We noted earlier that competition between syndicates can lead to "petty-bourgeois co-operativism," and that to eliminate this problem, the basis of collectivisation needs to be widened so that surpluses are distributed industry-wide or even society-wide. We also pointed out another advantage of a wide surplus distribution: that it allows for the consolidation of enterprises that would otherwise compete, leading to a more efficient allocation of resources and technical improvements. Here we will back up this claim with illustrations from the Spanish Revolution.

Collectivisation in Catalonia embraced not only major industries like municipal transportation and utilities, but smaller establishments as well: small factories, artisan workshops, service and repair shops, etc. Augustin Souchy describes the process as follows:

"The artisans and small workshop owners, together with their employees and apprentices, often joined the union of their trade. By consolidating their efforts and pooling their resources on a fraternal basis, the shops were able to undertake very big projects and provide services on a much wider scale . . . The collectivisation of the hairdressing shops provides an excellent example of how the transition of a small-scale manufacturing and service industry from capitalism to socialism was achieved."

"Before July 19th, 1936 [the date of the Revolution], there were 1,100 hairdressing parlours in Barcelona, most of them owned by poor wretches living from hand to mouth. The shops were often dirty and ill-maintained. The 5,000 hairdressing assistants were among the most poorly paid workers. . . Both owners and assistants therefore voluntarily decided to socialise all their shops.

"How was this done? All the shops simply joined the union. At a general meeting they decided to shut down all the unprofitable shops. The 1,100 shops were reduced to 235 establishments, a saving of 135,000 pesetas per month in rent, lighting, and taxes. The remaining 235 shops were modernised and elegantly outfitted. From the money saved, wages were increased by 40%. Everyone having the right to work and everyone received the same wages. The former owners were not adversely affected by socialisation. They were employed at a steady income. All worked together under equal conditions and equal pay. The distinction between employers and employees was obliterated and they were transformed into a working community of equals — socialism from the bottom up." ["Collectivisations in Catalonia," in Sam Dolgoff, The Anarchist Collectives, pp. 93-94]

Therefore, co-operation ensures that resources are efficiently allocated and waste is minimised by cutting down needless competition. As consumers have choices in which syndicate to consume from as well as having direct communication between consumer co-operatives and productive units, there is little danger that rationalisation in production will hurt the interests of the consumer.

Another way in which wide distribution of surplus can be advantageous is in investment and research and development. By creating a fund for research and development which is independent of the fortunes of individual syndicates, society as a whole can be improved by access to useful new technologies and processes.

Therefore, in a libertarian-socialist society, people (both within the workplace and in communities) are likely to decide to allocate significant amounts of resources for basic research from the available social output. This is because the results of this research would be freely available to all enterprises and so would aid everyone in the long term. In addition, because workers directly control their workplace and the local community effectively "owns" it, all affected would have an interest in exploring research which would reduce labour, pollution, raw materials and so on or increase output with little or no social impact.

This means that research and innovation would be in the direct interests of everyone involved. Under capitalism, this is not the case. Most research is conducted in order to get an edge in the market by increasing productivity or expanding production into new (previously unwanted) areas. Any increased productivity often leads to unemployment, deskilling and other negative effects for those involved. Libertarian socialism will not face this problem.

It should also be mentioned here that research would be pursued more and more as people take an increased interest in both their own work and education. As people become liberated from the grind of everyday life, they will explore possibilities as their interests take them and so research will take place on many levels within society - in the workplace, in the community, in education and so on.

