Mutualism (economic theory)

Mutualism is an economic theory and anarchist school of thought that advocates a society with free markets and occupation and use property norms.[1] One implementation of this scheme involves the establishment of a mutual-credit bank that would lend to producers at a minimal interest rate, just high enough to cover administration.[2] Mutualism is based on a version of the labor theory of value holding 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".[3] Mutualism originated from the writings of philosopher Pierre-Joseph Proudhon.

Mutualists oppose the idea of individuals receiving an income through loans, investments and rent as they believe these individuals are not laboring. 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".[4] Insofar as they ensure the worker's right to the full product of their labor, mutualists support markets and property 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")[5]—thus advocating personal property, but not private property.

Although mutualism is similar to the economic doctrines of the 19th-century American individualist anarchists, unlike them mutualism is in favor of large industries.[6] Therefore, mutualism has been retrospectively characterized sometimes as being a form of individualist anarchism[7] and as ideologically situated between individualist and collectivist forms of anarchism as well.[8] Proudhon himself described the "liberty" he pursued as "the synthesis of communism and property".[9] Some consider Proudhon to be an individualist anarchist[10][11][12] while others regard him to be a social anarchist.[13][14]

Mutualists have distinguished mutualism from state socialism and do not 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 subjecting capital to the natural law of competition, thus bringing the price of its own use down to cost".[15]


Portrait of philosopher Pierre-Joseph Proudhon (1809–1865) by Gustave Courbet. Proudhon was the primary proponent of anarchist mutualism, and influenced many later individualist anarchist and social anarchist thinkers.

As a term, "mutualism" has seen a variety of related uses. Charles Fourier first used the French term mutualisme in 1822,[16] 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.[17] In the early 1830s, a labor organization in Lyons, France called themselves the "Mutuellists".

French origins

Pierre-Joseph Proudhon was involved with the Lyons mutualists and later adopted the name to describe his own teachings.[18] 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".[19] 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, 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[20] and Albert Brisbane,[21] together with works by Proudhon,[22] William B. Greene, Pierre Leroux, and others.

During the Second French Republic (1848–1852), Proudhon had his biggest public effect through his involvement with four newspapers: Le Représentant du Peuple (February 1848 – August 1848); Le Peuple (September 1848 – June 1849); La Voix du Peuple (September 1849 – May 1850); and Le Peuple de 1850 (June 1850 – October 1850). His polemical writing style, combined with his perception of himself as a political outsider, produced a cynical, combative journalism that appealed to many French workers but alienated others. He repeatedly criticised the government's policies and promoted reformation of credit and exchange. He tried to establish a popular bank ( Banque du peuple) early in 1849, but despite over 13,000 people signing up (mostly workers), receipts were limited falling short of 18,000FF and the whole enterprise was essentially stillborn.

Proudhon ran for the constituent assembly in April 1848, but was not elected, although his name appeared on the ballots in Paris, Lyon, Besançon, and Lille, France. He was successful in the complementary elections of June 4 and served as a deputy during the debates over the National Workshops, created by the February 25, 1848 decree passed by Republican Louis Blanc. The workshops were to give work to the unemployed. Proudhon was never enthusiastic about such workshops, perceiving them to be essentially charitable institutions that did not resolve the problems of the economic system. He was against their elimination unless an alternative could be found for the workers who relied on the workshops for subsistence.

Proudhon was surprised by the Revolutions of 1848 in France. He participated in the February uprising and the composition of what he termed "the first republican proclamation" of the new republic. But he had misgivings about the new provisional government, headed by Dupont de l'Eure (1767–1855), who since the French Revolution in 1789 had been a longstanding politician, although often in the opposition. Proudhon published his own perspective for reform which was completed in 1849, Solution du problème social (" Solution of the Social Problem"), in which he laid out a program of mutual financial cooperation among workers. He believed this would transfer control of economic relations from capitalists and financiers to workers. The central part of his plan was the establishment of a bank to provide credit at a very low rate of interest and the issuing of exchange notes that would circulate instead of money based on gold.

Ideological development

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. Historian Wendy McElroy reports that American individualist anarchism received an important influence of 3 European thinkers. "One of the most important of these influences was the french political philosopher Pierre-Joseph Proudhon whose words "Liberty is not the Daughter But the Mother of Order" appeared as a motto on Liberty's masthead"[23] (influential individualist anarchist publication of Benjamin Tucker). For American anarchist historian Eunice Minette Schuster: "It is apparent...that Proudhonian Anarchism was to be found in the United States at least as early as 1848 and that it was not conscious of its affinity to the Individualist Anarchism of Josiah Warren and Stephen Pearl Andrews ... William B. Greene presented this Proudhonian Mutualism in its purest and most systematic form".[24]

After 1850, Greene became active in labor reform.[24] He was elected vice-president of the New England Labor Reform League, the majority of the members holding to Proudhon's scheme of mutual banking; and in 1869 president of the Massachusetts Labor Union.[24] He then publishes Socialistic, Mutualistic, and Financial Fragments (1875).[24] He saw mutualism as the synthesis of "liberty and order".[24] His " checked by individualism..."Mind your own business", "Judge not that ye be not judged". Over matters which are purely personal, as for example, moral conduct, the individual is sovereign as well as over that which he himself produces. For this reason, he demands "mutuality" in marriage—the equal right of a woman to her own personal freedom and property".[24]

Benjamin Tucker, editor of the anarchist publication Liberty, later connected his economic views with those of Pierre-Joseph Proudhon, Josiah Warren and Karl Marx, taking sides with Proudhon and Josiah Warren:

