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The Economics of Anarchy

A Study of the Industrial Type (1890)


by Dyer D. Lum (1839-1893)


X. Insurance (Security)



EA-10.1 Wherein lies security in the absence of statute law? What assurance is there that with full opportunity for labor to exploit nature in order to receive full reward, it can enjoy it in peace and unmolested? That such questions have arisen in every previous twilight period of progressive evolution is no answer where new needs and fresh requirements are involved. Let us, then, follow out our application to this renewed doubt of freedom in industrial relations. And in this connection, the scope of this work not permitting replies to all objections which may be urged by militant defenders, we will consider the problem of social assurance under the following heads: 1. Incentive; 2. transportation; 3. unskilled labor; 4. personal security.
EA-10.2 1. INCENTIVE. We have seen that land, as the source of production, is held in fee simple by individuals, their monopoly having the sanction and authority of government; that the monopoly invested in the landlord, has no claim in equity, but rests upon supposed social interest, upon custom, and the direct fiat of law which legalizes the claim and defends it from the encroachment of the disinherited, thus making the interests of man secondary to the mythical interests of aggregated men, vainly imagining that the welfare of the individual is the result rather than the cause of social interests. It would seem to be a truism to say that with freedom common wants, as in all other matters, would bring common security, and that to the demand for security co-operation would furnish ample supply. Then would be realized the truths stated by Thomas Paine:
EA-10.3
“There is a natural aptness in man, and more so in society, because it embraces a greater variety of abilities and resources, to accommodate itself to whatever situation it is in. The instant formal government is abolished society begins to act, a general association takes place, and common interests produce common security.”
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“Where the rights of men are equal every man must finally see the necessity of protecting the rights of others as the most effectual security for his own.”
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“Whether the rights of man shall be equal is not a matter of opinion, but of right, and consequently of principle; for men do not hold their rights as grants from each other, but every one in right of himself.”
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“He that would make his own liberty secure must guard even his own enemy from oppression, for if he violates this duty he establishes a precedent that will reach to himself.”
[Online editor’s note: First quotation from Rights of Man (1792), II.1; next three from First Principles of Government (1795). – RTL]
EA-10.7 We have also seen that in freedom to organize co-operative credit, that in the removal of monopoly now conferred upon capital to make a particular form of wealth the measure of all value, alone lies relief, for without it individual activity is cramped, wealth saved is denied the right to capitalize itself as wealth used without paying toll to privilege. Under the relations which Anarchy seeks to inaugurate every material produced by industry would through mutual credit become the basis for a medium of exchange having social value founded on labor, rather than speculative value based on command over necessities; the bill of exchange would be generalized, secured by products pledged, and obtaining acceptance by co-operation, connecting means of use with occupancy of soil, thus making capital the tool of labor.
EA-10.8 With the cessation of rent and interest as enforced exactions imposed upon labor, which freedom to compete is alone enabled to accomplish, instead of being a “cripple” labor would step forth a herculean giant, strong in its own resources, independent from all restrictions, capable of entering upon any enterprise, and free through co-operation to accomplish the most colossal endeavors and gigantic undertakings. Instead of labor waiting upon capital, hat in hand, to crave permission to toil, it would possess capital and be free to apply it in whatever direction it saw fit. Instead of waiting till the exactions of rent, interest, and profits were filled, exactions competing with each other to reduce the sum left for labor to the level that slavery bequeathed to productive toil, the reward of industry would be all that it brought into being, and with every advance toward competence new wants would arise, new desires would spring into existence, grander goals would loom up for attainment, conceptions of “rights” attain a broader meaning, and loftier aims and higher social ideals would form to call out vaster combinations of industrial energy and productive skill to wring from passive nature prosperity and wealth in which all might share, and to deck nature’s banquet with covers for even the weakest and most dependent. Then the possession of wealth and luxury would cause no envy, for equal opportunities to natural abilities would lie open to stimulate all.
