Still more interesting is the way in which he applied this “theory of markets” to a study of over-production crises, and the light which that sheds upon the nature of Say’s thought. Garnier had already pointed out that a general congestion of markets was possible. As crises multiplied this fear began to agitate the minds of a number of thinkers. “Nothing can be more illogical,” writes Say. “The total supply of products and the total demand for them must of necessity be equal, for the total demand is nothing but the whole mass of commodities which have been produced: a general congestion would consequently be an absurdity.”[276] It would simply mean a general increase of wealth, and “wealth is none too plentiful among nations, any more than it is among individuals.”[277] We may have an inefficient application of the means of production, resulting in the over-production of some one commodity or other—i.e. we may have partial over-production.[278] Say wishes to emphasise the fact that we need never fear general over-production, but that we may have too much of some one product or other. He frequently gave expression to this idea in the form of paradoxes. We might almost be led to believe that he denies the existence of crises altogether in the second edition of his work.[279] In reality he was very anxious to admit their existence, but he wished to avoid everything that might prove unfavourable to an extension of industry.[280]
He thought that crises were essentially transient, and declared that individual liberty would be quite enough to prevent them. He was extremely anxious to get rid of the vague terrors which had haunted those people who feared that they would not be able to consume all this wealth, of a Malthus who thought the existence of the idle rich afforded a kind of safety-valve which prevented over-production,[281] of a Sismondi who prayed for a slackening of the pace of industrial progress and a checking of inventions. Such thoughts arouse his indignation, especially, as he remarks, when it is remembered that even among the most flourishing nations “seven-eighths of the population are without a great number of products which would be regarded as absolute necessities, not by a wealthy family, but even by one of moderate means.”[282] The inconvenience—and he is never tired of repeating it—is not the result of over-production, but is the effect of producing what is not exactly wanted.[283] Produce, produce all that you can, and in the natural course of events a lowering of prices will benefit even those who at first suffered from the extension of industry.
In this once famous controversy between Say, Malthus, Sismondi, and Ricardo (the latter sided with Say) we must not expect to find a clear exposition of the causes of crises. Indeed, that is nowhere to be found. All we have here is the expression of a sentiment which is at bottom perfectly just, but one which Say wrongly attempted to state in a scientific formula.
J. B. Say plays a by no means negligible part in the history of doctrines. Foreign economists have not always recognised him. Dühring, who is usually perspicacious, is very unjust to him when he speaks of “the labour of dilution” to which Say devoted his energies.[284] His want of insight frequently caused him to glide over problems instead of attempting to fathom them, and his treatment of political economy occasionally appears very superficial. Certain difficulties are veiled with pure verbiage—a characteristic in which he is very frequently imitated by Bastiat. Despite Say’s greater lucidity, it is doubtful whether Smith’s obscurity of style is not, after all, more stimulating for the mind. Notwithstanding all this, he was faithful in his transmission of the ideas of the great Scotch economist into French. Happily his knowledge of Turgot and Condillac enabled him to rectify some of the more contestable opinions of his master, and in this way he avoided many of the errors of his successors. He has left his mark upon French political economy, and had the English economists adopted his conception of the entrepreneur earlier, instead of waiting until the appearance of Jevons, they would have spared the science many useless discussions provoked by the work of a thinker who was certainly more profound but much less judicious than Say, namely, David Ricardo.[285]
CHAPTER III: THE PESSIMISTS
A new point of view is presented to us by the economists of whom we are now going to speak. Hitherto we have heard with admiration of the discovery of new facts and of their beneficent effects both upon nations and individuals. We are now to witness the enunciation of new doctrines which cast a deepening shadow across the radiant dawn of economics, giving it that strangely sinister aspect which led Carlyle to dub it “the dismal science.”
Hence the term “Pessimists,” although no reproach is implied in our use of that term. On the contrary, we shall have to show that the theories of the school are often truer than those of the Optimists, which we must study at a later stage of our survey. While nominally subscribing to their predecessors’ doctrine concerning the identity of individual and general interests, the many cogent reasons which they have adduced against such belief warrants our classification. The antagonism existing between proprietors and capitalists, between capitalists and workmen, is a discovery of theirs. Instead of the “natural” or “providential” laws that were to secure the establishment of the “order” provided they were once thoroughly understood and obeyed, they discovered the existence of other laws, such as that of rent, which guaranteed a revenue for a minority of idle proprietors—a revenue that was destined to grow as the direct result of the people’s growing need; or the “law of diminishing returns,” which sets a definite limit to the production of the necessaries of life. That limit, they asserted, was already being approached, and mankind had no prospect of bettering its lot save by the voluntary limitation of its numbers. There was also the tendency of profits to fall to a minimum—until it seemed as if the whole of human industry would sooner or later be swallowed up by the stagnant waters of the stationary State.
Lastly, they deserve to be classed as pessimists because of their utter disbelief in the possibility of changing the course of these inevitable laws either by legislative reform or by organised voluntary effort. In short, they had no faith in what we call progress.
But we must never imagine that they considered themselves pessimists or were classed as such by their contemporaries. This verdict is posterity’s, and would have caused them no little surprise. As for themselves, they seem to stand aloof from their systems with an insouciance that is most disconcerting. The “present order of things” possessed no disquieting features for them, and they never doubted the wisdom of “Nature’s Lord.” They believed that property had been put upon an immovable basis when they demonstrated the extent of its denotation, and that the spirit of revolt had been disarmed by impressing upon the poor a sense of responsibility for their own miseries.[286]
The best known representatives of the school are Malthus and Ricardo. They claimed to be philanthropists and friends of the people, and we have no reason to suspect their sincerity.[287] Their contemporaries, also, far from being alarmed, received the new political economy with the greatest enthusiasm. A warm welcome was extended to its apostles by the best of English society,[288] and ladies of distinction contended with one another for the privilege of popularising the abstract thoughts of Ricardo in newspaper articles and popular tales.[289]
Neither should we omit to pay them full homage for the eminent services rendered to the science, and among these not the least important was the antagonism which their theories aroused in the minds of the working classes. Pessimists unwittingly often do more for progress than optimists. To these two writers fell the task of criticising economic doctrines and institutions, a task that has been taken up by other writers in the course of the century, but which seems as far from completion as ever. Karl Marx, another critic, is intellectually a scion of the Ricardian family. It would be a mistake to imagine that all their theories savour of pessimism, but their reputation has always been more or less closely linked with the gloomier aspect of their teaching.
I: