Mutualism (economic theory)

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As a term, mutualism has seen a variety of related uses. Charles Fourier first used the French term mutualisme in 1822,[23][24] 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.[25] In the early 1830s, a French labor organization in Lyons called themselves the Mutuellists.[26][27] In What Is Mutualism?, the American mutualist Clarence Lee Swartz defined it this way:

A social system based on equal freedom, reciprocity, and the sovereignty of the individual over himself, his affairs and his products; realized through individual initiative, free contract, cooperation, competition and voluntary association for defense against the invasive and for the protection of life, liberty and property of the non-invasive.[6][28]

In a general sense, mutualism can be considered the original anarchy since the mutualist Pierre-Joseph Proudhon was the first person to identify himself as an anarchist. Although mutualism is generally associated with anarchism, it is not necessarily anarchist. According to James J. Martin, William Batchelder Greene did not become a "full-fledged anarchist" until the last decade of his life, but his writings show that by 1850 he had articulated a Christian mutualism, drawing heavily on the writings of Proudhon's sometimes-antagonist Pierre Leroux.[29] According to Ian McKay, the Christian mutualist form or anarchist branch of distributism and the works of distributists such as Dorothy Day and the Catholic Worker Movement can be considered a form of mutualism, or free-market libertarian socialism, due to their opposition to both state capitalism and state socialism.[30] According to A Mutualist FAQ, mutualism was "the original form taken by the labor movement, first in Great Britain and shortly thereafter in France and the rest of Western Europe. Both mutualist practice and theory arose as part of the broad current of working class radicalism in England, from around the time of the publication of Paine's Rights of Man and the organization of the first Societies of Correspondence in the 1790s, to the Chartist movement. Mutualism existed for some time as a spontaneous working class practice before it was formalized in theory."[6]

Proudhon was involved with the Lyons mutualists and later adopted the name to describe his own teachings.[31] In What Is Mutualism?, 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".[32] When 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.[26][27] Of Proudhon's philosophy, Geoffrey Ostergaard summarized "he argued that working men should emancipate themselves, not by political but by economic means, through the voluntary organization of their own labour—a concept to which he attached redemptive value. His proposed system of equitable exchange between self-governing producers, organized individually or in association and financed by free credit, was called 'mutualism'. The units of the radically decentralized and pluralistic social order that he envisaged were to be linked at all levels by applying 'the federal principle.'"[6][33]

The authors of A Mutualist FAQ quote E. P. Thompson's description of the early working-class movement as mutualism. Thompson argued that it was "powerfully shaped by the sensibilities of urban artisans and weavers who combined a 'sense of lost independence' with 'memories of their golden age.' The weavers in particular carried a strong communitarian and egalitarian sensibility, basing their radicalism, 'whether voiced in Owenite or biblical language,' on 'essential rights and elementary notions of human fellowship and conduct.'" [6] Thompson further wrote: "It was as a whole community that they demanded betterment, and utopian notions of redesigning society anew at a stroke—Owenite communities, the universal general strike, the Chartist Land Plan—swept through them like fire on the common. But essentially the dream which arose in many different forms was the same—a community of independent small producers, exchanging their products without the distortions of masters and middlemen."[6]

Mutualist anti-capitalism has its origins in the Jacobin-influenced radicalism of the 1790s which saw exploitation largely in terms of taxation and feudal landlordism in that "government appears as court parasitism: taxes are a form of robbery, for pensioners and for wars of conquest."[6] In Constantin François de Chassebœuf, comte de Volney's Ruins of Empire, the nation was divided between those who "by useful laborus contribute to the support and maintenance of society" and "the parasites who lived off them", namely "none but priests, courtiers, public accountants, commanders of troops, in short, the civil, military, or religious agents of government."[6] This was summarized by the following statement:

People.... What labour do you perform in the society?
Privileged Class. None: we are not made to labour.
People. How then have you acquired your wealth?
Privileged Class. By taking the pains to govern you.
People. To govern us!... We toil, and you enjoy; we produce and you dissipate; wealth flows from us, and you absorb it. Privileged men, class distinct from the people, form a class apart and govern yourselves.[6]

