Horizontal Economic Planning or Decentralized Economic Planning is is a type of economy in which the investment and allocation of resources and goods is done accordingly to an economy-wide plan built and coordinated through a distributed network of disparate economic agents (ie community assemblies and confederations) production units (self-managed workplaces). It, alongside the gift economy, is a key theory in anarcho-communism.
Theory
Calculation in Kind
Calculation in kind is a way of valuating resources and a system of accounting that uses physical attributes such as labor time, weight, size, material inputs, material outputs and externalities to calculate the usage and efficiency of a resource. We will develop small working groups ('communal statistical commissions') that can record information from areas of production (like mines, factories, farms and workshops) and consumption (like warehouses and supermarkets) that can then be visualized in graphs and made open-source. Such as the number a kind of items consumed, all of which would have their own physical measurements available for anyone to look up. These groups would publish this information to be freely available to community assemblies and federations.
When in considering to work on a new project (such as a factory switching its production) or whether or not to build a railway, assemblies would look at the various pros and cons of such an endeavor and allow for the community to collectively decide if such a decision is worth it based on the communities values.I n addition, common rules of thumb would possibly be agreed, such as agreements not to use scarce materials unless there is no alternative (either ones that use a lot of labour, energy and time to produce or those whose demand is currently exceeding supply capacity).
When ordering goods from a production outlet, the consumer (which could be an assembly, another production outlet or even a household or individual) would have to inform the producer why they want the good. Allowing for the producer to decide which request is most worthwhile based on their request. For example, if an individual “needs” a ship-builders syndicate to build a ship for his personal use, the ship-builders may not “need” to build it and instead builds ships for the transportation of freight). However, in almost all cases of individual consumption, no such information will be needed as consumption outlets would order consumer goods in bulk as they do now. Hence the economy would be a vast network of co-operating individuals and workplaces and the dispersed knowledge which exists within any society can be put to good effect (better effect than under capitalism because it does not hide social and ecological costs in the way market prices do and co-operation will eliminate the business cycle and its resulting social problems).
Consider two production processes. Method A requires 70 tons of steel and 60 tons of concrete while Method B requires 60 tons of steel and 70 tons of concrete. Which method should be preferred? One of the methods will be more economical in terms of leaving more resources available for other uses than the other but in order to establish which we need to compare the relevant quantities.
Supporters of capitalism argue that only prices can supply the necessary information as they are heterogeneous quantities. Both steel and concrete have a price (say $10 per ton for steel and $5 per ton for concrete). The method to choose is clearly B as it has a lower price that A ($950 for B compared to $1000 for A). However, this does not actually tell us whether B is the more economical method of production in terms of minimising waste and resource use, it just tells us which costs less in terms of money.
Why is this? Simply because, as we argued in section I.1.2, prices do not totally reflect social, economic and ecological costs. They are influenced by market power, for example, and produce externalities, environmental and health costs which are not reflected in the price. Indeed, passing on costs in the form of externalities and inhuman working conditions actually are rewarded in the market as it allows the company so doing to cut their prices. As far as market power goes, this has a massive influence on prices, directly in terms of prices charged and indirectly in terms of wages and conditions of workers. Due to natural barriers to entry (see section C.4), prices are maintained artificially high by the market power of big business. For example, steel could, in fact cost $5 per ton to produce but market power allows the company to charge $10 per ton,
Wage costs are, again, determined by the bargaining power of labour and so do not reflect the real costs in terms of health, personality and alienation the workers experience. They may be working in unhealthy conditions simply to get by, with unemployment or job insecurity hindering their attempts to improve their conditions or find a new job. Nor are the social and individual costs of hierarchy and alienation factored into the price, quite the reverse. It seems ironic that an economy which it defenders claim meets human needs (as expressed by money, of course) totally ignores individuals in the workplace, the place they spend most of their waking hours in adult life.
So the relative costs of each production method have to be evaluated but price does not, indeed cannot, provide an real indication of whether a method is economical in the sense of actually minimising resource use. Prices do reflect some of these costs, of course, but filtered through the effects of market power, hierarchy and externalities they become less and less accurate. Unless you take the term “economical” to simply mean “has the least cost in price” rather than the sensible “has the least cost in resource use, ecological impact and human pain” you have to accept that the price mechanism is not a great indicator of economic use.
What is the alternative? Obviously the exact details will be worked out in practice by the members of a free society, but we can suggest a few ideas based on our comments above.
When evaluating production methods we need to take into account as many social and ecological costs as possible and these have to be evaluated. Which costs will be taken into account, of course, be decided by those involved, as will how important they are relative to each other (i.e. how they are weighted). Moreover, it is likely that they will factor in the desirability of the work performed to indicate the potential waste in human time involved in production (see section I.4.13 for a discussion of how the desirability of productive activity could be indicated in an anarchist society). The logic behind this is simple, a resource which people like to produce will be a better use of the scare resource of an individual’s time than one people hate producing.
