III. THE PESSIMISTS…

III. THE PESSIMISTS

A new point of view is presented to us by the economists of whom we are now going to speak. Hitherto we have heard with admiration of the discovery of new facts and of their beneficent effects both upon nations and individuals. We are now to witness the enunciation of new doctrines which cast a deepening shadow across the radiant dawn of economics, giving it that strangely sinister aspect which led Carlyle to dub it “the dismal science.”

Hence the term “Pessimists,” although no reproach is implied in our use of that term. On the contrary, we shall have to show that the theories of the school are often truer than those of the Optimists, which we must study at a later stage of our survey. While nominally subscribing to their predecessors’ doctrine concerning the identity of individual and general interests, the many cogent reasons which they have adduced against such belief warrants our classification. The antagonism existing between proprietors and capitalists, between capitalists and workmen, is a discovery of theirs. Instead of the “natural” or “providential” laws that were to secure the establishment of the “order” provided they were once thoroughly understood and obeyed, they discovered the existence of other laws, such as that of rent, which guaranteed a revenue for a minority of idle proprietors—a revenue that was destined to grow as the direct result of the people’s growing need; or the “law of diminishing returns,” which sets a definite limit to the production of the necessaries of life. That limit, they asserted, was already being approached, and mankind had no prospect of bettering its lot save by the voluntary limitation of its numbers. There was also the tendency of profits to fall to a minimum—until it seemed as if the whole of human industry would sooner or later be swallowed up by the stagnant waters of the stationary State.

Lastly, they deserve to be classed as pessimists because of their utter disbelief in the possibility of changing the course of these inevitable laws either by legislative reform or by organised voluntary effort. In short, they had no faith in what we call progress.

But we must never imagine that they considered themselves pessimists or were classed as such by their contemporaries. This verdict is posterity’s, and would have caused them no little surprise. As for themselves, they seem to stand aloof from their systems with an insouciance that is most disconcerting. The “present order of things” possessed no disquieting features for them, and they never doubted the wisdom of “Nature’s Lord.” They believed that property had been put upon an immovable basis when they demonstrated the extent of its denotation, and that the spirit of revolt had been disarmed by impressing upon the poor a sense of responsibility for their own miseries.[286]

The best known representatives of the school are Malthus and Ricardo. They claimed to be philanthropists and friends of the people, and we have no reason to suspect their sincerity.[287] Their contemporaries, also, far from being alarmed, received the new political economy with the greatest enthusiasm. A warm welcome was extended to its apostles by the best of English society,[288] and ladies of distinction contended with one another for the privilege of popularising the abstract thoughts of Ricardo in newspaper articles and popular tales.[289]

Neither should we omit to pay them full homage for the eminent services rendered to the science, and among these not the least important was the antagonism which their theories aroused in the minds of the working classes. Pessimists unwittingly often do more for progress than optimists. To these two writers fell the task of criticising economic doctrines and institutions, a task that has been taken up by other writers in the course of the century, but which seems as far from completion as ever. Karl Marx, another critic, is intellectually a scion of the Ricardian family. It would be a mistake to imagine that all their theories savour of pessimism, but their reputation has always been more or less closely linked with the gloomier aspect of their teaching.

I: MALTHUS[290]

Malthus is best known for his “law of population.” That he was a great economist, even apart from his study of that question, might easily be proved by reference to his treatise on political economy, or by a perusal of the many miscellaneous articles which he wrote on various economic questions. A consideration of many of these theories, notably the theory of rent, must be postponed until we come to study them in connection with the name of Ricardo.

THE LAW OF POPULATION

Twenty years had elapsed since the publication of Smith’s immortal work, without economics making any advance, when the appearance of a small anonymous volume, known to be the work of a country clergyman, caused a great sensation. Even after the lapse of a century the echo of the controversy which it aroused has not altogether passed away. At first sight one might be led to think that the book touches only the fringe of economics, seeing that it is chiefly a statistical study of population, or demography, as the science is called to-day. But this new science, of which Malthus must be regarded as the founder, was separated from the main trunk of economics at a much later date. Furthermore, we shall find that the influence of his book upon all economic theories, both of production and distribution, was enormous. The essay might even be considered a reply to that of Adam Smith. The same title with slight modification would have served well enough, and James Bonar wittily remarks that Malthus might have headed it An Essay on the Causes of the Poverty of Nations.

The attempt to explain the persistence of certain economic phenomena by connecting them with the presence of a new factor, biological in its character and differing in its origin both from personal interest and the mere desire for profit, considerably expanded the economic horizon and announced the advent of sociology. We know that Darwin himself acknowledged his indebtedness to the work of Malthus for the first suggestion of what eventually became the most celebrated scientific doctrine of the nineteenth century, namely, the conception of the struggle for existence and the survival of the fittest as one of the mainsprings of progress.

There is no necessity for thinking that the dangers which might result from an indefinite growth of population had not engaged the attention of previous writers. In France Buffon and Montesquieu had already shown some concern in the matter. But a numerous population was usually regarded as advantageous, and fear of excess was never entertained inasmuch as it was believed that the number of people would always be limited by the available means of subsistence.[291] This was the view of the Physiocrat Mirabeau, stated in his own characteristic fashion in his book L’Ami des Hommes, which has for its sub-title Traité de la Population. Such a natural fact as the growth of population could possess no terrors for the advocates of the “natural order.” But in the writings of Godwin this “natural” optimism assumed extravagant proportions. His book on Political Justice appeared in 1793 and greatly impressed the public. Godwin, it has been well said, was the first anarchist who was also a doctrinaire. At any rate he seems to have been the first to employ that famous phrase, “Government even in its best state is an evil.” His illimitable confidence in the future of society and the progress of science, which he thought would result in such a multiplicity of products that half a day’s work would be sufficient to satisfy every need, and his belief in the efficacy of reason as a force which would restrain personal interest and check the desire for profit, really entitles him to be considered a pioneer. But life having become so pleasant, was there no possibility that men might then multiply beyond the available means of subsistence? Godwin was ignorant of the terrible intricacies of the problem he had thus raised, and he experienced no difficulty in replying that such a result, if it ever came to pass, must take several centuries, for reason may prove as powerful in controlling the sexual instinct as in restraining the desire for profit. Godwin even goes so far as to outline a social State in which reason shall so dominate sense that reproduction will cease altogether and man will become immortal.[292]

Almost at the same time there appeared in France a volume closely resembling Godwin’s, entitled Esquisse d’un Tableau historique des Progrès de l’Esprit humain, written by Condorcet (1794). It displays the same confidence in the possibility of achieving happiness through the all-powerful instrumentality of science, which, if not destined actually to overcome death, was at least going to postpone it indefinitely.[293] This optimistic book, written by a man who was about to poison himself in order to escape the guillotine, cannot leave us quite unmoved. But, death abolished, Condorcet finds that he has to face the old question propounded to Godwin: “Can the earth always be relied upon to supply sufficient means of subsistence?” To this question he gives the same answer: either science will be able to increase the means of subsistence or reason will prevent an inordinate growth of population.

It was inevitable, in accordance with the law of rhythm which characterises the movements of thought no less than the forces of nature, that such hasty optimism should provoke a reaction. It was not long in coming, and in Malthus’s essay we have it developed in fullest detail.

To the statement that there are no limits to the progress of mankind either in wealth or happiness, and that the fear of over-population is illusory, or at any rate so far removed that it need cause no apprehension, Malthus replied that, on the contrary, we have in population an almost insurmountable obstacle, not merely looming in the distant future, but pressing and insistent[294]—the stone of Sisyphus destined to be the cause of humanity’s ceaseless toil and final overthrow. Nature has planted an instinct in man which, left to itself, must result in starvation and death, or vice. This is the one fact that affords a clue to men’s suffering and a key to the history of nations and their untold woes.

Everyone, however little acquainted with sociological study, knows something of the memorable formula by which Malthus endeavoured to show the contrast between the frightful rapidity with which population grows when it is allowed to take its own course and the relative slowness in the growth of the means of subsistence. The first is represented by a geometrical series where each successive number is a multiple of the previous one. The second series increases in arithmetical progression, that is, by simple addition, the illustration being simply a series of whole numbers:

1 2 4 8 16 32 64 128 256 1 2 3 4 5 6 7 8 9

Every term corresponds to a period of twenty-five years, and a glance at the figures will show us that population is supposed to double every twenty-five years, while the means of subsistence merely increases by an equal amount during each of these periods. Thus the divergence between the two series grows with astonishing rapidity. In the table given above, containing only nine terms, the population figure has already grown to twenty-seven times the means of subsistence in a period of 225 years. Had the series been extended up to the hundredth term a numerical representation of the divergence would have required some ingenuity.

The first progression may be taken as correct, representing as it does the biological law of generation. The terms “generation” and “multiplication” are not used as synonyms without some purpose. It is true that doubling supposes four persons to arrive at the marriageable age, and this means five or six births if we are to allow for the inevitable wastage from infant mortality. This figure appears somewhat high to those who live in a society where limitation of the birth-rate is fairly usual. But it is certain that among living beings in general, including humankind, who are least prolific, the number of births where no restraint of any kind exists is really much higher. Women have been known to give birth to twenty or even more children. And there are no signs of diminishing capacity among the sexes, for population is still growing. In taking two as his coefficient Malthus has certainly not overstepped the mark.[295]

The period of twenty-five years as the interval between the two terms is more open to criticism.[296] The practice of reckoning three generations to a century implies that an interval of about thirty-three years must elapse between one generation and another.

But these are unimportant details. It is immaterial whether we lengthen the interval between the two terms from twenty-five to thirty-three years, or reduce the ratio from 2 to 1½, or even to something between 1¼ and 1¹/₁₀. The movement will be a little slower, but it is enough that its geometrical character should be admitted, for however slow it moves at first it will grow by leaps and bounds until it surpasses all limits. These corrections fail to touch the real force of Malthus’s reasoning concerning the law of reproduction.

The series representing the growth of the means of subsistence is also open to criticism. It is evidently of a more arbitrary character, and we cannot say whether it is simply supposed to represent a possible contingency like the first, or whether it pretends to represent reality. At least it does not correspond to any known and certain law, such as the law of reproduction. As a matter of fact it rather seems to give it the lie; for, in short, what is meant by means of subsistence unless we are to understand the animal and vegetable species that reproduce themselves according to the same laws as human beings, only at a much faster rate? The power of reproduction among plants, like corn or potatoes, or among animals, like fowls, herrings, cattle even, or sheep, far surpasses that of man. To this criticism Malthus might have replied as follows. This virtual power of reproduction possessed by these necessaries of life is in reality confined to very limited areas of the habitable globe. It is further restricted by the difficulty of obtaining the proper kind of nourishment, and by the struggle for existence. But if we admit exceptions in the one case why not also in the other? It certainly seems as if there were some inconsistency here. As a matter of fact we have two different theses. The one attempts to show how multiplication or reproduction need not of necessity be less rapid among plants or animals than it is among men. The other expresses what actually happens by showing that the obstacles to the indefinite multiplication of men are not less numerous than the difficulties in the way of an indefinite multiplication of vegetables or animals, or, in other words, that the former is a function of the latter.

In order to grasp the true significance of the second formula it must be translated from the domain of biology into the region of economics. Malthus evidently thought of it as the amount of corn yielded by a given quantity of land. The English economists could think of nothing except in terms of corn! What he wished to point out was that the utmost we can expect in this matter is that the increase in the amount of the harvest should be in arithmetical progression—say, an increase of two hectolitres every twenty-five years. This hypothesis is really rather too liberal. Lavoisier in 1789 calculated that the French crop yielded on an average about 7¾ hectolitres per hectare. During the last few years it has averaged about 16, and if we admit that the increment has been regular throughout the 120 years which have since elapsed we have an increase of 2 hectolitres per 25 years. This rate of increase has proved sufficient to meet the small increase which has taken place in the population of France. But would it have sufficed for a population growing as rapidly as that of England or Germany? Assuredly not, for these countries, despite their superior yields, are forced to import from outside a great proportion of the grain which they consume. The question arises whether France can continue indefinitely on the same basis during the course of the coming centuries. This is, indeed, unlikely, for there must be a physical limit to the earth’s capacity on account of the limited number of elements it contains. The economic limit will be reached still earlier because of the increasing cost of attempting to carry on production at these extreme limits. Thus it seems as if the law of diminishing returns, which we must study later, were the real basis of the Malthusian laws, although Malthus himself makes no express mention of it.

It is a truism that the number of people who can live in any place cannot exceed the number of people who can gain subsistence there. Any excessive population must, according to definition, die of hunger.[297] This is just what happens in the animal and vegetable kingdoms. Germs are extraordinarily prolific, but their undue multiplication is pitilessly retarded by a law which demands the death of a certain proportion, so that life, like a well-regulated reservoir, always remains at a mean level, the terrible gaps made by death being replenished by a new flow. Among savages, just as among animals, which they much resemble, a large proportion literally dies of hunger. Malthus devoted much attention to the study of primitive society, and he must be regarded as one of the pioneers of prehistoric sociology—a subject that has made much headway since then.

He proceeds to show how insufficient nourishment always brings a thousand evils in its train, not merely hunger and death, but also epidemics and such terrible practices as cannibalism, infanticide, and slaughter of the old, as well as war, which, even when not undertaken with a definite view to eating the conquered, always results in robbing them of their land and the food which it yielded. These are the “positive” or “repressive” checks.

But it may be replied that both among savages and animals the cause of this insufficiency of food is an incapacity for production rather than an excess of population.

Malthus has no difficulty in answering this objection by showing how savage customs prevailed among such civilised people as the Greeks. And even among the most modern nations the repressive checks, somewhat mitigated it is true, are never really absent. Famine in the sense of absolute starvation is seldom experienced nowadays, except in Russia and India, perhaps, but it is by no means a stranger even to the most advanced communities. Tuberculosis, which involves such terrible bodily suffering, is nothing but a deadly kind of famine. Lack of food is also responsible for the abnormally high rate of infant mortality and for the premature death of the adult worker. As for war, it still demands its toll. Malthus was living during the wars of the Revolution and the First Empire—bloody catastrophes that caused the death of about ten million men, all in the prime of life.

In civilized communities equilibrium is possible through humaner methods, in the substitution of the preventive check with its reduced birth-rate for the repressive check with its abnormal death-rate. Here is an expedient of which only the rational and the provident can avail themselves, an expedient open only to man. Knowing that his children are doomed to die—perhaps at an early age—he may abstain from having any. In reality this is the only efficacious way of checking the growth of population, for the positive check only excites new growth, just as the grass that is mown grows all the more rapidly afterwards. The history of war furnishes many a striking illustration of this. The year following the terrible war of 1870-71 remains unique in the demographic annals of France on account of the sudden upward trend of the declining curve of natality.

It was in the second edition of his book that Malthus expanded his treatment of the preventive checks, thus softening the somewhat harsher aspects of his first edition. It is very important that we should grasp his exact meaning. We therefore make no apology for frequently quoting his views on one point which is in itself very important, but upon which the ideas of the reverend pastor of Haileybury have been so often misrepresented.

The preventive check must be taken to imply moral restraint. But does this mean abstaining from sexual intercourse during the period of marriage after the birth, say, of three children, which may be taken as sufficient to keep the population stationary or moderately progressive? We cannot find that Malthus ever advocated such abstention. We have already seen that he considered six children a normal family, implying the doubling of the population every twenty-five years. Neither is it suggested that six should be the maximum, for he adds: “It may be said, perhaps, that even this degree of prudence might not always avail, as when a man marries he cannot tell what number of children he shall have, and many have more than six. This is certainly true.” (P. 536.)

But where does moral restraint come in? This is how he defines it: “Restraint from marriage which is not followed by irregular gratifications may properly be termed moral restraint” (p. 9); and to avoid any possible misunderstanding he adds a note: “By moral restraint I would be understood to mean a restraint from marriage from prudential motives with a conduct strictly moral during the period of this restraint, and I have never intentionally deviated from this sense.” All this is perfectly explicit. He means abstention from all sexual intercourse outside the bonds of marriage, and the postponement of marriage itself until such time as the man can take upon himself the responsibility of bringing up a family—and even the complete renunciation of marriage should the economic conditions never prove favourable.

Malthus unceremoniously rejected the methods advocated by those who to-day bear his name, and expressly condemned all who favoured the free exercise of sexual connection, whether within or without the marriage bond, through the practice of voluntary sterilization. All these preventive methods are grouped together as vices and their evil effects contrasted with the practice of moral restraint. Malthus is equally explicit on this point. “Indeed, I should always particularly reprobate any artificial and unnatural modes of checking population. The restraints which I have recommended are quite of a different character. They are not only pointed out by reason and sanctioned by religion, but tend in the most marked manner to stimulate industry.” (P. 572.) And he adds these significant words, so strangely prophetic so far as France is concerned: “It might be easy to fall into the opposite mistake and to check the growth of population altogether.”

It is quite needless to add that if Malthus thus made short work of conjugal frauds he all the more strongly condemned that other preventive method, namely, the institution of a special class of professional prostitutes.[298] He would similarly have condemned the practice of abortion, of which scarcely anything was heard in his day, but which now appears like a scourge, taking the place of infanticide and the other barbarous practices of antiquity. Criminal law seems powerless to suppress it, and it has already received the sanction of a new morality.

But apart from the question of immoral practices, did Malthus really believe that moral restraint as he conceived of it would constitute an effective check upon population?

He doubtless was anxious that it should be so, and he tried to rouse men to a holy crusade against this worst of all social evils. “To the Christian I would say that the Scriptures most clearly and precisely point it out to us as our duty to restrain our passions within the bounds of reason.… The Christian cannot consider the difficulty of moral restraint as any argument against its being his duty.” (P. 452.) And to those who wish to follow the dictates of reason rather than the observances of religion he remarks: “This virtue [chastity] appears to be absolutely necessary in order to avoid certain evils which would otherwise result from the general laws of nature.” (P. 452.)[299]

At bottom he was never quite certain as to the efficacy of moral restraint. The threatening hydra always peered over the fragile shield of pure crystal with which he had hoped to do battle.[300] He also felt that celibacy might not merely be ineffective, but would actually prove dangerous by provoking the vices it was intended to check. Its prolongation, or worse still its perpetuation, could never be favourable to good morals.

Malthus was faced with a terrible dilemma, and the uncompromising ascetic is forced to declare himself a utilitarian philosopher of the Benthamite persuasion. He has now to condone those practices which satisfy the sexual instinct without involving maternity, although at an earlier stage he characterised them as vices. It seemed to him to be the lesser of two evils, for over-population[301] is itself the cause of much immorality, with its misery, its promiscuous living and licence. All of which is very true.[302] At the same time the rule of conduct now prescribed is no longer that of “perfect purity.” It is, as he himself says, the grand rule of utility. “It is clearly our duty gradually to acquire a habit of gratifying our passion, only in that way which is unattended with evil.” (P. 500.) These concessions only served to prepare the way for the Neo-Malthusians.

Malthus gives us a picture of man at the cross-roads. Straight in front of him lies the road to misery, on the right the path of virtue, while on the left is the way of vice. Towards the first man is impelled by a blind instinct. Malthus warns him to rein in his desires and seek escape along either by-road, preferably by the path on his right. But he fears that the number of those who will accept his advice and choose “the strait road of salvation” will be very small. On the other hand, he is unwilling to admit, even in the secrecy of his own soul, that most men will probably follow the road that leads on to vice, and that masses will rush down the easy slope towards perdition. In any case the prospect is anything but inviting.

* * * * *

No doctrine ever was so much reviled. Imprecations have been showered upon it ever since Godwin’s memorable description of it as “that black and terrible demon that is always ready to stifle the hopes of humanity.”

Critics have declared that all Malthus’s economic predictions have been falsified by the facts, that morally his doctrines have given rise to the most repugnant practices, and not a few French writers are prepared to hold him responsible for the decline in the French birth-rate. What are we to make of these criticisms?

History certainly has not confirmed his fears. No single country has shown that it is suffering from over-population. In some cases—that of France, for example—population has increased only very slightly. In others the increase has been very considerable, but nowhere has it outstripped the increase in wealth.

The following table, based upon the decennial censuses, gives the per capita wealth of the population of the United States, the country from which Malthus obtained many of his data:

Year Dollars

1850 308 1860 514 1870 780 1880 870 1890 1036 1900 1227 1905 1370

In fifty years the wealth of every inhabitant has more than quadrupled, although the population in the same interval also shows a fourfold increase (23 millions to 92 millions).[303]

Great Britain, i.e. England and Scotland, at the time Malthus wrote (1800-5), had a population of 10½ millions. To-day it has a population of 40 millions. Such a figure, had he been able to foresee it, would have terrified Malthus. But the wealth and prosperity of Great Britain have in the meantime probably quadrupled also.

