The Demise of Mutualism

Since I last blogged about my defense of mutualism, I changed my mind and began to oppose mutualism. At first impression, mutualism appears compatible with libertarianism. Mutualists, for instance, do not oppose employment, and support the free market. Also, contrary to common conceptions, mutualists do not even oppose rent and interest, as they only predict that in an anarchic society, rent and interest will fall near zero. Even though these positions held by mutualists seem consistent to the libertarian philosophy, the mutualistic theory, however, has flaws that contradicts the ethics and strategy of libertarianism. My justifications for opposing mutualism include their theory of prices, egalitarianism, Luddite ideology, gradualism, and syndicalism. Although their advocacy for the labor theory of value seems small, this, however, has potential repercussions that undermine the philosophy of libertarianism.

First of all, we will define mutualism. Mutualists support an occupancy and use theory of land. That means, as long as an individual currently uses or possesses land, he has the right to control it. However, once as he gives up using or occupuying land, he does not have the right to control it anymore. Thus, this will make land available for other individuals to use.

This occupancy and use theory of land may seem difficult to implement in a stateless society, but arbitrators can do this job by resolving disputes over occupancy and use. Hence, supporters of mutualism would argue that individuals can voluntarily join a mutualist society with the mutualistic occupancy and use laws, thus not interfering with other societies. Thus, a mutualist society and an anarcho-capitalist society can coexist, because they each respect voluntary associations.

Pierre-Joseph Proudhon first developed this theory based on the free market, and he called it mutualism. Proudhon, while supporting the free market in general, opposes the ownership of the means of production, and suggests the occupancy and use theories. Benjamin Tucker, who followed Proudhon's footsteps, begun to diverge from some of Proudhon's ideas. While Proudhon sees employment as exploitative, Spooner and Tucker did not see it that way.

Knowledge Problems

Mutualists are utilitarianists that are not tolerant of some kinds of property rights. Although they highly respect property rights, they are highly intolerant of property that is supposibly "stolen" by capitalists. They claim that they have the right reclaim the "stolen" property. Mutualists want to take over a factory by killing the boss and so they can then "homestead" the factory for all the workers to control.

There are many examples showing there violent behavior: On the Mutualist.org site, there is a statement: "Our ultimate vision is of a society in which the economy is organized around free market exchange between producers, and production is carried out mainly by self-employed artisans and farmers, small producers' cooperatives, worker-controlled large enterprises, and consumers' cooperatives. To the extent that wage labor still exists (which is likely, if we do not coercively suppress it), the removal of statist privileges will result in the worker's natural wage, as Benjamin Tucker put it, being his full product."

Murray Rothbard has written an article about how violent anarcho-communist were about taking over factories. Mutualists are the same, and they claim that they factory is "stolen" property and so they have to right to kill the owner for defense.

However, this raises serious problems. Once all the workers took over the factory, the workers might not have the knowledge to operate nor repair it. Also, the democratic-rule would be unmangeable due to lack of knowledge and also other problems such as the free rider problem. This unmangeability would undermine competition between other firms, which would cause ineffiency and utimately reduce their standard of living.

If they disagree with the current conditions, then why voluntary cooperatives already exist? If they believe that coorperative controlled communes would pay them more, then they should be widely recognized. Coorperatives do not exist in our current society because the workers get paid less than non-collective firm due to their inefficiency. Therefore, the workers are still better off working in a non-collective firm because they get paid more from increased efficiency.

But today's workers are impovished due to corruption such as licenses and regulations, not ineffiency in some firms, intrinsically.

It seems that their belief of "homesteading" the factory is based on their economic ignorance.

Interest and Rent

Proudhon and Tucker, however, claim that interest rates exist due to the money monopoly, and rent exists due to the ownership of land. They believed that once the state deregulated the printing of money, and once ownership of land has replaced with the occupancy and use theory, interest and rent will fall to zero. Thus, the mutualists also oppose profit earned interest and rent.

Spooner actively supports interest and argues that lending restrictions causes poverty.

