Economic Structure and Coordination[34]
by Augustin Souchy

Two great industrial systems, private capitalism and state capitalism, dominate economic society. The notion that state ownership or control of production is preferable to private capitalism is a widespread falsehood...This, however, does not mean that capitalism is in itself a good economic system. Even without its endemic economic imperialism and imperialistic wars, capitalism would still be a social disaster. Nor is the fundamental evil of exploitation automatically abolished under state capitalism.

The alternative economic system is collectivism--or a socialism established by the people themselves without state interference. To an astonishing degree this ideal was being realized in Spain. Within a few years, during the Spanish Civil War, the Spanish workers and peasants were establishing what could be loosely called libertarian syndicalist socialism, a system without exploitation and injustice. In this type of libertarian collectivist economy, wage slavery is replaced by the equitable and just sharing of labor. Private capitalism or state capitalism is replaced by the workers’ factory council, the union, and the industrial association of unions up to the national federation of industrial unions.[35]

The Spanish syndicalists demonstrated that such a system is practical. Libertarian collectivism preserves and widens freedom, stimulates and encourages initiative, and smooths the way for progress. A syndicalist collective economy is not state planned or state dominated. Planning is directed to satisfy the consumer. The syndicalist collective is for the producer what the consumer’s cooperative association is for the consumer.

The collectives organized during the Spanish Civil War were workers’ economic associations without private property. The fact that collective plants were managed by those who worked in them did not mean that these establishments became their private property. The collective had no right to sell or rent all or any part of the collectivized factory or workshop. The rightful custodian was the CNT, the National Confederation of Workers Associations. But not even the CNT had the right to do as it pleased. Everything had to be decided and ratified by the workers themselves through conferences and congresses.

The new order was flexible. The factory or plant was operated by the workers, but they did not resemble Fourier’s “Phalansteries” or the “national workshops” in Louis Blanc’s sense. The collectives were an attempt to organize work on the basis of solidarity and mutual aid: to organize the economy through the organization of mutual credit without interest in a manner somewhat similar to Proudhon’s Mutual Credit Banks. Nor did the syndicalist collective economy resemble the “free enterprise” system. There is no connection whatever between an economy based on workers’ control, mutual aid, and self-management and a capitalist economy with its unrestrained exploitation and cutthroat competition.

The syndicalist economic structure was firmly established in a few years. The plants were managed by the workers themselves through managers chosen by them. Problems beyond the capacity of the single plant were tackled by the local Economic Council ... On August 28, 1937, one year after the beginning of collectivization, an economic congress of the Catalonian collectives was held in Barcelona. Shortly after, a national economic congress embracing all urban and agrarian collectives and all socialized industry was held in Valencia. How the Barcelona Congress dealt with problems illustrates the character of the new economic structure. Several examples:

1. The collectivized shoe factories need credit of 2,000,000 pesetas. They have always paid the workers full wages, but because of a leather shortage they have been forced to cut down working time. In spite of this, they are paying 500 workers full weekly wages without deductions for lost time. The Economic Council studied the condition of the shoe industry. It reports that there is no surplus of shoes. Granting of credit will enable the purchase of leather and the modernization of a number of outdated factories which will result in lower costs and lower prices, and with it increased consumption. The reorganized and rehabilitated industry will then be able to help other industries in need of assistance. Acting on this favorable report, credit is granted.

2. There are no aluminum factories in Catalonia. The aluminum factory located in Huesca is in fascist hands. To carry on the war, aluminum is crucially needed. The Economic Council, with the cooperation of chemists, engineers, and technicians, work out plans to build a new aluminum factory. Water power, electricity, coal, and bauxite are available. The Economic Council also submits a plan to finance the installation. Money is to be raised through the collectivized plants, the socialized industries, and from the union. The issuing of stocks and bonds is not recommended because it would lead to the restoration of capitalism. Capitalism, ejected from the door, would climb back in through the window...

