A Few Thoughts on Anarchist Economics

This is a very good article, giving an excellent breakdown of potential economic routes for an anarchist society as well as critiquing some of the all-encompassing theories (such as Parecon) which don’t supply all the answers they claim. Further, McKay’s analysis of economic critiques of capitalism is good, as it takes Post-Keynesian conceptions of modern capitalism (in particular disequilibrium and non-perfect markets) and uses them as a significant critique of our modern economy. I just wish he would’ve maintained a focus on actual stateless economies and even provided examples of modern peripheral economies that could show the way toward a truly stateless economy and society. (by the blog author)

by Iain McKay


First off, my Proudhon anthology Property is Theft! should be complete and sent to the printers next week. At last! That is over two years of work finally finished — a big thank you to the people who translated material plus the folks at AK Press in America. I’m hoping it will have an impact on how Proudhon is viewed in the anarchist movement, as well as generally in the radical and academic worlds. Second, before sharing a few thoughts on anarchist economics, I need to go over the articles I’ve posted. It has been a busy couple of weeks.

There are six, two old ones and four just written. The two old ones are replies to Marxist articles on Bakunin. One is a reply to a review of Bakunin’s Statism and Anarchy, which is not too bad, the other, by Louis Proyect, is just terrible — a classic example of how not to critique anarchism. Really, discussing Bakunin’s pre-anarchist work in an article trying to refute his anarchism? I decided to post these because I had already decided to do my own review of Statism and Anarchy (for Freedom) and thought it wise to bring these over from my old web-site. As can be seen, I’m a bit of a Bakunin fan (as I discussed last year in 170 years of anarchism, I rate him highly as an anarchist thinker).

And talking of material from my old webpage, I’ve been bringing it across in (more or less) the order of how good I think it is. This has the annoying side-effect of having all my favourite works towards the end of a search by author! Still, what I think is good need not be shared by the general public — for example, I thought that Syndicalism, Anarchism and Marxism was a better and more important piece than a simple book review of The Coming Insurrection but the latter got more hits (at first, anyway).

The next three are related to what I want to talk about, anarchist economics. When I was asked by a while-back to do a talk on “Anarchist economics” by a co-operative group, I had to ask whether they mean an anarchist analysis/critique of the economy (i.e., capitalism) or the economics of a free society. They said the latter, and so The Economics of Anarchy was created (my most popular article by fair). The two are, I think, inter-related as what we think is wrong now will feed into our visions of a better society. In terms of the analysis of capitalism, the article Snow way to run an economy discusses the slow-down in the UK economy and links it with the austerity measures of the Con-Dem government (the great Steve Bell was on form with this cartoon on Osbourne — and this was good too). This explains (with the aid of a few jokes) why cutting income makes things worse. Such articles are important in the class struggle as they help win the battle of ideas and change the popular perspective on the need to resist.

The other two articles are on visions of socialism. One is about market socialism by Theodore A. Burczak, which as well as showing a shocking ignorance of other schools of socialism than Marxism is also too impressed by the “Austrian” school of economics. Not to mention the somewhat incredulous aim to create a “market Marxism”! Why bother, when what he “teases” from Marx was originally and explicitly argued by Proudhon? But, then, most Marxists assume Marx’s comments on Proudhon were accurate… I wasn’t actually planning to do this review just now as I aimed to stay away from Proudhon for a while, but the reviews editor of Freedom needed copy so I knocked this together for him! The other review is about a book by Pat Devine, which postulates what could be termed quasi-market socialism. It has market exchange (and competing!) but planned and negotiated investment. As I suggest, while elements of it are useful, overall it just seems like meeting overload — not to mention that it seems based on representative democracy.

So what of anarchist economics? Well, as I indicated in the discussion of Marx’s The Poverty of Philosophy in the Proudhon Reader, Proudhon’s vision of a free economy was bound up with his critique of the existing one. Thus he discussed the contradictions caused by applying machinery under capitalism and concluded that to solve these you needed to abolish wage-labour by workers associations, or “organising labour” (see my review of System of Economic Contradictions). This was the focus of my chapter on Proudhon’s economics for a new book on anarchist economics called The Accumulation of Freedom: Writings on Anarchist Economics (due out early 2012 from AK Press). These is a panel discussion on the book by Deric Shannon, Chris Spannos, Abbey Willis, and Wayne Price and is interesting. It has been put up on Zspace and You Tube.

