Anarchist Economics

compiled by Jon Bekken

A casual observer of the anarchist movement, restricted to contemporary writings, could be forgiven for concluding that anarchists have no conception of economics. Several years ago a serious debate was carried out in the pages of the British anarchist paper Freedom in which it was argued that all wealth comes from agriculture – that the working class is merely a burden that peasants and other agricultural workers are compelled to shoulder. The only possible conclusion from this line of reasoning is that we should dismantle the cities and factories and all return to agrarian pursuits. One suspects that farmers – deprived of tractors, books and other useful items and confronted with millions of starving city dwellers cluttering up perfectly good farmland that could otherwise be growing crops – might take a somewhat different point of view.

On this side of the Atlantic, countless trees have been killed in furtherance of “arguments” for abolishing work, abandoning technology and turning to a barter economy (or, alternately, to local currencies) both as a strategy for escaping (I hesitate to use the word overthrowing) capitalism and as a principle for reorganizing economic life in a free society. Such approaches may have a certain appeal for lifestylists whose aim is more to reduce the extent to which capital impinges on their personal existence (a rather futile enterprise) than to abolish its tyranny over society, but they are simply irrelevant to those of us truly committed to building a free society.

Although anarchists are of necessity interested in the workings of capitalist economies, our attention is focused on the class struggle. An anarchist economics might study the theft of our labor by the bosses, the squandering of social resources by the state, and the channels through which the bosses manipulate markets, finance and production to increase their profits and to pit workers in different parts of the world against each other. And, most importantly, an anarchist economics would address itself to the problems of maintaining economic activity in a revolutionary situation, and to the sort of economic arrangements which might support a free society.

We have been attempting such a study in the columns of our journal for several years. In our Winter 1991 issue (#10), Libertarian Labor Review (now Anarcho-Syndicalist Review) announced the anarchist economics project which continues to this day. As we said then:

Far too many anarchists nowadays have underestimated the importance of economics in their vision of social change, but this was not always the case. The classical anarchists, who always considered themselves part of the socialist movement, recognized the new economic arrangements created by the social revolution would determine its success or failure. Thus they were forced to create an economic “science,” which although sometimes in agreement with capitalist or marxist economics on various points, must diverge from them to the same extent that it differed in its goals. The notion of a political anarchist who was an economic marxist or economic capitalist – a notion one runs across all too often today – would have struck the original anarchist thinkers as an absurd impossibility. It is our hope that this series will help to show why this is so, as well as to help bring anarchist economics up to date with current developments.So far we expect the series to include discussions of the contributions made by Proudhon, Bakunin and the First International Workers Association, Kropotkin, the Spanish Anarchists and their practical experiences in the Spanish Revolution, as well as those of less-well-known anarchists. We also hope to add to this critiques of Marxist economics and modern capitalist economists such as Keynes and his neo-classical critics. Finally we will look at contributions made by modern economists such as E.F. Schumacher and the appropriate technologists, whose views have converged with those of the anarchist movement in several ways.
Due to the scope of the projected series, we are hoping to get contributions of articles and letters from outside our small collective. We extend an open invitation to all in our movement who are interested in taking part in this series along the lines we have mentioned to get in touch with us…

To date we have published articles on the economic theories advanced by Proudhon, Bakunin and Kropotkin; a translation of a major article by Abraham Guillen; a critique of Marxism; an analysis of the Mondragon cooperatives; and several articles on contemporary economic issues. Our plans for the future include critiques of neo-Marxist and Keynesian economics, and a series of articles building on the anarchist economic tradition to suggest ways in which we might organize production, distribution and consumption in a free society.

Economics is fundamentally the study of how to organize production and consumption to meet human needs most efficiently and satisfactorily. As such, it is inextricably bound up with questions of human values – with our sense of who we are, how we wish to relate to our fellow human beings and to our planet, and how we wish to live our lives. Bourgeois economists have made the mistake of confusing their (fundamentally anti-human) values with economic laws, asserting against all evidence the necessity and efficiency of mechanisms such as markets, wages and (in an earlier day) chattel slavery. Marx similarly seized on bourgeois economists’ claims that the price of commodities is determined by the amount of labor socially necessary to their production for his Labor Theory of Value, a quasi-religious doctrine which cannot hold up to the slightest empirical scrutiny. Wage levels, like the price of all commodities, are set not by their cost of production or the amount of labor they require (though there are of course material constraints; few workers will be paid more than the revenues they make possible or less than it takes to feed them), but by the relative economic, military and social power held by the respective parties. Kropotkin’s research demonstrated that shortages, economic crises and general distress are endemic to capitalism, but are wholly unnecessary. The means to meet all of society’s needs were already at hand a century ago, but instead of doing so capitalism creates a perverse set of incentives encouraging chronic underproduction and deprivation.

Kropotkin argued for restructuring production to decentralize agriculture and industry, arguing that economies of scale and specialization are largely illusory. At the same time, he rejected the notion that it was possible to reduce labor to the individual – to isolate any one worker’s contribution to social production. The simple act of manufacturing a shirt necessitates thousands of workers, from the farmers who grow the cotton (or the chemists who fabricate the nylon), to the makers of the sewing machines (and of the raw materials from which they are manufactured), to the sewing machine operators, to those maintaining the vast economic infrastructure (energy, roads, water, etc.) necessary to production. All production is social. We enrich each other – not only spiritually, but materially as well – as we work, think and play together; and without the efforts of society as a whole no one prospers.

Anarchist economics should begin not from the standpoint of production, but rather from the standpoint of consumption – of human needs. Needs should govern production; the purpose of anarchist economics is not so much to understand the workings of the capitalist economy but rather to study human needs and determine how they might be best satisfied. Every kind of human activity should begin from what is local and immediate, and should link in a cooperative network with no center and no directing agency (federation). Nor is it enough merely to meet people’s material needs – we must also have the means to pursue our artistic, intellectual and aesthetic interests. These are not luxuries, but necessities.

It seems to me that any anarchist economics must begin from certain basic premises:

    • No Markets: Everyone above all has the right to live, and so a free society must share the means of existence among all, without exception. All goods and services should be provided free of charge to all. Those available in abundance should be available without limit, those in short supply should be rationed on the basis of need.
    • No Wages: The notion that people will not work without compulsion is provably false. Far from shirking work when they do not receive a wage, when people work cooperatively for the good of all they achieve feats of productivity never realizable through coercion. Efforts to arrive at “just wages” are necessarily artificial and arbitrary. Labor vouchers, consumption credits and similar schemes are nothing more than attempts to maintain the reality of the wage system while changing its name.
    • What Work and Why? Despite dramatic increases in productivity over the last century, we work as many (and often more) hours as ever, while millions of our fellow workers languish without the means to support themselves. Enormous effort is squandered tracking the flow of money, encouraging people to consume, and making products designed to wear out quickly. Meanwhile, vitally important social needs go unmet. Many jobs can be eliminated, but other jobs (for example, cleaning up the environment or building a viable public transport system to replace our current auto-intensive one) will be created. Some effort will have to go to material assistance to our fellow workers in other parts of the globe to develop economies capable of sustaining themselves and the planet (this is a matter not only of human solidarity, but also of our own self-interest). Nonetheless, there is no reason why we cannot dramatically reduce the number of hours we spend at work, while simultaneously making that time less alienating and better meeting human needs.
    • Self-Management: Under current conditions, too many workers spend long hours doing boring work under unhealthy conditions, while others have no work at all or do work that serves no socially useful purpose. Over-specialization, repetitive drudgery and the separation of manual and mental labor must be replaced with self-managed, cooperative labor.

Self-management necessarily implies federalist economic arrangements. Where “libertarian Marxists” such as Michael Albert and Robin Hahnel suggest a centralized economic planning bureaucracy (albeit under some form of democratic oversight) which would inevitably lead to a dictatorship of the “facilitator” class, an anarchist economics would clearly devolve most decisions to the local level and rely on free agreements to handle coordination. (Of course, difficult issues of how to balance, for example, ecological concerns with production and consumption needs would remain, and some method would have to be developed for addressing them in a way that simultaneously upholds the rights of those most directly impacted by the decisions and the broader social issues at stake.)

Expropriation, direct action, federalism and self-management are the means for making the social revolution and reconstructing society. Ultimately, only the free distribution of necessities, in all their variety, on the basis not of position or productivity, but of need, is compatible with a free society.

As Kropotkin noted a century ago, production and exchange are so complicated that no government would be capable of organizing production unless the workers themselves took charge, “for in all production there arises daily thousands of difficulties that no government can hope to foresee … only the efforts of thousands of intelligences working on problems can cooperate in the development of the new social system and find solutions for the thousands of local problems.” (quoted in Dolgoff, Relevance of Anarchism to Modern Society)

The society we hope to build must necessarily be built on the basis of what presently exists – seizing the existing industries and goods to meet immediate needs, and as the building blocks from which we will construct a free society. To think otherwise is to build castles in the air. As Sam Dolgoff notes, “Anarchy or no anarchy, the people must eat and be provided with the other necessities of life. The cities must be provisioned and vital services cannot be disrupted. Even if poorly served, the people in their own interests would not allow us or anyone else to disrupt these services unless and until they are reorganized in a better way…” So we need to think about how we would manage the transition from what is to what we want (it seems to me that revolutionary unions offer the best prospects). While it is not possible to spell out in every detail how a free society might operate, it is important to think about its general outlines in advance, so that we might build with a vision of where we are trying to go.

Published to Date in our Anarchist Economics Series:

Jeff Stein, “Proudhon’s Economic Legacy,” LLR 10 (Winter 1991), pp. 8-13.

Jon Bekken, “Capitalism is Criminal,” LLR 10 (Winter 1991), pp. 14-19.

Jon Beken, “Kropotkin’s Anarchist Critique of Capitalism,” LLR 11 (Summer 1991), pp. 19-24.

Etcetera, “Dispersed Fordism and the New Organization of Labor,” LLR 12 (Winter 1992), pp. 16-18. Translated by Mike Hargis.

Jon Bekken, “Peter Kropotkin’s Anarchist Communism,” LLR 12 (Winter 1992), pp. 19-24.

Jeff Stein, Revew: “Looking Forward,” LLR 12 (Winter 1992), pp. 25-28.

Jon Bekken, “North American Free Trade,” LLR 13 (Summer 1992), pp. 18-19.

Jeff Stein, “The Collectivist Tradition,” LLR 13 (Summer 1992), pp. 24-29.

Jeff Stein, Review: “Market Anarchism? Caveat Emptor,” LLR 13 (Summer 1992), pp. 33-34.

Michael Bakunin, “The Capitalist System,” Champaign: Libertarian Labor Review, 1993, 15 pp. Translated by G.P. Maximoff and Jeff Stein.

Abraham Guillen, “Principles of Libertarian Economics,” in three parts: LLR 14 (Winter 1993), pp. 20-25; LLR 15 (Summer 1993), pp. 24-30; LLR 16 (Winter 1994), pp. 18-23. Translated and with an afterword by Jeff Stein.

Mike Hargis, “The Myth of the Vanishing Working Class,” LLR 16 (Winter 1994), pp. 2-3.

Jon Bekken, “The American Health Care Crisis: Capitalism,” LLR 16 (Winter 1994), pp. 10-14.

Harald Beyer-Arnesen, “From Production-Links to Human Relations,” LLR 17 (Summer 1994), pp. 13-14.

Jeff Stein, “Marxism: The Negation of Communism,” LLR 17 (Summer 1994), pp. 20-26.

Noam Chomsky, “The “New’ Corporate World Economic Order,” LLR 18 (Spring 1995), pp. 6-11.

Mike Long, “The Mondragon Co-operative Federation: A Model for Our Times?” LLR 19 (Winter 1996), pp. 19-36. With a commentary by Mike Hargis.

Jon Bekken, “The Limits of “Self’-Management Under Capitalism,” LLR 21 (Winter 1997), pp. 29-33.

Rene Berthier, “Crisis of Work, or Crisis of Capital?” LLR 23 (Summer 1998), pp. 19-24. Translated by Mike Hargis.

Jeff Stein, “The Tragedy of the Markets,” LLR 23 (Summer 1998), pp. 30-37.

Jeff Stein, “Scamming the Welfare State,” LLR 24 (Winter 1998-99), pp. 14-18.

Jeff Stein, “Freedom and Industry: The Syndicalism of Christian Cornelissen,” ASR 28 (Spring 2000), pp. 13-19.

Jon Bekken, Review: “Campaigning for a Living Wage,” ASR 28 (Spring 2000), p. 31.

Brian Oliver Sheppard, “Anarchism vs. Right-Wing ‘Anti-Statism,'” ASR 31 (Spring 2001), pp. 23-25.

Jeff Stein, Review: “The Irrational in Capitalism,” ASR 31 (Spring 2001), pp. 26-27.

Brian Oliver Sheppard, “Anarcho-Syndicalist Answer to Corporate Globalization,” ASR 33 (Winter 2001/02), pp. 11-15.

Jeff Stein, Review: “After Capitalism,” ASR 37 (Spring 2003), pp. 33-34.

Jon Bekken, Review Essay: “Work Without End, or Time to Live?” ASR 38 (Winter 2003/04), pp. 23-29.

Also of Relevance:

Frank Adams, “Worker Ownership: Anarchism in Action?” LLR 5 (Summer 1988), pp. 24-26.

Jon Bekken, Review Essay: “In the Shell of the Old?” LLR 5 (Summer 1988), pp. 36-39.

Sam Dolgoff, editor, The Anarchist Collectives: Workers’ Self-Management in the Spanish Revolution. Montreal: Black Rose Books.

Sam Dolgoff, “The Role of Marxism in the International Labor Movement,” LLR 5 (Summer 1988), pp. 27-35.

Sam Dolgoff, The Relevance of Anarchism to Modern Society. Chicago: Charles H. Kerr, 1989.

Peter Kropotkin, Fields Factories and Workshops . New Brunswick: Transaction. A condensed and annotated edition edited by Colin Ward is also available from Freedom Press under the title Fields, Factories and Workshops Tomorrow.

Peter Kropotkin, The Conquest of Bread . New York: New York University Press.

Gaston Leval, Collectives in the Spanish Revolution . London: Freedom Press.

Mike Long, “A Tale of Two Strikes: Education Workers in Hawai’i,” ASR 33 (Winter 2001/02), pp. 19-30.

Mike Long, Review Essay: “Mondragon and Other Co-ops: For & Against,” ASR 29 (Summer 2000), pp. 15-28.

G.P. Maximoff, Program of Anarcho-Syndicalism. (extract from his Constructive Anarchism, published in English in 1952; this section is not included in the only edition of the work now in print.) Sydney: Monty Miller Press, 1985

Pierre Proudhon, What Is Property? (B. Tucker, translator). New York: Dover.

Pierre Proudhon, General Idea of the Revolution in the Nineteenth Century (J. Robinson, translator). London: Pluto Press.

Graham Purchase, “After the Revolution” (Review of D.A. Santillan’s After The Revolution: Economic Reconstruction in Spain Today), LLR 20 (Summer 1996), pp. 38-39.

Jeff Stein, “The Tragedy of the Markets” (Review), LLR 23 (Summer 1998)

Jeff Stein, “Freedom and Industry: The Syndicalism of Christian Cornelissen,” ASR 28 (Winter 2000)

Jon Bekken, “Capitalism and its Economics” (Review) ASR 31 (Spring 2001)

Jon Bekken, “Work without end, or time to live? Fighting over time” (Review Essay), ASR 38 (Winter 2003-04)

Jon Bekken, “The Impossibility of Just Prices” (Review), ASR 41 (Summer 2005)

Iain McKay, “Would cutting wages really reduce unemployment?” ASR 50 (Winter 20

Iain McKay, “On Paul Krugman’s Nobel prize in economics: Class, power & “free” markets,” ASR 51 (Winter 2009)

Iain McKay, “The economics of anarchy,” ASR 53 (Winter 2010)
Iain McKay, “Reforming health care,” ASR 53 (Winter 2010)

Jon Bekken, “The Economics of Freedom,” ASR 54 (Summer 2010)

Iain McKay, “Radical Economics & Labor” (Review), ASR 57 (Winter 2012)

Iain McKay, “Pay Inequality: Where it comes from and what to do about it,” ASR 58 (Summer 2012)

Eric Chester, “The Crisis of Capitalism,” ASR 59 (Winter 2013)

Wayne Price, “Workers’ Self-Directed Enterprises: A Revolutionary Program,” ASR 61 (Winter 2014), pp. 21-24.
Iain McKay, “Anarchist Economics,” ASR 61 (Winter 2014), pp. 25-28.
Brian Martin, “Prosperity Through Self-Management,” ASR 61 (Winter 2014), pp. 39-43.
Jeff Stein, “The Irrational in Economics  (Review), ASR 61 (Winter 2014), pp. 44-47.

Jon Bekken, “(barely) Staying Alive: The US Economy Since the ’70s (50 Years of Economic Crisis),” ASR 64/5 (Summer 2015), pp. 13-16.
Brian Martin, “From Capitalism To Commons,” ASR 64/5 (Summer 2015),  pp. 17-20.

Iain McKay, “Poor Adam Smith,” ASR 66 (Winter 2016),  pp. 21-22.
Iain McKay, “Proudhon, Property & Possession,” ASR 66 (Winter 2016), pp. 23-25.
Jeff Stein, “The Realities of Self-Management” (Review), ASR 66 (Winter 2016), pp. 32-34.

