Rethinking Property, Money and Banking: Social Ownership, Self-Management and Mutuality in the Anarchist Economy Carlota Moreno Villar ​(11063556) University of Amsterdam MSc Thesis Political Science (International Relations) Word count: ​23761 Date: June 2020 Thesis group Alternatives to Capitalism: Models of Future Society Supervisor Dr. Annette Freyberg-Inan Second Reader Dr. Paul Raekstad 1 Abstract Capitalism is a social, political and economic system embedded in history which inherently creates inequality and oppressive social relations. The main sources of inequality and oppression in capitalism are private property and the monetary system —which fuel the process of accumulation— and the racial and colonial nature of capitalism. The focus of this thesis will be on private property and money. Money and monetary policy will be analysed from a heterodox sociological and historical perspective. The aim of this thesis will be to propose economic reforms that are conducive to the development of an alternative anarchist economy, incorporating insights from heterodox economic theory and grassroots economic experiments. The thesis will argue that the fundamental values of anarchism are equality, freedom and solidarity. Further, it will propose three principles of allocation that should guide an anarchist economy. Namely, self-management, mutuality and social ownership. The economic reforms that follow these principles, and which are conducive to the development of an anarchist economy, include the introduction of complementary currencies and the development of cooperatives. 2 Table of Contents Chapter 1: Introduction ​4 1.1 Capitalism and Inequality ​4 1.1.1 Capitalism, Income Inequality and Wealth Inequality ​5 1.1.2 Capitalism and Freedom ​6 1.1.3 Capitalism, Colonialism and Racism ​7 1.2 Orthodox Economic Theory and Capitalism ​9 1.3 Anarchism, Prefigurative Politics and Economics ​10 Chapter 2: Anarchism, Anarchist Economics and Revolutionary Action ​13 2.1 Anarchism and Anarchist Values ​13 2.1.1 What Is Anarchism? ​13 2.1.2 Anarchism, Freedom, Equality and Solidarity ​15 2.2 Anarchist Economics and Revolutionary Action ​17 2.2.1 Anarchism and Private Property ​18 2.2.2 Anarchism and Money ​20 2.2.3 Anarchist Praxis and Revolutionary Action ​22 Chapter 3: Economic Theory, Orthodoxy and Heterodoxy ​25 3.1 Orthodox and Heterodox Economics ​25 3.1.1 The Sociological Definition ​25 3.1.2 The Intellectual Definition ​27 3.2 Orthodox and Heterodox Monetary Analysis ​28 3.2.1 What Is Money? ​28 3.2.1.1 Money as a medium of exchange and the myth of money neutrality ​28 3.2.1.2 Money as a social relation and the non-neutrality of money ​30 3.2.2 Money and Capitalism From the Heterodox Perspective ​31 3.2.2.1 Money creation in capitalism ​32 3.2.2.2 Money creation, crises and inequality ​33 3.2.2.3 The sociological approach and the Marxist theory of money ​34 3.3 The Feasibility of the Anarchist Utopian Vision and Prefigurative Politics ​34 Chapter 4: Alternative Economic Arrangements ​36 4.1 Democratisation of Monetary Policy: Complementary Currencies ​36 4.1.1 Local Exchange Trading Systems (LETS) ​39 4.1.2 Time-Banks: Fureai Kippu ​41 4.2 Cooperatives ​42 4.2.1 Worker Cooperatives: Mondragon ​44 4.2.2 Worker-Recuperated Enterprises in Argentina ​46 4.2.3 Indigenous Cooperatives in Canada ​47 4.2.4 Cooperative Finance ​48 Conclusion ​51 References ​54 3 Chapter 1: Introduction Cohen (1981) describes three commonly used justifications or arguments in favor of capitalism. Namely, that the regime of private property enlivens production, safeguards freedom and conforms to principles of justice. These are the ​economic ​argument, the ​freedom ​argument and the ​justice ​argument, respectively. As Cohen (1981) explains, the economic argument rests on the assumption that free markets and private property result in good economic consequences that are to the advantage of everyone. The freedom argument states that deviations from the free market are transgressions against freedom. Finally, the justice argument rests on the moral defence of private property. In the coming chapters, these ideas will be challenged. First, with respect to the economic argument, I will question the idea that capitalism delivers great amounts of wealth to the inhabitants of this planet, and that wealth eventually trickles down to those at the bottom. Second, with respect to the (economic) freedom argument, I will show that deviating from market exchange does not restrict one’s freedom. The market is a mechanism for distributing goods and services which is based on negative reciprocity. Alternative methods for distributing resources exist which do not restrict one’s freedom, such as exchanges based on (positive) reciprocity. This will be illustrated in chapter 2. Further, in the next section of this chapter I will argue that the inequality that characterises capitalism results from the control elites maintain over the economic resources of a country, which increases their political power (Krieger & Meierrieks, 2015). This power is then used by elites to limit economic freedom in order to defend their economic interests. Finally, with respect to the justice argument, the idea that private property is morally justified will be challenged. An account of the role private property serves in capitalism, and how it is related to inequality and exploitation, will be given in chapter 2. 