Early anarchist thinkers blurred the line between socialist and capitalist.

Two Sides of the Same Coin

David S. D’Amato is an attorney, a regular opinion contributor at The Hill, and an expert policy advisor to the Future of Freedom Foundation and the Heartland Institute. His writing has appeared in Forbes, Newsweek, The American Spectator, the Washington Examiner, Investor’s Business Daily, The Daily Caller, RealClearPolicy, Townhall, CounterPunch, and many others, as well as at nonpartisan, nonpartisan policy organizations such as the American Institute for Economic Research, the Centre for Policy Studies, the Institute for Economic Affairs, the Foundation for Economic Education, and the Institute for Ethics and Emerging Technologies, among others. He earned a JD from New England School of Law and an LLM in Global Law and Technology from Suffolk University Law School. He lives and writes in Chicago.

Libertarianism is the simple idea that each individual has rights 1 that no other individual or group of them may violate. It assumes the liberty and autonomy of the individual, premised on the natural equality of all people before the law. The nineteenth century libertarian philosopher Herbert Spencer called this “the law of equal freedom,” arguing that “every man has freedom to do all that he wills, provided he infringes not the equal freedom of any other man.” While libertarians ground their robust commitment to individual liberty in several different philosophical traditions, they generally subscribe to some form of this law of equal freedom, satisfied that, in general, the only legitimate limit on the individual’s freedom to act is the identical freedom of everyone else.

Anarchism is the philosophical opposition to authority — social, political, and economic — together with the correspondent belief that the state ought to be abolished, that is, that society could and should function without it. Anarchism is also deeply concerned with the liberty of the individual, her ability to order her life as she chooses. Anarchist writer and cartoonist Donald Rooum says that anarchism, like libertarianism, hopes to create a society that widens the range of choices available to individuals. To that end, he argues, people must not be permitted to threaten one another with violence: “Any social relationship in which one party dominates another by the use of threats (explicit or tacit, real or delusory) restricts the choices of the dominated party.” As Rooum shows us here, anarchists have traditionally worried about domination and understand that it often manifests itself outside of politics proper; social and economic instances of domination seem to abound, situations in which some external power dominates the will of the individual, yet the coercive power of the state is apparently absent (though perhaps merely hidden). Today, those who self‐​identify as anarchists are likely to see the modern libertarian movement—which, as an ideological phenomenon, is closely associated with the United States—as inattentive to the realities of these social and economic forms of domination. For them, the freedom free‐​market libertarians advocate is the freedom of the capitalist to exploit. Genuine economic freedom means, to the anarchist, socialism, not capitalism.

Indeed, even to say that anarchism and libertarianism are similar is to partially obscure the true relationship between the two. After all, historically the terms themselves have been used as synonyms: the first people to call themselves libertarians were anarchists, in particular the French libertarian socialist Joseph Déjacque. It is strange, then, that contemporary political terminology should place libertarianism at the far reaches of the political right and anarchism at the far left. Are the terms not both standing in for the same fundamental idea — the principled opposition to unjust exercises of authority over the individual?

The trouble, as we are beginning to see, arises out of economic questions, specifically the question of whether capitalism is the embodiment of freedom in economics or its negative. Anarchists tend to see capitalism as a system of abuse and exploitation, an unjust, coercive system through which the property‐​owning ruling classes steal from working people and monopolize wealth. Libertarians, on the other hand, are its diehard defenders, the “radicals for capitalism,” to borrow Ayn Rand’s description of her Objectivist faithful (we will set aside at the present moment the fact that Ayn Rand rather despised libertarians, despite the obvious similarity between her philosophy and theirs). So while both anarchism and libertarianism want a free society, they appear to call for diametrically opposed economic systems, socialism and capitalism respectively. Yet, as we shall see, this is an oversimplified explanation of what is, it turns out, a thorny subject.

