Chapter XXXVIII: Book II: , chap. 4 (1)

[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.