use. To quote

Alexander Berkman, anarchism

“abolishes private ownership of the means of production and

distribution, and with it goes capitalistic business. Personal

possession remains only in the things you use. Thus, your watch is your

own, but the watch factory belongs to the people. Land, machinery, and

all other public utilities will be collective property, neither to be

bought nor sold. Actual use will be considered the only title – not to

ownership but to possession. The organisation of the coal miners, for

example, will be in charge of the coal mines, not as owners but as the

operating agency. Similarly will the railroad brotherhoods run the

railroads, and so on. Collective possession, co-operatively managed in

the interests of the community, will take the place of personal

ownership privately conducted for profit.”

Proudhon summarised this well as “possessors without masters”

Socialisation

While not all anarchists have used the term “socialisation”, the fact

this is the necessary foundation for a free society and, unsurprisingly,

the concept (if not the word) is at the base of anarchism. This is

because it ensures universal self-management by allowing free access to

the means of production. As Emma Goldman and John Most argued, it

“logically excludes any and every relation between master and servant”

This has been an anarchist position as long as anarchism has been called

anarchism. Thus we find Proudhon arguing in 1840 that “the land is

indispensable to our existence” and “consequently a common thing,

consequently insusceptible of appropriation” and that “all accumulated

capital being social property, no one can be its exclusive proprietor.”

This means “the farmer does not appropriate the field which he sows” and

“all capital ... being the result of collective labour” is “collective

property.” Unsurprisingly, Proudhon argued for “democratically organised

workers associations” and that “[u]nder the law of association,

transmission of wealth does not apply to the instruments of labour, so

cannot become a cause of inequality.”

As economist David Ellerman explains, the democratic workplace “is a

social community, a community of work rather than a community residence.

It is a republic, or res publica of the workplace. The ultimate

governance rights are assigned as personal rights ... to the people who

work in the firm ... This analysis shows how a firm can be socialised

and yet remain ‘private’ in the sense of not being government-owned.”

Self-management

Socialisation logically implies that there would be no labour market,

simply people looking for associations to join and association looking

for associates. Wage-labour would be a thing of the past and replaced by

self-management.

This is sometimes termed “workers’ control” or, in the words of

Proudhon, “industrial democracy” and the turning of workplaces into

“little republics of workers.” For Kropotkin, a libertarian economy

would be based on “associations of men and women who ... work on the

land, in the factories, in the mines, and so on, [are] themselves the

managers of production.”

This would be based on one member, one vote (and so egalitarian

structures and results); administrative staff elected and recallable;

integration of manual and intellectual work; and division of work rather

than division of labour.

Thus, as Proudhon suggested, workplaces “are the common and undivided

property of all those who take part therein” rather than “companies of

stockholders who plunder the bodies and souls of the wage workers.” This

meant free access, with “every individual employed in the association”

having “an undivided share in the property of the company” and has “a

right to fill any position” as “all positions are elective, and the

by-laws subject to the approval of the members.”

While these principles underlie all schools of anarchism, there are

differences between them.

Mutualism

The first school of anarchism was mutualism, most famously associated

with Proudhon. [1]

This system has markets. This does not imply capitalism, as markets are

not what define that system. Markets pre-date it by thousands of years.

What makes capitalism unique is that it has the production of

commodities and wage labour. [2] So this means that mutualism is based

on producing commodities but with wage labour replaced by

self-employment and cooperatives.

This implies that distribution is by work done, by deed rather than

need. Workers would receive the full product of their labour, after

paying for inputs from other co-operatives. This does not mean that

co-operatives would not invest, simply that association as a whole would

determine what faction of their collective income would be distributed

to individual members and would be retained for use by the co-operative.

It should be noted here that neo-classical economics argues that

co-operatives produce high unemployment. However, like the rest of this

ideology this is based on false assumptions and is, ultimately, a theory

whose predictions have absolutely nothing to do with the observed facts.

As well as co-operatives, the other key idea of mutualism is free

credit. People’s Bank would be organised and would charge interest rates

covering costs (near 0%). This would allow workers to create their own

means of production. Again, neo-classical economics suggest that there

would be a problem of inflation as mutual banks would increase the money

supply by creating credit. However, this is flawed as credit is not

created willy-nilly but “rationed”, i.e., given to projects which are

expected to produce more goods and services. Thus it would not be a case

of more and more money chasing a set number of goods but rather money

being used to create more and more goods!