Deric Shannon, “An Overview of Anarchist Economics” (part 1):

Deric Shannon, “An Overview of Anarchist Economics” (part 2):

Deric mentions my chapter on Proudhon (called “Laying the Foundations: Proudhon’s Contribution to Anarchist Economics”) at the start of the second part — I must point out that is NOT how to pronounce my surname! Unfortunately I have to wait until the book is published before I can put it on-line, which is a shame as I think it is quite good. It is a chronological account of Proudhon’s ideas on economics (both in terms of critique and vision), split by sub-headings named after his key works. I like it and I used its summary of System of Economic Contradictions when I revised the appendix on The Poverty of Philosophy in the reader as well as the review I did for Freedom.

I’ve had a look at the contents page and it does look very impressive. The focus is more the economics of an anarchist society rather than anarchist analysis of economics and capitalism, although my chapter discusses both and makes the point you cannot really separate them — what we are for feeds into what we are against and what we are against drives what we are for. If the articles match the titles, it should be a very good read. I do hope that its not too pro-Parecon, though, as I wouldn’t like anarchist economics reduced to that. There is, unfortunately, a postscript by Micheal Albert — my instant thought was “why?” as he is not an anarchist, a libertarian of sorts, yes — a libertarian social democratic? (the SWP think he is an anarchist, so that implies he is not given how well they understand anarchism). There is a chapter by his co-author, Robin Hahnel — but I’ve not seen it so I won’t speculate. Saying that, if it gets non-anarchists to read it then it may be worth including the likes of Albert — just as having people like John Pilger at the anarchist bookfair will get more people to attend. But, still, I would have preferred someone like Chomsky — bigger name and better politics. Anyways, I have asked Deric, and while a few chapters have some pro-Parecon bits in them it is not pro-Parecon in the main. Which is good, as it really is impossible (as subject I will return to shortly).

My chapter links Proudhon’s ideas on an anarchist economy with those of later anarchists like Bakunin, Kropotkin and Bakunin, based on a summation of his ideas from What is Property? through to Political Capacity of the Working Classes — with all quotes from Property is Theft!. I’ve tried to keep a balance between recounting Proudhon’s critique of capitalism and exploring his visions of a just economy. I’ve made a few slight additions to it, one to include quotes from Justice in the Revolution and the Church (as in the Biographical Sketch). It seeks to link his critique of capitalism with his ideas on the economy of mutualism, showing how the two are bound together and inform each other.

The key problem with an anarchist economics in the sense of “the economics of anarchy” is that it describing something that does not exist (oh, I know that neo-classical economics does that but when economics started the likes of Smith and Ricardo expressed ideas which did, however incompletely, discuss actual economies). As such, you need to get a balance between providing detail and remembering that a free economy will be shaped by the process which created it and its own dynamics. As Proudhon argued in 1846, simply presenting utopian visions is hardly convincing — you need to place your socialism on developments going on around you. Interestingly, this is what most Marxists seems to think was the contribution of Marx and Engels. From Wikipedia (and this seems to reflect the Marxist position):

“The utopian socialist thinkers did not use the term utopian to refer to their ideas. Karl Marx and Friedrich Engels referred to all socialist ideas that were simply a vision and distant goal for society as utopian. Utopian socialists were likened to scientists who drew up elaborate designs and concepts for creating what socialists considered a more equal society. They were contrasted by scientific socialists, likened to engineers, who were defined as an integrated conception of the goal, the means to producing it, and the way that those means will inevitably be produced through examining social and economic phenomena.”

