from Libertarian Labor Review #16
Winter 1994, pages 18-23


               PRINCIPLES OF LIBERTARIAN ECONOMICS
          by Abraham Guillen (translated by Jeff Stein)
                             Part 3

                 Information and Self-government

     This is the final installment in this three-part series. Part
I ran in LLR #14, Part II in LLR #15.
     A self-managed economy will have to rationally organize the
branches of industry and, within each one, integrate the small and
medium enterprises with the big enterprises to constitute a unified
whole. For example, in the branch of industry of domestic
electronics, which seems to have no relationship with the
construction industry, it may be suitable to control home heating
and cooling not with individual refrigeration and individual
furnaces but centrally, with the goal of saving energy. In this
sense, the construction industry, to construct new housings, would
build them to work in the manner of hotels, with all included
services, so the worker would live similar to a present day
bourgeois in a great hotel. For this to happen it would be
necessary to increase the productivity of labor in the primary and
secondary sectors, so that each worker in agriculture and in
industry would be capable of producing for many people so that, in
compensation, they would proportion him the necessary services of
a sort of social hotel, as we have indicated. But for this to
happen will require a great revolution in culture and technology,
investing much in Research and Development.
    The self-managed economy will have to invest a good portion of
the national income in the production of both consumer and capital
goods, particularly in its first years of operation, so that the
productivity of the labor is increased to unprecedented levels. In
this order of ideas, economic growth, with libertarian socialism,
would be greater than with private capitalism or State capitalism,
since the surplus-value wasted on the parasitic classes under
capitalism would be invested instead. Consequently, it wouldn't be
necessary to harshly tighten the belts of the workers, as did
Stalin; instead the gross national or social income would increase
annually in greater proportion than under industrialized capitalism
or bureaucratic socialism (which wastes too much in armaments, in
salaries of unproductive officials, and slows economic growth to no
greater a pace than that of the developing capitalist countries).
    By means of the application of information and of computer
networks, well supplied with all types of data, the Federative
Council of the Economy would have the actual information for each
branch of production or of services. Therefore, the economic
integration of branches of production and of service would be a
positive science, which would know everything necessary in order to
avoid crisis of disproportional of growth in those branches,
without the production of excesses of personal, of goods not sold,
or of raw materials, since it would be known, at each moment, the
amount necessary to produce, to distribute or invest so that the
social economy has a law of harmonious development.
    For example, the central computers of the Federative Council of
Economy, with informative contributions of the computer terminals
in local factories, provincial and regional, would make known what
was everyone's production, reserves and shipments to the
self-managed market. In the case of the industry for manufacturing
of paper containers, the central computer would register the number
of establishments, the personnel employed in each one of them,
total of work-hours, cost of the personnel in stable monetary
units, electric power consumed in the process of production, value
of the fuels and gas used, value of the consumed raw materials,
general expenses, taxes, value of the total production, value of
the employed labor, amounts destined to pay debts and for new
investments. In sum: programming the economy would be simple,
without need of bureaucrats, of capitalist managers or of
technocrats.
    When we speak of taxes we don't refer to the tribute of the
western capitalist type nor to the business taxes (mainly figured
as a business expense usurped from the enterprises by the State in
the USSR and in the "popular republics that made up the COMECON),
but to the delivery of a pre-determined quota of the economic
surplus, extracted by the self-managed enterprises, transferred to
the self-governments, responsible for returning those transfers to
society in social and public services according to their ability:
sanitation, hygiene, paving of streets, highways, roads, ports,
railroads, education, public health and other responsibilities of
the self-governments which would be too great to enumerate.
                        Labor-Value Money
    In this case we would attempt to strengthen the economy of the
free self-managed municipality, not in the traditionally Roman
[state-citizen] nor modern bureaucratic sense, but as the social
and public enterprise of the citizens; as well as the industrial,
agricultural, of research enterprise or certain global services
which would constitute the task of the associated workers with
their means of production, self-organized into Worker Councils of
Self-Management and in Basic Units of Associated Labor, where the
economic accounting should be automated by means of computers and
take as their unit of calculation, the labor-hour (LH). It would
have thus a monetary equivalence of the same value, if the money is
intended to remain stable. The LH would circulate monetarily in the
form of ticket which would give the right to consume reasonably,
always leaving an important portion in order to invest more capital
than wornout during a year, so that libertarian socialism would
enlarge the social capital, with the goal of progressing more with
self-management than under the dominance of capitalists or of
bureaucrats.
