Counter-Economics refers to building a alternative economic structure from the ground up.
This refers to a debate within the libertarian movement, which has a strong anti-state focus. The sub-tendency of Agorism gives a narrower and more ideological definition of 'counter-economics', reserving it for economic activities which are 'forbidded by the state'.
From the Wikipedia:
"Counter-economics is a term originally used by Samuel Edward Konkin III and J. Neil Schulman, libertarian activists and theorists. Konkin defined it as "the study or practice of all peaceful human action which is forbidden by the State." The term is short for "counter-establishment economics" and may also be referred to as counter politics. Counter-economics was integrated by Schulman into Konkin's doctrine of agorism." (http://en.wikipedia.org/wiki/Counter-economics)
"The first presentation of the theory of counter-economics was made by Samuel Edward Konkin III at a conference organized by J. Neil Schulman in 1974 held in Cheshire, Massachusetts. The first book to portray counter-economics as a strategy for achieving a libertarian society was Schulman's novel Alongside Night (1979)." (http://en.wikipedia.org/wiki/Counter-economics)
Per Bylund, a Swedish libertarian-anarchist, distinguishes two distinct counter-economics strategies: vertical and horizontal.
"What I’m proposing is a mix of two somewhat known recipes that are really liberating in two distinctly different ways. The first recipe provides instructions for how to break free vertically through building a decentralized infrastructure for free communities avoiding the State and its centralized "solutions" altogether. The other recipe advocates breaking free horizontally through making use of one’s personal network of friends and colleagues, and doing business out of the State’s reach. One might also call these recipes or strategies the introvert and extrovert solutions to our methodological problem.
The basis for both theories is the understanding of life at a micro level rather than seeing the world only from above. It is not necessary to focus on the federal government and how to force it back. You cannot win taking the State on mano a mano so why even bother? But it is quite possible to break free small-scale and doing it for yourself. I have no idea why libertarians seem to wish to liberate "the whole nation," instead of doing what’s best for yourself and your kin first. It isn’t very individualistic and libertarian to think of the collective population first, with the sole result being you are yourself left in chains. (I usually refer to this as the "Savior Complex" or "Messiah Complex," the strange conviction that one has to liberate all of mankind in order to liberate oneself.)
The Vertical or Introvert Strategy
As has already been briefly stated, this strategy consists of falling out of the large structures of the State in order to at a much smaller scale build infrastructures and technology to support one’s community. I’m calling this the vertical strategy since it literally means stepping away from the centralized mode of the State in order to supply for one’s life and well-being in a decentralized, local manner. It is in the same sense introvert in that it says we should be looking at what is and not what is not, i.e. to use the resources available rather than pursuing the unattainable.
What this means in real terms is to create local or neighborhood networks for self-reliance, where people in the vicinity get together to find ways to produce whatever is necessary for survival and a good life. It means creating local production facilities and markets with no effective State regulations and without the State’s knowledge.
Karl Hess discusses the enormous possibilities of this approach in his excellent but small book Community Technology. In the book, Hess discusses his own experience in creating local networks for creating free and independent neighborhoods through replacing State "services" with community technology and voluntarily partaking in neighborhood activities and projects producing vegetables on rooftops and breeding fish in basements.
Hess’s experience is that one can provide for a whole neighborhood’s demand for vegetables through setting up greenhouses on a fraction of the available rooftops. Also, through using the pumps from old washing machines and left-over construction materials, the people in this neighborhood community were able to set up a fish-breeding facility producing hundreds of pounds of fish annually.
This might not sound like your cup of tea, but these are just two examples of the enormous possibilities of getting together to provide solutions for the community. This specific Hessian project was carried out in Washington D.C., which shows it is possible to create a somewhat sovereign and independent community even in very urban areas. A neighborhood not dependent on the State for supplies is a neighborhood not easily subdued. Also, such a community is not as easily punished by the government if its independence is discovered and the threat considered real. A community does not suffer from government refusing to supply its services if it isn’t first wholly dependent on such services.
The point I’m trying to make here is not that we should all go rural, live like cavemen, and grow our own vegetables. I’m saying we should stop thinking in terms of centralization and large-scale production. Hess stresses the fact that most, if not all important technology is equally or better suited for small-scale use on a family or community level. We do not need to rely on global corporations or the nation-state to get our hands on what we treasure in life. Community Technology shows just that.
The Horizontal or Extrovert Strategy
The other strategy simply means taking part in and actively creating networks and structures for black markets. I call this the horizontal strategy because it is simply the free market in action – individuals trading voluntarily with each other. It is also an extrovert strategy in that it does not necessarily focus on the neighborhood or community, but can easily be stretched throughout a city or state and work in parallel with the coercive structures of the State.
What it basically proposes is to trade with people you know and people who are recommended to you. This can all be done at whatever scale one finds appropriate, using available technology such as the Internet and e.g. E-bay for communication and money transactions. A first step could be to hire the children next-door to mow the lawn or baby-sit. It does not have to be very sophisticated at first.
This approach should come naturally to libertarians, since it simply means exercising trade without bothering with State regulations or paying taxes. Most people are willing to exchange goods and services without registering the sales tax, which is a good start. Some of them will also find it in their interest to do this on a larger scale, producing and distributing goods and services without ever paying taxes or following unnecessary government regulations and controls. And most people don’t really care about government standards if they trust their supplier.
