Anarchism and capitalism

Though the anarchist critique of capitalism is rooted in socialist theory, there are certain key distinctions in their critiques, which this article attempts to elucidate. Some of the critiques listed here may mirror marxist ideas but are written by anarchist writers from the same era. Certain critiques of capitalism may even be completely unique to the anarchist movement. Note that these objections would not be made by anarcho-capitalists, who support laissez-faire capitalism.

Historical Critique

Objections to the Idea of Profit

Anarchists point to profit to be the driving motive of capitalists. If a profit cannot be made, a good is not produced, regardless of how many people "subjectively value" it. They point to the origins of profit itself.

In order to make more money, money must be transformed into capital, i.e., workplaces, machinery and other "capital goods." By itself, however, anarchists argue that capital (like money) produces nothing. Rather, capital only becomes productive in the labour process when workers use capital.

"Neither property nor capital produces anything when not fertilised by labour" - Bakunin

Under capitalism, workers not only create sufficient value (i.e. produced commodities) to maintain existing capital and their own existence, they also produce a surplus. This surplus expresses itself as a surplus of goods, i.e. an excess of commodities compared to the number a workers' wages could buy back.

"The working man cannot. . . repurchase that which he has produced for his master. It is thus with all trades whatsoever. . . since, producing for a master who in one form or another makes a profit, they are obliged to pay more for their own labour than they get for it." Proudhon, What is Property?, p. 189

In other words, the price of all produced goods is greater than the money value represented by the workers' wages (plus raw materials and overheads such as wear and tear on machinery) when those goods were produced. Thus, anarchists argue that the labour contained in these "surplus-products" is the source of profit, which has to be realised on the market. (In practice, of course, the value represented by these surplus-products is distributed throughout all the commodities produced in the form of profit -- the difference between the cost price and the market price).

Capitalist economists argue against this theory of how a surplus arises. Instead, they suggest that wealth can be created by way of appreciation, risk in investment, or capital consolidation. Anarchists sometimes use an analogy to argue against this perspective. They give the example of an elite poker-player who can use equipment (capital), take risks, delay gratification, engage in strategic behaviour, innovate, and even cheat, in order to earns large winnings, even doing so repeatedly. However, in the process of these transaction no surplus product results; the gambler's winnings are simply redistributions from others with no new production occurring. Thus, risk-taking, abstinence, entrepreneurship, etc. might be necessary for an individual to receive profits, and might in some instances increase the yield of production (and in other cases decrease it) they are not sufficient, in themselves, for the process of production. Of course each of these phenomena can aid in more efficient production, thus increasing yields, but anarchists argue that such endeavors should only receive the product of their benefit to the degree of labor being invested in them by such innovators, risk-takers, etc, rather than being little more than diversions thrown up by capitalists to excuse profit taking by those who are performing no labor at all.

Thus, anarchists believe that in order for a profit to be generated within capitalism two things are required. Firstly, a group of workers to work the available capital. Secondly, that they must produce more value than they are paid in wages. If only the first condition is present, all that occurs is that social wealth is redistributed between individuals. With the second condition, a surplus proper is generated. In both cases, however, anarchists hold that workers are exploited for without their labor there would be no goods to facilitate a redistribution of existing wealth nor surplus products.

Surplus Values

The surplus value produced by labour is divided between profits, interest and rent (or, more correctly, between the owners of the various factors of production other than labour). In practice, this surplus is used by the owners of capital for: (a) investment (b) to pay themselves dividends on their stock, if any; (c) to pay for rent and interest payments; and (d) to pay their executives and managers (who are sometimes identical with the owners themselves) much higher salaries than workers; (e) taxes. As the surplus is being divided between different groups of capitalists, this means that there can be clashes of interest between (say) industrial capitalists and finance capitalists. For example, a rise in interest rates can squeeze industrial capitalists by directing more of the surplus from them into the hands of rentiers. Such a rise could cause business failures and so a slump (indeed, raising interest rates is a key way of regulating working class power by generating unemployment to discipline workers by fear of the sack). The surplus, like the labour used to reproduce existing capital, is embodied in the finished commodity and is realised once it is sold. This means that workers do not receive the full value of their labour, since the surplus appropriated by owners for investment, etc. represents value added to commodities by workers -- value for which they are not paid.

Thus, anarchists contend that capitalist profits (as well as rent and interest payments) are in essence unpaid labour, and hence capitalism is based on exploitation.