Thoughts on the 2012 Presidential Elect-Chains

We anarchists don’t have a lot of use for elections. We know that the decisions that most affect our lives as workers are made by the employing class and that politicians are just there to give the illusion of representation as they carry out the bosses’ class program. Still, elections can tell us something about the terrain upon which we are currently deployed.
The re-election of Barack Obama tells us, for example, that a majority of those voting prefer a government that “provides for the general welfare,” as the U.S. Constitution puts it, rather than just the welfare of the rich. That the voters will be sorely disappointed when the lame-duck Obama administration seeks to make a “grand bargain” with Republicans that cuts beloved “entitlements” over the next few years doesn’t change the fact that the people voted to defend those programs. The AFL-CIO mobilized its staff and ranks to get out the vote for Obama, even though he did nothing over the past four years to earn labor’s support, and they’ve vowed to bring street heat to prevent the inevitable sell-out. We’ll see.
Americans rejected the notion that Wall Street knows best.  Obama’s opponent, Mitt Romney, tried to convince voters that his experience at Bain Capital, a private equity firm, would make him capable of jump-starting the ailing American economy. During the election campaign, including the Republican primaries, it was revealed that Bain Capital and Mitt Romney had no record of reviving American industry.  Instead Bain Capital was known for leveraged buy-outs of older marginally profitable companies and then loading them with debt from high pay-outs to investors, big pay increases to Bain corporate executives, and borrowed funds.  When the leveraged companies were unable to pay these debts created by Bain, the companies were taken into bankruptcy and the assets sold off, leaving the workers unemployed and retirees without their full pensions. Instead of a “job creator,” Romney was a “vulture capitalist.” Obama did not offer an alternative to vulture capitalism, but was able to raise considerable skepticism about Romney’s vision of letting Wall Street guide the economic recovery.
Another lesson from the election is that the days of white supremacy (or at least its cultural manifestation) in the U.S. are numbered – and this is driving the racists to distraction. On Fox Snooze, pundit Bill O’Reilly claimed that Obama won re-election because we are no longer living in a “traditional America” and that the non-traditional Americans just “want stuff,” presumably for free (and what’s wrong with that, might we ask?). It is well known that by 2050 the pale-faces will be only half the population, the rest will be people of color (or mud people, if you’re a tea-bagger). Obama won the votes of over 70% of Latino voters, over 70% of Asians, over 90% of African-Americans, over 60% of youth and over 55% of women – all the constituencies that don’t watch Fox Snooze.
The writing is on the wall, and “traditional America” doesn’t like what it’s telling them. Following the election the racists began venting on Twitter and Facebook; the buffoon Donald Trump called the elections a farce and called for a revolution; and thousands of people in the states that went for Romney have signed petitions asking for permission to secede from the United States.
Of course, these people are delusional.
We know that Obama is not a socialist, or even a progressive. He’s actually a Richard Nixon Republican.
Rich people have done just fine during his administration. Profits are way up. The auto bailout was accompanied by deep concessions granted by the auto workers union (just like in 1979). The Obama education “reform” program sees teachers unions as a road-block to be smashed and the wages of federal workers have been frozen for the past two years. Efforts to stem climate change have given way to “energy independence.” Unemployment among Black folk is still double that of Whites and unemployment overall is double-digit; the prison-industrial complex continues to incarcerate over 2,000,000 people, a majority of whom are people of color, and militarism has never been more rampant: the war in Afghanistan is slated to go on for another two years despite the fact that the number of so-called insider attacks on NATO forces is increasing; the drone-assassination program continues to kill suspected “terrorists” and anybody who happens to be in the neighborhood; and the love of all things military is paraded in public at all times. Tune in to any sporting event.
Really, the only thing that Bill O’Reilly and company have to complain about is that the captain of the ship of state does not look like them (oh, and that they might actually be asked to pay a little extra for the privilege of the protection of their state).
We anarcho-syndicalists have a tough row to hoe. With people so invested in protecting the crumbs from the bosses’ plate how to convince them that they can provide for the well-being of all by taking control of the means of life? Will the inevitable disappointment in a second Obama term result in greater cynicism among the people or open them up to a radical critique of the system? Big Labor has promised to keep Obama’s feet to the fire. If history is any indicator, what this means is a few demonstrations targeting Republican legislators and further support for Democrats in 2014. Will there be openings for revolutionaries to intervene in these mobilizations to point to a different path? One thing is for certain – there will be more class battles in the near future as the crisis continues and further attempts are made to make the workers pay. An added dimension, the racist right will undoubtedly engage in more violent direct action against people of color and anti-racists will have to actively defend against this unless we want the people to have to depend on the state for protection, thus increasing the state’s power.
In any event the re-election of Barack Obama to the presidency is not going to end the “war on terror,” reduce unemployment, secure women’s reproductive rights, save Social Security, Medicare or Medicaid, start to address global climate change or do any of the other nice things Obama supporters voted for. Autonomous working class organization and direct action are still the only way to stay the hand of capital and bend the state to the people’s will.