According to the authors of A Mutualist FAQ, "it would be a mistake to make a sharp distinction between this analysis and the later critique of capitalism. The heritage of the manorial economy and the feudal aristocracy blurred the distinction between the state and the economic ruling class. But such a distinction is largely imaginary in any social system. The main difference is that manorialism was openly founded on conquest, whereas capitalism hid its exploitative character behind a facade of 'neutral' laws."[6] They further write that "[t]he critique of pre-capitalist authority structures had many features that could be expanded by analogy to the critique of capitalism. The mutualist analysis of capitalism as a system of state-enforced privilege is a direct extension of the Jacobin/radical critique of the landed aristocracy. The credit and patent monopolies were attacked on much the same principles as the radicals of the 1790s attacked seigneural rents. There was a great continuity of themes from the 1790s through Owenist and Chartist times. One such theme was the importance of widespread, egalitarian property ownership by the laboring classes, and the inequity of concentrating property ownership in the hands of a few non-producers."[6] According to them, this prefigured distributism. Other notable people mentioned as influences on mutualism include John Ball and Wat Tyler as part of the Peasants' Revolt, William Cobbett, the English Dissenter and radical offshoots of Methodism such as the Primitive Methodists and the New Connexion as well as the more secular versions of republicanism and economic populism going back to the Diggers and the Levellers, the Fifth Monarchists, William Godwin Robert Owen, Thomas Paine, Thomas Spence and the Quakers.[6]

Pierre-Joseph Proudhon, the first self-called anarchist and the primary proponent of mutualism which influenced many individualist and social anarchist thinkers

By 1846, Proudhon was speaking of "mutuality" (mutualité) in his writings and he used the term "mutualism" (mutuellisme) at least as early as 1848 in his Programme Révolutionnaire. In 1850, Greene 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[34] and Albert Brisbane,[35] together with works by Proudhon,[36] Greene, Leroux and others.[26][27]

Proudhon ran for the French Constituent Assembly in April 1848, but was not elected, although his name appeared on the ballots in Paris, Lyon, Besançon and Lille. 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 25 February 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.[26][27]

Proudhon was surprised by the French Revolution of 1848. He participated in the February uprising and the composition of what he termed "the first republican proclamation" of the new republic. However, he had misgivings about the new provisional government headed by Jacques-Charles 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, titled 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.[26][27]

Mutualism was especially prominent in the United States and advocated by American individualist anarchists.[37] While individualist anarchists in Europe are pluralists who advocate anarchism without adjectives and synthesis anarchism, ranging from anarcho-communist to mutualist economic types, most individualist anarchists in the United States advocate mutualism as a libertarian socialist from of market socialism, or a free-market socialist form of classical economics.[38][39][40]

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 Batchelder Greene, but Greene drew from the work of Proudhon, Edward Kellogg and William Beck as well as from the land bank tradition. Within individualist anarchist circles, mutualism came to mean non-communist anarchism or non-communist socialism.[41]

American individualist anarchist Benjamin Tucker, one of the individualist anarchists influenced by Proudhon's mutualism

Historian Wendy McElroy reports that American individualist anarchism received an important influence of three 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.[42] Liberty was an influential American individualist anarchist publication of Benjamin Tucker. For American anarchist historian Eunice Minette Schuster, "[i]t 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".[43]

After 1850, Greene became active in labor reform.[43] 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.[43] He then publishes Socialistic, Communistic, Mutualistic, and Financial Fragments (1875).[43] He saw mutualism as the synthesis of "liberty and order".[43] His "associationism [...] is 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".[43]

In Individual Liberty,[44] Tucker later connected his economic views with those of Proudhon, Warren and Karl Marx, taking sides with the first two while also arguing against American anti-socialists who declared socialism as imported, writing:

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.[45]

Francesc Pi i Margall, briefly president of the First Spanish Republic and main Spanish translator of Proudhon's works

Mutualist ideas found fertile ground in the 19th 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.[46] The Catalan politician Francesc Pi i Margall became the principal translator of Proudhon's works into Spanish[47] and later briefly became president of Spain in 1873 while being the leader of the Democratic Republican Federal Party. According to George Woodcock, "[t]hese 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 [sic]".[48]

