The article titled Benjamin Tucker American Mutualist, Part 1 [in anchorage anarchy29], dealt with the economics of American Mutualists like Benjamin Tucker and Josiah Warren. To recap, rather than capitalism, which is a market based on the subjective theory of value, Tucker wanted a competitive market system based on the labor theory of value, ie, a free market with non-exploitative employers. Economic exploitation occurs when employees are paid less than the full value of their labor, creating what is called surplus value.[i]In a capitalist economy the average going rate of a job on the market is distorted because workers are forced to accept lower wages just to survive. If workers had the option of going into business for themselves with relative ease through Mutual Banks, most workers would not accept employers who offer low wages. Therefore, wages would go up as employers would offer more to entice workers to work for them rather going into business for themselves. This way workers would be in a position to dictate their own wages, which would thus reflect the true value of their occupation on the market, eliminating exploitation. Employers who pay their workers less than the general value on the market for that occupation would be exploiting those workers.[ii]
Tucker also believed in occupancy and use land tenure, meaning that only those who lived or worked on the land could own it. He thought there could be non-exploitative landlords that would get paid by their tenants, but only for the work the landlords did on the land. If the landlords did not do any work on the land used by the tenant, the tenant would not have to pay.[iii]
In addition, Tucker also advocated for Mutual Banks, which would provide credit at an interest rate of one percent or less to their customers so they could go into business for themselves if they were economically exploited by employers.[iv]
A Brief Introduction to Freedoms in an Individualist Society
Tucker’s individualist society is based solely on contract so the associations or ‘governments’ in the individualist society could take any form that people choose, and those who did not wish to take part would not be forced to. For example, the society could be extremely democratic or extremely hierarchical, extremely religious or extremely atheist, or anything in between. Those who disagreed would not have to live by the society’s rules as long as they did not forcefully impose their views on others. The only rule is that everyone is to ‘mind their own business.’ The only time the voluntary defense associations (which are companies based on protecting the freedom of their customers) would interfere in someone’s life is if an individual or group of people tried to prevent people from living life as they see fit.[v]
Government as it is now could exist including with military, jails, police (ie, voluntary defense association), etc, but with voluntary taxation.[vi] Those who do not wish to pay the voluntary tax will not be forced to, but may not get the benefits of the government they choose not to pay for. A more accurate name for this voluntary ‘government’ would be voluntary association, since those who do not wish to support the association will likely not get any of it benefits. Those who did not wish to live in a society where the majority of people are Individualists could also leave if they wished. Since they would be receiving the full value of their labor, most people could more easily afford to move on than is the case in a capitalist society where people are paid only a portion of value of their labor. In the individualist mutualist anarchist society proposed by Tucker, everyone can live and do as they wish as long as they respect the same freedom for all others. Society would be based on free markets and non-exploitative wage labor and all agreements would be made by contract.[vii] So of course he believed in freedom of speech, freedom of religion, freedom of press, etc. (William Greene and JK Ingalls were involved in Christian ministry[1]as well as being Individualist Mutualists and influential in the Individualist Anarchist movement.) Even though Tucker disagreed with usury he still believed people should have the freedom to voluntarily borrow or lend money at exploitative rates of interest in the Individualist society.[viii]
Mutual Banking
What follows in this section is a brief introduction to William Greene’s mutual banking theory which Tucker supported. James Martin states that Greene’s mutual banking “…resulted in one of the few real additions to Warrenite mutualism.”[ix]
Greene was involved in Unitarian ministry and Transcendentalism,[2]was a military officer, and Individualist Mutualist.[x][3]Greene, with his Libertarian Mutualism, believed a bank had only one reason to exist and that is to be a place where borrowers and lenders can come together.[xi]He believed traditional banks did not follow the labor theory of value and were charging higher than justified rates of interest to customers. Greene noted “On the side of the bank there is a small army, well equipped, well officered, and well disciplined; on the side of the community, there is a large undisciplined crowd, without arms, and without leaders.”[xii]
Governments have helped the banks charge high interest rates through legislation. The exchangeable value of a commodity is determined by both its utility (usefulness) as well as its scarcity. However, after government legislation dictated gold and silver as the only forms of legal tender allowed “…those who managed to obtain a monopoly of the supply of these metals to similarly control the business of the area using them as the sole legal tender, and thereby secure a premium for their use by all others engaged in commerce.”[xiii]
Greene believed high interest rates charged by banks kept many people in poverty as they were forced to work for others and were paid less than the full value of their labor. Because of the low wages they received for their labor, they could not afford to obtain credit at the prevailing high interest rates and were thus unable to go into business for themselves or create co-operatives.[xiv]
What is the solution according to Greene? The Mutual Bank.