The modern libertarian movement overwhelmingly tends to define capitalism simply as a system of free competition and exchange, in which private owners order their own property and contractual agreements are strictly voluntary. Capitalism here is just another way of saying free market. But free‐​market economics was not always capitalist economics. It is important to note here that mid‐​nineteenth century defenders of laissez faire — for example, Richard Cobden and John Bright in England, Charles Comte and Charles Dunoyer in France — did not believe that they were engaged in a defense of capitalism. 2 An analysis using Google’s Ngram Viewer reveals a picture of which the careful student of history is already aware: the word “capitalism” was only very rarely used prior to the twentieth century; earlier in appearance were phrases like “capitalistic system,” which were employed to describe not the principled free market system championed by modern libertarians, but a system in which property‐​owners were systematically advantaged by special legal treatment. The term for the individual holder of capital, “capitalist,” also long predates the -ism form that, in the twentieth century, became the ensign of the libertarian movement. Such is the semantic context in which both libertarianism and anarchism were born.

This context must inform our discussion of the relationship between anarchism and libertarianism, in which discussion we should also include a consideration of liberalism. Anarchism may be understood as a “creative synthesis,” borrowing Paul McLaughlin’s words, of classical liberalism’s opposition to and critique of domination and socialism’s opposition to and critique of exploitation. As classical political economy came, in the industrial era’s youth, to be associated (correctly or not) with a bourgeois apology for monopoly and the exploitative treatment of workers, many radicals searched for justice in a balancing of liberty and equality. The French anarchist Pierre‐​Joseph Proudhon was one such radical, a unique thinker whose work can help us better understand the historical intermingling of socialist, anarchist, liberal, and libertarian currents. The kinship connecting classical liberalism and early anarchism remains underappreciated, in part because the tag liberal is often applied as an epithet by contemporary radicals, including anarchists. David Goodway, who specializes in anarchist history, observes the “truth in the remark that Proudhon was a liberal in proletarian clothing,” sharing with classical liberals (radical ones in particular) “the ideal of a society based on contractual relationships between free and equal individuals.” In this vision at least, Proudhon was almost certainly influenced by Charles Comte and Charles Dunoyer, 3 students of economist Jean‐​Baptiste Say and publishers of the radical liberal journal Le Censeur (later Le Censeur Européen). Their liberalism is remarkable in its similarity to modern movement libertarianism. Historian Annelien de Dijn observes that the radical laissez‐​faire liberalism of Comte and Dunoyer was “developed as an alternative to both the Jacobins’ republicanism and the royalists’ aristocratic liberalism.” The general “admiration for the classical republics,” so central a feature of eighteenth century liberal thought, left Comte and Dunoyer cold; they were concerned not with the architectural design of the ideal polity, but rather with limiting the power and role of the state itself, allowing the productive, industrial spirit its freedom. Comte and Dunoyer pioneered class theory (the supposedly exclusive domain of socialists and communists) and, in foreseeing “a complete withering away of the state,” 4 skirted the edges of explicit anarchism.

Still, the apparent rift on the subject of economics asserted itself even in these early decades of the nineteenth century. Proudhon was a socialist who arraigned private property and classical political economy as it had been presented to that point. He declared that “property is theft!” and railed against the capitalist’s “right of increase,” the right to a stream of income for which the idle proprietor gave up no equivalent in exchange. How can we reconcile such ideas with libertarianism as we know it? First, Proudhon’s famous proclamation “property is theft!” must be among the most widely misunderstood statements in political theory; libertarians, for whom strong private property rights are so important, are apt to read it and conclude that Proudhon has nothing to contribute to contemporary libertarian theory. To draw this conclusion would be a mistake. Indeed, Proudhon’s distinctive critique of political economy on the one hand and state socialism on the other made him enemies on all sides.

To Marx, “Proudhon was the paradigmatic theorist of petty bourgeois socialism.” This was the critique to which Benjamin Tucker’s individualist anarchism, so deeply influenced by Proudhon’s work, would be subjected again and again as Tucker’s stature as a libertarian and socialist intellectual grew. David McNally follows Marx in arguing that Proudhon’s socialism regrettably reflected an “uncritical adoption of the presuppositions of bourgeois economics.” If What Is Property? was an attempt to “turn political economy’s premises … against its conclusions,” then, McNally argued, Proudhon ultimately failed to adequately criticize those premises. He rather accepted them, reconciling socialism and market exchange. Arguably, then, Proudhon’s project was as much a defense of liberal principles as it was a plea for socialism and working class revolution. That it was, in fact, both offers an important lesson for contemporary libertarians: liberalism, socialism, and libertarianism are genealogically intertwined, not hermetically sealed, unconnected currents. It is impossible to develop a nuanced understanding of one without an appreciation for the others. Again, as McLaughlin argues, anarchism is, at least in part, an attempt to take seriously and account for “the exploitative dimension of liberalism and the oppressive dimension of socialism.” He argues that the anarchist left that would emerge in the following decades was only indirectly influenced by Proudhon, 5 that Bakunin and others became its prime movers.

