Anarchist economics

Anarchist economics entails theory and practice relating to economic activity within the philosophical outlines of anarchism. Anarchists (most notably anarcho-syndicalists and anarcho-communists) primarily oppose capitalism because its characteristic institutions promote and reproduce various forms of oppression, including private property, hierarchical production relations, collecting rents from private property, taking a profit in exchanges, and collecting interest on loans. Individualist anarchists are mutualist rather than socialist; they support private property but oppose usury - defining usury as profit from others' labor through rent, capital, interest, and wage-labor not paid "full" price. Finally, anarcho-capitalists fully support capitalism, but only the totally free-market laissez-faire kind.

Anarchist Critique of Capitalism

Critique of Subjective Theories of Value

Supporters of capitalism usually agree with what is called the Subjective Theory of Value (STV). The prevalent form of the (STV) which usually appears in economics textbooks is known as the marginal utility theory of value. In academia, this school supercedes the older classical economics of Adam Smith and David Ricardo.

As with previous theories based upon a utility theory of value the marginalists maintained that commodities exchanged on the market were sources of utility for consumers. However the defining innovation of the marginalists was a rigorous abstract explanation of how market prices reflecting supply and demand were, in the last analysis, a net aggregrate expression of the economizing behaviour of the independent individuals who populated the market. The theory was anchored by the notion that, since utility satisfaction for a given commodity diminishes with each additional increment consumed, rational individuals balance their consumption choices so as to maximize total marginal utility for their given set of preferences. Market prices were the expression of this marginalizing rationality as it is constrained by the interacting competititve context of the market economy.

Anarchist economists join many other leftist economists, notably Marxists, neo-Ricardians, and critical institutionalists, in dissenting against mainstream economics which "far from being the 'science' it claims to be, instead serves as capitalism's ideology." (Dowd, Understanding Capitalism, 4) They have argued that marginal utility theories of value contain fundamentally incoherent views of human agency, institutions, valuation and allocation. Accordingly, they have argued that marginalism is reductionist in its illegitimate narrowing of economic behaviour to rational self-interest. Social anarchists point to the role of social institutions, including that of class and other forms of domination as important factors accounting for human agency. They have also pointed to the irrelevance of theoretical models based upon competitive equilibrium with regard to modern oligopolies that are sustained by a complex fabric of dominance in the form of economic, legal, political and cultural institutions. Additionally they maintain that a marginal utility of value leaves important aspects of economic life that enter into valuation out of the picture, such as the household and production relations, and draw attention to its failure to adequately account for dynamic processes related to long-term economic change. Underlying many of these sharp disagreements are qualitatively different approaches to the methodology of economic enquiry. Social anarchist economists vociferously reject the preliminary intellectual dispositions of marginalists towards economic enquiry including their methodological individualism, emphasis on mathematical and logical formalism, and what they regard as a hollow stance of value neutrality.

Alternative Theories of Value and Currency

Many anarchists advocate the abolition of money, but others call for a replacement of it with new value systems, still others, such as Benjamin Tucker, want simply the end of the government money monopoly, i.e. privatization of minting and banking and the repeal of legal tender laws.

Gift Economy

Gift economies are those based of free distribution of goods and services. Anarcho-communists are the main proponents of such. However many times this is said to refer to a planned economy which ensures everyones needs are satisfied in a way that allows a good quality of life (the kind of planning advocated by most if not all anarchocommunists differs from that of firms and the so called command economies in that it is democratic and voluntary). There are a number of variations on the concept, but they are centered on the notion of "From each according to ability to each according to need". Primitivists also advocate this kind of economy (although they believe that it is not possible with current modes of production and thus advocate a return to pre-industrial and often pre-agricultural modes of production).

Labor Theory of Value

A labor theory of value (LTV) was notably advanced in different forms by David Ricardo and Karl Marx. Ricardo held that the relative prices of most reproduceable goods and services were proportional to the amount of present and past labor time required to obtain, manufacture, process, distribute, and transport them. Marx's "Law of Value" is often interpreted as an analytic device elucidating the ways in which capitalism as a whole distributes socially necessary abstract labour time,while revealing that an important characteristic of commodities and their value relations is commodity fetishism obscuring an underlying reality of exploitative social relations.

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.

Some 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 some 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 (something that is thought impossible and useless by many anarchists).

One group that has advocated a system using energy is the Technocratic movement with a system based on energy-credits where energy is used to "buy" a product or service without being exchanged, so the effect is that products or services are distributed to the user without gain by the provider (who has the same amount of energy in his or her account regardless) so allegedly making profit impossible.

Examples of Anarchist Economies

Utopia (sometimes known as Trialville) was an individualist anarchist colony begun in 1847, by Josiah Warren and associates, in the United States on a tract of land approximately 30 miles from Cincinnati, Ohio. see also: mutualism and Cincinnati Time Store.

The anarchist collectives formed during the Spanish Civil War is the most famous example of an anarchist economy operating on a large scale. The collectives were formed under the influence of the anarcho-syndicalist union the CNT in rural and urban areas and successfully practised self-management for a number of years in extremely difficult economic and political circumstances. Other examples of self-management include the factory committee movement during the Russian Revolution and the workplace occupations in Argentina during its crisis at the turn of the 21st century. Attempts at forming co-operatives also appeared during the Paris Commune of 1871 and the Italian Factory Occupations of 1920.

