Proudhon on Justice and Exchange

Proudhon on Justice and Exchange

Despite his affinity for the classical creed, Proudhon refuted the arguments of the classical economists so that their position would not be confused with his own. He detected a false promise in classical liberalism that aborted its conclusions. Classical economic liberalism relied upon the price mechanism to accomplish social ends, and Proudhon was convinced that the price mechanism was just as oppressive as law and govern­ment.

In essence, Proudhon's rejection of classical liberalism turned on one of the assumptions of the classical system. Classical economists assumed a more or less equal diffusion of economic power, whereas Proudhon saw the price mechanism as oppressive because of the extremely unequal diffusion of mar­ket power. The law of supply and demand, he claimed, is a "deceitful law... suitable only for assuring the victory of the strong over the weak, of those who own property over those who own nothing" (On the Political Ca­pacity of the Working Classes, cited in Ritter, p. 121).

Presumably, Proudhon would admit the market as a method of organizing society if everyone had an equal chance to benefit from the vagaries of supply and demand. But he did not believe that all traders were equally subject to the market; hence the market could not fulfill its promise of protection for each individual's freedom to pursue his or her own goals.
In retrospect, Proudhon's criticism of economic liberalism seems unfair, since what he objected to was monopoly, not competition. In fact, he gloried in the latter. While the market itself is oppressive, Proudhon declared compe­tition "the spice of exchange, the salt of work. To suppress competition is to suppress liberty itself" (General Idea of the Revolution, cited in Ritter, p. 123). Competition encourages creativity and on that account should be main­tained. The task of the economist, as Proudhon saw it, was to create a more appropriate environment for competition so that its salutary effects could be recognized.

Proudhon's ideal world is one in which individuals are perfectly free to bar­gain with one another for all the things they want. It is a mutual society where respect, rather than authority, provides the glue that holds the social fabric to­gether. The bargaining relation "imposes no obligation on its parties but that which results from their personal promise... it is subject to no external authority___When I bargain for some good with one or more of my fellow cit­izens, it is clear that then it is my will alone that is my law" (General Idea of the Revolution, cited in Ritter, p. 124).

In order to protect bargainers from being exploited by their rivals, Proudhon sought to equalize their power. It was with this in mind that he pro­posed the universalization of property and the creation of interest-free loans for all customers. To protect against trade stalemates that might result from the leveling of power relations, Proudhon encouraged social diversity, which in turn is encouraged by competition and is consistent with individual liberty. Social diversity tends to avoid economic deadlocks by increasing the incentive of traders to compromise. Nonmarket disputes (e.g., over ideology), more­over, cannot arise under true mutualism.

This mutualism of Proudhon's is another tendency that he shared with Saint-Simon. Neither trusted the egoistic practice of self-interest to spontane­ously establish social harmony. Saint-Simon, however, suggested replacing traditional government with a hierarchy of experts who are best able to discern and provide for the public interest. Proudhon eschewed all forms of law, gov­ernment, and hierarchy in favor of the mutualist norm of commutative justice. The duty of all bargainers in Proudhonian exchange is to give goods to one another of equal real value. Thus Proudhon would impose the same basic rule of trade as Aristotle or Aquinas. The problem with such max­ims of trade (as we have seen) is that their purely subjective nature does not guarantee the viability of mutual exchange. In fairness to Proudhon, he recog­nized this shortcoming of his theory of exchange, but he never could ade­quately resolve it in a manner consistent with his other principles of liberty.