Chapter XII: Section III: is broader, more vigorous and in general more rewarding than (8)

[147] In the review of an essay on _Observations on the injurious Consequences of the Restrictions upon Foreign Commerce, by a Member of the late Parliament, London, 1820_ (_Edinburgh Review_, vol. lxvi, pp. 331 ff.). This interesting document, from which the following extracts are taken, an essay with a Free Trade bias, paints the general position of the workers in England in the most dismal colours. It gives the facts as follows: 'The manufacturing classes in Great Britain ... have been suddenly reduced from affluence and prosperity to the extreme of poverty and misery. In one of the debates in the late Session of Parliament, it was stated that the wages of weavers of Glasgow and its vicinity which, when highest, had averaged about 25_s._ or 27_s._ a week, had been reduced in 1816 to 10_s._; and in 1819 to the wretched pittance of 5-6_s._ or 6_s._ They have not since been materially augmented.' In Lancashire, according to the same evidence, the direct weekly wage of the weavers was from 6_s._ to 12_s._ a week for 15 hours' labour a day, whilst half-starved children worked 12 to 16 hours a day for 2_s._ or 3_s._ a week. Distress in Yorkshire was, if possible, even greater. As to the address by the frame-work knitters of Nottingham, the author says that he himself investigated conditions and had come to the conclusion that the declarations of the workers 'were not in the slightest degree exaggerated'.

[148] Ibid., p. 334.

[149] Paris, 1827.

[150] Preface to the second edition. Translation by M. Mignet, in _Political Economy and the Philosophy of Government_ (London, 1847), pp. 114 ff.

[151] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. 79.

[152] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. xv.

[153] Ibid., p. 92.

[154] Ibid., pp. 111-12.

[155] Ibid., p. 335.

[156] Op. cit., vol. ii, p. 435.

[157] Ibid., p. 463.

[158] Op. cit., vol. i, p. xiii (pp. 120-1 of Mignet's translation).

[159] _Nouveaux Principes_ ... (2nd ed.), vol. i, p. 84.

[160] Ibid., p. 85.

[161] Ibid., p. 86.

[162] Ibid., pp. 86-7.

[163] _Nouveaux Principes_ ..., vol. i, p. 87.

[164] Ibid., pp. 87-8.

[165] Ibid., pp. 88-9.

[166] _Nouveaux Principes_ ..., vol. i, pp. 108-9.

[167] Ibid., pp. 93-4.

[168] Ibid., p. 95.

[169] _Nouveaux Principes_ ..., vol. i, pp. 95-6.

[170] Ibid., pp. 104-5.

[171] Ibid., p. 105.

[172] Ibid., pp. 105-6.

[173] Ibid., pp. 113, 120.

[174] _Nouveaux Principes_ ..., vol. i, p. 121.

[175] Vladimir Ilyich [Lenin], _Economic Studies and Essays_, _St. Petersburg_, 1899.

_CHAPTER XI_

MACCULLOCH _v._ SISMONDI

Sismondi's emphatic warnings against the ruthless ascendancy of capital in Europe called forth severe opposition on three sides: in England the school of Ricardo, in France J. B. Say, the commonplace vulgariser of Adam Smith, and the St. Simonians. While Owen in England, profoundly aware of the dark aspects of the industrial system and of the crises in particular, saw eye to eye with Sismondi in many respects, the school of that other great European, St. Simon, who had stressed the world-embracing conception of large industrial expansion, the unlimited unfolding of the productive forces of human labour, felt perturbed by Sismondi's alarms. Here, however, we are interested in the controversy between Sismondi and the Ricardians which proved the most fruitful from the theoretical point of view. In the name of Ricardo, and, it seemed, with Ricardo's personal approval, MacCulloch anonymously published a polemical article[176] against Sismondi in the _Edinburgh Review_ in October 1819, i.e. immediately after the publication of the _Nouveaux Principes_.

