Anarcho-Socialists and Anarcho-Capitalists — Friend or Foe?
Written by Darrell Anderson.
Exchanging ideas is a challenging process all humans face. Words and language are imprecise and because all knowledge is a result of an interpretive process, exchanging ideas requires much patience between participants.
One of the divided areas of ideas are those shared by people calling themselves anarcho-socialists and anarcho-capitalists (for brevity, hereinafter called ansocs and ancaps). Browse any literature, online discussion group, or bulletin board where the ideas of each philosophy and political theory are discussed and one likely will find some hostility between the two groups. This is unfortunate, because the primary motivator of both ideologies is the philosophy of anarchy. Despite differences in perspectives and approaches, an outsider initially would think that the two sides would and should have much in common.
The two groups do indeed have much in common, but because of the challenge of language and words, the two groups maintain polarizing definitions that keep the two camps opposed instead of helping one another. Their arguments are in many ways substantively similar, but their opposing definitions tend to create games of rhetoric and semantics. I grieve over that opposition because the common enemy are people who embrace the ideology of statism and like the marriage that goes sour, ancaps and ansocs focus on their differences instead of embracing each other to end the destructive forces of statism.
When I study both philosophies I notice the root problem for disagreement is the same as with many discussions that end in heated debate — definitions. When fundamental definitions are not explained and understood by the participants in a discussion, and all sides assume that other people know what certain words mean, then the outcome is predictable: confusion, and often anger and discontent.
I propose to briefly analyze both the ansoc and ancap philosophies. I champion neither camp. I believe both worldviews possess much to offer the world, but as long as both sides fail to address their differences in terminology, a combined effort to eradicate statism seems unlikely. Thus, statism will continue to prevail, and that is why the feud between the two camps grieves me.
My goal is to demonstrate that the two philosophies have more in common than people from either side might currently believe. I am aware of the emotions running through both sides of the fence, and in the end, perhaps I am merely volunteering to stand in the middle of a spitting contest. Nonetheless, those people in both camps who have learned to think before offering a response might be surprised to learn how much both philosophies have in common. The key will be whether individuals in both camps are willing to understand and mature past the fundamental definitions both sides tend to use. I cannot help those people who refuse to realize and admit that the true enemy is the philosophy of statism; but to those who recognize the true enemy, I hope you will stay with me as I wander through some differences and similarities.
I hope to show readers that once an individual matures past an understanding of basic definitions, that traversing through the remainder of another philosophy is not difficult. Like learning a foreign language, the key is learning how to “speak the language.” Every human language possesses nuances that are challenging to newcomers. Discussing philosophies and ideologies is no different. That is, learn the meaning of the key words of the discussion and then focus on the philosophy through those definitions. An individual does not have to agree with how initial words and concepts are defined, nor is that always important. Words are a part of language and part of the interpretive process all humans must use. What is important — if dialogues are to be fruitful — is to speak the same language when discussing ideas. Those foundational cornerstones is where I will be focusing my attention. I intend to show that after an individual gets past “accepting” how certain words are defined that the philosophies of anarcho-socialism and anarcho-capitalism are quite similar.
I plan to discuss only a few basic definitions used by both sides, and I will propose some replacement definitions and thoughts that might be palatable to both camps. However, because writing is a linear process, I cannot discuss these definitions in parallel. Thus, be patient with me as I work through the discussion in a linear manner as eventually I cover both sides of the fence.
Also, when I use the terms ansoc and ancap I am not creating a one-size-fits-all definition of the people in those camps. There are variations of opinion and theories within both camps, and I am merely using those terms generically. There are some people in each camp who are rigid theorists and will reject what I offer, while there are some who will completely understand my analysis.
Some people on the fringes of anarchist theory reject the idea that violent force and coercion never should be initiated. A minority of anarchists advocate violence to achieve goals and reforms. Basically, such people believe that if their version of anarchy is not followed, then force and coercion may be used to encourage people to comply. I’m excluding such beliefs from this general discussion and am addressing only the mainstream beliefs of most anarchists. In short, that such people embrace the concept of using violent force and coercion (outside the possible realm of self-defense and restitution) would indicate that they are not really anarchists at all, but terrorists. I have not written this paper in the hopes of converting the minority who advocate violence, but to address those who understand the true meaning of anarchy.
Lastly, there are several hyphenated forms of anarchy and I do not intend to discuss those ideas here.
Anarchy, Statism, and Government
First I want to provide a definition of anarchy. After all, both groups address themselves primarily as anarchists, and capitalists and socialists second. Many people today carelessly use the word anarchy to mean bomb-throwing, unlimited boundaries, chaos, and disorder. Serious students who embrace the philosophy of anarchism reject that definition.
A proper etymological definition of anarchy means “without rulers.” For example, monarchy is the rule of one, oligarchy is the rule of a few, hierarchy is a layered rule; thus anarchy is the rule of none. Anarchy does not mean without rules, but is merely a social system without rulers or centralized coercive control.
A minority of people define anarchy as no rules, but that most certainly would be a world of chaos and confusion. Anarchy is not utopian or idealistic but a realistic logical conclusion to the first principle of self-ownership. From that principle is derived other concepts such as rights, property, contracts, and consent. Anarchy as a social system contains a presumption of self-government. Anarchy depends upon the concepts of reciprocity, free association, and voluntary exchange. Anarchist theory is not against law and order, but against the fiat legislation of a privileged or self-appointed few. Anarchists oppose coercive, fiat, dictatorial law and social systems.
Because anarchy is a social system without rulers or centralized control, anarchy embraces localized customary law. Fundamentally, customary law is “a collection of societal rules developed outside any formal written frameworks.” There is some overlap, but customary law should not be associated totally with English common law (judge-made or judge-found law). Although also depending upon customs, traditions, and precedents, English common law was sometimes influenced by dictatorial law or people, and as the English common law system grew, many English common law judges were employees of the king. Customary law is a horizontal, bottom-up system of regulating human action and is a natural outgrowth of any social system.
The human concepts of self, property, rights, contracts, and consent provide people the foundations they seek to regulate human actions. These concepts arise because of the desire to control conflict and violence, and a desire to sustain energy flows in a peaceable manner. The innate and inherent instinct for self-preservation and survival is always at tension with the desire to promote mutual survival. Both individual and mutual survival would be difficult without some sense of order, balance, and compromise. This effort or process to peaceably regulate human action and provide for social order is referred to as government.
Like other ideas, government is a concept. Government is a process, not a thing or an entity. The word implies a collective voluntary restraint to provide an ordered community with respect to fundamental boundaries. The process of government is a societal device and nothing more, and exists in any community of people.
All individuals attempt to pursue their own definition of happiness and seek to prevent others from trespassing against that pursuit. All individuals seek both liberty of action and security. Therefore, the concept of government is a natural outgrowth of people forming societies and is a desire to protect person and resources. The process of government is a natural outgrowth of the desire for liberty and security.
The concept of government must not be confused with the coercive political process and philosophy known as statism. Many political theorists confuse themselves and others because they seldom distinguish between those two concepts. The desire for government (societal order) is a natural outgrowth of human interaction and is a natural result of wanting to protect self-interests. The political process of statism is a natural outgrowth of wanting to promote self-interests at the expense of others. The concept of government is a social process of self-regulation. The philosophy of statism is a social process of coerced privilege and monopoly. The desire for satisfying self-interests is within all humans, but how that self-interest manifests is different between the two philosophies. In the 19th century Gustave de Molinari and Pierre-Joseph Proudhon, and in the 20th century Albert Jay Nock, recognized the distinction between the process of government and the philosophy of statism, but unfortunately many modern theorists have failed to maintain this distinction.
Because anarchy is a social system without rulers or centralized control, that philosophy is diametrically opposed to the philosophy of statism. Statism is an ideology embracing centralized control, encourages top-down hierarchical authoritative law, and embraces a policy of using force and coercion and the threat of violence to satisfy needs and wants.
The German sociologist Franz Oppenheimer called voluntary exchange the economic means of satisfying needs and wants, and forced exchange as the political means. The former method implies persuasion and cooperation to obtain title to resources, the latter implies force and coercion — and often violence or the threat of violence. The former method implies moral power, the latter political power.
The French Liberals of the early nineteenth century also recognized the distinction between voluntary and involuntary exchange, articulating that difference as a class struggle between warriors (bandits) and the industrious class (producers). This struggle can be expressed in many ways: power vs. liberty, takers vs. producers, administrators vs. producers, force and coercion vs. persuasion and cooperation, idlers vs. laborers, predators vs. creators, moneyed elite vs. workers, exploiters vs. creators, status vs. contract, or rulers vs. the ruled. The political means is merely a way to sustain energy flows with minimal effort — the desire of getting something for nothing.
Anarchist theory embraces the economic means of survival, and implies a process of persuasion and cooperation to obtain lawful title to resources. Statism embraces the political means, and implies force and coercion — and often violence or the threat of violence.