So, for example, steel may take 3 person hours to produce one ton, produce 200 cubic metres of waste gas, 2000 kilo-joules of energy, and has excellent working conditions. Concrete, on the other hand, may take 4 person hours to produce one ton, produce 300 cubic metres of waste gas, uses 1000 kilo-joules of energy and has dangerous working conditions due to dust. What would be the best method? Assuming that each factor is weighted the same, then obviously Method A is the better method as it produces the least ecological impact and has the safest working environment — the higher energy cost is offset by the other, more important, factors.
What factors to take into account and how to weigh them in the decision making process will be evaluated constantly and reviewed so to ensure that it reflects real costs and social concerns. Moreover, simply accounting tools can be created (as a spreadsheet or computer programme) that takes the decided factors as inputs and returns a cost benefit analysis of the choices available.
Supply and Demand
Anarchists do not ignore the facts of life, namely that at a given moment there is so much a certain good produced and so much of is desired to be consumed or used. Neither do we deny that different individuals have different interests and tastes. However, this is not what is usually meant by “supply and demand.” Often in general economic debate, this formula is given a certain mythical quality which ignores the underlying realities which it reflects as well as some unwholesome implications of the theory. So, before discussing “supply and demand” in an anarchist society, it is worthwhile to make a few points about the “law of supply and demand” in general.
Firstly, as E.P. Thompson argues, “supply and demand” promotes “the notion that high prices were a (painful) remedy for dearth, in drawing supplies to the afflicted region of scarcity. But what draws supply are not high prices but sufficient money in their purses to pay high prices. A characteristic phenomenon in times of dearth is that it generates unemployment and empty pursues; in purchasing necessities at inflated prices people cease to be able to buy inessentials [causing unemployment] ... Hence the number of those able to pay the inflated prices declines in the afflicted regions, and food may be exported to neighbouring, less afflicted, regions where employment is holding up and consumers still have money with which to pay. In this sequence, high prices can actually withdraw supply from the most afflicted area.” [Customs in Common, pp. 283–4]
“As to decisions involving choices of a general nature, such as what forms of energy touse, which of two or more materials to employ to produce a particular good, whether tobuild a new factory, there is a ... technique ... that could be [used] ... ‘cost-benefit anal-ysis’ ... in socialism a points scheme for attributing relative importance to the variousrelevant considerations could be used ... The points attributed to these considerationswould be subjective, in the sense that this would depend on a deliberate social decisionrather than some objective standard, but this is the case even under capitalism whena monetary value has to be attributed to some such ‘cost’ or ‘benefit’ ... In the sensethat one of the aims of socialism is precisely to rescue humankind from the capitalistfixation with production time/money, cost-benefit analyses, as a means of taking intoaccount other factors, could therefore be said to be more appropriate for use in social-ism than under capitalism. Using points systems to attribute relative importance in thisway would not be to recreate some universal unit of evaluation and calculation, butsimply to employ a technique to facilitate decision-making in particular concrete cases.”[Adam Buick and John Crump,State Capitalism: The Wages System Under NewManagement, pp. 138–139
Therefore “the law of supply and demand” may not be the “most efficient” means of distribution in a society based on inequality. This is clearly reflected in the “rationing” by purse which this system is based on. While in the economics books, price is the means by which scare resources are “rationed” in reality this creates many errors. Adam Smith argued that high prices discourage consumption, putting “everybody more or less, but particularly the inferior ranks of people, upon thrift and good management.” [cited by Thompson, Op. Cit., p. 284] However, as Thompson notes, “[h]owever persuasive the metaphor, there is an elision of the real relationships assigned by price, which suggests...ideological sleight-of-mind. Rationing by price does not allocate resources equally among those in need; it reserves the supply to those who can pay the price and excludes those who can’t...The raising of prices during dearth could ‘ration’ them [the poor] out of the market altogether.” [Op. Cit., p. 285]
In other words, the market cannot be isolated and abstracted from the network of political, social and legal relations within which it is situated. This means that all that “supply and demand” tells us is that those with money can demand more, and be supplied with more, than those without. Whether this is the “most efficient” result for society cannot be determined (unless, of course, you assume that rich people are more valuable than working class ones because they are rich). This has an obvious effect on production, with “effective demand” twisting economic activity. As Chomsky notes, “[t]hose who have more money tend to consume more, for obvious reasons. So consumption is skewed towards luxuries for the rich, rather than necessities for the poor.” George Barrett brings home of the evil of such a “skewed” form of production:
Therefore, as far as “supply and demand” is concerned, anarchists are well aware of the need to create and distribute necessary goods to those who require them. This, however, cannot be achieved under capitalism. In effect, supply and demand under capitalism results in those with most money determining what is an “efficient” allocation of resources for if financial profit is the sole consideration for resource allocation, then the wealthy can outbid the poor and ensure the highest returns. The less wealthy can do without.