In 1820, Sismondi replied in Rossi's _Annales de Jurisprudence_ with an essay entitled: 'Does the Power of Consuming Necessarily Increase with the Power to Produce? An Enquiry.'[177]

In his reply Sismondi[178] himself states that his polemics were conceived under the impact of the commercial crisis: 'This truth we are both looking for, is of utmost importance under present conditions. It may be considered as fundamental for economics. Universal distress is in evidence in the trade, in industry and, in many countries certainly, even in agriculture. Such prolonged and extraordinary suffering has brought misfortune to countless families and insecurity and despondency to all, until it threatens the very bases of the social order. Two contrasting explanations have been advanced for the distress that has caused such a stir. Some say: we have produced too much, and others: we have not produced enough. "There will be no equilibrium," say the former, "no peace and no prosperity until we consume the entire commodity surplus which remains unsold on the market, until we organise production for the future in accordance with the buyers' demand."--"There will be a new equilibrium," say the latter, "if only we double our efforts to accumulate as well as to produce. It is a mistake to believe that there is a glut on the market; no more than half our warehouses are full; let us fill the other half, too, and the mutual exchange of these new riches will revive our trade."'[179]

In this supremely lucid way, Sismondi sets out and underlines the real crux of the dispute. MacCulloch's whole position in truth stands or falls with the statement that exchange is actually an interchange of commodities; every commodity accordingly represents not only supply but demand. The dialogue then continues as follows:

'Demand and supply are truly correlative and convertible terms. The supply of one set of commodities constitutes the demand for another. Thus, there is a demand for a given quantity of agricultural produce, when a quantity of wrought goods equal thereto in productive cost is offered in exchange for it; and conversely, there is an effectual demand for this quantity of wrought goods, when the supply of agricultural produce which it required the same expense to raise, is presented as its equivalent.'[180]

The Ricardian's dodge is obvious: he has chosen to ignore the circulation of money and to pretend that commodities are immediately bought and paid for by commodities.

From the conditions of highly developed capitalist production, we are thus suddenly taken to a stage of primitive barter such as we might find still flourishing at present in Central Africa. There is a distant element of truth in this trick since money, in a simple circulation of commodities, plays merely the part of an agent. But of course, it is just the intervention of an agent which separates the two transactions of circulation, sale and purchase, and makes them independent of one another in respect of both time and place. That is why a further purchase need not follow hard upon a sale for one thing; and secondly, sale and purchase are by no means bound up with the same people: in fact, they will involve the same performers only in rare and exceptional cases. MacCulloch, however, makes just this baseless assumption by confronting, as buyer and seller, industry on the one hand and agriculture on the other. The universality of these categories, _qua_ total categories of exchange, obscures the actual splitting up of this social division of labour which results in innumerable private exchange transactions where the sale and purchase of two commodities rarely come to the same thing. MacCulloch's simplified conception of commodity exchange in general which immediately turns the commodity into money and pretends that it can be directly exchanged, makes it impossible to understand the economic significance of money, its historical appearance.

Sismondi's answer to this is regrettably clumsy. In order to show that MacCulloch's explanation of commodity exchange has no application for capitalist production, he takes recourse to the Leipsic Book Fair.[181]

'At the Book Fair of Leipsic, booksellers from all over Germany arrive, each with four or five publications of his own in some 40 or 50 dozen copies; these are exchanged for others and every seller takes home 200 dozen books, just as he has brought 200 dozen, with the sole difference, that he brought four different works and takes home 200. This is the demand and the production which, according to M. Ricardo's disciple, are correlative and convertible; one buys the other, one pays for the other, one is the consequence of the other. But as far as we are concerned, for the bookseller and for the general public, demand and consumption have not even begun. For all that it has changed hands at Leipsic, a bad book will still be just as unsold (a bad mistake of Sismondi's, this!), it will still clutter up the merchants' shops, either because nobody wants it, or because everyone has a copy already. The books exchanged at Leipsic will only sell if the booksellers can find individuals who not only want them but are also prepared to make sacrifices in order to withdraw them from circulation. They alone constitute an effective demand.'[182]

Although this example is rather crude, it shows clearly that Sismondi was not side-tracked by his opponent's trick, that he knows after all what he is talking about.

MacCulloch then attempts to turn the examination from abstract commodity exchange to concrete social conditions: 'Supposing, for the sake of illustration, that a cultivator advanced food and clothing for 100 labourers, who raised for him _food_ for 200; while a master-manufacturer also advanced food and clothing for 100, who fabricated for him _clothing_ for 200. Then the farmer, besides replacing the food of his own labourers, would have food for 100 to dispose of; while the manufacturer, after replacing the clothing of his own labourers, would have clothing for 100 to bring to market. In this case, the two articles would be exchanged against each other, the supply of food constituting the demand for the clothing, and that of the clothing the demand for the food.'[183]

