This work is available to download as a
Our subject is political authority, the authority rightfully due a state. So to begin, let us define “state.”
This definition is from Max Weber, who put it thusly: “A state is a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory.” Having this relatively sharp definition of “state” at our disposal, we can better understand and evaluate historic anarchist thought. We are at an advantage over luminaries like Proudhon and Spooner, in that we have more experience with the modern state, an institutional analysis of the state, and new reasons to distrust and hate the state. We can stand on the shoulders of anti-statist theorists like Tucker, Nock, and Rothbard, leverage our greater understanding of economics, and discover new wisdom and new understanding.
Anti-statists tend to see society and state as inherently opposing institutions. Society is the sum total of all voluntary human interaction. Aggression (the violation of rights, the initiation of force or threat of it) is morally wrong. The state is aggression legalised and legitimised.
state—an organisation with an effective monopoly on the legal use of force in a given geographic area.
The political philosophy that supports all three anti-statist assertions is called “anarchism.” Prior to the late 1700s, known anarchist writings were negative, purely a critique of the institution of state. They did not offer a positive alternative. An eloquent example is Vindication of Natural Society by Edmund Burke. Burke stresses that natural society—without artificial government—could not possibly be worse than the known bloody and tyrannical history of states. He shows how states fail, and the undesirability of states, but offers no positive vision of a stateless society. Modern anarchists have ideas about how such a society would be organised and brought about. Thus, for full-fledged anarchists there is an additional consideration: How a stateless society may work.
The first positive treatment of what came to be known as anarchism was a book by William Godwin called An Enquiry Concerning Political Justice, published in 1793. This first effort at positive anarchism, we see with perfect hindsight, contained two major flaws. The first flaw, one might call the utopian flaw, consisted of the belief that the nature of mankind is sufficiently malleable to allow the abandonment of all legal systems. This attitude basically throws the baby out with the bath water. Since decreed law (state monopoly law) was illegitimate, early utopian anarchists jumped to the erroneous conclusion that all law was bad. This is understandable, since the polycentric law systems that predominated in the Middle Ages were forgotten, cultures with polycentric law were largely unknown, and like today, most people simply assumed that law and state were inseparable. Another flaw seen in early anarchism had to do with economics: A belief in the doctrine of just price. In particular, the early “classical” anarchists held the normative doctrine that “cost is the limit of price,” also known as the labour theory of value.
Major Errors in Classical Anarchism
Much of modern anarchist thought has been updating the core anti-statist principles to reflect modern thought and scientific advancement in these two areas. As we will see, historians now know more about polycentric and spontaneous law in various cultures and civilisations throughout history. For example, hunter-gatherer tribes were generally not communistic as once thought, but had private property in scarce goods like tools and weapons. We know now that, for these indigenous peoples, land was simply not sufficiently scarce to warrant property status. Early utopians had assumed that these were “noble savages” with a communist bent, and that natural society had to reject private property. Now we know, with our greater understanding of the advantages of division of labour, and the concept of comparative advantage, that freedom of association, trade, and property rights are not only advantageous in terms of an individuals’ standard of living, but are also absolutely necessary to maintain the number of people on earth today. The modern anarchist tends to be ardently pro-property and pro-market, championing “anarcho-capitalism”—the radicalism of the twenty-first century. How times have changed!
The second flaw is perhaps the more contentious. The labour theory of value is still believed today by many people. Like the belief in astrology, otherwise rational people hang on to it. Discredited over a century ago by the marginalist revolution in economics, the labour theory yet survives.
There are reasons for this flat-earth view of economics. First, some of the original economic luminaries held the labour theory of value. Adam Smith and David Ricardo supported it. It is fair to say that the high priests of “capitalism” planted the seed for the main criticism of “capitalism.” Karl Marx quoted Smith and Ricardo to support his condemnation of capitalism. A second reason for the continued popularity of the labour theory of value is that it contains a kernel of truth, at least in its descriptive formulation. The price of a good (or service) can be gauged by the amount of labour expended in producing it. One can argue that other measures are more accurate, or more easily determined. One can argue that the subjective theory of value—supply and demand—is more general in that it explains a broader range of phenomena. One could argue that labour-time is an effect rather than a cause. But as a rough gauge for many goods, labour often suffices as a workable measure of price.
The problem with the just price doctrine is that it goes beyond the descriptive claim that labour-time can be used to measure or predict price; it claims that the measure should be the exchange price. In other words, it makes a normative claim—what the price ought to be—rather than a descriptive claim of fact.
There are other weaknesses in classical anarchist economic theory: It does not recognise the information function of price or know the meaning of scarcity, it ignores or underestimates the advantages of a division of labour, its theory of money is non-existent or naive. This is not surprising, given that the theories were worked out in the nineteenth century. But whatever other economic errors it makes, classical anarchism’s most fatal economic flaw is its reliance on that creationism of the left—the labour theory of value as a normative principle.
Before we look at how it may work, focusing on the history of anarchism and the economic aspects—the differences between anarcho-socialism and anarcho-capitalism—let us cover the basics. We first will examine “legitimate authority” in an effort to discover its essence.