You may have noted that I used the term “free market” to designate the kind of system that prevails under Anarchy. Many Socio-Anarchists would decry this as being capitalist propaganda. But the State cannot, by its very nature, permit the existence of free markets, because having a free market implies that the agents (be it the individual, the group or the community) set their own rules, and the State claims to be the sole creator of rules.
Even those economists who have most brilliantly defended the free market against the interference of the authorities have usually neglected the parallel consideration that no free market is really compatible with a law-making process centralized by the authorities. This leads some of these economists to accept an idea of the certainty of the law, that is, of precisely worded rules such as those of written law, which is compatible neither with that of a free market nor, in the last analysis, with that of freedom understood as the absence of constraint exercised by other people, including the authorities, over the private life and business of each individual.
Bruno Leoni, Freedom and the Law (bold mine)
The free market and capitalism are therefore opposite concepts. Nowhere is this more obvious than in the fact that the free market cannot contain corporations, while capitalism is founded on the concept of the corporation. The free market allows for competition between agents, with the individual consumer’s values as the guide, while capitalism is based primarily on collusion between corporate entities and within the State (since corporations are part of the State). While it is true that competition exists in capitalism, the benefits of manipulating the law for one’s own advantage means that corporations will use political means more readily than meet demand. Capitalism is based on cooperation between corporations and competition between individuals, while the market is the exact opposite, having cooperation between individuals and competition between organizations. In short, the free market is founded on the free exchange of value, while capitalism is founded on organized coercion.
I consider all Anarchist economic systems to be market systems. Socio-Anarchists propose a number of economic systems which they consider to be non-markets, such as a barter system or a common pool system, but they have yet to prove that any of these are non-market. Their error is in believing that value can only be monetary or goods, and that thus only a system where people directly trade money for goods can be considered a market.
In fact, most of what we value is not directly money or goods: these non-pecuniary values include knowledge, security, relationships, affection, love, social visibility, freedom, self-expression, etc. You can see that these are very important values! By putting them out of the equation, the Socio-Anarchists have a vastly incomplete picture of what an “exchange of value” can be.
Take a common pool system, for instance. Socio-Anarchists would say that a system where a person puts resources in a common pool, and then takes some resources from the pool whenever needed, is not a market system because when the person puts resources in the pool he does not receive value. But this is obviously false: the person who does this gains the important value of being allowed to participate in the system, and the security of being able to count on it in times of need.
In fact, we do have a market process just like this: it’s called insurance. Insurance markets have existed in the past, and while the current insurance area is very clearly not a market, due to being heavily regulated and corporatized, you can be sure that when Anarchy restarts such markets will also reemerge.
Talking about restarting Anarchy, a final word I want to analyze is “privatization.” Socio-Anarchists demonize it, and for good reason: switching any given activity from a government monopoly to a corporate monopoly is not an improvement at all, and in some ways make things worse. But they believe that privatization means taking control away from the people, which is ridiculous. The average State subject has no more control over the government than he does over corporations (that is to say, a vanishingly small amount).
To the Market Anarchist, privatization is not a bad word, if it means “taking things away from the State,” not “giving control to corporations.” Indeed, that is what Anarchy is all about, reclaiming from the State what we legitimately own. But what we observe as privatization within the statist context is not Anarchy at all. As Kevin Carson notes in “Libertarian Property and Privatization: An Alternative Paradigm”:
Privatization of state property, as it is actually carried out is just another form of state capitalist subsidy. In the first state, transnational capital promotes infrastructure projects in Third World countries that are essential to returns on Western capital in those countries, as a way of subsidizing foreign investment there at the expense of native taxpayers. Next, the resulting debt load is used to discipline the country’s government into carrying out policies favorable to Western capital. And finally, under the “structural adjustment” regime imposed by the IMF and World Bank, the country is forced to sell assets (previously paid for in the sweat of the native producing classes) to Western capital at pennies on the dollar.
Privatization also commonly involves a phenomenon known as “tunnelling,” in which politically connected elites have an advantage in acquiring rights to the former state property. For example, besides Western capital, the other group that had funds available for buying up former Soviet enterprises was the Party nomenklatura, which had accumulated ill gotten gains from decades of graft and corruption. (Sort of like the good ol’ boy sheriff who uses labor from the county work farm to staff his plantation, but on a much larger scale.)
The disparity principle applies here, as anywhere else. Privatization only benefits society as a whole if the firms thus constituted or augmented are relatively small and work towards good purposes. Privatizing police, jails or the military only makes the State’s apparatus of exploitation more efficient. Privatizing a vital function, like water, to a big corporation, as seen in the movie The Corporation, can only lead to disaster. At least government monopolies are slightly constrained by their need for popular support, and can only expand so much at a time. Corporate monopolies, on the other hand, have no such constraints, especially in such a vital area as water.
My personal position on corporations is that, once Anarchy is back in place, we could return to the system that existed in the early 19th century, where corporations were set up for a limited period of time, for a specific purpose, and with public approval (but of course it would have to be community approval, not government approval). This system was wiped out because the State cannot resist expanding the power of corporations in order to attract more and more of them, and stimulate economic growth at the expense of its subjects. In an Anarchist society, such incentive would be balanced by the individual’s desire for his own well-being and that of his society.