Obviously, a given society needs to take into account changes in consumption and so invest in new means of production. An anarchist society is no different. As G.D.H Cole points out, "it is essential at all times, and in accordance with considerations which vary from time to time, for a community to preserve a balance between production for ultimate use and production for use in further production. And this balance is a matter which ought to be determined by and on behalf of the whole community." [Guild Socialism Restated, p. 144]

How this balance is determined varies according to the school of anarchist thought considered. All agree, however, that such an important task should be under effective community control.

The mutualists see the solution to the problems of investment as creating a system of mutual banks, which reduce interest rates to zero. This would be achieved "[b]y the organisation of credit, on the principle of reciprocity or mutualism. . .In such an organisation credit is raised to the dignity of a social function, managed by the community; and, as society never speculates upon its members, it will lend its credit . . . at the actual cost of transaction." [Charles A. Dana, Proudhon and his "Bank of the People", p. 36] This would allow money to be made available to those who needed it and so break the back of the capitalist business cycle (i.e. credit would be available as required, not when it was profitable for bankers to supply it) as well as capitalist property relations.

So under a mutualist regime, credit for investment would be available from two sources. Firstly, an individual's or co-operative's own saved funds and, secondly, as zero interest loans from mutual banks, credit unions and other forms of credit associations. Loans would be allocated to projects which the mutual banks considered likely to succeed and repay the original loan.

Collectivist and communist anarchists recognise that credit is based on human activity, which is represented as money. As the Guild Socialist G.D.H. Cole pointed out, the "understanding of this point [on investment] depends on a clear appreciation of the fact that all real additions to capital take the form of directing a part of the productive power of labour and using certain materials not for the manufacture of products and the rendering of services incidental to such manufacture for purposes of purposes of further production." [Guild Socialism Restated, p. 143] So collectivist and communist anarchists agree with their Mutualist cousins when they state that "[a]ll credit presupposes labour, and, if labour were to cease, credit would be impossible" and that the "legitimate source of credit" was "the labouring classes" who "ought to control it" and "whose benefit [it should] be used" [Charles A. Dana, Op. Cit., p. 35]

Therefore, in collectivism, investment funds would exist for syndicates, communes and their in community ("People's") "banks." These would be used to store depreciation funds and as well as other funds agreed to by the collectives for investment projects (for example, collectives may agree to allocate a certain percentage of their labour notes to a common account in order to have the necessary funds available for major investment projects). Similarly, individual syndicates and communes would also create a store of funds for their own investment projects. In this, collectivist anarchism is like mutualism, with communal credit banks being used to facilitate investment by organising credit and savings on a non-exploitative basis (i.e. issuing credit at zero interest).

However, the confederations of syndicates to which these "People's Banks" would be linked would have a defined planning function as well — i.e. taking a role in investment decisions to ensure that production meets demand (see below). This would be one factor in deciding which investment plans should be given funding (this, we stress, is hardly "central planning" as capitalist firms also plan future investments to meet expected demand).

In a communist-anarchist society, things would be slightly different as this would not have the labour notes used in mutualism and collectivism. This means that the collectives would agree that a certain part of their output and activity will be directed to investment projects. In effect, each collective is able to draw upon the sums approved of by the Commune in the form of an agreed claim on the labour power of all the collectives (investment "is essentially an allocation of material and labour, and fundamentally, an allocation of human productive power." [Cole, Op. Cit., pp. 144-5]). In this way, mutual aid ensures a suitable pool of resources for the future from which all benefit.

How would this work? Obviously investment decisions have implications for society as a whole. The implementation of these decisions require the use of existing capacity and so must be the responsibility of the appropriate level of the confederation in question. Investment decisions taken at levels above the production unit become effective in the form of demand for the current output of the syndicates which have the capacity to produce the goods required. This would require each syndicate to "prepare a budget, showing its estimate of requirements both of goods or services for immediate use, and of extensions and improvements." [Cole, Op. Cit., p. 145] These budgets and investment projects would be discussed at the appropriate level of the confederation (in this, communist-anarchism would be similar to collectivist anarchism).

