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Anarchism and Economic Freedom

AQA, Edexcel, IB

Last updated 26 May 2019

Anarchism promotes economic freedom on the grounds that it enables people to organise their own economic affairs autonomously.

Under these arrangements, there is no place for state ownership, regulation or intervention. This endorsement of economic freedom rests on anarchism’s rejection of the state and all types of hierarchical authority because they are oppressive.

Consequently, anarchists oppose existing forms of capitalism (such as the ‘managed’ or neo-liberal capitalism operating in western Europe and the USA) and state socialism (such as those adopted by the USSR, China and North Korea).

It is important to note too that different strands of anarchism reject capitalism and state socialism for different reasons (see further below). Beyond a general preference for a decentralised economy, however, there is no common agreement among anarchists as to what should replace capitalist and state socialist systems. On this issue, a fundamental division exists between collectivist anarchists who call for an economy based on cooperation and collective ownership and anarcho-capitalists who advocate a ‘pure’ free market capitalist system with private property. The section below outlines the key differences:

Anarchist objections to capitalist and state socialist economies


Collectivist anarchist objections to Capitalism

Capitalism, in both its ‘managed’ and neoliberal forms, rests on inequality, exploitation and private property. It uses the state to protect the wealth and power of the privileged and to oppress the masses so real freedom cannot exist. As Kropotkin argues ‘Individual appropriation is neither just nor serviceable. All belongs to all.’ Private property, protected by the state, leads inevitably to exploitation, greed, unfairness and social instability.

SOLUTIONS: A new economic order cannot be based on capitalist assumptions, such as the market value for labour and goods, because this leads to inequality and conflict. Therefore, capitalism, private ownership and the state have to be replaced with collective ownership or mutualism to promote human altruism, determine the ‘true value’ of labour and goods (not the market value) and develop liberty and natural orde

Collectivist anarchist objections to State Socialism

Under state socialism, the coercive bureaucratic one party state (including the leadership cadres) simply becomes the new exploiting power over the masses. By replacing capitalism and its ruling elite with another system of economic control, the apparatus of state socialism ensures that no real freedom exists. Bakunin neatly sums up the point in his famous maxim that ‘Socialism without freedom is slavery and brutality.’

SOLUTIONS: The coercive nature of state socialist ‘collectivism’ needs to be replaced with genuine collective ownership or mutualism. Such a change would encourage goods and labour to be exchanged on the basis of mutual benefit, ‘true value’ and free and fair negotiation. Under these new economic circumstances, the worker is liberated, or as Proudhon puts it ‘the labourer is no longer the serf of the State …’


Anarcho-capitalist objections to Capitalism

State intervention in a ‘managed’ or neo-liberal capitalist economy limits competition and choice and, by extension, liberty. All forms of state economic management or regulation skew the market (because the latter is not free and open) and create privileged, uncompetitive public and private monopolies. As Murray Rothbard contends ‘The state has typically been a device for producing affluence for a few at the expense of many".

SOLUTIONS: The state should be abolished to allow an entirely free competitive market (including private property) to function. Indeed, for David Friedman, ‘private property is the central institution of a free society’. Unlike the state, this unfettered market would permit rational, autonomous and self-interested individuals to make decisions in their own best interests, establishing an equilibrium so natural order can develop.

Anarcho-capitalist objections to State Socialism

State socialism relies on state control/ownership over all aspects of planning, production and distribution in economic affairs. As a result, this system constrains individual liberty, removes competition and choice, coerces workers and rejects property rights. In short, state socialism offers no economic freedom at all. It is, according to Murray Rothbard, a form of economic organisation based on ‘force and dictation—the way of the State.’

SOLUTIONS: State socialism should be replaced with a totally free competitive market (including the right to private property) because individuals can experience economic freedom only through free competition with no outside interference. In David Friedman’s words ‘under private property … each individual uses his own resources to pursue his own ends.’

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