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Alternatives to Capitalism: Parecon -vs- Anarchist Communism

category international | economy | feature author Thursday October 09, 2008 20:26author by Wayne Price / Michael Albert Report this post to the editors

An exchange of positions between Michael Albert and Wayne Price

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Alternatives to Capitalism

We are constantly being told that the only economy that works is the capitalist market economy. However, events over the last few weeks have shown this to be a lie. Capitalism is a crazy way in which to run a society. But are there any alternatives? And if so, what are they and how would they work?

In this debate (originally hosted on Znet), two leading thinkers outline other economic systems. Michael Albert and Wayne Price put forward their respective positions and reply to each other in a series of 10 short articles.

Wayne Price, a member of the North American anarchist organization NEFAC and a regular contributor to Anarkismo, argues the case for Anarchist Communism, while Michael Albert, co-author of Parecon and founder of Znet, speaks on behalf of Participatory Economics. Each article is then commented upon by the other author, who then each have an opportunity to respond before making a final conclusion.

Parecon -vs- Revolutionary Class-Struggle Anarchism

An exchange of positions between Michael Albert and Wayne Price


This is a debate, originally hosted by Znet, in which Michael Albert and Wayne Price put forward their respective positions and reply to each other in a series of 10 short articles. Wayne Price, a member of the North American anarchist organization NEFAC and a regular contributor to Anarkismo, argues the case for Anarchist Communism, while Michael Albert, co-author of Parecon and founder of Znet, speaks on behalf of Participatory Economics, or Parecon. Each article is then commented upon by the other author, who then each have an opportunity to respond before making a final conclusion.

Debating Albert's Perspective

Debating Price's Perspective

Albert: Parecon & Movement Building Price: Revolutionary Class-Struggle Anarchism
Price: Reply 1 Albert: Reply 1
Albert: Rejoinder 1 Price: Rejoinder 1
Price: Reply 2 Albert: Reply 2
Albert: Concluding Statement Price: Concluding Statement

author by James - ZACFpublication date Mon Oct 13, 2008 05:44author address author phone Report this post to the editors

The link to Price's reply 1 on this page doesn't work: it leads back to the earlier debate. The one on ZNet does work. Can someone fix the one here?

author by ajohnstone - Socialist Party of Great Britain publication date Fri Oct 17, 2008 16:12author email alanjjohnstone at yahoo dot co dot ukauthor address scotlandauthor phone naReport this post to the editors

Michael Albert says " Further, if we agree on rejecting systems with markets and/or central planning for allocation, don't we have to offer an alternative method of allocation?"

I came across this article at the World Socialist Party of United States website that may be of interest in presenting a different manner of economic calculation from Parecon . The full article is at the link but the following highlights the main points

In proposals for a rudimentary method for calculation labor costs associated with a socialist economy, we operate under the assumption that the labor-hour will be adopted as the unit of choice. This has the strongest tradition in socialist literature, however in the 21st century different units, such as the kilowatt-hour, being a bit more scientific in that they are derived from actual physical measurements in addition to time, may prove to be more universal and accurate as an accounting tool...

...some sort of objective hierarchy of productive processes might need to be established, which would control at which step of the process each of them would be factored into a new labor hour calculation, and then, in turn, modified themselves by later iterations. It may be useful to look now at a hypothetical list for illustrative purposes. Let us imagine that the administrative bodies of a socialist economy, with democratic approval, enacted that all productive processes would be assigned to one of the following groups and then placed them in this sequence:

1. Raw materials production
2. Energy production
3. Productive Equipment and Tools
4. Facilities, Infrastructure and Transportation
5. Human Needs
6. Waste Management

