IV. THE ANARCHISTS (part 1 of 2)

IV. THE ANARCHISTS (part 1 of 2)

The social creed of the anarchist is a curious fusion of Liberal and socialist doctrines. Its economic criticism of the State, its enthusiasm for individual initiative, as well as its conception of a spontaneous economic order, are features which it owes to Liberalism; while its hatred of private property and its theory of exploitation represent its borrowings from socialism.

Doctrinal fusions of this kind which seek to combine two extreme standpoints not infrequently outdo them both. Dunoyer, for example, was the extremest of Liberals, but he took great care to remind his readers of at least one function which none but the State could perform: no other authority, he thought, could ever undertake to provide security. True bourgeois of 1830 that he was, Dunoyer always considered that “order” was a prime social necessity.[1292] But, armed with the criticism of the socialists, the anarchists soon get rid of this last vestige of the State’s prerogative. In their opinion the security of which Dunoyer spoke merely meant the security of proprietors; “order” is only necessary for the defence of the possessors against the attack of the non-possessors. The socialists themselves (with the exception of Fourier, perhaps, whom the anarchists claim as one of themselves), however opposed to private property, were exceedingly anxious to retain considerable powers in the hands of the State, such as the superintendence of social production, for example. Armed this time with the criticism of the Liberal school, the anarchists experience no difficulty in demonstrating the economic and administrative incapacity of the State. “Liberty without socialism means privilege, and socialism without liberty means slavery and brutality”—so writes Bakunin.[1293]

It is only fitting that a few pages at the end of this book should be devoted to a doctrine that attempts to fuse the two great social currents that strove so valiantly for the upper hand in nineteenth-century history.

It is not our first acquaintance with anarchy, however. It has already been given a “local habitation and a name” by Proudhon, who is the real father of modern anarchism. This does not imply that similar doctrines may not be discovered in writings of a still earlier date, as in Godwin’s, for example. But such writers remained solitary exceptions,[1294] while the links connecting the anarchical teaching of Proudhon with the political and social anarchy of the last thirty years are easily traced. Not only is the similarity of ideas very striking, but their transmission from Proudhon to Bakunin, and thence to Kropotkin, Reclus, and Jean Grave, is by no means difficult to follow.

Alongside of the political and social anarchism which form the principal subject of this chapter there is also the philosophical and literary anarchism, whose predominant characteristic is an almost insane exaltation of the individual. The best known representative of this school, which hails from Germany, is Max Stirner, whose book entitled Der Einzige und sein Eigenthum appeared in 1844.[1295] The work was forgotten for a long time, although it enjoyed a striking success when it first appeared. Some twenty years ago, just when Nietzsche was beginning to win that literary renown which is so unmistakably his to-day, it was seen that in Stirner he had a precursor, although Stirner’s works probably remained quite unknown to Nietzsche himself, with the result that Stirner has since enjoyed posthumous fame as the earliest immoraliste. A few words only are necessary to show the difference between his doctrines and those of Proudhon, Bakunin, and Kropotkin.[1296]

I: STIRNER’S PHILOSOPHICAL ANARCHISM AND THE CULT OF THE INDIVIDUAL

Stirner’s book was written as the result of a wager. The nature of the circumstances and the character of the epoch that gave birth to it were briefly these. Stirner was a member of a group of young German Radicals and democrats whom Bruno Bauer had gathered round him in 1840. They drew their inspiration from Feuerbach, and accepted the more extreme views of the Hegelian philosophy. Their ideal was the absolute freedom of the human spirit, and in the sacred name of liberty they criticised everything that seemed in any way opposed to this ideal, whether nascent communism, dogmatic Christianity, or absolute government. The intellectual leaders of the German Revolution of 1848 were drawn from this group, but they were soon swept aside in the reaction of 1850. A few of them who were in the habit of meeting regularly in one of the Berlin restaurants assumed the name die Freien. Marx and Engels occasionally joined them, but soon left in disgust. Their joint pamphlet, which bears the ironical title of The Holy Family, is supposed to refer to Bauer and his friends. A few of the German Liberal economists, including Julius Faucher among others, paid occasional visits to the Hippel Restaurant. Max Stirner, who was one of the most faithful members and a most attentive listener, although it does not seem that he contributed much to the discussion, conceived the idea of preparing a surprise for his friends in the form of a book in which he attempted to prove that the criticism of the supercritics was itself in need of criticism.

The extreme Radicals who formed the majority of the group were still very strongly attached to a number of abstract ideas which to Stirner seemed little better than phantoms. Humanity, Society, the Pure, and the Good seemed so many extravagant abstractions; so many fetishes made with hands before whom men bow the knee and show as much reverence as ever the faithful have shown towards their God. Such abstractions, it seemed to him, possess about as much reality as the gods of Olympus or the ghosts that people the imagination of childhood. The only reality we know is the individual; there is no other. Every individual constitutes an independent original force, its only law its own personal interest, and the only limit to his development consists in whatever threatens that interest or weakens its force. Every man has a right to say, “I want to become all that it is within my power to become, and to have everything I am entitled to.”[1297] Bastiat had already expressed it as his opinion that there could be no conflict of legitimate rights, and Stirner declares that “every interest is legitimate provided only it is possible.” “The crouching tiger is within his rights when he springs at me; but so am I when I resist his attacks.” “Might is right, and there is no right without might.”[1298]

Granting that the individual is the only reality, all those collective unities that go by the name of the family, the State, society, or the nation, and all of which tend to limit his individuality by making the individual subservient to themselves, at once become meaningless. They are devoid of substance and reality.[1299] Whatever authority they possess has been ascribed to them by the individual. Mere creatures of the imagination, they lose every right as soon as I cease to recognise them, and it is only then that I become a really free man. “I have a right to overthrow every authority, whether of Jesus, Jehovah, or God, if I can. I have a right to commit a murder if I wish it—that is to say, unless I shun a crime as I would a disease. I decide the limits of my rights, for outside the ego there is nothing.… It may be that that nothing belongs to no one else; but that is somebody else’s affair, not mine. Self-defence is their own look-out.”[1300] The workers who complain of exploitation, the poor who are deprived of all property, have just one thing which they must do. They must recognise the right to property as inherent in themselves and take as much of it as they want. “The egoist’s method of solving the problem of poverty is not to say to the poor, ‘Just wait patiently until a board of guardians shall give you something in the name of the community,’ but ‘Lay your hands upon anything you want and take that.’ The earth belongs to him who knows how to get hold of it, and having got hold of it knows how to keep it. If he seizes it, not only has he the land, but he has the right to it as well.”[1301]

But what kind of a society would we have under such conditions? It would simply be a “Union of Egos,” each seeking his own and joining the association merely with a view to greater personal satisfaction. Present-day society dominates over the individual, making him its tool. The “Union of Egos”—for we cannot call it a society—would be simply a tool in the hand of the individual. No scruples would be felt by anyone leaving the union if he thought something was to be gained by such withdrawal. Every individual would just say to his neighbour, “I am not anxious to recognise you or to show you any respect. I simply want you to be of some service to me.”[1302] It would be a case of bellum omnium contra omnes, with occasional precarious alliances. But it would at least mean liberty for all.

Such strange, paradoxical doctrines are irrefutable if we accept Stirner’s postulates. But we must reject his whole point of view and dispute the stress laid upon the individual as the only reality, as well as his denial of the reality of society. Granting that the individual is the only reality, then society and the nation are mere abstractions created by man and removable at his pleasure. But that is just the mistake. The individual has no existence apart from society, nor has he any greater degree of reality. He is simply an element, not a separate entity. His existence or non-existence does not depend upon himself. Nor is society merely an idea. It is a natural fact. The individual may be quite as appropriately described as an abstraction or a mere phantom.

The fundamental difference between Stirner and the other anarchists who will engage our attention is just this recognition of the reality of the social fact which Stirner denies in toto. It also marks the cleavage between literary and political anarchism.[1303]

II: SOCIAL AND POLITICAL ANARCHISM AND THE CRITICISM OF AUTHORITY

Stirner spent his life between his study and the Hippel Restaurant, the rendezvous of his friends. Bakunin and Kropotkin are men of a different stamp who have risked their freedom, and even their lives, for the sake of the cause which they have at heart. It is true that the seed sown in the mind of the ignorant as the result of their teaching has often had most deplorable results, but no one can deny the quality of courage to either Kropotkin or Reclus, or withhold from them the title of greatness both of mind and character.

Bakunin was reared in much the same intellectual atmosphere as Stirner.[1304] By birth he belonged to the Russian nobility, and spent the earliest years of his life in the Russian army. In 1834, at the age of twenty, he resigned his commission in order to devote himself to the study of philosophy, and, like Proudhon, Stirner, and Marx, he came under the universal spell of Hegel. In 1840 he proceeded to Berlin, where he became acquainted with the school of young Radicals of whom we have already spoken. From 1844 to 1847 we find him in Paris, where he used to spend whole nights in discussion with Proudhon. Proudhon’s influence upon him is very marked, and one constantly meets with passages in the writings of the Russian anarchist which are nothing but paraphrases of ideas already put forward by Proudhon in the Idée générale de la Révolution au XIXe Siècle. The year 1848 revealed to the dilettante nobleman his true vocation, which he conceived to be that of a revolutionary. He successively took part in the risings at Prague and in the Saxon Revolution at Dresden. He was arrested and twice condemned to death, in Saxony and again in Austria, but was finally handed over to the Russian authorities, who imprisoned him in the fortress of St. Peter and St. Paul, where an attack of scurvy caused him to lose all his teeth. He was exiled to Siberia in 1857, but managed to escape in 1861. Making his way to London, he undertook the direction of a vigorous revolutionary campaign, which was carried on in Switzerland, Italy, and France. During the years 1870 and 1871 he successfully planned a popular rising at Lyons. Bernard Lazare has graphically described him as “a hirsute giant with an enormous head which seems larger than it really is because of the mass of bushy hair and untrimmed beard which surrounds it. He always sleeps rough, has no roof above him, and no homeland which he can call his own, and like an apostle is always prepared to set out on his sacred mission at any hour of the night or day.”

The most striking fact in his history was his rupture with Karl Marx at the last International Congress, held at The Hague in 1872. Bakunin joined the International in 1869. Disgusted with the pontifical tendencies of the General Council, which was entirely under the heel of Marx, he proposed a scheme of federal organisation under which each section would be left with considerable autonomy. The Jura Federation supported his proposals, and so did several of the French, Belgian, and Spanish delegates, as well as all the Italian. But he was expelled from the International by Marx’s own friends. The official rupture between Marxian socialism and anarchy, grown to considerable proportions since, dates from that very moment. That Hague congress marks also the end of the International. Marx soon afterwards transferred the centre of the administration to the United States, and no conference has been held since. Bakunin also retired from the struggle about the same time, but not before he had set up a new association at Geneva, composed of a few faithful friends. In 1876 Bakunin died at Berne.

It was in the region of the Jura, in the neighbourhood of Neuchâtel, where Bakunin had still a few followers among the extremely individualistic but somewhat mystical population of those parts, that Kropotkin in the course of a short stay in the district in 1872 imbibed those anarchist ideas to the propagation of which he has so strenuously devoted his life.[1305] Although personally unacquainted with Bakunin, Kropotkin must be regarded as his direct descendant.

Prince Kropotkin is also a Russian aristocrat, and he, like his master, joined the army after a short period of study. He attracted public notice first of all as the author of several remarkable works dealing with natural history and geography, which showed him to be a confirmed disciple of Darwin. But science was by no means his only interest. By 1871 Hegelian influence was on the wane in Russia, and the more thoughtful of the younger generation turned their attention to democracy. The new watchword was, “Go, seek the people, live among them, educate them and win their confidence if you want to get rid of the yoke of autocracy.” Kropotkin caught the inspiration. He himself has told us how one evening after dinner at the Winter Palace he drove off in a cab, took off his fine clothes, and, putting on a cotton shirt instead of his silk one, and boots such as the peasants wore, hurried away to another quarter of the city and joined a number of working men whom he was trying to educate. But his propaganda proved short-lived, for one evening when he was leaving the headquarters of the Geographical Society, where he had just been reading a paper and had been offered the presidency of one of the sections, he was arrested on a charge of political conspiracy and imprisoned in the fortress of St. Peter and St. Paul. He managed to escape in 1876, and found refuge in England. Afterwards he was wrongfully condemned to three years’ imprisonment at Clairvaux on account of his supposed complicity in an anarchist outbreak which took place at Lyons in 1884. But there was something extraordinary about a prisoner who could get the libraries of Ernest Renan and the Paris Academy of Sciences placed at his disposal during his term of imprisonment in order to enable him to pursue his scientific investigations. During his previous imprisonment in Russia the Geographical Society of St. Petersburg had extended him a similar privilege. Kropotkin has since lived in England.

The best known French anarchists, Élisée Reclus, the geographer, and Jean Grave, simply reproduce Kropotkin’s ideas, with an occasional admixture of Bakunin’s or Proudhon’s.[1306]

Our concern is with the expression of anarchist ideas as we find them in the best known writers of the school. Consequently we must pass over the very striking but immature formulæ which are not infrequently to be met with in the works of more obscure writers.[1307]

Here again the distinguishing features are the emphasis laid upon individual rights and a passion for the free and full development of personality, which, as we have seen, was the keynote of Stirner’s system. “Obedience means abdication,” declares Élisée Reclus.[1308] “Mankind’s subjection will continue just so long as it is tolerated. I am ashamed of my fellow-men,” writes Proudhon in 1850 from his prison at Doullens.[1309] “My liberty,” says Bakunin, “or what comes to the same thing, my honour as a man, consists in obeying no other individual and in performing only just those acts that carry conviction to me.”[1310] Jean Grave declares that society can impose “no limitations upon the individual save such as are derived from the natural conditions under which he lives.”[1311]

But this cult of the individual which is present everywhere in anarchist literature rests upon a conception which is the direct antithesis of Stirner’s. To Stirner every man was a unique being whose will was his only law. The anarchists who follow Proudhon, on the other hand, regard man as a specimen of humanity, i.e. of something superior to the individual. “What I respect in my neighbour is his manhood,”[1312] wrote Proudhon. It is this humanity or manhood that the anarchist would have us respect by respecting his liberty, for, as Bakunin declares, “liberty is the supreme aim of all human development.”[1313] It is not the triumph of the egoist but the triumph of humanity in the individual that the anarchists would seek, and so they claim liberty not merely for themselves but for all men. Far from wishing to be served by their fellow-men, as Stirner desired, they want equal respect shown for human dignity wherever found. “Treat others as you would that others should treat you under similar circumstances,”[1314] writes Kropotkin, employing Kantian and even Christian phraseology. Bakunin, a faithful disciple of Proudhon’s, considered that “all morality is founded on human respect, that is to say, upon the recognition of the humanity, of the human rights and worth in all men, of whatever race or colour, degree of intellectual or moral development”;[1315] and he adds that “the individual can only become free when every other individual is free. Liberty is not an isolated fact. It is the outcome of mutual goodwill; a principle not of exclusion, but of inclusion, the liberty of each individual being simply the reflection of his humanity or of his rights as a human being in the conscience of every free man, his brother and equal.”[1316] This idea of humanity, which the latest anarchists owe to Proudhon, is not simply foreign to Stirner, but is just one of those phantoms which Stirner was particularly anxious to waylay.[1317]

Along with this extravagant worship of individual liberty goes a hatred of all authority. Here the political anarchists join hands with Stirner. For the exercise of authority of one man over another means the exploitation of one man by another and a denial of his humanity. The State is the summation of all authority, and the full force of anarchist hatred is focused upon the State. No human relation is too sacred for State intervention, no citizen but is liable to have his conduct minutely prescribed by law. There are officers to apply the law, armies to enforce it, lecturers to interpret it, priests to inculcate respect for it, and jurists to expound it and to justify everybody. Thus has the State become the agent par excellence of all exploitation and oppression.[1318] It is the one adversary, in the opinion of every anarchist—“the sum total of all that negates the liberty of its members.” “It is the grave where every trace of individuality is sacrificed and buried.” Elsewhere, “it is a flagrant negation of humanity.”[1319] Bakunin, who in this matter as well as in many others is a follower of Bastiat, speaks of it as “the visible incarnation of infuriated force.” That is enough to label it for ever with the evil things of life, for the aim of humanity is liberty, but force is “a permanent negation of liberty.”[1320]

A necessary agent of oppression, government always and inevitably becomes the agent of corruption. It contaminates everything that comes into contact with it, and the first to show signs of such contamination are its own representatives. “The best man, whoever that may be, whatever degree of intelligence, magnanimity, and purity of heart he may have, is unavoidably corrupted by his trade. The person who enjoys any privilege, whether political or economic, is intellectually and morally a depraved character.” So Bakunin thought,[1321] and Elisée Reclus writes in a similar strain. “Every tree in nature bears its own peculiar fruit, and government, whatever be the form it take, always results in caprice or tyranny, in misery, villainy, murder, and evil.”[1322] The governing classes are inevitably demoralised, but so are the governed, and for just the same reasons. Government is a worker of evil even when it would do good, for “the good whenever it is enjoined becomes evil. Liberty, morality, real human dignity consists in this, that man should do what is good not because he is told to do it, but simply because he thinks that it really is the best that he can ever wish or desire.”[1323]

It matters little what form government takes. Absolute or constitutional monarchy, democratic or aristocratic republicanism, government on the basis of a universal or a restricted suffrage, are all much the same, for they all presuppose a State of some sort. Authority, whether of a despot or of the majority of the community, is none the less authority, and implies the exercise of a will other than the individual’s own. The great error committed by all the revolutions of the past has been this: one government has been turned out, but only to have its place usurped by another. The only true revolution will be that which will get rid of government itself—the fount and origin of all authority.

Still closer scrutiny reveals the interesting fact that the State, which is naturally oppressive, gradually becomes employed as the instrument for the subjugation of the weak by the strong, the poor by the rich. It was Adam Smith who ventured to declare that “civil government … is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”[1324] Pages of anarchist literature simply consist of elaborate paraphrases of this remark of Smith’s.

Kropotkin thinks that every law must belong to one or other of three categories. To the first category belong all laws concerned with the security of the individual; to the second all laws concerned with the protection of government; and to the third all those enactments where the chief object in view is the inviolability of private property.[1325] In the opinion of the anarchist, all laws might more correctly be placed under the last category only, for whenever the safety of the individual is in any way threatened it is generally the result of some inequality of fortune.[1326] Indirectly, that is to say, the attack is directed against property. The real function of government is to defend property, and every law which is instrumental in protecting property is also effective in shielding the institution of government from attack.

Property itself is an organisation which enables a small minority of proprietors to exploit and to hold in perpetual slavery the masses of the people. In this instance the anarchists have not made any weighty contribution of their own, but have merely adopted the criticisms of the socialists.[1327] Proceeding in the usual fashion, they point to the miserable wages which are usually paid to the workers, and show how the masters always manage to reserve all the leisure, all the joys of existence, all the culture and other benefits of civilisation for themselves. Private property is of the essence of privilege—the parent of every other kind of privilege. And the State becomes simply the bulwark of privilege. “Exploitation and government,” says Bakunin, “are correlative terms indispensable to political life of every kind. Exploitation supplies the means as well as the foundation upon which government is raised, and the aim which it follows, which is merely to legalise and defend further exploitation.”[1328] “Experience teaches us,” says Proudhon,[1329] “that government everywhere, however popular at first, has always been on the side of the rich and the educated as against the poor and ignorant masses.”[1330]

Whether the extinction of private property, which would free the worker from the danger of being exploited by the rich, would also render the State unnecessary is a question upon which the anarchists are not agreed. Proudhon, we remember, had hoped by means of the Exchange Bank to reduce the right of property to mere possession. Bakunin, on the contrary, is under the spell of the Marxians, and, like a true collectivist, he thinks that all the instruments of production, including land, should be possessed by the community. Such instruments should always be at the disposal of groups of working men expert in the details of agriculture or industrial production, and such workers should be paid according to their labour.[1331] Kropotkin, on the other hand, regards communism as the ideal and looks upon the distinction drawn by the collectivist between instruments of production and objects of consumption as utterly futile. Food, clothing, and fuel are quite as necessary for production as machinery or tools, and nothing is gained by emphasising the distinction between them. Social resources of every kind should be freely placed at the disposal of the workers.[1332]

But the State and the institution of private property by no means exhausts the list of tyrannies. Individual liberty is as little compatible with irrevocable vows—that is, with a present promise which binds for ever the will of man—as it is with submission to external authority. The present marriage law, for example, violates both these conditions. Marriage ought to be a free union. A contract freely entered upon and deliberately fulfilled is the only form of marriage that is compatible with the true dignity and equality of both man and woman.[1333] A free and not a legal contract is the only form of engagement which the anarchists recognise. Free contract between man and wife, between an individual and an association, between different associations pursuing the same task, between one commune and another, or between a commune and a whole country. But such engagements must always be revocable, otherwise they would merely constitute another link in the chain that has shackled humanity. Every contract that is not voluntarily and frequently renewed becomes tyrannical and oppressive and constitutes a standing menace to human liberty. “Because I was a fool yesterday, must I remain one all my life?”[1334] asks Stirner; and on this point Bakunin, Kropotkin, Reclus, Jean Grave, and even Proudhon are agreed.

To regard their social philosophy as nothing but pure caprice because of the wonderful faith which they had in their fellow-men would, however, be a great mistake.

Notwithstanding the merciless criticism of authority of every kind, there was still left one autocrat, of a purely abstract character perhaps, but none the less imperious in its demands. This was the authority of reason or of science. The sovereignty of reason was one of the essential features of Proudhon’s anarchist society.[1335] What Proudhon calls reason Bakunin refers to as science, but his obeisance is not a whit less devotional. “We recognise,” says he, “the absolute authority of science and the futility of contending with natural law. No liberty is possible for man unless he recognise this and seek to turn this law to his own advantage. No one except a fool or a theologian, or perhaps a metaphysician, a jurist, or a bourgeois economist, would revolt against the mathematical law which declares that 2 + 2 = 4.” The utmost that a man can claim in this matter is that “he obeys the laws of nature because he himself has come to regard them as necessary, and not because they have been imposed upon him by some external authority.”[1336]

Not only does Bakunin bow the knee to science, but he also swears allegiance to technical or scientific skill. “In the matter of boots I am willing to accept the authority of the shoemaker; of clothes, the opinion of the tailor; if it is a house, a canal, or a railway, I consult the architect and the engineer. What I respect is not their office but their science, not the man but his knowledge. I cannot, however, allow any one of them to impose upon me, be he shoemaker, tailor, architect, or savant. I listen to them willingly and with all the respect which their intelligence, character, or knowledge deserves, but always reserving my undisputed right of criticism and control.”[1337] Bakunin has no doubt that most men willingly and spontaneously acknowledge the natural authority of science. He agrees with Descartes and employs almost identical terms[1338] when he declares that “common sense is one of the commonest things in the world.” But common sense simply means “the totality of the generally recognised laws of nature.” He shares with the Physiocrats a belief in their obviousness, and invokes their authority whenever he makes a vow. He is also anxious to make them known and acceptable of all men through the instrumentality of a general system of popular education. The moment they are accepted by “the universal conscience of mankind the question of liberty will be completely solved.”[1339] Let us again note how redolent all this is of the rationalistic optimism of the eighteenth century, and how closely Liberals and anarchists resemble one another in their absolute faith in the “sweet reasonableness” of mankind. Bakunin only differs from the Physiocrats in his hatred of the despot whom they had enthroned.

A society of free men, perfectly autonomous, each obeying only himself, but subservient to the authority of reason and science—such is the ideal which the anarchists propose, a preliminary consideration of its realisation being the overthrow of every established authority. “No God and no master,” says Jean Grave; “everyone obeying his own will.”[1340]

III: MUTUAL AID AND THE ANARCHIST CONCEPTION OF SOCIETY

At first sight it might seem that a conception of social existence which would raise every individual on a pedestal and proclaim the complete autonomy of each would speedily reduce society to a number of independent personalities. Every social tie removed, there would remain just a few individuals in juxtaposition, and society as a “collective being” would disappear.

But it would be a grievous mistake to conceive of the anarchist ideal in this light. There is no social doctrine where the words “solidarity” and “fraternity” more frequently recur. Individual happiness and social well-being are to them inseparable. Hobbes’ society, or Stirner’s, where the hand of everyone is against his brother, fill the anarchists with horror. To their mind that is a faithful picture of society as it exists to-day. In reality, however, man is a social being. The individual and society are correlative: it is impossible to imagine the one without thinking of the other.

No one has given more forcible expression to this truth than Bakunin; and this is possibly because no one ever had a keener sense of social solidarity. “Let us do justice once for all,” he remarks, “to the isolated or absolute individual of the idealists. But that individual is as much a fiction as that other Absolute—God.… Society, however, is prior to the individual, and will doubtless survive him, just as Nature will. Society, like Nature, is eternal; born of the womb of Nature, it will last as long as Nature herself.… Man becomes human and develops a conscience only when he realises his humanity in society; and even then he can only express himself through the collective action of society. Man can only be freed from the yoke of external nature through the collective or social effort of his fellow-men, who during their sojourn here have transformed the surface of the earth and made the further development of mankind possible. But freedom from the yoke of his own nature, from the tyranny of his own instincts, is only possible when the bodily senses are controlled by a well-trained, well-educated mind. Education and training are essentially social functions. Outside the bounds of society, man would for ever remain a savage beast.”[1341]

Whether we read Proudhon or Kropotkin, we always meet with the same emphasis on the reality of the social being, on the pre-existence of the State, or at least of its necessary coexistence, if the individual is ever to reach full development. It is true that there are a few anarchists, such as Jean Grave, who still seem to uphold the old futile distinction between the individual and society, and who conceive of society as made up of individuals just as a house is built of bricks.

But is there no element of contradiction between this idea and the previous declaration of individual autonomy? How is it possible to exalt social life and at the same time demand the abolition of all traditional social links?[1342]

The apparent antinomy is resolved by emphasising a distinction which Liberalism had drawn between government and society. Society is the natural, spontaneous expression of social life. Government is an artificial organ, or, to change the metaphor, a parasite preying upon society.[1343] Liberals from the days of Smith onward had applied the distinction to economic institutions; the anarchists were to apply it to every social institution. Not only the economic but every form of social life is the outcome of the social instinct which lies deep in the nature of humanity. This instinct of solidarity urges men to seek the help of their fellow-men and to act in concert with them. It is what Kropotkin calls mutual aid, and seems as natural to man and as necessary for the preservation of the species as the struggle for existence itself. What really binds society together, what makes for real cohesion, is not constraint (which, contrary to the time-honoured belief of the privileged classes, is really only necessary to uphold their privileges), but this profound instinct of mutual help and reciprocal friendship, whose strength and force have never yet been adequately realised. “There is in human nature,” says Kropotkin, “a nucleus of social habits inherited from the past, which have not been as fully appreciated as they might. They are not the result of any restraint and transcend all compulsion.”[1344]

Law, instead of creating the social instinct, simply presupposes it. Laws can only be applied so long as the instinct exists, and fall into desuetude as soon as the instinct refuses to sanction them. Government, far from developing this instinct, opposes it with rigid, stereotyped institutions which thwart its full and complete development. To free the individual from external restraint is also to liberate society by giving it greater plasticity and permitting it to assume new forms which are obviously better adapted to the happiness and prosperity of the race.[1345] Kropotkin in his delightful book Mutual Aid gives numerous examples of this spontaneous social instinct. He shows how it assumes different forms in the economic, scientific, educational, sporting, hygienic, and charitable associations of modern Europe; in the municipalities and corporations of the Middle Ages; and how even among animals this same instinct, which forms the real basis of all human societies, has enabled them to overcome the natural dangers that threaten their existence.

Anarchist society must not be conceived as a bellum omnium contra omnes, but as a federation of free associations which everyone would be at liberty to enter and to leave just as he liked. This society, Kropotkin tells us, would be composed of a multitude of associations bound together for all purposes that demand united action. A federation of producers would have control of agricultural and industrial, and even of intellectual and artistic, production; an association of consumers would see to questions of housing, lighting, health, food, and sanitation. In some cases the federation of producers would join hands with the consumers’ league. Still wider groups would embrace a whole country, or possibly several countries, and would include people employed in the same kind of work, whether industrial, intellectual, or artistic, for none of these pursuits would be confined to some one territory. Mutual understanding would result in combined efforts, and complete liberty would give plenty of scope for invention and new methods of organisation. Individual initiative would be encouraged; every tendency to uniformity and centralisation would be effectively checked.[1346]

In such a society as this complete concord between the general and the individual interests, hitherto so vainly sought after by the bourgeoisie, would be realised once for all in the absolute freedom now the possession of both the individual and the group, and in the total disappearance of all traces of antagonism between possessors and non-possessing, between governors and governed. Again we note a revival of the belief in the spontaneous harmony of interests which was so prominent a feature of eighteenth-century philosophy.[1347]

Such an attractive picture of society was bound to invite criticism. The anarchists foresaw this, and have tried to meet most of the arguments.

In the first place, would such extravagant freedom not beget abuse, unjustifiable repudiation of contracts, crimes and misdemeanours? Would it not give rise to chronic instability? and would the conscientious never find themselves the victims of the fickle and the fraudulent?

The anarchists agree that there may be a few pranks played, or, as Grave euphemistically calls them, “certain acts apparently altogether devoid of logic.”[1348] But can we not reckon upon criticism and disapproval checking such anti-social instincts? Public opinion, if it were once freed from the warping influence of present-day institutions, would possess far greater coercive force.[1349] Our present system of building prisons, “those criminal universities,” as Kropotkin calls them, will never check these anti-social instincts. “Liberty is still the best remedy for the temporary excesses of liberty.”[1350] Moreover, such a system would enjoy a superior sanction in the possible refusal of other people to work with those who could not keep their word.[1351] “You are a man and you have a right to live. But as you wish to live under special conditions and leave the ranks, it is more than probable that you will suffer for it in your daily relations with other citizens.”[1352]

But there is still a more serious objection. Were there no compulsion, would anyone be found willing to work? The host of idlers is at the present time vast, and without the sting of necessity it would become still greater. Kropotkin remarks that “it is only about the sugar plantations of the West Indies and the sugar refineries of Europe that robbery, laziness, and very often drunkenness become quite usual with the bees.”[1353] Is it not possible that men are just imitating the bee?

The anarchists point out that many a so-called idler to-day is simply a madcap who will soon discover his true vocation in the free society of the future, and will thus be gradually transformed into a useful member of society.[1354] Moreover, does not the fact that so many people shun work altogether prove that the present method of organising society must be at once cruel and repugnant? The certainty of being confined in an unhealthy workshop for ten or twelve hours every day, with mind and body “to some unmeaning task-work given,” in return for a wage that is seldom sufficient to keep a family in decent comfort, is hardly a prospect that is likely to attract the worker. One of the principal aims of the anarchist régime—and in this respect it resembles the Phalanstère of Fourier—will be to make labour both attractive and productive.[1355] Science will render the factory healthy well lighted and thoroughly ventilated. Machinery will even come to the rescue of the housewife and will relieve her of many a disagreeable task. Inventors, who are generally ignorant of the unpleasant nature of many of these tasks, have been inclined to ignore them altogether. “If a Huxley spent only five hours in the sewers of London, rest assured that he would have found the means of making them as sanitary as his physiological laboratory.”[1356] Finally, and most important of all, the working day could then be reduced to a matter of four or five hours, for there would no longer be any idlers, and the systematic application of science would increase production tenfold.

The wonderful expansion of production under the influence of applied science is a favourite theme of the anarchists. Kropotkin has treated us to some delightful illustrations of this in his Conquest of Bread. He begins by pointing out the wonders already accomplished by market gardeners living in the neighbourhood of Paris. One of these, employing only three men working twelve to fifteen hours a day, was able, thanks to intensive cultivation, to raise 110 tons of vegetables on one acre of ground. Taking this as his basis, he calculates that the 3,600,000 inhabitants in the departments of the Seine and the Seine-et-Oise could produce all the corn, milk, vegetables, and fruit which they could possibly need in the year with fifty-eight half-days labour per man. By parity of reasoning he arrives at the conclusion that twenty-eight to thirty-six days’ work per annum would secure for each family a healthy, comfortable home such as is occupied by English working men at the present time. The same thing applies to clothing. American factories produce on an average forty yards of cotton in ten hours. “Admitting that a family needs two hundred yards a year at most, this would be equivalent to fifty hours’ labour, or ten half-days of five hours each,[1357] and that all adults save women bind themselves to work five hours a day from the age of twenty or twenty-two to forty-five or fifty.… Such a society could in return guarantee well-being to all its members.”[1358] Élisée Reclus shares these hopes. It seems to him that “in the great human family hunger is simply the result of a collective crime, and it becomes an absurdity when we remember that the products are more than double enough for all the needs of consumers.”[1359]

Amid such superabundant wealth, in a world thus transformed into a land of milk and honey, distribution would not be a very difficult problem. Nothing really could be easier. “No stint or limit to what the community possesses in abundance, but equal sharing and dividing of those commodities which are scarce or apt to run short.”[1360] Such was to be the guiding principle. In practice the women and children, the aged and the infirm, were to come first and the robust men last, for such even is the etiquette of the soup kitchen, which has become a feature of some recent strikes. As to the laws of value which are supposed to determine the present distribution of wealth, and which the economists fondly believe to be necessary and immutable, the anarchists regard them as being no concern of theirs. The futility of such doctrines is a source of some amusement to them.[1361]

IV: REVOLUTION

But how is the beautiful dream to be realised? The way thither, from the miserable wilderness wherein we now dwell to the Promised Land of which they have given us a glimpse, lies through Revolution—so the anarchist tells us.

A theory of revolution forms a necessary part of the anarchist doctrine. In the mind of the public it is too often thought to be the only message which the anarchists have to give. We must content ourselves with a very brief reference to it, for the non-economic ideas of anarchism have already detained us sufficiently long.

Proudhon is soon out of the running. We have already had occasion to refer to his disapproval of violence and revolution. It seemed to him that the anarchic ideal was for ever impossible apart from a change of heart and a reawakening of conscience. But his successors were somewhat less patient. To their minds revolution seemed an unavoidable necessity from which escape was impossible. Even if we could imagine all the privileged individuals of to-day agreeing among themselves on the night of some fourth of August to yield up every privilege which they possess and to enter the ranks of the proletariat of their own free will, such a deed would hardly be desirable. The people, says Reclus, with their usual generosity, would simply let them do as they liked, but would say to their former masters, “Keep your privileges.” “It is not because justice should not be done, but things ought to find a natural equilibrium. The oppressed should rise in their own strength, the despoiled seize their own again, and the slaves regain their own liberty. Such things can only really be attained as the result of a bitter struggle.”[1362]

It is not that Bakunin, Kropotkin, or their disciples revel in bloodshed or welcome outbreaks of violence. Bloodshed, although inevitably and inseparably connected with revolution, is none the less regrettable, and should always be confined within the narrowest limits. “Bloody revolutions are occasionally necessary because of the crass stupidity of mankind; but they are always an evil, an immense evil, and a great misfortune; not only because of their victims, but also because of the pure and perfect character of the aims in view of which they are carried out.”[1363] “The question,” says Kropotkin,[1364] “is not how to avoid revolutions, but how to secure the best results by checking civil war as far as possible, by reducing the number of victims, and by restraining the more dangerous passions.” To do this we must rely upon people’s instincts, who, far from being sanguinary, “are really too kind at heart not to be very soon disgusted with cruelty.”[1365] The attack must be directed not against men but against their position, and the aim must be not individuals but their status. Hence Bakunin lays great stress upon setting fire to the national archives, and to papers of all kinds relating to title in property, upon the immediate suppression of all law courts and police, upon the disbanding of the army, and the instant confiscation of all instruments of production—factories, mines, etc. Kropotkin in the Conquest of Bread gives us a picture of an insurgent commune laying hold of houses and occupying them, seizing drapers’ establishments and taking whatever they need, confiscating the land, cultivating it, and distributing its products. If revolutionists only proceeded in this fashion, never respecting the rights of property at all (which was the great mistake made by the Commune in its dealing with the Bank of France during the rising of 1871), the revolution would soon be over and society would speedily reorganise itself on a new and indestructible basis and with a minimum of bloodshed.

But the tone is not always equally pacific. Bakunin during at least one period of his life preached a savage and merciless revolution against privilege of every kind. At that time, indeed, he might justly have passed as the inventor of the active propaganda which, strenuously pursued for many years by a few exasperated fanatics, had the effect of rousing public opinion everywhere against anarchism. “We understand revolution,” someone has remarked, “in the sense of an upheaval of what we call the worst passions, and we can imagine its resulting in the destruction of what we to-day term public order.” “Brigandage,” it is remarked elsewhere, “is an honourable method of political propaganda in Russia, where the brigand is a hero, a defender and saviour of the people.”[1366] In a kind of proclamation entitled The Principles of Revolution, which, as some writers point out, ought not to be attributed to Bakunin, but which at any rate appears to give a fair representation of his ideas at this period of his life, we meet with the following words: “The present generation should blindly and indiscriminately destroy all that at present exists, with this single thought in mind—to destroy as much and as quickly as possible.”[1367] The means advocated are of a most varied description: “Poison, the dagger, and the sword … revolution makes them all equally sacred. The whole field is free for action.”[1368] Bakunin had always shown a good deal of sympathy for the rôle of the conspirator. In the Statutes of the International Brotherhood, which prescribed the rules of conduct for a kind of revolutionary association created by Bakunin in 1864, are some passages advocating violence which are as bloodcurdling as anything contained in Netchaieff’s famous Revolutionary Catechism. It is difficult to find lines more full of violent revolutionary exasperation than that passage of the Statutes of the International Socialist Alliance which forms the real programme of the anarchists. Since it also seems to us to give a fairly faithful expression of Bakunin’s thoughts on the matter, it will afford a fitting close to our exposition.

“We want a universal revolution that will shake the social and political, the economic and philosophical basis of society, so that of the present order, which is founded upon property, exploitation, dominion, and authority, and supported either by religion or philosophy, by bourgeois economics or by revolutionary Jacobinism, there may not be left, either in Europe or anywhere else, a single stone standing. The workers’ prayer for peace we would answer by demanding the freedom of all the oppressed and the death of everyone who lords it over them, exploiters and guardians of every kind. Every State and every Church would be destroyed, together with all their various institutions, their religious, political, judicial, and financial regulations; the police system, all university regulations, all social and economic rules whatsoever, so that the millions of poor human beings who are now being cheated and gagged, tormented and exploited, delivered from the cruellest of official directors and officious curates, from all collective and individual tyranny, would for once be able to breathe freely.”[1369]

A discussion of anarchist doctrine lies beyond our province. Moreover, such sweeping generalisations disarm all criticism. Their theories are too often the outbursts of passionate feeling and scarcely need refuting. Let us, then, try to discover the kind of influence they have had.

We are not going to speak of the criminal outrages which unfortunately have resulted from their teaching. Untutored minds already exasperated by want found themselves incapable of resisting the temptations to violence in face of such doctrines. Such deeds, or active propaganda as they call it, can have no manner of justification, but find an explanation in the extreme fanaticism of the authors. It is not very easy to attribute such violence to a social doctrine which, according to the circumstances, may on the one hand be considered as the philosophy of outrage and violence, and on the other as an ideal expression of human fraternity and individual progress.

The influence of which we would speak is the influence which anarchy has had upon the working classes in general. Undoubtedly it has led to a revival of individualism and has begotten a reaction against the centralising socialism of Marx. Its success has been especially great among the Latin nations and in Austria, where it seemed for a time as if it would supplant socialism altogether. Very marked progress has also been made in France, Italy, and Spain. Is it because individuality is stronger in those countries than elsewhere? We think not. The fact is that wherever liberty has only recently been achieved, order and discipline, even when freely accepted, seem little better than intolerable signs of slavery.

An anarchist party came into being between 1880 and 1895. But since 1895 it seems to have declined. This does not mean that the influence of anarchism has been on the wane, but simply that it has changed its character. In France especially many of the older anarchists have joined the Trade Union movement, and have occasionally managed to get the control of affairs into their own hands, and under their influence the trade unions have tried to get rid of the socialist yoke. The Confédération générale du Travail has for its motto two words that are always coupled together in anarchist literature, namely, “Welfare and liberty.” It has also advocated “direct action”—that is, action which is of a definitely revolutionary character and in defiance of public order. Finally, it betrays the same impatience with merely political action, and would have the workers concentrate upon the economic struggle.

The prophets of revolutionary syndicalism deny any alliance with anarchy. But, despite their protests, it would be a comparatively easy matter to point to numerous analogies in the writings of Bakunin and Kropotkin. Moreover, they admit that Proudhon, as well as Marx, has contributed something to the syndicalist doctrine; and we have already noted the intimate connection which exists between Proudhon and the anarchists.

The first resemblance consists in their advocacy of violence as a method of regenerating and purifying social life. “It is to violence,” writes M. Sorel, “that socialism owes those great moral victories that have brought salvation to the modern world.”[1370] The anarchists in a similar fashion liken revolution to the storm that clears the threatening sky of summer, making the air once more pure and calm. Kropotkin longs for a revolution because it would not merely renew the economic order, but would also “stir up society both morally and intellectually, shake it out of its lethargy, and revive its morals. The vile and narrow passion of the moment would be swept aside by the strong breath of a nobler passion, a greater enthusiasm, and a more generous devotion.”[1371]

In the second place, moral considerations, which find no place in the social philosophy of Marx, are duly recognised by Sorel and by the anarchist authors. Bakunin, Kropotkin, and Proudhon especially demand a due respect for human worth as the condition of every man’s liberty. They also proclaim the sovereignty of reason as the only power that can make men really free. M. Sorel, after showing how the new school may be easily distinguished from official socialism by the greater stress which it lays upon the perfection of morals, proceeds to add that on this point he is entirely at one with the anarchists.[1372]

Finally, their social and political ideals are the same. In both cases the demand is for the abolition of personal property and the extinction of the State. “The syndicalist hates the State just as much as the anarchist. He sees in the State nothing but an unproductive parasite borne upon the shoulder of the producer and living upon his substance.”[1373] And Sorel regards socialism as a tool in the hands of the workers which will some day enable them to get rid of the State and abolish the rights of private property.[1374] “Free producers working in a factory where there will be no masters”[1375]—such is the ideal of syndicalism, according to Sorel. There is also the same hostility shown towards democracy as at present constituted and its alliance with the State.

But despite many resemblances the two conceptions are really quite distinct. The hope of anarchy is that spontaneous action and universal liberty will somehow regenerate society. Syndicalism builds its faith upon a particular institution, the trade union, which it regards as the most effective instrument of class war. On this basis there would be set up an ideal society of producers founded upon labour, from which intellectualism would be banished. Anarchy, on the other hand, contents itself with a vision of a kind of natural society, which the syndicalist thinks both illusory and dangerous.

It has not been altogether useless, perhaps, to note the striking analogy that exists between these two currents of thought which have had such a profound influence upon the working-class movement during the last fifteen years, and which have resulted in a remarkable revival of individualism.

CONCLUSION

Can a history of economic doctrines really be said to have a conclusion?

It is obviously impossible to regard the history of any science as complete so long as that science itself is not definitely constituted. This applies to all sciences alike, even to the more advanced—physics, chemistry, and mathematics, for example, all of which are continuously undergoing some modification, abandoning in the course of their progress certain conceptions that were formerly regarded as useful, but which now appear antiquated, and adopting others which, if not entirely new, are at least more comprehensive and more fruitful. And not only is this true of individual sciences, but it is equally true of the very conception of science itself. Progress in the sciences involves a modification of our ideas concerning science. The savant, to-day as of yore, is engaged in the pursuit of truth, but the conception of scientific truth at the beginning of the twentieth century is not what it was at the beginning of the nineteenth, and everything points to still further modifications of that conception in the future. It is scarcely to be expected that political economy, a young science hardly out of its swaddling-clothes, will prove itself less mutable than the sciences already mentioned. All that the historian is permitted to do is to point to the distance already traversed, without pretending to be able to guess the character of the road that still remains to be covered. His object must be to appreciate the nature of the tasks that now await the economist, and for this his study of the efforts put forth in the past, to which the preceding chapters bear record, should prove of some assistance.

A simple analogy will perhaps help us to gauge the kind of impression left upon us by a study of a century and a half of economic ideas. Imagine ourselves looking at a fan spread out in front of us. At the handle the separate radii are so closely packed together that they appear to form a single block. But as the eye travels towards the circumference the branches gradually separate from one another until they finally assume quite divergent positions. But their separation is not complete, and the more they are spread out the easier it is to detect the presence of the tissue that forms a common bond between the various sections of the fan and constitutes the basis of a new unity which is quite as powerful, if not perhaps more so, than the unity which results from their superposition at the base.

So it was with the Physiocrats, and still more with Adam Smith, whose theory of political economy was a doctrine of such beautiful simplicity that the human mind could grasp it at a single glance. But as time went on and the science progressed it was realised that the unity which characterised it at first was more apparent than real. The contradictory theories which Smith had seemed able to reconcile gave rise to new currents of thought, which tended to drift farther and farther apart as they assumed a greater degree of independence. Conflicting theories of distribution and of value began to take the field, and quarrels arose over the relative merits of the abstract and the historical method, or the claims of society and the rights of the individual. With a view to self-defence, each of these schools took its own path, which it followed with varied fortune, including not a few setbacks. Each of them also surrounded itself with a network of observations and inductions, thus bringing into the common fund a wealth of new truths and useful conclusions. All this has resulted in the gradual formation, around each great current of economic thought, of a thick enveloping layer of great resistance and of increasing extent, which constitutes a kind of common scientific matrix uniting them together, and underneath which may still be detected the salient features of the great systems. What strikes us now is not the multiplicity of branches which go to make up the fan, but the presence of the common tissue in which, especially towards the circumference, the different radii seem to lose themselves and to disappear altogether. In other words, the sum total of acquired truths is the only legacy left us by the various systems of the past, and this is the only thing that interests us to-day.

Hence one result of so much discussion and polemical warfare has been the discovery of some common ground upon which all economists, whatever their social and political aspirations, can meet. This common ground is the domain of economic science—a science that is concerned, not with the presentation of what ought to be, but with the explanation and the thorough understanding of what actually exists. The superiority of a theory is measured solely by its explanatory power. It matters little whether its author be Interventionist or Liberal, Protectionist or Free Trader, Socialist or Individualist—everyone must necessarily bow before an exact observation or a scientific explanation.

But while these divergent schools tend to be lost in the unity of a more fully comprehended science, we see the emergence of other divisions, less scientific perhaps, but much more fertile so far as the progress of the science itself is concerned. It seems as if a new kind of fan arrangement were making its appearance underneath the old.

This is obviously the case with regard to method, for example, where the separation between pure and descriptive economics, or between the theoretical systematisation and the mere observation of concrete phenomena, is becoming very pronounced. Both kinds of research are equally necessary, and demand different mental qualities which are very seldom found combined in the same person. Economic science, however, cannot afford to dispense either with theory or observation. The desire to seize hold of the chain of economic phenomena and to unravel its secret connections is as strong as ever it was. On the other hand, in view of the transformation and the daily modifications which industry everywhere seems to be undergoing, it is useless to imagine that we can dispense with the task of observing and describing these. The two methods are developing and progressing together, and the violent quarrels as to their respective merits appear to be definitely laid at rest.

Accordingly what we find is a segmentation of economic science into a number of distinct sciences, each of which tends to become more or less autonomous. Such separation does not necessarily imply a conflict of opinion, but is simply the outcome of division of labour. At the outset of its career the whole of political economy was included within the compass of one or two volumes, and all those facts and theories of which an economist was supposed to have special knowledge were, according to Say and his disciples, easily grouped under the three heads of Production, Consumption, and Distribution. But since then the science has been broken up into a number of distinct branches. The term “physics,” which was formerly employed as a name for one of the exact sciences, is just now little better than a collective name used to designate a number of special sciences, such as electricity, optics, etc., each of which might claim the lifelong devotion of the student. Similarly “political economy” has just become a vague but useful term to denote a number of studies which often differ widely from one another. The theory of prices and the theory of distribution have undergone such modifications as entitle them to be regarded as separate studies. Social economics has carved out a domain of its own and is now leading a separate existence, the theory of population has assumed the dimensions of a special science known as demography, and the theory of taxation is now known as the science of finance. Statistics, occupying the borderland of these various sciences, has its own peculiar method of procedure. Descriptions of the commercial and industrial mechanism of banks and exchanges, the classification of the forms of industry and the study of its transformations are related to political economy much as zoology, descriptive botany, and morphology are related to the science of natural history. And although a different name must not always be taken as evidence of a different science, there is little doubt about the existence of the separate sciences already enumerated. The difficulty rather is to grasp the connection between them and to realise the nature of that fundamental unity which binds them all together.

But there still remains a wide region over the whole of which divergences exist and conflicts continue, and where, moreover, they will probably never cease. This is the realm of social and political economics.

Despite the gradual rise of a consensus of scientific opinion among economists, the divergences concerning the object that should be pursued and the means employed to achieve that end are as pronounced as ever. Each of the chief doctrines of which we have given an exposition in the course of this work has its body of representatives. Liberals, Communists, Interventionists, State and Christian Socialists continue to preach their differing ideals and to advocate different methods of procedure. On the question of the science itself, however, they are all united. The arguments upon which they base their contentions are largely borrowed from sources other than scientific. Moral and religious beliefs, political or social convictions, individual preference or sentiment, personal experience or interest—these are among the considerations determining the orientation of each. The earlier half of the nineteenth century witnessed the science of political economy making common cause with one particular doctrine, namely, Liberalism. The alliance proved most unfortunate. The time when economic doctrines were expected to lend support to some given policy is for ever gone by. But the lesson has not been lost, and everybody realises that nothing could be more dangerous for the development of the science than to link its teaching to the tenets of some particular school. At the same time the science might conceivably furnish valuable information to the politician by enabling him to foresee the results of such and such a measure; and it is to be hoped that such predictions, all too uncertain as yet, may, accordingly, become more precise in the future.

We cannot, then, suppose that the various currents of opinion to-day known as Liberalism, Socialism, Solidarism, Syndicalism, and Anarchism are likely to disappear in the immediate future. They may be given other names, perhaps, but they will always continue to exist in some form or other, simply because they correspond to some profound tendency in human nature or to certain permanent collective interests which alternately sway mankind.

We cannot pretend to regret this. Uniformity of belief is an illusory ideal, and from a purely practical point of view we should be sorry to see the day when there will be no conflict of opinion even about those causes or those methods which we hold most dear.

We may sum up our conclusions as follows: From a scientific standpoint unity is likely to become more pronounced and collaboration much more general than in the past, thanks to the adoption of more scientific methods.

In the domain of practice the variety of economic ideals and the conflict between them is likely to continue.

Such, it seems to us, will be the spectacle presented by the political economy of the future.

Thus the impression obtained from a perusal of this history of economic doctrines is, if not somewhat melancholy, at least sufficient to justify a certain degree of humility. So many doctrines that we thought definitely established have disappeared altogether, and so many that we thought completely overthrown have been rehabilitated. Those that die do not seem altogether dead, somehow, and those that are revived are not quite the same.

What the science and its teachers need most of all is full and complete liberty—liberty to follow whatever method suits them best and to accept whatever theory attracts them most; liberty to choose their own ideals and to formulate their own systems—for systems and ideals, by bringing sentiment into play, may occasionally prove very stimulating even to scientific research. Nothing could be more harmful than the dogmatism which the science has only recently escaped. In this matter, unfortunately, no school and no country is entirely above criticism.

Sismondi used to complain that Liberalism, after it had achieved its triumph, had attempted to convert political economy into a system of orthodoxy. But Liberalism is not the only doctrine against which a similar charge might be brought. It is only a few years since Schmoller, the chief of the German Historical school, in an address delivered as Rector of Berlin University, declared that neither Marxians nor the disciples of Smith could in future be regarded as accredited teachers of the science. Does the German Historical school really wish to revive that ostracism from which it was itself one of the first to suffer? Neither can we, as Frenchmen, pride ourselves upon having been less exclusive. The indifference or even the actual hostility with which the Historical school was for a long time treated does very little credit to us. Moreover, that same intolerance of which “bourgeois economics” was so justly accused, is it not to be met with in an equally extravagant fashion in the socialism of to-day? The ultra-dogmatism of the Liberal school can be easily paralleled from the history of Marxism and the frantic efforts made by some socialists to prevent other Marxians making a breach in the doctrine. If there is one lesson more than another that emerges from a study of the history of economic doctrines it is the necessity for a more critical spirit and a more watchful attitude, always ready to test any new truths that present themselves, to extend a hearty welcome to every fresh observation or new experience, thus enabling the science to enlarge its scope and gain a deeper significance without sacrificing any of its essential tenets.

FOOTNOTES

[1] See an article by M. Deschamps in the Réforme sociale of October 1, 1902, on the value of this kind of teaching.

[2] In an article on the teaching of the history of economic doctrines (Revue de l’Enseignement, March 15, 1900) M. Deschamps declares that it is unpardonable that we should be unable to make better use of the marvellous economic teachings of which both ancient and mediæval history are full, but he adds that “as far as the history of the science is concerned there is no need to go farther back than the Physiocrats.”

[3] In the new edition of M. Espinas’s work an entire volume is devoted to the study of economic doctrines in ancient and mediæval times.

[4] “What useful purpose can be served by the study of absurd opinions and doctrines that have long ago been exploded, and deserved to be? It is mere useless pedantry to attempt to revive them. The more perfect a science becomes the shorter becomes its history. Alembert truly remarks that the more light we have on any subject the less need is there to occupy ourselves with the false or doubtful opinions to which it may have given rise. Our duty with regard to errors is not to revive them, but simply to forget them.” (Traité pratique, vol. ii, p. 540.)

[5] Wealth of Nations, vol. i, p. 351.

[6] Quesnay’s first economic articles, written for the Grande Encyclopédie, were on Les Grains and Les Fermiers.

[7] Professor Hector Denis, speaking of the Physiocratic doctrine, remarks that its imperfections are easily demonstrated, but that we seldom recognise its incomparable greatness.