The Crisis of Capitalism

By Eric Chester, ASR 59

The global economy is mired in the worst crisis since the Great Depression of the 1930s, and yet capitalism has always been characterized by instability and insecurity. An economic system that operates without an overall plan, and in which powerful economic forces act on the basis of maximizing short-run profits, is a system that is inherently unstable. Marx predicted a collapse of capitalism leading to a revolutionary upsurge as early as the 1850s.1 This would appear to be a prediction that has been contradicted by the course of history, but in fact the global economy has been plunged into one crisis after another.
The unpleasant reality we confront today is that although capitalism is constantly changing, the impact of these changes is, on balance, overwhelmingly destructive. Indeed, as capitalism grows and expands, it destroys everything in its path. As the system unravels, more and more workers become permanently displaced from the workforce; income and wealth differentials widen within the already industrialized societies, as an increasing number of countries are added to the list of “failed” nations; and ecological catastrophe threatens the continued existence of the planet as we know it. We are at a crossroads. Either the working class acts as a class and wrests power from the capitalist class, or the system will disintegrate into a catastrophic freefall.
The Business Cycle
Capitalism has always been marked by short-run business cycles in which times of prosperity are followed by harsh times. To some extent, these short-run cycles are self-regulating. Unplanned growth leads to overproduction in certain sectors and investors pull back. Bankruptcies ripple through the economy, allowing venture capitalists to purchase existing assets at bargain prices. Lower prices, and, more importantly, even lower wages, create opportunities for new investment, and the cycle begins again.
Capitalism has also experienced several severe downturns when its continued existence was called into question. Frequently, an economic boom is accompanied by a period of frenzied speculation. When the bubble bursts and speculators go bankrupt, the crisis spreads rapidly through the entire economy, with banks and financial institutions the hardest hit. Investment banks play a vital role in directing investment into new sectors, the dynamic growth sectors. Once confidence in the financial sector has been lost investment spirals downward and the entire economic system confronts a total collapse.
Although a decline in the price of capital goods might help to overcome the down phase of the usual short-run business cycle, the opposite is the case when bankruptcies occur as the result of a sustained and precipitous slump, such as the current one. Firms coming out of administration initiate massive layoffs as venture capitalists squeeze a greatly reduced workforce in a desperate search for profits. In the end, the spiral of bankruptcies that ensues in the course of an economic crisis only reinforces the pervasive collapse in investor confidence, thus making it even more difficult to spur the economy back into sustained growth.
Bailouts and Total War
When the system reaches the point of catastrophic collapse at the onset of a crisis of confidence, the most powerful capitalist interests usually intervene, often in conjunction with the state, bailing out the banks in order to avert a disastrous crash. This happened in the fall of 2008 and into the spring of 2009, with the support of both Presidents Bush and Obama. Confronted with the imminent possibility of a precipitous fall in output, and in stock market prices, the rich and powerful abandoned their distaste for planning and government intervention and agreed to a massive rescue of bankrupt financial institutions, as well as the auto industry. The recent bailout is not the only time that such a crisis intervention has occurred during a financial panic.
An imminent economic collapse is not the only moment of crisis when the government can rapidly assert a dominant role in the economy. The planned mobilization of a nation’s resources when fighting a total war is the other circumstance. During both world wars, the governments of the combatant nations commanded vast resources, becoming the predominant factor in the economy. In some cases, key industries were nationalized, and the rudiments of a national economic plan were put into practice. Segments of the Left, especially mainstream social democrats, viewed these developments as significant steps toward a socialist economy. The move toward a more planned economy was cited as a further proof that a socialist transformation was inevitable. Furthermore, it was argued, the inefficiencies of an unplanned economy were so glaring that even segments of the capitalist class understood the need for a regulated economy, with a substantial public sector that included key industries.
These arguments were advanced by some influential socialists in the United States during World War I, only to quickly be proven totally mistaken. Once the war ended, there was a concerted corporate onslaught designed to ensure that the capitalist class regained its hegemonic control of the economy. The entire network of railroads had been taken over by the federal government during the war, but the railroads were returned to their owners soon after the war came to an end. Public sector spending was sharply curtailed, and any hint of government planning was abandoned. After World War II, the anti-Communist hysteria provided a convenient rationale for dismantling wartime planning, along with the social reforms of the New Deal.
The dire threats arising from a total war provide a temporary crisis situation in which the government displaces the capitalist class as the prime factor in determining investment. In a very different context, a pending economic collapse has the same effect. In both cases, the role of the state as the determining factor in the economy has proven to be a temporary phenomenon. As the crisis passes, the pendulum soon swings back, and the government is forced to retreat.
The Limits of Deficit Financing
The capitalist economy is not self-regulating. Furthermore, emergency bailouts of bankrupt banks and corporations can prevent a rapid and total collapse, but they don’t resolve the crisis, which continues as economic stagnation threatens to deepen into a downward freefall.
Keynesian economists recognize this and argue for active government intervention as an effective means of stabilizing the system. In “normal” times, Keynesian economics can act to provide a certain balance, smoothing out the cycle. Higher interest rates can check the tendency to high inflation rates during the boom years. Deficit financing can enable the government to stimulate output and employment during the downturn. Only a few years ago, many mainstream economists were convinced that counter-cyclical government intervention assured the continued stability of the system. The current crisis has proven that this forecast was nothing more than an ideological rationale for the capitalist system.
In fact, once an immediate crisis situation has been passed, the traditional resistance to government intervention, and, indeed, to any kind of broader plan, reasserts itself. This resistance represents more than an adherence to the ideology of “free markets.” Indeed, the powerful corporate interests that backed the bailout did so in pragmatic disregard for “free market” dogma. One of the essential mechanisms of control held by the capitalist class is its ability to determine how much of its savings it will invest, and in which industries it will invest. To permit the government to become the primary channel for the flow of investment funds is to strip capitalists of a key component of the economic power they control as the ruling class.
It is easy for the wealthy to bring pressure on the government because a rapidly growing debt will lead bondholders to become more fearful of a default. With an increasing public debt to government budget ratio, or public debt to output ratio, interest on the debt starts rising as a proportion of total spending. This can not continue indefinitely since some types of expenditures are viewed as critically important, and thus are extremely difficult to cut. Thus, aside from upholding the interests of the capitalists as the ruling class, bondholders have real concerns that the state will default on interest payments as debt ratios increase. Deficit financing by its nature can only act as a short-term means of stimulating the economy.
Keynesian Economics and the 1930s
These underlying factors produce the curious paradox that Keynesian policies only work in “normal” times to smooth the short-run fluctuations of the business cycle, and not in a time of crisis when the system is threatened with collapse. Yet Keynes developed his General Theory in the 1930s with the express purpose of countering the Great Depression. He was convinced that his policies would enable the industrialized countries to overcome the Great Depression, and to avoid further slides into mass unemployment. Both predictions have proven to be false. Once the “animal spirits”2 of investors have totally soured, as the wealthy few lose confidence in the growth potential of the economy, deficit spending will not succeed in moving the economy back on track.
The experience of the United States in the 1930s provides an interesting case to examine. President Franklin Roosevelt was surrounded by advisers who viewed themselves as social reformers, and who were open to Keynesian economics. The federal government deliberately expanded its expenditures on social services, through deficit financing, with the explicit intention of stimulating economic growth and returning the country to prosperity. These policies were followed from the time FDR was inaugurated in March 1933 until June 1937.
When Roosevelt became president in March 1933, the United States had already experienced four years of economic collapse, during which President Hoover had done virtually nothing to counter the crash. Estimates of unemployment indicate that one out of four workers could not find a job, and millions wandered the country looking to survive.3  This was a catastrophic disaster, one requiring drastic measures.
Roosevelt had no overriding strategy, but he was prepared to take immediate action to counter the crisis. Legislation creating the Civilian Conservation Corps was rapidly enacted by Congress, creating jobs for hundreds of thousands to create nature trails and buildings in national parks, as well as building and repairing basic infrastructure. In 1935, the Works Progress Administration was launched, pump-priming the economy on a large scale with a wide variety of projects that employed a total of eight million workers over the eight years of its existence.4
New Deal programs were funded through deficit financing. Historians have estimated that the unemployment rate fell from 24% in 1933 to 14% in 1937. This was an improvement, but hardly an impressive one. The United States was still bogged down in an economic depression, with millions of workers confronting long periods of unemployment, with little hope for the future.
In early 1937, President Roosevelt’s administration came under heavy attack from corporate interests. The national debt had been rapidly rising, and bondholders were becoming skittish. Furthermore, CIO unions had organized militant strikes and occupations in the automobile industry, as well as other key industries. A spike in unemployment might dampen the militancy of an aroused rank and file.
Roosevelt had always viewed deficit financing as a temporary measure, a brief exception to the norm of a balanced budget. In June 1937, he proposed a drastic cut of three billion dollars in the funding of New Deal programs, with the Works Progress Administration and the Civilian Conservation Corps absorbing most of the cuts.5
The result was a profound shock to the system, with the downturn even more precipitous than that of 1929, at the start of the Great Depression. In the ten months following June 1937, total output fell by 12%, while industrial output dropped by one-third. Estimates of the unemployment rate indicate a jump from 14% in 1937 to 19% in 1938, with 10.4 million workers out of work.6
Roosevelt’s advisors pleaded with him to restore the cuts, but he refused until the spring of 1938, when funding was partially restored. A further collapse was averted, but the economy continued to sputter until the fall of 1939, when military production began to escalate as the European countries prepared for World War II.7
Keynesian policies did not succeed in overcoming the economic crisis of the 1930s, although the technical analysis underlining the policy recommendations was shown to be true. Government spending when not counterbalanced by taxes on the working class has a significant multiplier effect on output, income and employment. Nevertheless, Keynes did not take into account the overall context. First, unlike wartime, countering an economic downturn does not provide the government, even a very popular one such as that of FDR’s New Deal, with sufficient momentum to engage in the level of deficit spending required to counter the collapse in private investment. As a result, the economy remains stuck in the doldrums, although no longer at the trough of the cycle.
Second, Keynes’s analysis views pump priming as a temporary fix. The government gives the system a boost and then the economy returns to its previous course. In fact, during a severe downturn investor confidence does not respond to deficit financing. Once the government moves toward a balanced budget, usually by reducing spending on social services, output falls, moving back to the level where it was prior to the government intervention. The underlying problem, the refusal by the wealthy few to invest, has not been resolved.
The only way deficit financing could work in the midst of a severe economic downturn is if it were to be made a permanent feature of the economy, but this can never happen. Deficit financing can only be a temporary measure because the state is taking over an essential task in a capitalist economy, one reserved to the capitalist class. It follows that the rich and powerful will use all of their power to ensure that deficits are cut and they again become the driving force in the economy, determining the flow and direction of investment.
The experience of the United States in the 1930s provides an archetypical model. In spite of New Deal pump-priming, the Great Depression only came to an end with the start of World War II. Such a solution to the current economic crisis is no longer possible. Capitalism is a dynamic system in which certain innovations are fostered. The producers of armaments are always seeking deadlier weapons that require fewer soldiers to deploy them. Thus, a future total war would be over quickly and would leave the planet a radioactive wasteland. Smaller, localized wars of occupation do not necessitate a huge output of military weapons and do not involve enormous armies. Indeed, the United States was fighting two localized wars in 2008 and yet still experienced the worst economic downturn since the Great Depression. In the current context, the military can not provide the sustained demand needed to lift a country out of the mire of economic stagnation.
The Myth of Neo-Liberalism
In analyzing the failure of Keynesian economics to resolve the tendency of the capitalist economy to veer into an economic collapse, the emphasis has been on the underlying economics and class relations, and not on ideological dogma. The current “common wisdom” of the Left ascribes the defeat of Keynesian economics to the ascendancy of neo-liberal ideologues. This is a highly dubious explanation.
There is nothing new about the theory that the capitalist system is self-regulating, and that any government intervention can only make the situation worse by upsetting the automatic correcting mechanisms built into a market economy. Similar ideas were formulated by the Austrian school of economists in the late nineteenth century in response to the rise of a working class movement influenced by Marxism.
There is no doubt that this perspective has more traction now than even a few decades ago, but this is hardly because of its cogency or insights. The globalization of production has provided the objective basis for the rise of neo-liberalism. Corporations have outsourced their factories and mills to low-wage countries, thus destroying unions in the private sector. Unions provided the essential base of support for social democratic parties that legislated the welfare state in Western Europe, and for the liberal wing of the Democratic Party as well.
As transnational corporations create a global workforce, corporate bosses see no need to pay wages and benefits to workers in the previously industrialized countries that are higher than those paid to low-wage workers in Bangladesh, China or India. This drive to reduce wages is not a matter of ideology, but rather the pragmatic imperative of the bottom line. Globalization has substantially shifted the balance of class forces. The rightward tilt in the ideological debate reflects a more fundamental shift in the underlying balance of class forces.
This is not to deny that the rise of neo-liberal ideologues marks a meaningful change in the political terrain. In particular, in the United States, which has a long history of elections dominated by two corporate parties controlled by opportunistic politicians whose political perspective does not extend beyond a commitment to upholding the power of the capitalist class. The Tea Party has a program and an ideology that goes well beyond this, calling for the total dismantling of the welfare state reforms instituted during the New Deal. Its rapid rise in visibility has made a significant impact on the Republican Party, which has begun to present a distinct alternative to the pragmatic centrism of the Democrats.
As socialists, we can recognize that there are genuine differences between the pragmatic Obama Democrats and the Tea Party neo-liberal ideologues. Nevertheless, both approaches remain well within the constraints of mainstream capitalist politics. When leftists target neo-liberalism as the primary problem, they underscore their failure to understand the essential dynamic of the current crisis in their desire to exaggerate the differences between neo-liberals and their pragmatic opponents. This position is often followed by a call for a coalition of the broad Left against the rabid, dogmatic Right, as those on the Left subordinate their radical politics to defeat the perceived threat of a neo-liberal victory.
Global capitalism, not neo-liberalism, is the primary problem, and a rapid transition to a socialist society provides the only possible answer.
Capitalism has always had an inherent tendency to expand. Of course, the drive to conquer others precedes the rise of the capitalist system, as imperial rulers have always fought to expand their domain. In the past, this would involve looting and pillaging. The empires that have arisen in modern times have certainly looted and pillaged, but this has been a secondary aspect of their rule.
Historically, a capitalist power has sought to create a distinctive link between the imperial center and the subject countries on its periphery. The British empire of the nineteenth century is the classic example. Industrial production was concentrated in the center, England and Scotland, while industry in the periphery was actively discouraged. The headquarters and coordinating functions of the finance sector were also centrally located in London. Conquered countries were limited to one primary economic role, providing cheap raw materials for the industries of the imperial power. This could entail the exploitation of scarce natural resources, with no regard for the environment, or the extreme exploitation of unskilled labor through the use of force.
In this context, the working class of the imperial power had a vested interest in maintaining the empire. Indeed, a century ago the more far-sighted strategists of the British Empire understood the utility of ensuring the loyalty of the British working class by providing limited social benefits and establishing a minimum wage. In the past, there had been a unique and defined set of economic relationships between the imperial power and its dependent colonies.
The outsourcing of industry and mining to the developing countries has devastated the traditional working class in the developed capitalist countries. Unions in the private sector have been virtually wiped out, and public sector unions have come under intensive attack. As a result, inequalities in income and wealth have significantly widened, thereby increasing the volatility of the system as well as its tendency to become mired in prolonged slumps. Globalization also increases the volatility of the system because it greatly restricts the ability of governments to regulate the economy, and to redistribute income through taxes. The interconnectedness of the global economy also increases the likelihood that a crisis triggered in one country will spread quickly throughout the globe.
Globalization makes the system more volatile, but it only accentuates the fundamental underlying problems. Indeed, the Great Depression of the 1930s occurred decades before corporations began shifting industrial production overseas. Still, globalization adds to the instability of the system, while making it more difficult to pull the economy out of a prolonged downturn.
The Keynesian policy of deficit financing as a method of stimulating the economy constitutes one of an array of government programs designed to stabilize the system. Many on the Left are convinced that the deregulation of markets, as driven by the neo-liberals, provides the primary reason for the current global downturn. In their view, future disasters can only be avoided by strict regulation of the economy, especially the financial sector.
At the turn of the twentieth century, progressives pushed for government action to break up the trusts. They called for anti-trust legislation, hoping that the market economy would return to a mythical golden age when small firms, acting independently of each other, operated within competitive markets. This project proved to be a total failure, as large corporations discovered ingenious ways to evade anti-trust legislation in order to create ever more gigantic entities, and to act in collusion with other powerful firms in their market. Capitalist economies have always been dominated by a few large corporations that manipulate prices and outputs so as to maximize profits. These days, corporations span the globe, crossing national borders with ease.
During the New Deal, the focus of reform shifted from anti-trust legislation to the financial sector. The current crisis has led progressives, once again, to argue that strict regulation of the financial sector will be a critical element in a program that will allow the economy to overcome the current slump and prevent another one from occurring. In fact, such a policy is bound to fail.
To start with, a speculative frenzy only occurs when investors are confident of the future and are willing to take risks. The current situation is characterized by investor pessimism, and a reluctance to undertake risky projects. Indeed, investor confidence appears to be heading downward, with no imminent sign of any upswing. The current problem confronting capitalism is not how to curb an unbridled speculative frenzy. Quite the contrary, investors are following an extremely cautious path.
Even if the current crisis were to be overcome, it will be very difficult for any government to enforce strict regulations on the financial sector that inhibit speculative investments. The only time the economy can prosper is when investors are prepared to undertake investments in new sectors where, by definition, the future is unclear and the risks are high. Obviously, there are no gains to society from the kind of scam investments that brought the housing market to a standstill. Still, it is difficult to discern in the midst of a boom what are risky but still potentially worthwhile investments and what are elaborate frauds.
Furthermore, even the most skillful regulation does not touch the underlying problem. Capitalism generates more savings than can be matched by profitable investments. Globalization has further exacerbated this underlying problem by widening the gap between rich and poor. Regulating the financial sector will not add to effective demand, and, indeed, may well reduce it by dampening investment.
There is also little reason to believe that regulation of the financial sector will prove to be effective. Globalization has integrated the world’s financial markets, making it easy to shift funds from country to country. Financial institutions need no longer remain in New York or London, but rather can be relocated to any place that is connected to the internet. Restrictive legislation in the United States and Britain will just speed the rate at which financial institutions move offshore.
Finally, the impetus to enforce strict regulation dissipates as the crisis that spurred these actions fades in memory. As time goes on, enforcement becomes increasingly lax and banks, and financial institutions become more adept in evading the rules. Corporations use their enormous power to press the case for regulatory “reform,” insisting on the need for freeing financial institutions from “unnecessary” restrictive red tape.
This trajectory can be traced in the United States from the 1930s to the recent debacle. During the first days of the New Deal, the Glass-Steagall Banking Bill was passed with the goal of stabilizing the financial sector, in part by making it harder for banks to invest in high-risk loans. One aspect of this was the creation of a tight barrier between retail banks, those taking deposits from individuals and small businesses, and investment banks, which funnel large sums to fund mergers and new technologies, but also underwrite risky investment vehicles. Over the years, the tight separation of the two types of financial institutions was eroded, until legislation passed in 1999, during the Clinton Administration, junked the entire policy, permitting retail banks to merge with investment banks. The funneling of funds from retail banks to the high-risk investments of credit default swaps and real estate investment trusts was one factor facilitating the speculative frenzy in the housing market, which, when it collapsed, triggered the current crisis. It should be noted that this piece of deregulation was not formulated by neo-liberal ideologues, but rather by the pragmatic advisors of Bill Clinton who were enamored with the rapid spread of a global financial sector.
Capitalism is inherently unstable, and subject to extended periods of mass unemployment, bankruptcies and crisis. Government regulation will not prevent economic instability. Efforts to regulate the financial sector in order to prevent destructive speculative booms are bound to fail. These efforts represent yet another case of reformers fruitlessly trying to fix a system through piecemeal changes. Capitalism can not be reformed. It must be fundamentally transformed through a revolutionary process.
Obama and the Economic Crisis
Emergency bailouts of banks and bankrupt corporations can forestall a total collapse, but the economy remains mired in stagnation. The recent course of events in the United States is indicative of the depth of the problems confronting a capitalist system in decline.
President Barack Obama is, above all, a pragmatist. He has no ideological reluctance to using the state to intervene in the economy, and yet he also has no intention of confronting the capitalist class. Very much the corporate centrist, Obama’s economic policy has been marked by cautious timidity. A total collapse has been forestalled, but output remains stalled, and unemployment remains at high levels. The official unemployment rate fell from 10.0% in 2008 to 8.4% in 2011. These figures limit the count of the unemployed to those who are currently out of work, but who are actively seeking employment. A broader figure adds to the number of unemployed those who have become discouraged, as well as those “marginally” tied to the workforce, including older workers who reluctantly retired after finding that work was no longer available. Using this more accurate indicator, the unemployment rate fell from 15.2% in 2008 to 13.5% in 2011.
These statistics demonstrate that the United States remains stalled in the worst economic crisis since the 1930s, and the Administration has done little to overcome it. Obama’s approach to overcoming the crisis has been far more cautious than Roosevelt’s New Deal, as limited as that was. This reflects several factors. First, the bailout of 2008 was enormously expensive, adding significantly to the total debt, and thus making it more difficult to undertake deficit financing to spark a revival. Furthermore, globalization has led to the U.S. debt being held by wealthy individuals and financial institutions from around the world. It is all too easy for those currently holding U.S. bonds to sell them should they become concerned with the federal government’s increasing debt. Such a dumping would significantly increase the interest rate accruing to U.S. bonds, making it more expensive to borrow.
These factors are relevant, but secondary to the significant shifts in the objective situation since the 1930s. Globalization has undermined the strength of the working class in the previously industrialized countries. (In the United States, only 7% of those working in the private sector are union members.) With the working class in retreat, Obama has only agreed to implement a fiscal policy of economic stagnation. This is in contrast with the first years of the New Deal, when Roosevelt authorized deficit financing on a scale that led to lower unemployment rates, although unemployment still remained at depression levels. Globalization makes capitalism even more susceptible to severe economic downturns, while at the same time making it more difficult to recover.
Obama has also been eager to limit the scope of counter-cyclical spending to capital projects that can be viewed as emergency measures, while avoiding projects that widen the scope of projects undertaken by the public sector. New Deal plans to counter mass unemployment were quite different. The Civilian Conservation Corps constructed roads and buildings in wilderness areas that made natural parks more accessible and desirable, and thus stimulated the demand for increased funding for the park system that lasted well beyond the 1930s. The Works Progress Administration was given a broad mandate that led to a variety of projects such as the Federal Theater Project and the Federal Art Project8 that could only inspire working people to demand that the federal government do more than fund a vast military apparatus. The Obama administration has studiously avoided any creativity in envisioning pump-priming projects.
This difference in approach reflects the underlying shift in the balance of class forces. Roosevelt was worried that the working class in the United States might be attracted by Soviet Russia or Nazi Germany. He therefore sought to present a positive alternative, a welfare state which remained a capitalist market economy.
The change in approach to deficit financing also reflects the very different global context in which the United States finds itself. In the 1930s, most Americans believed that the Great Depression was merely a temporary downturn that would be followed by further periods of prosperity. Eighty years later, globalization has led to deindustrialization.
For three decades prior to the economic crisis of 2008, the working class has suffered through declining real wages and a deterioration in essential social services. Although Obama has pursued a fiscal policy of modest economic stimulus that has forestalled a total collapse, state and local governments have not been provided with funds from the federal treasury needed to counteract the precipitous drop in tax revenues at every level of government. As a result, there have been drastic cutbacks in education, health care and mass transit, compounding those that were already in place before the current crisis. Workers are constantly told that austerity is inevitable, and that they will have to live on less, not just now but in the future.
The Eurozone Debt Crisis
The sharp downturn in the global economy has led to a rapid increase in the debt owed by governments in most of the developed capitalist countries. Banks have been bailed out by governments anxious to avoid a collapse of the financial sector. Tax revenues have substantially declined, as output and incomes spiral downward. At the same time, some countries have pursued Keynesian pump-priming policies by increasing expenditures on infrastructure projects, such as roads, railroads, even prestige projects such as venues for the Olympics.
In several countries within the Eurozone, the rise in the national debt has led to a catastrophic collapse in the economy. Generally, these countries are among those with the weakest economies, having the lowest per capita incomes within Western Europe. Still, the crisis is deepening and spreading. Even France and Holland are threatened by the debt crisis, and the possibility that the European Union may disintegrate is very real.
Although several countries are approaching the economic abyss, their paths to this critical point have been strikingly different. Spain had a small debt to output ratio prior to 2008. The Spanish housing market boomed, but once the slump began, mortgages could not be repaid and the banks collapsed. In Greece, the debt to output ratio was high before 2008. The Greek government hoped that the richer EU countries, particularly Germany, would continue to funnel aid its way, permitting the Greeks to construct a network of social services that approached that of the wealthier countries of Western Europe. Once the global crisis hit, the shaky foundation of this fleeting prosperity was exposed, and the economy collapsed.
In both Spain and Greece, official unemployment rates stand at 25%, and interest rates on government bonds have risen to levels that cannot be sustained. Although the specific road to the debt crisis has varied, the results have been very similar. The economic crisis has led to a sharp fall in output and, as a result, tax revenues have fallen as well. As deficits increase, the countries are pressured into sharp cuts in social services, which produce even further cuts in output, and the downward spiral continues as the system spins out of control.
Bondholders observe debt to output ratios rapidly increasing in the weaker Eurozone countries, and they respond by shifting out of the bonds of those countries and into safe havens, such as U.S. government bonds. The increase in those wanting to sell leads to a fall in the price of the bonds of the beleaguered countries, and thus an increase in interest rates. Higher interest rates add to government expenditures, thus creating even larger government deficits, and a further twist in the downward spiral.
As interest rates on government bonds approach 7% per year, bondholders begin to panic, and bankruptcy looms. Interest rates for both Greece and Spain have begun to approach this critical point. To avoid a crisis, the European Union, that is primarily the German government, provides emergency funds to buy the bonds of the targeted country, demanding stringent repayment plans and further cutbacks. The emergency infusion of funds stabilizes the bond market for awhile, until the spiral begins again and the abyss approaches again.
In this situation, austerity measures are self-defeating. Cutting government spending only exacerbates the underlying problem. Still, stimulating the economy through deficit financing will not work either, given the readiness of bondholders to flee from the risk of default. Furthermore, the draconian cuts required to service the emergency loans virtually propel the working class into action, and the militancy of the popular resistance deters the government from fully implementing the austerity program demanded by the European Union and the International Monetary Fund.
There would appear to be only one way out of this impasse within the constraints of a capitalist market economy. The wealthy few must be heavily taxed, and the revenues thus generated used to fund vital social services. This would require a significant shift in the balance of class forces toward the working class. The recent decades have been characterized by the exactly contrary trend, as the gap between the rich and the poor widens even further.
Globalization not only undercuts the power of the working class in the previously industrialized societies, but it also makes it easier for the affluent to hide their incomes in the many tax havens that have sprung up around the world. The ability of nation states to effectively tax wealthy individuals or large corporations has been significantly undermined by globalization. Incomes and corporate profits would have to be taxed at the source, and this would require full and open transparency by corporations to become meaningful. A true accounting would necessitate a direct confrontation with international capital, triggering massive capital flight.
Immediately, the Eurozone countries confronting economic collapse can gain a breathing space by leaving the European Union and defaulting on sovereign debt. By being integrated into a currency zone dominated by Germany, less technologically advanced countries such as Spain and Greece have been saddled with overpriced exports. This has exacerbated the impact of the global downturn, and has been one factor contributing to the economic crisis in these countries. Nevertheless, leaving the Eurozone will not resolve the underlying problems. Investor confidence has been decimated, and a brief upsurge in exports is not likely to remedy the problem.
A Stark Choice
The choice is stark. Either countries such as Greece and Spain move rapidly to overthrow capitalism, and to establish a new society, or economic stability will be restored by quashing the working class, dismantling social services and slashing wages. This is a choice that can not be confined to one country. The revolutionary option will only succeed if it rapidly spreads. The current crisis can not be transcended through half-measures and limited reforms. We need to think in bold terms, to view our commitment to building a new society as an immediate strategic priority, not as a goal for some vaguely defined future.

1.  In a letter to Engels written on September 25, 1856, Marx suggested that the crisis had “assumed European dimensions such as have never been seen before.” The two revolutionaries would not “be able to spend much longer here merely as spectators.” Karl Marx and Frederick Engels, Collected Works (London: Lawrence and Wishart, 1983), 40:72.
2.  John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936), p. 161.
3.  The federal government did not collect statistics on unemployment during the 1930s, so economic historians have calculated rough estimates based on the available statistics concerning output and income. In 1940, the current system was initiated, based on monthly surveys of the labor force. The estimates of unemployment rates from the 1930s, therefore, are not comparable to the current statistics.
4.  Frank Knight, “The Economic Principles of the New Deal,” in Morton J. Frisch and Martin Diamond, The Thirties: Reconsideration in the Light of the American Political Tradition (De Kalb: Northern Illinois University Press, 1968), p. 92.
5.  William Leuchtenberg, Franklin D. Roosevelt and the New Deal, 1932-40 (New York: Harper and Row, 1963), p. 244.
6.  Richard Polenberg, “The Decline of the New Deal, 1937-1940,” in John Braeman, Robert H. Bremner and David Brody, eds., The New Deal: The National Level (Columbus: Ohio State University Press, p. 255.
7. Knight, “Economic Principles,” p. 94.
8.  Leuchtenberg, Roosevelt and the New Deal, pp. 125-8.

Anarcho-Syndicalist Review #60

asr60 coverASR #60 is now available.  Click on the link to order online (via Paypal), or you can order a copy for $5 from ASR, PO Box 42531, Philadelphia PA 19101 email: anarchosyndicalistreview


EDITORIAL: A booming economy?
OBITUARIES: Audrey Goodfriend, Mott Green; Nunzio Pernicone by Robert Helms
WOBBLES: Oiligarchs Fund “Stink Tanks,” Murderous Capital, Vanishing Labor Law, Chinese workers seize CEO
SYNDICALIST NEWS: USI-AIT hospital workers strike, Employer opens fire on migrant workers, Workers’ Control in Greece, Garment workers strike after factory collapse, Wobbly News… Compiled by Mike Hargis
Interview with Egyptian anarchist by Mark Mason
Do Fast Food Strikes Signal U.S. Labor Revival? Seattle Teachers Refuse Standardized Tests by John Kalwaic
ARTICLES: Seething anger, wildcat strikes, and growing struggles in South Africa’s mines by Shawn Hattingh
Thatcher: Putting the fun back into funeral by Iain McKay
Thatcher: Reagan with a brain by Mike Long
Proudhon on Race and the Civil War: Neither Washington nor Richmond by Iain McKay
REVIEWS: Lucy Parsons: American Anarchist Review essay by Iain McKay
Anarchism & Syndicalism in the Colonial World Review by Jon Bekken
Environmental Anti-Humanism Review by Graham Purchase
The IWW & the Spanish Revolution Review by Jon Bekken
Anarchist Science Fiction Review essay by Iain McKay
LETTERS: Consensus, Occupy Shareholders Meetings

Nationalism or Freedom?

