 Welcome to Free Thoughts, a podcast project of the Cato Institute's libertarianism.org. Free Thoughts is a show about libertarianism and the ideas that influence it. I'm Aaron Powell, a research fellow here at Cato and editor of libertarianism.org. And I'm Trevor Burrus, a research fellow at the Cato Institute Center for Constitutional Studies. Socialism, as we understand the term today, is antithetical to liberty, specifically to economic liberty. But this wasn't necessarily always the case, or at least the term wasn't always used to mean centralized planning and control by the state. In fact, in the 19th century, there was a tradition of individualist anarchists who called themselves socialists while defending truly free markets. Joining us today to discuss this potentially perplexing topic is David S. DeMotto, an attorney and a senior fellow and trustee at the Center for Stateless Society and also a columnist at libertarianism.org. Welcome to Free Thoughts, Dave. Hi, Aaron. It's great to be here. So while back I had done this video for libertarianism.org where I had answered the question, can libertarianism tolerate the existence of a socialist community? And in that video, I had defined socialism as something like centralized economic planning or total economic control by the state or basically the absence of economic liberty. And I had said that in that regard, a socialist state was incompatible with liberty but a state that embraced liberty, a libertarian state, could tolerate voluntary socialist communities. And you had written this piece for libertarianism.org partially in response to that video where you had argued that a lot of us might be struck. It might sound a little bit weird to talk about voluntary socialism. But in fact, in the 19th century or in the 19th century that in fact voluntary socialism was the kind of common understanding of socialism. So I was wondering, can you elaborate on that a bit, like what would voluntary socialism look like? Sure. So even in the 19th century, the figures that I was writing about used kind of equivocal, I guess, definitions of words that are very familiar to us. And I think this is interesting because today 21st century libertarians don't tend to think of socialism as a voluntary system, as compatible with the free market system. And you have these figures in the 19th century like Benjamin Tucker and Ezra Haywood and J.K. Ingalls, and they thought about socialism as basically how do we solve the social question or the social problem? And that gave them an ability to use socialism in ways that are again not very familiar to us as libertarians, as free marketers today. And I think their use of socialism is interesting and is worth talking about. So people like Benjamin Tucker, the people you mentioned, people today would often call them proto-libertarians, but would socialists also maybe adopt them as proto-socialists? Yes. I've seen Benjamin Tucker claimed by social anarchists, socialists, free market libertarians, mostly by free market libertarians, however, just because I think that today's socialists are so uncomfortable with the idea of free market competition that most of the time they'd rather distance themselves from somebody with Tucker's views than adopt them as a forebear. So maybe in some sort of weird perverse way you could say that libertarians have forgotten some of our socialist roots and socialists have forgotten some of their libertarian roots? I think that's exactly right. And that's one of the points of my piece is just to bring attention to the, again, equivocal ways that we use words like capitalism and socialism and to try to get underneath those words to more substantive views. So before we move into discussing some of their ideas, maybe you could give us a bit of background on who these people are you're talking about, what sorts of stuff they were up to, and just a bit on these individualist anarchists, as you call them. Sure. Sure. It's hard to know where to start, but I like to begin with Josiah Warren, who was, to me, the first real American individualist anarchist. And he was a socialist and a disciple of the businessman and sort of visionary Robert Owen, who I mentioned in the piece. And the substance of Josiah Warren's views were he molds things that today, again, we wouldn't recognize as being related, but he thought of free market principles and the sovereignty of the individual as leading to a socialistic result, I guess. And his whole set of views was based on the idea that the individual shouldn't be submerged. His experience with the Owen colonies, as it were, taught him that if you tried to plan society, if you tried to have some external force molding it, that you were going to get results that you didn't intend and that you couldn't have that kind of system function as the sort of socialism that we would want. So would this be more on voluntarism rather than, because a lot of people would think of socialism, think of equitable outcomes, equality of ownership, equality of wealth, some sort of system that imposes that. Is this more about the idea that if voluntary people went and participated entirely without power structures above them, the result would be equity by itself? Was that part of the idea? That's definitely part of the idea. One of Warren's more