[8] “The genuine economists are easily depicted. In Dr. Quesnay they have a common master; a common doctrine in the Philosophie rurale and the Analyse économique. Their classical literature is summed up in the generic term Physiocracy. In the Tableau économique they possess a formula with technical terms as precise as old Chinese characters.” This definition of the Physiocrats, given by one of themselves, the Abbé Baudeau (Éphémérides, April 1776)—writing, we may be sure, in no malicious spirit—shows us that the school possessed not a little of the dogmatism of the Chinee.

[9] The first not only in chronological order but the chief recognised by all was Dr. Quesnay (1694-1774), the physician of Louis XV and of Mme. de Pompadour. He had already published numerous works on medicine, especially the Essai physique sur l’Économie animale (1736) before turning his attention to economic questions and more especially to problems of “rural economy.” His first contributions, the essays on Les Grains and Les Fermiers, which appeared in the Grande Encyclopédie in 1756 and 1757, were followed by his famous Tableau économique in 1758, when he was sixty-four years of age, and in 1760 by his Maximes générales du Gouvernement économique d’un Royaume agricole, which is merely a development of the preceding work.

His writings were not numerous, but his influence, like that of Socrates, disseminated as it was by his disciples, became very considerable.

The best edition of his works is that published by Professor Oncken of Berne, Œuvres économiques et philosophiques de F. Quesnay (Paris and Frankfort, 1888). Our quotations from the founders are taken from Collections des Principaux Économistes, published by Daire.

The Marquis de Mirabeau, father of the great orator of the Revolution, a man of a fiery temperament like his son, published at about the same date as the production of the Tableau his L’Ami des Hommes. This book, which created a great sensation, does not strictly belong to Physiocratic literature, for it ignores the fundamental doctrine of the school. La Théorie de l’Impôt (1760) and La Philosophie rurale (1763), on the other hand, owe their inspiration to Physiocracy.

Mercier de la Rivière, a parliamentary advocate, published L’Ordre natural et essentiel des Sociétés politiques in 1767. Dupont de Nemours refers to this as a “sublime work,” and though it does not, perhaps, deserve that epithet it contains, nevertheless, the code of the Physiocratic doctrine.

Dupont de Nemours, as he is called after his native town published about the same time, 1768, when he was only twenty-nine, a book entitled Physiocratie, ou Constitution essentielle du Gouvernement le plus avantageux au Genre humain. To him we owe the term from which the school took its name—Physiocracy, which signifies “the rule of nature.” But the designation “Physiocrats” was unfortunate and was almost immediately abandoned for “Économistes.” Quesnay and his disciples were the first “Économistes.” It was only much later, when the name “Economist” became generic and useless as a distinctive mark for a special school, that writers made a practice of reverting to the older term “Physiocrat.”

An enthusiastic disciple of Quesnay, Dupont’s rôle was chiefly that of a propagandist of Physiocratic doctrines, and he made little original contribution to the science. At an early date, moreover, the great political events in which he took an active part proved a distraction. He survived all his colleagues, and was the only one of them who lived long enough to witness the Revolution, in which he played a prominent part. He successively became a deputy in the Tiers État, a president of the Constituent Assembly, and later on, under the Directoire, President du Conseil des Anciens. He even assisted in the restoration of the Empire, and political economy was first honoured at the hands of the Institut when he became a member of that body.

In 1777 Le Trosne, an advocate at the Court of Orleans, published a book entitled De l’Intérêt social, par rapport à la Valuer, à la Circulation, à l’Industrie et au Commerce, which is perhaps the best or at least the most strictly economic of all. Mention must also be made of the Abbé Baudeau, who has no less than eighty volumes to his credit, chiefly dealing with the corn trade, but whose principal work is L’Introduction à la Philosophie économique (1771); and of the Abbé Roubaud, afterwards Margrave of Baden, who had the advantage of being not merely a writer but a prince, and who carried out some Physiocratic experiments in some of the villages of his small principality.

We have not yet mentioned the most illustrious member of the school, both in respect of his talent and his position, namely, Turgot (1727-81). His name is generally coupled with that of the Physiocrats, and this classification is sufficiently justified by the similarity of their ideas. Still, as we shall see, in many respects he stands by himself, and bears a close resemblance to Adam Smith. Moreover, he commenced writing before the Physiocrats. His essay on paper money dates from 1748, when he was only twenty-one years of age, but his most important work, Réflexions sur la Formation et la Distribution des Richesses, belongs to 1766. As the Intendant of Limoges and again as a minister of Louis XVI he possessed the necessary authority to enable him to realise his ideas of economic liberty, which he did by his famous edicts abolishing taxes upon corn passing from one province to another, and by the abolition of the rights of wardenship and privilege.

Unlike the other Physiocrats, who swore only by Dr. Quesnay, Turgot owed a great deal to a prominent business man, Vincent de Gournay, who at a later date became the Intendant of Commerce. Gournay died in 1759, at the early age of forty-seven. Of Gournay we know next to nothing beyond what Turgot says of him in his eulogy (See Schelle, Vincent de Gournay, 1897).

Bibliography. Books dealing with the Physiocratic system, both in French and other languages, are fairly numerous. A very detailed account of these may be found in M. Weulersse’s work, Le Mouvement physiocratique en France de 1756 à 1770, published in 1910, which also contains a very complete exposition of the Physiocratic doctrine. In English there is a succinct account of the system in Higgs’ Physiocrats (1897).

[10] Especially in the celebrated pamphlet, L’Homme aux Quarante Écus.

[11] J. J. Rousseau, the author of the Contrat Social (1762), was a contemporary of the Physiocrats, but he never became a member of the school. Mirabeau’s attempt to win his allegiance proved a failure. The “natural order” and the “social contract” seem incompatible, for the natural and spontaneous can never be the subject of contract. One might even be tempted to think that Rousseau’s celebrated theory was formulated in opposition to Physiocracy, unless we remembered that the social contract theory is much older than Rousseau’s work. Traces of the same idea may be found in many writings, especially those inspired by Calvinism. To Rousseau the social question seemed to be a kind of mathematical problem, and any proposed solution must satisfy certain complicated conditions, which are formulated thus: “To find a form of association which protects with the whole common force the person and property of each associate, and in virtue of which everyone, while uniting himself to all, obeys only himself and remains as free as before.” Nothing could well be further from the Physiocratic view. Their belief was that there was nothing to find and nothing to create. The “natural order” was self-evident.

It is true that Rousseau was an equally enthusiastic believer in a natural order, in the voice of nature, and in the native kindness of mankind. “The eternal laws of nature and order have a real existence. For the wise they serve as positive laws, and they are engraved on the innermost tablets of the heart by both conscience and reason.” (Émile, Book V.) The language is identical with that of the Physiocrats. But there is this great difference. Rousseau thought that the state of nature had been denaturalised by social and especially by political institutions, including, of course, private property; and his chief desire was to give back to the people the equivalent of what they had lost. The “social contract” is just an attempt to secure this. The Physiocrats, on the other hand, regarded the institution of private property as the perfect bloom of the “natural order.” Its beauty has perhaps suffered at the hands of turbulent Governments, but let Governments be removed and the “natural order” will at once resume its usual course.

There is also this other prime difference. The Physiocrats regarded interest and duty as one and the same thing, for by following his own interest the individual is also furthering the good of everybody else. To Rousseau they seemed antagonistic: the former must be overcome by the latter. “Personal interest is always in inverse ratio to duty, and becomes greater the narrower the association, and the less sacred.” (Contrat Social, ii, chap. 3.) In other words, family ties and co-operative associations are stronger than patriotism.

[12] “There is a natural society whose existence is prior to every other human association.… These self-evident principles, which might form the foundation of a perfect constitution, are also self-revealing. They are evident not only to the well-informed student, but also to the simple savage as he issues from the lap of nature.” (Dupont, vol. i, p. 341.) Some Physiocrats even seem inclined to the belief that this “natural order” has actually existed in the past and that men lost it through their own remissness. Dupont de Nemours mournfully asks: “How have the people fallen from that state of felicity in which they lived in those far-off, happy days? How is it that they failed to appreciate the natural order?” But even when interpreted in this fashion it had no resemblance to a savage state. It must rather be identified with the Golden Age of the ancients or the Eden of Holy Scripture. It is a lost Paradise which we must seek to regain.

The view is not peculiar to the Physiocrats, but it is interesting to note how unfamiliar they were with the modern idea of evolutionary progress.

[13] Mercier de la Rivière, vol. ii, p. 615. “Natural right is indeterminate in a state of nature [note the paradox]. The right only appears when justice and labour have been established.” (Quesnay, p. 43.)

[14] “By entering society and making conventions for their mutual advantage men increase the scope of natural right without incurring any restriction of their liberties, for this is just the state of things that enlightened reason would have chosen.” (Quesnay, pp. 43, 44.)

[15] Pursuing this same idea, Dupont writes as follows: “It is thirteen years since a man of exceptional genius, well versed in profound disquisition, and already known for his success in an art where complete mastery only comes with careful observation and complete submission to the laws of nature, predicted that natural laws extended far beyond the bounds hitherto assigned to them. If nature gives to the bee, the ant, or the beaver the power of submitting by common consent and for their own interest to a good, stable, and equable form of government, it can hardly refuse man the power of raising himself to the enjoyment of the same advantages. Convinced of the importance of this view, and of the important consequences that might follow from it, he applied his whole intellectual strength to an investigation of the physical laws which govern society.” Elsewhere he adds: “The natural order is merely the physical constitution which God Himself has given the universe.” (Introduction to Quesnay’s works, p. 21.)

Hector Denis in his Histoire des Doctrines expresses the belief that the most characteristic feature of the Physiocratic system is the emphasis laid upon a naturalistic conception of society. He illustrates this by means of diagrams showing the identity of the circulation of wealth and the circulation of the blood.

[16] “Its laws are irrevocable, pertaining as they do to the essence of matter and the soul of humanity. They are just the expression of the will of God.… All our interests, all our wishes, are focused at one point, making for harmony and universal happiness. We must regard this as the work of a kind Providence, which desires that the earth should be peopled by happy human beings.” (Mercier de la Rivière, vol. i, p. 390; vol. ii, p. 638.)

[17] “There is a natural judge of all ordinances, even of the sovereign’s. This judge, which recognises no exceptions, is just the evidence of their conformity with or opposition to natural laws.” (Dupont, vol. i, p. 746.)

[18] Dupont, introduction to Quesnay’s works, vol. i, pp. 19 and 26.

[19] Baudeau, vol. i, p. 820.

[20] Letter to Mdlle. Lespinasse (1770).

[21] See some remarks on the Tableau économique on p. 18.

[22] Baudeau, Éphémérides du Citoyen.

[23] “The laws of the natural order do not in any way restrain the liberty of mankind, for the great advantage which they possess is that they make for greater liberty.” (Quesnay, Droit Naturel, p. 55.) And Mercier de la Rivière says (vol. ii, p. 617): “The institution of private property and of liberty would secure perfect order without the help of any other law.”

[24] Dialogues sur les Artisans.

[25] Mercier de la Rivière, vol. ii, p. 617.

[26] The origin of the famous formula is uncertain. Several of the Physiocrats, especially Mirabeau and Mercier de la Rivière, assign it to Vincent de Gournay, but Turgot, the friend and biographer of Vincent de Gournay, attributes it, under a slightly different form, laissez-nous faire, to Le Gendre, a merchant who was a contemporary of Colbert. Oncken thinks that the credit must go to the Marquis d’Argenson, who employed the term in his Mémoires as early as the year 1736. The formula itself is quite commonplace. It only became important when it was adopted as the motto of a famous school of thinkers, so that this kind of research has no great interest. For a discussion of this trivial question, see the work of M. Schelle, Vincent de Gournay (1897), and especially Oncken’s Die Maxime Laissez-faire et Laissez-passer (Berne, 1886).

[27] “The prosperity of mankind is bound up with a maximum net product.” (Dupont de Nemours, Origine d’une Science nouvelle, p. 346.)

[28] “Labour applied anywhere except to land is absolutely sterile, for man is not a creator.” (Le Trosne, p. 942.)

“This physical truth that the earth is the source of all commodities is so very evident that none of us can doubt it.” (Le Trosne, Intérêt social.)

“The produce of the soil may be divided into two parts … what remains over is free and disposable, a pure gift given to the cultivator in addition to the return for his outlay and the wages of his labour.” (Turgot, Réflexions.)

“Raw material is transformed into beautiful and useful objects through the diligence of the artisan, but before his task begins it is necessary that others should supply the raw material and provide the necessary sustenance. When their part is completed others should recompense them and pay them for their trouble. The cultivators, on the other hand, produce their own raw material, whether for use or for consumption, as well as everything that is consumed by others. This is just where the difference between a productive and a sterile class comes in.” (Baudeau, Correspondance avec M. Graslin.)

[29] “A weaver buys food and clothing, giving 150 francs for them, together with a quantity of flax, for which he gives 50 francs. The cloth will be sold for 200 francs, a sum that will cover all expenditure.” (Mercier de la Rivière, vol. ii, p. 598.) “Industry merely superimposes value, but does not create any which did not previously exist.” (Ibid.)

[30] Baudeau, Éphém. ix (1770). One feels that the Physiocrats go too far when they say that “the merchant who sells goods may occasionally prove as useful as the philanthropist who gives them, because want puts a price upon the service of the one just as it does upon the charity of the other.” (Du Marchand de Grains, in the Journal de l’Agriculture, du Commerce, et des Finances, December 1773, quoted in a thesis on the corn trade by M. Curmond, 1900.) We must insist upon the fact that “unproductive” or “sterile” did not by any means signify “useless.” They saw clearly enough that the labour of the weaver who makes linen out of flax or cloth out of wool is at any rate as useful as that of the cultivator who produced the wool and the flax, or rather that the latter’s toil would be perfectly useless without the industry of the former. They also realised that although we may say that agricultural labour is more useful than that of the weaver or the mason, especially when the land is used for raising corn, one cannot say as much when that same land is employed in producing roses, or mulberry trees for rearing silkworms.

[31] Le Trosne, p. 945.

[32] “It seems necessary as well as simple and natural to distinguish the men who pay others and draw their wealth directly from nature, from the paid men, who can only obtain it as a reward for useful and agreeable services which they have rendered to the former class.” (Dupont, vol. i, p. 142.)

[33] It is rather strange that Turgot should have added this qualification, because he was more favourable to industry and less devoted to agriculture than the rest of the Physiocrats.

[34] “I must have a man to make my clothes, just as I must have a doctor whose advice I may ask concerning my health, or a lawyer concerning my affairs, or a servant to work instead of me.” (Le Trosne, p. 949.)

[35] On this point see M. Pervinquière, Contribution à l’Étude de la Productivité dans la Physiocratie. The indifference of the Physiocrats to mines shows a want of scientific spirit, for even from their own point of view the question was one of prime importance. No commodity could be produced without raw material, and wealth is simply a collection of commodities. Raw material is furnished by the mine as well as by the soil. In the history of mankind iron has played as important a part as corn. Agriculture itself is an extractive industry, where the miner—the agriculturist—uses plants instead of drills, and in both cases the product is exhaustible.

[36] Le Trosne, p. 942.

“Land owes its fertility to the might of the Creator, and out of His blessing flow its inexhaustible riches. This power is already there, and man simply makes use of it.” (Le Trosne, Intérêt social, chap. 1, § 2.)

[37] Quesnay, p. 325.

[38] Geschichte der National Oekonomie, Part I, Die Zeit vor Adam Smith.

M. Méline’s book, Le Retour à la Terre, though Protectionist in tone, is wholly imbued with the Physiocratic spirit.

[39] Essai physique sur l’Économie animale (1747).

[40] “There have been since the world began three great inventions which have principally given stability to political societies, independent of many other inventions which have enriched and advanced them. The first is the invention of writing, which alone gives human nature the power of transmitting without alteration its laws, its contracts, its annals, and its discoveries. The second is the invention of money, which binds together all the relations between civilised societies. The third is the Economical Table, the result of the other two, which completes them both by perfecting their object; the great discovery of our age, but of which our posterity will reap the benefit.” (Mirabeau, quoted in Wealth of Nations, Book IV, chap. 9.) Baudeau is no less enthusiastic. “These figures,” he writes, “are borrowed with the consent and upon the advice of the great master whose genius first begat the sublime idea of this Tableau. The Tableau gives us such a clear idea of the premier position of the science that all Europe is bound to accept its teaching, to the eternal glory of the invention and the everlasting happiness of mankind.” (P. 867.)

The first edition of the Tableau, of which only a few copies were printed, is missing altogether, but a proof of that edition, corrected by Quesnay himself, was recently discovered in the Bibliothèque Nationale in Paris by Professor Stephen Bauer, of the University of Bâle. A facsimile was published by the British Economic Association in 1894.

[41] “The discovery of the circulation of wealth in economic societies occupies in the history of the science the same position as is occupied by the discovery of the circulation of the blood in the history of biology.”

[42] Quesnay’s table consists of a number of columns placed in juxtaposition with a number of zigzag lines which cross from one column to another. If he had been living now he would almost certainly have used the graphic method, which would have simplified matters very considerably, and it is somewhat strange that no one has attempted this with his Tableau. Hector Denis has compared his tables with those of the anatomist and traced a parallel between the links of the economical world and the plexus of veins and arteries in the human body.

His explanation of the Tableau by means of mathematical tables gives him a claim to be considered a pioneer of the Mathematical school. Full justice has been done to him in this respect. An article by Bauer in the Quarterly Journal of Economics, 1890, recognises his claim, and there is another by Oncken in the Economic Journal for June 1896, entitled The Physiocrats as Founders of the Mathematical School. His contemporary Le Trosne is even more emphatic on the point: “Economic science, being a study of measurable objects, is an exact science, and its conclusions may be mathematically tested. What the science lacked was a convenient formula which might be applied to test its general conclusions. Such a formula we now have in the Tableau économique.” (De l’Ordre social, viii, p. 218.)

[43] Turgot, although he is not speaking of the Tableau itself in this case, sums it up admirably in the following: “What the labourers get from the land in addition to what is sufficient to supply their own needs constitutes the only wages fund [note the phrase], which all the other members of society can draw upon in return for their labour. The other members of society, when they buy the commodities which the labourer has produced, simply give him the bare equivalent of what it has cost the labourer to produce them.” (Turgot, vol. i, p. 10.) For a more detailed account see Baudeau, Explication du Tableau économique.

[44] “This movement of commerce from one class to another, and the conditions which give rise to it, are not mere hypotheses. A little reflection will show that they are faithfully copied from nature.” (Quesnay, p. 60.)

[45] They imagined that it was actually so. “On the one hand, we see the productive class living on a series of payments, which are given in return for its labour, and always bearing a close relation to the outlay upon its upkeep. On the other, there is nothing but consumption and annihilation of goods, but no production.” (Quesnay, p. 60.)

[46] “It is impossible not to recognise the right of property as a divine institution, for it has been ordained that this should be the indirect means of perpetuating the work of creation.” (La Rivière, p. 618.) “The order of society presupposes the existence of a third class in society, namely, the proprietors who make preparation for the work of cultivation and who dispense the net product.” (Quesnay, p. 181.)

[47] “Immediately below the landed proprietors come the productive classes, whose labour is the only source of their income, but who cannot exercise that labour unless the landlord has already incurred some outlay in the way of ground expenses.” (Baudeau, p. 691.)

[48] The Physiocrats never mention the agricultural workers, and one might almost think that there were none. Their solicitude for the agriculturists does not extend beyond the farmers and métayers. M. Weulersse has referred to their system, not without some justification, as an essentially capitalistic one.

[49] “We may call them the nobility, as well as the propertied class. Nobility in this sense, far from being illusory, is a very useful institution in the history of civilised nations.” (Baudeau, p. 670.)

[50] “In the third line—they generally occupy the first rank—we have the landed proprietors who prepare the soil, build houses, make plantations and enclosures at their own expense or who pay for those outlays by buying property already developed. This revenue, they might argue, belongs to us because of the wisdom and forethought we have exercised in preparing the land, in undertaking to keep it in repair, and to improve it still further.” (Baudeau, Philosophie économique, p. 757.) “The foremost and most essential agent of production must be that man who makes it possible. But who is this agent but the landed proprietor, whose claims to his prerogatives are based upon the need for his productive services?” (Mercier de la Rivière, pp. 466-467.)

“It is this expenditure that makes the claim of proprietors real and their existence just and necessary. Until such expenditure is incurred the right of property is merely an exclusive right to make the soil capable of bearing fruit.” (Baudeau, p. 851.) In other words, so long as the proprietor has not incurred some expenditure the right of property is simply reduced to occupation.

The Physiocrats distinguished three kinds of avances:

1. The annual expenditure (avances annuelles) incurred in connection with the actual work of cultivation, which recurs every year, such as the cost of seed and manure, cost of maintaining labourers, etc. The annual harvest ought to repay all this, which to-day would be called circulating capital.

2. The “original” outlay (avances primitives) involved in buying cattle and implements which render service for a number of years, and for which the proprietor does not expect to be recompensed in a single year. The return is spread out over a number of years. Here we have the distinction between fixed and circulating capital, and the idea of the gradual redemption of the former as against the total repayment of the latter at one single use. It did not escape the Physiocrats’ notice that an intelligent increase of the fixed might gradually reduce the annual expenditure. Such ideas were quite novel. But they immediately took their place as definite contributions to the science. They are no longer confined to agriculture, however, but apply equally to all branches of production.

3. The avances foncières are the expenses which are undertaken with a view to preparing the land for cultivation. (The adjective “primitive” would have been better applied here.)

The first two kinds of expenditure are incumbent upon the agriculturist and entitle him to a remuneration sufficient to cover his expenses.

The third is incumbent upon the proprietor and constitutes his claim to a share of the funds. “Before you can set up a farm where agriculture may be steadily practised year in and year out what must be done? A block of buildings and a farmhouse must be built, roads made and plantations set, the soil must be prepared, the stones cleared, trees cut down and roots removed; drains must also be cut and shelters prepared. These are the avances foncières, the work that is incumbent upon proprietors, and the true basis of their claim to the privileges of proprietorship.” (Baudeau, Éphémérides, May 1776. A reply to Condillac.)

[51] “Without that sense of security which property gives, the land would still be uncultivated.” (Quesnay, Maximes, iv.) “Everything would be lost if this fount of wealth were not as well assured as the person of the individual.” (Dupont, vol. i. p. 26.)

[52] Mercier de la Rivière, vol. i, p. 242.

[53] Maximes, iv.

[54] Pp. 615, 617.

[55] It is necessary to make a note here of one of the many differences between Turgot and the Physiocrats. Turgot seems much less firmly convinced of the social utility of landed property and of the legitimacy of the right of property. He thinks that its origin is simply due to occupation. This weakens the Physiocratic case very considerably. “The earth is peopled and cultivation extends. The best lands will in time all be occupied. For the last comers there will only be the unfertile lands rejected by the first. In the end every piece of land will have its owner, and those who possess none will have no other resource than to exchange the labour of their arm for the superfluous corn of the proprietor.” (Vol. i, p. 12.) We are here not very far from the Ricardian theory.

[56] Baudeau, p. 378.

[57] “A proprietor who keeps up the avances foncières without fail is performing the noblest service that anyone can perform on this earth.” (Baudeau.)

[58] “The rich have the control of the fund from which the workers are paid, but they are doing a great injustice if they appropriate it.” (Quesnay, vol. i, p. 193.)

[59] Pp. 835, 839. And Mercier de la Rivière writes in terms not less severe; “He is responsible under pain of annihilation for the products of society, and no part of the produce which goes to support the cultivator should wittingly be employed otherwise.” The history of Ireland is an interesting commentary on these words.

But let us always remember that when the Physiocrats speak of the rights of the cultivator they think only of the farmer and métayer and never of the paid agriculturist. They are content to demand merely a decent existence for the latter. Were they put too much at ease they would perhaps leave off working. See Weulersse, vol. ii, p. 729. He seems a little unjust, and quotes some words of Quesnay, who protests against the belief that “the poor must be kept poor if they are not to become indolent.”

[60] One is perhaps surprised to find that freedom of work—in other words, the abolition of corporations—is not included in their list, especially since the credit for the downfall of those institutions is usually given to the Physiocrats. Their writings contain only very occasional reference to this topic, because industrial labour is regarded as sterile, and reform touching its organisation concerned them but little. They did, however, protest against the rule that confined the right to engage in a trade to those who had received an express privilege from the Crown. They considered that “to an honest soul this was the most odious maxim which the spirit of domination and rapacity ever invented.” (Baudeau, in Éphémérides, 1768, vol. iv.) Turgot’s famous Edict of January 1776, abolishing the rights of corporations and establishing liberty for all, is, with good reason, attributed to Physiocratic influence.

[61] “Exchange is a contract of equality, equal value being given in exchange for equal value. Consequently it is not a means of increasing wealth, for one gives as much as the other receives, but it is a means of satisfying wants and of varying enjoyment.” (Le Trosne, pp. 903, 904.) But what does this satisfying of wants and variation of enjoyment signify if it does not mean increased wealth?

[62] Mercier de la Rivière, p. 545.

[63] P. 548.

[64] “The settlement of international indebtedness by payment of money is a mere pis aller of foreign trade, adopted by those nations which are unable to give commodities in return for commodities according to custom. And foreign trade itself is a mere pis aller adopted by those nations whose home trade is insufficient to enable them to make the best use of their own productions. It is very strange that anyone should have laid such stress upon a mere pis aller of commerce.” (Quesnay’s Dialogues, p. 175.)

[65] “After all merchants are only traffickers, and the trafficker is just a person who employs his ability in appropriating a part of other people’s wealth.” (Mercier de la Rivière, p. 551.) “Merchants’ gains are not a species of profit.” (Quesnay, p. 151.)

[66] Ordre Naturel, p. 538.

[67] Enforcing sales in open market and in limited quantities only, keeping corn beyond two years, etc. Corn was to be supplied to consumers in the first place, then to bakers, and finally to merchants, etc.

[68] “Let entire freedom of commerce be maintained, for the surest, the exactest, the most profitable regulator both of home and of foreign trade for the nation as well as for the State is perfect freedom of competition.” (Quesnay’s Maximes, xxv.) “We must tell them that free trade is in accordance with the order and with the demands of justice, and everything that conforms to the order bears its own reward.” (Le Trosne, p. 586.)

[69] Dialogues, p. 153. The dearth of plenty, as they paradoxically put it, stimulates production, and Boisguillebert, in an equal paradox, remarks that “Low price gives rise to want.” In the Maximes, p. 98, Quesnay contents himself by saying that free trade in corn makes the price more equal. “It is clear,” he adds, “that, leaving aside the question of foreign debt, equal prices will increase the revenue yielded by the land, which will again result in extended cultivation, which will provide a guarantee against those dearths that decimate population.”

Mercier de la Rivière writes in a similar vein. “A good constant average price ensures abundance, but without freedom we have neither a good price nor plenty.” (P. 570.)

Turgot in his Lettres sur le Commerce des Grains develops the argument at great length and tries to give a mathematical demonstration of it. There was no need for this. It is a commonplace of psychology that a steady price of 20 is preferable to alternative prices of 35 and 5 francs respectively, although the average in both cases is the same.

[70] It is worth noting that the nature of American competition was clearly foreseen by Quesnay—one of the most remarkable instances of scientific prevision on record. In his article on corn in the Encyclopédie he says that he views the fertility of the American colonies with apprehension and dreads the growth of agriculture in the New World, but the fear is provisionally dismissed because the corn is inferior in quality to that of France and is damaged in transit. (See our remarks concerning the Physiocratic connection with modern Protectionist theories.)

[71] It must not be forgotten that the Protectionist system aided the development of industry and retarded that of agriculture by its policy of encouraging the exportation of manufactured products and its restrictions on the exportation of agricultural products and raw materials with a view to securing cheap labour and a plentiful supply of raw materials for the manufacturing industries. The Protectionists were not concerned to prevent the exportation of corn. Both Colbertism and Mercantilism sacrificed the cultivator by preventing the exportation of corn and by allowing of its importation, while doing the exact opposite for manufactured products.

[72] “Upon final analysis do you find that you have gained anything by your policy of always selling to foreigners without ever buying from them? Have you gained any money by the process? But you cannot retain it. It has passed through your hands without being of the least use. The more it increases the more does its value diminish, while the value of other things increases proportionally.” (Mercier de la Rivière, pp. 580-583.)

[73] Turgot, Œuvres, vol. i, p. 181. “If you succeed in keeping back foreign merchants by means of your protective tariffs they will not bring you those goods which you need, thus causing those impositions which were designed for others to retaliate upon your own head.” (Quesnay, Dialogues.)

[74] Dialogues, pp. 254, 274.

[75] Ibid., p. 237.

[76] Ibid., p. 22. He proposed a highly complicated system imposing moderate duties both upon the importation and exportation of corn—a 5 per cent. ad valorem duty in the one case and a 10 per cent. in the other.

[77] Turgot was the author of a work on this subject, entitled Mémoire sur les Prêts d’Argent (1769).

[78] Réflexions sur la Formation des Richesses, §§ lix, lxi, lxxiv.

[79] “Remove all useless, unjust, contradictory, and absurd laws, and there will not be much legislative machinery left after that.” (Baudeau, p. 817.) “It is not a question of procuring immense riches, but simply a question of letting people alone, a problem that hardly requires a moment’s thought.” So wrote Boisguillebert sixty years before.

[80] Quesnay, Maximes, vol. i, p. 390. Mercier de la Rivière writes in much the same style; “The positive laws that are already in existence are merely expressions of such natural rights.” (Vol. ii, p. 61.) It sounds like a preamble to the Declaration of the Rights of Man.

[81] “The Physiocrats had the most absolute contempt for political liberty.” (Esmein, La Science politique des Physiocrates, address at the opening session of the Congress of Learned Societies, Paris, 1906.)

“The Greek republics never became acquainted with the laws of the order. Those restless, usurping, tyrannical tribes never ceased to drench the plains with human blood, to cover with ruins and to reduce to waste the most fertile and the best situated soil in the then known world.” (Baudeau, p. 800.)

“It is evident that a democratic sovereign—i.e. the whole people—cannot itself exercise its authority, and must be content to name representatives. These representatives are merely agents, whose functions are naturally transitory, and such temporary agents cannot always be in complete harmony with every interest within the nation. This is not the kind of administration contemplated by the Physiocrats. The sovereignty of the natural order is neither elective nor aristocratic. Only in the case of hereditary monarchy can all interests, both personal and individual, present and future, be clearly linked with those of the nation, by their co-partnership in all the net products of the territory submitted to their care.” (Dupont, vol. i, pp. 359-360.)

This sounds very much like a eulogy of the House of Hohenzollern, delivered by William II.

Very curious also are Dupont’s criticisms of the parliamentary régime. In his letter to J. B. Say (p. 414) he notes “its tendency to corruption and canker,” which had not then manifested itself in the United States of America. These letters, though very interesting, hardly belong to a history of economic doctrines.

[82] “It is only when the people are ingenuous that we find real despots, because then the sovereign can do whatever he wills.” (Dupont, p. 364.)

[83] Quesnay, Maximes, i. The Physiocrats were in favour of a national assembly, but would give it no legislative power. It was to be just a council of State concerned chiefly with public works and with the apportionment of the burden of taxation. See M. Esmein’s mémoire on the proposed National Assembly of the Physiocrats (Comptes rendus de l’Académie des Sciences Morales et Politiques, 1904).

[84] “The personal despotism will only be the legal despotism of an obvious and essential order. In legal despotism the obviousness of a law demands obedience before the monarch enjoins it. Euclid is a veritable despot, and the geometrical truths that he enunciates are really despotic laws. The legal and personal despotism of the legislator are one and the same. Together they are irresistible.” (Mercier de la Rivière, pp. 460-471.) This despotism is really not unlike that of Comte, who remarks that there is no question of liberty of conscience in geometry.

[85] “On the contrary,” says Quesnay in a letter to Mirabeau, “this despotism is a sufficient guarantee against the abuse of power.”

[86] “That is an abominable absurdity,” says Baudeau, “for on this reckoning a mere majority vote would be sufficient to justify parricide.”

Is it necessary to point out that this is exactly the reverse of the view held by interventionists and socialists of these later times, who think that the mission of the State is to redress the grievances caused by natural laws?

[87] “This single supreme will which exercises supreme power is not, strictly speaking, a human will at all. It is just the voice of nature—the will of God. The Chinese are the only people whose philosophy seems to have got hold of this supreme truth, and they regard their emperor as the eldest son of God.” (Baudeau, p. 798.)

[88] Some writers—for example, Pantaleoni in his introduction to Arthur Labriola’s book, Le Dottrine economiche di Quesnay—seem to think that the Physiocratic criticism proved fatal to feudal society, just as the socialistic criticism of the present time is undermining the bourgeois society. Politically this is true enough, for the Physiocrats advocated the establishment of a single supreme monarch with undivided authority. Economically it is incorrect, for their conception even of sovereignty and taxation is impregnated with feudal ideas.

[89] Dupont, Discours en tête des Œuvres de Quesnay, vol. i, p. 35.

[90] Ibid. p. 22.

[91] Turgot, who is less inclined to favour agriculture, thinks that certain royal privileges must be granted before manufacturers can compete with agriculture (Œuvres, vol. i, p. 360).

[92] “One has come to regard the various nations as drawn up against one another in a perpetual state of war. This unfortunate prejudice is almost sacred, and is regarded as a patriotic virtue.” (Baudeau, p. 808.)

The three errors usually committed by States, and the three that led to the downfall of Greece, Baudeau thought, were arbitrary use of legislative authority, oppressive taxation, and aggressive patriotism (p. 801).

[93] “Before a harvest can be reaped not only must the cultivators incur the usual outlay upon stock, etc., and the proprietors upon clearing the land, but the public authority must also incur some expense, which might be designated avances souveraines.” (Baudeau, p. 758.)

[94] “The Government ought to be less concerned with the task of saving than with the duty of spending upon those operations that are necessary for the prosperity of the realm. This heavy expenditure will cease when the country has become wealthy.” (Quesnay, Maximes, xxvi.)

“It is a narrow and churlish English idea which decrees that an annual sum should be annually voted to the Government, and that Parliament should reserve to itself the right of refusing this tax. Such a procedure is a travesty of democracy.” (Dupont, in a letter to J. B. Say.)

[95] “The amount of the tax as compared with the amount of the net product should be such that the position of the landed proprietor shall be the best possible and the state of being a landowner preferable to any other state in society.” (Dupont, p. 356.)

[96] If we compare this figure with the total gross revenue of France, valued then at 5 milliard francs, it would represent a tax of 12 per cent., which is rather heavy for a State that was supposed to be governed by the laws of the “natural order.” The proportion which the present French Budget bears to the total revenue of the country is 16 per cent.

The French Budget of 1781, introduced by Necker, corresponded almost exactly with the figure given by the Physiocrats, namely, 610 millions. Of course, we ought to add to this the ecclesiastical dues, the seigniorial rights, and the compulsory labour of every kind, which were to disappear under the Physiocratic régime.

[97] “The tax is a kind of inalienable common property. When proprietors buy or sell land they do not buy and sell the tax. They can only dispose of that portion of the land which really belongs to them, after deducting the amount of the tax. This tax is no more a charge upon property than is the right of fellow proprietors a burden upon one’s property. And so the public revenue is not burdensome to anyone, costs nothing, and is paid by no one. Hence, it in no way curtails the amount of property which a person has.” (Dupont, vol. i, pp. 357, 358.)

[98] In order to give every security to proprietors the Physiocrats were anxious that the value of the property, when once it was fixed, should vary as little as possible. Baudeau, however, recognised the advisability of periodical revaluations “in order that the sovereign power should always share in both the profits and the losses of the producer.” And he addresses this important caution to the proprietors: “Take no credit to yourselves for the increase in the revenue of land. The thanks are really due to the growing efficiency of the sovereign authority.” (P. 708.)

[99] “Let us observe, in passing, that the terms ‘taxation’ and ‘public revenue’ have unfortunately become synonymous in the public mind. The term ‘taxation’ is always unpopular. It implies a charge that is hard to bear, and which everybody is anxious to shirk. The public revenue is the product of the sovereign’s landed property, which is distinct from his subjects’ property.” (Mercier de la Rivière, p. 451.)

[100] “The sovereign takes a fixed amount of the net product for his annual income. This amount of necessity grows with every increase of the net product and diminishes with every shrinking of the product. The people’s interests and the sovereign’s are, consequently, necessarily one.” (Baudeau, p. 769.)

[101] This was the basis of Voltaire’s lively satire, L’Homme avec Quarante Écus. It treats of a wealthy financier who escapes taxation, and who makes sport of the poor agriculturist who pays taxes for both, although his income is only forty écus.

[102] “Such a reduction of the necessary expenditure must result in diminished production, because there can be no harvest without some amount of preliminary expense. You may check your expenditure, but it will mean diminishing your harvest—a decrease in the one means an equal decrease of the other. Such a fatal blow to the growth of population would, in the long run, injure the landed proprietor and the sovereign.” (Dupont de Nemours, p. 353.)

“A fall in the expenditure means a smaller harvest, which means that less will be expended upon making preparation for the next harvest. This cyclical movement seems a terrible thing to those who have given it some thought.” (Mercier de la Rivière, p. 499.)

[103] “There would be something to say for this if the rich repaid them by increased wages or additional almsgiving. But the poor give to the rich, and so add to their misery, already sufficiently great. The State demands from those who have nothing to give, and directs all its penalties and exercises all its severity upon the poor.” (Turgot, Œuvres, vol. i, p. 413).

“It would be better for the landed proprietors to pay it direct to the Treasury, and thus save the cost of collection.” (Dupont de Nemours, p. 352.)

[104] “It might happen—and, indeed, it often does happen—that the worker’s wage is only equal to what is necessary for his subsistence.” (Réflexions, vi.)

It is also possible that Jesus was not formulating a general law when He said that we have the poor always with us. Turgot likewise wished to state the simple fact, and not to draw a general conclusion.

[105] Quesnay, Second Problème économique, p. 134. The argument which follows is rather curious. He does not seem to think that a fall in wages even below the minimum would result in the death of many people, but simply that it would result in emigration to other countries, and that as a consequence of such emigration the diminished supply at home would soon lead to higher wages being paid—a fairly optimistic conclusion for the period.

[106] Baudeau (p. 770) points out the error of confusing the gross revenue with the net revenue. Allowance should be made for the cost of collecting the revenue, etc.

[107] “If unfortunately it be true that three-tenths of the annual product is not sufficient to cover the ordinary expenditure, there is only one natural and reasonable conclusion to be drawn from this, namely, curtail the expenditure.” (Dupont de Nemours, p. 775.)

“The tax must never be assessed in accordance with individual caprice. The amount is determined by the natural order.” (Dupont, Sur l’Origin d’un Science nouvelle.) Neither should the State, in their opinion, exceed the limit, because it would mean having recourse to borrowing, which would simply mean increased deferred taxation.

[108] See M. Garçon’s instructive brochure, Un Prince allemand physiocrate, for a résumé of the Margrave’s correspondence.

[109] We find the word in one of Dupont’s letters to Say, but that is much later.

[110] Henry George dedicated his volume entitled Protection or Free Trade to them because he considered that they were his masters. But his tribute loses its point somewhat when we remember that he admits that he had never read them.

[111] Listen to Mercier de la Rivière: “We must admire the way in which one man becomes an instrument for the happiness of others, and the manner in which this happiness seems to communicate itself to the whole. Speaking literally, of course I do not know whether there will not be a few unhappy people even in this State, but their numbers will be so few and the happy ones will be so numerous that we need not be much concerned about helping them. All our interests and wills will be linked to the interest and will of the sovereign, forming for our common good a harmony which can only be regarded as the work of a kind Providence that wills that the land shall be full of happy men.” This enchanting picture only applies to future society, when the “natural order” will be established. The optimism of the Physiocrats is very much like the anarchists’.

[112] Very little seems to have been known about Cantillon for more than a century after his death. But, like all the rediscovered founders of the science, he has received considerable attention for some years past. His influence upon the Physiocrats has perhaps been exaggerated. Mirabeau’s earliest book, L’Ami des Hommes, which appeared just twelve months after Cantillon’s work, is undoubtedly inspired by Cantillon. No discussion of his work is included in the text because it was felt that it might interfere with the plan of the work as already mapped out. There are several articles in various reviews which deal with Cantillon’s work, the earliest being that contributed by Stanley Jevons to the Contemporary Review in 1881.

[113] Valeurs et Monnaies, which dates from 1769, and again in his Réflexions. Quesnay’s conception of value may be gleaned from his article entitled Hommes, which remained unpublished for a long time, and has only recently appeared in the Revue d’Histoire des Doctrines économiques et sociales, vol. i, No. 1.

[114] He dilates at considerable length on the distinction between estimative value (what would now be called subjective value) and appreciative (or social) value. The first depends upon the amount of time and trouble we are willing to sacrifice in order to acquire it. In this connection the notion of labour-value appears. As to appreciative value, it differs from the preceding only in being an “average estimative value.”

[115] Turgot, though a disciple of Quesnay, remained outside the Physiocratic school. He always referred to them contemptuously as “the sect.”

[116] “I am so struck with this notion that I think it must serve as the basis of this whole treatise.” (Chap. 1.)

[117] Le Commerce et le Gouvernement, p. 15.

[118] Ibid., Part I, chap. 1.

[119] “It is not correct to say that the exchanged values are equal; on the contrary, each party seeks to give a smaller value in exchange for a larger one. The process proves advantageous to both; hence, doubtless, the origin of the idea that the values must be equal. But one ought to have come to the conclusion that if each gains both must have given less and obtained more.” (Op. cit., pp. 55, 86.) Compare this with the quotation from de Trosne, p. 27, and note its psychological superiority.

[120] Op. cit., Part I, chap. 9.

[121] “Even where the land is covered with products there is no additional material beyond what there was formerly. They have just been given a new form, and wealth consists merely of such transformations.”

[122] Op. cit., Part I, chap. 29.

[123] In a recent study of the wage bargain we find M. Chatelain giving expression to similar ideas, though apparently knowing nothing of Condillac’s work.

[124] Op. cit., chap. xv, par. 8.

[125] See Turgot, Mémoire sur les Prêts d’Argent, p. 122: “In every bargain involving the taking of interest a certain sum of money is given now in exchange for a somewhat larger sum to be paid at some future date; difference of time as well as of place makes a real difference to the value of money.” Further on he adds (p. 127): “The difference is familiar to everyone, and the well-known proverb ‘A bird in the hand is worth two in the bush’ is simply a popular way of expressing it.”

[126] The life of Adam Smith presents nothing remarkable. It is easily summed up in the story of his travels, his professional activities, and the records of his friendships, and among these his intimacy with Hume the philosopher has become classical. He was born at Kirkcaldy, in Scotland, on June 5, 1723. From 1737 to 1740 he studied at the University of Glasgow under Francis Hutcheson, the philosopher, to whom he became much attached. From 1740 to 1746 he continued his studies at Oxford, where he seems to have worked steadily, chiefly by himself. The intellectual state of the university was at that time extremely low, and a number of the professors never delivered any lectures at all. Returning to Scotland, he gave two free courses of lectures at Edinburgh, one on English literature and the other on political economy, in the course of which he defended the principles of commercial liberty. In 1751 he became Professor of Logic at Glasgow, at that time one of the best universities in Europe. Towards the end of the year he was appointed to the chair of Moral Philosophy, which included the four divisions of Natural Theology, Ethics, Jurisprudence, and Politics within its curriculum. In 1759 he published his Theory of Moral Sentiments, which speedily brought him a great reputation. In 1764, when forty years of age, he quitted the professorial chair at Glasgow University and accompanied the young Duke of Buccleuch, son-in-law of Charles Townshend, the celebrated statesman, on his travels abroad. With the young nobility of this period foreign travel frequently took the place of a university training, on account of the disrepute into which the latter had fallen. Smith was given a pension of £300 a year for the rest of his life, so that the mere material advantage was considerably in excess of his earnings as a professor. The years 1764-66 were spent in this way. A year and a half was passed at Toulouse, two months at Geneva, where he met Voltaire, and another ten months at Paris. While in Paris he became acquainted with the Physiocrats, particularly with Turgot and the Encyclopædists. It was at Toulouse that he began his Wealth of Nations. Returning to Scotland in 1767, he went to live with his mother, with the sole object of devoting himself to this work. By 1773 the book was nearly complete. But Smith moved to London, and the work did not appear till 1776. By this achievement Smith crowned the great celebrity which he already enjoyed. In January 1778 Smith was appointed Commissioner of Customs at Edinburgh, a distinguished position which he held until his death in 1790.

All that we know of Smith’s character shows him to have been a man of tender feelings and of great refinement of character. His absent-mindedness has become proverbial. In politics his sympathies were with the Whigs. In religion he associated himself with the deists, a school that was greatly in vogue towards the end of the eighteenth century, and of which Voltaire, who was much admired by Smith, was the most celebrated representative.

For a long time the only life of Smith which we possessed was the memoir written by Dugald Stewart, Account of the Life and Writings of Adam Smith, and read by him in 1793 before the Royal Society of Edinburgh. It appeared in the Transactions of the society for 1794, and was published in volume form in 1811 along with other biographies, under the title of Biographical Memoirs of Adam Smith, Robertson, etc., by Dugald Stewart. To-day we are more fortunate. John Rae in his charming Life of Adam Smith (London, 1895) has succeeded in bringing to light all that we can know of Smith and his circle. To him we are indebted for most of the details we have given. In 1894 James Bonar published a catalogue of Smith’s library, containing about 2300 volumes, and comprising about two-thirds of his whole library. A still more important contribution to the study of Smith’s ideas has been made by Dr. Edwin Cannan, who in 1896 published Lectures on Justice, Police, Revenue, and Arms, delivered in Glasgow by Adam Smith, from Notes taken by a Student in 1763 (Oxford). This represents the course of lectures on political economy delivered by Smith while professor at Glasgow. A manuscript copy of the notes taken in this course by a student, probably in 1763, was accidentally discovered by a London solicitor in 1876. These notes were in 1895 forwarded to Dr. Cannan for publication. They are especially precious in helping us to understand Smith’s ideas before his stay in France and his meeting with the Physiocrats. Of the numerous editions of the Wealth of Nations which have hitherto been published, the more important are those of Buchanan, McCulloch, Thorold Rogers, and Nicholson. The latest critical edition is that of Dr. Cannan, published in 1904 by Methuen, containing very valuable notes. This is the edition we have used.

[127] Wealth of Nations, vol. ii, p. 275.

[128] On this point see Schatz’s Individualisme économique et social (Paris, 1908).

[129] Chap. iv of sec. ii of the 7th part of the Theory of Moral Sentiments is entitled Of Systems of License.

[130] Oncken’s edition, p. 331.

[131] The theory that there are three factors of production, which has since become a commonplace of economics, is not to be found in Smith. Indirectly, however, it was he who originated the idea by distinguishing in his treatment of distribution between the various sources of revenue. The distinction once made, it was quite natural to consider each source as a factor of production; and this is just what J. B. Say did in his Treatise (2nd ed., chaps. iv and v). Cf. Cannan’s History of the Theories of Production and Distribution, p. 40 (1894).

[132] Wealth of Nations, Book I, chap. 1; Cannan, vol. i, pp. 13-14.

[133] “In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature.” (Wealth of Nations, Book I, chap. 2; Cannan, vol. i, p. 16.)

[134] Wealth of Nations, Book I, chap. 1; Cannan, vol. i, p. 6.

[135] Ibid., Book V, chap, 1, par. iii, art. 2; vol. ii, p. 267.

[136] “For a very small expence the public can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.” (Wealth of Nations, Book V, chap. 1, part iii, art. 2; Cannan, vol. ii, p. 270.)

[137] Ibid., Book I, chap. 3; vol. i, p. 19.

[138] “As the accumulation of stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is previously more and more accumulated.” (Ibid., Book II, Introd.; vol. i, p. 259.) It is true that in another passage he speaks of the quantity of stock which can be employed in any branch of business depending very much upon that of the labour which can be employed in it (Book I, chap. 10, part ii; vol. i, p. 137). But this observation remains isolated, while the former represents his true teaching.

[139] Cf. Cannan’s penetrating criticism of this idea of Smith’s in Theories of Production and Distribution, pp. 80-83.

[140] This is the first of the four celebrated maxims enunciated by Smith in his theory of taxation. Here are the other three: “(ii) The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. (iii) Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it. (iv) Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the State.” (Wealth of Nations, Book V, chap. 2, part ii; Cannan, vol. ii, pp. 310-311.)

[141] This rule of payment according to ability did not prevent his pronouncing in another paragraph in favour of progressive taxation. This is an instance of a want of logic frequently evidenced in his writings. Speaking of taxes upon rent, he remarks that they weigh more heavily upon rich than upon poor, because the former in proportion to their income spend more upon house rent than the latter. But “it is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.” (Ibid., Book V, chap. 2, part ii, art. 1; vol. ii, p. 327.)

[142] Ibid., Book II, chap. 3; vol. i, p. 314.

[143] “Farmers and country labourers, indeed, over and above the stock which maintains and employs them, reproduce annually a neat produce, a free rent to the landlord. As a marriage which affords three children is certainly more productive than one which affords only two; so the labour of farmers and country labourers is certainly more productive than that of merchants, artificers, and manufacturers. The superior produce of the one class, however, does not render the other barren or unproductive.” (Wealth of Nations, Book IV, chap. 9; Cannan, vol. ii, p. 173.)

[144] Ibid., Book IV, chap. 9; vol. ii, p. 176.

[145] Ibid., Book II, chap. 5; vol. i, p. 344.

[146] Wealth of Nations, Book II, chap. 5; Cannan, vol. i, p. 344. Note that here as elsewhere Smith entertains more than one opinion. In other passages in the book he regards rent as a monopoly price “that enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit, are the causes of high or low price; high or low rent is the effect of it. It is because high or low wages and profit must be paid, in order to bring a particular commodity to market, that its price is high or low. But it is because its price is high or low; a great deal more, or very little more, or no more, than what is sufficient to pay those wages and profit, that it affords a high rent, or a low rent, or no rent at all.” (Ibid., Book I, chap. 11; vol. i, p. 147.)

It is impossible to reconcile these statements. In the one case rent is regarded as a constituent element of price, in the other it is the effect of price.

In the first edition this contradiction was still more evident. In that edition rent, along with profit and wages, was treated as a third determinant of value. (See Cannan’s edition, vol. i, p. 51, note 7.) The paragraph was deleted from the second edition, and rent was treated merely as a component part of the price. This modification was perhaps the outcome of a letter written by Hume to Smith on April 1, 1776, after he had read the Wealth of Nations for the first time. “I cannot think,” says Hume, “that the rent of farms makes any part of the price of the produce, but that the price is determined altogether by the quantity and the demand.” (Quoted by Rae in his Life of Adam Smith, p. 286.) The celebrated controversy as to whether rent enters into prices is not a thing of yesterday. Its origin dates from the birth of political economy itself, and it will probably only die with it.

[147] His error is partly due to the fact that he failed to distinguish between the profits of the entrepreneur and the interest of the capitalist. Both with Smith and with his successors the word “profit” signified a twofold revenue, and this was perfectly correct so long as the entrepreneur was also a capitalist. The word “interest” was reserved for the income of that person who lent capital but who did not himself produce anything. The revenue “derived from stock, by the person who manages or employs it, is called profit. That derived from it by the person who does not employ it himself, but lends it to another, is called the interest or the use of money.” (Ibid., Book I, chap. 6; vol. i, p. 54.) J. B. Say was the first to give us a definite idea of the entrepreneur. Had Smith realised more clearly the functions of the entrepreneur he would probably have perceived: (1) That the entrepreneur, in addition to paying interest on his capital, frequently has to pay rent for the use of the soil; (2) that profit strictly so called includes an element analogous to rent. According to Smith, profit was simply payment for risks undergone or for work undertaken.

[148] James Watt in 1756 had set up his workshop within the precincts of the University of Glasgow, for which he manufactured mathematical instruments. The corporation had refused him permission to set it up in the town—a striking illustration of the narrowness and inflexibility of “the corporative régime.”

[149] A combination of Hargreave’s spinning jenny and Arkwright’s water frame.

[150] Marx speaks of Smith as the economist who is the very epitome of the manufacturing period. (Das Kapital, vol. i, p. 313, note.)

[151] See Mantoux’ work, La Révolution industrielle au XVIIIe Siècle, p. 75 (Paris, 1905). “We are mistaken,” says he, “if we think that manufacture was the dominant feature of the period preceding the factory system. Logically it may be the necessary antecedent, but historically its claim to priority is weak, although it left its indelible marks upon industry. The appearance of industry at the time of the Renaissance is an event of the greatest importance and significance, but it only played a part of secondary importance for a century or two.”

[152] Rae’s Life of Adam Smith, p. 89.

[153] Wealth of Nations, Book I, chap. 11; Cannan, vol. i. p. 250.

[154] Wealth of Nations, Book I, chap. 8; Cannan, vol. i, p. 80.

[155] Ibid., Book I, chap. 9, in fine; vol. i, p. 100.

[156] Ibid., Book I, chap. 10, part ii; vol. i, p. 143.

[157] Ibid., Book I, chap. 10, part ii; vol. i, p. 128. The whole passage contains a curious eulogy of proprietors and farmers.

[158] Wealth of Nations, Book IV, chap. 2; Cannan, vol. i, p. 427.

[159] For the connection between Smith’s system and the philosophy of his time see W. Hasbach, Die allgemeinen philosophischen Grundlagen der von F. Quesnai und A. Smith begründeten politischen Oekonomie (Leipzig, 1890).

[160] Wealth of Nations, Book I, chap. 2; Cannan, vol. i, p. 15.

[161] The whole passage, almost word for word, may be found in Smith’s course of lectures at Glasgow, and the whole is taken from Mandeville’s Fable des Abeilles.

[162] Wealth of Nations, Book I, chap. 4; Cannan, vol. i, p. 24.