3. The Barcelona Economic Council, to mitigate unemployment in the cities, worked out a plan with the cooperation of the agricultural workers union to bring new areas into cultivation (irrigation, fertilizers, new installations, etc.). Unemployment in the cities was appreciably reduced, while needed labor from the cities was supplied to modernize agriculture. Russian state capitalism solved such problems by forced labor, herding many workers (at least 2,000,000) into concentration camps. Libertarians viewed such means with repugnance. The Spanish libertarian collectives have proven that compulsory labor is counterproductive and totally unnecessary. The unemployed worker did not have to be forced to work in the country. He was, on the contrary, welcomed on equal terms as a brother worker engaged in a common cooperative enterprise, sharing both the burdens and rewards of his fellow workers.

4. How were such vast, complex, and costly operations financed and coordinated? The workers helped each other. Isolated enterprises were financial pygmies. With all the collectivized factories and establishments working and pooling their resources together, they were giants. The finances of all the collectivized plants, the socialized industries, and the unions were deposited in the Central Labor Bank in Barcelona, with branches everywhere. The bank channeled funds from more prosperous collectives to less prosperous collectives in need of credit. Cash transactions were reduced to an absolute minimum. Credit was not given in cash. The bank balanced accounts between collectives and arranged credit where needed not in cash but in exchange for products or services.

The Bank of Labor also arranged foreign exchange and importation and purchase of raw materials and other products. As in domestic transactions, payment was made (where possible) in commodities, not in cash. All important operations of the Labor Bank were reviewed, and policies set, at union congresses. Finally, the Labor Bank was not a capitalist bank in business to make money by usury. It served as a coordinating agency and charged only 1% interest to defray expenses.

A Note on the Difficult Problems of Reconstruction[36]
by Diego Abad de Santillan

It is hard to imagine the complexity of the problems which this convulsion, war and revolution, created: the rupture of the old relations and the creation of new forms of social life. And all this simultaneously with carrying on the anti-fascist war, to which we sent 30,000 men to the Aragon front, not counting auxiliary forces. It takes the labor of 200,000 industrial and agricultural workers to supply an army of 30,000. All this had to be built up from scratch, lacking indispensable resources and under the worst possible conditions.

If on the day following the victory over the fascists the railroad system did not function smoothly at full capacity under the new management of the revolutionary workers, it was not for lack of ability, but because coal was in short supply, and priority had to be given to war transportation. From the very beginning we suffered from an alarming lack of indispensable war materials in a region naturally poor in minerals, textile fibers, and coal. Barcelona normally consumed 56,000 tons of coal daily. And we extracted from the poor mines in the region, after exceedingly hard labor, only 300 tons daily. We were able in a few months to increase output to 1,000 tons. Despite all our efforts, the scarcity of coal was a constant tragedy, particularly coal for the metal industry (foundries, etc.). Asturias could have helped greatly,[37] but in response to our requests one of its top officials, Amador Fernandez, preferred to ship coal to others or to keep it unused rather than to supply Catalonia. This in spite of the fact that we offered to exchange scarce products badly needed in Asturias (especially cloth and other materials) in exchange for the coal...

Money and Exchange
by Sam Dolgoff

One of the most vexing problems of the Spanish Revolution, as in every revolution, was exchange. The whole question of the “abolition of money” particularly provoked considerable controversy. This problem had a great bearing on the Revolution, especially the rural collectives. The views outlined here of the workers of the CNT textile workers union (the industry was collectivized a few months after July 19^th) are especially cogent:

In a viable social order, money only as a symbol to facilitate exchange of goods and services will have to be adapted to the revolutionary economy, preserving all its invaluable advantages (the product of the economic experience of generations). It is to be used solely as the most efficient means of conducting transactions yet developed.[38]

Some form of money, a uniform standard for the exchange of the infinite variety of dissimilar goods and services, is indispensable in a complex organized society. Thus viewed, “money” is a standard for measuring the value of goods and services just as the metric system is used to measure distances or the dimensions and weight of objects. Just as the metric system replaced other systems of measurement, the monetary system can also be altered. Ninety-nine percent of the world’s transactions are conducted not in hard cash but by vouchers in the form of checks, notes, credit cards, trading stamps, etc. But this does not mean that “money is abolished.” It simply means the substitution of one symbol of exchange for another.