Any person could become a member of the bank by pledging mortgages to the bank on actual property, and bills of exchange amounting to one-half of the total value of the mortgaged property would be issued. No money would be loaned to persons who were not members of the banking company. All members of the bank would enter into a voluntary agreement to accept the paper money issued by the bank for all payments when presented by fellow members. Members could be released from their pledge when their mortgage had been redeemed.[xv][4]
Greene suggested that 10,000 people sign up before starting the mutual bank. This, he believed, would insure a feeling of security among the mutual bank members because all could inspect the books and therefore observe on what basis all others were having money issued. In addition, with 10,000 local people as members people would be able to use the mutual money in everyday local life in member stores, hotels, theaters, shops, restaurants etc.[xvi]
The mutual bank is a producer bank. Its currency is non-interest-bearing. The monetization of commodities other than gold and silver (though Tucker mentioned people could use gold or silver if they wished) would enable a person with only their work skills to easily borrow capital to engage in productive work and thus create capital goods of their own.[xvii]
Greene’s Mutual Banks were not like those that issued “wildcat money” because such money was not backed either by specie or by any other commodity. Mutual bank money on the other hand, although not redeemable in specie, is based on existing commodities such as property or a promise of labor. Mutual money is issued against actual values and is utilized by all who participate in the mutual bank. Mutual money has no more effect upon the precious metals than upon any other commodities.[xviii]
Like Proudhon, Greene encouraged co-operatives and democratically run businesses. Greene promoted Associated Workshops, Protective Union Stores, and his Mutual Banks which he called the “…Triple Formula of Mutualism.”[xix]This triple formula is similar to Proudhon’s Agro-Industrial Federation,[xx]in the belief that these types of businesses would protect against companies entering the market with the intent of creating usury (un-worked income). Greene believed the mutual bank was best adapted to the local community level. In times of economic troubles, the mutual money would prove a safeguard against inflationary or deflationary pressures. The local town cannot fail disastrously because they use money backed by real property in the local community.[xxi]
Like Tucker, Greene believed people should be free to live any way they wished.[xxii] He believed Mutual Banking would eventually lead to a free mutualist society:
“Mutualism operates, by its very nature, to render political government, founded on arbitrary force, superfluous; that is, it operates to the decentralization of political power, and to the transformation of the State by substituting self-government instead of government ab extra.”[xxiii]
Final Conclusion
As noted above, Benjamin Tucker advocated for a society with voluntary taxation by ‘government’ and private businesses with either self-employed individuals or non-exploitative employers who pay their employees the full product of their labor. He envisioned land-owners who own only the land they live on or non-exploitative landlords,[5]and interest at low rates designed to cover only the costs and wages of running a mutual bank. The mutual banks would offer interest rates low enough to insure that anyone who can work would be able to become self-employed as an alternative to employers who pay their employees less than the full value of their labor. Given this option, employers would be looking for employees and therefore would have to raise wages to the full value of what workers produce, the ‘natural wage.’ Tucker followed the Labor Theory of Value and opposed unearned income which is why he is a market socialist or Mutualist. In other words, Tucker wanted voluntary taxation and equality of opportunity on the competitive market.
As stated by James Martin:
“The abolition of compulsory taxation would mean the abolition of the state as well, Tucker asserted, and the form of society succeeding it would be on the line of a voluntary defensive institution… There were two methods of government…The other was the anarchist method of ‘leadership’, inducing the individual to the ‘goal of an ideal civilization’ through persuasion and ‘attraction’…Two aims of anarchist activity, the abolition of compulsory taxation and the abolition of legally-protected money and land monopolies, form the main theme of his critical writing…”[xxiv]
People who do not accept the Individualist Society can move to another society that more fits their preferences and they will find it easier to move because they will be paid the full value of their labor.
Proudhon, an influence on Tucker and his contract theory (See Tucker’s Instead of a Book), stated in the Epilogue to his General Idea of Revolution in the Nineteenth Century (1923):
“Will you join the compact, and form a part of their society?