Does this prove the claim that is constantly being made, that Malthus’s laws are not borne out by the facts? We think that it is correct to say that the laws still remain intact, but that the conclusions which he drew from them were unwarranted. No one can deny that living beings of every kind, including the human species, multiply in geometrical progression. Left to itself, with no check, such increase would exceed all limits. The increase of industrial products, on the other hand, must of necessity be limited by the numerous conditions which regulate all production—that is, by the amount of space available, the quantity of raw material, of capital and labour, etc. If the growth of population has not outstripped the increase in wealth, but, as appears from the figures we have given, has actually lagged behind it, it is because population has been voluntarily limited, not only in France, where the preventive check is in full swing, but also in almost every other country. This voluntary limitation which gave Malthus such trouble is one of the commonest phenomena of the present time.

Malthus’s apprehensions appear to involve some biological confusion. The sexual and the reproductive instincts are by no means one and the same;[304] they are governed by entirely different motives. Only to the first can be attributed that character of irresistibility which he wrongly attributes to the second. The first is a mere animal instinct which rouses the most impetuous of passions and is common to all men. The second is frequently social and religious in its origins, assuming different forms according to the exigencies of time and place.

To the religious peoples who adopted the laws of Moses, of Manu, or of Confucius to beget issue was to ensure salvation and to realise true immortality.[305] For the Brahmin, the Chinese, or the Jew not to have children meant not merely a misfortune, but a life branded with failure. Among the Greeks and Romans the rearing of children was a sacred duty laid upon every citizen and patriot. An aristocratic caste demanded that the glories of its ancestors and founders should never be allowed to perish for the want of heirs. Even among the working classes, whose lot is often miserable and always one of economic dependence, there are some who are buoyed up by the hope that the more children they have the larger will be their weekly earnings and the greater their power of enlisting public sympathy. And in every new country there is a demand for labourers to cultivate its virgin soil and to build up a new people.

The reproductive instinct, on the other hand, may be thwarted by antagonistic forces—by the selfishness of parents who shun their responsibilities, or of mothers who dread the pains and perils of child-bearing; by the greed of parents who would endow old age rather than foster youth; by the desire of women to enjoy independence rather than seek marriage; by the too early emancipation of children, which leaves to the parents no gains and no joys beyond the cost and trouble of upbringing; by insufficient house-room or exorbitant taxation, or by any one of a thousand causes.

Thus the considerations that influence reproduction are infinitely varied, and being of a social character they are neither necessary nor permanent, nor yet universal. They may very well be defeated by motives that belong to the social order, and this is just what happens. And it is at least possible to conceive of a state of society where religious faith has vanished and patriotism is dead, where the family lasts only for one generation, and where all land has been appropriated so that the calling of the father is denied to the son; where existence has again become nomadic and suffering unbearable, and where marriage, easily annulled by divorce, has become more or less of a free union. In such a community, with all incentives to reproduction removed and all antagonistic forces in full operation, the birth-rate would fall to zero. And if all nations have not yet arrived at this stage they all seem to be tending towards it. It is true that a new social environment may give rise to new motives. We believe that it will, but as yet we are ignorant of the nature of these promptings.

Paradoxical as it may seem, the sexual instinct plays quite a secondary rôle in the procreation of the human species. Nature doubtless has united the two instincts by giving them the same organs, and those who believe in final causes can admire the ruse which Nature has adopted for securing the preservation of the species by coupling generation with sexual attraction. But man has displayed ingenuity even greater than Nature’s by separating the two functions. He now finds that (since he has known how to get rid of reproduction) he can gratify his lust without being troubled by the consequences. The fears of Malthus have vanished: the other spectre, race suicide, is new casting a gloom over the land.

Malthus’s condemnation of such practices was of little avail. Other moralists more indulgent than the master have given them their sanction by endeavouring to show that this is the only way in which men can perform a double function, on the one hand giving full scope to sexual instinct in accordance with the physiological and psychological laws of their being, and on the other taking care not to leave such a supreme duty as that of child-bearing to mere chance and not to impose upon womankind such an exhausting task as that of maternity save when freely and voluntarily undertaken. This is quite contrary to the pastor’s teaching concerning moral restraint. The Neo-Malthusians, on the other hand, consider his teaching very immoral, as being contrary to the laws of physiology, infected with ideas of Christian asceticism, and altogether worse than the evil it seeks to remedy. His rule of enforced celibacy might, in their opinion, involve more suffering even than want of food, and late marriages simply constitute an outrage upon morality by encouraging prostitution and increasing the number of illegitimate births. The Neo-Malthusians[306] persist in regarding themselves as his disciples because they think that he clearly demonstrated, despite himself perhaps, that the exercise of the blind instinct of reproduction must result in the multiplication of human beings who are faced by want and disease and liable to sudden extinction or slow degradation, and that the only way of avoiding this is to check the instinct.

There is reason to believe, however, that were Malthus now alive he would not be a Neo-Malthusian. He would not have willingly pardoned his disciples the perpetration of sexual frauds which enable man to be freed from the responsibilities which Nature intended him to bear. Nevertheless we must recognise that the concessions which he made prepared the way for this further development.

Malthus did not seem to realise the full import of these delicate questions which contributed so powerfully to the overthrow of his doctrine. Especially is this true of the emphasis which he laid upon chastity, involving as he thought abstention from the joys of marriage. Such celibacy he would impose only upon the poor.[307] The rich are obviously so circumstanced that children cannot be a hindrance. We know well enough that it was in the interests of the poor themselves that Malthus imposed his cruel law “not to bring beings into the world for whom the means of support cannot be found.” But that does not prevent its emphasising in the most heartless fashion imaginable the inequality of their conditions, forcing the poor to choose between want of bread and celibacy. Malthus gave a quietus to the old song which eulogises love in a cottage as the very acme of happiness. It is only just to remark, however, that he does not go so far as to put an interdict upon marriage altogether, which is actually the case in some countries. The old liberal economist asserts himself here. He sees clearly enough that, leaving aside all humanitarian considerations, the remedy offered would be worse than the evil, for its only result would be a diminution in the number of legitimate children and an increase in the number of those born out of wedlock.[308]

When telling the poor that they themselves were the authors of their misery,[309] because of their improvident habits, their early marriages, and their large families, and that no written law, no institution, and no effort of charity could in any way remedy it, he failed to realise that he was furnishing the propertied classes with a good pretext for dissociating themselves from the fate of the working classes.[310] And during the century which has passed since he wrote the way to every comprehensive scheme of socialistic or communistic organisation has been barred and every projected reform which claimed to ameliorate the condition of the poor effectively thwarted by the argument that the only result would be to increase the number of participators as well as the amount to be distributed, and that consequently no one would be any the better off.

Whatever opposition Malthus’s doctrines may have aroused, his teaching has long since become a part and parcel of economic science. Occasionally it has thwarted legitimate claims, while at other times it has been used to buttress some well-known Classical doctrine, such as the law of rent or the wages fund theory. On more than one occasion it has done service in the defence of family life and private property, two institutions which are supposed to act as effective checks upon the growth of population, because of the responsibilities which they involve.[311]

The population question has lost none of its importance, although it has somewhat changed its aspect. What Malthus called the preventive check has got such a hold of almost every country that modern economists and sociologists are concerned not so much with the question of an unlimited growth of population as with the regular and universal decline of the birth-rate. Everyone is further agreed that the causes must be social.

It is not enough to say that the cause is a deliberate determination of parents to have no children or to have only a limited number. The question is, Why do they decide to have none or to limit their family to a certain number only? Why is this limitation more marked in France than elsewhere, and why is it more pronounced there to-day than it was say two or three generations ago? The special causes which apply to the France of to-day must somehow be discovered, and such causes may be expected to be less active elsewhere. It may be that Paul Leroy-Beaulieu is right when he claims that the progress of civilisation must always mean a declining birth-rate, because the fresh needs and desires and the extra expenditure which it necessarily involves are incompatible with the duties and responsibilities of maternity. It is possible that it diminishes as democracy advances, because the latter strengthens the telescopic faculty and quickens the desire to rise in the social scale as rapidly and as effectively as possible. M. Dumont, who advocates this view, has happily named it the law of capillarity. More precise causes are sometimes invoked, but they vary according to the particular school that formulates them. Le Play thinks that it is due to the practice of social inheritance. Paul Bureau takes it as a sign of the weakening of moral and religious belief, and of the growth of intemperate habits of every kind—alcoholism, debauchery, etc. Unfortunately none of the explanations given seem quite satisfactory, and a second Malthus is required to open up a new chapter in the history of demography.[312]

II: RICARDO

Next to Smith, Ricardo is the greatest name in economics, and fiercer controversy has centred round his name than ever raged around the master’s. Smith founded no school, and his wisdom and moderation saved him from controversy. Hence every economist, whatever his views, is found sitting at his feet straining to catch the divine accents as they fall from his lips.

But Ricardo was no dweller in ethereal regions. He was in the thickest of the fight—the butt of every shaft. In discussions on the question of method the attack is always directed against Ricardo, who is charged with being the first to lead the science into the fruitless paths of abstraction. The Ricardian theory of rent affords a target for every Marxian in his general attack upon private property. The Ricardian theory of value is the starting-point of modern socialism—a kinship that he could never have disavowed, however little to his taste. The same thing is true of controversies concerning banks of issue and international trade: Ricardo’s place was ever with the vanguard.

His defects are as interesting as his merits, and have been equally influential. Of his theories, especially his more characteristic ones, there is now little left, unless we recall what is after all quite as important—the criticisms they aroused and the adverse theories which they begot. The city banker was a very indifferent writer, and his work is adorned with none of those beautiful passages so characteristic of Smith and Stuart Mill. No telling phrase or striking epithet ever meets the eye of the reader. His principal work is devoid of a plan, its chapters being mere fragments placed in juxtaposition. His use of the hypothetical method and the constant appeal to imaginary conditions makes its reading a task of some difficulty. This abstract method has long held dominion over the science, and it is still in full activity among the Mathematical economists. His thoughts are penetrating, but his exposition is frequently obscure, and a remark which he makes somewhere in speaking of other writers, namely, that they seldom know their own strength, may very appropriately be applied to him. But obscurity of style has not clouded his fame. Indeed, it has stood him in good stead, as it did Marx at a later date. We hardly like to say that a great writer is unintelligible—a feeling prompted partly by respect and partly arising out of fear lest the lack of intelligence should really be on our side. The result is an attempt to discover a profound meaning in the most abstruse passage—an attempt that is seldom fruitful, especially in the case of Ricardo.

It is clearly impossible to outline the whole of this monumental work. We shall content ourselves with an attempt to place the leading conceptions clearly before our readers.[313]

Speaking generally, Ricardo’s chief concern is with the distribution of wealth. He was thus instrumental in opening up a new field of economic inquiry, for his predecessors had been largely engrossed with production. “To determine the laws which regulate this distribution is the principal problem in political economy.” We have already some acquaintance with the tripartite division of revenues corresponding with the threefold division of the factors of production—the rent of land, the profits of capital, and the wages of labour. Ricardo wanted to determine the way in which this division took place and what laws regulated the proportion which each claimant got. Although unhampered by any preconceptions concerning the justice or injustice of distribution, we can easily understand how he ushered in the era of polemics and of socialistic discussion, seeing that the natural laws pale into insignificance when contrasted with the influence wielded by human institutions and written laws. The latter override the former, and individual interests which may co-operate in production frequently prove antagonistic in distribution.

We shall follow him in his exposition of the laws of rent, wages, and profits, but especially rent, for according to him the share given to land determines the proportions which the other factors are going to receive.

One would imagine that an indispensable preliminary to this study would be an examination of the Ricardian theory of value, especially when we recall the importance of his theory of labour-value in the history of economics doctrine and how it prepared the way for the Marxian theory of surplus value, which is the foundation-stone of contemporary socialism. Despite all this we shall only refer to his theory of value incidentally, and chiefly in connection with the laws of distribution. We have Ricardo’s own authority for doing this: “After all, the great problem of rent, of wages, or of profits might be elucidated by determining the proportions in which the total product is distributed between the proprietors, the capitalists, and the workers, but this is not necessarily connected with the doctrine of value.”[314]

It is, moreover, probable that Ricardo himself did not begin with an elaborate theory of value from which he deduced the laws of distribution, but after having discovered, or having convinced himself that he had discovered, the laws of distribution he attempted to deduce from them a theory of value. One idea had haunted him his whole life long, namely, that with the progress of time nature demanded an ever-increasing application of human toil. No doubt it was this that suggested to him that labour was the foundation, the cause, and the measure of value. But he never came to a final decision on the question, and his statements concerning it are frequently contradictory. We must also confess that his theory of value is far from being his most characteristic work. In the elucidation of that difficult question, vigorous thinker though he was, he has not been much more fortunate than his predecessors. He himself acknowledged this on more than one occasion, and shortly before his death, with a candour that does him honour, he recognised his failure to explain value.[315]

1. THE LAW OF RENT

Of all Ricardian theories that of rent is the most celebrated, and it is also the one most inseparably connected with Ricardo’s name. So well known is it that Stuart Mill spoke of it as the economic pons asinorum, and it has always been one of the favourite subjects of examiners.

The question of rent—that is, of the return which land yields—had occupied the attention of others besides Ricardo. It was the burning question of the day. The problem of rent dominated English political economy during the first half of the nineteenth century, and a later period has witnessed a revival of it in the land nationalisation policy of Henry George. In France there was but a feeble echo of the controversy, for France even long before the Revolution had been a country of small proprietors. Landlordism was far less common there, and where it existed its characteristics were very different. That threefold hierarchy which consisted of a worker toiling for a daily wage in the employ of a capitalist farmer who draws his profits towered over by a landlord in receipt of rents formed a kind of microcosmic picture of the universal process of distribution, but it was seldom as clearly seen in France as it was in England.

The first two incomes presented no difficulties. But how are we to explain that other income—that revenue which had created English aristocracy and made English history? The Physiocrats had named it the “net product,” and they argued a liberality of nature and a gift of God. Adam Smith, although withholding the title of creator from nature and bestowing it upon labour, nevertheless admits that a notable portion—perhaps as much as a third of the revenue of land—is due to the collaboration of nature.[316]

Malthus had already produced a book on the subject,[317] and Ricardo hails him as the discoverer of the true doctrine of rent. Malthus takes as his starting-point the explanation offered by the Physiocrats and Adam Smith, namely, that rent is the natural outcome of some special feature possessed by the earth and given it by God—that is, the power of enabling more people to live on it than are required to till it. Rent is the result, not of a merely physical law, but also of an economic one, for nature seems to have a unique power of creating a demand for its products, and consequently of maintaining and even of increasing indefinitely both its own revenue and value. The reason for this is that the population always tends to equal and sometimes to surpass the means of subsistence. In other words, the number of people born is seldom less than the maximum number that the earth can feed. This new theory of rent is a simple deduction from Malthus’s law concerning the constant pressure of population upon the means of subsistence.

Malthus emphasised another important feature of rent, and it was this characteristic that especially attracted Ricardo. Seeing that different parts of the earth are of unequal fertility, the capitals employed in cultivation must of necessity yield unequal profits. The difference between the normal rate of profit on mediocre lands and the superior rate yielded by the more fertile land constitutes a special kind of profit which is immediately seized by the owner of the more fertile land. This extra profit afterwards became known as differential rent.

To Malthus, as well as to the Physiocrats, this kind of rent seemed perfectly legitimate and conformed to the best interests of the public. It was only the just recompense for the “strength and talent” exercised by the original proprietors. The same argument applies to those who have since bought the land, for it must have been bought with the “fruits of industry and talent.” Its benefits are permanent and independent of the proprietor’s labour, and in this way the possession of land becomes a much-coveted prize, the otium cum dignitate which is the just reward of meritorious effort.

Ricardo enters upon an entirely new track. He breaks the connection with Smith and the Physiocrats—a connection that Malthus had been most anxious to maintain. All suggestion of co-operation on the part of nature is brushed aside with contempt. Business-man and owner of property as he was, he had no superstitious views concerning nature, whose work he contemplated without much feeling of reverence. As against the celebrated phrase of Adam Smith he quotes that of Buchanan: “The notion of agriculture yielding a produce and a rent in consequence because nature concurs with human industry in the process of cultivation is a mere fancy.”[318] He proceeds to defend the converse of Smith’s view and to show how rent implies the avarice rather than the liberality of nature.

The proof that the earth’s fertility, taken by itself, can never be the cause of rent is easily seen in the case of a new country. In a newly founded colony, for example, land yields no rent, however fertile, if the quantity of land is in excess of the people’s demand. “For no one would pay for the use of land when there was an abundant quantity not yet appropriated, and therefore at the disposal of whosoever might choose to cultivate it.”[319] Rent only appears “when the progress of population calls into cultivation land of an inferior quality or less advantageously situated.” Here we have the very kernel of Ricardo’s theory. Instead of being an indication of nature’s generosity, rent is the result of the grievous necessity of having recourse to relatively poor land under the pressure of population and want.[320] “Rent is a creation of value, not of wealth,” says Ricardo—a profound saying, and one that has illuminated many a mystery attaching to the theory of rent. In that sentence he draws a distinction between wealth born of abundance and satisfaction and value begotten of difficulty and effort, and he declares that rent is of the second category and not of the first.

Still, this cannot be accepted as the final explanation. It is difficult to understand how a purely negative condition such as the absence of fertile land could ever create a revenue. It were better to say that the want of suitable land supplies the occasion for the appearance of rent, although it is not its cause. The cause is the high price of agricultural products—say corn—due to the increased difficulty of cultivating the less fertile lands.[321] In short, the cause and the measure of the rent of corn-land are determined by the quantity of labour necessary to produce corn under the most unfavourable circumstances, “meaning by the most unfavourable circumstances the most unfavourable under which the quantity of produce required renders it necessary to carry on production.”[322]

Let us assume, as Ricardo did, that first-class land yields a bushel of corn as the result of ten hours’ work, the corn selling for ten shillings a bushel.[323] In order to supply a population that is increasing in accordance with the Malthusian formula, land of the second class has to be cultivated, when the production of a bushel requires fifteen hours’ work. The value of corn will rise proportionately to fifteen shillings, and landed proprietors of the first class will draw a surplus value or a bonus of five shillings per bushel. So rent emerges. Presently the time for cultivating lands of the third class will approach, when twenty hours’ labour will be necessary for the production of a bushel. The price of corn goes up to twenty shillings, and proprietors of the first class see their gift increased or their rent raised from five to ten shillings per bushel, while the owners of the second-class land obtain a bonus of five shillings per bushel. This marks the advent of a new class of rent-receivers, who modestly take their place a little below the first class. The third class of landowner will receive a rent whenever the cultivation of fourth-class land becomes a necessity.[324]

It has been said in criticism of the theory that the hierarchy of lands has simply been invented for the purpose of illustrating the theory. But what Ricardo has really done is to put in scientific language what every peasant knows—what has been handed down to him from father to son in unbroken succession, namely, that all land is not equally fertile.

Ricardo, so often represented as a purely abstract thinker, was in reality a very practical man and a close observer of those facts that were then occupying the attention of both public and Parliament. High rents, following upon high prices, constituted the most important phenomenon in the economic history of England towards the end of the eighteenth and the beginning of the nineteenth centuries. Right through the eighteenth century—that is, up to 1794—the highest price paid for corn was only a few pence above 60s. per quarter. But in 1796 the price rose to 92s., and in 1801 it reached 177s.—nearly three times the old price. The exceptionally high price, due to extraordinary causes, chief among them being the Napoleonic wars and the Continental blockade, could not last long, although the average during the years 1810-13 remained as high as 106s.[325]

This high price of corn was not entirely due to accidental causes. Something must be attributed to the fact that the available land was insufficient for the upkeep of the population, and that new land had to be cultivated irrespective of situation or degree of fertility. The pastures which had formerly covered England were daily disappearing before the plough. It was the period of the iniquitous Enclosure Acts, when landlords set their hearts upon enclosing the common lands. Professor Cannan has drawn up an interesting chart to show the close correspondence between the progress of the enclosure movement and the high price of corn.[326]

In 1813 a Commission appointed by the House of Commons to inquire into the price of corn—for the proprietors dreaded the day when the return of peace would allow of importation—came to the conclusion that new lands could not produce corn at a less cost than 80s. a quarter. What an argument for Ricardo’s theory![327]

But is there no possible means of avoiding the cultivation of lands of the second and third order? Intensive cultivation might doubtless do something to swell the returns on the older lands, but only up to a certain point. It would be absurd to imagine that on a limited area of land an unlimited quantity of subsistence can be produced. There must be a limit somewhere—an elastic limit perhaps, and one which the progress of science will push farther and farther away, even beyond our wildest hopes. But the cultivator stops long before this ideal limit is reached, for practice has taught him that the game is not worth the candle, because the outlay of capital and labour exceeds the profits on the return. This practical limit is determined for him by the law of diminishing returns.[328]

That law is indispensable to an understanding of the Ricardian theory, and is implied in Malthus’s theory of population. Its discovery is still earlier, and we have an admirable statement of it in Turgot’s writings: “It can never be imagined that a doubling of expenditure would result in doubling the product.” Malthus, unconsciously no doubt, repeated Turgot’s dictum.[329] It is evident, says he, that as cultivation extends, the annual addition made to the average product must continually diminish.[330] Ricardo witnessed the operation of the law under his very eyes, and he frequently hinted at the decreasing returns yielded by capital successively applied to the same land. Even in cases of that kind, where recourse to new lands was impossible, rents were bound to increase.

