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Mutualism (economic theory)

Mutualism (economic theory)

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Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon
Pierre-Joseph Proudhon
Pierre-Joseph Proudhon was a French politician, mutualist philosopher and socialist. He was a member of the French Parliament, and he was the first person to call himself an "anarchist". He is considered among the most influential theorists and organisers of anarchism...

, who envisioned a society where each person might possess a means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

, either individually or collectively, with trade representing equivalent amounts of labor in the free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

. Integral to the scheme was the establishment of a mutual-credit bank that would lend to producers at a minimal interest rate, just high enough to cover administration. Mutualism is based on a labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...

 that holds that when labor or its product is sold, in exchange, it ought to receive goods or services embodying "the amount of labor necessary to produce an article of exactly similar and equal utility". Receiving anything less would be considered exploitation, theft of labor, or usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...

.

Some mutualists believe that if the state did not intervene, as a result of increased competition in the marketplace, individuals would receive no more income than that proportional to the amount of labor they exert (this being a desirable effect in the school
Anarchist schools of thought
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...

 of Mutualism). Mutualists oppose the idea of individuals receiving an income through loans, investments, and rent, as they believe these individuals are not laboring. Some of them argue that if state intervention ceased, these types of incomes would disappear due to increased competition in capital. Though Proudhon opposed this type of income, he expressed that he had never intended "...to forbid or suppress, by sovereign decree, ground rent and interest on capital. I think that all these manifestations of human activity should remain free and voluntary for all: I ask for them no modifications, restrictions or suppressions, other than those which result naturally and of necessity from the universalization of the principle of reciprocity which I propose."

Insofar as they ensure the worker's right to the full product of their labor, mutualists support market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...

s (or artificial markets
Artificial market
An artificial market or arket is an economic institution proposed mainly by libertarian socialists as a replacement for currently existing markets based on money and private ownership and control of an economy's means of production...

) and property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

 in the product of labor. However, they argue for conditional titles to land, whose ownership is legitimate only so long as it remains in use or occupation (which Proudhon called "possession"); thus advocating personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...

 but not private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...

.

Proudhon's Mutualism supports labor-owned cooperative firms
Worker cooperative
A worker cooperative is a cooperative owned and democratically managed by its worker-owners. This control may be exercised in a number of ways. A cooperative enterprise may mean a firm where every worker-owner participates in decision making in a democratic fashion, or it may refer to one in which...

 and associations for "we need not hesitate, for we have no choice. . . it is necessary to form an ASSOCIATION among workers . . . because without that, they would remain related as subordinates and superiors, and there would ensue two . . . castes of masters and wage-workers, which is repugnant to a free and democratic society" and so "it becomes necessary for the workers to form themselves into democratic societies, with equal conditions for all members, on pain of a relapse into feudalism
Feudalism
Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...

." As for capital goods (man-made, non-land, "means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

"), mutualist opinions differs on whether these should be commonly managed public assets or private property.

Though Proudhon's mutualism is similar to the economic doctrines of the nineteenth century American individualist anarchists, unlike them, the Proudhonists are in favor of association for large industries. Because of this, mutualism has been retrospectively characterized sometimes as being economic individualism, and another times as ideologically situated between individualist and collectivist forms of anarchism. Proudhon himself described the "liberty" he pursued as "the synthesis of communism and property."

Mutualists have distinguished mutualism from state socialism
State socialism
State socialism is an economic system with limited socialist characteristics, such as public ownership of major industries, remedial measures to benefit the working class, and a gradual process of developing socialism through government policy...

, and don't advocate state control over the means of production. Benjamin Tucker
Benjamin Tucker
Benjamin Ricketson Tucker was a proponent of American individualist anarchism in the 19th century, and editor and publisher of the individualist anarchist periodical Liberty.-Summary:Tucker says that he became an anarchist at the age of 18...

 said of Proudhon, that "though opposed to socializing the ownership of capital, [Proudhon] aimed nevertheless to socialize its effects by making its use beneficial to all instead of a means of impoverishing the many to enrich the few...by subjecting capital to the natural law of competition, thus bringing the price of its own use down to cost."