In addition, it should be noted that basic research is not something which capitalism does well. The rise of the Pentagon system in the USA indicates that basic research often needs state support in order to be successful. As Kenneth Arrow noted over thirty years ago that market forces are insufficient to promote basic research:

"Thus basic research, the output of which is only used as an informational input into other inventive activities, is especially unlikely to be rewarded. In fact, it is likely to be of commercial value to the firm undertaking it only if other firms are prevented from using the information. But such restriction reduces the efficiency of inventive activity in general, and will therefore reduce its quantity also." ["Economic Welfare and the Allocation of Resources for Inventiveness," in National Bureau of Economic Research, The Rate and Direction of Inventive Activity, p. 618]

Would modern society have produced so many innovations if it had not been for the Pentagon system, the space race and so on? Take the Internet, for example — it is unlikely that this would have got off the ground if it had not been for the state. Needless to say, of course, much of this technology has been developed for evil reasons and purposes and would be in need of drastic change (and, in many cases, abolition) before it could be used in a libertarian society. However, the fact remains that it is unlikely that a pure market based system could have generated most of the technology we take for granted. As Noam Chomsky argues:

"[Alan] Greenspan [head of the US Federal Reserve] gave a talk to newspaper editors in the US. He spoke passionately about the miracles of the market, the wonders brought by consumer choice, and so on. He also gave examples: the Internet, computers, information processing, lasers, satellites, transistors. It's an interesting list: these are textbook examples of creativity and production in the public sector. In the case of the Internet, for 30 years it was designed, developed and funded primarily in the public sector, mostly the Pentagon, then the National Science Foundation — that's most of the hardware, the software, new ideas, technology, and so on. In just the last couple of years it has been handed over to people like Bill Gates . . . In the case of the Internet, consumer choice was close to zero, and during the crucial development stages that same was true of computers, information processing, and all the rest . . .

"In fact, of all the examples that Greenspan gives, the only one that maybe rises above the level of a joke is transistors, and they are an interesting case. Transistors, in fact, were developed in a private laboratory — Bell Telephone Laboratories of AT&T — which also made major contributions to solar cells, radio astronomy, information theory, and lots of other important things. But what is the role of markets and consumer choice in that? Well, again, it turns out, zero. AT&T was a government supported monopoly, so there was no consumer choice, and as a monopoly they could charge high prices: in effect a tax on the public which they could use for institutions like Bell Laboratories . . . So again, it's publicly subsidised. As if to demonstrate the point, as soon as the industry was deregulated, Bell Labs went out of existence, because the public wasn't paying for it any more . . . But that's only the beginning of the story. True, Bell invented transistors, but they used wartime technology, which, again, was publicly subsidised and state-initiated. Furthermore, there was nobody to but transistors at that time, because they were very expensive to produce. So, for ten years the government was the major procurer . . . Government procurement provided entrepreneurial initiatives and guided the development of the technology, which could then be disseminated to industry." [Rogue States, pp. 192-3]

As well as technological developments, a wide basis of surplus generation would help improve the skills and knowledge of the members of a community. As Keynesian economist Michael Stewart points out, "[t]here are both theoretical and empirical reasons to suppose that market forces under-provide research and development expenditures, as well as both education and training." [Keynes in the 1990s, p. 77]

If we look at vocational training and education, a wide basis of surplus distribution would aid this no end. Under free market capitalism, vocational training suffers due to the nature of the market. The argument is simple. Under free market capitalism, if companies stood to gain, in terms of higher profits, from training more workers, they would train them. If they did not, that just proves that training was not required. Unfortunately, this piece of reasoning overlooks the fact that profit maximising firms will not incur costs that will be enjoyed by others. This means that firms will be reluctant to spend money on training if they fear that the trained workers will soon be poached by other firms which can offer more money because they had not incurred the cost of providing training. This means that few firms will provide the required training as they could not be sure that the trained workers will not leave for their competitors (and, of course, a trained work force also, due to their skill, have more workplace power and are less replaceable).

By socialising training via confederations of workplaces, syndicates could increase productivity via increasing the skill levels of their members. Higher skill levels will also tend to increase innovation and enjoyment at "work" when combined with workers' self-management. This is because an educated workforce in control of their own time will be unlikely to tolerate mundane, boring, machine-like work and seek ways to eliminate it, improve the working environment and increase productivity to give them more free time.

The free market can also have a negative impact on innovation. This is because, in order to please shareholders with higher share prices, companies may reduce funds available for real investment and R&D, which would also depress growth and employment in the long term. What shareholders might condemn as "uneconomic" (investment projects and R&D) can, and does, make society as a whole better off. However, these gains are over the long term and, within capitalism, it is short-term gains which count. Higher share prices in the here and now are essential in order to survive and so see the long-run.