Statism is a philosophy of attempting to create artificially a privileged social system, a unique subsystem of society attempting to create virtual perpetual motion through the captured labor of other people. Politically created privileges deny the concept of justice, because a handful of individuals is allowed to trespass against others under the color of law.
Color of law: acting under the pretense that a statute or custom, whether or not necessary, provides justification to bypass, evade, or ignore known or accepted boundaries.
Statism is a philosophy of creating a social system of classes, an attempt to create superior and inferior social groups based upon distinctions of rank or property titles.
What should be clear is that the philosophies of anarchy and statism are incompatible, and that the concept of government is not statism.
Somebody once declared that the only two political theories that are completely consistent are anarchism and totalitarianism. Anarchism fully embraces the concept of self-ownership, totalitarianism fully rejects that concept. Whereas the concept of government and anarchism are compatible, statism always degenerates into totalitarianism.
Economics and Politics
From within that foundation of anarchy — and understanding the distinction between anarchy and statism as well as government and statism — an outside observer initially should be unable to distinguish any major differences between ancaps and ansocs. Both philosophies oppose statism, support the principle of self-ownership, embrace persuasion and cooperation, and oppose using force and coercion against maintaining self-ownership and title to lawfully obtained resources.
Confusion arises between the two camps, however, because of the definitions each side uses. Neither side uses the same definition for certain words and phrases. The reasons why each camp often opposes the philosophy of the other makes sense, but only when carefully examining the definitions each side uses. If better definitions were used, both sides might be surprised to learn how much they agree with one another. Because of those differing definitions, there are some obvious disagreements between the two camps.
Ansocs perceive capitalism as a branch or component of statism and they make little effort to distinguish between the economic process of capitalism and the privileged and regulated environment of statism. Gustave de Molinari recognized this shortcoming in the mid 19th century. Not distinguishing between economic and political processes is unfortunate, but hardly insurmountable.
People act out of self-interest. Self-interest is a natural part of human existence. All humans seek to improve their well-being. Some individuals might argue that humans also act out of charity or hatred. However, charity arguably is an act of self-interest — a desire in providing self-satisfaction and good feelings toward creating a better world to live in. Hatred too could be considered an act of self-interest — an act to improve the world (according to a particular worldview) by controlling or eliminating certain people.
All people satisfy material self-interests primarily by exchanging wealth for wealth. What is wealth?
Wealth: anything tangible derived from labor that satisfies individual happiness.
Wealth is a finite, positive physical quantity, always existing in the real world. Wealth can be exchanged between people. Wealth is not defined by perceived exchange value — wealth is related to the physical world, exchange value is related to subjective human desires. Value is subjective and imaginary, wealth is objective and real.
Debt arises when one individual does not immediately receive wealth in an exchange for wealth.
Debt: an unfinished exchange of wealth.
An unfinished exchange of wealth creates an absence of wealth. Therefore, debt is a negative quantity, always existing in the imaginary world. Debt has no physical existence. Through the concept of debt Hindus originated the concept of negative numbers. Debt, as a concept, cannot be physically exchanged between people (although the things representing that debt can be exchanged). To claim a debt owed is to claim wealth not yet received.
Debt occurs frequently and as a natural result of the typical exchange process between people because only some wealth-for-wealth exchanges are completed instantaneously (strictly speaking, because all humans are constrained by the time domain, no exchange can occur instantaneously). Some debts are commonly called expenses and are extinguished within a short period after receiving wealth. Some debts are extinguished in a matter of seconds or minutes, some debts are long-term and require several years to extinguish. Rarely are wealth-for-wealth exchanges consummated instantaneously. Typically there is a time delay in all exchanges of wealth.
Wealth is always subject to the natural laws described by physics. Debt is always subject to the abstract principles of mathematics. Wealth, existing in the unconditional physical realm, is always subject to decay, as described by the Second Law of Thermodynamics. Debt, existing in the conditional metaphysical realm of ideas, is never subject to decay. Wealth can be consumed. Debt can live perpetually, can be extinguished, but never consumed.
Therefore, wealth is a function of the real, physical world. Debt is a function of social systems. Wealth can exist without people interacting with one another, but not debt.
Wealth is a form of usable stored energy. Energy is the capacity to perform work and work is the process of applying physical force to move objects. Therefore, consuming wealth is a process of consuming energy. All wealth is intended to be consumed in one manner or another. Some consumption is immediate — such as eating food, while other consumption occurs more slowly — such as using an automobile or a house. The former is called perishable goods and the latter durable. The former also can be called consumable wealth and the latter permanent wealth. All wealth is subject to decay. Therefore, the word permanent is used only with respect to typical human life spans.
Wealth can be consumed directly, can be exchanged for other forms of wealth, or can be devoted to producing more wealth. That last form of wealth is called capital. Capital is a concept and does not exist until wealth exists, and does not exist unless that wealth is actually used to produce additional wealth. Intent is a controlling element. A human made resource is not capital if intended for uses other than further producing wealth.
Because capital is a form of wealth, capitalism is a process describing how capital is devoted and used to create additional wealth when some of that wealth is returned to help continue production. Adding the suffix ism to a word implies an act, practice, result, or condition of the root word. The root word defines the ism. Capitalism is merely a process of converting and maintaining energy flows — material progress. Indeed, without some reinvestment of previously produced wealth, human material progress stops and people would be forced to live primitively in a hunter-gatherer or herder condition. One does not mine coal to heat a home without a pick axe, shovel, and wheelbarrow. Land and labor are limited in usefulness without capital.
This physical process of using capital — tools, equipment, and other resources — to improve material progress provides no clues about various social or political processes. As just defined the word capitalism does not imply any social or political process of exploitation or privilege. Unfortunately, many people today use the word capitalism more as a political expression and within that context garners much discontent because the processes of statism are used to coercively create avenues of monopoly and political privilege.
Ancaps generally distinguish between the economic process of capitalism and the political processes of statism, but often fail to recognize the injustices created when statism protects capitalism. Many ancaps fail to realize or appreciate that without the supporting structures of statism the nature of capitalism would change. At the core of ansoc theory is recognizing these many social injustices — manifested through the machinations and protections of statist monopoly, privilege, and regulation. Much of the original socialist and anarchist theories were derived because of many social injustices and inequities.
Ansocs define certain terms from within a perspective of the social injustices they see and often fail to distinguish those terms from the political elements of statism that cause or promote the injustices. Thus, to the unfortunate confusion of ancaps, words such as private property and wage labor take on new meaning within anarcho-socialism. This is not an insurmountable problem but only if ancaps are willing to understand how these words are used within the ansoc context, and just as importantly, why these terms are used differently.
Ancaps perceive socialism against the backdrop of modern political communism — essentially through what history witnessed with Soviet Russia, communist China, and various satellite nations. Thus, ancaps see socialism primarily as a coercive political process, whereas ansocs today still define socialism as the word was understood by the original anarchists of the 19th century. That original definition did not promote the coercive forces witnessed by 20th century political socialism and communism. Many scholars have argued that Karl Marx would spin in his grave had he witnessed how his theories had been manipulated by certain people.
At the heart of ansoc theory is the concept of exploitation. Exploitation in a pure sense merely means using something, but in a socio-political sense is the willingness to circumvent knowable boundaries, and if necessary use force and coercion and the threat of violence to satisfy the needs and wants of a privileged few. As previously discussed, that process is called the political means of satisfying needs and wants. The process of exploitation coercively controls resources and denies individuals an opportunity to be self-owning and self-determining. All acts of privilege and fiat regulation are acts of human exploitation, and therefore, are acts of force and coercion. All such acts ignore the principles of self-ownership, free association, and voluntary exchange.
At the heart of ancap theory is the concept of free association, voluntary exchange, and true free markets. Because statism is a system of status, privilege, and fiat legislation, statism prohibits such relationships or at a minimum, fiercely regulates those relationships. However, ancaps might be surprised to learn that much of modern “capitalism” rests upon exploitation too. Any political system of privilege that denies free association, voluntary exchange, and true free markets is essentially a philosophy denying the concept of self-ownership.
Both sides arrive at their definition of anarchy from different starting points. Ansocs first focus on social injustices caused by political systems creating privilege and regulation, and thereby conclude that all political systems must be abolished. Ancaps first focus on economic theory to logically arrive at full and free association and voluntary exchange, and thereby conclude that all political systems must be abolished. Both approaches have merit and arrive at the final logical conclusion of anarchy.
However, both sides also often suffer from being unable to look backwards from their conclusions. Ansocs sometimes cannot see that market processes are not the same as political processes, and incorrectly blame market processes as the cause of the social injustices they see. Ancaps sometimes cannot see that political forces tend to protect certain aspects of economic processes and therefore tend not to see the social injustices caused by political processes.