1. Labor time calculation for not only a global socialist economy, but each productive process making it up, would probably have to be an iterative one, meaning the results of rudimentary calculations are fed back into a series of successively deeper (and more accurate) calculations for the purposes of taking into account all of the interdependent labor costs inherent in any one process.
2. Since you have to start somewhere, socialism can perhaps assume that raw materials are in infinite supply. Of course this is not true in most cases, but the finite nature can then be expressed in their LP values.
3. Therefore the steps in the iterative process could then start with the simple labor hour costs for actual production, which are then are summed with the labor costs inherent in the other physical quantities necessary for production (energy, machinery, transport etc).
4. Some labor costs can be reduced by collective action.
5. Waste is factored into the overall labor-time calculation for any given process, as well as the overall socialist economy. The method for doing so is flexible.
6. At the same time an overall socialist economy is performing iterative calculations of the labor costs necessary to meet human needs, individual productive processes have to undergo similar calculations to arrive at an ever-increasingly accurate labor cost for their product.

It is in a manner such as this that a socialist economy may be administered so that a reasonably good means of determining how much (and what type of) labor will be necessary, both in total and from each worker, to meet the needs of a global population.

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author by Dave B - worldsocialistmovmentpublication date Sat Oct 18, 2008 01:35author address Manchester UKauthor phone Report this post to the editors

Hi Alan

You are quite right and as you might remember we discussed this kind of thing three years ago on our list. An extract of which appears below for those sceptical about the ease with which this can be done and maybe an insight for others into the world of modern manufacturing.

I repeated the exercise with a friend who worked in a similar industry, cartons of milk in his case and he came up with almost identical figures calculated in a mater of moments as well.

I was going to post yesterday to say how easy it is to retrieve this
kind of information. The value added in labour time to units of
product at its point of manufacture But I thought I would actually
try it out. It really did take less than ten minutes although the
person I spoke to did so happen to have the Excel spread sheet open
on his computer for sales to end of Aug 2005. This is not even
secret information, it is published in our monthly factory


Total people who work on site = 214

Homogenous abstract labour comprising canteen staff, office cleaners
and one chemist.

Cases of product to end of Aug 2005 = 12.8 million

As I said this information is on an Excel spreadsheet type thing and
can be broken down to individual products, production by day or by
line , hour or whatever. I am no good at computers but I know what
clever tricks they can do if you know how to ask the question.

This information took 2 minutes to retrieve. I then went to the John
as advised with calculator pen and paper to work out labour time
added per unit of product.

Projection for 12 months = 19.2 million cases

There are about 10 litres on average to a case, it would be simple
enough to give it in litres, cartons or whatever.

Rather than mess about 192 million litres per 214 person years

(214 people x 48 weeks x 40 hours x 60) person minutes make
192,000,000 litres.

we get four weeks holiday a year.

One person minute makes 7.8 liters of packed product or one litre of
product contains 7.7 seconds added labour time. A surprising
figure, I had no idea of what this would be, it also looks like I
packed off one million litres of juice last year, that is 1000
tonnes approximately, Jesus no wonder I feel tired.

I should add we are a pretty high tech factory, robots and all.

This is our added value to the dead labour in the raw material,
constant capital. The ingredient list, including packaging for each
individual product in their correct proportions is also on the
magical spreadsheet.

This kind of information is recoverable by the grunts on the shop
floor as they often need it.

In fact when the sales order comes in to replace product sold in the
stores the production planner just types in 22,000 litres of 1 litre
tetra Banana and Tomato juice to be produced at set time and date
on a certain line. The computer calls all the ingredients out of
stock, makes up short falls by automatic reordering demanding the
required delivery date is met . It re orders, if required, to
maintain set minimum stock levels which are kept very low or
sometimes not at all. This is the "just in time system" or as we call
it the "just too late" system.

Our suppliers could supply us with their added value in labour time
in about ten minutes like I did and so on with their suppliers .
Thus the accumulated added dead labour time in all the raw material,
its value can be very easily determined.

Thus we could if desired provide a labour time value for each
individual product. Overheads could be spread across all products as
could capital depreciation like they do now, ie transfer of dead
labour time from fixed capital to product.

This is anything but complicated , it couldn't be simpler. Even Karl
can do just these kind calculations in Capital despite his terrible
algebra, probably while sitting on the John.