According to the Encyclopædia Britannica, "[d]uring the Spanish revolution of 1873, Pi y Margall attempted to establish a decentralized, or cantonalist, political system on Proudhonian lines".[46] 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, "[t]he 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".[49]

According to historian of the First International G. M. Stekloff, in April 1856 "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".[50] Stekloff continues by saying that "[i]t 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. [...] [A] group 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".[51]

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; wherein 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".[52] According to Stekoff, the Belgian Federation "threw in its lot with the anarchist International at its Brussels Congress, held in December, 1872. [...] [T]hose taking part in the socialist movement of the Belgian intelligentsia were inspired by Proudhonist ideas which naturally led them to oppose the Marxist outlook".[53]

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".[54]

Market libertarian socialist anti capitalist mural

19th-century mutualists considered themselves libertarian socialists[55] and are still considered libertarian socialists to this day.[56] While oriented towards cooperation, mutualists favor free-market solutions, believing that most inequalities are the result of preferential conditions created by government intervention.[57] Mutualism is something of a middle way between classical economics and socialism of the collectivist variety,[58] with some characteristics of both.[59] As for capital goods (man-made and non-land, means of production), mutualist opinion differs on whether these should be common property and commonly managed public assets or private property in the form of worker cooperatives, for as long as they ensure the worker's right to the full product of their labor, mutualists support markets and property in the product of labor, differentiating between capitalist private property (productive property) and personal property (private property).[8][9]

Contemporary mutualist Kevin Carson considers mutualism to be free-market socialism. Proudhon supported labor-owned cooperative firms and associations,[60][61] for "we need not hesitate, for we have no choice. [...] [I]t 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".[62] In the preface to his Studies in Mutualist Political Economy, 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".[63] 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 that "[i]t is state intervention that distinguishes capitalism from the free market".[64] Carson does not define capitalism in the idealized sense, but he says that when he talks about capitalism he is referring to what he calls actually existing capitalism.[65] Carson 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". Carsons says he has no quarrel with anarcho-capitalists who use the term laissez-faire capitalism and distinguish it from actually existing capitalism. Although Carson says he has deliberately chosen to resurrect an old definition of the term.[66] many anarchists, including mutualists, continue to use the term and do not consider it an old definition of the term.[67] Carson argues that 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 and 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 classless society where people could easily choose between working as a freelancer, working for a living wage, taking part of a cooperative, or being an entrepreneur. As did Benjamin Tucker before him, Carson notes 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.[68]

Following Proudhon, mutualists are libertarian socialists who consider themselves to part of the market socialist tradition and the socialist movement. However, some contemporary mutualists outside the classical anarchist tradition such as those involved in the market-oriented left-libertarianism within the Alliance of the Libertarian Left and the Voluntary Cooperation Movement abandoned the labor theory of value and prefer to avoid the term socialist due to its association with state socialism throughout the 20th century. Nonetheless, those contemporary mutualists are part of the libertarian left and "still retain some cultural attitudes, for the most part, that set them off from the libertarian right. Most of them view mutualism as an alternative to capitalism, and believe that capitalism as it exists is a statist system with exploitative features".[55]

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 and so on. He also expanded his notions of contract into expanded notions of federation.[27] 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?[69]

Dual power is the process of building alternative institutions to the ones that already exist in modern society. Originally theorized by Proudhon, it has become adopted by many anti-state movements such as agorism and autonomism.[27] Proudhon described it as follows:

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.[70]

As it was also theorized by Proudhon, dual power should not be confused with the dual power popularized by Vladimir Lenin.[71][72][73] In Proudhon's meaning, it refers to a more specific scenario where a revolutionary entity intentionally maintains the structure of the previous political institutions until the power of the previous institution is weakened enough such that the revolutionary entity can overtake it entirely. Dual power as implemented by mutualists is the development of the alternative institution itself.[74]