The idea of a political theory based on mutualism is not excluive to Anarchist thought or to Proudhon, other authors such as Kropotkin
Kropotkin
Peter Kropotkin was a Russian prince and anarchist.Kropotkin may also refer to:*Pyotr Nikolayevich Kropotkin , Soviet/Russian geologist, tectonician, and geophysicist*Mount Kropotkin, a peak in Antarctica...

 have also written about it. The base concept is a biological analogy, as mutualism is the opposite of parasitism
Parasitism
Parasitism is a type of symbiotic relationship between organisms of different species where one organism, the parasite, benefits at the expense of the other, the host. Traditionally parasite referred to organisms with lifestages that needed more than one host . These are now called macroparasites...

. Thus, anarchists and others contrast the capitalist order as a form of parasitism
Parasitism (social offense)
Social parasitism is a charge that is leveled against a group or class in society which is considered to be detrimental to the whole by analogy with biologic parasitism .-General concept:...

 with forms of mutualism calling for revolutionary action to restore/establish a different social order.

History


Mutualism, as a term, has seen a variety of related uses. Charles Fourier
Charles Fourier
François Marie Charles Fourier was a French philosopher. An influential thinker, some of Fourier's social and moral views, held to be radical in his lifetime, have become main currents in modern society...

 first used the French term "mutualisme" in 1822, although the reference was not to an economic system. The first use of the noun "mutualist" was in the New-Harmony Gazette by an American Owenite
Robert Owen
Robert Owen was a Welsh social reformer and one of the founders of utopian socialism and the cooperative movement.Owen's philosophy was based on three intellectual pillars:...

 in 1826. In the early 1830s, a labor organization in Lyons, France, called themselves the "Mutuellists."

Pierre Joseph Proudhon was involved with the Lyons mutualists and later adopted the name to describe his own teachings. In What Is Mutualism? Clarence Lee Swartz
Clarence Lee Swartz
Clarence Lee Swartz was an American individualist anarchist.Clarence Lee Swartz' most famous writing is a book entitled What is Mutualism? published in 1927 where he explains the economic system of mutualism. He edited an anarchist journal called Voice of the People and was an assistant editor for...

 gives his own account of the origin of the term, claiming that "[t]he word "mutualism" seems to have been first used by John Gray
John Gray (19th century socialist)
John Gray was a British socialist economist.-Life and views:Very little personal information about John Gray is available. He lived mostly in Edinburgh. According to his own account, he was a poor student who dropped out of school early, went to London and took up factory work as a youngster...

, an English writer, in 1832." When John Gray's 1825 Lecture on Human Happiness was first published in the United States in 1826, the publishers appended the Preamble and constitution of the Friendly Association for Mutual Interests, located at Valley Forge. 1826 also saw the publication of the Constitution of the Friendly Association for Mutual Interests at Kendal, Ohio
Kendal, Ohio
The plat for the town of Kendal, in Stark County, Ohio was entered on April 20, 1812. It was named by its founder, Thomas Rotch , after the town of Kendal, in Cumbria, England. Kendal was absorbed into the town of Massillon, Ohio in 1853.-History:...

.

By 1846, Pierre Joseph Proudhon
Pierre-Joseph Proudhon
Pierre-Joseph Proudhon was a French politician, mutualist philosopher and socialist. He was a member of the French Parliament, and he was the first person to call himself an "anarchist". He is considered among the most influential theorists and organisers of anarchism...

 was speaking of "mutualité" in his writings, and he used the term "mutuellisme," at least as early as 1848, in his "Programme Révolutionnaire." William B. Greene, in 1850, used the term "mutualism" to describe a mutual credit system similar to that of Proudhon. In 1850, the American newspaper The Spirit of the Age, edited by William Henry Channing, published proposals for a "mutualist township" by Joshua King Ingalls and Albert Brisbane, together with works by Proudhon, William B. Greene, Pierre Leroux
Pierre Leroux
Pierre Henri Leroux , French philosopher and political economist, was born at Bercy, now a part of Paris, the son of an artisan.- Life :...

, and others.