Except, Proudhon did precisely this in 1846! Thus we find Proudhon stating: “But here socialism relapses from criticism into utopia, and its incapacity becomes freshly apparent in its contradictions”; “it is enough to say that there is a superior formula which reconciles the socialistic utopias and the mutilated theories of political economy, and that the problem is to discover it”; “As for socialism, that was summed up long since by Plato and Thomas More in a single word, UTOPIA, – that is, no-place, a chimera.” As usual, Marx and Engels followed where Proudhon lead… not that many know this. Again, from Wikipedia, we have this gem:

Utopian socialists never actually used this name to describe themselves; the term “Utopian socialism” was introduced by Karl Marx and Friedrich Engels in The Communist Manifesto in 1848, although Marx shortly before the publication of this pamphlet already attacked the ideas of Pierre-Joseph Proudhon in Das Elend der Philosophie (originally written in French, 1847) . . . Marx criticized the economic and philosophical arguments of Proudhon set forth in The System of Economic Contradictions, or The Philosophy of Poverty. Marx accused Proudhon of wanting to rise above the bourgeoisie. In the history of Marx’ thought and marxism, this work is pivotal in the distinction between the concepts of utopian socialism and what Marx and the marxists claimed as scientific socialism.

Really, that is as distorted as Marx’s attack on Proudhon! This attack on utopian socialism starts with Proudhon, not Marx and Engels (just as I have noted, according to Engels own definition, “modern workers’ socialism” also starts with the Frenchman not Marx!). Do not believe me? Well, here is Marx himself on the matter from 1846:

“The only point upon which I am in complete agreement with M. Proudhon is the disgust he feels for socialist sentimentalising. I anticipated him in provoking considerable hostility by the ridicule I directed at ovine, sentimental, utopian socialism.” (Marx-Engels Collected Works, vol. 38, p. 104)

Sadly Marx did not say where he “anticipated” Proudhon (it is doubtful that it was in a public work, if it existed at all), but since Proudhon’s attacks on utopian socialism (or “community”) started in 1840 this seems wishful thinking on Marx’s part. But, then, in 1880 he suggested that the “drastic tone of this polemic” (The Poverty of Philosophy) was Proudhon’s fault “as he heaped coarse insults on the utopian socialists and communists whom Marx honoured as the forebears of modern socialism”! (vol. 24, p. 326) Make your mind up! Marx also stated that his 1847 work “contains the seeds of the theory developed after twenty years’ work in Capital.” In a sense, yes, as Marx’s theory of exploitation in Capital is similar to Proudhon’s in the 1840s! In a sense, no, as there is no theory of exploitation in The Poverty of Philosophy, unlike System of Economic Contradictions!

And it would be remiss of me not to note that it was Proudhon in 1840 raised the notion of a “scientific socialism” in What is Property?. As Proudhon scribbled in his copy of The Poverty of Philosophy: “what Marx’s book really means is that he is sorry that everywhere I have thought the way he does, and said so before he did. Any determined reader can see that it is Marx who, having read me, regrets thinking like me. What a man!”

So a true economics of anarchy will come about when an anarchist society has been created. That seems obvious. Adam Smith did not invent a model of an economy and seek to convert people to it — he described, analysed and modelled what he saw going on around him. Sure, his analysis influenced how that system developed (just as Milton Friedman‘s completely wrong Monetarism influenced — for the worse! — the economy, and class war, in early the 1980s). That said, we can start building “economics of anarchy” now as long as it is grounded in developments within capitalism — so if wage-labour causes oppression and exploitation then we can conclude that associated labour is a solution and can point to co-operatives as evidence for this. This was what drove Proudhon’s aside on association in his discussion of the contradictions of Monopoly in 1846, for example. As I argue in a footnote to this:

The term “acte de société” literally means “deed of partnership.” Proudhon is referring to the process of creating and joining workplaces, contrasting the forms created within capitalism (with wage-labour as management rights reflect the capital provided) to the socialised, egalitarian, and self-managed ones of mutualism (with management rights granted automatically on joining). It should also be noted that “société” can be translated as “society” as well as “company.”