By Jon Bekken, Anarcho-Syndicalist Review #32

Writing in the most recent Arsenal, a well-produced “magazine of anarchist strategy and culture,” Mike Staudenmaier devotes one of the leading articles to a critique of ASR’s “extensive and influential writings opposing nationalism and advocating working-class internationalist revolution.” (Unfortunately, he cannot be troubled to cite any of them, perhaps recognizing that his muddled argument could not stand up to any anarchist writings on the subject.)

According to Staudenmaier, we follow the “people, not nations” analysis he attributes to Rudolf Rocker, “combin [ing] the sort of economic reductionism that is often the hallmark of syndicalism with careful analysis of the harsh experiences of the Cuban revolution.” Our color-blind position that “working people have no country” was revolutionary a century ago, he continues, but today is a manifestation of white supremacy responsible for the overwhelmingly white membership of “one of the best-recruiting and most steadily growing segments of North American anarchism.”

Citing our criticism of Chomsky’s suggestion that in this era of globalization, the nation-state can serve as a mechanism for popular self-defense (and strangely arguing that the Brazilian nation-state, which routinely murders homeless children on the street, aids and abets transnational corporations in despoiling Brazil’s abundant natural resources, and forces landless peasants into debt peonage, is less repressive than the IMF), Staudenmaier says we fail to acknowledge the substantial divisions within global economic classes posed by racial and national identities. These divisions, he argues, create the possibility of “meaningful cross-class alliances – difficult to assimilate into a syndicalist world view.” (13)

In a typically confused passage he then conflates race, culture and nation, and claims that syndicalists say that the struggle for racial justice must be put off until after the anticapitalist revolution (which, Staudenmaier suggests, is exactly backward). Conceding that syndicalists are “sincerely anti-racist,” he argues that we ” underestimate the importance of cultural identity to people’s lives and to social struggles,” thereby leading revolutionaries into a dead-end.

After some muted criticisms of anarcho-nationalist tendencies, which have led many who consider (or once considered) themselves anarchists into backing a variety of Marxist-Leninist groupings (a significant fraction of the now-dissolved Love & Rage Federation recently joined the Maoist Freedom Road Socialist Organization) for ignoring class struggle, the author turns from setting up his straw men to putting forward his own perspective:

“Where ASR offers the false dichotomy between people and nations, the ABCF upholds a similarly questionable opposition between ‘oppressor nationalism’ … and ‘nationalism of the oppressed’ … [But] in both cases, the social experience at a grassroots level is the same – cultural identity rooted in geography, language and assorted historical intangibles, producing a broad-based love and prioritization of a community of communities.” (15)

Staudenmaier rejects this attempt to separate what he sees as inextricably intertwined positive and negative aspects of national identity. Instead he champions what he admits is an ad hoc analysis, skeptical of national liberation struggles while supporting them, “recit[ing] rhetoric about class struggle” while working with radicals of all class backgrounds (he apparently believes there are significant numbers of the employing class to be found in the anarchists’ ranks, something I have never observed), and calling upon activists to embrace the contradictions.

Anarchist support for the EZLN (the Zapatistas) is offered as an example “of this promising new anarchist response to nationalism,” (16) citing Marcos’ embrace of “the nation” in a typically incoherent quote. But for Staudenmaier the Zapatistas embody an anti-statist nationalism, apparently because they have recognized that they are in no position to seize state power and so instead negotiate with the state and pressure it to change its policies. Unwilling to embrace nationalism fully, Staudenmaier instead urges us to “participate in and/or lend support to anticolonial struggles in a principled and critical way. … Anarchists must become involved in a critical way in what Marcos calls the ‘reconstruction’ of the nation, which can only happen if we avoid the twin pitfalls of knee-jerk anti-nationalism and uncritical acquiescence to national liberation. By balancing the competing claims of race and class, we can develop a new anarchist understanding of nations and nationalism.” (17)

I apologize if this summary seems incoherent; while I have endeavored to distill a coherent argument from seven pages of confusion, this is at best a difficult task. I undertake this thankless task only because Staudenmaier is quite mistaken when he describes our writings on this question as “influential.” In fact, most North American anarchists today embrace the muddled thinking he advocates, with devastating results. In upholding the traditional anarchist opposition to nationalism (although our recent writings on the subject have hardly been extensive, and have tended to discuss the Middle East far more than Cuba), we have waged a difficult and usually lonely struggle for fundamental anarchist principles.

Staudenmaier’s argument relies upon an almost total exclusion of evidence, allowing patently false claims such as that syndicalists argue that the struggle for racial justice must be postponed until after The Revolution to stand cheek by jowl with highly questionable characterizations of various nation-states and nationalist movements. Failing to critically engage the one example of “progressive” nationalism he discusses (the Zapatistas), he leaves readers with no concrete sense of what this “new anarchist understanding” might look like in actual practice, or why we might consider it to be in any way anarchist.

Staudenmaier is unable even to keep his core concept clear. He offers two definitions of nationalism: a common language and shared geography (11) and cultural identity rooted in geography, language and historical intangibles (15). These definitions are quite useless in understanding actually existing nationalism. In the Balkans, for example, the allegedly intractable nationalisms there (we leave aside the high levels of intermarriage and other such inconvenient facts) have nothing whatever to do with language (Serbian and Croatian are the same language, only the script in which they are written differs) or geography (the populations are completely intermingled, thus the necessity for “ethnic cleansing”). This confusion is not entirely his fault. The “nation” is an essentially mythic concept, its signifiers chosen arbitrarily by ideologues seeking to unite followers against the “other” or to conceal real conflicting interests behind a facade of national unity.

As Mikhail Bakunin (whose understanding of nationalism was far more complex than Staudenmaier’s), noted: “There is nothing more absurd and at the same time more harmful, more deadly, for the people than to uphold the fictitious principle of nationalism as the ideal of all the people’s aspirations. Nationality is not a universal human principle; it is a historic, local fact. … We should place human, universal justice above all national interests .” While consistently defending the principle of self-determination, Bakunin (whose political activity began in pan-Slavism) came to see nationalism (and its corollary, patriotism) as a manifestation of backwardness. “The less developed a civilization is, and the less complex the basis of its social life, the stronger the manifestation of natural patriotism.”

Bakunin also termed nationalism a “natural fact” that had to be reckoned with. Indeed, nationalism does exist, in precisely the same sense that dementia does. There are many people in the world who hear God giving them orders – sometimes cruel, sometimes bizarre, sometimes quite humane – or who see hallucinations. While these unfortunates insist upon the reality of their visions, we know better. Such things simply do not exist, for all that thousands of our fellow humans act upon them. But the mental disorder that sparks these delusions quite certainly exists. Sometimes it is relatively harmless and can perhaps be ignored, though I tend to believe symptoms should be responded to before the disease gets worse. Sometimes the derangement is quite serious, and must be confronted forcefully.

In precisely the same way, we can say that nationalism exists, even though there is no useful sense in which “nations” can be said to exist, except as an artificial construct imposed by states, churches and other powers to suit their own interests.

Nations are in fact inventions of relatively recent origin. Five hundred years ago, the language we now know as “French” was a family of loosely related regional tongues that were not mutually intelligible. The “Italian” nation was invented in the 1800s, and a significant fraction of the Italian right now seems determined to uninvent it. In Chicago, in the early 1900s, there was a prolonged struggle over the national identity of the people now known as Ukrainian immigrants, with competing networks of institutions seeking to construct national identities as Poles, Ruthenians, Little Russians, Russians, and Ukrainians. With the defeat of the claimants in the diaspora, the Ruthenian nation vanished without a trace, aside from some old buildings where it was engraved into the stone. Similarly, there was heated debate within the Polish community over whether Jews, atheists, socialists, and members of the Polish National Alliance could be considered members of the Polish nation. Such debates had little to do with language or culture, rather they represented efforts by competing leaderships to establish dominance and to exclude those who subscribed to competing identities from inclusion in the fold of “the people.”

But Staudenmaier’s confusion does not end with his definition of nationalism. Throughout his essay, he treats the concepts of “nation” and “race” as if they were synonyms. There are, of course, important similarities between the two concepts: Both lack any basis in the real, material world, but are instead ideological constructs invented to justify oppression and domination. Although their boundaries are porous, subject to constant reinterpretation and redefinition (as are all arbitrary categorization schemes), many people have internalized these constructs, making them part of their own self-identification. Both are poisonous, pernicious ideologies; there is no crime too heinous to be “justified” under the cloak of race or nation. And, of course, both are manifested in social arrangements that reflect not only relations of power (which have their own historic weight), but have also implanted themselves in the consciousness even of those sincerely committed to the cause of human emancipation.

But despite these similarities, there are also important distinctions between race and nation. While no one can define either with any precision, given their wholly mythic character, race certainly does not involve questions of geography or language – the only two generally agreed-upon markers of nationality. (That nation is not in fact defined in any way by these markers is a different question.)

There are certainly people who have historically been – and continue to be – oppressed in particular ways, justified in part by alleged differences in skin color and/or physical build. (Such differences have relatively little explanatory power; in the 1790s there was a debate in this country over whether Germans were “white” or ” black”; in the 1800s the same question was raised about the Irish; in the early 1900s Finns were widely considered an “Asiatic” people by specialists in racial categorization. Physical characteristics are purely incidental to such arguments, which are fundamentally about power and domination.) This history of oppression manifests itself in many ways, from the jobs workers are able to obtain, to the schools their children are enrolled in, to the accumulated resources they have at their disposal to see them through hard times or enable them to secure a viable economic foothold, to their likelihood of being shot by police. Syndicalists have always recognized the importance of racial oppression, fighting against discrimination on the job and in the broader society, demanding equal access to jobs, and putting our bodies on the line in the struggle for racial justice. “Race” has been used both to divide the working class and to subject one segment of our class to particularly brutal oppression and exploitation, and as such it can not be ignored. But its manifestation is radically different than that of “nation,” and to treat them as interchangeable is a dangerous confusion.

It is particularly dangerous when Staudenmaier swings between race and nation, arguing that anarchists should build cross-class alliances – an anarchist version of the Popular Front which has sucked so many radicals into pallid reformism. While there is a certain logic to cross-class alliances for those who seek state power above all else (the politician needs money for propaganda, for armed henchmen, and his material comforts, but also needs a mass base to provide cannon fodder, generate wealth and implement the great leader’s schemes), there is absolutely no reason why anarchists should be making common cause with our exploiters. It is not only wrong in principle, it not only feeds illusions among our fellow workers, but it is tactically stupid to boot.

As we noted earlier this year, “The right of a people to self-determination is a long-standing anarchist principle. Nationalism, however, is a fraud whereby would-be rulers ‘self-determine’ to impose their vision of nationhood on an entire community. Nationalism is an ideology of separation, of hatred for the ‘other.’ It is a creed of violence and war and oppression. And it has absolutely nothing to offer the world’s oppressed. What is necessary is to develop human solidarity, the instincts of mutual aid that enable us to survive and which have fueled all human progress…”

Even many Marxists are at long last recognizing the folly of their long detour into nationalism. In a recent essay, George Kateb describes nationalism (and its close cousin, patriotism) as “a grave moral error” arising out of “a state of mental confusion.” Noting that the nation is an amalgam “of a few actual and many imaginary ingredients,” he notes that patriotism, in its essence, “is a readiness to die and to kill for an abstraction … for what is largely a figment of the imagination.” (907) Necessarily constructed to exclude the vast majority of humanity from its imagined community, patriotism – the celebration of the nation armed – needs external enemies. ” Patriotism is on a permanent moral holiday, and once it is made dynamic, it invariably becomes criminal.” (914) But not only does nationalism define itself in opposition to the whole of humanity, Kateb argues, it also requires that the individual surrender her moral authority and individuality, abandoning her own dignity and individuality to embrace submersion into an ideology of hatred, a life of criminality. Quoting Thoreau, he concludes that only those who surrender their “self-respect, and sacrifice the greater to the less” can be patriotic. “They love the soil which makes their graves, but have no sympathy with the spirit which may still animate their clay. Patriotism is a maggot in their heads.”

As Rudolf Rocker noted, “the change of human groups into nations, that is, State peoples, has not opened out a new outlook… It is today one of the most dangerous hindrances to social liberation.” (202) Peoples with common history, language and cultural backgrounds evolved over long periods of living together in free (and sometimes not so free) social alliances. No anarchist would propose that such communities should be forced to dissolve themselves into some invented social identity. But this is precisely what nationalism, the political theology of the state, attempts. “Nations” are in no sense natural communities; they stand in stark opposition to human autonomy, to the right of self-organization and self-determination, and to the principles of mutual aid and solidarity upon which our very survival depends.


ASR: “The Folly of Nationalism,” #30 (Winter 2000/01), pp. 1-2.

Mikhail Bakunin, “Statism and Anarchism,” “Letters on Patriotism,” “A Circular Letter to My Friends in Italy,” “The Knouto-Germanic Empire and the Social Revolution.” Excerpted in G.P. Maximoff, ed., The Political Philosophy of Bakunin.

Jon Bekken, “Negotiating Clas and Ethnicity: The Polish-Language Press in Chicago.” Polish-American Studies (Autumn 2000), pp. 5-29.

George Kateb, “Is Patriotism a Mistake?” Social Research 67(4) (Winter 2000), pp. 901-24.

Rudolf Rocker, Nationalism and Culture.

Werner Sollors (ed.), The Invention of Ehtnicity.

Mike Staudenmaier, “What Good are Nations?” Arsenal 3 (2001), pp. 11-17.

Direct Action: Towards an understanding of a concept

by Harald Beyer-Arnesen, ASR #29

Campaigning for wage-workers to join the Industrial Workers of the World, Eugene V. Debs stated in December 1905: “The capitalist own the tools they do not use, and the workers use the tools they do not own.” To this one could add: At times direct action may mean putting the tools we do not own out of action, at times it may mean bringing them into play for our own, self-defined needs and ends. In the final instance, it can only mean acting as if all the tools were in fact our own.

Direct action brought to its ultimate and logical end is the libertarian social revolution: the working class’s direct overtaking, rearrangement, transformation and deconstruction (when not found appropriate to human needs) of the means of production (the material tools of freedom), and the disarmament of the forces protecting the order that was. If we are talking about a genuine social revolution, this can be nothing but the collective, direct action by the working class abolishing itself as a class, and thus the state and class society as such, making us all into citizens of a world of our own making.

Many are those who talk about direct actions these days, fewer try to explore its meaning, asking what kind of tool it is. This is not a semantic question but one of substance – one that lies at the core of the whole anarchist, social-revolutionary project where “the emancipation of the working classes must be conquered by the working classes themselves,” and the means are determined by and contained in our ends. From this perspective we can define direct action as being an action carried out on the behalf of nobody else but ourselves, where the means are immediately also the ends, or if not, as in a wage strike not mediated by any union bureaucracy, the means (decreasing the bosses’ profits by our non-work, and thus also diminishing the bosses’ power) stand in an immediate relationship to self-defined ends (increasing our wages and extending our own power). A direct action successfully carried out brings about a direct rearrangement of existing conditions of life through the combined efforts of those directly affected.

Nobody need wholly agree with this definition, but I find it logical as well as a potentially powerful instrument in developing a practice where the future society comes to life within the shell of the old. In all circumstances, we as anarchists and social revolutionaries must comprehend direct action within the context of our project of human emancipation. Direct action is however not like pregnancy, which is something you either are or are not. Elements of direct action may be contained in actions that do not fully qualify as such. Part of our task consists in trying to make these elements as dominant as possible, whenever possible. To this we need a usable definition, something to aspire towards and measure our actions by, and thus also acquire a greater awareness of the sources of our strengths and shortcomings.

We will not always have the power to reach our ends through direct action. More than any other form of action, it tends to demand a collective, organizational force. Most clearly this will manifest itself in the working class’s direct re-expropriation of the instruments of production and freedom. We can achieve anything together. Building that togetherness is the difficult part, and like a muscle not used, the force of collective action is weakened by passivity. On a local level, where most of our actions are still confined, or on international level, through the coordinated actions within one small sector of the working class, our ability to carry out direct action will be restricted by it being a means not yet generalized. We should still be able to make use of it some of the time, but not all of the time without being crushed by the forces we are up against. If you are fired, a sit-down strike might save your job, but if you are the only one sitting there it might be a good idea to look up a lawyer or some union bureaucrat. Something which also draws our attention to how the concept of direct action links up with another old word in the vocabulary of working class struggles, namely practical solidarity. Solidarity does not mean charity, and cannot be reduced to altruism. Rather it is something which grows out of an understanding of common interests. At the root of the IWW catchword, “an injury to one is an injury to all,” lies more than a moral economy. The words also describe a fact of social life.

Direct action has been defined as action without intermediaries. This is a definition in need of qualification. From an anarchist perspective direct action is connected not only to solidarity, but also to what tends to be a precondition for solidarity and the underlying principle of the concept of direct democracy: non-hierarchical human communication. Such communication lies at the roots of what direct action always is, individual and collective self-empowerment. As direct action contains its own end, within that self-defined end its meaning is also found. The more the ends are manifested in the means, the more it is a direct action.