Gustave de Molinari was one of the first economists to arrive at the logical conclusion of anarchy by analyzing economics through the focus of free association and voluntary exchange. Pierre-Joseph Proudhon was one of the early political theorists to arrive at the logical conclusion of anarchy by evaluating the various social injustices caused by political systems. Both theories are based upon the same concept of self-ownership.
However, even back at these early stages of anarchist political theory, fundamental differences already existed. The so-called political economists of Molinari’s influence (for example, Bastiat, Dunoyer, etc.) rejected some of the conclusions derived by Proudhon and his successors (for example, Bakunin, Kropotkin, etc.), and vice-versa. For example, Proudhon argued against national currencies and the concept of compound interest, citing both processes as forms of monopoly and privilege. The political economists disagreed and despite the obvious anarchist conclusions of Molinari, he refused to use the term anarchy because of his concern of being associated with the early ansocs.
Because of these different approaches both sides tend to define words and terms differently from one another. Although the two philosophies are not entirely compatible, there nonetheless is much more in common than both sides typically would believe.
Both sides should not focus on how certain words are necessarily used, but on where the other camp is noticing exploitation, privilege, and the denial of self-ownership. Those processes always begin from within the philosophy of statism. All anarchists oppose using force and coercion that deny self-ownership. Thus, despite the distinction between certain words, each side should be in agreement with the other if any resource or asset is used in a manner that denies the principle of self-ownership.
To ancaps, socialism is a social system of exploitation. As seen by ancaps, through socialism individuals are forced with the options of “working for the commune,” stealing, or starving. Because of the way ansocs define their terms, ansocs do not understand why ancaps proclaim these three options.
To ansocs, capitalism is a social system of exploitation. As seen by ansocs, through capitalism individuals are forced with the options of “working for the corporation,” stealing, or starving. Because of the way ancaps define their terms, ancaps do not understand why ansocs proclaim these three options.
Sadly, there is no reason for such a division. As just seen, carefully defining words and the system eliminates any disagreement.
Deriving Property Titles
According to ansoc theory, capitalism is made possible through the concepts of private property, wage labor, taxes, and landlordism. To the ansoc these problems arise through coercive political control of land and capital, and in more modern times, through the additional privileged and regulated environment of incorporation.
A major distinction for ansocs is that private property, sometimes just called property, is different from possessions. To the ancap, the terms private and property are redundant; to the ansoc, the terms are contradictory.
This distinction was made popular by Pierre-Joseph Proudhon, in his treatise What is Property? An Inquiry into the Principle of Right and of Government (1840), when he declared that “property is robbery.”
By definition, the concept of property necessarily includes a right to exclude. To ansocs, the term private property often refers to private title in land, but not all ansocs restrict the idea to land. As a starting point, many ansocs minimally would define private property to include any possession that can be used to exploit other people. In that minimal definition ansocs are trying to distinguish and emphasize how title is derived. The focus should not be the term private property, but the concept ansocs are trying to convey with the term.
Within a narrow context, private property is legal title created by political privilege and allows for exploitation. The problem is not the inherent exclusivity derived from property titles, but that title is created by political privilege. With land, in the United States this problem has existed from the beginning of the nation-state because Congressional legislators by fiat have always claimed first and superior title to all untitled land in the federation. Thereafter, legislators always created the first private title to land, primarily through land grants, land patents, and land warrants. In Europe, land titles were strictly controlled by the landed nobility since the time of William the Conqueror. When feudalism gave way to modern industrialism, possession of land titles never changed, nor did the philosophy of how those titles were derived. This created an environment where only landed title holders could create or provide capital, or qualify for bank loans to create new businesses.
Because ansocs seldom distinguish between the economic process of capitalism and the coercive political process of statism, they see private property as a tool of those coercive processes. When property titles are created and protected by legislative fiat, privilege, and regulation, the concept of property is distorted into a means of exploitation. When titles are created by free association, voluntary exchange, contracts, and usufruct — and protected by local community social structures — then property is merely a possession. Usufruct is a concept of possessing rights to use and enjoy certain resources without necessarily possessing title to those resources. The key challenge is not who possesses title, but how that title was obtained. If title is created and subsequently protected by privilege, then exploitation exists.
As popularized by Proudhon, the concept of property title must be based upon a theory of justice, not political privilege. That concept of justice rests upon the idea of having equal access to support one’s life by obtaining and possessing resources. Herbert Spencer independently promoted that same idea in his 1850 version of Social Statics.
Justice is a recognition of a concept of rights, a recognition of boundaries to specific actions and claims. Justice is a recognition of a right to self-defense, a right to seek remedy for trespass. Justice is a process of recognizing a violation of those boundaries and rights.
Proudhon’s famous declaration that “property is robbery” must be recognized from within the context the statement was made. Proudhon actually declared that “Property is an institution of justice; and property is robbery.” Proudhon was showing the inherent dichotomy and contradiction in how the word could be used, he was not declaring that all forms of property should be abolished. Proudhon embraced the concept of small-scale ownership in land, that artisans, shopkeepers, and small-scale farmers should be able to own and control the tools, dwellings, and local land necessary to support his or her trade and family. Proudhon also supported the idea of large tracts of land being titled, as long as that land was being used directly to produce something. Thus, despite his well-known statement that property is robbery, Proudhon could not have been advocating a policy of abolishing the concept of property.
Proudhon was declaring that the concept of property is vitally necessary to maintain societal order, but property also possesses attributes that are easily distorted and perverted. By definition, the concept of property includes the attribute of exclusion. When titles are created by political privilege, the common right to survival is nullified. Thus, property titles created by fiat legal systems of privilege are a violation of the principle of justice. The right to exclude is not created through natural processes. Property titles created through such a system creates an inequitable system and provides no justice. Property titles created by political privilege is an indirect way to create property titles in human flesh. Thus, (the concept of) property becomes theft because self-ownership is denied. This distinction is important.
The objection to private property, especially with respect to political privilege, goes back to the early 18th century French philosophers. During that period much of Europe was transitioning from feudalism to the Industrial Age. Yet, in that transition, the political elite did not surrender their political titles of privilege to land. The rise of philosophical socialism primarily was a response to modern industrialization. Thus, the common laborer often had no place to go and no place to work other than “for the man.”
Property vs. Possessions
To ancaps, the word property means the same thing that the word possession means to ansocs. This becomes clear when using typical sources for studying definitions.
What is property? Black’s Law Dictionary, sixth edition reveals:
Property: That which is peculiar or proper to any individual.
From Noah Webster’s 1828 American Dictionary of the English Language:
Property: The exclusive right of possessing, enjoying and disposing of a thing; ownership.
Notice that neither definition addresses the concept of exploitation or how title is derived. Thus, to the ancap, the words property and possession are identical. To the ansoc the words are different.
If the discussion ended here, despite the distinction between the words property and possession, an outside observer still would be unable to differentiate between ancaps and ansocs.
Why the distinction between the words private property and possessions? The distinction is unfortunate, but on the other hand, there is no singular word that embraces the idea that people can use privileged property titles to exploit other people. Although some ansocs would argue otherwise, the traditional meaning of the word property is the same as the traditional meaning of the word possession, and trying to distinguish the concept of exploitation by circumventing those traditional definitions does indeed create confusion. However, focusing on the reason for the distinction helps people understand the distinction between the words private property and possessions.
The difference between these two terms is in how title is created and protected.
What is important for ancaps to understand is when they say property or private property ansocs hear privilege and exploitation, and when ancaps say possessions, ansocs hear “things I own and created with my labor, things I did not receive through political privilege, things I use that do not exploit others.”
No anti-statist denies that human exploitation is imaginary. Privilege and coercive regulation does indeed exist. Thus, the primary focus should not be on the definitions of the two words, but in the source of where exploitation and privilege derives. Despite the difference between the words, ancaps should agree with ansocs on the source for the distinction. Both should agree that the source of exploitation and privilege occurs from within the philosophy of statism, not in the process of possessing title to resources.
For approximately the past 100 years, much of the economic processes of capitalism has been exercised through political privilege and the concept of incorporation, where much privilege and regulation is created and protected through the philosophy of statism. Thus, ansocs see capitalism as part of the problem, not the solution.
Only through the coercive political processes of statism is exploitation and privilege possible. Ansocs correctly recognize the monopoly and privilege problems of controlling credit and currency, land title distribution, and “intellectual” property (patents and copyrights). Through those monopolies and avenues of privilege, a minority of people easily control the means of production (land, labor, and capital). When ancaps use the word property within the context of statist political processes, ansocs rightly and correctly hear exploitation.
Ancaps often recognize these forced and coerced monopolies and privileges. Indeed, most libertarians recognize that monopolies are, by definition, possible only through force and coercion. In an environment of true free association and voluntary exchange, monopolies are impossible. In such an environment, the sole general store in a small community might be a solitary provider, but is not a monopoly because consumers can vote with their feet and competitors are free to enter that market.