formidable and more famous tracks describes what he called equitable commerce. And so to Warren, if you had a system where people were not forced to combine, he liked to use the word combination and he likes to juxtapose combination to, I guess, the free movement of people and goods. And he inherited from Owen this idea of a labor note and this is where we get into the labor theory of value and he thought that the best way to preserve what he considered to be this fundamental law of the labor theory of labor inputs creating value, he thought that the best way to preserve this was free market, free market competition and individualism to a rather extreme individualism. And all of this, they were contrasting with this true freedom of markets. They were contrasting with what they called capitalism, but typically a lot of people today see capitalism as simply meaning the same thing as free markets. Right. Right. Exactly. Today I think from largely owing to figures like Ludwig von Mises and Einrand, people treat capitalism as a synonym for free markets, but people like Josiah Warren thought that capitalism was a system in which capital and the rule of capital was paramount even to individuals' freedoms and individual sovereignty. So they looked at capitalism as a system of coercive monopolization of wealth and they didn't think that that could exist under their version of a true free market. And where does the coercion come in on that version of capitalism? So their idea was that capitalism represented, and this is where we get into kind of the circular way that we use words and their definitions. They thought that capitalism just meant a system of monopolization. So monopolization of capital goods, of land, of ideas, through intellectual property. And this kind of is a segue into later on Tucker developed this idea of the Four Monopolies and he liked to hammer away at the Four Monopolies as a convenient way to describe what it was that individualist anarchists were in opposition to. What are those Four Monopolies? So the Four Monopolies are land, tariffs, intellectual property, and money or banking. And that would be things that he thought were not natural to the voluntary order, but rather somehow imposed. Right, exactly. He set these up in opposition to a free market and we'll see that the economics of the individualist anarchists were basically a radicalized version of classical economics and they took Smith and Ricardo and the like and they radicalized their ideas and they took the classical labor theory of value and they sort of envisioned, I guess, what you could see as a free market in perfect equilibrium that would wipe out rent interest and profit, which Tucker called the trinity of usury. For our listeners who perhaps aren't familiar with some of the terminology that we're using, let's ask maybe pretty simple questions, but we've talked about capital and this rule by capital, but what do we mean by capital in this case? Capital here, we mean land and capital goods. So the individualists would often compare sources of wealth that were natural to the world and they'd compare that with things that people could make. So we could think about it in terms of comparing land to chattels. So they thought that it was only through the monopolization of land and other natural resources that you could get rent interest and profit, which they considered to be unequal exchange and that's what, this is the pivot point for them. They found any kind of unequal exchange to be odious, I guess. An unequal in the sense of bargaining positions or some coercive arm behind one part of the exchange? I think that they tried to think about it in terms of both and this is what for today's libertarians is very uncomfortable. They did think that labor was the source of value, but they also thought that people should be able to exchange in whatever ways they wanted to. So they just happened to think that in a real free market without unequal bargaining power that you would get to a result of perfectly equal exchanges or pretty close, which most libertarians today having been influenced by sort of marginal utility theory and subjective theory don't hold to those views anymore. The labor theory of value when it's talked about today in kind of a really simplified form is often meant that the value of a particular good, say, is just equal to the amount of labor that went into it. So if one worker took two hours to make a given product, that product is worth twice as much as one that only took one hour to make. So we can kind of exactly measure the value of goods based on how much labor it took for each one. Is that the labor theory of value that they're talking about? It's close, but they thought of the labor theory of value more as a gravitational pull, if you will. It was a tendency to them. Again, it goes back to this idea that what they really were talking about was a free market in perfect equilibrium. So they didn't think that other types of natural rents, for instance, Tucker often talked about natural rents attending different areas of property, and some being more valuable than others just for natural reasons. What do you mean by the natural rents there to clarify? So natural rents would say you had a tract of land that was arable and could be used for farming, and then you