Kropotkin's notion that an anarchist society must also be a communist one - communist in the sense of distribution by need, not output - should be understood. The anarchists of the First International tended to share with classical Marxism the view that a just wage system could be applied in a postcapitalist society, based on remuneration by output. This "anarchist collectivism" (as it was later known) was partly a holdover of mutualist ideas of the workers receiving the full product of their labour and was reinforced by Marxist thinking about a postcapitalist society.

Kropotkin challenged these ideas in a series of works. In the first place, he made an argument for the social character of production. Production was, he insisted, a collective process, based on the knowledge, experience, and resources developed in the past, and undertaken by large numbers of people in a complex division of labour in the present. Consequently, individual contributions could not be isolated or calculated, nor could the contribution of a particular group of workers, in a particular industry to a particular good, be properly calculated...

Luigi Galleani (1861-1931)...added the point that the value of less tangible products, such as "Pascal's theorem...Newton's law of gravitation, or ... Marconi's wireless telegraphy," could scarcely be assessed, nor could the innovations of these men be separated from the ideas and discoveries of others...

It is necessary at this point to discuss the question of the determination of prices under capitalism. Marx's use of the labour theory of value, his idea of exchange value, and his law of value were integral to his view that prices were objective and set by the average labour time in production. This notion was present before the late nineteenth century, notably but not only in the work of [Adam] Smith, where it coexisted uneasily with the perspective that prices were set by subjective factors through the "law" of supply and demand...

By the late nineteenth century - and in no small part in reaction to the way in which mutualists, Marxists, anarchists, and others were using the labour theory of value to claim class exploitation - economic liberals sought to develop an entirely subjective theory of price. The theory of marginal utility, developed from William Stanley Jevons onward, suggested that in a free market all prices...were determined by individual preferences.

Where did the anarchists fall into these debates? It is useful here to look at Kropotkin's views on wages and capitalism. For Marx, labour power was a commodity, and like any other commodity, its price was set by the labour time required in its production - the labour time required to produce and reproduce the workers who embodied labour power. For Kropotkin, however, wage rates were often quite arbitrary and were set by a wide variety of factors, including the unequal power relations between classes, government policies, the relative profitability of particular industries, and, last but not least, the ability of skilled and professional employees to establish monopolies in particular trades.

Like Smith, then, Kropotkin believed that both subjective utility and exchange value shaped prices, but he added that power relations also played an important role. Berkman developed the point, arguing that prices were not simply a reflection of subjective individual choices or objective exchange values. Prices were affected by labour value, by levels of supply and demand, and were also manipulated by powerful monopolies and the state...

It followed from arguments like those of Kropotkin and Berkman that there was no possibility of operating a fair postcapitalist wage system. Indeed, if wages - like other prices - were partly set by power and class relations, and if - as Kropotkin believed - the dictatorship of the proletariat would be a new class system, then there was no reason to expect that the wages paid by the revolutionary state would be any more fair than those paid by openly capitalist ones.

Kropotkin's second argument against a post capitalist wage system was centred on the issue of justice. Remuneration on the basis of output meant remuneration on the basis of occupation and ability, rather than effort or need... If the hypothetical engineer lived alone without family commitments and was healthy, and the hypothetical cleaner supported several children and had serious medical problems, the engineer would nonetheless earn a higher wage than the cleaner. Such a situation was both unjust and would "maintain all the inequalities of the present society," particularly the gap between skilled and unskilled labour....