The confederation of syndicates/communes would be the ideal forum to discuss (communicate) the various investment plans required — and to allocate scarce resources between competing ends. This would involve, possibly, dividing investment into two groups — necessary and optional — and using statistical techniques to consider the impact of an investment decision (for example, the use of input-output tables could be used to see if a given investment decision in, say, the steel industry would require investment in energy production). In this way social needs and social costs would be taken into account and ensure that investment decisions are not taken in isolation from one another, so causing bottle-necks and insufficient production due to lack of inputs from other industries.

Necessary investments are those which have been agreed upon by the appropriate confederation. It means that resources and productive capacity are prioritised towards them, as indicated in the agreed investment project. It will not be required to determine precisely who will provide the necessary goods for a given investment project, just that it has priority over other requests. When a bank gives a company credit, it rarely asks exactly where that money will be built. Rather, it gives the company the power to command the labour of other workers by supplying them with credit. Similarly in an anarcho-communist society, except that the other workers have agreed to supply their labour for the project in question by designating it a "necessary investment." This means when a request arrives at a syndicate for a "necessary investment" a syndicate must try and meet it (i.e. it must place the request into its production schedule before "optional" requests, assuming that it has the capacity to meet it). A list of necessary investment projects, including what they require and if they have been ordered, will be available to all syndicates to ensure such a request is a real one.

Optional investment is simply investment projects which have not been agreed to by a confederation. This means that when a syndicate or commune places orders with a syndicate they may not be meet or take longer to arrive. The project may go ahead, but it depends on whether the syndicate or commune can find workers willing to do that work. This would be applicable for small scale investment decisions or those which other communes/syndicates do not think of as essential.

This we have two inter-related investment strategies. A communist-anarchist society would prioritise certain forms of investment by the use of "necessary" and "optional" investment projects. This socialisation of investment will allow a free society to ensure that social needs are meet while maintaining a decentralised and dynamic "economy." Major projects to meet social needs will be organised effectively, but with diversity for minor projects. In addition, it will also allow such a society to keep track of what actual percentage of resources are being used for investment, so ensuring that current needs are not sacrificed for future ones and vice-versa.

As for when investment is needed, it is clear that this will be based on the changes in demand for goods in both collectivist and communist anarchism. As Guilliame puts it, "[b]y means of statistics gathered from all the communes in a region, it will be possible to scientifically balance production and consumption. In line with these statistics, it will also be possible to add more help in industries where production is insufficient and reduce the number of men where there is a surplus of production." [Bakunin on Anarchism, p. 370] Obviously, investment in branches of production with a high demand would be essential and this would be easily seen from the statistics generated by the collectives and communes. Tom Brown states this obvious point:

"Goods, as now, will be produced in greater variety, for workers like producing different kinds, and new models, of goods. Now if some goods are unpopular, they will be left on the shelves. . . Of other goods more popular, the shops will be emptied. Surely it is obvious that the assistant will decrease his order of the unpopular line and increase his order of the popular." [Syndicalism, p. 55]

As a rule of thumb, syndicates that produce investment goods would be inclined to supply other syndicates who are experiencing excess demand before others, all other things being equal. Because of such guidelines and communication between producers, investment would go to those industries that actually required them. In other words, customer choice (as indicated by individuals choosing between the output of different syndicates) would generate information that is relevant to investment decisions.

As production would be decentralised as far as it is sensible and rationale to do so, each locality/region would be able to understand its own requirements and apply them as it sees fit. This means that large-scale planning would not be conducted (assuming that it could work in practice, of course) simply because it would not be needed.

This, combined with an extensive communications network, would ensure that investment not only did not duplicate unused plant within the economy but that investments take into account the specific problems and opportunities each locality has. Of course, collectives would experiment with new lines and technology as well as existing lines and so invest in new technologies and products. As occurs under capitalism, extensive consumer testing would occur before dedicating major investment decisions to new products.