EA-10.9 Still the incentive is the dreadful spook which haunts even the mind of the laissez passer Economist when the motive for gain over the failure of rivals is removed. Having made greed the spring to action, having legalized spoliation, organized force to defend robbery, bound freedom of action with restrictive bonds, and made privilege to exploit the sole goal of ambition, the Rip Van Winkles of political economy raise their eyes from their ledgers to inquire wherein would be the incentive for their sleepless nights to take advantage over a neighbor, or to apply their talents to devise new appliances to monopolize production? How many of our millionaires cease to amass when competence is reached? Has ability to enjoy ever caused desire to decrease? And how could incentive be lost when opportunity to produce is increased, when with every successive step new wants would arise calling out new activity? As well assume that there can be no incentive to acquire knowledge when the school is left behind and the master’s rod is no longer applied! The incentive lies in our natures, and co-operative societies would afford fruitful fields for industrial activity, for in every advance would be born higher wants. But any attempt to institute artificial regulation over production, to limit the free scope of individual activity, whether by centralizing power under the delusion that a social providence may be thus created, or the organization of groups in which self-elected needs rather than deeds become the governing principle of distribution, is a violation of logical deductions from liberty. Freedom to co-operate is the first desideratum, and this carries with it the preservation of every incentive to healthful activity. And it must ever be remembered that cooperation does not imply instituting corporate action alone. Personal incentives weakened, a distributing agency arises, centralization and bureaucracy result, and those upon whom we are taught to depend become in time both donors and masters.
EA-10.10 We may, therefore, confidently conclude that under equal freedom social activity would revolutionize production. With individual needs supplied by a minimum of exertion, the claims of family, the natural desire for rest in declining years, the broadening of social feeling, and the higher enjoyment under diffused prosperity and happiness would bring out enterprise upon a grander scale than syndicates have yet conceived. And as each invention would lessen toil, would directly bring through increased social benefit relief to each individual toiler, would render the struggle for existence lighter upon all, greater flight would be given to talent, greater opportunity for its realization, and greater glory and pleasure in achievement. Production and distribution being no longer determined by greed, equal freedom to co-operate would suppress poverty, eradicate vice and crime, and inaugurate a social millennium to which the myth of paradise would no more compare than the light of a tallow dip to the brightness of the noonday sun.
EA-10.11 2. TRANSPORTATION. Can free activity cope with the problem of gigantic social enterprises? Society being permanent and governmental forms but temporary, would not co-operative effort become the more imperatively necessary under freedom? To all arguments urged for the extension of freedom in social relations scepticism retorts: It may do well enough for a factory or a store, or even for village needs, but government is needed for enterprises of a national character. And many of those who profess a lip-service devotion to liberty and most ardently desire industrial emancipation, stumble over this objection and give the lie to their assumed sympathy by vociferously appealing to authority in the vain hope of finding therein support for liberty. Anarchy, to win approval, must show itself capable of meeting and resolving all problems that not only now, but under a higher and more complete civilization, may be seen to arise, and do so in accordance with progress and equity.
EA-10.12 Under the present regime of capitalism the allurement of profits induce [sic] private enterprise into the most colossal undertakings. Ocean lines of steamers ply from every port, mountains are tunneled, miles of inter-state railways laid, the cutting of vast ship canals projected, trans-continental railways and telegraphs are built, and we read of American capital seeking investment in China and an English syndicate contracting to build a railroad across the great central plateau of Asia Minor, connecting Constantinople with Bagdad. Therefore the assumption of governmentalists that private enterprise cannot undertake such colossal works is unfounded, and we are brought to the consideration of the question whether upon the substitution of Anarchist (free) co-operation for the profits system sufficient assurance for the necessary outlay of capital will still remain? Our pseudo-socialist being answered by the facts, let us see whether the continuance of the profits system is essential to elicit supply to social demand.
EA-10.13 It has been shown that in the organization of credit Anarchy (or equal freedom) would introduce, incentive would not be destroyed. We have also seen that the advantages of co-operative production and exchange would continually enlarge the boundaries of such joint concurrence of effort. Let us take, for instance, the grain exchange. The necessity for finding a market for surplus grain would necessarily lead independent bodies to the organization of such a co-operative board to furnish an outlet for foreign supply, or to find their exertions limited and grain rotting on their hands. If self-interest now leads farmers to organize into national organizations and to affiliate with like bodies, would not the inducement be as great under larger opportunities to reach the market? With the facility to credit that Anarchy alone affords, the solidarity of interests of widely separated communities, and the urgent necessities of the case prompting action, means necessarily would be taken to adjust supply to demand, and the grain exchange (or exchanges) rise to meet all needs, with a net work of affiliated agencies wherever circumstances might render them desirable.