Taking again land No. 1, which yields corn at 10s. a bushel, let us imagine that there is an increased demand for wheat. Instead of breaking up land No. 2 an attempt might be made to increase the yield on No. 1, but nothing will be gained by it because the new bushel produced on No. 1 will cost 15s., which is just what it would cost if raised on second-class land. Furthermore, the price will now rise to 15s., and the two bushels will be disposed of for 30s., thus giving the proprietor a rent of 5s., because they have only cost 25s. to produce.[331]

There is still another possibility, however. Resort might be had to emigration and colonists might be encouraged to cultivate the best soils of distant lands, soils equal in fertility to those in the first class. The products of such lands would be got in exchange for the manufactured goods of the home country, to which the law of diminishing returns does not apply. But some account of the cost of transport, which increases the cost of production, must be taken, and this leads to the same result, namely, a rent for those nearest the market, because of the advantages of a superior situation. Distance and sterility, as J. B. Say remarks, are the same thing. If land in America yields corn at 10s. a bushel and freightage equals 5s., it is clear that corn imported into England must sell for 15s.—exactly the same condition of things as if land of the second order had been cultivated, and English landlords of the first class will still draw a rent of 5s. This third possibility was scarcely mentioned by Ricardo, and he could hardly have foreseen the wonderful developments in transportation that took place during the next fifty years, which resulted in a reversal of the law of diminishing returns and the confuting of the prophets.[332]

The great Ricardian theory, prima facie self-evident, is in reality based upon a number of postulates to which we must pay more attention. Some of them must be regarded as economic axioms, but the validity of others is somewhat more doubtful.

In the first place there is the assumption that the produce of lands unequally fertile and representing unequal amounts of labour will always sell at the same price, or, in other words, will always possess the same exchange value. Is this proposition demonstrably sound? It is true when the product in question—for example, corn—is of uniform quality and kind. When the goods offered on the same market are so much alike that it is a matter of indifference to the buyer whether he takes the one or the other, then it is true that he will not pay a higher price for the one than he will for the other. This is what Jevons called the “law of indifference.”[333] In the second place it is implied that this exchange value, uniform for all identical products, is determined by the maximum amount of labour required for its production, or, in other words, by the amount of labour necessary for the production of the more costly portion.

This brings us to the Ricardian theory of value. We know that he considered that the value of everything was determined by the amount of labour necessary for its production.[334] Adam Smith had already declared that value was proportional to the amount of labour employed, but that this was the case only in primitive societies. “In civilised society, on the contrary, there is a still smaller number [of cases] in which it consists altogether in the wages of labour.” Labour was regarded by Smith as one of the factors determining value—though by no means the only one, land and capital being obviously the others.

But Ricardo simplified matters, as abstract thinkers frequently do, by neglecting the last-named factors. This leaves us only labour. Land is dismissed because rent contributes nothing to the creation of value, but is itself entirely dependent upon value.[335] Corn is not dear because land yields rent, but land yields rent because corn is dear. “The clearly understanding this principle is, I am persuaded, of the utmost importance to the science of political economy.” As for capital, why should we make a special factor of it, seeing that it is only labour? Its connotation might be extended so as to include “the labour bestowed not on their immediate production only, but on all those implements or machines required to give effect to the particular labour to which they were applied.”[336] But Ricardo was not thoroughly satisfied with this identification of capital and labour, and, great capitalist that he was, it must have caused him much searching of heart. Furthermore, it was not very easy to apply the conception to such commodities as timber and wine, which increase in value as they advance in age. In a letter to McCulloch he admits the weakness of his theory. After all the study that he had given to the matter, he had to confess that the relative value of commodities appeared to be determined by two causes: (1) the relative quantity of labour necessary for its production; (2) the relative length of time required to bring the commodity to market. He seems to have had a presentiment of the operation of a new and distinct factor, to which Böhm-Bawerk was to ascribe such importance.

The usual method of stating the Ricardian theory of value is to say that value is determined by cost of production. It is also the correct way, inasmuch as he stated it thus himself. It is, however, quite a different thing to say on the one hand that value is determined by labour and on the other that it depends upon the sum of wages and profits (supposing we omit rent).[337] On this point, as on several others, obscurity of thought alone saves Ricardo from the reproach of self-contradiction.

Suppose we proceed a step farther. The statement that value is determined by labour is not enough to account for the phenomenon of rent. Let us imagine a market where three sacks of corn are available for sale. Let us further suppose that the production of each involved a different quantity of labour, one being produced on land that was very fertile, the other on soil that was less generous, etc. Every sack will sell at the same price, but the question is, which of those different quantities of labour is the one that determines the price? Ricardo replies that it is the maximum quantity, and the value of the corn is determined by the value of that sack which is produced under the greatest disadvantages. But why should it not be determined by the value of the sack grown under the most favourable circumstances, or by the value of that other sack raised under conditions of average difficulty?

That is impossible. Let us imagine that the three sacks of corn came from three different kinds of land, A, B, and C, where the necessary quantities of labour were respectively 10, 15, and 20. It is inconceivable that the price should fall below 20, the cost of production of corn grown on C, for if it did C would no longer be cultivated; but the produce of C is ex hypothesi indispensable. The market price cannot rise above 20, for in that case lands of the fourth class would be brought under cultivation, and their yield would be added to the quantity already on the market. The supposition is that the quantity of corn on the market is already sufficient to meet the demand, and the increase in supply would soon cause the price to fall again to the irreducible minimum of 20.

We cannot but admire the ingenuity of a demonstration that seeks to explain a phenomenon like rent—which is a revenue obtained independently of all labour—by the aid of a generalisation which regards labour as the one source of value. But the explanation is ingenious rather than convincing, for it is quite clear that only in the case of one of the sacks do value and amount of labour actually coincide. In the two other instances the quantity of labour and exchange value are absolutely and indefinitely divergent.

Most contemporary economists, while denying that value is solely the product of labour and preferring to regard it as a reflection of human preferences, would willingly recognise the element of truth contained in the Ricardian view. But it must be understood in the sense that competition, although tending to reduce price to the level of cost of production, cannot reduce it below the maximum cost of production, or the price necessary to repay the expenses of producing the most costly portion of the total amount demanded by the market.[338] In this sense it is true not only of agricultural but also of all other products, and it has a wider scope than was at first ascribed to it by its authors. Rent is nowadays recognised as an element which enters into all incomes. But with an extension of sway has gone attenuation, and the term has lost something of its original significance and precision. To-day rent is treated as the outcome of certain favourable conjunctures, which are to be found in all stations in life, and it is no uncommon thing to speak of consumer’s rent even.

The Ricardian theory, moreover, presupposed the existence of a class of land which yielded no rent, the returns which it gave being only just sufficient to cover cost of production. In other words, Ricardo only recognised the existence of differential rents, and dismissed the other cases mentioned by Malthus.

It really seems as if Malthus were in this instance more correct than Ricardo. It is quite possible that in the colonies, for example, there may be lands which yield no rent because of the superabundance of fertile land. Or the same thing may occur in an old country because of the extreme poverty of the land. But it is quite evident that in a society having a certain density of population the mere fact that there exists only a limited amount of land is enough to give to all lands and to their products a scarcity value independent of unequal returns. Nor would the case be materially different if all lands were supposed to be of equal fertility, for who would be willing to cultivate land which only yielded the bare equivalent of the expenses of production?

Ricardo’s unwillingness to recognise this other class of rent, which depends solely upon the limited quantity of land, was due to the fact that it would have contradicted his other theory that there is no value except labour. It is true that he made an exception of some rare “products,” such as valuable paintings, statuary, books, medals, first-class wines, etc., the quantity of which could not be increased by labour. Nobody would have taken any notice of such a slight omission as that, but had he left out such an important item of wealth as the earth itself there would be great danger of the whole theory crumbling to dust.[339]

* * * * *

Such is the theory of rent, celebrated above all economic doctrines, and concerning which it might be said that no doctrine, not even that of Malthus, has ever excited such impassioned criticism. For this there are several reasons.

In the first place, it led to an overthrow of the majesty of the “natural order” by simply depicting some of its gloomier aspects. Men had been led to believe that the “order” was for ever beyond challenge. Now, however, it seemed that if the new doctrine was true then the interests of the landed proprietors were opposed not only to those of every other class in the community—for sharing always begets antagonism—but also to the general interest of society as a whole.

For what are the real interests of proprietors? First, that population and its demands should increase as rapidly as possible in order that men may be forced to cultivate new lands, and that these new lands should be as sterile as possible, requiring much toil and thus causing an increase in rents. Exhaustive labour bestowed upon the cultivation of land that is gradually becoming poorer and poorer would soon make the fortune of every landlord.

As a class, proprietors have every interest in retarding the progress of agricultural science, a paradox which the slightest reflection will show to be true. Every advance in agricultural science must mean more products from the same amount of land and a check upon the law of diminishing returns, resulting in lower prices and reduced rents, since it would no longer be necessary to cultivate the poorer soils. In a word, since rent is measured by reference to the obstacles which thwart cultivation, just as the level of water in a pond is determined by the height of the sluice, everything that tends to lower this obstacle must reduce the rent. In mitigation of this charge it must, however, be noted that, taken individually, every proprietor is of necessity interested in agricultural improvement, because he may have an opportunity of benefiting by larger crops before the improvements have become general enough to lower prices and to push back the margin of cultivation. If every proprietor argued in this way, individual interest would finally cheat itself, to the advantage of the general public. But this is nothing to be very proud of.

Ricardo set out to demonstrate the antagonism,[340] and with what a vigorous pen does he not picture it! The study of this question of rent made of him a Free Trader stauncher than Adam Smith, more firmly convinced than the Physiocrats. Free Trade was for them founded upon the conception of a general harmony of interests, while Ricardo built his faith upon one clearly demonstrated fact—the high price of corn and its concomitant, high rents. Free Trade seemed to be the means of checking this disastrous movement. The free importation of corn implied the cultivation of distant lands as rich as or even richer than any in Britain. All this meant avoiding the cultivation of inferior lands and reducing the high price of corn.

He was also desirous of proving to the proprietors that the practice of free exchange, even though it might involve some loss of revenue to them, was really to their interest. Their opposition, he thought, was very short-sighted. “They fail to see,” he writes, “that commerce everywhere tends to increase production, and that as a result of this increased production general well-being is also improved, although there may be partial loss as the result of it. To be consistent with themselves they ought to try to arrest all improvement in agriculture and manufacture and all invention of machinery.”[341]

The theory of rent, in the second place, endangered the reputation of landowners by showing that their income is not the product of labour, and is consequently anti-social. No wonder that it has been so severely criticised by conservative economists. Ricardo himself, however, seemed quite unconscious of the nature of the blow thus aimed at the institution of private property. His indifference, which appears to us so surprising, is partly explained by the fact that the theory absolved the proprietor from all responsibility in the matter. Unlike profits and wages, rent does not figure in cost of production because it makes no contribution to the price of corn, but is itself wholly determined by that price.[342] The landed proprietor thus appears as the most innocent of the co-partners, playing a purely passive rôle. He does not produce rent, but simply accepts it.

That may be; but the fact that the proprietor plays no part in the production of rent, whilst exonerating him from complicity in its invidious consequences, spells ruin to his title of proprietor—that is, if we consider labour to be the only title to proprietorship. It was just this aspect of the question that drew the attention of Ricardo’s contemporary James Mill. Mill advocated the confiscation of rent or its socialisation by means of taxation.[343] He thus became a pioneer in the movement for land nationalisation, a cause that has since been championed by such writers as Colins, Gossen, Henry George, and Walras.

Finally, the theory of rent seems to give colour to certain theories which predict an extremely dark future for the race, corroborating the gloomy forebodings of Malthus. As society grows and advances it will be forced to employ lands that are less fertile and means of production that are more onerous. It seems as if the curse uttered in Genesis has been scientifically verified. “Thorns also and thistles shall it bring forth to thee; … in the sweat of thy face shalt thou eat bread.”

True, he did not carry his pessimism so far as to say that as the result of this fatal exhaustion of this most precious instrument of production the progress of mankind would for ever be arrested by the ravages of famine. Other beneficent forces, the progress of agricultural science and a larger employment of capital, would surmount the difficulty. “Although the lands that are actually being cultivated may be inferior to those which were in cultivation some years ago, and consequently production is becoming more difficult, can anyone doubt that the quantity of products does not greatly exceed that formerly produced?”

Ricardo’s theory does not involve a denial of progress. But it shows how the struggle is becoming more and more difficult, and how scarcity and want, if not actual famine, must lie in the path along which we are advancing. Suppose Great Britain were now to attempt to feed her 45 million inhabitants from her own soil, would there be much doubt as to the correctness of Ricardo’s prophecy?

It is an easy matter to reproach Ricardo[344] with his failure to foresee the remarkable development in the methods of transport and cheap importation which resulted in the arrest, if not the reversal, of the upward movement of the rent curve. The complaints of landlords both in England and Europe seem to belie the Ricardian theory.[345] But who can tell whether the peril is finally removed or not? The inevitable day will arrive when new countries will consume the corn which to-day they export. This may not come about in the history of England and Europe for some centuries yet, but when it does happen, rent, instead of being stationary and retrogressive, as it has been so long, will again resume its upward trend.

It is true that we may reckon upon the aid of agricultural science even if foreign importation should fail us. Ricardo was ever mindful of the great possibilities of human industry. Other economists, notably Carey and Fontenay, one of Bastiat’s disciples, have propounded a theory which is the exact antithesis of the Ricardian, namely, that human industry in its utilisation of natural forces always begins with the feeblest as being more easily tamed, the more powerful and recalcitrant forces only coming in for attention later on. The earth is no exception to the rule, and agricultural industry might well become not less but more productive.

This thesis, which implies a negation of the law of diminishing returns, is based upon a very debatable analogy.

When speaking of the future of industry it is well to remember that forces now seldom used, and perhaps seldom thought of, such as the energies liberated by chemical and intermolecular action, may hold infinite resources in reserve for mankind. But agriculture is different. Admitting that with nitrogen got from the atmosphere, or with phosphorus extracted from the subsoil, we may enrich the land indefinitely, still we are continually confronted with the limitations of time and space, which must determine the development of living things, and of agricultural products among them. When albumen can be scientifically produced then will the Ricardian theory become obsolete. Until then it holds the field.

2. OF WAGES AND PROFITS

Let us now approach these two laws of Malthus and Ricardo—the law of population and the law of rent—and ask what effect they are likely to have upon the condition of the worker and the amount of his wages. The answer is not very reassuring. On the one hand there is an indefinite increase in the numbers of the proletariat—the result of unchecked procreation, for “the moral restraint” can hardly be said to have influence at all. The inevitable result is the degradation of human labour. On the other hand, the law of diminishing returns causes a continuous rise in the price of necessaries. Between low wages on the one hand and high prices on the other, the worker feels himself crushed as between the hammer and the anvil.

Turgot had long since given utterance to the tragic thought that the wages of the worker are only just sufficient to keep him alive. His contemporary Necker gave expression to the view in terms still more melancholy. “Were it possible,” writes Necker, “to discover a kind of food less agreeable than bread but having double its sustenance, people would then be reduced to eating only once in two days.” These must be looked upon as mere isolated statements, sufficiently well attested by contemporary facts, perhaps, but laying no claim to be considered general, permanent, and inevitable laws such as Ricardo and Malthus would have regarded them.

And Ricardo still more emphatically declares that “the natural price of labour is that price which is necessary to enable the labourers one with another to subsist and to perpetuate their race without either increase or diminution.” Note the last words, “without increase or diminution”; that is, if a working man has more children than are necessary for replacing their parents, then their wages will fall below the normal rate until increased mortality shall have again established equilibrium.

This is not tantamount to saying that nominal wages measured in terms of money cannot increase. Indeed, it is absolutely necessary that they should increase, seeing that the price of commodities is continually rising. If they were to remain the same the workman would soon be reduced to starvation. Wages accordingly will show a tendency to rise in sympathy with the rising price of corn, so that the workman will always be able to procure just the same quantity of bread, no more and no less. It is his real wages measured in corn that remain stationary, and upon this depends the well-being of the working class.

But do they really remain stationary? Ricardo does not seem to think so. “In the natural advance of society the wages of labour will have a tendency to fall, as far as they are regulated by supply and demand; for the supply of labourers will continue to increase at the same rate, whilst the demand for them will increase at a slower rate.”[346]

It is even possible that an increase in nominal wages may hide a decrease in real wages. In that case, of course, wages will appear to rise, but “the fate of the labourer will be less happy; he will receive more money wages it is true, but his corn wages will be reduced.” Only when the working classes are sufficiently thoughtful to limit the number of their children will it be possible to hope for a preservation of the status quo. “It is a truth which admits not a doubt, that the comforts and well-being of the poor cannot be permanently secured without some regard on their part or some effort on the part of the legislature to regulate the increase of their numbers, and to render less frequent among them early and improvident marriages.”

In other words, there will always be a demand for a certain number of individuals in order to supply the needs of industry. So long as this indispensable minimum is not exceeded the wages even of the very lowest order must be sufficient to maintain existence, for they must all be kept alive at any rate. But should the working population exceed this demand nothing can prevent wages falling even below the minimum necessary for existence, for there will no longer be any necessity for keeping them all alive.

It must be remarked here that on this question, as on that of rent, Malthus is less pessimistic than Ricardo. Far from maintaining that every rise in wages of necessity involves an excess of population and a consequent lowering of wages, Malthus believed that a capacity for forethought, which constitutes the most efficacious check upon the operation of blind instinct, may be engendered even among the working classes, and that a high standard of life once secured may become permanent. All this may be very true, but the reasoning involves us in a vicious circle. In order that a high rate of wages may produce its beneficial effects it must first of all be established, but how can it possibly be established as long as the working classes remain steeped in the misery caused by not exercising this forethought?

An exit from the circle is only possible by recalling the fact that the market wage incessantly oscillates about the natural wage according to the exigencies of demand and supply. If this accidental rise could be prolonged a little it might become permanent and modify the workman’s standard of life.[347]

Such is the law of wages, which has long since passed into an axiom, and whose authority is invoked in every discussion on social reform. To every socialistic scheme, to every proposal for social reform, there is always one answer: “There is no means of improving the lot of the worker except by limiting the number of his children. His destiny is in his own hands.”[348] Latter-day socialism, commencing with Lassalle, makes a careful study of the law, and returns to the charge against the existing economic order by affirming that in no respect is it a natural law, but merely a result of the capitalist régime, upon which it supplies an eloquent commentary.

We must not fail to note that in the Ricardian theory there is not what we can exactly call antagonism between the landed proprietor and the proletarian. To the latter it is a matter of indifference whether rents be high or low, for his money wages move in sympathy with the price of corn, but his real wages never change. The proprietor on his side is equally indifferent to rising or falling wages, for they never affect his receipts. His rent, as a matter of fact, is determined by the quantity of labour employed on the least fertile lands, but this quantity of labour has nothing to do with the rate of wages. The landlords are the grandees of a different order.[349]

The real struggle lies between capitalist and worker. Once the value of corn has been determined by the cost of producing it on the least favoured land, the proprietor seizes whatever is over and above this, saying to both worker and capitalist, “You can divide the rest between you.” This clearly is Ricardo’s view.[350] “Whatever raises the wages of labour lowers the profits of stock.” Wages can only rise at the expense of profits, and vice versa—a terrible prophecy that has been abundantly illustrated by the fortunes of the labour movement, but never more clearly than at the present moment.

But the mere statement of the fatal antagonism between capitalist and workman must have caused both grief and surprise to those economists who had endeavoured to demonstrate the solidarity of interests between them as between brothers. Bastiat was one of these, and he tried to show that in the course of economic evolution the share of each factor tends to grow, but that labour’s shows the greatest increase.