However, Benjamin Tucker, in his essay titled State Socialism and Anarchism, he shattered the myth that mutualists oppose interest:

For, say Proudhon and Warren, if the business of banking were made free to all, more and more persons would enter into it until the competition should become sharp enough to reduce the price of lending money to the labor cost, which statistics show to be less than three-fourths of once per cent.

Tucker said that interest will fall to three-fourths of one percent, not to zero. In an anarchic society, interest rates will indeed fall, since the missing lending restrictions and greater wealth, in the absence of the state, will lead to a lower interest rate.

However, Tucker viewed that the interest rates will equal approximately three-fourths of one percent, not because of inherent interest, but due to the labor costs of operating the interest loans:

... credits of the customers and a charge therefor of less than one per cent., not as interest for the use of capital, but as pay for the labor of running the banks.

As a corollary, Tucker deduced since interest will fall, profits will also fall:

Thus the same blow that strikes interest down will send wages up. But this is not all. Down will go profits also. For merchants, instead of buying at high prices on credit, will borrow money of the banks at less than one per cent., buy at low prices for cash, and correspondingly reduce the prices of their goods to their customers.

The interest and rent theories of mutualism does, however, contradict with Rothbardian anarchism. The mutualists think that the amount of labor from the lending service determines its rates, but the Austrian theory states that the cumulative time preferences of each lender and borrower determines the rates.

In our Defense of Mutualism, we mentioned that these errors do not seem as significant detriments to libertarianism. We now, however, changed our position and will discuss about how these meager errors will produce significant consequences.

The Labor

The mutualists hold a prediction that the labor paid will eventually fall proportionally to the labor, in an anarchic society. Benjamin Tucker noted:

The abolition of this monopoly would result in a great reduction in the prices of all articles taxed, and this saving to the laborers who consume these articles would be another step toward securing to the laborer his natural wage, his entire product.

Thus, this confirms that they do not wish to "aggressively implement" the labor theory of value, but they think that the wages will natually fall toward approximately to the amont of labor exerted.

This interpretation of the labor theory of value appears as an approximation of the long-term effects of the marginal theory of value. The greater competition in an anarchic society will let workers receive wages approximately to the labor they exerted.

Flawed economic understanding

However, their advocacy of the labor theory of value over the marginal theory of value presents a problem. Since the mutualists do not understand the marginal theory of value and thus do not understand how the free price mechanism works, they confuse the "economic calculation problem" with assymetrical information. Mutualists misinterpret the economic calculation problem, since understanding the economic calculation problem requires prior knowledge of the marginal theory of value.

Mutualists use their misinterpretation of the "economic calculation problem" as a criticism of corporations. However, the economic calculation problem, as properly understood, does not apply to corporations, though mutualists say it does. The economic calculation problem only applies to the overall allocation of goods in a price system. Corporations have assymetrical information, not the "economic calculation problem." Replacing every occurance of the word "economic calculation problem" with "assymetrical information" in this article would make it correct.

Dismissing the marginal theory of value would greately undermine the mutualist movement. For example, since they oppose the marginal theory of value, mutualists may support syndicalism as a means of achieving a free society, as they try to modify wage rates according to the amount of labor.

The Syndicalism

Many mutualists advocate syndicalism or anarcho-syndicalism as a means of achieving a free society. Kevin Carson and Brad Spangler even support coercive unions.  

Voluntary unions, also have disadvantages. While voluntary unions may raise wage rates for the members, it will decrease the wage rates for the non-members. Even if every worker in every industry joined the same exact union, the economy does not have enough money pay every worker high wages. Therefore, it will cause unemployment if every worker joined the union. Many workers will thus decide to leave the union, and receive lower wages, due to threat of unemployment.

The Gradualism

Many mutualists, including Benjamin Tucker and Kevin Carson, showed signs of their advocacy of a gradualist strategy for achieving liberty. Roderick T. Long, Charles Johnson, Brad Spangler, and many of the "thick libertarians" advocate a gradualist strategy, and have mutualist sympathies.