had a plot right next to it that happened to be rocky and unsusceptible to farming. So Tucker would admit that there would be natural rents attending the better tract, but he thought that the more important issue was rents attending monopolization. And even today we can think about the difference in price in an oligopoly or a monopoly market versus a free market. And that might be getting too deep in the weeds, but the point is that they saw a difference between natural rents and artificial rents. That are created by the state in some way. Exactly. And so you were talking about the labor theory of value and their view of that, contrasting it to the libertarian view or sort of the Adam Smith view of other types of value, the marginal utility and subjectivist. How do those come together or do they come together with the libertarian socialists? I think they do. Lawrence Labity, who is the son of Joseph Labity, would talk about the fact that the individualists were never trying to say that products had inherent value, which is sort of more of a spooky view. That wasn't really their idea of the labor theory. They just thought that ways to create value without using labor happened to usually use coercion. And they clung to the classical view of the labor theory that they got from Adam Smith, though interestingly, as I mentioned and I think I mentioned in my piece, it's unclear whether somebody like Josiah Warren ever read Smith and he obviously gives a very clear labor theory of value with his phrase cost the limit of price. But I think it's possible to bring them together. Then let's talk about this trinity of usury idea, so they rent interest and profit. And maybe we could just step through those three of them and talk about what they meant by each one of them. So just kind of broad definitions and then how they thought they were related to injustice or to this coercion and how it is that in the absence of that coercion, so in truly free markets, those things would kind of go away. Particularly things like interest and profits, many argue those are in fact crucial to the functioning of free markets. So rent on real property, interest on money lent and profit in exchange to the individualist anarchists were hints that something was wrong because they all represented the same thing which was, as I mentioned, unequal exchange. And they thought that this unequal exchange was made possible by state interference in a free market and state collusion with big business. So for instance, in banking they theorized that the absence of government regulations would lead to a system of mutual banking or free banking in which anybody could act as a bank and lend money and people could get lines of credit on the way they put it was anything sold under the hammer. So their own property, their own capital goods, whatever it was that they had, cattle, and they thought that this would undercut a bank's ability, if everyone was allowed into the market and there were no barriers to entry, that this would undercut a bank's ability to take interest on money lent. But would they still say that in that highly competitive system there would eventually be no interest charged by anyone? Well, I mean, and that's where you get it. Even Tucker admitted that interest would still be possible theoretically. And my view is that they vastly overestimated the ability of free market competition to undercut or undermine rent, interest, and profit. And I think that was their mistake because again, what they were really talking about was an equilibrium theory. And I don't think that many economists today look at their economic ideas and think that they can hold water. But I think where they're useful is that on the other hand, today's libertarians may vastly underestimate the equalizing force of competition. And so by similarly why you said the idea that profits would go away in a voluntary system had to do with the perfectly competitive market driving profits down to zero? Yeah. And this is what they believed. They thought profit was just unequal exchange again. And they envisioned, I guess, this might take us to the double inequality of value that Rothbard talked about. They thought that everyone would profit in exchange but not profits in the way that would be something objectionable. So they did admit that anytime anybody exchanged obviously it would be because one person subjectively valued what they were going to get rather than what they were going to give up. But they didn't see that as profit in the same sense. So I mean, but with something as simple as like an example of like me selling Trevor a painting I made for $10 when the painting only cost me eight to make be, you know, and then so there's $2 profit. Let's talk about the injustice. Would that be a sufficient example? You know, it's interesting because I don't think that, and for obvious reasons, I don't think the individualists confronted a lot of the most common objections to the labor theory of value. And that's, you know, that's one of those. I think what they were getting at is, you know, supposing that there's a widget factory. And this widget factory relies on government barriers to entry and government land monopolization. It's going to be able to sell its widgets essentially at whatever price it decides. And if you can't