Lastly, there is the Agro-industrial federation. Proudhon was well aware

of the problems faced by isolated co-operatives and so suggested

associations organise a federation to reduce risk by creating

solidarity, mutual aid and support. As all industries are interrelated,

it makes sense for them to support each other. In addition, the

federation was seen as a way to stop return of capitalism by market

forces. It would also be for public services (such as railways, roads,

health care and so forth) which would be communally owned and run by

workers co-operatives.

Mutualism is reformist in strategy, aiming to replace capitalism by

means of alternative institutions and competition. Few anarchists

subscribe to that perspective.

Collectivism

The next school of anarchist economics is collectivism, most famously

associated with Bakunin. It is similar to mutualism, less market based

(although still based on distribution by deed). However, it has more

communistic elements and most of its adherents think it will evolve into

libertarian communism.

So it can be considered as a half-way house between mutualism and

communism, with elements of both. As such, it will not be discussed here

as its features are covered in these two. Like libertarian communism, it

is revolutionary, considering that capitalism cannot be reformed.

Communism

First, this is not like Stalinism/Leninism! That was state capitalism

and not remotely communistic, never mind libertarian communist. Most

anarchists are libertarian communists and the theory is most famously

associated with Kropotkin.

Unlike mutualism and collectivism, there are no markets. It is based on

the abolition of money or equivalents (labour notes). So no wage labour

AND no wages system (“From each according to their abilities, to each

according to their needs”).

Communist-anarchism extends collective possession to the products of

labour. This does not mean we share toothbrushes but simply that goods

are freely available to those who need it. To quote Kropotkin:

“Communism, but not the monastic or barrack-room Communism formerly

advocated [by state socialists], but the free Communism which places the

products reaped or manufactured at the disposal of all, leaving to each

the liberty to consume them as he pleases in his [or her] own home.”

These anarchists urge the abolition of money because there are many

problems with markets as such, problems which capitalism undoubtedly

makes worse but which would exist even in a non-capitalist market

system. Most obviously, income does not reflect needs and a just society

would recognise this. Many needs cannot be provided by markets (public

goods and efficient health care, most obviously). Markets block

information required for sensible decision making (that something costs

£5 does not tell you how much pollution it costs or the conditions of

the workplace which created it). They also systematically reward

anti-social activity (firms which impose externalities can lower prices

to raise profits and be rewarded by increased market share as a result).

Market forces produce collectively irrational behaviour as a result of

atomistic individual actions (e.g., competition can result in people

working harder and longer to survive on the market as well as causing

over-production and crisis as firms react to the same market signals and

flood into a market). The need for profits also increases uncertainty

and so the possibility of crisis and its resulting social misery.

Rather than comparing prices, resource allocation in anarcho-communism

would be based on comparing the use values of specific goods as well as

their relative scarcities. The use-values compared would be both

positive (i.e., how well does it meet the requirements) and negative

(i.e., what resources does it use it, what pollution does it cause, how

much labour is embodied in it, and so on). In this way the actual cost

information more often then not hidden by the price can be communicated

and used to make sensible decisions. Scarcity would be indicated by

syndicates communicating how many orders they are receiving compared to

their normal capacity – as syndicates get more orders, their product’s

scarcity index would rise so informing other syndicates to seek

substitutes for the goods in question.

Evidence

Fine, it will be said, but that is just wishful thinking! Not true as

the empirical evidence is overwhelming for libertarian economic ideas.

For example, workers’ participation in management and profit sharing

enhance productivity. Worker-run enterprises are more productive than

capitalist firms. A staggering 94% of 226 studies into this issue showed

a positive impact, with 60% being statistically significant.

Interestingly, for employee ownership to have a strong impact on

performance, it needs worker participation in decision making.

Co-operatives, moreover, have narrow differences in wages and status

(well under 1 to 10, compared to 1 to 200 and greater in corporations!).

Unsurprisingly, high levels of equality increase productivity (as

workers don’t like slaving to make others rich off their labour!).

What about a lack of stock market? No real need to discuss how stock

markets are bad for the real economy in the current cycle but suffice to

say, they serious communication problems between managers and

shareholders. Moreover, the stock market rewards short-term

profit-boosting over long-term growth so leading to over-investment in

certain industries and increasing risk and gambling. Significantly,

bank-centred capitalism has less extreme business cycle than stock

market one.

The successful co-operatives under capitalism, like Mondragon, are

usually in groups, which shows sense of having an agro-industrial

federation and are often associated with their own banking institutions

(which, again, shows the validity of Proudhon’s ideas).

