On the Defense of Lasseiz-Faire Economics Against the Case Presented by Collectivist Anarchism

by J. Nathaniel Sloan
Political Studies 155

May 15, 1997

Since Pierre-Joseph Proudhon first declared himself an anarchist nearly a century and a half ago, many thinkers have followed in his footsteps, together defining a discipline which, they hope, will eventually replace republican capitalism as the societal system by which all others are judged. Theirs is a discipline with neither hierarchy, structure, nor authority. It is based upon the idea that many men, working in harmony, may produce greater benefits for all than could each man muster were he working for himself.

It is this philosophy which shall be addressed herein. The benefits of a society without external authoritarian influence are clear, and, indeed, on this point the philosophies of lasseiz-faire capitalism and anarchism converge. Anarchism's problems lie in its embrace of communism -- the joint ownership by the community of the means of production and of the products themselves. To allow men who fail to produce to benefit from the hard work of others... ensures that none will create anything.

The Spanish Question

The most common example given by anarchists to show that communistic philosophies can be successful is the anarchist takeover of much of northeastern Spain during the Spanish Civil War. The expropriation of the fields and factories led not to the general drunkenness and rowdiness which had occurred in the 1917 Revolution in Russia, and which, it shall be shown, would be the general rule; instead, workers simply moved in and took control1.

How could such a change occur? How could so many men act in such a responsible and honourable fashion when there was apparently nothing, save their moral fortitude, to stop them from doing as they please? Why is it that, for several months in 1936, Spanish workers were able to accomplish that which has never been seen, before or since?

The reason Russia and Spain underwent different processes need not elude one for long. Both Russia and Spain were undergoing a civil war when the social revolution occurred, but the two wars were markedly different... and different wars produce different results. The war in Russia was an uprising of the working class against the state, and it (fairly) quickly turned in the direction of the Bolsheviks. This took much of the pressure off of the individual peasants; it is much less stressful to be winning a war than to be losing one. Freed from the pressures of fighting a battle to defend their homes and livelihoods, they moved into their new society... and promptly lost the spirit which had driven the revolution.

The result is similar to a more recent event. American voters have, at some point in the past century, realised that they can vote themselves bread and circuses, and have thus introduced large-scale welfare programs such as Social Security and Medicare... which, if continued, will push up budget deficits by an estimated $200 billion per year, given current policy2. In a nutshell -- Russian workers realised that since there was no one to tell them to get back to work, they could sit around and drink vodka all day... and so they did just that.

Spain was quite a different story, however. The Spanish Civil War was not the result of a popular movement by those apposed to authoritarian rule; rather, it amounted to what was really an outside invasion, by a fascist army intent upon supressing the free will of the people. The social revolution came about when the Catalans realised that their government wasn't going to protect them in this time of crisis; they were moved, in this time of necessity, to take over the factories and run them themselves. Their very survival depended upon it. Certainly, then, there was no drunkenness, no disorder. The people of Spain were united against a common enemy whose threat was so great as to require their combined effort to fight back. No one had time for leisure, nor the luxury of disinterestedness.

Thus, there can be no answer to the question "How could so many men act in such a responsible and honourable fashion when there was apparently nothing, save their moral fortitude, to stop them from doing as they please?"... because the question's premise itself is false. That which kept Spain from turning into Russia was not metaphysical in nature; it was purely necessity.

The Power Vacuum

One might, however, seek to learn more from the Spanish Civil War than might be uncovered in this superficial examination. In particular, one might wonder how it was that Generalísimo Franco's main opponent in the war was not the Spanish government, but was rather the anarchist social revolution3. This is not very difficult to understand; there was no Spanish government at the time! Or, more properly, the existing government was completely ineffectual.

Just as it is true that if you remove all of the air from a jar, it shall, if allowed, wish to fill itself once more, societies, in the absense of a ruler, will, if allowed, wish to rule themselves once more; this effect can be termed a "power vacuum." This was the state of Spain on the eve of her civil war. Because she lacked effective government, various parties had thoughts of moving in to set her straight, including El Generalísimo.

We thus turn our thoughts to defense. Sensing the absense of power in an anarchist society (an issue to which we shall return), does it not seem natural that foreign powers should wonder about the possibilities of enslaving the workers once more? Rather than being faced with an organised, trained army with a purpose, they would see merely dedicated people defending their freedom. Yet if the anarchists are correct in their assumptions about the state, they face this every day as it is! They would hardly be afraid to face the same resentment from foreigners that they receive from their own people.

And, of course, the anarchists could no more expect help from other states than could the F.A.I.-C.N.T. in the Spanish Civil War, for what state would support those who would wish to destroy the system the states had set up? Thus, just as the anarchists lost the Spanish Civil War (and lost it rather badly), so would they lose any number of fights; and, even should they manage to win one or two, there would still be people around who could smell the sweet scent of available power that the vacuum was emitting.

