Anarchist economics

Anarchist economics entails theory and praxis relating to economic activity within the ideological outlines of anarchism. Anarchists primarily oppose capitalism because they object to the idea of collecting rent from private property, taking a profit in exchanges, and collecting interest on loans--all of which they consider to be usury. The goal of anarchist economics is therefore to create or spread economic ideas and systems that preclude usury. Anarchist economics differs from Marxist ideas in that they do not rely on a State or centralized body.

Anarchist Critique of Capitalism

main article - Anarchism and capitalism

Critique of Subjective Theory of Value

Supporters of capitalism usually agree with what is called the Subjective Theory of Value (STV), as explained by most mainstream economic textbooks. This system of economics is usually termed "marginalist" economics.

The STV states that the price of a commodity is determined by its marginal utility to the consumer and producer. Marginal utility is the point on an individual's scale of satisfaction at which his/her desire for a commodity is satisfied. Hence price is the result of individual, subjective evaluations within the marketplace. Anarchists claim that STV is a myth and as an explanation of how to determine the price of a commodity, it has serious flaws.

Bias of Marginalist Economists

Anarchists object to the portrayal of economics as a "value-free science".

"[A]ll the so-called laws and theories of political economy are in reality no more than statements of the following nature:" "'Granting that there are always in a country a considerable number of people who cannot subsist a month, or even a fortnight, without accepting the conditions of work imposed upon them by the State, or offered to them by those whom the State recognises as owners of land, factories, railways, etc., then the results will be so and so.' "So far middle-class political economy has been only an enumeration of what happens under the just-mentioned conditions -- without distinctly stating the conditions themselves. And then, having described the facts which arise in our society under these conditions, they represent to us these facts as rigid, inevitable economic laws." -- Kropotkin's Revolutionary Pamphlets, p. 179

Command Economies and Free Markets

Anarchists object to useage of these terms even though they apply for some of their economic strategies. For example, technically, a Syndicalist-run labor-based currency system is a free market system, but because neoliberal rhetoric uses the term heavily, anarchists avoid the term, prefering to call such a system a fair market.

Similarly, anarchists object to the "command" part of command economy, though it simply means an economy in which production and consumption is controlled. Parecon is technically a command economy scheme, though it relies on feedback loops to regulate production/consumption.

Alternative Currency Theories

Many, if not most, anarchists advocate the abolition of money, but others call for a replacement of it with new value systems, new exchange paradigms, and new means of production, arguing that the modern economy cannot be handled without some kind of currency or that it will be a while before we can abolish currency.

Gift Economy

Gift Economies are those based of free distribution of goods and services. Anarcho-Communists are the main proponents of such. There are a number of variations on the concept, but they center around the notion of "From each according to ability to each according to need". Primitivists also also advocate this kind of economy.

Labor Theory of Value

The Labor theory of Value (LTV) was advanced by Karl Marx and David Ricardo as an analytical tool. It equates all labor-time to be worth the same no matter who it is done by or the nature of the work done. Therefore the price of all goods and services can be evaluated by the amount of labor done to obtain, manufacture, process, distribute, and transport it.

Recently, some local currencies have taken on LTV characteristics by having a currency based on time although participants are not primarily anarchists. Critics point out that in many of these Time-dollar based currencies, it is really easy to inflate the currency, that there is no way to ensure that people are not paid more than an HOUR per hour, and conversely it ignores factors like value-added work (work that incorporates past labor in order to perform, such as the time spent by a dentist in school). One of the reasons that the IRS has chosen not to tax local currencies is that they are used for charitable purposes, such as community-building.

Anarchists are interested in LTV currency systems because they make complex free market, fair trade systems possible, although in their current practices they are not applicable for anything other than local (ie. town-sized) economies. Detractors argue that the definition of a free market precludes usage of a normative pricing system, but anarchist point out that since participation in an LTV currency network is voluntary, any LTV system is merely another choice in a free market of markets.

Energy Theory of Value

The theory that all values can be evaluated in terms of Joules. In the same vein as LTV, this is an attempt to make a normative basis for value. Accounting for such a system would be vastly more complex than current or other theoretical currency systems because all energy output of workers and energy expenditure on goods/services must be tracked.