This flowed from his analysis and critique of the capitalist workplace, based as it is on wage-labour and so hierarchy and exploitation:

Cf. Marx: “[Proudhon’s] whole system rests on the labour commodity, on labour which is trafficked, bought and sold…” (63) Proudhon repeatedly contrasts the associated (self-managed) workplaces of mutualism with capitalist firms with their “hierarchical organisation” (Chapter IV: section II) in which wage-workers toil “under a master” (Chapter XI: section III) after they “parted with their liberty” and “have sold their arms” to a boss who appropriates both the “collective power” (Chapter VI: section II) and the “surplus of labour” they create (Chapter XI: section IV)

As Proudhon put it in 1851: “association, due to the immorality, tyranny and theft suffered, seems to me absolutely necessary and right. The industry to be carried on, the work to be accomplished, are the common and undivided property of all those who take part therein: the granting of franchises for mines and railroads to companies of stockholders, who plunder the bodies and souls of the wage-workers, is a betrayal of power, a violation of the rights of the public, an outrage upon human dignity and personality.” Later anarchists like Varlin and Bakunin argued that trade unions would take over the means of production, going from resistance societies against capitalism to being the associations of workers needed to replace it. It is far from utopian to argue that workers should occupy their workplaces and that these strike assemblies become the means of organising production, organising labour! And, unsurprisingly, anarchists have long been advocates of precisely that (far longer than Marxists).

So, as I said, there is a need for balance in any “economics of anarchy” — the balance between discussing how it could (and I stress could) work/function and recognising (as Bakunin and Proudhon stressed) that real life has dynamics of its own which cannot be predicted nor limited to what is discussed in books. Any real anarchist economy will be created from below by mass participation and action — it will not be created by following detailed visions written by people who have not gone through the social struggles which make such a popular creation possible. Which is another reason I dislike Parecon, it simply is a new utopian vision like those produced by Fourier and abstractly compares an ideal vision against the grim realities of capitalism.

The main reason I dislike Parecon is the shear impossibility of it. Its supporters simply fail to recognise the vast amount of information it would need to gather and process in order to create a plan — actually, multiple plans as the people would vote for a specific one. Then there is the issue of presenting that plan (assuming it were possible to create one). A real economy has millions of final and intermediate products and these would need to be listed, not to mention descriptions of balanced job plans. You cannot just say 5 million tonnes of food as that is meaningless — and different combinations of “food” imply different inputs and this needs to be reflected in the plan. Who would be able to read such a plan proposal, never mind a few of them! Then there is the issue of informing workplaces what their part of the plan is. Perhaps the people vote for a plan which includes 10 million nails — how do the production units know what kind of nails are required, who needs them and when? So a detailed plan would need to specify the kinds of nails, who needs them and when they should be delivered — no point producing 5,000 10cm nails in October if 4,000 12cm nails are needed in July. I could go on, but I think I’ve made my point. And unless that information is in the plan, the plan (“we will produce 10 million nails”) is meaningless.

Hence the pressing need for horizontal links (aka contracts, free agreements) between production units as well as between workplaces and communes. In a mutualist or collectivist economy, this would be achieved by contracts of exchange between co-operatives. In a communist one, such links are needed to make informed decisions on the use-values being produced. That is the flaw in detailed planning (whether Parecon and central planning), it forgets that use-value is a very subjective thing. It depends on specific needs and so saying “we will produce 10 million nails” is not producing use-values as it is not reflecting the fact that workplace A needs 4,000 12cm nails in July. That is the specific use-value which needs to be created, not an abstract use-value somehow independent of real people and their requirements. Moreover, horizontal links allows the communication of relevant information — the positive (does it meet a need?) and negative (what does it cost to produce? Is it in short supply) use-vales to production units (and in manageable numbers and with the aid of various aids to the mind) in order to make an informed decision. The sort of information detailed planning needs, but finds it difficult to gather and process.

So any anarchist economics would be based on this, on the need for genuine decentralisation and free agreements (horizontal links) between economic agents. That is the only way that real needs can be identified and met. This is not to say planning would be out the window — far from it. Hell, even capitalist firms plan. The issue is not planning against non-planning, it is who plans and at what level. There is a need for socio-economic federalism (Proudhon’s agricultural-industrial federation) to oversee an economy, to discuss public works and major investment projects and such like (and remember, large-scale capitalist firms do such major investment plans and you don’t hear pro-capitalism types complaining about those top-down plans!). But that is it, to oversee rather than plan in detail — at its most basic, the future is unknown and uncertain (and I must note uncertainty can, and must, be used to critique capitalism and defend libertarian communism — see section I.1.5 of AFAQ)! As I’ve suggested before, the few scattered remarks on social planning by Marx and Engels have lumbered the left with a fetish for a utopia — worse, as the Bolsheviks showed, this utopian vision was the justification in dismissing the genuine socialistic experiments of the factory committee movement.

