Mutualism and Equitable Commerce: A Libertarian Socialist Catechism By W. J. Whitman What is mutualism? Mutualism is the oldest form of anarchism. It is a school of anarchist thought that holds that all economic transactions ought to mutually benefit both parties so that there is true equity in commerce and that social order should be based solely upon voluntary and mutual associations of individuals. The early mutualists held that equitable commerce, just wages, and just prices would naturally result from market processes if the market were set free from all forms of government intervention. What is a just wage? A just wage is a wage that gives the producer the equivalent of what his labour has produced. What is a just price? A just price is a price that is equivalent to the cost of production. This may be called the “cost principle.” What is equitable commerce? Equitable commerce is when the buyer and the seller equally benefit from the transaction in a sale. Equitable No rights reserved, because there is no such thing as intellectual 1 property. commerce is when the trade is so equal that neither party profits off of the trade but both parties benefit equally. Can such an arrangement ever come about? On a free market, trades will probably never be totally equal, yet there would be no room for substantial profits. The libertarian socialist understanding of the “labour theory of value” states that competition under free- market conditions will tend to force prices down to the lowest possible level, as each seller will want to lower his price to undercut the competition. As the sellers compete, prices drop until they are nearly equivalent to the cost of production. Under such conditions, the sale of the product leads to no substantial profit for the seller because the trade is equal. Why would the producer produce if he can’t make a profit? He would produce because he benefits even without profit. He will always “break even” but will never be left with nothing to show for it. Mr. X makes widgets: he then sells them at cost of production (i.e. the cost of acquiring the materials plus the cost of labour). Upon selling the widgets, he receives money as payment. He No rights reserved, because there is no such thing as intellectual 2 property. can then use the money to buy other things that he wants and needs. Under such a free-market socialist system (aka mutualism), he can live comfortably. He can save a little money if he wants more expensive things; and he can buy those things in the future, after he saves enough. How do mutualists define the term capitalism? The term capitalism in reference to a specific economic system was originally coined by Thomas Hodgskin, a free-market economist and Ricardian socialist anarchist. Hodgskin used the term to refer to the existing economic system during the Industrial Revolution, which system was heavily interventionist in nature. Mutualists follow this original definition of the term capitalism, and hence do not regard capitalism as a free-market system. Capitalism is an economic system in which the State intervenes in the economy in order to benefit the capitalist class at the expense of all other classes. The chief characteristics of the capitalist system are (1) that wage labour is an ordinary phenomenon and (2) that the vast majority of people are not capitalists or owners of productive property. Kevin A. Carson, the leading contemporary advocate of mutualism, writes: No rights reserved, because there is no such thing as intellectual 3 property. “Capitalism, as distinguished from a free market, is a system in which the state represents the owners of capital and land and intervenes in the market on their behalf. Its enforcement of special privileges keeps land and capital artificially scarce and expensive in comparison to labor, so that labor must pay tribute for access to the means of production. Let, therefore, the state remove its guarantees of privilege, and let the suppliers of land and capital compete in a free market without entry barriers, and land and capital will cease to draw monopoly returns.”(Kevin A. Carson, Free Market Anti- Capitalism) Hilaire Belloc, a classical distributist writer, defined capitalism thus: “[Capitalism’s] main characteristic is the possession of the means of production, that is land and machinery, by a small number of citizens, while the great majority of citizens remain dispossessed not only of the land and machinery, but of the stores of food and clothing and housing, without which men cannot live.”(Nationalization) No rights reserved, because there is no such thing as intellectual 4 property. Likewise, John Médaille gives the same definition: “In capitalist economies, the vast majority of men are not capitalists; that is, they do not have sufficient capital to make their own livings, either alone or in cooperation with their neighbors, but must work for wages in order to live.”(Toward a Truly Free Market, Chapter 5) How can wage labour be a form of slavery? Why do mutualists say that “wage slavery” is an essential characteristic of the capitalist system? Wage labour is a form of slavery if the economic system renders it necessary for most individuals within society. If the economic system is designed so as to ensure that the wage-worker does not have any viable alternative to wage labour, then the labour contract is not entirely voluntary. Capitalism as an economic system was preceded by a process of enclosures of common lands throughout Europe. In England, for example, there were common lands that were grazed and cultivated by ordinary people. After the rise of Protestantism, all of the common lands were confiscated and given to certain individuals whom the government happened to favour. The land naturally belonged to those who cultivated it, No rights reserved, because there is no such thing as intellectual 5 property. as labour is the only just means of appropriating property, but the State arbitrarily took the land out of the hands of the ordinary workers and farmers and handed it over to certain privileged individuals who had not expended any labour in the appropriation of the land, creating a class of landlords and capitalists. These new “owners” of the land became landlords and started charging the farmers rent for the use of the land. Production is necessary for survival. By removing the means of production from the hands of the producers, the State assisted in enslaving the producers to the idle class of “owners.” Thus, the proletariat or working class was enslaved to the capitalist class (i.e. that class of individuals who happen to “legally” own the means of production). Capitalism is merely industrialized feudalism, the heritage of historical economic arrangements that were created by arbitrary State interventions in the economy. Is it the case that all wage labour is “wage slavery”? No, wage labour is not wage slavery if the wage-worker has sufficient alternatives. It is not wage-slavery if the economic system allows the average worker the liberty to survive by means other than wage labour. No rights reserved, because there is no such thing as intellectual 6 property. Why do mutualists oppose “big business” as it exists within capitalistic systems? Big business is the result of government intervention in the economy. Under free-market conditions, large businesses (such as Walmart, Monsanto, Boeing, GM, etc.) could not possibly exist. The law of diminishing returns naturally limits the size of any firm. Under free- market conditions, firms would expand to their optimum size and then expand no further. The national and international corporations that we see today are too big to survive under free-market conditions. Their expansion past the point of optimum size was subsidized by the government. If Walmart had been forced to bear the full burden of the cost of large-scale distribution, the company would never have expanded on a national basis. The creation of the necessary transportation infrastructure for such companies was provided by the State. The railroads and highway systems were created by the State with tax-payer money. Companies like Walmart would have stopped further expansion long ago rather than spending more money in order to create the necessary infrastructure for expansion. The same goes for commercial aviation, the internet, etc. Boeing would No rights reserved, because there is no such thing as intellectual 7 property. never have created the commercial airline had it not been for the massive subsidies that it received from the State for the purposes of research and development of military aircrafts. The research and development would have been too expensive and the company would have pursued safer investments that guaranteed more immediate returns. Moreover, large companies would have been put out of business by the competition had it not been for the restriction of competition through government regulation. Patent laws prohibit competitors from manufacturing the same or similar products, thereby limiting competition. The reason that big businesses do so well is because of their monopolistic/oligopolistic nature. If any competitor were allowed to manufacture automobiles using the same technologies as GM, then the potential for additional profit as the result of large scale would be outweighed by the additional costs. There would be nothing to distinguish GM’s product from that of the competition, rendering it unprofitable to manufacture on a large scale. Under free-market conditions, we would see thousands and thousands of smaller-scale local manufacturers producing cars rather than a few large corporations in the automotive industry. Businesses No rights reserved, because there is no such thing as intellectual 8 property. would generally be smaller, but competition would ensure that the products would tend to be better.