On Libertarian Socialism

Powell goes on to explain that if freely adopted by a particular group of people, a system founded on the principles of liberty could indeed brook such a communal socialism. “So in a state founded on principles of liberty, under libertarianism,” he says, “you can have voluntary socialism, but under socialism, you cannot have liberty.” On the terms as set out, this is all true enough, but that phrase — “voluntary socialism” — will evoke in many minds a distinct moment in the history of libertarian thought in America. “Voluntary socialism” was once, in point of fact, just the label radical free marketers put to their ideas, ¹ to the individualist anarchism of free and open competition in a stateless society that they championed. Identifying capitalism with statism and monopoly, and socialism with what the visionary reformer Josiah Warren called “equitable commerce,” these individualist anarchists regarded free market competition as one of many incarnations of the latter. It is important to understand that the term “socialism” connoted, for people writing in the nineteenth century, something rather different, and importantly vaster and more varied, than what is commonly meant when the term is summoned today. The twentieth century and its debates have largely taught us to reflexively collapse all socialisms that have existed (even if only as the subjects of theory) to state socialism alone. Likewise, today and for most of the foregoing century, libertarians have come to treat “capitalism” and “free markets” as synonymous, though in previous moments this equivalence would seem much less obvious and ineludible.

Products of an age when the lines dividing classical liberalism from inchoate socialism were less unyielding or clearly defined, nineteenth century reformers and radicals grappled with what they often called “the Social Question.” The results of their experiments and musings were various forms of socialism, various answers to that question, frequently as different from one another as they were from other -isms. As radicals, the individualist anarchists plumbed for the deepest connections between social, economic and political problems, their anarchism critiquing liberalism from a socialist perspective and vice versa. ² Within the nomenclatural paradigms of today, the individualist anarchists appear to present a paradox: Both free marketers and labor movement radicals, “rugged individualists” and egalitarians, libertarians and socialists, the alloy of ideas they present can confound the contemporary student of political thought.

By the close of the nineteenth century, individualist anarchism had coalesced into a distinct, recognizable variety of radical thought, largely owing to the stature of Benjamin R. Tucker and his anarchist periodical, Liberty, published more or less frequently from 1881 to 1908. As an MIT undergraduate, already sampling a number of radical notions, Tucker was intoxicated by the ideas presented during a spring meeting of the New England Labor Reform League. There he met William B. Greene and Josiah Warren, whose work would become part of the foundation of the distinctive libertarian position presented for almost thirty years in Liberty. Warren had been a devotee of the socialist Robert Owen, who emigrated from Wales at the beginning of the nineteenth century and undertook to establish utopian communities based upon his unique brand of thought. ³ From his association with Owen, Warren inherited a number of the economic ideas that would come to characterize his own philosophy. He abandoned, however, Owen’s determinist rejection of individual responsibility and volition as real and important factors in community and economic life, eventually concluding that the Owenite settlements were foredoomed due to their “submergence of the individual within the confines of the community.” ⁴ His formative experiences with and reactions to the particular socialist framework of Owen led to the extreme dissociative and decentralist tendencies that are core features of Warren’s own work — both his writings and his own practical experimentations.

As William O. Reichert put it in his study of American anarchism, Partisans of Freedom, the hallmark of Warren’s thinking was “struggling with the difficult problem of reconciling liberty and equality in such a way that neither would be compromised.” ⁵ That struggle and the narrative that it frames are indispensable in understanding the later, more mature, fully formed individualist anarchism expounded by Tucker and the cast orbiting Liberty. And while Tucker’s individualist thinking was informed by everyone from Herbert Spencer and Pierre-​Joseph Proudhon to Max Stirner, Warren was arguably his single greatest influence. It was Josiah Warren to whom Tucker dedicated his Instead of a Book, writing, “To the Memory of My Old Friend and Master, Josiah Warren, Whose Teachings Were My First Source of Light, I Gratefully Dedicate this Volume.” The import and centrality of Warren’s Cost Principle (“making cost the limit of price” ⁶ ) in Tucker’s ideas is conspicuous in almost everything he wrote. Following Warren, Tucker argued that adherence to the Cost Principle, the full convergence of cost and price, would finally destroy, in Proudhon’s words, “the last vestiges of old-​time slavery.”

By reference to the Cost Principle, a permutation of the labor theory of value notably presented by classical economics, Tucker pinpointed the “Somebody” responsible for the social and economic problems, for the plight of the poor and exploitation of labor. The individualist anarchists poured scorn upon freeloaders, those who wanted something for nothing, who lazed about benefiting from the hard work and productivity of the industrious. Unlike populist conservatives, however, they regarded the foremost parasites on productive society not as those receiving social welfare benefits from the state in order to subsist, but as the rich — the “usurers” who they argued misappropriated the lion’s share of the wealth produced by the common man. Condemning them as “the brotherhood of thieves who prey upon labor,” Tucker made a career of savaging capitalists on radical free market grounds. He contended that, free market conditions obtaining, individuals would have to exchange relatively equal values, effectively eradicating what Frank H. Brooks called the “trinity of usury”: rent, interest and profit. Tucker regarded these three species of income as fundamentally tantamount to theft, indeed in very much the same way that he conceived taxation. This reproof of usury was of course a practical implication of the Cost Principle: profit in exchange, interest on money lent, and rent on real property all represented capital’s “power of increase,” its ability to accumulate wealth without incurring cost, without working. It was only the state and its purposeful impediments to genuinely free competition that allowed the unequal exchange involved in rent, interest and profit to prevail. By “capitalists,” then, the individualist anarchists meant not enterprising innovators or entrepreneurs, but rather those monopolists granted the arbitrary power to leverage “politically-​created artificial advantages” for gain. ⁷