[163] For a long time economists were quite content with Smith’s theory of capital. Like other portions of his work, it readily became classic, and subsequent writers simply repeated it. To-day, however, this success hardly seems to have been warranted. “It can scarcely be denied,” writes Cannan, “that Smith left the whole subject of capital in the most unsatisfactory state.” (Theories of Production and Distribution, p. 89.) If this remark needs any justification we have it in the many discussions which have taken place on this subject during the last fifty years, and which are not yet at an end. Some of the most original works of recent years, Böhm-Bawerk’s Positive Theory of Capital, for example, are entirely taken up with this topic. In England, America, and Italy the best-known economists, Cannan, Fisher, and Pareto, have recently revived the ancient notions, and the discussions which have followed are sufficient evidence that Smith had by no means exhausted the subject. If we carefully read Book II of the Wealth of Nations, which is entirely devoted to this topic, what do we find? We have a distinction drawn between fixed and circulating capital borrowed from practical affairs, but possessing no great scientific value; the very doubtful identification of national capital with the sum of private capitals; a very unsatisfactory attempt at differentiating between the notions of capital and revenue; the affirmation that saving involves consumption, a paradox repeated ad nauseam down to the days of Mill; the commonplace statement that capital increases as saving grows; and, finally, the proposition that “capital limits industry.”

[164] Wealth of Nations, Book II, chap. 3; Cannan, vol. i, p. 325. “The annual produce of the land and labour of any nation can be increased in its value by no other means, but by increasing either the number of its productive labourers, or the productive powers of those labourers who had before been employed. The number of its productive labourers, it is evident, can never be much increased, but in consequence of an increase of capital, or of the funds destined for maintaining them. The productive powers of the same number of labourers cannot be increased, but in consequence either of some addition and improvement to those machines and instruments which facilitate and abridge labour; or of a more proper division and distribution of employment. In either case an additional capital is almost always required.”

[165] Ibid., Book IV, chap. 2; vol. i, p. 423.

[166] “The general industry of the society never can exceed what the capital of the society can employ.” (Ibid., Book IV, chap. 2; vol. i, p. 419.) John Stuart Mill was the first to employ the formula in its condensed form, “Industry is limited by capital.”

[167] We have spoken of the controversies as threadbare, for every economist is by this time persuaded that, assuming the necessity for the co-operation of capital, land, and labour in production, it is quite clear that the amount of produce raised must depend upon the amount of each of these factors employed, and not upon the amount of any one of them.

Smith had anticipated the arguments advanced by such socialists as Rodbertus and Lassalle, who regard saving rather than labour as the source of capital. “Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides the subject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater.” (Wealth of Nations, Book II, chap. 3; Cannan, vol. i, p. 320.)

[168] Ibid., Book II, chap. 3; vol. i, pp. 323, 324, 325.

[169] Wealth of Nations, Book I, chap. 7; Cannan, vol. i, p. 58. “The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand; since it may be sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said in some sense to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it.”

[170] For Smith oppression meant the tyranny either of producers or consumers. When profits are above the normal rate “it is a proof that something is either bought cheaper or sold dearer than it ought to be, and that some particular class of citizens is more or less oppressed either by paying more or by getting less than what is suitable to that equality which ought to take place, and which naturally does take place among all the different classes of them.” (Ibid., Book IV, chap. 7, part iii; vol. ii, p. 128.)

The correspondence between selling price and the cost of production seemed to Smith to be of the very essence of justice. Complete correspondence would realise the ideal of the just price.

[171] Wealth of Nations, Book I, chap. 4; Cannan, vol. i, p. 30. The passage is well known. “The word ‘value,’ it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use,’ the other ‘value in exchange.’ The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.”

[172] The statement has been qualified because in the passage referred to Smith seems to define utility in the vulgar sense (i.e. utility as contrasted with mere agreeableness). This want of exactness was corrected by Ricardo, and is the subject of a searching criticism by Mill. The following passage from his Lectures on Justice may serve to throw some light upon the definition: “There is no demand for a thing of little use; it is not a rational object of desire.” Smith could not conceive the possibility of a demand or even a desire for a commodity which was useless from a rational point of view. But this is evidently a great mistake.

[173] The radical separation of the two ideas was perhaps more a matter of expression than of reasoning, for in his Lectures on Justice, p. 176, value in use, coupled with the purchasing power possessed by those who desired the commodity, was regarded as one of the elements which determined the demand for it and fixed its market price. The whole discussion of the theory of value by Smith is very unsatisfactory.

[174] We ought perhaps to have said that he had to choose between three possible definitions, for in the Lectures on Justice we find a third definition of “natural price” (p. 176).

[175] Wealth of Nations, Book I, chap. 7; Cannan, vol. i, p. 58.

[176] Ibid., Book I, chap. 5; vol. i, p. 33.

[177] Pareto in his recent article L’Économie et la Sociologie au point de vue scientifique (Rivista di Scienza, 1907, No. 2) expresses himself as follows: “Underneath the actual prices quoted on the exchanges, prices varying according to the exigencies of time and place and dependent upon an infinite number of circumstances, is there nothing which has any constancy or is in any degree less variable? This is the problem that political economy must solve.”

[178] Wealth of Nations, Book I, chap. 5; Cannan, vol. i, p. 32. In this passage Smith seems to imply that the value of an object is determined, not by the amount of labour which it cost to produce it, but by the amount of labour which can be bought in exchange for it. Fundamentally the two ideas are one, for objects of equal value only can be exchanged, so that the amount of labour anyone can buy with any given object is equal to the amount of labour which that object cost to produce. “Goods,” says Smith, “contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity.”

[179] Ibid., Book I, chap. 5; vol. i, p. 33.

[180] Ibid., Book I, chap. 6; vol. i, p. 50.

[181] Wealth of Nations, Book I, chap. 7; Cannan, vol. i, p. 57.

[182] Ibid., chap. 6; vol. i, p. 51. Here, for example, is a passage in which, as Böhm-Bawerk forcibly remarks (Kapital und Kapitalzins, 2nd ed., 1900, p. 84), the two conceptions are found in juxtaposition without any attempt at reconciliation: “In this state of things [where labour and capital have already been appropriated] the whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity, the only circumstance which can regulate the quantity which it ought commonly to purchase, command, or exchange for. An additional quantity, it is evident, must be due for the profits of the stock which advanced the wages and furnished the materials of that labour.” At the beginning of the passage the workman shared the produce of his labour and profits constituted a deduction from the value created by labour alone; at the end of the paragraph profits issue from a supplementary value which is an addition to the value already given it by labour. Other passages where the two conceptions come into contact are also cited by Böhm-Bawerk. Interest and rent are also occasionally taken as evidence that the workman is being exploited, and this entitles Smith to be regarded as the father of socialism. More than one passage in his work seems to point to this conclusion. “In other countries, rent and profit eat up wages, and the two superior orders of people oppress the inferior one.” (Book IV, chap. 7, part ii; vol. ii, p. 67.) Concerning property he writes: “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.” (Book V, chap. 1, part ii; vol. ii, p. 207.) And finally there is the famous passage from the sixth chapter: “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.… He [the workman] must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities makes a third component part.” (Book I, chap. 6; vol. i, p. 51.) Dr. Cannan in his History of the Theories of Production and Distribution goes the length of declaring that the theory of spoliation is the only one in Smith’s work. It is to Smith that we owe that idea so frequently expressed by socialists, namely, that the workman in modern society never really obtains the produce of his toil.

[183] Cf. supra, p. 64, note 2.

[184] Wealth of Nations, Book I, chap. 7; Cannan, vol. i, p. 59.

[185] Smith only gives at most seven or eight lines to monopoly price. He simply states that “the price of monopoly is upon every occasion the highest which can be got.” (Ibid., Book I, chap. 7; vol. i, p. 63.) To-day the theory of monopoly prices is one of the most important in the whole of economics.

[186] Wealth of Nations, Book I, chap. 8; Cannan, vol. i, pp. 81-82.

[187] “That wealth consists in money, or in gold and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce, and as the measure of value.” (Wealth of Nations, Book IV, chap. 1; Cannan, vol. i, p. 396.) The whole chapter is an attempt to get rid of this prejudice.

[188] Ibid., Book IV, chap. 1; vol. i, p. 416; also Book II, chap. 2; vol. i, p. 274. “Though the weekly or yearly revenue of all the different inhabitants of any country, in the same manner, may be, and in reality frequently is, paid to them in money, their real riches, however, the real weekly or yearly revenue of all of them taken together, must always be great or small in proportion to the quantity of consumable goods which they can all of them purchase with this money. The whole revenue of all of them taken together is evidently not equal to both the money and the consumable goods; but only to one or other of those two values, to the latter more properly than to the former.”

[189] We meet with this expression several times: in Book I, chap. 11, part iii (vol. i, pp. 4 and 240), and in Book II, chap. 3 (vol. i, pp. 315, 323).

[190] An expression that is met with three times—in chap. 2 of Book II (vol. i, pp. 272, 275, 279).

[191] Wealth of Nations, Book II, chap. 2; Cannan, vol. i, p. 275.

[192] All these questions so obscurely treated in Smith’s work are handled with admirable lucidity in Irving Fisher’s Nature of Capital and Income (New York, 1907). Revenue is entirely stripped of that material suggestion which was always associated with it in Smith’s work, and is looked upon as a continual flow of services, whilst capital as a whole is regarded as total wealth existing at one particular moment and from which these services flow out.

[193] Wealth of Nations, Book II, chap. 2; Cannan, vol. i, p. 304.

[194] Ibid., Book IV, chap. 1; vol. i, pp. 402, 406.

[195] Ibid., Book II, chap. 3; vol. i, p. 322.

[196] Hume’s treatment of the quantity theory of money in his essays on Money and The Balance of Trade is much clearer than Smith’s.

[197] Wealth of Nations, Book II, chap. 2; Cannan, vol. i, p. 285.

[198] For instance, a high rate of exchange immediately readjusts the commercial indebtedness of nations. (Ibid., Book IV, chap. 1; vol. i, p. 400.) Elsewhere he points out that the advantages enjoyed by Europe from the possession of colonies were not exactly sought by her. The search for colonies, their discovery and exploitation, all this was undertaken without any preconceived plan, and in spite of the disastrous regulations imposed by European Governments. (Ibid., Book IV, chap. 7, part ii; vol. ii, pp. 90, 91.)

[199] Wealth of Nations, Book IV, chap. 5; Cannan, vol. i, p. 324; Book II, chap. 9; vol. ii, p. 43; Book IV, chap. 9; vol. ii, p. 172.

[200] “It is thus that the private interests and passions of individuals naturally dispose them to turn their stock towards the employments which in ordinary cases are most advantageous to the society.” The word “passion” was not inserted by chance. It occurs no less than three times on the same page. (Ibid., Book IV, chap. 7, part iii; vol. ii, p. 129.)

[201] Ibid., Book III, chap. 4; vol. i, pp. 389, 390.

[202] Ibid., Book II, chap. 1, in fine; vol. i, p. 267.

[203] Wealth of Nations, Book II, chap. 4, beginning of chapter; Cannan, vol. i, p. 332.

[204] Ibid., Book II, chap. 2; vol. i, p. 278.

[205] Ibid., Book IV, chap. 2; vol. i, p. 421. After having just said: “By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.”

[206] Ibid., Book IV, chap. 5; vol. ii, p. 43.

[207] Wealth of Nations, Book IV, chap. 9; Cannan, vol. ii, p. 172.

[208] “The great object of the political œconomy of every country, is to increase the riches and power of that country.” (Wealth of Nations, Book II, chap. 5; Cannan, vol. i, p. 351.) The expression “the political economy of every country,” which Smith frequently employed, might be used in answer to writers such as Knies, who speak of the Universalism or Internationalism of Smith.

[209] Ibid., Book IV, chap. 1; vol. i, p. 421.

[210] Wealth of Nations, Book I, chap. 8; Cannan, vol. i, p. 68. The masters possess the advantage in discussion (1) because they can combine much more easily; (2) because, thanks to their superior funds, they can afford to wait while “many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment.”

[211] Cf. supra, p. 78.

[212] Ibid., Book IV, chap. 7, part ii, the beginning; vol. ii, p. 67.

[213] Say, speaking of the working classes, remarks: “Are we quite certain that the workman obtains that share of wealth which is exactly proportioned to the amount which he has contributed to production?” (Treatise, 6th ed., p. 116.)

[214] Wealth of Nations, Book IV, chap. 9, in fine; Cannan, vol. ii, p. 184.

[215] Ibid., Book V, chap. 2, part i; vol. ii, p. 304. He makes exception only of the post-office, “perhaps the only mercantile project which has been successfully managed by, I believe, every sort of government.” (P. 303.)

[216] Ibid., Book II, chap. 3; vol. i, p. 328.

[217] Ibid., Book V, chap. 2, part ii, art. 1; vol. ii, p. 318.

[218] Ibid., Book V, chap. 3; vol. ii, p. 413.

[219] Wealth of Nations, Book V, chap. 2, part ii; Cannan, vol. ii, p. 308.

[220] Cf. particularly Burgin, Les Communaux et la Révolution française, in Nouvelle Revue historique de Droit, Nov.-Dec. 1908.

[221] Wealth of Nations, Book V, chap. 1, part iii, art. 2; Cannan, vol. ii, p. 250.

[222] Ibid., Book IV, chap. 9; vol. ii, p. 185.

[223] Ibid., Book I, chap. 10, part ii; vol. i, p. 130.

[224] Wealth of Nations, Book V, chap. 1, part iii, art. 1; Cannan, vol. ii, p. 233.

[225] Ibid., Book V, chap. 1, part iii, art. 1; vol. ii, p. 246.

[226] Ibid., Book II, chap. 4, in fine. It is probable that his conversion to belief in absolute liberty took place later as the result of his perusal of Bentham’s Defence of Usury, published in 1787, advocating the right of taking interest. This seems to have been the case if we can credit the report of a conversation which Smith had with one of Bentham’s friends, mentioned in a letter written to Bentham by another of his friends—George Wilson. Cf. John Rae, Life of Adam Smith, p. 423.

[227] Wealth of Nations, Book II, chap. 2; Cannan, vol. i, p. 307.

[228] Wealth of Nations, Book II, chap. 2; Cannan, vol. i, p. 307. He continues: “The obligation of building party walls in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.” This passage proves that Smith was in favour of public regulations which would further the material security of the citizens. Elsewhere he shows his partiality for adopting hygienic precautions against the spread of contagious diseases (Book V, chap. 1, part iii; vol. ii, p. 272).

[229] Cf. Mantoux, op. cit., pp. 65-66. This work gives most interesting details bearing upon all the points mentioned here. Internal restrictions are criticised by Smith in the second part of chap. 10 of Book I.

[230] “Each of those different branches of trade, however, is not only advantageous, but necessary and unavoidable, when the course of things, without any constraint or violence, naturally introduces it,” says he, after giving an exposition of the respective advantages of the various forms of economic activity. (Wealth of Nations, Book II, chap. 5; Cannan, vol. i, p. 352.)

[231] Wealth of Nations, Book IV, chap. 2; Cannan, vol. i, p. 419.

[232] Ibid., Book IV, chap. 1; vol. i, p. 422.

[233] Ibid., Book IV, chap. 3, part ii; vol. i, pp. 457-458.

[234] Principles of Political Economy, Book III, chap. 17.

[235] Wealth of Nations, Book IV, chap. 8; Cannan, vol. ii, p. 159.

[236] It is true that in Book IV, chap. 3, part 2, he declares: “In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest, that it seems ridiculous to take any pains to prove it.” (Cannan, vol. i, p. 458.)

[237] Speaking of duties on corn, he writes: “To prohibit by a perpetual law the importation of foreign corn and cattle, is in reality to enact, that the population and industry of the country shall at no time exceed what the true produce of its own soil can maintain.” (Ibid., Book IV, chap. 2; vol. i, p. 427.) He always views the question from the standpoint of increased population and labour, and not from that of the consumer.

[238] Ibid., Book II, chap. 5. Cf. Book IV, chap. 1.

[239] Wealth of Nations, Book IV, chap. 2, in fine; Cannan, vol. i, p. 435.

[240] The “Navigation Laws” is a generic term for a number of laws, the most famous of them dating from the time of Cromwell. Their immediate object was the destruction of the Dutch fleet, and English commerce was organised with a view to securing this. There is no doubt but that they contributed very considerably to the development of English maritime power.

[241] Ibid., Book IV, chap. 2; vol. i, p. 429.

[242] But “when there is no probability that any such repeal can be procured it seems a bad method of compensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them.” (Ibid., Book IV, chap. 2; vol. i, p. 433.)

[243] The discussion of these various cases is to be found towards the end of chap. 2 of Book IV.

[244] This system is expounded in Book V, chap 2, part ii, art. 5.

[245] In the preface to his translation, 1821 ed., p. lxix.

[246] Rae, Life of Smith, p. 103. The author of this famous phrase is not known.

[247] J. B. Say, Traité, 1st ed., p. 240.

[248] Mantoux, La Révolution industrielle, p. 83. M. Halévy gives expression to a similar idea in his La Jeunesse de Bentham, p. 193 (Paris, 1901).

[249] So called in honour of the leading English representative, Lord Eden.

[250] In 1778, 1784, 1786, 1789.

[251] 1791, 1793, 1796.

[252] Professor Kraus, writing in 1796, declared that no book published since the days of the New Testament would effect so many welcome changes when it became thoroughly known (J. Rae, p. 360). By the beginning of the nineteenth century its influence had become predominant. All the Prussian statesmen who aided Stein in the preparation and execution of those important reforms that gave birth to modern Prussia were thoroughly versed in Smith’s doctrines, and the Prussian tariff of 1821 is the first European tariff in which they are deliberately applied. (Cf. Roscher, Geschichte der Nationalökonomik in Deutschland.)

[253] In his introduction to the Traité, 1st ed. (The phrase was deleted in the 6th ed.)

[254] J. B. Say, Traité, 1st ed., introduction, p. xxxiii.

[255] He was born at Lyons on January 5, 1767. After a visit to England he entered the employment of an assurance company, and took part as a volunteer in the campaign of 1792. From 1794 to 1800 he edited a review entitled Décade philosophique, littéraire et politique, par une Société de Républicains. He was nominated a member of the Tribunate in 1799. After the publication of his Traité, the First Consul, having failed to obtain a promise that the financial proposals outlined in the first edition would be eliminated in the second, dismissed him from the Tribunate, offering him the post of director of the Droits réunis as compensation. Say, who disapproved of the new régime, refused, and set up a cotton factory at Auchy-les-Hesdins in the Pas-de-Calais. He realised his capital in 1813, returned to Paris, and in 1814 published a second edition of his treatise. In 1816 he delivered a course of lectures on political economy at the Athénée, probably the first course given in France. These lectures were published in 1817 in his Catéchisme d’Économie politique. In 1819 the Restoration Government appointed him to give a course on “Industrial Economy” (the term “Political Economy” was too terrible). In 1831 he was made Professor of Political Economy in the Collège de France. He died in 1832. His Cours complet d’Économie politique was published, in six volumes, in 1828-29.

[256] Cf. a letter to Louis Say in 1827 (Œuvres diverses, p. 545).

[257] Garnier’s translation of Adam Smith, 1802, vol. v, p. 283.

[258] Traité, 1803 ed., p. 39.

[259] Ibid., p. 21. Later on he employs the more comprehensive term “natural agents.”

[260] Traité, 1803 ed., Book I, chaps. 42 and 43. By “industry” Say understands every kind of labour. Cf. 6th ed., pp. 70 et seq.

[261] Malthus still appeared hostile to the doctrine of immaterial products, but Lauderdale, Tooke, McCulloch, and Senior accepted it, and it seemed definitely fixed when Stuart Mill confined the word “product” to material products only. For Tooke’s view see his letter to J. B. Say in the Œuvres diverses of the latter.

[262] Traité, Book I, chap. 2. Is it not strange that Say should have failed to apply this idea to commerce? He regards the latter as productive because it creates exchangeable values. Nevertheless he criticises Condillac for having said that mere exchange of goods increases wealth because it increases the utility of objects. This is because Say is perpetually mixing up utility and exchange value, a confusion that leads him into many serious mistakes.

[263] Traité, 6th ed., p. 6. The word “laws” does not appear in the first edition. Say merely speaks of general principles. It is found for the first time in the edition of 1814: “General facts or, if one wishes to call principles by that name, general laws” (p. xxix).

[264] Correspondence with Malthus, in Œuvres diverses, p. 466.

[265] Traité, Introd., 1st ed., p. ix; 6th ed., p. 13.

[266] Ibid., 1st ed., Book I, p. 404.

[267] There is no need for exaggeration, however, and no need to regard Say as totally indifferent to suffering and misery. He declares, e.g., that “for many homes both in town and country life is one long privation,” and that thrift in general “implies, not the curtailment of useless commodities, such as expediency and humanity would welcome, but a diminution of the real needs of life, which is a standing condemnation of the economic system of many Governments.” (Traité, 1st ed., vol. i, pp. 97-98; 6th ed., p. 116.)

[268] Traité, 6th ed., p. 403.

[269] Ibid., 1st ed., vol. i, p. 48.

[270] Ibid., 5th ed., vol. i, p. 67.

[271] Critical examination of McCulloch’s treatise (1825), in Œuvres diverses, pp. 274-275.

[272] Traité, 6th ed., p. 349.

[273] “Rent,” he says, “doubtless is partly interest on capital buried in the soil, for there are few properties which do not owe something to improvements made in them. But their total value is seldom due to this alone. It might be if the land were fertile but lacked the necessary facilities for cultivation. But this is never the case in civilised countries.” (Critical examination of McCulloch’s treatise (1825), in Œuvres diverses, p. 277.)

[274] Traité, 1st ed., p. 154.

[275] “The theory of heat and of weight and the study of the inclined plane have placed the whole of nature at the disposal of mankind. In the same way the theory of exchange and of markets will change the whole policy of the world.” (Ibid., 6th ed., p. 51.)

[276] Traité, 1st ed., vol. ii, p. 175.

[277] Ibid., p. 179.

[278] Ibid., p. 178.

[279] “One kind of product would seldom be more plentiful than another and goods would seldom be too many if everyone were given complete freedom.” Too much stress has possibly been laid on the phrase “Certain products are superabundant just because others are wanting,” and it has been taken as implying that even partial over-production is an impossibility. A note inserted on the next page helps to clear up the matter and to prevent misunderstanding. “The argument of the chapter,” says he, “is not that partial over-production is impossible, but merely that the production of one thing creates the demand for another.” He certainly seems unfaithful to his own position in the letters he wrote to Malthus, in which he tries to defend his own point of view by saying that “production implies producing goods that are demanded,” and that consequently if there is any excessive production it is not the fault of production as such and cannot be regarded as over-production. In greater conformity with his own views and much nearer the truth is his reply to an article by Sismondi published in 1824 in the Revue encyclopédique under the title Sur la Balance des Consommations avec les Productions (Œuvres diverses, p. 250). His statements vary from one edition to another, and anything more unstable than Say’s views on this question would be difficult to imagine. The formula “Products exchange for products” is so general that it includes everything, but means nothing at all; for what is money, after all, if it is not a product?

[280] Letters to Malthus (Œuvres diverses, p. 466).

[281] Malthus, Principles of Political Economy, Book II, chap. 1, sect. 9.

[282] Sur la Balance des Consommations avec les Productions, p. 252.

[283] Ibid., p. 251.

[284] Dühring, Kritische Geschichte der Nationalökonomie und des Sozialismus, 2nd ed., 1875, p. 165. For the other side of the question one may profitably peruse the interesting study of Say contributed by M. Allix to the Revue d’Économie politique, 1910 (pp. 303-341), and the Revue d’Histoire des Doctrines, 1911, p. 321.

[285] Stanley Jevons (Theory of Political Economy, 3rd ed., 1888) has recognised in too absolute a fashion, perhaps, the superiority of the French economists over Ricardo. “The true doctrine may be more or less clearly traced through the writings of a succession of great French economists, from Condillac, Baudeau, and Le Trosne, through J. B. Say, Destutt de Tracy, Storch, and others, down to Bastiat and Courcelle-Seneuil. The conclusion to which I am ever more clearly coming is that the only hope of attaining a true system of economics is to fling aside, once and for ever, the mazy and preposterous assumptions of the Ricardian School.” (Preface, p. xlix.)

[286] “The people must comprehend that they are themselves the cause of their own poverty.” (Malthus, p. 458.) Doubtless this is the reason why M. Halévy, among others, in his book Le Radicalisme philosophique, remarks that Ricardo, Malthus, and their disciples were regarded as the exponents of optimism and quietism. But in what sense were they optimists? Of course they believed that the existing economic order is the best possible, and that it would be impossible to change it for a better. That may be. But we prefer to think of them as “contented pessimists.”

[287] “Every reader of candour must acknowledge that the practical design uppermost in the mind of the writer, with whatever want of judgment it may have been executed, is to improve the condition and increase the happiness of the lower classes of society.” It is with this declaration that Malthus brings his book on population to a close.

[288] Miss Edgeworth, a contemporary of Ricardo, states in her letters that political economy was so much the fashion that distinguished ladies before engaging a governess for their children inquired about her competence to teach political economy.

[289] Conversations on Political Economy, by Mrs. Marcet (1816). Illustrations of Political Economy, by Miss Martineau (9 vols., containing thirty stories, 1832-34).

[290] Thomas Robert Malthus was born in 1766. His father, a country gentleman, was a man of learning and a friend of most of the philosophers of his time, especially Hume, and, it also seems, J. J. Rousseau. He was the youngest son of the family, and was intended for the Church and given an excellent education. After leaving Cambridge he took a living in the country, but in 1807 was appointed professor at a college founded by the East India Company at Haileybury, in Hertfordshire, where he remained until his death in 1834. He married when thirty-nine years of age, and had three sons and a daughter.

Malthus was a young unmarried clergyman living in a small country parish when, at the age of thirty-two, he in 1798 published anonymously his famous Essay on the Principle of Population as it affects the Future Improvement of Society. His critics were legion. In order to devote more study to the subject, he took a three years’ tour (1799-1802) on the Continent—avoiding France, because France at this period was anything but inviting to an Englishman. In 1803 he published—under his own name this time—a second edition, much modified and amplified, and with a slightly different title: An Essay on the Principle of Population, or a View of its Past and Present Effects on Human Happiness. Four other editions were published during his lifetime.

We must not forget his other works, although they were all eclipsed by his earliest effort. These were: The Principles of Political Economy considered with a View to their Practical Application (1820); A Series of Short Studies dealing with the Corn Laws (1814-15); On Rent (1815); The Poor Law (1817); and finally his Definitions in Political Economy (1827).

[291] See Stangeland, Pre-Malthusian Doctrines (New York, 1904).

[292] Godwin, Political Justice, Book VIII, chap. 7 (reprinted, London, 1890).

[293] “Man doubtless will never become immortal, but it is possible that the span of human life may be indefinitely prolonged.”

[294] Chap. 8 is entitled “The Error of Thinking that the Danger resulting from Population is Remote.” “There are few States in which there is not a constant effort in the population to increase beyond the means of subsistence. This constant effort as constantly tends to subject the lower classes of society to distress, and to prevent any great permanent amelioration of their condition.” (P. 10.)

[295] If two children were the normal issue of every marriage, population would evidently diminish, for all the children will not reach the marriageable age. Of those that do all will not become parents. Experience seems to show that with a birth-rate of less than three per family population does not increase, or if it does grow at all it is almost imperceptibly. This is the case in France, where on an average there are 2·70 births to every marriage.

To justify multiplying by two, Malthus regards a family of six as being a normal one. Of the six, two will die before attaining marriageable age, or will remain celibates, so that we are left with four, who will in turn become parents, and so we have the series 2, 4, etc.

[296] The statement that population doubles every twenty-five years might appear to be confirmed by the growth of population in the United States. It is curious to find that the population there during the nineteenth century conforms exactly to Malthus’s formula. In 1800 it was 5 millions. Doubling four times (4 periods of 25 years = 100) gives us a population of 80 millions, which is actually the figure for 1905, five years after the end of the century. But of course this is pure chance, the increase resulting from immigration rather than a rising birth-rate.

[297] It was in this connection that Malthus penned those famous words which have been so frequently brought up against him, although they were omitted from a later edition. “A man who is born into a world already possessed, if he cannot get subsistence from his parents on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food, and, in fact, has no business to be where he is. At Nature’s mighty feast there is no vacant cover for him. She tells him to be gone.…” On the other hand, let us remember his services in reorganising public assistance in England in 1832.

[298] “The effect of anything like a promiscuous intercourse which prevents the birth of children is evidently to weaken the best affections of the heart and in a very marked manner to degrade the female character. And any other intercourse would, without improper arts, bring as many children into the society as marriage, with a much greater probability of their becoming a burden to it.” (P. 450.)

[299] “These considerations show that the nature of chastity is not, as some have supposed, a forced produce of artificial society; but that it has the most real and solid foundation in nature and reason; being apparently the only virtuous means of avoiding the vice and misery which result so often from the principle of population.” (P. 450.)

He also notes that this virtue has usually been especially commended to women, but that “there is no reason for supposing that the violation of the laws of chastity are not equally dishonourable for both sexes.” Malthus evidently believed in one moral law for both sexes.

Consequently whenever the reverend gentleman is reproached with encouraging blasphemy, a point upon which he is particularly sensitive—for example, when it is pointed out that God’s injunction to man was to increase and multiply—he has no difficulty in showing that if procreation is the will of Providence, chastity is dictated by Christianity, and that the glorious work of chastity is to aid Providence in keeping even the balance of life.

[300] “Of the other branch of the preventive check, which comes under the head of vice, though its effect appears to have been very considerable, yet upon the whole its operation seems to have been inferior to the positive checks.” (P. 140.)

“I have said what I conceive to be strictly true, that it is our duty to defer marriage till we can feed our children; and that it is also our duty not to indulge ourselves in vicious gratifications; but I have never said that I expected either, much less both, of these duties to be completely fulfilled. In this and a number of other cases, it may happen that the violation of one of two duties will enable a man to perform the other with greater facility.… The moralist is still bound to inculcate the practice of both duties, and each individual must be left to act as his conscience shall dictate.” (P. 560.)

[301] “I should be extremely sorry to say anything which could either directly or remotely be construed unfavourably to the cause of virtue; but I certainly cannot think that the vices which relate to the sex are the only vices which are to be considered in a moral question.” (P. 462.) Malthus omits to mention the particular vice which he has in mind. “I have not the slightest hesitation in saying that the prudential check [note the word—no longer “moral restraint”] to marriage is better than premature mortality.” (P. 560.) We are far removed from the first edition, where there is no mention of a third alternative between chastity and vice.

[302] “Abject poverty is a state the most unfavourable to chastity that can well be conceived.… There is a degree of squalid poverty in which if a girl was brought up I should say that her being really modest at twenty was an absolute miracle.” (P. 464.) And elsewhere he writes: “I maintain that the diminution of the vice which results from poverty would afford a sufficient compensation for any other evil that might follow.”

[303] These figures only give the values expressed in money by capitalising them at the market rate of interest, which gives a rather fictitious result. It does not warrant the belief that an American citizen of to-day, however much his consumption may have increased, is any better off than his ancestors.

[304] These differ, again, from the desire for marriage, which is influenced by other considerations. French people marry in order to have a home, but a desire for a home and a desire for love or for children are very different things.

[305] “By a son a man obtains victory over all people; by a son’s son he enjoys immortality; and afterwards by the son of that grandson he reaches the solar abode.” “The son delivers his father from hell.” “A son of a Brahmin if he performs virtuous acts redeems from sin his ten ancestors.” (P. 105.)

This is Manu’s law, which Malthus quotes in support of his contention. But he failed to see that as soon as one begins to doubt Manu’s teaching the argument is the other way. One of the reasons why sterility was considered a dishonour by Jewish women was that each of them secretly hoped that she might become the mother of the promised Messiah. But when the Jews ceased to hope for the Deliverer that was to come, then the incentive to childbirth was gone.

[306] Neo-Malthusianism dates from the publication of Dr. Drysdale’s book, Elements of Social Science, in 1854, but the Malthusian League came into existence only in 1877. During the last few years the movement seems to have taken hold everywhere, especially in France, where we would least have expected it.

[307] He categorically declares that “we must suppose the general prevalence of such prudential habits among the poor as would prevent them from marrying when the actual price of labour joined to what they might have saved in their single state would not give them the prospect of being able to support a wife and five or six children without assistance.” (P. 536.) Marriage seems prohibited to every worker whose wages are not enough to keep eight persons, which practically would mean that no workman could marry.

[308] “I have been accused of proposing a law to prohibit the poor from marrying. This is not true.… I am, indeed, most decidedly of opinion that any positive law to limit the age of marriage would be both unjust and immoral.” (P. 357.)

[309] It is worth while recalling the passage to which we have already incidentally drawn attention: “The poor are themselves the cause of their own poverty.” (P. 458.)

[310] His views concerning charity are exceedingly interesting, and are directly connected with his theory of population. This was the practical question about which he was most concerned, and his influence in this direction has been very considerable. He showed himself an uncompromising opponent of the English Poor Law as it then existed. Speaking of the famous 43rd of Elizabeth, he declares that one of its clauses is “as arrogant and as absurd as if it had enacted that two ears of wheat should in future grow where one only had grown before. Canute, when he commanded the waves not to wet his princely foot, did not in reality assume a greater power over the laws of nature.” Since public assistance cannot create wealth, it cannot either keep alive a single pauper. “It may at first appear strange, but I believe it is true, that I cannot by means of money raise the condition of a poor man … without proportionally depressing others in the same class.” But it may be pointed out that although charity cannot beget wealth it does transfer a certain portion of wealth from the pockets of the rich to fill the mouths of the hungry poor. The consumption of the one is increased just as much as the other’s is decreased.

Not only does he condemn charity in the way of almsgiving, but also the practice of giving work for charity’s sake. He admits an exception in the case of education, of which everybody can partake without making anyone else the poorer. Such arguments would seem to imply the prohibition of all charity, whether public or private, and as a matter of fact he demands the gradual abolition of the Poor Laws and of every kind of systematic assistance which offers to the poor any kind of help upon which they can always reckon. But he recognises the “good results of private charity, discriminately and occasionally exercised.” Though he failed to remove the Poor Laws, the effect of his teaching is clearly seen in the Poor Law Amendment Act of 1834.

Malthus’s doctrine is just the reverse of the social teaching on the question in France at the present time. There you have an attempt to substitute solidarity for Christian charity. That means that the poor should be able to demand assistance, not as a gift, but as a right, and that the place of individual or private charity should be taken by a public institution with a view to giving effect to this. His teaching concerning the preventive obstacle has been so thoroughly taken to heart that there is not much fear of legal assistance resulting in a growth of population.

[311] It is not proved, however, that such were Malthus’s views. Private property, at least peasant proprietorship, acts as a stimulus to population. And it is very curious to think that he should have taken his illustration from France, where the multiplication of small farms is considered one of the causes of the falling birth-rate. “At all times the number of small farmers and proprietors in France was great, and though such a state of things is by no means favourable to the clear surplus produce or disposable wealth of a nation, yet sometimes it is not unfavourable to the absolute produce, and it has always a strong tendency to encourage population.” And again: “Even in France, with all her advantages of situation and climate, the tendency of population is so great and the want of foresight among the lower classes so remarkable.…” Godwin and Young express similar opinions. The latter is quoted by Malthus: “The predominant evil of the kingdom is the having so great a population that she can neither employ nor feed it.” (P. 509.)

Marriage, Malthus thought, had a restraining influence upon population. He admits that the simplest and most natural obstacle is to oblige every father to rear his own children. He also admits that the shame which the mother of a bastard and her child have to endure is a matter of social necessity. He does not approve of forcing the man who has betrayed a woman to marry, but he declares that seduction ought to be seriously punished. This is the view commonly adopted to-day, but it was very novel then.

[312] There are some sociologists who, like Malthus, would seek an explanation both of depopulation and of over-population in biological causes. Fourier and Doubleday, for example, are among the number. Doubleday, who wrote forty years before Malthus, believed that fecundity varied inversely with subsistence, and that this acted as a kind of natural check upon the growth of population. There are others, again, who think that reproductive capacity varies inversely with intellectual activity. Both explanations seem to suggest a kind of opposition between the development of the individual and the progress of the race which is very suggestive. But their views have not gained many adherents. If they are ever proved, which is not very likely, the prospect is not an attractive one. It would mean that those nations and classes who have risen to a position of ease through their superior culture would disappear, while the poorer, uncultured masses would continue to increase.

[313] David Ricardo was descended from a Jewish family originally domiciled in Holland. He was born in 1772 in London, where his father had settled as a stockbroker. He entered business at an early age, and soon became thoroughly conversant with the intricacies of banking and exchange. On the occasion of his marriage he changed his religion, and thus incurred the displeasure of his family. Setting up as a broker on his own account, he was not long in amassing a huge fortune, estimated at about £2,000,000—an enormous sum for those days.

Naturally enough, his earliest interest in economics centred round banking questions. The French wars had caused a depreciation in the value of the bank-note, and this aroused the interest not only of the specialists, but also of the public. His first essay, published in 1810, when he was thirty-eight years of age, was entitled The High Price of Bullion a Proof of the Depreciation of Bank-notes. It was soon followed by other studies dealing with banks and with the credit system. But these short polemical efforts gave scarcely any indication of the great attention which he was bestowing upon the principles of the science. His interest was primarily personal, for it appears that he had no intention of publishing anything on the subject. In 1817, however, the results were seen in a volume entitled The Principles of Political Economy. Ricardo the business man could hardly have guessed that it would shake the capitalistic edifice to its very foundations.

In 1819 he was elected a member of the House of Commons, but he was as indifferent a speaker as he was a writer. He was always listened to, however, with the greatest respect. “I have twice attempted to speak,” he writes, “but I proceeded in the most embarrassed manner: and I have no hope of conquering the alarm with which I am assailed the moment I hear the sound of my own voice.” In 1821 he founded the Political Economy Club, the earliest of those numerous societies for the study of economic subjects which have since been established in every country. In 1822 he published a work on Protection to Agriculture. The following year he died, at the comparatively early age of fifty-one.

Since his death all his writings have been carefully collected, and his correspondence with the chief economists of his day, with Malthus, McCulloch, and Say, published. The correspondence is extremely important for an understanding of his doctrines.

[314] Letter to McCulloch, July 13, 1820, quoted by H. Denis, vol. ii, p. 171.

[315] In his correspondence with McCulloch, under date December 18, 1819, he writes: “I am not satisfied with the explanation which I have given of the principles which regulate value. I wish a more able pen would undertake it.”

In a letter to Malthus written on August 15, 1820, speaking of his own theory of value and of McCulloch’s, he despairingly adds: “Both of us have failed.” See Halévy, Le Radicalisme philosophique, and Hector Denis, op. cit.

[316] Smith had likened industry to a household with two children—wages and profits; agriculture to a household with three—wages, profits, and rent.

[317] An Inquiry into the Nature and Progress of Rent (1815).

[318] It is necessary to remember, however, that the old theory survived and appears here under the very name of Ricardo, for he was unsuccessful in freeing himself altogether from its influence. He defines rent as “that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.” He continually refers to these powers of the soil, which are described as “natural,” “primitive,” “indestructible,” i.e. as independent of all labour.

[319] “Nothing is more common than to hear of the advantages which the land possesses over every other source of useful produce on account of the surplus which it yields in the form of rent. Yet when land is most abundant, when most productive and most fertile, it yields no rent, and it is only when its powers decay … that rent appears.” (Principles, ed. Gonner, p. 52.)

[320] “The labour of Nature is paid, not because she does much, but because she does little. In proportion as she becomes niggardly in her gifts she exacts a greater price for her work.” (Ibid., p. 53, note.)

“The comparative scarcity of the most fertile lands is the cause of rent.” (Ibid., p. 395.)

Adam Smith had already offered this as an explanation in the case of the products of the mine, but he failed to see that arable land is really nothing but a sort of mine.

[321] To-day we simply say that it is determined by increased demand. But this is quite contrary to Ricardo’s views, for in his opinion it is labour and not demand that creates value.

[322] “The value of corn is regulated by the quantity of labour bestowed on its production on that quality of land [or with that portion of capital] which pays no rent.” (Principles, ed. Gonner, p. 51.)

[323] The illustration as given by Ricardo is somewhat more complicated.

[324] “When land of an inferior quality is taken into cultivation the exchangeable value of raw produce will rise because more labour is required to produce it.” (Ibid., p. 49.)

[325] See Cannan’s delightful volume The Theories of Production and Distribution, p. 150, where the average decennial price works out as follows:

s. d.

1770-1779 45 0 1780-1789 45 9 1790-1799 55 11 1800-1809 82 2 1810-1813 106 2

[326] The number of Enclosure Acts which Parliament, acting with the sanction of public opinion, passed during the latter part of the eighteenth and the beginning of the nineteenth centuries increased very rapidly. Between 1700 and 1845 no fewer than 3835 such Acts were passed, involving the enclosure of 7,622,664 acres, most of it common land. Not until 1845 do we find a change either in the attitude of public opinion or in the action of Parliament.

[327] It is not quite clear whether the high price of corn is due to the cultivation of new lands or whether this high price is the cause of the cultivation of new lands. The second interpretation appears to us to be the most natural, but it involves the abandonment of the Ricardian theory.

[328] Some critics, e.g. Fontenay, Bastiat’s disciple, suggested that land No. 4 might very well become No. 1, if, instead of being employed in the cultivation of corn, an intelligent husbandman were to put it to viticulture or rose-growing. But this is to beg the question. The law of rent implies products of the same kind, for it is this identity of quality that enables them to be sold at the same price. If bad corn-land could become good rose-growing ground, then of course it would take its place among rose-growing areas, yielding rent as soon as less fertile lands were employed for the same purpose.

[329] Turgot, Observations sur un Mémoire de M. de Saint-Péravy (Œuvres, vol. i, p. 420). “It can never be imagined that a doubling of expenditure would result in doubling the product.… It is more than probable that by gradually increasing the expenditure up to the point where nothing would be gained on the return, such items would successively become less fruitful. The earth’s fertility resembles a spring that is being pressed downwards by the addition of successive weights. If the weight is small and the spring not very flexible, the first attempts will leave no results. But when the weight is enough to overcome the first resistance then it will give to the pressure. After yielding a certain amount it will again begin to resist the extra force put upon it, and weights that formerly would have caused a depression of an inch or more will now scarcely move it by a hair’s breadth. And so the effect of additional weights will gradually diminish.

“The comparison is not very exact, but it is near enough to enable us to understand that when the earth is producing nearly all it can, a great deal of expense is necessary to obtain very little more produce.”

Turgot, with his usual perspicacity, has noted a fact which the Classical writers generally failed to perceive, namely, that at the beginning of the process of cultivation there may be a period when the return shows no signs of diminishing.

[330] We must note the fact that the law of diminishing returns was already implied in the second of the famous progressions given by Malthus, for an arithmetical progression that shows an increase of one every twenty-five years implies an addition slower than the growth of the series itself, i.e. slower than the movement of time. Let us take land that yields one; in twenty-five years it will yield two, an increase of 100 per cent. But this is only the first step. At the end of another twenty-five years it will yield three, the increase being always one. But the increase from two to three means an increase of only 50 per cent., from three to four of only 33 per cent., and so on to 25 per cent. and 20 per cent. When the hundredth place has been reached, the increase will only be 1 per cent., and it will continue to fall farther, only more slowly.

[331] Ricardo gives a slightly different explanation. “If with a capital of £1000 a tenant obtains 100 quarters of wheat from his land, and by the employment of a second capital of £1000 he obtains a further return of eighty-five, his landlord would have the power at the expiration of his lease of obliging him to pay fifteen quarters, or an equivalent value for additional rent, for there cannot be two rates of profit.” (Principles, ed. Gonner, p. 48.) He means to say that if profits fall because new capital is less productive than old, rent must necessarily appear, because by definition rent is what remains of the produce after deducting profits and wages. This explanation closely resembles that one given by West in his Application of Capital to Land, published in 1815, and Ricardo was not above acknowledging his indebtedness to West.

[332] Shortly afterwards a German landowner published a book dealing with just that side of the problem of rent which had been neglected by Ricardo, namely, the influence of distance from a market upon cultivation and the price of products. We are referring to Thünen, who in his book Der Isolerte Staat (vol. i, 1826) draws a picture of a town surrounded by a belt of land, and shows how cultivation will be distributed in concentric zones around that centre, and how the kind of cultivation adopted will be a function of the distance.

[333] But the honour of discovering this law, which is so important for an understanding of exchange value, does not belong entirely to Ricardo. Forty years before a humble Scotch farmer named Anderson had observed the phenomenon and given a very satisfactory analysis of it in his book Observations on the Means of Exciting a Spirit of National Industry (1777). “Now as the expense of cultivating the least fertile soil is as great or greater than that of the most fertile field, it necessarily follows that if an equal quantity of corn, the produce of each field, can be sold at the same price, the profit on cultivating the most fertile soil must be much greater than that of cultivating the other, and as this continues to decrease as the sterility increases, it must at length happen that the expense of cultivating some of the inferior soils will equal the values of the whole produce.” (Quoted by Jevons, Theory of Political Economy, p. 229.) Anderson’s name was forgotten until quite recently, when it attracted a certain amount of attention among the pioneers of Ricardo. Ricardo himself does not seem to be aware of his existence; at least he never quotes him. The only two writers mentioned by Ricardo are Malthus and West.

[334] “In speaking, however, of labour as being the foundation of all value, and the relative quantity of labour as almost exclusively determining the relative value of commodities, I must not be supposed to be inattentive to the different qualities of labour.” (Principles, ed. Gonner, p. 15.)

[335] Hume had already pointed out the objection to this view. Cf. p. 64, footnote.

[336] “If fixed capital be not of a durable nature it will require a great quantity of labour annually to keep it in its original state of efficiency, but the labour so bestowed may be considered as really expended on the commodity manufactured, which must bear a value in proportion to such labour.” (Principles, ed. Gonner, p. 32.)

[337] In a note on Section VI, chap. 1, he adds: “Malthus appears to think that it is a part of my doctrine that the cost and value of a thing should be the same—it is, if he means by cost, cost of production including profits.” (Ibid., p. 39.)

[338] Still we must note that Ricardo and Karl Marx, like everyone who has tried to base a theory of value upon labour, tacitly assume the operation of the law of demand and supply in order that their theories may fit in with the facts.

[339] But how was it that he never realised that land at least in any given country, and indeed for that matter over the whole world, is simply a kind of wealth “of which no labour could increase the quantity”?

[340] “The dealings between the landlord and the public are not like dealings in trade, whereby both the seller and the buyer may equally be said to gain, but the loss is wholly on one side and the gain wholly on the other.” (Principles, ed. Gonner, p. 322.) And so when a proprietor sells corn to a consumer it is not of the nature of an ordinary bargain where both parties gain something. The consumer gets nothing in return for what he gives, i.e. for what he gives over and above what it has cost to produce the corn. To get nothing in return for something given is the kind of transaction that generally goes by the name of theft.

Ricardo soon finds a reply to the comfortable doctrine of Smith, that the interests of the landlords are nowhere opposed to those of the rest of the community. “The interest of the landlord is always opposed to that of the consumer and manufacturer. Corn can be permanently at an advanced price only because additional labour is necessary to produce it, because its cost of production is increased. It is therefore for the interest of the landlord that the cost attending the production of corn should be increased. This, however, is not the interest of the consumer.… Neither is it the interest of the manufacturer that corn should be at a high price, for the high price of corn will occasion high wages, but will not raise the price of his commodity.” (Ibid., p. 322.)

[341] “Wealth increases most rapidly in those countries where the disposable land is most fertile, where importation is least restricted, and where, through agricultural improvements, productions can be multiplied without any increase in the proportional quantity of labour, and where consequently the progress of rent is slow.” (Principles, ed. Gonner, p. 54.) The contrast between fertile lands, free exchange, and the development of agricultural science on the one hand, and the growth of rent on the other, is very strikingly brought out in this paragraph.

[342] “Rent does not and cannot enter in the least degree as a component part of its price.” (Ibid., p. 55.) And he adds: “The clearly understanding of this principle is, I am persuaded, of the utmost importance to the science of political economy.” It is true that Smith, writing long before this time, had declared that the “high rate of rent is the effect of price,” but he does not seem to have attached any great importance to the remark.

[343] Ricardo wisely admits the possibility of confiscating this rent by means of taxation, the reason for this being that “a tax on rent would affect rent only, it would fall wholly on landlords and could not be shifted to any class of consumers.” (Principles, ed. Gonner, p. 154.) And the argument which he advances in proof of this, namely, that the tax could not be shifted, seems to indicate that this particular kind of revenue is not quite as intangible as that of some other classes in society. But his advocacy is somewhat restrained, for, as he points out, it would be unjust to put all the burden of taxation upon the shoulders of one class of the community. Rent is often the property of people who, after years of toil, have invested their earnings in land. The original injustice, if any, would thus be got rid of in the process of selling the land. This might be a sufficient reason for indemnifying the expropriated, but it is not enough to condemn expropriation altogether.

[344] “Malthus and Ricardo have both proved false prophets and mistaken apostles. The much-vaunted Ricardian law is a pure myth.” (Article by M. de Foville on Les Variations de la Valeur du Sol en Angleterre au XIXe Siècle, in L’Économiste français, March 21, 1908.)

[345] Mr. Robert Thompson, in a paper read before the Royal Statistical Society on December 17, 1907, has shown how the average rent per acre, valued at 11s. 2d. in 1801-5, reached the figure of 20s. in 1841-45, and despite the abolition of protection continued to rise up to 1872-77, when it reached a maximum of 29s. 4d. It then continued to fall until it reached the present amount of 20s. The present figure is double what it was in Ricardo’s time, but considerable deductions are necessary in view of the improvements made in the character of the soil. Thompson, after making these deductions, puts the amount at 15s. 5d., leaving just 4s. 7d. for rent pure and simple. The 11s. for rent at the beginning of the century covered something besides economic rent. Considerable deductions are again necessary, but the amount of capital employed in agriculture was much less then.

One seems justified in saying that in England and even in France and other Protective countries the land has lost both in revenue and value during the last quarter of the nineteenth century almost all that it had gained from the time of Ricardo up till then. But is the recoil sufficient to justify Foville’s description of Ricardo’s vaunted law as a pure myth? We think not. It has the experience of seventy-five years behind it and of twenty-five years against it, that is all. Anyone who would predict a further fall in rent would certainly be running the risk of becoming a false prophet.

[346] “The condition of the labourer will generally decline, and that of the landlord will always be improved.” (Principles, ed. Gonner, p. 79.)

[347] “It generally happens, indeed, that when a stimulus has been given to population an effect is produced beyond what the case requires.… The increased wages are not always immediately expended on food, but are first made to contribute to the other enjoyments of the labourer. His improved condition, however, induces and enables him to marry.” (Principles, ed. Gonner, p. 95.)

[348] “Every suggestion which does not tend to the reduction in number of the working people is useless, to say the least of it. All legislative interference must be pernicious.” (Quoted by Graham Wallas, Life of Francis Place. Place was the author of a book on population which appeared in 1822.)

[349] This is a fundamental distinction upon which Ricardo is always insisting. The greater or smaller quantity of labour employed in the production of corn bears no necessary relation to the worker’s wages. The one is merely a question of production, the other of distribution. The one is the task, the other the reward. But some might ask if the Ricardian theory of value does not state that the value of the product is determined by the quantity of labour necessary for its production, that this value will be subsequently divided between capitalist and worker, and that the greater this quantity the greater will be the share of each. Labour’s share may increase, but not the labourer’s, for we must not forget that when the price of corn goes up from 10s. to 20s. it is because the cultivation of poorer lands requires twice the number of labourers demanded by the better kind of land. Besides, it would be a strange thing to pay a man more as the work becomes less remunerative. All that one could hope for would be that the workers under the new conditions might be able to retain their old standard of life—that is, might be able to purchase the same quantity of bread despite the rise in price.

[350] “Thus, then, I have endeavoured to show that a rise of wages would invariably lower profits.”

“Thus in every case … profits are lowered … by a rise of wages.”

On the inexactness of the term “high rate of profits” as a synonym for a proportionally larger share of the produce see note, p. 162.

[351] Ricardo does not deny this. Indeed, he lays stress upon the fact that he is arguing on the assumption that the value produced remains the same. “I have therefore made no allowance for the increasing price of the other necessaries, besides food of the labourer; an increase which would be the consequence of the increased value of the raw materials from which they are made, and which would of course further increase wages and lower profits.”

[352] But this only means a rise in the nominal or money wage. It does not mean that the worker gets more corn; he only gets the same amount as before, because the price of corn has gone up and it makes no difference whether the man is paid in money or in kind.

[353] “For as soon as wages should be equal to the whole receipts of the farmer, there must be an end of accumulation: for no capital can then yield any profit whatever, and no additional labour can be demanded, and consequently population will have reached its highest point.” (Principles, ed. Gonner, p. 67.)

[354] When speaking of a reduction of capital’s share Ricardo frequently employs the phrase “a lowering of the rate of profits,” or “a fall in the rate of profits.” A fall in the rate is not necessarily synonymous with a reduction of capital’s share, however. The rate of profit simply implies a certain proportion between revenue and capital—5 per cent., for example; there is no suggestion of comparison between the quantities drawn by capitalist and workers respectively. Doubtless we must admit that when the rate of profit is diminished, ceteris paribus, the part drawn by capital relatively to labour’s share also diminishes, but it is clear that if the quantity of capital employed in any industry were to be doubled, or the product halved, capital, even at the rate of 3 instead of 5 per cent., would be drawing a more considerable share and leaving labour with less. Bastiat, as we shall have to note, made the same mistake.

[355] In a letter to Malthus, December 18, 1814, he admits with a sigh of regret that even if a belt of fertile land were added to this island of ours profits would still keep up. Free Trade has added the illimitable zone of fertile land which Ricardo dreamed of, with the result that both profits and rents have fallen.

In his essay On Protection to Agriculture (1822) he shows how Protection, by forcing the cultivation of less fertile lands at home, raises the price of corn and increases rents; and his demand was not for free importation, but for a reduction of the duty to 10s. a quarter.

[356] See An Inquiry into the Nature and Progress of Rent.

[357] Cf. this unexpected remark to which H. Denis has recently drawn attention: “It is evidently impossible for any Government to let things just take their natural course.” (Malthus, introduction to the Principles.)