If we stay seated or go on playing darts as a means to prolong a lunch break, and thus shorten our working day, then the meaning of the action is also immediately the means used. But such collective action has as its precondition the human dialogue. It is through the mediation of the dialogue the ends are defined that gives the action its signification for us as human beings. If we stay seated or go on with our dart playing because the boss tells us so, then even if this will prolong our lunch break just as much or more, it is not direct action. Now there are forms of direct action that may involve only a single person, precisely because it is something which is of nobody elseÕs concern. But in general, for an action to be effective and have more than a symbolic significance in a social context, it must involve the participation of many. A one-(wo)man strike is at best a political statement.

Protesting the modern-day popes and tsars

If you lack water you might have to dig a well, and the act of digging will be direct action. You may need the assistance of others and your lack will very likely also be shared by them, making it into a collective task. But within a class society things are rarely that simple. The land may be owned by an absent landowner, and an apparatus of force will exist to impose proprietor rights. Just going out there digging the well would thus be illegal. Still, illegality is not what defines it as direct action. Collective self-education, for instance, is a form of direct action that often, if not always, would be perfectly legal.

We could imagine that rather than digging the well without a permit, we organized to sit down outside the landowner residence, the KingÕs Palace, the White House or the parliament building, called in the press and proclaimed we would remain seated on the lawn (committing the crime of trespassing) until the absent landowner, a legislative body or somebody else with authority, granted us a permit to dig for water on his or her property – or until we were carried or otherwise forced away.

This surely would be civil disobedience, a breach of law, but would it also be direct action? Hardly. We had tried to put pressure on an authority to make or undo a judgment. In this we had abided by their power and authority to make such a judgment in the first place. Rather than letting our ends only be mediated by our own efforts and (wo)man-made tools – which in this case would be spades or excavators – we had put their rule between our means and ends. The tools yes, the instruments of production and destruction, as well as our own creativity: sold hours of life turned into instruments of our exploitation. We are the ones who employ these tools, but not according to own plans, needs and desires. We rarely utilize them as means of direct action. The wage working cook does not serve the poor as part of collective project in the time (s)he has sold to an alien force, instead (s)he casts a vote, signs a petition, joins a demonstration, breaks some windows or blows up a building in his or her unwaged time. None of which produces anything immediately digestible.

Some would define any non-parliamentary action as a direct action, such as any street demonstration. But to make a statement about we would like something to be, or not to be, is not likely to move any mountain. If the mere words, “Stop the bombing!” halted bombs in mid-air, or took away their deadly effect, the world be a better place to live. It is not any more likely that breaking window panes would generate this effect, either.

That symbolic actions, and actions that borrow their efficiency from the very powers we are struggling against, more and more have come to be defined as direct actions, reflects our present organizational impotence, our social fragmentation and a generalized lack of trust among waged and unwaged workers in their own collective powers. Under particular circumstances symbolic actions can be powerful. But they should be seen as what they are at their best: means of communication. Their degree of efficiency outside this lies foremost in the fear among the owners of the world that they will be followed up by more direct forms of action. At the present moment, disorganized as we stand, or organized into passivity, they are also often all we have, but that should not lead us to the conclusion that they are all we could have.

Often, as during the WTO meeting in Seattle, we see proclaimed as direct actions protests carried out in spectacular and some times violent or destructive ways to draw the attention of mainstream media. Though often denied, the whole logic of such actions is to influence the powers that be by way of some imagined “public opinion.” And in the age of the world-wide web, even a demonstration of a few dozen people can appear as a world event if only the rumor about it is widely enough circulated, while you can live a couple of blocks away without even noticing that it has taken place. So maybe a better term than direct action in such circumstances might be virtual or multi-mediated action. Ironically, both larger protests, like those in Seattle, as well as smaller ones tend to be followed by a critique of the mainstream media for distorting the (f)acts, for only having reproduced their most spectacular aspects.

Of course it could be said, and not without some truth, that the property destruction in Seattle had a symbolic value that it gained from the particular context if functioned within. I am not arguing against that, though this value would soon be devalued if the same procedure was tried repeated over and over again. However, apart from their symbolic value, the actions had no immediate relation to what one wanted to achieve. The blocking of the meeting or the destruction of property were not means to bring about any immediate changes in the conditions of trade, exploitation and oppression: they fed no one, did not reduce the pollution of our environment or in other ways enrich the lives of working-class people.

Exploitation and oppression always work in concrete ways, and the realities of what one was protesting against and the concrete points of possible change escaped the protesters. Lacking the power to bring about immediate changes, one appealed to the Pope and the Tsar, some would say in less than polite ways, to use their commanding powers over us to bring such changes about. Rather than going out digging the wells to find the water, one demanded of the high and mighty to order us to do so, and rather than blocking the ruling order from polluting our water, one called on them to make laws prohibiting such acts, or to refrain from introducing new ones allowing the pollution. One appealed to the force of their laws, asking for better ones: asking for an atheist Pope, a landless Tsar, a capitalism where money wields no power. Many will find this a misrepresentation: “We demanded the break-up of the WTO,” they will say. But this, even had it been realistic – which it was not – would at best only substitute a not yet defined set of international laws and power relations for the particular ones existing or in making. It was a wholly abstract demand.

If temporarily halting the mere coming together of the delegates of the World Trade Organization was all one had wanted to achieve, then the protesters used means (their own bodies) appropriate to this end. But was this really their end? Hopefully, and far more likely, they thought of it as a means. In the age before the telegraph and telephone, to say nothing about more modern means of communication, such means might also have had a more immediate effect, and a far closer relation to the end. But today such gatherings of the high and mighty foremost have symbolic significance. The decision-making and coordination of power takes place elsewhere, and not in any particular place at any particular date. I for one am certain that the protesters aspired to bring about an end to particular destructive practices associated with the policies of the World Trade Organization, as well as to halt even more destructive ones, and not to the mere obstruction of the coming together of some people at a certain place and time. Had practices of exploitation, oppression and destruction existed only in the minds and the statements of the high and mighty, we would not have to offer them much attention. Nor would the high then be very mighty.

If from every community affected by the policies of the WTO (or rather of global capitalism) there had been one person present among the protesters in Seattle, they would be in the wrong place to bring about changes through direct action. The concrete and daily manifestations of WTO policies takes place in the communities they would have left behind, and it is also there these policies could be directly confronted. On the other hand, such a global assembly could have served as an opportunity to coordinate actions throughout the world, and not primarily to worry about what was going on in the congress halls where the WTO delegates were gathered. As it was, people from every community of the planet were not gathered in Seattle. What is more, those who were there, to the degree they at all considered the option of direct action, were in Seattle precisely because of their, or rather our, impotence to bring about the organization needed to confront the WTO through direct action on our home ground.

Propaganda by the deed & solidarity revisited

A critical dialogue in search of forms of action that could directly put whatever has and will be resolved within the framework of the WTO, IMF and World Bank wholly, or more realistically at this stage, in part out of operation, has hardly even been attempted, despite of, or maybe because of all claims of direct action practices.

In this context, it is interesting that West Coast longshoremen carried out a political strike against the WTO. However positive this was a sign of times to come, it did not go beyond being a symbolic action. But the event may also be considered as symbolic in another context. The longshoremen (dockers and wharfies) and transport workers in general, are the wage workers with the most manifest potency to directly and materially impose the terms of world trade. Thus also all the efforts to destroy their strength. But these workers would in no circumstances be able to wield such power for long if their “propaganda by the deed” did not also bring about manifestations of direct action by the waged and unwaged workers of the world, or at least within significant parts of it.

The term “propaganda by the deed” brings forth associations to bombs and other individual acts of desperation and social impotence. But it need not refer to this. When tasks meet us on a global scale, direct action carried out locally to bring about smaller changes in the here and now, or internationally by a small section of the working class, may be considered as just a drop in the bucket. But if successfully carried out direct actions will communicate a message beyond their immediate ends, carrying within themselves the very seeds of a libertarian social revolution. Acts of immediate empowerment tend to be contagious as they practically illustrate roads that may be traveled outside the realm of bureaucratic intermediaries and parliamentary representation. Direct action is always “propaganda by the deed.”

This all brings us back to the question of solidarity and its relation to direct action, and then in particular as defined as an action carried out on behalf of nobody else. The question also arises out of ecological concerns. Who are the directly affected, and at what point does an act cease being direct action because it is not being carried out by those directly affected? What interests us here is of course the political implications of the answer given. The advocates of ideologies of representative democracy, social democracy and Leninism all claim to act on the behalf of “the people” in the interest of “the people.” Anarchists have always rejected not only that the representatives of these ideologies do so, but the very notion that they could. What is more, even if they could, we claim that this would not be in our best interest as the value of being our own masters is the very essence of being a human being. Something, it must be added, which does not imply an escape from the influence and critique of others, without which we would be nothing.

On the other hand we uphold the principles of mutual aid and solidarity; that an injury to one is an injury to all, and thus also the concern of all. We can skip the most absurd interpretations of non-representation, like: “If we see a person drowning, this is not our concern.” Whether or not saving another person from drowning also should be defined as direct action is not an interesting question. Philosophical riddles are not the concern here, but the politics of human emancipation.

On this level the answer to the question leads us to another: who has the defining power? I define the low wages and bad working conditions in company X, wherever it may be situated in the world, as my concern not only for moral reasons, but also because, to paraphrase Bakunin: in the hands of the owners of the world, their exploitation and oppression becomes an instrument for my subordination. Brought to its logical conclusion this reasoning may however brings us straight back to rule by representation and enlightened despotism. The defining power must be situated among the workers of company X. However, my participation in direct action on their initiative, or through joint initiative and cooperation, would make me part of this direct action if my acts also otherwise qualified as such, for instance through a blockade during a strike. We have realized our common interests.

There is much more that could be said around this topic. But what is crucial is to grasp its importance, so that claimed direct action does not become a road that leads us towards elitism, and thus also away from the anarchist project of individual and social emancipation.

Once again we reach the conclusion that as a rule, the greater the task the more collective the action – this to fit a libertarian definition of direct action. We should never lose sight of the fact that the concept of direct action emerges out of people doing something with their own situation. It is for this reason that it has held such a central position within the traditions of anarchism and revolutionary syndicalism. Direct action is an expression of power over our lives: our empowerment. Direct actions are primarily, if not exclusively, tied to collective forms of actions also for the simple reason that it is together we as waged and unwaged workers have the potency to directly, and often immediately, change our conditions of life. The fewer the actors the more symbolic our acts as a rule will also be. They then tend to become, not means to the immediate transformation of part of our reality through our own efforts but foremost to call on the power of others.

While many may live under the illusion that through direct action we escape the need for organizing, the opposite is true: Generally it requires a greater degree of organized coordination. The degree of our disorganization is the degree to which our lives will be organized by others. It is we who make the world, but we make it as a collective (presently under the command of and through the mediation of the owners of the world) and it is thus also together we can make direct profound changes unmediated by outside forces, and in the final instance conquer the world and the power over our own destinies.

Direct action could be seen as a kind of language: a language of practical articulation. As such it contains also a symbolic force far greater than any mere symbolic action, precisely because its message is contained in and not separated from its means. Much of the reason for our present impotence to express us through direct action lies in an ever increasing division of labor within modern capitalism. Not so much due to this division in itself but in our failure to bridge it in our minds, and through organization and action.

We need to reconnect our means with our ends. To return to the wage strike Ð it used to signify, and still often does, striking the bosses where it hurt them the most, their banking accounts, by withholding our capacity for labor. So why did the workers of the “public owned” trams in Melbourne ten years ago strike by running the trams Ð the tools they do not own – free of charge for the public, while their bosses struck back by closing them down by force? The reason is obvious. As so often is the case with public services, the non-work of the publicly employed tramdrivers would not have cost the city council a cent. It could only save them the expenses of the workers’ wages. Free public transport, however, would cost them.

What is more crucial, this was a manifestation of workers turning the tools they do not own into means for their own ends, as well as for the working class community at large. What if all the waged and unwaged workers (including school and university students) of Melbourne had non-hierarchically organized to do the same, if only for day or a week? That really would have been a symbolically powerful manifestation of our potency by means of direct action. Reality is still concrete. Let’s not forget it. Also in the struggle against the policies of the World Trade Organization, the International Monetary Fund and the World Bank we should seek to find ways to on a local and global scale halt and put into action the tools we do not own for our self-defined needs.

Book Review: Looking Forward

Looking Forward: Participatory Economic for the Twenty First Century by Michael Albert and Robin Hahnel. Boston, South End Press, 1991
Review by Jeff Stein [Published in Libertarian Labor Review No. 12]

The economy in the Soviet Union is a mess and always has been,” say Marxist theorists Michael Albert and Robin Hahnel. The problem isn’t with having a planned economy, but a matter of who is doing the planning. In the Soviet Union, economic planning was exclusively a power of an elite class of “coordinators” [i.e. the Communist bureaucrats]. Thus it should have come as no surprise whose interest the Soviet economy served. Instead of “coordinatorism” the authors propose a rough model of a system of economic planning in which all workers and consumers would have a voice.

The model proposed by the authors is based upon a sort of democratic bargaining in which yearly production proposals made by workplace councils are compared to yearly consumption request made by consumer councils. A series of “facilitation boards” tabulate all the proposals and revises the “prices” of goods and services in terms of additional labor required to meet consumer demands. Goods and services, for which supply is not expected to meet demands, go up in price and vice versa. The councils then revise their previous proposals based upon the new prices. This continues for several rounds or “iteration” of planning proposals until at some point an exact match is made between projected yearly production and consumption. In order to encourage a convergence towards a final plan, councils are limited by how much they can alter a previous proposal in the next round. Proposals leading in direction of convergence can be changed up to 50%. Proposals leading away from an agreement can only be changed by 25%.

To make sure that everyone benefits equally from their economic model, Albert and Hahnel propose that every worker receive an equal share of consumption and be required to work an equal number of hours. In the former case, this can be modified somewhat by local consumer councils, based upon individual needs. A local consumer council can decide to increase or decrease the share of individual members; as long as the council’s total consumption stays the same. In the case of the latter, the requirement to work an equal number of hours is accompanied by the requirement that the overall quality of working conditions also be equal for all workers. Thus every worker is required to have a “balanced job complex”, made up of an average amount of pleasant tasks and drudgery.

The idea of “balanced job complexes” comes from the traditional socialist rejection of the capitalist division of labor, which condemns most individuals to a life of dull, repetitive, often dangerous hand labor, in order to free up a minority for the more creative and artistic work. Unlike some socialists (principally other Marxists) who merely propose to ameliorate the bad side effects of the division of labor by complex wage schemes, etc., Albert and Hahnel insist on doing away with the division of labor entirely. They argue that the quality of work assignments determines the amount of power an individual worker has within the economy. People with more interesting and enjoyable jobs have more control. As the authors put it, “Classlessness and real rather than formal workplace democracy require that each worker has a job complex composed of comparably fulfilling responsibilities.the half dozen or so tasks that I regularly do must be roughly as empowering as the half dozen or so tasks that you regularly do if we are to participate as equals in council decision making.” (p.19, my emphasis)

I am sure many will find Looking Forward a thought-provoking read. However I am not so sure how useful a guide it is towards creating a self-managed social economy. The general idea of allowing everyone to take part in the planning process is good, although I don’t agree on their specific suggestions for how to implement it. I also think their suggestion for making economic planning into a sort of bargaining process through several sessions or “iterations” could be useful. However in many ways I thought their system to be far less decentralized and “participatory” than they claim it to be. The authors tend to be somewhat vague about the role of the government in enforcing their system. For instance what about a workplace council which finds the final plan so intolerable that they refuse to go along with it? Can they negotiate their own separate agreement, or will some higher authority lock them out of their facilities, cut their rations, or worse? The authors say nothing about the right to strike, not to mention the right of voluntary association, the basis of federalism.

The authors, being Marxists, still tend to be complacent about the potential for authoritarian abuses in their model. Their economic organization requires a large number of “facilitation boards”: CFCBs . “Collective Consumption Facilitation Boards,” CFBs . “Consumption Facilitation Boards”, EFBs . “Employment Facilitation Boards,” HFBs . “Housing Facilitation Boards,” IFBs . “Iteration Facilitation Boards,” PFBs . “Production Facilitation Boards,” and UFBs . “Updating Facilitation Boards.” Supposedly the facilitators have no power other than collecting information and communicating it back to society via computer networks. But there is a tremendous amount of power involved in the control of information and its flow, particularly when this information is presented as being “objective and unbiased” (even more so when it is presented as computer data . about which the authors suggest “computers never lie”). Albert and Hahnel argue that such power would not be abused since the facilitator would (theoretically) be limited to the same consumption levels as everyone else and would therefore have nothing to gain by cooking the data. The authors somehow can not envision any other reason for distorting data other than direct economic benefit, such as ideological bias or pursuit of political objectives.

It is not hard to imagine a “facilitatorism” developing if these boards do not have sufficient safeguards placed upon them. It is somewhat disturbing that Albert and Hahnel seem reluctant to insist upon even the most elementary safeguards, such as limiting the terms of board members, since [as they say] this might interfere with the need for “expertise” at facilitation. This is even more surprising considering that they see expertise in every other job as being so unnecessary that it doesn’t interfere with their “job complex” work rotation scheme at all. Apparently anybody can fly a passenger airline jet but it takes a special breed to “facilitate” society.

Even supposing the facilitator had to be changed once and a while (every four years?), however, “job complexing” would not necessarily end the division of labor. The point of doing away with divided labor is to help workers control their own work, to understand the full implications of their efforts by allowing them to play a role in the design of their products and organize their own jobs as they see fit. Thus the artificial separation between hand work and brain work, labor and management, is abolished. Albert and Hahnel, however, have devised more of a socialist job enrichment scheme in which workers would be required to move between several workplaces each week, doing one task here, one task there, as though the sum total of all these fragmented experiences would give them a sense of control over the entire economy. Spending a few hours each week picking apples will not give a construction worker a better understanding of either agriculture or the construction industry. Nor would it necessarily give farm workers more control of their industry. The influx of thousands of part-time workers with no particular knowledge of or interest in the industry, could make matters worse on the job if the part-timers had an equal vote in workplace matters and were played off against the regular workforce.