Then there is the example of various social revolutions around the

world. No anarchist talk would be complete with a reference to the

Spanish Revolution of 1936 and this is no exception. Yet we do so for a

reason as this shows that libertarian self-management can work on a

large-scale, with most of industry in Catalonia successfully

collectivised while vast areas of land owned and managed collectively.

More recently, the revolt against neo-liberalism in Argentina included

the taking over of closed workplaces. These recuperated factories show

that while the bosses need us, we do not need them!

Getting there

So, with the desirability and validity of libertarian socialism

sketched, the question becomes one of how do we get there. Obviously,

one elements of this would be creating and supporting co-operatives

within capitalism (Proudhon: “That a new society be founded in the heart

of the old society”) This could include promoting socialisation and

co-operatives as an alternative to closures, bailouts and

nationalisation.

However, most anarchists see that as just a part of encouraging a

culture of resistance, or encouraging collective struggles against

capitalism and the state. In other words, encouraging direct action

(strikes, protests, occupations, etc.) and ensuring that all struggles

are self-managed by those within them and that any organisations they

create are also self-managed from below. The goal would be for people to

start occupying workplaces, housing, land, etc., and so making

socialisation a reality. By managing our struggles we learn to manage

our lives; by creating organisations for struggles against the current

system we create the framework of a free society.

Together we can change the world!

More information: section I of An Anarchist FAQ)

(Based on a talk give at the Radical Routes Conference “Practical

Economics: radical alternatives to a failed economic system” on the 23rd

May. Radical Routes is a network of co-operatives and can be contacted

at Radical Routes Enquiries, c/o Cornerstone Resource Centre, 16

Sholebroke Avenue, Leeds, LS7 3HB)

Anarchist Economics

Introduction

Economics, rightly, is subject to much scorn. As Malatesta memorably put

it: “The priest keeps you docile and subjected, telling you everything

is God’s will; the economist says it’s the law of nature.” Thus “no one

is responsible for poverty, so there’s no point rebelling against it.”

Proudhon, rightly, argued that “political economy… is merely the

economics of the propertied, the application of which to society

inevitably and organically engenders misery.” People suffering austerity

across the world would concur with him: “The enemies of society are

Economists.”

Nothing has changed, except the usual alternative has been shown to be

worse. Only a non-worker could come up with Lenin’s vision: “All

citizens are transformed into the salaried employees of the state… The

whole of society will have become a single office and a single factory.”

The poverty of this concept of socialism is summed up by his

proclamation that we must “organise the whole economy on the lines of

the postal service.” Clearly someone not aware of the expression going

postal…

As Kropotkin noted long ago, the Marxists “do not trouble themselves at

all to explain that their idea of a Socialist State is different from a

system of State capitalism under which everybody would be a functionary

of the State.”

We need a better vision than replacing capitalists with bureaucrats.

The need for an alternative

Anarchists have long fought against this limited vision (on both sides).

Emma Goldman, for example, argued that “[r]eal wealth consists of things

of utility and beauty, in things that help create strong, beautiful

bodies and surroundings inspiring to live in.” You will not find that in

economics textbooks! Kropotkin put it well:

“Under the name of profits, rent, interest upon capital… economists have

eagerly discussed the benefits which the owners of land or capital… can

derive… from the under-paid work of the wage-labourer… the great

question ‘What have we to produce, and how?’ necessarily remained in the

background… The main subject of social economy – that is, the economy of

energy required for the satisfaction of human needs is consequently the

last subject which one expects to find treated in a concrete form in

economical treatises.”

This suggests that socialism would mean the end of bourgeois economics,

which is little more than ideology defending capitalism and the rich,

not a science… In fact, it would mean the dawn of economics as a genuine

science.

What is Anarchist economics?

So what is Anarchist economics? It means, I think, two things. The first

is an anarchist analysis and critique of capitalism while the second are

ideas on how an anarchist economy could function. The two are obviously

interrelated. What we are opposed to in capitalism will be reflected in

our visions of a libertarian economy just as our hopes and dreams of a

free society will inform our analysis

But before discussing anarchist economics, I will need to quickly cover

non-libertarian alternatives. Historically, there have been two ways of

looking at the problem of a socialist economy, both of which are wrong.

The first is to provide detailed descriptions of the future society, the

second is to limit yourself to short comments on socialism.

