“Anarchists don’t understand risk!”

The concept of risk is often used by capitalists when they argue in favour of usury. The argument goes something like this: the entrepreneur faces such a risk of failure that he deserves to be rewarded for his successes, and thus deserves to pay his employees less than their labour, charge customers more than cost, and so on.

Prima facie, this seems like a strange argument. After all, people take all sorts of risks, most of which are not rewarded in any special way. Why therefore should this particular form of risk be rewarded, and why should it be rewarded with something as drastic as usury? Why not any other form of reward?

Furthermore, if the entrepreneur is rewarded for his risk-taking, why are the first employees not similarly rewarded? The entrepreneur risks his capital, that is true, but the employee, who often lives from paycheck to paycheck, risks his livelihood. And yet only the former is rewarded in such a manner.

It seems to me, therefore, that the argument is an ad hoc rationalization used to justify usury. It is usury that is assumed as the constant and risk-taking that is brought in as the justification, not vice-versa.

It’s also interesting to note that, in capitalism as we know it, risk-taking is limited, and a majority of the largest Western firms would not exist without government protection or subsidies. The recent wave of bailouts- more capital-democratic redistribution of resources from the poor to the rich- only emphasizes the importance of this protection.

If we accept the capitalist bizarro logic, bailouts actually make sense: if corporations are persons, why should we not help persons who are about to die? Also, we should not be surprised that the US government is imposing conditions on these same corporate persons. After all, we see during natural disasters that, when the government deigns to help people, it still treats them like vermin. So why should the government not be a little rough with the corporate persons it saves as well? (never mind how much it contradicts property theory)

The capitalist will inevitably ask the Anarchist what reward he would give to successful entrepreneurs, what incentive he would give for people to try their hand at starting new businesses. To which we should rightly answer: why is such a reward and incentive needed? That’s an implicit premise in need of evidence. Of course, capitalists wouldn’t think of doing a cost-benefit analysis on the whole process, since other people’s failures and expanded energy does not concern them.

Of course Anarchists recognize the validity of such work, as they recognize the validity of any other work. And like any other work, it should be rewarded in the same way. If a certain job implies risks to one’s finances or health, then these risks are part of the costs of doing that job, and should be compensated. But in no way does it give one the right to take money that legitimately belongs to others, that is to say, to use a word that capitalists absolutely hate, to exploit them.

Exploitation cannot be made ethical by making it a reward any more than it is reasonable to give people the right to kill others as a reward (we reserve that right only to policemen, soldiers and executioners). And in most places in the world, exploitation- whether it be the theft of common land, the theft of natural resources, economic servitude to Western economies, the destruction of ecosystems- is only so short of a death sentence. Surely none of this can be rationalized as a just reward for legally made-up persons, let alone actual persons, unless we are actually all insane.

How would businesses start in a free society? We can’t make predictions about the future, obviously. There are many different solutions to this problem, and wanton risk-taking is only one of them. But one thing we can conclude is that, in an egalitarian society, such decisions could not be taken unilaterally, since no one could accumulate capital to such an extent. It is likely that, as it is today, most Anarchist businesses would be financed by a pool of resources coming from a great number of people.

It is also likely that, since a free society would have small economic units, some new businesses would break off of bigger ones. Add to all this the freedom to occupy unused land, LTV limits on prices and wages making planning a great deal easier and reducing supply as a whole, and other particular Anarchist factors, and the level of risk required will be easily seen as lower than that in today’s societies.

4 thoughts on ““Anarchists don’t understand risk!”

  1. WorBlux January 4, 2010 at 06:28

    There’s a local landscaping business that has hatched several entrepreneurial and independent businesses under it’s wing.It’s really an admirable thing that I wish more people would emulate.

    In all cases of activities bearing risk, the nature of human action is such that a person must first perceive the rewards as outweighing the costs and risks.

    Of course you are correct though in saying the risk in way justifies the use of subsidies and market restrictions to guarantee returns on investment.

  2. Ibid January 8, 2010 at 00:37

    If we assume that a borrower has no risk of defaulting and there is no inflation, the lender is still 100% justified in charging interest. It has nothing to do with risk and everything to do with the time value of money. I would prefer to be paid a dollar today rather than a dollar a year from now.

  3. Francois Tremblay January 8, 2010 at 01:26

    You seem to be confused: in this entry I was talking about profits, not interest. I didn’t say anything about interest in this entry. (usury is composed of interest, profit and rent)

    If you want to know my reply on interest, it’s on the libsoc FAQ:
    http://docs.google.com/View?id=dhbvr2gz_506v2f83dh
    My basic reply would be that whether I’d like money now more than later or not, does not give you the right to extort interest. It’s fine that you don’t want to use your money right away, but you shouldn’t ask other people to reward you above and beyond your work for that.

  4. Cindy April 27, 2010 at 13:11

    I did not knowwhat Bizzo Logic meant so I looked it up , this is whatI found.

    http://loknar54.com/SA-Bizarro-1.html

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