I am trying to find out more about Prodhoun’s writings. His main ideology was Mutualism.
Here is from wikipedia page on Mutualism

When labor or its product is sold, it ought to receive in exchange, goods or services embodying “the amount of labor necessary to produce an article of exactly similar and equal utility”

Basically under this theory, if I make a football then I should get goods or services which required the same amount of labor. Now I would end the theory here, presuming that Proudhon does not want anyone to get more value than the required labor, unlike in a market where if you produced something which is required by more number of people than the price goes up for that product. But Mutualist are not anti-Market it seems, they do believe in market. In fact the only restriction they have is receiving anything less is considered exploitation, theft of labor, or “usury”. It sounds like an unnecessary clause, because in a free market, if people are paid less than they put in, they move on to do something else. For example if the housing sector is paying too less for their work then they move on to work in some other field like mining or something.

But then there comes the main point of disengagement between Libertarians and Mutualist.
Mutualists oppose the idea of individuals receiving an income through loans, investments, and rent, as they believe these individuals are not laboring.

Why do Mutualist(and Socialists) don’t believe that loans, investments and rents are proper labor?

Here is my attempt in explaining what is rent and interest or capital.

John is a carpenter who makes furnitures. He is a pretty primitive kind of carpenter(For the sake of ease of example), he just uses axe to cut the wood, saw to chop them in shape and nails to bind them together.

One day he meets his cousin from the other village who tells him that if he uses a Plane(a tool used to smoothen the surface of wood), then his furnitures will be much more comfortable. So John learns how to make a plane from his cousin, and figures out that, he works for 300 days in a year, excluding the holidays. Out of those 300 days, he needs to use 2 full days to make that Plane. If he spends that two days on it, he will be able to produce much more comfortable furnitures which means he will be able to earn more profit for 298 days. So he saves some every day, till he is able to save enough(food, money, water whatever), that he is able to sustain himself on those two days without working his main job.

So he spends two days working on that Plane, and produces it. Now once the Plane is produced, his friend from other village Peter, who is also a carpenter comes to him, and sees that Plane, and says,

John you have to do me a favor? I want you to lend this Plane to me, for one year. After one year, I will return back this exact Plane to you, the thing which I borrowed from you.”

John: But Peter, if you are going to use it for a year, won’t it wear and tear and become less useful, in that case, you will be returning less than what you took from me.

Peter: Ok fine, I promise that I will return this Plane to you after one year, in the exact same condition as I took from you, I will get it repaired, or buy you a new Plane, or give you enough money to sustain yourself for those two days when you make a new one for yourself. Now would that be fine for you to take this deal?

John: Ok Peter, I understand that you are going to give me the exact same thing you took from me, but here is the thing. What will you do to me in return?

Peter: Nothing, why should I? I am taking something from you for one year, I promise to give you back the exact same thing, back to you after one year. Don’t you know that Capital is inherently unproductive, you are not doing any labor for me by lending it to me, you will be sitting on your ass (at least from my perspective), for one year not doing anything. Yes I understand that you have spent some resources and labor on manufacturing this Plane, but then as I said, I will give you back your labor and resources spent on manufacturing this Plane exactly after one year. So I guess deal is even now?”

John: I don’t think so. First of all I didn’t make this Plane for you, I made it for myself. I expect to gain some advantage from it. My furniture will be more smooth if I use this plane, which means I will be earning more profit out of this Plane. On the top of that, if I made the Plane, and you are going to use that Plane on your furnitures, that profit will be yours. Wouldn’t that be slavery if I keep on working for your profit and not get anything in return.

Peter: But as I said, I will give you your Plane back to you as new, polished, and sharp as it is now. You will be able to reap benefits from it next year.

John: I don’t care about next year. I made this Plane for this year, and I made it now so that I can reap the profits NOW. I spent days saving something each day so that I can sustain myself for those two days I will be working on this. I did all those savings, I gave myself that discomfort so that I can improve my work and conditions, if you merely return it in one year, you will be the one gaining the whole profit for one year. I am not bound to do that service to you. So I am extremely sorry Peter, I can’t give this Plane to you if you are just going to give it back to me as-is after one year.

Peter: But John you are my friend, and I am giving you an even deal. You have to lend me that Plane.

John: Well you are forgetting the part that I spent 2 full working days on this Plane, I saved for those two days, and yeah you are right that my life will go on as usual without any lowering of any standard, but you will be taking away those two days worth of labor from me, if you really want this Plane why don’t you give me the material I have spent on this Plane, and my 2 days worth of labor right now, and get the full ownership of this Plane.

Peter: Ok fine, deal! I will give you your full worth of labor you have spent working on this Plane, and all the material, after a year, when I made some money off this Plane….

John cuts him off in middle: No no no!, you don’t seem to be getting it. If you want to buy this Plane, you have to offer me its full value NOW, not one year from now. The point is simple, you will be again making me wait for one year to enjoy the fruits of my labor. If you borrow this Plane from me, for one year, I wait during that time to enjoy the fruits of my labor. If you buy this Plane from me now and defer the payment for one year, I will again wait for one full year befor I enjoy the fruits of my labor. Maybe this is not that much of a labor, but it is still labor! That’s why I want some compensation for waiting. How about just a small percentage of the price of this Plane. Say just a plank of wood?

Finally, Peter agrees to pay John another plank, in addition to returning the Plane in the same condition to John after a year.

Funny thing if understanding the labor in rent or interest was that short and concise we wouldn’t even be having this discussion, and Prophet Mohammad wouldn’t have written “Usury is illegal” in Quran.
Lemme write down in concise what is labor in Interest. People want goods delivered to them sooner than later.
If you want $100 from me, and give it back to me in one minute. I wouldn’t mind, because I am getting the good back very soon.
If you take $100 from me and give it back to me in one year, well I will be devoid of that money for one year. I wouldn’t be able to enjoy that money for one year. I am delaying my pleasure of my property for one year, so I must be compensated for that.
This compensation is INTEREST.
Same goes for the house. I build a large mansion in sub-urbs of Delhi (right now I live in a really small house of my own). I make that house to live in it, but then you come to me and say you wanna live in it for a year. Well if I am going to WAIT for one year, before I can move in my OWN house, better compensate me for waiting that long.
That compensation is RENT.

Read a related article here