However, the question remains of how, in an anarchist society, do you know that valuable labour and materials might be better employed elsewhere? How do workers judge which tools are most appropriate? How do they decide among different materials if they all meet the technical specifications? How important are some goods than others? How important is cellophane compared to vacuum-cleaner bags?
It is answers like this that the supporters of the market claim that their system answers. However, as indicated, it does answer them in irrational and dehumanising ways under capitalism but the question is: can anarchism answer them? Yes, although the manner in which this is done varies between anarchist threads. In a mutualist economy, based on independent and co-operative labour, differences in wealth would be vastly reduced, so ensuring that irrational aspects of the market that exist within capitalism would be minimised. The workings of supply and demand would provide a more just result than under the current system.
However, collectivist, syndicalist and communist anarchists reject the market. This rejection often implies, to some, central planning. As the market socialist David Schweickart puts it, “[i]f profit considerations do not dictate resource usage and production techniques, then central direction must do so. If profit is not the goal of a productive organisation, then physical output (use values) must be.” [Against Capitalism, p. 86]
However, Schweickart is wrong. Horizontal links need not be market based and co-operation between individuals and groups need not be hierarchical. What is implied in this comment is that there is just two ways to relate to others — namely, by bribery or by authority. In other words, either by prostitution (purely by cash) or by hierarchy (the way of the state, the army or capitalist workplace). But people relate to each other in other ways, such as friendship, love, solidarity, mutual aid and so on. Thus you can help or associate with others without having to be ordered to do so or by being paid cash to do so — we do so all the time. You can work together because by so doing you benefit yourself and the other person. This is the real communist way, that of mutual aid and free agreement.
So Schweickart is ignoring the vast majority of relations in any society. For example, love/attraction is a horizontal link between two autonomous individuals and profit considerations do not enter into the relationship. Thus anarchists argue that Schweickart’s argument is flawed as it fails to recognise that resource usage and production techniques can be organised in terms of human need and free agreement between economic actors, without profits or central command. This system does not mean that we all have to love each other (an impossible wish). Rather, it means that we recognise that by voluntarily co-operating as equals we ensure that we remain free individuals and that we can gain the advantages of sharing resources and work (for example, a reduced working day and week, self-managed work in safe and hygienic working conditions and a free selection of the product of a whole society). In other words, a self-interest which exceeds the narrow and impoverished “egotism” of capitalist society. In the words of John O’Neil:
Thus free agreement and horizontal links are not limited to market transactions — they develop for numerous reasons and anarchists recognise this. As George Barret argues:
To make productive decisions we need to know what others need and information in order to evaluate the alternative options available to us to satisfy that need. Therefore, it is a question of distributing information between producers and consumers, information which the market often hides (or actively blocks) or distorts due to inequalities in resources (i.e. need does not count in the market, “effective demand” does and this skews the market in favour of the wealthy). This information network has partly been discussed in the last section where a method of comparison between different materials, techniques and resources based upon use value was discussed. However, the need to indicate the current fluctuations in production and consumption needs to be indicated which complements that method.
In a non-Mutualist anarchist system it is assumed that confederations of syndicates will wish to adjust their capacity if they are aware of the need to do so. Hence, price changes in response to changes in demand would not be necessary to provide the information that such changes are required. This is because a “change in demand first becomes apparent as a change in the quantity being sold at existing prices [or being consumed in a moneyless system] and is therefore reflected in changes in stocks or orders. Such changes are perfectly good indicators or signals that an imbalance between demand and current output has developed. If a change in demand for its products proved to be permanent, a production unit would find its stocks being run down and its order book lengthening, or its stocks increasing and orders falling ... Price changes in response to changes in demand are therefore not necessary for the purpose of providing information about the need to adjust capacity.” [Pat Devine, Democracy and Economic Planning, p. 242]
To indicate the relative changes in scarcity of a given good it will be necessary to calculate a “scarcity index.” This would inform potential users of this good whether its demand is outstripping its supply so that they may effectively adjust their decisions in light of the decisions of others. This index could be, for example, a percentage figure which indicates the relation of orders placed for a commodity to the amount actually produced. For example, a good which has a demand higher than its supply would have an index value of 101% or higher. This value would inform potential users to start looking for substitutes for it or to economise on its use. Such a scarcity figure would exist for each collective as well as (possibly) a generalised figure for the industry as a whole on a regional, “national,” etc. level.
In this way, a specific good could be seen to be in high demand and so only those producers who really required it would place orders for it (so ensuring effective use of resources). Needless to say, stock levels and other basic book-keeping techniques would be utilised in order to ensure a suitable buffer level of a specific good existed. This may result in some excess supply of goods being produced and used as stock to buffer out unexpected changes in the aggregate demand for a good.