EA-10.14 Nor is this building social assurance upon purely hypothetical foundations. Anarchy in postulating self-interest as the spring of action, endeavors to show that causes now found sufficient to cross the earth for the purpose of exploiting profits from industry, would still remain operative to further individual interests where greed did not enter, for whatever furthered individual interests would necessarily be reflected in that of the association which these farmers either conjointly constitute or mutually employ. This is but a single illustration and can be extended to any other branch of production. We must remember these facts: freedom to the organization of mutual credit would emancipate farmer and artisan alike from the domination of capital in the exaction of interest. In the facility to the capitalization of all wealth production would be released from the restrictions which now clog and hamper it. In this indefinite extension of productive power an enlargement of joint action would necessarily result to give social assurance in the absence of paternalism. As labor receives the full reward of its exertion, an increase of co-operative effort brings increased multiplicity of products. One of the growing wants of the emancipated producers would be to utilize their capital toward facilitating wider exchange. The demand would exist, the means to realize the demand would be present, the enlargement of the scope of co-operation would furnish the method, and why should not the supply be forthcoming as well under freedom as through artificial interference of centralized organization by governmental “direction”?
EA-10.15 We are so much in the habit of carrying the conditions of today with us over into our conceptions of tomorrow, that we are apt to associate with the word co-operation merely combination for local results. On the contrary, in the absence of meddling interference by politics in economics the solidarity of interests between kindred bodies would lead to the extension of credit affiliation between them. Thus we may readily conceive of the various industries engaged in the manufacture of iron products affiliating together till the iron industry would embrace all branches from the mining of the ore to the distribution of foundry products. But would not this be government? On the contrary, it would be social administration; instead of providing “direction” for production, it would seek means to further distribution, a radical difference. Its sphere would be limited to that industry alone as distributing agencies and having no connection with a like affiliation of interests in the building trades, for example. Nor does it follow that there need be but one such; events would determine all such details without instituting “direction.”
EA-10.16 The necessity for distribution arising from increased production, the advantages resulting from enlarging the boundaries of co-operative functions, the facility with which capital could be directed to opening transportation, and the centralization of functions extending outward and upward from the social unit to the several boards of administration, would all combine to render practicable any work that would conduce to “the better arrangement of the social relations of mankind than that which has hitherto prevailed,” as Webster defines Socialism, and to which the industrial type aspires. Not alone in transportation would this be seen, but in draining of swamps, the irrigation of barren lands, the fertilization of desert wastes, and in other ways beyond the power of governments or privileged syndicates to achieve. Anarchy asks but one predicate – given equal freedom, and it will transform the world into a paradise transcending any that myth ever conceived.
EA-10.17 3. UNSKILLED LABOR. “An utopian dream,” said cardinal-ministers when the equal right to private judgment was asserted in the realm of church authority, and smiled contemptuously as the poor heretics were led to the stake or the rack.
EA-10.18 “An utopian dream,” said noble protestant ministers when liberty of choice was asserted in the realm of royal authority ; and their noble countenances assumed a sterner glance as patriots were butchered to maintain tyranny.
EA-10.19 “An utopian dream,” repeat republican office-holders when freedom of contract is asserted prior to production, and they fancy they sit more securely in their upholstered chairs as social heretics are sent to the scaffold or the dungeon.
EA-10.20 Yet liberty in social relations still asserts itself against all foes, whether openly espousing coercive measures or tacitly doing so under the guise of pseudo-socialism.
EA-10.21 We have seen, and the repetition is permissible, that industrial emancipation lies in the freedom of land and labor – freedom of access to the source of production, freedom to acquire the means of production, freedom under equal opportunities to escape from wage-thraldom. We have seen how the farmer would naturally adjust his activities to natural social conditions; how the skilled artisan could achieve wealth and ease through co-operation. The day laborer remains to torment the mind of sceptics in the realization of the industrial type. Granted that land and labor were emancipated, for industrialism involves emancipation, then it follows these conclusions necessarily result: 1. It must offer means to labor to utilize land. 2. All who love liberty must approve the fullest extension of individual freedom. 3. That cooperation logically results from individual freedom. 4. That politics would be lost in the development of fuller individuality. 5. That government would disappear into voluntary social administration. 6. That production would be the province of free, autonomous associations. 7. That the farmer would find self-interest and leisure furthered in co-operative distribution. 8. That supply for demand for public works would be facilitated. 9. That individuality would thus be enhanced under social baptism. 10. That morality springs from, and increases with, sociality. 11. That education would then have greater scope to obliterate ignorance and vice, and unite intelligence with labor. 12. That security is a function of insurance.