    The LH, as labor-money, wouldn't lead to monetary inflation
like capitalist money or like the soviet ruble, which conceal by
being the money of class, the parasitical incomes of the western
bourgeoisie, or of the eastern bureaucracy, inflating the growth of
the gross national product (GNP), with salaries of officials or
unproductive technocrats, or with dividends, interests, rents and
surplus values received by the capitalists, according to the
western economic model, where each day there exist a growing
parasitical class at the expense of productive workers.
    Every project of investment would be calculated in hours of
labor (LH), as well as in terms of personal and public consumption
required. It would be monitored that neither would be excessive in
the carrying on of a libertarian, self-managed society, of direct
associative democracy, so that a part of the global economic
surplus would be invested in achieving a greater automation of
industrial production and of agricultural production. It would thus
be possible to continue reducing the working day to a range which
would allow a more leisure time, so that all the citizens could
occupy their time in more relaxation and, above all, in better
scientific, cultural and technological preparation
    The LH, as labor-money and as a quantification of
the economy, having a stable monetary value would program the
economy: to account it; to establish the costs of the goods and
services; programming the integrated branches of the division of
the labor and correct disharmonies between them; quantifying in
the products the cost of raw, energy, amortization of the
capital, value of the work, economic contributions to the local
self-governments and to the national co-government, etc. All of
this would function within a libertarian socialism of a
self-managed market, without speculators, hoarders or merchants,
in order that competition benefit the workers and the consumers,
the cooperative groups and self-managed enterprises, in the
manner similar to the way the market functioned in the Spanish
libertarian collectives during the Spanish Revolution of 1936-39.
The goal would be to avoid the bureaucracy of a centrally planned
economy, such as occurred in the USSR and China, where the
officials decided everything and the people participated in
nothing. As if that were socialism, however much they try to
introduce it thus by means of a totalitarian propaganda, as if lies
could be converted into truths by force of repeating them as the
only truth, thanks to the state monopoly of the radio, the press,
the television, the universities, the schools, so that Power
regulates knowledge according to their political convenience.
    In a libertarian economy, labor-money wouldn't be money in the
capitalist sense such as we understand it and need it today, since
it wouldn't allow the individual accumulation of capital in order
to exploit the labor of other people and obtain a surplus value.
Rather it would be intended to facilitate the exchange of goods and
service, in a self-managed market, where these exchange at their
true labor value, so that it fulfill economically the law of equal
exchange in equality of condition for all the integrated branches
of the social division of the labor and the law of the cooperation
of those same branches or federations of production and of service.
If, on the other hand, there were no free operation of the
self-managed market, things would fall into economic chaos, by
trying to centrally plan everything. Prices and their economic
calculation, as well as the market that really forms them (without
maintaining bureaucratic costs) are only possible within an
indicative global programming, but which leave the day-to-day
market free, so that all the enterprises are able to produce the
best and most economically, about which the consumers must
ultimately decide. From this method, there is an invisible hand
which self-regulates the social economy, better than thousands of
officials and technocrats equipped with thousands of computers who
without liberty, order disorganization by being poorly informed or
because of the self-interests of the totalitarian bureaucracy, who
manage more like inquisitors or cruel police (as happened in the
USSR and China).
    If the LH, the unit of labor-money, would have, for example, an
purchasing power of 1 hour of average social-labor and this were
equivalent, roughly speaking, to one dollar, one could establish,
among others, the following calculation of economic-accounts:
     Calculation in (LH) of an Industrial Enterprise
     - Costs of machinery               = $1000   =  1000 LH
     - Raw materials, energy, etc.  = $50,000     = 50,000 LH
     - Hours worked in production       = 50,000 LH
     - Total of LH                           = 101,000 LH
     - Units produced during the period of work  = 100
    Dividing the total number of LH, spent in the process of
production, and the total of units produced in that time of work
which could be daily, monthly, or yearly, we would have an average
of labor value for unit produced of 1.010 of LH or of labor-money.
    Now then, as no money could be absolutely stable, since
if the productivity of the labor increases, due to improvements in
machines, education of the workers and more efficient methods, it
would result that the LH will end up having less value of exchange,
increasing its value of use, driving this economic process toward
an economy of abundance where, overcoming venal value, the value of
use would only remain. Consequently, having reached this stage in
the economy and technology, with most of the work automated, the
value of the produced goods wouldn't be based much on living labor,
but almost everything would be labor of the past (accumulated
capital), which would determine thereby a self-regulated production
of abundance. Then the wonderful time will have arrived of
overcoming finally both money and the commodity, each man receiving
according to his necessity, although he only contributes according
to his unequal capacity, or in other words, that it would make
possible the economic equality between the men: libertarian
communism, rationally and scientifically, economically possible,
without which it must considered as a beautiful utopia.