1.1 Capitalism and Inequality The reality is that capitalism has not delivered on the promises made on its behalf by the likes of Milton Friedman or Friedrich Hayek. Harris-White (2005) examines the idea that poverty is continually being created and re-created under capitalism, instead of contributing to its eradication through the creation of wealth. She concludes that, although capitalism creates wealth, capitalist growth is not a solution to poverty. “On the contrary there are many ways in which it causes poverty, even though that poverty may be exported to sites from which it is not visible” (Harris-White, 2005, p. 11). Similarly, Wachtel (1972) concludes that poverty and inequality are a logical consequence of the proper functioning of capitalist institutions, in line with Marxist thinking. Crucially, capitalism is a social, political and economic system embedded in history that has originated and evolved with the racialism of Europe’s pre-modern civilisation (Robinson, 2000), its patriarchal character (Eisenstein, 1979) and colonial history 4 (Blaut, 1989). The sources of inequality in capitalism are multifaceted, and cannot be explained only in terms of the material reality of capitalism. This section will show the extent to which inequality is present in capitalist societies. 1.1.1 Capitalism, Income Inequality and Wealth Inequality Kuznets (1955) posits that there exists an inverted U-shaped relation between inequality and economic development. Using historical data from various industrial economies, Kuznets shows that a general developmental pattern exists whereby, in the process of development, inequality first increases until it reaches a peak, and then decreases. In the case of the United States, Kuznets believes the peak was reached in the 1890s. Inequality remained stable for several decades after this point and, after the 1920s, it began to decline (Alderson & Nielsen, 2002). This pattern of inequality in the context of economic development has been found to apply to a variety of industrial economies (Lindert & Williamson, 1985). However, more recent developments in industrial societies show a reversal of the relationship hypothesised by Kuznets. Harrison & Bluestone (1988) show how in the 1970s this trend was reversed in the US, with rising income inequality maintaining a steady rate in at least the following two decades. Fritzell (1993) compares income inequality trends in Canada, Germany, Sweden, the United Kingdom and the United States. Whilst there is substantial cross-national variation with respect to changes in inequality trends since the 1970s, he shows that there was a universal tendency towards increased inequality and polarisation of the earnings distribution. According to Alvaredo et al. (2018), in recent decades, income inequality has increased in nearly all countries. Similarly, Harvey (2015, p. 171) claims that over the last forty years or so there have been “dramatic increases in income and wealth disparities among individuals and social groups in almost every country of the world”. In the beginning of 2020, ahead of the World Economic Forum (WEF) in Davos, Oxfam released a report titled “Time To Care”, looking into the global inequality crisis. The report explained that in 2019, the world’s billionaires, 2.153 people, had more wealth than 4.6 billion people (Lawson et al., 2020). Alvaredo et al. (2018) provide estimates of how global income growth has been distributed to the totality of the world population since 1980. They find that the global top 1% earners have captured twice as much growth as the bottom 50%. In the United States, between 1976 and 2006 the per capita income of the top 1% earners increased by 232%, whilst it only increased by 64% for the bottom 90% of the population (Wisman, 2013). Since 1980, income inequality has increased rapidly in North America, China, India and Russia, and moderately in Europe. There are, however, exceptions, such as in Brazil or sub-Saharan Africa, where it has remained stable (Alvaredo et al., 2018). “The diversity of trends observed across countries since 1980 shows that income inequality dynamics are shaped by a variety of national, institutional and political contexts” (Alvaredo et al., 2018, p. 10). For example, the income share of the top 1% in the United States and Europe was 5 close to 10% in 1980. Whilst in Western Europe it increased to 12% in 2016, in the United States it rose up to 20% in the same year (Alvaredo et al., 2018). Overall, it has become clear that the hypothesis developed by Kuznets (1955) does not conform to reality. The reversal of the downward trend of inequality in the 1970s-1980s supports this idea.