[358] “Gold and silver having been chosen for the general medium of circulation, they are by the competition of commerce distributed in such proportions among the different countries of the world as to accommodate themselves to the natural traffic which would take place if no such metals existed and the trade between countries were purely a trade of barter.”

[359] Ricardo also points out that “if, which is a much stronger case, we agreed to pay a subsidy to a foreign Power, money would not be exported whilst there were any goods which could more cheaply discharge the payment.” (McCulloch’s edition, p. 269.) As a matter of fact, the European Powers who were leagued against Napoleon were subsidised in this fashion, the exports exceeding the imports by many millions. The indemnity of 5 milliards of francs paid by France to Germany affords another illustration of the same truth.

[360] Ricardo’s works, McCulloch’s edition, p. 287.

[361] Ricardo’s works, McCulloch’s edition, p. 404.

[362] Ibid., p. 349.

[363] S. and B. Webb, History of Trade Unionism, p. 54.

[364] In 1835 Andrew Ure (Philosophy of Manufactures, p. 481) reckoned that in the manufacture of cotton, wool, linen, and silk in England there were employed 4800 boys and 5308 girls below 11 years of age, 67,000 boys and 89,000 girls between 11 and 18 years of age, and 88,000 men and 102,000 women above 18 years; a total of 159,000 boys and men against 196,000 girls and women.

[365] J. B. Say, De l’Angleterre et des Anglais, in Œuvres, vol. iv, p. 213.

[366] Villermé’s report in Mémoires de l’Académie des Sciences morales, vol. ii, p. 414, note. Villermé’s observations were made in 1835 and 1836, although his celebrated work, Tableau de l’État physique et moral des Ouvriers, was not published till 1840. This book is a reproduction of his report to the Academy.

[367] Enquête sur l’Industrie du Coton, 1829, p. 87. Evidence of Messrs. Witz and Son, manufacturers.

[368] Vide Bulletin de la Société, etc., 1828, p. 326-329.

[369] Cf. Rist, Durée du Travail dans l’Industrie française de 1820 à 1870, in the Revue d’Économie politique, 1897, pp. 371 et seq.

[370] Sismondi was a native of Geneva. His family was originally Italian, but took refuge in France in the sixteenth century, and migrated to Geneva after the Revocation of the Edict of Nantes. Here Sismondi was born in 1773. He is even better known for his two great works L’Histoire des Républiques italiennes and L’Histoire des Français than for his economic studies. He was a frequent guest of Mme. de Staël at the Château Coppet, and among the other visitors whom he met there was Robert Owen. He died in 1842.

[371] Nouveaux Principes, vol. ii, p. xxii. Our quotations are taken from the second edition, published in 1827.

[372] Ibid., p. iv.

[373] Two volumes, Paris, 1837 and 1838.

[374] Nouveaux Principes, vol. ii, pp. 50-51. “Adam Smith’s doctrine is also ours, but the practical conclusion which we draw from the doctrine borrowed from him frequently appears to us to be diametrically opposed to his.”

[375] Ibid., p. 56. “Adam Smith recognised the fact that the science of government was largely experimental, that its real foundation lay in the history of various peoples, and that it is only by a judicious observation of facts that we can deduce the general principles. His immortal work is, indeed, the outcome of a philosophic study of the history of mankind.” Cf. also vol. i, pp. 47, 389.

[376] Nouveaux Principes, vol. ii, p. 268. Cf. also pp. 388, 389.

[377] Ibid., p. 56. In several other passages he takes Ricardo to task (vol. i, pp. 257, 300, 336, 366, 423; vol. ii, pp. 184, 190, 218, 329).

[378] Ibid., p. 86.

[379] Études sur Économie politique, preface, p. v. Already in his first work, La Richesse commerciale, he had declared: “Political economy is based upon the study of man or of men. We must know human nature, the character and destiny of nations in different places and at different times. We must consult historians, question travellers, etc.… The philosophy of history … the study of travels, etc., are parallel studies.”

[380] Nouveaux Principes, vol. i, p. 257.

[381] Sismondi’s awkwardness in the manipulation of abstract reasoning is clearly visible in a host of other passages, especially in the vagueness of his definitions. Labour in one place is defined as the source of all revenues (ibid., vol. i, p. 85); elsewhere, as the workers’ revenue as contrasted with interest and rent (vol. i, pp. 96, 101, 110, 113, 114; vol. ii, p. 257, etc.). He never distinguishes between national and private capital, and wages are sometimes treated as capital, sometimes as revenue (p. 379). He constantly uses such vague terms as “rich” and “poor” to designate capitalist and worker (vol. ii, chap. 5). In his explanation of how the rate of interest is fixed he says that the strength of the lenders of capital just balances the strength of the borrowers, and, as in all other markets, they hit upon a proportional mean (vol. ii, p. 36). In a similar fashion he is constantly confusing revenue in kind with money revenue.

[382] “Last year’s revenue pays for the production of this.” (Ibid., vol. i, p. 120.) Farther on he adds: “After all, what we do is to exchange the total product of this year against the total product of the preceding one” (p. 121). Sismondi attached great importance to the distinction between the national revenue and the annual product. “The confusion of the annual revenue with the annual product casts a thick veil over the whole science. On the other hand, all becomes clear and facts fall in with the theory as soon as one is separated from the other.” (Ibid., pp. 366-367.) It is he himself, on the contrary, who creates the confusion.

[383] McCulloch criticised Sismondi in an article in the Edinburgh Review of October 1819. For J. B. Say see pp. 115-117.

With regard to Ricardo, Sismondi relates that in the very year of his death he had two or three conversations with him on this subject at Geneva. In the end he seems to have accepted Ricardo’s point of view, but not without several reservations. “We arrive then at Ricardo’s conclusion and find that when circulation is complete (and having nowhere been arrested) production does give rise to consumption”; but he adds: “This involves making an abstraction of time and place, and of all those obstacles which might arrest this circulation.”

Sismondi defended his point of view against his three critics in two articles reprinted at the end of the second edition of the Nouveaux Principes.

[384] “The accumulation of wealth in abstracto is not the aim of government, but the participation by all its citizens in the pleasures of life which the wealth represents. Wealth and population in the abstract are no indication of a country’s prosperity: they must in some way be related to one another before being employed as the basis of comparison.” (Nouveaux Principes, vol i, p. 9.)

[385] Nouveaux Principes, vol. ii, p. 250. Elsewhere he adds: “Should the Government ever propose to further the interests of one class at the expense of another that class should certainly be the workers.” (Ibid., vol. i, p. 372.)

[386] Cours complet, vol. ii, p. 551.

[387] Nouveaux Principes, vol. i, p. 333.

[388] Ibid., p. 336.

[389] Nouveaux Principes, vol. i, pp. 220-221.

[390] The unanimity is not quite absolute, however. Ricardo in the third edition of his Principles added a chapter on machinery in which he admitted that he was mistaken in the belief that machines after a short period always proved favourable to the interests of the workers. He recognised that the worker might suffer, for though the machine increases the net product of industry it frequently diminishes the total product. He seemed to think that this might happen frequently, but in reality it is quite exceptional.

[391] We may here recall the celebrated winch argument. Suppose, says Sismondi, that England succeeded in tilling her fields and doing all the work of her towns by means of steam power, so that her total products and revenue remain the same as they are to-day, though her population is only equal to that of the republic of Geneva. Is she to be regarded as being richer and more prosperous? Ricardo would reply in the affirmative. Wealth is everything, men nothing. Really, then, a single king, dwelling alone on the island, by merely turning a winch might conceivably automatically perform all the work done in England to-day. One can only reply to this argument by saying that long before arriving at this state the community itself would have devised some machinery for distributing the product between all its members. To suppose that a portion of the population dies of hunger through want of employment while the other part continues to manufacture the same quantity of goods as before is sufficiently contradictory. But at bottom, disregarding the paradoxical form given it by Sismondi, the question set by him is insoluble. What is the best equilibrium between production and population? Are we to prefer a population rapidly increasing in numbers, but making no advance in wealth, to a population which is stationary or even decreasing, but rapidly advancing in wealth? Everyone is free to choose for himself. Science gives us no criterion.

[392] “We have said elsewhere, but think it essential to repeat it, that it is not the perfection of machinery that is the real calamity, but the unjust distribution of the goods produced. The more we are able to increase the quantity of goods produced with a given quantity of labour, the more ought we to increase our comforts or our leisure. Were the worker his own master, after accomplishing in two hours with a machine a task which formerly took him twelve he would then desist from toil, unless he had some new need or were able to make use of a larger amount of products. It is our present organisation and the workman’s servitude that has forced him to work not less but more hours, at the same wage, and this despite the fact that machinery has increased his productive powers.” (Nouveaux Principes, vol. ii, p. 318.) In this passage we have Sismondi’s real opinion on the subject of machinery most clearly expressed.

[393] Wealth of Nations, Book II, chap. 2, in fine.

[394] Nouveaux Principes, vol. i, p. 92.

[395] Études sur l’Économie politique, vol. i, p. 35.

[396] Ibid., pp. 274-275.

[397] Nouveaux Principes, vol. i, p. 103.

[398] On this point we must dissociate ourselves from the interpretation placed upon the passage by M. Aftalion in his otherwise excellent monograph, L’Œuvre économique de Simonde de Sismondi (Paris, 1899), as well as from the view expressed by M. Denis (Histoire des Systèmes économiques, vol. ii, p. 306). But Sismondi’s text appears to us to leave no room for doubt. “As against land we might combine the other two sources of wealth, life which enables a man to work and capital which employs him. These two powers when united possess an expansive characteristic, so that the labour which a worker puts in his work one year will be greater than that put in the preceding year—upon the product of which the worker will have supported himself. It is because of this surplus value [mieux value], which increases as the arts and sciences are progressively applied to industry, that society obtains a constant increment of wealth.” (Nouveaux Principes, vol. i, p. 103.)

[399] Nouveaux Principes, vol. i, pp. 111-112. Cf. also p. 87: “Wealth, however, co-operates with labour. And its possessor withholds from the worker the part which the worker has produced beyond his cost of maintenance—as compensation for the help which he has given him.” It is true that this proportion is a considerable one. “The entrepreneur is bound to leave to the worker just enough to keep him alive, reserving for himself all that the worker has produced over and above this.” (P. 103.) But this is not a matter of necessity—a deduction from the laws of value, as it is with Marx.

[400] “The poor man, by his labour and his respect for the property of others, acquires a right to his home, to warm, proper clothing, to ample nourishment sufficiently varied to maintain health and strength.… Only when all these things have been secured to the poor as the fruit of their labour does the claim of the rich come in. What is superfluous, after supplying the needs of everyone, that should constitute the revenue of opulence.” (Études sur l’Économie politique, vol. i, p. 273.) Here we see quite clearly the sense in which Sismondi uses the term “spoliation.”

[401] Nouveaux Principes, vol. i, p. 407. Cf. also pp. 200, 201.

[402] “Everyone’s interest if checked by everybody else’s would in reality represent the common interest. But when everyone is seeking his own interest at the expense of others as well as developing his own means, it does not always happen that he is opposed by equally powerful forces. The strong thus find it their interest to seize and the weak to acquiesce, for the least evil as well as the greatest good is a part of the aim of human policy.” (Ibid., p. 407.) Cf. also infra, p. 188, note 1.

[403] “There is one fundamental change which is still possible in society, amid this universal struggle created by competition, and that is the introduction of the proletariat into the ranks of human beings—the proletariat, whose name, borrowed from the Romans, is so old, but who is himself so new.” (Études sur l’Économie politique, vol. i, p. 34.)

[404] Revue mensuelle d’Économie politique, 1834, vol. ii, p. 124.

[405] Nouveaux Principes, vol. ii, p. 434.

[406] Études sur l’Économic politique, introd., pp. 39 et seq.

[407] “That everyone understands his own interest better than any Government ever can is a maxim that has been considerably emphasised by economists. But they have too lightly affirmed that the interest of each to avoid the greatest evil coincides with the general interest. It is to the interest of the man who wishes to impoverish his neighbour to rob him, and it may be the latter’s interest to let him do it provided he can escape with his life.

“But it is not in the interest of society that the one should exercise the force and that the other should yield. The interest of the day labourer undoubtedly is that the wages for a day of ten hours should be sufficient for his upkeep and the upbringing of his children. It is also the interest of society. But the interest of the unemployed is to find bread at any price. He will work fourteen hours a day, will send his children to work in a factory at ten years of age, will jeopardise his own health and life and the very existence of his own class in order to escape the pressure of present need.” (Nouveaux Principes, vol. i, pp. 200-201.)

[408] Ibid., p. 201.

[409] “Population will then regulate itself simply in accordance with the revenue. Where it exceeds this proportion it is always just because the fathers are deceived as to what they believe to be their revenue, or rather because they are deceived by society.” (Ibid., p. 254.) “The more the poor is deprived of all right of property the greater is the danger of its mistaking its revenue and contributing to the growth of a population which, because it does not correspond to the demand for labour, will never find sufficient means of subsistence.” (Ibid., p. 264.)

[410] Ibid., p. 286.

[411] We note that Sismondi does not accept Malthus’s theory of population. He never admits that population depends upon the means of subsistence; he holds that it varies according to the will of the proprietor, who stimulates or retards it according to his demand, but who is interested in its limitation in order to secure for himself the maximum net product. “Population has never reached the limits of possible subsistence, and probably it never will. But all those who desire the subsistence have neither the means nor the right to extract it from the soil. Those, on the contrary, to whom the laws give the monopoly of the land have no interest in obtaining from it all the subsistence it might produce. In all countries proprietors are opposed, and must be opposed, to any system of cultivation which would tend merely to multiply the means of subsistence while not increasing the revenue. Long before being arrested by the impossibility of finding a country which produced more subsistence population would be checked by the impossibility of finding the people to buy those means or to work and bring them into being.” (Nouveaux Principes, vol. ii, pp. 269-270.)

[412] Ibid., pp. 263, 264.

[413] Nouveaux Principes, vol. i, p. 153.

[414] Ibid., p. 235. This problem of the net and gross produce occupied Sismondi’s attention for a long time. We find a suggestion of it in his first work, Le Tableau de l’Agriculture toscane (Geneva, 1801), and though he does not definitely take the side of the gross produce, he shows some leanings that way. “Why is the gain of a single rich farmer considered more profitable for a State than the miserable earnings of several thousand workers and peasants?” The book, however, is a treatise on practical agriculture, and includes only a few economic dicta. It is here that we have his beautiful description of his farm at Val Chiuso (p. 219).

[415] It is true that Sismondi wished to get rid of the practice of producing corn for a market, so as to free the nation’s food from the fluctuations of that market. Neither is he over-enthusiastic in his praise of the gross produce. He recognises that the gradual growth of the gross produce might, in its way, be the consequence of a state of suffering if population were to progress too rapidly (Nouveaux Principes, vol. i, p. 153). This shows what a hesitating mind we are dealing with.

[416] Ibid., p. 368.

[417] Nouveaux Principes, vol. i, p. 361.

[418] Elsewhere he remarks: “The petty merchants, the small manufacturers, disappear, and a great entrepreneur replaces hundreds of them whose total wealth was never equal to his. Taken altogether, however, they consumed more than he does. His costly luxury gives much less encouragement to industry than the honest ease of the hundred homes which it has replaced.” (Ibid., p. 327). The theory is more than doubtful. What we want to know is whether the demand will remain the same in amount, not whether there will be no change in its character—a contingency that need not result in a general crisis, but simply in a passing inconvenience.

[419] Sismondi applies the same principles to a consideration of a fall in the rate of interest as he does to the growth of production or the increase of machinery. “An increase of capital is desirable only when its employment can be increased at the same time. But whenever the rate of interest is lowered it is a certain sign that the employment of capital has proportionally diminished as compared with the amount available; and this fall in the rate, which is always advantageous to some people, is disadvantageous to others—some will have to be content with smaller incomes and others with none at all.” (Nouveaux Principes, vol. i, p. 393.)

[420] Compare the Saint-Simonian review, Le Producteur, vol. iv, pp. 887-888.

[421] Nouveaux Lundis, vol. vi, p. 81.

[422] Études sur l’Économie politique, vol. i, pp. 60, 61.

[423] Nouveaux Principes, vol. i, p. 341; vol. ii, p. 459.

[424] Ibid., vol. ii, pp. 415, 435. See also Études, vol. i, p. 25.

[425] Nouveaux Principes, vol. ii, pp. 365, 366.

[426] Ibid., p. 451.

[427] Ibid., p. 338.

[428] Nouveaux Principes, vol. ii, p. 661.

[429] Ibid., p. 364.

[430] See section I of present chapter.

[431] Knies, strangely enough, classes him with the socialists.

[432] A. Blanqui, in his Histoire de l’Économie politique en Europe (1837), considers him a writer of the modern school, which he describes as follows: “Writers of this school are no longer willing to treat production as a pure abstraction apart from its influence upon the workers. To produce wealth is not enough; it must be equitably distributed.” (Introd., 3rd ed., p. xxi.)

[433] Droz (1773-1850) published in 1829 his Économie politique, ou Principes de la Science des Richesses. It is in this work that we find the famous phrase, “Certain economists seem to think that products are not made for men, but that men are made for the products.”

[434] Paris, 1841, two volumes. Buret died in 1842, when thirty-two years of age.

[435] It was not intended that any reference should be made in this volume to the doctrine of socialism before the opening of the nineteenth century, but the question whether the French Revolution of 1789 was socialist in character or simply middle-class, as the socialists of to-day would put it, has been so frequently discussed that we cannot ignore it altogether.

There is no doubt that the leaders of the Revolution—including Marat even, who is wrongly regarded as a supporter of that agrarian law which he condemned as fatal and erroneous—always showed unfailing respect for the institution of private property. The confiscation of the property of the Church and of the émigré nobles was a political and not an economic measure, and in that respect is fairly comparable with the historic confiscation of the property of Jews, Templars, Huguenots, and Irish, which in no case was inspired by merely socialist motives. The confiscation of endowments—of goods belonging to legal persons—was regarded as a means of defending individual or real property against the encroachments of merely fictitious persons and the tyranny of the dead hand. When it came to the abolition of feudal rights great care was taken to distinguish the tenant’s rights of sovereignty, which were about to be abolished, from his proprietary rights, which deserved the respect of everyone who recognised the legitimacy of compensation. In practice the distinction proved of little importance. Scores of people were ruined during those unfortunate months—some through mere misfortune, others because of the muddle over the issue of assignats, and others, again, because of the confiscation of rents; but the intention to respect the rights of property remains indisputable still. It would seem that in this matter the revolutionary leaders had come under the influence of the Physiocrats, whose cult of property has already engaged our attention. And how easy it would be to imagine a Physiocrat penning Article 17 of the Declaration of the Rights of Man when it speaks of property as an inviolable, sacred right! But, on the other hand, it is true that Rousseau in his article Économie politique speaks of the rights of property as the most sacred of the citizen’s rights.

It was not only on the question of property that the revolutionists of 1789 showed themselves anti-socialist. They were also anti-socialist in the sense that they paid no attention to class war and ignored the antagonism that exists between capitalists and workers. All were to be treated as citizens and brothers, all were equal and alike.

However, those who claim the most intimate connection with the spirit of the Revolution remain undismayed by such considerations. They endeavour to show that the Revolution was not quite so conservative nor so completely individualistic as is generally supposed, and after diligent search they claim to have discovered certain decrees bearing unmistakable traces of socialism. But a much more general practice is to plead extenuating circumstances. “Are we to demand that the social problems which appeared fifty years afterwards, when industry had revolutionised the relations of capital and labour, should have been solved at the end of the eighteenth century? It would have been worse than useless for the men of 1789 and 1793 to try to regulate such things in advance.” (Aulard, Address to Students, April 21, 1893. Cf. his Histoire politique de la Révolution, chap. 8, paragraph entitled “Le Socialisme.”)

We must not lose sight of the communist plot hatched by François Babeuf during the period of the Revolution. But in this case, at any rate, the exception proves the rule, for, despite the fact that Babeuf had assumed the suggestive name of Gaius Gracchus, he found little sympathy among the men of the Convention, even in La Montagne, and he was condemned and executed by order of the Directory. Babeuf’s plot is interesting, if only as an anticipatory protest of revolutionary socialism against bourgeois revolution. Cf. Aulard, loc. cit., p. 627.

[436] Not to speak of celebrated Utopians like Plato, More, and Campanella, a number of writers who have been minutely studied by Lichtenberger undertook to supply such criticism in the eighteenth century. Morelly, Mably, Brissot, and Meslier the curé in France, and Godwin in England, attacked the institution of property with becoming vigour. Babeuf, who in 1797 suffered death for his attempt to establish a community of equals, has left us a summary of their theories. But the Saint-Simonians owe them nothing in the way of inspiration. Eighteenth-century socialism was essentially equalitarian. What aroused the anger of the eighteenth-century writers most of all was the inequality of pleasure and of well-being, for which they held the institution of private property responsible. “If men have the same needs and the same faculties they ought to be given the same material and the same intellectual opportunities,” says the Manifeste des Égaux. But the Saint-Simonians recognise neither equality of needs nor of faculties, and they are particularly anxious not to be classed along with the Babeuvistes—the champions of the agrarian law. Their socialism, which is founded upon the right to the whole produce of labour and would apportion wages according to capacity, aims neither at equality nor uniformity.

The Saint-Simonians seem to have remained in ignorance of the socialist theories of their contemporaries, the French Fourier and the English Thompson and Owen. Fourier’s work only became known to Enfantin after his own economic doctrine had been formulated. Saint-Simon and Bazard appear never to have read him. It is probable that Enfantin only became aware of Fourier’s writings after 1829, and when he did he interested himself merely in those that dealt with free love and the theory of passions. As Bourgin put it: “If Fourier did anything at all, he has rather hastened the decomposition of Saint-Simonism.” (Henry Bourgin, Fourier, p. 419; Paris, 1905.)

The English socialists are never as much as mentioned. The Ricardian doctrine of labour-value, which is the basis of Thompson’s theory and of Owen’s, and later still of that of Marx, seems never to have become known to them. “Questions of value, price, and production, which demand no fundamental knowledge either of the composition or the organisation of society,” are treated as so many details (Le Producteur, vol. iv, p. 388). Their doctrine is primarily social, containing only occasional allusions to political economy. Enfantin is careful to distinguish between Quesnay and his school and Smith or Say. The Physiocrats gave a social character to their doctrine, which the economists wrongfully neglected to develop. Aug. Comte, in the fourth volume of the Cours de Philosophie, has criticised political economy in almost identical terms, which affords an additional proof of his indebtedness to Saint-Simonism.

[437] Cf. especially Dumas, Psychologie de deux Messies positivistes, Saint-Simon et A. Comte (Paris, 1905), and for biographical details Weill, Saint-Simon et son Œuvre (1894).

[438] Weill, Saint-Simon et son Œuvre, p. 15.

[439] In 1814 De la Réorganisation de la Société européenne, by Saint-Simon and A. Thierry, his pupil; 1817-18, Industrie, in 4 vols. (the 3rd vol. and the first book of the 4th vol. are the work of A. Comte); 1819, La Politique; 1821, Le Système industriel; 1823-24, Le Catéchisme des Industriels (the third book, by A. Comte, bears the title Système de Politique positive); 1825, Le Nouveau Christianisme. Our quotations from Saint-Simon are taken from the Œuvres de Saint-Simon et d’Enfantin, published by members of the committee instituted by Enfantin for carrying out the master’s last wishes (Paris, Dentu, 1865), and from the Œuvres choisies de Saint-Simon, published in 3 vols. by Lemonnier of Brussels (1859).

[440] L’Organisateur, Part I, 1819, pp. 10-20. This passage was republished by Olinde Rodrigues in 1832 under the title of Une Parabole politique in a volume of miscellaneous writings by Saint-Simon, with the result that Saint-Simon was prosecuted before the Cour d’Assises. He was acquitted, however.

[441] “With the enfranchisement of the communes we shall witness the middle classes at last in enjoyment of their liberty, setting up as a political power. The essence of that power will consist in freedom from being imposed upon by others without consent. Gradually it will become richer and stronger, at the same time growing in political importance and improving its social position in every respect, with the result that the other classes, which may be called the theological or feudal classes, will dwindle in estimation as well as in their real importance. Whence I conclude that the industrial classes must continue to gain ground, and finally to include the whole of society. Such seems to be the trend of things—the direction in which we are moving.” (Lettres à un Américain, Œuvres, vol. ii, p. 166.)

[442] “Industry is the basis of liberty. Industry can only expand and grow strong with the growth of liberty. Were this doctrine, so old in fact but so new to many people, once fully grasped instead of those fictitious dreams of antiquity, we should have heard the last of such sanguinary phrases as ‘equality or death.’” (Œuvres, vol. ii, pp. 210-211.)

[443] “Lawyers and metaphysicians are wont to take appearance for reality, the name for the thing.” (Syst. indust., Œuvres, vol. v., p. 12.)

[444] “Parliamentary government must be regarded as an indispensable step in the direction of industrialism.” (Œuvres, vol. iii, p. 22.) “It is absolutely necessary if the transition from the essentially arbitrary régime which has existed hitherto is to be replaced by the ideal liberal régime which is bound to come into being by and by.” (Ibid. p. 21.)

[445] Writing in 1803 in his Lettres d’un Habitant de Genève, he uses the following words: “Everyone will be obliged to do some work. The duty of employing one’s personal ability in furthering the interests of humanity is an obligation that rests upon the shoulders of everyone.” (Œuvres, vol. i, p. 55.)

[446] “I find it essential to give to the term ‘labour’ the widest latitude possible. The civil servant, the scientist, the artist, the manufacturer, and the agriculturist are all working as certainly as the labourer who tills the ground or the porter who shoulders his burden.” (Introduction to Travaux scientifiques, Œuvres choisies, vol. i, p. 221.)

[447] The national or industrial party includes the following classes:

1. All who till the land, as well as any who direct their operations.

2. All artisans, manufacturers, and merchants, all carriers by land or by sea, as well as everyone whose labour serves directly or indirectly for the production or the utilisation of commodities; all savants who have consecrated their talents to the study of the positive sciences, all artists and liberal advocates; “the small number of priests who preach a healthy morality; and, finally, all citizens who willingly employ either their talents or their means in freeing producers from the unjust supremacy exercised over them by idle consumers.”

“In the anti-national party figure the nobles who labour for the restoration of the old régime, all priests who make morality consist of blind obedience to the decrees of Pope or clergy, owners of real estates, noblemen who do nothing, judges who exercise arbitrary jurisdiction, as well as soldiers who support them—in a word, everyone who is opposed to the establishment of the system that is most favourable to economy or liberty.” (Le Parti national, in Le Politique, Œuvres, vol. iii, pp. 202-204.)

[448] Syst. indust., Œuvres, vol. vi, p. 17, note.

[449] Syst. indust., Œuvres, vol. vi, pp. 91-92.

[450] Œuvres, vol. iii, pp. 35-36.

[451] On this point see Halévy’s article in the Revue du Mois for December 1907, Les Idées économiques de Saint-Simon, and Allix, article mentioned supra, p. 117.

[452] In the following passage the opposition is very marked: “One must recognise that nearly all Government measures which have presumed to influence social prosperity have simply proved harmful. Hence people have come to the conclusion that the best way in which a Government can further the well-being of society is by letting it alone. But this method of looking at the question, however just it may seem when we consider it in relation to the present political system, is evidently false when it is adopted as a general principle. The impression will remain, however, until we succeed in establishing another political order.” (L’Organisateur, Œuvres, vol. iv, p. 201.)

Later on the Saint-Simonians abandoned this idea and demanded Governmental control of all social relations. “Far from admitting that the directive control of Government in social matters ought to be restricted, we believe that it ought to be extended until it includes every kind of social activity. Moreover, we believe that it should always be exercised, for society to us seems a veritable hierarchy.” (Doctrine de Saint-Simon, Exposition, Deuxième Année, p. 108; Paris, 1830.)

[453] “Under the old régime men were considered inferior to things,” according to a brochure entitled Des Bourbons et des Stuarts (1822; Œuvres choisies, vol. ii, p. 447). “The object of the new system will be to extend man’s hold over things.” (Œuvres, vol. iv, p. 81.) “In the present state of education what the nation wants is not more government, but more cheap administration.” (Syst. indust., Œuvres, vol. v, p. 181.) Engels, in his book written in reply to Eugen Dühring, makes use of identical terms in speaking of the socialist régime. “When the administration of things and the direction of the processes of production take the place of the governing of persons the State will not merely be abolished: it will be dead.” (Philosophie, Économie politique, Socialisme, French translation by Laskine, p. 361; Paris, 1911.)

[454] Lettres à un Américain, Œuvres, vol. ii, p. 189.

[455] Des Bourbons et des Stuarts, Œuvres choisies, vol. ii, pp. 437-438.

[456] L’Organisateur, Œuvres choisies, vol. iv, pp. 86 and 150-151.

[457] Lettres à un Américain, Œuvres, vol. ii, p. 188.

[458] This is not the only plan of government proposed by Saint-Simon, although it is the one most characteristic of him. It is to be found in L’Organisateur immediately after the Parable. We have to remember that Saint-Simon was very hostile to a Government of savants. Power was to be placed in the hands of the industrial leaders—the savants were simply to advise. “Should we ever have the misfortune to establish a political order in which administration was entrusted to savants we should soon witness the corruption of the scientists, who would readily adopt the vices of the clergy and become astute, despotic quibblers.” (Syst. indust., Œuvres, vol. v, p. 161.)

[459] Syst. indust., Œuvres, vol. vi, p. 96.

[460] F. Engels, Herrn Eugen Dührings Umwälzung der Wissenschaft, 4th ed., p. 277. French translation, Paris, 1911, p. 334. The whole of this chapter in Engels’ book is from the pen of Karl Marx.

[461] French translation under the title L’État socialiste, Paris, 1906.

[462] This is the full text: “The object of socialism is to set up a new system of society based upon the workshop as a model. The rights of the society will be the customary rights of the factory. Not only will socialism stand to benefit by the existence of the industrial system which has been built up by capital and science upon the basis of technical development, but it will gain even more from that spirit of co-operation which has long been a feature of factory life, drawing out the best energy and the best skill of the workman.” Earlier in the same volume he writes: “Everything will proceed in an orderly, economical fashion, just like a factory.” (G. Sorel, Le Syndicalisme révolutionnaire, in Le Mouvement socialiste, November 1 and 15, 1905.)

[463] Saint-Simon often quotes Say and Smith with distinct approval. But he charges Say with the separation of politics from economics instead of merging the former in the latter, and with inability to realise to the full extent what he “dimly saw, as it were, in spite of himself, namely, that political economy is the one true foundation of politics.” (Lettres à un Américain, Œuvres, vol. ii, p. 185.)

[464] Saint-Simon is classed among the socialists for two reasons: (1) the interest he takes in the condition of the poor; (2) his opinions concerning the necessity for reforming the institution of private property. But none of the texts that are generally quoted seem to have the significance that is occasionally given them. With regard to the first point, a celebrated passage from the Nouveau Christianisme is the one usually quoted: “Society should be organised in such a fashion as to secure the greatest advantage for the greatest number. The object of all its labours and activities should be the promptest, completest amelioration possible of the moral and physical condition of the most numerous class.” (Œuvres, vol. vii, pp. 108-109.) Already in his Système industriel Saint-Simon had said that the direct object which he had in view was to better the lot of that class that had no other means of existence than the labour of its own right arm. (Ibid., vol. vi, p. 81.) But is this not just the old Benthamite formula—the greatest good of the greatest number? Besides, how does Saint-Simon propose to secure all this? By giving the workers more power? Not at all. “The problem of social organisation must be solved for the people. The people themselves are passive and listless and must be discounted in any consideration of the question. The best way is to entrust public administration to the care of the industrial chiefs, who will always directly attempt to give the widest possible scope to their undertakings, with the result that their efforts in this direction will lead to the maximum expansion of the amount of work executed by the mass of the people.” (Ibid., vol. vi, pp. 82-83.) A Liberal economist would hardly have expressed it otherwise.

As to the question of private property, Saint-Simon certainly regarded its transformation as at least possible. This is seen in a number of passages. “Property should be reconstituted and established upon a foundation that might prove more favourable for production,” says he in L’Organisateur. (Ibid., vol. iv, p. 59.) Elsewhere, in a letter written to the editor of the Journal général de la France, he mentions the fact that he is occupied with the development of the following ideas: (1) That the law establishing the right of private property is the most important of all, seeing that it is the basis of our social edifice; (2) the institution of private property ought to be constituted in such a fashion that the possessors may be stimulated to make the best possible use of it. (Ibid., vol. iii, pp. 43-44.) In his Lettres à un Américain he gives the following résumé of the principles which underlie the work of J. B. Say (an incidental proof of his attachment to the Liberal economists): “The production of useful objects is the only positive, reasonable aim which political societies can propose for themselves, and consequently the principle of respect for production and producers is a much more fruitful one than the other principle of respect for property and proprietors.” (Œuvres, vol. ii, pp. 186-187.) But all that this seems to us to imply is that the utility of property constitutes its legality and that it should be organised with a view to social utility. Admitting that he did conceive of the necessity of a reform of property, it does not appear that he intended this to mean anything beyond a reform of landed property. We have already seen how he regarded capital as a kind of social outlay which demanded remuneration. The following passage bears eloquent testimony to his respect for movable property: “Wealth, generally speaking, affords a proof of the manufacturers’ ability even where that wealth is derived from inherited fortune, whereas in the other classes of society it is apparently true to say that the richer are inferior in capacity to those who have received less education but have a smaller fortune. This is a truth that must play an important part in positive politics.” (Syst. indust., Œuvres, vol. v, p. 49, note.)

[465] The exact title is Doctrine de Saint-Simon, Exposition, Première Année, 1829. Our quotations are taken from the second edition (Paris, 1830). One ought to mention, in addition to these, the articles contributed by Enfantin to Le Globe and republished under the title of Économie politique et Politique, in one volume (2nd ed., 1832). But none of these articles is as interesting as the Doctrine, and they only reproduce the ideas already discussed by Enfantin in his articles in Le Producteur.

[466] Despite the fact that the oral exposition of the doctrine was the work of Bazard and was prepared for the press by his disciples—Hippolyte Carnot among others—most of the economic ideas contained in it must be attributed to Enfantin. Enfantin also was responsible for the majority of the economic articles that appeared in Le Producteur. But the doctrine set forth in Le Producteur differs considerably from that expounded in the Exposition. Interest and rent are subjected to severe criticism as tributes paid to idleness by industry. Inheritance, on the other hand, though treated with scant sympathy, is not condemned. A lowering of the rate of interest would, Enfantin thinks, help to enfranchise the workers, and a sound credit system would solve the greatest of modern problems—that is, it would reconcile workers and idlers, “whose interests will never again be confused with the general interest, inasmuch as the possession of the fruits of past labour will no longer constitute a claim to the enjoyment of the benefits of labour in the present or future.” (Le Producteur, vol. ii, p. 124.) These ideas are more fully developed in the Exposition.

[467] Doctrine de Saint-Simon, p. 182.

[468] Ibid., p. 190.

[469] Ibid., p. 93.

[470] Sismondi’s term was rather “spoliation.” See supra, p. 185.

[471] “The mass of workers are to-day exploited by those people whose property they use. Captains of industry in their dealings with proprietors have to submit to a similar kind of treatment, only to a much less degree. But they occasionally share in the privilege of the exploiters, for the full burden of exploitation falls upon the working classes—that is, upon the vast majority of mankind.” (Doctrine de Saint-Simon, p. 176.)

[472] “It is our belief that profits diminish while wages increase; but the term ‘wages’ as we use it includes the profits that accrue to the entrepreneur, whose earnings we regard as the price of his labour.” (Le Producteur, vol. i, p. 245. The article is by Enfantin.)

[473] We might sum up the different senses of the word “exploitation” as used by Sismondi, the Saint-Simonians, and Marx respectively as follows:

(1) Sismondi thinks that the worker is exploited whenever he is not paid a wage sufficient to enable him to lead a decent existence. Unearned income seems quite legitimate, however.

(2) Exploitation exists, in the opinion of the Saint-Simonians, whenever a part of the material produce raised by labour is devoted to the remuneration of proprietors through the operation of ordinary social factors.

(3) Marx speaks of exploitation whenever a portion of the produce of labour is devoted to the remuneration of capital either through the existence of social institutions or the operation of the laws of exchange.

[474] See p. 25.

[475] Doctrine, p. 191.

[476] See p. 79, note.

[477] Doctrine, pp. 191-192.

[478] The Saint-Simonians never make use of the term, but they describe the doctrine admirably.

[479] “We may provisionally speak of this system as a general system of banking, ignoring for the time being the somewhat narrow interpretation usually placed upon that word. In the first place, the system would comprise a central bank, which would directly represent the Government. This bank would be the depository for every kind of wealth, of all funds for productive purposes and all instruments of labour—in a word, it would include everything that is to-day comprised within the term ‘private property.’ Depending upon this central bank would be other banks of a secondary character, which would be, as it were, a prolongation of the former and would supply it with the means of coming into touch with the principal localities, informing the central institution as to their particular needs and their productive ability. Within the area circumscribed for these banks would be other banks of a more specialised character still, covering a less extensive field and including within their ambit the tenderer branches of the industrial tree. All wants would be finally focused in the central bank and all effort would radiate from it.” (Doctrine, pp. 206-207.) The idea is probably Enfantin’s, for there is an exposition of the same idea in Le Producteur, vol. iii, p. 385.

[480] Doctrine, p. 210, note. Elsewhere (p. 330): “We are weary of every political principle that does not aim directly at putting the destiny of the people in the hands of the most able and devoted among them.”

[481] “We come back with real joy to this great virtue, so frequently misconceived, not to say misrepresented, at the present time—that virtue which is so easy and so delightful in persons who have a common aim which they want to attain, but which is so painful and revolting when combined with egoism. This virtue of obedience is one to which our thoughts return ever with love,” (Ibid., p. 330.)

[482] The formula in the third edition of the Doctrine is a little different. “Each one,” it runs there, “ought to be endowed according to his merits and rewarded according to his work.” We know that the first part of the formula refers to the distribution of capital, i.e. to the instruments of labour, while the second refers to individual incomes. The word “classed” was substituted for “endowed” in the second edition.

[483] Published as an appendix to the second edition of the Doctrine de Saint-Simon, Exposition, Première Année, 1829.

[484] In his small volume Le Collectivisme (Paris, 1900).

[485] Littré has disputed Comte’s indebtedness to Saint-Simon in his Auguste Comte et le Positivisme. Saint-Simon, however, in his preface to Système industriel remarks that in political matters the jurists form a connecting link between feudal government on the one hand and industrial government on the other, just as the metaphysicians are intermediate between the theological and the scientific régimes. In a note which he adds he states his position still more clearly (Œuvres, vol. v, p. 9). It is true that the Système industriel dates from 1821, and is consequently subsequent to the beginning of the friendly relations between Comte and Saint-Simon. But textual evidence, however precise, cannot decide the question of the reciprocal influence which these two Messiahs exercised upon one another. A similar idea had already found expression in Turgot’s work.

[486] P. 179.

[487] “Another mistake that is also very general is to speak of property as if it were an institution with a fixed, unchangeable form, while as a matter of fact it has assumed various aspects and is still capable of further modification as yet undreamt of.” (Laveleye, De la Propriété et de ses Formes primitives, 1st ed., 1874, p. 381.) Stuart Mill, in a letter addressed to Laveleye on November 17, 1872, congratulated him on the demonstration he had given of this. (Ibid., preface, p. xiii.)

[488] Note this argument, which has so frequently been employed by Liberal economists, and which we shall come across in Bastiat’s work. The Saint-Simonians are constantly running with the hare as well as hunting with the hounds.

[489] Doctrine, p. 182. The historical argument of which we have just given a short summary is developed in the Doctrine, pp. 179-193. It is open to a still more fundamental criticism, inasmuch as it does not seem to be historically accurate.

[490] Saint-Simon, Mémoire introductif sur sa Contestation avec M. de Redern (1812) (Œuvres, vol. i, p. 122).

[491] Doctrine, p. 144.

[492] The philosophy of history might be said to consist of attempts to show that history is made up of alternating periods of organic growth and destructive criticism. The former periods are marked by unity of thought and aim, of feeling and action in society; the latter by a conflict of ideas and sentiments, by political and social instability. The former periods are essentially religious, the latter selfish. Reform and revolution are the modern manifestations of the critical nature of the period in which we live. Saint-Simonism would lead us into a definitely organic epoch. Historical evolution seems to point to a religious and universal association.

[493] Doctrine, p. 119.

[494] Ibid., p. 121. “Man is not without some intuitive knowledge of his destiny, but when science has proved the correctness of his surmises and demonstrated the accuracy of his forecasts, when it has assured him of the legitimacy of his desires, he will move on with all the greater assurance and calmness towards a future that is no longer unknown to him. Thus will he become a free, intelligent agent working out his own destiny, which he himself cannot change, but which he may considerably expedite by his own efforts.”

[495] This is developed at great length in the seventh lecture, Doctrine, pp. 211 et seq.

[496] “Politics,” says Saint-Simon, “have their roots in morality, and a people’s institutions are just the expression of their thoughts.” (Œuvres, vol. iii, p. 31.) “Philosophy,” he remarks elsewhere, “is responsible for the creation of all the more important political institutions. No other power would have the strength necessary to check the action of those that have already become antiquated or to set up others more in conformity with a new doctrine.” (Syst. indust., Œuvres, vol. v, p. 167.) He further insists upon the part which philanthropists may play in the creation of a new society. “One truth,” he writes, “that has been established in the course of human progress is this: a disinterested desire for the general well-being of the community is a more effective instrument of political improvement than the conscious self-regarding action of the classes for which these changes will prove most beneficial. In a word, experience seems to show that those who should naturally be most interested in the establishment of a new order of things are not those who show the greatest desire to bring it about.” (Œuvres, vol. vi, p. 120.) It would be difficult to imagine a neater refutation of Marxian ideas, especially the contention that the emancipation of the workers can only come from the workers themselves.

[497] Cf. on these points Weill, L’École Saint-Simonienne (1896), and Charléty, Histoire du Saint-Simonisme (1896).

[498] “The object of credit,” says Enfantin (Économie politique et Politique, p. 53), “in a society where one set of people possess the instruments of production but lack capacity or desire to employ them, and where another have the desire to work but are without the means, is to help the passage of these instruments from the former’s possession into the hands of the latter.” No better definition was ever given.

[499] Doctrine, p. 226. Cf. p. 223 for an eloquent passage denouncing Ricardo and Malthus, who, as the result of their “profound researches into the question of rent,” undertake to defend the institution of private property.

[500] The article is entitled De la Classe ouvrière, and may be found in vol. iv of Le Producteur. See particularly pp. 308 et seq.

[501] Engels, Herrn Eugen Dührings Umwälzung der Wissenschaft, p. 277.

[502] “The majority of economists, and especially Say, whose work we have just reviewed, regard property as a fixed factor whose origin and progress is no concern of theirs, but whose social utility alone concerns them. The conception of a distinctively social order is more foreign still to the English writers.” (Doctrine, pp. 221 and 223.) No exception is made in favour of Sismondi or Turgot.

[503] Le Producteur, vol. iii, p. 385.

[504] In the preface to Économie politique et Politique, Enfantin again writes: “All questions of political economy should be linked together by a common principle, and in order to judge of the social utility of a measure or idea in economics it is absolutely necessary to consider whether this idea or measure is directly advantageous to the workers or whether it indirectly contributes to the amelioration of their lot by discrediting idleness.” It is a pleasure to be able to concur in the opinion expressed by M. Halévy in his article on Saint-Simon (Revue du Mois for December 1907), in which he maintains that this idea is the distinctive trait of Saint-Simon’s socialism. We have already called attention to another feature that seems to us equally important, namely, the suggested substitution of industrial administration for political government.

[505] It is impossible not to make a special mention of Anton Menger’s excellent little book. Das Recht auf den vollen Arbeitsertrag (1886) (the English translation, with an excellent introduction by Professor Foxwell, is unfortunately out of print). It is indispensable in any history of socialism. We must also mention, with deep acknowledgments, Pareto’s Les Systèmes socialistes (Paris, 1902, 2 vols.)—the most originally critical work yet published on this subject, though not always the most impartial—and Bourguin’s Les Systèmes socialistes et l’Évolution économique (Paris, 1906), as containing the most scientific criticism of the economic theories of socialism.

[506] “Association, which is destined to put an end to antagonism, has not yet found its true form. Hitherto it has consisted of separate groups which have been at war with one another. Accordingly antagonism has not yet become extinct, but it certainly will as soon as association has become universal.” (Doctrine de Saint-Simon, Exposition, Première Année, p. 177.)

[507] In Owen’s paper, the Economist, for August 11, 1821, we meet with the following words: “The secret is out!… The object sought to be obtained is not equality in rank or possessions, is not community of goods, but full, complete, unrestrained co-operation on the part of all the members for every purpose of social life.” Fourier writes in a similar strain: “Association holds the secret of the union of interests.” (Assoc. domestique, vol. i, p. 133.) Elsewhere he writes: “To-day, Good Friday, I discovered the secret of association.”

[508] On the relations of socialism to the French Revolution see the preceding chapter on Saint-Simon (p. 199, note).

[509] The Declaration of the Rights of Man speaks of liberty, property, resistance to oppression, but there is not a word about the right of association. Trade association, one of the oldest and most democratic forms of association, was proscribed by the famous decree of Le Chapelier (1791), and severe penalties were imposed upon associations of more than twenty persons by the Penal Code of 1810. These prohibitions were gradually removed in the course of the nineteenth century. Friendly societies were the first to be set free, then followed trade unions, but these laws were not definitely repealed until July 1, 1901.

[510] “It is obvious that the present régime of free competition which is supposed to be necessary in the interests of our stupid political economy, and which is further intended to keep monopoly in check, must result in the growth of monopoly in almost every branch of industry.” (Victor Considérant, Principes de Socialisme.)

[511] Fourier’s first book, Les Quatre Mouvements, was published in 1808, and his last, La Fausse Industrie, in 1836. Owen’s earliest work, A New View of Society; or Essays on the Formation of Human Character, was published in 1813, and his last work, The Human Race governed without Punishment, in 1858.

[512] “According to details supplied by journalists, Owen’s establishments seem to have at least three serious drawbacks which must inevitably destroy the whole enterprise—the numbers are excessive, equality is one of his ideals, and there is no reference to agriculture.” (Unité universelle, vol ii, p. 35)

[513] Despite the fact that Chartism was essentially a working-class movement, controlled by the Working Men’s Association, its demands were exclusively political, the chief of them being universal suffrage.

[514] It is quite possible that Owen regarded the term as his own invention, but we now know that it had been previously employed by Pierre Leroux, the French socialist. The publication of Owen’s What is Socialism? in 1841, however, is the earliest instance of the term being employed as the title of a book.

Owen lived an extremely active life, and died in 1857 at the advanced age of eighty-seven. Of Welsh artisan descent, he began life as an apprentice in a cotton factory, setting up as a master spinner on his own account with a capital of £100, which he had borrowed from his father. His rise was very rapid, and at the age of thirty he found himself co-proprietor and director of the New Lanark Mills. It was then that he first made a name for himself by his technical improvements and his model dwellings for his workmen. It was at this period that his ideas on education also took shape. By and by it became the fashion to make a pilgrimage to view the factory at New Lanark, and among the visitors were several very distinguished people. His correspondents also included more than one royal personage. Among these we may specially mention the King of Prussia, who sought his advice on the question of education, and the King of Holland, who consulted him on the question of charity.

The crisis of 1815 revealed to Owen the serious defects in the economic order, and this marks the beginning of the second period of his life, when he dabbled in communal experiments. In 1825 he founded the colony of New Harmony in Indiana, and the same year witnessed the establishment of another colony at Orbiston, in Scotland. But these lasted only for a few years. In 1832 we have the National Equitable Labour Exchange, which was not much more successful.

Owen, sixty-three years of age, and thoroughly disappointed with his experiments, but as convinced as ever of the truth of his doctrines, entered now upon the third period of his life, which, as it happened, was to be a fairly long one. This period was to be devoted wholly to propagating the gospel of the New Moral World—The New Moral World being the title of his chief work and of the newspaper which he first published towards the end of 1834. He took an active part in the Trade Union movement, but does not seem to have been much interested in the co-operative experiments which were started by the Rochdale Pioneers in 1844, although curiously enough this is his chief claim to fame.

Owen was in no sense a littérateur, being essentially a man of affairs, and we are not surprised to find that the number of books which he has left behind him is small. But he was an indefatigable lecturer, and wrote a good deal for the press. We must confess, however, that it is not easy, as we read his addresses and articles to-day, to account for the wonderful contemporary success which they had.

There is an excellent French work by Dolléans dealing with his life and doctrines (1907). The best English life, that of Podmore, is unfortunately out of print.

[515] To his fellow-employers who complained of his almost revolutionary proposals Owen made reply as follows—and his words are quite as true now as they were then: “Experience must have taught you the difference between an efficiently equipped factory with its machinery always clean and in good working order and one in which the machinery is filthy and out of repair and working only with the greatest amount of friction. Now if the care which you bestow upon machinery can give you such excellent results, may you not expect equally good results from care spent upon human beings, with their infinitely superior structure? Is it not quite natural to conclude that these infinitely more delicate and complex mechanisms will also increase in force and efficiency and will be really much more economical if they are kept in good working condition and treated with a certain measure of kindness? Such kindness would do much to remove the mental friction and irritation which always results whenever the nourishment is insufficient to keep the body in full productive efficiency, as well as to arrest deterioration and to prevent premature death.”

[516] Education is given a very prominent place in Owen’s system, and once we accept his philosophy we realise what an important place it was really bound to have. Education was to make men, just as boots and caps are made. Were it not altogether foreign to our purpose it would be interesting to compare his educational ideals with those of Rousseau as outlined in Émile.

[517] “The idea of responsibility is one of the absurdest, and has done a great deal of harm.” (Catechism of the New Moral World, 1838.)

[518] On the other hand, Owen had great influence with the working classes, and this he attributed to the fact that, “freed from all religious prejudice, he was able to look upon men and human nature in general with infinite charity, and in that light men no longer seemed responsible for their actions.” (Quoted by Dolléans.)

[519] Like most of the economists and socialists of that time, Owen was very much impressed with the crisis of 1815.

[520] On the other hand, there is this objection:

Whenever profit forms a part of cost of production it is impossible to distinguish it from interest. In that case it is true that even perfect competition would not do away with profit, since it will only reduce the price to the level of cost of production. In that case profit cannot be said to be either unjust or parasitic, for the product is sold exactly for what it cost.

When profit does not enter into cost of production there is no possibility of confusing it with interest. It is simply the difference between the sale price and the cost of replacing the article. In this it is certainly parasitic, and would disappear under a régime of perfect competition, which must to some extent destroy the monopoly upon which such profit rests.

But the distinction between profit and interest was not known in Owen’s time, and Owen would have said that they are both one, and that if profit occasionally claims a share in the cost of production with a view to defying competition it has no right to any such refuge, for cost of production should consist of nothing but the value of labour and the wear and tear of capital. Accordingly it ought to be got rid of altogether.

[521] “Metallic money is the cause of a great deal of crime, injustice, and want, and it is one of the contributory causes which tend to destroy character and to make life into a pandemonium.

“The secret of profit is to buy cheap and to sell dear in the name of an artificial conception of wealth which neither expands as wealth grows nor contracts as it diminishes.”

[522] This contradiction did not escape Owen. But we must not forget that he regarded this merely as a compromise, and that he looked forward to a time when the establishment of a communistic association with a new environment would lead to a complete solution of the problem. He began in the New Harmony colony by making pro rata payment for the work done, but the object was to arrive gradually at a state of complete equality where no distinction was to be made between the service rendered or the labour given—with the result that the colony was extinct in six months.

[523] The Labour Exchange, which was opened in September 1832, at first enjoyed a slight measure of success. There were 840 members, and they even went the length of establishing a few branches. Among the chief causes of the failure of the scheme the following may be enumerated:

(a) The associates, being themselves allowed to state the value of their products, naturally exaggerated, and it became necessary to relieve them of a task which depended entirely upon their honour, and to place the valuation in the hands of experts. But these experts, who were not at all versed in Owen’s philosophy, valued the goods in money in the ordinary way, and then expressed those values in labour notes at the rate of 6_d._ for every hour’s work. It could hardly have been done on any other plan. But it was none the less true that Owen’s system was in this way inverted, for instead of the labour standard determining the selling value of the product, the money value of the product determined the value of the labour.

(b) As soon as the society began to attract members who were not quite as conscientious as those who first joined it, the Exchange was flooded with goods that were really unsaleable. But for the notes received in exchange for these the authorities would be forced to give goods which possessed a real value, that is, goods which had been honestly marked, and which commanded a good price, with the result that in the long run there would be nothing left in the depot except worthless products. In short, the Exchange would be reduced to buying goods which cost more than they were worth, and selling goods that really cost less than they were worth.

Since the notes were not in any way registered, any one, whether a member of the society or not, could buy and sell them in the ordinary way and make a handsome profit out of the transaction. Three hundred London tradesmen did this by offering to take labour notes in payment for merchandise. They soon emptied the Exchange, and when they saw that nothing valuable was left they stopped taking the notes, and the trick was done.

M. Denis very aptly points out that the Exchange was really of not much use to the wage-earner, who was not even allowed to own what he had produced. There is some doubt after all as to whether the system would prove quite successful in abolishing the wage-earners.

[524] This does not imply that consumers’ associations, when they are better organised and federated, with large central depots at their command, will not take up this project once again—that is, will not try to dispense with money in their commercial transactions. They will certainly keep an eye on that problem.

[525] That was Holyoake’s view (History of Co-operation, vol. i, p. 215). But, according to a passage quoted by Dolléans, Owen contemplated making an appeal to the co-operative societies to come to the rescue of his National Labour Exchange.

[526] To the workers he wrote: “Would you like to enjoy yourselves the whole products of your labour? You have nothing more to do than simply to alter the direction of your labour. Instead of working for you know not whom, work for each other.” (Quoted by Foxwell in his introduction to Anton Menger’s The Right to the Whole Produce of Labour.)