What are we to admire more in this hypothesis: the absurdity of the set-up which reverses all actual relations, or the effrontery which simply takes for granted in the premises all that is later claimed proved? In order to prove that it is always possible to create an unlimited demand for all kinds of goods, MacCulloch chooses for his example two commodities which pertain to the most urgent and elementary wants of every human being: food and clothing. In order to prove that commodities may be exchanged at any time, and without regard to the needs of society, he chooses for his example two products in quantities which are right from the start in strict conformity with these needs, and which therefore contain no surplus as far as society is concerned. And yet he calls this quantity needed by society a surplus--_viz._ as measured against the producer's personal requirements for his own product, and is consequently able to demonstrate brilliantly that any amount of commodity 'surplus' can be exchanged for a corresponding 'surplus' of other commodities. Finally, in order to prove that different privately produced commodities can yet be exchanged, although their quantity, production costs and social importance must of course be different, he chooses for his example commodities whose quantity, production cost and general social necessity are precisely the same right from the start. In short, MacCulloch posits a planned, strictly regulated production without any over-production in order to prove that no crisis is possible in an unplanned private economy.

The principal joke of canny Mac, however, lies elsewhere. What is at issue is the problem of accumulation. Sismondi was worried by, and worried Ricardo and his followers with, the following question: if part of the surplus value is capitalised, i.e. used to expand production over and above the income of society, instead of being privately consumed by the capitalists, where are we to find buyers for the commodity surplus? What will become of the capitalised surplus value? Who will buy the commodities in which it is hidden? Thus Sismondi. And the flower of Ricardo's school, its official representative on the Chair of London University, the authority for the then English Ministers of the Liberal Party and for the City of London, the great Mr. MacCulloch replies--by constructing an example in which no surplus value whatever is produced. His 'capitalists' slave away in agriculture and industry in the name of charity, and all the time the entire social product, including the 'surplus', is only enough for the needs of the workers, for the wages, while the 'farmer' and 'manufacturer' see to production and exchange without food and clothing.

Sismondi, justly impatient, now exclaims: 'The moment we want to find out what is to constitute the surplus of production over consumption of the workers, it will not do to abstract from that surplus which forms the due profit of labour and the due share of the master.'[184]

MacCulloch's only reaction is to multiply his silly argument by a thousand. He asks the reader to assume '1,000 farmers', and 'also 1,000 master-manufacturers' all acting as ingenuously as the individuals. The exchange, then, proceeds as smoothly as can be desired. Finally, he exactly doubles labour productivity 'in consequence of more skilful application of labour and of the introduction of machinery--thus that every one of the 1,000 farmers, by advancing food and clothing for 100 labourers, obtains a return consisting of ordinary food for 200 together with sugar, grapes and tobacco equal in production cost to that food', while every manufacturer obtains, by an analogous procedure, in addition to the previous quantity of clothing for all workers, 'ribbands, cambrics and lace, equal in productive cost, and therefore in exchangeable value, to that clothing'.[185] After such complete reversal of the chronological order, the assumption, that is, of first the existence of private property with wage labour, and then, at a later stage, such level of labour productivity as makes exploitation possible at all, he now assumes labour productivity to progress with equal speed in all spheres, the surplus product to contain precisely the same amount of value in all branches of industry, and to be divided among precisely the same number of people. When these various surplus products are then exchanged against one another, is it any wonder that the exchange proceeds smoothly and completely to everybody's satisfaction? It is only another of his many absurdities that MacCulloch makes the capitalists who had hitherto lived on air and exercised their profession in their birthday suits, now live exclusively on sugar, tobacco and wine, and array themselves only in ribbons, cambrics and lace.

The most ridiculous performance, however, is the _volte-face_ by which he evades the real problem. The question had been what happens to the capitalist surplus, that surplus which is used not for the capitalist's own consumption but for the expansion of production. MacCulloch solves it on the one hand by ignoring the production of surplus value altogether, and on the other, by using all surplus value in the production of luxury goods. What buyers, then, does he advance for this new luxury production? The capitalists, evidently; the farmers and manufacturers, since, apart from these, there are only workers in MacCulloch's model. Thus the entire surplus value is consumed for the personal satisfaction of the capitalists, that is to say, simple reproduction takes place. The answer to the problem of the capitalisation of surplus value is, according to MacCulloch, either to ignore surplus value altogether, or to assume simple reproduction instead of accumulation as soon as surplus value comes into being. He still _pretends_ to speak of expanding reproduction, but again, as before when he pretended to deal with the 'surplus', he uses a trick, _viz._ first setting out an impossible species of capitalist production without any surplus value, and then persuading the reader that the subsequent _début_ of the surplus value constitutes an expansion of production.

