As we have seen, private ownership of the means of production is the lynchpin of capitalism, because it is the means by which capitalists are able to exploit workers by appropriating surplus value from them. To eliminate such exploitation, social anarchists propose that social capital — productive assets such as factories and farmland — be owned by society as a whole and shared out among syndicates and self-employed individuals by directly democratic methods, through face-to-face voting of the whole community in local neighbourhood and confederal assemblies, which will be linked together through voluntary federations. It does not mean that the state owns the means of production, as under Marxism-Leninism or social democracy, because there is no state under libertarian socialism. (For more on neighbourhood and community assemblies, see sections I.5.1 and I.5.2).

Production for use rather than profit/money is the key concept that distinguishes collectivist and communist forms of anarchism from market socialism or from the competitive forms of mutualism advocated by Proudhon and the Individualist Anarchists. Under mutualism, workers organise themselves into syndicates, but ownership of a syndicate's capital is limited to its workers rather than resting with the whole society. The workers' in each co-operative/syndicate share in the gains and losses of workplace. There is no profit as such, for in "the labour-managed firm there is no profit, only income to be divided among members. Without employees the labour-managed firm does not have a wage bill, and labour costs are not counted among the expenses to the subtracted from profit, as they are in the capitalist firm. . . [T]he labour-managed firm does not hire labour. It is a collective of workers that hires capital and necessary materials." [Christopher Eaton Gunn, Workers' Self-Management in the United States, pp. 41-2]

Thus mutualism eliminates wage labour and unites workers with the means of production they use. Such a system is socialist as it is based on self-management and workers' control/ownership of the means of production. However, social anarchists argue that such a system is little more than "petit-bourgeois co-operativism" in which the worker-owners of the co-operatives compete in the marketplace with other co-operatives for customers, profits, raw materials, etc. — a situation that could result in many of the same problems that arise under capitalism (see section I.3). Moreover, social anarchists argue, such a system can easily degenerate back into capitalism as any inequalities that exist between co-operatives would be increased by competition, forcing weaker co-operatives to fail and so creating a pool of workers with nothing to sell but their labour. The successful co-operatives could then hire those workers and so re-introduce wage labour.

Some Mutualists recognise this danger. Proudhon, for example, argued for an "ago-industrial federation" which would "provide reciprocal security in commerce and industry" and "protect the citizens . . . from capitalist and financial exploitation." In this way, the "agro-industrial federation. . . will tend to foster increasing equality . . . through mutualism in credit and insurance . . . guaranteeing the right to work and to education, and an organisation of work which allows each labourer to become a skilled worker and an artist, each wage-earner to become his own master." Thus mutualism sees "all industries guaranteeing one another mutually" and "the conditions of common prosperity." [The Principle of Federation, p. 70, p. 71 and p. 72] It seems likely that this agro-industrial federation would be the body which would fix "after amicable discussion of a maximum and minimum profit margin" and "the organising of regulating societies. . . to regulate the market." [Selected Writings of Pierre-Joseph Proudhon, p. 70]

Thus, some Mutualists are aware of the dangers associated with even a self-managed, socialistic market and create support structures to defend workers' self-management. Moreover, it is likely that industrial syndicates would be linked to mutual banks (a credit syndicate). Such syndicates would exist to provide interest-free credit for self-management, new syndicate expansion and so on. And if the experience of capitalism is anything to go by, mutual banks will also reduce the Business cycle as its effects as "[c]ountries like Japan and Germany that are usually classifies as bank-centred — because banks provide more outside finance than markets, and because more firms have long-term relationships with their banks — show greater growth in and stability of investment over time than the market-centred ones, like the US and Britain. . . Further, studies comparing German and Japanese firms with tight bank ties to those without them also show that firms with bank ties exhibit greater stability in investment over the business cycle." [Doug Henwood, Wall Street, pp. 174-5]

In addition, supporters of mutualism can point to the fact that existing co-operatives rarely fire their members and are far more egalitarian in nature than corresponding capitalist firms. This they argue will ensure that mutualism will remain socialist, with easy credit available to those who are made unemployed to start their own businesses again.