[527] See the lecture on Les Prophéties de Fourier in Gide’s Co-opération.

[528] It is hardly necessary, however, to credit him with a greater amount of eccentricity than he actually possessed, and I seize this opportunity of refuting once more a story told by more than one eminent economist, attributing to him the statement that the members of the Phalanstère would all be endowed with a tail with an eye at the end of it. The caricaturists of the period—“Cham,” for example—represent them in that fashion. The legend doubtless grew out of the following passage from his works, which is fantastic enough, as everybody will admit. After pointing out that the inhabitants of other planets have several limbs which we do not possess, he proceeds: “There is one limb especially which we have not, and which possesses the following very useful characteristics. It acts as a support against falling, it is a powerful means of defence, a superb ornament of gigantic force and wonderful dexterity, and gives a finish as well as lending support to every bodily movement.” (Fausse Industrie, vol. ii, p. 5.)

[529] Nouveau Monde industriel, p. 473.

[530] Letter dated January 23, 1831, quoted by Pellarin, Vie de Fourier (Paris, 1850).

[531] Nouveau Monde industriel, p. 26. For further details see Œuvres choisies de Fourier, with introduction by Charles Gide, and Hubert Bourgin’s big volume on Fourier.

[532] It is necessary to point out that Fourier’s suggestions for a solution of the domestic servant problem are really not quite so definite as we have given the reader to understand in the text. They are mixed up with a number of other ideas of a more or less fantastic description, but very suggestive nevertheless. This is especially true of the suggestion to transform domestic service by making it mutually gratuitous—an idea that is worth thinking about.

[533] We were thinking especially of associations like that of the painters under the leadership of M. Buisson, where distribution is as follows: labour, 50 per cent., capital 27 per cent., administration 12 per cent.

[534] Association domestique, vol. i, p. 466.

[535] Ibid., p. 466. Note that Fourier says that this only applies to civilised societies. For those who live in the future Harmony city there will be other and more powerful motives.

[536] Unité universelle, vol. iii, p. 517.

[537] Ibid., p. 457.

[538] The system of integral association proposed by Fourier, including both co-operative production and co-operative distribution, will be better understood if we look at the facts of the present situation.

On the one hand we have co-operative associations of producers who are not particularly anxious that their products should be distributed among themselves; they simply produce the goods with a view to selling them and making a profit out of the transaction. On the other hand, the distributing societies simply aim at giving their members certain advantages, such as cheaper goods, but they make no attempt to produce the goods which they need.

In countries where co-operative societies are properly organised, as they are in England, for example, many of these societies have undertaken to produce at least a part of what they consume, and some of them have even acquired small estates for the purpose; but only a small proportion of the employees are members of the societies, with the result that their position is not very different from that of other working men. One understands the difficulty of grouping people in this way. But if the associations are to live it is absolutely necessary that they should produce what they require under conditions that are more favourable than those of ordinary producers; in a word, that they should be able to create a kind of new economic environment.

Even in the colonies one does not find many instances of vigorous associations of this kind.

[539] Co-partnership as outlined by M. Briand is to-day an item in the programme of the Radical Democratic party. See Les Actions du Travail, by M. Antonelli.

[540] M. Faguet, Revue des Deux Mondes, August 1, 1896.

[541] “Industrialism is the latest scientific illusion.” (Quatre Mouvements, p. 28.) We must also draw attention to his suggestion for co-operative banks, where agriculturists could bring their harvest and obtain money in exchange for it—a rough model of the agricultural credit banks. But he only regarded this as a step towards the Phalanstère.

[542] The kinds of labour which Fourier selects as examples are always connected with fruit-growing—cherry orchards, pear orchards, etc. Fruit and flowers have a very important place in his writings. He seems to have anticipated the fruit-growing rancher of California.

Without stopping to examine some of the more solid reasons—which unfortunately are buried beneath a great deal of rubbish—why fruit-growing should take the place of agriculture, we must just recall the curious fact that he was always emphasising the superiority of sugar and preserves over bread, and pointed to the “divine instinct” by which children are enabled to discover this. The suggestion was ridiculed at the time, but is to-day confirmed by some of the most eminent doctors and teachers of hygiene.

[543] It is interesting to contrast this view with Bücher’s, who thinks that the evolution of industry simply increases its irksomeness. A conception of regressive or spiral evolution might reconcile the two views.

[544] Let us not forget his Petites Hordes, which consisted of groups of boys who undertook the sweeping of public paths, the surveillance of public gardens, and the protection of animals. The idea was very much ridiculed at the time, but a number of similar organisations, each with its badge and banner, were recently instituted by Colonel Waring in the city of New York.

[545] “My theory is that every passion given by nature should be allowed the fullest scope. That is the key to my whole system. Society requires the full exercise of all the faculties given us by God.”

[546] Quatre Mouvements, p. 194.

[547] See, for example, such works as Zola’s Travail, and Barrè’s L’Ennemi des Lois; and as an example of the general change in the tone of the economists we may refer to Paul Leroy-Beaulieu’s latest writings, in which he speaks of Fourier as a “genial thinker.”

[548] It is no part of our task to relate the story of the several colonies founded either by disciples of Fourier or of Owen. Experiments of this kind were fairly general in the United States between 1841 and 1844, when no less than forty colonies were founded. Brook Farm, which is the best known of these, included among its members some of the most eminent Americans—Channing and Hawthorne, for example—but none of the settlements lasted very long.

Similar attempts have been made in France at a still more recent period. The one at Condé-sur-Vesgres, near Rambouillet, where a few faithful disciples of Fourier have come together, is still flourishing.

[549] Founded in 1859, it only became a co-partnership in 1888, the year of Godin’s death.

[550] As a matter of fact it first appeared as an article in the Revue du Progrès in 1839.

[551] Buonarotti was the author of La Conspiration pour l’Égalité, dite de Babeuf, published in 1828. Little notice was taken of the volume by the public, but it was much discussed in democratic circles.

[552] Organisation du Travail, 5th ed. (1848). p. 77.

[553] We refer to it as the commonest type because in the previous section we have shown that other co-operative societies exist, such as Le Travail, for example, which claims to be modelled upon Fourier’s scheme, especially in the matter of borrowed capital. But the usual type is affiliated to the Chambre consultative des Associations de Production. Article II of its regulations reads as follows: “No one will be allowed to become a subscriber who is not a worker in some branch of production or other.” See the volume published by the Office du Travail in 1898, Les Associations Ouvrières de Production.

[554] In the Journal des Sciences morales et politiques, December 17, 1831. Only one association—the goldsmiths’, in 1834—was founded as the result of this article.

[555] Quoted by Festy, Le Mouvement ouvrier au Début de la Monarchie de Juillet, p. 88 (Paris, 1908).

[556] Buchez’s proposals for the reform of the “great industry” were of an entirely different character.

[557] François Vidal, De la Répartition des Richesses (1846).

[558] “The emancipation of the working classes is a very complicated business. It is bound up with so many other questions and involves such profound changes of habit. So numerous are the various interests upon which an apparent though perhaps not a real attack is contemplated, that it would be sheer folly to imagine that it could ever be accomplished by a series of efforts tentatively undertaken and partially isolated. The whole power of the State will be required if it is to succeed. What the proletarian lacks is capital, and the duty of the State is to see that he gets it. Were I to define the State I should prefer to think of it as the poor man’s bank.” (Organisation du Travail, p. 14.)

[559] “The illusive conception of an abstract right has had a great hold upon the public ever since 1789. But it is nothing better than a metaphysical abstraction, which can afford but little consolation to a people who have been robbed of a definite security that was really theirs. The ‘rights of man,’ proclaimed with pomp and defined with minuteness in many a charter, has simply served as a cloak to hide the injustice of individualism and the barbarous treatment meted out to the poor under its ægis. Because of this practice of defining liberty as a right, men have got into the habit of calling people free even though they are the slaves of hunger and of ignorance and the sport of every chance. Let us say once for all that liberty consists, not in the abstract right given to a man, but in the power given him to exercise and develop his faculties.” (Organisation du Travail, p. 19.)

[560] Cf. pp. 186 et seq.

[561] “Your want of faith in association,” he wrote to the National Assembly of 1848, “will force you to expose civilisation to a terribly agonising death.”

[562] L’Humanité (1840). It would be wrong to conclude, however, that this desire for secularising charity meant that Leroux was anti-religious. On the contrary, he admits his indebtedness for the conception of solidarity to the dictum of St. Paul, “We are all members of one body.”

[563] “I was the first to employ the term ‘socialism.’ It was a neologism then, but a very necessary term. I invented the word as an antithesis to ‘individualism.’” (Grève de Samarez, p. 288.) As a matter of fact, as far back as 1834 he had contributed an article entitled De l’Individualisme et du Socialisme to the Revue encyclopédique. The same word occurs in the same review in an article entitled Discours sur la Situation actuelle de l’Esprit humain, written two years before. See his complete works, vol. i, pp. 121, 161, 378. For a further account of Leroux see M. F. Thomas’s Pierre Leroux (1905), a somewhat dull but highly imaginative production.

[564] For Cabet’s life and the story of Icaria see Prudhommeaux’s two volumes, Étienne Cabet and Histoire de la Communauté icarienne.

[565] “The communists will never gain much success until they have learned to reform themselves. Let them preach by example and by the exercise of social virtues, and they will soon convert their adversaries.”

[566] Protection was attacked by Sismondi in Nouv. Princ., Book IV, chap. 11. He considered it a fruitful source of over-production, and uttered his condemnation of the absurd desire of nations for self-sufficiency. Saint-Simon considered Protection to be the outcome of international hatred (Œuvres, vol. iii, p. 36), and commended the economists who had shown that “mankind had but one aim and that its interests were common, and consequently that each individual in his social connection must be viewed as one of a company of workers” (Lettres à un Americaine, Œuvres, vol. ii, pp. 186-187). The Saint-Simonians never touched upon the question directly, but it is quite clear that Protective rights were to have no place in the universal association of which they dreamt. According to Fourier, there was to be the completest liberty in the circulation of goods among the Phalanstères all the world over. (Cf. Bourgin, Fourier, pp. 326-329; Paris, 1905.)

[567] We refer to two of them only: Augustin Cournot and Louis Say of Nantes. The former, in his Recherches sur les Principes mathématiques de la Théorie des Richesses (1838), a work that is celebrated to-day but which passed unnoticed at the time of its publication, has criticised the theory of Free Trade. But the reputation which he subsequently achieved was not based upon this part of the book. Louis Say (1774-1840) was a brother of J. B. Say. He published a number of works, now quite forgotten, in which he criticised several doctrines upheld by his brother, whose displeasure he thus incurred. We refer to his last work, Études sur la Richesse des Nations et Réfutation des principales Erreurs en Économie politique (1836), for this is the work to which List alludes. It is probable that Louis Say’s name would have remained in oblivion but for List. Richelot, in his translation of List (second edition, p. 477), quotes some of the more important passages of Say’s book.

[568] The union of England and Scotland dates from 1707. Compare the passage in Adam Smith, Book V, chap. 2, part ii, art. 4; Cannan’s edition, vol. ii, p. 384.

[569] List, Werke, ed. Häusser, vol. ii, p. 17. The seventh edition of the National System, which was published in 1883 by M. Eheberg, contains an excellent historical and critical introduction. Our quotations are from the English translation by Lloyd, published in 1885, republished, with introduction by Professor Shield Nicholson, in 1909.

[570] Petition presented to a meeting of the German princes at Vienna in 1820 (Werke, vol. ii, p. 27).

[571] Baden, Nassau, and Frankfort joined in 1835 and 1836. But there still remained outside Mecklenburg and the Free Towns of the Hanse, Hanover, Brunswick, and Oldenburg.

[572] List’s expression “exchangeable value” merely signifies the mass of present advantages—the material profit existing at the moment. It is not a very happy phrase, and it would be a great mistake to take it literally or to attach great importance to it. In his Letters to Ingersoll, p. 186, he gives expression to the same idea by saying that Smith’s school had in view “the exchange of one material good for another,” and that its concern was chiefly with “such exchanged goods rather than with productive forces.” We note that List never speaks of Ricardo, but only of Smith and Say, whose works alone he seems to have read.

[573] “In the Italian and the Hanseatic cities, in Holland and England, in France and America, we find the powers of production and consequently the wealth of individuals growing in proportion to the liberties enjoyed, to the degree of perfection of political and social institutions, while these, on the other hand, derive material and stimulus for their further improvement from the increase of the material wealth and the productive power of individuals.” (National System, p. 87.)

[574] He defines “political or national economy” as “that which, emanating from the idea and nature of the nation, teaches how a given nation, in the present state of the world and its own special national relations, can maintain and improve its economical condition.” (Ibid., p. 99.)

[575] It was the example of England that gave List the idea, but the whole conception is based upon a historical error. England possessed a navy, had founded colonies and developed her international trade long before she became a manufacturing nation. Since the time of List various categories of national development have been proposed. Hildebrand speaks of periods of natural economy, of money economy, and of credit economy (Jahrbücher für National Oekonomie, vol. ii, pp. 1-24). Bücher proposed the periods of domestic economy, of town economy, and of national economy as a substitute (Die Entstehung der Volkswirtschaft, 3rd ed., p. 108). Sombart, in his turn, has very justly criticised this classification in his book Der moderne Kapitalismus (vol. i, p. 51; Leipzig, 1902). But would that which he proposes himself be much better?

No one, we believe, has as yet remarked that List borrowed this enumeration of the different economic states, almost word for word, from Adam Smith. In chap. 5 of Book II, speaking of the various employments of capital, Smith clearly distinguished between three stages of evolution—the agricultural state, the agricultural-manufacturing, and the agricultural-manufacturing-commercial. Smith considered that this last stage was the most desirable, but in his opinion its realisation must depend upon the natural course of things.

[576] The term “normal” is one of the vaguest and most equivocal we have in political economy. It would be well if we were rid of it altogether. What controversies have not raged around the ideas of a normal wage or a normal price! One of the chief merits of the Mathematical school lies in the success with which it has effected the substitution of the idea of an equilibrium price. The idea of a normal nation is about as vague as that of a normal wage, and it is curious that our author describes as normal a whole collection of characteristics which, according to his own account, were at the moment when he wrote only realised by one nation, namely, England.

[577] P. 292. The idea of national power is, moreover, not completely lost sight of by Smith, as is proved by the following passages: “The riches and, so far as power depends upon riches, the power of every country must always be in proportion to the value of its annual produce.… But the great object of the political economy of every country is to increase the riches and power of that country.” (Wealth of Nations, Book II, chap. 5; Cannan’s edition, vol. i, p. 351.)

[578] On the question of the industrial vocation of the temperate zone and the agricultural vocation of the torrid compare National System, Book II, chap. 4.

[579] “The German nation will at once obtain what it is now in need of, namely, fisheries and naval power, maritime commerce and colonies.” (National System, p. 143.) List has no difficulty in allying his patriotic idealism with the practical side of his nature.

[580] List deliberately distinguishes between exchange values and productive forces; but the distinction is by no means a happy one. For a policy which aims at encouraging productive forces has no other way of demonstrating its superiority than by showing an increase of exchange value. The two notions are not opposed to one another, and in reckoning a nation’s wealth we must take some account of its present state as well as of its future resources. In his Letters to Ingersoll (cf. Letter IV, referred to above) he distinguishes between “natural and intellectual capital” on the one hand and “material productive capital” on the other (Adam Smith’s idea of capital). “The productive powers of the nation depend not only upon the latter, but also and chiefly upon the former.”

[581] National System, p. 117.

[582] Unjustly as we think, for on more than one occasion Smith did take account of moral forces. He dated the prosperity of English agriculture from the time when farmers were freed from their long servitude and became henceforth independent of the proprietors. He remarks that towns attain prosperity quicker than the country, because a regular government is earlier established there. “The best effect which commerce and manufactures have is the gradual introduction and establishment of order and good government, and with them the liberty and security of individuals among the inhabitants of the country. This, though it has been the least observed, is by far the most important of their effects. Mr. Hume is the only writer who so far as I know has hitherto taken notice of it.” (Book III, chap. 4; Cannan, vol i, p. 383.) Speaking of the American colonies, Smith (Cannan, vol. ii, p. 73) makes the remark that although their fertility is inferior to the Spanish, Portuguese, and the French colonies, “the political institutions of the English colonies have been more favourable to the improvement and cultivation of this land than those of any of the other three nations.” How could List have forgotten the celebrated passage in which Smith attributes the prosperity of Great Britain largely to its legal system, which guarantees to each individual the fruits of his toil and which must be reckoned among the definitive achievements of the Revolution of 1688? “That security which the laws in Great Britain give to every man that he shall enjoy the fruits of his own labour is alone sufficient to make any country flourish, notwithstanding these and twenty other absurd regulations of commerce; and this security was perfected much about the same time that the bounty was established.” (Book IV, chap. 5; Cannan, vol. ii, pp. 42-43.)

[583] National System, chap. 17, beginning.

[584] Compare chapters 7 and 15, where he treats of the manufacturing industry in its relation to each of the great economic forces of the country.

[585] Ibid., p. 87.

[586] National System, p. 150.

[587] “It may in general be assumed that where any technical industry cannot be established by means of an original protection of 40 to 60 per cent., and cannot continue to maintain itself under a continued protection of 20 to 30 per cent., the fundamental conditions of manufacturing power are lacking.” (Ibid., p. 251.)

[588] “Solely in nations of the latter kind, namely, those which possess all the necessary mental and material conditions and means for establishing a manufacturing power of their own and of thereby attaining the highest degree of civilisation and development of material prosperity and political power, but which are retarded in their progress by the competition of a foreign manufacturing Power which is already farther advanced than their own—only in such nations are commercial restrictions justified for the purpose of establishing and protecting their own manufacturing power.” (Ibid., p. 144.)

[589] Ibid., p. 240.

[590] “Everyone knows,” says he (quoted by Hirst, pp. 231 et seq.), “that the cost of production of a manufactured good depends very largely upon the quantity produced—that is, upon the operation of the law of increasing returns. This law exercises considerable influence upon the rise and fall of manufacturing power.… An English manufacturer producing for the home market has a regular sale of 10,000 yards at 6 dollars a yard.… His expenses being thus guaranteed by his sales in the home market, the cost of producing a further quantity of 10,000 yards for the foreign market will be considerably reduced and would yield him a profit even were he to sell for 3 or 4 dollars a yard. And even though he should not be making any profit just then, he can feel pretty confident about the future when he has ruined the foreign producer and driven him out of the field altogether.” List thinks that this shows how impossible it is for manufacturers in a new country without any measure of protection to compete with other countries whose industry is better established. But this is one of the arguments that has been most frequently used by British manufacturers in recent years in demanding protection against American competition. We would like to know what List would have thought of this.

[591] National System, p. 144, and the whole of chap. 16 of Book II. He considered that “it would be a further error if France, after her manufacturing power has become sufficiently strong and established, were not willing to revert gradually to a more moderate system of Protection and by permitting a limited amount of competition incite her manufacturers to emulation.” (Ibid., p. 249.)

[592] Ibid., p. 253, and especially p. 162, etc., where with a sudden change of front he declares himself in favour of Free Trade in agriculture, and employs the arguments which Free Traders had applied to all products. Compare again p. 230, where he declares that agriculture “by the very nature of things is sufficiently well protected against foreign competition.”

[593] The authors were unable to find a copy of Hamilton’s works in France, but according to Bastable (Commerce of Nations, 6th ed., London, 1912, pp. 120, 121) the principal arguments deduced by the report to prove the advantages of industry are that it permits of greater division of labour, prevents unemployment, supplies a more regular market than the foreign, and encourages immigration.

[594] It is very probable that List had read the work of another American Protectionist, Daniel Raymond, whose Thoughts on Political Economy appeared in 1820 and ran into four editions (cf. Daniel Raymond, by Charles Patrick Neill, Baltimore, 1897). This seems to be the opinion of the majority of writers who during the last few years have especially concerned themselves with the study of List’s opinions (Miss Hirst, in her Life of Friedrich List, and M. Curt Kohler in his book Problematisches zu Friedrich List, Leipzig, 1909). But to regard Raymond as his only inspirer, as is done by Rambaud in his Histoire des Doctrines, seems to us mere exaggeration. Apart from the facts that Raymond’s ideas are not particularly original and that List had lived some years in America in a Protectionist environment, List never quotes him at all. On the other hand, he frequently and enthusiastically refers to both Dupin and Chaptal in his Letters to Ingersoll. The expression “productive forces” was probably borrowed from Baron Dupin’s Situation progressive des Forces de la France (Paris, 1827), which opens with the following words: “This forms an introduction to a work entitled The Productive and Commercial Forces of France. By productive forces I mean the combined forces of men, animals, and nature applied to the work of agriculture, of industry, or of commerce.” Again, the idea of protecting infant industries is very neatly put by Chaptal. On p. xlvi of the introduction to his De l’Industrie français (published in 1819) we meet with the following words: “It does not require much reflection to be convinced of the fact that something more than mere desire is needed to overcome the natural obstacles in the way of the development of industry. Everywhere we feel that ‘infant industries’ cannot struggle against older establishments cemented by time, supported by much capital, freed from worry and carried on by a number of trained, skilled workmen, without having recourse to prohibition in order to overcome the competition of foreign industries.”

It is certain that List, during his first stay in France, had read these two authors, and had there found a confirmation of his own Protectionist ideas. It is not less certain, from a letter written by him in April 1825 (quoted by Miss Hirst, p. 33), that he was converted before going to America, but that he expected to find some new arguments there which would strengthen him in his opposition to Smith. Marx’s assertion made in his Theorien über den Mehrwerth, vol. i, p. 339 (published by Kautsky, Stuttgart, 1905), that List’s principal source of inspiration was Ferrier (Du Gouvernement considéré dans ses Rapports avec le Commerce, Paris, 1805) has not the slightest foundation. Neither has the attempt to credit Adam Müller with being the real author of the conception of a national system of political economy. List, we know, was acquainted with Müller, a Catholic writer who wished for the restoration of the feudal system. But to be a German writer in the Germany of the nineteenth century was quite enough to imbue one with the idea of nationality. Moreover, Protectionists’ arguments are extremely limited in number, so that they do not differ very much from one epoch to another, and it is a comparatively easy task to find some precursors of Friedrich List.

[595] Published in a volume entitled Outlines of a New System of Political Economy, in a Series of Letters addressed by F. List to Charles Ingersoll (Philadelphia, 1827). This publication did not find a place in the collected edition published by Häusser, but the whole of it has been incorporated in the interesting Life of Friedrich List by Margaret E. Hirst (London, 1909).

[596] This was the consideration that influenced him in adopting a Protectionist attitude, although hitherto he had regarded himself as a disciple of Smith and Say. (Letters to Ingersoll, p. 173.)

[597] National System, preface, p. 54.

[598] The Zollvereinsblatt, which was published by him towards the end of 1843.

[599] National System, p. 230. We do not by any means imply that the Germany of List’s day was in greater need of Protection than the Germany of to-day. Indeed, if we accept Chaptal’s view, we may well deny this, for, writing in 1819, he said that Saxony occupied a place in the front rank of European nations in the matter of industry. Speaking of Prussia, he declared that the industry of Aix-la-Chapelle alone was enough to establish the fame of any nation (De l’Industrie française, vol. i, p. 75). We must also recall the fact that the basis of the present prosperity of Germany was laid under a régime of much greater freedom.

[600] “Neither is it at all necessary that all branches of industry should be protected in the same degree. Only the most important branches require special protection, for the working of which much outlay of capital in building and management, much machinery and therefore much technical knowledge, skill, and experience, and many workmen are required, and whose products belong to the category of the first necessaries of life and consequently are of the greatest importance as regards their total value as well as regards national independence (as, for example, cotton, woollen, and linen manufactures, etc.). If these main branches are suitably protected and developed, all other less important branches of manufacture will rise up around them under a less degree of protection.” (National System, p. 145.)

[601] On Carey see infra, Book III.

[602] Carey, Principles of Social Science.

[603] Carey, Principles of Social Science.

[604] National System, Book II, chap. 3.

[605] Principles of Political Economy, Book V, chap. 10, § 1.

[606] “Of all the things required for the purposes of man, the one that least bears transportation, and is, yet, of all the most important, is manure. The soil can continue to produce on the condition, only, of restoring to it the elements of which its crop had been composed. That being complied with, the supply of food increases, and men are enabled to come nearer together and combine their efforts—developing their individual faculties, and thus increasing their wealth; and yet this condition of improvement, essential as it is, has been overlooked by all economists.” (Principles of Social Science, vol. i, pp. 273-274.)

[607] Principles of Political Economy, Book V, chap. 10, § 1.

[608] On this point see Jenks, Henry C. Carey als Nationalökonom, chap. 1 (Jena, 1885).

[609] Compare the long passage in the Principles, Book V, chap. 10, § 1, which begins: “The only case in which on mere principles of political economy protecting duties can be defensible is when they are imposed temporarily (especially in a young and rising nation) in hopes of naturalising a foreign industry, in itself perfectly suitable to the circumstances of the country. The superiority of one country over another in a branch of production often varies only from having begun it sooner.” Stuart Mill, however, does not refer to List, and one wonders whether the paragraph owes anything to his influence.

[610] We must make an exception of M. Cauwès, whose Protectionism, on the contrary, is a quite logical adaptation of List’s idea, viz. the superiority of nations possessing a complex economy. This is the only scientific system of Protection that we are to-day acquainted with. But it must be confessed that the majority of writers are very far removed from Cauwès’ point of view. Compare his Cours d’ Économie politique, 3rd ed., vol. iii.

[611] Such, e.g., are the economists who are always speaking of a “commercial deficit,” i.e. of an unfavourable balance of commerce. Despite the frequent refutations which have been given of it, it is still frequently quoted as an axiomatic truth. List criticised the school for its complete indifference to the balance of imports and exports. But he did not favour the Mercantilist theory of the balance of trade; on the contrary, he regarded that as definitely condemned (p. 218). He regarded the question from a special point of view, that of monetary equilibrium. When a nation, says he, imports much, but does not export a corresponding amount of goods, it may be forced to furnish payment in gold, and a drainage of gold might give rise to a financial crisis. The indifference of the school with regard to this question of the quantity of money is very much exaggerated (Book II, chap. 13). The policy of the great central banks of to-day aims at easing those tensions in the money market which appear as the result of over-importation, and in this matter they have proved themselves much superior to any system of Protection.

[612] Some writers go even farther. Patten (Economic Foundations of Protection) longs to see a national type established peculiar to each country, as the result of forcing the inhabitants to be nourished and clothed according to the natural resources of the country in which they live. We should, as a consequence of this, have an American type quite superior to any European type. “Then,” says he, “we should be able to exercise a preponderant influence upon the fate of other nations and could force them to renounce their present economic methods and adopt a more highly developed social State.” Until then no foreign goods are to enter the country. Here, as is very frequently the case, Protectionism is confounded with nationalism or imperialism.

[613] “A merely agricultural State is an infinitely less perfect institution than an agricultural-manufacturing State. The former is always more or less economically and politically dependent on those foreign nations which take from it agricultural products in exchange for manufactured goods. It cannot determine for itself how much it will produce: it must wait and see how much others will buy from it.” (National System, p. 145.)

[614] “A nation which has already attained manufacturing supremacy can only protect its own manufactures and merchants against retrogression and indolence by the free importation of means of subsistence and raw materials, and by the competition of foreign manufactured goods.” (National System, p. 153.) Hence the appeal to England in the name of this theory to abolish her tariffs, but to gracefully allow France, Germany, and the United States to continue theirs.

[615] See M. Pareto’s Economia Politica (Milan, 1906) for a demonstration that international exchange is not necessarily advantageous for both parties (chap. 9, § 45).

[616] But the line is sometimes difficult to follow. Latterly statesmen have been concerned not so much with the exportation of goods as with the migration of capital. Ought the Minister for Foreign Affairs to veto the raising of a loan in the home market on behalf of a foreign Power or an alien company? To what extent ought bankers and capitalists to accept his advice? Such are some of the questions that for some years past have been repeatedly asked in France, England, and Germany. And it seems in almost every case that political economy has had to bow before political necessity, and not vice versa.

[617] It is very remarkable that List’s greatest admirer, Dühring, in his Kritische Geschichte der Nationalökonomie und des Sozialismus (2nd ed., p. 362), insists on the fact that Protection is not an essential element, but a mere temporary form of the principle of national economic solidarity, which is List’s fundamental conception, and which must survive all forms of Protection. Dühring is the only real successor of List and Carey. He has developed their ideas with a great deal of ability and has shown himself a really scientific thinker. But what he chiefly admires in both writers is not their Protection, but their effort to lay hold of the material and moral forces which lie below the mere fact of exchange, and upon which a nation’s prosperity really depends. His Kursus der National- und Sozial-oekonomie (Berlin, 1873) is very interesting reading.

[618] Except the Saint-Simonians nobody seems to have conceived of the State’s responsibility for a nation’s productive forces. List refers to them sympathetically, especially to those who, like Michel Chevalier, “sought to discover the connection of these doctrines with those of the premier schools, and to make their ideas compatible with existing circumstances” (National System, p. 287). But List differs from them in his love of individual liberty and in the importance which he attaches to moral, political, and intellectual liberty as elements of productive efficiency.

[619] Philosophie du Progrès, Œuvres, vol. xx, p. 19: “Growth is essential to thought, and truth or reality whether in nature or in human affairs is essentially historical, at one time advancing, at another receding, evolving slowly, but always undergoing some change.” In his Contradictions économiques he defines social science as “the systematised study of society, not merely as it was in the past or will be in the future, but as it is in the present in all its manifold appearances, for only by looking at the whole of its activities can we hope to discover intelligence and order.” (Vol. i, p. 43.) “If we apply this conception to the organisation of labour we cannot agree with the economists when they say that it is already completely organised, or with the socialists when they declare that it must be organised, but simply that it is gradually organising itself; that is, that the process of organisation has gone on since time immemorial and is still going on, and that it will continue to go on. Science should always be on the look-out for the results that have already been achieved or are on the point of realisation.” (Vol. i, p. 45.)

[620] A vigorous exposition of his other ideas is given in Bouglé’s La Sociologie de Proudhon (Paris, 1911).

[621] The following are Proudhon’s principal works: 1840, Qu’est-ce que la Propriété? (studies in ethics and politics); 1846, Système des Contradictions économiques (the “philosophy of destitution”); 1848, Organisation du Crédit et de la Circulation et Solution du Problème social; 1848, Résumé de la Question sociale, Banque d’Échange; 1849, Les Confessions d’un Révolutionnaire; 1850, Intérêt et Principal (a discussion between M. Bastiat and M. Proudhon); 1858, De la Justice dans la Révolution et dans l’Église (three volumes); 1861, La Guerre et la Paix; 1865, De la Capacité politique des Classes ouvrières. Our quotations are taken from the Œuvres complètes, published in twenty-six volumes by Lacroix (1867-70).

[622] “Do you happen to know, madam, what my father was? Well, he was just an honest brewer whom you could never persuade to make money by selling above cost price. Such gains, he thought, were immoral. ‘My beer,’ he would always remark, ‘costs me so much, including my salary. I cannot sell it for more.’ What was the result? My dear father always lived in poverty and died a poor man, leaving poor children behind him.” (Letter to Madame d’Agoult, Correspondance, vol. ii, p. 239.)

[623] It has been said that Proudhon borrowed this formula from Brissot de Warville, the author of a work entitled Recherches philosophiques sur le Droit de Propriété et sur le Vol, considérés dans la Nature et dans la Société. It was first published in 1780, and reappeared with some modifications in vol. vi, pp. 261 et seq., of his Bibliothèque philosophique du Législateur (1782). But this is a mistake. Proudhon declares that the work was unknown to him (Justice, vol. i, p. 301); and, moreover, the formula is not there at all. Brissot’s point of view is entirely different from Proudhon’s. The former believes that in a state of nature the right of property is simply the outcome of want, and disappears when that want is satisfied; that man, and even animals and plants, has a right to everything that can satisfy his wants, but that the right disappears with the satisfaction of the want. Consequently theft perpetrated under the pressure of want simply means a return to nature. The rich are really the thieves, because they refuse to the culprit the lawful satisfaction of his needs. The result is a plea for a more lenient treatment of thieves. But Brissot is very careful not to attack civil property, which is indispensable for the growth of wealth and the expansion of commerce, although it has no foundation in a natural right (p. 333). There is no mention of unearned income. Proudhon, on the other hand, never even discusses the question as to whether property is based upon want or not. He would certainly have referred to this if he had read Brissot.

[624] Contradictions, vol. i, pp. 219, 221.

[625] Résumé de la Question sociale, p. 29. We meet with the same idea in other passages. “Property under the influence of division of labour has become a mere link in the chain of circulation, and the proprietor himself a kind of toll-gatherer who demands a toll from every commodity that passes his way. Property is the real thief.” (Banque d’Échange, p. 166.) We must also remember that Proudhon did not consider that taking interest was always illegal. In the controversy with Bastiat he admits that it was necessary in the past, but that he has found a way of getting rid of it altogether.

[626] We must distinguish between this and Marx’s doctrine. Marx believed that all value is the product of labour. Proudhon refuses to admit this. He thinks that value should in some way correspond to the quantity of labour, but that this is not the case in present-day society. Marx was quite aware of the fact that Proudhon did not share his views (see Misère de la Philosophie). Proudhon follows Rodbertus, who taught that the products only and not their values are provided by labour.

[627] Propriété, 1er Mémoire, pp. 131-132. It is true that Proudhon adds that without land and capital labour would be unproductive. But he soon forgets his qualifications when he proceeds to draw conclusions, especially when he comes to give an exposition of the Exchange Bank, where we meet with the following sentence: “Society is built up as follows: All the raw material required is gratuitously supplied by nature, so that in the economic world every product is really begot of labour, and capital must be considered unproductive.” Elsewhere he writes: “To work is not necessarily to produce anything.” (Solution du Problème social, Œuvres, vol. vi, pp. 361 et seq., and p. 187.)

[628] Propriété, 1er Mémoire, p. 133.

[629] L. von Stein, Geschichte der sozialen Bewegung in Frankreich, vol. iii, p. 362 (Leipzig, 1850). A remarkable piece of work altogether.

[630] It is true that Proudhon’s attack is entirely directed against the ethics of private property. He shows how every justification that is usually offered, such as right of occupation, natural right, or labour, cannot justify the institution as it is to-day. Private property as we know it is confined to the few, whereas on these principles it ought to be widely diffused. Criticism of this kind is not very difficult, perhaps, but it does nothing to weaken the arguments of those who would justify property on the grounds of social utility. The criticism of the Saint-Simonians, who approach it from the point of view of utility and productiveness rather than from the ethical standpoint, seems to be much more profound. This is why we have regarded them as the critics of private property.

[631] “This is the fundamental idea of my first Mémoire.” (Quoted by Sainte-Beuve, P. J. Proudhon, p. 90.) Later on he complains that the suggestion was never even discussed.

[632] Propriété, 1er Mémoire, p. 94.

[633] Ibid., p. 91.

[634] Blanqui’s letter dated May 1, 1841, in reply to a communication from Proudhon concerning the second Mémoire on property.

[635] Cf. Sainte-Beuve, P. J. Proudhon, pp. 202, 203; and see on this point Proudhon’s amusing letters to Guillaumin (Correspondance, vol. ii).

[636] Propriété, 1er Mémoire, p. 203.

[637] An article in Le Peuple, in 1848. Proudhon’s attacks are more especially directed against Fourier. Fourier’s was at this time the only socialist school that had any influence, and this was largely due to the active propaganda of Victor Considérant. See Contradictions, vol. ii, p. 297, and Propriété, 1er Mémoire, pp. 153 et seq.

[638] Contradictions, vol. ii, p. 285. For the attack on Cabet, Louis Blanc, and the communists see the whole of chap. 12 of the Contradictions. Louis Blanc “has poisoned the working classes with his ridiculous formulæ” (Idée générale de la Révolution, p. 108). Louis Blanc himself is summed up as follows: “He seriously thought that he was the bee of the Revolution, but he turned out to be only a grasshopper.” (Ibid.)

[639] “I believe that I am the first person possessed of a full knowledge of the phenomena in question who has dared to uphold the doctrine that instead of restraining economic forces whose strength has been so much exaggerated we ought to try to balance them against one another in accordance with the little known and less perfectly understood principle that contraries, far from being mutually destructive, support one another just because of their contrary nature.” (Justice, vol. i, pp. 265-266.) The same idea also finds expression on pp. 302-303. Elsewhere he remarks that what society is in search of is a way of balancing the natural forces that are contained within itself (Révolution démontrée par le Coup d’État, p. 43).

[640] “Division of labour, collective force, competition, exchange, credit, property, and even liberty—these are the true economic forces, the raw materials of all wealth, which, without actually making men the slaves of one another, give entire freedom to the producer, ease his toil, arouse his enthusiasm, and double his produce by creating a real solidarity which is not based upon personal considerations, but which binds men together with ties stronger than any which sympathetic combination or voluntary contract can supply.” (Idée générale de la Révolution au XIXe Siècle, p. 95.) The economic forces are somewhat differently enumerated in chap. 13 of La Capacité des Classes ouvrières. Association and mutuality are mentioned; but while recognising the prestige of the word “association,” especially among working men, Proudhon concludes that the only real association is mutuality—not in the sense of a mutual aid society, which he thinks is altogether too narrow.

[641] It is true that Fourier was not a communist. Proudhon shows that on the one hand his Phalanstère would abolish interest, while it would give a special remuneration to talent on the other, simply because “talent is a product of society rather than a gift of nature.” (Propriété, 1er Mémoire, p. 156.)

[642] Proudhon’s opposition to the principle of association is very remarkable. He refers to it more than once, but especially in the Idée générale de la Révolution. “Can association be regarded as an economic force? For my own part I distinctly say, No. By itself it is sterile, even if it does not check production, because of the limits it puts upon the liberty of the worker.” (P. 89.) “Association means that everyone is responsible for someone else, and the least counts as much as the greatest, the youngest as the oldest. It gets rid of inequality, with the result that there is general awkwardness and incapacity.” (Ibid.)

[643] La Révolution démontrée par le Coup d’État, pp. 53, 54. Elsewhere: “When you speak of organising labour it seems as if you would put out the eyes of liberty.” (Organisation du Crédit et de l’Échange, Œuvres, vol. vi, p. 91.)

[644] Programme révolutionnaire. To the electors of the Seine, in the Représentant du Peuple. (Œuvres, vol. xvii, pp. 45, 46.)

[645] “I should like everybody to have some property. We are anxious that they should have property in order to avoid paying interest, because exorbitant interest is the one obstacle to the universal use of property.” (Le Peuple, September 2, 1849.)

[646] Propriété, 1er Mémoire, p. 204.

[647] Contradictions, vol. ii, p. 203.

[648] Organisation du Credit et de la Circulation, p. 131. Elsewhere: “To adopt Hegelian phraseology, the community is the first term in social development—the thesis; property the contradictory term—the antithesis. The third term—the synthesis—must be found before the solution can be considered complete.” (Propriété, 1er Mémoire, p. 202.) That term will be possession pure and simple—the right of property with no claim to unearned income. “Get rid of property, but retain the right of possession, and this very simple change of principle will result in an alteration of the laws, the method of government, and the character of a nation’s economic institutions. Evil of every kind will be entirely swept away.” Proudhon employed Hegelian terminology as early as 1840, four years before Karl Grün’s visit to Paris. For Proudhon’s relation to Grün see Sainte-Beuve’s P. J. Proudhon.

[649] Justice dans la Révolution, vol. i, pp. 182-183.

[650] Ibid., p. 269. “It is easy to show how the principle of mutual respect is logically convertible with the principle of reciprocal service. If men are equal in the eyes of justice they must also have a common necessity, and whoever would place his brothers in a position of inferiority, against which it is the chief duty of society to fight, is not acting justly.”

[651] This idea of mutual service is further developed, especially in Organisation du Crédit et de la Circulation (Œuvres, vol. vi, pp. 92-93), and in Idée générale, p. 97.

[652] That is how the problem is put in the preface to the first Mémoire.

[653] Contradictions, vol. ii, p. 414.

[654] Le Droit au Travail et le Droit de Propriété, pp. 4, 5, 58 (1848).

[655] Every historian is agreed on this point, which Louis Blanc has dealt with at great length in his Histoire de la Révolution de 1848 (chap. 11). The testimony of contemporaries, especially Lamartine in his Histoire de la Révolution de 1848 (vol. ii, p. 120), is also very significant. “These national workshops were placed under the direction of men who belonged to the anti-socialist party, whose one aim was to spoil the experiment, but who managed to keep the sectaries of the Luxembourg and the rebels of the clubs apart until the meeting of the National Assembly. Paris was disgusted with the quantity and the character of the work accomplished, but it little thought that these men had on more than one occasion defended and protected the city. Far from being in the pay of Louis Blanc, as some people seem to think, they were entirely at the beck and call of his opponents.” É. Thomas in his Histoire des Ateliers nationaux (pp. 146-147) relates how Marie sent for him on May 23 and secretly asked him whether the men in the workshops could be relied upon. “Try to get them strongly attached to you. Spare no expense. If there is any need we shall give you plenty of money.” Upon Thomas asking what was the purpose of all this, Marie replied: “It is all in the interest of public safety. Make sure of the men. The day is not far distant when we shall need them in the streets.”

[656] These addresses were afterwards published in a volume entitled Le Droit au Travail.

[657] Louis Blanc, Histoire de la Révolution de 1848, vol. ii, p. 135.

[658] See the addresses in his La Révolution de Février au Luxembourg (Paris, 1849).

[659] Moniteur, April 27, May 2, 3, and 6, 1848. The dismissal of the commission meant an interruption of the Exposé général, but Vidal in his work Vivre en travaillant! Projets, Voires, et Moyens de Réformes sociales (1848) continued the exposition. It contains a plan for agricultural credit, a State land purchase scheme in order to get rid of rent, a proposal for buying up railways and mines and for erecting cheap dwellings. It affords an interesting example of State Socialism in 1848 which seems to have struck many people then as being very amusing.

[660] Cf. supra, p. 297, note 3.

[661] Cf. supra, “The Associative Socialists.”

[662] “I need hardly say that this measure of fiscal reform [namely, the abolition of private property] must be carried out without any violence or robbery. There must be no spoliation, but ample compensation must be given.” (Résumé de la Question sociale, p. 27.)

[663] Solution du Problème social (Œuvres, vol. vi, p. 32).

[664] Œuvres, vol. xviii, pp. 6-7. See also the letter dated February 25, 1848 (Correspondance, vol. ii, p. 280): “France will certainly accomplish it, whether it remains a republic or not. It might even be carried out by the present decadent Government, at a trifling cost.” This thought did not prevent his taking a hand in the Revolution.

[665] In a pamphlet entitled Organisation du Crédit et de la Circulation, and dated March 31, 1848, he expounds the principle of the scheme and indicates some of its general features. The scheme is dealt with in a number of articles contributed to Le Représentant du Peuple for April, afterwards published in book form by Darimon, under the title of Résumé de la Question sociale. The plan differs slightly from the statutes of the People’s Bank as they appear in vol. vi of the Œuvres, but the guiding principle is much the same. A further exposition was given in Le Peuple in February and March 1849, just when the Bank was being founded. There is still another account contained in the volume entitled Intérêt et Principal: Discussion entre M. Proudhon and M. Bastiat sur l’Intérêt du Capitaux (Paris, 1880). This controversy was carried on in the columns of La Voix du Peuple from October 1849 to October 1850. Proudhon frequently refers to the same idea in his other works, notably in Justice dans la Révolution, vol. i, pp. 289 et seq., and in Idée générale, pp. 197 et seq.

[666] See Solution du Problème social, pp. 178, 179.

[667] Intérêt et Principal, p. 112.

[668] “Money is simply a supplementary kind of capital, a medium of exchange or a credit instrument. If this is the case what claim has it to payment? To think of remunerating money for the service which it gives!” (Ibid., p. 113.)

[669] Cf. Résumé de la Question sociale, p. 39.

[670] Moreover, the advances will take the form of discount. The entrepreneur who has some scheme which he wishes to carry out “will in the first place collect orders, and on the strength of those orders get hold of some producer or dealer who has such raw material or services at his disposal. Having obtained the goods, he pays for them by means of promissory notes, which the bank, after taking due precaution, will convert into circulation notes.” The consumer is really a sleeping partner in the business, and between him and the entrepreneur there is no need for the intervention of money at all. (Organisation du Crédit, Œuvres, vol. vi, p. 123.) Discount was the fundamental characteristic of the bank, and no criticism is directed against this feature of its operations.

[671] “How to resolve the bourgeoisie and the proletariat into the middle class, the class which lives upon its income and that which draws a salary into a class which has neither revenue nor wages, but lives by inventing and producing valuable commodities to exchange them for others. The middle class is the most active class in society, and is truly representative of a country’s activity. This was the problem in February 1848.” (Révolution démontrée par le Coup d’État, p. 135.)

[672] “Reciprocity means a guarantee on the part of those who exchange commodities to sell at cost price.” (Idée générale de la Révolution, pp. 97-98.)

[673] “The very existence of the State implies antagonism or war as the essential or inevitable condition of humanity, a condition that calls for the intervention of a coercive force which shall put an end to the struggle continually waging between the weak and the strong.” (Voix du Peuple, December 3, 1849; Œuvres, vol. xix, p. 23.) “When economic development has resulted in the transformation of society even despite itself, then the weak and the strong will alike disappear. There will only be workers; and industrial solidarity, and a guarantee that their products will be sold, will tend to make them equal both in capacity and wealth.” (Ibid., p. 18.)

[674] “Consequently we consider ourselves anarchists and we have proclaimed the fact more than once. Anarchy is suitable for an adult society just as hierarchy is for a primitive one. Human society has progressed gradually from hierarchy to anarchy.” (Œuvres, vol. xix, p. 9.) A little later, in Idée générale de la Révolution, he states that the aim of the Revolution was “to build up a property constitution and to dissolve or otherwise cause the disappearance of the political or government system by reducing or simplifying, by decentralising and suppressing the whole machinery of the State.” This idea was borrowed from Saint-Simon, and Proudhon has acknowledged the debt in his Idée générale. This conception of industrial society rendering government useless or reducing it to harmless proportions is a development, though perhaps somewhat extravagant, of the economic Liberalism of J. B. Say. The first edition of the Mémoire sur la Propriété contains an admission of anarchical tendencies. “What are you, then? I am an anarchist.—I understand your doubts on this question. You think that I am against the Government.—That is not so. You asked for my confession of faith. Having duly pondered over it, and although a lover of order, I have come to the conclusion that I am in the fullest sense of the word an anarchist.”

[675] “The whole problem of circulation is how to make the exchange note universally acceptable, how to secure that it shall always be exchangeable for goods and services and convertible at sight.” (Organisation du Crédit, Œuvres, vol. vi, pp. 113, 114.)

[676] Organisation du Crédit.

[677] Proudhon always maintained that his reform merely consisted in transforming a credit sale into a cash one. But he might as well have said that black was white. Far from giving mutual benefit, the borrower will be the one who will gain most advantage. Elsewhere he says that to give credit is merely to exchange. This is true enough, but discount is employed just to equalise different credit transactions.

[678] In the Idée générale de la Révolution au XIXe Siècle, p. 198: “The citizens of France have a right to demand and if need be to join together for the establishment of bakehouses, butchers’ shops, etc., which will sell them bread and meat and other articles of consumption of good quality at a reasonable price, taking the place of the present chaotic method, where short weight, poor quality, and an exorbitant price seem to be the order. For a similar reason they have the right to establish a bank, with the amount of capital which they think fit, in order to get the cash which they need for their transactions as cheaply as possible.”

[679] “Association avoids the waste of the retail system. M. Rossi recommends it to those small householders who cannot afford to buy wholesale. But this kind of association is wrong in principle. Give the producer, by helping him to exchange his products, an opportunity of supplying them with provisions at wholesale prices, or, what comes to the same thing, organise the retail trade so as to leave only just the same advantage as in the case of the wholesale transaction, and ‘association’ will be unnecessary.” (Idée générale de la Révolution, p. 92.)

[680] This system was criticised by Marx in his Misère de la Philosophie, published in 1847 (Giard and Brière’s edition, 1896, pp. 92 et seq.). A more recent and more complete exposition is given in Foxwell’s introduction to Anton Menger’s The Right to the Whole Produce of Labour, pp. lxv, etc.

[681] Mazel gave an exposition of his scheme in a series of pamphlets written in very bombastic language, but only of very slight interest to the economist. Another bank known as Bonnard’s Bank was established at Marseilles in 1838, and afterwards at Paris. The ideas are somewhat similar, but much more practical. Both branches are still in active operation. Proudhon refers to this bank in his Capacité politique des Classes ouvrières. Courcelle-Seneuil gives a very eulogistic account of it in his Traité des Banques, and in an article in the Journal des Économistes for April 1853. The modus operandi is explained in three brochures, which may be seen in the Bibliothèque Nationale. One of these is entitled Liste des Articles disponibles à la Banque; the other two describe the mechanism of the bank. Darimon, one of Proudhon’s disciples, in his work De la Réforme des Banques (Paris, Guillaumin, 1856), gives an account of a large number of similar institutions which were founded during this period. Several systems of the kind have also been discussed by M. Aucuy in his Systèmes socialistes d’Échange (Paris, 1907). But we cannot accept his interpretation of various points.

Bonnard’s Bank differs from the others in this way. The client of the bank, instead of bringing it some commodity or other which may or may not be sold by the bank, gets from the bank some commodity which he himself requires, promising to supply the bank with a commodity of his own production whenever the bank requires it. The bank charges a commission on every transaction. Its one aim is to bring buyer and seller together, and the notes are simply bills, payable according to the conditions written on them. But they cannot be regarded as substitutes for bank bills. Cf. Banque d’Échange de Marseille, C. Bonnard et Cie., fondée par Acte du 10 Janvier, 1849 (Marseilles, 1849).

[682] “I repudiate Mazel’s system root and branch,” he declares in an article contributed to Le Peuple of December 1848 (Œuvres, vol. xvii, p. 221). He also adds that when he wrote first he had no acquaintance of any kind with Mazel. “It was M. Mazel who on his own initiative revealed his scheme to me and gave me the idea.” In one of his projects, published on May 10, 1848, Proudhon seems inclined to adopt this idea, just for a moment at any rate. Article 17 seems to hint at this. “The notes will always be exchangeable at the bank and at the offices of members, but only against goods and services, and in the same way commodities and services can always be exchanged for notes.” (Résumé de la Question sociale, p. 41.) This article justifies the interpretation which Courcelle-Seneuil puts on it, in his Traité des Operations de Banque (9th ed., 1899, p. 470), and which Ott accepts in his Traité d’Économie sociale (1851), which, moreover, contains a profound analysis and some subtle criticism of Proudhon’s idea. But we think that this article was simply an oversight on Proudhon’s part; for beyond a formal refutation of Mazel’s idea there is no reference to it in any of his other works, not even in the scheme of the People’s Bank. Moreover, it seems to contradict the statement that the notes would be issued against commodities which had been actually sold and delivered, as well as other articles of the scheme—e.g. Article 30, dealing with buying and selling. It also conflicts with the idea that the discounting of goods is the prime and essential operation of the bank. In our opinion, Diehl in his book on Proudhon (P. J. Proudhon, Seine Lehre u. seine Leben, vol. ii, p. 183) is wrong in thinking that the Exchange Bank would issue notes against all kinds of goods without taking the trouble to discover whether they had been sold or not.

[683] Annales de l’Institut Solvay, vol. i, p. 19.

[684] Ibid., p. 25.

[685] Cf. Principes d’Orientation sociale, a résumé of Solvay’s studies in productivism and accounting (Brussels, 1904).

[686] Although Solvay’s scheme seems very different from Proudhon’s, it possesses features that received the highest commendation from the Luxembourg Commission. In L’Exposé général de la Commission de Gouvernement pour les Travailleurs, which appeared in Le Moniteur of May 6, 1848, we read: “When in the future association has become complete, there will be no need for notes even. Every transaction will be carried on by balancing the accounts. Book-keepers will take the place of collecting clerks. Money, both paper and metallic, is largely superfluous even in present-day society.” The author then proceeds to outline a scheme of clearing-houses.

[687] A hit at Proudhon’s Philosophie de la Misère, which was the sub-title of his Contradictions économiques.

[688] In a letter written to Karl Marx on May 17, 1846 (Correspondance, vol. ii, p. 199), à propos the expression “at the moment of striking,” which Marx had employed, Proudhon takes the opportunity of declaring that he is opposed to all kinds of revolution. “You are perhaps still of opinion that no reform is possible without some kind of struggle or revolution, as it used to be called, but which is nothing more or less than a shock to society. That opinion I shared for a long time. I was always willing to discuss it, to explain it, and to defend it. But in my later studies I have completely changed my opinion. I think that it is not in the least necessary, and that consequently we ought not to consider revolution as a means of social reform. Revolution means an appeal to force, which is clearly in contradiction to every project of reform. I prefer to put the question in a different fashion, namely, How can we arrange the economic activities of society in such a fashion that the wealth which is at present lost to society may be retained for its use?” And in the Confessions d’un Révolutionnaire, p. 61: “A revolution is an explosion of organic forces, an evolution spreading from the heart of society through all its members. It can only be justified if it be spontaneous, peaceful, and gradual. It would be as tyrannous to try to suppress it as to bring it about through violence.” See M. Bourguin’s article on Proudhon and Karl Marx in the Revue d’Économie politique, 1893.

[689] On this point see Puech, Proudhon et l’Internationale (Paris, 1907); preface by M. Andler.

[690] This fact is recognised even by German socialists themselves. “The people who gave socialism to the world even in its earlier forms have immortalised themselves,” says Karl Grün, when speaking of France just about the time that our chapter refers to. (Quoted by Puech, loc. cit., p. 57.)

[691] “So many things have we attempted! How is it that liberty, the easiest of all, has never been given a trial?” (Bastiat, Harmonies, chap. 4, p. 125.)