Mutualism has been associated with two types of currency reform. Labor notes
Labor notes (currency)
Labor notes are an alternative currency based on exchange of hours of labor.Two early attempts at implementing labor notes were made by social reformers Josiah Warren and Robert Owen following their experiences attempting to establish a utopian community at New Harmony, Indiana, in which currency...

 were first discussed in Owenite
Robert Owen
Robert Owen was a Welsh social reformer and one of the founders of utopian socialism and the cooperative movement.Owen's philosophy was based on three intellectual pillars:...

 circles and received their first practical test in 1827 in the Time Store
Cincinnati Time Store
The Cincinnati Time Store was a successful retail store that was created by American individualist anarchist Josiah Warren to test his theories that were based on his strict interpretation of the labor theory of value. The experimental store operated from May 18, 1827 until May 1830...

 of former New Harmony
New Harmony, Indiana
New Harmony is a historic town on the Wabash River in Harmony Township, Posey County, Indiana, United States. It lies north of Mount Vernon, the county seat. The population was 916 at the 2000 census. It is part of the Evansville metropolitan area. Many of the old Harmonist buildings still stand...

 member and individualist anarchist Josiah Warren
Josiah Warren
Josiah Warren was an individualist anarchist, inventor, musician, and author in the United States. He is widely regarded as the first American anarchist, and the four-page weekly paper he edited during 1833, The Peaceful Revolutionist, was the first anarchist periodical published, an enterprise...

. Mutual banking aimed at the monetization of all forms of wealth and the extension of free credit. It is most closely associated with William B. Greene, but Greene drew from the work of Proudhon, Edward Kellogg, and William Beck
William Beck
William “Skipper” Beck was an American businessman and the co-owner of the NBA basketball team, the Charlotte Bobcats....

, as well as from the land bank tradition. Mutualism can in many ways be considered "the original anarchy," since Proudhon was the first to identify himself as an anarchist. Though mutualism is generally associated with anarchism, it is not necessarily anarchist.

Nineteenth century mutualists considered themselves libertarian socialists. While still oriented towards cooperation
Cooperative
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...

, mutualists favor free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

 solutions, believing that most inequalities are the result of preferential conditions created by government intervention. Mutualism is something of a middle way between classical economics
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

 and socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...

, with some characteristics of both. Modern-day Mutualist Anarchism's Kevin Carson, considers anarchist mutualism to be "free market socialism."

The "cost principle" or "cost the limit of price"


Mutualists argue that most of the economic problems associated with capitalism each amount to a violation of the cost principle, or as Josiah Warren
Josiah Warren
Josiah Warren was an individualist anarchist, inventor, musician, and author in the United States. He is widely regarded as the first American anarchist, and the four-page weekly paper he edited during 1833, The Peaceful Revolutionist, was the first anarchist periodical published, an enterprise...

 interchangeably said, "Cost the limit of price." It was inspired by the labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...

, popularized, though not invented, by Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...

 in 1776 Proudhon mentions Smith as an inspiration. The labor theory of value holds that the actual price of a thing (or the "true cost") is the amount of labor that was undertaken to produce it. In Warren's terms, cost should be the "limit of price," with "cost" referring to the amount of labor required to produce a good or service. Anyone who sells goods should charge no more than the cost to himself of acquiring these goods. Proudhon also held that the "real value of products was determined by labour time, and that all kinds of labour should be regarded as equally effective in the value-creating process, and he advocated therefore equality of wages and salaries."

Property


Pierre Joseph Proudhon
Pierre-Joseph Proudhon
Pierre-Joseph Proudhon was a French politician, mutualist philosopher and socialist. He was a member of the French Parliament, and he was the first person to call himself an "anarchist". He is considered among the most influential theorists and organisers of anarchism...

 was one of the most famous philosophers to have articulated thoughts on the nature of property. He is known for claiming that "property is theft," but is less known for the claims that "property is liberty" and "property is impossible". According to Colin Ward
Colin Ward
Colin Ward was a British anarchist writer. He has been called "one of the greatest anarchist thinkers of the past half century, and a pioneering social historian." -Life:...

, Proudhon did not see a contradiction between these slogans. This was because Proudhon distinguished between what he considered to be two distinct forms of property often bound up in the single label. To the mutualist, this is the distinction between property created by coercion and property created by labor. Property is theft "when it is related to a landowner or capitalist whose ownership is derived from conquest or exploitation and [is] only maintained through the state, property laws, police, and an army". Property is freedom for "the peasant or artisan family [who have] a natural right to a home, land [they may] cultivate, [...] to tools of a trade", and the fruits of that cultivation — but not to ownership or control of the lands and lives of others. The former is considered illegitimate property, the latter legitimate property.