Unfortunately, ancaps tend to eagerly protect the concept of incorporation and “big business.” Thus, they tend to alienate ansocs. What many ancaps often fail to understand or appreciate is that the concept of incorporation is a political process, a process of creating an artificial entity, of using a legal fiction. Legal fictions are a difficult concept to maintain outside of the political arena. Legal fictions are contrived presumptions in order to operate under the color of law. Legal fictions exist for two primary reasons:
Although embraced within the jargon of the legal community, the idea of a “legal fiction” is an oxymoron. A fiction is something that does not exist. Something either exists or does not.
Through the concept of legal fictions, several rules or principles of law are being masked. One principle is there is no true complainant or defendant involved in any legal action. Another masked principle is that often no actual trespass occurs. There is only the illusion that trespass might occur if certain actions are not coercively regulated and there are only humans acting behind a veil of political privilege. Another masked principle is pretending that this process does not create artificial scarcities. The primary purpose of political “licensing” is to promote artificial scarcity and to protect political privileges. Political “licensing” denies the concept of self, is a form of conscription, denies explicit consent, and therefore, denies free association and voluntary exchange.
What both ansocs and ancaps should realize at this point is the enemy is still statism, political privilege, and regulation. Yes, different words are used, but the focus is still the same for both camps.
Wage Labor and Surplus Value
Closely associated with the concept of exploitation is the concept of wage labor. This claim often is muddy to ancaps. Ancaps correctly argue that the word wages is merely the word used to describe the price of labor. Ancaps argue that laborers are free to vote with their feet and can work elsewhere if they do not like the conditions of their current job. Although laborers indeed can vote with their feet, as seen by ansocs the problem is that they simply trade one form of enslavement for another. That is, no matter where they go they always are forced to “work for the corporation” — the particular corporation is all that changes. They exchange the devil they know for the devil they don’t know.
Ansocs are not arguing against free association, voluntary exchange, and contracts. If laborers truly could control some of the earth’s resources such that they could negotiate true contracts of goods and services, then laborers would be truly voting with their feet. Unfortunately, most resources are controlled by the statist-privileged corporations.
The current statist political climate prevents truly voting with your feet because of the way politicians and bureaucrats control land title distribution and the way specialized legislation is enacted to enrich and provide privileges to those who hide behind the veil of limited liability through incorporation.
Modern incorporation is possible only through the mechanisms of statism. Corporations are fictional entities — “creatures of the state,” and therefore are viewed by ansocs as part of the overall statist problem. Through legal twistifications, corporations have been declared “persons” recognized at law and therefore “possess” rights recognized at law. Thus, ansocs do not see any true options to vote with their feet, but are forced instead to “work for the corporation.” Ansocs perceive capitalism manifested through the machinations of incorporation. Indeed, in today’s market, distinguishing between the two often is impossible.
Ancaps tend to antagonize this problem because often they see incorporation as merely an economic process that tends to improve efficiencies of production and distribution and therefore benefits consumers. Ancaps are partially correct in their economic analysis, but many ancaps fail to distinguish the trauma caused by statist interference in those processes.
Economic and social systems are incredibly complex and merely “eliminating” the mechanisms of statism will not create simplified anarchist social systems. By removing one of the key elements of the current economic system — statism, the entire system is changed. New boundaries appear, as well as new elements and system relational rules. In an anarchist society, people might still incorporate businesses; but without the power and mechanisms of statism, the nature of incorporation changes dramatically. With anarchy, no longer would people be able to hide behind the artificial and false veil of limited liability. In an anarchist society all law likely would be tort-centered, meaning individuals would sue individuals. Individuals would not sue corporations, nor could they in an anarchist society because only individuals can harm other individuals. Furthermore, without the machinations of statism, corporate board members could not seek privileges and specialized legislation to create artificial scarcity and monopolies. There simply is no mechanism in which to create such privileges. In a true anarchist society, existing corporations probably would be employee-owned operations, (sometimes called syndicalism). In anarchy some proprietorships might sell stock to raise revenues to build or expand a business, but without the false veil of limited liability, such stock would be profit-sharing only — as a reward for the risk of providing investment funds, with all legal liabilities remaining with the proprietor.
Ansocs deplore that “mom-and-pop” businesses and family farms suffer from the statist protections and regulations of global incorporation. “Mom-and-pop” businesses arguably are the backbone of the entrepreneurial process and local communities, and such enterprises provide and promote an atmosphere of liberty and self-ownership. When the international corporate executives of the world use political processes such as eminent domain to obtain title to land, and then through specialized legislation receive privileged subsidy breaks to reduce production and distribution costs, then the “mom-and-pops” no longer can compete. The root problem is not that the modern corporation process can produce more efficiently, but rather that some people produce more efficiently but only through the politicized privileged mechanisms of statism. The game is rigged. The end result is the mom and pops must go to work for the corporation to put beans on the table. Mom and pops are faced with the options of “working for the corporation,” stealing, or starving. When ancaps “blindly” defend the economic process of incorporation without distinguishing the harm caused by statist interference, ansocs simply see ancaps as part of the problem and not the solution.
This is a critical point ansocs are trying to emphasize when they argue against the concept of wage labor. They are not arguing against contracting between individuals — the act of exchanging goods and services for goods and services; they are arguing against the artificial exchange environment created by statism and incorporation. Without the mechanisms of statism and statist-supported incorporation, laborers would then be negotiating true contracts of exchange, not just employment “contracts” for “slave wages.”
Ansocs do not believe in selling their labor as much as they believe in selling the products of their labor. Many ancaps cringe at that distinction, but at least one modern libertarian thinker, N. Stephan Kinsella, argues similarly. Kinsella argues against labor being something people possess or own, but that labor is merely something people do. If one pauses for a moment to realize that labor is merely the word used to describe the human process of converting energy into work, then the idea makes sense. Kinsella argues that the concept of property title is based upon possession (occupancy), not upon a Lockean “mixing of labor with resources.” Mixing labor with resources only provides openly knowable evidence of somebody already possessing and occupying resources. Thus, with respect to labor and the products of labor, Kinsella’s perspective tends to affirm the ansocs’ claim.
Ansocs believe that the products of labor belong to the individual, and generally believe that all natural resources are held in common by all humans. Although that idea is generally rejected by many ancaps, the idea is based upon the Lockean Proviso. This belief is not only held by ansocs, but by Geoists (Georgists).
Through this false and artificially created atmosphere of employment “contracts,” ansocs are able to maintain their theories about surplus values. With the help of technology and capital equipment, people obtain an ability to overproduce beyond immediate need. This overproduction is called surplus value, and when land and thereafter capital is controlled by political monopoly then socialists believe they no longer are receiving full value for the products of their labor. When using the term idlers, early socialist theorists were referring not to people who were unemployed but to the landed titleholders. Those early theorists observed that landed titleholders received their land titles through political privilege and seldom produced anything other than supplying land and capital. They provided no direct labor. But the landed titleholders were able to do so only because of their privileged political status. Thus, this observation gave rise to concepts such as surplus value and unearned income.
In the statist-controlled environment, ansocs do not see the laborer as possessing a truly free opportunity to negotiate as a self-owned individual and thus, they believe they do not receive a fair exchange in their contracts. Nor can they because of the political interference. To the ansoc, the game is rigged through political privilege and monopoly. If both the factory owner and the laborer were truly negotiating in an environment without statist interference — an environment of true free association and voluntary exchange — then the argument of surplus value vanishes because each party is then negotiating honestly and freely — goods and services are exchanged directly for goods and services. In such an environment the concept of surplus value cannot exist.
Ansocs see the social injustices caused by modern incorporation and land title distribution, but often fail to distinguish that the injustices are caused by statist interference, not the economic processes. Conversely, ancaps see the benefits of improved production and distribution processes, but often fail to recognize that much of that improvement is provided by statist privilege and regulation.
If both sides would step back and ponder for a moment, they would realize that they support exactly the same arguments proposed by the other side. Both sides reject statism, reject artificial scarcity, and reject monopoly and privilege. Both sides support free association, voluntary exchange, and the right to contract.
When both sides study the statist system through the focus of the other side, both would see exactly the same statist problems they see when viewed through the focus of their own philosophy.
Thus, at this point, an outside observer still sees no difference between anarcho-capitalism and anarcho-socialism.
Coerced Communal Sharing
Generally, socialists reject a system of private property and their reasons are embedded in the belief that private property (property created by political privilege) allows for monopoly and exploitation. Yet, exploitation is possible not because of the concept of title ownership, but because of the way in which statism artificially creates and protects property. Thus, ansocs desire abolishing all property titles created and protected by statism.
Without a system of individual ownership, many ansocs are left with a social system based upon community-owned property and personal possessions. Recall that ansocs distinguish between property and possessions. A house and plot of land is not property if not being used to exploit others and was obtained through free association and voluntary exchange. That would be called a possession. If the land and buildings are used to coercively exploit people or received through privilege (which is possible through a coercive political system), then the possession is defined as private property.
