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Mutualism is an economic theory based on a labor theory of value that advocates that equal amounts of labor should receive equal pay. Pierre Joseph Proudhon coined the term "mutualism" to describe his formalized economic theory based on that theory of value. Prior to Proudhon's advocacy, actual mutualist-like experiments had been undertaken in England and America (for example, the Time Store in Cincinatti, Ohio in 1827 by American individualist anarchist Josiah Warren). Mutualism can in many ways be considered "the original anarchy," since Proudhon was the first to call himself an anarchist. He claimed that "anarchy is order" - the natural order of true unity from below, rather than the false unity brough about by constraint. His thoughts on the economics of such an anarchist society are known as Mutualism. Individualist anarchists often espouse mutualism.

Near the end of his life, Proudhon wrote, "All of my economic ideas as developed over twenty-five years can be summed up in the words: agricultural-industrial federation. All of my political ideas boil down to a similar formula: political federation or decentralization."

Mutualist thoughts on capitalism

Property

Pierre Joseph Proudhon was one of the first people to articulate thoughts on the nature of property. He is known for exclaiming property is theft!, but is less known for also exclaiming "property is freedom." He did not see a contradiction between the two slogans. To the mutualist, this is the distinction between property and posession. Property is theft when it is related to a landowner or capitalist whose ownership is derived from conquest or exploitation and is 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, tools of a trade, land to cultivate, and the fruits of that cultivation - but not to ownership or control of the lands and lives of others. The former is considered property, the latter posession. However, modern mutualists commonly use the terms "private property" and "possession" interchangably to refer to those things that are rightfully possessed by individuals. Mutualist, Clarence Swartz, says in What is Mutualism: " "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" (historian Albert Weisbord considers this quote to represent "their article of faith").

The cost principle

Mutualists believe that most of the economic problems associated with capitalism come back to a violation of the cost principle. This holds that someone who incurs the cost of producing something should be able to consume the result. Likewise, anyone who is consuming goods should pay the full cost of producing them. Wages that are diminished for the sake of profiting an employer, for instance, are a violation of the cost principle. They will generate a condition of overproduction and underconsumption, since the laborer is not paid the full value of his or or her labor.

Mutualist economics

The major tenets of mutualism are free association, mutualist credit, contract (or federation), and gradualism (or dual-power).

Free association

Mutualists only believe that association is 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 believed 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. When asked about state ownership of peasant lands, Proudhon replied, I see in it a barrier to liberty ... the free disposition of the soil taken away from him who cultivates it; and this precious sovereignty... forbidden to the citizen, and reserved for that ficticious being, without intelligence, without passion, without morality, that we call the State. By this arrangement, the occupant has less to do with the soil than before; the clod of earth seems to stand up and say to him: You are only a slave of the taxes; I do not know you!

Mutualist credit

Mutualists believe that 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 property. Banks are essentially creating money by lending out deposits that do not actually belong to them, then charging interest on the difference. Mutualists believe that by establishing a democratically run bank, 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.

Contract / 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." It is possible that these ideas, more fully developed, could strongly resemble participatory economics today.

Gradualism / 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 Mondragon Collectives or NoBAWC in San Francisco.

See also

• Individualist anarchism

External links

• Mutualist.org Mutualist web site
• Mutualism from The Conquest of Power, by Albert Weisbord
• Plan of the Cincinnati Labor for Labor Store by Josiah Warren