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Anarchist economics is the set of theories and practices of economics and economic activity within the political philosophy of anarchism. Anarchist economic theory, along with anarchist political philosophy, is divided between individualistic free market theories based on the Austrian or neoclassical schools that see statelessness as economically efficient, and collectivist economic theory (most notably anarcho-syndicalism and anarcho-communism) that normatively opposes free market capitalism based on Marxian economics or deontological rejection of private property, hierarchical production relations, collecting rents from private property, taking a profit in exchanges, or collecting interest on loans.
Many modern anarchist economists are anarcho-capitalists and advocate free market capitalism as ideal laissez-faire. Influential anarcho-capitalist economists such as Murray Rothbard, David D. Friedman and Hans-Hermann Hoppe developed their political and economic theory in close connection. Rothbard and Hoppe are notable advocates of the marginalist Austrian school of economics. Not all anarchists subscribe to heterodox economics such as that of the Austrian school; Friedman for example endorses the logical positivism of the Chicago school, a variant of the dominant Neoclassical economics.
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Anarchist · Capitalist
Communist · Corporatist
Fascist · Georgist
Islamic · Laissez-faire
Market socialist · (Neo-) Mercantilist
Protectionist · Socialist
|Sectors and systems|
|Closed (Autarky) · Digital
Dual · Gift · Informal
Market · Mixed · Natural
Open · Planned · Subsistence
Underground · Virtual
|Other types of economies|
|Anglo-Saxon · Feudal
Global · Hunter-gatherer
Newly industrialized country
Palace · Plantation
Post-capitalist · Post-industrial
Social market · Socialist market
Token · Traditional
Transition · Barter
Many anarchist economic theorists, starting with Proudhon, have emphasized subjective utility or subjective elements in value.
Some market anarchists have attributed short-term prices to supply and demand, but predicted long-term prices with cost theories of value, often a labor theory of value, as auxiliary hypotheses to predict long-term prices. Other market anarchists have rejected these auxiliary hypotheses and used a subjective theory of value for to predict long-term, as well as short-term, prices.
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 reproducible 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.
Michael Albert and Robin Hahnel began to write about Parecon in the 1980s. 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. Parecon is a market abolitionist theory. 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. Some anarchists consider Parecon to be a modern-day incarnation of collectivist anarchism. However some other anarchists call it "participatory bureaucracy". Also, the American anarchist James Herod describes as follows the Parecon proposal: “This has got to be the sorriest proposal in the history of utopian literature. Albert uses all the right words ―councils, self-management, participation― good ideas taken from the radical movement. But here they get morphed into a world-class monstrosity. It's as if he has embraced capitalist society in toto, but then tried to make it participatory".
Anarchist communists propose that a society composed of a number of self-governing communes with collective use of the means of production and direct democracy as the political organizational form, and related to other communes through federation would be the freest form of social organisation. However, some anarchist communists oppose the majoritarian nature of direct democracy, feeling that it can impede individual liberty and favor consensus democracy. In anarchist communism, individuals would not receive direct compensation for labour (through sharing of profits or payment), but would instead have free access to the resources and surplus of the commune. According to anarchist communist Peter Kropotkin and later Murray Bookchin, the members of such a society would spontaneously perform all necessary labour because they would recognize the benefits of communal enterprise and mutual aid. Kropotkin believed that private property was one of the causes of oppression and exploitation and called for its abolition, advocating instead common ownership.
The status of anarchist communism within anarchism is disputed, because it is seen by most individualist anarchists as incompatible with freedom. Some anarcho-syndicalists, such as the Spanish union CNT, saw an anarcho-communist society as their objective. Platformism is an anarchist communist tendency in the tradition of Nestor Makhno who argued for the "vital need of an organization which, having attracted most of the participants in the anarchist movement, would establish a common tactical and political line for anarchism and thereby serve as a guide for the whole movement." Some forms of anarchist communism are strongly Egoist in nature, and are strongly influenced by radical individualist philosophy, believing that anarcho-communism does not require a communitarian nature at all; anarchist communist Emma Goldman was influenced by both Max Stirner and Kropotkin and blended their philosophies together in her own.