The division of labor is not negated by forcing workers to frequently change jobs. Instead of empowering workers, such a scheme could make them even more dependent on the few within industry who “facilitate” all the job rating and the rotation of work assignments. Proudhon made this point in reference to similar suggestions by utopian socialists, “As if to change ten, fifteen, twenty times a day from one kind of divided labor to another was to make labor synthetic.Even if such industrial vaulting was practicable . and it may be asserted in advance that it would disappear in the presence of making laborers responsible and therefore their functions personal . it would not change at all the physical, moral, and intellectual condition of the laborer; the dissipation would only be a surer guarantee of his incapacity and, consequently, his dependence.” (System of Economic Contradictions, Tucker, trans., p.186)

Job complexing could certainly work at the workplace level and may be desirable, but making it a strict requirement for shuffling workers between industries is incompatible with self-management. Albert and Hahnel have the relationship between power and desirable work reversed. People do not lack power at their workplaces because they do the lousy jobs; rather they do the lousy jobs because they lack power. It is far more important to discuss the distribution of decision-making within workplaces and industry, than to try to formulate an elaborate job-sharing scheme which should be left up to the workers themselves. Formal democracy hat hides an informal class system is a valid concern, but I suspect that wherever this exists it may have more to do with a minority having a monopoly on information and education and a “good ol’ boy” political network, than with the absence of a system for rating every job for some abstract enjoyment level.

Another problem with the Albert-Hahnel model is its use of the labor theory of value as a means for determining individual consumption levels. The authors are correct in making the simple observation that if society as a whole wants to consume more, that at any given technological level, some people will have to work more. It only seems fair that those who wish to do the extra consuming should have to do the extra working. A problem comes in determining exactly how much each individual’s labor is worth when production is a complex and interdependent social undertaking. Albert and Hahnel get around this problem with their “job complexing”. In theory, every hour of labor is equal to some average because every worker works at the same average level of intensity under the same average working conditions. (This certainly makes things easier for the statisticians.)

Yet even if it were possible to balance all jobs in society according to some average level (and ignoring the huge bureaucracy this might require), Albert and Hahnel sacrifice the most valid application of the labor theory of value, its connection to technological change, while they retain the theory’s negative side effect, its neglect of ecological devastation. One might say, they have kept the bath water and thrown out the baby.

Let’s take a look at the “baby”, the labor theory of value and its connection to technological change. If you wish to make goods and services more plentiful, you must economize and reduce the amount of labor required to reduce them. According to the Albert-Hahnel model, workers at workplaces who adopt more efficient labor-saving technologies would be “rewarded” by being forced to work the hours they saved at less desirable jobs in other industries. Although it is true that this is no worse than under capitalism where labor-saving technology “rewards” workers with unemployment and subsequent loss of income, the point is that under the Albert-Hahnel model workers would be reluctant to adopt new technology since they would not benefit directly. Under a socialist system it would seem that the best reward for improving productivity would be to allow workers to decrease their work hours with no loss of income.

Albert and Hahnel would probably argue that their system would still reward labor saving efforts by giving a collective benefit to all workers. If workplace A, for instance, cuts its labor needs by say five hours a week per worker, then all workers throughout society would experience some small fraction of that reduction spread out proportionally. So even though the workers at workplace A might have to work part of the time elsewhere, instead of the five hours, it might be only 4 hours and 45 minutes at the other job. Even supposing that is sufficient incentive to keep technological progress going, there still remains the problem of using labor time as a method of pricing commodities and services.

One of the criticisms used by the Marxists against any sort of market system for determining prices has been that the “law of supply and demand” creates”commodity fetishism”. Consumers only concerned with getting the most commodities for the lowest price, ignore the labor involved and that lowest price often is accompanied by maximum labor exploitation. Although a pricing system based on labor time, may make this more apparent to consumers, the labor theory of value ignores the ecological costs of goods: energy, raw materials, wastes generated, natural habitats destroyed, etc. These costs can’t be measured in labor units. Thus instead of “commodity fetishism”, Albert and Hahnel would create a “labor fetish”.

For an example of how their use of the labor theory of value ignores ecological costs, let’s use one of their own examples. In the chapter on “Participatory Allocation”, Albert and Hahnel pose the problem of an increased demand for milk. “Sometimes, however, changes will not balance so that the net increase, say, in milk demand must be communicated to milk producers, who then either produce more . by increasing work intensity, hours worked by each employee, or adding personnel . or refuse to increase production.’ (p.80) Clearly, the assumption is that increased production only requires additional human labor. But how about the cattle that actually produce this milk? How about the extra land that must be set aside to feed the cattle, perhaps wilderness and wetlands destroyed? How about the degraded water supply from the animal wastes in the run-off from feed lots or pastures? These ecological consequences can’t be factored into a labor pricing system, and therefore would not show up on the computer terminals of consumers voting on the yearly economic plan.

Looking Forward has been accused by more orthodox Marxists of being an anarcho-syndicalist inspired proposal. Unfortunately this is not so. Although the authors clearly would like to give local economic bodies some autonomy, there still lingers a central plan and a state authority in the background (one the authors claim will wither away as their system has less “need” for it). Some rather ambiguous remarks made towards that end about Cuba suggest that the authors haven’t strayed too far from the Marxist fold. At best the Albert-Hahnel model could be described as “central-planning by referendum”.

While terms like “councils” and “federations” and anarchist quotes litter the text, there is no clear understanding of these demonstrated by the authors. Looking Forward is a utopian Marxist proposal with little anarchism in it.

Bakunin: The Collectivist Tradition

Anarchist economics began with Proudhon but eventually developed into two schools of thought: anarcho-syndicalism with its emphasis on mass production industries in an urban environment, and anarchist-communism with its emphasis on egalitarian distribution and small-scale communities. Both these theories developed out of anarcho-collectivism, a radical economic federalism developed by the libertarian elements of the (First) International Workingmen’s Association. Its principal advocates were Michael Bakunin and James Guillaume, but the real credit for the theory of collectivism should go to the workers belonging to the International, who took the various socialist and trade union economic ideas of the time and modified them in light of their own experience.

The Limits of Proudhonian Economics

The collectivists shared a number of ideas with the followers of Proudhon in the International, in particular the concepts of workers self-management of industry and economic federalism. On the other hand they saw a need to go beyond the sort of utopian thinking that led the Proudhonists to believe capitalism might be transformed by the growth of worker cooperatives and mutualist credit. By the time the International was formed in 1864, worker cooperatives had been experimented with for several decades and by now were floundering. In the last years of his life, even Proudhon was forced to admit the cooperative movement was not developing as he had hoped:

Not many years later, in 1857, he severely criticized the existing workers’ associations; inspired by naive, utopian illusions, they had paid the price of their lack of experience. They had become narrow and exclusive, had functioned as collective employers, and had been carried away by hierarchical and managerial concepts. All the abuses of capitalist companies “were exaggerated further in these so-called brotherhoods.” They had been torn by discord, rivalry, defections, and betrayals. Once their managers had learned the business concerned, they retired to “set up as bourgeois employers on their own account.” In other instances, the members had insisted on dividing up the resources. In 1848 several hundred workers’ associations had been set up; nine years later only twenty remained. (Guerin, pp. 47-48)

These same observations were made by the members of the International: “The English section reported on cooperatives. Without denying the usefulness of cooperative organizations, it indicated a dangerous tendency noticeable in a majority of such bodies in England, which were beginning to develop into purely commercial and capitalist institutions, thus creating the opportunity for the birth of a new class – the working bourgeoisie.” (Maximoff, p. 47)

The small, isolated, under-capitalized worker cooperatives could barely survive in competition with their better established capitalist rivals. The few cooperatives that prospered, often betrayed their working class supporters and began to operate as though their facilities were their own private property, aided and abetted by the laws and existing capitalist businesses. The failings of the cooperatives had raised the thorny issue of how to turn the socialization of the means of production from an ideal into a practical reality. The solution suggested by the collectivists was to expropriate the means of production from the capitalists and for the workers’ associations to own these “collectively”, no longer recognizing any individual ownership rights to divide up and sell them. The third Congress of the International accordingly passed a resolution that the main purpose of the cooperatives must go beyond narrow self-interest. Instead their purpose must be support the struggle “to wrench from the hands of the capitalists the means of production and return them to their rightful owners, the workers themselves.” (Guillaume, p. 70)

As we have seen, in The Principle of Federation (1863), Proudhon began to sketch the outlines of a sort of economic federalism before he died. This did not, however, prevent his mutualist followers from trying to defend his earlier ideas. At the 1869 Basel Congress of the International, a dispute arose over a resolution calling for the collectivization of the land. The Proudhonists held out for the right of small farmers to own land privately, as long as they did not rent out the land for others to work. Tolain, speaking for the mutualists, suggested the resolution be changed to read, “The Congress declares that, to realize the emancipation of the worker, it must transform the leases of farmland…to contracts of sale: so that ownership, continually in circulation, ceases to be abusive in itself; and consequently [by ensuring the individual worker the right to the product of his labors]…safeguards the liberty of the individual groups.” (Guillaume, p. 197)

Bakunin, speaking for the collectivists, disputed the notion that private property, even in a limited form, was justified as a means for safeguarding individual rights.

…the individual is a product of society, and without society man is nothing. All productive labor is above all social labor; “production is only possible through the combination of the labor of past generations with the present generation, there is not ever labor that can be called individual labor.” He [Bakunin] is thus a supporter of collective property, not only of the soil, but of all social wealth. As for the organization of agricultural production, it is concluded by the solidarization of the communes, as proposed by the majority of the commission, all the more willingly that this solidarization implies the organization of society from the bottom upwards, while the proposition of the minority presupposes a State [to guarantee and enforce the terms of sale]. (Guillaume, p. 197)

To be fair to Proudhon and the mutualists, their waffling on the issue of private property was not so much due to ambivalence about collective ownership, as an example of the extremes they were prepared to go to avoid a revolutionary confrontation. Mutualist credit was intended to produce “a new economic arrangement” which would somehow avoid the “shock” of violent confrontation with the capitalists over their property rights. To the collectivists, who were veterans of bitter labor strikes and insurrections, this was hopelessly idealistic. Capitalism had not originated out of a peaceful, democratic debate as to how to organize production to ensure economic justice and well-being for all, but was the product of centuries of fraud, theft, and State-sponsored violence. Proudhon often ignored that these activities were as much a part of the functioning of the existing economy as was the official market side of capitalism. The State and the capitalists would not disappear with a new set of rules, since they, more often than not, did not play by their own rules.

Although Proudhon had discovered many of the contradictions of capitalist economics, his non-confrontational solutions were just too out of touch with reality. What the anarchists needed was to base their economics less on moral arguments than on a positivist materialism. As Bakunin put it:

…Proudhon remained an incorrigible idealist all his life, swayed at one moment by the Bible and at the next by Roman Law …His great misfortune was that he never studied natural science and adopted its methods….As a thinker Marx is on the right path. He has set up the principle that all religious, political and legal developments in history are not the cause but the effect of economic developments. Many others before him had a hand in the unveiling of it and even expressed it in part, but in the last resort credit is due to him for having developed the idea scientifically and having made it the basis of his whole scientific teaching. On the other hand, Proudhon understood the idea of freedom better than Marx. (Jackson, pp. 128-129)

Collectivism and Marxism

The criticism Bakunin made of Proudhon’s idealism was perhaps a kinder version of the same criticism Marx had made in The Poverty of Philosophy. It is on the basis of such statements, as well as his praise for Marx’s Capital, that some argue that Bakunin shared the economic views of Marx. In reality Bakunin and his fellow collectivists differed with Marx on economic grounds as well as on political matters. Bakunin did begin a translation of Capital into Russian, but never completed it. Had his enthusiasm for the work been as overwhelming as some claim, he would no doubt have finished it and collected the remainder of the sum agreed upon by the Russian publishing house (instead of getting expelled at the Hague Congress of the International for allegedly threatening the publisher in order to get out of the deal). A closer look at what Bakunin thought about Capital reveals his real reason for admiring the work:

…nothing, that I know of, contains an analysis so profound, so luminous, so scientific, so decisive and if I can express it thus, so merciless an expose of the formation of bourgeois capital and the systematic and cruel exploitation that capital continues exercising over the work of the proletariat. The only defect of this work…is that it has been written, in part, in a style excessively metaphysical and abstract…which makes it difficult to explain and nearly unapproachable for the majority of workers. (Bakunin, p. 195)

Bakunin, more the revolutionary than the economist, admired Capital as a great piece of revolutionary propaganda. Marx, drawing his facts and figures out of British government documents and parliamentary debates, had hoisted the capitalists by their own petards. This does not mean he endorsed it verbatim. Bakunin had earlier translated The Communist Manifesto into Russian and made no bones about his disagreements with Marx and Engels over their proposals for a centralized state socialist economy.

I am not a communist because communism concentrates and absorbs all the powers of society into the state, because it necessarily ends in the centralization of property in the hands of the state…I want society and collective property to be organized from the bottom upwards by means of free association and not from the top downwards by means of some form of authority…it is in this sense that I am a collectivist. (quoted in Cahm, p. 36)

Rather than a State or a market determining the allocation of resources and the distribution of products, the workers would decide these things themselves by free agreements among the associations. These agreements would be monitored by the communes, and industrial federations to make sure that labor was not exploited. Bakunin, however, recognized that any system of free exchange of products still held the danger of monopoly and private accumulation of wealth, particularly by the self-employed farmer or artisan, who tried to pass on land or equipment to his children. Thus he also called for the abolition of inheritance to prevent the rise of a new working class bourgeoisie.

The International debated the subject of inheritance at its Basel Congress in 1869. Marx was opposed to the International taking a position on the subject of inheritance on the grounds that once the private ownership of the means of production had been abolished (and expropriated by the workers’ government), there would be nothing left to inherit. Even worse, it implied the International would support something other than the state communism of Marx. As Eccarius, speaking for Marx, put it, “the abolition of the right of inheritance can not be the point of departure for the same social transformation: it would be too absurd to require the abolition of the law of supply and demand while continuing the state of conditions of exchange; it would be a reactionary theory in practice. By treating the laws of inheritance, we suppose necessarily that individual ownership of the means of production would continue to exist.” (Guillaume, p. 201)

Eccarius was half right. Bakunin and the other collectivists intended that something other than the state ownership of the means of production and central control would exist, but it would not necessarily be capitalist ownership nor a market economy. The full collectivization of the economy would not be carried out by a single decree, but over a generation. Abolition of wage labor by the collectivization of the capitalist employers would be the first step, but the right of the self-employed, particularly the small farmer, to their means of livelihood would be respected. To recognize this right of possession to the tools needed for one’s own labor, however, was not to recognize an ownership right that could be bought and sold or passed on to one’s children. This was the meaning behind the collectivist demand for the abolition of inheritance.

If after having proclaimed the social liquidation, we attempted to dispossess by decree millions of small farmers, they would necessarily be thrown onto the side of reaction, and in order for them to submit to the revolution, it would be necessary to employ force against them…It would be well then to leave them possessors in fact of those small parcels of which they are proprietors. But if you don’t abolish the right of inheritance what would happen? They would transfer their holdings to their children…If, to the contrary, at the same time that you would make the social liquidation… you abolish the right of inheritance what would remain with the peasants? Nothing but defacto possession, and that possession… no longer sheltered by the protective power of the state, would easily be transformed under the pressure of events and of revolutionary forces. (Bakunin, quoted by Guillaume, p. 203)

The Collectivist Economic Doctrine

Collectivism, unlike Proudhon’s Mutualism or Marxism, was not a well developed theory, the product of a single mind. Its principal advocates were socialist revolutionaries and workers caught up in the events of the time: the upheavals of 1848 which occurred throughout Europe, the birth of the labor unions, and the Paris Commune of 1871. As far as they could tell, a social revolution was not an abstract goal looming far off in the distance, but something that had to be prepared for right away. Some sort of workable economic program had to be agreed upon by the labor movement, which had broad appeal to the various socialist and labor groupings that made up the International, without locking everyone into something they might regret later. This explains why collectivism often was so sketchy in details, and some of its advocates disagreed among themselves over various points.

The closest thing to a “definitive” statement of collectivism is an essay written by James Guillaume in 1874, “Ideas on Social Organization” (see Dolgoff, pp. 356-379). Guillaume begins by emphasizing that there can be no “blueprint” for social revolution, since it must be left up to the workers themselves to decide how best to organize themselves in their own areas. However, having said that, he begins to make various suggestions about the collectivist approach. First the system of wage labor will be abolished by the workers “taking possession” of all capital and tools of production, ie. the collectivization of property. The self-employed and the owners of family businesses are to be left alone to operate as they wish, but with this important exception: “his former hired hands, if he had any, will become his partners and share with him the products which their common labor extracts from the land.” (Dolgoff, p. 359)

The internal organization of the worker collectives, working conditions, hours, distribution of responsibilities, and share of income, etc., are to be left in the hands of their members: “Each workshop, each factory, will organize itself into an association of workers who will be free to administer production and organize their work as they think best, provided that the rights of each worker are safeguarded and the principles of equality and justice are observed.” (Dolgoff, p. 363, my emphasis)

However the fact that the collectivists were willing to tolerate those groups which decided to distribute income according to hours worked, does not mean the collectivists believed in the principle, “to each according to their work.” As Guillaume makes clear, this is only justified (where it is practiced) as a temporary expedient, to discourage over-consumption during the transition period when capitalist conditions of scarcity will not yet have been overcome.