Tucker, in his State Socialism and Anarchism essay, advocated Proudhon's gradualist idea of abolishing the tariff monopoly after abolishing the money monopoly:

Proudhon admitted, however, that to abolish this monopoly before abolishing the money monopoly would be a cruel and disastrous police, first, because the evil of scarcity of money, created by the money monopoly, would be intensified by the flow of money out of the country which would be involved in an excess of imports over exports, and, second, because that fraction of the laborers of the country which is now employed in the protected industries would be turned adrift to face starvation without the benefit of the insatiable demand for labor which a competitive money system would create.

While Kevin Carson, also, sees taxation as theft, he still supports welfare funded by a temporary progressive tax, as a means to achieve a free society, because he believes the labor theory of value and opposes the marginal theory.

The Egalitarianism and Primitivism

The mutualists see workers as having the same preferences, and see that education level does not affect wages relative to the amount of labor exerted. Mutualists thus have an egalitarian idea that all individuals have the same preferences and can have the same education. However, as Rothbard claims, this undermines the individuality of the human and undermines the division of labor.

Their ardent alliance with the so-called "green anarchists" implies a Luddite view of technology. The "green anarchists," a less extreme form of "anarcho"-primitivism, opposes the supposed "overpopulation" and opposes innovation.

The Bureaucracy

The mutualists, by no doubt, have an accurate view that bureaucracies will decrease efficiency due to mismanagement. The employment of managers and workers, especially predominant in the modern corporation, obviously has increased overhead and communication costs, and agency problems.  

In the corporation, it has several levels of hierarchy. Beginning with the shareholders, they democratically vote for the board of directors. This enables the directors to strategically make decisions for the corporation's policy, while having a limited liability barrier between the shareholders and the directors. The limited liability barrier gives the board of directors an incentive take more risky decisions than the shareholders. They board of directors, then, employ chief executive officer, who strategically manages the corporation's policies. The chief executive officer may hire a president for the daily management for his strategic decisions. The president, may, in turn, hire several vice presidents, who work in more specialized functions, such as marketing, legal compliance, and finance. The vice presidents, in turn, hire senior managers, who follows the decrees set by the vice presidents. The senior managers hire middle-level managers, who work in more specialized areas, such as hiring and firing workers and their supervisors. At the bottom of the hierarchy, the supervisors do not hire or fire the workers, but only obey the commands from the middle-level managers.

We will list the corporate hierarchy: shareholders > board of directors > CEO > president > vice president > senior manager > middle-level manager > supervisor > worker

This hierarchy has a total of nine levels. On each level, the principle-agency cost exists. So in a total of nine levels, the agency costs have propagated into a very large agency cost.

Some useful bureaucracies, such as arbitration, may exist in an anarchic society. The subscribers of an arbitrator have to follow the arbitrator's decisions, which seem authoritarian. Though dispute resolution by a third party has significant communication problems, arbitrators may exist in a free society so that individuals have a third party to resolve disputes.

Conclusion

However, as some may wonder Tucker never identified himself as a mutualist. He still follow the philosophy of Proudhon, so we have some reason to identify them as mutualists. Spooner, however, differs. He never appeared to have influence from Proudhon, and Spooner explicitly supports interest and rent, and advocate the abolishment of lending and rent restrictions. The differences between Proudhon and Tucker demonstrate mutualism as an evolving philosophy. Mutualists do not hold constant positions. For instance, some mutualists, such as Proudhon, thinks that rent and interest will fall to zero. Some Tuckerite anarchists think these will fall near zero.

Rothbardian anarchists should not support mutualism, as this equates package-dealing Rothbardian anarchism with incompatible mutualistic positions. The mutualistic advocacy of syndicalism also undermines the libertarian strategy.

Environmentalism Leads to Starvation

The environmentalists, conservationists, and population controllers all have irrational policies of attempting to make society a better place. These three ideologies relate closely to one another, and those who believe in one of these three would probably also care about the other two. Many of them opposes technology and opposes change.