[692] One of the sections of Dunoyer’s La Liberté du Travail is entitled: “Of the True Means of remedying the Evils from which the Workers suffer, by extending the Sphere of Competition.” (Book IV, chap. 10, § 18.)

“As a matter of fact,” says Dunoyer elsewhere, “this competition which seems such an element of discord is really the one solid bond which links together all the various sections of the social body.”

[693] “Whenever the State undertakes to supply the wants of the individual, the individual himself loses his right of free choice and becomes less progressive and less human; and by and by all his fellow citizens are infected with a similar moral indifference.” (Bastiat, Harmonies, chap. 17, p. 545.)

[694] Dunoyer says: “You may search the literature of association as much as you like, but you will never come across a single intelligent discussion of an equitable means of distribution.” (Liberté du Travail, vol. ii, p. 397.) Further, he asserts that association has damaged social even more than individual morality, because nothing will be considered lawful unless done by society as a whole. It is true that in this case he was speaking chiefly of corporative association, but the condemnation has a wider import.

[695] On the occasion of the international gathering of economists at the Paris Exposition in July 1900, Levasseur, one of the most moderate members of the Liberal school, said: “There is no need to draw any distinction between us. Liberal economists ought not to be divided in this way. There may be different opinions on the question of applying our principles, but we are all united on this question of liberty. A man becomes wealthy, successful, or powerful all the sooner if he is free. The more liberty we have, the greater the stimulus to labour and thought and to the production of wealth.” (Journal des Économistes, August 15, 1900.)

[696] “It is a good thing to have a number of inferior places in society to which families that conduct themselves badly are liable to fall, and from which they can rise only by dint of good behaviour. Want is just such a hell.” (Dunoyer, La Liberté du Travail, p. 409.)

[697] See the discussion of the political doctrine of the Physiocrats, pp. 33 et seq.

[698] Editions of the same work appeared between 1825 and 1830; but the volume was much smaller and had a different title. Dunoyer will again engage our attention towards the end of this chapter. Cf. Villey, L’Œuvre économique de Dunoyer (Paris, 1899).

[699] Henry Charles Carey was born at Philadelphia in 1793, and died in 1879. Up to the age of forty-two he followed the profession of a publisher, retiring in 1835 to devote himself to economic studies. The three volumes of his Principles of Political Economy were issued in 1837, 1838, and 1840 respectively. In 1848 appeared The Past, the Present, and the Future, which contains his theory of rent. In 1850 his Harmony of Interests, Agricultural, Manufacturing, and Commercial, was published, and in 1858-59 his Principles of Social Science.

These dates possess some importance. At the time of the publication of the Harmonies in 1850 Carey wrote a letter to the Journal des Économistes accusing Bastiat of plagiarism. Bastiat, who was already on the point of death, wrote to the same paper to defend himself. He admitted that he had read Carey’s first book, and excuses himself for not making any reference to it on the ground that Carey had said so many uncomplimentary things about the French that he hesitated to recommend his work. Several foreign economists have since made the assertion that Bastiat merely copied Carey, but this is a gross exaggeration. Coincidence is a common feature in literary and scientific history. We have quite a recent instance in the simultaneous appearance of the utility theory in England and France.

[700] Frédéric Bastiat, born in 1801 near Bayonne, belonged to a family of fairly wealthy merchants, and he himself became in turn a merchant, a farmer in the Landes district, a justice of the peace, a councillor, and finally a deputy in the Constituent Assembly of 1848. He made little impression in the Assembly; but he scarcely had time to become known there before his health gave way. He died at Rome in 1850, at the age of forty-nine.

Brief as was Bastiat’s life, his literary career was shorter still. It lasted just six years. His first article appeared in the Journal des Économistes in 1844. His one book, appropriately called Les Harmonies économiques, written in 1849, remains a fragment. In the meantime he published his Petits Pamphlets and his Sophismes, which were aimed at Protection and socialism. He was very anxious to organise a French Free Trade League on the lines of that which won such triumphs in England under the guidance of Cobden, but he did not succeed.

His life was that of the publicist rather than the scholar. He was not a bookworm, although he had read Say before he was nineteen, and Franklin’s Poor Richard’s Almanac soon afterwards. He was very enthusiastic about the merits of Franklin’s works, and Franklin’s influence upon his writings, even upon his personal appearance and behaviour, is very marked. “With his long hair, his small cap, his long frock-coat, and his large umbrella, he seemed for all the world like a rustic on a visit to town.” (Molinari in the Journal des Économistes, February 1851.)

These biographical details should not be lost sight of, especially by those who accuse him of lacking scientific culture and of being more of a journalist than an economist.

Despite the fact that he has been severely judged by foreign economists, he is still very popular in France. His wit is a little coarse, his irony somewhat blunt, and his discourses are perhaps too superficial, but his moderation, his good sense, and his lucidity leave an indelible impression on the mind. And we are by no means certain that the Harmonies and the Pamphlets are not still the best books that a young student of political economy can possibly read. Moreover, we shall find by and by that the purely scientific part of his work is by no means negligible.

[701] On this question of who benefits by international trade see our discussion of Mill’s treatment of the problem (pp. 364-365).

[702] Harmonies, p. 21. Our quotations are taken from the tenth edition of the Œuvres complètes.

[703] “Economic phenomena are not without their efficient cause and their Providential aim.” (Harmonies, last page.)

“Looking at this harmony, the economist can join with the astronomer and the physiologist and say: Digitus Dei est hic.” (Ibid., chap. 10, p. 39.)

“If everyone would only look after his own affairs, God would look after everybody’s.” (Ibid., chap. 8, p. 290.)

[704] Auguste Comte, Cours de Philosophie positive, vol. iv, p. 202.

[705] The liturgy of the Reformed Church reads as follows: “We acknowledge and confess our manifold sins.” See our chapter on Doctrines that owe their Inspiration to Christianity.

[706] Harmonies, chap. 5, p. 140.

[707] “I have attempted to show that value is based not so much upon the amount of labour which a thing has cost the person who made it, as upon the amount of labour it saves the persons who obtain it. [He ought to have acknowledged his indebtedness to Carey in this matter.] Hence I have adopted the term ‘service,’ which implies both ideas.” (Ibid., chap. 9, p. 341.)

[708] Ibid., chap. 5, p. 145.

[709] Harmonies, chap. 5, p. 193.

“Socialists and economists, champions of equality and fraternity, I challenge you, however numerous you may be, to raise even a shadow of objection to the legitimacy of mutual service voluntarily rendered, and consequently against the institution of private property as I have defined it. With regard to both these considerations, men can only possess values, and values merely represent equal services freely secured and freely given.” (Ibid., chap. 8, pp. 265, 268.)

Had the limits of this work permitted us to speak of the Italian economists we should have had to refer to Ferrara, professor at Turin from 1849 to 1858, whose theory of value and economic harmony link him to his contemporaries Carey and Bastiat. The whole economic edifice, according to Ferrara, was built upon cost of production. The value of a commodity is not measured by the amount of labour which it really has cost to produce, but by the amount of labour that would be required to produce another similar commodity, or, if the commodity in question be absolutely limited in quantity, such as is the case with an old work of art, by the labour necessary to produce a new one that would satisfy the same need equally well—an application of the principle of substitution which had not been formulated when Ferrara wrote. The progress of industry gradually reduces the cost of labour and dispenses with human effort; hence harmony.

Everything, including the earth and its products, even capital, are subject to this same law, and a gradual diminution of rent and a lowering of the rate of interest are thus assured.

Ferrara’s principal writings consist of prefaces to Italian translations of the works of the chief economists. They were published in a collection known as Biblioteca dell’ Economista (Turin, 1850-70, 26 vols.).

[710] Harmonies, chap. 7, p. 236. The controversy between Bastiat and Proudhon in 1849 concerning the legitimacy of interest was published under the title of Gratuité du Crédit, but the argument is scarcely worth examining here. Bastiat’s argument is based upon the supposition that the person who lends money performs some service or other, and that the service, whenever given, should be paid for; in other words, he maintains that capital is productive. A plane means more planks produced, and it is only just that the owner of the plane should get some of them. Proudhon replies that he does not deny the legitimacy of interest under present conditions, but that interest itself is just a historical category—to use a phrase that only became current after Proudhon’s time—and that it will be quite unnecessary under the new régime. The Exchange Bank was to be the parent of the new order. The two combatants never really come to blows. They keep on arguing about nothing. The result is that this discussion is very trying and brings little honour to either.

[711] “The relative importance of any service must vary with the circumstances. This will depend upon its utility, and the number of people who are willing to give the amount of labour, of ability or training necessary to produce it, as well as the amount of labour which it will save us.” (Harmonies, chap. 5, p. 146.)

[712] Bastiat himself was obliged to recognise this. “I have not taken the trouble to ask whether all these services are real and proper or whether men are not sometimes paid for services which they never give. The world is full of such injustices.” (Ibid., chap. 5, p. 157.)

But if the world is full of people who are paid for services which they have never given or for merely imaginary and improper work, what is the use of speaking of value and property as if they were founded upon service rendered?

See Gide’s article on La Notion de la Valeur dans Bastiat, in the Revue d’Économie politique, 1887.

[713] J. B. Say had already employed the term “service” without giving it any normative significance, simply using it to distinguish between wealth which consists of acts and wealth which consists of material products.

[714] Social Possibilities of Economic Chivalry, in Economic Journal, March 1907.

[715] “And I also declare that you have not intercepted any of the gifts of God. It is true that you received them free out of nature’s hand. But it is equally true that you have handed them on freely, reserving nothing for yourself. Fear not, but live in peace and freedom from every qualm.” (Harmonies, chap. 8, p. 257.)

“Coal is free for everyone. There is neither paradox nor exaggeration in that. It is as free as the water of the brook, if we only take the trouble to get it, or pay others for getting it for us.” (Ibid., chap. 10.) Bastiat would not regard the shareholders’ dividends as payments for the trouble which the shareholders have taken in getting the coal. The dividends simply pay for the trouble taken to save the money which made the exploitation possible.

Say spoke of free natural agents. What he meant to refer to was such natural commodities as air and water, which are at the disposal of everyone.

[716] Harmonies, chap. 8, p. 256.

[717] Ibid., chap. 5, p. 142.

[718] Bastiat does not seem to have studied rent. The chapter of the Harmonies on this subject was never completed. Fontenay, one of his disciples, wrote a brilliant book called Du Revenu foncier (1854), which is almost forgotten to-day. He attempted to show:

(1) That Ricardian or differential rent would not exist were all the land equally fertile and suitably cultivated.

(2) That it is incorrect to speak of the rent of natural fertility, as Adam Smith and the Physiocrats did, if all utility (and not merely value) is the product of human labour. A fish, a grape, a grain of wheat, a fat ox, all of them have been created by human industry. Nature is for ever incapable of doing this. This is quite true if we say nature alone, but it is equally true of labour taken by itself.

[719] Carey, Principles of Social Science.

[720] Even in Algeria, for example, where Carey’s theory was at first true, now that the fertile plain of the Mitidja has been cultivated by two generations of colonists it is certain that there is only second-class land available.

[721] “Wealth consists of the right to command the services of nature, which are always free.” (Carey, Principles of Social Science, vol. i, chap. 13.)

“As man’s power over nature grows, his power over his fellow-men seems to dwindle and equality becomes possible.” (Ibid., vol. iii, p. 122.)

Compare, for example, the relative equality of comfort enjoyed by those who travel by rail irrespective of class distinctions (which are only to be found in some countries) with the former method of travelling by post-chaise.

[722] “Capitalists and workers, don’t look at one another with an air of defiance and vengeance.” (Harmonies, p. 252.)

[723] A lowering of the rate of interest from 5 to 3 per cent. means that what formerly cost £60 and yielded 3 per cent. will now cost £100. There is no decrease of the revenue and there is an increase in the capital. It is quite a good bargain. A lowering of the rate of interest will simply reduce the amount of capital in those instances where the borrower can effect a conversion to his own advantage.

[724] This truth is so obvious that Rodbertus, as we shall see by and by, took the opposite point of view and attempted to argue on the strength of the “iron law” that capital’s share is always increasing, while labour’s is decreasing. This thesis seems to have no better foundation than the other. See an article by Rist entitled Deux Sophismes économiques, in the Revue d’Économie politique for March 1905.

Bastiat’s thesis may also be seen in Carey. The Liberal school has clearly adopted it. See Paul Leroy-Beaulieu’s Répartition der Richesses.

[725] See Gide’s Political Economy, p. 599 (English translation), and Colson’s Political Economy, vol. iii, p. 366. According to Colson, capital’s share has quadrupled since 1820, while labour’s has only increased in the proportion of 1:3½.

[726] “Just as the earth is the great reservoir of electricity, so the public or the consumer is the one source of any gain or loss which the producer makes or suffers. Everything comes back to the consumer. Consequently every important question must be studied from the consumer’s point of view if we want to get hold of its general and permanent results.” (Harmonies, chap. 11, p. 414.)

[727] See one of Bastiat’s best known pamphlets, La Vitre cassée.

[728] Harmonies, chap. 6, p. 419.

[729] Quoted by his friend Paillottet in his preface to the Œuvres complètes.

[730] E.g. Yves Guyot in the Journal des Économistes for 1904 et passim. See p. 326.

[731] The word is not his invention. That honour is claimed by Pierre Leroux. See p. 235.

[732] Harmonies, chap. 21, p. 624.

“There is not a man living whose character has not been determined by a thousand factors entirely beyond his control.” (Ibid., p. 623.)

“All profit by the progress of the one, and the one by the progress of the many.” (Ibid., chap. 11, p. 411.)

[733] “Solidarity implies a kind of collective responsibility. And so solidarity as well as responsibility is a force that makes for progress. It is a system that is admirably calculated to check evil and to advance the good.” (Ibid., chap. 21, pp. 622-626.)

[734] “Workers must understand that these collective funds [pension funds] must be voluntarily contributed by those who are to have a share in them. It would be quite unjust, as well as anti-social, to raise them by means of taxation—that is, by force—from the classes who have no share in the benefits.” (Harmonies, chap. 14, p. 471.)

“A peasant marries late in the hope of having a small family, and we force him to rear other people’s children. He has to contribute towards the rearing of bastards.” (Ibid., chap. 20, pp. 617, 618.)

Speaking of sharing in the benefits, he remarks: “That is really not worth talking about.” (Ibid., chap. 14, p. 457.)

[735] “Organisms in nature have their rank and degree of perfection determined by the number of organs which they possess and the amount of difference which exists between each of them.” (Social Science, vol. iii, p. 461.)

“Life has been defined as an exchange of mutual obligations, but if there were no difference between the various objects how could the exchange take place?” (Ibid., vol. i, pp. 54-55.)

“The more perfectly co-ordinated the whole is, the better developed will be each of its parts.” (Ibid., vol. iii, p. 462.)

[736] Charles Dunoyer was Bastiat’s senior. The first edition of De la Liberté du Travail, to which we have already referred, dates from 1825, and the last edition from 1845. He took an active part in opposing the Restoration Government, but he became prefect and subsequently Conseiller d’État under Louis Philippe.

[737] Molinari, a modern French economist, holds similar views.

[738] If a person died intestate he was in favour of equal division of wealth. The arguments which he employed are very interesting, especially those directed against the upholders of primogeniture. They thought that by depriving the younger sons of their inheritance they became more industrious and thoughtful. Dunoyer replies by asking whether it would not be an advantage to deny the right of succession to the eldest son as well, “for it is obviously unfair that he should be deprived of that kind of training which is so profitable to his younger brothers.” Dunoyer forgot that it would have gone ill with his arguments if the socialists had taken him at his word.

[739] “Labour is the only source of productive power. Capital is a human creation, and land is simply a form of capital.” (De la Liberté du Travail, Book VI.)

[740] Say had already recognised the claims of immaterial wealth alongside of material, and he had employed the term “services” in describing them. In this way he considered that the professor, the doctor and the actor had claims to be regarded as producers. Dunoyer, while accepting his conclusion, criticises his way of putting it. He recognises no distinction between material and immaterial wealth. There is nothing but utility. “It is true that taste, education, etc., are immaterial, but so is everything that man produces.” But he is entirely wrong when he says that a good teacher is a producer of enlightened men and a doctor a producer of healthy persons. We are at a loss to explain why at one moment he refuses to recognise the material element in production, while at another he grossly exaggerates the material results of purely intellectual labour.

[741] “Labour and exchange belong to two categories of facts which are absolutely distinct in their nature. Labour implies production. Commerce and exchange imply nothing of the kind.” (De la Liberté du Travail, p. 599.)

[742] Seligman in the Economic Journal for 1903, pp. 335-511, devotes two very interesting articles to such writers under the title of Some Neglected British Economists. One is astonished to find how many there are and the originality which they show, and to learn that several of the more important modern theories are simply rediscoveries.

[743] Mrs. Marcet’s Conversations belong to 1817, Miss Martineau’s Illustrations to 1832. The latter had a wonderful vogue.

[744] Quoted by Seager in a lecture on economics at Columbia University in 1908.

[745] We have already referred to McCulloch and James Mill, two of Ricardo’s immediate disciples. We must just add the names of Torrens and Gibbon Wakefield. Wakefield was the author of a book which had a great reputation at one time, but which was simply an attempt to apply the Ricardian principles to the practice of colonisation.

[746] Nassau Senior during a part of his life was Professor of Political Economy at Oxford. The Oxford chair, created in 1825, was the first chair of economics to be established in England. His writings, which treat of various subjects, belong to the period 1827-52. The bulk of his doctrine is contained in his Political Economy, contributed to the Encyclopædia Britannica in 1836 and afterwards published separately. This small volume may be regarded as the earliest manual of political economy.

[747] The four principles were: (i) the Hedonistic Principle; (ii) the Principle of Population; (iii) the Law of Increasing Returns in Industry; (iv) the Law of Diminishing Returns in Agriculture.

[748] “But a considerable part of the produce of every country is the recompense of no sacrifice whatever; is received by those who neither labour nor put by, but merely hold out their hands to accept the offerings of the rest of the community.” (Political Economy, p. 89.) He takes the income of a successful doctor as an illustration, and divides it up as follows (ibid., p. 189):

Wages or payment for labour £40 Profit or payment for abstinence £960 Rent £3000

See Senior’s Theory of Monopoly, by Richard Ely (American Economic Association, 1899).

[749] This confusion between rent and the income of inherited wealth does little honour to Senior, for the two facts belong to entirely different categories. Rent is a purely economic phenomenon, resulting from the necessary conditions of exchange. It owes nothing to social organisation, not even to the institution of private property. Inheritance, on the other hand, is a purely juridical phenomenon, the product of civil law. Even if inheritance were abolished it would make no difference to the existence and growth of rent, whether obtained from the soil or from some other source; whereas under the hypothetical régime of perfectly free competition, although rent would no longer be known, inheritance, together with all its privileges, might still continue to exist. Senior evidently understands by the term “rent” any kind of income that is not obtained by personal effort. But this is clearly a perversion of the original meaning.

[750] Rau’s treatise on political economy belongs to the years 1826-37, and von Thünen’s Der Isolirte Staat appeared in 1826.

[751] Pellegrino Rossi, who became a naturalised Frenchman in 1833, was an Italian by birth. He succeeded Say as professor at the Collège de France. He afterwards became Lecturer on Constitutional Law, and his name is commemorated in one of the annual prizes. He eventually entered the diplomatic service, and was attached to the Papal See during the pontificate of Pius IX. He was assassinated at Rome in 1848.

[752] John Stuart Mill, born in 1806, was the son of James Mill the economist of whom we have already spoken. The system of education which his father planned for him can only be described as extraordinary. Practised on anyone else it would have been fatal. At the age of ten he was already well versed in universal history and in the literatures of Greece and Rome. At thirteen he had a fair grasp of science and philosophy, and had written a history of Rome. By the time he was fourteen he knew all the political economy that there was to know then. In 1829, then a young man of twenty-three, he published his first essays on political economy. In 1843 appeared his well-known System of Logic, which immediately established his fame. In 1848 he issued the admirable Principles of Political Economy. Mill was in the service of the East India Company up to the time when it lost its charter in 1858. From 1865 to 1868 he was a member of the House of Commons. After the death of his wife, who collaborated with him in the production of several of his works, especially Liberty (1859), being unwilling to quit the spot where she lay buried, he spent the last years of his life, except those taken up by his Parliamentary work, at Avignon. His autobiography contains a precious account of his life and of his gradual conversion to socialistic views.

[753] Principles, Book II, chap. 1, § 3.

[754] Ibid., Book IV, chap. 7, § 7.

[755] Dupont de Nemours, writing very much in the spirit of the Classical school, had already given an excellent definition of natural law. “By natural law we are to understand those essential conditions that regulate all things in accordance with the design laid down by the Author of Nature. They are the ‘essential conditions’ to which men must submit if they would obtain all the benefits which the natural order offers them.” (Introduction to Quesnay’s works, p. 21.)

[756] Adam Smith, let us remember, also wrote a book on the Theory of Moral Sentiments (see Book I, chap. 2), and Stuart Mill writes as follows: “In the golden rule of Jesus of Nazareth we read the complete spirit of the ethics of utility. To do as you would be done by and to love your neighbour as yourself constitute the ideal perfection of utilitarian morality.” (Utilitarianism, chap. 2.)

[757] This is how Mill views it: “It is only in a very imperfect state of the world’s arrangements that anyone can best serve the happiness of others by the absolute sacrifice of his own.” (Utilitarianism, chap. 2.) But it is scarcely necessary to add, seeing that the two propositions are necessarily complementary, that one of the best ways of securing happiness is to sacrifice one’s self in the cause of others. All that is required is a little patience. “Education and opinion will so use that power as to establish in the mind of every individual an indissoluble association between his happiness and the good of the whole.” Interpreted in this way, individualism is closely akin even to the most transcendent form of solidarity.

[758] One is sometimes asked to state the differences between the Classical, the Individualist, the Liberal, and the Optimist schools. The question does not seem to us to be a very important one, but we may answer it in this way:

(a) The Individualist school, according to the worst interpretation put upon it, thinks that egoism is the only possible system of ethics and that each for himself is the sole principle of action. But, naturally enough, everyone is anxious to avoid the taunt of selfishness, and the existence of such economic ties as exchange and division of labour make egoism impossible as an ethical system. According to the broadest interpretation of the term, individualism implies the recognition of individual welfare as the sole aim of every activity, whether individual or social, economic or political. But this does not take us very far, for every socialist and individualist would accept this interpretation. We seldom speak of the welfare of society per se as an entity possessed of conscious feeling. This definition is much too wide. It includes solidarity and association, State intervention and labour legislation, provided the aim be to protect the individual against certain dangers. Self-sacrifice is not excluded, for what can strengthen individualism like self-sacrifice? This is the interpretation which Schatz puts upon it in his L’Individualisme économique et social. But the term “individualist” is too indefinite and we must avoid it whenever we can.

(b) The so-called Liberal school uses the term in a much more definite fashion. The individual is to be not merely the sole end of economic action, but he is also to be the sole agent of the economic movement, because no one else can understand his true interests or realise them in a better way. Interpreted in this fashion, it means letting the individual alone and removing every external intervention, whether by the State or the master.

According to the one definition, individualism is a creed which everyone can adopt; according to the other it is open to very serious objections. Experience shows that the individual, whether as consumer buying injurious, costly, or useless commodities, or as worker working for wages that ruin his health and lower his children’s vitality, is a poor judge of his own interest, and is helpless to defend himself, even where science and hygiene are on his side.

(c) If we push this interpretation a stage farther and admit not only that each individual is best qualified to speak for himself, but also that the social interest is simply the sum of the individual interests, all of which converge in a harmonious whole, then the Liberal school becomes the Optimistic. In France it has the tradition of a generation behind it, and an attempt has been made to revive it in certain recent works; still it may now be regarded as somewhat antiquated.

(d) When we speak of the Classical school we mean those who have remained faithful to the principles enunciated by the earlier masters of economic science. An effort has been made to improve, to develop, and even to correct the older theories, but no attempt has been made to change their essential aspects. Individualistic and liberal by tradition, this school has never been optimistic. It lays no claim to finality of doctrine or to the universality of its aim, but simply confines itself to pure science.

[759] Auguste Comte and Positivism.

[760] Principles, Book IV, chap. 7, par. 7 (Ashley’s ed., p. 793). See the recent work of Molinari, or La Morale de la Concurrence, by Yves Guyot.

[761] “It is in vain to say that all mouths which the increase of mankind calls into existence bring with them hands. The new mouths require as much food as the old ones and the hands do not produce as much.” (Principles, Book I, chap. 11, § 2.)

[762] “It is seldom by the choice of the wife that families are too numerous; on her devolves (along with all the physical suffering and at least a full share of the privations) the whole of the intolerable domestic drudgery resulting from the excess.” (Principles, Book II, chap. 13, § 2.)

[763] “While a man who is intemperate in drink, is discountenanced and despised by all who profess to be moral people, it is one of the chief grounds made use of in appeals to the benevolent that the applicant has a large family and is unable to maintain them.” (Ibid., Book II, chap. 13, § 1.) “Little improvement can be expected in morality, until the producing large families is regarded with the same feelings as drunkenness or any other physical excess. But while the aristocracy and clergy are foremost to set the example of this kind of incontinence what can be expected of the poor?” (Ibid., Ashley’s ed., p. 375, note.)

He complains that the Christian religion inculcates the belief that God in His wisdom and care blesses a numerous family.

[764] “The laws which in many countries on the Continent forbid marriage unless the parties can show that they have the means of supporting a family, do not exceed the legitimate powers of the State. They are not objectionable as violations of liberty.” (Liberty, chap. 5.)

On the other hand he thought that a law which limited the number of public-houses involved a violation of liberty because it meant treating the workers as children. (Ibid., chap. 5.)

[765] “The rise or the fall continues until the demand and supply are again equal to one another: and the value which a commodity will bring in any market is no other than the value which in that market gives a demand just sufficient to carry off the existing or expected supply.” (Principles, Book III, chap. 2, § 4.)

Cournot in his criticisms of the law of demand and supply had anticipated Mill. But it is very probable that Mill was not acquainted with the Recherches.

[766] Principles, Book III, chap. 3, § 1.

[767] Ibid., Book III, chap. 1, § 1.

[768] “Wages depend, then, on the proportion between the number of the labouring population and the capital or other funds devoted to the purchase of labour, and cannot under the rule of competition be affected by anything else.” (Ibid., Book II, chap. 11, parts 1 and 3.)

[769] Saving with a view to augmenting the wages fund is only possible for the rich, and Mill is as insistent upon their doing it as he is upon the workers refraining from marriage. He also tries to impress upon the workers the importance of saving, but his way of showing its advantages is often laborious and obscure.

[770] Stuart Mill admitted that trade unions might modify the relations between demand and supply, forgetting for the moment that this meant a contradiction of the Classical theory.

The unions might limit the number of available men. He feared that this would result in high wages for the small number of organised labourers and in low wages for the others. They might check the birth-rate, their members becoming accustomed to such a degree of comfort and well-being as would raise their standard of life. He was always a strict Malthusian.

[771] See the quarterlies of Harvard and Columbia. It was an American, however, Francis Walker, in his Wages Question (1876), who did more than anyone to destroy the old wage fund theory.

[772] “The cost value of a thing means the cost value of the most costly portion of it.” (Principles, Book III, chap. 6, § 1, prop. 7.)

“The extra gains which any producer or dealer obtains through superior talents for business or superior business arrangements are very much of a similar kind. If all his competitors had the same advantages, and used them, the benefit would be transferred to their customers through the diminished value of the article: he only retains it for himself because he is able to bring his commodity to market at a lower cost while its value is determined by a higher.” (Ibid., Book III, chap. 5, § 4.)

Senior had already emphasised one important difference between agricultural and industrial production, namely that whilst the law of diminishing returns operates in the former case, the law of increasing returns is operative in the second. In other words, the cost of production diminishes as the quantity produced increases. The result is, as Mill points out elsewhere, that the industrial employer is anxious to reduce the sale price in order to produce more and to recoup himself for a reduction in price by a reduced cost of production.

[773] Ricardo, moreover, gives an exposition of the advantages of international trade in terms that Bastiat might have adopted. “Under a system of perfectly free commerce each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. 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: while by increasing the general mass of productions it diffuses general benefit and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilised world. It is this principle which determines that wine shall be made in France and Portugal, that corn shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England.” (Ricardo, Works, p. 75.)

[774] The following apparent paradox may be deduced from Ricardo’s theory. A country is wise in importing not only those commodities which it can only produce at a disadvantage as compared with its rivals, but also those goods in which it has a distinct advantage in the matter of production, though not so great as the advantage enjoyed in some other case. Under those circumstances it is better that it should produce that product in the making of which it has the greater advantage and exchange it for some other product in which it has less.

“Two men can both make shoes and hats, and one is superior to the other in both employments; but in making hats, he can only exceed his competitor by one-fifth, or 20 per cent., and in making shoes he can excel him by one-third, or 33 per cent. Will it not be for the interest of both, that the superior man should employ himself exclusively in making shoes, and the inferior man in making hats.” (Ricardo, Works, p. 77, note.)

And so England might find it advantageous to exchange her coal for French cloths, although she may be able to produce those cloths cheaper herself.

[775] “The value of a thing in any place depends on the cost of its acquisition in that place; which in the case of an imported article means the cost of production of the thing which is exported to pay for it.” (Principles, Book III, chap. 18, § 1.)

[776] Mill first treated of the theory in his Unsettled Questions of Political Economy. A more complicated but more precise exposition is given in the Principles Book III, chap. 18, § 7. The whole process of reasoning, based as it is upon the hypothetical conduct of two persons, is purely abstract, and is of very little practical use. What is really important is to know the relation between the advantages gained by either side. It is true that on the whole imports and exports balance one another, thanks to the operation of money, but that is another question.

[777] “It still appears, that the countries which carry on their foreign trade on the most advantageous terms are those whose commodities are most in demand by foreign countries, and which have themselves the least demand for foreign commodities, from which, among other consequences, it follows that the richest countries, ceteris paribus, gain the least by a given amount of foreign commerce, since, having a greater demand for commodities generally they are likely to have a greater demand for foreign commodities and thus modify the terms of interchange to their own disadvantage.” (Principles, Book III, chap. 18, § 8.) Note the phrase “a given amount of foreign commerce.” That is, although the rate of interchange is less advantageous for the rich country than it is for the poor, still, since the former exchanges much more than the latter it gains more on the whole transaction. Mill states this expressly elsewhere. The rich and the poor country are like the wholesale house and the little shop. The former gains very little on each article sold, but gains much on the whole turnover.

[778] Ibid., Book V, chap. 10, § 1.

[779] An even more important concession to the Protectionist view is his admission that the duties are not always borne by the home consumer in the form of higher prices, but that they are sometimes paid by the foreigner.

[780] Principles, Book V, chap. 10, § 1. The duty would check the demand of the importing country, and according to Mill’s own formula it ought to modify the exchange equation in its favour.

[781] Histoire des Doctrines économiques, p. 338.

[782] Mill was for many years resident in France, and died at Avignon. An article written by him in defence of the Revolution of 1848 has been translated into French and published in book form by M. Sadi Carnot.

[783] Principles, p. 210.

[784] Representative Government, chap. 3.

[785] “The laws and conditions of the production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them.… It is not so with the distribution of wealth. This is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like.” (Principles, Book II, chap. 1, § 1.) Karl Marx, a little later than this, claimed that distribution is wholly determined by production.

[786] See Chatelain’s introduction to Rodbertus’s Kapital.

[787] See Autobiography, p. 133 (“Popular” edition).

[788] “If the improvement which even triumphant military despotism has only retarded, not stopped, shall continue its course there can be little doubt that the status of hired labourers will gradually tend to confine itself to the description of workpeople whose low moral qualities render them unfit for anything more independent, and that the relation of masters and workpeople will be gradually superseded by partnership in one of two forms: in some cases, association of the labourers with the capitalist; in others, and perhaps finally in all, association of labourers among themselves.” (Principles, Book IV, chap. 7, § 4.)

“In this or some such mode, the existing accumulations of capital might honestly and by a kind of spontaneous process become in the end the joint property of all who participate in their productive employment—a transformation which, thus effected, would be the nearest approach to social justice and the most beneficial ordering of industrial affairs for the universal good which it is possible at present to foresee.” (Ibid., Book IV, chap. 7, § 6.)

[789] The co-operative movement probably suggested this idea to him. He several times expresses the opinion that middlemen’s profits exceed those of the capitalists, and that the working class would gain more by the removal of the former than they would by the extinction of the latter.

[790] But Young remained a champion of grande culture, while Mill was a complete convert to peasant proprietorship. But peasant proprietorship is proposed simply as a step towards association.

“The opinion expressed in a former part of this treatise respecting small landed properties and peasant proprietors may have made the reader anticipate that a wide diffusion of property in land is the resource on which I rely for exempting at least the agricultural labourers from exclusive dependence on labour for hire. Such, however, is not my opinion. I indeed deem that form of agricultural economy to be most groundlessly cried down, and to be greatly preferable in its aggregate effects on human happiness to hired labour in any form in which it exists at present. But the aim of improvement should be not solely to place human beings in a condition in which they will be able to do without one another, but to enable them to work with or for one another in relations not involving dependence.” (Principles, Book IV, chap. 7, § 4.)

Mill was not the only one who looked to peasant proprietorship partly to solve the social problem. Not to mention Sismondi, who was very much taken up with the idea, we have Thornton in England in his Plea for Peasant Proprietors (1848) and Hippolyte Passy in France in his excellent little volume Des Systèmes de Culture (1852) strongly advocating it. The Classical economists for the most part took the opposite point of view, especially Lavergne in his Essai sur l’Économie rurale de l’Angleterre.

[791] “Were I framing a code of laws according to what seems to me best in itself, without regard to existing opinions and sentiments, I should prefer to restrict, not what anyone might bequeath, but what anyone should be permitted to acquire by bequest or inheritance. Each person should have power to dispose by will of his or her whole property; but not to lavish it in enriching some one individual beyond a certain maximum.” (Principles, Book II, chap. 2, § 4.)

It is hardly necessary to say that this limitation of the right of inheritance is a purely personal opinion of Mill, and that it is rejected along with his other solutions by most individualists. It is not quite correct to say then, as Schatz has said in his Individualism, that Stuart Mill is “the very incarnation of the individualistic spirit.” He was really a somewhat sceptical disciple of the school, and his frequent change of opinion was very embarrassing!

[792] Principles, Book II, chap. 6, § 2.

[793] “There is at every time and place some particular rate of profit, which is the lowest that will induce the people of that country and time to accumulate savings.… But though the minimum rate of profit is thus liable to vary, and though to specify exactly what it is would at any given time be impossible, such a minimum always exists; and whether it be high or low, when once it is reached no further increase of capital can for the present take place. The country has then attained what is known to political economists under the name of the Stationary State.” (Ibid., Book IV, chap. 4, § 3.)

Mill indicates the causes that contribute to a fall in the rate of profits as well as the causes that arrest that fall, such as the progress of production and the destruction of wealth by wars and crises.

It may be worth while pointing out that the word profit as employed by the English economists, and especially by Mill, has not the same meaning as it has with the French writers. French economists since the time of Say have employed the term profit to denote the earnings of the entrepreneur, the capitalist’s income being designated interest. The English economists do not distinguish between the work of the entrepreneur and that of the capitalist, and the term profit covers them both. The result is that the French Hedonistic economists can say that under a régime of absolutely free competition profit would fall to zero, while the English economists cannot accept their thesis because profits include interest, which will always remain as the reward of waiting.

The French point of view is more generally adopted to-day.

[794] In a letter to Gustave d’Eichthal, recently published, speaking of Auguste Comte, he writes as follows: “How ridiculous to think that this law of civilisation requires as its correlative constant progress! Why not admit that as humanity advances in certain respects it degenerates in others?”

[795] On the question of co-operation as a method of social reform, Cairnes, who simply refers to it as a possible alternative, may have owed something to Mill.

[796] Essays, p. 281.

[797] Since 1830 there have only been four professors.—J. B. Say, Rossi, Michel Chevalier, and Chevalier’s son-in-law, M. Paul Leroy-Beaulieu. The history of the chair is a fair summary of the history of French economics.

[798] His most curious book, perhaps, was De la Baisse probable de l’Or, a title that caused a good deal of amusement during the latter half of the nineteenth century, but which proved somewhat of a prophecy after all.

[799] Joseph Garnier, who must not be confused with Germain Garnier, the translator of Smith’s works, published the first edition of his Éléments d’Économie politique in 1845. From 1848 up to his death in 1881 he was chief editor of the Journal des Économistes.

[800] G. Schmoller, Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (Leipzig, 1888). The expression will be found in his study of Roscher.

[801] A. Toynbee, The Industrial Revolution.

[802] It is curious that the Historians never refer to Sismondi as one of the pioneers of historical study. Roscher and Hildebrand never mention him at all, and Knies only thinks of him as a socialist (cf. Die Nationalökonomie vom historischen Standpunkt, 2nd ed., p. 322).

[803] Even List did not escape criticism at their hands. Hildebrand thinks that he was infected with the atomic views of Adam Smith and never showed himself sufficiently conscious of the ethical nature of society. “List seems to think that the entire subordination of private interest to public utility is dictated by custom, and even by private interest when properly understood, but he never regards it as a public duty rising out of the very nature of society itself.” (Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 73.) Note the ethical standpoint of the school.

[804] See, among others, Max Weber’s articles in Schmoller’s Jahrbuch for 1903, p. 1881, and 1905, p. 1323. The methodological errors of Roscher, Knies, and Hildebrand get their due meed of criticism.

[805] Grundriss, preface.

[806] Knies is of the same opinion. He remarks that Roscher’s work simply means “a completion of historiography rather than a correction of political economy.” (Die Nationalökonomie vom geschichtlichen Standpunkte, p. 35.)

[807] Grundriss, preface, pp. iv-v.

[808] Untersuchungen über die Methode der Sozialwissenschaften und der Politischen Oekonomie insbesondere. (Leipzig, 1883.)

[809] Schmoller, loc. cit. For further information concerning the Cameralists see Geschichte der Nationalökonomie, by M. Oncken. Menger and Schmoller also connect Roscher with Heeren, Gervinus, and the other historians of Göttingen who during the first quarter of the nineteenth century tried to found a science of politics upon a general study of history. Roscher had studied history under them, and his aim is in every respect similar to theirs.

[810] In the introduction, p. v, he declares that the object of his work is “to open a way for an essentially historical standpoint in political economy and to transform the science of political economy into a body of doctrines dealing with the economic development of nations.”

[811] Even Roscher had ventured to say that they partook of a mathematical nature. This is how he expresses his views as against those of Hildebrand on the real aim of political economy in the Jahrbücher für Nationalökonomie und Statistik, vol. i, p. 145: “Economic science need not attempt to find the unchangeable, identical laws amid the multiplicity of economic phenomena. Its task is to show how humanity has progressed despite all the transformations of economic life, and how this economic life has contributed to the perfection of mankind. Its task is to follow the economic evolution of nations as well as of humanity as a whole, and to discover the bases of the present economic civilisation as well as of the problems that now await solution.”

[812] The exact title of the first edition was Die Politische Oekonomie vom Standpunkte der geschichtlichen Methode. A second edition appeared in 1883 with a slightly different title. Our quotations are taken from the second edition.

[813] Schmoller, Grundriss der Volkswirtschaftslehre, vol. i, p. 107 (1904).

[814] Ibid., vol. i, p. 108.

[815] Ibid., vol. ii, p. 653.

[816] All historians, however, are not equally sceptical. Ashley in his preface to English Economic History and Theory writes as follows: “Just as the history of society, in spite of apparent retrogressions, reveals an orderly development, so there has been an orderly development in the history of what men have thought, and therefore in what they have thought concerning the economic side of life.” And Ingram, in his History of Political Economy, points out that “As we have more than once indicated, an essential part of the idea of life is that of development—in other words, of ordered change. And that such a development takes place in the constitution and working of society in all its elements is a fact which cannot be doubted.… That there exist between the several social elements such relations as make the change of one element involve or determine the change of another is equally plain; and why the name of natural laws should be denied to such constant relations of coexistence and succession it is not easy to see. These laws being universal admit of the construction of an abstract theory of economic development.” (P. 205.)

[817] Schmoller thinks that the science in the present stage of development, while it cannot be prevented from attempting a philosophy of history, is much better employed in building up simple scientific hypotheses with a view to gauging the future course of development than in getting hold of “absolute truths.”

[818] Marshall, Principles, Appendix A.

[819] Its influence has been noted by Toynbee in his article on Ricardo and the Old Political Economy. “It was the labour question, unsolved by that removal of restrictions which was all deductive political economy had to offer, that revived the method of observation. Political economy was transformed by the working classes.” Elsewhere he adds: “The Historical method is often deemed conservative, because it traces the gradual and stately growth of our venerable institutions; but it may exercise a precisely opposite influence by showing the gross injustice which was blindly perpetrated during this growth.” (Industrial Revolution, p. 58.)

[820] The first edition appeared in 1857.

[821] We would specially mention Levasseur’s excellent work, Histoire des Classes ouvrières en France (first edition, 1867).

[822] More especially we must mention the group of workers associated with M. Durkheim and the Anné sociologique. But it would be a great mistake to confuse the two methods, the Historical and the Sociological. See Simiand, Méthode historique et Science sociale, in the Revue de Synthèse historique, 1903. See also La Méthode positive en Science économique (Paris, 1912), which contains a study of the methodological problems presented by political economy.

[823] There is one aspect of the critical work of the German school with which we have not dealt in this book—namely, the criticism of laissez-faire. Some of the members, e.g. Hildebrand, have insisted on the ethical criterion, but none of them share in the optimism of either Smith or Bastiat. The emphasis laid upon relativity made this quite impossible. But all the more eminent writers have remained faithful to the Liberal teaching of the founders. See Hildebrand’s confession of faith at the beginning of vol. i of the Jahrbücher für Nationalökonomie, 1863, vol. i, p. 3. And although some of them, e.g. Brentano and Schmoller, seem to be connected with the new current of ideas that gave rise to State Socialism, the association was quite accidental. They never considered it an organic part of their teaching, and they made no very original contribution to that part of the study. Their connection with economics must always depend upon the light which they have thrown upon the question of method.

[824] Cf. Schmoller’s account of Menger’s work published in the Jahrbuch in 1884. The article appears also in the volume entitled Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1888).

[825] Cf. Menger, loc. cit., pp. 130 et seq. Marshall’s ironical remark is very apposite here: “German economists have done good service by insisting on this class of consideration, but they seem to be mistaken in supposing that it was overlooked by the older English economists.” (Principles, Book I, chap. 6, note.)

[826] Knies, loc. cit., pp. 24-25. Ashley gives an unmistakable expression to the same opinion in his History. “Political economy is not a body of absolutely true doctrines, revealed to the world at the end of the last and the beginning of the present century, but a number of more or less valuable theories and generalisations.… Modern economic theories, therefore, are not universally true; they are true neither for the past, when the conditions they postulate did not exist, nor for the future, when, unless society becomes stationary, the conditions will have changed.” (Preface.)

[827] See Karl Pearson, The Grammar of Science.

[828] Marshall, Principles, 4th ed., Book I, chap. 6, § 6.

What we say about the mathematical method does not imply any criticism of the Mathematical method in political economy. To establish mathematical relations between economic phenomena, as Walras and his school did, and to deduce economic conclusions from general mathematical theories are two different things.

[829] Knies employs the differences there set up in order to deny that economic laws have even the character of national laws. The new Historical school does not go quite so far, as we shall see presently.

[830] Chap. 4, “Of the Logic of the Moral Sciences.”

[831] Principles, Book I, chap. 6, § 6.

[832] Walras, Economie politique pure.

[833] Some authors would not admit complete assimilation; e.g. Wagner (Grundlegung, vol. i, p. 335).

[834] Schmoller especially insists on this point.

[835] Knies, op. cit., p. 23.

[836] A. Wagner, Grundlegung, § 67.

[837] Vol. ii, p. 502.

[838] Logic, vol. ii, p. 497.

[839] Principles, Book I, chap. 5, § 9.

[840] Marshall, Principles, Book I, chap. 5, § 7.

[841] Zur Litteraturgeschichte, p. 279.

[842] Untersuchungen über die Methode, p. 279.

[843] The English economists, even the most eminent, are often mistaken, says Wagner (Grundlegung, chap. 4, § 4), but their errors are not to be imputed to their method so much as to the use they make of it. And Menger, who so energetically undertook the defence of deduction, further undertakes to renew the Classical theories. Economic theory, says he, as constituted by the English Classical school, has not succeeded in giving us a satisfactory science of economic laws (Menger, loc. cit., p. 15).

[844] Cf. Menger, loc. cit., p. 79: “The student of pure mechanics does not deny the existence of air or friction, any more than the student of pure mathematics denies the existence of real bodies, of surfaces, and lines, or the student of pure chemistry denies the influence of physical forces or the physicist the presence of chemical factors in actual phenomena, although each of these sciences only considers one side of the real world, making an abstraction of every other aspect of it. Nor does the economist pretend that men are only moved by egoism or that they are infallible and omniscient because they envisage social life from the point of view of the free play of individual interest uninfluenced by other considerations, by sin or ignorance.” Wagner and Marshall take the same view.

[845] So great is the respect for psychology among the deductive writers of to-day that it has been suggested that the Austrian school should be known as the Psychological school. We can say that they have done much more in this direction than the Historical school.

[846] Manuale di Economia politica, p. 24 (Milan, 1906).

[847] Principles, 4th ed., Book I, chap. 3.

[848] Handwörterbuch der Staatswissenschaften. In his Grundriss we read: “The writers who figure as representatives of inductive research in recent German economics are not opposed to the practice of deduction as such, but they do believe that it is too often based upon superficial and insufficient principles and that other principles derived from a more exact observation of facts might very well be substituted for these.” Everyone would subscribe to this view.

[849] Die Entstehung der Volkswirtschaft, Dr. Wickett’s translation.

[850] “National life, like every other form of existence, forms a whole of which the different parts are very intimately connected. Complete understanding even of a single aspect of it requires a careful study of the whole. Language, religion, arts and sciences, law, politics and economics must all be laid under tribute.” (Roscher, Principles.) Cf. also Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 29. This is also Knies’s thought.

[851] Die Nationalökonomie der Gegenwart und Zukunft, p. 29.

[852] Principles, Book I, chap. 4, § 1. “History,” says Wagner (Grundlegung, § 83), “may well affirm the existence of causal or conditional relations, but it can never prove it.”

[853] History may, as a matter of fact, become explanatory, but only in a particular sense. In other words, although it cannot discover the general laws regulating phenomena, it may show what special circumstances (whose general laws are already supposed to be known) have given rise to some event equally specialised in character. But every honest historian has to admit that such explanations are definitely personal and subjective in character. For a recent examination of these ideas from the pen of a historian see the profound yet charming introduction contributed by Meyer to the second edition of his Geschichte des Alterthums. Cf. also Simiand, pp. 14-16.

[854] Cf. Marshall, Principles, Book I, chap. 6, § 4, and especially Menger, Untersuchungen, pp. 15-17: “We may be said to have historical knowledge of a particular phenomenon when we have traced its individual genesis, i.e. when we have succeeded in representing to ourselves the concrete circumstances among which it came into being, with their proper qualifications, etc. We may be said to have a theoretical knowledge of some concrete phenomenon when we are enabled to envisage it as a particular instance of a certain law or regularity of sequence or coexistence, i.e. when we are able to give an account of the raison d’être and the nature of its existence as an exemplification of some general law.”

[855] A full exposition of this idea is given in his Grundriss, but Knies, in the name of the conception of a unique evolution, contests the view.

[856] This is what M. Renouvier thinks of this conception: “If we proceed to ask another question in addition to the difficult one already asked and inquire as to the circumstances under which different nations have advanced or declined in the path of goodness and of truth and transmitted their triumphs or their defeats to the next generations, and if we support ourselves in the quest by the belief that we already have some knowledge of a scientific law and consequently of the aim of human society (this kind of knowledge generally begins with formulating such aims), we shall find ourselves in the position of a religious prophet who, not merely content with an inspired version of the truth, and of the destiny of mankind, proceeds to expound to his auditors the necessity under which both preacher and auditors are compelled to believe and to act in accordance with what will undoubtedly come to pass. Philosophical and religious imagination seeks in external observation the elements of a confidence which it can no longer place in itself. History becomes a kind of inspiring divinity. But although the object of the illusion is different its nature is still the same, for the new deity is as little effective as were the ancient ones in the opinion of those who have no faith in it, and it only inspires those who already believe.” (Introduction à la Philosophie analytique de l’Histoire, 2nd ed., vol. i, p. 121.) Bergson’s philosophy also contests the possibility of guessing what the future may be like from the character of the present. See especially Creative Evolution.

[857] Grundlegung, p. 342.

[858] Cf. Ingram, History of Political Economy, and Denis, Histoire des Systèmes.

[859] A. Comte, Cours, vol. iv, p. 198.

[860] Cours, vol. iv, p. 328.

[861] It is interesting to learn the views of historians on this point. Meyer thinks that the object of history is not to discover the general laws of development, but to describe and explain particular concrete events as they succeed one another. Such descriptions can only be made in accordance with the rules of historical criticism, but explanation is only possible with the aid of analogy. “It is only by the use of analogy that the historian can explain past events, especially where there are psychological motives that require analysis. The explanation thus given will necessarily be of a subjective character, and from its very nature somewhat problematic.” Cf. Ed. Meyer, Geschichte des Alterthums, Introduction, 2nd ed. §§ 112 et seq. There does not seem to be any connection between this method and that of Aug. Comte. One becomes still more convinced of this after reading Langlois and Seignobos’s Introduction aux Études historiques or G. Monod’s study in historical method in De la Méthode dans les Sciences (Paris, 1909), or, finally, the numerous articles dealing with this question of method which have appeared in the Revue de Synthèse historique.

[862] Theory of Political Economy, preface to the second edition, 1879.

[863] Schmoller’s Jahrbuch contains descriptive studies of present-day commercial and industrial undertakings which are veritable models.

[864] The Present Position of Political Economy, in the Economic Journal, 1907, p. 481.

[865] We have not the necessary space in this volume to refer to the history of statistics. This science, though independent of political economy, is, however, such a powerful auxiliary that its progress has to some extent been parallel with the growth of economics. During the last twenty years the methods of interpreting statistics (we are speaking merely of observation) have been very considerably improved. The logical problems involved have been studied with much care, and the application of mathematics to these problems has proved very fruitful. No student of the social sciences can afford to neglect such mathematical theories as those of combination, correlation, degree of error, etc. The history of statistics, which contains many eminent names, from Quetelet to Karl Pearson, would certainly deserve a chapter in a book dealing with method, although there would be some risk of giving it too statistical a bias. We must rest content with referring the reader to Udny Yule’s Introduction to the Theory of Statistics, which constitutes what is perhaps the best recent introduction to the discussion concerning the method to be employed in this social science, and forms an indispensable complement to the study of the problems examined in this chapter.

[866] Dupont-White makes the remark somewhere that the State, strictly speaking, has only existed since 1789. It appears, then, that a State which is not constitutional, democratic, and liberal has none of the virtues of the true State. Such exclusion, although permissible in the publicist, is indefensible in the theorist or historian.

[867] “The distinctive character of the State merely consists in this necessity to have recourse to force, which also helps to indicate the extent and the proper limits of its action. Government is only possible through the intervention of force, and its action is only legitimate when the intervention of force can be shown to be justifiable.” (Harmonies, 10th ed., pp. 552-553.)

[868] Wealth of Nations, Book IV, chap. 9; Cannan’s ed., vol. ii, p. 185.

[869] Harmonies, 10th ed., p. 556.

[870] Hermann, Staatswirtschaftliche Untersuchungen, 1st ed., pp. 12-18.

[871] A similar idea is contained in Liberty, where it is stated that “trade is a social act,” that the conduct of every merchant “comes within the jurisdiction of society,” and that “as the principle of individual liberty is not involved in the doctrine of Free Trade, so neither is it in most of the questions which arise respecting the limits of that doctrine; as, for example, what amount of public control is admissible for the prevention of fraud by adulteration; how far sanitary precautions, or arrangements to protect workpeople employed in dangerous occupations, should be enforced on employers.… But that they [people] may be legitimately controlled for these ends is in principle undeniable.” (Chap. 5.)

[872] Michel Chevalier, Introductory Lectures, No. 10, in Cours, vol. i, p. 221.

[873] Cours, vol. i, pp. 211, 214; vol. ii, pp. 38, 115.

[874] Pareto, Cours d’Économie politique, vol. ii, § 656 (1897).

[875] Principes, p. 422.

[876] Ibid., pp. 444, 462, 521.

[877] Stuart Mill has tried to do so in a formula that is not very illuminating: “To individuality should belong the part of life in which it is chiefly the individual that is interested; to society, the part which chiefly interests society.” (Liberty, chap. 4.)

[878] Republished in his Études d’Économie sociale, 1896. See a brief résumé in our chapter on Rent.

[879] For a general account of Lassalle’s life, and especially his relations with Bismarck, see Hermann Oncken, Lassalle (Stuttgart, 1904).

[880] There has been no dispute concerning the French origin of Rodbertus’s ideas since the evidence was sifted by Menger in his Das Recht auf den vollen Arbeitsertrag (1st ed., 1886). But Menger only mentions two sources of inspiration, Proudhon and the Saint-Simonians. The text will sufficiently indicate his indebtedness to the Saint-Simonians, but we think that Sismondi might well have been substituted for Proudhon. The only Proudhonian doctrine that is discoverable in Rodbertus is the theory concerning the constitution of value. But in the second of the Soziale Briefe (Schriften, vol. ii, p. 46, note) he states definitely that the idea was not a borrowed one, and that he himself was the first to formulate it, although he omits to state in what connection. He may be referring to a passage in his Forderungen, where the idea is quite clearly expressed. Speaking of Ricardo’s theory of value, he says: “That theory comes to grief on a single issue, namely, in regarding a thing as existing when it only exists in the mind, and treating a thing as a reality when it only becomes real in the future.” (Schriften, vol. iii, p. 120.) It is clearly pointed out that the task of the future is to determine what value is. The Forderungen, where all the master ideas of Rodbertus may be studied, was published in 1837, nine years before the Contradictions économiques was published by Proudhon, who made his first reference to the question in that work.