"Products, say economists, are only bought by products. This maxim is property's condemnation. The proprietor producing neither by his own labour nor by his implement, and receiving products in exchange for nothing, is either a parasite or a thief. What is Property?, p. 170

It is this appropriation of wealth from the worker by the owner which differentiates capitalism from the simple commodity production of artisan and peasant economies. All anarchists agreed with Bakunin when he stated that:

"What is property, what is capital in their present form? For the capitalist and the property owner they mean the power and the right, guaranteed by the State, to live without working. . . [and so] the power and right to live by exploiting the work of someone else . . . those . . . [who are] forced to sell their productive power to the lucky owners of both." The Political Philosophy of Bakunin, p. 180

Capitalist Counterpoint

Proponents of capitalist economics disagree with these views. They claim that although most capitalists also work either directly producing goods or managing workers and resources, capital or savings does allow them and others to live without working during retirement or illness. However, capitalists do not belive that they are exploiting the workers while doing this, but rather exploiting their own past productivity and deferral of consumption. Profits are not, according to capitalists, the product of exploitation and workers, and the wages paid workers out of the surplus over other costs are more surplus than the workers could produce on their own without capital equipment. Capitalists, by deferring their own consumption and accumulating savings, are able to devote resources to improving the productivity of workers and ultimately increasing the wealth and through research the knowledge of all society. Capitalists and landlords get paid the value of their contributions to output. Human beings, according to capitalists, freely choose to do the actual work and it is usually more worth their time, than without the benefit of productivity increasing capital equipment. Anarchists argue that if the capitalists are actually being paid the value of their contributions, then they should simply be hired onto a collective as workers, rather than reserving the right to appropriate part of the surplus labor even in those instances when they do not contribute. Capitalists thus have various arguments for why owners should deserve to keep the products made through the labor of others. Also, capitalists maintain that capitalism is not exploitative, and that capitalists seldom keep the products others make, unless they anticipate the market value of those products being greater in the future.

Some apologists for capitalism cite the empirical fact that, in most modern capitalist economies, a large majority of all income goes to "labor," with profit, interest and rent adding up to something under twenty percent of the total. Anarchists response that even if surplus value was less than 20% of a workers' output, this does not change its exploitative nature. Few would argue, for example, that a leech who only sucks a small percentage of your blood is anything other than a leech due to the small amount of blood it takes. Further, anarchists point out that most apologists of capitalism would not claim that taxation is anything other than theft just because it is around 10% of all income. Further, anarchists argue that the 20% value for profit, interest and rent is based on a statistical sleight-of-hand, as "worker" is being defined as including everyone who has a salary in a company, including managers and CEOs, whose earnings are often vastly disproportionate to those of the physical laborers regardless of their effect on production. As such, the large incomes which many managers and all CEOs receive ensure that a large majority of all income does go to "labour." However, anarchists state that this "fact" ignores the role of most managers as de facto capitalists and exploiters of surplus value in addition to ignoring the fact that it leaves most laborers bereft of a significant (if not vast) portion of their product.

Private property

There is some debate about the question of private property and economic organization, with anarcho-communists claiming that the existence of property results in wage slavery, while many individualists and mutualists argue that possession is the only legitimate form of private property.

The libertarian socialist perspective

Libertarian socialists, specifically anarcho-communists as well as some post-left anarchists, argue that private property is a fiction enforced by illegitimate institutions which do not account for the needs and desires of the individuals they affect, and that beyond "personal possession" of immediate goods, the idea of property is only maintained by institutions which enforce property laws. When a business hierarchy enforces these rules, it is no different than a government enforcing such rules.

They propose that beyond personal possession, resources should be collectively managed, particularly capital goods used as means of economic production. The form of this collective management can vary greatly, but in all cases those affected by economic decisions have some representation in them. On one end of the spectrum lie the syndicalists, who propose a planned economy based on a series of collectives that rely fundamentally on consensus and free association. On the other end are the individualists, who advocate a free market without the constraints of usury, wage, and rent. They believe that property beyond personal possession should be handled by mutualist banks which print their own money and loan it free of interest.

Regardless of how an economy is managed, anarchists believe that ownership of goods should not extend beyond personal property. What anarchists consider to be personal property is often vaguely defined, but by most accounts it means unique items that are part of a consistent use-pattern in their day to day lives, or those which have emotional/sentimental value for the possessor, ie. clothing, mementos, customized bicycles, art, furniture and other things that people commonly move from home to home.

Wage labor

Anarchists believe that the employer-employee relationship is based on employer coercion. They argue that the oppressive restrictions of public and private property, upheld variously by states, corporations, and individuals, allow employers to blackmail employees into working for use of resources that they would otherwise have free access to either individually through mutualist banks or collectively through voluntarily associated communes and syndicates. Traditional anarchists claim that such oppression should be resisted. However, they generally follow Kant in maintaining that freedom can not be given as a privilege by some third party, but must instead be won through the struggles of the oppressed themselves. As such, libertarian socialists encourage employees to resist and obstruct economics based on hierarchical power and what they consider to be wage slavery. This is known as direct action. Many also believe that anarchists are obliged to aid such groups when they call for help in their struggles. Ultimately, traditional anarchists believe that all forms of institutional authority must be resisted, because of their coercive nature.

Anarchists often argue that, just as no ordinary person (as opposed to someone who is independently wealthy) can refuse to work, so there is no freedom involved in the negotiation of a contract with an employer who has the ability to dictate the terms of any contract to dispossessed employees who amount to little more than wage slaves living at the whim of the wealthy.