When talking about the Spanish Revolution, the confusion stems from the failure to stipulate that “abolishing money” refers to the official national money of Spain as distinct from the local money issued by the collectives. Only the local use of this national currency was abolished or, most often, in varying degrees curtailed. (The value of goods and the balancing of accounts was still calculated in terms of the peseta.) It would be more correct to say that the libertarian collectives in each locality (to assure just and equitable sharing of goods and services, and prevent hoarding and speculation) worked out their own systems of exchange. They issued their own local money in the form of vouchers, tokens, rationing booklets, certificates, coupons, etc., which carried no interest and were not negotiable outside of the issuing collective.

Aside from the loose use of the term “money,” Burnett Bolloten gives a fair general idea of the exchange system in typical libertarian communities:

In those libertarian communities where money was suppressed, wages were paid in coupons, the scale being determined by the size of the family. Locally produced goods, if abundant, such as bread, wine, and olive oil, were distributed freely, while other articles could be obtained by means of coupons at the communal depot. Surplus goods were exchanged with other anarchist towns and villages, money [the legal national currency] being used only for transactions with those communities that had not yet adopted the new system. (pp. 61, 62)

Some collectives did in fact abolish money. They had no system of exchange, not even coupons. For example, a resident of Magdalena de Pulpis, when asked, “How do you organize without money? Do you use barter, a coupon book, or anything else?,” replied, “Nothing. Everyone works and everyone has the right to what he needs free of charge. He simply goes to the store where provisions and all other necessities are supplied. Everything is distributed free with only a notation of what he took.”

However, these attempts to really abolish money were not generally successful. Peirats recalls that:

Under the constant pressure of political-military circumstances, the first attempts to abolish money and wages had to be abandoned and replaced by the family wage. (Los Anarquistas en la Crisis Politica Española, p. 131)

Some kind of family wage became quite common in the Spanish collectives. This wage was assigned to families and varied according to the number of members in a family. It was based on the needs of the family rather than on the product of the family members. The exact nature of a particular family wage system depended on numerous things (like the relative abundance or scarcity of necessities for a collective or region). This led to a wide variety of “monetary” experiments. Leval comments that:

In regions like Castile, Catalonia, or in the Levant, where the republican state was more entrenched, the “peseta,” official national currency based on the gold standard, was retained. Although obliged to use the “peseta” as the standard of value and unit of distribution, the libertarian communist collectives adopted the family wage...Where the state was weaker, each village tackled exchange in its own fashion. In such localities, above all Aragon, local collectives issued as many as 250 and even 300 different kinds of local money, vouchers, coupons, ration booklets, metal tokens, cards, etc.[39] (Espagne Libertaire, pp. 203, 208)

This chaotic situation could not be tolerated for long. The Congress of the Aragon Federation of Peasant Collectives, for instance, unanimously agreed to replace local currencies with a uniform ration booklet for all the Aragon collectives, leaving it for each collective to stipulate the quantity of items available to each family or individual living alone.

The family ration booklet, dated April 23, 1937, (when the new system went into effect) to December 31, 1937, was divided into weekly columns enumerating 21 articles more or less in the following order: bread, wine, oil, rice, chick peas, green beans, flour, sausage and smoked sausage, lard, sugar, pudding, various preserves, canned tomatoes, potatoes, milk, lentils, olives, chocolate, footwear, household articles, hardware, haberdashery... (Gaston Leval, Espagne Libertaire, p. 210)

A uniform ration booklet was one attempt to refine a chaotic situation. Another problem was how to cope with the complex transactions necessary in the economic world without falling back to old statist and capitalist ways of doing things. Gaston Leval reports the decision of the Peasant Federation of Levant:

to establish a bank of our own ... to keep things moving between our collectivized villages, and for trade with other towns ... instead of helping the government cut the ground from under us. (Né Franco né Stalin, p. 310)

And Mintz points out that:

[the] anarchists abandoned the idea of a substitute for national money. The agrarian collectives decided to abolish money, only to adopt other systems of exchange... The difficulties created by local money and the lack of a unified currency soon became evident. Very soon the collectivists of Aragon saw the advantages of a kind of national bank. (p. 168)[40]

Diego Abad de Santillan (Minister of the Economy in the Catalonian government in 1936) formulated an approach to this problem. In outlining his conception of the future new revolutionary economy, he suggests that foreign and domestic transactions would be conducted by federations of coordinative “Councils of Credit and Exchange,” sort of clearing houses whose “personnel would be selected from the present banking institutions.”