Do you promise to respect the honor, the liberty and the property of your brothers?
Do you promise never to appropriate for yourself by violence, nor by fraud, nor by usury, nor by interest, the products or possessions of another?
Do you promise never to lie nor deceive in commerce, or in any part of your transactions?
You are free to accept or refuse.”
The society by contract through voluntary taxation and non-exploitative wage labor on a free market with equality of opportunity was Tucker’s goal. How can the Individualist society of Tucker be created?
Mutual banking may no longer be able to have the intended impact it once could have potentially had. Tucker stated in his 1926 postscript to State Socialism and Anarchism:
“…Today the way is not so clear. The four monopolies, unhindered, have made possible the modern development of the trust, and the trust is now a monster which I fear, even the freest banking, could it be instituted, would be unable to destroy…If this be true, then monopoly, which can be controlled permanently only by economic forces, has passed for the moment beyond their reach, and must be grappled with for a time solely by forces political or revolutionary. Until measures of forcible confiscation, through the State or in defiance of it, shall have abolished the concentrations that monopoly has created, the economic solution proposed by Anarchism and outlined in the forgoing pages—and there is no other solution—will remain a thing to be taught to the rising generation, that conditions may be favorable to its application after the great leveling. But education is a slow process, and may not come too quickly. Anarchists who endeavor to hasten it by joining in the propaganda of State Socialism or revolution make a sad mistake indeed. They help to so force the march of events that the people will not have time to find out, by the study of their experience, that their troubles have been due to the rejection of competition.”[xxv]
So gradual peaceful change through education is the main key to creating an Individualist Mutualist society according to Tucker.
While peaceful gradual education is key, creating Individualist mutual banks and Individualist-run businesses can still be helpful. Although we are living in a system without equality of opportunity on the market, another small way to help to create the Individualist Libertarian[6]society is by creating mutual banks or by applying the Individualist way of operating a business (any type of business), where everyone in the company (both employers and employees) vote on wages of both the employees and the employers. The jobs within the company that are the most stressful mentally or physically would be paid the most. This is the Labor Theory of Value or the ‘Cost Principle’ (which includes the mental and physical stress) proposed by Josiah Warren. The only difference between the individualist model with employers and the co-ops proposed by Proudhon is that in the Individualist anarchist model the employers are not voted in or out like in the model of Proudhon. In either model there is no surplus value because the wage is decided by how difficult the work is and only people who work (add value) are paid. When employees, being the majority in the company, decide their wages themselves through voting (rather than letting the market do it as in the individualist anarchist model, which does not exist at this time), they have equality of opportunity to decide their wages depending on the physical and mental intensity of the work and thus receive their entire product. Also, encouraging the Individualist Anarchist attitudes of freedom, tolerance, and respect for all others’ views are things someone can do to help create an Individualist society based on the views of Tucker, Warren and Andrews.
[1]Please see Men Against the State by Martin.
[2]This author finds the Christian and Transcendentalist beliefs of Greene as well as the methods of the Sedona Method more helpful than Tucker’s egoism. While most interested in the Individualist Libertarians, this author also likes all forms of libertarianism (ie, Proudhon, Bakunin, Kropotkin).
[3]Lysander Spooner previously stated his free money decentralist views in Constitutional Law Relative to Credit, Currency and Banking in 1843. Spooner is a Libertarian Mutualist because although he supported absentee landlords, he opposed economic exploitation in the workplace. And unlike Tucker, who preferred employers who pay their employees their full value or natural wage on the market, Spooner preferred co-operative businesses. It is Spooner’s opposition to economic exploitation which was the reason for his (and Greene’s) invitation to the International Working Men’s Association. (See: Woodcock, George. Anarchism: A History of Libertarian Ideas and Movements. P 460. Available at: https://libcom.org/files/Woodcock,%20George%20-%20Anarchism,%20A%20Histo…) The Labor Theory of Value can only work on a large scale if there is equal opportunity in the market by means of Mutual Banks, or if everyone owned a house. Otherwise, people would settle for lower wages simply to survive in a market without equality of opportunity and hence not receive their natural wage.
[4] In today’s society, and especially in the future, it may be more efficient to use cashless ways of payment through things like debit cards to represent different types of money from different banks (ie, Government-backed money, mutual money etc).