In contrast, within anarcho-collectivism and anarcho-communism, society as a whole owns the social capital, which allows for the elimination of both competition for survival and the tendency for workers to develop a proprietary interest the enterprises in which they work. As Kropotkin argued, "[t]here is no reason why the factory . . . should not belong to the community. . . It is evident that now, under the capitalist system, the factory is the curse of the village, as it comes to overwork children and to make paupers of its male inhabitants; and it is quite natural that it should be opposed by all means by the workers. . . But under a more rational social organisation, the factory would find no such obstacles; it would be a boon to the village." Needless to say, such a workplace would be based on workers' self-management, as "the workers . . . ought to be the real managers of industries." [Fields, Factories and Workshops Tomorrow, p. 152 and p. 157] This "socially organised industrial production" (to use Kropotkin's term) would ensure a decent standard of living without the problems associated with a market, even a non-capitalist one. It would enable goods to be either sold at their production prices (or labour-cost) so as to reduce their cost to consumers or distributed in accordance with communist principles (namely free); it facilitates efficiency gains through the consolidation of formerly competing enterprises; and it eliminates the many problems due to the predatory nature of competition, including the destruction of the environment through the "grow or die" principle, the development of oligopolies from capital concentration and centralisation, and the business cycle, with its periodic recessions and depressions, and the turning of free people into potential wage slaves.

For social anarchists, therefore, libertarian socialism is based on decentralised decision making within the framework of communally-owned but independently-run and worker-self-managed syndicates (or co-operatives):

"[T]he land, the instruments of work and all other capital may become the collective property of the whole of society and be utilised only by the workers, on other words, by the agricultural and industrial associations." [Bakunin, Michael Bakunin: Selected Writings, p. 174]

In other words, the economy is communalised, with land and the means of production being turned into communal "property." The community determines the social and ecological framework for production while the workforce makes the day-to-day decisions about what to produce and how to do it. This is because a system based purely on workplace assemblies effectively disenfranchises those individuals who do not work but live with the effects of production (e.g., ecological disruption). In Howard Harkins' words, "the difference between workplace and community assemblies is that the internal dynamic of direct democracy in communities gives a hearing to solutions that bring out the common ground and, when there is not consensus, an equal vote to every member of the community." ["Community Control, Workers' Control and the Co-operative Commonwealth", pp. 55-83, Society and Nature No. 3, p. 69]

This means that when a workplace joins a confederation, that workplace is communalised as well as confederated. In this way, workers' control is placed within the broader context of the community, becoming an aspect of community control. This does not mean that workers' do not control what they do or how they do it. Rather, it means that the framework within which they make their decisions is determined by the community. For example, the local community may decide that production should maximise recycling and minimise pollution, and workers informed of this decision make investment and production decisions accordingly. In addition, consumer groups and co-operatives may be given a voice in the confederal congresses of syndicates or even in the individual workplaces (although it would be up to local communities to decide whether this would be practical or not). In these ways, consumers could have a say in the administration of production and the type and quality of the product, adding their voice and interests in the creation as well as the consumption of a product.

Given the general principle of social ownership and the absence of a state, there is considerable leeway regarding the specific forms that collectivisation might take — for example, in regard to methods of surplus distribution, the use or non-use of money, etc. — as can be seen by the different systems worked out in various areas of Spain during the Revolution of 1936-39 (as described, for example, in Sam Dolgoff's The Anarchist Collectives).

Nevertheless, democracy is undermined when some communities are poor while others are wealthy. Therefore the method of surplus distribution must insure that all communities have an adequate share of pooled revenues and resources held at higher levels of confederation as well as guaranteed minimum levels of public services and provisions to meet basic human needs.