Information AboutMutualism (economic Theory) |
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Mutualism is a Libertarian Socialist economic theory or system based on the Labor Theory Of Value which states that equal amounts of labor should receive equal pay. One way some mutualists wish to facilitate this is through the use of money backed by a quantity of labor to trade goods and services. The first use of the term "mutualism" was by Charles Fourier in 1822, however Fourier did not support the system to which this article refers but rather a communalist system. The first usage of the noun "mutualist" was in the ''New-Harmony Gazette'' by an American Owenite in 1826. William B. Greene , in 1850, also used the term to label his proposed system that was similar to Pierre Joseph Proudhon 's. Proudhon later used the term to describe his economic philosophy as well. Mutualism was first implemented in practice by Individualist Anarchist Josiah Warren in the United States , and then by others in England . Mutualism can in many ways be considered "the original anarchy," since Proudhon was the first to identify himself as an Anarchist . Individualist Anarchist s often espouse mutualism. MUTUALIST THOUGHTS ON CAPITALISM The "cost principle" or "cost the limit of price" Mutualists believe that most of the economic problems associated with capitalism come back 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. Proudhon and Warren, working without association or apparent knowledge of each other, accepting this axiom, drew from this the conclusion that it is therefore ''unethical'' to charge higher price for a thing than the amount of labor that was undertaken to produce it. In Warren's terms, cost should be the "limit of price." Anyone who sells goods should charge no more than the cost to himself of acquiring these goods. As far as determining payment for goods, they should pay for those goods with an equivalent amount of labor lest they violate the cost principle. In terms of employment, an employer should not be paid unless he labors, and if he labors less than an employee then he should be paid less than that employee. Therefore, if the cost principle is followed, profit to an employer through the labor of others is not possible --everyone receives the "full produce" of his own labor and receives no produce of the labor of another unless he pays with an equivalent amount of labor. Warren says that this is in contrast to "Value the limit of price" where the only limit to price is the highest amount someone is willing to pay for a thing based on his own subjective valuation (see '' Subjective Theory Of Value ''). Property Mutualists reject John Locke 's property on land and believe in possession (occupancy and use). Pierre Joseph Proudhon was one the most famous philosophers to have articulated thoughts on the nature of property. He is known for exclaiming " Property Is Theft ", but is less known for also exclaiming "property is freedom," and "property is impossible." 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 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 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 believed the property in the product of labor is essential to liberty, while property in natural resources 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? Mutualist, Clarence 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.''" MUTUALIST ECONOMICS The major tenets of mutualism are free association, '''mutualist credit''', '''contract''' (or '''federation'''), 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 is founded on "an act of robbery as massive as feudalism," and argues that capitalism could not exist in the absence of a state. 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 Patent 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 believe 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 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. 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."'' (No Gods, No Masters, AK Press, vol. 1, Daniel Guerin (ed.)p. 62) 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."'' ('''The General Idea of the Revolution''', Pluto Press, p. 277 and p. 281) 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."'' ("Introduction", General Idea of the Revolution, p. xxxii) 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."'' ('''Pierre-Joseph Proudhon and the Rise of French Republican Socialism,''' Oxford University Press, Oxford, 1984, p. 230 and p. 156) Mutual credit Mutualists believe 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 believe 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. 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 Mondragón Cooperative Corporation in Spain and NoBAWC in San Francisco. MUTUALISM TODAY Kevin Carson is a contemporary mutualist author. Social Economy , some Fair Trade movements and some Free Software projects as Debian or Linux Users Groups follow a similar spirit, focussing on Mutual Aid , decentralization and free association (see Small "a" Anarchism ). NOTES |