    Only a self-managed economy, rational and objective, based on
scientific laws, from the commencement of the establishment of
libertarian socialism, avoiding the fall into one phase or another,
into either the socialism of group property, into forms of
corporatism or of narrow syndicalism, but towards a condition of
always placing the general interest above the particular interest
of the professional or work groups.
                     The Libertarian Society
    On the subject of the future of a libertarian and self-managed
society, Kropotkin warned and advised:
     We are convinced that the mitigated individualism of the
     collectivist system will not exist alongside the partial
     communism of possession of all of the soil and of the
     instruments of labor. A new form of production will not
     maintain the old form of redistribution. A new form of
     production will not maintain the old form of consumption,
     just as it will not accommodate the old forms of
     political organization. 
    In this order of ideas, explains Kropotkin, the private
ownership the capital and of the earth are attributes of
capitalism. Those conditions were consistent with the bourgeoisie
as a dominant class, although the public [state] ownership of
capital and of the earth is consistent with the capitalism of the
soviet-State, which elevates the totalitarian bureaucracy as a new
dominant class.
    The private ownership of the means of production and of
exchange created capitalism as a mode of production and the
bourgeoisie as dominant class.
     "They were", says Kropotkin, "the necessary condition for the
development of the capitalist production; it will die with her,
although some may try disguising it under form of a 'labor bonus'.
The common possession of the instruments of labor will bring
necessarily the common enjoyment of the fruits of the common
labor." (The Conquest of Bread, p.28)
    If upon changing the mode of production and of distribution,
daily life doesn't change, including distribution, consumption,
education, the political system, the legal and social, in the sense
that one dominant classes are not substituted by other, then,
really, nothing essentially has changed. Thus it happened in the
Soviet Union, where the economic categories and the economic laws
of the capitalism were hardly modified, with the result that the
economic dictatorship of the bourgeoisie was replaced with the
political and economic dictatorship of the bureaucracy and, in
consequence, private or anonymous capitalism for the capitalism of
State. A revolution like this, although it is called socialist,
constitutes a great swindle to the detriment of working people, for
whom in the majority of cases, it has not meant more than a change
of master or of a saddle, to the unfortunate beast of burden. So
instead of being the proletarian of the bourgeois, they have a new
Patron, that is to say, the technocrat and the bureaucrat. In our
way of thinking, the alternative to capitalism is not Marxism
Leninism, but libertarian socialism.
                   The True Social Revolution
    For a revolution to be true, in the sense of emancipating
working people from the oppression and exploitation of the dominant
classes, it has to establish a new mode of production, exchange,
distribution and consumption and create new social relationships;
new and more powerful productive forces; new political forms of
popular direct participation; new legal institutions having as
their basis the popular jury, new universities and technical
schools integrated with industries, agriculture, mining, energy,
fishing, the forests and other sectors; new philosophic,
political,social, artistic, and cultural doctrines; new conceptions
of national and social defense based more on the people in arms
(than on a bureaucratic professional army, expensive and wasteful)
in order to defend the society, as much inside as outside of it. It
is necessary to affirm the system of popular self-defense, since
without which there couldn't be a guarantee that self-management
will be accepted by a professional army, the latter always having
tendencies to stage a "coup" in order to take Power.
    On the other hand, in order to avoid the coming to power of a
one-Party-state, which is the worst and greatest single political
wrong, as happened in the USSR, there will need to be created a
participatory socialism. This would entail a respect for the free
personality within the collective, the self-determination of the
local governments within a federalism which coherently maintains a
unified market, the social and national self-defense, diplomatic
relations with the exterior, the socio-economic system as a
relatively homogeneous regime. A federalism which keeps a national
and social accounting system in order to estimate and program the
authentic valuation of the national or social global income, making
it possible to know where we have been and toward where we are
going economically, socially, politically, scientifically and
technologically.
    But a new economic system, based on self-managed socialism,
will have to have another way of estimating the annual economic
growth on the basis of short, medium and long term plans,
constructing a macro-economic picture of the national and social
economy, departing from the known figures and projecting toward
figures to be attained in the next trimesters, semesters, years.