Such a buffer system would work on an individual workplace level and at a communal level. Syndicates would obviously have their inventories, stores of raw materials and finished goods “on the shelf,” which can be used to meet excesses in demand. Communal stores, hospitals and so on would have their stores of supplies in case of unexpected disruptions in supply. This is a common practice even in capitalism, although it would (perhaps) be extended in a free society to ensure changes in supply and demand do not have disruptive effects.
Communes and confederations of communes may also create buffer stocks of goods to handle unforeseen changes in demand and supply. This sort of inventory has been used by capitalist countries like the USA to prevent changes in market conditions for agricultural products and other strategic raw materials producing wild spot-price movements and inflation. Post-Keynesian economist Paul Davidson argued that the stability of commodity prices this produced “was an essential aspect of the unprecedented prosperous economic growth of the world’s economy” between 1945 and 1972. US President Nixon dismantled these buffer zone programmes, resulting in “violent commodity price fluctuations” which had serious economic effects. [Controversies in Post-Keynesian Economics, p. 114 and p. 115]
Again, an anarchist society is likely to utilise this sort of buffer system to iron out short-term changes in supply and demand. By reducing short-term fluctuations of the supply of commodities, bad investment decisions would be reduced as syndicates would not be mislead, as is the case under capitalism, by market prices being too high or too low at the time when the decisions where being made. Indeed, if market prices are not at their equilibrium level then they do not (and cannot) provide adequate knowledge for rational calculation. The misinformation conveyed by dis-equilibrium prices can cause very substantial macroeconomic distortions as profit-maximising capitalists response to unsustainable prices for, say, tin, and over-invest in a given branch of industry. Such mal-invest could spread through the economy, causing chaos and recession.
This, combined with cost-benefit analysis described in section I.4.4, would allow information about changes within the “economy” to rapidly spread throughout the whole system and influence all decision makers without the great majority knowing anything about the original causes of these changes (which rest in the decisions of those directly affected). The relevant information is communicated to all involved, without having to be order by an “all-knowing” central body as in a Leninist centrally planned economy. As argued in section I.1.2, anarchists have long realised that no centralised body could possibly be able to possess all the information dispersed throughout the economy and if such a body attempted to do so, the resulting bureaucracy would effectively reduce the amount of information available to society and so cause shortages and inefficiencies.
To get an idea how this system could work, let use take the example of a change in the copper industry. Let use assume that a source of copper unexpectedly dries up or, what amounts to the same thing, that the demand for copper increases. What would happen?
First, the initial difference would be a diminishing of stocks of copper which each syndicate maintains to take into account unexpected changes in requests for copper. This would help “buffer out” expected, and short lived, changes in supply or requests. Second, naturally, there is an increase in demand for copper for those syndicates which are producing it. This immediately increases the “scarcity index” of those firms, and so the “scarcity index” for the copper they produce and for the industry as a whole. For example, the index may rise from 95% (indicating a slight over-production in respect to current demand) to 115% (indicating that the demand for copper has risen in respect to the current level of production).
This change in the “scarcity index” (combined with difficulties in finding copper producing syndicates which can supply their orders) enters into the decision making algorithms of other syndicates. This, in turn, results in changes in their plans (for example, substitutes for copper may be used as they have become a more efficient resource to use).
This would aid a syndicate when it determined which method of production to use when creating a consumer good. The cost-benefit analysis out-lined in the last section would allow a syndicate to determine the costs involved between competing productive techniques (i.e. to ascertain which used up least resources and therefore left the most over for other uses). Producers would already have an idea of the absolute costs involved in any good they are planning to use, so relative changes between them would be a deciding factor.
In this way, requests for copper products fall and soon only reflects those requests that need copper and do not have realistic substitutes available for it. This would result in the demand falling with respect to the current supply (as indicated by requests from other syndicates and to maintain buffer stock levels). Thus a general message has been sent across the “economy” that copper has become (relatively) scare and syndicates plans have changed in light of this information. No central planner made these decisions nor was money required to facilitate them. We have a decentralised, non-market system based on the free exchange of products between self-governing associations.
Looking at the wider picture, the question of how to response to this change in supply/requests for copper presents itself. The copper syndicate federation and cross-industry syndicate federations have regular meetings and the question of the changes in the copper situation present themselves. The copper syndicates, and their federation, must consider how to response to these changes. Part of this is to determine whether this change is likely to be short term or long term. A short term change (say caused by a mine accident, for example) would not need new investments to be planned. However, long term changes (say the new requests are due to a new product being created by another syndicate or an existing mine becoming exhausted) may need co-ordinated investment (we can expect syndicates to make their own plans in light of changes, for example, by investing in new machinery to produce copper more efficiently or to increase efficiency). If the expected changes of these plans approximately equal the predicted long term changes, then the federation need not act. However, if they do then investment in new copper mines or large scale new investment across the industry may be required. The federation would propose such plans.
