As noted in earlier sections, individualists mostly base their economic ideas on the free market. However, as we have argued elsewhere (see section B.1), competition for profits in a free market creates numerous problems -- for example, the creation of an "ethics of mathematics" and the strange inversion of values in which things (property) become more important than people. In addition, the accumulation needs of a competitive market economy do not disappear just because capitalism has been replaced by co-operatives and mutual credit banks -- a fact that implies the inevitable development of big business.
Unless there is some form of community control, a free market in banks may soon lead to the growth of purely capitalist firms. For in order to survive, banks -- like any company -- will have to make money, and so they will wish to lend to the most profitable firms. Capitalist firms are exploitative, thus allowing them to expand faster than co-operative firms. Hence even mutual banks will wind up preferring to lend to capitalist firms in order to survive on the market. This will enforce the division of labour (as opposed to work) as the most "efficient" way of exploiting workers, and this practice will spread across the economy like an oil slick as more and more co-operatives find themselves needing to introduce similar working practices in order to survive. Thus competition will soon result in like competing against like, not only in the market but also in production.
While mutual banks would undoubtedly aid the position of workers under capitalism (which is why Bakunin and other social anarchists recommended them), they cannot undermine capitalism. This is because capitalism, due to its need to accumulate, creates natural barriers to entry into a market (see section C.4, "Why does the market become dominated by Big Business?"). For this reason, even in a mutualist market certain companies would receive a bigger slice of profits than (and at the expense of) others. This means that exploitation would still exist as larger companies could charge more than cost for their products. In addition, the free market in banking would also result in its market being dominated by a few big banks, with similar results.
This problem was recognised by Tucker himself in the postscript to a 1911 London edition of his famous essay "State Socialism and Anarchism." While arguing that when he wrote his essay 25 years earlier "the denial of competition had not effected the enormous concentration of wealth that now so gravely threatens social order" and so a policy of mutual banking might have stopped and reversed the process of accumulation, the way was now (in 1911) "not so clear." This was because the tremendous capitalisation of industry now made monopoly a convenience, but no longer a necessity. Admitted Tucker, "The trust is now a monster which. . . even the freest competition, could it be instituted, would be unable to destroy" as the "concentrated capital" could set aside a sacrifice fund to bankrupt smaller competitors and continue the process of expansion of reserves. Natural barriers to entry, resulting from the process of capitalist production, had ensured that mutualism could no longer reform capitalism away and the problem of the trusts "must be grappled with for a time solely by forces political or revolutionary." [James J. Martin, Men Against the State, p. 273]
In addition, even if individualist mutualism did result in an increase in wages by developing artisan and co-operative ventures that decreased the supply of labour in relation to its demand, this would not eliminate the subjective and objective pressures on profits that produce the business cycle within capitalism (see sections C.7 and C.8 for more on these pressures). This means that an increase in the bargaining power of labour would soon see capital moving to non-anarchist areas and using its financial power to buy up any resources in the anarchist areas. Because individualist anarchists assume an evolution towards anarchy, this is a distinct possibility. And co-operatives in a market economy will be as influenced by the business cycle as capitalist firms.
Also, we may note, in the slow transition towards anarchism, we would see the rise of pro-capitalist "defence associations" which would collect rent from land, break strikes, attempt to crush unions and so on. With the head start big business and wealthy have in terms of resources, conflicts between pro- and anti-capitalist "defence associations" would usually work against the anti-capitalist ones (as trade unions often find out). In other words, reforming capitalism would not be as non-violent or as simple as Tucker maintained.
Mutual banks would not, therefore, undermine modern capitalism. Moreover, any individualist system could revert back to wage labour, for two reasons. Firstly, there is a possibility that possession would be replaced by property as individuals sell their means of production to others voluntarily or to repay loans in bad times and these new owners create "defence associations" to enforce their claims. In addition (and this may seem ironic), wage labour does have the advantage that people can move to new locations and work without having to sell their old means of living. Often moving somewhere can be a hassle if one has to sell a shop or home. Many people prefer not to be tied down to one place. This is a problem in a system based on self-employed artisan labour, but not in social anarchism.