Proudhon argued that property in the product of labor is essential to liberty, while property that strayed from "possession" ("occupancy and use") was the basis for tyranny and would lead a society to destroy itself. The conception of entitlement property as a destructive force and illegitimate institution can be seen in this quote by Proudhon,
"Then if we are associated for the sake of liberty, equality, and security, we are not associated for the sake of property; then if property is a natural right, this natural right is not social, but anti-social. Property and society are utterly irreconcilable institutions. It is as impossible to associate two proprietors as to join two magnets by their opposite poles. Either society must perish, or it must destroy property. If property is a natural, absolute, imprescriptible, and inalienable right, why, in all ages, has there been so much speculation as to its origin? for this is one of its distinguishing characteristics. The origin of a natural right! Good God! who ever inquired into the origin of the rights of liberty, security, or equality?" (What is Property?)


Mutualist, Clarence Lee Swartz
Clarence Lee Swartz
Clarence Lee Swartz was an American individualist anarchist.Clarence Lee Swartz' most famous writing is a book entitled What is Mutualism? published in 1927 where he explains the economic system of mutualism. He edited an anarchist journal called Voice of the People and was an assistant editor for...

, says in What is Mutualism:
"It is, therefore, one of the purposes of Mutualists, not only to awaken in the people the appreciation of and desire for freedom, but also to arouse in them a determination to abolish the legal restrictions now placed upon non-invasive human activities and to institute, through purely voluntary associations, such measures as will liberate all of us from the exactions of privilege and the power of concentrated capital."


Swartz also states that mutualism differs from anarcho-communism and other collectivist philosophies by its support of private property: "One of the tests of any reform movement with regard to personal liberty is this: Will the movement prohibit or abolish private property? If it does, it is an enemy of liberty. For one of the most important criteria of freedom is the right to private property in the products of ones labor. State Socialists, Communists, Syndicalists and Communist-Anarchists deny private property."

However, Proudhon warned that a society with private property without equality would lead to statist-like relations between people.
"The purchaser draws boundaries, fences himself in, and says, 'This is mine; each one by himself, each one for himself.' Here, then, is a piece of land upon which, henceforth, no one has right to step, save the proprietor and his friends; which can benefit nobody, save the proprietor and his servants. Let these multiply, and soon the people . . . will have nowhere to rest, no place of shelter, no ground to till. They will die of hunger at the proprietor's door, on the edge of that property which was their birth-right; and the proprietor, watching them die, will exclaim, 'So perish idlers and vagrants.'"


Unlike capitalist private-property supporters, Proudhon stressed equality. He thought all workers should own property and have access to capital. He stressed that in every cooperative "every worker employed in the association [must have] an undivided share in the property of the company".

This distinction Proudhon made between different kinds of property has been articulated by some later anarchist and socialist theorists as one of the first distinctions between private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...

 and personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...

; the latter having actual use-value to the individual possessing it.

Mutualist economics


The major tenets of mutualism are free association
Free association (communism and anarchism)
In the anarchist, Marxist and socialist sense, free association is a kind of relation between individuals where there is no state, social class or authority, in a society that had abolished the private property of means of production...

, mutualist credit, contract (or federation/confederation), and gradualism (or dual-power). Mutualism is often described by its proponents as advocating an "anti-capitalist free market".

Contemporary mutualist author Kevin Carson holds that capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

has been founded on "an act of robbery as massive as feudalism," and argues that capitalism could not exist in the absence of a state. He says "[i]t is state intervention that distinguishes capitalism from the free market". He does not define capitalism in the idealized sense, but says that when he talks about "capitalism" he is referring to what he calls "actually existing capitalism
Actually existing capitalism
Actually existing capitalism or really existing capitalism is a term used mainly by anti-capitalists to refer to economies that do not fit the ideal definition of capitalism as a laissez-faire free market economic system, but have significant state intervention and partnerships between private...

." He believes the term "laissez-faire capitalism" is an oxymoron because capitalism, he argues, is "organization of society, incorporating elements of tax, usury, landlordism, and tariff, which thus denies the Free Market while pretending to exemplify it". However, he says he has no quarrel with anarcho-capitalists who use the term "laissez-faire capitalism" and distinguish it from "actually existing capitalism." He says he has deliberately chosen to resurrect an old definition of the term. Carson argues the centralization of wealth into a class hierarchy
Class hierarchy
As in taxonomy, the classifications of species, a class hierarchy in computer science is a classification of object types, denoting objects as the instantiations of classes inter-relating the various classes by relationships such as "inherits", "extends", "is an abstraction of", "an interface...

 is due to state intervention to protect the ruling class
Ruling class
The term ruling class refers to the social class of a given society that decides upon and sets that society's political policy - assuming there is one such particular class in the given society....