Needless to say, the future can be guessed, it cannot be accurately predicted. Thus there may be over-investment in certain industries as expected changes do not materialise. However, unlike capitalism, this would not result in an economic crisis as production would continue (with over investment within capitalism, workplaces close due to lack of profits, regardless of social need). All that would happen is that the syndicates would rationalise production, close down relatively inefficient plant and concentrate production in the more efficient ones. The sweeping economic crises of capitalism would be a thing of the past.
Therefore, each syndicate receives its own orders and supplies and sends its own produce out. Similarly, communal distribution centres would order required goods from syndicates it determines. In this way consumers can change to syndicates which respond to their needs and so production units are aware of what it is socially useful for them to produce as well as the social cost of the resources they need to produce it. In this way a network of horizontal relations spread across society, with co-ordination achieved by equality of association and not the hierarchy of the corporate structure. This system ensures a co-operative response to changes in supply and demand and so reduces the communication problems associated with the market which help causes periods of unemployment and economic downturn (see section C.7.2).
While anarchists are aware of the “isolation paradox” (see section B.6) this does not mean that they think the commune should make decisions for people on what they were to consume. This would be a prison. No, all anarchists agree that is up to the individual to determine their own needs and for the collectives they join to determine social requirements like parks, infrastructure improvements and so on. However, social anarchists think that it would be beneficial to discuss the framework around which these decisions would be made. This would mean, for example, that communes would agree to produce eco-friendly products, reduce waste and generally make decisions enriched by social interaction. Individuals would still decide which sort goods they desire, based on what the collectives produce but these goods would be based on a socially agreed agenda. In this way waste, pollution and other “externalities” of atomised consumption could be reduced. For example, while it is rational for individuals to drive a car to work, collectively this results in massive irrationality (for example, traffic jams, pollution, illness, unpleasant social infrastructures). A sane society would discuss the problems associated with car use and would agree to produce a fully integrated public transport network which would reduce pollution, stress, illness, and so on.
Therefore, while anarchists recognise individual tastes and desires, they are also aware of the social impact of them and so try to create a social environment where individuals can enrich their personal decisions with the input of other people’s ideas.
On a related subject, it is obvious that different collectives would produce slightly different goods, so ensuring that people have a choice. It is doubtful that the current waste implied in multiple products from different companies (sometimes the same company) all doing the same job would be continued in an anarchist society. However, production will be “variations on a theme” in order to ensure consumer choice and to allow the producers to know what features consumers prefer. It would be impossible to sit down beforehand and make a list of what features a good should have — that assumes perfect knowledge and that technology is fairly constant. Both these assumptions are of limited use in real life. Therefore, co-operatives would produce goods with different features and production would change to meet the demand these differences suggest (for example, factory A produces a new CD player, and consumption patterns indicate that this is popular and so the rest of the factories convert). This is in addition to R&D experiments and test populations. In this way consumer choice would be maintained, and enhanced as consumers would be able to influence the decisions of the syndicates as producers (in some cases) and through syndicate/commune dialogue.
Therefore, anarchists do not ignore “supply and demand.” Instead, they recognise the limitations of the capitalist version of this truism and point out that capitalism is based on effective demand which has no necessary basis with efficient use of resources. Instead of the market, social anarchists advocate a system based on horizontal links between producers which effectively communicates information across society about the relative changes in supply and demand which reflect actual needs of society and not bank balances. The response to changes in supply and demand will be discussed in section I.4.8 (What about investment decisions?”) and section I.4.13 (“Who will do the dirty or unpleasant work?”) will discuss the allocation of work tasks.
Investment and Growth
From An Anarchist FAQ:
In a communist-anarchist society, things would be slightly different as this would not have the labour notes used in mutualism and collectivism. This means that the collectives would agree that a certain part of their output and activity will be directed to investment projects. In effect, each collective is able to draw upon the sums approved of by the Commune in the form of an agreed claim on the labour power of all the collectives (investment “is essentially an allocation of material and labour, and fundamentally, an allocation of human productive power.” [Cole, Op. Cit., pp. 144–5]). In this way, mutual aid ensures a suitable pool of resources for the future from which all benefit.
How would this work? Obviously investment decisions have implications for society as a whole. The implementation of these decisions require the use of existing capacity and so must be the responsibility of the appropriate level of the confederation in question. Investment decisions taken at levels above the production unit become effective in the form of demand for the current output of the syndicates which have the capacity to produce the goods required. This would require each syndicate to “prepare a budget, showing its estimate of requirements both of goods or services for immediate use, and of extensions and improvements.” [Cole, Op. Cit., p. 145] These budgets and investment projects would be discussed at the appropriate level of the confederation (in this, communist-anarchism would be similar to collectivist anarchism).
