Mutualism, particularly its Tuckerite branch, has fascinated me since my discovery of it several years ago. Why is it so fascinating to me? Because it is widely regarded by scholars as a leftist branch of free-market libertarianism. It’s genuinely left-wing…but it’s still free market libertarianism/anarchism. Who the hell doesn’t want to jump on that bandwagon? Where do I sign up?
Unfortunately, the more I looked into and thought about it, the more I began to realize why Rothbard created anarcho-capitalism in the first place. Mutualism is a confusing, dated, convoluted mess of a political philosophy with very dubious positions on economics. (I'm not going to spend much time on the labor theory of value, since it has been done elsewhere.)
“Syndical Syndrom:” Rothbard’s Critique of Mutualism
Most market anarchists are familiar with Rothbard’s critique of some Mutualist ideas in The Spooner-Tucker Doctrine: An Economist’s View. Less are aware of his critique in Syndical Syndrom, which in my opinion is a far better article. Excerpt:
In free-market capitalism, there have never been
any restrictions on workers banding together in producers'
coops to own their own capital equipment. And yet, in the
free economy, producers' coops have been notorious by
their non-existence, or rapid failure in competition with
'capitalist" firms. The reason is that, unknown to the
economically ignorant syndicalists, the capitalists perform
an extremely important service to the workers, as a
result of which most people prefer to be hired by capitalists
rather than be self or cooperatively employed. The
two basic functions are those of the "capitalist" per se
and those of the "entrepreneur". As a capitalist, the employer
saves money from his possible consumption, and
invests the money in paying workers their income in advance
of sale of product. In an automobile factory, the
capitalist pays workers their weekly wages now; in a producers'
cooperative factory, the workers would have to go
without income for months or years, until their product is
finally sold to the consumers. The capitalist earning of
"interest" for this advance payment is precisely equivalent
to the creditor who earns interest by lending someone
money now while being repaid at some point in the future.
In both cases, "interest" is earned as payment for savings
and time preference for income now rather than waiting
for the future.
The second service performed by the employer is to
assume the significant risks of entrepreneurship. A producers'
cooperative firm invests resources in a product,
and then hopes to sell that product to the consumers at a
net profit. But suppose that the efficiency and the foresight
of the workers is minimal; suppose, in short, that
they produce an Edsel that fails to sell? If they do, their
income is negative rather than positive, and they lose
capital assets which they can scarcely afford. In the
capitalist economy, the employer assumes these capital
risks, and only he therefore is subject to monetary losses
if his product is inefficiently produced or if he cannot achieve
Most workers are unwilling or unable to assume these
risks of entrepreneurship, and therefore they greet the
employer's willingness to do so, as well as to pay them
in advance of sales, with sighs of relief. Or would if they
understood the process. We can confidently predict that
if Yugoslavia ever allows full-scale capitalist employment
(as it does now for small-scale enterprise) that its
producers' coops will rapidly give way to orthodox "capitalist"
modes of production - to the benefit of all concerned.
These are striking blows, IMO, to the mutualist position on rent, interest, and profit. How exactly are people going to survive when they have to wait YEARS to get paid? How many people have the money to invest in, say, a new airline, even if they wanted to? Without profit, I don't even see how modern retailers or wholesalers could exist. The mutualist answer to this argument has been mostly unimpressive. Kevin Carson's response:
Time preference is not a constant. It is skewed much more to the present for a laborer without independent access to the means of production, or to subsistence or security. Even the vulgar political economists recognized that the degree of poverty among the laboring classes determined their level of wages, and hence the level of profit.
Ok, fair enough, so state intervention and social standing are obviously going to impact one's time preference to some extent. But does anyone seriously believe that interest and profit are going to fall to zero!? Or that everyone is going to happily wait for months or years to get paid?
Even modern anti-capitalist individualist anarchists are a little queasy about these positions:
Benjamin Tucker, a 19th Century individualist anarchist, and perhaps the most famous individualist anarchist of all, at one point, thought that not only ownership of land, but also all rent, business profits, and interest were wrong, and their victims should never be compelled to pay any of these, unless it was their choosing. He even thought that workers, renters, and lendees, who had once voluntarily agreed to respect these capitalist institutions, should later be able to go back and seek compensation for the wrongs done to them.
Today, with more developed economic theory, this doesn't seem to make so much sense -- if you prohibit all rent, profit, and interest, what will most likely happen is nobody will rent, lend, or make capital investments, and the poor will simply not be able to obtain housing, money, or physical capital to work with.
Another critique of the Mutualist position echoes Rothbard:
In a given anarcho-socialist business, production is owned entirely by those who worked upon the capital (for they own the capital,) and is presumably sold in some form of market.
Given that no one would give capital to an anarcho-socialist business for free, and given that no one can invest in an anarcho-socialist business for they can gain no return, therefore to gain employment workers must be forced to contribute capital. Which means that workers without capital are in an irresolvable situation, for they can neither gain employment nor capital, unless some charitable person were to grant them capital for free. A loan of capital to the worker is out of the question, for consider; the creditor purchases capital upon which the worker is employed, the creditor takes some of the production in return, which is no different from capitalist investment!, and this holds true even if the loan is issued by their future co-workers.