, by using a money monopoly, granting patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

s and subsidies to corporations, imposing discriminatory taxation, and intervening militarily to gain access to international markets. Carson’s thesis is that an authentic free market economy would not be capitalism as the separation of labor from ownership and the subordination of labor to capital would be impossible, bringing a class-less society where people could easily choose between working as a freelancer, working for a fair wage, taking part of a cooperative, or being an entrepreneur. He notes, as did Tucker before him, that a mutualist free market system would involve significantly different property rights than capitalism is based on, particularly in terms of land and intellectual property.

Free association


Mutualists argue that association is only necessary where there is an organic combination of forces. For instance, an operation that requires specialization and many different workers performing their individual tasks to complete a unified product, i.e., a factory. In this situation, workers are inherently dependent on each other and without association they are related as subordinate and superior, master and wage-slave.

An operation that can be performed by an individual without the help of specialized workers does not require association. Proudhon argued that peasants do not require societal form, and only feigned association for the purposes of solidarity in abolishing rents, buying clubs, etc. He recognized that their work is inherently sovereign and free. In commenting on the degree of association that is preferable Proudhon said:

"In cases in which production requires great division of labour, it is necessary to form an ASSOCIATION among the workers... because without that they would remain isolated as subordinates and superiors, and there would ensue two industrial castes of masters and wage workers, which is repugnant in a free and democratic society. But where the product can be obtained by the action of an individual or a family... there is no opportunity for association."


For Proudhon, mutualism involved creating "industrial democracy," a system where workplaces would be "handed over to democratically organised workers' associations . . . We want these associations to be models for agriculture, industry and trade, the pioneering core of that vast federation of companies and societies woven into the common cloth of the democratic social Republic." He urged "workers to form themselves into democratic societies, with equal conditions for all members, on pain of a relapse into feudalism." This would result in "Capitalistic and proprietary exploitation, stopped everywhere, the wage system abolished, equal and just exchange guaranteed." Workers would no longer sell their labour to a capitalist but rather work for themselves in co-operatives.

As Robert Graham notes, "Proudhon's market socialism is indissolubly linked to his notions of industry democracy and workers' self-management." K. Steven Vincent notes in his in-depth analysis of this aspect of Proudhon's ideas that "Proudhon consistently advanced a program of industrial democracy which would return control and direction of the economy to the workers." For Proudhon, "...strong workers' associations . . . would enable the workers to determine jointly by election how the enterprise was to be directed and operated on a day-to-day basis."

Mutual credit


Mutualists argue that free banking
Free banking
Free banking refers to a monetary arrangement in which banks are subject to no special regulations beyond those applicable to most enterprises, and in which they also are free to issue their own paper currency...

 should be taken back by the people to establish systems of free credit. They contend that banks have a monopoly on credit, just as capitalists have a monopoly on land. Banks are essentially creating money by lending out deposits that do not actually belong to them, then charging interest on the difference. Mutualists argue that by establishing a democratically run mutual bank
Mutual bank
Mutual bank or mutual banking may refer to*Mutual savings bank*Cooperative banking*Mutualism...

 or credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...

, it would be possible to issue free credit so that money could be created for the benefit of the participants rather than for the benefit of the bankers. Individualist anarchists noted for their detailed views on mutualist banking include Proudhon, William B. Greene, and Lysander Spooner
Lysander Spooner
Lysander Spooner was an American individualist anarchist, political philosopher, Deist, abolitionist, supporter of the labor movement, legal theorist, and entrepreneur of the nineteenth century. He is also known for competing with the U.S...

.

Some modern forms of mutual credit are LETS and the Ripple monetary system
Ripple monetary system
Ripple is an open-source software project for developing and implementing a protocol for an open decentralized payment network. In its developed form , the Ripple network would be a peer-to-peer distributed social network service with a monetary honour system based on trust that already exists...

 project.