The confederation of syndicates/communes would be the ideal forum to discuss (communicate) the various investment plans required — and to allocate scarce resources between competing ends. This would involve, possibly, dividing investment into two groups — necessary and optional — and using statistical techniques to consider the impact of an investment decision (for example, the use of input-output tables could be used to see if a given investment decision in, say, the steel industry would require investment in energy production). In this way social needs and social costs would be taken into account and ensure that investment decisions are not taken in isolation from one another, so causing bottle-necks and insufficient production due to lack of inputs from other industries.
Necessary investments are those which have been agreed upon by the appropriate confederation. It means that resources and productive capacity are prioritised towards them, as indicated in the agreed investment project. It will not be required to determine precisely who will provide the necessary goods for a given investment project, just that it has priority over other requests. When a bank gives a company credit, it rarely asks exactly where that money will be built. Rather, it gives the company the power to command the labour of other workers by supplying them with credit. Similarly in an anarcho-communist society, except that the other workers have agreed to supply their labour for the project in question by designating it a “necessary investment.” This means when a request arrives at a syndicate for a “necessary investment” a syndicate must try and meet it (i.e. it must place the request into its production schedule before “optional” requests, assuming that it has the capacity to meet it). A list of necessary investment projects, including what they require and if they have been ordered, will be available to all syndicates to ensure such a request is a real one.
Optional investment is simply investment projects which have not been agreed to by a confederation. This means that when a syndicate or commune places orders with a syndicate they may not be meet or take longer to arrive. The project may go ahead, but it depends on whether the syndicate or commune can find workers willing to do that work. This would be applicable for small scale investment decisions or those which other communes/syndicates do not think of as essential.
This we have two inter-related investment strategies. A communist-anarchist society would prioritise certain forms of investment by the use of “necessary” and “optional” investment projects. This socialisation of investment will allow a free society to ensure that social needs are meet while maintaining a decentralised and dynamic “economy.” Major projects to meet social needs will be organised effectively, but with diversity for minor projects. In addition, it will also allow such a society to keep track of what actual percentage of resources are being used for investment, so ensuring that current needs are not sacrificed for future ones and vice-versa.
As for when investment is needed, it is clear that this will be based on the changes in demand for goods in both collectivist and communist anarchism. As Guilliame puts it, “[b]y means of statistics gathered from all the communes in a region, it will be possible to scientifically balance production and consumption. In line with these statistics, it will also be possible to add more help in industries where production is insufficient and reduce the number of men where there is a surplus of production.” [Bakunin on Anarchism, p. 370] Obviously, investment in branches of production with a high demand would be essential and this would be easily seen from the statistics generated by the collectives and communes. Tom Brown states this obvious point:
As a rule of thumb, syndicates that produce investment goods would be inclined to supply other syndicates who are experiencing excess demand before others, all other things being equal. Because of such guidelines and communication between producers, investment would go to those industries that actually required them. In other words, customer choice (as indicated by individuals choosing between the output of different syndicates) would generate information that is relevant to investment decisions.
As production would be decentralised as far as it is sensible and rationale to do so, each locality/region would be able to understand its own requirements and apply them as it sees fit. This means that large-scale planning would not be conducted (assuming that it could work in practice, of course) simply because it would not be needed.
This, combined with an extensive communications network, would ensure that investment not only did not duplicate unused plant within the economy but that investments take into account the specific problems and opportunities each locality has. Of course, collectives would experiment with new lines and technology as well as existing lines and so invest in new technologies and products. As occurs under capitalism, extensive consumer testing would occur before dedicating major investment decisions to new products.
In addition, investment decisions would also require information which showed the different outcomes of different options. By this we simply mean an analysis of how different investment projects relate to each other in terms of inputs and outputs, compared to the existing techniques. This would be in the form of cost-benefit analysis (as outlined in section I.4.4) and would show when it would make economic, social and ecological sense to switch industrial techniques to more efficient and/or more empowering and/or more ecologically sound methods. Such an evaluation would indicate levels of inputs and compare them to the likely outputs. For example, if a new production technique reduced the number of hours worked in total (comparing the hours worked to produce the machinery with that reduced in using it) as well as reducing waste products for a similar output, then such a technique would be implemented.
Similarly with communities. A commune will obviously have to decide upon and plan civic investment (e.g. new parks, housing and so forth). They will also have the deciding say in industrial developments in their area as it would be unfair for syndicate to just decide to build a cement factory next to a housing co-operative if they did not want it. There is a case for arguing that the local commune will decide on investment decisions for syndicates in its area (for example, a syndicate may produce X plans which will be discussed in the local commune and 1 plan finalised from the debate). For regional decisions (for example, a new hospital) would be decided at the appropriate level, with information fed from the health syndicate and consumer co-operatives. The actual location for investment decisions will be worked out by those involved. However, local syndicates must be the focal point for developing new products and investment plans in order to encourage innovation.
