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This article is from the Anarchy FAQ, by Bryan Caplan with numerous contributions by others.

"In an anarchist society in which both systems X and Y existed, X would inevitably outcompete Y"

Again, this argument has been made from several perspectives. Left-anarchists have argued that if workers had the genuine option to work for a capitalist employer, or else work for themselves in a worker cooperative, virtually all workers would choose the latter. Moreover, workers in a worker-managed firm would have higher morale and greater incentive to work hard compared with workers who just worked for the benefit of their employer. Hence, capitalists would be unable to pay their workers wages competitive with the wages of the labor-managed firm, and by force of competition would gradually vanish.


Anarcho-capitalists find that the argument works in precisely the opposite direction. For what is a worker-owned firm if not a firm in which the workers jointly hold all of the stock? Now this is a peculiarly irrational portfolio to hold, because it means that workers would, in effect, put all their eggs in one basket; if their firm does well, they grow rich, but if their firm goes bankrupt, they lose everything. It would make much more sense for workers to exchange their shares in their own firm to buy shares in other firms in order to insure themselves against risk. Thus, the probable result of worker-owned firms with negotiable shares would be that workers would readily and advantageously sell off most of their shares in their own firm in order to diversify their portfolios. The end result is likely to be the standard form of capitalist organization, in which workers receive a fixed payment for their services and the owners of the firms' shares earn the variable profits. Of course, alienation of shares could be banned, but this appears to do nothing except force workers to live with enormous financial risk. None of this shows that worker-owned firms could not persist if the workers were so ideologically committed to worker control that their greater productivity outweighed the riskiness of the workers' situation; but anarcho-capitalists doubt very much that such intense ideology would prevail in more than a small portion of the population. Indeed, they expect that the egalitarian norms and security from dismissal that left-anarchists typically favor would grossly undermine everyone's incentive to work hard and kill abler workers' desire for advancement.


Some anarcho-capitalists go further and argue that inequality would swiftly re-emerge in an anarcho-syndicalist economy. Workers would treat their jobs as a sort of property right, and would refuse to hire new workers on equal terms because doing so would dilute the current workers' shares in the firm's profits. The probable result would be that an elite class of workers in capital-intensive firms would exploit new entrants into the work force much as capitalists allegedly do today. As evidence, they point to existing "worker-controlled" firms such as law firms -- normally they consist of two tiers of workers, one of which both works and owns the firm ("the partners"), while the remainder are simply employees ("the associates" as well as the secretaries, clerks, etc).