There can be no objection to Ricardo’s method of stating the law. The whole thing is so evident that it is almost a truism. A cake is being shared between two persons. If one gets more than his due share is it not evident that the other must get less? It may be pointed out, on the other hand, that the amount available for distribution is continually on the increase, so that the share which each participant gets may really be growing bigger. But that is hardly the problem to be solved.[351] Increase the cake tenfold, even a hundredfold, but if one person gets more than half of it the other must have less. Ricardo’s implication is just that. His law deals with proportions and not with quantities.

Admitting that the proportion which one of the two factors receives can be increased only if the other is lessened, the problem is to discover which of the two, capital or labour, has the bigger portion. It really seems as if it were labour, for Ricardo speaks of another law of profits, namely, “the tendency of profits to a minimum.” Here is another thesis which has had a long career in the history of economics, but what are the reasons that can be adduced in support of it? The natural tendency of profits, then, is to fall; “for in the progress of society and wealth the additional quantity of food required is obtained by the sacrifice of more labour.” It is determined by the same cause as determined rent—the system is a solid piece of work at any rate.

But how does the cultivation of inferior land affect the rate of profits? We have already seen how the worker’s share, the minimum necessary for keeping body and soul together, goes to swell the high price of corn.[352] But the manufacturer cannot transfer the cost of high wages to the consumer, for the rate of wages has no effect on prices. (Labour has, but wages have none.) As a consequence, the capitalist’s share must be correspondingly reduced. We must remember that the workman gains nothing by the high rate of wages, for his consumption of food is limited by nature, but this does not hinder the capitalist losing a great deal by it.

And so there must come a time when the necessary wage will have absorbed everything and nothing will remain for profit. There will be a new era in history, for every incentive to accumulate capital will disappear with the extinction of profit. Capital will cease growing, no new lands will be cultivated, and population will be brought to a sudden standstill.[353] The stationary state with its melancholy vistas will be entered upon. Mill has described it in such eloquent terms that we are almost reconciled to the prospect. But it could hardly have been a pleasant matter for Ricardo, who was primarily a financier and had but little concern with philosophy. He was very much attached to his prophecies, and there is a delicate piece of irony in the thought that the tendency of profits towards a minimum should have been first noted by this great representative of capitalism. At the same time he felt a little reassured when he thought of the opposing forces which might check its downward trend and arrest the progress of rent. In both instances the best corrective seemed to lie in the freedom of foreign trade.

The general lines of distribution are presented to us in a strikingly simple fashion. The demonstration is neater even than the famous Tableau économique, and it has the further merit of being nearer the actual facts as they appeared in Ricardo’s day, for they are no longer quite the same. It may be represented by means of a diagram consisting of three lines.

At the top is an ascending line representing rent—the share of Mother Earth. The proprietor’s rent reveals a double increase both of money and kind, for as population and its needs grow it requires an increasing quantity of corn at an increased price. Still, the high price cannot be indefinitely prolonged, for beyond a certain point a high price of corn would arrest the growth of population and at the same time the growth of rent; then it would no longer be necessary to cultivate new lands.

In the middle is a horizontal line representing wages—labour’s share. The real wages of labour remain stationary, for it simply receives the quantity of corn necessary to keep it alive. It is true that as the corn is gradually becoming dearer the worker’s nominal wages increase, but with no real benefit to him.

Below this is a descending line representing profits—capital’s share.[354] It shows a downward trend for the simple reason that it finds itself squeezed between the proprietor’s share, which tends to increase, and the labourer’s, which is stationary. The capitalist is brought to our notice in the guise of an English farmer who is obliged to raise his servants’ wages as the corn becomes dearer, but who gains nothing by this rise because the extra revenue is taken by the proprietor in the form of higher rent. But profits cannot fall indefinitely, for beyond a certain point it would involve an end to the employment of old capital and the formation of new capital. This would hinder the cultivation of new lands, and would arrest the high price of corn and lower rent.

3. THE BALANCE OF TRADE THEORY AND THE QUANTITY THEORY OF MONEY

Such are the more characteristic of Ricardo’s doctrines—at any rate, those that left the deepest impression upon his successors and caused the greatest stir among his contemporaries. There are other doctrines besides which, regarded as contributions to the science, are much more important and more definite; but just because they figured almost directly in the category of universally accepted truths whose validity and authorship have never been questioned they have contributed less to his fame. Such are his theories of international trade and banking, where the theorist becomes linked to a first-rate practical genius. Here at any rate there is no note of pessimism and no suggestion of conflicting interests. On the contrary, he was able to point out that “under a system of perfectly free commerce the pursuit of individual advantage is admirably connected with the universal good of the whole.”

In the matter of international trade he showed himself a more resolute Free Trader than either Smith or the Physiocrats. It seemed to him that the only way of arresting the terrible progress of rent and of checking the rising price of corn and the downward tendency of profits was by the freest importation of foreign corn.[355]

In addition to this twofold argument in favour of Free Trade, Ricardo brings forward another which is of considerable importance even at the present time. This argument is based upon the advantages which accrue from the territorial division of labour. “By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by Nature, it distributes labour most effectively and most economically.”

It may be worth while remarking that his illustrious contemporary Malthus remained more or less of a Protectionist.[356] It might seem strange that Malthus, continually haunted as he was by the spectre of famine, should refuse to welcome importation. But his point of view was doubtless largely that of the modern agricultural Protectionist, who believes that the surest way of preserving a country from famine is not to abandon its agriculture to the throes of foreign competition, but, on the contrary, to strengthen and develop the home industry by securing it a sufficiently high price for its products. We must also remember that Malthus’s theory of rent differed somewhat from Ricardo’s, and that he was not so violently opposed to State intervention.[357]

But Ricardo’s principal contribution to the science was his discovery of the laws governing the movements of commodities and the counter-movements of money from one place to another, and the admirable demonstration which he has given us of this remarkable ebb and flow.

As soon as the balance of commerce becomes unfavourable to France, let us say—that is, as soon as importation exceeds exportation say by £1,000,000—money is exported to pay for this excessive importation. Money becomes scarce, its value rises, and prices fall. But a fall in price will check foreign importation and will encourage exportation, so that imports will show signs of falling off while exports will grow. Money will no longer be sent abroad, and the current will begin to run the other way, until the £1,000,000 sent abroad is returned again. Moreover, the £1,000,000 sent abroad will cause a movement in the opposite direction—superabundance and a depreciation in the value of money, high prices, a premium on importation and a check upon exportation. Accordingly economic forces on both sides will conspire to bring back the balance of commerce to a position of equilibrium—that is, to that position where each country will possess just the quantity of money that it needs.

It might be pointed out, on the other hand, that this somewhat complicated mechanism can only operate very slowly, and that considerable time must elapse before the prices of goods begin to respond to the change in the quantity of money. But as a matter of fact it is not necessary to wait until this phenomenon becomes established, for another striking feature precedes it and announces its approach so to speak, and this is, as Smith had already noted, a change in the value of bills drawn on foreign countries. The foreign exchanges are so sensitive that the slightest rise is enough to stimulate exportation and to check importation.

Accordingly money seldom leaves a country, or only leaves it for a short time. In other words, contrary to the generally accepted opinion, silver and gold in international trade do little more than oil the wheels of commerce. The trade is carried on as if the metals were non-existent. In short, it is essentially of the nature of barter.[358]

The explanation is very schematic. Every incidental phenomenon is omitted, and the whole theory implies the validity of the quantity theory of money, which is now open to considerable criticism as being altogether inadequate for an explanation of the facts involved. But this theory of the automatic regulation of the balance of trade by means of variations in the value of money, although already hinted at by Hume and Smith, is none the less a discovery of the first order, and one that has done service as a working hypothesis for a whole century.[359]

Its explanation turns upon a particular theory of international trade which we can only mention in passing, but which we shall find more fully developed in Stuart Mill’s theory of international values.

4. PAPER MONEY, ITS ISSUE AND REGULATION

The enunciation of the principles which should govern the conduct of bankers in issuing paper money is another debt that we owe to the genius of Ricardo. The Bank Act of 1822, and that of 1844 especially, which laid down the future policy of the Bank of England, represent an attempt on the part of the Government to put his principles into practice.

Ricardo was an eye-witness of the great panic of February 26, 1797, when the reserves of the Bank of England fell from ten millions to a million and a half, necessitating an Order in Council suspending cash payments. The suspension, which was supposed to be a temporary expedient, extended right up to 1821. The depreciation in the value of the bank-note averaged about 10 per cent., but at one period towards the end of the Napoleonic wars it rose as high as 30 per cent. He also witnessed the suffering which such depreciation caused. Landlords demanded the payment of their rents in gold, or claimed an increase in the rent equal to the fall in the value of the note.

Ricardo tried to unravel the causes of this depreciation in his pamphlet entitled The High Price of Bullion, published in 1809, and came to the conclusion that there was only one cause, namely, an excessive supply of paper. At this distance of time it might not be thought such an extraordinary discovery after all. Still, he had the greatest difficulty in getting people to admit this, and in refuting the absurd explanations which had previously been suggested. He showed how a depreciation in the value of the note necessarily resulted in the exportation of gold, although most of his contemporaries, on the contrary, believed that the exportation of gold was the cause of all the mischief which they sought to check by an Act of Parliament. “The remedy which I propose for all the evils in our currency is that the Bank should gradually decrease the amount of their notes in circulation until they shall have rendered the remainder of equal value with the coins which they represent, or in other words till the prices of gold and silver bullion shall be brought down to their Mint price.”[360]

But if that is the case why not cut the Gordian knot and suppress paper money altogether? The reply shows how well Ricardo had studied Smith: “A well-regulated paper currency is so great an improvement in commerce that I should greatly regret if prejudice should induce us to return to a system of less utility.” “The introduction of the precious metals for the purposes of money may with truth be considered as one of the most important steps towards the improvement of commerce and the arts of civilised life; but it is no less true that with the advancement of knowledge and science we discover that it would be another improvement to banish them again from the employment to which, during a less enlightened period, they had been so advantageously applied.”[361]

Proceeding, he points out that where you have only metallic money it might happen that the production of gold fails to keep pace with the growth of population, in which case you have a rise in the value of gold accompanied by a fall in prices. This danger might be obviated by a careful issue of notes in accordance with the demands of society. In short, Ricardo is so little disposed to abandon the system of paper money and to return to the previous system of metallic money that, on the contrary, he would prefer to abolish the metallic system altogether, taking good care that paper money did not become superabundant.

So convinced was he of the superiority of paper money that he had no desire to see the Bank resume cash payment. The result of the resumption would be a demand on the part of the public for a conversion of their paper money, “and thus, to indulge a mere caprice, a most expensive medium would be substituted for one of little value.”

But if the notes are not convertible into cash, what is there to guarantee their value or to regulate their issue and prevent depreciation? This can be done merely by keeping a reserve of gold at the bank, not necessarily in the form of money, but in the form of ingots. The bank would not be allowed to issue any notes beyond the value of these ingots. This regulation would have the effect of keeping the value of the note at par, for bankers and money-dealers would immediately proceed to convert these notes into gold as soon as they showed any signs of depreciation. This would not mean, however, that the public at large would again return to the use of metallic money, for these ingots would be of little use for purposes of everyday life.

It is a curious system. One would hardly expect the great champion of Liberal political economy to outline a banking system which could only operate through a State bank. This was clearly his opinion, however. He declared himself utterly opposed to the free banking system, and doubted the ability of such a system to regulate the currency. “In that sense there can be no excess whilst the bank does not pay in specie, because the commerce of the country can easily employ and absorb any sum which the bank may send into circulation.”[362] This shows what little confidence a Liberal individualist like Ricardo had in the liberty of individuals and their ability to judge of the kind of money that is most serviceable.

* * * * *

Ricardo’s disciples are legion, and among them is every economist of standing of the earlier part of the nineteenth century. The best known among these are the three writers who immediately follow him in chronological order: James Mill, the father of John Stuart Mill (Elements of Political Economy, 1821), his friend McCulloch (Principles of Political Economy, 1825), and Nassau Senior (Political Economy, 1836).

The two first-named writers contented themselves with a vigorous defence of the master’s views without contributing anything very new. We have already referred to the very different conclusions which James Mill draws from the theory of rent, and how he became an advocate of land nationalisation. McCulloch also was one of the earliest advocates of the right to strike.

Senior deserves a few pages to himself, for his work in systematising the Classical doctrines. We shall deal with him in our chapter on John Stuart Mill.

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II. THE ANTAGONISTS

With the completion of the work of Say, Malthus, and Ricardo it really seemed as if the science of political economy was at last definitely constituted.

It would, of course, be extravagant to imagine that these three writers were unanimous on all questions. There were several points that still remained obscure, and more than one theory that was open to discussion. Despite its apparent rigidity, it would not have required much critical ability to detect flaws in the symmetrical doctrine so recently elaborated and to predict its ultimate discredit.

Hardly, indeed, was their task completed before the new doctrine found itself subjected to a most formidable attack, which was simultaneously directed against it from all points of the compass. The criticisms and objections advanced against the new science of political economy form the subject-matter of this second book.

First comes Sismondi, a purely critical mind, with a haunting catalogue of the sufferings and miseries resulting from free competition. Spirits still more daring will essay the discovery of new principles of social organisation. The Saint-Simonians will demand the suppression of private property, the extinction of inheritance, and the centralised control of industry by the arm of an omniscient government. The voluntary socialists—Owen, Fourier, Louis Blanc—will claim the substitution of voluntary co-operation for personal interest. Proudhon will dream of the reconciliation of liberty and justice in a perfect system of exchange from which money shall be excluded. Finally, the broad cosmopolitanism of the Classical writers is to find a formidable antagonist in Friedrich List, and a new Protectionism, based on the sentiment of nationality, is to regild the old Mercantilism which seemed so hopelessly battered under the blows of Adam Smith and the Physiocrats.

These very diverse doctrines, along with much that is fanciful and erroneous, contain many just ideas, many original conceptions. They never succeeded in supplanting the doctrine of the founders; but they demonstrated, once for all, that the science, apparently complete, was in reality far from perfection. To the Orthodox school they flung the taunt which Hamlet cast at Horatius: “There are more things in heaven and earth than are dreamt of in your philosophy.” In this way fruitful discussions were frequently raised, and the public proved sympathetic listeners. The economists who were still faithful to the Classical creed began to doubt the validity of their deductions and were forced to modify their methods and to overhaul their conclusions.

Let us now attempt to realise the importance of the part which these critics played.

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I. SISMONDI AND THE ORIGINS OF THE CRITICAL SCHOOL

The first thirty years of the nineteenth century witnessed profound transformations in the structure of the economic world.

Economic Liberalism had everywhere become triumphant. In France the corporation era was definitely at an end by 1791. Some manufacturers, it is true, demanded its re-establishment under the First Empire; but they were disappointed, and their demands were never re-echoed. In England the last trace of the Statute of Apprentices, that shattered monument of the Parliamentary régime, was removed from the Statute Book in 1814. Nothing remained which could possibly check the advent of laissez-faire. Free competition became universal. The State renounced all rights of interference either with the organisation of production or with the relations between masters and men, save always the right of prohibiting combinations in restraint of trade, and this restriction was upheld with a view to giving free play to the law of demand and supply. In France the Penal Code of the Empire proved as tyrannous as the old régime or the Revolution; and although freedom of combination was granted in England by an Act of 1825, the defined limits were so narrow that the privilege proved quite illusory. The general opinion of the English legislator is well expressed in the report of a Commission appointed by the House of Commons in 1810, quoted by Mr. and Mrs. Webb.[363] “No interference of the legislature with the freedom of trade, or with the perfect liberty of every individual to dispose of his time and of his labour in the way and on the terms which he may judge most conducive to his own interest, can take place without violating general principles of the first importance to the prosperity and happiness of the community.” In both countries—in England as well as in France—a régime of individual contract was introduced into industry, and no legal intervention was allowed to limit this liberty—a liberty, however, which really existed only on the side of the employers.

Under this régime the new manufacturing industry, born of many inventions, was wonderfully developed. In Great Britain Manchester, Birmingham, and Glasgow, in France Lille, Sedan, Rouen, Elbeuf, Mulhouse, became the chosen centres of large-scale production.

Alongside of these brilliant successes we have two new phenomena which were bound to draw the attention of observers and to invite the reflection of the thoughtful. First we have the concentration in the great centres of wealth of a new and miserable class—the workers; and, secondly, we have the phenomenon of over-production.

Factory life during the earlier half of the nineteenth century has been the subject of countless treatises, and attention has frequently been drawn to the practice of employing children of all ages under circumstances that were almost always unhealthy and often cruel,[364] to the habit of prolonging the working day indefinitely, to the inadequate wages paid, to the general ignorance and coarseness of the workers, as well as to the deformities and vices which resulted under such unnatural conditions. In England, medical reports, House of Commons inquiries, and the speeches and publications of Owen aroused the indignation of the public, and in 1819 an Act of Parliament was passed limiting the hours of work of children in cotton factories. This, the first rudiment of factory legislation, was to be considerably extended during the course of the century. J. B. Say, who in 1815 was travelling in England, declared that a worker with a family, despite efforts often of an heroic character, could not gain more than three-quarters and sometimes only a half of what was needed for his upkeep.[365]

In France we must wait until 1840 to find in the great work of Dr. Villermé a complete description of the heartrending life of the workers and the martyrdom of their children. Here, for example, we learn that “in some establishments in Normandy the thong used for the punishment of children in the spinner’s trade appears as an instrument of production.”[366] Even before this, in an inquiry into the state of the cotton industry in 1828, the Mulhouse masters expressed their belief that the growing generation was gradually becoming enervated under the influence of the exhaustive toil of a day of thirteen or fifteen hours.[367] The Bulletin of the Industrial Society of Mulhouse of the same year states that in Alsace, among other places, the general working day averaged from fifteen to sixteen hours, and sometimes extended even to seventeen hours.[368] And all evidence goes to show that things were equally bad, if not worse, in other industrial towns.[369]

Crises supplied phenomena no less disquieting than the sufferings of the proletariat. In 1815 a first crisis shook the English market, throwing a number of workmen on to the street and resulting in riots and machine-breaking. It arose from an error of the English manufacturers, who during the war period had been forced to accumulate the stocks which they could not export, so that on the return of peace their supplies far exceeded the demands of the Continent. In 1818 a new commercial panic, followed by fresh riots, again paralysed the English market. In 1825 a third and more serious crisis, begot probably of the extensive credit given to the newly opened markets of South America, caused the failure of about seventy English provincial banks, bringing much ruin in its train, as well as a shock to several neighbouring countries. During the whole of the nineteenth century similar phenomena have recurred with striking regularity, involving ruin to ever-widening areas, as production on a large scale has extended its sway. No wonder some people were driven to inquire whether the economic system beneath all its superficial grandeur did not conceal some lurking flaw or whether these successive shocks were merely the ransom of industrial progress.

Poverty and economic crises were the two new facts that attracted immediate attention in those countries where economic liberty had secured its earliest triumphs; and no longer could attention be diverted from them. Henceforth they were incessantly employed by writers of the most various schools as weapons against the new régime. In many minds they gradually engendered a want of confidence in the doctrines of Adam Smith. With some philanthropic and Christian writers they provoked sentimental indignation and aroused the vehement protest of humanity against an implacable industrialism which was the source of so much misery and ruin. With others, especially with the socialists, who pushed criticism to much greater lengths, even to an examination of the institution of private property itself, they resulted in a demand for the complete overthrow of society. All critics whatsoever rejected the idea of a spontaneous harmony between private and public interests as being incompatible with the circumstances which we have just mentioned.

Among such writers no one has upheld the testimony of these facts more strongly than Sismondi.[370] All his interest in political economy, so far as theory was concerned, was summed up in the explanation of crises, so far as practice, in the amelioration of the condition of the workers. No one has sought the explanation or striven for the remedy with greater sincerity. He is thus the chief of a line of economists whose works never ceased to exercise influence throughout the whole of the nineteenth century, and who, without being socialists on the one hand or totally blind to the vices of laissez-faire on the other, sought that happy mean which permits of the correction of the abuses of liberty while retaining the principle. The first to give sentiment a prominent place in his theory, his work aroused considerable enthusiasm at the time, but was subjected to much criticism at a later period.