Ancaps shudder at the idea of forced communal property. If the concept of self-ownership is to mean anything then no individual can be coerced into communal living. Although some ansocs promote the concept of forced communal ownership to all land titles, many do not actually require all people to live in such an environment. Proudhon certainly did not. Ansocs still believe in free association, voluntary exchange, and contracts. Generally, ansocs are not against owning title to a building and a plot of land, they are against any political mechanism that allows that title holder to create an environment of exploitation — privilege and monopoly. Unfortunately, many ansocs fail to distinguish this point. By distinguishing between private property and possessions, instead of focusing on the root problem of statism, ansocs have created an environment of confusion.
Ansocs should realize that any time an ancap hears the word socialism, the ancap thinks forced communal living. If the word forced is being used, then self-ownership is denied. Ansocs should better distinguish that communal ownership of some land titles would be just another part of the voluntary exchange process and free association. In a global anarchist world, some communities likely will be based upon communal ownership of some property, some communities will not. Ansocs should provide better explanations that by eliminating the avenues of privilege and exploitation provided through political processes, and by eliminating the coercive environments made possible by modern incorporation, that social systems likely will develop locally and communally. Ancaps should realize that this is what ansocs mean by socialism.
Some ansocs do indeed believe that all land and associated primary structures must be owned communally in order to prevent monopolies and privileges on the means of production. That is a noble intent. However, in a social system truly honoring free association, voluntary exchange, and contract, no such communal ownership system can be coerced. Although an individual might own a pencil factory, no other individual is forced or coerced into working for or trading with that individual. The pencil factory owner must engage in true contractual relationships. In fact, the factory owner has no other option because without the mechanisms of statism, no status, rank, or privilege can be granted to that factory owner. Although some ansocs promote the idea of forced communal ownership of property, such title possession is unnecessary. The true enemy is the political mechanisms of statism, not actual title possession.
Ansocs are concerned with who controls the means of production. Ancaps correctly cannot envision a world where somebody does not own the means of production. Somebody has to possess and own title to various resources or else the entire concept of free association and voluntary exchange become meaningless. In fact, without individually possessing some sort of title in the means of production, the concept of self-ownership becomes impossible. Ansocs agree, but ansocs often fail to distinguish that they reject statist manipulations of controlling the means of production.
Ansocs tend to grow impatient with ancaps because the latter tends not to acknowledge that the current system of land title distribution would disappear because all land titles today are controlled and distributed through the statist political machinery. The form through which land titles would be recognized outside the current statist system is impossible to know. Land titles might be recognized only through local communities, or perhaps through land clubs. Some land titles might be recognized solely by usage, some titles might allow absentee ownership through a fee system. All land title systems would need an approved process of publicly recognizing abandonment. Ancaps cannot defend land titles unless they qualify that land title distribution would be different without the statist system of privilege and protection.
The point to all of this is that ansocs and ancaps often are describing the same despicable and hated philosophy of statism, but because of their choice of words and definitions, they end up arguing with one another endlessly. There is no need for this confusion. The enemy is statism.
One of the areas of confusion to both ansocs and ancaps is the concept of private property. Recall that ansocs define private property as any possession that is converted into an avenue of exploitation and privilege. Ansocs define private property as any property title created through interventionist privilege and fiat legislation. Often this process is seen through land titles. Ansocs correctly see a problem of exploitation and desire to remedy that problem. Their remedy is to abolish the concept of private property.
Ancaps recoil against the concept of communal ownership of land and major capital structures. Land is the primary source of all natural resources, natural resources that are necessary to mere survival as well as to be used to improve living conditions and overall material wealth. Ancaps defend the individual right to possess title in land — regardless of usage or occupancy. Ansocs defend a limited right in land title ownership based primarily on usage and occupancy.
When ancaps defend individual ownership of land titles using the words private property, ansocs hear privilege and exploitation. Why? First, because they define private property as title created by privilege. Second, because there no longer is any freely available land to homestead and create new titles, ansocs correctly see a land title shortage. When ancaps defend the concept of individual possession of land titles, and that individual possession is allowable through fictitious entities known as corporations, then ansocs assume that ancaps are defending the current statist land title distribution system.
Ansocs incorrectly attack ancaps for believing in individual land title ownership. Instead, ansocs should be attacking the statist system for controlling and distributing land titles and the problem of incorporation. Ancaps add fuel to the fire by not listening to why ansocs oppose private property (titles created by privilege) and by blindly defending land titles without qualifying when such title possessions are acceptable.
Neither side truly listens to the other and both fail to recognize the true root cause for so much discontent over land title distribution. The problem is not a land shortage as many ansocs believe, nor is the problem individual possession of titles. The problem is not a scarcity in land but an artificial scarcity in land titles created by political privilege and regulation. Simple spreadsheet calculations reveal that plenty of arable land is available to adequately provide all humans with ample leg room. The true problem is the statist system has created an artificial shortage.
The statist political system has created that shortage through several avenues:
Thus, ansocs should not be advocating the abolition of private property, but abolition of the statist land title distribution system that prevents people from homesteading and creating their own individual and communal usufruct in that land.
Conversely, ancaps must recognize these social inequities before they jump on the bandwagon defending excessive land titles. They must qualify and distinguish when such titles are acceptable. The current system is unacceptable and that is why ansocs are against the concept of private property (title created by privilege).
Once these distinctions are recognized by both camps, both should realize that they seek the same outcome. Again, once recognizing these distinctions the outside observer see no difference between ancaps and ansocs.
The Problem of Compound Interest
Another area of much confusion is the concept of charging fees for using currency. Both sides suffer from a lack of understanding of the concept of money.
Ansocs promote the idea of an interest-free circulating currency. Pierre-Joseph Proudhon is acknowledged with originating the idea of what is today the loose basis for the modern credit union. Proudhon thought that at most a community banking system should charge simple administrative fees for introducing new currency into circulation — and nothing more. The American anarchist Benjamin Tucker supported Proudhon’s idea. The American anarchist Lysander Spooner offered ideas for circulating an interest-free currency and early 19th century social reformer Josiah Warren also promoted an idea of a fee-less exchange system.
Ancaps recoil when they hear that the property (possession) of currency should be lent without profit. They argue that interest is merely the rental cost of currency, and based upon the concepts of free association, voluntary exchange, and contracts, such fees are acceptable. Ansocs recoil at such arguments. Ansocs see usury as another avenue of exploitation.
Once again the true problem is neither side carefully defining their terms. Ancaps are correct when they argue that currency possesses rental value. Ansocs are correct that usury is wrong. Both sides are correct and both sides are wrong. The primary problem is incorrectly believing that wealth and currency are the same and failing to distinguish between the concept of interest and the concept of compound interest.
Money is a psychological concept representing a system of measurement. Like all units of measurement, nobody can touch or see a number, an hour, an inch, a kilogram, or money. Frederick Soddy said that, “Money is the Nothing you get for Something before you can get Anything.” The concept of money does not exist except between our ears. Yet, humans create ways to physically represent concepts, such as an abacus, a clock, a ruler, a scale, and currency. These representations are token representations, and not actually the concept.
Many people incorrectly use the words wealth, money, and currency interchangeably. Distinguishing the terms is important.
Money: anything that is used as a medium of exchange.
Currency: the physical thing that circulates commonly as a medium of exchange to represent the concept of money.
In an exchange of wealth where a general currency is used, one party receives wealth and the other party usually receives currency. Regardless of form or substance, currency serves only as a token reminder of an unfinished exchange of wealth. Currency is a token symbol physically representing wealth not yet received. Thus, all currencies are token symbols of debt, not wealth. All currencies are physical representations of debt.
Part of the flaw with modern monetary systems is an incorrect belief that currency is wealth. The concept of money is a psychological creation. The things used to represent that concept — currency — are token claims on future wealth.
All currencies — regardless of form or substance — are IOUs. Common circulating currencies differ from private IOUs in two ways:
General currencies do not specify participating parties. Private IOUs are limited to assigned parties or the bearer and issuer, general currencies circulate throughout an entire community of people without a specific bearer or issuer. Unlike private IOUs where a claim is made against a specific individual, a general currency is used as a claim on the general wealth of the community of people using the currency.
A general circulating currency is a mutually shared utility of any community of people. Currency is grease to help exchange wealth. The main difference between currency and a simple IOU is the IOU is evidence of an unfinished exchange between specific individuals, whereas currency represents an unfinished exchange between the holder and the participating members of a society.
The amount of currency circulating in a community is directly related to the division of labor. As the division of labor rises, so does the need for a circulating currency. In a small self-sufficient community, direct trading of wealth for wealth satisfies all exchanges and currency is unnecessary. In a large global economy currency becomes much more important because a high division of labor means people are not self-sufficient and depend upon indirectly exchanging wealth to satisfy needs and wants.
Excluding charity and theft, all people exchange wealth for wealth or exchange wealth for temporary debt. Everybody expects to ultimately exchange wealth for wealth, not currency. Currency is merely a temporary medium through which people exchange wealth. Currency merely helps everybody track their exchanges.