Sismondi is not quite up to these Scottish acrobatics. He had up to now succeeded in pinning his Mac down, proving him to be 'obviously absurd'. But now he himself becomes confused with regard to the crucial point at issue. On the above rantings of his opponent, he should have declared coldly: Sir, with all respect for the flexibility of your mind, you are dodging the issue. I keep on asking, who will buy the surplus product, if the capitalists use it for the purpose of accumulation, i.e. to expand production, instead of squandering it altogether? And you reply: Oh well, they will expand their production of luxury goods, which they will, of course, eat up themselves. But this is a conjuring trick, seeing that the capitalists consume the surplus value in so far as they spend it on their luxuries--they do not accumulate at all. My question is about the possibility of accumulation, not whether the personal luxuries of the capitalists are possible. Answer this clearly, if you can, or else go play with your wine and tobacco, or go to blazes for all I care.

But Sismondi, instead of putting the screws on the vulgariser, suddenly begins to moralise with pathos and social conscience. He exclaims: 'Whose demand? Whose satisfaction? The masters or the workers in town or country? On this new conception [of Mac's] there is a surplus of products, an advantage from labour--to whom will it accrue?'[186] and gives his own answer in the following impassioned words: 'But we know full well, and the history of the commercial world teaches us all too thoroughly, that it is not the worker who profits from the increase in products and labour; his pay is not in the least swelled by it. M. Ricardo himself said formerly that it ought not to be, unless you want the social wealth to stop growing. On the contrary, sorry experience teaches us that wages nearly always contract by very reason of this increase. Where, then, does the accumulation of wealth make itself felt as a public benefit? Our author assumes 1,000 farmers who profit, while 100,000 workers toil; 1,000 entrepreneurs who wax rich, while 100,000 artisans are kept under their orders. Whatever good may result from the accumulation of the frivolous enjoyment of luxuries is only felt by a 100th part of the nation. And will this 100th part, called upon to consume the entire surplus product of the whole working class, be adequate to a production that may grow without let or hindrance, owing to progress of machinery and capitals? In the assumption made by the author, every time the national product is doubled, the master of the farm or of the factory must increase his consumption a hundredfold; if the national wealth to-day, thanks to the invention of so many machines, is a hundred times what it was when it only covered the cost of production, every employer would to-day have to consume enough products to support 10,000 workers.'[187]

At this point Sismondi again believes himself to have a firm grasp on how crises begin to arise: 'We might imagine, if put to it, that a rich man can consume the goods manufactured by 10,000 workers, this being the fate of the ribbons, lace and cambrics whose origin the author has shown us. But a single individual would not know how to consume agricultural product to the same tune, the wines, sugar and spices which M. Ricardo [whom Sismondi evidently suspected of having written the article since he only got to know 'Anonymous' of the _Edinburgh Review_ at a later date] conjures up in exchange, are too much for the table of one man. They will not sell, or else the strict proportion between agricultural and industrial products, apparently the basis of his whole system, cannot be maintained.'[188]

Sismondi, we see, has thus fallen into MacCulloch's trap. Instead of waiving an answer to the problem of accumulation which refers to the production of luxuries, he pursues his opponent into this field without noticing that the ground under his feet has shifted. Here he finds two causes for complaint. For one thing, he has moral objections to MacCulloch's allowing the capitalists instead of the workers to benefit by the surplus value, and is side-tracked into polemising against distribution under capitalism. From this digression, he unexpectedly reverts to the original problem which he now formulates as follows: the capitalists, then, consume the entire surplus value in luxuries. Let it be so. But could anyone increase his consumption as rapidly and indefinitely as the progress of labour productivity makes the surplus value increase? And in this second instance, Sismondi himself abandons his own problem. Instead of perceiving that it is the lack of consumers other than workers and capitalists which accounts for the difficulty in capitalist accumulation, he discovers a snag in simple reproduction because the capitalists' capacity to consume has physical limits. Since the absorptive capacity of the capitalists for luxuries cannot keep up with labour productivity, that is to say with the increase in surplus value, there must be crises and over-production. We have encountered this line of thought once before in the _Nouveaux Principes_--so Sismondi himself was manifestly not quite clear about the problem at all times. And that is hardly surprising, since one can really come to grips with the whole problem of accumulation only when one has fully grasped the problem of simple reproduction, and we have seen how much Sismondi was at fault in this respect.

