The second division of socialism comes from the conflict between the “anti-statist” and “statist” currents during the First International. Founded in 1864, the International Association of Workers (known as the “First International”) aspired to unite the labour movement in most European countries and in the United States of America. Very quickly, this movement was divided into three tendencies: Pierre-Joseph Proudhon’s mutualism, Mikhail Bakunin’s anarcho-collectivism and Karl Marx’s socialism or Marxism. Both Pierre-Joseph Proudhon’s mutualism and Mikhail Bakunin’s anarcho-collectivism are part of the libertarian tradition since they both aspire to the immediate abolition of the state, while Marxism sees the state as a transitional instrument used to get rid of capitalism. Although anarchist in their orientation, mutualism and anarcho-collectivism aspire to an egalitarian society marked by social progress, i.e. socialism.
If mutualism is critical of private property, it must be differentiated from Robert Owen’s cooperative movement. Indeed, Pierre-Joseph Proudhon rejects the idea of owning property because property is capital that allows one to receive an income through this collective force that is labour. To free themselves from capitalism, workers must organize production themselves. Mutualism proposes to offer capital without interest so that only labour generates value. Pierre-Joseph Proudhon sees in federalism the political continuity of mutualism. Federalism is based on a federation’s contract in which individuals bind themselves by a common obligation and commit to providing resources only to those they receive, but they also retain their sovereignty. Pierre-Joseph Proudhon’s libertarian socialism is thus based on the principle of autonomy, but it is also on an individualistic conception since the community is ultimately the result of individual will. After individuals have formed communities, they gather into territorial entities which federate themselves by pooling public services, establishing the mutuality of credit and tax equalization. Proudhon offers here a model of a stateless society, which “consists in the fact that, as political functions are reduced to industrial functions, social order would result solely from transactions and exchanges” (Proudhon, 1863, p. 20). The philosophy of Pierre-Joseph Proudhon inspired several theorists of socialism after him, the most famous being Karl Marx. He would conceive his notions of property, capitalism and the alienation of the working class on the basis of Proudhonian theory.
Taking up the concept of anarchy from Pierre-Joseph Proudhon, Mikhail Bakunin vigorously opposes Marxism. Indeed, he criticizes Karl Marx’s vision of a stateless society after a transitional phase called the “dictatorship of the proletariat” that would use the state to break with capitalism and bourgeois society. Mikhail Bakunin writes on this point: “Both the theory of the state and the theory of so-called revolutionary dictatorship are based on this fiction of pseudo-popular representation – which in actual fact means the government of the masses by an insignificant handful of privileged individuals, elected (or even not elected) by mobs of people rounded up for voting and never knowing what or whom they are voting for – on this imaginary and abstract expression of the imaginary thought and will of all the people, of which the real, living people do not have the faintest idea” (Bakunin,  2020). Proposing to destroy the state that he perceives as the counterpart of capitalism, Mikhail Bakunin favours an anarcho-collectivist model. For him, the revolution necessarily begins with the abolition of private property, the pooling of the means of production and the self-management of the agricultural and industrial sectors. Individuals then would come together in autonomous federations based on their common identity, interests and aspirations. Mikhail Bakunin’s philosophy is egalitarian to the point that he aspires to destroy religions, because they create social hierarchies and prevent absolute freedom of conscience.