If Proudhon assailed nascent industrial capitalism, its brutal subjection of those without property to the will of the powerful, then he was no less forceful in his denunciations of communism and state socialism. Proudhon argues that

the doctrinaire, authoritarian, dictatorial, governmental communist system is based on the principle that the individual is essentially subordinate to the collective; that from it alone he has his right and life; that the citizen belongs to the State like a child to the family; that he is in its power and possession, in manu, and that he owes it submission and obedience in all things.

In this passage the student of anarchism hears echoes of Josiah Warren, often regarded as Proudhon’s American counterpart. Warren is another early to mid‐​nineteenth century libertarian that exceeds the capacities of today’s left‐​right spectrum. Like Proudhon, he was sensitive to the social and political inequality involved in the subordination of the individual to any collective, machine, or (one of Warren’s favorite terms) combination. Warren’s first‐​hand experience with the carefully blueprinted utopian projects of Robert Owen persuaded him that their embrace of the “most fatal mistake” had doomed all previous “attempts at radical reformation.” That mistake was the establishment of “artificial combinations” empowered to direct the actions of the individual, to force surrender of “the natural sovereignty of the individual.” This is not to suggest that Warren believed individuals ought to live solitary lives, strictly independent from one another, relying on no one but themselves. Warren rather consistently celebrated community and cooperation. In Native American Anarchism, Eunice Minette Schuster’s notable study of individualist anarchism, she observes that, for Warren, “the freedom to differ” was “the basis of universal cooperation.” He opposed only compelled connections, those that “tend to obscure the lines of responsibility,” 6 to breed incentive problems and conflicts of interest.

Warren’s economic theories and the practical experiments to which they led are extremely idiosyncratic. Unlike later socialists, Warren sought not to abolish “the wages system,” as it was often called in nineteenth century anarchist writings, but to establish and ensure equitable exchange. Benjamin Tucker, a disciple of both Warren and Proudhon, would expand on this idea in his debates with his socialist and anarchist contemporaries. For Tucker, the payment of wages, of the employee’s sale of labor under contract with the employer, was not problematic or inconsistent with his socialist opposition to monopoly privilege, at least not in and of itself. “Why,” Tucker writes, “I thought that the fact that [labor] is not paid was the whole grievance.” That one might choose to hire himself out for a wage was perfectly inoffensive to Tucker’s individualist anarchism and its notions of economic justice. Instead, what bothered Tucker were the privileges that empowered “the capitalistic class,” as he called it, to lay claim to unearned wealth. Tucker believed that unadulterated free‐​market competition, free of state‐​granted privileges, would yield conditions in which no seller could charge more (or at least much more) than the amount of his costs. Banks could not charge interest on loans; landowners could not charge rent; merchants could not make profits. All of these were usurious, made possible only by various monopolies, which placed arbitrary limits on competition. Market competition, then, was treated as a practical way (to Tucker, the only way) to effect the dreams of the socialist movement. This was a prediction based on the idea that, under perfectly free competition, the true source of economic value, labor, would fully assert itself. Tucker’s anti‐​monopolist economic program calls to mind the work of another “free‐​market laborist.” 7

