Mutualism, Lange-Lerner Socialism, & Libertarian Social Democracy

It will come as no surprise to people who are familiar with me and my ideas that I am heavily influenced by Pierre-Joseph Proudhon’s mutualism. At the same time, I totally accept Joseph Dejacque’s anarcho-communist critique of mutualism. This is why my thought ends up aligning more with Lange-Lerner socialism in some ways. Nevertheless, there is a very important sense in which my model of libertarian social democracy departs from Lange-Lerner and aligns with Proudhon.

One of the benefits of competition is the fact that more competitors equals more options. If you don't like one company, you can buy from a different company. This creates a sort of democracy of the marketplace, wherein you can vote with your dollars. Monopoly means lack of choice. This is true regardless of whether you have a private monopoly or a government monopoly. Under the Lange-Lerner model of socialism, socialized industry becomes government monopoly. Production becomes monolithic. The consumers are free to buy whatever they want, but they are limited in their choices. Proudhon’s approach to socialization appears to be somewhat better. Proudhon wanted socialized land and industry at the level of the municipality, but he also wanted free competition. His proposal entails turning factories into worker- managed co-operatives. The co-ops would then compete against each other in the marketplace. I find this approach appealing. I would like for socialized industry to be turned into worker- managed co-operatives. Industrial democracy should be introduced into socialized industry. Hierarchical capitalistic firms ought to be converted into horizontal co-operatives with a more democratic structure. The Mondragon Corporation is an interesting co-operative to use as an example. When it comes to the organization of industry, my ideas are more in line with libertarian socialism and distributism than with the Lange-Lerner approach.

At the same time, I accept Joseph Dejacque’s critique of Proudhon's mutualism. His critique of mutualism was twofold: first, he notes that people are really entitled to natural rights (life, liberty) more so than they are entitled to the product of their own labor, then he observes that competition between co-operatives would be analogous to competition between capitalistic firms and would have a lot of the same negative consequences. The ruthless competition will still take place. It will be in the best interest of each co-operative to either buy up the competition and create a merger or else put the competitors out of business. Markets tend towards oligopoly or monopoly. At the same time, mutualism still results in wealth accumulating into the hands of a minority. Wealth from natural resources still goes exclusively to the workers in the particular company that owns those resources, rather than going to society as a whole. The capitalists and landlords are merely replaced by the co-operatives and municipalities, so that mutualism seems to fall short of full socialism. If one co-op owns the oil fields, it's members will become really wealthy. The disparity of wealth would persist and mutualism would be something akin to capitalism in that regard. I believe that there are two schools of thought that can teach us something here. The first is ordoliberalism and the second is Lange-Lerner socialism. Ordoliberalism teaches us that market competition tends to lead to oligopoly or monopoly. In order to preserve something approximate to conditions of pure competition, it is necessary to have antitrust laws and other regulations that foster competition. Large corporations must be prohibited from buying all of the smaller ones in order to establish a monopoly. Even with something more like mutualism in place, where hierarchical corporations are replaced by horizontal co-operatives, it would still be necessary to create rules and regulations that help to foster competition. It is not free markets that benefit society as much as it is competitive markets. On the other hand, the Lange-Lerner model provides a solution to the problem of wealth inequality. If you nationalize industry, turning it into a sort of national joint-stock corporation in which every citizen of the nation owns an equal share, then you can prevent one co-op’s members from becoming super wealthy by monopolizing natural resources or social wealth. Each worker in that industry receives their ordinary wages, but every member of society (including those same workers) will receive a social dividend of the profits from the industry.

Lange-Lerner socialists want a “Central Planning Board” and government management of industry, which could lead to burdensome bureaucracy and inefficiency. The mutualist approach avoids these problems. Furthermore, mutualism does not have to even attempt to solve the “socialist calculation problem,” since competition would still take place and the pricing mechanism would still function just as before.

My libertarian social democracy model actually combines the best elements of both mutualism and Lange-Lerner socialism. For example, I would like to have the State turn the various auto companies into worker-managed co-operatives, but nationalize the profits by restructuring the organizations so that they become joint-stock corporations owned by the citizens as a whole, yet still allow the companies to compete in a more mutualist or distributist fashion. So, the industry would be State-owned in the sense that the profits would be owned by society and shares thereof would be distributed to citizens by the State, but the workers in these socialized industries would independently control and manage the companies and compete against other such socialized companies. And the state would prohibit mergers of very large companies and would create rules and regulations that prevent the emergence of oligopolies and monopolies. This would more closely approximate pure competition, which is the state in which markets are most efficient and beneficial, and also eliminate the disparities of wealth that competition usually creates.

My views, then, represent a non-anarchist version of libertarian socialism. The role of the State ought to be solely to do those things which are morally obligatory but which other smaller organizations cannot effectively do. So, regulating large corporations and distribution of social wealth are among its primary goals, but the bulk of what the State does today ought not to be done by the State at all. Unlike other forms of State socialism, my model would be decentralized.