EA-10.22 But it may still be asked will not immigration bring ignorant laborers and disagreeable tasks furnish them employment, thus again having a pariah caste? In brief, who will dig ditches and clean sewers? Waiving discussion of the doubt whether immigration would tend to flow to such prospects, we will approach the problem whether there is social assurance that disagreeable labor will be performed.
EA-10.23 When the producer has all he produces under equitable distribution, when all the necessary outlay to facilitate exchange will be limited to the one item, cost, the bottom drops out of the wage-system as an enforced condition; employes would be mainly co-operators. But it does not follow that there would be no wages paid for services, for undoubtedly it will always exist. The abolition of the wage-system is the removal of the causes which render it both a necessary and a subservient condition, as the introduction of superior facilities for light may be said to have abolished candles and pine knots. As there is no general inducement now to return to the tallow dip for light, will there be inducement then to undertake disagreeable labor? And here it may be well to call attention to the militant scheme proposed by Bellamy, in which compulsory enlistment is relied upon to assure society that digging ditches, cleaning sewers, domestic service and other disagreeable labor is guaranteed. While those “looking backward” to Sparta and Peru for social models may approve such methods, subject to draft for new requirements, “compulsory upon all,” Anarchists calmly rely upon the law of equal freedom to meet all social demands. How Anarchy will assure the performance of disagreeable labor we will now see.
EA-10.24 Under equal opportunities, where wealth saved can be capitalized for production freely, where rent and interest are eliminated from distribution by mutual exchange which logically substitutes cost as the mean limit of price for profits, where taxation would enter into cost as an element of mutual insurance, labor expended would determine price. And as under our premise of equal freedom co-operation would naturally arise and social relations adjust themselves to their new environment, so the reward for labor could not be artificially fixed at time engaged, but must cover repugnance overcome. Using the word wages in its economic sense as reward for service performed, such reward, or wages, would evidently be measured by the amount sufficient to overcome repugnance. And this, it will be seen, is strictly in accord with our definition of value: proportionality between products. Mining, for instance, involving both danger and hardship, must present inducement to attract labor from lighter employment. The demand under equal freedom would determine supply, and the more disagreeable labor offer a higher reward than pleasanter occupations. Prices, like water, in the absence of interference would gravitate to a level, and following the lines of least resistance demand draw out ample supply.
EA-10.25 But while mining could be easily co-operative how could ditching and sewer cleaning be performed? Must every one dig and clean his own sewers? While there is not much danger that in a free community much difficulty need be experienced in securing the performance of repugnant labor, let us abide by our postulate of self interest and see if that alone is not all-sufficient. As the millionaire now would give any price, if necessary, for the performance of such labor, so it is likely that there would be many tasks in a free community which would call for special inducements to have performed.
EA-10.26 Remember that the desired “abolition of the wage-system” is but for the cessation of conditions which confine productive labor to that system, and if hiring labor remains, and there is no reason why it should not, the sum paid must present greater inducements than equal opportunities to self-labor presents. For instance, insurance may require a corps of watchmen, whether for fire or depredation will be determined by demand, and whether they were furnished by selection from the co-operators, or hired by private enterprise, is a detail which must settle itself. Enough to say that that which proved most advantageous would be adopted. Cost the mean of price applies here as well as in the exchange of products. If by private enterprise the wages offered must, necessarily, be sufficient to present inducement to such service, and the success of such enterprise dependent upon its performing the special function for which it was created better and cheaper than the co-operators would care to do, which would constitute its recommendation to the co-operation of general patronage.