Recipes for the cook-shops of the future…

The first socialists, the likes of Fourier and Saint-Simon, did present

detailed plans and two things quickly become clear. The first is the

impossibility of their perfect communities, the second is their elitist

nature – they really did think they knew best and so democracy and

liberty were not important in their visions of “socialism” (if that is

the right word). Proudhon, rightly, attacked these systems as tyranny

(which he termed “Community,” but is usually translated as “communism”).

Regardless of the desirability or practicality of these visions, the

underlying notion that we can produce detailed descriptions is false.

Adam Smith, for example, did not present a detailed model of how

capitalism should work, he described how it did work. The abstract

models came later, with neo-classical economics to justify the current

system. This reached its height in post-war economics, which saw

economists producing irrelevant models based on impossible assumptions.

Sadly, these have been and still are being used to impose terrible

things on real economies and so real people.

We do not want to repeat this just to impress a few neo-classical

true-believers

Marxism as an impossibility (at best) or state capitalism (at worse)

The other way of looking at socialist economists is associated with

Marx. He wrote very little about socialism, undoubtedly in reaction to

the Utopian socialists and their detailed plans. Sadly, his few

scattered remarks on planning have proved to be the bane of socialism.

The problem can be seen from his alternative to Proudhon’s market

socialism in The Poverty of Philosophy, which amounted to just three

sentences. It is a classic example of the fallacy of composition, only

appearing to be feasible when you are discussing the economic

relationships between two people as Marx did (his Peter and Paul). It is

decidedly not feasible for an economy that has millions of people,

products and workplaces within it. In such circumstances it is simply

utopian, as would have been obvious if Marx had tried to explain how it

would work!

Marx quickly dropped the immediate (centralised) communism of The

Poverty of Philosophy and The Communist Manifesto argued for a

transitional period of state capitalism. This would be the basis on

which “socialism” would be slowly introduced, a “socialism” built on

capitalist structures and marked by centralisation. Yet this advocacy of

central planning was based on a fallacy, an extrapolation from how

capitalist firms were growing in size and replacing the market by

conscious decision making on a wider scale. Yet under capitalism the

decision-making criteria is narrow and Marx never questioned whether

planning by large firms was only possible because it was based on one

factor – profit. It is this reductionism within capitalism that makes it

wrongly appear that centralised planning could work.

Also, it seems strange that by some sort of happy coincidence that an

economic and industrial structure forged by the criteria necessary for

increasing the profits and power of the ruling few is perfect for

socialism, a system which should meet the needs capitalism denies!

As with neo-classical economics, these false ideas have consequences.

During the Russian Revolution they provided the ideological underpinning

for the Bolsheviks undermining the genuine (if incomplete) socialism of

the factory committees in favour of the centralised industrial

structures inherited from capitalism (the Tzarist Glavki) – with

disastrous results both for the economy and socialism.

Sketching the future by analysing the present

So the Marxist is perspective is flawed, a few sentences are not enough.

We need to sketch the future, based on analysis of modern society and

its tendencies.

I must stress that Anarchists do not abstractly compare capitalism to

some perfect model. As Proudhon argued in 1846 (in his System of

Economic Contradictions), the “present form” of organising labour “is

inadequate and transitory.” While he agreed with the Utopian Socialists

on this, he rejected their vision making in favour of grounding his

socialism in an analysis of trends and contradictions within capitalism:

“we should resume the study of economic facts and practices, discover

their meaning, and formulate their philosophy… The error of socialism

has consisted hitherto in perpetuating religious reverie by launching

forward into a fantastic future instead of seizing the reality which is

crushing it…”

This analysis and critique of capitalism does feed into positive

visions.

Proudhon, for example, argued that workers were exploited within

production as they have “sold their arms and parted with their liberty”

to the boss who controls their labour and appropriates the “collective

force” they produce. However, “[b]y virtue of the principle of

collective force, workers are the equals and associates of their

leaders.” Yet “that association may be real, he who participates in it

must do so” as “an active factor” with “a deliberative voice in the

council” based on “equality.” This implies free access and socialisation

and so workers must “straightway enjoy the rights and prerogatives of

associates and even managers” when they join a workplace. This meant the

need to create “a solution based upon equality, – in other words, the

organisation of labour, which involves the negation of political economy

and the end of property.”

Creating the future by fighting the present

Today, we can only analyse capitalism, understand its dynamics and

identify elements within it which point to the future. These two forms –

objective tendencies within capitalism (such as large-scale production)

and oppositional tendencies against it (such as unions, resistance,

strikes).