[881] Zur Erkenntniss unserer staatswirtschaftlichen Zustände (New Brandenburg, 1842). The work was to consist of three parts, only the first of which was published, and that has not been reissued since.

[882] The first three Soziale Briefe, as well as the Forderungen, have been republished in Schriften von Dr. Karl Rodbertus-Jagetsow (Berlin, 1899, 3 vols.). This is the edition we quote. The fourth Brief, entitled Das Kapital, was written in 1852, but was not published until after Rodbertus’s death. It was translated into French in 1904 by M. Chatelain, and published by Messrs. Giard and Brière. Our references in the succeeding pages are to this edition. Two other articles written by Rodbertus have been published, one by R. Meyer under the title Briefe u. Sozialpolitische Aufsätze (Berlin, 1882), the other by Moritz Wirth under the title of Kleine Schriften (Berlin, 1890). For a complete bibliography of Rodbertus’s work see Andler’s Le Socialisme d’État en Allemagne (Paris, 1897). Professor Gonner has written an illuminating study of his political philosophy.

[883] In his introduction to the Briefe von Lassalle an Rodbertus, p. 8 (Berlin, 1878).

[884] On the other hand, as Menger shows, the sources of Marx’s theory are English rather than French—another point of difference between the two socialists.

[885] He was for a short time Minister of Public Worship. Appointed on July 4, he resigned at the end of a fortnight because his colleagues refused to recognise quite as fully as he wished the rights of the Parliament of Frankfort.

[886] A characteristic sign of this evolution is the substitution throughout the second edition of the Sociale Briefe of the word Staatswille (“the will of the State”) for the word Volkswille (“the people’s will”). This second edition, comprising the second and third letters, was published by him in 1875 under the title Zur Beleuchtung der sozialen Frage.

[887] Letter to R. Meyer, November 29, 1871. This point of view is developed at length in his “Open Letter to the Committee of the Association of German Workmen at Leipzig,” April 10, 1863, published by Moritz Wirth in the Kleine Schriften.

[888] Letter to R. Meyer, March 12, 1872. Cf. the letters of January 23 and February 3, 1871.

[889] Ibid., November 30, 1871. In 1874 he proposes to offer himself as a socialist candidate for the Reichstag, but recognises that the State must first of all be strengthened on the military side as well as on the religious.

[890] Ibid., October 17, 1872.

[891] Ibid., January 6, 1873.

[892] Ibid., March 10, 1872, and Physiokratie u. Anthropokratie, in Briefe u. Sozialpolitische Aufsätze, pp. 521, 522.

[893] He protests vigorously against the title of Katheder Sozialist in a letter of August 26, 1872. A vigorous criticism of the Socialism of the Chair, written in a private letter of Rodbertus, is quoted at length by Rudolf Meyer in his Emancipationskampf des 4ten Standes, pp. 60-63 (Berlin, 1874).

[894] “Communion or community of labour would be a better term than division of labour” (Kapital, p. 74); and in another connection: “The only real division of labour is territorial division of labour” (ibid.). Elsewhere (p. 87) he warns his readers against confusing the terms “social” and “national.” Adopting the Saint-Simonian philosophy of history, he declares history to be a process of unification which brings gradually widening circles into closer unity with one another (Zur Geschichte der römischen Tributsteuer, in the Jahrbücher für Nationalökonomie u. Statistik, 1865, vol. v, p. 2). “The course of history is just the expansion of communism.” (Kapital, p. 85, note.)

[895] Physiokratie u. Anthropokratie, in Briefe u. Sozialpolitische Aufsätze, p. 519.

[896] Schriften, vol. iii, p. 216.

[897] “In a social State of this description people produce, not with a view to satisfying the needs of labour, but the needs of possession; in other words, they produce for those who possess.” (Kapital, p. 161. Cf. also p. 51.)

[898] “Provided we knew the time that a person could afford to devote to the work of production, we could easily determine the quantity that would be sufficient to satisfy the needs of everybody.” (Kapital, p. 109.)

[899] Ibid., p. 108.

[900] Kapital, p. 143.

[901] The question of the net and gross product was one of the outstanding problems of this period. Vidal (Répartition des Richesses, p. 219, Paris, 1846) and Ott (Traité d’Économie sociale, p. 95, 1851) lay stress upon it. Since then Cournot, Dühring, and more recently Effertz and Landry, have handled the problem anew. But each of them when he comes to define the word “productivity” defines it in his own fashion, so that they do not really discuss the same question. Rodbertus, as we shall have occasion to point out in the text, uses the word in a very vague fashion indeed, but still it is the basis of his whole discussion. It seems to us that under a régime of division of labour rentability should be the one criterion. But it would be a mistake to imagine that when dwindling profits make a change in the methods of production imperative, that change will be welcomed with equal enthusiasm by everybody, by both master and worker alike.

[902] He is dealing merely with individual wants. Rentability is not the only guide. Many collective wants must be satisfied, but the process is not always a profitable one. The problem is to determine which are those wants. Rodbertus is speaking of private wants; he has taken good care to leave the public needs aside, so that his argument applies only to the former.

[903] Kapital, pp. 164-166.

[904] Rodbertus further adds that a portion of everybody’s income should be expended in supplying such public needs. (Kapital, pp. 132-133.)

[905] Kapital, pp. 150-160.

[906] Cf. Zur Erkenntniss, pp. 7-10: “Every economic good costs labour and only labour.” In the third of the Soziale Briefe he expresses this idea in a slightly different form: “All economic goods are the product of labour” (Schriften, vol. ii, pp. 105-106). Developing the same thought, he declares that this formula means: (1) that “only those goods which have involved labour should figure in the category of economic goods”; (2) that, “economically speaking, goods are regarded, not as the product of nature or of any other force, but simply as the product of labour”; (3) that “goods economically considered are just the product of labour, carried out by means of the material operations which are necessary for production.” The work of industrial direction and its remuneration are regarded in the same light. Cf. Schriften, vol. ii, p. 219.

[907] On this point see Rist’s Le Capital provient-il uniquement du Travail? in the Revue d’Économie politique, February 1906.

[908] Rodbertus expressly declares that to say that goods are the product of labour is not to imply that the value of the product is always equal to what it cost in the way of labour, or, in other words, that the labour spent on it does not always measure its value (Schriften, vol. ii, pp. 104, 105). A similar statement is made in the Forderungen (1837). In the Zur Erkenntniss (1842) (pp. 129-131) he gives some of the reasons why he thinks that the value of a product is not equal to the labour it has cost: (1) There is the necessity for equalising the gains of capital; (2) the price of a unit of any commodity is fixed by the price of the unit which costs most to reproduce. In the second of the Soziale Briefe he repeats the statement that the labour value theory is nothing better than an ideal (Kapital, Appendix, p. 279). In a letter written to R. Meyer on January 7, 1872, he affirms the demonstration which he had already given, “that goods do not and cannot exchange merely in proportion to the quantity of labour which has been absorbed by them simply because of the existence of capital”; and he adds the significant words: “a demonstration that might in case of need be employed against Marx.”

[909] “The coincidence between the value of the products and the quantity of labour involved in their production is simply the most ambitious ideal that economics has ever formulated.” (Second Sozial Brief.)

[910] Occasionally Rodbertus admits for the sake of hypothesis or demonstration that prices do coincide with the labour cost; but his essential theory has no need of any such hypothesis, and it really plays quite an auxiliary or subordinate rôle. It is in the course of his exposition of the theory concerning the distribution of unearned income between landed proprietors and capitalists (quite an erroneous theory, by the way) that he is driven to admit that “the exchange value of each completed product, as well as of each portion of the product, is equal to its labour value.” (Third Sozial Brief, Schriften, vol. ii, p. 101.)

[911] Kapital, p. 105.

[912] “Whenever exchange is allowed to take its own course in the matter of distributing the national dividend, certain circumstances connected with the development of society and with the growing productivity of social labour cause the wages of the working classes to diminish so as to constitute a decreasing fraction of the national product.” (Second Sozial Brief, Schriften, vol. ii, p. 37.)

[913] Kapital, p. 153.

[914] The idea that entrepreneurs base their production upon the demand of the higher classes is a somewhat novel one, but it is quite definitely stated by Rodbertus. “The classes can only influence the market in proportion to the quantity of the social product which is given them. But the entrepreneurs must determine the quantities which they will produce, according to the size of their demands.” (Kapital, pp. 51-52. Cf. also pp. 170-171.) It is quite obvious, on the contrary, that the entrepreneurs base their production solely upon the demand for the particular goods which they manufacture, and that they are quite indifferent to the share which goes to the higher classes.

[915] Kapital, p. 53.

[916] We shall soon be convinced of the similarity that exists between the two theories if we read the passage in the article on Balance des Consommations avec les Productions, published by Sismondi as an appendix to the second edition of the Nouveaux Principes, vol. ii, p. 430. Rodbertus agrees with Sismondi that equilibrium will be re-established in the long run, but that in the meantime a crisis may have to intervene. (Kapital, p. 171, note; cf. p. 190, supra.)

[917] Such, as we have already seen, is Colson’s conclusion (Cours, vol. iii, p. 366), and such is the verdict of M. Chatelain after studying the United States census returns. According to Chatelain (Questions pratiques de Législation ouvrière, June and July, 1908), the American metal-workers’ share in the product fell from 71 to 68 per cent. between the years 1890 and 1905, while capital’s share increased from 28 to 32 per cent. The men’s wages during the same period rose from 551 dollars to 626, while the rate of interest fell from 9 to 8 per cent. Despite this diminution in labour’s share of the total product it is impossible to say whether the remuneration of labour in general is moving upward or downward, for the working classes do not depend solely upon the wages of their labour. Some of them have a little capital—a very small amount, perhaps, but there is no reason for thinking that it will not grow in future.

It is quite clear that this complicated question must be carefully defined. Three different factors must be distinguished: (1) The individual’s wage; (2) labour’s share in the product; (3) the income of the working class. On this problem see Edwin Cannan’s article in the Quarterly Journal of Economics, 1905, and his statements in his Theory of Production and Distribution, 1776-1848.

[918] Kapital, p. 176.

[919] Ibid., p. 187.

[920] “And so I believe that just as history is nothing but a series of compromises, the first problem that awaits economic science at the present moment is that of effecting some kind of a working compromise between labour, capital, and property.” (Kapital, p. 187.) In a letter written on September 18, 1873, to R. Meyer, he declares that the great problem “is to help us to pass by a peaceful evolution from our present system, which is based upon private property in land and capital, to that superior social order which must succeed it in the natural course of history, which will be based upon desert and the mere ownership of income, and which is already showing itself in various aspects of social life, as if it were already on the point of coming into operation.”

[921] Cf. Kapital, pp. 109 et seq., and especially his article Der Normalarbeitstag, which appeared in 1871 and was republished in Briefe u. Sozialpolitische Aufsätze, p. 552 et seq. The idea of determining value in the way Rodbertus intended was criticised by Marx in his Misère de la Philosophie, à propos of Proudhon’s attempt in 1847. The socialisation of production involves the socialisation of exchange as well. This is another point upon which Marx and Rodbertus differ.

[922] Cf. Kapital, p. 188, note.

[923] Zur Geschichte der römischen Tributsteuer, in Jahrbücher für Nationalökonomie u. Statistik, vol. viii, pp. 446-447, note.

[924] “Extreme socialism,” says Wagner, “is simply an exaggeration of that partial socialism which has long been a feature of the economic and social evolution of all nations, especially the most civilised.” (Grundlegung, 3rd ed., p. 756.)

[925] George Meredith in his Tragic Comedians weaves his story round this tragic adventure, giving us an admirable study of Lassalle’s psychology. Cf. also Lassalle, by Georges Brandes, and Oncken’s Lassalle (Stuttgart, 1904).

[926] Théorie systématique des Droits acquis, vol. i, p. 274, note (Paris, 1904).

[927] Briefe von Lassalle an Rodbertus, p. 46 (Berlin, 1878).

[928] Ibid., p. 44.

[929] Freilich darf man das dem Mob heut noch nicht sagen. (Ibid., p. 46.)

[930] “No workman will ever forget that property whenever legally acquired is absolutely inviolable and just,” says he in an address delivered to the workers of Berlin on April 12, 1862, and published under the title of Arbeiterprogramm (Schriften, vol. i, p. 197). Elsewhere he defends himself against the charge of inciting the proletariat by claiming that his agitation was of a purely democratic character, and intended to facilitate the fusion of classes (ibid., vol. ii, pp. 126-127). (Our quotations are taken from Pfau’s edition. We were unable to obtain the latest and by far the best edition of Lassalle’s works, published by Bernstein.)

[931] Wagner’s introduction to Briefe von Lassalle an Rodbertus, p. 5. Lassalle has himself defined this somewhat Machiavellian attitude in a letter written to Marx in 1859, in which he speaks of a drama which he had just written dealing with Franz von Sickingen. “It looks like the triumph of superior realistic ability when the leader of a rebellion takes account of the limited means at his disposal and attempts to hide from other men the real object which he has in view. But the success achieved by deceiving the ruling classes in this way puts him in possession of new forces which enable him to employ this partial triumph for carrying out his real object.” (Aus dem litterarischen Nachlass von K. Marx, F. Engels, und Lassalle, vol. iv, p. 133; published by F. Mehring, Stuttgart, 1902.)

[932] Schriften, vol. ii, p. 99. This address has been published under the title of Arbeiterlesebuch. This is just the attitude of which Marx disapproved. In a letter written to Schweitzer on October 13, 1868, quoted by Mehring (Aus dem litterarischen Nachlass, etc., vol. iv, p. 362), he expresses himself as follows: “He is too liable to be influenced by the immediate circumstances of the moment. He exaggerates the trivial difference between himself and a nonentity like Schulze-Delitzsch, until the issue between them, governmental intervention as against private initiative, becomes the central point of his agitation.”

[933] Schriften, vol. i, p. 213.

[934] See, among others, the chapter entitled Hegel et la Théorie de l’État, in Lévy-Brühl’s L’Allemagne depuis Liebnitz, especially p. 398 (Paris, 1890). The State, according to Hegel, is an expression of the spirit realising itself in the conscience of the world, while nature is an expression of the same spirit without the conscience, an alter ego—a spirit in bondage. God moving in the world has made the State possible. Its foundation is in the might of reason realising itself in will. It is necessary to think of it not merely as a given State or a particular institution, but of its essence or idea as a real manifestation of the mind of God. Every State, of whatever kind it may be, partakes of this divine essence. For full information concerning the philosophical origin of State Socialism see Andler’s Le Socialisme d’État en Allemagne (1897).

[935] Fichte issued a very curious work in 1800 entitled Der geschlossene Handelsstaat, published in vol. iii of his complete works (Berlin, 1845), and containing ideas with many points of resemblance to those of State Socialism. Fichte thought that the State should not merely guarantee to every citizen his property, but should first of all rear its citizens, let them build their property, and then defend it. In order to do this everyone should be given the necessary means of livelihood, for the one aim of all human activity is to live, and everyone here has an equal right to live (p. 402)—a declaration of the right of existence. Until all are so provided for no luxuries should be allowed. No one should decorate his house until he feels certain that everyone has a house, and everyone should be comfortably and warmly clad before anyone is elegantly dressed (p. 400). “Nor is it enough to say that I can afford to pay for it, for it is unjust that one individual should be able to buy luxuries while his fellow citizens have not enough to procure the necessaries of life. The money with which the former purchases his luxuries would in a rational State not be his at all.” Adopting this as his guiding principle, Fichte proposes to organise a State in which the members of every profession, agriculturists, artisans, merchants, etc., would make a collective contract with one another, in which they would promise not to encroach upon one another’s labour, but would guarantee to everyone a sufficient number of the goods which each has made for his own use. The State would also undertake to see that the number of persons in every profession was neither too few nor too many. It would also fix the price of goods. Lastly, in view of the fact that foreign trade would naturally upset the equilibrium established by the contract which guaranteed security of existence to each individual, the commercial State would have to be entirely hemmed in by tariff walls. The whole work is original and interesting. A. Menger, who gives a brief résumé of it in his second chapter of The Right to the Whole Produce of Labour, thinks that Fichte was influenced by what he saw of the Convention during the Reign of Terror, by the issue of assignats, and perhaps by Babeuf. Fichte, on the other hand, takes care to point out that his commercial State is not realisable as such, but that a book like his is not less useful in view of the general hints which it affords a statesman.

[936] It is remarkable that the majority of the commercial and financial measures introduced in Germany between 1866 and 1875, such as a uniform system of weights and measures, the reform of the monetary system, banks, the tariffs, etc., were directly inspired by the principles of economic Liberalism.

[937] A copy of the text translated into French appeared in the Revue d’Économie politique, 1892. The translation was the work of our regretted colleague Saint-Marc.

[938] In addition to Wagner we might mention Albert Schaeffle, who has shown considerable literary activity, but who is more of a sociologist than an economist. His great work, Bau und Leben des sozialen Körpers (1875-78), contains an organic and biological theory of society, but his best known book is the Quintessenz des Sozialismus.

[939] Wagner’s principal works, which contain an exposition both of the ideas and programme of State Socialism, are Grundlegung (1st ed. 1876), translated into French in 1900 under the title Fondements de l’Économie politique; Finanzwissenschaft; his article Staat in the Handwörterbuch der Staatswissenschaften; and especially two articles entitled Finanzwissenschaft and Staatssozialismus, published in the Zeitschrift für die gesammte Staatswissenschaft, 1887, pp. 37-122, 675-746. One might profitably consult two addresses, the one of March 29, 1895, Sozialismus, Sozialdemokratie, Katheder u. Staatssozialismus, the other of April 21, 1892, Das neue sozialdemokratische Programm.

[940] It is a curious fact that Wagner’s definition of the province and functions of the State is not very different from Smith’s, though differing considerably from Bastiat’s. “As a general rule,” says he, “the State should take charge of those operations which are intended to satisfy the wants of the citizens, but which private enterprise or voluntary associations acting for the community either cannot undertake or cannot perform as well or as cheaply.” (Grundlegung, 3rd ed., 1893, 1st part, p. 916.)

[941] “Liberalism only recognises one task which the State can perform, namely, the production of security.” (Quoted by Schönberg, Handbuch der politischen Oekonomie, 3rd ed., vol. i, p. 61. The quotation is taken from Rentzsch’s dictionary, articles on Freihandel and Handelsfreiheit.)

[942] “Kultur und Wohlfahrtzweck” (Wagner, Grundlegung, p. 885.)

[943] Wagner, Grundlegung, 3rd ed., pp. 811 et seq.; 839 et seq. The State Socialists have a habit of wrongfully using the two expressions “free competition” and “economic liberty” as if they were synonymous terms. See Grundlegung, p. 97.

[944] Dupont-White, L’Individu et l’État, 5th ed., p. 9.

[945] Ibid., p. 267.

[946] Preface to Stuart Mill’s Liberty.

[947] Wagner, Grundlegung, 3rd ed., pp. 892 et seq.

[948] Finanzwissenschaft und Staatssozialismus, p. 106.

[949] See supra, p. 430.

[950] Dupont-White, Capital et Travail, p. 353 (1847); L’Individu et L’État, p. 81.

[951] L’Individu et l’État, p. 65.

[952] Ibid., pp. 163, 164.

[953] “No means has as yet been suggested which will help to delimit the functions of the State from those of the individual. But that is not a consideration of any great moment, for we can always arrange matters so as to make them balance roughly when it comes to a particular case.” (L’Individu et l’État, pp. 298 and 301.) Elsewhere (in his preface to Mill’s Liberty) he gives it as his opinion that such a delimitation is impossible, and that when we are speaking of the State and the individual we are speaking of two distinct powers, such as life and law (p. vii). Law has to follow in the footsteps of life, reproving its excesses and correcting its faults (p. xiii).

[954] Wagner, Grundlegung, p. 887.

[955] State enterprise is to be recommended wherever possible, “not only for specific reasons which make the State ownership of certain industries highly desirable, but also for reasons of social policy, such as the advisability of helping industry to pass from a régime of individual ownership to that of communal control.” (Finanzwissenschaft und Staatssozialismus, p. 115.)

[956] Dupont-White’s individualism is as unimpeachable as Wagner’s, which proves that an individualist need not always be a Liberal. “The author of Liberty,” says he in his preface to Mill’s Liberty, p. lxxxix, “has a keen sympathy for individualism, which I share to the full, though without any misgivings as to the future destiny of this unalterable element. Individualism is life. In that sense individualism is imperishable.”

[957] Cf., for example, Schmoller’s open letter to von Treitschke (1874-75), translated in his Politique sociale et Économie politique (Paris, 1902). To the objection that the civil list of European monarchs is condemned in principle Schmoller replies that he is “speaking of the average man,” but that “the Hohenzollerns, when considered in this light, have no more than they deserve” (p. 92). We suspect that this argument will not carry much weight outside Germany.

[958] Wagner recognises the arbitrary nature of his suggestions. Theoretically, he says, this method of procedure is quite legitimate, but practically it is not so simple, “for the object, in short, is to employ the principles of equity and of social utility, which are by no means difficult to formulate, and to transmute those principles into legislative enactments, so as to put a check upon the arbitrary and excessive accumulation of wealth in the hands of a few individuals, such as is the case under a régime of free competition.” (Finanzwissenschaft und Staatssozialismus, p. 719.)

[959] P. 398.

[960] Finanzwissenschaft und Staatssozialismus, p. 718.

[961] The imperial message of November 17, 1881, announcing the celebrated series of Insurance Acts admits the necessity for a more marked policy of State intervention: “To lay hold of the ways and means whereby the working classes may best be helped is by no means an easy task, but it is one of the highest which a moral and Christian community can set its heart upon.” Bismarck, in his speech of May 9, 1884, said: “I unhesitatingly recognise the rights of labour, and so long as I occupy this place I shall uphold them. In so doing I base my plea, not upon socialism, but upon the Prussian Landrecht.” Section 2 of Art. XIX of the second part of the Prussian Landrecht (February 5, 1794) reads as follows: “To such as have neither the means nor the opportunity of earning their own livelihood or that of their family, work shall be given, adapted to their strength and capacity.” Despite its general tone, it did not contemplate giving relief.

[962] Speech delivered on March 18, 1889, quoted by Brodnitz, Bismarcks Nationalökonomische Ansichten, p. 141 (Jena, 1902).

[963] The well-known German economist Professor Lexis has unfortunately not been mentioned in this chapter, for the Göttingen professor has the misfortune of being neither a State Socialist nor a member of the Historical school. His works, dealing with various topics—money, the population theory, and general economic theory—are scattered through a number of reviews and other publications, especially the Jahrbücher für Nationalökonomie und Statistik, Schönberg’s Handbuch, and the great Handwörterbuch der Staatswissenschaften. His writings are distinguished not only by a definitely scientific method of treatment, but also by a remarkable clearness of thought. While appearing to continue the tradition of the Classical school, he takes care to reject the optimistic conclusions which are too often regarded as an inseparable element of that tradition. In 1900 Lexis gave us a general résumé of his teaching in the Allgemeine Volkswirtschaftslehre, where he treats of the economic world as concerned merely with the circulation of goods. In addition to an interesting theory of crises, upon which we cannot dwell just now, the most original part of the work consists of a theory concerning the method of distributing the social product between workers and capitalists. Lexis thinks that all material goods are produced by labour and measurable in terms of labour. The problem then is to determine where the capitalist gets his income. The capitalist’s profit is not the result of exploitation, as Marx thought, but is simply what is added to the sale price—a sum corresponding to the capitalist’s interest is added to the sum representing the workmen’s wages. Profit originates in the sphere of circulation. But how will this increased sale price benefit the capitalists, seeing that under existing conditions the workers can only buy the equivalent of the products which they have already helped to produce? We need to remember, however, that they produce for the capitalist as well as for themselves, and with the money thus obtained the working classes are enabled to buy whatever they need at market prices, i.e. at a price that includes interest, which constitutes the capitalist’s profit. Whenever the capitalists themselves purchase goods made by themselves they are reciprocally benefiting one another. Their class position is not modified by such procedure, for each entrepreneur simply draws profits in proportion to his capital. And so we avoid the most serious objection which can be raised to Marx’s theory. This explanation of the surplus value received by the capitalists is at least very ingenious. Lexis has been mostly influenced by Marx and Rodbertus, and has attempted a fusion of their more vigorous conceptions. Despite the objections that might be raised to it, the work is certainly one of the most original of recent years.

[964] Karl Marx, generally spoken of as a Jew, was born on May 5, 1818, of Jewish parents who had been converted to Protestantism. Born of a respectable bourgeois family and wedded to the daughter of a German baron, few would have predicted for him the career of a militant socialist. Such was to be his lot, however. In 1843, at the age of twenty-five, the authorities having suppressed a newspaper which he was conducting, he fled to Paris, and thence to Brussels. Returning to Germany during the Revolution of 1848, in which he took an active part, he was again expelled, and this time took refuge in London (1849). Here he spent the rest of his life (about thirty years), leaving for France a short time before his death in 1883. He died at London on March 14 in that year.

Although Marx was one of the founders and directors of the famous association known as the “International,” which was the terror of every European Government between 1863 and 1872, he was not a mere revolutionary like his rival Bakunin, nor was he a famous tribune of the people like Lassalle. He was essentially a student, an affectionate father, like Proudhon, an indefatigable traveller, and a man of great intellectual culture.

The best known of his works, which is frequently quoted but seldom read, is Das Kapital, of which the first volume—the only one published during his lifetime—appeared in 1867. The other two volumes were issued after his death, in 1885 and 1894, through the efforts of his collaborator Engels.

This book has exercised a great influence upon nineteenth-century thought, and probably no work, with the exception of the Bible and the Pandects, has given rise to such a host of commentators and apologists. Marx’s other writings, though much less frequently quoted, are also exceedingly important, especially La Misère de la Philosophie, published in 1847 in answer to Proudhon’s Les Contradictions Économiques; Zur Kritik der politischen Oekonomie (1859); and particularly the Communist Manifesto, published in January 1848. The Manifesto is merely a pamphlet, and at first it attracted scarcely any attention, but Labriola goes so far as to say—not without some exaggeration, perhaps—that “the date of its publication marks the beginning of a new era” (Essai sur la Conception matérialiste de l’Histoire, p. 81). At any rate, it is the breviary of modern socialism. There is scarcely a single one of its phrases, each of which stings like a dart, that has not been invoked a thousand times. The Programme of the Communist Manifesto is included in Ensor’s Modern Socialism.

It is a much-debated question as to whether Karl Marx was influenced by French socialists, and if so to what extent. On the question of his indebtedness to Pecqueur and Proudhon see Bourguin’s article in La Revue d’Économie politique, 1892, on Des Rapports entre Proudhon et K. Marx. Proudhon’s work, at any rate, was known to him, for one of his books was a refutation of the doctrines of the petit bourgeois, as he called him. Certain analogies between the works of these two writers to which we shall have to call attention will help us to appreciate the extent to which Marx is indebted to Proudhon. But, as Anton Menger has pointed out, we must seek Marx’s antecedents among English socialists, in the works of writers like Thompson especially. Nor must we forget his friend and collaborator Friedrich Engels, who for the sake of his master has been content to remain in the background. Engels collaborated in the publication of the famous Manifesto in 1848, and it was he who piously collected and edited Karl Marx’s posthumous work. It is difficult to know exactly what part he played in the development of Marx’s ideas, but it is highly probable that it was considerable.

[965] Marx calls attention to the fact that even Aristotle was puzzled by this common element which exchanged objects seemed to possess, and by the fact that exchange appeared to make them of equal value. We say that 5 beds = 1 house. “What is that equal something, that common substance, which admits of the value of the beds being expressed by a house? Such a thing, in truth, cannot exist, says Aristotle. And why not? Compared with the beds the house does represent something equal to them, in so far as it represents what is really equal, both in the beds and the house. And that is—human labour.” (Kapital, p. 29; Moore and Aveling’s translation—to which the Translator is indebted for the succeeding quotations also.)

“If we make abstraction from its use-value we make abstraction at the same time from the material elements and shapes that make the product a use-value.… Its existence as a material thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour … there is nothing left but what is common to them all; all are reduced to one and the same sort of labour—human labour in the abstract.” (Ibid., p. 5.)

[966] “The capitalist epoch is therefore characterized by this, that labour-power takes in the eyes of the labourer himself the form of a commodity which is his property; his labour consequently becomes wage-labour.… Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence: in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer.” (Kapital, p. 149.)

[967] This demonstration implies that the wages drawn by the worker is necessarily only just equal to the value of the means of his subsistence. It is the old classic law of Turgot and Ricardo over again, which Lassalle, Marx’s contemporary and rival, graphically called the “brazen law of wages.” We are simply given a more scientific demonstration of it, that is all.

The demonstration is based upon a postulate which ought first to have been proved, namely, that the quantity of labour necessary to keep the worker alive is always less than the quantity which he provides for his master. But what is there to prove that a man who works ten hours a day does not require all those ten hours to produce sufficient for his upkeep? Is there some natural law that supports this contention? Marx simply regards it as an axiom and attempts no proof. Everyone would admit it to be true in a general way—as a kind of empirical law. For were it true that man’s labour was wholly absorbed by the necessaries of life there would be no increase of numbers, no saving of capital, and civilisation, which is the product of leisure, would never have been possible.

What we have here is the Physiocratic “net product” once again, with this difference, that instead of being confined to agricultural labour it is now regarded as an attribute of labour of every kind.

[968] See p. 184 for what is said of Sismondi and his conception of “increment value.”

[969] It is necessary to point out that this proportion, which gives half the value to hand labour, leaving 100 per cent. surplus value, is put forward merely for the sake of illustration. Some Marxians, however, among whom is Jules Guesde, claim that this is actually the proportion in practice. Marx himself would probably have been more moderate in his estimate, because in one part of his thesis he accepts the statement of English manufacturers who declared that it was just the last hour that gave them their profits.

[970] The development of machinery, according to the Marxian theory, tends to reduce the cost of living, and consequently the price of labour, by producing cheaper clothes, furniture, etc., and to a lesser extent cheaper food.

By parity of reasoning ought it not to reduce the price of goods produced by the wage-earner and so lower the surplus value? We must be careful, however, not to confuse a reduction in the price of each unit with a reduction in the total value of the articles produced by machinery. A yard of cloth produced by a modern loom has not the same value as a yard produced by an old hand-loom. But the value of the total quantity produced each day must be equal to the value produced by hand, provided the same number of hours have been spent upon its production.

[971] Marx points out that there are other ways of increasing the amount of work done and of adding to the surplus value, such as the speeding up of labour. Speeding up does not increase the value of the goods, because the value depends upon the time spent upon them, and not upon the intensity of the effort put forth, but it does lower the cost of production.

[972] “Our friend Money-bags … must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting.… These are the conditions of the problem. Hic Rhodus! hic salta!” (Kapital, p. 145.) Cf. p. 215, where something is said about the different phases through which the idea of exploitation has passed.

Although Marx never says that the worker is actually robbed by the capitalist, but simply that the capitalist profits by circumstances which he is powerless to change, that has not prevented him treating the capitalist somewhat harshly and unjustly even, judging from his own point of view. He speaks of the capitalist as “a vampire which thrives upon the blood of others and becomes stouter and broader the more blood it gets.” He might have added that no blame could be attached to the vampire, seeing that it only obeyed the tendencies of its nature.

[973] “By turning his money into commodities that serve as the material elements of a new product, and as factors in the labour process by incorporating living labour with their dead substance, the capitalist at the same time converts value—i.e. past, materialized, and dead labour—into capital, into value big with value, a live monster that is fruitful and multiplies.” (Ibid., p. 176.)

[974] A potter working with his hands makes a vase in ten hours; each vase, then, costs ten hours’ labour. The same potter decides to make a wheel—a species of fixed capital. Setting up the wheel was a hundred hours’ task. If he still continues to produce only one vase per diem, which is a perfectly absurd proposition, for he would never have gone to the trouble of making the wheel if it did not mean some advantage to him, the value of each vase will now be 10 hours + 100 hours divided by x, which is the number of vases he would have produced had he not wasted his time making a wheel.

[975] Take two industries, A and B, each employing a capital of £1000. In A the amount of fixed capital is £100 and circulating £900. In B the fixed = £900 and the circulating £100. Admitting that surplus value is at the rate of 100 per cent., as in the example chosen just now, the total surplus value in A will be £900, equal to a profit of 90 per cent. on a capital of £1000. B, on the other hand, will only make £100 profit, which is equal to 10 per cent.

[976] This explanation only appears in the later volumes, which were published after his death.

It is true that Marx had drawn attention to the contradiction in the first volume, but no explanation was forthcoming until the later volumes appeared. Having stated that the greater quantity of surplus value is the direct result of the greater proportion of circulating capital employed, he proceeds: “This law clearly contradicts all experience based on appearance. Everyone knows that a cotton-spinner who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus value than a baker who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to demonstrate that 0/0 may represent an actual magnitude.… Vulgar economy, which, indeed, has really learnt nothing, here, as everywhere, sticks to appearance in opposition to the law which regulates and explains them.” (Kapital, p. 274.)

It is probable that Marx was not very well satisfied with his explanation, which may account for his reluctance to publish it during his lifetime.

[977] In the example just given suppose A and B represent the total industry of the country: the whole national industry will be made up of £900 + £100 circulating capital and £100 + £900 fixed—£2000 altogether. If the surplus value be at the rate of 100 per cent. of the circulating capital, the total capital value will be £900 + £100 = £1000 on a capital of £2000, or a percentage of 50.

[978] Taking the example given on p. 427, the mean of £900 + £100 = £500, and industry A, instead of 90 per cent., will draw only 50 per cent. profit, while industry B, instead of drawing only 10 per cent., will draw 50 per cent.

[979] We have indifferently employed the terms “profit” and “surplus value” simply because the former is a much more familiar word. But we must warn the reader against thinking that the two terms are synonymous. The surplus value is all that part of the value of the produce which is over and above the expenses of labour involved in its production—that enormous slice which becomes the property of every class in society except the workers, not merely the employers, but merchants, landlords, etc.; while profit is that part of the surplus value which the employers of labour keep for their own use. The rate of profit also is something quite different from the percentage of surplus value, as we shall see later.

We must call attention once more to the different interpretations which have been given of the term “profit.” Marx and the English economists take the word to comprise the whole revenue of capital under a régime of free competition, no distinction being drawn between profit properly so called and interest. To-day we understand by profit the income drawn by the entrepreneur—as distinct from the capitalist—as the result of certain favourable circumstances, notably imperfect competition.

It would be absurd to speak of a law of equality of profit, seeing that profit, as we have defined it, is, like rent, a differential revenue.

[980] We are fully aware of the fact that our method of approach must appear absurd from the Marxian standpoint, because it lays Marx open to the charge of starting with a preconceived idea, much after the style of economists like Bastiat, for example. Such a method, it is contended, is utterly unscientific and unworthy of a great mind like Marx’s.

However great he may have been, we cannot help thinking that, in common with most scientists, he discovered just what he was looking for, and it would be difficult to prove that Marx was not a socialist long before he began the writing of Kapital, even long before he had constructed a system at all.

Our object in stating the conclusion first of all is to help the reader to an understanding of the argument, but it is quite open to anyone who thinks differently to say that Marx had not the least idea where the analysis would lead him.

[981] The general use of the term “collectivism” is largely due to Marx. While “collectivism” occurs almost on every page of the Manifesto, the term “communism,” on the other hand, is never once employed.

James Guillaume, in the preface to the second volume of Bakunin’s works, p. xxxvi, gives the following account of the origin of the word “collectivism”: “At the fourth General Congress of the International, held at Bâle in 1869, almost every delegate voted in favour of collective property. But there were two distinct opinions cherished by the delegates present. The German-Swiss, the English, and the German delegates were really State communists. The Spanish, Belgian, French-Swiss, and most of the French delegates were federal or anarchist communists who took the name of collectivists. Bakunin belonged to the second group, and to this group also belonged the Belgian Paepe and the French Varlin.” Bakunin always spoke of himself as a collectivist and not a communist, and in this respect he differs from Marx. The habit of thinking that all anarchists are communists is largely due to Kropotkin.

[982] “We think we can perceive a change in the physiognomy of our dramatis personæ. He who before was the money-owner now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other timid and holding back, like one who is bringing his own hide to market and has nothing to expect but—a hiding.” (Kapital, p. 155.)

[983] Manifesto, § 1.

[984] One of the chief objects of the trusts is the avoidance of over-production, but that does not mean less unemployment; on the contrary, a part of their policy consists in closing down certain establishments which appear to be unnecessary.

[985] See the Manifesto for an eloquent statement of this.

[986] Labriola.

[987] Kapital, p. 647.

[988] Manifesto, § 1.

[989] Engels in his preface to the Manifesto admits that one of its objects was “to announce the inevitable and imminent downfall of bourgeois property.”

Nowadays, however, it is more usual to characterise the aim of collectivism as an attempt to abolish the wage-earning class—abolition of property being simply a step towards that. This is how Labriola writes in his Essai sur la Conception matérialiste (2nd ed., p. 62): “The proletariat must learn to concentrate upon one thing, namely, the abolition of the wage-earner.”

It is well to remember that such is also the aim of the Associationists, the co-operators, and the Radical Socialists. They proceed, however, from the opposite point of view, and would multiply property rather than abolish it, thinking that the latter process would merely universalise the wage-earner.

[990] “Communism deprives no man of the power to appropriate the products of society. All that it does is to deprive him of the power to subjugate the labour of others by means of such appropriation.” (Manifesto, § 2.)

[991] To say that Karl Marx was the leader of a great socialist school is hardly the way to describe him, for it is necessary that we should remember that the vast majority of those who consider themselves socialists are more or less his disciples. The other socialist schools, the anarchists, the Fabians, the Collinsists, and the followers of Henry George, cut a very poor figure beside his.

The bulk of his adherents is drawn either from Germany or Russia, England being the country which has done least to swell the ranks of his followers. In France the pure doctrine has been vigorously preached since 1878 by MM. Jules Guesde and Lafargue—the latter of whom is Marx’s son-in-law. But a great many French socialists, though collectivists in name, refuse their adhesion to the Marxian doctrine in all its rigidity. They have accepted three of his main principles—the socialisation of the means of production, class war, and internationalism—but reject his theory of value and his materialistic conception of history. Moreover, they show no desire to break with the French socialist tradition, which was pre-eminently idealistic. Benoît Malon, the founder of the Revue socialiste (1885), was one of the earliest representatives of French collectivism, and among his successors may be reckoned M. George Renard and Fournière.

[992] Labriola, Essai sur la Conception matérialiste de l’Histoire, p. 24. The Saint-Simonians had already made a similar claim. It is hardly fair to class them among the Utopians, and some Marxians are quite ready to admit their claim to priority in this matter.

[993] Georges Sorel, one of Marx’s disciples, writing in no derogatory spirit, we may be certain, expresses himself as follows: “Our experience of the Marxian theory of value convinces us of the importance which obscurity of style may lend to a doctrine”—a remark that is applicable to other writers besides Marx.

[994] See Sorel’s article, Les Polémiques pour l’Interprétation du Marxisme, in the Revue internationale de Sociologie, 1900, p. 248. There is no such thing as a theory of value—in the accepted sense of the term in Marx. What we have is a theory of economic equilibrium which would only be true of a very rudimentary kind of society. It is assumed, for example, that all industries are equally easy or difficult, that all the workers are of one type, that ten men working for one hour will produce the same amount of wealth no matter what task they are engaged upon. It is this equality that enables comparison to be made between one commodity and another, and this constitutes their value. We are simply treated to an abstraction which shows that with the exercise of a little ingenuity it is at least possible to reconcile the theory of time-value and the theory of market price.

[995] Conception matérialiste, p. 91. Sorel says: “Marxism is really much more akin to the Manchester doctrine than to the Utopian. We must never forget this.” (La Décomposition du Marxisme, p. 44.)

[996] “The bourgeoisie, historically, has played a most revolutionary part.… The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.… All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify, all that is solid melts into air, all that is holy is profaned.” (Manifesto, § 1.)

Besides, the Marxians themselves have tried to prove that capital is actively undermining its own existence, which is surely the ne plus ultra of the revolutionary temperament.

[997] “The result is that capital has managed to solve problems which the Utopians tackled in vain. It has also given rise to conditions which permit of an entrance into a new form of society. Thus socialism will not need to invent new machinery or to get people accustomed to them,” etc. (Sorel, loc. cit., p. 41.)

[998] “The economists regard the feudal institutions as artificial, the bourgeois as natural. The existing economic ties, in their opinion, are elemental laws that must always bind society.… They have had some history, that is all we can really say.” (Marx, Misère de la Philosophie, pp. 167-168.)

[999] Manifesto, § 2.

[1000] Whenever they change their method of production men also change their whole social outlook. “The hand-mill gave us the servile State; the steam-mill is the parent of the industrial, capitalist State.” (Misère de la Philosophie, 2nd ed., p. 156.) This oft-repeated phrase contains a picturesque antithesis rather than a scientific formula of historical materialism. In his preface to his Kritik der politischen Oekonomie Marx expresses himself with much more moderation. The following is the most important passage of that celebrated page (p. 5):

“In the course of their efforts at production men enter into certain definite and necessary relations which may be wholly independent of their own individual preferences—such industrial ties being, of course, correlative to the state of their productive forces. Taken together, all these links constitute the economic structure of society. In other words, it supplies a basis upon which the legal and political superstructure is raised, and corresponding to it are certain social forms which depend upon the public conscience. The method of producing commodities, speaking generally, fixes the social, political, and intellectual processus of life. A man’s conscience has less to do with determining his manner of life than has his manner of life with determining the state of his conscience.”

The word “fixes,” even when qualified by “speaking generally,” seems a little pronounced, and Marxism has substituted the term “explained,” which is somewhat nearer the mark. Labriola says that “it merely represents an attempt to explain historical facts in the light of the economic substructure.” (Conception matérialiste, p. 120.)

This materialistic conception is developed in a very paradoxical fashion in Loria’s La Constitution sociale. He shows how all history and every war, whether of Guelph or of Ghibelline, the Reformation and the French Revolution, and even the death of Christ upon Calvary, rest upon an economic basis. In Loria’s opinion, however, this basal fact is not industrialism, but the various types of land systems. See the chapter on Rent.

It would not be correct to regard Marxism as a mere expression of fatalism or out-and-out determinism. The Marxian pretends to be, and as a matter of fact he really is, a great believer in will-power. Once the workers see where their interests really lie he would have them move towards that goal with irresistible strength. It is not always even necessary to define the end quite clearly before beginning to move. “Everything that has happened in history has, of course, been the work of man, but only very rarely has it been the result of deliberate choice and well-considered planning on his part.” (Labriola, Conception matérialiste, p. 133.) Elsewhere: “The successive creation of different social environments means the development of man himself.” (Ibid., pp. 131-132.)

It would be beyond the scope of this work to enter into a metaphysical discussion of these theories, however much one would like to.

[1001] See the works of MM. Jaurès, Études socialistes; George Renard, Le Régime socialiste; Fournière, L’Individu, l’Association, et l’État.

[1002] Labriola, op. cit. Vandervelde (L’Idéalisme Marxiste, in La Revue socialiste, February 1904) says that “upon final analysis it will be found that Marx’s whole argument rests upon a moral basis, which is that justice requires that every man should get all that he produces.”

M. Landry, in a book of lectures delivered by different authors entitled Études sur la Philosophie morale au XIXe Siècle (p. 164), is of an entirely different opinion. He thinks that Marx’s moral basis is simply potentiality. In other words, everything that has been created in the ordinary course of economic development is moral, everything that has been destroyed is immoral.

[1003] Hence the alliance of the Marxians with what appears to be a directly opposite philosophy—that of William James and Bergson (see Guy Grand, La Philosophie syndicaliste).

[1004] Manifesto. It is impossible to do away with the intellectuals altogether, but they may be reduced to the rank of mere wage-earners. “The Marxians always regarded revolution as the special privilege of the producers, by whom, of course, they understood the manual workers, who, accustomed as they are to nothing but the factory régime, would force the intellectuals also to supply some of the more ordinary wants of life.” (Sorel, Décomposition du Marxisme, p. 51.)

[1005] Manifesto, § 2. It is necessary that we should be reminded of the fact that the Saint-Simonians had already emphasised the antagonism by speaking, not of rich and poor, but of idlers and workers. The differentiation, that is to say, was economic. The Marxian distinction is quite different, for the Saint-Simonians included within the category workers, bankers, and employers, for example, who are excluded by the Marxians. In some cases the Saint-Simonians thought they had even better claims to inclusion than the ordinary worker.

[1006] The first of these means, namely, the acquiring of public works by the State, is spoken of as unified socialism in France, whereas the second, which relies upon direct action without the assistance of any political organisation, is known as syndicalism and is represented by the Confédération générale du Travail (see p. 480).

[1007] Marx, Misère de la Philosophie. “What does the word ‘revolt’ imply? Simply disobedience to law. But what are these laws that govern our lives? They are just the products of bourgeois society and of the institutions which they are supposed to defend. Revolution will simply mean replacing these laws by others which will have an entirely different kind of justification.”

[1008] “It is the worst side of things that begets movement and makes history by begetting strife.” (Ibid., 2nd ed., p. 173.)

[1009] Preface to Kapital, p. xix.

[1010] For the evolution of Marxism see Sombart’s lively volume Sozialismus und soziale Bewegung im 19 Jahrhundert (6th ed., 1908), and also Georges Sorel, La Décomposition du Marxisme (1908).

[1011] Labriola, Socialisme et Philosophie, p. 29. Others declare more unmistakably still that “these obscure formulæ [the writer is thinking of surplus labour] lead to equivocation and must be banished from the science altogether.” (Sorel, Revue internationale de Sociologie, 1900, p. 270.)

[1012] M. Sorel says of the revolutionary movement that everything connected with it is very improbable. (Décomposition du Marxisme.)

[1013] The Italian syndicalist Arthur Labriola (Revue socialiste, 1899, vol. i, p. 674) writes as follows: “While we Marxians are trying to repatch the master’s cloak political economy is making some headway every day. If we compare Marx’s Kapital with Marshall’s Principles—chapter by chapter, that is to say—we shall find that problems which required a few hundred pages in the Kapital are solved in a few lines by Marshall.” B. Croce (Materialismo storico ed Economia marxistica, 1900, p. 105) writes thus: “I am strongly in favour of economic construction along Hedonistic lines. But that does not satisfy the natural desire for a sociological treatment of profits, and such treatment is impossible unless we make use of the comparative considerations suggested by Marx.” Lastly, Sorel, in Saggi di Critica del Marxismo (1903, p. 13) says: “It is necessary to give up the attempt to transform socialism into a science.”

[1014] Especially in that passage to which Bernstein calls attention: “According to the law of value not merely must one devote the socially necessary amount of time to the production of each commodity, but each group of commodities must have such extra effort spent upon it as the nature of the commodity or the character of the demand requires. The first condition of value is utility or the satisfaction of some social need—that is, value in use raised to such a degree of potentiality as shall determine the proportion of total social labour to each of the various kinds of production.” (Kapital, vol. iii.)

Bernstein adds: “This admission makes it impossible to treat the themes of Gossen, of Jevons, and of Böhm-Bawerk as so many insignificant irrelevancies.” (Die Voraussetzungen des Sozialismus.)

[1015] “The surplus-value theory may be true or it may be false, but that will make no difference to the existence of surplus labour. Surplus labour is a fact of experience, demonstrable by observation, and requires no deductive proof.” (Bernstein, loc. cit., p. 42.) That Marx did not treat it with quite the same indifference is evident from the fact that the whole theory is developed, not incidentally in the course of the work, but at the very opening of the book.

[1016] In the book already quoted, which was published in 1899.

[1017] Sorel, Les Polémiques pour l’Interprétation du Marxisme, in the Revue internationale de Sociologie, 1900.

[1018] Sorel, Décomposition du Marxisme, p. 33.

[1019] Socialisme et Social-démocratie, p. 234. We have recently been told that syndicalism is just a literal application of Bergson’s philosophy.

[1020] This point of view is very neatly expressed in an article of M. Berth’s (Mouvement socialiste, May 1908, p. 393): “From a purely negative or critical point of view we agree with Bernstein rather than the orthodox Kautsky. But what does Bernstein propose to substitute for the revolutionary ideal—impracticable as it was—of the German Social Democratic party? The alternative offered is a simple democratic, reformist evolution, a political or economic development which would just be a pale imitation of the bourgeois Liberal régime, which it is hoped would result in the emancipation of the workers by getting rid of bourgeois Liberalism altogether. The complete democratisation of politics and economics would, it is hoped, effect the necessary improvement. On this point we syndicalists must definitely part company with Bernstein and his confrères, for what we want is not a mere evolution, but a revolutionary creation of new social forms.”

[1021] “An organisation of producers who will be able to manage their own affairs without having recourse to the superior knowledge which the typical bourgeois in supposed to possess.” (Sorel, Décomposition du Marxisme, pp. 60-61.)

[1022] “Revolutionary syndicalism is the great educative force which contemporary society has at its disposal to prepare it for the tasks which await it.” (Sorel, Réflexions sur la Violence, p. 244; 1909.)

“In the general ruin of institutions something new and powerful will remain intact. This will be what is generally known as the proletarian soul, which it is hoped will survive the general reassessment of moral values, but that will depend on the energy displayed by the workers in resisting the corruption of the bourgeoisie and in meeting their advances with the most unmistakable hostility.” (Ibid., p. 253.)

It is altogether a different point of view from that of the consumer, the shareholder, or the “literary idler,” who are only interested in the success of buyers’ social leagues, or in consumers’ societies. Cf. p. 342.

[1023] This incessant struggle is what Sorel has named violence, which he thinks is peculiarly healthy. “I have shown,” says he, “that proletarian violence has an entirely different significance from that usually attributed to it by politicians and amateur students of society.” It is incorrect, however, to say that he is in favour of sabotage. “Sabotage,” says Sorel, “belongs to the old régime, but does nothing to set the worker in the way of emancipation.” (Mouvement socialiste, 1905, November 1 and 15.)

One cannot fail to see the antagonism which exists in France between the Socialistes Unifiés (which is largely recruited from the old Marxian party) and the syndicalists, who condemn both universal suffrage and parliamentary action.

[1024] “One no longer thinks of drawing up a scheme which shall determine the way in which people in the future are to seek their own well-being. The problem now is how to complete the revolutionary education of the proletarian.” (Sorel, Décomposition du Marxisme, introduction, p. 37.)

[1025] This group is represented by the review called Le Mouvement socialiste, which is controlled by M. Lagardelle. Sorel has withdrawn from the group and is now leading a campaign in favour of Catholic nationalism.

The recent literature of syndicalism is very extensive. We have already mentioned M. Guy Grand’s La Philosophie Syndicaliste.

[1026] Réflexions sur la Violence, p. xxxv. We must note, however, that M. Sorel protests against any confusion being made between the myth as he understands it and Utopian socialism. The myth is obviously superior in the fact that it cannot be refuted, seeing that it is merely the expression of a conviction. See pp. xxv and 218 of the same work.

[1027] We need only recall the doctrine of usury and the legislation on the question—all of it the outcome of Canonist teaching.

[1028] A Catholic professor—long since forgotten—of the name of de Coux wrote as follows in a book entitled Essai d’Economie politique, published in 1832: “The practical application of Catholicism would result in the finest system of social economy that the world has ever seen.”

[1029] “Catholicism alone has the necessary cohesion and power to withstand socialism, which has been erected upon the ruins of the Liberal system.” (Comte de Mun, La Question sociale au XIXe Siècle, 1900.)

“There is no need to think of the Church as a kind of gendarme in cassock flinging itself against the people in the interest of capital. Rather it should be understood that it is working in the interests and solely for the defence of the weak.” (Comte de Mun, Discours, April 1893.)

[1030] The Social Christians somewhere make the remark that even if the orthodox account of creation is destined to disappear before the onslaughts of the evolutionary theory and Adam makes way for the gorilla, the problem would merely be intensified, for it would still be necessary to get rid of the “old man.” “We live,” says Brunetière, “in the strength of the victories won over the more primitive instincts of our nature” (Revue des Deux Mondes, May 1, 1895).

Kidd in his Social Evolution, a work which attracted great attention when it was first published in 1894, attempts to apply the Darwinian theory to Christianity. He accepts the Darwinian hypothesis that the struggle for existence and natural selection constitute the mainsprings of progress. But the struggle may demand, or the selection involve, the sacrifice of individual to collective interest, and the only force which can inspire such sacrifice is religion.

[1031] It was no Christian Socialist, but Auguste Comte, the founder of Positivism, who wrote: “The original equality of men is not a doctrine founded simply upon the observation of social facts. It was only clearly affirmed for the first time by Christianity.” (Traité de Politique, vol. i, p. 407.)

[1032] Frédéric Le Play (1806-82) was a mining engineer, and was educated at the École Polytechnique. He subsequently became a professor at the École des Mines and a Counseiller d’État. In 1855 he published a collection of monographs dealing with working-class families under the title of Les Ouvriers européens, in one volume (the second edition, which appeared in 1877, consisted of six volumes). In 1864 he published an exposition of his social creed in La Réforme sociale, a book that Montalembert declared to be “the most original, the most courageous, the most useful, and altogether the most powerful book of the century.” It hardly deserves such extravagant praise, perhaps, but it is true that many of its more pessimistic prophecies concerning the future of France have been very curiously verified.

In 1856 Le Play founded La Société d’Économie sociale, which since 1881 has been responsible for the publication of La Réforme sociale. He organised the Universal Exhibition in 1867, and was one of the first to arrange exhibitions of social work. For a résumé of his life and work see Frédéric Le Play d’après lui-même, by Auburtin (Paris, 1906).

[1033] Programme des Unions de la Paix sociale, chap. 1.

[1034] “The gravest and most dangerous error of all, and one that has been the parent of all our revolutions, is the false principle which the innovators of 1789 would put into practice and which affirms the original perfection of mankind. It also encourages the belief that a society composed of ‘natural’ men would enjoy peace and happiness without any effort at all, and that these desiderata are just the spontaneous outcome of every free society.”