EA-10.27 So with sewers, etc.; there must be an equivalence between both intensity and repugnance of the service required and the agreeableness of the reward, and disagreeable manual labor would command the highest pecuniary attraction; and this naturally without a board to regulate attraction. Remember that Anarchy, or freedom to contract, does not seek to regulate, or institute any system whatever. From its premise – given equal freedom, there will necessarily result co-operation in all matters where individual initiative fails, and where organized co-operation fails to present inducements, self-interest will lead to the highest pecuniary reward necessary to overcome repugnance. If it failed to elicit employ, private enterprise might, but only by offering more than equal opportunities offered to self.
EA-10.28 Instead of unskilled labor presenting the nucleus of a lower class to sink into the mire of poverty, a free society would furnish incentive to lift it out of dependence into self-reliance. Where disagreeable tasks presented the highest reward for exertion, social benefits instead of slowly percolating downward through class stratas, would be established in the heart to flow outward in every vein and artery, invigorating every organ, and diffusing throughout the whole organism of society the genial glow of social assurance.
EA-10.29 4. PERSONAL SECURITY. Though to the thinker, whose belief in industrial evolution is not shaken by militant sophisms, the question of security against depredation under equal freedom is but a question of demand and supply, and is no more alarming than the fact that water lilies may grow in a lake which furnishes a city with water; still so important does the doubt appear to militant admirers, reactionists either avowed or masquerading as twilight reformers, that it may be considered.
EA-10.30 The typical free trader is loud in his praise of the blessings of liberty; he paints in radiant hues the social advantages where artificial interference interposes no check to exchange: and after giving a brief outline of the divisions of production as artificially instituted, launches forth into a discussion of the laws governing distribution and consumption as the main province of Economics. In production liberty of contract between labor and capital is assumed; liberty in the exchange of products is the burden of the song, not liberty for labor in the conditions of production. Yet prior to production rent, interest, profits, and taxation unite to subject labor to capital, and all seek to find in government authoritative sanction for these exactions. Has labor any security where these robber claims compete with each other to secure all save what will suffice to support life in the laborer? Has it any security that the boon of toil will not be withdrawn? What company would dare insure you against loss of employment?
EA-10.31 Still the Anarchist, though without security for his own future, not knowing how soon he may become one of the “superfluous” for whom “nature has no cover laid at her banquet,” [Online editor’s note: Reference to a quotation from Malthus. – RTL] is called upon to provide security for that mythical quantity, “social interests.” Yet it is precisely because the toiler has felt the want of security that he has become convinced that under equal freedom the demand will call out ample supply for all without entailing injustice upon any. But our free trader does make a reservation against full liberty. Thus Amasa Walker:
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“All limitations upon the rights or powers of capital or labor not required by the public morality or security are useless and mischievous.”
[Online editor’s note: Science of Wealth, XI.6. – RTL]
EA-10.33 What is public security? If that state of equal freedom Anarchy seeks to usher in provides for the security of each individual, will not public security result? Can public security be more effectually gained than in that security each feels under equal opportunities in the full enjoyment of the fruits of industry?
EA-10.34 In the preceding pages we have considered, as far as the scope given will warrant, the manner in which social reorganization under industrialism would displace the leeches which now hang upon industry and which are productive only of vice, crime, and misery. We have seen that removal of restrictions has ever led to supply meeting demand with as unfailing regularity as water runs down hill. Under equal freedom wherever demand exists supply necessarily will be forthcoming, and guarantees for security will arise as easy as guarantees for politeness in the ball-room or parlor.
EA-10.35 Under equal opportunities wherever mankind are thrown upon their own resources, when being fed from a spoon by government pap shall have become a traditionary tale of a past superstition, what is there in the power of activity that co-operative enterprise cannot undertake? We now see on every hand a thousand instances of voluntary association to attain certain objects. Many such deemed impracticable a few centuries since are commonplaces today. Who will say the limit has been reached? Even in functions government assumes as necessary we find voluntary militia and homeguards; fire departments in many places in which all members risk their lives and turn out in all weather to render the lives and property of their neighbors secure; associations of private watchmen who find support even though their patrons pay taxes for municipal police protection; a fire patrol in the interests of insurance companies to protect property from destruction. These are instances of co-operation applied to guaranteeing security, of supply seeking demand without difficulty or friction, a demand by no means dependent upon legalization, but supplementing its deficiencies.
