Utopia: The Successful Libertarian Market Socialist Economy

By Nicholas Evans

“If found I could exchange my labor for theirs… I borrowed twenty six dollars to commence my business with, and paid all that and had thirty dollars left. I now have a house and lot… I feel now that I am a whole individual…” 1.

Wrote E. G. Cubberley, a resident of Utopia. Utopia was a successful voluntary market socialist community based on the principles of Josiah Warren. 2.

Warren’s views were a form of a labor theory of value and operated free from profit, interest, and rent* in a community of free individuals that could live as they wished on a voluntary basis. 3.

At around 1850 Warren’s theories were put to the test on a tract of land a mile from the site of the Claremont Phalanx on the bank of the Ohio River. 4.

This tract of land was to be the future village known as Trialville or Utopia, and it operated on voluntary market socialist terms. 5.

“The outcome of Warren’s theory of value…” stated Bailie “…was to place him squarely in line with the cardinal doctrine of all other schools of modern socialism. He believed that labor was robbed through rent, interest, and profit…” 6.

His aim, Bailie states, was the same as socialists who preferred a society free from unearned income. 7. The views that Warren held are essentially the analysis of Capitalism that other major socialists such as Marx and Proudhon hold. 8.

According to Warren’s labor theory of value, and also according to the labor theory of values of Marx and Proudhon, profit exists only through Capitalism**. Capitalism is a market system where employers pay their employees a wage less than the general value of what they produce. 9.

Therefore market socialism is a system of self employed individuals, democratic businesses, and employers that pay their employees enough to buy back the general value they produce. 10.

The residents of Utopia, following Warren’s labor theory of value, based the value of their products on how much labor went into producing a good. Corn was adopted as a medium of exchange at a rate of 20 pounds to the hour as an alternative to actual labor. 11.

Other products were used for the medium of exchange depending on the state of the community economy, technical learning, and machine production. 12.

Prices of individual goods included wheat at six hours to the bushel, milk at ten minutes per quart, eggs at twenty minutes per dozen, shoes varied between three to nine hours depending on quality ect. 13.

The value and prices were expected to change depending on new production methods that were introduced. The economy of Utopia worked, noted Martin, and it was illuminating. 14. The success of Utopia also included being free of rent.

In Utopia, people owned only the land they lived upon. Land ownership by landlords that receive pay from tenants is considered rent. 15. As with Marx and Proudhon, Warren consider rent a form of unearned income. 16.

For this reason, each member of the village owned up to two lots at most. The system of ownership was set up so the rights of each person and their land in the community was respected.

Differences of opinion, the responsibility of every individual and how each individual used their own individual land was encouraged, particularly with the mature members of the village. 17. In this way, individuals were able to build and own houses an businesses through their own work.

Four families became the original core of the town. By exchanging labor, they built satisfactory homes. At a later point, nearly two dozen families occupied the site in their own houses in the voluntary village, while also having successfully built stores and small mills to support and upgrade all the professional trades in their community. 18.

Yet profit and rent are not the only way to make unearned income according to the views held by Warren and the other major socialists.

Utopia operated by a voluntary system of a labor theory of value in a free community. Interest beyond expenses is considered a form of unearned in Marx’s and Proudhon’s therefore Warren’s labor theory of value. 19.

An example of interest operating only at the cost of covering expenses as in Warren’s system can be observed in an account between a store keeper using Warren’s methods and a borrower. A stranger had borrowed thirteen dollars from the store keeper.

“The money was lent-the note and security taken.” 20. In two weeks the stranger returned laying down thirteen dollars. The stranger noted the borrowing of the money saved him and his family from so much loss and distress and he wanted to compensate the keeper in proportion to the benefits he received.

“I am ready to pay you any premium you choose to ask.” The stranger paid ten cents to cover the cost of interest expense since it took around ten minutes of actual work for the lender to lend and receive the money. 21.

This principle of paying interest only for the cost of expenses, was the principle that was carried out in Utopia. 22. The views of Warren and his theory of a free market socialist society continued to be successful, long after Warren left. 23.

The village of Utopia was a libertarian Market Socialist society that worked when applied in practice. Warren later visited the village and he radiated with optimism.

“It is not the display that the little group of buildings makes to the eye… but knowing the means by which these… have been acquired, and seeing that there the subject of Equity has had eight years and sic months deep study and practical trial, and that from the beginning… the subject had lost nothing with those who first took hold of it.. But had gained… from year to year…” 24.

As Martin notes the village based on the labor exchange, was without a doubt an outstanding example of decentralist social and economic principles in actual operating situations. 25.

And unlike Marx and his big government way of Socialism, Warren’s Market Socialism was like Proudhon‘s Market Socialism, based on voluntary and therefore Libertarian views.

Utopia was “… a community without a formal government; it also preserved without the presence of a patriarch and escaped the general fate which fell to whose fortunes were inextricably interwoven with those of a dominant leader.” 26.

Yet, there was order. As a result, meetings by villagers tended to be for leisure only. “We have had a few meetings, but they were for friendly conversation, for music, dancing or some other social and pleasant pastime…” 27.

Utopia, like many communities with alternative theories, was tested for its practicality in the real world. It was proven that Warren’s ideas of individual freedom, his labor theory of value and a libertarian market socialist society free from profit, interest, and rent was applicable in a real economy. ***


* A socialist community can exist with landlords. It is called Feudal Socialism. Please see Section 3, part 1 A. in The Communist Manifesto by Marx.