In some communities remuneration will be in proportion to hours worked; in others payment will be measured by both the hours of work and the kind of work performed; still other systems will be experimented with to see how they work out. The problem of property having been resolved, and there being no capitalists placing a tax on the labor of the masses, the question of types of distribution and remuneration become secondary. We should to the greatest possible extent institute and be guided by the principle From each according to his ability, to each according to his need. When, thanks to the progress of scientific industry and agriculture, production comes to outstrip consumption, and this will be attained some years after the Revolution, it will no longer be necessary to stingily dole out each worker’s share of goods… (Dolgoff, p. 361)

Although collectivism promotes the greatest autonomy for the worker associations, it should not be confused with a market economy. The goods produced by the collectivized factories and workshops are exchanged not according to highest price that can be wrung from consumers, but according to their actual production costs. The determination of these honest prices is to be by a “Bank of Exchange” in each community (obviously an idea borrowed from Proudhon).

…the [labor] value of the commodities having been established in advance by a contractual agreement between the regional cooperative federations [ie. industrial unions] and the various communes, who will also furnish statistics to the Banks of Exchange. The Bank of Exchange will remit to the producers negotiable vouchers representing the value of their products; these vouchers will be accepted throughout the territory included in the federation of communes. (Dolgoff, p. 366) The Bank of Exchange …[will] arrange to procure goods which the commune is obliged to get from outside sources, such as certain foodstuffs, fuels, manufactured products, etc. These outside products will be featured side by side with local goods…and all goods will be uniformly priced. [Since similar goods all have the same average labor value.] (Dolgoff, p. 367)

Although this scheme bears a strong resemblance to Proudhonian “People’s Banking,” it should be noted that the Banks of Exchange, along with a “Communal Statistical Commission,” are intended to have a planning function as well.

…each Bank of Exchange makes sure in advance that these products are in demand [in order to risk] nothing by immediately issuing payment vouchers to the producers. (p. 367) ….By means of statistics gathered from all the communes in a region, it will be possible to scientifically balance production and consumption. In line with these statistics, it will also be possible to add more help in industries where production is insufficient and reduce the number of men where there is a surplus of production. (Dolgoff, p. 370)

As conditions permit, the exchange functions of the communal banks are to be gradually replaced by the distribution of goods “in accordance with the needs of the consumers.” (p. 368) Until that point is reached, the local community has the responsibility for providing certain basic needs for everyone without regard for production done by that particular individual. Among these essential needs to be distributed freely are education, housing, health, personal security and fire protection, disaster relief, and food services. The worker collectives engaged in these essential communal services will not be required to exchange them for their “labor value,” but “will receive from the commune vouchers enabling them to acquire all commodities necessary for the decent maintenance of their members.” (Dolgoff, p. 365)

Therefore each “commune” is to provide a basic standard of living for all its members during the transitional period leading towards economic abundance. Those people desiring a higher income will be given the right of access to the means of production in order to produce goods both for themselves and for exchange. Each worker collective, however, will not have to shift for itself but will receive assistance from the communes, and local and regional industry associations.

…social organization is completed, on the one hand by the establishment of regional corporative federations comprising all the groups of workers in the same industry; and on the other by the establishment of a federation of communes….The corporative federations will unite all the workers in the same industry; they will no longer unite to protect their wages and working conditions against the onslaughts of their employers, but primarily to guarantee mutual use of the tools of production which are the property of each of these groups and which will by a reciprocal contract become the collective property of the whole corporative federation. In this way, the federation of groups will be able to exercise constant control over production, and regulate the rate of production to meet the fluctuating consumer needs of society….The statistics of production, coordinated by the statistical bureaus of every a rational manner of the hours of labor, the cost price of products and their exchange value, and the quantities in which these products should be produced to meet the needs of consumers. (Dolgoff, pp. 376-377)

A Limited Form of Communism

In his essay, “Must We Apply Ourselves with an Examination of the Ideal of a Future System?”, Peter Kropotkin pointed out that the anarcho-collectivism advocated by Bakunin, Guillaume, and the anarchists in the First International, was actually a variety of anarchist communism, but “in an altered and limited form” (Miller, p. 59). The anarcho-collectivists felt that full communism, ie. the free distribution of all goods and services, would have to wait until the economy had been reorganized and the scarcity artificially created by the capitalist market had been overcome. Until then much of production would be according to the principle of “to each workplace according to their product.” This is not the same as the state collectivists who argued for “to each worker according to their work,” and called for elaborate schemes of income hierarchy. The worst that can be said about the anarcho- collectivists, is that they were willing to tolerate income differences at various workplaces for the sake of giving each collective the autonomy to decide for themselves. This was, however, not their ideal. Even for the transition period, the anarcho-collectivist principle was income equality for all working in the same collective.

Do not the manager’s superior training and greater responsibilities entitle him to more pay and privileges than manual workers? Is not administrative work just as necessary to production as is manual labor – if not more so? Of course, production would be badly crippled, if not altogether suspended, without efficient and intelligent management. But from the standpoint of elementary justice and even efficiency, the management of production need not be exclusively monopolized by one or several individuals. And the managers are not at all entitled to more pay… (Bakunin, quoted in Dolgoff, p. 424)

A much more serious problem for collectivism is the inequality which would inevitably arise between workers due to the exchange of products. The collectivists sought to ameliorate this to a certain extent by giving the investment arm of the communes, the Banks of Exchange, a more activist role in economic planning, and by putting an income floor under all workers by providing free housing, food, and public services. However, this creates further possible sources of inequality, since the communal service workers are supposed to work in return for meeting all their needs regardless of their productivity. Thus a possible source of conflict arises between a communist service sector and an exchange-based production sector. If the production goes well, the communal workers may resent the higher incomes gained by the production workers. If production goes poorly, the production workers may resent the income security of the service workers.

For the collectivists these problems were seen as minor, if recognized at all. Guillaume, for instance, assumed that the material abundance developed during the transitional period would bring about a blossoming of morality, which would soon make the exchange economy irrelevant. Unfortunately, this begs the question, since he did not bother to define what “abundance” is and how we are to know when we have achieved it. We can safely predict that in any future economy there is virtually no limit to human desires for material goods, while there will always be limits to what society and the ecology are able to provide without causing a breakdown. “Abundance” means different things to different people. The danger is that by leaving this point of development undefined, those who may be the economic”winners” of the transitional period, may be unwilling to make the next step.

The Collectivist Legacy

The main contribution of the collectivists to anarchist economics was their attempt to anticipate many of the problems which would be encountered during the revolutionary transition from capitalism to stateless communism, and their emphasis on the need for finding a balance between ultimate goals and day-to-day realities. These methods contributed enormously to the early successes of the 1936 revolution in Spain, where the anarchist movement retained a strong collectivist tradition. The specific proposals made by Guillaume and others, while useful as an example of applying anarchist principles to existing conditions, have lost most of their relevance. We do not live in 19th century europe nor 1930s Spain, but in a high-tech economy threatened by environmental exhaustion. In most industries, technology has developed well beyond the point needed for “abundance” in 19th century terms. This makes the question of defining the minimum level of abundance all the more important for modern anarchists, as well as the more practical problem of how to go beyond a crude exchange economy during the transition.


Bakunin, M. Obras Completas , Volume III. Translated by Santillan, Buenos Aires, 1926.

Cahm, Caroline. Kropotkin and the Rise of Revolutionary Anarchism 1872 – 1886 . Cambridge University Press, 1989.

Dolgoff, Sam. Bakunin on Anarchism. Black Rose Books, Montreal, 1980.

Guerin, Daniel. Anarchism. Monthly Review Press, 1970.

Guillaume, James. L’Internationale : Documents et Souvenirs (1864 – 1878) . Paris, 1905. 4 volumes.

Jackson,J. Marx, Proudhon and European Socialism. Collier, New York, 1966.

Maximoff, G.P. Constructive Anarchism. Chicago, 1952.

Miller, Martin A. Selected Writings on Anarchism and Revolution: P.A. Kropotkin. M.I.T. Press, 1970.

(I would like to thank Nan DiBello for her assistance with this article.)

Market Anarchism? Caveat Emptor!

In A Structured Anarchism, John Griffin argues that an anarchist communist society, while a desirable goal in the distant future, is not practical in the short-term. This is because 1) people accustomed to a capitalist society aren’t culturally prepared for it, and 2) the modern economy is too complicated to organize without the “self-regulation” of a market system. Therefore Griffin calls for a series of short term compromises to be made with classical liberal economics, and dubs this “collectivist anarchism.”

Griffin, unfortunately, doesn’t understand collectivism nor economics in general. He manages to garble and lump together the views of Proudhon, Bakunin, and Malatesta. Bakunin was the only collectivist of the three. Proudhon was a mutualist and Malatesta, an anarchist communist. Besides mistakenly lumping them all as “collectivists,” Griffin makes an even bigger error by equating collectivism with “market anarchism.” Collectivism, however, was not based on a market economy, but on a federally coordinated system of “honest exchange” of products at their labor cost. In a market system the prices of products are determined according to their relative scarcity (ie. the “law of supply and demand”). These are not the same thing. Time and again, whether on the issue of markets or money, Griffin proves he is in no position to lecture other anarchists about their shaky grasp of economics. For instance, on page 22 he writes, “The extraction of large amounts of unearned income by the capitalists is a source of inflation, since too much money is generated to buy the available goods, thus encouraging price rises. Any inflation in a collectivist [sic] economy will not be aggravated by this spurious money growth, since those who operate it are remunerated only for work done.”

The extraction of value by the capitalist out of the workers’ gross product has nothing whatsoever to do with the money supply, since the capitalist does not print his/her own money. (In effect, Griffin is saying that a robber creates money when he steals your purse.) If what Griffin was saying were true, the history of capitalism would be one long inflationary spiral, without periodic economic depressions. On the contrary, capitalism, if not interfered with by the state, tends towards economic depressions (which cause deflation), since its constant drive to reduce workers to low wages and unemployment has a depressive effect.

In reality, the individual capitalist has very little control over the money supply, which is a source of constant consternation to the pro-laissez faire monetarists, like Hayek and Milton Friedman, so oddly respected by Griffin (p.23). The monetarists, however, do not suggest that the money supply be set according to what has been produced, since according to them only the market can determine the “true” value of these products anyway. What the monetarists argue is that the state should increase the money supply at a constant rate, so the capitalists can plan ahead without having to worry about whether the state economic planners will overreact to some minor market “adjustment.” According to classical laissez faire theory, business cycles are inevitable and the market eventually corrects itself. As for the effects these cycles have on working people and the poor in the meantime, Hayek and Friedman could bloody well care less. We should not forget the role of the “Chicago Boys” (a group of Friedman’s disciples) in running the economy of the ruthless Pinochet regime in Chile. Griffin should freely choose his mentors more carefully.

The state has always played a key role in the capitalist market and monetary systems. First its role was as a defender of private property, strike breaker of last resort, and as a foundation of a (somewhat) stable currency. More recently it has acted as a “pump primer,” business subsidizer, and money lender of the last resort. The so-called “Keynesian revolution” in capitalist economics was not the beginning of the state’s role in the economy, just an attempt to better play that role in hopes of making a more smooth running system and to stave off its collapse. Griffin himself admits that “the manipulation of the market by both the State and the Capitalists make the so-called ‘free market’ unfree.” (p.24)

Yet by making this admission, Griffin has inadvertently undermined one of his own arguments. On the one hand he attacks the anarchist communist position because “it lacks empirical justification from modern technological societies: it is not enough in my view to dwell on its great ethical strength, and gloss over organizational problems.” (p.24) But on the other, he doesn’t hold his own doctrine up to the same standard. It may be true that the market system “works” (perhaps in the since that the inhabitants of Europe and North America haven’t all starved to death so far), but as he admits it is not a “free market,” and thus cannot be used to accurately predict what might happen in an anarchist version. What of the many problems which would result when the state no longer plays even its “limited” role in the laissez faire sense? Who, for instance, would issue money in his anarcho-market economy and guarantee its value? Although Griffin cites Malatesta to back-up his claim for the necessity of money during the transition towards an anarchist economy, he apparently missed the Malatesta’s admonition that “one should seek a way to ensure that money truly represents the useful work by its possessors…” (Malatesta: Life and Ideas, edited by Richards, p. 101). Griffin, in spite of his enthusiasm for money, doesn’t address this problem.

Unlike the anarchist communists, what Griffin lacks in empirical evidence and practical concern for organizational problems, he can not make up for with “ethical strength.” For in his conciliatory approach towards market economics, he is prepared to sacrifice even the most basic anarchist principles, including the abolition of wage slavery and an end to the private ownership of the means of production: “I think we have to face up to the fact that if some people want to be employed and others want to employ them, then wage labor will continue. Recourse to coercion by anarchists not involved should in my view be regarded as a ‘cure’ which is worse than the disease. As long as libertarian cultures constitute the dominant socializing force, I do not think that the presence of small scale capitalist enterprises is very important.” (p.30)

Perhaps Griffin does not understand the implications of what he has written. We are not talking about economic individualism, self-employment or family businesses (which as long as they don’t employ non-family members, are not capitalist). The only reason workers want to be employed by capitalists is because they have no other means for making a living, no access to the means of production other than by selling themselves. For a capitalist sector to exist there must be some form of private ownership of productive resources, and a scarcity of alternatives. The workers must be in a condition of economic desperation for them to be willing to give up an equal voice in the management of their daily affairs and accept a boss. Wage labor would not be tolerated in an anarchist society anymore than extortion or blackmail, no matter how much the perpetrator might claim the victims “asked for it.” It would not take any “coercion” to get rid of wage labor either, as long as the condition for possession of any productive property is that all workers be given an equal voice in management. If not, the facility in question is given to some other group that will run things democratically.

To the extent that A Structured Anarchism was meant to stir controversy, it has succeeded. If it was meant to lay the foundation for a more practical anarchist economic alternative, it is a botched attempt. Griffin’s “collectivism” might more accurately be described as watered-down mutualism mixed with laissez faire liberal ideology.

–Jeff Stein

Bakunin on The Capitalist System

This pamphlet is an excerpt from The Knouto-Germanic Empire and the Social Revolution and included in The Complete Works of Michael Bakunin under the title “Fragment.”
This, the first complete English translation of this text, was published by ASR in 1993. It continues to be available from us as a pamphlet.
Parts of the text were originally translated into English by G.P. Maximoff for his anthology of Bakunin’s writings, with missing paragraphs translated by Jeff Stein from the Spanish edition, Diego Abad de Santillan, trans. (Buenos Aires 1926) vol. III, pp. 181-196.