Yet in spite of all this, the first time that Sismondi crossed swords with the heirs of the classical school, he proved himself by no means the weaker party. On the contrary, in the end he routed his opponent. If Sismondi misunderstood the most elementary principles of social reproduction and ignored constant capital, quite in keeping with Adam Smith's dogma, he was in this respect no worse at any rate than his opponent. Constant capital does not exist for MacCulloch either, his farmers and manufacturers 'advance' merely food and clothing to their workers, and food and clothing between them make up the aggregate product of society. If there is, then, nothing to choose between the two as far as this elementary blunder is concerned, Sismondi towers heads above Mac because of his intuitive understanding of the contradictions in the capitalist mode of production. In the end, the Ricardian was at a loss to answer Sismondi's scepticism concerning the possibility of realising the surplus value. Sismondi also shows himself more penetrating in that he throws the Nottingham proletarians' cry of distress in the teeth of the apostles and apologists of harmony with their smug complacency, of those who deny 'any surplus of production over demand, any congestion of the market, any suffering', when he proves that the introduction of the machine must of necessity create a 'superabundant population', and particularly in the end, when he underlines the tendency of the capitalist world market in general with its inherent contradictions. MacCulloch denies outright that general over-production is possible. He has a specific for every partial over-production up his sleeve:

'It may be objected, perhaps, that on the principle that the demand for commodities increases in the same ratio as their supply, there is no accounting for the gluts and stagnation produced by overtrading. We answer very easily--A glut is an increase in the supply of a particular class of commodities, unaccompanied by a corresponding increase in the supply of those other commodities which should serve as their equivalents. While our 1,000 farmers and 1,000 master-manufacturers are exchanging their respective surplus products, and reciprocally affording a market to each other, if 1,000 new capitalists were to join their society, employing each 100 labourers in tillage, there would be an immediate glut in agricultural produce ... because in this case there would be no contemporaneous increase in the supply of the manufactured articles which should purchase it. But let one half of the new capitalists become manufacturers, and equivalents in the form of wrought goods will be created for the new produce raised by the other half: the equilibrium will be restored, and the 1,500 farmers and 1,500 master-manufacturers will exchange their respective surplus products with exactly the same facility with which the 1,000 farmers and 1,000 manufacturers formerly exchanged theirs.'[189]

Sismondi answers this buffoonery which 'very easily' pokes about in a fog, by pointing to the real changes and revolutions which take place before his own eyes. 'It was possible to put barbarous countries under the plough, and political revolutions, changes in the financial system, and peace, at once brought cargoes to the ports of the old agricultural countries which almost equalled their entire harvest. The recent Russian conquest of the vast provinces on the Black Sea, the change in the system of government in Egypt, and the outlawing of piracy in High Barbary, have suddenly poured the granaries of Odessa, Alexandria and Tunis into the Italian ports and have put such an abundance of corn on the markets that all along the coasts the farmer's trade is fighting a losing battle. Nor is the remainder of Europe safe from a similar revolution, caused by the simultaneous ploughing under of immense expanses of new land on the banks of the Mississippi, which export all their agricultural produce. Even the influence of New Holland may one day be the ruin of English industry, if not in the price of foodstuffs, which are too expensive to transport, at least in respect of wool and other agricultural products which are easier to transport.'[190]

What would MacCulloch have to advise in view of such an agrarian crisis in Southern Europe? That half the new farmers should turn manufacturer. Whereupon Sismondi counters: 'Such counsel cannot seriously apply to the Tartars of the Crimea or to the fellaheen of Egypt.' And he adds: 'The time is not yet ripe to set up new industries in the regions oversea or in New Holland.'[191]

Sismondi's acuity recognised that industrialisation of the lands overseas was only a matter of time. He was equally aware of the fact that the expansion of the world market would not bring with it the solution to the difficulty but would only reproduce it in a higher degree, in yet more potent crises. His prediction for the expansive tendency of capitalism is that it will reveal an aspect of fiercer and fiercer competition, of mounting anarchy within production itself. Indeed, he puts his finger on the fundamental causes of crises in a passage where he states the trend of capitalist production precisely as surpassing all limits of the market. At the end of his reply to MacCulloch he says: 'Time and again it has been proclaimed that the equilibrium will re-establish itself, that work will start again, but a single demand each time provides an impetus in excess of the real needs of trade, and this new activity must soon be followed by a yet more painful glut.'[192]

To such a profound grasp of the real contradictions in the movements of capital, the _vulgarus_ on the Chair of London University with his harmony cant and his country-dance of 1,000 beribboned farmers and 1,000 bibulous manufacturers could find no effective answer.