According to the ID project, economic democracy is the authority of demos (community) in the economic sphere — which requires equal distribution of economic power. Therefore, all 'macro' economic decisions, namely, decisions concerning the running of the economy as a whole (overall level of production, consumption and investment, amounts of work and leisure implied, technologies to be used, etc.) are made by the citizen body collectively and without representation. However, "micro" economic decisions at the workplace or the household levels are made by the individual production or consumption unit through a proposed system of vouchers.
As with the case of direct democracy, economic democracy today is only feasible at the level of the confederated demoi. It involves the ownership and control of the means of production by the demos. This is radically different from the two main forms of concentration of economic power: capitalist and 'socialist' growth economy. It is also different from the various types of collectivist capitalism, such as workers' control and milder versions suggested by post-Keynesian social democrats. The demos, therefore, becomes the authentic unit of economic life.
As David Freeman points out, although Takis Fotopoulos' approach "is not openly anarchism, yet anarchism seems the formal category within which he works, given his commitment to direct democracy, municipalism and abolition of state, money and market economy". James Herod also states that "his approach is the closest to mine (or mine to his) that I have yet seen in contemporary anarchist literature. He believes in direct democracy, promotes both workplace and community assemblies, and most unusually, outlines a radical epistemology to undergird the whole thing. He describes a voucher system that would facilitate exchange within a community without relying on the market or money".
Mutualism is a political and economic theory or system, largely associated with Pierre-Joseph Proudhon, based on a labor theory of value which holds that when labor or its product is sold, it ought to receive in exchange, an equal amount of labor or a product that required the same amount of labor to produce (receiving anything less is considered exploitation, theft of labor, or "usury"). Mutualists believe that a natural economic consequence of a truly laissez-faire economy, would be that income to individuals would be proportional to the amount of labor they exert. Mutualists oppose the idea of individuals receiving an income through loans, investments, and rent, as they believe these individuals are not laboring. They hold that if state intervention ceased that these types of incomes would disappear.
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. Anarcho-capitalists reject the labor theory of value as flawed and archaic. Thus, like most modern economists, they do not believe that there is any proper price for labor or goods other than the one found at the balance point where what the buyer is willing to pay is equal to what the seller is willing to accept. According to Murray Rothbard, in an interview with New Banner, "capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism."
At the same time, it would be wrong for anyone to jump to the conclusion that anarcho-capitalists or market anarchists support what politicians call "capitalism" today, with its privileges, bailouts, subsidies, and other "innovations". Anarcho-capitalists make a distinction between a free-market or laissez-faire capitalism and a neo-mercantilist or statist capitalism. As Rothbard once wrote, "The difference between free-market capitalism and state capitalism is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation." Rothbard goes on to write that he is "very optimistic about the future of free-market capitalism. I’m not optimistic about the future of state capitalism—or rather, I am optimistic, because I think it will eventually come to an end."
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.
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 mortgage 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.
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. Participatory economics 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 (sometimes denoted by the pejorative term "lifestyle 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 individuals and groups influenced by the Situationists, such as CrimethInc., as a viable means of survival and non-participation in the system. Some anarchists such as agorists support counter-economics, that is, participating in the "black" illegal market to undermine monopolies and the state. The goal of agorists is not simply to opt-out of capitalism/the system, but by developing alternative voluntary solutions to engineer the statist economy's collapse.
Many anarchists advocate the abolition of money, others call for its replacement with new currency systems, and others, such as Benjamin Tucker and Murray Rothbard, simply want the end of the government money monopoly and the repeal of legal tender laws, i.e. they want competition between private banks and currencies. Use of alternative currencies is growing, largely due to digital currencies offered on the internet, and availability of software to manage mutual credit schemes like Local Exchange Trading Systems. 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—for example, the Liberty Dollar. Thus alternative currencies range from labor-time notes to specie-backed warehouse receipts. Three popular alternative currencies are: community currency, local currency, and time-based currency.