Credit will be a social function and not a private speculation or usury... Credit will be based on the economic possibilities of society and not on interests or profit... Should it be necessary, as it probably will, to create a symbol of exchange [money] in response to the necessities of circulation and exchange of products, the Council will create a unit for this purpose exclusively as a facility and not as a money power... The Council of Credit and Exchange will be like a thermometer of the products and needs of the country. (After the Revolution, pp. 87, 88, 89)

Santillan anticipated the exchange measures adopted by the libertarian Levant Federation of Peasant Collectives. Souchy points out that:

Widespread and complex transactions made it necessary for the Federation to establish its own bank... The bank, through its federated branches, coordinated the exchange and sale of products within Republican Spain and regulated all matters pertaining to foreign trade. The Federation’s bank was of course administered by the Bank Workers Union... In the Central Labor Bank of Catalonia, organized in August, 1937, cash transactions were reduced to a minimum. Credit was not given in cash. The bank balanced accounts between collectives and arranged credit when needed, not in cash, but in exchange of goods or services... It served as a coordinating agency. (Souchy, pp. 156, 157)

Bolloten illustrates Souchy’s reference to the kind of “complex transactions” necessitating the bank:

In the region of Valencia, the center of the great orange industry, ... the CNT set up an organization for purchasing, packing, and exporting the orange crop[41] with a network of 270 committees in different towns and villages, elbowing out of this important trade several thousand middlemen. (p. 49)

Leval concludes that the collectives tackled the problem of distribution, which is, after all, a problem of money and exchange

with an originality, initiative, and practical sense which can only call forth universal admiration... The collective genius of the rank and file agricultural workers resolved, by trial and error, problems which the Central Government would never have been able to solve... In the Republican zones dominated by the state the incapacity or the government to halt the rise in prices and speculation brought ruinous inflation and with it the devaluation of the peseta... (Espagne Libertaire, p. 211)

That the collectives were able to solve the problem of distribution in accord with the spirit and principles of libertarian communism under such circumstances and on so vast a scale is a feat never equaled by the French, Russian, or any other revolution.

Statistical Information on Agrarian and Industrial Socialization

Adequate statistical information on this subject has not yet been compiled and is very difficult to obtain, but the following data should give a general idea of the extent of the libertarian revolution on the land and in the cities.

Pierre Broué and Emile Témime state that in Aragon, “under the control of the anarchists, the collectivization movement embraced more than three-quarters of the land, almost exclusively in communities affiliated to the CNT.” (p. 159)

“Over half the land in the Republican zone was collectivized.” (Souchy) Leval talks about “revolutionary experience involving, directly or indirectly, 7 to 8 million people.”

Peirats is more specific on the number of hectares cultivated by the collectives and makes a revealing comparison with the land “legally distributed during the five years of agrarian reform by the Republican government”--876,327 hectares--while only “in a few weeks the Revolution expropriated 5,692,202 hectares directly occupied by the peasants...” (Los Anarquistas en la Crisis Politica Española, Buenos Aires, 1964, p. 145--italics ours).

Frank Mintz estimates 1,265 to 1,865 collectives, “embracing 610,000 to 800,000 workers. With their families, they involve a population of 3,200,000...” (p. 149)

Leval lists 1,700 agrarian collectives, broken down as follows: Aragon, 400 (for Aragon Souchy estimates 510); Levant, 900; Castile, 300; Estrémadura, 30; Catalonia, 40; Andalusia, unknown. For the collectivized urban industries he estimates: Catalonia, all the industries and all transportation; Levant, 70% of all the industries; Castile, part of the industries--he gives no figures. (Espagne Libertaire, p. 80)