FOOTNOTES:

[176] The article in the _Edinburgh Review_ was really directed against Owen, sharply attacking on 24 pages of print the latter's four treatises: (1) 'A New View of Society, or Essays on the formation of Human Character', (2) 'Observations on the Effects of the Manufacturing System', (3) 'Two Memorials on Behalf of the Working Classes, Presented to the Governments of America and Europe', and finally (4) 'Three Tracts' and 'An Account of Public Proceedings relative to the Employment of the Poor'. 'Anonymous' here attempts a detailed proof that Owen's reformist ideas by no means get down to the real causes of the misery of the English proletariat, these causes being: the transition to the cultivation of barren land (Ricardo's theory of ground rent!), the corn laws and high taxation pressing upon farmer and manufacturer alike. Free trade and _laissez-faire_ thus is his alpha and omega. Given unrestricted accumulation, all increase in production will create for itself an increase in demand. Owen is accused of 'profound ignorance' as regards Say and James Mill.--'In his reasonings, as well as in his plans, Mr. Owen shows himself profoundly ignorant of all the laws which regulate the production and distribution of wealth.'--From Owen, the author proceeds to Sismondi and formulates the point of contention as follows: 'He [Owen] conceives that when competition is unchecked by any artificial regulations, and industry permitted to flow in its natural channels, the use of machinery may increase the supply of the several articles of wealth beyond the demand for them, and by creating an excess of all commodities, throw the working classes out of employment. This is the position which we hold to be fundamentally erroneous; and as it is strongly insisted on by the celebrated M. de Sismondi in his _Nouveaux Principes d'Économie Politique_, we must entreat the indulgence of our readers while we endeavour to point out its fallacy, and to demonstrate, that the power of consuming necessarily increases with every increase in the power of producing' (_Edinburgh Review_, Oct. 1819, p. 470).

[177] The original title is: _Examen de cette question: Le pouvoir de consommer s'accroît-il toujours dans la société avec le pouvoir de produire?_ We have not been able to obtain a copy of Rossi's _Annales_, but the essay as a whole was incorporated by Sismondi in the second edition of his _Nouveaux Principes_.

[178] At the time of writing, Sismondi was still in the dark as to the identity of 'Anonymous' in the _Edinburgh Review_.

[179] Sismondi, op. cit., vol. ii, pp. 376-8.

[180] MacCulloch, loc. cit., p. 470.

[181] Incidentally, Sismondi's Leipsic Book Fair, as a microcosm of the capitalist world, has staged a come-back after 55 years--in Eugen Duehring's 'system'. Engels, in his devastating criticism of that unfortunate 'universal genius' adduces this idea as proof that Duehring, by attempting to elucidate a real industrial crisis by means of an imaginary one on the Leipsic Book Fair, a storm at sea by a storm in a teacup, has shown himself a 'real German _literatus_'. But, as in many other instances exposed by Engels, the great thinker has simply borrowed here from someone else on the sly.

[182] Sismondi, op. cit., vol. ii, pp. 381-2.

[183] MacCulloch, loc. cit., p. 470.

[184] Sismondi, op. cit, vol. ii, p. 384.

[185] MacCulloch, loc. cit., p. 471.

[186] Sismondi, op. cit., vol. ii, pp. 394-5.

[187] Ibid., pp. 396-7.

[188] Ibid., pp. 397-8.

[189] MacCulloch, loc. cit., pp. 471-2.

[190] Sismondi, op. cit., vol. ii, pp. 400-1.

[191] Sismondi, op. cit., vol. ii, p. 401.

[192] Ibid., pp. 405-6.