Mutualists argue that association is only necessary where there is an organic combination of forces. 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 as 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 and so on. He recognized that their work is inherently sovereign and free.[5][27] In commenting on the degree of association that is preferable, Proudhon wrote:

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.[75]

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".[76] Under mutualism, workers would no longer sell their labour to a capitalist but rather work for themselves in co-operatives. Proudhon 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 "[c]apitalistic and proprietary exploitation, stopped everywhere, the wage system abolished, equal and just exchange guaranteed".[77]

As Robert Graham notes, "Proudhon's market socialism is indissolubly linked to his notions of industrial democracy and workers' self-management".[78] 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".[79]

American individualist anarchist Lysander Spooner, who supported free banking and mutual credit

Mutualists support mutual credit and 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 the means of production and landlords 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 savings 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 Pierre-Joseph Proudhon, William Batchelder Greene and Lysander Spooner.[27]

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, but it was turned down by the legislature.[80] This income tax Proudhon proposed to fund his bank was to be levied on rents, interest, debts and salaries.[81][82] 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.[83]

This scheme was vehemently objected to by others in the legislature, including Frédéric Bastiat.[83] 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".[84] In his debates with Bastiat, Proudhon did once propose funding a national bank with a voluntary tax of 1%.[85] Proudhon also argued for the abolition of all taxes.[86]

Pierre-Joseph Proudhon was an anarchist and socialist philosopher who articulated thoughts on the nature of property. He claimed that "property is theft", "property is liberty" and "property is impossible".[87] 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 while the latter is legitimate property.[88] Some individualist anarchists and followers of Proudhon's mutualism such as Benjamin Tucker started calling possession as property or private property, causing confusion within the anarchist movement and among other socialists.[89][90]

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.[5] The conception of entitlement property as a destructive force and illegitimate institution can be seen in this quote by Proudhon, who argued:

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?[91]

In What Is Mutualism?, Clarence Lee Swartz wrote:

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.[92][93]

Swartz also argued that mutualism differs from anarcho-communism and other collectivist philosophies by its support of private property, writing: "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."[94][95] However, Proudhon warned that a society with private property would lead to statist relations between people,[93] arguing:

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.'[96]

Unlike capitalist private-property supporters, Proudhon stressed equality. He thought that all workers should own property and have access to capital, stressing that in every cooperative "every worker employed in the association [must have] an undivided share in the property of the company".[97] 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 and personal property, with the latter having direct use-value to the individual possessing it.[98][99][100] For Proudhon, as he wrote in the sixth study of his General Idea of the Revolution in the Nineteenth Century,[101] the capitalist's employee was "subordinated, exploited: his permanent condition is one of obedience".[102]

Mutualists believe that land should not be a commodity to be bought and sold, advocating for conditional titles to land based on occupancy and use norms. Mutualists argue about whether an individual has a legitimate claim to ownership of land if he is not currently using it but has already incorporated his labor into it. All mutualists agree that everything which is produced by human labor and machines can be owned as personal property. Mutualists reject the idea of non-personal property and non-proviso Lockean sticky property. Any property that is obtained through the use of violence, bought with money that was gained through exploitation, or bought with money that was gained violating usufruct property norms is considered illegitimate.[4][5][27]

According to mutualist theory, the main problem with capitalism is that it allows for non-personal property ownership. Under these conditions, a person can buy property that they do not physically use themselves with the only goal of owning said property in order to prevent others from using it, putting them in an economically weak position, vulnerable enough to be controlled and exploited. Mutualists argue that this is historically how certain people were able to become capitalists. According to mutualism, a capitalist is someone who makes money by exercising power rather than laboring. Over time, under these conditions there emerged a minority class of individuals who owned all the means of production as non-personal property (the capitalist class) and a large class of individuals with no access to the means of production (the laboring class). The laboring class does not have direct access to the means of production and therefore is forced to sell the only thing they can in order to survive, i.e. their labor power, giving up their freedom to someone who the owns means of production in exchange for a wage. The wage a worker receives is always less than the value of the goods and services he produces. If an employer pays a laborer equal to the value of the goods and services that he produced, then the capitalist would at most break even. In reality, the capitalist pays his worker less and after subtracting overhead, the remaining difference is exploited profit which the capitalist has gained without working. Mutualists point out that the money capitalists use to buy new means of production is the surplus value that they exploited from laborers.[5]