If we take the first problem, namely the creation of employer-employee relationships within an anarchy, we see the danger of private statism arising (as in "anarcho"-capitalism) and so the end of anarchy. Such a development can be seen when Tucker argues that if, in an anarchy, "any labourers shall interfere with the rights of their employers, or shall use force upon inoffensive 'scabs,' or shall attack their employers' watchmen. . . I pledge myself that, as an Anarchist and in consequence of my Anarchistic faith, I will be among the first to volunteer as a member of a force to repress these disturbers of order, and, if necessary, sweep them from the earth." [Instead of a Book, p. 455]
In such a situation, these defence associations would be indeed "private states" and here Tucker's ideas unfortunately do parallel those of the "anarcho"-capitalists (although, as the employees would not be exploited by the employer, this does not suggest that Tucker can be considered a proto-"anarcho"-capitalist). As Kropotkin warned, "[f]or their self-defence, both the citizen and group have a right to any violence [within individualist anarchy] . . . Violence is also justified for enforcing the duty of keeping an agreement. Tucker. . . opens. . . the way for reconstructing under the heading of the 'defence' all the functions of the State." [Kropotkin's Revolutionary Pamphlets, p. 297] However, as we have argued, his opposition to usury in all forms implies co-operative labour, not wage labour, and if such a strike did occur in individualist anarchy it indicates that it was turning back into capitalism. And we may note this "love it or leave it" attitude of Tucker in regards firms in an anarchy ignores the fact that following orders is not a form of liberty and is degrading even when you get the full product of your labour. Ironically, by placing so much stress in opposing capitalist exploitation, instead of capitalist oppression, Tucker is actually closer to (the "authoritarian") Marx than (the "libertarian") Proudhon (Tucker's terms) and like Marx opens the door to various kinds of domination and restrictions on individual self-government within "scientific socialism" (one of Tucker's expressions for individualist anarchy!). Again we see a support for contract theory creating authoritarian, not libertarian, relationships between people.
Talking of which, we must note another contradiction within Tucker's viewpoint highlighted by this diatribe against strikes in an anarchy. If, as Tucker maintained, in an individualist anarchy the demand for workers exceeded supply (unlike under capitalism) so ensuring that "labour will. . . be in a position to dictate its wages, and will thus secure its natural wage, its entire product" [The Anarchist Reader, p. 150], how will the employer attract enough scabs? There would be few if any workers willing to swap jobs and work for an employer whose management style provoked strikes by fellow workers. And in such a situation the power of labour would be so strong that workers' control would have occurred long before!
Peter Kropotkin recognised the statist implications of some aspects of anarchist individualism which Tucker's strike example highlights. Tucker's anarchism, due to its uncritical support for contract theory, could result in a few people dominating economic life, because "no force" would result in the perpetuation of authority structures, with freedom simply becoming the "right to full development" of "privileged minorities." But, Kropotkin argued, "as such monopolies cannot be maintained otherwise than under the protection of a monopolist legislation and an organised coercion by the State, the claims of these individualists necessarily end up in a return to the State idea and to that same coercion which they so fiercely attack themselves. Their position is thus the same as that of Spencer and of the so-called 'Manchester school' of economists, who also begin by a severe criticism of the State and end up in its full recognition in order to maintain the property monopolies, of which the State is the necessary stronghold." [Kropotkin's Revolutionary Pamphlets, p. 162]
Such would be the possible (perhaps probable) result of the individualists' contract theory of freedom without a social background of communal self-management and ownership. As can be seen from capitalism, a society based on the abstract individualism associated with contract theory would, in practice, produce social relationships based on power and authority (and so force -- which would be needed to back up that authority), not liberty. As we argued in section A.2.14, voluntarism is not enough in itself to preserve freedom (as Kropotkin argued, the "individualisation they [the individualists] so highly praise is not attainable by individual efforts" [Op. Cit., p. 297]).