_CHAPTER XII_

RICARDO _v._ SISMONDI

MacCulloch's reply to Sismondi's theoretical objections evidently did not settle the matter to Ricardo's own satisfaction. Unlike that shrewd 'Scottish arch-humbug', as Marx calls him, Ricardo really wanted to discover the truth and throughout retained the genuine modesty of a great mind.[193] That Sismondi's polemics against him and his pupil had made a deep impression is proved by Ricardo's revised approach to the question of the effects of the machine, that being the point on which Sismondi, to his eternal credit, had confronted the classical school of harmony with the sinister aspects of capitalism. Ricardo's followers had enlarged upon the doctrine that the machine can always create as many or even more opportunities for the wage labourers as it takes away by displacing living labour. This so-called theory of compensation was subjected to a stern attack by Sismondi in the chapter 'On the Division of Labour and Machinery'[194] and in another chapter significantly entitled: 'Machinery Creates a Surplus Population',[195] both published in the _Nouveaux Principes_ of 1819, two years later than Ricardo's main work. In 1821, after the MacCulloch-Sismondi controversy, Ricardo inserted a new chapter in the third edition of his _Principles_, where he frankly confesses to his error and says in the strain of Sismondi: 'That the opinion entertained by the labouring classes, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy.'[196]

He, like Sismondi, had to defend himself against the suspicion that he is opposing technical progress, but, less ruthless, he compromises with the evasion that the evil emerges only gradually. 'To elucidate the principle, I have been supposing, that improved machinery is _suddenly_ discovered, and extensively used; but the truth is, that these discoveries are gradual, and rather operate in determining the employment of the capital which is saved and accumulated, than in diverting capital from its actual employment.'[197]

Yet the problem of crises and accumulation continued to worry Ricardo also. In 1823, the last year of his life, he spent some days in Geneva in order to talk the problem over face to face with Sismondi. The result of these talks is Sismondi's essay 'On the Balance Between Consumption and Production', published in the _Revue Encyclopédique_ of May 1824.[198]

In his _Principles_, Ricardo had at the crucial points completely accepted Say's trite doctrine of harmony in the relations between production and consumption. In chapter xxi he had declared: 'M. Say has, however, most satisfactorily shown, that there is no amount of capital which may not be employed in a country, because demand is only limited by production. No man produces, but with a view to consume or sell, and he never sells, but with an intention to purchase some other commodity, which may be immediately useful to him, or which may contribute to future production. By producing, then, he necessarily becomes either the consumer of his own goods, or the purchaser and consumer of the goods of some other person.'[199]

To this conception of Ricardo's, Sismondi's _Nouveaux Principes_ were a powerful challenge, and the dispute as a whole turned also on this point. Ricardo could not deny the fact of crises which had but recently passed over England and other countries. What was at issue was the explanation for them. Right at the outset of their debate, Sismondi and Ricardo had agreed on a remarkably lucid and precise formulation of the problem, excluding the question of foreign commerce altogether. Sismondi grasped the significance and necessity of foreign trade for capitalist production, its need for expansion, well enough; in this line he was quite in step with Ricardo's Free Traders, whom he considerably excelled in his dialectical conception of the expansionist needs of capital. He fully admitted that industry 'is increasingly led to look for its vents on foreign markets where it is threatened by greater revolutions'.[200] He forecast, as we have seen, the rise of a dangerous competition for European industry in the overseas countries. This was after all a creditable achievement in the year 1820, and one which reveals Sismondi's deep insight into the relations of capitalist world economy. But even so, Sismondi was in fact far from conceiving the problem of realising the surplus value, the problem of accumulation, to depend on foreign commerce as its only means of salvation, a view attributed to him by later critics. On the contrary, Sismondi was quite explicit in the sixth chapter of volume i:[201] 'In order to make these calculations with greater certainty and to simplify these questions, we have hitherto made complete abstraction from foreign trade and supposed an isolated nation; this isolated nation is human society itself, and what is true for a nation without foreign commerce, is equally true for mankind.'

In other words: in considering the entire world market as one society producing exclusively by capitalist methods, Sismondi grounds his problem in the same premises as Marx was to do after him. That was also the basis on which he came to terms with Ricardo. 'From the question that troubled us, we had each of us dismissed the instance of a nation that sold more abroad than it needed to buy there, that could command a growing external market for its growing internal production. In any case, it is not for us to decide whether fortunes of war or politics could perhaps bring forth new consumers for a nation--what is needed is proof that a nation can create these for itself simply by increasing its production.'[202]

This is how Sismondi formulated the problem of realising the surplus value in all precision, just as it confronts us throughout the ensuing era in economics, in contrast with Ricardo who actually maintains along with Say, as we are already aware and shall show in further detail, that production creates its own demand.