[1035] “It is the great misfortune of France that the family should be immersed in the commune, the commune in the department, the department in the State.” (La Réforme sociale, vol. iii, Book VII.)

[1036] “It [the patriarchal régime] in all matters relating to economic action or to social life shows greater attachment to the past than concern for the future. Obedience is the keynote rather than initiation. The family group tends to arrest the enterprise which would characterise the action of the more independent members of the family in a somewhat freer atmosphere.” (La Réforme sociale, Book III.)

[1037] “In short, I have never met with a social organisation which to the same extent vitiates the laws both of nature and morality.”

[1038] Le Play, who had some influence over Napoleon III, tried to get him to consent to some such modification of the Civil Code. But the Emperor, though favourably inclined, and despot as he was, dared not alienate public sympathy in the matter. And really fathers seldom exercise the full authority which the law gives them even now. The evil, then, if it is an evil, is deeper than Le Play imagined, and seems to be moral rather than legal.

[1039] “Human societies should aim not so much at the creation of wealth as such, but rather at increasing the well-being of mankind. Well-being includes daily bread, but it does not exclude social peace.” (Claudio Jannet in a lecture on Les Quatre Écoles d’Économie sociale.)

[1040] We must remember that these were the orthodox views then. Villermé, writing in 1840 in his celebrated Tableau de l’État moral et physique des Ouvriers, thought it was the employers really who could best improve the circumstances and character of the workers.

[1041] We get some idea of the importance which he attributed to the permanence of engagements when we realise that he contemplated the abolition of slavery with a measure of regret. (La Réforme sociale.)

[1042] Principles, Book IV, chap. 7.

[1043] “Among the panaceas advocated in our time none has been more criticised than ‘association.’ From a practical point of view these societies seem to present none of the advantages ordinarily associated either with complete independence or with a well-managed business concern.”

[1044] “I have frequently posted as much as 1000 kilometres in order to consult some eminent landowner living on the confines of Europe.” (Letter to M. de Ribbes, October 3, 1867.)

[1045] “This method is based upon a careful observation of each fact and its past history. Nothing is left to the imagination, the presupposition, or the prejudices of the observer. It is essentially scientific and exact.” (La Réforme en Europe.)

[1046] These monographs appeared first of all, as we have seen, in his great work on the European workmen in 1855. The work has been carried on by his disciples and the results incorporated in the Ouvriers des Deux Mondes, which already numbers above a hundred volumes. They have also employed the method in writing monographs on industries and communes, etc.

The method requires supplementing by reference to statistics of population and wages, which can only be supplied, of course, by Governments.

[1047] “The comparison of receipts and expenditure should help to discover any oversight, just as the weight of a chemical substance both before and after an experiment helps to determine the nature of the chemical reaction.” (Bureau, L’Œuvre d’Henri de Tourville.)

[1048] With a good deal of candour he admits offering a reward to anyone who could show him a single happy family except under conditions of this kind. “But,” he adds, “all my efforts proved fruitless.” (Les Ouvriers européens, vol. iv, introduction.)

[1049] When Le Play teaches us that the essential condition of society implies

A double foundation—the Decalogue and paternal authority, A twofold link—religion and sovereignty, and Three kinds of material—the community, private property, and employers,

we cannot help thinking that the so-called method of observation has a very pronounced trait of dogmatism in its constitution.

[1050] “The principal object to aim at here is the limitation of the ecclesiastical personnel with a view to keeping them all fully employed,” as he adds later on. He had the same antipathy to religious congregations as he had to other forms of association.

[1051] “No social phenomenon can ever be explained if it is taken out of its own setting. All social science is based upon this law.” (Demolins, La Classification sociale.)

[1052] The similarity noted here has given rise to emphatic protests on the part of certain members of this school. There is no need to take offence at the epithet, however, provided we are careful to distinguish it from philosophic materialism and recognise that it does not necessarily exclude idealism.

[1053] This branch of the school, of which Tourville and Demolins were the earliest leaders, has given us several excellent books. Demolins’ own work on the superiority of the Anglo-Saxons caused quite a stir. Then there is M. de Rousiers’ book on producers’ industrial unions, and P. du Maroussem’s. We would also specially mention Paul Bureau’s Le Contrat de Travail (1902), La Participation aux Bénéfices, and La Crise morale des Temps nouveaux. Bureau’s work is characterised by precise impartial analysis of facts combined with great moral fervour.

[1054] Huet was a professor at Ghent, which accounts for his being considered a Belgian, just as Walras is generally considered a Swiss.

[1055] He was the first to emphasise the importance of borrowers combining. Only in this way can the poor hope to offer some real security. “How is it that the worker cannot borrow? Simply because he has no security to offer except just his work in the future. That future guarantee can only become real and certain by means of combination. Union eliminates the uncertainty which hitherto made the security worthless and the loan impossible.” (La Question du Travail, p. 25.)

“The problem is to outline a state of society where working men will work only for themselves and not for others; where none will reap but has already sown, and where each will enjoy the fruits of his own labour.” (Ibid.)

[1056] “Christianity and revolution as far as humanity is concerned have identical aims, and the one is the natural outcome of the other.” (Buchez, Traité de la Politique, vol. ii, p. 504.)

[1057] Moufang’s principal writings were published in 1864 under the title of Le Question ouvrière et le Christianisme. He could never make up his mind as between the corporative and the co-operative ideal, however. The latter was very much to the front just then, not only in France, but also with the English Christian Socialists and with the German socialist Lassalle. This was before the co-operative movement was eclipsed by trade unionism.

Hitze, however, shows none of his master’s hesitation, but emphatically declares that “the solution of the social question is essentially and exclusively bound up with a reorganisation of trades and professions. We must have the mediæval régime of corporations re-established—a régime which offers a better solution of the social problem than any which existed either before or after. Of course times have changed, and certain features of the mediæval régime would need modification. But some such corporative régime conceived in a more democratic spirit must form the economic basis.” (Capital and Labour.)

[1058] “We must direct all our private initiative and concentrate public attention upon this one reform—the corporative reorganisation of society.” (Programme de l’Œuvre des Cercles ouvriers, April 1894.)

Co-operative association is dismissed altogether. The Social Catholics have especially little sympathy with the small retail co-operative stores, because they threaten the existence of the small merchant and the small artisan—types of individuals that are dear to the heart of the Catholics. On the other hand, it shows itself very favourably inclined towards co-operative credit, because of the possibility of assisting the classes already referred to—the shopkeeper and the small merchant.

[1059] In 1894 the Congress of Catholic Circles which met at Rheims declared that, “without minimising the difficulties which stand in the way of extending the mixed syndicats, the formation of such syndicats must be our chief aim.” In 1904 Father Rutten, one of the leaders of the Belgian Catholic Syndical movement, in a report on the syndicalist movement writes as follows: “We do not despair of the mixed syndicat, which in theory we certainly think is nearest perfection. But we must not blind ourselves to facts, and whether we will or no we have to admit that at the present moment the mixed syndicat in ninety industries out of every hundred seems quite Utopian.” (Quoted by Dechesne, Syndicats Ouvriers belges, p. 76; 1906.)

[1060] Such is the programme as outlined especially in Austria, which is one of the countries where Social Catholicism seems fairly powerful. As a matter of fact, the corporative régime has never quite disappeared there, and for some years now attempts have been made to revive it in the smaller crafts. The new corporation would take the form of a centralised organisation, whose regulations would be obligatory upon all the members of the craft.

[1061] “The commune has always been organised. Is there any reason why the trade should not be? In both cases special relations are established, special needs arise, there are frequent conflicts and occasional harmony between the different interests. But all of them are nevertheless intimately bound together, and the links connecting them must be co-ordinated on some regular plan if every one is to be safe, and free to follow his own bent.” (Henri Lorin, Principes de l’Organisation professionnelle, in L’Association catholique, July 15, 1892.)

To this it might be replied that the majority generally makes the law for the commune, but that in the case of a free corporation it is often the minority that rules. To which it might be retorted that the so-called majority is often not better than a minority of the electors, and a very small minority indeed of the whole inhabitants—who of course include women, who generally have no votes. Moreover, as soon as the rules of the syndicat became really obligatory the majority if not the whole of the workers in the trade would be found within the union.

[1062] Father Antoine writes as follows in his Cours d’Économie sociale, p. 154; “The social question can never be completely solved until we have a complete revival of Christian morals.” Still more categorical is the declaration of M. Léon Harmel in L’Association catholique for December 1889: “We can see only one remedy, and that is that the authority of the Pope should be recognised all the world over, and his ruling accepted by all people.”

The annual study reunions which go by the name of les Semaines sociales, and which afford one of the best manifestations of the kind of activities which Social Christianity gives rise to everywhere, are not so exclusive. Economic questions of all kinds are discussed, but the programme is not strictly Catholic at all, and the basis is wide enough to include everyone who is a professed Christian.

[1063] “The corporations which would be set up under the ægis of religion would aim at making all their members contented with their lot, patient in toil and disposed to lead a tranquil, happy life” (sua sorte contentos, operumque patientes et ad quietam ac tranquillam vitam agendam inducant). (Encyclical of Leo XII, December 28, 1878, called the Quod Apostolici. See History of Corporations, by M. Martin Saint-Leon.)

[1064] “The corporation is simply the model of the Church. Just as for the Church all the faithful are equal in the sight of God, so here. But equality ends there. For the rest it is a hierarchy.” (Ségur-Lamoignon, L’Association catholique, July 13, 1894.)

[1065] The Ligue sociale d’Acheteurs, founded in Paris in 1900, is of Social Catholic inspiration.

[1066] “More important even than free will, whether of masters or of men, is that higher and more ancient law of natural justice which demands that wages should always be sufficient to enable the worker to lead a sober and honest life. But lest the public authority in this case, as in some other analogous cases, such as the question of the length of the working day, should unwisely intervene, and in view of the great variety of circumstances, it is better that the solution should be left in the hands of the corporations or the unions.” (Encyclical, Rerum Novarum, 1891.)

[1067] The Social Catholics wherever found are usually Protectionists, the reason being that they think their “corporative régime could never be kept going without some protection against foreign competition,” and also because most of their adherents are drawn from the ranks of the agricultural unions. (Programme de l’Œuvre des Cercles ouvriers, Art. 7.)

[1068] “The so-called productivity of capital, which constitutes the greatest iniquity of profit-making society, and which is from an economical point of view the final cause of social suffering, is nothing better than a word invented to hide the real fact, namely, the appropriation of the fruits of labour by those who possess the instruments of labour.” (Loesewitz, Législation du Travail, in L’Association catholique, 1886.)

[1069] Extract from a report of a meeting of the Sillon, November 1907:

“MARC SANGNIER. The social transformation which we desire to see, comrades, will aim, not at absorbing the individual, but rather at developing him. We want the factories, the mines, and the industries in the possession, not of the State, but of groups of workers.

“AN INTERRUPTER. That is socialism.

“MARC SANGNIER. You can call it socialism if you like. It makes no difference to me. But it is not the socialism of the socialists, of the centralising socialists. We don’t want to set the proletarians free from the control of the masters to put them under the immediate control of one great master, the State; we want the proletarians themselves, acting collectively, to become their own masters.”

[1070] Milcent, in L’Association catholique, 1897, vol. ii, p. 58. There is a Catholic Social school which is Liberal and individualist in its tendencies, and which is represented by such writers as the late Charles Périn, professor at Louvain, author of La Richesse and La Socialisme chrétien, and by M. Rambaud, author of Cours d’Histoire des Doctrines. Nor ought we to forget their connection with the development of agricultural credit banks of the Raiffeisen type which have been established in Germany, France, and Italy—although their inception in Italy is largely the work of a Jew named Wollemborg.

[1071] Such, for example, is the opinion of Nitti in his book on Catholic Socialism, and because of that rather unsatisfactory reason he only devotes a few pages to it.

[1072] There are several historical considerations that may with advantage be kept in mind in dealing with this subject, such as, for example, the notable fact that while the Catholic Church has always been opposed to usury, it was Calvin and Calvinists like Saumaise and the ancient jurist Dumoulin who first justified the practice of taking interest.

[1073] The Christian Socialist was preceded by another paper called Politics for the People, founded in 1848, which may be taken as the birthday of the movement. In any case the date is significant in view of the contemporary revolution in France.

It is only just to note that Channing, the American pastor, who died in 1842, was one of the pioneers. His writings on social questions are still read.

Those who wish for more information either on the history or on the other aspects of Social Christianity should consult the New Encyclopædia of Social Reform, published in America.

[1074] The following year Charles Kingsley preached a sermon in London which caused such a sensation that the vicar of the parish felt bound to protest against its tone even during the service. In the course of the sermon Kingsley remarked that any social system which enabled capital to become the possession of a few, which robbed the masses of the land which they and their ancestors had cultivated from time immemorial, and reduced them to the condition of serfs working for daily wage or for charity, was contrary to the spirit of the Kingdom of God, as revealed in Christ. The sermon was afterwards published under the title of The Church’s Message to the Workers.

[1075] Maurice declared that everyone who is a Christian must also be a socialist. But the significance of the word “socialist” has changed somewhat since then. According to Maurice, “The motto of the socialist is co-operation; of the anti-socialist, competition.”

[1076] “There is no doubt about association being the form which industrial government will take in future, and I have no doubt as to its success, but a preliminary training extending possibly over a couple of generations is necessary before the worker has the requisite ability or moral strength to make use of it.” (Kingsley in 1856.)

And this is how State intervention appealed to him: “The devil is always ready to urge us to change law and government, heaven and earth even, but takes good care never to suggest that we might change ourselves.”

[1077] The official organ of the Christian Social Union, which is definitely connected with the Church of England, is the Economic Review, published at Oxford—not to be confused with the Economic Journal, which is published in London by the Royal Economic Society.

[1078] E. Gounelle, Le Mouvement des Fraternités.

[1079] Mr. Josiah Strong, director of the Institute of Social Service at New York, is the publisher of a review called The Gospel of the Kingdom, which has for its programme “the study of economic facts in the light of the Gospel,” and in which he maintains that “if the world is ever to be Christianised industry must be Christianised first of all.” On the question of unemployment, for example, he refers us to Matthew xx, 6, and on the still more vexed question of the closed or open shop we are referred to 1 Corinthians xii, 16, 26. We must also mention Rauschenbusch’s eloquent book, Christianity and the Social Crisis.

The well-known economist Professor Richard T. Ely is another of the leaders of this movement. Nor must we omit Herron, who caused some sensation by declaring that it is necessary to go well beyond collectivism, which he thinks altogether too conservative and reactionary. He adds that Karl Marx is a crusted Tory compared with Jesus, “for any one who accepts private property in any form whatsoever, even in matters of consumption, must reject Christ.”

[1080] At a conference held at Geneva in 1891. At this conference M. Stöcker defined his programme as follows: “We do not believe that we can do anything without the State, but we also believe in the spirit of association. We have told the masters that their duty is to make some sacrifice for the sake of solving the question in a way that will be agreeable to their men. We have also told the workers that they must work hard, economically, and conscientiously, even if they never obtain a better situation.”

[1081] He was formally repudiated by the Emperor in 1896 in a telegram addressed to a powerful employer, Baron Stumm.

[1082] Goehre is the author of a work entitled Three Months in a Workshop. The book has been a great success and has produced a crop of imitations.

[1083] Kutter’s book Sie Mussen caused quite a flutter. The author attempts to show that the socialists are to-day the real disciples of Christ, but have been disowned by the Church.

[1084] For the past twenty years M. de Boyve, the leader of the co-operative movement in France, has been the president, which confirms us in the suspicion that the two schools had a common parentage, both really springing from the École de Nîmes. Periodical congresses are held in connection with it, and it also has a review called Le Christianisme Social.

[1085] Pastor Tomy Fallot, the initiator of this movement, indicates the path that should be followed thus: “The essential thing is to get a rough outline of that perfect type which is known as co-operation. Just now it seems the only thing that contains a prophecy of better times.” (L’Action Bonne.) Compare this with Maurice’s formula.

“We are Social Christians because we are solidarists. In our search for solidarity we have found the Messiah and His Kingdom. Solidarity is the layman’s term, the Kingdom of God the theologian’s, but the two are the same.” (Gounelle, L’Avant-Garde,1907.)

[1086] This group found its earliest recruits among the young pastors who ministered in the great industrial towns (M. Wilfred Monod at Rouen and M. Gounelle at Roubaix, for example), and thus found itself in close touch with poverty, suffering, and discontent. But several laymen have also joined it, among them being a son of the economist who was regarded as the doyen of the Liberal school—Frédéric Passy.

The Christian Socialist group publishes a journal of its own, entitled L’Espoir du Monde.

[1087] “‘For I could wish that myself were accursed from Christ for my brethren,’ writes St. Paul; in other words, ‘I do not want to be saved alone, and I shall be completely saved only when humanity as a whole has been saved.’ And so the evangelical doctrine would subordinate the full realisation of my personal salvation to the salvation of others.” (W. Monod, La Notion apostolique du Salut.)

[1088] Or, as he epitomises it elsewhere, “It is useless to speak of giving ourselves until we are certain that we own ourselves.”

[1089] Ruskin himself did not think that his doctrines were only of slight importance. The introduction to Munera Pulveris (1862) contains the following words: “The following pages contain, I believe, the first accurate analysis of the laws of Political Economy which has been published in England.”

See also the preface to Unto This Last, which has for its sub-title “Four Essays on the First Principles of Political Economy.”

[1090] There are a great number of novels dealing with social questions. For the English novels bearing on this topic see M. Cazamian, Le Roman social.

[1091] So much was this the case with Ruskin that Mme. Brunhes has published a book called Ruskin et la Bible, and Tolstoy on his side has an edition of the Gospels to his credit which is said to be much nearer the original than the ordinary version of the canon.

[1092] See Fors Clavigera, passim. Tolstoy writes in a similar strain. Money is just a conventional sign giving the right or the possibility of claiming the service of others. But although money is all-powerful in the matter of exploiting the worker it is quite useless when it comes to a question of furthering his well-being. There is a curious development of this thesis in Tolstoy’s What is to be Done?

[1093] “All this has come of the spreading of that thrice accursed, thrice impious doctrine of the modern economist, that ‘To do the best for yourself, is finally to do the best for others.’ Friends, our great Master said not so.” (Ruskin, Crown of Wild Olive, Lecture II).

[1094] Especially in that celebrated passage: “It [Political Economy] sounds with Philosophico-Politice-Economic plummet the deep dark sea of troubles, and having taught us rightly what an infinite sea of troubles it is sums up with the practical inference and use of consolation that nothing whatever can be done in it by man, who has simply to sit still and look wistfully to ‘time and general laws,’ and thereupon without so much as recommending suicide coldly takes its leave of us.” (Chartism.)

[1095] “If thou ask again … What is to be done? allow me to reply: By thee, for the present, almost nothing.… Thou shalt descend into thy inner man, and see if there be any traces of a soul there; till then there can be nothing done!… Then shall we discern, not one thing, but, in clearer or dimmer sequence, a whole endless host of things that can be done. Do the first of these.” (Past and Present. Book I. chap. 4.)

[1096] See particularly Fors Clavigera.

[1097] “Why, the four-footed worker has already got all that this two-handed one is clamouring for, and you say it is impossible.” (Carlyle, Past and Present, chap. 3; and see also Chartism, chap. 4.)

[1098] This was the ideal which he had in mind in founding the Guild of St. George. See an article by Professor Marshall, The Social Possibilities of Economic Chivalry, in the Economic Journal, March 1907. There is no reference to Ruskin in it, however.

[1099] When the Christian Socialists in 1854 organised a course of lectures for working men in London Ruskin volunteered to give a few addresses, not on social economics or on history, but on drawing.

[1100] One naturally thinks first of such industrial villages as Bournville and Port Sunlight. But in 1903 an entirely new city of this kind was begun at Letchworth, Herts. The idea has recently undergone a considerable development by a society that owes its inspiration to Ruskin.

[1101] Story of a Horse, in his First Stories (1861).

[1102] See a book entitled Labour, which consists of the meditations of a muzhik called Bondareff upon those words of Genesis, “In the sweat of thy face shalt thou eat bread,” followed by a long commentary by Tolstoy.

[1103] “Pleasure and pain are undoubtedly the ultimate objects of the calculus of economics. To satisfy our wants to the utmost with the least effort, to procure the greatest amount of what is desirable at the expense of the least that is undesirable, in other words, to maximise pleasure, is the problem of economics.” (Stanley Jevons, Theory of Political Economy, p. 40.)

[1104] “The errors of the Classical school are, so to speak, the ordinary diseases of the childhood of every science.” (Böhm-Bawerk, The Austrian Economists, in Annals of the American Academy of Political and Social Science, January 1891.)

[1105] Recherches sur les Principes mathématiques de la Théorie des Richesses.

[1106] Let P = value of product and x, y, z represent wages, interest, and rent respectively, then x + y + z = P, which is insoluble.

Nor does it seem much more hopeful when written out thus:

x = P - (y + z) y = P - (x + z) z = P - (x + y)

[1107] “The theory of economic equilibrium is quite distinct from the theory of final utility, although the public are apt to confuse them and to think that they are both the same.” (Vilfredo Pareto, L’Economie pure, 1902.)

[1108] The name varies a little with different authors and in different countries. “The final degree of utility” is the term used by Jevons, “marginal utility” by the Americans, “the intensity of the last satisfied want” by Walras. Walras also speaks of it as “scarcity,” using the term in a purely subjective fashion to denote insufficiency for present need. This very plethora of terms suggests a certain haziness of conception. The term “marginal” seems clearer than the term “final,” although in some cases it may be impossible to oust the latter.

It appears that the first suggestion of final utility in the sense in which it is employed by the Psychological school is due to a French engineer of the name of Dupuit. He threw out the suggestion in two memoirs entitled La Mesure de l’Utilité des Travaux publics (1844) and L’Utilité des Voies de Communication (1849), both of which were published in the Annales des Ponts et Chaussées, although their real importance was not realised until a long time afterwards. Gossen also, whose book is referred to on p. 529, was one of the earliest to discover it.

In its present form it was first expounded by Stanley Jevons in his Theory of Political Economy, and by Karl Menger in his Grundsätze der Volkswirtschaftlehre (1871). Walras’s conception of scarcity, which is just a parallel idea, was made public about the same time (1874). Finally Clark, the American economist, in his Philosophy of Value, which is of a somewhat later date (1881), seems to have arrived at a similar conclusion by an entirely different method—a remarkable example of simultaneous discoveries, which are by no means rare in the history of thought.

Despite its cosmopolitan origin, the school is generally spoken of as the Austrian school, because its most eminent representatives have for the most part been Austrians. Among these we may mention Karl Menger, already referred to, Professor Sax (Das Wesen und die Aufgabe der Nationalökonomie, 1884), Wieser (Der natürliche Werth, 1889), and of course Böhm-Bawerk (author of Grundzüge der Theorie des wirtschaftlichen Güterwerths, in Jahrbücher für Nationalökonomie, 1886, and the well-known book on capital and interest).

Lately, however, the doctrine seems to have changed its nationality and become wholly American. The American professors J. B. Clark, Patten, Irving Fisher, Carver, Fetter, etc., are assiduous students of marginal utility, applying the conception not only to problems of capital and interest, but also to the question of distribution.

[1109] To escape the confusion which would result from employing the same term in two such very different senses—a confusion that is inevitable however one may try to avoid it—Pareto has substituted the word “ophelimity,” and Gide in his Principles (1883) “desirability.”

[1110] “The idea of final utility is the ‘open sesame,’ the key to the most complicated phenomena of economic life, affording a solution of its most difficult problems.” (Böhm-Bawerk, The Austrian Economists, in Annals of the American Academy of Political and Social Science, 1891.)

[1111] Condillac had already drawn attention to this fact (see p. 48), and Buffon had noted it even before that. “The poor man’s coin which goes to pay for the necessaries of life and the last coin that goes to fill the financier’s purse are in the opinion of the mathematician two units of the same order, but to the moralist the one is worth a louis, the other not a cent.” (Essai d’Arithmétique morale.)

The connection between quantity and demand is best expressed by means of a curve either of utility or of demand (see p. 532). Along the horizontal line let the figures 1, 2, 3, 4 denote the quantities consumed, and from each of these points draw a vertical line to denote the intensity of demand for each of these quantities. The height of the ordinate decreases more or less rapidly as the quantity increases, until at last it falls to zero.

[1112] It is in cases of this kind that figures become handy. If we take two curves, an ascending one to represent the utility of each handful of salt parted with, and a descending one to represent the utility of each handful of rice acquired, the two curves must necessarily intersect, seeing that one is just the inverse of the other. The point of intersection marks the place where the utilities of the two exchanged handfuls are exactly equal.

We must be careful not to confuse matters, however. It is not suggested that the final utilities in the case of the two co-exchangers are equal. There is no common measure by which the desires of different persons can be compared, and no bridge from one to the other. What is implied is that the final utility of both commodities for the same person are the same. The balance lies between two preferences of the same individual. The actual market exchange is just the resultant of all these virtual exchanges.

The Austrian school in its explanation makes use of a hypothesis known as the double limit, which does not seem to be absolutely indispensable, seeing that other economists of the same school—Walras, for example—appear to get on well enough without it. They seem to think of buyers and sellers drawn up in two rows facing one another. Every one of the sellers attributes to the object which he possesses and which he wants to sell a certain utility different from his neighbour’s. Each buyer in the same way attributes to that object which he desires to buy a degree of utility which is different from that which his neighbour puts upon it. The first exchange, which will probably have the effect of fixing the price for all the other buyers and sellers, will take place between the buyer who attributes the greatest utility to the commodity he has to sell, and who is therefore least compelled to sell, and the buyer who attributes the least utility to the commodity he wishes to buy and who is therefore least tempted to buy. At first sight it seems impossible that the party as a whole should be bound by the action of the two individuals who show the least inclination to come to terms. It would be more natural to expect the first move to take place between the seller who is forced to sell and because of his urgency is content with a price of 10_s._ per bushel, say, and the buyer who feels the strongest desire to buy and who rather than go without would be willing to give 30_s._ for it. But upon consideration it will be found that the price is indeterminate just because these two are ready to treat at any price. The most impatient individual will surely wait to see what terms the least pressed will be able to make, and it is only natural that those who are nearest one another should be the first to come together. These two co-exchangists who control the market are known as the “limiting couple.”

[1113] It was Stanley Jevons who gave it this expressive name. It is meant to imply that if two objects which fulfil very different needs, perhaps, can be interchanged, they cannot have very different values.

[1114] The law of substitution applies not merely to different objects which satisfy the same need, but also to objects which supply different needs, provided those needs are to any extent interchangeable—to tea as a substitute for wines, to coffee as a substitute for both, to travel as a substitute for the life of a country gentleman.

[1115] “The enjoyment derived from the least enjoyable unit is what we understand by final utility.” (Böhm-Bawerk, The Austrian Economists, in the Annals of the American Academy of Political and Social Science, 1891.)

[1116] The new school deduces a very curious conclusion from this law of indifference. Although there is only one price for all corn buyers, say, the final utility of the corn for each individual is by no means the same. Let us assume that the price is 20_s._, but one of the buyers, rather than go without, would possibly have given 25_s._ for it, and others might have been willing to give 24_s._, 23_s._, 22_s._, etc. Every one of those who ex hypothesi only pay 20_s._ gains a surplus which Professor Marshall has called consumer’s rent (Principles, Book III, chap. 6). He has given it that name in order to facilitate comparison with producer’s rent, which had gained notoriety long before the Hedonistic school arose. Both are due to similar causes, namely, the existence of differential advantages which give rise to a substantial margin between the selling price and the cost of production.

Really, however, the similarity is simply a matter of words, because consumer’s rent is purely subjective, whereas producer’s rent is a marketable commodity. It would be better to say simply that in many cases of exchange it is not correct to argue that because the prices are equal the satisfaction given to different persons is necessarily equal.

[1117] It is scarcely necessary to point out that if workers are not really interchangeable on account of their different capacities the law can no longer be said to hold good, since it always presupposes free competition, whereas in this case we have a personal monopoly.

[1118] It is not quite the same when the capital is fixed, for the law of substitution is no longer applicable in that case, and the incomes are very different.

[1119] It must not be supposed that in applying the term “school” to these writers we wish to suggest that they have a common programme. All we mean is that they make use of the same method.

It is generally recognised to-day that the school dates from the appearance of Cournot’s Recherches sur les Principes mathématiques de la Théorie des Richesses (1838). Cournot, who was a school inspector, died in 1877, leaving behind him several philosophical works which are now considered to be of some importance. The story of his economic work affords an illustration of the kind of misfortune which awaits a person who is in advance of his age. For several years not a single copy of the book was sold. In 1863 the author tried to overcome the indifference of the public by recasting the work and omitting the algebraical formulæ. This time the book was called Principes de la Théorie des Richesses. In 1876 he published it again in a still more elementary form, and under the title of Revue sommaire des Doctrines économiques, but with the same result. It was only shortly before his death that attention was drawn to the merits of the work in a glowing tribute which was paid to him by Stanley Jevons.

Gossen’s book, Entwickelung der Gesetze des menschlichen Verkehrs, which appeared much later (1853), was equally unfortunate. The author remained an obscure civil servant all his life. His book, of which there is still a copy in the British Museum—the only one in existence possibly—was accidentally discovered by Professor Adamson, and Stanley Jevons was again the first to recognise its merits. A brief résumé of the work will be found in our chapter on Rent.

Stanley Jevons (died 1882) belongs both to the Mathematical and to the Final Utility school. His charming book, The Theory of Political Economy, dates from 1871.

Léon Walras, who is persistently spoken of as a Swiss economist just because he happened to spend the greater part of his life at the University of Lausanne, also known as the School of Lausanne, was in reality a Frenchman. His Éléments d’Économie politique pure, of which the first part appeared in 1874, contains a full exposition of Mathematical economics.

To-day the Mathematical method can claim representatives in every country: Marshall and Edgeworth in England, Launhardt, Auspitz, and Lieben in Germany, Vilfredo Pareto and Barone in Italy, Irving Fisher in the United States, and Bortkevitch in Russia. France, however, the country of Cournot and Walras, has no Mathematical economists, unless we mention Aupetit whose work, Théorie de la Monnaie, although dealing with a special subject, contains a general introduction.

[1120] Des Différences d’Opinion entre Économistes (Geneva, 1897), inserted in Scritti varii di Economia, pp. 1-48 (1904).

[1121] Value itself, the pivot of Classical economics, is simply a link in exchange with the new school, and thus it loses all its subjectivity; and since it is not a thing at all, but merely an expression, it would be ridiculous to struggle to find its cause, foundation, or nature, as the older writers did. This is why Jevons proposed to banish the word altogether and to employ the term “ratio of exchange” instead. And Aupetit insists that “the expression ‘value’ is to-day devoid of content … and seems doomed to disappear from the scientific vocabulary altogether. There is no great harm in omitting this parasitical element as we have done, and in treating economic equilibrium as an entity without ever employing the term ‘value.’” (Théorie de la Monnaie, p. 85.)

[1122] If demand be represented by d and price by p, then d = f(p); i.e. demand is a function of price.

[1123] Dupuit, the engineer, was the first to make use of a demand curve. Cournot, who refers to it as the law of sale, gives an admirable illustration of its operation in the case of bottles of medicinal waters of wonderful curative power. At a very low price the demand and consequently the sale would be very great, though not infinite because of the limit which exists for each want. At a very high price it would be nil. Between the two extremes would be several intermediate curves. We cannot deal with all the ingenious deductions which Cournot makes concerning monopoly and the greater or lesser discord between monopoly and the general interest.

[1124] The demand curve is generally concave, and this characteristic form is just the geometrical expression of the well-known fact that when prices are low enough to be accessible to everybody the sales increase rapidly, because lean purses being much more numerous than fat ones a slight lowering of the level of prices will bring the commodity within the reach of a fresh stratum of people. It may take different forms, however. For some products, such as common salt, a considerable fall in the price will not result in a large increase in the sales. In the case of diamonds a great fall in price may cause a falling off in demand because they have become too cheap. The supply curve, on the other hand, is generally convex, because the supply, which only enters upon the scene at a certain point, is very sensible to price movements, going up rapidly with a slight increase in price. Its upward trend is soon arrested, however, because production cannot keep up the pace. It is even possible that the supply may fall off at the next point, for the simple reason that there is no more of the commodity available.

[1125] Below on the same diagram is traced a demand and a supply curve.

The figures along the horizontal line denote price, along the vertical the quantity demanded. In the given figure when price is 1, quantity demanded is VI, and with the price at 7 the quantity demanded falls to zero.

The dotted curve represents the supply. When price is 1, supply is nil. When price is 10, supply mounts up to IV. Exchange obviously must take place just where demand and supply are equal, i.e. at b, which marks the point of intersection of the two lines, when the amount demanded is equal to the quantity offered and the price is 5.

The vertical lines are called ordinates, and 0 X the axis of the ordinates. Distances along 0 X are called abscissæ. Each point on the curve simply marks the intersection of these, of the ordinates and the abscissæ. This is true of the point a, for example, where the perpendicular denotes the price (1) and the other line the number of units sold, in this case VI.

Though in the diagram we have considered the ordinates to represent price and the abscissæ quantities, the reverse notation would work equally well.

[1126] Mathematical economics also studies other forms of equilibrium which are much more complicated and not quite so important perhaps, relating as they do to conditions of unstable equilibrium.

[1127] Note Pareto’s terms of appreciation (Économie pure, 1902, p. 11): “Walras was the first to show the importance of these equations, especially in the case of free competition. This capital discovery entitles him to all the praise that we can give him. The science has developed a good deal since then, and will undoubtedly develop still more in the future, but that will not take away from the importance of Walras’s discovery. Astronomy has progressed very considerably since Newton published his Principia, but far from detracting from the merits of the earlier work it has rather enhanced its reputation.”

[1128] If this is to be taken as literally true, we have this curious result: the entrepreneur, receiving for the products which he sells just exactly what he paid for producing them, makes no profit at all.

Both Walras and Pareto fully admit the paradoxical nature of the statement. Of course it is understood that it can only happen under a régime of perfectly free competition, care being also taken to distinguish between profits and interest, a thing that is never done, apparently, by English economists, who treat both interest and profit as constituent elements of cost of production.

But this is not so wonderful as it seems at first sight. It simply means a return to the well-known formula that under a régime of free competition selling price must necessarily coincide with cost of production.

This does not prevent our recognising the existence of actual profits. Profits are to be regarded as the result of incessant oscillations of a system round some fixed point with which it never has the good fortune actually to coincide. According to this conception they are but the waves of the sea. But the existence of waves is no reason for denying a mean level of the ocean or for not taking that mean level as a basis for measuring other heights. Some day, perhaps, equilibrium will become a fact, and profits will vanish. But if that day ever does dawn either upon the physical or the economic world, all activity will suddenly cease, and the world itself will come to a standstill.

[1129] A full exposition of Walras’s system involves the supposition not only of two but of three markets interwoven together. On the actual market where goods are exchanged the quantity of these commodities depends upon the quantity of productive services, land, capital, and labour, and the quantity of these productive services, at least the quantity of capital, depends to a certain extent upon the creation of new capital, which in turn depends upon the amount of saving. The third market, then, is that of capitalisation. Since the new capital can only be paid for out of savings, i.e. out of that part of the revenue which has been employed in other ways than in buying consumable commodities, the price of capital must be such as to equal the quantity saved and the quantity of new capital demanded. If saving exceeds the demand the price will fall, etc.

To say that the price of capital has gone up is to say that the rate of interest or the reward of saving has fallen. But a fall in the rate of interest will check saving. The result will be a change of equilibrium, the price of new capital will fall, the rate of interest will go up, etc.

Briefly, then, the total maximum utilities on the one hand and the price on the other, these are the two conditions determining equilibrium in the economic world, no matter whether it be products or services or capital. “The same thing is true of gravity in the physical world, which varies directly with the mass and inversely with the square of the distance. Such is the twofold condition which determines the movement of the celestial bodies.… In both cases the whole science may be represented by a formula consisting of only two lines. Such a formula will include a great number of facts.” (Walras, Économie politique pure, p. 306.)

[1130] Professor Edgeworth employs a similar comparison, speaking of the economic man as a charioteer and of social science as consisting of a chariot and some such charioteer (Mathematical Psychics, p. 15). “‘Mécanique Sociale’ may one day take her place along with ‘Mécanique Céleste,’ throned each upon the double-sided height of one maximum principle, the supreme pinnacle of moral as of physical science.” (Ibid., p. 12.)

Pareto regards political economy as a study of the balance between desires and the obstacles which stand in the way of their satisfaction.

[1131] During the last few years we have had, of course, M. Colson’s great book on political economy, which contains a mathematical treatment of demand and supply, M. Landry’s exposition of the Austrian theory in his Manuel d’Économique, and M. Antonelli giving a special course on Walras’s system at the Collège libre des Sciences sociales. We have already referred to Aupetit’s book on money. We must also mention the translations of the Manual of Political Economy of Vilfredo Pareto and of Jevons’s Theory of Political Economy.

[1132] M. Paul Leroy-Beaulieu is particularly severe upon the Mathematical method. “It is a pure delusion and a hollow mockery. It has no scientific foundation and is of no practical use. It is as much a gamble as the scramble for prizes at the table at Monte Carlo.… The so-called curve of utility or demand is of no earthly use, for if the price of wine goes up the consumption of beer or cider will increase, that is all.” (Traité d’Économie politique, vol. i, p. 85; vol. iii, p. 62.)

This last criticism is somewhat unexpected, for we have already seen that the Hedonists are very far indeed from ignoring the law of substitution. If they did not actually discover it they immensely amplified it. And it is very probable that if there had been a contradiction between their doctrines and this law it would not have escaped them. Moreover, we note that beer and cider have their demand curves: cannot wine have one as well? Having to pass from one to the other does undoubtedly complicate matters, and the Mathematical economist frequently finds himself obliged to juggle not with one but with two or three balls. But this is just the kind of difficulty which is amenable to mathematical treatment—nay, even, perhaps, demands it. The connection between the values of complementary or supplementary goods is one of the problems that has been most thoroughly investigated by the Hedonists. See Pantaleoni, Economia pura.

A criticism of Mathematical economics may be found in an article by M. Simiand entitled La Méthode positive en Science économique (Revue de Métaphysique et de Morale, November 1908), and a good reply in La Méthode mathématique en Économie politique, by M. Bouvier.

[1133] Walras put it well when he wrote as follows: “We have never tried to analyse the motives of free human beings. We have simply tried to give a mathematical expression of the result.” (Éléments d’Économie politique pure, p. 232.)

[1134] “We do not know exactly what it is that binds the function and the variable together, or the intensity of the satisfied need to the quantity already consumed. But for every item on the one side we feel certain that there must be a corresponding item on the other.” (Aupetit, Théorie de la Monnaie, p. 42.)

[1135] For a vigorous refutation of this criticism see two articles by Rist entitled Économie optimiste and Économie scientifique in the Revue de Métaphysique et de Morale for July 1904 and September 1907.

[1136] Or he will argue, perhaps, that the market would have been much more favourable to Esau if Jacob had had more pottage than he could easily have disposed of—a case where even monopoly might offer some advantage to the buyer.

[1137] “For purposes of demonstration,” says Pareto, “we have assumed the existence of private property. But to assume on the strength of the conclusion which we have established that a régime of private property gives the maximum of well-being would clearly be to beg the question.”

[1138] This doctrine is not accepted even by all the Hedonists. Walras especially is very critical in the fourth edition of his Économie pure. M. A. Landez in his Intérêt du Capital (1904) and Irving Fisher in The Rate of Interest (1907) have tried if not to demolish it at least to correct it by giving a more subtle analysis of the motives determining a preference for a future income as compared with a present one. This time-preference, of course, varies according to the fortune of each and other circumstances.

[1139] We have already remarked on this in the case of M. Böhm-Bawerk. This is another respect in which the Hedonists have shown themselves faithful to the Classical tradition. The necessity for separating the art from the science of political economy, pure economics from applied, was especially emphasised by Courcelle-Seneuil and Cherbuliez. Pareto put it well when he said that the maximum of ophelimity can be put in the shape of an equation, but the maximum of justice can not.

[1140] This system, according to Walras, would possess another advantage in that it would facilitate the establishment of free trade, which is an ideal of the science. The chief difficulties would thus be avoided, such as unequal import duties and unequal degree of fertility. “Free trade has always involved the absence of duties, and the nationalisation of land would further result in the free movement of capital and labour to whatever place might prove most advantageous to them.” (La Paix par la Justice sociale et par le Libre-Échange, in Questions pratiques de Législation ouvrière, September-October 1907.)

[1141] The same is true of American economists, where the use of the Hedonistic method is by no means confined to one school. Professor Clark employs it, and he is rather inclined to set up an apology for the present economic order and to trust to the efficacy of free competition. But Professor Patten also makes use of it, and he is an interventionist of the extreme type.

[1142] Economics will become a science when it can say that “what was just now nothing better than an intuition can now be fully proved.” (Walras, Économie politique pure, p. 427.)

[1143] “It is necessary to apply the law of the variation of intensity of need to each separate individual in relation to each one of his needs.” (Aupetit, La Monnaie, p. 93.)

[1144] It is only those Hedonists who claim to be able to establish an exact science that make use of the mathematical and abstract method to the total exclusion of the historical and biological method. Professor Marshall expressly declares himself in favour of the biological method, and would advocate employing diagrams and curves as little as possible (Economic Journal, March 1898, p. 50).

[1145] Pareto, Giornali degli Economisti, September 1901.

[1146] Böhm-Bawerk, the Austrian Economists, loc. cit. On the other hand, one of the disciples of this school, M. Landry, writes: “To-day the Austrian school is somewhat played out” (L’École économique, in Rivista di Scienza, 1907). At the end of thirty years!—not a very long life.

[1147] Marshall, Distribution and Exchange, in Economic Journal, March 1898.

[1148] Our figures are taken from the well-informed pamphlet of M. Einaudi, La Municipalisation du Sol dans les Grandes Villes (Girard et Brière, 1898), reprinted from Devenir social.

[1149] P. Leroy-Beaulieu, L’Art de placer et gérer sa Fortune, p. 34.

[1150] Marshall, Principles, preface to the first edition.

[1151] There is a good account of the evolution of which we have given a brief résumé in a work published as far back as 1868, entitled Versuch einer Kritischen Dogmengeschichte der Grundrente, by Edward Berens (Leipzig), but especially in La Théorie de la Rente et son Extension récente, by Paul Frézouls (Montpellier, 1908), and in the very interesting articles of Herr Schumpeter, Das Rentenprinzip in der Verteilungslehre, which appeared in Schmoller’s Jahrbuch in 1907, pp. 31 and 591.

[1152] Ricardo’s Principles, chap. 3, “On the Rent of Mines.” Cf. Stuart Mill, Principles, Book III, chap. 5, § 3.

[1153] Stuart Mill, loc. cit.

[1154] This fact was noted by Hermann even as far back as 1832 in his very remarkable Staatswirtschaftliche Untersuchungen (Munich, 1832), p. 166: “A phenomenon that is exactly analogous to rent becomes manifest whenever a country employs imported machinery the multiplication of which is difficult, possibly because the producing country discourages such exportation. [Such was the case with English machinery at the time Hermann wrote.] … Suppose now that the price of the commodity manufactured with the aid of such machinery goes up. If the country under consideration can only manufacture with machinery that is more expensive but less efficient because of its defective character, the cost of production will still be higher than if the best [foreign] machinery were employed. The result is that the proprietors of the latter retain such advantages as the rise in price had secured them.” Mangoldt (in Die Lehre vom Unternehmergewinn, Leipzig, 1855) expresses his view in a somewhat similar fashion: “Rent shows itself clearest and on the largest scale in the case of agricultural land, but it is equally evident wherever the difficulty of multiplying capital prevails or where it can only be replaced by other capital of a more expensive character or a less productive yield.” Ricardo himself possibly had the rent of capital in mind when he said: “The exchangeable value of all commodities, whether they be manufactured or the produce of the mines or the produce of land, is always regulated, not by the less quantity of labour that ill suffice for their production under circumstances highly favourable, and exclusively enjoyed by those who have peculiar facilities of production, but by the greater quantity of labour necessarily bestowed on their production by those who have no such facilities, by those who contrive to produce them 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 the production.” (Principles, p. 37.) English writers, however, seldom speak of the rent of capital. Rent with them always signifies income due, not to the intervention of man, but to the natural resources of production.

[1155] Principles, Book III, chap. 5, § 4.

[1156] “But as it is clearly a surplus, the labour having been previously paid for by average wages, and that surplus the spontaneous gift of nature, we have thought it most convenient to term it rent.” (Quoted by Cannan, Production and Distribution, p. 198.)

[1157] In an article entitled The Source of Business Profit.

[1158] Walker is one of the first of the English-speaking economists to make this distinction and to employ the term “profit” in a narrow sense, distinguishing it from interest on the one hand and wages on the other. He even went so far as to subtract the wages of superintendence and direction because this work of supervision could be delegated to others (Wages Question, 2nd ed., 1891, pp. 230, etc.), while the special function performed by the entrepreneur, namely, the adaptation of supply to demand, requires special remuneration, which he proposes to call profit. It is a little odd that a writer who seemed completely isolated should be shown, after all, to share the views of other economists. Walker declares that save his own father, Amasa Walker, he knew of no economist who had distinguished between capitalist and entrepreneur. But J. B. Say had already made the same distinction, which had been adopted by all Continental economists even as far back as the beginning of the nineteenth century.

[1159] This is how Walker summarises his duties: “To furnish also technical skill, commercial knowledge, and powers of administration; to assume responsibilities and provide against contingencies; to shape and direct production, and to organise and control the industrial machinery.” (The Wages Question, p. 245.)

[1160] Walker, Quarterly Journal of Economics, April 1887, p. 278.

[1161] Hermann, Untersuchungen, p. 206; for J. B. Say cf. supra, p. 113.

[1162] Pantaleoni (Economia pura, Part III, chap. 4) seems to be the only economist who accepts Walker’s theory without any reservation.

[1163] For his criticism of Walker see the Quarterly Journal of Economics, 1887, p. 479, and the Principles, 4th edition, p. 705, note. In conformity with English tradition, Marshall includes within profits any interest upon such capital as the entrepreneur possesses.

[1164] Pantaleoni makes the same distinction: “Profits,” says he, “may be the result of superior ability acquired either by assiduous study or prolonged preparation. In that case we are dealing, not with a kind of rent, but with a species of profit which may be very remunerative but which is nevertheless amenable to a very different law from that which generally regulates the investment of capital.” (Economia pura, Part III, chap. 4.) On the other hand, Pantaleoni refuses to recognise the existence of an element of insurance against risk as an item in profits, because, as he points out, if the premium has been carefully reckoned up and compared with the risk, “it ought on an average to be equal to it at the end of a certain number of years, so that the net rent would become equal to zero.” (Ibid.)

[1165] Cf. Distribution of Wealth (1899) and Essentials of Economic Theory (1908).

[1166] Moreover, the entrepreneur may find himself forced to yield a part of this composite rent either to the landlord or to the capitalist from whom he has borrowed his capital or to the workers by whose superior ability he has benefited. The difficult question of determining what proportion ought to be given in this way is discussed by Marshall in his Principles, Book V, chap. 10, § 4; Book VI, chap. 8, § 9.

[1167] Walker might answer by saying that the dividend is simply the interest upon the capital. But we can hardly bring ourselves to believe this.

[1168] This word “acquired” is not quite in conformity with the pure theory of rent, for if these advantages are acquired the remuneration thus received should be considered merely as interest upon capital spent.

[1169] Stuart Mill, Principles, Book III, chap. 5, § 4.

[1170] “Wages and profits represent the universal elements in production, while rent may be taken to represent the differential and peculiar: any difference in favour of certain producers, or in favour of production in certain circumstances, being the source of a gain, which, though not called rent unless paid periodically by one person to another, is governed by laws entirely the same with it.” (Ibid., Book III, chap. 5, § 4.)

[1171] “Rent, it should be remembered, is the difference between the produce obtained by equal portions of labour and capital employed on land of the same or different qualities.” (Ricardo, Principles, chap. 9.)

[1172] Principles, Book II, chap. 16, § 2.

[1173] Ricardo had already made use of the following argument: “Suppose that the demand is for a million of quarters of corn, and that they are the produce of the land actually in cultivation. Now, suppose the fertility of all the land to be so diminished that the very same lands will yield only 900,000 quarters. The demand being for a million of quarters, the price of corn would rise, and recourse must necessarily be had to land of an inferior quality sooner than if the superior land had continued to produce a million of quarters.” (Principles, chap. 32, p. 246.) Towards the end of his life Ricardo seems to have been more favourably inclined to a conception of rent somewhat closer akin to J. B. Say’s. Compare the curious quotations given in Frézouls, op. cit., p. 21.

[1174] “A commodity may no doubt, in some contingencies, yield a rent even under the most disadvantageous circumstances of its production; but only when it is, for the time, in the condition of those commodities which are absolutely limited in supply, and is therefore selling at a scarcity value—which never is, nor has been, nor can be a permanent condition of any of the great rent-yielding commodities.” (Principles, Book III, chap. 5, § 4.) For the position with regard to mines see the same chapter, § 3.

[1175] In this case Stuart Mill seems to compare rent to a monopoly revenue: “A thing which is limited in quantity, even though its possessors do not act in concert, is still a monopolised article.” (Ibid., Book II, chap. 16, § 2.) The expression, though adopted by several other writers, is not quite accurate. In the case of a monopoly the owners fix the quantity which they will produce beforehand with a view to getting a maximum of profit. But this cannot apply to landowners. At any rate, if there is any monopoly it must be an incomplete one.

[1176] Stuart Mill, Principles, Book III, chap. 5, § 1.

[1177] Such was the argument employed by J. B. Say in the course of a controversy with Ricardo. “It is perfectly obvious that if the needs of society raise the price of corn to such a level as to permit of the cultivation of inferior lands which yield nothing beyond wages for the workmen and profits on the capital, then that demand on the part of society, coupled with the price which it can afford to pay for the corn, allows of a profit on the most fertile or best situated lands.” (Traité, 6th edition, p. 410.) Continuing, he remarks: “David Ricardo in the same chapter clearly shows that the profit from land is not the cause but the effect of the demand for corn, and the reasons which he adduces in support of this view may be turned against him to prove that other items in cost of production, notably the wages of labour, are not the cause but the effect of the current price of goods.” Ricardo himself seemed on the point of being converted to this view. See p. 554, note 2.

[1178] The theory of economic equilibrium enables us to give a still better demonstration of the general nature of this theory of rent. On this point we may refer to Pareto’s Cours and Sensi’s La Teoria della Rendita (Rome, 1912).

[1179] Cf. supra, p. 555, note 2.

[1180] Hermann, Staatswirtschaftliche Untersuchungen, Part V: Vom Gewinn. Even in the preface he declares that the doctrine of the rent of land must be regarded as a particular instance in the exposition of the law governing the returns from fixed capital in general.

[1181] Mangoldt, Die Lehre vom Unternehmergewinn (Leipzig, 1855), pp. 109 et seq.

[1182] Die nationalökonomische Theorie der ausschliessenden Absatzverhältnisse (Tübingen)—a work in which he attempts a justification of rents in general and of the rent of land in particular. Rent he regards as the reward offered to anyone who knows how to utilise either his personal capacity or his capital or land in a way that is particularly advantageous to society. It supplies an allurement that acts as the source of all progress and of all economic activity, a sort of natural right of ownership which society spontaneously confers upon those individuals who know how to serve society, and which competition causes to disappear at the opportune moment. The rent of land can be justified on this ground wherever legislation has not made an abuse of it. This new claim on behalf of rent is very interesting, and those who regard rent as exclusively unearned increment may ponder over this new characteristic of unearned incomes.

[1183] P. 148.

[1184] “The sum paid for the use of land differs in no material respect from the sum paid for the use of other kinds of capital—a machine, for example. Although the land or the machine has to be returned to its rightful owner in the same condition as it was received, one ought to pay something just because such capitals are economically scarce; in other words, the amount existing at any one time or place is not greater than the demand. What differentiates land from machinery is that savings might easily be employed in turning out new machinery, but cannot very well increase the quantity of land in existence, or at any rate cannot transform existing soils in a manner that is profitable.” (Pareto, Cours d’Économie politique, vol. ii, § 759.) Marshall makes use of analogous terms: “If the supply of any factor of production is limited, and incapable of much increase by man’s effort in any given period of time, then the income to be derived from it is to be regarded as of the nature of rent rather than profits in inquiries as to the action of economic causes during that period; although for longer periods it may rightly be regarded as profits which are required to cover part of the expenses of production and which therefore directly enter into those expenses.” (Principles, 1st ed., Book VI, chap. 3, § 1.)

[1185] Ibid., Book VI, chap. 3, § 7.

[1186] Did space permit, this would be the place to refer to the latest glorification of the doctrine of rent, which is to be found in Clark’s Distribution of Wealth, published in 1899. In that work, upon the strength of which the author enjoys a well-deserved reputation, revenues of various kinds are successively treated as rents. Imagine a fixed amount of capital applied along with successive doses of labour: each new dose of labour will produce less than the preceding one, while the production of the last dose regulates the remuneration of all the rest. But the product of the preceding doses is greater than that of the last, and a surplus value will be produced which will represent the product of capital and which will be exactly analogous to rent. Or suppose, on the other hand, that the quantity of labour is fixed and applied along with successive doses of capital; the productivity of the latter will in this case go on decreasing, and since the revenue of each dose will be proportionate to its productivity, any surplus left over will be of the nature of rent due to labour. There are other ingenious discussions which cannot be referred to in a note of this kind. But in our opinion the theory of economic equilibrium affords a simpler explanation of distribution, and the kind of optimism to which Clark’s theory gives rise seems hardly justified. His attempt to combine the idea of marginal productivity with the law of diminishing returns is a further proof of the persistent influence exerted by Ricardian ideas upon English-speaking economists.

[1187] Proudhon, Qu’est-ce que la Propriété, p. 74.

[1188] Pollock, The Land Laws, p. 12.

[1189] Agrarian Justice opposed to Agrarian Law and Agrarian Monopoly.

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