Therefore, social anarchists have to part company with individualists when the latter apply to bosses the maxim, "[t]o coerce the peaceful non-co-operator is to violate equality of liberty." [Tucker, Instead of a Book, p. 42] A boss not only "attempts to control another" but succeeds in doing so every day at work. To "coerce" bosses by removing their authority to control (i.e. to govern) others is not itself coercion but a blow struck for liberty. It is not coercive to prevent others from coercing! Therefore, social anarchists favour direct actions, such as the occupation of workplaces, picketing, etc., irrespective of whether such measures are desired by the boss. However, as already indicated in A.3.1, social anarchists reject attempts to coerce other workers into joining a co-operative.
Free contracts are not sufficient to ensure freedom. Therefore, social anarchists reject the individualists' conception of anarchy, simply because it can, unfortunately, allow hierarchy (i.e. government) back into a free society in the name of "liberty" and "free contracts." Freedom is fundamentally a social product, created in and by community. It is a fragile flower and does not fare well when bought and sold on the market.
As we noted in the last section, Individualist "defence associations" would not be the private states of "anarcho"-capitalism only if the workplaces they protected were co-operatives (and we have indicated why Individualist Anarchism logically implies co-operative labour). Tucker's example only drives home the contradictions in his views, contradictions resulting from his liberal slant on anarchism. If we agree with Kropotkin that Tucker's ideas are a combination of the anarchist Proudhon's and the liberal capitalist Herbert Spencer's, we see where the contradiction lies. If we reject Proudhon's support for association/co-operation as the basis of an anarchist economy, we are left with liberal capitalism and the need to protect the power of the employer over the employee, and so some form of statism ("anarcho"-capitalists, by ignoring Proudhon's argument from the start, miss the contradiction by jumping straight to capitalism and so private statism). Moreover, even assuming that such "defence associations" did protect a co-operative economy, they would still suffer from the problems of collusion which "anarcho"-capitalist "defence associations" face (as described in section F.6.3). If "self-defence" does become a commodity on the market, there is a distinct danger that the "defence associations" would (in time) become a new public state, due to the unique market forces within that specific market.
Also, Kropotkin saw that Tucker's argument against the forced expropriation of social capital by the working class would lead to a continuation of authoritarian relations in production, which would need to be maintained by coercion through some kind of state (aka "anarcho"-capitalist private states). In addition, Kropotkin seriously doubted that capitalism could be reformed away as Tucker maintained.
In addition, even assuming a fully individualist economy, co-operatives would still be controlled or influenced by market forces, which would drive them to increase working hours, create a division of labour, and implement a host of other dehumanising working practices in order to compete successfully against other co-operatives, and thus to "survive" economically. Hence survival, not living, would be the norm within such a society, just as it is, unfortunately, in capitalism.
So, taken as a whole, individualist anarchism would tend to revert back to capitalism. Moreover, it would not eliminate the tendency of a market economy to reduce people to commodities, as can be seen from Tucker's argument that children are "owned" by their parents until such time as they are able to make contracts -- an argument that led him, for the sake of logical consistency, to tolerate child labour. Therefore, because of the forces and tendencies at work within the any market system, social anarchists recognise the need to communalise, and so decentralise, production and finance in order to ensure that freely associated and co-operative labour is the basis of a free society.
Finally, as to its means of activism, individualist anarchism exaggerates the potential of mutual banks to fund co-operatives. While the creation of community-owned and -managed mutual credit banks would help in the struggle for a free society, such banks are not enough in themselves. Unless created as part of the social struggle against capitalism and the state, and unless combined with community and strike assemblies, mutual banks would quickly die, because the necessary social support required to nurture them would not exist. Mutual banks must be part of a network of other new socio-economic and political structures and cannot be sustained in isolation from them. This is simply to repeat our earlier point that capitalism cannot be reformed away.
However, while social anarchists disagree with the proposals of individualist anarchists, we do still consider them to be a form of anarchism -- one with many flaws and one perhaps more suited to an earlier age when capitalism was less developed and its impact upon society far less than it is now. John Quail, in his history of British Anarchism, puts his finger on the contextual implications and limitations of Tucker's ideas when he writes: "Tucker was a Proudhonist and thus fundamentally committed to a society based on small proprietorship. In the American context, however, where the small landowner was often locked in battle with large capitalist interests, this did not represent the reactionary position it often did later. . . Tucker had a keen sense of the right of the oppressed to struggle against oppression." [The Slow Burning Fuse, p. 19]