The last is key and what differentiates anarchism from Marxism, who

generally stress the former. Thus we find Proudhon pointing to

co-operative workplaces and credit during the 1848 revolution while

revolutionary anarchists like Bakunin and Kropotkin looked to the labour

movement. The latter, for example, arguing for “the workers, organised

by trades…[to] seize all branches of industry… [and] manage these

industries for the benefit of society.” And we can easily see how the

strike assemblies, committees and federations fighting capitalist

oppression and exploitation today can become the workplace assemblies,

committees and federations of the free socialist economy of tomorrow.

This perspective provides the necessary understanding of where socialism

will come from, from below by self-activity of the oppressed fighting

for their freedom. This, in turn, shows how the basic structures of

libertarian socialism will be the organs created by working class people

in their struggles against exploitation and oppression.

And will take time. As Kropotkin stressed, anarchists “do not believe

that… the Revolution will be accomplished at a stroke, in the twinkling

of a eye, as some socialists dream.” This is particularly the case given

the economic problems he rightly predicted a social revolution would

face. So he was correct to argue that “were we to wait for the

Revolution to display an openly communist or indeed collectivist

character right from its insurrectionist overtures, that would be

tantamount to throwing the idea of Revolution overboard once and for

all.” And this can be seen from every revolution – even the Spanish

revolution of 1936 and the collectives created by the members of CNT

which were not planned or desired by anarchists but rather a product of

the specific circumstances of the time (not that Marxists seem aware of

that, I must note!).

The Building Blocks of (libertarian) Socialism

So anarchist economics will develop after a revolution, as an anarchist

economy evolves. Yet based on what has been said we can sketch its

basics.

There is much in common in all schools of anarchism. Proudhon summarised

the core vision well when he argued that “ownership of the land and of

the instruments of labour is social ownership” and argued for

“democratically organised workers’ associations” united in a “vast

federation.”

Such an economy would see use rights, possession and socialisation

replacing private and state property, with self-management of production

(as Kropotkin constantly stressed, the workers “ought to be the real

managers of industries”). There would be socio-economic federalism on

the industrial, agricultural and communal levels along with user,

interest and user groups.

This would be a decentralised economy. As Kropotkin rightly argued, the

“economic changes that will result from the social revolution will be so

immense and so profound… that it will be impossible for one or even a

number of individuals to elaborate the [new] social forms… [This] can

only be the collective work of the masses.” This implies the need for

free agreements (or contracts) between economic bodies based on genuine

autonomy and horizontal links.

Simply put, production needs decentralisation and so agreements between

parties. A centralised body simply cannot know the requirements of

specific needs that are inherently subjective (as value in use must be,

by definition). It cannot know what criteria are needed in terms of

needs to be met (positive use values) or the costs that are considered

acceptable to meet them (negative use values). Nor can it know when and

where goods are needed. If it tried, it would be swamped by the data –

assuming it could collect all of it in the first place (or even know

what to ask!).

This applies for both individuals as well as workplaces and communities.

As Kropotkin correctly predicted, the idea of a “strongly centralised

Government… command[ing] that a prescribed quantity” of goods “be sent

to such a place on such a day” and “received on a given day by a

specified official and stored in particular warehouses” was both

“undesirable” and “wildly Utopian.” A feasible and appealing socialism

needs “the co-operation, the enthusiasm, the local knowledge” of the

people.

Such a system would be based on appropriate technology. Here I need to

stress that anarchists are not opposed to large-scale industry and have

clearly stated that since Proudhon onwards. Thus we find Kropotkin

arguing that “if we analyse the modern industries, we soon discover that

for some of them the co-operation of hundreds, or even thousands, of

workers gathered at the same spot is really necessary. The great iron

works and mining enterprises decidedly belong to that category; oceanic

steamers cannot be built in village factories.” In a free society the

scale of industry would be driven by objective needs, unlike capitalism

were profits all too often fosters a size not required by the

technology.

In addition, production would be based on integration not division. The

division of work replaces division of labour with the combining of

manual and mental work, industrial and agricultural labour. Agriculture

and industry would co-exist together in free communities, giving people

a wide range of labours and ending the division between order-givers and

order-takers, the lucky few with interesting work and the many toiling

away in unhealthy environments doing boring tasks.

This, of course, implies the transformation of workplaces, their

surroundings and work itself. Many seem to think that libertarian

socialism will take over, and leave unchanged, the industrial structure

and ways of working intact from capitalism – as if workers would do

things in the same way after a social revolution!

Libertarian Communism

Again, all this is pretty much common to all schools of anarchism. The

key difference is distribution – whether to base consumption on labour

done or communism, the old deeds versus needs debate.

