From the Anarchist FAQ.
Isn’t libertarian socialism an oxymoron?
No. As discussed in section A.1.3, the word “libertarian” has been used by anarchist socialists for far longer than the pro-free market right have been using it. This in itself does not, of course, prove that the term is free of contradiction. However, as we will show below, the claim that the term is self-contractory rests on the assumption that socialism requires the state in order to exist and that socialism is incompatible with liberty. This assumption, as is often true of objections to socialism, is based on a misconception of what socialism is, a misconception that many authoritarian socialists and the state capitalism of Soviet Russia have helped to foster. In reality it is the term “state socialism” which is an oxymoron.
The right (and many on the left) consider that, by definition, “socialism” is state ownership and control of the means of production, along with centrally planned determination of the national economy (and so social life). This definition has become common because many Social Democrats, Leninists, and other statists call themselves socialists. However, the fact that certain people call themselves socialists does not imply that the system they advocate is really socialism. We need to analyse and understand the systems in question, by applying critical, scientific thought, in order to determine whether their claims to the socialist label are justified. As we’ll see, to accept the above definition one has to ignore the overall history of the socialist movement and consider only certain trends within it as representing the movement as a whole.
Even a quick glance at the history of the socialist movement indicates that the identification of socialism with state ownership and control is not common. For example, Anarchists, many Guild Socialists, council communists, and other libertarian Marxists, as well as followers of Robert Owen, all rejected state ownership. Indeed, anarchists recognised that the means of production did not change their form as capital when the state took over their ownership, and hence that state ownership of capital was a tendency within, not opposed to, capitalism