Ultimately, only a “professional revolutionary” who never had a real job could, like Lenin, seriously suggest as a positive vision that “[a]ll citizens are transformed into the salaried employees of the state . . . All citizens become employees and workers of a single national state ‘syndicate’ . . . The whole of society will have become a single office and a single factory with equality of work and equality of pay”! Particularly as Engels, in On Authority, had proclaimed the factory to be “a veritable despotism independent of all social organisation”! But, then, Engels was a boss rather than a worker so his perspective and analysis, as I suggest in AFAQ, is flawed. Still, the notion of an economy as “one big workplace” fails to understand the dynamics of a workplace never mind an economy! So, yes, there is a need for federal structures along side the horizontal links but these federations should be focused more on discussing actual problems arising within the economy as well as social and economic priorities (such as major investment projects and public works) rather than producing detailed plans. The actual mix and procedures will be worked out, I am sure, in practice — and we must be open to the fact that our dreams and hopes may prove to be only partially realised (particularly at first) and, in fact, may not be realisable at all.

This is, I must note, not a call for purely “small-scale” planning. Anarchists reject that just as much as we do purely “small-scale” production. Marxist myths aside, we stand for appropriate levels of production and planning — in short, a combination of different scales of production and planning (small, medium, large) determined by the actual requirements of the situation. That is stating the obvious, but it needs to be said given how Marxists go on about how anarchist favour “small” production units and how “big” their production units are in comparison (needless to say, such terminology may make cause those familiar with Freud smirk).

Section I of An Anarchist FAQ goes into what an anarchist economy could work in some detail (the article The Economics of Anarchy tries to summarise this!). However, section I.2 addresses the blueprint argument/attack, explaining that while we reject blueprints we can outline our ideas, based on our critique of capitalism and the experiences of the class struggle and other movements within, but against, capitalism. I would particularly point to section I.2.3 which discusses how the framework of a free economy could develop — from strikes to occupations to associated labour, for example. Once that process starts, then a genuine anarchist economics could start rather than spectulation (however well founded!) on how a free economy could function.

So books like The Accumulation of Freedom are to be welcomed. We need to combine sketches of liberty (to varying degrees of detail) with an awareness that real life is far more complex and dynamic than authors — or planners or capitalists or facilitation boards — can comprehend. Socialism, as Proudhon, Bakunin, Kropotkin, etc. — can only be created from below, by the self-activity of working class people, and this will rarely reflect totally the hopes expressed before this starts. We are talking about transforming the lives of millions! Kropotkin covers this well in the last chapter of The State: Its Historic Role, for example.

This leaves the other key aspect of anarchist economics, the analysis and critique of capitalism — of which another aspect is the critique of bourgeois economics. The latter will come out of the former, as any analysis of the reality of capitalism cannot help expose the ideological and unreal nature of mainstream economics. For example, I happen to like Paul Krugman’s work — he is on the side of the Angels, even if he is a neo-classical Keynesian. He is not a socialist, just simply an economist with more of a grasp of reality than most. I’m aware of the limitations of his work, and criticise him for it — as a neo-classical Keynesian, he accepts a lot of the baggage that comes with the former. For example:

“The classic Radford paper on the economics of POW camps is still where I start when thinking about what money is and what it does.”

That is, a model of money based on the exchange of a given set of pre-existing goods — that is, one which ignores the production of goods within historical rather than logical time, one which ignores the class divisions of actual economies as there are no means of production to own nor be separated from, one which is not driven by the need to accumulate surplus value, i.e., the unpaid labour of others. I’m sure that the Radford paper does describe the goings on of a POW camp well — shame that an actual capitalist economy is nothing like it. As Joan Robinson summarised long ago:

“The neo-classical theory . . . pretends to derive a system of prices from the relative scarcity of commodities in relation to the demand for them. I say pretend because this system cannot be applied to capitalist production.

“The Walrasian conception of equilibrium arrived at by higgling and haggling in a market illuminates the account of prisoners of war swapping the contents of their Red Cross parcels.