** Capitalism is only one type of market system. There are other types of market systems. (ie. Market Socialism) As the economist Stanford notes:

“But capitalism is not the only economic system which relies on markets. Pre-capitalist economies also had markets-where producers could sell excess supplies of agricultural goods or handicrafts, and where exotic commodities (like spices or fabrics) from far-off lands could be purchased.

Most forms of socialism also rely heavily on markets to distribute end products and even, in some cases, to organize investment and production. So markets are not unique to capitalism, and there is nothing inherently capitalist about a market.”

Stanford, Jim. Economics for Everyone: A Short Guide to the Economics of Capitalism. Ann Arbor: MI., Pluto Press. 2008. Pp. 36

Sometimes individuals, even scholars, mistake Warren as a Capitalist because he supported markets.

Sometimes Capitalism is also confused with Anarchism. As radical Capitalist Rothbard noted,:

“We must therefore conclude that we are not anarchists, and that those who call us anarchists are not on firm etymological ground, and are being completely unhistorical…” Rothbard, N. Murray. ‘Are Libertarian’s ‘Anarchists’?’ Ludwig von Mises Institute re-print 2008 (original mid- 1950’s in the article Faith and Freedom under the name "Aubrey Herbert," article was never published)

Rothbard is using the term ‘Libertarian’ differently then I use it and how it is used in this article.

I am using the term Libertarian as it has been used since 1858 in New York by French Anarchist Joseph Dejacque to mean a free society with equality of opportunity.

Also please see: McKay, Iain. An Anarchist FAQ. AK Press: Oakland (2008) The FAQ has been regarded as “…very comprehensive…” by Graham, Paul; Hoffman, John. Introduction to Political Ideologies London: Pearson/Longman. (2006) pp 109

And as an "exemplar of the principles…” of community governing by Harvard resident fellow Joseph Reagle in: Why the Internet is Good - Community governance that works well Berkman Center for Internet and Society: Harvard Law School
(1998)

*** Warren’s views were later modified by Greene, who suggested a Mutual Bank and currency based on a commodity standard of value, but also allowing for the monetization of all durable wealth. These views were to work with the more advanced industrial forms of society.

Bibliography:

Bailie, William. Josiah Warren. Herbert C. Roseman: Brooklyn, New York. (1971)

Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970)

Marx, Karl. Capital Volume 1 England: Penguin Classics (reprint) 1990

Marx, Karl. Capital Vol. 3. England: Penguin Classics (reprint) 1991

Proudhon, Pierre-Joseph General Idea of the Revolution in the Nineteenth Century. New York: Cosmo Classics., 2007

Proudhon, Pierre-Joseph. What is Property? New York: Cosmo Classics., 2007


Footnotes:

1. Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970) pp 59

2. Ibid. pp 63

3. Ibid. pp 61

4. Ibid. pp 58

5. Ibid. pp 58

6. Bailie, William. Josiah Warren. Herbert C. Roseman: Brooklyn, New York. (1971) pp 111
7. Ibid. pp 112

8. Marx, Karl. Capital Volume 1 England: Penguin Classics (reprint) 1990 pp. 676.
Marx states:

"The working day of 12 hours is represented in a monetary value of, for example, 6 shillings. There are two alternatives. Either equivalents are exchanged, and then the worker receives 6 shillings for 12 hours of labour; the price of his labour would be equal to the price of his product.

In that case he produces no surplus-value for the buyer of his labour, the 6 shillings are not transformed in to capital, and the basis of capitalist production vanishes." Marx, Karl. Capital Volume 1 England: Penguin Classics (reprint) 1990 pp. 676.

And:

Proudhon, Pierre-Joseph. What is Property? New York: Cosmo Classics., 2007 pp 129

Proudhon states:
“…that the producer may live, his wages must repurchase his product.”

9. Please see footnote 8.

10. Please see Warren, Josiah. True Civilization. Boston Mass. (1863), Marx, Karl. Capital Volume 1 England: Penguin Classics (reprint) 1990 pp 931 and Proudhon, Pierre-Joseph General Idea of the Revolution in the Nineteenth Century. New York: Cosmo Classics., 2007 pp 213, 217

11. Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970) pp 61

12. Ibid. 62

13. Ibid. 62

14. Ibid. 62

15. Please see: Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970), Capital Vol. 3 by Marx, and What is Property? By Proudhon.

16. Please see: Marx, Karl. Capital Vol. 3. England: Penguin Classics (reprint) 1991 pp 926 and Pierre-Joseph. What is Property? New York: Cosmo Classics., 2007 pp 129 and Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970)

17. Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970) pp 60

18. Ibid. Pp 59

19. Marx, Karl. Capital Vol. 3. England: Penguin Classics (reprint) 1991 pp 460 and Pierre-Joseph. What is Property? New York: Cosmo Classics., 2007 pp 129 andWarren, Josiah. True Civilization. Boston, Mass. (1863) Passage 260

20. Warren, Josiah. True Civilization. Boston, Mass. (1863) Passage 260

21. Ibid.

22. Please see: Men Against the State by James J. Martin

23. Martin, James J. Men Against the State. Ralph Myles Publisher, Inc.: Colorado Springs USA. (1970) pp 65

24. Ibid. pp 63

25. Ibid. pp 63

26. Ibid. pp 60-61

27. Ibid. pp 60