Thus the future, in certain manner, will be anticipated by having
a Federative Council of the Economy, where each federation of
production or of services knows that which it has and that which it
wants, in accordance with the effective demand of the self-managed
market. Libertarian socialism, if it wants to distinguish itself
from authoritarian soviet communism, must respect the law of the
supply and demand, without falling into bourgeois liberalism, since
in the self-managed market the federations of production and of
social and public services act competitively. Because if the market
is suppressed, and with it the law of labor-value, the law of
economic competition, the law of formation of just prices in the
market, it would not be possible establish a rational economy of
costs and prices, necessary investments and appropriate
consumption. In its place would be a centralized and bureaucratic
planning which places the total-State above the oppressed,
exploited Society, as happened in the USSR under a planning of
economic decrees, without respect for objective economic laws.
    On the other hand, libertarian socialism has to respect the
pluralism of ideas, although it wouldn't provide a space for
byzantine struggles. People would be self-organized in their own
interest in self-managed enterprises, mutual cooperatives, local
self-governments and all types of socio-economic and political
forms of direct participation. Politics would be
deprofessionalized, abolishing the political class and the
political parties as expression of antagonistic interests, since
each citizen or worker will participate in their enterprise, local
self-government, federation, daily, without falling into the trap
of electoralism, where they only participate for a day to elect a
government worse than another.
                  Traps of Bourgeois Economics
    Libertarian socialism will have to create a new economic
doctrine and a new system of estimating the national or social
income. Actually, the concept of gross national product (GNP), of
which there is so much talk and is so little understood, counts in
unstable monetary units, the total of the goods and services
obtained by economic activity: agriculture, industry, services, as
large integrated sectors of the national economy.
    If the GNP, the way it is constituted in the bourgeois economy,
were estimated in monetary units of constant purchasing power, thus
deflating the official figures, it is possible that it actually
diminishes instead of increasing. On the other hand, the GNP, in
its bourgeois form, includes the economic participation of the
unproductive "tertiary" and "quaternary" sectors, in the sense not
that this should be concealed, but that the GNP shows "growth" when
it may have diminished materially, in effective production. Thus,
for example, in many countries which are diminishing their
industrial and agricultural production during some years, but if
salaries increase and the number of tertiaries in the state
bureaucracy, commerce, the banks, and in social and public services
grow, it is said that the GNP has grown, for example, an annual 3%,
when the reality is that this macro-economic figure only represents
salaries, incomes without effective work, surplus values taken,
parasitic income , etc.
    Libertarian socialism, creating a social economy based on
truthful figures, would have to estimate the GNP in a different
manner than the capitalists. It is necessary to give to the concept
of social income, units which are measured or concrete and in
constant money based on material output: agriculture, cattle
raising, forests, fishing, energy, mining, industry, or whatever is
actual production. As for the "services", only transportation,
railroads, trucking, marine and air would be included in the
concrete estimate of the effective or material income, since
although transportation doesn't add production, it transports it
from one side to another and, in consequence, it should be included
in the concrete income of one year to another.
    Adding the concrete income alongside gross income
(administrative "services", commerce, banks and other social and
public services), it would be seen if these take too great a
percentage in the total income by having too many unproductive
personal who, in order to not drain the social economy, would have
to be recycled as productive personnel. Now then, in the "services"
which could be considered as productive, would be included the
personnel destined for Research and Development (R &D), without
whose presence an economy will stagnate for lack of economic and
technological progress; but the personnel of R&D should be, besides
in the Institutes or Centers (which tend to be bureaucratic and
technocratic), directly in the industrial enterprises,
agricultural, energy, forests, mining, fishing, etc., since science
and technique should be united directly to labor as immediate
factors of production and not as though the ostentation of an
academic title should make one a technocrat.
    In sum, the net income of a country would have to be estimated,
in a libertarian socialism, at costs determined in relatively
stable physical and monetary units which don't mislead, deducting
the necessary investments of social capital in order to enlarge
production and not simple reproduction as happens to the bourgeois
economy in a crisis.
    The estimate of the national and social income must be
transparent: from the total of the wealth created in a year must be
deducted the material consumption of people and that of
self-administration (where there should not be much bureaucracy, by
reason of better information) and to deduct, set aside or remove
the social or national saving destined for investment in order to
increase the reproduction of effective wealth, create new
enterprises, design improved and more productive machines, carry on
scientific investigation, automate industrial production and public
services, and mechanize and electrify agriculture.