“It makes sense also, with some modifications, in an economy of artisans and small traders . . .

“Two essential characteristics of industrial capitalism are absent in these economic systems — the distinction between income from work and income from property and the nature of investments made in the light of uncertain expectations about a long future.” [Collected Economic Papers, vol. 5, p. 34]

But, then, as I’ve noted before Krugman does have a tendency, like all neo-classicals, to ignore time and production. And say what you like about classical economics, at least it focuses on both (as I summarise in an unfinished appendix to AFAQ). Sad to say, any anarchist economics in the sense of the analysis of capitalism will need to start, as did Proudhon and Marx, with classical economics — the dominance of neo-classical economics has effectively shunted economics into a dead-end for over 100 years.

Obviously, an anarchist economics will need to build on anarchist thinkers like Proudhon and Kropotkin. We have an advantage in that we do not call ourselves after a person, so we are not dependent on squeezing our analysis into the confining position of having to justify every point with a quote from Capital. Proudhon, for example, made mistakes (and was simply wrong!) while certain aspects of his analysis need development. He is, of course, been long dead and capitalism, like economics, have moved on. We need to supplement and develop their insights, utilising other thinkers. As I’ve suggested before, anarchists I think could gain from reading post-Keynesian economics. It builds on the best of Marx and Keynes, plus the likes of Robinson, Kaldor, Kalecki, and so on. Institutional economics (old-school ones, like Galbraith) would be of use too.

There is much work to be done, both in developing an anarchist economics which analyses capitalism as well as critiquing bourgeois economics. Hopefully section C is a start and indicates what it could look like, plus who to read-up on to help build it — some of whom, and why, I’ve indicated in my blog And the Noble Prize for class war goes to….

And talking of economics, here is another instalment of my sadly too regular series — The system IS working, part n of m (where both n and m are large numbers). Yes, comrades, the system IS working — the rich are getting richer… Paul Krugman provides graphs on the disconnect between economic growth and median income and median and mean income as well. More graphs can be found on this blog posting by David F. Ruccio (who used to teach in the Department of Economics and Policy Studies at the University of Notre Dame — until it was dissolved for not being neo-classical enough!). His blog (occasional links & commentary) is worth checking out. Also of note is Dean Baker (who is also an economist worth reading). His The Great British austerity experiment which attack the notion of the “commitment to prosperity through austerity” is worth reading:

“The elite media and the politicians whom they promote would love to see the United States follow the austerity path of the UK’s new government. However, if this path takes the UK into dangerous economic waters, it could provide a powerful warning to the public in the United States before we make the same mistake.”

As if Ireland were not a warning for the UK’s new masters… It is worth stressing that this austerity plan is ideologically driven. Baker spectulates: “Maybe the Liberal Democrats will break away from the coalition and force new elections.” And be wiped out in the election? I doubt it. Until the Tories stop getting a benefit from pushing out Lib-Dems to defend their policies (and so take the flack) and are sure they will win an election (maybe if there is an unexpected up-tick in the economy?) then the Lib-Dems will cling to power. I would not be surprised if we see Coalition candidates in the next election, as a reward to Clegg and Co’s utter betrayal of their promises, members and voters. Or, as in the recent by-election, a downplaying of Tory campaigning and an nudge to Tory voters to bolster Lib-Dems to keep Labour out?

Baker makes this important point: “Unfortunately, in the land of faith-based economics, evidence does not count for much.” Ah, how very true — economics must be the only “science” which does not reflect reality and considers it as anything other as something to ignore… Another useful economist is Bill Mitchell, aka Billy Blog. For example, The origins of the economic crisis is a good discussion of how the capitalists have been winning the class war for the past three decades and, as a result, why we are in crisis. It is full of useful facts and figures as well as good economic analysis:

“In March 1996, the real wage index was 101.5 while the labour productivity index was 139.0 (Index = 100 at Sept-1978). By September 2008, the real wage index had climbed to 116.7 (that is, around 15 per cent growth in just over 12 years) but the labour productivity index was 179.1.”