go elsewhere or if your options are limited elsewhere, even if other widget factories do exist, then they're going to have a markup that is because of coercive interference rather than legitimate competition. So I think that's sort of what they were getting at. So in the idea of the coercion and sort of illegitimately gained profits or benefits of some sort, what we can see now with some of these critiques possibly are maybe issues that we have now because Benjamin Tucker in particular wrote a lot about railroads and different sort of inequalities and coercive unfairness. So coming from those ideas now, where do we find ourselves and whether we look at the world as a fair place? Should we just ignore them or look at the world as a fair place now? Yeah. I mean, and to me, this is the real importance of the individualist anarchists and their legacy. They give us an opportunity to critique what we often incorrectly look at as just a free market or just a Liz a fair system. And the railroads are a good example of that. When they built the Transcontinental Railroad in the 19th century, it relied on land theft on a massive scale, on government spending on a massive scale, unprecedented at the time. And this was something that Tucker, who called himself a socialist, found unpalatable for all the reasons that we would as libertarians today. And so would they have argued, I guess, what would they have done about it as far as so you can point out that the distribution of wealth in the society at any given time may not be just because it's the result of these coercive exchanges and government grantor supported monopolies and so on. But would they then have been in favor of just hitting a reset button in the sense of radical redistribution or how would they have moved from the unfree markets that they saw at the time to this, what they're calling a more socialist system? Right. Well, one of the consistent currents that you find in the individualist anarchists and they all had different opinions about how best to get from point A to point B. But you do find an anti-political and an anti-redistributionist current very strong, particularly with Benjamin Tucker. He really, really didn't want the state in the business of trying to redistribute wealth because for obvious reasons, he thought that the state was a plutocratic entity that would serve the interests of the powerful and that it was impossible to think of the state as something that could be philanthropic or redistribute wealth in an equitable way. They had a strong individualist streak and mostly I think they all also shared a belief that free banking would allow people, the labor in classes, to create their own enterprises and to be most free from, out of all the monopolies, they all hammered away most vigorously on free banking and they thought that this would be the way to free people from the yoke of economic and political tyranny. So they'd have been big fans of Bitcoin. Yeah, absolutely. I often think about William Batchelor Green and Benjamin Tucker and Lysander Spooner when I'm thinking about Bitcoin because it's just the kind of experiment in free banking that I think they would have found very promising as a way to get people out of these coercive systems that are sort of built up around us and control the way we transact business and the way we undertake enterprise and the like. But would they also have been a big fan of Occupy Wall Street? Yeah, I think they probably would have. You know, Tucker was a skeptic and he was always above the fray and sort of criticizing everything, but I think they would have found things to like about it because it points at economic inequality and this was something that, you know, they thought liberty and equality were compliments and not at loggerheads with each other as we, you know, libertarians today often tend to pit them against each other and they wouldn't have felt that liberty and equality were in any way antithetical. And I think for that reason that something like Occupy Wall Street pointing to, you know, the collusion between the big banks and the Wall Street banks and the Federal Reserve, and they wrote at a time also when there was no central bank and they still saw, you know, all of these problems with the banking system that we had. And of course, I mean, the many libertarians have made some sympathetic overtures to Occupy Wall Street now in the sense of it being cronyistic and not true capitalism, a type of mixed system that is neither just nor free in any way. But so between this sort of discordant thing that I mentioned previously, the socialist roots of libertarians and the libertarian roots of socialism, what happened? I mean, in the sense of these sort of late 19th century people, did something happen to make that division occur? Yeah. I mean, you can see it happening at the end of the 19th century. And I think part of the reason for that is some cultural differences between, for instance, communists anarchists and individualists anarchists just had a lot of cultural baggage and cultural differences. For instance, there was a back and forth between Tucker and a communist Johann Most, who believed in sort of propaganda by the deed and violence against elected officials and capitalists. And this was something that Tucker, like the libertarians