I: THE AIM AND METHOD OF POLITICAL ECONOMY

Sismondi began his career as an ardent supporter of economic Liberalism. In 1803, the year that witnessed the production of Say’s treatise, he published an exposition of the ideas of Adam Smith in a book entitled La Richesse commerciale, a volume which achieved a certain measure of success. During the following years he devoted himself to work exclusively historical, literary, or political, and he only returned to the study of political economy in 1818. “At this period,” he writes, “I was keenly interested in the commercial crises which Europe had experienced during the past years, and in the cruel sufferings of the factory hands, which I myself had witnessed in Italy, Switzerland, and France; and which, according to public reports, were at least equally bad in England, Belgium, and Germany.”[371] It was at this moment that he was asked to write an article on political economy for the Edinburgh Encyclopædia. Upon a re-examination of his ideas in the light of these new facts he found to his surprise that his conclusions differed entirely from those of Adam Smith. In 1819 he travelled in England, “that wonderful country, which seems to have undergone a great experience in order to teach the rest of the world.”[372] This seemed to confirm his first impressions. He took the article which he had contributed to the Encyclopædia and developed it. From this work sprang the treatise which appeared in 1819 under the significant title of Nouveaux Principes d’Économie politique and made him celebrated as an economist. His path was already clear. His want of agreement with the predominant school in France and England was further emphasised by the appearance of his studies in economics,[373] in which he illustrates and confirms the ideas already expounded in the Nouveaux Principes by means of a great number of descriptive and historical studies bearing more especially upon the condition of the agriculturists in England, Scotland, Ireland, and Italy.

Sismondi’s disagreement was not upon the theoretical principles of political economy. So far as these were concerned he declared himself a disciple of Adam Smith.[374] He merely disagreed with the method, the aim, and the practical conclusions of the Classical school. We will examine his arguments on each of these points.

First of all as regards method. He draws an important distinction between Smith and his followers, Ricardo and J. B. Say. “Smith,” says he, “attempted to study every fact in the light of its own social environment,” and “his immortal work is, indeed, the outcome of a philosophic study of the history of mankind.”[375] Towards Ricardo, who is accused of having introduced the abstract method into the science, his attitude is quite different, and much as he admired Malthus, who, “possessed of a singularly forceful and penetrative mind, had cultivated the habit of a conscientious study of facts,”[376] still his spirit shrank from admitting those abstractions which Ricardo and his disciples demanded from him.[377] Political economy, he thought, was best treated as a “moral science where all facts are interwoven and where a false step is taken whenever one single fact is isolated and attention is concentrated upon it alone.”[378] The science was to be based on experience, upon history and observation. Human conditions were to be studied in detail. Allowance was to be made for the period in which a man lived, the country he inhabited, and the profession he followed, if the individual was to be clearly visualised and the influence of economic institutions upon him successfully traced. “I am convinced,” says he, “that serious mistakes have ensued from the too frequent generalisations which have been made in social science.”[379]

This criticism was levelled not only at Ricardo and McCulloch, but it also included J. B. Say within its purview, for Say had treated political economy as an exposition of a few general principles. It also prepared the way for that conception of political economy upon the discovery of which the German Historical school so prided itself at a later date. Sismondi, himself an historian and a publicist interested in immediate reforms, could not fail to see quite clearly the effects that social institutions and political organisation were bound to have upon economic prosperity. A good illustration of his method is furnished by his treatment of the probable effects of a complete abolition of the English Corn Laws. The question, he remarks, could not be decided by theoretical arguments alone without taking some account of the various methods of cultivating the soil. A country of tenant farmers such as England would find it difficult to meet the competition of feudal countries such as Poland or Russia, where corn only costs the proprietor “a few hundred lashes judiciously bestowed upon the peasants.”[380]

Sismondi’s conception of economic method is incontestably just so long as the economist confines himself to the discussion of practical problems or attempts to gauge the probable effects of a particular legislative reform or is unravelling the causes of a particular event. But should the economist wish to picture to himself the general aspect of the economic world, he cannot afford to neglect the abstract method, and Sismondi himself was forced to have recourse to it. It is true that he used it with considerable awkwardness, and his failure to construct or to discuss abstract theories perhaps explains his preference for the other method. At any rate it does partly explain the keen opposition which his book aroused among the partisans of what he was the first to call by the happy title of the “Orthodox” school.

But to imagine anything more confused than the reasonings by which he attempts to demonstrate the possibility of a general crisis of over-production is difficult.[381] For his point of departure he takes the distinction between the annual revenue and the annual production of a country. According to him the revenue of one year pays for the production of the following.[382] Accordingly, if the production of any one year exceeds the revenue of the previous year a portion of the produce will remain unsold and producers will be ruined. Sismondi reasons as if the nation were composed of agriculturists who buy the manufactured goods they need with the revenue received from the sale of the present year’s crop. Consequently if manufactured products are superabundant, the agricultural revenue will not be enough to pay a sufficient price.

But within the argument there lurks a twofold confusion. At bottom a nation’s annual revenue is its annual produce, and the one cannot be less than the other. Moreover, it is not the produce of two different years that is exchanged, but the various products of the same year, or rather (for this subdivision of the movements of the economic world into annual periods has no counterpart in actual life) it is the different products created at every moment that are being continually exchanged, thus constituting a reciprocal demand for one another. At any one moment there may be too many or too few products of a certain kind, resulting in a severe crisis in one or more industries. But of every product, at one and the same time, there can never be too much. McCulloch, Ricardo, and Say victoriously upheld this view against Sismondi.[383]

It is not only on the question of method, but still more on the question of aim, that Sismondi finds himself in opposition to the Classical school. To them political economy was the science of wealth, or chrematistics, as Aristotle called it. But the real object of the science should be man, or at least the physical well-being of man. To consider wealth by itself and to forget man was a sure way of making a false start.[384] This is why he gave such prominence to a theory of distribution alongside of the theory of production, which had received the exclusive attention of the Classical writers. The Classical school, it is true, might have retorted that they gave first place to production because the multiplication of products was a sine qua non of all progress in distribution. But Sismondi regarded it otherwise. Wealth only deserves the name when it is proportionately distributed. He could not conceive of an abstract treatment of distribution, and consequently could not appreciate it. In his own treatment of distribution he devoted a special section to the “poor,” who live by their labour and toil from morn till eve in field or workshop. They form the bulk of our population, and the changes wrought in their way of life by the invention of machinery, the freedom of competition, and the régime of private property was what interested him most. “Political economy at its widest,” he says, “is a theory of charity, and any theory that upon last analysis has not the result of increasing the happiness of mankind does not belong to the science at all.”[385]

What really interested Sismondi was not so much what is called political economy, but what has since become known as économie sociale in France and Sozialpolitik in Germany. His originality, so far as the history of doctrines is concerned, consisted in his having originated this study. J. B. Say scorned his definitions, so different were they from his own. “M. de Sismondi refers to political economy as the science charged with guarding the happiness of mankind. What he wishes to say is that it is the science a knowledge of which ought to be possessed by all those who are concerned with human welfare. Rulers who wish to be worthy of their positions ought to be acquainted with the study, but the happiness of mankind would be much jeopardised if, instead of trusting to the intelligence and industry of the ordinary citizen, we trusted to governments.”[386] And he adds: “The greater number of German writers, by following the false notions spread by the Colbertian system, have come to regard political economy as being purely a science of administration.”

II: SISMONDI’S CRITICISM OF OVER-PRODUCTION AND COMPETITION

Deceived as to the best method to follow, mistaken in its conception of the nature of the object to be kept in view, it is not surprising that the “Chrematistic school” should have gone astray in its practical conclusions. The teaching of the school gave an undoubted incentive to unlimited production, for it was loud in its praise of free competition. It preached the doctrine of harmony of interests, and considered that the best form of government was no government at all. These were the three essential points to which Sismondi took exception.

First as regards its immoderate enthusiasm for production. According to the Classical writers, the general growth of production presented no inconvenience, thanks to that spontaneous mechanism which immediately corrected the errors of the entrepreneur if he in any way under-estimated the necessities of demand. Falling prices warned him against a false step and influenced him in directing his efforts towards other ends. In a similar way rising prices proved to the producers that supplies were insufficient and that more must be manufactured. Hence the evils committed would always be momentary and transient.

To this Sismondi replied: If instead of reasoning in this abstract fashion economists had considered the facts in detail, if instead of paying attention to products they had shown some regard for man, they would not have so light-heartedly supported the producers in their errors. An increased supply, if supply were already insufficient to meet a growing demand, would injure no one, but would be profitable for all. That is true. But the restriction of an over-abundant supply when the needs grow at a less rapid rate is not so easily accomplished. Does anyone think that capital and labour could on the morrow, so to speak, leave a declining industry in order to engage in another? The worker cannot quickly leave the work he lives by, to which he has served a long and costly apprenticeship, and wherein he is distinguished for a professional skill that will be lost elsewhere. Rather than consent to leave it, he will let his wages fall, he will prolong the working day, remaining at work for fourteen hours, and will toil during those hours that would otherwise be spent in pleasure or debauchery; so that the produce raised by the same number of workmen will be very much increased.[387] As for the manufacturer, he will not be less loath than the worker to quit an industry into the management and construction of which he has put half or even three-quarters of his fortune. Fixed capital cannot be transferred from one use to another, for even the manufacturer is bound by custom—a moral force whose strength is not easily calculated.[388] Like the worker, he is tied to the industry which he has created and from which he draws a living. Consequently production, far from being spontaneously restrained, will remain the same or will even perhaps tend to increase. In the end, however, he must yield, and adaptation will take place, but only after much ruin. “Producers will not withdraw from that industry entirely, and their numbers will diminish only when some of the workshops have failed and a number of workmen have died of misery.” “Let us beware,” says he in conclusion, “of this dangerous theory of equilibrium which is supposed to be automatically established. A certain kind of equilibrium, it is true, is re-established in the long run, but it is only after a frightful amount of suffering.”[389] The dictum which was to some extent true in Sismondi’s day controls the policy of every trust and Kartel of the present day.

Nowadays production chiefly grows as the result of the multiplication of machinery, and Sismondi’s most telling attacks were directed against machinery. Consequently he has been regarded as a reactionary and treated as an ignoramus, and for half a century was refused a place among the economists.

On the question of machinery the Classical writers were unanimous.[390] Machinery they considered to be very beneficial, furnishing commodities at reduced rates and setting free a portion of the consumer’s revenue, which accordingly meant an increased demand for other products and employment for those dismissed as a result of this introduction. Sismondi does not deny that theoretically equilibrium is in the long run re-established. “Every new product must in the long run give rise to some fresh consumption. But let us examine things as they really are. Let us desist from our habit of making abstraction of time and place. Let us take some account of the obstacles and the friction of the social mechanism. And what do we see? The immediate effect of machinery is to throw some of the workers out of employment, to increase the competition of others, and so to lower the wages of all. This results in diminished consumption and a slackening of demand. Far from being always beneficial, machinery produces useful results only when its introduction is preceded by an increased revenue, and consequently by the possibility of giving new work to those displaced. No one will deny the advantage of substituting a machine for a man, provided that man can obtain employment elsewhere.”[391]

Neither Ricardo nor Say denies this; they affirmed that the effect of machinery is just to create some part of this demand for labour. But Sismondi’s argument is vitiated by the same false idea that, as we have seen above, made him admit the possibility of general over-production—the idea that increased production, if it is going to be useful, must always be preceded by increased demand. He was unwilling to admit that the growth of production itself created this demand. On the other hand, what is true in Sismondi’s attitude—and we cannot insist too much on this—is the protest he makes against the indifference of the Classical school in the face of the evils of these periods of transition.

The Classical school regarded the miseries created by large-scale production with that sang-froid which was to characterise the followers of Marx amid the throes of the “inevitable Revolution.” Among many similarities which may be pointed out between the writings of Marx and the doctrines of the Classical school, this is one of the most characteristic. The grandeur of the new régime is worthy of some sacrifice. But Sismondi was an historian. His interest lay primarily in those periods of transition which formed the exit from one régime and the entrance into another, and which involved so much suffering for the innocent. He was anxious to mitigate the hardships in order that the process of transition might be eased. Nothing can be more legitimate than a claim of this kind. J. B. Say recognised its validity to a certain extent, and this is precisely the rôle of social economics.

Sismondi makes another remark which is no less just. What disgusted him was not merely that workmen should be driven out by machinery, but that the workers who were retained only had a limited share of the benefits which they procured.[392] For the Classical school it was enough that workers and consumers should have a share in the general cheapening of production. But Sismondi demanded more. So long as toil is as laborious as it is to-day, is it not just that the workman should benefit by the introduction of machinery in the way of increased leisure? In the social system as at present existing, owing to the competition among workers as the result of excessive population, machinery does not increase leisure, but it rather strengthens competition, diminishes wages, provokes a more intense effort on the part of the workman, and forces him to extend his working day. Here again Sismondi appears correct. We cannot see why the consumer alone should reap all the profit of improved machinery, which never benefits the workman unless it affects articles which enter into his consumption. There would be nothing very striking if the benefits of progress, at least during a short time, were to be shared between consumer and worker just as to-day they are shared between inventor, entrepreneur, and society. This idea is the inspiring motive of certain trade unions to-day, which only accept a new machine in exchange for less work and more pay.

Sismondi’s method when applied to production and machinery leads to conclusions very different from those of the Classics. This is also true of his treatment of competition.

Adam Smith had written: “In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition it will always be the more so.”[393] Sismondi considered this doctrine false, and invoked two reasons of unequal value in support of his view.

The first is a product of the inexact idea already mentioned above, which regards any progress in production as useless unless preceded by more intensive demand. Competition is beneficial if it excites the entrepreneur to multiply products in response to an increased demand. In the opposite case it is bad, for if consumption be stationary, its only effect will be to enable the more adroit entrepreneur or the more powerful capitalist to ruin his rivals by means of cheap sales, thus attracting to himself their clientèle, but giving no benefit to the public. This is the spectacle that in reality is too often presented to us. The movements of our captains of industry are directed, not by any concern for the presumed advantage of the public, but solely with a view to increased profits.

Sismondi’s argument is open to the same objection as was made above. Cheapened production dispenses with a portion of the income formerly spent, and creates a demand for other products, thus repairing the evil it has created. Concentration of industry gives to society the same advantage as is afforded by machinery, and the same arguments may be used in its defence.

But against competition Sismondi directs a still more serious argument. Pursuit of cheapness, he remarks, has forced the entrepreneur to economise not only in the matter of stuff, but also of men. Competition has everywhere enticed women and children to bear the burden of production instead of adults. Certain entrepreneurs, in order to secure a maximum return from human energy, have enforced day and night toil with only a scanty wage in return. What is the use of cheapness achieved under such circumstances? The meagre advantage enjoyed by the public is more than counterbalanced by the loss of vigour and health experienced by the workers. Competition impairs this most precious capital—the life-energy of the race. He points to the workmen of Grenoble earning six or eight sous for a day of fourteen hours, children of six and eight years working for twelve or fourteen hours in factories “in an atmosphere loaded with down and dust” and perishing of consumption before attaining the age of twenty. He concludes that the creation of an unhappy and a suffering class is too great a price to pay for an extension of national commerce, and in an oft-quoted phrase he says, “The earnings of an entrepreneur sometimes represent nothing but the spoliation of the workmen. A profit is made not because the industry produces much more than it costs, but because it fails to give to the workman sufficient compensation for his toil. Such an industry is a social evil.”[394]

It is futile to deny the justice of the argument. When cheapness is only obtained at the cost of permanent deterioration in the health of the workers, competition evidently is a producer of evil rather than of good. The public interest is no less concerned with the preservation of vital wealth than it is with facilitating the production of material wealth. Sismondi showed that competition was a double-edged sword, and in doing so he prepared the way for those who very justly demand that the State should place limits upon its use and prescribe rules for its employment.

We might be tempted to go farther and see in the passage just cited an unreserved condemnation of profits even. That would involve placing Sismondi among the socialists, and this is sometimes done, although, as we think, wrongly.

In certain passages he doubtless expresses himself in a manner similar to Owen, the Saint-Simonians, and Marx. Thus in his studies on political economy we come across phrases such as the following: “We might almost say that modern society lives at the expense of the proletariat, seeing that it curtails the reward of his toil.”[395] And elsewhere: “Spoliation indeed we have, for do we not find the rich robbing the poor? They draw in their revenues from the fertile, easily cultivated fields and wallow in their wealth, while the cultivator who created that revenue is dying of hunger, never allowed to enjoy any of it.”[396] We might even say that Sismondi enunciated the theory of surplus value, which was worked out by Marx, when he makes use of the term mieux value.[397] But the similarity is simply a matter of words. Sismondi, speaking of surplus value, means to imply the value that is constantly growing or being created every year in a progressive country, not by the effort of labour alone, but by the joint operation of capital and labour.[398] Marx’s idea that labour alone created value, and that consequently profit and interest constituted a theft, is entirely foreign to Sismondi. Sismondi, indeed, recognised that the revenues of landed proprietors and capitalists were due to efforts which they themselves had never put forth. He rightly distinguished between the wages of labour and the revenues of proprietors, but to him the latter were not less legitimate than the former, for, says he, “the beneficiaries who enjoy such revenues without making any corresponding effort have acquired a permanent claim to them in virtue of toil undertaken at some former period, which must have increased the productivity of labour.”[399] When Sismondi says that the worker is robbed he merely means to say that sometimes the worker is insufficiently paid; in other words, that he does not always receive enough remuneration to keep him alive, and were it only for the sake of humanity that he ought to be better paid. But he does not consider that appropriation by proprietors or capitalists of a portion of the social product is in itself unjust.[400] His point of view is not unlike that adopted at a later period by the German socialists when they sought to justify their social policy.

But although Sismondi’s criticism does not amount to socialism, he causes considerable consternation among Liberals by the telling manner in which he shows the falsity of the theory affirmed by the Physiocrats and demonstrated by Smith, namely the natural identity of individual and general interests. It is true that Smith hesitated to apply it except to production. But Sismondi’s peculiar merit lies in the fact that he examined its content in relation to distribution. Sismondi finds himself forced by mere examination of the facts to dispute the very basis of economic Liberalism. Curiously enough, he seems surprised at his own conclusions. A priori the theory of identity of interests appeared to him true, for does it not, in fact, rest upon the two ideas, (1) that “each knows his own interest better than an ignorant or a careless Government ever can,” and (2) that “the sum of the interests of each equals the interests of all”? “Both axioms are true.”[401] Why then is the conclusion false?

Here we touch the central theme of Sismondi’s system, the point where he leaves the purely economic ground to which the Classical writers had stuck and approaches new territory—the question of the distribution of property. Sismondi discovered the explanation of the contradiction which exists between private and general interests in the unequal distribution of property among men and the resulting unequal strength of the contracting parties.[402]

III: THE DIVORCE OF LAND FROM LABOUR AS THE CAUSE OF PAUPERISM AND OF CRISES

Sismondi was the first writer to give expression to the belief that industrial society tends to separate into two absolutely distinct classes—those who work and those who possess, or, as he often put it, the rich and the poor. Free competition hastens this separation, causing the disappearance of the intermediate ranks and leaving only the proletariat and the capitalist.[403] “The intermediate classes,” says he somewhere, “have all disappeared: the small proprietor and the peasant farmer of the plain, the master craftsman, the small manufacturer, and the village tradesmen, all have failed to withstand the competition of those who control great industries. Society no longer has any room save for the great capitalist and his hireling, and we are witnessing the frightfully rapid growth of a hitherto unknown class—of men who have absolutely no property.”[404] “We are living under entirely new conditions of which as yet we have no experience. All property tends to be divorced from every kind of toil, and therein is the sign of danger.”[405]

This law of the concentration of capital which plays such an important rôle in the Marxian system, though true of industry, seems hardly applicable to property, for a considerable concentration of labour is not incompatible with a fairly even distribution of property. It was a memorable exposition that Sismondi gave of this law, showing how it wrought its ravages in agriculture, in industry, and in commerce all at the same time. “The tillage of the 34,250,000 acres under cultivation in England was, in 1831, accomplished by 1,046,982 cultivators, and now it is expected that the number may be still further reduced. Not only have all the small farmers been reduced to the position of labourers, but a great number of the day labourers have been forced to abandon field work altogether. The industry of the towns has adopted the principle of amalgamation of forces, and capital has been added to capital with a vigour greater than that which has joined field unto field. The manufacturer with a capital of £1000 was the first to disappear. Soon those who worked with £10,000 were considered small—too small. They were reduced to ruin and their places taken by larger employers. To-day those who trade with a capital of £100,000 are considered of an average size, and the day is not far distant when these will have to face the competition of manufacturers with a capital of £1,000,000. The refining mills of the Gironde dispensed with millers; the cask mills of the Loire ruined the coopers; the building of steamboats, of diligences, of omnibuses and railways with the aid of vast capitals have replaced the unpretentious industries of the independent boatman, carriage- or wagon-maker. Wealthy merchants have entered the retail trade and have opened their immense shops in the great capitals, where, in virtue of the improved means of transit, they are able to offer their provisions even to consumers who live at the very extremities of the empire. They are well on the way towards suppressing the wholesale trader as well as the retail dealer, and the petty shopkeeper of the provinces. The places of these independent tradesmen will soon be taken over by clerks, hirelings, and proletarians.”[406]

And now for the consequences of such a condition of things. In this opposition existing between these two social classes which formerly lived together harmoniously we shall find an explanation of the workman’s misery and of economic crises.