Regulation of Industry
It is often claimed that with a market producers would ignore the needs of consumers. Withoutthe threat (and fear) of unemployment and destitution and the promise of higher profits, produc-157 ers would turn out shoddy goods. The holders of this argument point to the example of the SovietUnion which was notorious for terrible goods and a lack of consumer goods.Capitalism, in comparison to the old Soviet block, does, to some degree make the producersaccountable to the consumers. If the producer ignores the desires of the producer then they willloose business to those who do not and be forced, perhaps, out of business (large companies,of course, due to their resources can hold out far longer than smaller ones). Thus we have thecarrot (profits) and the stick (fear of poverty) — although, of course, the carrot can be used asa stick against the consumer (no profit, no sale, no matter how much the consumer may needit). Ignoring the obvious objection to this analogy (namely we are human beings,notdonkeys!)it does have contain an important point. What will ensure that consumer needs are meet in ananarchist society?In an Individualist-Mutualist anarchist system, as it is based on a market, producers wouldbe subject to market forces and so have to meet consumers needs. Of course, there are threeproblems with this system. Firstly, those without money have no access to the goods producedand so the ill, the handicapped, the old and the young may go without. Secondly, inequalities maybecome more pronounced as successful producers drive others out of business. Such inequalitywould skew consumption as it does in capitalism, so ensuring that a minority get all the goodthings in life (Individualist anarchists would claim that this is unlikely, as non-labour incomewould be impossible). Lastly, there is the danger that the system would revert back to capitalism.This is because unsuccessful co-operatives may fail and cast their members into unemployment.This creates a pool of unemployed workers, which (in turn) creates a danger of wage-labourbeing re-created as successful firms hire the unemployed but do not allow them to join the co-operative. This would effectively end self-management and anarchy. Moreover, the successfulcould hire“protection agencies”(i.e. thugs) to enforce capitalist ideas of property rights.This problem was recognised by Proudhon, who argued for an agro-industrial federation toprotect self-management from the effects of market forces, as well as the collectivist-anarchists.In both these schemes, self-management would be protected by agreements between co-operativeworkplaces to share their resources with others in the confederation, so ensuring that new work-ers would gain access to the means of life on the same terms as those who already use it. In thisway wage-labour would be abolished. In addition, the confederation of workplaces would prac-tice mutual aid and provide resources and credit at cost to their members, so protecting firmsfrom failure while they adjust their production to meet consumer needs.In both these systems producers would be accountable to consumers by the process of buyingand selling between co-operatives. As James Guillaume put it, the workers’ associations would“deposit their unconsumed commodities in the facilities provided by the [communal] Bank of Ex-change ... The Bank of Exchange would remit to the producers negotiablevouchersrepresenting thevalue of their products”(this value“having been established in advance by a contractual agreementbetween the regional co-operative federations and the various communes”). [Bakunin on Anar-chism, pp. 366] If the goods are not in demand then the producer associations would not be ableto sell the product of their labour to the Bank of Exchange and so they would adjust their outputaccordingly. Overtime Guillaume hopes that this system would evolve into free communism asproduction develops and continually meets demand [Op. Cit., p. 368].While mutualist and collectivist anarchists can argue that producers would respond to con-sumer needs otherwise they would not get an income, communist-anarchists (as they seek amoneyless society) cannot argue their system would reward producers in this way. So what mech-158anism exists to ensure that“the wants of all”are, in fact, met? How does anarcho-communismensure that production becomes“the mere servant of consumption”and“mould itself on the wantsof the consumer, not dictate to him conditions”? [Peter Kropotkin,Act for Yourselves, p. 57]Libertarian communists argue that in afreecommunist society consumers’ needs would bemeet. This is because of the decentralised and federal nature of a communist-anarchist society.So what is the mechanism which makes producers accountable to consumers in a libertariancommunist society? Firstly, communes would practice their power of“exit”in the distributivenetwork. If a syndicate was producing sub-standard goods or refusing to change their output inthe face of changing consumer needs, then the communal stores would turn to those syndicateswhichwereproducing the goods desired. The original syndicates would then be producing fortheir own stocks, a pointless task and one few, if any, would do. After all, people generally desiretheir work to have meaning, to be useful. To just work, producing something no-one wantedwould be such a demoralising task that few, if any, sane people would do it (under capitalismpeople put up with spirit destroying work as some income is better than none, such an“incentive”would not exist in a free society).As can be seen,“exit”would still exit in libertarian communism. However, it could be arguedthat unresponsive or inefficient syndicates would still exist, exploiting the rest of society by pro-ducing rubbish (or goods which are of less than average quality) and consuming the productsof other people’s labour, confident that without the fear of poverty and unemployment theycan continue to do this indefinitely. Without the market, it is argued, some form of bureaucracywould be required (or develop) which would have the power to punish such syndicates. Thusthe state would continue in“libertarian”communism, with the“higher”bodies using