                Liberation of the Working People
    In sum, the libertarian economy should liberate the worker from
their old employers, either private managers or from the State as
Manager, to end that the workers, by means of their Self-Management
Enterprise Councils, direct the economy which they create with
their labor upon the means of production associated, from the
bottom up, by means of the federations of production and of social
services composed in a Federative Council of the Economy; only thus
could there be planning and liberty, an associative democracy of
full participation of the working people, a self-managed socialist
society, avoiding any form of totalitarian communism (which, as a
matter of fact, is capitalism of the State).
    Without economic liberty there can't be political liberty;
since with capitalism there is an economic dictatorship of a
plutocratic minority over the majority of working people; and with
capitalism of the State, in the soviet manner, the State exploits
and oppresses Society by means of the one-Party which is a bad one
for the majority and a good one for the bureaucratic, oppressive
and exploitive minority. The solution is: neither totalitarian
communism nor capitalism but self-management, direct democracy,
federalism and socialism.

                 An Afterword by the Translator
by Jeff Stein

     Abraham Guillen has given us some useful concepts for
analyzing the economic systems of state-socialist and corporate
capitalist countries. Although these economies are no longer
dominated by individual capitalist owner-managers, they remain
exploitive, class systems. According to Guillen, ownership of the
means of production is now collective, spread across a stratum of
"techno-bureaucrats". These techno-bureaucrats are just as much
concerned with accumulating capital through exploitation of
workers, as the old "robber baron" capitalists. However, the
surplus of the system is shared (although not on an equal basis)
within the techno-bureaucratic class. Under these systems, legal
ownership means less than one's position in the state or corporate
hierarchy. Only a system of worker self-management of their own
workplaces, can eliminate this exploitation by the techno-
bureaucracy.
     This does not mean Guillen's theory is without problems. His
proposals for a "market without capitalists" and the establishment
of "labor-money" are built open the assumption that the labor
theory of value can provide the basis for a libertarian socialist
economy. The labor theory of value provides a powerful argument for
the elimination of capitalists and bureaucrats, since their incomes
represent an unnecessary drag on the economy. However, in a self-
managed economy inequalities having nothing to do with labor
productivity would arise between self-managed enterprises, giving
some a competitive advantage over others. For instance, the size of
the enterprise, the availablity of scarce raw materials, the
presence or absence of strict environmental regulation by the local
municipality, etc., would all come into play, and these are not
always factors which are easily calculated in labor-hours.
     Augustin Souchy, another anarcho-syndicalist who made
extensive studies of various attempts at establishing workers self-
management, observed that:
     working hours as the only value determinant is 
     unrealistic. Experience shows that the lack of raw
     material, rarity of quality, differences of consumer
     goods, highly qualified services, etc. are equally vague
     determinants. These factors will not change in a
     socialist economy." (Beware! Anarchist!, Chicago, 1992.
     p.42)
     One factor which is becoming increasingly important in
determining production costs is energy. As the amount of labor
decreases due to automation, the amount of energy in terms of
fossil fuels, electricity required, etc., increases. This means
that while the labor value of many products is going down, their
energy value is going up. As long as energy is cheap and abundant,
this does not necessarily present a problem. However, in the
future, as the southern hemisphere becomes increasingly
industrialized and there is a greater demand for energy, and as
fossil fuel supplies dwindle, a purely labor-based system of
economic accounting would collapse. Energy would either have to be
rationed, or some sort of global federation would have to set a tax
on energy. Either way, the labor-exchange economy would be forced
away from an unregulated market system. On the other hand, the sort
of energy accounting based system proposed by some "green"
economists is not adequate either, since the energy theory of value
does not take into account the qualitative difference between human
energy (labor) and non-human energy.
     There is no such thing as a perfectly, objective theory of
economic value. Each theory has its own hidden biases which will
tend to skew the results of any accounting system (this includes
the bourgeois scarcity-value system, which favors those who own
capital and scarce resources). The best a labor theory of value can
do is identify that part of a thing's (a good or service) value,
which is the result of social production. The rest of a thing's
value is contributed by energy, nature, the social infrastructure,
and a host of other variables. In a libertarian, self-managed
economy, the accounting of these non-labor costs and the
distribution of these benefits, therefore needs to go beyond the
individual workplaces and their labor accounts. An economic role
must be played by the free municipalities (communes), who must set
democratic controls over energy, environmental standards, and
scarce resources, in order to make sure that those exchanges which
take place do not undermine social equality or the capacity of the
earth to sustain itself. Therefore, contrary to Guillen, we should
insist that whatever exchange or currency system exists in the
future, it provide for greater community control and allow all
citizens a voice as to how value should be determined. 