The sufferings of workmen, whence do they spring, if not from the fact that their numbers are in excess of the demand for their labour, thus forcing them to be content with the first wage that is offered them, even though it be opposed to their own interests and the interest of the whole class?[407] But “whence the necessity of submitting to these onerous conditions and of tolerating a burden that is ever becoming heavier under pain of hunger and death?” The explanation lies in the separation of property and toil.[408] Formerly the workman, an independent artisan, could gauge his revenue and limit his family accordingly, for population is always determined by revenue.[409] Robbed of his belongings, all his revenue is to-day got from the capitalist who employs him. Ignorant of the future demand for his products, as well as of the quantity of labour that may be necessary, he has no longer any excuse for exercising forethought, and accordingly he discards it. Population grows or diminishes in accordance with the will of the capitalist. “Let there be an increased demand for labour and a sufficient wage offered it and workmen will be born. If the demand fails, the workmen will perish.”[410]

This theory of population and wages is really Smith’s, who tried to prove that men, like commodities, extended or limited their numbers according to the needs of production. Sismondi, rather than accept it as a proof of the harmonious adaptation of demand to supply, emphasises the lamentable effects of the separation of wealth from labour.[411] Smith and Sismondi both fell into the error of Malthus and Ricardo, who imagined that high wages of necessity increased population. To-day facts seem to show that a higher standard of well-being, on the contrary, tends to limit it, and the proletarians, who constitute the majority of the nation, can no longer be treated as mere tools in the hands of the capitalists, to be taken up or thrown aside according to fancy or interest.

What is true of industrial employees is no less true of the toilers of the field. In this connection Sismondi introduces the celebrated distinction between net and gross production which has occupied the attention of many economists since then. If the peasants collectively owned all the land they would at least of a certainty find both the security and the support of their life in the soil. They would never let the gross produce fall below what was sufficient to support them.[412] But with great landed proprietors, and with the peasant transformed into the agricultural labourer, things have changed. The large proprietors have the net product only in view—that is, the difference between the cost of production and the sale price. It matters little to them if the gross produce is sacrificed for the sake of increasing the net produce. Here you have land which, when well cultivated, brings gross produce of the value of 1000 shillings to the farmer and yields 100 shillings in rent to the proprietor. But the proprietor thinks that he would gain 110 shillings if he left it fallow or let it as unprofitable pasture. “His gardener or vinedresser is dismissed, but he gains 10 shillings and the nation loses 890. By and by the capital employed in producing this plentiful supply will no longer be so employed, and there will be no profit. The workers whose former toil produced these products will no longer be employed and no wages will be paid.”[413] Examples are plentiful enough. A number of the great Scotch proprietors, in order to replace the ancient system of cultivation by the open pasture system, sent the tenants from their dwellings and drove them into the towns or huddled them on board ships for America. In Italy a handful of speculators called the Mercanti di tenute, animated by similar motives, have hindered the repopulation and cultivation of the Roman Campagna, “that territory formerly so very fertile that five acres were sufficient to provide sustenance for a whole family as well as sending a recruit to the army. To-day its scattered homesteads, its villages, the whole population, together with the farm enclosures, the vineyards, and the olive plantations—products that require the continual loving attention of mankind—have all disappeared, giving place to a few flocks of sheep tended by a few miserable shepherds.”[414] The criticism is just, but is directed rather against the abuse of private property than against the principle of the net product, for this principle is incident to peasant proprietorship as well. It is inevitable wherever production for a market takes place.[415]

It is just this opposition between proprietorship and labour that supplies an explanation of economic crises.

Sismondi holds the view that crises are partly due to the difficulty of acquiring exact knowledge of a market that has become very extensive, and partly to the fact that producers are guided in their actions by the amount of their capital rather than by the demand of the market.[416] But above all he thinks that they are due to the unequal distribution of revenues. The consequence of the separation of property from labour is that the revenues of those who possess lands increase while the incomes of the workers always remain strictly at the minimum. The natural result is a want of harmony in the demand for products. With property uniformly divided and with an almost general increase in the revenue there would result a certain degree of uniformity in the growth of demand. Those industries which supply our most essential and most general wants would experience a regular and not an erratic expansion. But as a matter of fact at the present time it is the revenue of the wealthy alone that increases. Hence there is a growing demand for the more refined objects in place of a regular demand for the ordinary things of life; a neglect of the more fundamental industries, and a demand for the production of luxuries. If the latter do not multiply quickly enough, then the foreigner will be called in to satisfy the demand. What is the result of these incessant changes? The old, neglected industries are obliged to dismiss their workmen, while the new industries can only develop slowly. During the interval the workmen who have suffered dismissal are forced to reduce their consumption of ordinary goods, and permanent under-consumption, attended by a crisis, immediately follows. “Owing to the concentration of wealth in the hands of a few proprietors, the home market is contracted and industry must seek other outlets for its products in foreign markets, where even more considerable revolutions are possible.”[417] Thus “the consumption of a millionaire master who employs 1000 men all earning but the bare necessities of life is of less value to the nation than a hundred men each of whom is much less rich but who employ each ten men who are much less poor.”[418]

Sismondi’s explanation of crises, though adopted by many writers since then, is not one of the best. The difficulty of adaptation would in all probability not disappear even if wealth were to be more equally distributed. Moreover, what he attempts to explain is an evil that is chronic in certain industries and not the acute periodical crises. But the theory has the merit of attempting to explain what still remains obscure, and what J. B. Say and Ricardo preferred to pass over in silence or regarded as of secondary importance under pretext that in the long run equilibrium would always be re-established.

IV: SISMONDI’S REFORM PROJECTS. HIS INFLUENCE UPON THE HISTORY OF DOCTRINES

The principal interest of Sismondi’s book does not lie in his attempt to give a scientific explanation of the facts that occupied his attention. Indeed, these attempts have little that is altogether satisfactory, for the analysis is frequently superficial, and even commonplace. His merit rather lies in having placed in strong relief certain facts that were consistently neglected by the dominant school of economists. Taken as a whole, his doctrine must be regarded as pessimistic. He deliberately shows us the reverse of the medal, of which others, even those whom we have classed as Pessimists—Ricardo and Malthus—wished only to see the brighter side. It is no longer possible to speak of the spontaneous harmony of interests, or to forget the misery and suffering which lies beneath an appearance of economic progress. Crises cannot be slipped over and treated as transient phenomena of no great moment. No longer is it possible to forget the important effects of an unequal division of property and revenues, which frequently results in putting the contracting parties in a position of fundamental inequality that annuls freedom of bargaining. In a word, it is no longer possible to forget the social consequences of economic transformations. And herein lies the sphere of social politics, of which we are now going to speak.

The new point of view occupied by Sismondi enables him to see that the free play of private interests often involves injury to the general interest, and that the laissez-faire doctrine preached by the school of Adam Smith has no longer any raison d’être. On the contrary, there is room for the intervention of society, which should set a limit to individual action and correct its abuses. Sismondi thus becomes the first of the interventionists.

State action, in the first place, ought to be employed in curbing production and in putting a drag upon the too rapid multiplication of inventions. Sismondi dreams of progress accomplished by easy stages, injuring no one, limiting no income, and not even lowering the rate of interest.[419] His sensitiveness made him timid, and critics smile at his philanthropy. Even the Saint-Simonians, too sympathetic to certain of his views, reproach him with having allowed himself to be misled by it.[420] This state of mind was reflected by his habits in private life. Sainte-Beuve[421] relates of him how he used to employ an old locksmith who had become so useless and awkward that everybody had left him. Sismondi remained faithful to the old man even to the very end, despite his inefficiency, lest he should lose his last customer. He wished society to treat the older industries in a similar fashion. He has been compared to Gandalin, the sorcerer’s apprentice in the fable, who, having unlocked the water-gate with the magic of his words, sees wave succeed wave, and the house inundated, without ever being able to find the word which could arrest its flow.

Governments ought to temper their “blind zeal” instead of urging on production.[422] Addressing himself to the savants, he begs them to desist from invention and recall the sayings of the economists, laissez-faire, laissez-passer, by giving to the generations which their inventions render superfluous at least time to pass away. For the old régime, with its corporations and wardens, he had the sincerest regard, while condemning them as being harmful to the best interests of production. Still he wondered whether some lesson could not be gleaned from them which might help us in fixing limits to the abuses of competition.[423]

Sismondi never seems to have realised that any restriction placed upon production with a view to alleviate suffering might hinder the progress and well-being of the very classes that interested him most. The conviction that the production of Europe was enough to satisfy all demands supported these erroneous views.[424] Sismondi never suspected the relative poverty of industrial society, a fact that struck J. B. Say very forcibly. Moreover, he felt that on this point the policy of Governments was not so easily modified, a feeling that undermined his previous confidence.

Since the causes of the evils at present existing in society are (1) the absence of property, (2) the uncertainty of the earnings of the working classes, all Government action ought to be concentrated on these points.

The first object to be aimed at, wherever possible, was the union of labour and property, and Sismondi eulogises the movement towards a new patriarchal state—that is, towards a revival of peasant proprietorship. The Nouveaux Principes contains a celebrated description of the idyllic happiness of such a state. In industry he wished for a return of the independent artisan. “I am anxious that the industries of the town as well as country pursuits should be carried on by a great number of independent workers instead of being controlled by a single chief who rules over hundreds and even thousands of workers. I hope to see manufactures in the hands of a great number of capitalists of average means, and not under the thumb of one single individual who constitutes himself master over millions. I long to see the chance—nay, even the certainty—of being associated with the master extended to every industrious workman, so that when he gets married he may feel that he has a stake in the industry instead of dragging on through the declining years of life, as he too often does, without any prospect of advancement.”[425] This for an end.

But the means? On this point Sismondi shows extraordinary timidity. Appeal to the legislator is not followed up by a plan of campaign, and in moments of scepticism and despair he even doubts whether reform is ever possible. He declares himself an opponent of communism. He rejects the Utopias of Owen, of Thompson, and of Fourier, although he recognises that their aim was his also. He failed to perceive that his “breaking up” process was quite as illusory as the communistic Utopias which he shunned. He rejected Owen’s system because he saw the folly of attempting to substitute the interest of a corporation for that of the individual. But he never realised that it had nothing to do with a corporation, and it is possible that were he alive at the present time he would be an ardent champion of co-operation.

But until the union of property and labour is realised Sismondi is content with a demand for a simpler reform, which might alleviate the more pressing sufferings of the working classes. First of all he appeals for the restoration, or rather the granting, of the right of combination.[426] Then follows a limitation of child labour, the abolition of Sunday toil, and a shortening of the hours of labour.[427] He also demanded the establishment of what he called a “professional guarantee,” whereby the employer, whether agriculturist or capitalist, would be obliged to maintain the workman at his own expense during a period of illness or of lock-out or old age. This principle once admitted, the employers would no longer have any interest in reducing the wages of the workman indefinitely, or in introducing machinery or in multiplying production unduly. Having become responsible for the fate of the workers, they would then take some account of the effect which invention might have on their well-being, whereas to-day they simply regard them from the point of view of their own profits.[428] One might be tempted to regard this as an anticipation of the great ideal which has to a certain extent been realised by the social insurance Acts passed during the last thirty years. But this is only partly so. Sismondi placed the charge of maintenance upon the master and not upon society, and his criticism of methods of relief, especially of the English Poor Law, was that they tended to decrease wages and to encourage the indifference of masters by teaching the workers to seek refuge at the hands of the State rather than at the hands of the masters.

In short, his reform projects, like his criticism of the economists, reveal a certain degree of hesitation, due, no doubt, to the perpetual conflict between reason and sentiment. Too keen not to see the benefits of the new industrial régime, and too sensitive not to be moved by some of its more painful consequences, too conservative and too wise to hope for a general overthrow of society, he is content to remain an astonished but grieved spectator of the helplessness of mankind in the face of this evil. He did not feel himself competent to suggest a remedy. He himself has confessed to this in touching terms:

“I grant that, having indicated what in my opinion is the principle of justice in this matter, I do not feel myself equal to the task of showing how it can be realised. The present method of distributing the fruits of industry among those who have co-operated in its production appears to me to be curious. But a state of society absolutely different from that with which we are now acquainted appears to be beyond the wit of man to devise.”[429]

* * * * *

It is a striking fact that most of the important movements in the nineteenth century can be traced back to Sismondi’s writings. He was the first critic whom the Classical school encountered in its march, and he treats us to a full résumé of its many heresies. In the bitter struggle which ensued the heretics won the day, their nostrums taking the place of the Classical doctrines in the public favour. But it seems hardly possible that Sismondi’s work should have determined the course of these newer tendencies. His immediate influence was extremely limited. It scarcely told at all except upon the socialists. His book was soon forgotten, and not until our own day was its importance fully realised. It would be truer to say that in the course of the nineteenth century there was a spontaneous revival of interest in the ideas promulgated by Sismondi. None the less he was the first writer to raise his voice against certain principles which were rapidly crystallising into dogmas. He was the earliest economist who dared resist the conclusions of the dominant school, and to point to the existence of facts which refused to tally with the large and simple generalisations of his predecessors. If not the founder of the new schools that were about to appear, he was their precursor. They are inspired by the same feelings and welcome the same ideas. His method is an anticipation of that of the Historical school. His definition of political economy as a philosophy of history[430] works wonders in the hands of Roscher, Knies, and Hildebrand. His plea for a closer observation of facts, his criticism of the deductive process and its hasty generalisations, will find an echo in the writings of Le Play in France, of Schmoller in Germany, and of Cliffe Leslie and Toynbee in England. The founders of the German Historical school, in their ignorance of foreign writers, regarded him as a socialist,[431] but the younger representatives of that school have done full justice to his memory, and recognise him as one of their earliest representatives.

By his appeal to sentiment and his sympathy for the working classes, by his criticism of the industrial régime of machines and competition, by his refusal to recognise personal interest as the only economic motive, he foreshadows the violent reaction of humanitarianism against the stern implacability of economic orthodoxy. We can almost hear the eloquence of Ruskin and Carlyle, and the pleading of the Christian Socialists, who in the name of Christian charity and human solidarity protest against the social consequences of production on a large scale. Like Sismondi, social Christianity will direct its attack, not against the science itself, but against the easy bourgeois complacency of its advocates. A charge of selfishness will be brought, not against economic science as such, but against its representatives and the particular form of society which it upholds.

Finally, by his plea for State intervention Sismondi inaugurated a reaction against Liberal absolutism, a reaction that deepened in intensity and covered a wider area as the century wore on, and which found its final expression in State socialism, or “the socialism of the chair.” He was the first to advocate the adoption of factory legislation in France and to seek to give the Government a place in directing economic affairs. The impossibility of complete abdication on the part of the State would, he thought, become clearer every day. But it was little more than an aspiration with him; it never reached the stage of a practical suggestion.

Thus in three different ways Sismondi’s proposals were destined to give rise to three powerful currents of thought, and it is not surprising that interest in his work should have grown with the development of the new tendencies which he had anticipated.

His immediate influence upon contemporary economists was very slight. Some of them allowed themselves to be influenced by his warmheartedness, his tenderness for the weak, and his pity for the workers, but they never found this a sufficient reason for breaking off their connections with the Classical school. Blanqui[432] in particular was a convert to the extent that he admitted some exceptions to the principle of laissez-faire. Theodore Fix and Droz[433] seemed won over for a moment, and Sismondi might rightly have expected that the Revue mensuelle d’Économie politique, started by Fix in 1833, would uphold his views. But the days of the Revue were exceedingly few, and before finally disappearing it had become fully orthodox. Only one author, Buret, in his work on the sufferings of the working classes in England and France,[434] has the courage to declare himself a whole-hearted disciple of Sismondi. The name of Villeneuve-Bargemont, author of Économie politique chrétienne, must be added to these. His work, which was published in three volumes in 1834, bears frequent traces of Sismondi’s influence.

Sismondi, though not himself a socialist, has been much read and carefully studied by socialists. It is among them that his influence is most marked. This is not very surprising, for all the critical portion of his work is really a vigorous appeal against competition and the inequalities of fortune. Louis Blanc read him and borrowed from him more than one argument against competition. The two German socialists Rodbertus and Marx are still more deeply indebted to him. Rodbertus borrowed from him his theory of crises, and owes him the suggestion that social progress benefits only the wealthier classes. Rodbertus quotes him without any mention of his name, but Marx in his Manifesto has rendered him full justice, pointing out all that he owed to his penetrative analysis. The most fertile idea borrowed by Marx was that which deals with the concentration of wealth in the hands of a few powerful capitalists, which results in the increasing dependence of the working classes. This conception is the pivot of the Manifesto, and forms a part of the very foundation of Marxian collectivism. The other idea of exploitation does not seem to have been borrowed from Sismondi, although he might have discovered a trace of the surplus value theory in his writings. Marx endeavours to explain profit by drawing a distinction between a worker selling his labour and parting with some of his labour force. Sismondi employs terms that are almost identical, and says that the worker when selling his labour force is giving his life. Elsewhere he speaks of a demand for “labour force.” Sismondi never drew any precise conclusion from these ideas, but they may have suggested to Marx the thesis he took such pains to establish.

Many a present-day socialist, without acknowledging the fact, perhaps without knowing it, loves to repeat the arguments which Sismondi was the first to employ, to stir up his indifferent contemporaries.

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II. SAINT-SIMON, THE SAINT-SIMONIANS, AND THE BEGINNINGS OF COLLECTIVISM

Sismondi, by supplementing the study of political economy by a study of social economics, had already much enlarged the area traced for the science by its founders. But while giving distribution the position of honour in his discussion, he never dared carry his criticism as far as an examination of that fundamental institution of modern society—private property. Property, at least, he thought legitimate and necessary. Every English and French economist had always treated it as a thing apart—a fact so indisputable and inevitable that it formed the very basis of all their speculations.

Suddenly, however, we come upon a number of writers who, while definitely rejecting all complicity with the earlier communists and admitting neither equality of needs nor of faculties, but tending to an agreement with the economists in claiming the maximum of production as the one aim of economic organisation, dare lay their hands upon the sacred ark and attack the institution of property with whole-hearted vigour. Venturing upon what had hitherto been holy ground, they displayed so much skill and courage that every idea and every formula which became a commonplace of the socialistic literature of the later nineteenth century already finds a place in their system. Having definite ideas as to the end which they had in view, they challenged the institution of private property because of its effects upon the distribution and production of wealth. They cast doubt upon the theories concerning its historical evolution, and concluded that its abolition would help the perfection of the scientific and industrial organisation of modern society. The problem of private property was at last faced, and a recurrence of the discussion was henceforth to become a feature of economic science.[435]

Not that it had hitherto been neglected. Utopian communists from Plato and More up to Mably, Morelly, Godwin, and Babeuf, the eighteenth-century equalitarians, all rest their case upon a criticism of property. But hitherto the question had been treated from the point of view of ethics rather than of economics.[436] The originality of the Saint-Simonian treatment is that it is the direct outcome of the economic and political revolution which shook France and the whole of Europe towards the end of the eighteenth and the beginning of the nineteenth centuries. The socialism of Saint-Simon is not a vague aspiration for some pristine equality which was largely a creation of the imagination. It is rather the naïve expression of juvenile enthusiasm in the presence of the new industrial régime begotten of mechanical invention and scientific discovery. The modern spirit at its best is what it would fain reveal. It sought to interpret the generous aspirations of the new bourgeois class, freed through the instrumentality of the Revolution from the tutelage of baron and priest, and to show how the reactionary policy of the Restoration threatened its triumph. Not content, however, with confining itself to the intellectual orbit of the bourgeoisie, it sought also to define the sphere of the workers in future society and to lay down regulations for their benefit. But its appeal was chiefly to the more cultured classes—engineers, bankers, artists, and savants. It was to these men—all of them members of the better classes—that the Saint-Simonians preached collectivism and the suppression of inheritance as the easiest way of founding a new society upon the basis of science and industry. Hence the great stir which the new ideas caused.

Consequently Saint-Simonism appears to be a somewhat unexpected extension of economic Liberalism rather than a tardy renewal of ancient socialistic conceptions.