If Warren was Proudhon’s American counterpart, then perhaps Thomas Hodgskin was his English analogue. Hodgskin’s famous distinction between private property as established by nature and private property as a socially destructive monopoly privilege created by the legislator (“arming the land‐​owner and the capitalist against the peasant and the artizan”) bears an obvious resemblance to Proudhon’s contrast of property with possession. It is remarkable, then, that the modern libertarian movement has tended to claim Hodgskin (insofar as it is aware of him) even as they reject Proudhon, apparently for the crime of being a socialist. Hodgskin was arguably no less a socialist, though of course not in either an anti‐​market or pro‐​state, authoritarian sense. As historian and Hodgskin biographer David Stack observes, Hodgskin’s thought defies “any simple dichotomy between socialism and individualism.” Whether socialist is a term that accurately describes Hodgskin remains the subject of scholarly debate. Michel Prum calls him a “Lockean anarchist,” and this may be the best, most accurate label for Hodgskin. Certainly the Ricardian Socialist label, first employed specifically to describe Hodgskin, is today widely regarded as both inaccurate and inadequate as applied to him. Stack, for example, argues that the whole preoccupation with Hodgskin’s theory of economic value — whether it derived from Ricardo or Smith, to what extent it influenced Marx — produced an deficient examination of Hodgskin’s project. Hodgskin, sharing still more with Proudhon, drew both praise and rancor from Marx, who alternately lauded Hodgskin’s outstanding contributions to English political economy and damned him for “accept[ing] all the economic preconditions of capitalist production as eternal forms.” Indeed, that Hodgskin is known today is largely due to the ongoing discussion of his influence on Marx, whom Sidney and Beatrice Webb, founders of the London School of Economics, called “Hodgskin’s illustrious disciple.” But rather than rejecting Hodgskin as a socialist, as they have Proudhon, today’s libertarian movement ought to extend its qualified embrace of Hodgskin to Proudhon.

Ostensibly competing aspects 8 of the anti‐​authoritarian tradition offer valuable insights, all of which belong to a thoroughgoing theory of liberty. But both the left (or socialist) and right (or capitalist) traditions of libertarianism have tended to neglect one another at best and despise one another at worst; both see the other’s claim to the titles of anarchist and libertarian as false, premised on mistaken notions of freedom. They accordingly emphasize different conceptions of liberty, the left its positive meaning, the right its meaning. A more interesting and useful approach — a reconciliatory, Proudhonian one perhaps — would attempt to recognize and study the ways in which negative freedom opens the way to positive as an empirical matter. And free‐​market libertarians have indeed attempted to show that broadening the space for the freedom to trade and compete, even marginally, has lifted millions out of the most abject poverty and squalor (Deirdre McCloskey’s phrase “trade‐​tested betterment” comes to mind). Contemporary libertarian theorists such as Roderick Long have argued that the libertarians of the various schools ought to embrace one another as family, differences notwithstanding. Doing so would start a mutually edifying conversation that strengthens the theory of liberty and spurs our imaginations

1. It’s important to establish here that not all libertarians believe individuals have natural rights; many do not and ground their theory of human freedom on some other philosophical foundation. For a survey of these, see Arguments for Liberty , edited by the Cato Institute’s Aaron Ross Powell and Grant Babcock, published by Lib​er​tar​i​an​ism​.org.

2. For several other reasons, too, these free‐​trade liberals would be positioned on the left of today’s spectrum. Opposition to war, imperialism, and slavery was, for example, a natural part of their libertarian and cosmopolitan project.

3. For a more far‐​reaching discussion of their influence on Proudhon, see David Hart’s thesis on Comte and Dunoyer.

4. Id.

5. David Goodway similarly argues, “The movement in anarchist ideology away from Proudhon’s contractarianism became virtually complete with the advent of anarchist communism. The anarchist communists attacked Proudhon’s views, although not always by name, on primarily two grounds. First, they argued that it is impossible to determine the moral worth of any particular individual’s contribution to the economy. In place of equivalent exchange they advocated distribution according to need. Second, they began to question the moral basis of contractarian ideology, which they regarded as evincing a ‘shopkeeper’s mentality.’”

6. Crispin Sartwell, The Practical Anarchist: Writings of Josiah Warren (Fordham University Press 2011), page 14.

7. Mark Perlman and Charles Robert McCann, Pillars of Economic Understanding: Ideas and Traditions (University of Michigan Press 1998).

8. It is inaccurate to call them “wings” or “sides,” as this implies a neat dichotomy that, as we have seen, has never existed within libertarian thought; it is more accurate to think of the relationships between the various ideologies as connected through a web or network.