How did Proudhon's People's Bank plan work?

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Red anarchy symbol, a capital letter A inside a circle, painted with rough brush strokes on a white background. — anarchism The “circle-A,” a common anarchist symbol.

Pierre-Joseph Proudhon’s People’s Bank was an initiative designed to implement his theory of Mutualism, a form of anarchism that emphasized economic cooperation over political centralization.1

The bank was intended to function through a system of mutual credit and the use of labor checks. Under this model, workers would be compensated based on the time expended on their products rather than traditional market-based wages. By facilitating this exchange, Proudhon aimed to provide workers with the means to control their own production and bypass exploitative financial systems.1

Although Proudhon attempted to establish this institution during the revolutionary period of 1848–1849, the venture was ultimately unsuccessful. Despite its failure, the concept remained a cornerstone of his broader vision, which sought to replace centralized government and state authority with a decentralized society of worker associations and free contracts.1