Notice in this explanation that exchanges of wealth are defined in terms of wealth, not a circulating currency. All such exchanges are tied directly to the real world of production. With that foundation the distinction between interest and compound interest now becomes possible.
Some people have argued that interest is compensation for risk or that an owner of capital (capital, not currency) is rewarded with interest for having abstained from using that capital. However, interest arises as compensation for the lack of increase that capital usually provides. Capital is wealth devoted to further producing wealth. Thus, not having access to capital necessarily implies not producing at the same capacity possible when using that capital in production. Therefore, interest is compensation for lost time — the difference between not using that capital and the increase one could have had. In addition to compensating for decay and wear-and-tear, interest is compensation for the lack of increase one normally expects to receive by using that capital in production.
When people lease the capital of other people, such as through the owner of the local rental shop, people pay straightforward fees for that opportunity. However, people today do not pay a straightforward rental fee for using another individual’s currency, but pay interest. If the rental cost of currency was a straightforward rental fee, then the name “interest” would be insignificant. However, the rental cost of currency is not a straightforward fee, but is compounded.
Albert Einstein allegedly said that the greatest invention in the universe is compound interest. Perhaps the famous scientist should know because compound interest is another way humans try to evade the natural laws described by physics to create virtual perpetual motion.
The concept of compound interest perverts the fundamental purpose of currency — to serve as a token placeholder for an unfinished exchange of wealth. Compound interest is not an attempt to derive compensation for the temporary loss of capital, decay, and wear-and-tear, but attempts to create wealth without any personal productive labor being expended — defying the order of the natural universe. Compound interest creates debt upon existing debt, without creating a corresponding increase or production of wealth. Compound interest is an effort to perpetually capture the labor of other people.
Compound interest: the interest paid on both the unpaid principal and accumulated unpaid interest.
Such an eloquent sounding definition is an illusion of jargon to distract people from the sole purpose of a circulating currency. Such a definition sounds impressive, but is mere sleight-of-hand. Compare the definition of compound interest to the definition of interest:
Interest: the return received from leasing capital.
Individuals pay interest only because they do not possess the means or desire to produce the necessary capital. The lender believes the price the borrower is willing to pay exceeds the productive return the lender might have received by personally putting that capital to use. Thus, interest is a normal and natural occurrence of human interaction.
Currency and capital are not the same thing. Capital is previously produced wealth used to further create additional wealth. Currency is a token symbol representing debt. Currency only represents potential or future capital — virtual wealth. People do not borrow for the sake of accumulating currency, they borrow only as means to obtain the wealth represented by that currency. Currency is merely an agent through which people transfer or create capital. Therefore, interest and compound interest are not the same thing. Thus, an important question is what should the fee paid for leasing currency be called? Interest? Usury? Monetization fee?
Once people recognize the important distinction between capital and currency, they should realize that the debt created by lending currency should be linearly proportional to the resulting production. Compound interest is calculated exponentially. That one characteristic dramatically transforms and distorts the aggregate flow of wealth. Like direct currency inflation through the printing press, compound interest inflates the currency and distorts the linear process of production and consumption.
The generic equation used to calculate both principal and interest is represented by:
Bn = Loan Balance after n payments have been made
This exponential distortion is especially important when capitalizing any wealth production through the modern banking and monetary system. In a direct wealth-for-wealth exchange system (barter and trade), currency enters circulation only when there is an unfinished exchange of wealth. In such a system currency is an IOU representing an unfinished exchange of wealth. In the modern age, currency does not necessarily first enter circulation through exchanges of wealth, but often is introduced into circulation through the political privilege provided to bankers. In a wealth-for-wealth exchange system, the elements of production are land, labor, capital, knowledge, and skills. In the modern price exchange system, an additional element is introduced — the financier or banker.
Not only does the concept of compound interest distort the natural process of human exchange, compound interest is mathematically unstable. Ask any engineer or scientist what happens when exponents are introduced into equations. Rather than smooth linear outputs, such systems display curved and ramping outputs. Such outputs start with little change and initially can appear linear, but in the final phase ramp dramatically upward. The previous examples display that instability. In other words, there simply is not enough aggregate wealth to pay such an aggregate debt. Wealth exchanges are fundamentally linear processes. Compound interest, being exponential, is non-linear.
Human production and consumption are linear processes, regardless of how efficient those processes might become. The exponential nature of compound interest leads to the legal fiction of creating wealth out of ever-expanding debt. At first glance one might think that a linear process never could maintain pace with an exponential process. However, humans employ tools and technology to produce. With sufficient time many individuals can overproduce to balance the effects of compound interest. That overproduction, much of which goes to a political elite, is an efficient process but nonetheless is linear because humans can act only sequentially. No individual can perform more than one act at any one time. Combined with the element of time, humans can act only in a sequential, linear manner.
All wealth exchange systems are debt-based systems. The moment there is an unfinished exchange of wealth a debt is created. Even if humans were to choose a pure wealth-for-wealth trading system using no general circulating currency, any unfinished exchange of wealth creates a debt and by definition is a debt-based exchange system. There is no escape from this system or process. The only way to avoid a debt-based exchange system is requiring immediate exchanges of wealth.
Straightforward definitions of wealth and debt imply that any unfinished exchange of wealth automatically indentures the debtor to the creditor. By definitions alone there is no way to escape this process — everybody is a “prisoner” of this system. The true question then becomes what is a fair and rational contract for unfinished exchanges of wealth?
The concept of compound interest is unacceptable in any society desiring to promote mutual survival through concepts such as of self-ownership, rights, property, contracts, and consent. Anything paid other than a straightforward usage fee is an attempt to capture the labor of other people.
With that explanation, ancaps should see why ansocs are against usury systems and why they promote the idea of introducing new currency into circulation that is interest-free. Ancaps rightly oppose the current statist-controlled monetary system, but typically only because of the obvious problems of currency inflation through central banking. However, ancaps need to take an additional step and realize the horror and servitude that is introduced into social systems when compound interest is used.
Although currency inflation occurs through the printing press, that printing press is far more destructive through the concept of compound interest. Compound interest necessarily inflates a circulating currency. Principle is issued into circulation but not the attached compound interest. Thus, the principle circulates much faster than necessary in order to increase production and satisfy debt payments. Increased velocity means demand exceeds supply — inflation. Other variables tend to offset the effects of this velocity increase, but as always, the effects of compound interest are amplified exponentially. Demand therefore increases exponentially while supply continues to increase linearly. Additionally, there is the immeasurable psychological effect of wanting to extinguish debts and that desire tends to increase velocity as well. People try to move money to make money. People also tend to raise prices of goods and services in order to combat the pressures of compound interest. Even if politicians and central bankers were eliminated from the monetary picture, inflation would continue to exist unabated in the current system because of compound interest. That eliminating central banking will resolve all inflationary problems is a tragic illusion. The most destructive element of currency inflation is compound interest — and always will be.
Ansocs rightly understand that when introducing new currency through local community banking systems, charging anything more than a simple administrative fee is wrong. Unfortunately, they have failed to articulate why. Conversely, ansocs also must realize that between private individuals a straightforward linear rental fee of existing circulating currency is acceptable. Interest and compound interest are not the same thing.
When a banking institution, a corporation created by legislative fiat and political privilege, charges anything other than a simple administrative fee, the creators of that new currency are attempting to create perpetual motion by capturing the labor of other people. This is Proudhon’s concept that property is theft. The lenders certainly provide a beneficial brokerage service of coordinating buyers and sellers, but do so only by political privilege. As a social institution there is no reason why new currency cannot be introduced without bankers or, introduced free of compound interest. Furthermore, bankers create new currency without actually depriving themselves of personal capital — possessions.
When a private individual lends currency, and that currency represents unclaimed wealth, then that currency possesses the same linear rental value as does the wealth the currency represents. Some ansocs argue that the lender deprives himself of no loss while lending the currency, that capital does not produce and only labor produces. Such a defense is only partially correct. That currency represents virtual wealth, wealth that could exist once the currency is circulated. Because wealth is subject to decay and wear and tear, lending actual wealth would warrant some return for the extra use that will accelerate the decay and wear and tear. Therefore, currency possesses this same rental value; but that rental value is limited to linear rental fees, not the illusion of compound interest.
The key for ansocs is that the legislative privilege of creating new currency is seen as a part of the capitalist system. After all, currency represents virtual wealth, or future capital. When ancaps promote interest, and they fail to distinguish between the two terms, ansocs assume that ancaps are merely promoting the current unjust system.
If both sides were more clear in their definitions and terms, and both properly understood the concept of money, there would be no misunderstanding and there would be agreement about the outcome. Both sides want to promote self-ownership, free association, voluntary exchange, and the right to contract. The concept and practice of compound interest denies those principles, especially when such fees are collected through the manipulations of political privilege and monopoly. Yet, without the machinations of the statist monopolistic currency system, no such mischief would be possible. Instead of attacking each other, ansocs and ancaps should be mutually attacking the statist system that promotes such enslavement.