EA-10.36 All relations under equal freedom will tend to become associative when and where it is seen to be most effective. Freedom for the individual cannot be construed into compulsory isolation. As an instance of how mutually felt wants may be met let us take an instance in mutual insurance. Prof. Edward Atkinson [Online editor’s note: American abolitionist, businessman, liberal economist, and antiwar activist Edward Atkinson (1827-1905). – RTL] is president of an insurance company in New England which is thus described in the columns of “Liberty”:
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“He is president of an insurance company doing business on a principle which, if it should be adopted in the banking business, would do more to abolish poverty than all the nostrums imagined or imaginable, including the taxation of land values. This principle is the mutualistic, or cost, principle.
EA-10.38
“Some time ago a number of mill-owners decided that they would pay no more profits to insurance companies, inasmuch as they could insure themselves much more advantageously. So they formed a company of their own, into the treasury of which each mill pays annually a sum proportional to the amount for which it wishes to insure, receiving it back at the end of the year minus its proportion of the year’s losses by fire paid by the company and the cost of maintaining the company. It is obvious by the adoption of this plan the mills would have saved largely, even if fires had continued to occur in them as frequently as before. But this is not all. By mutual agreement the mills place themselves, so far as protection against fire is concerned, under the supervision of the insurance company, which keeps inspectors to see that each mill avails itself of the best means of preventing and extinguishing fire and uses the utmost care in the matter. As a consequence the number of fires and the aggregate damage caused thereby has been reduced in a degree that would scarcely be credited, the cost of insurance to these mills is now next to nothing, and this cost might be reduced still further by cutting down an enormous salary paid to Mr. Atkinson for services which not a few persons more industrious and capable than he are ready to perform for less money.
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“Moreover, it is the height of stupidity for any champion of labor to slur this insurance company, for it contains in germ the solution of the labor question. When working men and business men are allowed to organize their credit as these mill-owners have organized their insurance, the former will pay no more tribute to the credit monger than the latter pay to the insurance monger, and the one class will be as safe from bankruptcy as the other is from fire.”
EA-10.40 What is even now done by wealthy mill-owners may be done by all when equal opportunities to exploit nature shall have removed special privileges to exploit fellow men, when co-operation in all needed relations lie [sic] open before us and labor enjoys its full, just share of the wealth, or values, it creates. With its resultant release from rent, interest, profits, and taxation as enforced tribute, the causes for vice and crime would rapidly diminish, for free access to nature would open to all more than a competence, and in ease give greater scope to the purely human sympathies for the unfortunate. Herbert Spencer has so completely demonstrated the fact that with increasing industrialism there has resulted decreasing crime, and that as compulsory co-operation has weakened, both independence and individual initiative have augmented, that the fact needs but to be stated. And so far as protection from the still vicious and idle is concerned, an extension of the scope of insurance can meet all requirements. An organization for protection to person and labor product, or property if you will, composed of those who felt the need for the exercise of such functions, in which loss by depredation would involve no greater difficulty than loss by fire, would naturally arise where such demand existed. The difference between the watchmen of such an organization, whose functions consist in mutual protection and defence of the equal limits of personal freedom, for commercial needs, and a political-policy system wherein personal liberty is subordinated to inanimate things as of a greater importance than their creators, is so apparent to the candid reader that I need not pause to dwell upon it. And when we bear in mind that rights are no more “natural” than they are “religious” or “moral,” but are simply a conception of equity in social relations; that the word “rights” itself, as an assertion, is not positive, but negative, being a protest against inequitable conditions which invade our equal rights as human beings; that their ever-broadening sphere is an approach to the sovereignty of the individual under equal opportunities; we may well rest assured that only in equal freedom can security be guaranteed at mutual cost. Progress and order is the true expression of social evolution, rather than the reverse, for law is ever fixity and its resulting order but uniformity wherein progress finds its grave. Order based upon progress, on the contrary, ever retains the plasticity essential to the latter, and this can only be realized in the further evolution of “the law of equal freedom” required by the Industrial Type.
EA-10.41 Here we pause. By the application of “the law of equal freedom” to the fundamental factors of Economics: Land, Labor, Capital, Exchange, Insurance, we have seen that the claims of their respective shares in distribution: Rent, Wages, Interest, Profits, Taxation, are not natural but artificial, having no claim in equity, founded on privilege and only maintained by the denial of equal freedom.
EA-10.42 Such is Anarchy !



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