It is fair to say that most anarchists are communists – not in the sense

of the Soviet Union (I’ve seen apparently intelligent people suggest

that!) but in the sense of “from each according to their abilities, to

each according to their needs.” Ethically, most anarchists would agree

with me that this is best system, for reasons Kropotkin indicated so

well and which I won’t attempt to summarise here.

How quickly such a system can be reached has long been a moot point in

anarchist circles, as have ideas on how precisely it will work. Suffice

to say, a libertarian communist society will develop based on the

desires of, and the objective circumstances facing, those creating it.

Yet we can and must discuss some obvious issues with such a system

today.

Unlike mutualism, say, there are no prices. While the need for profits

drives economic crises and adds to uncertainty under capitalism, it is

fair to say that there are many problems with even non-capitalist

markets. Yet market prices do guide economic decision-making as they

reflect real costs such as labour, raw materials, time and so on (while

ignoring, at worse, or hide, at best, many more) as well as reflecting

changing productive situations (even if distorted under capitalism by

monopoly, profits, etc.).

This raises the obvious question how best to allocate resources without

prices? This is not obvious. For example, gold and lead have similar use

values so why use one and not the other? Markets (however badly) do that

(gold being £100/kg and lead £10/kg makes which one to pick simple,

although too simplistic). So a libertarian communist economy needs to

inform people of the real costs and circumstances of production, without

the distorting impact of markets. As Kropotkin suggested, “are we not

yet bound to analyse that compound result we call price rather than to

accept it as a supreme and blind ruler of our actions?” Thus “we [have

to] analyse price” and “make a distinction between its different

elements” in order to inform our economic and social decision-making.

So we need to agree in the federal structures of a free society the

guidelines used to allocate resources. For example, a weighted points

scheme for the various factors in decision making could be created in

order to have a cost-benefit analysis at each stage of creating a

product (premised on previous decisions being right and costs

communicated). This would reflect objective costs (the time, energy and

resources needed), but what of supply and demand changes? This is an

important issue, as a libertarian communist society will have to produce

(supply) goods in response to requests (demand) for them. First off, it

would be common sense that each workplace would maintain stocks for

unexpected changes in requests in order to buffer out short-lived

changes in production or requests. In addition, each workplace could

have a scarcity index which indicates relative changes in requests

and/or production and this would be used by other workplaces to look for

alternatives – so if a given product cannot be supplied then the

scarcity index would rise, so informing others that they should contact

other workplaces or seek slightly different materials as inputs.

Federations of workplaces would seek to monitor changes in both, in

order to organise major investment/closures and large-scale projects –

based on dialogue with community, special interest and user

organisations and federations. Investment would done on different

levels, of course, with individual workplaces investing to reduce time

to produce goods in order to get more free time for members (and so be a

real incentive to innovate processes and productivity). The need for

federalism rests precisely on the fact that different decisions need to

be made at different (appropriate) levels.

Production however is more than producing goods. There is a human

question which outweighs questions of cheapness or mechanical

feasibility. So we must reject single objectives or criteria (like

maximising profit or reducing time) and look at the whole picture. So

while capitalism is based on “is it cheap?”, a libertarian economy would

be rooted in “is it right?”

Conclusions

Ultimately, we have a self-interest in economic freedom. I have never

understood how slaving for a boss can be held up as an example of

selfishness yet that is what bourgeois economics does.

As Kropotkin stressed, “production, having lost sight of the needs of

man, has strayed in an absolutely wrong direction, and that its

organisation is at fault… let us… reorganise production so as to really

satisfy all needs.” And these are the needs of the whole person, the

unique individual – as a “consumer” (user) of use-values, as a producer,

as member of a community and as part of an eco-system. The needs

capitalism denies or partially meets at the expense of other, equally

important, aspects of our lives.

Unlike Marxists, we are well aware that our current economic structure

is marked by the scars of the drive for profits within a class

hierarchy. So while our short term aim is to expropriate capital and

turn it to meeting human needs our longer term aim is to transform

industry and the industrial structure precisely because we recognise

what is “efficient” under capitalism cannot, regardless of what Lenin

said, be considered as good for socialism.

As I suggested earlier, anarchist economics will develop after a

revolution, as an anarchist economy evolves. We cannot predict the end

point, as our vision is impoverished by capitalism. All we can do today

is sketch a libertarian society as it emerges from the abolition of

class and hierarchy, a sketch based on our analysis and critique of

capitalism, the struggle against it and our hopes and dreams.