Mutualists also argue that capitalists maintain ownership of their non-personal properties because they support state violence through the funding of election campaigns. The state protects capitalist non-personal property ownership against direct occupation and use by the public in exchange for money and election support. Capitalists are then able to continue buying labor-power and the means of production as non-personal property and are able to continue extracting more surplus-value from more laborers, continuing the cycle. Mutualist theory states that by establishing usufruct property norms, exclusive non-personal ownership of the means of production by the capitalist class would be eliminated. The laboring classes would then have direct access to means of production, enabling them to work and produce freely in worker owned enterprises while retaining the full value of whatever they sell. Wage labor in the form of wage slavery would be eliminated and it would be impossible to become a capitalist because the widespread labor market would no longer exist and no one would be able to own the means of production in the form of non-personal property, two ingredients which are necessary for the exploitation of labor. This would result in the capitalist class to labor along with the rest of society.[5]

In Europe, a contemporary critic of Proudhon was the early libertarian communist Joseph Déjacque,[103][104] who was able to serialise his book L'Humanisphère, Utopie anarchique (The Humanisphere: Anarchic Utopia) in his periodical Le Libertaire, Journal du Mouvement Social (Libertarian: Journal of Social Movement), published in 27 issues from 9 June 1858 to 4 February 1861 while living in New York.[105][106] Unlike and against Proudhon, he argued that "it is not the product of his or her labor that the worker has a right to, but to the satisfaction of his or her needs, whatever may be their nature".[107][108][109] In his critique of Proudhon, Déjacque also coined the word libertarian and argued that Proudhon was merely a liberal, a moderate, suggesting him to become "frankly and completely an anarchist" instead by giving up all forms of authority and property.[110] Since then, the word libertarian has been used to describe this consistent anarchism which rejected private and public hierarchies along with property in the products of labour as well as the means of production. Libertarianism is frequently used as a synonym for anarchism and libertarian socialism.[111][112][113][114][115][116]

One area of disagreement between anarcho-communists and mutualists stems from Proudhon's alleged advocacy of labour vouchers to compensate individuals for their labor as well as markets or artificial markets for goods and services. However, the persistent claim that Proudhon proposed a labor currency has been challenged as a misunderstanding or misrepresentation.[117] Like other anarcho-communists, Peter Kropotkin advocated the abolition of labor remuneration 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?"[118] 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.[119]

Collectivist anarchist Mikhail Bakunin was an adamant critic of Proudhonian mutualism as well,[120] 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".[121][122] Bakunin also specifically criticized Proudhon,[123] stating that "[d]espite all his efforts to free himself from the traditions of classical idealism, Proudhon remained an incorrigible idealist all his life, swayed at one moment by the Bible and the next by Roman Law (as I told him two months before he died)."[124][125] According to Paul McLaughlin, Bakunin held that "'Proudhon, in spite of all his efforts to shake off the tradition of classical idealism, remained all his life an incorrigible idealist', 'unable to surmount idealistic phantoms' in spite of himself. It is Bakunin's purpose to rid Proudhon's libertarian thought of its metaphysicality, that is, to naturalize his anarchism — thereby overcoming its abstract, indeed reactionary, individualism and transforming it into a social anarchism."[126]

Criticism from pro-capitalist market sectors has been common as well. 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 which may closely follow contemporary mutualist Kevin 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. Like other mutualists, Carson only recognize occupancy and use as the standard for retaining legitimate control over something.[127] As a result of mutualist views on property, Austrian School economist and Objectivist 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 argued: "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".[128]

The pro-capitalism criticism is due to the different conception of property rights between capitalism and mutualism, with the latter supporting free access to capital, the means of production and natural resources, arguing that permanent private ownership of land and capital entails to monopolization, if there is not the equal liberty of access; and that a society with capitalist private property inevitably lead to statist relations between people.[129][130] 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 to Carson, "[a]n 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".[127]