There are many ways that all coercive political systems provide opportunities to capture the labor of other people. Consider how slavery and indentured servitude is masked through political processes such as land zoning and regulation, entail, minimum wages, price controls, fixed or minimum price laws, occupational permits, coerced affirmative action, unlimited patents and copyrights, cartels, incorporation charters, associated protections through special legislation, subsidies, monopoly, anti-trust laws, eminent domain, coerced unions and closed shops, regulated educational systems, trade restraints, welfare, asset forfeitures, traffic citations, cash transaction laws, and taxation. The political means of sustaining energy flows is an attempt to bypass natural laws and to create a virtual perpetual motion machine through the labor of other people — to get something for nothing. Both ancaps and ansocs recognize and oppose such processes.
Regardless, is there a way to reconcile the two sides with respect to the previously discussed words? Possibly, but new definitions are necessary, words that can provide consistent meaning to both sides.
Before providing new definitions, a quick review of history is helpful. When reviewing the history of anarchist theory (usually beginning with William Godwin, progressing through Pierre-Joseph Proudhon, Josiah Warren, Mikhail Bakunin, Peter Kropotkin, Leo Tolstoy, Lysander Spooner, Benjamin Tucker, Emma Goldman, etc.), ancaps would discover that until recently, all anarchists opposed capitalism based upon the flawed definition of that word. Thus, only recently has the term anarcho-capitalism become popular.
The reason why the words anarchy and capitalism never were used conjunctively is that capitalism was incorrectly viewed and analyzed through the focal lens of statism. Many past anarchists did not distinguish between statism and capitalism. Capitalism was thought as not being possible without the machinations of statism. Indeed, a rational study of the current capitalist economic process reveals that much would change if the privileged powers of statism were impossible.
Additionally, before the advent of politicized socialism as manifested in communist Soviet Russia, Eastern Europe, and mainland China, the word socialism was understood in a philosophical sense. Originally, excepting Karl Marx’s recommendation to use statism to destroy statism, socialism was not a social system using force and coercion and only promoted shared ownership of some forms of property. However, because early anarchists believed capitalism was not possible without statism, many of those early proponents assumed that the resulting social structure would be a world of small and loosely confederated small communities. Without the avenues of privilege found in statism, property titles would be a function of usufruct and community infrastructures, not politicized legal systems.
To many ancaps such claims might seem hard to swallow, but all one need do is check the literature. Thus, ancaps cannot hope to fully converse with ansocs until they recognize this history.
Conversely, ansocs cannot hope to fully converse with ancaps until they realize that capitalism and statism are not the same process, nor does statism make capitalism possible. Ansocs should realize that the philosophy of statism will pervert any economic process of free association and voluntary exchange, not just capitalism. As witnessed by history, statism easily perverted the original concept of socialism too.
Even in a voluntary socialist commune, laborers in that community will use resources to create new products. Those resources are assets — or capital. The individual who uses a hoe or tractor to raise food crops is capitalizing that venture. Ansocs would call such a resource a possession, but from a strict economic analysis, the term capital is acceptable.
Numerous special legislative exemptions and privileges exasperate these issues. The problem is not the economic mechanisms of capitalism — the desire to improve the quality of life, a natural human phenomenon — but the coerced interference of the political machinery to cloud and pervert the operations of free association and voluntary exchange. In other words, the problem is not capitalism, but the politicization of capitalism.
To ansocs, the word capitalism means forced and coerced property title distributions and resource allocations through the political machinations of statism. Ansocs are incorrect in not distinguishing the two terms, but are correct in recognizing how capitalism has been perverted by statism.
When used as a purely economic term, the words capitalism, free association, and voluntary exchange are compatible. When used in a political sense, as in denying access to and ownership of the means of production, capitalism is a process opposing free association and voluntary exchanges. Economic capitalism is a form of production whereas political capitalism is a form of “might makes right.” The former is cooperative competition, the latter destructive. Economic capitalism is a form of sustaining energy flows and increasing material wealth, while political capitalism is a form of moving money to make money — virtual perpetual motion. Political capitalism is an environment of regulating property titles to create a system of political privilege and benefiting a few individuals at the expense of all others — and should be more correctly labeled feudalism or fascism.
Feudalism is an economic system whereby property titles are controlled by a politically privileged few, thereby relegating everybody else to a role of serf and slave.
Fascism is a philosophy supporting individual ownership of resources, including land and capital, but embracing coercive political control and regulation with how those resources might be used. Usually fascism is recognized through a dictatorship or totalitarian regulatory systems, but fascism can exist through other forms too.
Both feudalism and fascism lend well to creating and establishing monopolies and various forms of privilege, which leads to various forms of artificial scarcity and exploitation. Political monopolies bypass the natural order of mutual survival and voluntary exchange in an attempt to create virtual perpetual motion through the captured labor of other people.
This politicized description of capitalism is the one for which 19th century American anarchist Benjamin Tucker was known. However, Tucker’s definition of capital was simply a politically sanctioned process of monopolizing the use of capital (assets). To Tucker, the term political capitalism would have been redundant. Tucker did not distinguish between the economic process of using capital (resources) to produce wealth and the statist process of monopoly. This was particularly true when speaking about capital strictly from a monetary currency perspective. Doing this is common when people confuse wealth and currency. Currency represents wealth (capital) not yet owned — an unfinished exchange of wealth. Thus, Tucker and his followers were mainly against the creation of usury (compound interest) associated with currency (capital). Perhaps this example shows the importance of clearly defining terms.
Some ansocs might agree with the previous explanation, but will declare that capitalism is, by their definition, nonetheless a process of exploitation. The reason is that the individual who possesses title to capital controls the means of production. Therefore, the individual in a small community who owns a tractor — even if title to the tractor was obtained through free association, voluntary exchange, and without any process of privilege or force and coercion, that the tractor owner controls the means of production. Therefore, some ansocs will argue that the tools and equipment (capital) must be owned communally to avoid the potential for monopoly and exploitation.
However, even if only one individual owned a tractor, somebody else possesses title to the gasoline, oil and other replacement parts needed to operate the tractor, another individual possesses title to the means of distributing harvested crops (trucks, railroads, shipping). There are natural limits to how much can be harvested and consumed in any small community; thus, excess production will be voluntarily traded with other people in exchange for other forms of wealth. Thus, trade relationships must evolve in order to make the tractor useful. Additionally, although a tractor is more efficient to raise crops than using a hoe, nobody is forced to use that tractor. Individuals still can use hoes if they want to avoid associating or exchanging with the tractor owner. The concept of self-ownership, free association, and voluntary exchange includes the right to not associate or exchange. Thus, the tractor owner hardly controls the means of production. The traditional definitions of capitalism always assumed private ownership of title to capital, but as just shown, when title is communally owned the economic process of creating wealth by using capital does not change.
That is not to declare that once statist interference occurs that the economic process of capitalism is not easily perverted, for that is exactly what happens. Those who do possess title to various forms of capital tend to seek privilege and monopolies through the statist system. The problem then is not the economic process of capitalism, but statism. The current form of political capitalism is unsustainable if statism is abolished. Only when the tractor owner obtains privileges and monopoly powers through political machinery does the problem arise of controlling the means of production.
Just as capitalism is based upon the root word capital, socialism is based upon the root word social. Excepting primitive hunter-gatherer or herder societies, humans recognize their lack of being self-sufficient, and therefore necessarily depend upon one another for survival. Thus, by nature, production is necessarily a social activity and exchange is a means through which consumption is fulfilled. Therefore, a straightforward definition of socialism is a process of mutual production and subsequent exchange. Like the straightforward meaning of capitalism, there is nothing antagonistic about the definition. The definition is neutral and apolitical.
Expanding upon that concept, socialism as a philosophy means a voluntary collective ownership of various processes of production, primarily land and some forms of capital. Pure socialism embraces voluntary communal ownership of such property and excludes the possibility of creating title through political privilege. Socialism has roots as far back as the early hunter-gatherers, herders, and agrarian communities. Survival of the tribe or community depended greatly upon the individual foregoing specific individual desires for the benefit of the group. Philosophical socialism still exists today — commonly known as the family.
Generally, socialists do not think primarily in terms of property but usufruct. Usufruct is commonly observed in families, where children are granted access to use and enjoy much of the resources possessed and titled in their parents’ name. Therefore, socialists often like to distinguish between possessions and private property. Within the philosophy of socialism, the former is recognized by what is created directly from labor and exchange while the latter is created through legal and political systems.