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author by Philip Ganchevpublication date Wed Oct 29, 2008 09:01author email phil.ganchev at gmail dot comauthor address author phone Report this post to the editors

Thank you for advertising this debate. But I think your introduction is misleading.

The debate is only about parecon, not about other models. Price declines to argue for any economic model on the grounds that people will choose among the alternatives. Several "altenatives" are only mentioned, but are not debated. Only one of the alternatives he mentions, inclusive democracy, is an actual model, fleshed out with institutions and procedures that will allow its implementation. The other "alternatives" are vague ideas.

Price's only critique of the model is that it does not emphasize local production and consumption whenever possible. But it certainly facilitates it, and people will be able to choose that on a case-by-case basis as it makes sense.

It is argued that parecon upholds all the values of anarchists and the model is as broad as possible so as to unite the left under a common vision - something essential for success.

So the image at the start of this article, suggesting parecon vs. anarchism is also seriously misleading. Please remove it or at least remove the "vs" from it.

author by Waynepublication date Fri Oct 31, 2008 10:17author address author phone Report this post to the editors

The title Parecon vs. Anarcho-Communism was chosen by the Parecon site editor, not by me. I had preferred Parecon vs. Revolutionary Class-Struggle Anarchism, but perhaps they thought this was too long. In any case, I was not contrasting models but general approaches.

You state, " It is argued that parecon upholds all the values of anarchists and the model is as broad as possible so as to unite the left under a common vision - something essential for success." I do not think that Parecon is so broad, as can be seen by contrasting it with the other models I refer to, including Incusive Democracy--all of which are consistent with the broad values of socialist-anarchism.

Nor do I agree that uniting the left under a common vision is essential to success. I expect differences between libertarian socialists and authoritarian socialists; I want the values of the libertarian socialists to dominate, but that does not require us all to agree on a specific model of post-capitalist society, such as Parecon. And even those who agree on libertarian socialism may disagree on other topics, as I demonstrate in my disputes with Albert. Particularly we may disagree about reformism vs. revolution, peaceful change or armed revolution, voting for bourgeois political candidates or rejecting electoralism, and other topics. I hope that my views come to dominate the left, but I never expect a "united left."

author by Mantarpublication date Fri Oct 31, 2008 11:32author address author phone Report this post to the editors

To the commenter of "Calculating Value" - how do you calculate and factor in scarcity? How do you tell when something is becoming scarce, and how do you pass this information on to others?

This is a major problem in economics, and I'd be interested to see how you come at it, but your writeup seems to ignore it.

author by ajohnstone - socialist party of great britainpublication date Sat Nov 01, 2008 03:29author email alanjjohnston at yahoo dot co dot ukauthor address scotlandauthor phone naReport this post to the editors

"how do you calculate and factor in scarcity?" asks Mantar .

First we have to define what scarcity is . Orthodox economics and Parecon argue it is limited supply - versus- boundless demand . Our wants are essentially “infinite” and the resources to meet them, limited , claim the economists .
Von Mise and Parecon claim that without the guidance of prices socialism would sink into inefficiency . According to the argument , scarcity is an unavoidable fact of life .It applies to any goods where the decision to use a unit of that good entails giving up some other potential use. In other words, whatever one decides to do has an "opportunity cost" — that is the opportunity to do something else which one thereby forgoes; economics is concerned with the allocation of scarce resources .I have a feeling that this is the issue Mantar is raising .

However in the real world , abundance is not a situation where an infinite amount of every good could be produced . Similarly, scarcity is not the situation which exists in the absence of this impossible total or sheer abundance. Abundance is a situation where productive resources are sufficient to produce enough wealth to satisfy human needs, while scarcity is a situation where productive resources are insufficient for this purpose.Abundance is a relationship between supply and demand, where the former exceeds the latter. In socialism a buffer of surplus stock for any particular item, whether a consumer or a producer good, can be produced, to allow for future fluctuations in the demand for that item, and to provide an adequate response time for any necessary adjustments.Thus achieving abundance can be understood as the maintenance of an adequate buffer of stock in the light of extrapolated trends in demand. The relative abundance or scarcity of a good would be indicated by how easy or difficult it was to maintain such an adequate buffer stock in the face of a demand trend (upward, static, or downward). It will thus be possible to choose how to combine different factors for production, and whether to use one rather than another, on the basis of their relative abundance/scarcity.