of today, he believed in sovereignty of the individual and wouldn't have been able to get on board with just random violence against different elected officials or businessmen. So you can start to see a split between the people who adhered to this sort of individualistic worldview. They put that in front of essentially the socialist outcomes. And then in the beginning of the 20th century, you still see the individualism, but now it's in people like Albert J. Nock or H. L. Menken. And they sort of are becoming or beginning to look more like what we would recognize as a libertarian today. So the issue here would been violence, possibly, as the difference maker here? Because the socialists, certainly some of them, Marxists in particular, turned to violence as a completely justified, if not necessary, obligatory aspect of their future state, correct? Right, exactly. Yeah, I think violence is one part of it. And also, just by the time the teens came, the socialist movement had been pretty much fully taken over, I guess, by people who did want to use the state to solve the social problem and the labor question and so forth. So by the time you get into the progressive era, or the later progressive era, you don't have people with Benjamin Tucker's politics of individualism. You don't see them as part of the socialistic movement anymore. So does this mean that in your view, do you have an idea of whether or not libertarianism is of the left or of the right, or whether or not that question is the right question to ask? I tend to think that libertarianism is on the left. Even if you just call today's libertarianism the successor of classical liberalism, and you leave out anarchism, and you leave out socialism, I still think that libertarianism is pretty firmly on the left. It's sort of an accident of history to me that it ends up on the right or as conservative. The reason why it ends up being conservative is because you have people trying to preserve classical liberal values in politics, so that ends up being conservative. But I do think that it makes more sense to think of libertarianism on the left. So in between, with people like Rand, or you mentioned Mises before, or even people like Barry Goldwater, are they coming in from a different tradition, would you say, than the left individualist, voluntarious type of position? It depends. I know Rand is sort of a special case, but I think, for instance, Ludwig von Mises is certainly, he calls himself a liberal and Hayek similarly, makes sure that he's not identified with conservatism, and that his work and his legacy are the successor of classical liberalism. So I think, again, even there, if we consider well-known libertarianism, the 20th century like Hayek and Mises, I think they should be considered liberals, and in no way is their work conservatism. How do these 19th century individuals, anarchists, then, relate to the modern school of what's often called left libertarianism? Yeah, left libertarianism, you can conceive of it in a few ways, and it's sort of a broad category. So you might think of today's anarchist communists as left libertarians, or you could just think of people who make the same points as the individualist anarchists about the difference between capitalism and free markets. You could think of those groups as left libertarians. So I think it's often a question of emphasis and identifying with the right or the left since the fusion movement sort of linked conservatism and libertarianism in a way that many libertarians now find to be not such a good idea from a tactical perspective or from an ideological or viewpoint perspective. So left libertarianism could mean a number of things, but I think you could be a free marketer and be a left libertarian. So at the time that the individual anarchists were around, and you had people like Herbert Spencer, who became kind of a pariah, a flag bearer for social Darwinism from the progressive viewpoint, but how about the relationship between Benjamin Tucker and Herbert Spencer or anyone else of the division at that time? Tucker was actually hugely influenced by Herbert Spencer, and it's from Herbert Spencer that we get the idea of, in the phrase, the law of equal freedom. And the law of equal freedom appears constantly in Tucker's writing, and he was always goading Spencer across the lake, as it were, to become more radical and to end up an anarchist. And so we see the thread of Spencer all through Tucker's work. Did Tucker ever live to see the Soviet Union or any of the sort of horrible examples of socialism that later occurred? He died in the early 20s, I believe, so he didn't get to see sort of the bloodbath that was the 20th century. But by the time he died, he had even grown skeptical of using the word socialism in a positive way. And earlier in his life, he was very apt to point out the difference between state socialism and anarchism as a form of socialism. And he always wanted to show that difference, but he always still, nevertheless, tried to save the word socialism for individualists. And by the end of his life, I think he was over that. He said once, and this is a paraphrase, but it'll be pretty close, that capitalism was at least tolerable and that could not be said for socialism. For libertarians today and I guess specifically for, say, non-anarchist