Mutualism (economic theory)
Translations of this material:
- into Russian: Мютюэлизм (экономическая теория). 9% translated in draft.
Submitted for translation by anarchofront 30.09.2010
Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon, who envisioned a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market. 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 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.
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 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 markets and private property in the product of labor. However, they argue for conditional titles to land, whose private ownership is legitimate only so long as it remains in use or occupation (which Proudhon called "possession.") Proudhon's Mutualism supports labor-owned cooperative firms 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." As for capital goods (man-made, non-land, "means of production"), 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, and don't advocate state control over the means of production. Benjamin Tucker 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."
Even as a political concept, mutualism is not limited to Anarchism or Proudhon and within that tradition, others such as Kropotkin having also written on it. The base concept is a biological analogy, as mutualism is the opposite of parasitism. Thus, anarchists and others contrast the capitalist order as a form of parasitism with forms of mutualism calling for revolutionary action to restore/establish a different (or in some cases no) social order.
Mutualism, as a term, has seen a variety of related uses. Charles Fourier 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 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 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, 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.
By 1846, Pierre Joseph Proudhon 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, and others.
Mutualism has been associated with two types of currency reform. Labor notes were first discussed in Owenite circles and received their first practical test in 1827 in the Time Store of former New Harmony member and individualist anarchist Josiah Warren. 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, 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, mutualists favor free market 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 and socialism, with some characteristics of both. Modern-day Mutualist Anarchism's Kevin Carson, considers anarchist mutualism to be "free market socialism."
Mutualist thoughts on capitalism
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 interchangeably said, "Cost the limit of price." It was inspired by the labor theory of value, popularized, though not invented, by Adam Smith 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."
Pierre Joseph Proudhon 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 impossible," and "property is liberty." According to Colin Ward, 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, 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".
The major tenets of mutualism are free association, 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 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." 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 is due to state intervention to protect the ruling class, by using a money monopoly, granting patents 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.
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."
Main article: Mutual credit
Mutualists argue that free banking 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 or credit union, 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.
Some modern forms of mutual credit are LETS and the Ripple monetary system project.
In a session of the French legislature, Proudhon proposed a government-imposed income tax 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; 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, "I have shown the contractor, at the birth of industry, negotiating on equal terms with his comrades, who have since become his workmen. It is plain, in fact, that this original equality was bound to disappear through the advantageous position of the master and the dependent position of the wage-workers. In vain does the law assure the right of each to enterprise . . . When an establishment has had leisure to develop itself, enlarge its foundations, ballast itself with capital, and assure itself a body of patrons, what can a workman do against a power so superior?"
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 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 in Spain and NoBAWC in San Francisco.
Kevin Carson is a contemporary mutualist and author of Studies in Mutualist Political Economy. 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, some fair trade movements and some free software projects such as Debian and Linux Users Groups follow a similar spirit, focusing on mutual aid, decentralization and free association (see Contemporary anarchism).
One area of disagreement between mutualists and anarchist communists stems from Proudhon's advocacy of money to compensate individuals for their labor. Peter Kropotkin, like other anarchist communists, advocated the abolition of wage labour and questioned, "how can this new form of wages, the labor note, 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, Kropotkin believed that a wage system in any form, whether "administered by Banks of the People or by workers' associations through labor cheques is a form of compulsion."
Collectivist anarchist Michael Bakunin was an adamant critic of Proudhonian mutualism as well, stating, "How ridiculous are the ideas of the individualists 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 capitalist George Reisman 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."
Notes and references
1. "Involved with radical politics and in his contact with the Marxists, he [Proudhon] soon rejected their doctrine, seeking rather a middle way between socialist theories and classical economics." - Irving Horowitz, The Anarchists, 1964, Dell Publishing
2. Some critics object to the use of the term capitalism in reference to historical or actually existing economic arrangements, which they term mixed economies. They reserve the term for the abstract ideal or future possibility of a genuinely free market. This sort of free-market capitalism may closely follow Carson's free-market anti-capitalism in its practical details except for the fact that Carson does not recognize a right of an individual to protect land that he has transformed through labor or purchased to be protected when he is not using it. Carson, like other mutualists, only recognize occupancy and use as the standard for retaining legitimate control over something. According to Carson, "For mutualists, occupancy and use is the only legitimate standard for establishing ownership of land, regardless of how many times it has changed hands. An existing owner may transfer ownership by sale or gift; but the new owner may establish legitimate title to the land only by his own occupancy and use. A change in occupancy will amount to a change in ownership. Absentee landlord rent, and exclusion of homesteaders from vacant land by an absentee landlord, are both considered illegitimate by mutualists. The actual occupant is considered the owner of a tract of land, and any attempt to collect rent by a self-styled landlord is regarded as a violent invasion of the possessor's absolute right of property. (p. 200. of Carson's "Mutualist Political Economy."