Whereas capitalism and Parecon relies on mostly monetary accounting , socialism relies on calculation in kind . This is one reason why socialism holds a decisive productive advantage over capitalism AND Parecon because of the elimination for the need to tie up vast quantities of resources and labour implicated in a system of monetary/pricing accounting. In socialism calculations will be done directly in physical quantities of real things , in use-values , without any general unit of calculation . Needs will be communicated to productive units as requests for specific useful things , while productive units will communicate their requirements to their suppliers as requests for other useful things .

To address Mantar's more specific questions " How do you tell when something is becoming scarce, and how do you pass this information on to others?"

Well , we use the tools and systems that capitalism bequeathes us ,which will be suitably modified and adapted and transformed for the new conditions . There is stock or inventory control systems and logistics . The key to good stock management is the stock turnover rate – how rapidly stock is removed from the shelves – and the point at which it may need to be re-ordered. This will also be affected by considerations such as lead times – how long it takes for fresh stock to arrive – and the need to anticipate possible changes in demand. The Just- In- Time systems are another well tried and trusted method of warehousing and lInkIng up supply chains which can be utilised . If requirements are low in relation to a build-up of stock , then this would an automatic indication to a production unit that its production should be reduced . If requirements are high in relation to stock then this would be an automatic indication that its production should be increased .
And there will be the existence of buffer stocks to provides for a period of re-adjustment.
It may be argued that this overlooks the problem of opportunity costs . For example, if the supplier of baked beans orders more tin plate from the manufacturers of tin plate then that will mean other uses for this material being deprived by that amount. However, it must be born in mind in the first place that the systematic overproduction of goods – i.e. a buffer stock – applies to all goods, consumption goods as well as production goods. So increased demand from one consumer/producer, need not necessarily entail a cut in supply to another or at least, not immediately. The existence of buffer stocks provides for a period of re-adjustment. Another point that this argument overlooks the possibility of there being alternative suppliers of this material or indeed, for that matter, more readily available substitutes for containers (say, plastic).

Some kind of “points system” might be used to evaluate different projects facing society - cost-benefit analysis which is not dependant upon dollars and cents calculations .Under capitalism ( also read Parecon) the balance sheet of the relevant benefits and costs advantages and disadvantages of a particular scheme or rival schemes is drawn up in money terms , but in socialism a points system for attributing relative importance to the various relevant considerations could be used instead. The points attributed to these considerations would be subjective, in the sense that this would depend on a deliberate social decision rather than on some objective standard. In the sense that one of the aims of socialism is precisely to rescue humankind from the capitalist fixation with production time/money, cost-benefit type analyses, as a means of taking into account other factors, could therefore be said to be more appropriate for use in socialism than under capitalism. Using points systems to attribute relative importance in this way would not be to recreate some universal unit of evaluation and calculation, but simply to employ a technique to facilitate decision-making in particular concrete cases. The advantages /disadvantages and even the points attributed to them can, and normally would, differ from case to case. So what we are talking about is not a new abstract universal unit of measurement to replace money and economic value but one technique among others for reaching rational decisions in a society where the criterion of rationality is human welfare.

There is the The “Law of the Minimum” WHICH was formulated by an agricultural chemist, Justus von Liebig in the 19th century. Liebig’s Law can be applied equally to the problem of resource allocation in any economy.For any given bundle of factors required to produce a given good, one of these will be the limiting factor. That is to say, the output of this good will be restricted by the availability of the factor in question constituting the limiting factor. All things being equal, it makes sense from an economic point of view to economise most on those things that are scarcest and to make greatest use of those things that are abundant.