The economic principles of Modern Socialism are a logical deduction from the principle laid down by Adam Smith in the early chapters of his “Wealth of Nations,” – namely, that labor is the true measure of price ... Half a century or more after Smith enunciated the principle above stated, Socialism picked it up where he had dropped it, and in following it to its logical conclusions, made it the basis of a new economic philosophy ... This seems to have been done independently by three different men, of three different nationalities, in three different languages: Josiah Warren, an American; Pierre J. Proudhon, a Frenchman; Karl Marx, a German Jew ... That the work of this interesting trio should have been done so nearly simultaneously would seem to indicate that Socialism was in the air, and that the time was ripe and the conditions favorable for the appearance of this new school of thought. So far as priority of time is concerned, the credit seems to belong to Warren, the American, – a fact which should be noted by the stump orators who are so fond of declaiming against Socialism as an imported article. Benjamin Tucker. Individual Liberty[25]

19th century Spain

Francesc Pi i Margall, Catalan briefly President of the First Spanish Republic and main Spanish translator of Proudhon´s works

Mutualist ideas found a fertile ground in the nineteenth century in Spain. In Spain, Ramón de la Sagra established the anarchist journal El Porvenir in A Coruña in 1845 which was inspired by Proudhon´s ideas.[26] The Catalan politician Francesc Pi i Margall became the principal translator of Proudhon's works into Spanish[27] and later briefly became president of Spain in 1873 while being the leader of the Democratic Republican Federal Party. According to George Woodcock: "These translations were to have a profound and lasting effect on the development of Spanish anarchism after 1870, but before that time Proudhonian ideas, as interpreted by Pi, already provided much of the inspiration for the federalist movement which sprang up in the early 1860's".[28] According to the Encyclopædia Britannica: "During the Spanish revolution of 1873, Pi y Margall attempted to establish a decentralized, or “cantonalist”, political system on Proudhonian lines".[26] Pi i Margall was a dedicated theorist in his own right, especially through book-length works such as La reacción y la revolución (Reaction and Revolution from 1855), Las nacionalidades (Nationalities from 1877) and La Federación (The Federation from 1880). For prominent anarcho-syndicalist Rudolf Rocker: "The first movement of the Spanish workers was strongly influenced by the ideas of Pi y Margall, leader of the Spanish Federalists and disciple of Proudhon. Pi y Margall was one of the outstanding theorists of his time and had a powerful influence on the development of libertarian ideas in Spain. His political ideas had much in common with those of Richard Price, Joseph Priestly [sic], Thomas Paine, Jefferson, and other representatives of the Anglo-American liberalism of the first period. He wanted to limit the power of the state to a minimum and gradually replace it by a Socialist economic order".[29]


For historian of the First International G. M. Stekloff: "In April, 1856, there arrived from Paris a deputation of Proudhonist workers whose aim it was to bring about the foundation of a Universal League of Workers. The object of the League was the social emancipation of the working class, which, it was held, could only be achieved by a union of the workers of all lands against international capital. Since the deputation was one of Proudhonists, of course this emancipation was to be secured, not by political methods, but purely by economic means, through the foundation of productive and distributive co-operatives".[30]

"It was in the 1863 elections that for the first time workers' candidates were run in opposition to bourgeois republicans, but they secured very few votes...agroup of working-class Proudhonists (among whom were Murat and Tolain, who were subsequently to participate in the founding of the (First) International issued the famous Manifesto of the Sixty, which, though extremely moderate in tone, marked a turning point in the history of the French movement. For years and years the bourgeois liberals had been insisting that the revolution of 1789 had abolished class distinctions. The Manifesto of the Sixty loudly proclaimed that classes still existed. These classes were the bourgeoisie and the proletariat. The latter had its specific class interests, which none but workers could be trusted to defend. The inference drawn by the Manifesto was that there must be independent working-class candidates".[31] For Stekloff, "the Proudhonists, who were at that date the leaders of the French section of the International. They looked upon the International Workingmen's Association as a sort of academy or synagogue, where Talmudists or similar experts could "investigate" the workers' problem; where in the spirit of Proudhon they could excogitate means for an accurate solution of the problem, without being disturbed by the stresses of a political campaign. Thus Fribourg, voicing the opinions of the Parisian group of the Proudhonists (Tolain and Co.) assured his readers that “the International was the greatest attempt ever made in modern times to aid the proletariat towards the conquest, by peaceful, constitutional, and moral methods, of the place which rightly belongs to the workers in the sunshine of civilisation".[32]

"The Belgian Federation threw in its lot with the anarchist International at its Brussels Congress, held in December, 1872...those taking part in the socialist movement of the Belgian intelligentsia were inspired by Proudhonist ideas which naturally led them to oppose the Marxist outlook".[33]

Nineteenth-century mutualists considered themselves libertarian socialists [34] and are still considered libertarian socialists to this day. [35] While oriented towards cooperation, mutualists favor free market solutions, believing that most inequalities are the result of preferential conditions created by government intervention.[36] Mutualism is something of a middle way between classical economics and socialism of the collectivist variety,[37] with some characteristics of both.[6] Modern-day mutualist Kevin Carson considers anarchist mutualism to be "free market socialism".

Proudhon supported labor-owned cooperative firms and associations[38] 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".[39] 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.

Mutualism also had a considerable influence in the Paris Commune. George Woodcock manifests that "a notable contribution to the activities of the Commune and particularly to the organization of public services was made by members of various anarchist factions, including the mutualists Courbet, Longuet, and Vermorel, the libertarian collectivists Varlin, Malon, and Lefrangais, and the bakuninists Elie and Elisée Reclus and Louise Michel".[40]

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