In addition, investment decisions would also require information which showed the different outcomes of different options. By this we simply mean an analysis of how different investment projects relate to each other in terms of inputs and outputs, compared to the existing techniques. This would be in the form of cost-benefit analysis (as outlined in section I.4.4) and would show when it would make economic, social and ecological sense to switch industrial techniques to more efficient and/or more empowering and/or more ecologically sound methods. Such an evaluation would indicate levels of inputs and compare them to the likely outputs. For example, if a new production technique reduced the number of hours worked in total (comparing the hours worked to produce the machinery with that reduced in using it) as well as reducing waste products for a similar output, then such a technique would be implemented.

Similarly with communities. A commune will obviously have to decide upon and plan civic investment (e.g. new parks, housing and so forth). They will also have the deciding say in industrial developments in their area as it would be unfair for syndicate to just decide to build a cement factory next to a housing co-operative if they did not want it. There is a case for arguing that the local commune will decide on investment decisions for syndicates in its area (for example, a syndicate may produce X plans which will be discussed in the local commune and 1 plan finalised from the debate). For regional decisions (for example, a new hospital) would be decided at the appropriate level, with information fed from the health syndicate and consumer co-operatives. The actual location for investment decisions will be worked out by those involved. However, local syndicates must be the focal point for developing new products and investment plans in order to encourage innovation.

Therefore, under social anarchism no capital market is required to determine whether investment is required and what form it would take. The work that apologists for capitalism claim currently is done by the stock market can be replaced by co-operation and communication between workplaces in a decentralised, confederated network. The relative needs of different consumers of a product can be evaluated by the producers and an informed decision reached on where it would best be used.

Without a capital market, housing, workplaces and so on will no longer be cramped into the smallest space possible. Instead, housing, schools, hospitals, workplaces and so on will be built within a "green" environment. This means that human constructions will be placed within a natural setting and no longer stand apart from nature. In this way human life can be enriched and the evils of cramping as many humans and things into a small a space as is "economical" can be overcome.

In addition, the stock market is hardly the means by which capital is actually raised within capitalism. As Engler points out, "[s]upporters of the system . . . claim that stock exchanges mobilise funds for business. Do they? When people buy and sell shares, 'no investment goes into company treasuries . . . Shares simply change hands for cash in endless repetition.' Company treasuries get funds only from new equity issues. These accounted for an average of a mere 0.5 per cent of shares trading in the US during the 1980s." [Apostles of Greed, pp. 157-158] Indeed, Doug Henwood argues that "the signals emitted by the stock market are either irrelevant or harmful to real economic activity, and that the stock market itself counts little or nothing as a source of finance. Shareholders . . . have no useful role." [Wall Street, p. 292]

Moreover, the existence of a stock market has serious (negative) effects on investment. As Henwood notes, there "are serious communication problems between managers and shareholders." This is because "[e]ven if participants are aware of an upward bias to earnings estimates [of companies], and even if they correct for it, managers would still have an incentive to try to fool the market. If you tell the truth, your accurate estimate will be marked down by a sceptical market. So, it's entirely rational for managers to boost profits in the short term, either through accounting gimmickry or by making only investments with quick paybacks." So, managers "facing a market [the stock market] that is famous for its preference for quick profits today rather than patient long-term growth have little choice but to do its bidding. Otherwise, their stock will be marked down, and the firm ripe for takeover." While "[f]irms and economies can't get richer by starving themselves" stock market investors "can get richer when the companies they own go hungry — at least in the short term. As for the long term, well, that's someone else's problem the week after next." [Op. Cit., p. 171]

Ironically, this situation has a parallel with Stalinist central planning. Under that system manager of State workplaces had an incentive to lie about their capacity to the planning bureaucracy. The planner would, in turn, assume higher capacity, so harming honest managers and encouraging them to lie. This, of course, had a seriously bad impact on the economy. Unsurprisingly, the similar effects caused by capital markets on economies subject to them as just as bad, downplaying long term issues and investment.

And it hardly needs to be repeated that capitalism results in production being skewed away from the working class and that the "efficiency" of market allocation is highly suspect.

Only by taking investment decisions away from "experts" and placing it in the hands of ordinary people will current generations be able to invest according to their, and future generations', self-interest. It is hardly in our interest to have a institution whose aim is to make the wealthy even wealthier and on whose whims are dependent the lives of millions of people.