Priorities can be determined byapplying Maslow’s “Hierarchy of Needs” as a guide . It would seem reasonable to suppose that needs that were most pressing and upon which the satisfaction of other needs are dependant would take priority over those other needs. We are talking here about our basic physiological needs for food, water, adequate sanitation and housing and so on. This would be reflected in the allocation of resources: high priority end goals would take precedence over low priority end goals where resources common to both are revealed (via the self regulating system of stock control) to be in short supply .

Since the needs of consumers are always needs for a specific product at a specific time in a specific locality, we will assume that socialist society would leave the initial assessment of likely needs to a delegate body under the control of the local community . In a stable society such as socialism, needs would change relatively slowly. Hence it is reasonable to surmise that an efficient system of stock control, recording what individuals actually chose to take under conditions of free access from local distribution centres over a given period, would enable the local distribution committee to estimate what the need for food, drink, clothes and household goods would be over a similar future period. Some needs would be able to be met locally: local transport, restaurants, builders, repairs and some food are examples as well as services such as street-lighting, libraries and refuse collection. The local distribution committee would then communicate needs that could not be met locally to the bodies charged with coordinating supplies to local communities.

Production and distribution in socialism would thus be a question of organising a coordinated and more or less self-regulating system of linkages between users and suppliers, enabling resources and materials to flow smoothly from one productive unit to another, and ultimately to the final user, in response to information flowing in the opposite direction originating from final users. The productive system would thus be set in motion from the consumer end, as individuals and communities took steps to satisfy their self-defined needs. Socialist production is self-regulating production for use.

To ensure the smooth functioning of the system, statistical offices ( and those exist now in a variety of forms ) would provide estimates of what would have to be produced to meet peoples likely individual and collective needs. These could be calculated in the light of consumer wants as indicated by returns from local distribution committees and of technical data (productive capacity, production methods, productivity, etc) incorporated in input-output tables. For, at any given level of technology (reflected in the input-output tables), a given mix of final goods (consumer wants) requires for its production a given mix of intermediate goods and raw materials; it is this latter mix that statistical offices would be calculating . Such calculations would also indicate whether or not productive capacity would need to be expanded and in what branches. The centres would be essentially an information clearing house, processing information communicated to it about production and distribution and passing on the results to industries for them to draw up their production plans so as to be in a position to meet the requests for their products coming from other industries and from local communities. As stated before the only calculations that would be necessary in socialism would be Calculations -in- Kind. On the one side would be recorded the resources (materials, energy, equipment, labour) used up in production and on the other side the amount of the good produced, together with any by-products.Each part of of production would know its position . If requirements are low in relation to a build-up of stock , then this would an automatic indication to a production unit that its production should be reduced . The supply of some needs will take place within the local community and in these cases production would not extent beyond this , as for example with local food production for local consumption .Other needs could be communicated as required things to the regional organisation of production. Regional manufacture would produce and assemble equired goods for distribution to local communities .

To repeat , given that socialism will still need to concern itself with the efficient allocation of resources and this will be achieved mostly through calculation in kind. Decentralized production entails a self-regulating system of stock control. Stocks of goods held at distribution points would be monitored, their rate of depletion providing vital information about the future demand for such goods, information which will be conveyed to the units producing these goods. The units would in turn draw upon the relevant factors of production and the depletion of these would activate yet other production units further back along the production chain. There would thus be a marked degree of automaticity in the way the system operated. The maintenance of surplus stocks would provide a buffer against unforeseen fluctuations in demand .The regional production units would in turn communicate its own manufacturing needs to their own suppliers , and this would extend to world production units extracting and processing the necessary raw materials .

Decisions will be made at different levels of organisation: global, regional and local but with the bulk of decision-making being made at the local level. A socialist economy would be a polycentric not a centrally planned economy. Socialism will be a self regulating , decentralised inter-linked system to eventually provide in due cours for a self-sustaining steady-state society.
Imagine a situation where human needs were in balance with the resources needed to satisfy them. Such a society would already have decided, according to its own criteria and through its own decision-making processes, on the most appropriate way to allocate resources to meet the needs of its members. This having been done, it would only need to go on repeating this continuously from production period to production period. Production would not be ever-increasing but would be stabilized at the level required to satisfy needs. All that would be produced would be products for consumption and the products needed to replace and repair the raw materials and instruments of production used up in producing these consumer goods. This has been called by some economists a 'steady-state economy' and what Marx called 'simple reproduction'.