[5]Tucker agreed with Josiah Warren on equitable non-exploitative land rent, though Tucker did not call non-exploitative rent ‘rent,’ but sale. Warren states “The equitable rent of either would be the wear, insurance, etc., and the labor of making contracts and receiving the rents, all of which are different items of cost.” Warren, Josiah. Equitable Commerce. ULAN Press. USA 2017. P 46. By ‘cost’ Warren means the physical and mental labor along with the material costs in addition to the average going rate on the market. Tucker states that he considers the term rent to mean usury or unearned income by a landlord. However, if a landlord worked on their own land, and the tenant pays the landlord for work done to compensate for the damage and wear by the tenant, then that is non-exploitative and thus not rent but sale. Tucker states: “If Edgeworth performs preparatory labor on a cotton field, the result of which would remain intact if the field lay idle, and that result is damaged by a tenant, the tenant ought to pay him for it on the basis of reward defined above…the transaction, nevertheless, is in the nature of a sale, and not a payment for a loan. Every sale is an exchange of labor, and the tenant simply pays money representing his own labor for the result of Edgeworth’s labor which he (the tenant) has destroyed in appropriating it to his own use. If the tenant does not damage the result of Edgeworth’s preparatory labor, then…this money, paid over and above all damage, if it does not bring equivalent ownership, is payment for use, usury, and in my terminology, rent… The difference between us is just this. Edgeworth says that from tenant to landlord there is payment for damage, and this is just rent; and there is payment for use, and this is unjust rent. I say there is payment for damage, and this is indemnification or sale, and is just; and there is payment for use, and that is rent, and is unjust.” Tucker, Benjamin. Instead of A Book. Forgotten Books. 2012. P 303.
[6]With the exception of the Individualist Libertarians like Tucker, Warren, and Andrews, the vast majority of Libertarians want a society of democratically-run businesses or workplaces. See works by Greene, Proudhon, Bakunin, and Kropotkin. Tucker and the other individualists are still libertarians due to their belief in the labor theory of value which is a preference for a society free from economic exploitation. Most libertarians want a society free of the state and democratic control of the workplace unlike Tucker and other individualists who want voluntary taxation and non-exploitative wage labor. The Libertarianism that I am referring to is the original term dating back to the 1800s. Please see Iain Mackay’s excellent AFAQ Blog. “150 Years of Libertarian.” Anarchist Writers: AFAQ’s Blog (12/11/2008) Retrieved Nov 2, 2017 from: http://anarchism.pageabode.com/afaq/150-years-of-libertarian The AFAQ has been regarded as “very comprehensive” by Graham, Paul & Hoffman, John. Introduction to Political Ideologies. London: Pearson/Longman. 2006. P 109.
[i]See Capital, Volume 1 by Karl Marx.
[ii]Tucker, Benjamin. Instead of A Book. Forgotten Books. 2012. P 12.
[iii]Ibid. P 303.
[iv]Ibid. P 11.
[v]Ibid. P 14.
[vi]Ibid. P 14; Martin, James. Men Against the State. Ralph Myles Publisher, Inc. Colorado Springs. 1970. P 96.
[vii]Tucker. Instead of A Book. P 25.
[viii]See: Ibid.
[ix]Ibid. P 126.
[x]Ibid. P 126.
[xi]Ibid. P 128.
[xii]Ibid. P 128.
[xiii]Ibid. P 129.
[xiv]See: Mutual Banking, 1850 Edition, by William Greene. (Although Greene opposed wages he did believe it was necessary for landless bank members to have non-exploitative wage labor as a transition period until they could get enough money to buy land of their own to pledge to the mutual banks in order to become self-employed or join co-operatives.)
[xv]Martin. Men Against the State. P 131.
[xvi]Ibid. P 131.
[xvii]Ibid. P 132.
[xviii]Ibid. P 132.
[xix]Ibid. P 135.
[xx]Proudhon, Pierre Joseph. Translated by Richard Vernon. The Principle of Federation. University of Toronto Press. Canada. 1979.
[xxi]Ibid. P 135.
[xxii]Ibid. P 135.
[xxiii]Ibid. P 133.
[xxiv]Ibid. P 216-218.
[xxv]Please see the post script at: https://archive.org/details/statesocialisman00tuck