Laissez Faire City was an attempt to create a stateless unregulated laissez-faire economy in cyberspace. Although it eventually failed, many similar attempts, more decentralized, are being made in areas such as of cryptologically secure email and digital currency. Some, such as Davidson and Rees-Mogg in their book The Sovereign Individual, see an inevitable evolution to de-facto anarchy due to the liberating technology of the information age. Many anarchists see cyberspace as an anarchist outpost.

Theoretical Anarchist Economic Systems

Laissez-faire capitalism

Separation of economics and State is the goal of anarcho-capitalists. They want an economy free from any coercive regulation or control. Anarcho-capitalists generally see the State as the cause of all monopoly. Thus, abolishing the State would allow capitalism, the free market, the division of labor, and society as a whole to prosper and thrive.

However, most anarchists, including the American Individualist Anarchists see capitalism as incompatable with anarchy - being the absence of hierarchical authority - as capitalist firms are organised hierarchically. Hence Noam Chomsky:

"a fascist system. . . [is] absolutist - power goes from top down . . . the ideal state is top down control with the public essentially following orders.

"Let's take a look at a corporation. . . [I]f you look at what they are, power goes strictly top down, from the board of directors to managers to lower managers to ultimately the people on the shop floor, typing messages, and so on. There's no flow of power or planning from the bottom up. People can disrupt and make suggestions, but the same is true of a slave society. The structure of power is linear, from the top down." [Keeping the Rabble in Line, p. 237]

This authoritarian form of organisation is seen to be inherently statist. Indeed, it is argued that the anarcho-capitalists support of private property justifies statism. For example, in Anarchy, State and Utopia [p. 270], libertarian capitalist Robert Nozick argues:

"[I]f one starts a private town, on land whose acquisition did not and does not violate the Lockean proviso [of non-aggression], persons who chose to move there or later remain there would have no right to a say in how the town was run, unless it was granted to them by the decision procedures for the town which the owner had established."

This seems essentially to be a description of a small totalitarian state.

Similarly, most anarchists believe that a capitalist economy free from any coercive regulation or control is an oxy-moron, as capitalism cannot exist without state intervention to protect private ownership of the means of production. They argue that without the organised violence of the state, such as the police and the army, or some other coercive, authoritarian agency, capitalists could not stop workers from expropriating the means of production.

Participatory Economics

Michael Albert and Robin Hahnel began to write about Parecon in the 1980's. This work builds on their earlier critiques of both market-based and centrally planned economies suggesting instead allocation by participatory planning created by the democratic interaction of a network of production and consumption councils. Though not strictly an "anarchist" idea, its core features of decentralized democratic planning, institutions and remuneration based upon egalitarian norms and self-management, balanced job roles, environmental responsibility, and social efficiency, appeals to many anarchists.

Mutualism

Mutualism is a form of stateless market socialism advocated by Individualist Anarchists such as Benjamin Tucker. They argued that a free market in credit increase competition between lenders, make interest-free loans available. This would enable workers to buy their own means of production rather than having to sell their labour to a capitalist in order to survive, resulting in form of market socialism where workers' cooperatives and self-employed individuals freely exchange goods and services.

Mutualism features an modification of the principle of private property, whereby communities or private defense agencies would only protect ownership of land, housing or workplaces on the basis of continual occupancy and use. In "What Is Property?" Pierre Jospeph Proudhon highted the distinction between ownership coinciding with use (possession) and absentee ownership (property) arguing that communities should only protect the former.

Proudhon also advocated that people create democratically controlled mutual credit associations or "peoples' banks", similar to local currency systems, rather than relying on the market to provide credit. These would lend only to cooperative workplaces, thus preventing the market from causing a relapse into capitalism.

Technological LTV Networks

A revision of LTV that incorporates information technology, cryptography, and open-source software to create a 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 analogous, 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, i.e. energy production is best tracked in kilowatt-hours, but collectible items have highly subjective values and therefore require a different exchange medium. Even Parecon could be incorporated in this approach.

Economics as Anarchist Strategy

Some anti-capitalist 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.

Some 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

Some anarchists believe that changing personal consumption habits to minimize (or eliminate entirely) involvement in the prevailing capitalist economy is essential to practicing anarchism in their lives. Withdrawing from 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. Many anarchists support counter-economics, that is, participating in the "black" illegal market.

Use of alternative currencies is growing, largely due to digital currencies offered on the internet, and availability of software to manage local currency systems like LETS.. Since States cannot collect taxes and revenue through use of alternative currencies they will theoretically lose power to the point of collapse. Some of these alternative currencies are designed to prevent usury, others are designed simply as alternatives to state-issued fiat money, as a hedge against inflation. Thus alternative currencies range from labor-time notes to specie-backed warehouse receipts. Three popular alternative currencies are: e-gold, Liberty Dollar, and Ithaca Hours.

External 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
Industrial Workers of the World - Industrial Worker newspaper