libertarians or people who would identify as right libertarians, what value do the individualist anarchists have and what can we learn from them? Sure. I think that the individualist anarchists present a prism through which we can sort of critique our political economy. They lived and they wrote at a time that many of today's libertarians would see as sort of a laissez-faire paradise in the mid and the late 19th century. And even then, in that environment, they were finding all sorts of very good, very trenchant free market critiques of what they were observing in the relationship between powerful actors in the commercial realm and in government. And for today's libertarians living in a time of cronyism that we're always pointing out, I think they give us a great opportunity to sort of revive those critiques and say, how are economic actors trying to use the state and politics and coercion to limit legitimate free markets based on the sovereignty of the individual and equal liberty and legitimate property rights. But yeah, that all sounds good. I completely agree with you, but the interesting question too is what should we ignore about them? Because I think that they probably were wrong enough about some economic concepts that their observations are not necessarily, not to say not that worthwhile, but at least no longer accurate. Perhaps the labor theory of value is a good example. Right. I think yeah, they were very orthodox in clinging to the classical labor theory of value, that today we don't have much use for that given developments that we've made in economic theory. So that would be something to ignore to the extent that as I mentioned earlier, I think that they vastly, vastly overestimated the extent to which we could wipe out things like rent, interest, and profit in a free market. They posited an economy in basically perfect equilibrium and that's not possible. And I think in a real free market, you're still looking at, you're still looking at rent, interest, and profit as just economic phenomena and not political phenomena. So I think you're correct, I think those are areas that we could probably steer away from their embrace of the labor theory. But perhaps the overarching idea that as libertarians, we should be concerned with power and its illegitimate uses and the way it makes the world skewed from some sort of better type of world. Yeah, exactly. I think that the mistake they made was in one direction and I think that the mistake today's libertarians often make is forgetting from one moment to the next whether we're actually looking at a free market today or whether we're talking about something very different that involves coercion at almost every level and an economic system that's polluted by politics essentially at almost every level in big important ways. And for those of us who I guess are interested in exploring these guys more and exploring their thought, where would be a good place to start? Is there a particular thinker or particular book that would be best to pick up and read? Yeah, I would have to recommend Tucker as the starting point. I think he's an interesting point of convergence for so many of the most important radical thinkers of the 19th century. For instance, he was at 21, he was the first English translator of Proudhon. You find Sternner's influence in his work just so much there and he's such a clear and emotive writer. He writes in a way that it's very polemical and it draws you in and his collection instead of a book I would really recommend is somebody who wants to get familiar with the ideas of this group of people. So going ahead, would you suggest that libertarians maybe A, stop thinking themselves as of the right or adopting that moniker that has been put on us and B, start thinking, listening possibly more to people like Occupy Wall Street and other critiques who are carrying some of those Tucker and individual antarist critiques forward today? Yeah, I definitely think libertarians should engage the left more and I think what the individualist anarchists show more than anything else is that when it comes to questions of wealth inequality and marginalized groups in society, we actually have the best arguments and I think if we were to make a bigger point of that and to do a better job of reading and reaching out to the left and showing that no, we're against a lot of this cronyism and a lot of this business as usual too, I think libertarianism could make a serious headway as a movement for sort of regular people and I think one of the big problems that we have as libertarians on the PR front is often libertarianism is seen as just an apology for whatever it is that is going on economically in the world now and so I think we can make a good critique of the status quo from a free market standpoint. I want to thank Dave for joining us today on Free Thoughts and I want to thank you for listening. If you have any questions about today's episode, you can find me on Twitter at arossp, that's A-R-O-S-S-P. You can find me on Twitter at tcburris, that's T-C-B-U-R-R-U-S. And I'm on Twitter as dsdomoto, that's D-S-D-A-M-A-T-O. Free Thoughts is a project of Libertarianism.org in the Cato Institute and is produced by Evan Banks. To learn more about libertarianism, visit us on the web at www.libertarianism.org.