Before any form of enterprise, whether a conventional business or an autonomous workers' collective, can produce goods or services, it must obtain items such as premises, tools and raw materials. This involves an up-front cost which is incurred before the enterprise starts. Under capitalism, this up-front cost is traditionally met by investing capital with the aim of making a profit. Communists, are opposed to investing capital for profit because of the exploitation of workers it entails, so another mechanism must be found to cover the up-front costs. "Free banking" is one possible mechanism. A new autonomous workers' organisation borrows the up-front cost from supporters or existing organisations. This can be by means of a loan in conventional or alternative currency, by borrowing the items needed such as tools, or a combination of the two. In time, this loan is either repaid to the lender, or lent on to another new organisation creating a revolving loan fund.
In this context, the word "free" indicates that the borrowing organisation is free of takeover threats from the provider of capital which form part of the traditional capitalist model. The loan may be interest free (similar to the Scandinavian JAK members bank model of agricultural finance) or a limited rate of interest may be charged. There may also be other charges e.g. to cover administration costs or to cover against bad debts.
Small-scale practical examples of anarchist free banking initiatives exist in various countries, but banking laws make it hard for them to operate. In most countries bank regulation prohibits organisations from describing themselves as banks unless they are legally registered as such, and a collectively-run organisation would not meet corporate governance standards in banking law. Nevertheless, such initiatives sometimes show a much lower bad debt rate than conventional banks, because they are based on solidarity, and failing to repay a loan from a free banking initiative may be seen as culturally equivalent to stealing from friends. The reverse can however also be true, as a trust-based system is open to abuses of that trust. To safeguard completely against such risks would involve a level of cultural vetting more intrusive than anything traditionally done by credit rating agencies.
The term "free banking" should not be confused with the UK banking concept of free personal banking, which means a current account with no account charges for standard services so long as the account is kept in credit.
Gift economies are those based on 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 everyone's needs are satisfied in a way that allows a good quality of life (the kind of planning advocated by most if not all anarcho-communists differs from that of firms and the so called command economies in that it is democratic, decentralized, 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". Anarcho-communists believe that people should be free to produce, consume and distribute according to their "need" (self-determined likings and preferences) without need of monetary value.
Anarcho-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).
While many anarcho-communists are opposed to trade, some post-left, post-scarcity anarcho-communists, and ones with syndicalist sympathies are not opposed to trade. Some support a non-monetary form of trade in the form of post-monetary trade unions and commons. Others such as Tiziana Terranova easily see anarcho-communism being compatible with a non-hierarchical, open access, free association, post-monetary form of trade such as P2P.
Recently, some local currencies are based on time although participants are not primarily anarchists. In the United States, 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 labor note 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 anarchists point out that since participation in a labor note network is voluntary, any labor note system is merely another choice in a free market of markets. Other critics argue that labor notes cannot provide price signals, that many of these Time-dollar based currencies are prone to inflation (since there is no way to ensure that people are not paid more than an hour per hour), and that these ignore factors like value-added work (work that incorporates past labor in order to perform, such as the time spent by a dentist in school). Other Anarachist Time-dollar based currencies have had exchange rates, based on the job performed. However, another criticism is at large scales workers function at varying skill level, so in a Time-based dollar would reward inefficient workers of efficient one, who produced more in a given unit of time.
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 by accounting for embodied energy. 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 Technocracy movement with a system based on energy accounting 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.
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. Another example of individual anarchists attempting to put their economic theories into action was the Cincinnati Time Store, where labor notes were redeemable for goods.
The anarchist collectives formed during the Spanish Civil War are 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 Workers' self-management and Collectivist anarchism 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.
It has also been suggested that Chiapas under Zapatista Army of National Liberation rule exercises a working anarcho-socialist economy, and recent Somalian political economy as epitomising aspects of anarcho-capitalism.