Adam Smith had written: “In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition it will always be the more so.”[393] Sismondi considered this doctrine false, and invoked two reasons of unequal value in support of his view.
The first is a product of the inexact idea already mentioned above, which regards any progress in production as useless unless preceded by more intensive demand. Competition is beneficial if it excites the entrepreneur to multiply products in response to an increased demand. In the opposite case it is bad, for if consumption be stationary, its only effect will be to enable the more adroit entrepreneur or the more powerful capitalist to ruin his rivals by means of cheap sales, thus attracting to himself their clientèle, but giving no benefit to the public. This is the spectacle that in reality is too often presented to us. The movements of our captains of industry are directed, not by any concern for the presumed advantage of the public, but solely with a view to increased profits.
Sismondi’s argument is open to the same objection as was made above. Cheapened production dispenses with a portion of the income formerly spent, and creates a demand for other products, thus repairing the evil it has created. Concentration of industry gives to society the same advantage as is afforded by machinery, and the same arguments may be used in its defence.
But against competition Sismondi directs a still more serious argument. Pursuit of cheapness, he remarks, has forced the entrepreneur to economise not only in the matter of stuff, but also of men. Competition has everywhere enticed women and children to bear the burden of production instead of adults. Certain entrepreneurs, in order to secure a maximum return from human energy, have enforced day and night toil with only a scanty wage in return. What is the use of cheapness achieved under such circumstances? The meagre advantage enjoyed by the public is more than counterbalanced by the loss of vigour and health experienced by the workers. Competition impairs this most precious capital—the life-energy of the race. He points to the workmen of Grenoble earning six or eight sous for a day of fourteen hours, children of six and eight years working for twelve or fourteen hours in factories “in an atmosphere loaded with down and dust” and perishing of consumption before attaining the age of twenty. He concludes that the creation of an unhappy and a suffering class is too great a price to pay for an extension of national commerce, and in an oft-quoted phrase he says, “The earnings of an entrepreneur sometimes represent nothing but the spoliation of the workmen. A profit is made not because the industry produces much more than it costs, but because it fails to give to the workman sufficient compensation for his toil. Such an industry is a social evil.”[394]
It is futile to deny the justice of the argument. When cheapness is only obtained at the cost of permanent deterioration in the health of the workers, competition evidently is a producer of evil rather than of good. The public interest is no less concerned with the preservation of vital wealth than it is with facilitating the production of material wealth. Sismondi showed that competition was a double-edged sword, and in doing so he prepared the way for those who very justly demand that the State should place limits upon its use and prescribe rules for its employment.
We might be tempted to go farther and see in the passage just cited an unreserved condemnation of profits even. That would involve placing Sismondi among the socialists, and this is sometimes done, although, as we think, wrongly.
In certain passages he doubtless expresses himself in a manner similar to Owen, the Saint-Simonians, and Marx. Thus in his studies on political economy we come across phrases such as the following: “We might almost say that modern society lives at the expense of the proletariat, seeing that it curtails the reward of his toil.”[395] And elsewhere: “Spoliation indeed we have, for do we not find the rich robbing the poor? They draw in their revenues from the fertile, easily cultivated fields and wallow in their wealth, while the cultivator who created that revenue is dying of hunger, never allowed to enjoy any of it.”[396] We might even say that Sismondi enunciated the theory of surplus value, which was worked out by Marx, when he makes use of the term mieux value.[397] But the similarity is simply a matter of words. Sismondi, speaking of surplus value, means to imply the value that is constantly growing or being created every year in a progressive country, not by the effort of labour alone, but by the joint operation of capital and labour.[398] Marx’s idea that labour alone created value, and that consequently profit and interest constituted a theft, is entirely foreign to Sismondi. Sismondi, indeed, recognised that the revenues of landed proprietors and capitalists were due to efforts which they themselves had never put forth. He rightly distinguished between the wages of labour and the revenues of proprietors, but to him the latter were not less legitimate than the former, for, says he, “the beneficiaries who enjoy such revenues without making any corresponding effort have acquired a permanent claim to them in virtue of toil undertaken at some former period, which must have increased the productivity of labour.”[399] When Sismondi says that the worker is robbed he merely means to say that sometimes the worker is insufficiently paid; in other words, that he does not always receive enough remuneration to keep him alive, and were it only for the sake of humanity that he ought to be better paid. But he does not consider that appropriation by proprietors or capitalists of a portion of the social product is in itself unjust.[400] His point of view is not unlike that adopted at a later period by the German socialists when they sought to justify their social policy.
But although Sismondi’s criticism does not amount to socialism, he causes considerable consternation among Liberals by the telling manner in which he shows the falsity of the theory affirmed by the Physiocrats and demonstrated by Smith, namely the natural identity of individual and general interests. It is true that Smith hesitated to apply it except to production. But Sismondi’s peculiar merit lies in the fact that he examined its content in relation to distribution. Sismondi finds himself forced by mere examination of the facts to dispute the very basis of economic Liberalism. Curiously enough, he seems surprised at his own conclusions. A priori the theory of identity of interests appeared to him true, for does it not, in fact, rest upon the two ideas, (1) that “each knows his own interest better than an ignorant or a careless Government ever can,” and (2) that “the sum of the interests of each equals the interests of all”? “Both axioms are true.”[401] Why then is the conclusion false?
Here we touch the central theme of Sismondi’s system, the point where he leaves the purely economic ground to which the Classical writers had stuck and approaches new territory—the question of the distribution of property. Sismondi discovered the explanation of the contradiction which exists between private and general interests in the unequal distribution of property among men and the resulting unequal strength of the contracting parties.[402]
III: THE DIVORCE OF LAND FROM LABOUR AS THE CAUSE OF PAUPERISM AND OF CRISES
Sismondi was the first writer to give expression to the belief that industrial society tends to separate into two absolutely distinct classes—those who work and those who possess, or, as he often put it, the rich and the poor. Free competition hastens this separation, causing the disappearance of the intermediate ranks and leaving only the proletariat and the capitalist.[403] “The intermediate classes,” says he somewhere, “have all disappeared: the small proprietor and the peasant farmer of the plain, the master craftsman, the small manufacturer, and the village tradesmen, all have failed to withstand the competition of those who control great industries. Society no longer has any room save for the great capitalist and his hireling, and we are witnessing the frightfully rapid growth of a hitherto unknown class—of men who have absolutely no property.”[404] “We are living under entirely new conditions of which as yet we have no experience. All property tends to be divorced from every kind of toil, and therein is the sign of danger.”[405]
This law of the concentration of capital which plays such an important rôle in the Marxian system, though true of industry, seems hardly applicable to property, for a considerable concentration of labour is not incompatible with a fairly even distribution of property. It was a memorable exposition that Sismondi gave of this law, showing how it wrought its ravages in agriculture, in industry, and in commerce all at the same time. “The tillage of the 34,250,000 acres under cultivation