The environmentalists, conservationists, and population controllers all presume the existence of the state, heavily regulated against environmental ``exploitation" while advocating the same type of exploitation by itself. They set policies that appears to reduce pollution and poverty, while these only work as minor cookie-cutter fixes while ignoring the origin of these problems: the state.

The state works by exploiting the individuals by taxes, regulations, interventions, and slavery. The state steals from the individuals, while forcing individuals to work inefficiently, unproductively and wastefully. Without the massive waste that the state has caused, poverty will exist much less than it exists today.

In the following sections, we will discuss that we do not need a state to solve all the environmental and overpopulation problems. Though we deny that global warming and overpopulation present a problem to society, we will nevertheless present solutions of reducing of these in a free society. We will do these, just to convince those radical environmentalists to a libertarian-compatible position. (It is hard to enforce morality, unless you present consequentialist arguments defending the deontology.)

The primitivists

The philosophy of primitivism, also advocates these three policies---environmentalism, conservationism, and population control---as the three tenets of their philosophy. The primitivists advocate population reduction, to apparently reduce the supposedly ``high" demand for natural resources and food, and opposes technology as they see it as damaging to the environment. The primitivists lacks the obvious flaw that technology actually helps the environment, since it reduces waste and increases the efficiency of production.

An important policy advocate by most of the proponents of the environmentalists alike, resolves in the tariff policy. Although they have a moral stance of opposing the so-called ``free trade agreements," they also want to raise tariffs afterwards. They say that tariffs reduce pollution and the exploitation of natural resources, and almost all of the governments and organizations believe in just that. All of the organizations practicing environmentalism, including the Green Parties, actively wants to raise tariffs attempting to reduce pollution, but they just do the reverse. They say that raising tariffs would reduce the transportation of products, which would reduce gasoline and reduce carbon dioxide emissions.

However, their policy of raising tariffs does the reverse, and much greater harm to the environment than it minusculely fixes. Raising any tariff, would reduce the efficient allocation of production, which might mean that machines might even increase amount of gasoline consumption due to inefficiency.

The overpopulation solution

Raising tariffs also cause another important inefficiency: inefficiency in food production. Whenever states like China and India produces food, the state actively enforces the inefficient production of food. If one wants to see the inefficiency of food production in these states, one would see the primitive tools that they use. The high tariffs prohibit the importation of advanced farming equipment. The missing advanced farming machinery, which might even use less energy the primitive tools, has outweighed by far the presumed gasoline savings from tariffs. This sets another example of how the environmentalists harm, rather than help, the environment.

Farmers in China and India use ridiculously simple tools for farming, probably even hundreds of time as inefficient than the currently available technology would do. If the state does not exist, then tariffs forbidding the importation of machinery will ease, and the agricultural output would increase by multiple times. Food prices will lower, and much more individuals would feed themselves.

In the current world, farmers only use a small fraction of the total arable land. If farmers used all of the currently existing arable land, then food production would multiple. Non-arable land can also turn into arable land by irrigation, so increased production may form from more land for farming, in addition to the unused arable land and importation of advanced machinery.

Furthermore, the increase in technology would let farming productivity rise. Innovations in farming equipment, biotechnology and genetic engineering would increase food productivity at a rate higher than population growth.

These changes, available from current technology, would occur when the state collapses. Food productivity may increase by hundreds of times by these changes, so population a hundred times larger the current population seems not a problem.

According to the laws of economics, food prices will automatically rise when the demand of food increases. Accordingly, individuals will have less children if the population gets unsustainable, due to expensive resource costs from high demand. The population would adjust itself.

Even before the population has multiplied hundreds of times, we will probably colonize space by then.

The demographic paradox

We should even suggest that if the population grows in the first place. In fact, the population declines in the most developed nations. Birth rates falls below replacement level, meaning that the population would eventually shrink. Many economists called this phenomenon as the demographic paradox.

You may wonder the reason behind the population decline in the most developed nations. In developed nations, parents have more incentive to invest their children in education. The rate of return gained from investing additional education compares far greater than the rate of return gained from having more children. Thus, individuals see that having one highly educated child as a more economical investment than having many uneducated children.