We must, in fact, distinguish between two currents in Saint-Simonism. The one represents the doctrine preached by Saint-Simon himself, the other is that of his disciples, the Saint-Simonians. Saint-Simon’s creed can best be described as “industrialism” plus a slight admixture of socialism, and it thus naturally links itself with economic Liberalism, of which it is simply an exaggerated development. The disciples’ doctrine, on the other hand, can only be described as collectivism. But it is a collectivism logically deduced from two of the master’s principles which have been extended and amplified. For a history of economic ideas it is the theories of the disciples that matter most, perhaps. But it would be impossible to understand these without knowing something of Saint-Simon’s theory. We shall give an explanation of his doctrine, first attempting to show the links which surely, though strangely enough, affiliate the socialism of Saint-Simon with economic Liberalism.

I: SAINT-SIMON AND INDUSTRIALISM

Saint-Simon was a nobleman who led a somewhat dissolute, adventurous life. At the early age of sixteen he took part in the American War of Independence. The Revolution witnessed the abandonment of his claim to nobility, but by successful speculation in national property he was enabled to retrieve his fortune to some extent. Imprisoned as a suspect at Sainte-Pélagie, set free on the 9th Thermidor, he attained a certain notoriety as a man of affairs interested chiefly in travels and amusements and as a dilettante student of the sciences. From the moment of his release he began to regard himself as a kind of Messiah.[437] He was profoundly impressed by what seemed to him to be the birth of a new society at which he had himself assisted, in which the moral and political and even physical conditions of life were suddenly torn up by the roots, when ancient beliefs disappeared and nothing seemed ready to take their place. He himself was to be the evangelist of the new gospel, and with this object in view on the 4th Messidor, An. VI, he called together the capitalists who were already associated with him and, pointing out the great necessity for restoring public confidence, proposed the establishment of a gigantic bank whose funds might be employed in setting up works of public utility—a proof of the curious way in which economic and philosophic considerations were already linked together in his thoughts.[438] An ill-considered marriage which was hastily broken off, however, was followed by a period of much extravagance and great misery. By the year 1805 so reduced were his circumstances that he was glad to avail himself of the generosity of one of his old servants. After her death he lived partly upon the modest pension provided him by his family and partly upon the contributions of a few tradesmen, but he was again so miserable that in 1823 he attempted suicide. A banker of the name of Olinde Rodrigues came to the rescue this time and supplied him with the necessary means of support. He died in 1825, surrounded by a number of his disciples who had watched over the last moments of his earthly life. During all these years, haunted as he was by the need for giving to the new century the doctrine it so much required, he was constantly engaged in publishing brochures, new works, or selections from his earlier publications, sometimes alone and sometimes in collaboration with others,[439] in which the same suggestions are always revived and the same ideas keep recurring, but in slightly different forms.

Saint-Simon’s earlier work was an attempt to establish a scientific synthesis which might furnish mankind with a system of positive morality to take the place of religious dogmas. It was to be a kind of “scientific breviary” where all phenomena could be deduced from one single idea, that of “universal gravitation.” He himself has treated us to a full account of this system, which is as deceptive as it is simple, and which shows us his serious limitations as a philosopher whose ambition far outran his knowledge. Auguste Comte, one of his disciples, attempted a similar task in his Cours de Philosophie positive and in the Politique positive, so that Saint-Simon, who is usually considered the father of socialism, finds himself also the father of positivism.

From 1814 up to his death in 1825 he partly relinquished his interest in philosophy and devoted himself almost exclusively to the exposition of his social and political ideas, which are the only ones that interest us here.

His economics might be summed up as an apotheosis of industry, using the latter word in the widest sense, much as Smith had employed the term as synonymous with labour of all kind.

His leading ideas, contained within the compass of a few striking pages, have since become known as “Saint-Simon’s Parable.”

“Let us suppose,” says he, “that France suddenly loses fifty of her first-class doctors, fifty first-class chemists, fifty first-class physiologists, fifty first-class bankers, two hundred of her best merchants, six hundred of her foremost agriculturists, five hundred of her most capable ironmasters, etc. [enumerating the principal industries]. Seeing that these men are its most indispensable producers, makers of its most important products, the minute that it loses these the nation will degenerate into a mere soulless body and fall into a state of despicable weakness in the eyes of rival nations, and will remain in this subordinate position so long as the loss remains and their places are vacant. Let us take another supposition. Imagine that France retains all her men of genius, whether in the arts and sciences or in the crafts and industries, but has the misfortune to lose on the same day the king’s brother, the Duke of Angoulême, and all the other members of the royal family; all the great officers of the Crown; all ministers of State, whether at the head of a department or not; all the Privy Councillors; all the masters of requests; all the marshals, cardinals, archbishops, bishops, grand vicars and canons; all prefects and sub-prefects; all Government employees; all the judges; and on top of that a hundred thousand proprietors—the cream of her nobility. Such an overwhelming catastrophe would certainly aggrieve the French, for they are a kindly-disposed nation. But the loss of a hundred and thirty thousand of the best-reputed individuals in the State would give rise to sorrow of a purely sentimental kind. It would not cause the community the least inconvenience.”[440]

In other words, the official Government is a mere façade. Its action is wholly superficial. Society might exist without it and life would be none the less happy. But the disappearance of the savants, industrial leaders, bankers, and merchants would leave the community crippled. The very sources of wealth would dry up, for their activities are really fruitful and necessary. They are the true governors who wield real power. Such was the parable.

According to Saint-Simon, little observation is needed to realise that the world we live in is based upon industry, and that anything besides industry is scarcely worth the attention of thinking people. A long process of historical evolution, which according to Saint-Simon commenced in the twelfth century with the enfranchisement of the communes and culminated in the French Revolution, had prepared the way for it.[441] At least industry is the one cardinal feature of the present day.

The political concerns of his contemporaries were regarded with some measure of despair. The majority of them were engaged either in defending or attacking the Charter of 1814. The Liberals were simply deceiving themselves, examining old and meaningless formulæ such as “the sovereignty of the people,” “liberty,” and “equality”—conceptions that never had any meaning,[442] but were simply metaphysical creations of the jurists,[443] and they ought to have realised that this kind of work was perfectly useless now that the feudal régime was overthrown. Men in future will have something better to do than to defend the Charter against the “ultras.” The parliamentary régime may be very necessary, but it is just a passing phase between the feudalism of yesterday and the new order of to-morrow.[444] That future order is Industrialism—a social organisation having only one end in view, the further development of industry, the source of all wealth and prosperity.

The new régime implies first of all the abolition of all class distinction. There will be no need for either nobles, bourgeois, or clergy. There will be only two categories, workers and idlers—or the bees and the drones, as Saint-Simon puts it. Sometimes he refers to them as the national and anti-national party. In the new society the second class[445] is bound to disappear, for there is only room for the first. This class includes, besides manual workers,[446] agriculturists, artisans, manufacturers, bankers, savants, and artists.[447] Between these persons there ought to be no difference except that which results from their different capacities, or what Saint-Simon calls their varying stakes in the national interest. “Industrial equality,” he writes, “consists in each drawing from society benefits exactly proportionate to his share in the State—that is, in proportion to his potential capacity and the use which he makes of the means at his disposal—including, of course, his capital.”[448] Saint-Simon evidently has no desire to rob the capitalists of their revenues; his hostility is reserved for the landed proprietors.

Not only must every social distinction other than that founded upon labour and ability disappear, but government in the ordinary sense of the term will largely become unnecessary. “National association” for Saint-Simon merely meant “industrial enterprise.” “France was to be turned into a factory and the nation organised on the model of a vast workshop”; but “the task of preventing thefts and of checking other disorders in a factory is a matter of quite secondary importance and can be discharged by subordinates.”[449] In a similar fashion, the function of government in industrial society must be limited to “defending workers from the unproductive sluggard and maintaining security and freedom for the producer.”[450]

So far Saint-Simon’s “industrialism” is scarcely distinguishable from the “Liberalism” of Smith and his followers, especially J. B. Say’s. Charles Comte and Dunoyer, writing in their review, Le Censeur, were advancing exactly similar doctrines,[451] sometimes even using identical terms. “Plenty of scope for talent” and laissez-faire were some of the favourite maxims of the Liberal bourgeois. Such also were the aspirations of Saint-Simon.

But it is just here that the tone changes.[452]

Assuming that France has become a huge factory, the most important task that awaits the nation is to inaugurate the new manufacturing régime and to seek to combine the interests of the entrepreneurs with those of the workers on the one hand and of the consumers on the other. There is thus just enough room for government—of a kind. What is required is the organising of forces rather than the governing of men.[453] Politics need not disappear altogether, but “must be transformed into a positive science of productive organisation.”[454] “Under the old system the tendency was to increase the power of government by establishing the ascendancy of the higher classes over the lower. Under the new system the aim must be to combine all the forces of society in such a fashion as to secure the successful execution of all those works which tend to improve the lot of its members either morally or physically.”[455]

Such will be the task of the new government, where capacity will replace power and direction will take the place of command.[456] Applying itself to the execution of those tasks upon which there is complete unanimity, most of them requiring some degree of deliberation and yet promptness of action, it will gradually transform the character of politics by concentrating attention upon matters affecting life or well-being—the only things it need ever concern itself with.[457]

In order to make his meaning clearer, Saint-Simon proposes to confine the executive power to a Chamber of Deputies recruited from the representatives of commerce, industry, manufacture, and agriculture. These would be charged with the final acceptance or refusal of the legislative proposals submitted to them by the other two Chambers, composed exclusively of savants, artists, and engineers. The sole concern of all legislation would, of course, be the development of the country’s material wealth.[458]

An economic rather than a political form of government, administering things instead of governing men, with a society modelled on the workshop and a nation transformed into a productive association having as its one object “the increase of positive utility by means of peaceful industry”[459]—such are the ruling conceptions which distinguish Saint-Simon from the Liberals and serve to bring him into the ranks of the socialists. His central idea will be enthusiastically welcomed by the Marxian collectivists, and Engels speaks of it as the most important doctrine which its author ever propounded.[460] Proudhon accepts it, and as a practical ideal proposes the absorption of government and its total extinction in economic organisation. The same idea occurs in Menger’s Neue Staatslehre,[461] and in Sorel’s writings, where he speaks of “reorganising society on the model of a factory.”[462]

It is this novel conception of government that most clearly distinguishes Saint-Simon’s industrialism from economic Liberalism.[463]

But, despite the fact that he gave to socialism one of its most fruitful conceptions, we hardly know whether to class Saint-Simon as a socialist or not, especially if we consider that the essence of socialism consists in the abolition of private property. It is true that in one celebrated passage he speaks of the transformation of private property.[464] But it is quite an isolated exception. Capital as well as labour, he thought, were entitled to remuneration. The one as well as the other involved some social outlay. He would probably have been quite content with a purely governmental reform.

It would not be difficult, however, to take the ideal of industrialism as outlined by Saint-Simon as the basis of a demand for a much more radical reform and a much more violent attack upon society. Such was the task which the Saint-Simonians took upon themselves, and our task now is to show how collectivism was gradually evolved out of industrialism.

II: THE SAINT-SIMONIANS AND THEIR CRITICISM OF PRIVATE PROPERTY

Saint-Simon’s works were scarcely ever read. His influence was essentially personal, and the task of spreading a knowledge of his ideas devolved upon a number of talented disciples whom he had succeeded in gathering round him. Augustin Thierry, who was his secretary from 1814 to 1817, became his adopted son. Auguste Comte, who occupied a similar post, was a collaborator in all his publications between 1817 and 1824. Olinde Rodrigues and his brother Eugène were both among his earliest disciples. Enfantin, an old student of the Polytechnic, and Bazard, an old Carbonaro who had grown weary of political experiments, were also of the number. Soon after the death of Saint-Simon his following founded a journal called Le Producteur with a view to popularising his ideas. Most of the articles on economics were contributed by Enfantin. The paper lasted only for one year, although the number of converts to the new doctrine was rapidly increasing. All of them were persuaded that Saint-Simon’s ideas furnished the basis of a really modern faith which would at once supplant both decadent Catholicism and political Liberalism, the latter of which, in their opinion, was a purely negative doctrine.

In order to strengthen the intellectual ties which already united them, this band of enthusiasts set up among themselves a sort of hierarchy having at its summit a kind of college or institution composed of the more representative members of the group, upon whom the title “fathers” was bestowed. The next lower grade was composed of “sons,” who were to regard one another as “brothers.” It was in 1828, under the influence of Eugène Rodrigues, that the Saint-Simonians assumed this character of an organised sect. About the same time Bazard, one of their number, was giving an exposition of the creed in a series of popular lectures. These lectures, delivered during the years 1828-30, and listened to by many men who were afterwards to play an important part in the history of France, such as Ferdinand de Lesseps, A. Carrel, H. Carnot, the brothers Péreire, and Michel Chevalier, were published in two volumes under the title Exposition de la Doctrine de Saint-Simon. The second volume is more particularly concerned with philosophy and ethics. The first includes the social doctrine of the school, and according to Menger forms one of the most important expositions of modern socialism.[465]

Unfortunately, under the influence of Enfantin the philosophical and mystical element gained the upper hand and led to the downfall of the school.

The Saint-Simonians considered that it was not enough to take modern humanity into its confidence and reveal to it its social destiny. It must be taught to love and desire that destiny with all the ardour of romantic youth. For the accomplishment of this end there must exist a unity of action and thought such as a common religious conviction alone can confer. And so Saint-Simonism became a religion, a cult with a moral code of its own, with meetings organised and churches founded in different parts of the country, and with apostles ready to carry the good tidings to distant lands. A striking phenomenon surely, and worthy the fullest study. It was a genuine burst of religious enthusiasm among men opposed to established religion but possessed of fine scientific culture—the majority of whom, however, as it turned out, were better equipped for business than for the propagation of a new gospel.

Enfantin and Bazard were to be the popes of this new Catholicism. But Bazard soon retired and Enfantin became “supreme Father.” He withdrew, with forty of the disciples, into a house at Ménilmontant, where they lived a kind of conventual life from April to December 1831. Meanwhile the other propagandists were as active as ever, the work being now carried on in the columns of Le Globe, which became the property of the school in July 1831. This strange experiment was cut short by judicial proceedings, which resulted in a year’s imprisonment for Enfantin, Duverger, and Michel Chevalier, all of whom were found guilty of forming an illegal association. This was the signal for dispersion.

The last phase was the most extravagant in the whole history of the school, and naturally it was the phase that attracted most attention. The simple social doctrine of Saint-Simon was overwhelmed by the new religion of the Saint-Simonians, much as the Positivist religion for a while succeeded in eclipsing the Positive philosophy. Our concern, of course, is chiefly with the social doctrine as expounded in the first volume of the Exposition. That doctrine is sufficiently new to be regarded as an original development and not merely as a résumé of Saint-Simon’s ideas. Both Bazard and Enfantin had some hand in it. But it is almost certain that it was the latter who supplied the economic ideas,[466] and that to the formation of those ideas Sismondi’s work contributed not a little. The work is quite as remarkable for the vigorous logical presentation of the doctrine as it is for the originality of its ideas. The oblivion into which it has fallen is not easily explicable, especially if we compare it with the many mediocre productions that have somehow managed to survive. There are not wanting signs of a revived interest in the doctrines, and for our own part we are inclined to give them a very high place among the economic writings of the century.

The Doctrine de Saint-Simon resolves itself into an elaborate criticism of private property.

The criticism is directed from two points of view—that of distribution and that of the production of wealth, that of justice and that of utility. The attack is carried on from both sides at once, and most of the arguments used during the course of the century are here hurled indiscriminately against the institution of private property. The doctrines of Saint-Simon contributed not a little to the success of the campaign.

(a) Saint-Simon had already emphasised the impossibility of workers and idlers coexisting in the new society. Industrialism could hold out no promise for the second class. Ability and labour only had any claim to remuneration. By some peculiar misconception, however, Saint-Simon had regarded capital as involving some degree of personal sacrifice which entitled it to special remuneration. It was here that the Saint-Simonians intervened. Was it not perfectly obvious that private property in capital was the worst of all privileges? The Revolution had swept away caste distinctions and suppressed the right of primogeniture, which tended to perpetuate inequality among members of the same family, but had failed to touch individual property and its privilege of “laying a toll upon the industry of others.” This right of levying a tax is the fundamental idea in all their definitions of private property.[467] Property, according to the generally accepted meaning of the term to-day, consists of wealth which is not destined to be immediately consumed, but which entitles its owner to a revenue. Within this category are included the two agents of production, land and capital. These are primarily instruments of production, whatever else they may be. Property-owners and capitalists—two classes that need not be distinguished for our present purpose—have the control of these instruments. Their function is to distribute them among the workers. The distribution takes place through a series of operations which give rise to the economic phenomena of interest and rent.[468] Consequently the worker, because of this concentration of property in the hands of a few individuals, is forced to share the fruits of his labour. Such an obligation is nothing short of the exploitation of one man by another,[469] an exploitation all the more odious because the privileges are carefully preserved for one section of the community. Thanks to the laws of inheritance, exploiter and exploited never seem to change places.

To the retort that proprietors and capitalists are not necessarily idle—that many of them, in fact, work hard in order to increase their incomes—the Saint-Simonians reply that all this is beside the point. A certain portion of the income may possibly result from personal effort, but whatever they receive either as capitalists or proprietors can obviously only come from the labour of others, and that clearly is exploitation.

It is not the first time we have encountered this word “exploitation.” We are reminded of the fact that Sismondi made use of it,[470] and the same term will again meet us in the writings of Marx and others. None of them, however, uses it in quite the same sense, and it might be useful to distinguish here between the various meanings of a term which plays such an important rôle in socialist literature and which leads to so much confusion.

Sismondi, we know, regarded interest as the legitimate income of capital, but at the same time admitted that the worker may be exploited.

Such exploitation, he thought, took place whenever the wages were barely sufficient to keep the wage-earner alive, although at the same time the master might be living in luxurious ease. In other words, there is exploitation whenever the worker gets less than a “just” wage. It is merely a temporary defect and not an ineradicable disease of the economic system. It certainly does occur occasionally, although there is no reason why it ever should, and it may be removed without bringing the whole system to ruin. Conceived of in this vague fashion, what is known as exploitation is as difficult to define as the “just price” itself. It appears under several aspects, and is by no means peculiar to the master-servant relation. An individual is exploited whenever advantage is taken of his ignorance or timidity, his weakness or isolation, to force him to part with his goods or his services at less than the “just price” or to pay more for the goods or services of others than they are really worth.

The Saint-Simonians, on the other hand, considered that exploitation was an organic defect of our social order. It is inherent in private property, of which it is an invariable concomitant. It is not simply an incidental abuse, but the most characteristic trait of the whole system, for the fundamental attribute of all property is just this right to enjoy the fruits of labour without having to undergo the irksome task of producing. Such exploitation is not confined to manual labourers; it applies to every one who has to pay a tribute to the proprietor. The entrepreneur, in his turn, becomes a victim because of the interest which he pays to the capitalist, who supplies him with the funds which he needs.[471]

The entrepreneur’s profit, on the other hand, is not the result of exploitation. It represents payment for the work of direction. The master may doubtless abuse his position and reduce the wages of the workers excessively. The Saint-Simonians would then agree with Sismondi in calling this exploitation. But this is not a necessity of the system. And the Saint-Simonians look forward to a future state of society in which exceptional capacity will always be able to enjoy exceptional reward.[472] This is one of the most interesting elements in their theory.

Marx conceives of exploitation as an organic vice inherent in capitalism. But with him the term has quite a different connotation from that given it by the Saint-Simonians. Following the lead of certain English socialists, Marx comes to the conclusion that the origin of exploitation must be sought in the present method of exchanging wealth. Labour, in his opinion, is the source of all value, and consequently interest and profit must be of the nature of theft. The entrepreneur’s revenue is quite as unjust as the capitalist’s or landlord’s.[473]

This last theory, with its wholesale condemnation of income of every kind save the worker’s wage, seems much more logical than any of the others. But as a matter of fact it is much more open to criticism. If it can be demonstrated that the value of products is not the mere result of manual labour, then Marx’s idea falls to the ground. The Saint-Simonians were never embarrassed by any theory of value. Their whole contention rests upon the distinction between the income which is got from labour and the revenue which is derived from capital, which every one can appreciate. It was a distinction which had already been emphasised by Sismondi, and no conclusion other than the illegitimacy of all revenue not derived from labour can be drawn from the premises thus stated. Some basis other than labour must be discovered if this revenue is ever to be justified, and a new defence of private property must somehow be attempted.

The exigencies of production itself may supply such justification. Private property and the special kind of revenue which is derived from its possession justifies itself, in the opinion of a growing number of economists, on account of the stimulus it affords to production and the accumulation of wealth. This seems the most advantageous method of defence, and it is one of the grounds chosen by the Physiocrats.[474]

But the Saint-Simonians from the very first set this argument aside and attacked the institution of private property in the interests of social utility no less than in the interest of justice. Production as well as distribution, in their opinion, demanded its extinction.

