Economics/Class Relations

On Mutualism & Interest on Capital

By William Schnack

Evolution of Consent

Much of the conflict between mutualism and other schools of economics seems to be based on terminology. Mutualists lack the terminology to properly separate returns from land, capital, and labor, while Georgists, and others, divide them classically into rent, interest, and wages. Georgists, and others, lack the language necessary to describe returns on these factors due purely to privilege, while mutualists describe these usurious returns as rent, interest, and profit. Naturally, this brings us to conflict.

One reason the mutualists lack terminology to divide the fair and unfair returns on the three factors of production may be because of their belief that competitive markets (or, as I argue, bilateral monopolies) push prices to costs. Because they oppose patent-restrictions, land monopoly, and other privileges, they believe that, fairly quickly, in a free market, positive innovations will be assimilated into the industries which benefit from them, driving down interest to a cost of acquisition that is very small in comparison to today’s markets (transition costs associated to new technologies, of course, could be facilitated with mutual credit). Francis Tandy, mutualist, and author of Voluntary Socialism, clarifies in this lengthy quote:

If an article suddenly acquires an increased utility, people will be willing to give articles which embody a great amount of labor in order to obtain the more useful article. So the producers of that article, will be able to reap a greater reward for their labor than the other members of the community.

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