In practice, however, socialism has been politicized as much as capitalism. Just as political capitalism today creates a system of privilege preventing free association and voluntary exchange, political socialism violates those same principles by coercing collective associations. Political socialism is an institutionalized policy of redistributing wealth away from user-owners. Political socialism renders meaningless the concepts of self and voluntary cooperative production. Like politicized capitalism, politicized socialism is statism. Politicized socialism denies the concepts of self, free association and voluntary exchange, and usufruct. As with politicized capitalism, with politicized socialism an elite minority of people benefit at the expense of the entire community.
In an anarchist world — a world promoting self-ownership, free association, voluntary exchange, and the right to contract — the mechanisms of the philosophy of statism could not exist and could not perpetuate into special privileges or monopoly. Both ancaps and ansocs embrace such a world. Whether a community of people choose to embrace communal ownership of some titles or choose to possess title individually is irrelevant to the foundations of anarchist theory. What is important, however, is to prevent any politicization of those communities, the goal of which is to capture the labor of other people.
All coercive political systems overrule natural relationships to determine how property titles will be used and distributed. Such systems are about the forced sharing and redistribution of wealth and titles — under color of law — from one class of people to another class of people. All such systems tend to coerce all people into permanent labor — slavery. Permanent slavery defies the basic foundations of human existence. All such systems violate the fundamental principle that all people are creatures of free will and free to pursue their happiness.
Political capitalism and political socialism (and political democracy) all are nothing more than philosophical systems of privilege, monopoly, and control. Imperialism is nothing more than a desire to promote those philosophies globally. Such systems are collective desires to plunder and control others — a perversion of self-interest into greed. Monopolies and imperialism are natural outgrowths of greed — the willingness to usurp property boundaries to satisfy self-interests.
All statist political systems create the same outcome — shifting from a balance between production and consumption to emphasizing consumption without production — shifting from production to non-production. Consuming without production is the political means of survival. People produce only because they consume. All people try to produce as reasonably efficient as possible. Thus, any social system allowing consumption without production is by far a most efficient model of sustaining energy flows. Therefore, as such philosophical systems forcibly redistribute wealth through a society, people realize that consumption becomes easier not necessarily through improved and more efficient production, but by using the political means to sustain energy flows. People begin exploiting one another — coercively redistributing energy flows — not as producers but as consumers.
Many individuals believe only producers (those who control the means of production) are capable of exploitation. However, because all modern political systems forcibly redistribute wealth, people exploit others only through their desire for consumption.
All of these political philosophies are systems, and like all systems possess unique boundaries, elements and relational rules. Economic capitalism knows no political interference. Therefore, neither producer nor consumer can exploit the other because there always is only voluntary exchange.
Political capitalism, however, allows for changing the principles of free association and voluntary exchange under the color of law. People manipulate production processes only to maximize their own consumption and to increase personal exchange power. The problem is not producers exploiting consumers, but consumers exploiting consumers through political processes. The battle never has been producers versus consumers or rich versus poor, but always consumers versus consumers.
This is necessarily so because life is primarily a process of sustaining energy flows. Sustaining energy flows is primarily a consumptive act, not productive. Production is merely a means that enables consumption.
In all such systems people learn to become politicians first, and producers and consumers second. Through such philosophies coerced wealth redistribution is not only allowed but encouraged, and indicates that people are merely trying to create virtual perpetual motion machines to get something for nothing; and they do this by capturing the labor of other people — enslavement. Adversarial raw acquisition, that is, “might makes right,” rules the day.
Ansocs and ancaps will discover that by properly focusing on the foundations that they agree.
To-May-To and To-Mah-To
How can the two camps promote a more encouraging dialogue amongst one another? Existing terms and definitions are unlikely to change quickly, but they must change.
Thus, when ansocs say capitalism, ancaps should think political capitalism. When ancaps say socialism, ansocs should think political socialism. When necessary both sides should preface those terms with the word political to ensure the difference is understood. Both sides should realize that ancaps oppose political capitalism, and ansocs oppose political socialism. Both sides should make a better effort to distinguish between economic capitalism and political capitalism, and philosophical socialism and political socialism.
If the two sides would agree that capitalism and statism are not the same, there still would be the distinction between private property and possessions. Possibly an easy way that both sides can articulate their ideas is to augment those words too. Ancaps should emphasize their desire to see titles created without privilege and should say property titles created without privilege, then affirm that concept by labeling the concept as possessions. Such an effort will do much to quiet the concerns of ansocs. Ansocs can do exactly the same to ensure they and ancaps are discussing the same concept.
When ancaps say private property, ansocs will think possessions. When ansocs say possessions, ancaps should think property titles created without privilege. Generally, when talking to ansocs, ancaps should avoid using the words private property and instead say possessions. Conversely, when ansocs talk with ancaps they should use the word property instead of possessions. Both sides should avoid using the word private to qualify the word property.
Is the term anarcho-capitalism an oxymoron? With respect to the current ansoc definition of capitalism, yes. Ansocs lump the concept of capitalism into the same broad category of statism. This is unfortunate, but hardly an insurmountable problem. Once the term capitalism is carefully defined, both sides should then be able to more easily understand one another, and find that they agree on much. Ancaps should accept that ansocs perceive capitalism through the focal lens of statism, but ansocs need to change that perspective.
With a strict economic definition of capitalism, no, the term anarcho-capitalism is not an oxymoron. However, ancaps probably would be better off if they changed their self-descriptive title, or at least did a much better job of distinguishing economic capitalism from political capitalism. Despite my definition describing pure capitalism as an economic process, ancaps might want to focus and emphasize free association, voluntary exchange, and the right to contract instead of the volatile word capitalism. Ancaps would do better to describe themselves simply as anarchists, or free market anarchists. Ancaps must do a better job of recognizing how statism perverts the economic process of capitalism, and that such distortion is what alienates ansocs. The word capitalism is simply far too charged.
Is the term anarcho-socialist an oxymoron? With respect to the current ancap definition of socialism, yes. However, often ancaps fail to distinguish between political socialism and voluntary socialism. Once the word socialism is carefully defined, and everyone rejects the coercive elements of political socialism, then the word is not an oxymoron.
When property titles are created through the machinations of statism, both ancaps and ansocs lose. Political privileges and monopolies triumph over fundamental rights. Both camps must and do oppose such processes. As Pierre-Joseph Proudhon noticed, the problem is not the concept of property (possessions), but how property titles are distributed and maintained within the statist political system to artificially create boundaries of exclusion and monopoly. When boundaries are created by political privilege and fiat, the concept of justice becomes meaningless. Eliminate statism from the process of title distribution and exchange, and the distinction between property and possessions disappears. Eliminate statism and the current nature of capitalism disappears and capitalism becomes strictly an economic term, not a political system. Not only is the current system of capitalism impossible without statism, the entire political system of privilege becomes impossible.
Neither ansocs nor ancaps should object to the previous definitions and explanations. The terms have been carefully distinguished between the economic and political processes in creating those definitions. Both camps are against the statist politicization of the economic means of providing needs and wants.
I hope I have demonstrated that ansocs and ancaps have much more in common than they might have imagined. Thus, attempting to build bridges and cooperatively battling statism should be a primary focus.
I realize I have hardly addressed all the differences between the two philosophies. For example, many ancaps believe that all property should be held privately through the processes of free association and voluntary exchange. From that foundation they believe that free market solutions will arise to provide commonly used goods and services, such as roads and security.
Ansocs believe that some properties must be titled communally to avoid the inherent challenges of privilege and regulation. Through that foundation, they believe the need for certain commonly used goods and services will disappear. First, because much of those goods and services are communally provided and titled, and second, services such as police forces will be almost unnecessary because the main reason for crime will have been eliminated through communal ownership of property and preventing of avenues of privilege.
Nobody can predict what a future anarchist society actually will look like in totality, and despite educated guesses, predictions ultimately are impossible. However, despite such fundamental disagreements, I believe much of the current divergence is centered around a failure to define terms and a failure to converse within the defined boundaries of each philosophy.
As an anarchist who claims allegiance to neither camp, and who recognizes credible arguments within both philosophies, I believe I have examined the explanations of both sides without bias. Yes, the choice of words and resulting definitions do cause confusion amongst one another, but once those distinctions are understood, there actually is much less difference between the two camps than imagined — both desire a state-free world based upon self-ownership, free association, and voluntary exchange; a world free of political privilege and monopoly.
Consider a short example of how the problem of definitions can be overcome. There is a story about a young boy who was being groomed by a tutor. The boy was sufficiently young not to yet know the names of many common animals. One day while the two were traveling, the tutor asked the boy if the young lad knew the name of some animals grazing in a field. The young boy pondered for a moment and then replied, “Yes, I believe those animals are pigs.” The tutor calmly affirmed the boy’s answer, “Ah, yes. A good answer. You most certainly may call those animals pigs if you so choose. However, you might be interested in knowing that most folks in this land tend to call those animals sheep.” The young boy, quite mature for his young age, replied, “Thank you, my excellent and humble teacher. I shall remember your words when conversing with the people of this land, for I wish to understand them, and I wish them to understand me.”
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