In undeveloped nations, by contrast, parents like to have as many children as possible to help them with subsistence farming. As in the last section, the lack of farming equipment causes an inefficient proportion of human labor instead of machinery, parents in the undeveloped nations like to have as much labor as possible by having lots of children.

Unless the farmers in the undeveloped nations import advanced farming equipment, they will have many children instead of using machinery to help them farm. As productivity might increase by hundreds of times as described in the last section, individuals in the undeveloped nations would have less children when the state collapses.

As farming productivity increases in the undeveloped nations, less individuals would work as farmers. But currently, the individuals in the undeveloped nations do not have enough resources to educate their children, due to state taxes and regulations. When the state collapses, however, these individuals would instead invest their children in education instead of farming.

The reverse demographic paradox

In the last section, we have analyzed how education decreases birth rate. Parents find having less, but better educated children as a better investment than lots of children. But other factors might even increase the number of children when the state collapses. Examples includes the increased wealth when the state does not confiscate or regulate, the lack of child labor laws which motivates parents to have children work instead of consume, and the lack of compulsory education laws.

A good example of more children involves increasing wealth. Since the state taxes and regulates individuals, when the state collapses, the wealth of each individual may increase by five times. Richer individuals will have more children, as they can afford to buy resources for their children to consume.

Another side-effect of increased wealth includes less time that individuals work. Due to increased productivity in a free society, individuals do not have to work as long every day, and have more time to spend on their children. It becomes increasingly more common for only one parent in the family to work, in addition to the shorter time and longer weekends that he or she would work every day.

The lack of child labor laws would also increase wealth. The money earned by a child may outweigh the money spent on taking care of the child. Thus, some individuals might have children just to increase wealth.

Population growth benefits the economy

In a free society, the economic quality will depend solely on the current technology levels. The state will not meddle with the economy anymore and would not produce fake growth by manipulating growth statistics. In the absence of the state, the economy will only grow by increased innovation.

A larger population benefits the economy. A larger population implies that more individuals would spend their time to innovate, thus helping the economy to grow further. The increased leisure time from increased productivity will magnify the amount of time individuals would spend on innovation, instead of sustenance.

Ultimately, we should not see population growth as a vice, but a virtue.

The environmental solution

Many libertarians advocate a private rights approach for environmental pollution. The protection of property rights would give individuals an incentive to not dump waste on someone else's property. Individuals may also own portions of water, as it may reduce overfishing---a solution to conservation.

But the property rights approach to environmentalism has a fault. It suggests no solution to global warming, caused by carbon dioxide emissions. Since releasing a moderate amount of carbon dioxide does no apparent harm to neighbors, courts would not likely sue the the polluters. Under current technology, it seems difficult to measure the amount of carbon dioxide released. This also makes individuals difficult to estimate the amount of global warming, and thus impossible to reclaim monetary compensation proportional to the amount of carbon dioxide released.

The global warming solution

Proponents of a state suggest that it would solve global warming caused from carbon dioxide emissions. They suggest that without a state, individuals would still pollute since an individual derives no benefit by reducing emissions. Only in the case that most of the population in the world reduced pollution, everyone would benefit. But the some individuals would free ride, or ``cheat" by letting others reduce emissions while refraining from reducing this themselves. So they conclude that only a state can prevent the free rider problem by forcing every individual to reduce emissions.

However, solutions to this free rider problem does exist even without the state. A method to solve global warming involves the boycott. The individuals who reduced emissions can agree with each other to boycott those who not practice that themselves. To enforce the treaty, the members agreeing with the reduced emissions agreement, would also agree to refrain from trading with the non-members. This would encourage the non-members (the free riders) to agree reducing their emissions, to freely trade with everyone else.

Conclusion

We have shown that the society does not need the state to solve all three problems: global warming, conservation, overpopulation, and poverty. Most importantly, we have appeared to solve the problem that even most libertarians find it as impossible: global warming.

The primitivists has turned onto the wrong direction, hurting individuals from their policies that supposed to help.