In a more socialised economy, wide-scale collectivisation could aid in allocating resources for Research and Development, long term investment, innovation and so on. Via the use of mutual banks or confederations of syndicates and communes, resources could be allocated which take into account the importance of long-term priorities, as well as social costs, which are not taken into account (indeed, are beneficial to ignore) under capitalism. Rather than penalise long term investment and research and development, a socialised economy would ensure that adequate funds are available, something which would benefit everyone in society in some way.

In addition to work conducted by syndicates, education establishments, communes and so on, it would be essential to provide resources for individuals and small groups to pursue "pet projects." Of course, syndicates and confederations will have their own research institutions but the innovatory role of the interested "amateur" cannot be over-rated. As Kropotkin argued:

"What is needed to promote the spirit of innovation is . . . the awakening of thought, the boldness of conception, which our entire education causes to languish; it is the spreading of a scientific education, which would increase the numbers of inquirers a hundred-fold; it is faith that humanity is going to take a step forward, because it is enthusiasm, the hope of doing good, that has inspired all the great inventors. The Social Revolution alone can give this impulse to thought, this boldness, this knowledge, this conviction of working for all.

"Then we shall have vast institutes . . . immense industrial laboratories open to all inquirers, where men will be able to work out their dreams, after having acquitted themselves of their duty towards society; . . . where they will make their experiments; where they will find other comrades, experts in other branches of industry, likewise coming to study some difficult problem, and therefore able to help and enlighten each other — the encounter of their ideas and experiences causing the longed-for solution to be found." [The Conquest of Bread, p. 117]

In addition, unlike under capitalism, where inventors often "carefully hide their inventions from each other, as they are hampered by patents and Capitalism — that bane of present society, that stumbling-block in the path of intellectual and moral progress," inventors within a free society will be able to build upon the knowledge of everyone and past generations. Rather than hide knowledge from others, in case they get a competitive advantage, knowledge would be shared, enriching all involved as well as the rest of society [Ibid.]. As John O'Neil argues:

"There is, in a competitive market economy, a disincentive to communicate information. The market encourages secrecy, which is inimical to openness in science. It presupposes a view of property in which the owner has rights to exclude others. In the sphere of science, such rights of exclusion place limits on the communication of information and theories which are incompatible with the growth of knowledge . . . science tends to grow when communication is open. . . [In addition a] necessary condition for the acceptability of a theory or experimental result is that it pass the public, critical scrutiny of competent scientific judges. A private theory or result is one that is shielded from the criteria of scientific acceptability." [The Market, p. 153]

Thus socialisation would aid innovation and scientific development. This is two fold, by providing the necessary resources for such work and by providing the community spirit required to push the boundaries of science forward.

Lastly, there is the issue of those who cannot work and general provision of public goods. With a wide distribution to surplus, communal hospitals, schools, universities and so on can be created. This simple fact is that any society has members who cannot (indeed, should not) work. For example, the young, the old and the sick. In a mutualist society, particularly an Individualist Anarchists mutualist society, there is no real provision for these individuals unless someone (a family member or friend) provides them with the money required for hospital fees and so on. However, with a communal basis for distribution every member of the commune can receive an education, health care and so on as a right — and so live a fully human life as a right, rather than a privilege. Moreover, the experience of capitalist countries suggests that socialising, say, health care, leads to a service with lower costs than one which is predominately privatised. For example, the administrative costs of the British National Health Service are a fraction of the U.S. or Chilean systems (where a sizeable percentage of income ends up as profit rather than as health care).

This tendency for the use of surplus for communal services (such as hospitals and education) can be seen from the Spanish Revolution. Many collectives funded new hospitals and colleges for their members, providing hundreds of thousands with services they could never have afforded by their own labour. This is a classic example of co-operation helping the co-operators achieve far more than they could by their own isolated activities.