“The question then arises: if the output per unit of labour input (labour productivity) is rising so strongly yet the capacity to purchase (the real wage) is lagging badly behind – how does economic growth which relies on growth in spending sustain itself? . . . The trick was found in the rise of “financial engineering” which pushed ever increasing debt onto the household sector. The capitalists found that they could sustain purchasing power and receive a bonus along the way in the form of interest payments.”


“The rich, however, have got much richer since the 1970s . . . The explanation is simple: while workers’ average real wages stayed flat, their productivity rose . . . The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers. . .”

This is also good: When will the workers wake up?. It discusses this article in The Guardian: The myth of ‘American exceptionalism’ implodes by Richard Wolff.

Oh, I’m sure Proudhon (if he were alive today) would be busy muttering about “contradictions” and invoking the word “impossible” — and he would be right. It is a case where we have a crisis because capital is too strong and yet our economic masters are still haunted by the 1960s and 1970s when we had a crisis when capital was too weak (or, better, labour was too strong and refusing to be reduced to a commodity). Many sections of the ruling elite actually believe their own rhetoric on laissez-faire capitalism, so causing them to oppose actions which will help the system. As Proudhon put it: “Hence it is, finally, that every society declines the moment it falls into the hands of the ideologists.” Ultimately, if we do not resist then we will pay the costs for resolving the crisis — and that may take some time if the “Austerity” muppets win the debate. Hence the need to understand and critique both the economy and bourgeois economics — to quote Joan Robinson: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”

I should also point to this (which, I think, I may have linked to before) on Billy Blog — A code of ethics doesn’t go far enough. It sums up what is wrong with economics and what positions an anarchist economics would start from:

“The whole body of mainstream economics needs to be trashed . . . Many of their models are internally inconsistent (for example, all those that deal with income distribution and production) and none really stack up against empirical realities . . .”

As regards distribution, he specifically points to “marginal productivity theory” (see section C.2.4 of AFAQ) and “the Capital Controversies of the 1960s” (see section C.2.5 of AFAQ). I added a comment about over-egging the influence of Marx, pointing to both Proudhon and the British Ricardian socialists as more pressing concerns for the founders of neo-classical economics. But, then, I would… He ends by summarising what a real economics should be:

“I think a call for a code of ethics should be broadened for a major closure of economics programs around the world and a new approach to the study of economics . . . incorporating sociology, psychology, anthropology, and a more reasoned view of firm-based operations in the context of a class-based economy – where workers want to work less and be paid more and bosses want them to do the opposite.”

This is spot on. Any real economics would be based on viewing individuals as what they are, social creatures within a specific social and class context rather than the abstract and atomised individuals so beloved of bourgeois economics. It should start with an aware that economies operate in real rather than logical time and that production actually happens (as I noted, neo-classical economics starts with a set number of products and shows how these would be exchanged as a result of a “given” distribution of resources). It would reject equilibrium analysis, recognising that any real economy would be in dis-equilibrium and that moves towards equilibrium in can push the economy as a whole further away from equilibrium (i.e., unlike most “Austrians” economists actually think through the implications of disequilibrium rather than use it as a “just-so” story to justify giving our economic masters free reign not to mention rationalising returns to capitalists). In short, use it as post-Keynesians do! It would recognise, as Proudhon stressed, that capitalism is just the latest economy of many and that its social relationships are not eternal (rather than produce an economic analysis which, by strange co-incidence, proves that the social classes of capitalism produces the most efficient economy there could ever be!). It would be as critical of the information blocks within the (hierarchical, top-down) capitalist company as it would be of those within state bodies! And so on. One where, in a clash between theory and facts, it does not side with the theory (ideology, more like) — and denounce people for being “irrational” when they do things they wish. This is expressed in, for example, the standard neo-classical model of a co-operative which has little relation to their reality so prompting the conclusion was the co-operative members as “irrational” rather than the model being wrong (interestingly, at least two “Austrian” economists refer uncritically to this model which shows their differences from neo-classical economics are not great). The implication is what people (and society!) must change to reflect the theory, not vice versa. Hence the strong tendency to propose (say) smashing unions — although rarely big business! — to make the economy better fit the model! with, as noted in AFAQ less that wonderful results. And, as far as economists do, that does seem to happen:

“Studying economics also seems to make you a nastier person. Psychological studies have shown that economics graduate students are more likely to ‘free ride’ . . . Economists also are less generous that other academics in charitable giving . . . And on other tests, [economic] students grow less honest . . . after studying economics, but not studying a control subject like astronomy” (Doug Henwood, Wall Street, p, 143)

Needless to say, if we produce the right way of analysing capitalism (i.e., make economics a science rather than self-serving apologectic ideology for that system and its economic masters) we will be in a position to produce not only realistic spectulations of an anarchist economy but also, when the time comes, to start on the actual economics of an actual anarchy.