In capitalism people's needs are not met and reasonable people feel insecure. People tend to acquire and hoard goods because possession provides some security. People have a tendency to distrust others because the world is organized in such a dog-eat-dog manner.
In capitalist society there is a tendency for individuals to seek to validate their sense of worth through the accumulation of possessions. In socialism, status based upon the material wealth at one's command, would be a meaningless concept.
Why take more than you need when you can freely take what you need? However, this does require that we appreciate what is meant by "enough" and that we do not project on to socialism the insatiable consumerism of capitalism.
The establishment of socialism presupposes the existence of a mass socialist movement and a profound change in social outlook. It is simply not reasonable to suppose that the desire for socialism on such a large scale, and the conscious understanding of what it entails on the part of all concerned, would not influence the way people behaved in socialism and towards each other. Why would they want to jeopardise the new society they had just helped create?

In a particular situation of actual physical shortage perhaps resulting from crop failure we can assume that the shortage can be tackled by some system of direct rationing such as prioritising indviduals needs by vulnerability , and if there is no call for that criteria , by lottery , or first come first served

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author by Mantarpublication date Sat Nov 01, 2008 13:56author address author phone Report this post to the editors

Thanks for that. I've heard the market anarchist arguments, and have been looking for a good explanation of the socialist side of things.

author by Mentiethpublication date Fri May 21, 2010 10:08author email emjay_360 at msn dot comauthor address author phone Report this post to the editors

Firstly it would be pertinent to note that this debate should not be decided upon taste or personal preference: rather, the outcome should be that which is of most benefit to the masses; that which holds to benefit the most people the most. We are in a battle of right and wrong, not of taste. (Also, a system that holds well in isolation is important - idealism should not blind us to reality, the world will not fall into anarchism in a day.)

I personally find a problem with the anarcho-communist argument that I cannot shake. Namely, who makes the economic decisions? If we are to hold that it will run itself, that is a brilliant theory, but I can scarce believe it will ever be actualised. Inherent in communism is either central planning - which makes some a little more equal - or the alternate which is restricted markets - then why call it communism? Even a restricted market opens the power shares so as to give preference to those with more bargaining power, luck and feasible means. This is a problem which needs to be addressed.

Having said this, the idea of a soviet system - that is, the idea of soviets, not the united soviet states - is almost echoed in ParEcon. It seems a good idea to have, far from representative government (for which I will write a short critique below to qualify my statements), but rather spokesmen of councils. The limits should be that of representing voices, opinions and decision. Hitherto, they are not ones to espouse the 'supposed' ideas of those they represent, but rather the 'actual' ideas and decisions. The bureaucratic possibility is important to note, however the matter is trivial at best. Surely if decisions are broken to a low enough level this can be lessened. Moreover, I would put forth an idea to send ideas up and options down: such that discussion is formulated at the base level, and as matters are taken further in the council hierarchy - not in manner of power, but rather jurisdiction - discussion is decreased and options are more formalised, to be voted on under universal suffrage. The constant voting, and possible slow decision making process is easily averted with modern technology and such.

How do we resolve the decision making process?

A short critique of representative government

We all understand the evils of government; not merely our government but rather the entire insidious idea. Why? The only way for the government to represent the people is for representation: such lies we are fed! Anon, the man becomes enlightened and realises the truth: the only way for a government to represent the people is for the government to be the people - and then why call it government? Representatives are foolish, for an elected politician - wretched men - do not speak for the people, but for themselves in the *supposed* name of the people. This is the crux of the issue: representatives cannot possibly know the will of the people, they are NOT the people. We all know this, but it is worth restating why we detest. All must decide, for the few are fools: and the many is an average - let us not pretend the average are intellects beyond measure, but rather they are fools with.

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