In a session of the French legislature, Proudhon proposed a government-imposed income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 to fund his mutual banking scheme, with some tax brackets reaching as high as 33 1/3 percent and 50 percent, which was turned down by the legislature. This income tax Proudhon proposed to fund his bank was to be levied on rents, interest, debts, and salaries. Specifically, Proudhon's proposed law would have required all capitalists and stockholders to disburse one sixth of their income to their tenants and debtors, and another sixth to the national treasury to fund the bank. This scheme was vehemently objected to by others in the legislature, including Frédéric Bastiat
Frédéric Bastiat
Claude Frédéric Bastiat was a French classical liberal theorist, political economist, and member of the French assembly. He was notable for developing the important economic concept of opportunity cost.-Biography:...

; the reason given for the income tax's rejection was that it would result in economic ruin and that it violated "the right of property." In his debates with Bastiat, Proudhon did once propose funding a national bank with a voluntary tax of 1%. Proudhon also argued for the abolition of all taxes.

Contract and federation


Mutualism holds that producers should exchange their goods at cost-value using systems of "contract." While Proudhon's early definitions of cost-value were based on fixed assumptions about the value of labor-hours, he later redefined cost-value to include other factors such as the intensity of labor, the nature of the work involved, etc. He also expanded his notions of "contract" into expanded notions of "federation." As Proudhon argued,

Gradualism and dual-power


Beneath the governmental machinery, in the shadow of political institutions, out of the sight of statemen and priests, society is producing its own organism, slowly and silently; and constructing a new order, the expression of its vitality and autonomy...


Proudhon noted that the shock of the French Revolution
French Revolution
The French Revolution , sometimes distinguished as the 'Great French Revolution' , was a period of radical social and political upheaval in France and Europe. The absolute monarchy that had ruled France for centuries collapsed in three years...

 failed the people, and was instead interested in a federation of worker cooperations that could use mutualist credit to gradually expand and take control of industry. This is similar to economic models based on worker cooperatives today, such as the Mondragón Cooperative Corporation
Mondragón Cooperative Corporation
The MONDRAGON Corporation is a corporation and federation of worker cooperatives based in the Basque region of Spain. Founded in the town of Mondragón in 1956, its origin is linked to the activity of a modest technical college and a small workshop producing paraffin heaters...

 in Spain and NoBAWC in San Francisco.

Mutualism today


Kevin Carson is a contemporary mutualist and author of Studies in Mutualist Political Economy
Studies in Mutualist Political Economy
Studies in Mutualist Political Economy is a book on political economy published on 2007 by american mutualist anarchist Kevin Carson. In its preface Carson describes this work as "an attempt to revive individualist anarchist political economy, to incorporate the useful developments of the last...

. In its preface Carson describes this work as "an attempt to revive individualist anarchist political economy, to incorporate the useful developments of the last hundred years, and to make it relevant to the problems of the twenty-first century."Contemporary mutualists are among those involved in the Alliance of the Libertarian Left and in the Voluntary Cooperation Movement.

Social economy
Social economy
Social economy refers to a third sector in economies between the private sector and business or, the public sector and government. It includes organisations such as cooperatives, non-governmental organisations and charities....

, some fair trade
Fair trade
Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries make better trading conditions and promote sustainability. The movement advocates the payment of a higher price to producers as well as higher social and environmental standards...

 movements such as the "Reciprocal Transparent Cost Price Network" project and some free software
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...

 projects such as Debian
Debian
Debian is a computer operating system composed of software packages released as free and open source software primarily under the GNU General Public License along with other free software licenses. Debian GNU/Linux, which includes the GNU OS tools and Linux kernel, is a popular and influential...

 and Linux Users Groups
Linux User Group
A Linux User Group or Linux Users' Group or GNU/Linux User Group is a private, generally non-profit or not-for-profit organization that provides support and/or education for Linux users, particularly for inexperienced users...

 follow a similar spirit, focusing on mutual aid
Mutual aid
Mutual aid may refer to:*Mutual aid , a tenet of organization theories.*Mutual aid , an agreement between emergency responders.*Mutual Aid: A Factor of Evolution, a biology book by anarchist Peter Kropotkin...

, decentralization and free association (see Contemporary anarchism
Contemporary anarchism
Anarchism is a political philosophy encompassing theories and attitudes which consider the state, as compulsory government, to be unnecessary, harmful, and/or undesirable, and favors the absence of the state ....

).

Primitive mutualism



Primitive, Primitivist or non-capital mutualism is a form of mutualism where all forms of capital have been abolished, and all goods, services, and property are either individually or collectively owned, and distributed, in a "free" society.