Anarchists also reject the claim that their objection to capitalist economics is based on the necessity of labor. They mostly agree that some form of manual labor (which they often distinguish from work) is currently necessary. However, they do not agree that the necessity for manual labor requires that the form of this labor be dictated by privileged individuals who control the wealth and resources of the society. Instead, they argue that individual liberty requires that the laborers themselves control the means and mode of their labor, rather than having their actions dictated by others. Thus, those who are required to labor for survival should have representation in the use and distribution of the resources they interact with and distribute. They do not believe that the mere ability to disassociate from a given employer is an adequate form of representation, given that the employers as a class can continue to dictate use of resources and compel others into wage-slavery once the association is disbanded.

Furthermore, anarchists argue that being a servant with the "freedom" to choose your master does not represent actual "freedom" in any meaningful sense. Often, they also argue that a worker's "freedom" to choose his employer is no different than that same worker's "freedom" to choose what state he lives under (by moving to another country if necessary), because there is no real difference between the coercion of private companies and the coercion of the state - and thus it makes no sense to abolish one while preserving the other.

Anarchists such as Benjamin Tucker (who identified his Individualist Anarchism as Anarchistic Socialism) were both anti-capitalist and pro-free market, who did not see a problem with wage labor as long as the employers and employees were paid equally for equal hours worked (a similar approach was put into action through Time Store which was organized by Josiah Warren) thus eliminating the economic parasitism of the boss class and therefore being anti-capitalist. Benjamin Tucker described the non-exploitive employer-employee relationship as "the workers natural wage, being their full product."

Contemporary Critiques

Some of the anarchist critiques from writers of the 18th and 19th century have been retained, but with new techniques of historical analysis available, anarchists have adopted certain ideas for their critique.

Emergence of Hierarchies

Anarchists oppose hierarchy (a ranked form of authority) of any form and argue that any capitalist economic system, no matter how level the initial starting conditions, will naturally give rise to hierarchies. This analysis draws heavily on game theory to show the emergence of social conditions undesirable to anarchists from capitalist systems.

Manuel De Landa observes in 1000 Years of Nonlinear History that market systems act like an abstract machine whereas the natural process is for relatively flat meshworks of producer-consumers to transform into hierarchies over time; hierarchies of meshworks as well as meshworks of hierarchies. These monopolistic hierarchies are not necessarily large enterprises (corporations), but can be taken to mean dominant cities in the world economic scale, such as Venice in the 14th century, wherein rich merchants enjoyed enormous economic advantage over rivals in other cities. Template:Fn

Fernand Braudel alleges that since capitalism's roots in 13th-century Italy, it has always been monopolistic and oligopolistic. Capitalism has always been associated with large enterprises, with respect to their operational markets. It is thus that Delanda labels capitalism as actually being "antimarket", rather than a market-driving force as most people believe.

From this and other analysis anarchists conclude that capitalism gives rise to undesirable social relations; the subjugation of geographically disadvantaged populations, class inequities within populations, and general microeconomic instability. Capitalism, being an antimarket force, sets agendas dictated by large enterprises and the wealthy; since it is a hierarchy-creating and maintaining system, anarchists find it objectionable.

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

Theories can pursue truth or serve vested interests. In the latter capacity they will incorporate only concepts suited to attaining the results desired. An economic theory, for example, may highlight profits, quantities of output, amount of investment, and prices but leave out class struggle, alienation, hierarchy and bargaining power. Then the theory will serve capitalists, and, since capitalists tend to pay economists' wages and endow their universities, economists and their students who comply, will benefit as well.

Anarchists contend that General equilibrium analysis and marginalism is made to order for the ruling class and that marginalism ignores the question of production and concentrates on exchange. It argues that any attempt by working people to improve their position in society (by, for example, unions) is counter-productive, it preaches that "in the long run" everyone will be better off and so present day problems are irrelevant (and any attempt to fix them counterproductive) and the capitalists are entitled to their profits, interest payments and rent. Anarchists argue that an economic theory that justifies inequality, "proves" that profits, rent and interest are not exploitative and argues that the economically powerful be given free reign will have more use-value ("utility") to the ruling class than those that do not.

Monetary systems

Main Article: Anarchist Economics

Within the realm of anarchist labor issues is the issue of the monetary system. While all anarchists are against the current monetary system, there is disagreement as to whether or not there should be a monetary system. Alexander Berkman was an anarchist against the monetary system. In his book What is Anarchism?, Berkman argues that in an anarchist society, money would become unnecessary. Within anarchy, all occupations are viewed as equally beneficial to society. Since the concept of value is different for everyone and cannot be determined, it is argued that it should not be set and one's contribution to society through their occupation entitled them to be a part of it. Within this system, there is a free exchange of goods, without the need for money. Money in its current form is a hierarchical system, the exception being when all people are paid equal salaries. The argument goes further, however, to question the purpose of money if people are paid equally. Certainly those who agree with this would also note that a monetary system would open a vulnerability for some to acquire more of it and create a class system. Not every anarchist, however, is totally against the idea of money. Others see money as simply an index for exchanging goods and that its existence wouldn't necessarily create a class system.