The Profit Motive

Of course, personal economics plays a large role in the demise of the communist system as well. Any economist will tell you that the motivation for the completion of useful tasks in a capitalist society is profit. To put it another way, some members of a capitalist society offer payment to others, in exchange for the production of material, which has benefits, to them in particular and to society in general. Now, from the point of view of the economist, it is easy to calculate the effect of communism. To the individual, the collective becomes, essentially, a body of taxation, and, in fact, the marginal tax rates approach 100% in even a fairly small society. After all, if the society has, say, one thousand people, and it is dedicated to the equal distribution of wealth, a worker's additional output of one dollar comes back to him as one tenth of one cent, plus 99.9 cents in "taxes," which go to the other 999 members of the collective. This results in a marginal tax rate of 99.9%.

What will be the benefit to society of this scheme? A simple application of the Laffer Curve is enough to see clearly that with marginal tax rates near 100%, tax revenue (or, in this case, total societal production) drops to a value near zero. Or, as Gwartney and Stroup state in Macroeconomics, "Confronting a 100 percent tax rate, most individuals would go fishing -- or find something else to do rather than engage in taxable productive activity, since the 100 percent tax rate would completely remove the material reward derived frmom earning taxable income.4"

To further study this effect of communism, in an attempt to better understand and possibly to combat it, let us consider the case of the loafer. He has no care for his fellow man; his interests are entirely internal. To him, whether his society flounders or flourishes is of no concern, so long as he himself is relieved of suffering.

This is where the problem is to be found. Our loafer soon realises that he will be provided with the bare necessities of life regardless of his work output -- this is the only logical extension of communistic thought. He is a member of the collective, and therefore care is taken of him.

"But wait," you say, "wouldn't he be removed from the collective for such behaviour?" The answer to that can be seen with an examination of unionism in modern America. It is common knowledge that one of the results of the rise of the union has been the growing inability of businesses to punish workers for poor performance, for fear of inciting a strike. We thus modify our premise. Suppose that rather than being dedicated to doing nothing, our subject is merely dedicated to doing as little as possible. This doesn't change our argument, for he will still come to the conclusion that very little, in fact, need be done, and he will resign himself to doing that part, and spending the rest of his time in leisure. Now he will be joined in this, first by a few friends, then by a few hundred, just as has happened in American labour.

What should happen now, if he is threatened by expulsion? Well, first of all, this situation will no longer arise, because now the people who would be punishing him for this behaviour are engaged in the behaviour also. However, even neglecting that point, there is a second to be made. In exchange for his support at a later date, his comrades will back him in his effort to be retained. They will threaten their own departure; in effect, they will threaten to strike. In fact, forward-thinking labour leaders will act proactively and "outlaw" ostricisation in the first place, based on these same principles, just as the idea of "tenure" for teachers in inner-city schools ensures that they can never be censured for ineffective work!

Thus, it is easy to see the path of the loafer. He simply has to contribute a very small amount, which is supplemented with his colleagues equally dismal production. Content in his knowledge that nothing can force him to do otherwise, he relaxes all the day long, and, for him, and people like him, society suffers.

Breakdown in Theory

It seems reasonable, then, to ask the question, "Where does anarchism, which is presented by so many great thinkers as a relative good, break down in a practical situation? That is to say, where are the flaws in the theory of anarchism?"

Anarchism begins by assuming that the person is basically good, and that, given the chance, he will act in such a manner so as to better his society and, in the process, to help others, even at his own expense. William Godwin defines the differences between absolute good -- that being anything which, on the surface, appears to be good -- and relative good -- that which is, at a deeper level, good, but which may appear, on the surface, to be evil5, and, obviously, anarchists believe people to be governed by a desire for that which is relatively good; for things which are merely good in an absolute sense may, at some level, be a relative evil.

It is this premise itself that is flawed. Such topics as we have already discussed -- for example, the issue of the profit motive -- are clear reflections of the greed inherent in the human soul. The instinct for survival is the one feature common to all species, and, just as animals, in times of need, will eat the weaker members of the pack such that the strong may survive, and as, in fact, many examples of human cannibalism have been found throughout the globe, so too is it that, when it becomes necessary, the human being shall revert to avarice.

And, then again, what of the child whose mother must continually remind him to share his toys with the other girls and boys? Need she make this plea, if the child is inherently a good, societal being? It would seem not, yet none would deny that her lectures still are necessary. Rather, we see that the human's first, basest thoughts are for his own good and happiness, and only later may he think for others.

"But what is the issue with that?" one asks. "After all, no one has suggested that three-year-olds set up an anarchist society, but rather that mature adults do so instead." Yet there are still flaws in this thinking. Are we not today surprised, if a lost wallet is returned with its money intact? Do we not expect the average person to commit this heinous crime, simply because he could never be found? Surely, though, we do not expect the person who returns the wallet to be a child; instead, we expect him to be an adult, fully capable of moral reasoning, who acts in this manner, at the expense of someone he knows not at all.