3. See The Iron Fist Behind The Invisible Hand.
4. "For mutualists, occupancy and use is the only legitimate standard for establishing ownership of land, regardless of how many times it has changed hands. According the mutualist Kevin Carson "A change in occupancy will amount to a change in ownership." An existing owner may transfer ownership by sale or gift; but the new owner may establish legitimate title to the land only by his own occupancy and use. A change in occupancy will amount to a change in ownership. Absentee landlord rent, and exclusion of homesteaders from vacant land by an absentee landlord, are both considered illegitimate by mutualists. The actual occupant is considered the owner of a tract of land, and any attempt to collect rent by a self-styled landlord is regarded as a violent invasion of the possessor's absolute right of property. (p. 200. of Carson's "Mutualist Political Economy." (editor's emphasis)
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4. Tandy, Francis D., 1896, Voluntary Socialism, chapter 6, paragraphs 9, 10 & 22.
Carson, Kevin, 2004, Studies in Mutualist Political Economy, chapter 2 (after Meek & Oppenheimer).
5. Tandy, Francis D., 1896, Voluntary Socialism, chapter 6, paragraph 19.
Carson, Kevin, 2004, Studies in Mutualist Political Economy, chapter 2 (after Ricardo, Dobb & Oppenheimer).
6. Proudhon's Solution of the Social Problem, Edited by Henry Cohen. Vanguard Press, 1927.
7. Swartz, Clarence Lee. What is Mutualism? VI. Land and Rent
8. Hymans, E., Pierre-Joseph Proudhon, pp. 190-1,
Woodcock, George. Anarchism: A History of Libertarian Ideas and Movements, Broadview Press, 2004, pp. 110 & 112
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11. Carson, Kevin A. Studies in Mutualist Polical Economy Preface.
12. Avrich, Paul. Anarchist Voices: An Oral History of Anarchism in America, Princeton University Press 1996 ISBN 0-69-04494-5, p.6
Blackwell Encyclopaedia of Political Thought, Blackwell Publishing 1991 ISBN 0-631-17944-5, p.11
13. Pierre-Joseph Proudhon, What Is Property?, p. 281.
14. Tucker, Benjamin, State Socialism and Anarchism, State Socialism and Anarchism
15. Mutual Aid: A Factor of Evolution
16. Fourier, Charles, Traité (1822), cited in Arthur E. Bestor, Jr., "The Evolution of the Socialist Vocabulary", Journal of the History of Ideas, Vol. 9, No. 3 (Jun., 1948), 259-302.
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21. Albert Brisbane, "The Mutualist Township," The Spirit of the Age, II, 12 (March 23, 1850), 179-183.; II, 13 (March 30, 1850), 200-202.
22. Pierre-Joseph Proudhon, "The Coming Era of Mutualism," Spirit of the Age, I, 7 (August 18, 1849), 107-8.
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32. The General Idea of the Revolution, Pluto Press, p. 277 and p. 281
33. "Introduction", General Idea of the Revolution, p. xxxii
34. Pierre-Joseph Proudhon and the Rise of French Republican Socialism, Oxford University Press, Oxford, 1984, p. 230 and p. 156
35. Anderson, Edwin Robert. 1911. The Income Tax: A Study of the History, Theory and Practice of Income Taxation at Home and Abroad. The MacMillan Company. p. 279
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37. Corkran, John Frazer. 1849. History of the National Constituent Assembly, from May, 1848. Harper & Brothers. p. 275
38. a b Martin, Henri, & Alger, Abby Langdon. A Popular History of France from the First Revolution to the Present Time. D. Estes and C.E. Lauria. p. 189
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