There are probably a few libertarians in every town who are interested in starting a private network for free trade. This network can grow and find other networks to trade with and thus cover a multitude of goods and services and large areas and perhaps whole continents. The beauty of it is that it all comes naturally, it is intuitive for people to exchange favors, goods, and services without first asking the State’s permission.
This strategy was originally proposed by agorist Samuel Edward Konkin III, author of The New Libertarian Manifesto (online here), in which he elaborates the strategy of counter-economics. Konkin’s strategy supposedly starts locally and evolves into regional, state, and national inter-networks of free trade. When big enough, which isn’t necessarily very big at all, a demand is created in these networks of free traders for protection and contract enforcement services. Thus, eventually this strategy would, through the spontaneous and voluntary mechanisms of the market provide services competing with the State’s "core" functions and services. This undermines the power of the State and could easily replace it.
It is easy to see the beauty and power of Konkin’s idea of counter-economics as a means for revolutionary change, especially because of its simplicity and its intuitiveness for libertarians. It puts the libertarian principles into practice through individual action and while doing so it undermines the powers of the State.
Combining the Two
Even though Konkin’s idea is simple, powerful and principally superior to the alternatives, it is not necessarily applicable to everybody and always. For some people it would perhaps be advantageous to not take active part in trading in the so-called counter-economy (i.e. all human action not sanctioned by State), perhaps because they have certain personal convictions or to a too great degree rely on products dependent on State services. In this case, it would beneficial to begin with community technology.
Even though Konkin’s concept encompasses such actions and local networks for self-reliance, it does not stress their importance. While the community technology approach is applicable to a certain area in which people live and work, counter-economic action is not necessarily geographically bound; and while a strong local community does not need to trade with the "outer" world, there is no assurance that the practice of counter-economics would identify the advantages of providing important services locally.
Counter-economic networks would grow much stronger if combined with the insight of Karl Hess that people are able to and benefit from taking over the production of essential goods and services locally. Imagine the web of counter-economic actors combined with sovereign communities with production of foodstuffs and technology exceeding their internal demand. That combined counter-State movement for personal benefit and profit would provide a powerful adversary to the State.
It would also benefit from the great advantages of libertarian, non-hierarchical organization (i.e. the horizontal web through market transactions). States function only as centralized structures of power and rule and cannot fight an enemy as diverse and individually motivated as such a counter-economic movement based partly on community technology and sovereignty.
What this combined strategy all boils down to is a decentralized, voluntary, spontaneous, and for-profit web of actors doing what they perceive as beneficial and thereby replacing most or all of the State’s functions. It provides also a solution to the problem of discussing only what’s wrong and what should be – through doing right where the State does wrong. It means action where it is most important and where it is most beneficial." (http://www.lewrockwell.com/orig6/bylund6.html)
Kevin Carson in Mutualist.org, a blog on 'free-market anti-capitalism'
Building the Structure of the New Society within the Shell of the Old
"Anything that marginally increases the independence of labor and reduces its dependence on wages, and marginally reduces the supply of labor available to capitalists and landlords, will also marginally reduce the rate of profit and thus make their land and capital less profitable to them. The value of land and capital to landlords and capitalists depends on the ability to hire labor on their own terms. Anything that increases the marginal price of labor will reduce the marginal returns on capital and land.
What's more, even a partial shift in bargaining power from capital to labor will increase the share of their product that wage-workers receive even in capitalist industry. The individualist anarchists argue that a removal of special legal privileges for capital would increase the bargaining power of labor until the rate of profit was effectively zero, and capitalist enterprises took on the character (de facto) of workers' co-ops.
And the owning classes use less efficient forms of production precisely because the state gives them preferential access to large tracts of land and subsidizes the inefficiency costs of large-scale production. Those engaged in the alternative economy, on the other hand, will be making the most intensive and efficient use of the land and capital available to them. So the balance of forces between the alternative and capitalist economy will not be anywhere near as uneven as the distribution of property might indicate.
If everyone capable of benefiting from the alternative economy participates in it, and it makes full and efficient use of the resources already available to them, eventually we'll have a society where most of what the average person consumes is produced in a network of self-employed or worker-owned production, and the owning classes are left with large tracts of land and understaffed factories that are almost useless to them because it's so hard to hire labor except at an unprofitable price. At that point, the correlation of forces will have shifted until the capitalists and landlords are islands in a mutualist sea--and their land and factories will be the last thing to fall, just like the U.S Embassy in Saigon." (http://mutualist.blogspot.com/2005/03/building-structure-of-new-society.html)
Narrow Agorist Definition of Counter-Economics
"Counter-economics = the study and/or practice of all peaceful human action which is forbidden by the State." (http://www.agorism.info/)
The above discussion is largely based on the following sources:
"This strategy was originally proposed by agorist Samuel Edward Konkin III, author of The New Libertarian Manifesto , in which he elaborates the strategy of counter-economics....
Counter-economic networks would grow much stronger if combined with the insight of Karl Hess that people are able to and benefit from taking over the production of essential goods and services locally." (http://www.lewrockwell.com/orig6/bylund6.html)
See also the related entry on the governance model of the Venture Commune
Just Things: The Fair Trade Journal of Applied Counter-Economics, at http://justthings.info/