(b) This brings us to the second point, which Saint-Simon did little more than suggest, namely, whether the institution of private property as at present existing is in the best interests of producers. The Saint-Simonians hold that it clearly is not, so long as the present method of distributing the instruments of production continues. At the present moment capital is transmitted in accordance with the laws of inheritance. Individuals chosen by the accident of birth are its depositors, and they are charged with the most difficult of all tasks, namely, the best utilisation of the agents of production. Social interest demands that they should be placed in more capable hands and distributed in those places and among those industries in which the need for those particular instruments is most keenly felt, without any fear of a scarcity in one place or a glut in another.[475] To-day it is a blind chance that picks out the men destined to carry out this infinitely difficult task. And all the efforts of the Saint-Simonians are concentrated just on this one point—inheritance.

Their indignation is easily explained. There is certainly something paradoxical in the fact to which they draw attention. If we accept Smith’s view, that government “is in reality instituted for the defence of those who have some property against those who have none at all”—a very narrow conception of the function of government[476]—inheritance is simply inevitable. On the other hand, if we put ourselves at the point of view of the Saint-Simonians, who lived in an industrial society where wealth was regarded, not as an end, but as a means, not merely as the source of individual income, but as the instrument of social production, it seems utterly wrong that it should be left at the disposal of the first comer. The practice of inheritance can only be justified on the ground that it provides a stimulus to the further accumulation of wealth, or that in default of a truly rational system the chances of birth are not much more open to criticism than any other.

Such scepticism was little to the taste of the Saint-Simonians. But they were firmly convinced that all the disorders of production, whether apparent or real, were due to the dispersion of property according to the chances of life and death.

“Each individual devotes all his attention to his own immediate dependents. No general view of production is ever taken. There is no discernment and no exercise of foresight. Capital is wanting here and excessive there. This want of a broad view of the needs of consumers and of the resources of production is the cause of those industrial crises whose origin has given rise to so much fruitless speculation and so many errors which are still circulating in our midst. In this important branch of social activity, where so much disturbance and such frequent disorder manifests itself, we see the evil result of allowing the distribution of the instruments of production to be in the hands of isolated individuals who are at once ignorant of the demands of industry, of other men’s needs, and of the means that would satisfy them. This and nothing else is the cause of the evil.”[477]

Escape from such economic anarchy, which has been so frequently described, can only become possible through collectivism—at least so the Saint-Simonians thought.[478] The State is to become the sole inheritor of all forms of wealth. Once in possession of the instruments of production, it can distribute them in the way it thinks best for the general interest. Government is conceived on the model of a great central bank where all the wealth of the country will be deposited and again distributed through its numerous branches. The uttermost ends of the kingdom will be made fertile, and the necessaries of life will be supplied to all who dwell therein. The best of the citizens will be put to work at tasks that will call forth their utmost efforts, and their pay will be as their toil. This social institution would be invested with all the powers which are so blindly wielded by individuals at the present moment.[479]

We need not insist too much on this project or press for further details, which the Saint-Simonians would have some difficulty in supplying.

Who, for example, is to undertake the formidable task of judging of the capacity of the workmen or of paying for their work? They are to be the “generals”—the superiors who are to be set free from the trammels of specialisation and whose instinctive feelings will naturally urge them to think only of the general interest. The chief will be he who shows the greatest concern about the social destiny of the community.[480] It is not very reassuring, especially when we remember that even with the greatest men there is occasionally a regrettable confusion of general and private interests.

But admitting the incomparable superiority of the “generals,” what of obeying them? Will the inferiors take kindly to submission or will they have to be forced to it? The first alternative was the one which they seemed to favour, for the new religion, “Saint-Simonism,” would always be at hand to inspire devotion and to deepen the respect of the inferiors for their betters.[481] One is tempted to ask what would become of the heretics if ever there happened to be any.

Further criticism of this kind can serve no useful purpose, and it applies to every collective system, differing only in matters of detail. Whenever it is proposed to set up an elaborate plan of economic activity, directed and controlled by some central authority, with a view to supplanting the present system of individual initiative and social spontaneity, we are met at the threshold with the difficulty of setting up a new code of morality. Instead of the human heart with its many mixed motives, its insubordination and weaknesses, in place of the human mind with all its failings, ignorance, and error, is to be substituted a heart and mind altogether ideal, which only serve to remind us how far removed they are from anything we have ever known. The Saint-Simonians recognised that a change so fundamental could only be accomplished through the instrumentality of religion. In doing this they have shown an amount of foresight which is rare among the critics who treat their ideas with such disdain.

It is more important that we should insist upon another fact, namely, that the Saint-Simonian system is the prototype of all the collectivist schemes that were proposed in the course of the century.

The whole scheme is very carefully thought out, and rests upon that penetrative criticism of private property which differentiates it from other social Utopias. The only equality which the Saint-Simonians demanded was what we call equality of opportunity—an equal chance and the same starting-point for every one. Beyond that there is to be inequality in the interests of social production itself. To each according to his capacity, and to every capacity according to the work which it has accomplished—such is the rule of the new society.[482]

An interesting résumé of the Saint-Simonians’ programme, given in a series of striking formulæ which they addressed to the President of the Chamber of Deputies,[483] is worth quoting:

“The Saint-Simonians do not advocate community of goods, for such community would be a manifest violation of the first moral law, which they have always been anxious to uphold, and which demands that in future every one shall occupy a situation becoming his capacity and be paid according to his labour.

“In view of this law they demand the abolition of all privileges of birth without a single exception, together with the complete extinction of the right of inheritance, which is to-day the greatest of all privileges and includes every other. The sole effect of this system is to leave the distribution of social advantages to a chance few who are able to lay some pretence to it, and to condemn the numerically superior class to deprivation, ignorance, and misery.

“They ask that all the instruments of production, all lands and capital, the funds now divided among individual proprietors, should be pooled so as to form one central social fund, which shall be employed by associations of persons hierarchically arranged so that each one’s task shall be an expression of his capacity and his wealth a measure of his labour.

“The Saint-Simonians are opposed to the institution of private property simply because it inculcates habits of idleness and fosters a practice of living upon the labour of others.”

(c) Critics of private property, generally speaking, are not content with its condemnation merely from the point of view either of distribution or production. They almost invariably employ a third method of attack, which might be called the historical argument. The argument generally takes the form of a demonstration of the path which the gradual evolution of the institution of private property has hitherto followed, coupled with an attempt to show that its further transformation along the lines which they advocate is simply the logical outcome of that process. The argument has not been neglected by the Saint-Simonians.

The history of this kind of demonstration is exceedingly interesting, and the rôle it has played in literature other than that of a socialist complexion is of considerable importance. Reformers of every type, whether the immediate objective be a transformation of private property or not, always base their appeals upon a philosophy of history.

Marx’s system is really a philosophy of history in which communism is set forth as the necessary consummation of all industrial evolution. Many modern socialists, although rejecting the Marxian socialism, still appeal to history. M. Vandervelde builds his faith upon it.[484] The authors of that quite recent work Socialisme en Action rely upon it, and so do Mr. and Mrs. Sidney Webb and all the Fabian Socialists. Dupont-White’s State Socialism is inspired by similar ideas, and so is the socialism of M. Wagner. Friedrich List has a way of his own with history; and the earliest ambition of the Historical school was to transform political economy into a kind of philosophy of history. If we turn to the realm of philosophy itself we find somewhat similar conceptions—the best known, perhaps, being Comte’s theory of the three estates, which was borrowed directly from Saint-Simon.[485]

This is not the place to discuss historical parallels. The point will come up in a later chapter in connection with the Historical school. What we would remark here is the good use which the Saint-Simonians made of the argument. All the past history of property was patiently ransacked, and the arguments of other writers who have extolled the merits of collectivism were thus effectually forestalled.

“The general opinion seems to be,” says the Doctrine de Saint-Simon,[486] “that whatever revolutions may take place in society, this institution of private property must for ever remain sacred and inviolable; it alone is from eternity unto eternity. In reality nothing could be less correct. Property is a social fact which, along with other social facts, must submit to the laws of progress. Accordingly it may be extended, curtailed, or regulated in various ways at different times.” This principle, once it was formulated, has never failed in winning the allegiance of every reformer. Forty years later the Belgian economist Laveleye, who has probably made the most thoroughly scientific study of the question, used almost identical words in summing up his inquiry into the principal forms of property.[487]

The Saint-Simonians feel confident that a glance at the progress of this evolution is enough to convince anyone that it must have followed the lines which they have indicated. The conception of property was at first broad enough to include men within its connotation. But the right of a master over his slaves gradually underwent a transformation which restricted its exercise, and finally caused its disappearance altogether. Reduced to the right of owning things, this right of possession was at first transmissible simply according to the proprietor’s will. But the legislature intervened long ago, and the eldest son is now the sole inheritor. The French Revolution enforced equal distribution of property between all children, and so spread out the benefits which the possession of the instruments of production confers. To-day the downward trend of the rate of interest is slowly reducing the advantages possessed by the owners of property, and goes a long way towards securing to each worker a growing share of his product.[488] There remains one last step which the Saint-Simonians advocate, which would secure to all workers an equal right to the employment of the instruments of production. This reform would consist in making everybody a proprietor, but the State the sole inheritor. “The law of progress as we have outlined it would tend to establish an order of things in which the State, and not the family, would inherit all accumulated wealth and every other form of what economists call the funds of production.”[489]

These facts might be employed to support a conclusion of an entirely different character. That equality of inheritance which was preserved rather than created by the French Revolution might be taken as a proof that modern societies are tending to multiply the number of individual proprietors by dividing the land between an increasing number of its citizens. But such discussion does not belong to a work of this kind. We are entitled to say, however, that the Saint-Simonian theory is a kind of prologue to all those doctrines that ransack the pages of history for arguments in favour of the transformation, or even the suppression, of private property.

Here again the Saint-Simonians have merely elaborated a view which their master had only casually outlined. Saint-Simon, also believed that in history we have an instrument of scientific precision equal to the best that has yet been devised.

Saint-Simon, who owes something in this matter to Condorcet, regarded mankind as a living being having its periods of infancy and youth, of middle and old age, just like the individuals who compose it. Epochs of intellectual ferment in the history of the race are exactly paralleled by the dawning of intellectual interests in the individual, and the one may be foretold as well as the other. “The future,” says Saint-Simon, “is just the last term of a series the first term of which lies somewhere in the past. When we have carefully studied the first terms of the series it ought not to be difficult to tell what follows. Careful observation of the past should supply the clue to the future.”[490] It was while in pursuit of this object that Saint-Simon stumbled across the term “industrialism” as one that seemed to him to express the end towards which the secular march of mankind appeared to lead. From family to city, from city to nation, from nation to international federation—such is the sequence which helps us to visualise the final term of the series, which will be some kind of “a universal association in which all men, whatever other relations they may possess, will be united.”[491] In a similar fashion the Saint-Simonians interpret the history of individual property and predict its total abolition through a process of its gradual extension to all individuals combined with the extinction of private inheritance.

The doctrine of the Saint-Simonians may well be regarded as a kind of philosophy of history.[492] Contemplation of the system fills them with an extraordinary confidence in the realisation of their dreams, to which they look forward not merely with confidence, but with feelings of absolute certainty. “Our predictions have the same origins and are based upon the same kind of foundations as are common to all scientific discoveries.”[493] They look upon themselves as the conscious, voluntary agents of that inevitable evolution which has been foretold and defined by Saint-Simon.[494] This is one trait which their system has in common with that of Marx. But there are two important differences. The Marxians relied upon revolution consummating what evolution had begun, while the Saint-Simonians relied upon moral persuasion.[495] The Saint-Simonians, true children of the eighteenth century that they were, believed that ideas and doctrines were sufficiently powerful agents of social transformation, while the Marxians preferred to put their hope in the material forces of production, ideas, in their opinion, being nothing better than a pale reflection of such forces.[496]

III: THE IMPORTANCE OF SAINT-SIMONISM IN THE HISTORY OF DOCTRINES

The doctrine of the Saint-Simonians consists of a curious mixture of realism and Utopianism. Their socialism, which makes its appeal to the cultured classes rather than to the masses, is inspired, not by a knowledge of working-class life, but by close observation and remarkable intuition concerning the great economic currents of their time.

The dispersion of the school gave the leaders an opportunity of taking an active part in the economic administration of their own country, and we find them throwing themselves whole-heartedly into various schemes of a financial or industrial character. In 1863 the brothers Péreire founded a credit association which became the prototype of the financial institutions of to-day. Enfantin took a part in the founding of the P.L.M. Railway, which involved an amalgamation of the Paris-Lyons, Lyons-Avignon, and Avignon-Marseilles lines. Enfantin was also the first to float a company for the purpose of making a canal across the isthmus of Suez. At the Collège de France Michel Chevalier defended the action of the State in undertaking certain works of a public character. It was he also who negotiated the treaty of 1860 with England, which was the means of inaugurating the era of commercial liberty for France. Other examples might be cited to show the important part which the Saint-Simonians played in nineteenth-century economic history.[497]

More especially did they realise the enormous place which banks and institutions of a similar nature were bound to have in modern industrial organisation. And whatever views we may hold as to the rights of property, we are bound to recognise how these deposit banks have already become great reservoirs of capital from which credit is distributed in a thousand ways throughout the whole realm of industry. Some writers, all of them by no means of the socialist way of thinking, would reproach the banks, especially in France, with their lack of courage in regulating and stimulating industry, which, as the Saint-Simonians foresaw, is a legitimate part of their duty.[498] The important part which they saw international financiers playing in the domestic affairs of almost every European nation during the Restoration period, coupled with their personal knowledge of bankers, helped the Saint-Simonians in anticipating the all-important rôle which credit was to play in modern industry.

Equally remarkable was the foresight they displayed in demanding a more rigorous control of production, and in emphasising the need for some better method of adapting that production to meet the exigencies of demand than is possible under a competitive system. The State obviously has neither the ability nor the inclination to discharge such functions, but so great are the inconveniences of competition that manufacturers are forced to enter into agreements with one another in order to exercise some such control. This is nothing less than a partial application of the doctrine of Saint-Simon.

In addition to the considerable personal influence which they were able to exercise over economic development, we have to recognise that in their writings we have the beginnings both of the critical and of the constructive contribution made by socialists to nineteenth-century economics. Their doctrine is, as it were, little more than an index to later socialist literature.

In the first place one must be struck by the number of formulæ to be met with in their work which have since become the commonplaces of socialism. “The exploitation of man by man” was a phrase that was exceedingly popular up to 1848. The term “class war,” which has taken its place since the time of Marx, expresses the same idea. They spoke of “the organisation of labour” even before Louis Blanc, and employed the term “instrument of labour” as a synonym for land and movable capital long before it was so used by Marx. Although we have not considered it necessary to group them with the Associationists, they have been as assiduous as any in proclaiming the superior merits of producers’ associations. Moreover, they anticipated the use which the socialists would make of the theory of rent. In a curious passage written long before the time of Henry George they refer to the possibility of applying the doctrines of Ricardo and Malthus to justify the devotion of the surplus produce of good land to the general needs of society, thus anticipating the theory of another prominent socialist thinker.[499] Other ideas might be mentioned, though not of a specifically socialist character. Thus the theory of profit-sharing, as far as our knowledge goes, was first developed in an article in Le Producteur.[500]

The more one examines the doctrines of the Saint-Simonians the more conscious does one become of the remarkable character of these anticipations and of the injustice of the oblivion which has since befallen them. Marx’s friend Engels called attention to the “genial perspicacity of Saint-Simon, which enabled him to anticipate all the doctrines of subsequent socialists other than those of a specifically economic character.”[501] The specifically economic idea of which Engels speaks and which Saint-Simon, in his opinion, did wrong to neglect was the Marxian theory of surplus value. We are inclined to the opinion that it was more of a merit than a fault to place socialism on its real foundation, which must necessarily be a social one, rather than to found it upon an erroneous theory of value.

But new formulæ are not their only contribution. Due note was taken of that fundamental opposition which exists between economists and socialists and which has caused all the conflicts and misunderstandings that disfigure the history of the century and resulted in their speaking an entirely different language. We shall try to define the nature of the conflict, in order, if possible, to help the reader over the difficulties that arise just where the bifurcation of economic thought takes place.

No attempt was made either by Adam Smith, Ricardo, or J. B. Say to make clear the distinction between the science of political economy and the fact of social organisation.[502] Property, as we have already had occasion to remark, was a social fact that was accepted by them without the slightest demur. The methods of dividing property and of inheriting it, the causes that determined its rise and the consequences that resulted from its existence, were questions that remained outside the scope of their discussions. By division or distribution of wealth they meant simply the distribution of the annual revenue between the various factors of production. Their interest centres round problems concerning the rate of interest or the rate of wages or the amount of rent. Their theory of distribution is simply a theory concerning the price of services. No attention was paid to individuals, the social product being supposed to be divided between impersonal factors—land, capital, and labour—according to certain necessary laws. For convenience of discussion the impersonal occasionally becomes personal, as when they speak of proprietors, capitalists, and workers, but that is not allowed to affect the general trend of the argument.

For the Saint-Simonians, on the other hand, and for socialists in general the problem of distribution consists especially in knowing how property is distributed. The question is to determine why some people have property while others have none; why the instruments of production, land, and capital should be so unevenly distributed, and why the revenues resulting from this distribution should be unequal. For a consideration of the abstract factors of production the socialists are anxious to substitute the study of actual living individuals or social classes and the legal ties which bind them together. These differing conceptions of distribution have given rise to two different problems, the one primarily economic, the other social, and sufficient care has not always been taken to distinguish between these two currents, which have managed to coexist, much to the confusion of social thinking in the nineteenth century.

Another essential difference between their respective points of view consists of the different manner in which economists and socialists conceive of the opposition that exists between the general interest and the interests of individuals.

Classical writers envisaged it as a conflict between the interests of consumers, i.e. everybody, and the interests of producers, which are more or less the interests of a particular class.

The Saint-Simonians, on the other hand—and in this matter their distinction has met with the hearty approval of every socialist—think it better to regard it as between workers on the one hand and idlers on the other, or between workers and capitalists, to adopt the cramped formula of a later period. The worker’s is the general interest; the particular interest is that of the idler who lives at the former’s expense. “We have on several occasions,” writes Enfantin, “pointed out some of the errors in the classification adopted by most present-day economists. The antithesis between producer and consumer gives a very inadequate idea of the magnitude of the gap that lies between the various members of society, and a better differentiation would be that which would treat them as workers and idlers.”[503] The difference in the point of view naturally results in an entirely different conception of social organisation. Economists think that society ought to be organised from the point of view of the consumer and that the general interest is fully realised when the consumer is satisfied. Socialists, on the contrary, believe that society should be organised from the standpoint of the worker, and that the general interest is only fully achieved when the workers draw their full share of the social product, which is as great as it possibly can be.[504]

There is one last element of difference which is very important. Classical writers made an attempt to reduce the apparent disorder of individual action within the compass of a few scientific laws. By the time the task was completed so struck were they with the profound harmony which they thought they had discovered that they renounced all attempts at amelioration. They were so satisfied with the demonstration which they had given of the way in which a spontaneous social force, such as competition, for example, tended to limit individual egoism and to complete the triumph of the general interest that they never thought of inquiring whether the action of these forces might not be rendered a little less harmful or whether the mechanism might not with advantage be lubricated and made to run somewhat more smoothly.

The Saint-Simonians, on the other hand—and in this matter it is necessary to couple with theirs the name of Sismondi—are convinced of the slowness, the awkwardness, and the cruelty with which spontaneous economic forces often go to work. Consequently they are concerned with the possibility of substituting a more conscious, carefully thought-out effort on the part of society. Instead of a spontaneous reconciliation of conflicting interests they suggest an artificial reconciliation, which they strive with all their might to realise. Hence the innumerable attempts to set up a new mechanism which might take the place of the spontaneous mechanism, and the childish efforts to co-ordinate or combine economic forces. These attempts, most of them of necessity unsuccessful, furnished the adversaries of socialism with their best weapons of attack. All of them, however, did not prove quite fruitless, and some of them were destined to exercise a notable influence upon social development.

It is in the Saint-Simonian doctrine that we find these contrasts between political economy and socialism definitely marked and in full detail. It matters little to us to-day that the school was ridiculed or that the eccentricities of Enfantin destroyed his propaganda work just when Fourier was pursuing his campaign with great success. Ideas are the things that stand out in a history of doctrines. To us, at any rate, Saint-Simonism appears as the first and most eloquent as well as the most penetrating expression of the sentiments and ideals that inspire nineteenth-century socialism.[505]

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