Theoretical Anarchist Economic Systems

Participatory Economics

main article - Parecon

Michael Albert and Robin Hahnel wrote about Parecon in the 1980's. It builds on the premise of gift economies to incorporate feedback loops to the production and consumption cycles to democratically regulate the economy. Though not strictly an "anarchist" idea, the concept of decentralized, efficient, economic regulation appeals to many anarchists.

Technological LTV Networks

A revision of LTV that incorporates information technology, cryptography, and open-source software to create an medium of exchange that precludes all forms of usury and thus requires no oversight or ideological guidance. In contrast to Parecon, there is no planned economy because users of the system will approve of labor that they feel is necessary and so production happens as people fill the labor market as they will.

Crucial to this system is the premise that money (credit for work done) can be improved with the addition of identity, information, and transparency, i.e. all credits created are associated with a particular individual (they are non-transferable), they inform users of the work done to create it, and can be viewed by any user on the system.

There are no specifications for how decisions are made within these Technological LTV Systems - each one is tasked to create its own ruleset. Joining such a network would be akin to signing a contract or EULA so revision of rulesets would resemble the open-source paradigm of updating software and having the user agree to a new ruleset. Decision making would then be implicit in any user's ability to participate in the revision of the system software, even though this approach could be elitist.

Prices on goods and services would be evaluated by the amount of credit earned by laborers involved--requiring that every individual item or service be tracked. Production then represents a mirror of the credit creation, so physical items would require their "negative" credit to be cancelled by a person wishing to own it. Since income distribution would be relatively flat in this system, it is hoped that most of the problems of capitalist accumulation and class structure will be avoided.

Panarchist Synthesis

This is the theory that all alternative economic systems could exist simultaneously. Though it may imply accepting a greater complexity of day-to-day living, anarchists predicate this overlapping of systems on the removal of states and corporations, and the presence of multiple currency paradigms. In effect, this would be analgous, on an individual level, to having various subscriptions or club memberships--a level of complexity surpassed by the average American middle-class consumer that holds several credit cards with various debts, owes mortage and car payments, and so forth.

The motive to adopt a panarchist approach to economics is the theory that not all goods, services, or resources are best exchanged/regulated within a single system. Ie. energy production is best tracked in kilowatts-hours, but collectible items have highly subjective values and therefore require a different exchange medium.

Economics as Anarchist Strategy

Some anarchists believe that it is not radical political activity that will transform society, but radical economic activity that will make true change. They regard boycotts, consumer advocacy, and class-action lawsuits to be merely liberal actions that do not address the core problem which is capitalism itself.

Anarchists believe that changing the nature of work itself is the crux of defeating capitalism. Parecon addresses the division of labor question by advocating balanced job complexes wherein all workers at a production facility share in all aspects of labor, i.e. everyone takes part in labor, management, maintenance, and all related work in order to ensure equality and that skills are shared amongst workers. Labor Theory of Value based alternative currencies are founded on the assumption that if all compensation for work was equal, people will gravitate towards work that they most enjoy or feel compelled to do (for the greater "good").

Almost all anarchists believe that changing personal consumption habits to minimize (or eliminate entirely) all involvement in the prevailing capitalist economy is essential to practicing anarchism in their lives. Dropping out of the system by living on scavenged, stolen, or scammed resources is often touted by situationists such as CrimethInc. as a viable means of survival and non-participation in the system.

Shadow Economies

Shadow Economics entails the use of alternative currencies and growing them to the point where other curriences based on STV principles cease to exist. Since States cannot collect taxes and revenue through use of alternative currencies they will theoretially lose power to the point of collapse. If alternative currencies are designed to not permit usury, capitalist enterprises will have nothing to gain in these shadow economies and will also be "pushed out" if the alternative currencies become popular.

Outside Links

Alternative Currency

Complementary Currencies
Helger Lipmaa's links on electronic cash
NeuMoNe (The Neutral Money Network)
LETS Systems
OpenMoney Project

Ostensibly Anarchist

General Left-Wing Economic Reporting

Dollars & Sense - "The Magazine of Economic Justice"
Left Business Observer - "accumulation & its discontents"
Left Turn - "Notes from the Global Intifada"
Financial Sense