Still, the labor theory of the individualist anarchists is often misunderstood and misconstrued today by libertarians and non-​libertarians alike. Undoubtedly they adjudged labor the genuine and ultimate source of value at the bottom of all economic laws, naturally holding the concomitant view of capital as merely “stored-​up labor that has already received its pay in full.” ⁸ But their views about economic value were far subtler than they are generally given credit for. Fundamentally, the economic views of the individualist anarchists represent a radicalization of the ideas of classical economists such as Smith, Ricardo, and Mill. ⁹ But as James J. Martin observed in Men Against the State , though Smith pronounced what probably remains the most prominent and influential statement of the labor theory of value, it had been explicated by others generations before. Indeed, Martin doubted that Josiah Warren, for instance, had ever even read a word Smith wrote. Caricatures and easy dismissals of labor cost theories are belied by their complex histories and by the argument they actually beget. The misunderstanding held by many contemporary readers of the individualist anarchists inheres in the suggestion that they actually controverted the subjective, marginal utility argument about economic value; they of course did not. In his novel, The Anarchists, the German anarchist John Henry Mackay illustrates the broader individualist anarchist acceptance of subjectivity:

Elsewhere, Mackay writes similarly, “In itself nothing has value.” ¹¹ The individualists understood marginal utility and what Murray Rothbard much later tagged a “double inequality of values” quite well, appreciating its truth and conceptual value as far as it goes. Even Josiah Warren acknowledged the real importance of subjective valuation in all exchange. But the individualist anarchists challenged those economists who engaged marginal utility as a pretext for all manner of economic injustice, to explain away the deprivation of the laboring masses using the language of voluntary exchange. ¹²

Accepting that each individual, in her discretion and idiosyncrasies, reckons value differently, they nevertheless prevised a leveling to issue from the realization of true free competition. On the other hand, the individualist anarchists emphatically decried, in the words of Henry Appleton, any “artificial attempt to level things,” placing it in opposition to “social development resting upon untrammeled [sic] individual sovereignty” (emphasis added). They simply thought that in the absence of economic privilege, limiting competition and access to capital goods, rent, interest and profit would vanish (or close). Setting up labor theories of value in square opposition to subjective theories thus overlooks the nuances of both and does neither justice. For Tucker and his ilk it was privilege — founded upon the authority of the state in antagonism to economic laws — that allowed the exploitation of unequal exchange (i.e., “usury”). Anti-​competitive “class-​made laws” accounted for the difference between the wage that labor was entitled to, its full product, and what it was in fact paid. The mechanics of monopoly were, to the individualist anarchist mind, quite simple, with government aggression (through, for example, holding large swaths of uncultivated land out of use for the benefit of political favorites; compulsory conditions to market entry that meant expensive barriers; and intellectual property laws that gave individuals the right to own and extract rents from ideas themselves, to name a few) stacking the deck for the capitalist class. By forcibly precluding competition and equal access to important natural resources, the state places plutocratic interests in the position of monopsonists in the market for hired labor; they could purchase it at prices far below what it was actually worth (i.e., worth in a free market) only because other options had been foreclosed, sources of bargaining power neutered.

As American anarchist Voltairine de Cleyre wrote, adumbrating individualist anarchist economics, without the state screening key interests from competition, “bosses would be hunting men rather than men bosses,” and “wages would rise to the full measure of individual production.” ¹³ It was thus unnecessary (indeed mistaken) to abolish private property, as advocated by communist anarchists, who piqued Benjamin Tucker perhaps more than any other group. Rather it was legitimate private property, its contours determined by the law of equal freedom, that was most desperately needed to supplant the venal system of collusion and favoritism that the individualist anarchists railed against. Most famously articulated by Herbert Spencer, the law of freedom was the guiding principle upon which all of the individualist anarchists’ positions were based; as an abstract standard, it preceded and shaped the individualists’ approaches to questions like private property, which were ultimately issues only of implementing the law of equal freedom. As William Bailie said in his series in Liberty, “Problems of Anarchism,” “whatever ideas are entertained upon property or any other question of principle and rights must harmonize with that leading idea [i.e., the equal liberty of all].” If “the political and the economic despotisms” (which Tucker referred to “Siamese twins”) were the enemy, then free market competition and equality of access and opportunity were the most formidable ally, the means to equitably distributing wealth throughout society.

Whether the free market anarchism of the individualists was indeed a form of socialism was debated even in their own day. Socialism as a conceptual object was fluid enough during that time to embrace such a set of views on the basis of their resistance to the status quo (which they designated “capitalism”) and aspiration for economic fairness. By the 1930s, it seems even Tucker had come to identify the word “socialism” with the state socialism that he had inveighed against in the pages of Liberty for over a quarter of a century. In his last years, his optimism concerning the prospects for human freedom at its nadir, Tucker wrote, “Capitalism is at least tolerable, which cannot be said of Socialism or Communism.” ¹⁴ Glib dismissals of their economic ideas notwithstanding, the individualist anarchists still have much to offer in the way of lessons to we contemporary free marketer champions. Their analyses challenge us to look more critically at the existing economic order, to see it not so much as an imperfect instantiation of our free market ideas, but as a profound departure from them.

Originally Published on October 23, 2013

Federalism in Proudhon and Ostrom, written by David S. D’Amato