Why would someone act in this manner? Be it education? Surely not, as some of the most successful criminals are those with the most education -- Rhodes scholars are no more exempt from avarice than dropouts. Fine, then; what of upbringing? Again, some of the vilest men come from the finest families. There must, it seems, be some characteristic in common, which can be weeded out from an anarchist society and immunise it from these dangers.

Power and Anarchy

The blame then comes to rest upon power, and its adjunct, money. "Money is the root of all evil," it is said, and perhaps it is true. An anarchist society has no money and no power. Or does it? Certainly, money could be removed, at the risk of encouraging the loafer. But what of power? An anarchist claims to reject all forms of hierarchy, and, as hierarchy is the source of power, it is thus destroyed as well.

Yet, part of the human spirit is the drive for competition. In a society without hierarchy, there can be no competition, because to compete implies to struggle to achieve a higher position based upon the superiority of some skill. However, let us suppose that in an anarchist village there are two candlemakers. One produces candles which are gnarled and wretched-looking, lumpy and green. The other produces beautiful works of art; tall, thin, tapered candles, or short, stout, stately candles. Those shaped as men, or as trees, or as any of a hundred other items.

Naturally, when the villagers need candles, they search first for those produced by the second artisan, and only afterward will they accept those produced by the first. Thus, we see competition! Though the people will still claim to accept no authority, they have implicitly ordered the two craftsmen.

Does this lead to power? Suppose that the second candlemaker produced candles at a much slower pace than the first, and thus his candles were perpetually in short supply. Suppose further that there are also two coopers, similarly distinct in skill. Now, allow the better of the coopers to approach the better of the candlemakers. Perhaps it is initially an innocent conversation. Maybe they talk about sport, or the weather. At some point, however, the cooper is inclined to stoop his head and make an offer. "My fine sir," says he, "my fine sir. Such beautiful candles have ye! It would be quite a shame to package them in, well, shall we say, less than superior cartons, would it not? Supposing... well, supposing I were to alert you when I were on my way to the central depository? Just a quick nod at the end of my day? Then, perhaps you would be able to secure my barrels yourself. And, if you would make the same concession to me..." Neither has larceny in their heart; they are simply engaged in the human tradition of trying to achieve some small gain from their skills. Why should they not? There is nothing dishonest about this transaction, and the community, as a whole, benefits. Yet, power has been created. The cooper now has the ability to get the best candles, and the candlemaker the best barrels. Perhaps they collaborate further, bringing in the best cobbler, and then the best blacksmith. Eventually, distinct classes of society develop from the midst of anarchy!


The obvious answer to each question posed thus far is a system of loosely regulated capitalism. The state's power must be diminished, for the anarchists are right to claim that its coercive power is harmful to society, if only for its adverse economic effects. However, the concept of property, which the collectivist anarchist villifies so thoroughly, is the one item which is the saving grace of the system. Economic output will soar as the near-100% marginal tax rate is eliminated and replaced with something more reasonable. The profit motive will be unleashed in its full fury, forcing people to work for everything they receive, and ensuring that those whose work is most effective are most rewarded. The economy will be highly efficient; nobody will take any job which fails to make the most of their abilities, because there would be more wage to be earned in a job which fails not.

The natural effect of competition, in an economy unrestricted by governement interference, will further help the average worker. Anarchists fear the exploitation of man by man. They forget, however, that exploitation is unprofitable! Surely capitalists know this all too well. The company which treats its employees poorly stands to lose an edge in the marketplace as they migrate to other firms. If the rights of all are equally protected, Adam Smith's invisible hand will do the rest, and do it well.

And what of the loafer earlier visited? He has no place in a capitalist society. Perhaps he may choose death, or exile; these are his rights. More likely, however, he will come to the realisation that he must work to survive. Thus, the capitalists derive a much greater gain for society from this individual than were able the anarchists.


The paradise the anarchists seek is but an illusion. Although the Spaniards thought they had it working during their Civil War, the truth is that it could not have stood had it won the conflict, and it quite likely never could have won the conflict anyway. Even had it withstood outside invasion, power would have seeped up from inside it and wrecked the lack of system for which the anarchists had fought, because the theories behind anarchism are based upon some axia which are simply impossible to substantiate using real-world experiences, such as the idea that man is basically a good creature. Greed and the motive for profit would do away with any semblance of the anarchist order.


1Rudolf Rocker, The Tragedy of Spain (New York: Freie Arbeiter Stimme, 1937) 25.
2Ramesh Ponnuru, "Ponzi's Revenge," National Review Feb. 24, 1997: 35.
3Peter Marshall, Demanding the Impossible: A History of Anarchism. (London: Fontana, 1993) 460.
4James D. Gwartney and Richard L. Stroup, Macroeconomics: Public and Private Choice, 8th Ed. (Fort Worth, TX: Dryden, 1997) 126.
5William Godwin, Enquiry Concerning Political Justice and its Influence upon Morals and Happiness, 4th Ed. (1798) Book IV, Chapter XI.

Return to the Anarchy Archives

This page prepared by J. Nathaniel Sloan for the Anarchy Archives and Political Studies 155, at Pitzer College, with Professor Dana Ward.