Criticisms


One area of disagreement between mutualists and anarchist communists
Anarchist communism
Anarchist communism is a theory of anarchism which advocates the abolition of the state, markets, money, private property, and capitalism in favor of common ownership of the means of production, direct democracy and a horizontal network of voluntary associations and workers' councils with...

 stems from Proudhon's advocacy of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...

 and later labour vouchers
Labour voucher
Labour vouchers are a device proposed to govern demand for goods in some models of socialism, much as money does under capitalism.-Outline:...

 to compensate individuals for their labor as well as markets or artificial markets
Artificial market
An artificial market or arket is an economic institution proposed mainly by libertarian socialists as a replacement for currently existing markets based on money and private ownership and control of an economy's means of production...

 for goods and services. Peter Kropotkin
Peter Kropotkin
Prince Pyotr Alexeyevich Kropotkin was a Russian zoologist, evolutionary theorist, philosopher, economist, geographer, author and one of the world's foremost anarcho-communists. Kropotkin advocated a communist society free from central government and based on voluntary associations between...

, like other anarchist communists, advocated the abolition of labor remuneration and questioned, "how can this new form of wages, the labor note
Labour voucher
Labour vouchers are a device proposed to govern demand for goods in some models of socialism, much as money does under capitalism.-Outline:...

, be sanctioned by those who admit that houses, fields, mills are no longer private property, that they belong to the commune or the nation?" According to George Woodcock
George Woodcock
George Woodcock was a Canadian writer of political biography and history, an anarchist thinker, an essayist and literary critic. He was also a poet, and published several volumes of travel writing. He founded in 1959 the journal Canadian Literature, the first academic journal specifically...

, Kropotkin believed that a wage system in any form, whether "administered by Banks of the People or by workers' associations through labor cheques
Labour voucher
Labour vouchers are a device proposed to govern demand for goods in some models of socialism, much as money does under capitalism.-Outline:...

" is a form of compulsion."

Collectivist anarchist
Collectivist anarchism
Collectivist anarchism is a revolutionary doctrine that advocates the abolition of both the state and private ownership of the means of production...

 Michael Bakunin was an adamant critic of Proudhonian mutualism as well, stating, "How ridiculous are the ideas of the individualists of the Jean Jacques Rousseau school and of the Proudhonian mutualists who conceive society as the result of the free contract of individuals absolutely independent of one another and entering into mutual relations only because of the convention drawn up among men. As if these men had dropped from the skies, bringing with them speech, will, original thought, and as if they were alien to anything of the earth, that is, anything having social origin."

Criticism from pro-market sectors has been common as well. Laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....

 capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

 George Reisman
George Reisman
George Gerald Reisman is Professor Emeritus of Economics at Pepperdine University and author of Capitalism: A Treatise on Economics . He is also the author of an earlier book, The Government Against the Economy , which was praised by F.A...

 charges that mutualism supports exploitation when it does not recognize a right of an individual to protect land that he has mixed his labor with if he happens to not be using it. Reisman sees the seizure of such land as the theft of the product of labor and has said that "Mutualism claims to oppose the exploitation of labor, i.e. the theft of any part of its product. But when it comes to labor that has been mixed with land, it turns a blind eye out foursquare on the side of the exploiter."

Mutualists reject this claim however on the basis that land is never the product of labor, and only the product of labor can be legitimate property. Since nobody can create land with their labor, individuals can only be stewards of the land. However, most mutualists would argue that it is legitimate to claim that if you build a home and live in it, it is yours by right of possession.

Mutualists reject Anarcho-Capitalist land ownership on the basis that it is merely re-arranging twigs. They claim that if one makes even a minor superficial improvement and can manage to convince oneself that it improves the value of the land; such as planting a tree or making a pond, that it is illegitimate to claim all of the surrounding area as a personal dominion by that alone. Instead, use would define occupancy, and the capitalist class would lose their holdings to the underclass, which mutualists see as a positive step towards free market socialism.

See also


  • Cincinnati Time Store
    Cincinnati Time Store
    The Cincinnati Time Store was a successful retail store that was created by American individualist anarchist Josiah Warren to test his theories that were based on his strict interpretation of the labor theory of value. The experimental store operated from May 18, 1827 until May 1830...

  • Consumers' cooperative
    Consumers' cooperative
    Consumer cooperatives are enterprises owned by consumers and managed democratically which aim at fulfilling the needs and aspirations of their members. They operate within the market system, independently of the state, as a form of mutual aid, oriented toward service rather than pecuniary profit...