Is it necessary to repeat here the irrefutable arguments of Socialism which no bourgeois economist has yet succeeded in disproving? 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 since neither property nor capital produces anything when not fertilized by labor — that means the power and the right to live by exploiting the work of someone else, the right to exploit the work of those who possess neither property nor capital and who thus are forced to sell their productive power to the lucky owners of both.
Note that I have left out of account altogether the following question: In what way did property and capital ever fall into the hands of their present owners? This is a question which, when envisaged from the points of view of history, logic, and justice, cannot be answered in any other way but one which would serve as an indictment against the present owners. I shall therefore confine myself here to the statement that property owners and capitalists, inasmuch as they live not by their own productive labor but by getting land rent, house rent, interest upon their capital, or by speculation on land, buildings, and capital, or by the commercial and industrial exploitation of the manual labor of the proletariat, all live at the expense of the proletariat. (Speculation and exploitation no doubt also constitute a sort of labor, but altogether non-productive labor.)
I know only too well that this mode of life is highly esteemed in all civilized countries, that it is expressly and tenderly protected by all the States, and that the States, religions, and all the juridical laws, both criminal and civil, and all the political governments, monarchies and republican — with their immense judicial and police apparatuses and their standing armies — have no other mission but to consecrate and protect such practices. In the presence of these powerful and respectable authorities I cannot even permit myself to ask whether this mode of life is legitimate from the point of view of human justice, liberty, human equality, and fraternity. I simply ask myself: Under such conditions, are fraternity and equality possible between the exploiter and the exploited, are justice and freedom possible for the exploited?
Let us even suppose, as it is being maintained by the bourgeois economists and with them all the lawyers, all the worshippers and believers in the juridical right, all the priests of the civil and criminal code — let us suppose that this economic relationship between the exploiter and the exploited is altogether legitimate, that it is the inevitable consequence, the product of an eternal, indestructible social law, yet still it will always be true that exploitation precludes brotherhood and equality.
It goes without saying that it precludes economic equality. Suppose I am your worker and you are my employer. If I offer my labor at the lowest price, if I consent to have you live off my labor, it is certainly not because of devotion or brotherly love for you. And no bourgeois economist would dare to say that it was, however idyllic and naive their reasoning becomes when they begin to speak about reciprocal affections and mutual relations which should exist between employers and employees. No, I do it because my family and I would starve to death if I did not work for an employer. Thus I am forced to sell you my labor at the lowest possible price, and I am forced to do it by the threat of hunger.
But — the economists tell us — the property owners, the capitalists, the employers, are likewise forced to seek out and purchase the labor of the proletariat. Yes, it is true, they are forced to do it, but not in the same measure. Had there been equality between those who offer their labor and those who purchase it, between the necessity of selling one’s labor and the necessity of buying it, the slavery and misery of the proletariat would not exist. But then there would be neither capitalists, nor property owners, nor the proletariat, nor rich, nor poor: there would only be workers. It is precisely because such equality does not exist that we have and are bound to have exploiters.
This equality does not exist because in modern society where wealth is produced by the intervention of capital paying wages to labor, the growth of the population outstrips the growth of production, which results in the supply of labor necessarily surpassing the demand and leading to a relative sinking of the level of wages. Production thus constituted, monopolized, exploited by bourgeois capital, is pushed on the one hand by the mutual competition of the capitalists to concentrate evermore in the hands of an ever diminishing number of powerful capitalists, or in the hands of joint-stock companies which, owing to the merging of their capital, are more powerful than the biggest isolated capitalists. (And the small and medium-sized capitalists, not being able to produce at the same price as the big capitalists, naturally succumb in the deadly struggle.) On the other hand, all enterprises are forced by the same competition to sell their products at the lowest possible price. It [capitalist monopoly] can attain this two-fold result only by forcing out an ever-growing number of small or medium-sized capitalists, speculators, merchants, or industrialists, from the world of exploiters into the world of the exploited proletariat, and at the same time squeezing out ever greater savings from the wages of the same proletariat.
On the other hand, the mass of the proletariat, growing as a result of the general increase of the population — which, as we know, not even poverty can stop effectively — and through the increasing proletarianization of the petty-bourgeoisie, ex-owners, capitalists, merchants, and industrialists — growing, as I have said, at a much more rapid rate than the productive capacities of an economy that is exploited by bourgeois capital — this growing mass of the proletariat is placed in a condition wherein the workers are forced into disastrous competition against one another.
For since they possess no other means of existence but their own manual labor, they are driven, by the fear of seeing themselves replaced by others, to sell it at the lowest price. This tendency of the workers, or rather the necessity to which they are condemned by their own poverty, combined with the tendency of the employers to sell the products of their workers, and consequently buy their labor, at the lowest price, constantly reproduces and consolidates the poverty of the proletariat. Since he finds himself in a state of poverty, the worker is compelled to sell his labor for almost nothing, and because he sells that product for almost nothing, he sinks into ever greater poverty.
Yes, greater misery, indeed! For in this galley-slave labor the productive force of the workers, abused, ruthlessly exploited, excessively wasted and underfed, is rapidly used up. And once used up, what can be its value on the market, of what worth is this sole commodity which he possesses and upon the daily sale of which he depends for a livelihood? Nothing! And then? Then nothing is left for the worker but to die.
What, in a given country, is the lowest possible wage? It is the price of that which is considered by the proletarians of that country as absolutely necessary to keep oneself alive. All the bourgeois economists are in agreement on this point. Turgot, who saw fit to call himself the ‘virtuous minister’ of Louis XVI, and really was an honest man, said:
“The simple worker who owns nothing more than his hands, has nothing else to sell than his labor. He sells it more or less expensively; but its price whether high or low, does not depend on him alone: it depends on an agreement with whoever will pay for his labor. The employer pays as little as possible; when given the choice between a great number of workers, the employer prefers the one who works cheap. The workers are, then, forced to lower their price in competition each against the other. In all types of labor, it necessarily follows that the salary of the worker is limited to what is necessary for survival.” (Reflexions sur la formation et la distribution des richesses)
J.B. Say, the true father of bourgeois economists in France also said: “Wages are much higher when more demand exists for labor and less if offered, and are lowered accordingly when more labor is offered and less demanded. It is the relation between supply and demand which regulates the price of this merchandise called the workers’ labor, as are regulated all other public services. When wages rise a little higher than the price necessary for the workers’ families to maintain themselves, their children multiply and a larger supply soon develops in proportion with the greater demand. When, on the contrary, the demand for workers is less than the quantity of people offering to work, their gains decline back to the price necessary for the class to maintain itself at the same number. The families more burdened with children disappear; from them forward the supply of labor declines, and with less labor being offered, the price rises… In such a way it is difficult for the wages of the laborer to rise above or fall below the price necessary to maintain the class (the workers, the proletariat) in the number required.” (Cours complet d’ economie politique)
After citing Turgot and J.B. Say, Proudhon cries: “The price, as compared to the value (in real social economy) is something essentially mobile, consequently, essentially variable, and that in its variations, it is not regulated more than by the concurrence, concurrence, let us not forget, that as Turgot and Say agree, has the necessary effect not to give to wages to the worker more than enough to barely prevent death by starvation, and maintain the class in the numbers needed.”1
The current price of primary necessities constitutes the prevailing constant level above which workers’ wages can never rise for a very long time, but beneath which they drop very often, which constantly results in inanition, sickness, and death, until a sufficient number of workers disappear to equalize again the supply of and demand for labor. What the economists call equalized supply and demand does not constitute real equality between those who offer their labor for sale and those who purchase it. Suppose that I, a manufacturer, need a hundred workers and that exactly a hundred workers present themselves in the market — only one hundred, for if more came, the supply would exceed demand, resulting in lowered wages. But since only one hundred appear, and since I, the manufacturer, need only that number — neither more nor less — it would seem at first that complete equality was established; that supply and demand being equal in number, they should likewise be equal in other respects. Does it follow that the workers can demand from me a wage and conditions of work assuring them of a truly free, dignified, and human existence? Not at all! If I grant them those conditions and those wages, I, the capitalist, shall not gain thereby any more than they will. But then, why should I have to plague myself and become ruined by offering them the profits of my capital? If I want to work myself as workers do, I will invest my capital somewhere else, wherever I can get the highest interest, and will offer my labor for sale to some capitalist just as my workers do.
If, profiting by the powerful initiative afforded me by my capital, I ask those hundred workers to fertilize that capital with their labor, it is not because of my sympathy for their sufferings, nor because of a spirit of justice, nor because of love for humanity. The capitalists are by no means philanthropists; they would be ruined if they practiced philanthropy. It is because I hope to draw from the labor of the workers sufficient profit to be able to live comfortably, even richly, while at the same time increasing my capital — and all that without having to work myself. Of course I shall work too, but my work will be of an altogether different kind and I will be remunerated at a much higher rate than the workers. It will not be the work of production but that of administration and exploitation.
But isn’t administrative work also productive work? No doubt it is, for lacking a good and an intelligent administration, manual labor will not produce anything or it will produce very little and very badly. But from the point of view of justice and the needs of production itself, it is not at all necessary that this work should be monopolized in my hands, nor, above all, that I should be compensated at a rate so much higher than manual labor. The cooperative associations already have proven that workers are quite capable of administering industrial enterprises, that it can be done by workers elected from their midst and who receive the same wage. Therefore if I concentrate in my hands the administrative power, it is not because the interests of production demand it, but in order to serve my own ends, the ends of exploitation. As the absolute boss of my establishment I get for my labor ten or twenty times more than my workers get for theirs, and this is true despite the fact that my labor is incomparably less painful than theirs.
But the capitalist, the business owner, runs risks, they say, while the worker risks nothing. This is not true, because when seen from his side, all the disadvantages are on the part of the worker. The business owner can conduct his affairs poorly, he can be wiped out in a bad deal, or be a victim of a commercial crisis, or by an unforeseen catastrophe; in a word he can ruin himself. This is true. But does ruin mean from the bourgeois point of view to be reduced to the same level of misery as those who die of hunger, or to be forced among the ranks of the common laborers? This so rarely happens, that we might as well say never. Afterwards it is rare that the capitalist does not retain something, despite the appearance of ruin. Nowadays all bankruptcies are more or less fraudulent. But if absolutely nothing is saved, there are always family ties, and social relations, who, with help from the business skills learned which they pass to their children, permit them to get positions for themselves and their children in the higher ranks of labor, in management; to be a state functionary, to be an executive in a commercial or industrial business, to end up, although dependent, with an income superior to what they paid their former workers.
The risks of the worker are infinitely greater. After all, if the establishment in which he is employed goes bankrupt, he must go several days and sometimes several weeks without work, and for him it is more than ruin, it is death; because he eats everyday what he earns. The savings of workers are fairy tales invented by bourgeois economists to lull their weak sentiment of justice, the remorse that is awakened by chance in the bosom of their class. This ridiculous and hateful myth will never soothe the anguish of the worker. He knows the expense of satisfying the daily needs of his large family. If he had savings, he would not send his poor children, from the age of six, to wither away, to grow weak, to be murdered physically and morally in the factories, where they are forced to work night and day, a working day of twelve and fourteen hours.
If it happens sometimes that the worker makes a small savings, it is quickly consumed by the inevitable periods of unemployment which often cruelly interrupt his work, as well as by the unforeseen accidents and illnesses which befall his family. The accidents and illnesses that can overtake him constitute a risk that makes all the risks of the employer nothing in comparison: because for the worker debilitating illness can destroy his productive ability, his labor power. Over all, prolonged illness is the most terrible bankruptcy, a bankruptcy that means for him and his children, hunger and death.
I know full well that under these conditions that if I were a capitalist, who needs a hundred workers to fertilize my capital, that on employing these workers, all the advantages are for me, all the disadvantages for them. I propose nothing more nor less than to exploit them, and if you wish me to be sincere about it, and promise to guard me well, I will tell them:
“Look, my children, I have some capital which by itself cannot produce anything, because a dead thing cannot produce anything. I have nothing productive without labor. As it goes, I cannot benefit from consuming it unproductively, since having consumed it, I would be left with nothing. But thanks to the social and political institutions which rule over us and are all in my favor, in the existing economy my capital is supposed to be a producer as well: it earns me interest. From whom this interest must be taken — and it must be from someone, since in reality by itself it produces absolutely nothing — this does not concern you. It is enough for you to know that it renders interest. Alone this interest is insufficient to cover my expenses. I am not an ordinary man as you. I cannot be, nor do I want to be, content with little. I want to live, to inhabit a beautiful house, to eat and drink well, to ride in a carriage, to maintain a good appearance, in short, to have all the good things in life. I also want to give a good education to my children, to make them into gentlemen, and send them away to study, and afterwards, having become much more educated than you, they can dominate you one day as I dominate you today. And as education alone is not enough, I want to give them a grand inheritance, so that divided between them they will be left almost as rich as I. Consequently, besides all the good things in life I want to give myself, I also want to increase my capital. How will I achieve this goal? Armed with this capital I propose to exploit you, and I propose that you permit me to exploit you. You will work and I will collect and appropriate and sell for my own behalf the product of your labor, without giving you more than a portion which is absolutely necessary to keep you from dying of hunger today, so that at the end of tomorrow you will still work for me in the same conditions; and when you have been exhausted, I will throw you out, and replace you with others. Know it well, I will pay you a salary as small, and impose on you a working day as long, working conditions as severe, as despotic, as harsh as possible; not from wickedness — not from a motive of hatred towards you, nor an intent to do you harm — but from the love of wealth and to get rich quick; because the less I pay you and the more you work, the more I will gain.”
This is what is said implicitly by every capitalist, every industrialist, every business owner, every employer who demands the labor power of the workers they hire.
But since supply and demand are equal, why do the workers accept the conditions laid down by the employer? If the capitalist stands in just as great a need of employing the workers as the one hundred workers do of being employed by him, does it not follow that both sides are in an equal position? Do not both meet at the market as two equal merchants — from the juridical point of view at least — one bringing a commodity called a daily wage, to be exchanged for the daily labor of the worker on the basis of so many hours per day; and the other bringing his own labor as his commodity to be exchanged for the wage offered by the capitalist? Since, in our supposition, the demand is for a hundred workers and the supply is likewise that of a hundred persons, it may seem that both sides are in an equal position.
Of course nothing of the kind is true. What is it that brings the capitalist to the market? It is the urge to get rich, to increase his capital, to gratify his ambitions and social vanities, to be able to indulge in all conceivable pleasures. And what brings the worker to the market? Hunger, the necessity of eating today and tomorrow. Thus, while being equal from the point of juridical fiction, the capitalist and the worker are anything but equal from the point of view of the economic situation, which is the real situation. The capitalist is not threatened with hunger when he comes to the market; he knows very well that if he does not find today the workers for whom he is looking, he will still have enough to eat for quite a long time, owing to the capital of which he is the happy possessor. If the workers whom he meets in the market present demands which seem excessive to him, because, far from enabling him to increase his wealth and improve even more his economic position, those proposals and conditions might, I do not say equalize, but bring the economic position of the workers somewhat close to his own — what does he do in that case? He turns down those proposals and waits. After all, he was not impelled by an urgent necessity, but by a desire to improve his position, which, compared to that of the workers, is already quite comfortable, and so he can wait. And he will wait, for his business experience has taught him that the resistance of workers who, possessing neither capital, nor comfort, nor any savings to speak of, are pressed by a relentless necessity, by hunger, that this resistance cannot last very long, and that finally he will be able to find the hundred workers for whom he is looking — for they will be forced to accept the conditions which he finds it profitable to impose upon them. If they refuse, others will come who will be only too happy to accept such conditions. That is how things are done daily with the knowledge and in full view of everyone.
If, as a consequence of the particular circumstances that constantly influence the market, the branch of industry in which he planned at first to employ his capital does not offer all the advantages that he had hoped, then he will shift his capital elsewhere; thus the bourgeois capitalist is not tied by nature to any specific industry, but tends to invest (as it is called by the economists — exploit is what we say) indifferently in all possible industries. Let’s suppose, finally, that learning of some industrial incapacity or misfortune, he decides not to invest in any industry; well, he will buy stocks and annuities; and if the interest and dividends seem insufficient, then he will engage in some occupation, or shall we say, sell his labor for a time, but in conditions much more lucrative than he had offered to his own workers.
The capitalist then comes to the market in the capacity, if not of an absolutely free agent, at least that of an infinitely freer agent than the worker. What happens in the market is a meeting between a drive for lucre and starvation, between master and slave. Juridically they are both equal; but economically the worker is the serf of the capitalist, even before the market transaction has been concluded whereby the worker sells his person and his liberty for a given time. The worker is in the position of a serf because this terrible threat of starvation which daily hangs over his head and over his family, will force him to accept any conditions imposed by the gainful calculations of the capitalist, the industrialist, the employer.
And once the contract has been negotiated, the serfdom of the workers is doubly increased; or to put it better, before the contract has been negotiated, goaded by hunger, he is only potentially a serf; after it is negotiated he becomes a serf in fact. Because what merchandise has he sold to his employer? It is his labor, his personal services, the productive forces of his body, mind, and spirit that are found in him and are inseparable from his person — it is therefore himself. From then on, the employer will watch over him, either directly or by means of overseers; everyday during working hours and under controlled conditions, the employer will be the owner of his actions and movements. When he is told: “Do this,” the worker is obligated to do it; or he is told: “Go there,” he must go. Is this not what is called a serf?
M. Karl Marx, the illustrious leader of German Communism, justly observed in his magnificent work Das Kapital 2 that if the contract freely entered into by the vendors of money —in the form of wages — and the vendors of their own labor —that is, between the employer and the workers — were concluded not for a definite and limited term only, but for one’s whole life, it would constitute real slavery. Concluded for a term only and reserving to the worker the right to quit his employer, this contract constitutes a sort of voluntary and transitory serfdom. Yes, transitory and voluntary from the juridical point of view, but nowise from the point of view of economic possibility. The worker always has the right to leave his employer, but has he the means to do so? And if he does quit him, is it in order to lead a free existence, in which he will have no master but himself? No, he does it in order to sell himself to another employer. He is driven to it by the same hunger which forced him to sell himself to the first employer. Thus the worker’s liberty, so much exalted by the economists, jurists, and bourgeois republicans, is only a theoretical freedom, lacking any means for its possible realization, and consequently it is only a fictitious liberty, an utter falsehood. The truth is that the whole life of the worker is simply a continuous and dismaying succession of terms of serfdom — voluntary from the juridical point of view but compulsory in the economic sense — broken up by momentarily brief interludes of freedom accompanied by starvation; in other words, it is real slavery.
This slavery manifests itself daily in all kinds of ways. Apart from the vexations and oppressive conditions of the contract which turn the worker into a subordinate, a passive and obedient servant, and the employer into a nearly absolute master — apart from all that, it is well known that there is hardly an industrial enterprise wherein the owner, impelled on the one hand by the two-fold instinct of an unappeasable lust for profits and absolute power, and on the other hand, profiting by the economic dependence of the worker, does not set aside the terms stipulated in the contract and wring some additional concessions in his own favor. Now he will demand more hours of work, that is, over and above those stipulated in the contract; now he will cut down wages on some pretext; now he will impose arbitrary fines, or he will treat the workers harshly, rudely, and insolently.
But, one may say, in that case the worker can quit. Easier said than done. At times the worker receives part of his wages in advance, or his wife or children may be sick, or perhaps his work is poorly paid throughout this particular industry. Other employers may be paying even less than his own employer, and after quitting this job he may not even be able to find another one. And to remain without a job spells death for him and his family. In addition, there is an understanding among all employers, and all of them resemble one another. All are almost equally irritating, unjust, and harsh.
Is this calumny? No, it is in the nature of things, and in the logical necessity of the relationship existing between the employers and their workers.

1. Not having to hand the works mentioned, I took these quotes from la Histoire de la Revolution de 1848, by Louis Blanc. Mr. Blanc continues with these words: “We have been well alerted. Now we know, without room for doubt, that according to all the doctrines of the old political economy, wages cannot have any other basis than the regulation between supply and demand, although the result is that the remuneration of labor is reduced to what is strictly necessary to not perish by starvation. Very well, and let us do no more than repeat the words inadvertently spoken in sincerity by Adam Smith, the head of this school: It is small consolation for individuals who have no other means for existence than their labor.” (Bakunin)
2. Das Kapital, Kritik der politischen Oekonomie, by Karl Marx; Erster Band. This work will need to be translated into French, because nothing, that I know of, contains an analysis so profound, so luminous, so scientific, so decisive, and if I can express it thus, so merciless an expose of the formation of bourgeois capital and the systematic and cruel exploitation that capital continues exercising over the work of the proletariat. The only defect of this work… positivist in direction, based on a profound study of economic works, without admitting any logic other than the logic of the facts — the only defect, say, is that it has been written, in part, but only in part, in a style excessively metaphysical and abstract… which makes it difficult to explain and nearly unapproachable for the majority of workers, and it is principally the workers who must read it nevertheless. The bourgeois will never read it or, if they read it, they will never want to comprehend it, and if they comprehend it they will never say anything about it; this work being nothing other than a sentence of death, scientifically motivated and irrevocably pronounced, not against them as individuals, but against their class. (Bakunin)