Pierre Joseph Proudhon (1809–1865) was a founder of anarchism and author of the book What is Property? (1842) to which he gave the celebrated answer, “it is theft”.
Proudhon was one of the most prominent radical thinkers of his day, and in works such as System of Economic Contradictions — or The Philosophy of Poverty (1846) and Credit, Free of Interest (1858) was an early advocate of some fair trade ideas. He argued that workers should receive the full value of their labour, but would be free only when they could acquire the means of production, become handicraftsmen (women, as Marx sarcastically noted, would stay in the “domestic hearth”), and ensure the just marketing of their produce.
To help them set up, Proudhon and his supporters advocated the establishment of a People’s Bank, which would lend money at very low interest. Apparently they tried to set one up in 1848. They also proposed a system of money based directly on labour time to ensure a more equitable distribution.
Proudhon opposed large-scale industry and wanted a reformed capitalism, in which the “bad side” of the division of labour and competition would be eliminated, while good side was retained.
Marx and Engels admired Proudhon in their early years, but in works such as The Poverty of Philosophy (1847) and in Capital (1867), they criticised him mercilessly as the representative of small traders, with an essentially backward-looking and utopian vision of the world.
They argued that for Proudhon, the problem with capitalism lay primarily in the realms of exchange and credit. The key issues for him were unequal or unfair exchange and the role of the money-lender. This was how it appeared to small proprietors such as artisans and peasants. But Marx insisted that the contradictions of capitalism do not derive from exchange as such, or from trade — profits did not come primarily from unequal exchange but from exploitation at the point of production.
Proudhon was also opposed to strikes and the organisation of trade unions, believing that higher wages would simply lead to higher prices. Again, Marx and Engels disagreed, arguing that unions and strikes were a vital means to militate against exploitation and wage the class struggle against capital.