  • Egalitarianism
    Egalitarianism
    Egalitarianism is a trend of thought that favors equality of some sort among moral agents, whether persons or animals. Emphasis is placed upon the fact that equality contains the idea of equity of quality...

  • Individualist anarchism
    Individualist anarchism
    Individualist anarchism refers to several traditions of thought within the anarchist movement that emphasize the individual and his or her will over external determinants such as groups, society, traditions, and ideological systems. Individualist anarchism is not a single philosophy but refers to a...

  • Labor theory of property
    Labor theory of property
    The labor theory of property or labor theory of appropriation or labor theory of ownership is a natural law theory that holds that property originally comes about by the exertion of labor upon natural resources...

  • Left-libertarianism
    Left-libertarianism
    Left-libertarianism names several related but distinct approaches to politics, society, culture, and political and social theory, which stress equally both individual freedom and social justice.-Schools of thought:...

  • Libertarian socialism
    Libertarian socialism
    Libertarian socialism is a group of political philosophies that promote a non-hierarchical, non-bureaucratic, stateless society without private property in the means of production...

  • Socialist economics
    Socialist economics
    Socialist economics are the economic theories and practices of hypothetical and existing socialist economic systems.A socialist economy is based on public ownership or independent cooperative ownership of the means of production, wherein production is carried out to directly produce use-value,...

  • Utopia (anarchist community)
  • Voluntary Socialism
    Voluntary Socialism
    Voluntary Socialism is a work of nonfiction by the American mutualist Francis Dashwood Tandy. First published in 1896, it has been favorably cited by many individualist anarchists, including Clarence Lee Swartz, minarchist Robert Nozick and left-libertarian Roderick T...

  • Worker cooperative
    Worker cooperative
    A worker cooperative is a cooperative owned and democratically managed by its worker-owners. This control may be exercised in a number of ways. A cooperative enterprise may mean a firm where every worker-owner participates in decision making in a democratic fashion, or it may refer to one in which...

  • Workplace democracy
    Workplace democracy
    Workplace democracy is the application of democracy in all its forms to the workplace....

  • Workers' self-management
    Workers' self-management
    Worker self-management is a form of workplace decision-making in which the workers themselves agree on choices instead of an owner or traditional supervisor telling workers what to do, how to do it and where to do it...

  • :Category:Mutualists

Further reading

  • Mutualism from The Conquest of Power, by Albert Weisbord
  • Plan of the Cincinnati Labor for Labor Store by Josiah Warren
  • Proudhon and Anarchism by Larry Gambone — contains a discussion on Proudhonist mutualism
  • Mutual Banking by William B. Greene
  • What is Mutualism? by Clarence Lee Swartz (1927) - A classic text on Mutualism
  • Mutual Aid: A Factor of Evolution Peter Kropotkin
    Peter Kropotkin
    Prince Pyotr Alexeyevich Kropotkin was a Russian zoologist, evolutionary theorist, philosopher, economist, geographer, author and one of the world's foremost anarcho-communists. Kropotkin advocated a communist society free from central government and based on voluntary associations between...

     1902
  • Anarchist-Mutualism by John William Lloyd, a criticism
  • Studies in Mutualist Political Economy by Kevin Carson. For more of Carson's points of view about mutualism you can check his blog.
  • Journal of Libertarian Studies Vol. 20 Num. 1. This issue is devoted to Kevin Carson's Studies in Mutualist Political Economy. It includes critiques and Carson's rejoinders.
  • Mutualism: A Philosophy for Thieves by George Reisman
    George Reisman
    George Gerald Reisman is Professor Emeritus of Economics at Pepperdine University and author of Capitalism: A Treatise on Economics . He is also the author of an earlier book, The Government Against the Economy , which was praised by F.A...

    .
  • The Atheian System, Exhibit 98 in Warren Commission Report Vol. XVI, p. 432 - Lee Harvey Oswald
    Lee Harvey Oswald
    Lee Harvey Oswald was, according to four government investigations,These were investigations by: the Federal Bureau of Investigation , the Warren Commission , the House Select Committee on Assassinations , and the Dallas Police Department. the sniper who assassinated John F...

    's utopian vision with Mutualist elements, such as the stipulation "that no person not directly working or otherwise directly taking part in the creational process of any enterprise, have a share of or otherwise recive (sic) any part of the resultant profit of it".