Sunday 5 May 2013

A Description of Anarchist Economy

Anarchist Economics


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

Sketching the future by analysing the present

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!).

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?”


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.

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