coercionagainst the lower ones to ensure they meet consumer needs or produced enough.While, at first glance, this appears to be a possible problem on closer inspection it is flawed. Thisis because anarchism is based not only on“exit”but also“voice.”Unlike capitalism, libertariancommunism is based on association and communication. Each syndicate and commune is in freeagreement and confederation with all the others. Thus, is a specific syndicate was producing badgoods or not pulling its weight, then those in contact with them would soon realise this. First,those unhappy with a syndicate’s work would appeal to them directly to get their act together.If this did not work, then they would notify their disapproval by refusing to“contract”withthem in the future (i.e. they would use their power of“exit”as well as refusing to provide thesyndicate with any goodsitrequires). They would also let society as a whole know (via themedia) as well as contacting consumer groups and co-operatives and the relevant producer andcommunal confederations which they and the other syndicate are members of, who would, inturn, inform their members of the problems (the relevant confederations could include local andregional communal confederations, the general cross-industry confederation, its own industrial/communal confederation and the confederation of the syndicate not pulling its weight). In today’ssociety, a similar process of“word of mouth”warnings and recommendations goes on, alongwith consumer groups and programmes. Our suggestions here are an extension of this commonpractice (that this process exists suggests that the price mechanism does not, in fact, provideconsumers with all the relevant information they need to make decisions, but this is an aside).If the syndicate in question, after a certain number of complaints had been lodged against it,still did not change its ways, then it would suffer non-violent direct action. This would involvethe boycotting of the syndicate and (perhaps) its local commune with products and investment,so resulting in the syndicate being excluded from the benefits of association. The syndicate would159face the fact that no one else wanted to associate with it and suffer a drop in the goods coming itsway, including consumption products for its members. In effect, a similar process would occur tothat of a firm under capitalism that looses its customers and so its income. However, we doubtthat a free society would subject any person to the evils of destitution or starvation (as capitalismdoes). Rather, it would provide a bare minimum of goods required for survival would still beavailable.In the unlikely event this general boycott did not result in a change of heart, then two optionsare left available. These are either the break-up of the syndicate and the finding of its membersnew work places or the giving/selling of the syndicate to its current users (i.e. to exclude themfrom the society they obviously do not want to be part off). The decision of which option to go forwould depend on the importance of the workplace in question and the desires of the syndicates’members. If the syndicate refused to disband, then option two would be the most logical choice(unless the syndicate controlled a scare resource). The second option would, perhaps, be best asthis would drive home the benefits of association as the expelled syndicate would have to surviveon its own, subject to survival by selling the product of its labour and would soon return to thefold.Kropotkin argued in these terms over 100 years ago. It is worthwhile to quote him at length:“First of all, is it not evident that if a society, founded on the principle of free work, werereally menaced by loafers, it could protect itself without the authoritarian organisationwe have nowadays, and without having recourse to wagedom [or payment by results]?“Let us take a group of volunteers, combining for some particular enterprise. Having itssuccess at heart, they all work with a will, save one of the associates, who is frequentlyabsent from his post... some day the comrade who imperils their enterprise will be told:‘Friend, we should like to work with you; but as you are often absent from your post,and you do your work negligently, we must part. Go and find other comrades who willput up with your indifference!’“This is so natural that it is practised everywhere, even nowadays, in all industries ...[I]f [a worker] does his work badly, if he hinders his comrades by his laziness or otherdefects, if he is quarrelsome, there is an end of it; he is compelled to leave the workshop.“Authoritarian pretend that it is the almighty employer and his overseers who main-tain regularity and quality of work in factories. In reality ... it is the factory itself, theworkmen [and women] who see to the good quality of the work ...“Not only in industrial workshops do things go in this way; it happens everywhere,every day, on a scale that only bookworms have as yet no notion of. When a railwaycompany, federated with other companies, fails to fulfil its engagements, when its trainsare late and goods lie neglected at the stations, the other companies threaten to cancelthe contract, and that threat usually suffices.“It is generally believed ... that commerce only keeps to its engagements from fear oflawsuits. Nothing of the sort; nine times in ten the trader who has not kept his word willnot appear before a judge... the sole fact of having driven a creditor to bring a lawsuitsuffices for the vast majority of merchants to refuse for good to have any dealings witha man who has compelled one of them to go to law.160“This being so, why should means that are used today among workers in the workshop,traders in the trade, and railway companies in the organisation of transport, not be madeuse of in a society based on voluntary work?”[The Conquest of Bread, pp. 152–3]Thus, to ensure producer accountability of production to consumption, no bureaucratic bodyis required in libertarian communism (or any other form of anarchism). Rather, communicationand direct action by those affected by unresponsive producers would be an effective and efficientmeans of ensuring the accountability of production to consumption.