So the resources for a robust anarchist economics are out there. The question is, will we have the time and energy to create it? Anarchists tend to be activists, and from experience this often makes it hard to find the time to theorise — hence the tendency for some anarchists to let Marxist academics to do our economic analysis for us! Still, we have a rich tradition to build upon and I hope we do. We can, of course, include insights by the likes of Marx and Keynes — what matters is whether it is right (right, though, for the right reasons based on realistic analysis rather by accident), not who says it!

Of course, I could have called this a discusion on libertarian economics but thanks to the right stealing that name, such a title could be misconstrued by those ignorant of the history of that term — which is precisely why I called my recent blog on Proudhon’s analysis of capitalism The Libertarian Critique of Capitalism! Sadly, the appropriation of the word “libertarian” by the right is gathering pace in the UK. I hope we can stop it going the way it has in America. Perhaps we should make a point of writing to every paper which lets a right-winger call themselves a “libertarian” get away with? Anyways, I thought this was a great comment from an article in The Guardian and summed up well why we in the UK must fight to save the good name “libertarian” from a fate worse than death:

‘When I was one of the “Arlesey Anarchists” in the 1960s we called ourselves Libertarians. Now it seems to mean anyone who believes the poor deserve their faces grinding in the dust!’

And way to go the people in Middle East! Keep at it. And I would love to hear Cameron dismiss a similar protest here — or have the president of Egypt refer to Blair’s ignoring of the anti-war marches in 2003 to explain why it is important he remains in power. I’m sure anarchists in the Middle East will be joining these protests — and urging them to go beyond mere political change into social and economic change. In short, as anarchists did in Russian in 1917, urge the transformation of a political revolt into a social revolution. For example, by arguing for the general strike into a general occupation of workplaces, by arguing for community assemblies, for federations of workplace and community councils, and so on — as, for example, I suggested in regards to the revolt against neo-liberalism in Argentina.

Watching the American state flounder between its rhetoric of freedom and its real need for stability and practical backing of these repressive regimes is fun. And at least few people are suggesting these revolts are a product of Bush’s imperialist adventures! These revolts clearly show the difference between imposing “freedom” by bombs and a genuine popular struggle for freedom. And the popular nature of these revolts is why the right are not embracing them (plus, of course, racism against Arabs disguised by hatred of Islam). Thus we see that Glen Beck, like many wingnuts, does not hear the chimes of freedom in the Middle East:

“I believe that I can make a case in the end that there are three powers that you will see really emerge. One, a Muslim caliphate that controls the Mideast and parts of Europe. Two, China, that will control Asia, the southern half of Africa, part of the Middle East, Australia, maybe New Zealand, and God only knows what else. And Russia, which will control all of the old former Soviet Union bloc, plus maybe the Netherlands. I’m not really sure. But their strong arm is coming. That leaves us and South America. What happens to us?”

What perplexed me was Russia controlled “all of the old former Soviet Union bloc, plus maybe the Netherlands.” plus the Netherlands? why the Netherlands? That just seems tacked on for no reason, making it look like its just made-up mad-talk by a crazy person… 🙂

And, finally, a very funny cartoon: Carl Sagan and his Fully Armed Spaceship of the Imagination. And this flows into yet another brilliant Stephen Colbert sketch:

Then there ia suthor Philip Pullman on why public libraries are wonderful: Leave the libraries alone. You don’t understand their value. I agree totally, there is nothing like having access to a library — the wealth of knowledge available! And as Stephen Colbert proved (echoing Kropotkin, unknowningly I am sure!), hot-beds of communistic principles… So after me: Hey, Tories, leave those books alone…

Until I blog again, be seeing you…

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