All workers must invest capital, and their remuneration must be commensurate with the amount that they invest; for any other would be grossly unfair. Workers however do different types of work, for different durations, requiring different skills. remuneration must also be commensurate with the type of work they do. Given that the remuneration, or ownership of production if you like, is dependent upon the level of investment and of work, both of which vary, why not allow people to invest and do no work, as per capitalism? And this brings to light the false distinction, for anarcho-socialism contains the capitalist element of capitalism, just that investors must work on their capital, which seems to me -- utterly stupid. Any level set by law which determines whether an individual investor is really ‘a worker’ or ‘an evil capitalist’ will be an arbitrary ratio between the level of investment and the level of work contributed. Now, the judgment by members of a business as whether to employ an additional co-worker will depend not only on the skills of the particular worker, the amount of remuneration relative to their contributed work that they desire and the business can afford, but also the amount of capital which this particular worker can and wishes to contribute. Given that this is specific to the worker, and given that each business will have different needs for capital, there will be no market-price for any type of labor, and so no reliable guide.
By forbidding all investment where the capitalist does not also work on the capital, businesses can only gain investment by employing more people, and individuals cannot invest unless they work, which means they also cannot distribute risk in their investments.
Unlike in the capitalist system, workers must work without pay until the product is sold.
The results of an anarcho-socialist system are inevitable; substantially reduced investment, increased poverty.
Assume though that an anarcho-socialist system were viable, and that one day a former worker decides to invest his/her earnings, except that he/she does not wish to work upon capital. Consider though that he/she offers employment to someone working elsewhere in a similar line of work for an anarcho-socialist business, and that the offer includes; immediate pay, no requirement of investment and therefore no risk, and a higher wage, and that the product is sold at a lower price to consumers. This would be forbidden. Yet... what is so wrong about it that it requires legislation?
To be fair, I don't believe Kevin Carson or other Mutualists would "forbid" this. Yet, this just leads to the next part of my critique:
Mutualism and Wage Labor: The Contradiction That Just Won't Go Away
Confusingly, many Mutualists support/supported wage labor, despite their opposition to profit. Huh!? That's right.
As Tucker put it,
...the minute you remove privilege, the class that now enjoy it will be forced to sell their labor, and then, when there will be nothing but labor with which to buy labor, the distinction between wage-payers and wage-receivers will be wiped out, and every man will be a laborer exchanging with fellow-laborers. Not to abolish wages, but to make every man dependent upon wages and secure to every man his whole wages is the aim of Anarchistic Socialism.
He also believed that...
When interest, rent, and profit disappear under the influence of free money, free land, and free trade, it will make no difference whether men work for themselves, or are employed, or employ others. In any case they can get nothing but that wage for their labor which free competition determines. Therefore they need not become their own employers.
Your average reader (whether a follower of Rothbard or Kropotkin or Marx) is now confused shitless. How, exactly, are you going to have wage labor without profit? Why in the world would you bother paying someone wages if you aren't hoping to see a return? It would defeat the entire point. A number of mutualists themselves (at least some on message boards and blogs) seem to think this is a contradiction.
The answer is even more confusing. Tucker wanted wages to absorb profits. In other words, he wanted wages to rise to the laborer's "full product." Don't worry, I don't understand it either.
Nobody in the real world is going to put that much effort and risk into a project, just to let some schmuck off the street get the profits. Again, that would defeat the entire point of hiring someone.
If there is an answer to this contradiction, I haven't heard it.
"Occupancy and Use"? Maybe in the 19th Century.
Mutualists believe private property in land should be run on an "occupancy and use" basis. The problems with this are enormous.
If we followed this "occupancy and use" thing consistently, we would no longer have hotels, college dorms, or even parking spaces. Life would become extremely inconvenient. All companies that expanded beyond one building would not be able to operate. How a highway road would operate without being owned by someone is anyone's guess. And god help you if you want to go on a vacation (or not own a home).
D. Burton (again) is also skeptical of how well this would work today.
..individualist anarchists have traditionally opposed the unlimited ownership of land, especially absentee ownership, for the purpose of passively collecting rent. In the 19th Century, the main idea was some kind of squatter sovereignty, in which individuals only had a right to land while they were using it. Any unused land was free for someone else to claim. That made a lot of sense in the frontier-type situation of 19th Century America. Today, there is a lot more complex and innovative though to deal with space constraints and environmental issues.
Out With The Old, In With The New
Most individualist anarchists today disagree with mutualism, but still find much to admire in it. I will admit that I greatly enjoy reading what Kevin Carson has to say, and that Tucker is one of my favorite anarchists. I may not always agree with their views, but I still find mutualism and old-school individualist anarchism to be quite fascinating.
To conclude, I'm going to cut and paste what I said in an earlier post:
Rothbardian anarcho-capitalism, influenced by Lysander Spooner and Benjamin Tucker, retains most of their spirit but omits their silly ideas and errors (such as the labor theory of value, which nobody believes in anymore). In my opinion, it is simply a modernized form of market anarchism with the crap cut out. Does that put it outside of historical/classical anarchism a bit? Yes. Who cares?