• Tom Cleary

Anarchy = Capitalism Part II: The Practical Case


So, we have seen that socialism cannot be reconciled with any sort of innate human rights, and that only capitalism with its protection of personal and property rights can be so reconciled. What about the practical case that anarchy can be squared with a socialist society? This fails as well. As we shall see, any socialist society will break down into one with a government, and a large and intrusive one at that. At best, it may break down into a grouping of smaller governments that will likely be warring with each other and in all likelihood, coalesce into a large centralized state.

The first question that needs to be answered by “anarchist socialists”, is by what means will private property be stripped from its owners? Almost assuredly, that agency will be the government. Even if you had a revolutionary situation, a true bottom to top reversal, you will still be left with a group in control of the apparatus of violence; the state. This is of course what happened in Russia cum Soviet Union. The first thing this victorious revolution did was to consolidate power in a newly formed government. This is the dynamic of power in the real world; once gained it is usually not voluntarily surrendered.

You may end up with a situation in which you have decentralized centers of power, for these socialists this would presumably be in the worker coop or commune. This only shifts the locus of government from a centralized state to a series of mini states. While more decentralized governments may be better than a centralized one, two things come to mind. One, you still have government; you have not gotten to an anarchist society and you cannot as long as these smaller governments exercise power, even if by majority vote. Second, you will likely see arise a situation in which these decentralized governments go to war with each other in an attempt to increase the size of its area of control.

This is, in fact, what has happened historically. In every instance the attempt to bring about a stateless and socialist society has failed. I will use the example that the socialists often point to; the “anarchist-socialist” environment in parts of Spain during their civil war in the 1930s. A good overview of this history can be found here. The upshot is that these “anarchies” acted very much as governments. “The Anti-fascist military organization which was controlled by the Anarchist and other socialist groups enforced anti-capitalist laws at gunpoint and they had no competition. Moreover, they set up local government councils responsible for education, propaganda, healthcare and economic planning. The Anarchist were not merely in control on the municipal level, in Catalonia they were the power behind the throne of the Catalan government. In Aragon they established a one-party dictatorship and did not let other socialist parties participate in regional politics. The "Anarchist" leadership showed just how hypocritical it was by accepting multiple cabinet positions in the republican coalition government.” This quote is form an insightful comment by a commentator with the handle “J K” in the comments section of this fine article, which I shall be further referencing below. The history of the example all socialists point to as proof of the practical viability of “anarcho-socialism” was that it was statist to the core.

The other way in which socialist anarchy is impossible is that it assumes a never changing static world. That this is so can be seen in their denial of a concept called time preference. Time preference is a wonkish yet critical concept in economics.  In short, it is the innate desire of humans to consume sooner, rather than later. Other things being equal, everyone on the planet would rather consume sooner rather than later.  Obviously, things are not always equal.  If given enough of a reason, people will defer consumption until later.  What would that reason be?  The answer is the ability to consume more at a later period.  The way this is measured in money terms is interest.  Interest is the thing that causes people to be willing to wait to consume.  Most people conceive of interest as the price of money, but it really is the price of time; how much will you pay me to defer my consumption?  Thus, interest is a thing that is hard-wired into the DNA of all of humanity.  Its existence is what gives rise to the accumulation of capital.  People defer consumption, save resources and use those resources to produce even more goods.  Interest is the payment to savers for having to wait to consume and is critical in the formation of capital; capital being another name for tools which make labor more productive.  This increase in productivity is the only way humanity can become materially wealthier.  Time preference sits at the heart of the wealth creation process.

It is this concept that destroys the labor exploitation theory. Which is why socialists either deny it or ignore it. The arguments against it can be found in Section C.2.6 here. Basically, they consider it unrealistic, as much of capital comes from previously accumulated profits. Duh. The theory says you will consume less than you could, thereby accumulating more capital to make your labor more productive. Also, they claim that capitalists are in a position to wait and labor is not, thereby betraying a power differential. While it is true that someone with a high income will likely have a lower time preference than someone living paycheck to paycheck (the same is true of poorer societies in general), this only explains that people have different levels of time preference. This, in no way, destroys the concept itself. Also, if this were true at a class level then how do you explain the ne’er do well wealthy person who dissipated their wealth? The explanation, of course, is that person has a high time preference, in spite of their wealth.

Pushed off their initial rejection of time preference, the socialist will retreat to their old standby: “The most obvious problem is that an individual's psychology is conditioned by the social situation they find themselves in. One’s "time preference" is determined by ones social position” (see Section C.2.7). This veers very close to the thoroughly discredited Marxist notion of polylogism. This is the notion that there is a different logical structure to the brain depending upon what economic class you are from. The obvious objection was posed by Ludwig von Mises when he asked how one would explain a differing logical brain structure of another class without using…human logic. Also, how does one explain “class traitors”? Why would a proletariat want to become (and many do) a capitalist? Why would an industrialist help a proletarian (like Engels did Marx)? This is par for the socialist course. When faced with choices that others freely make that they don’t like, they fall back on spurious theories as to why it was not really a free choice.

The reason this is important in the context of socialism’s impracticality is that with different time preferences there can be no stasis. Let’s say you got to a socialist nirvana with locally controlled communes. Soon different choices made based upon time preferences would arise and some would not want to be owners. Most, in fact, don’t want to take on that kind of risk. Most of us simply want to put in our time, collect our pay and be on our way. We don’t have the time preference to wait for profits and don’t want to take on the risk of losses. [Losses bring up a salient point, completely ignored by socialists: that capitalists can and do lose copious amounts of wealth. Most businesses fail within five years draining the capitalists of their capital. Yet, the wage earner is not forced to give back their wages. That is part of the deal they freely made. The empirical reality is that capital subsidizes labor by this process.] So, as change inevitably occurs, some will HORRORS! accumulate more and some will even GREATER HORRORS! become capitalists. This will trigger the response that started all of this: the socialists must strip owners of their property, via a government of course. This cycle will repeat itself, until the likely outcome of one government maintaining total control.

In the end it is the subjective valuation of people that is in command. Buyers subjectively create economic value, labor (nor capital) do not. Labor and capital subjectively choose to engage in their respective roles because that best suits their values. This makes a static society only attainable via social destruction and stagnation. The desire of people to change and to engage in actions that improve their situations makes stasis impossible in all but a deeply violent statist society. This does not scratch the surface of the socialist calculation problem, which makes any attempt at a socialist society utterly fail.

The only social arrangement that offers the hope of real material progress and the reflection of individuals freely chosen goals is an anarchist society; a real anarchist society, without the state or a state by another name. The socialist “anarchist” experiment will always break down into a governmental reality. To achieve real anarchy demands the protection of private property and the protection of the choices people freely make in that property’s use.

Therefore, the moral and the practical case come together in complete harmony. Just the way God intends for these things to work out.

Praise Be to God

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