Ricardo's thesis in the controversy with Sismondi takes the following form: 'Supposing that 100 workers produce 1,000 sacks of corn, and 100 weavers 1,000 yards woollen fabric. Let us disregard all other products useful to man and all intermediaries between them, and consider them alone in the world. They exchange their 1,000 yards against the 1,000 sacks. Supposing that the productive power of labour has increased by a tenth owing to a successive progress of industry, the same people will exchange 1,100 yards against 1,100 sacks, and each will be better clothed and fed; new progress will make them exchange 1,200 yards for 1,200 sacks, and so on. The increase in products always only increases the enjoyment of those who produce.'[203]

The great Ricardo's standards of reasoning, it must regretfully be stated, are if anything even lower than those of the Scottish arch-humbug, MacCulloch. Once again we are invited to witness a harmonious and graceful country-dance of sacks and yards--the very proportion which is to be proved, is again taken for granted. What is more, all relevant premises for the problem are simply left out. The real problem--you will recollect--the object of the controversy had been the question: who are the buyers and consumers of the surplus product that comes into being if the capitalists produce more goods than are needed for their own and their workers' consumption; if, that is to say, they capitalise part of their surplus value and use it to expand production, to increase their capital? Ricardo answers it by completely ignoring the capital increase. The picture he paints of the various stages of production is merely that of a gradually increasing productivity of labour. According to his assumptions, the same amount of labour first produces 1,000 sacks and 1,000 yards textiles, then 1,100 sacks and 1,100 yards, further 1,200 sacks and 1,200 yards, and so on, in a gracefully ascending curve. Not only that the image of a marshalled uniform progression on both sides, of conformity even in the number of objects brought to exchange, is wearisome, the expansion of capital is nowhere as much as mentioned in the model. Here we have no enlarged but simple reproduction with a greater bulk of use-values indeed, but without any increase in the value of the aggregate social product. Since only the amount of value, not the number of use-values is relevant to the exchange transaction, and this amount remains constant in the example, Ricardo makes no real advances, even though he seems to analyse the progressive expansion of production. Finally, he is quite oblivious of the relevant categories of reproduction. MacCulloch had begun by making the capitalists produce without any surplus value and live on air, but at least he recognised the existence of the workers, making provision for their consumption. Ricardo, however, does not even mention the workers; for him the distinction between variable capital and surplus value does not exist at all. Besides this major omission, it is of small account that he, just like his disciple, takes no notice of constant capital. He wants to solve the problem of realising the surplus value and expanding capital without positing more than the existence of a certain quantity of commodities which are mutually exchanged.

Sismondi was blind to the fact that the venue has been changed altogether. Yet he tried faithfully to bring the fantasies of his famous guest and opponent down to earth and to analyse their invisible contradictions, plaintively saying that these assumptions, 'just like German metaphysics, abstract from time and space'.[204] He grafts Ricardo's hypothesis on to 'society in its real organisation, with unpropertied workers whose wage is fixed by competition and who can be dismissed the moment their master has no further need of their work ... for'--remarks Sismondi, as acute as he is modest--'it is just this social organisation to which our objection refers'.[205]

He lays bare the many difficulties and conflicts bound up with the progress of labour productivity under capitalism, and shows that Ricardo's postulated changes in the technique of labour, from the point of view of society, lead to the following alternative: Either a number of workers corresponding to the increase in labour productivity will have to be dismissed outright--then there will be a surplus of products on the one hand, and on the other unemployment and misery--a faithful picture of present-day society. Or the surplus product will be used for the maintenance of the workers in a new field of production, the production of luxury goods. Here Sismondi undoubtedly proves himself superior: he suddenly remembers the existence of the constant capital, and now it is he who subjects the English classic to a frontal attack:

'For setting up a new industry for manufacturing luxuries, new capital is also needed; machines will have to be built, raw materials procured, and distant commerce brought into activity; for the wealthy are rarely content with enjoying what is immediately in front of them. Where, then, could we find this new capital which may perhaps be much more considerable than that required by agriculture?... Our luxury workers are still a long way from eating our labourers' grain, from wearing the clothes from our common factories; they are not yet made into workers, they may not even have been born yet, their trade does not exist, the materials on which they are to work have not arrived from India. All those among whom the former should distribute their bread, wait for it in vain.'[206]

Sismondi now takes constant capital into account, not only in the production of luxuries, but also in agriculture, and further raises the following objection against Ricardo: 'We must abstract from time, if we make the assumption that the cultivator, whom a mechanical discovery or an invention of rural industry enables to treble the productive power of his workers, will also find sufficient capital to treble his exploitation, his agricultural implements, his equipment, his livestock, his granaries: to treble the circulating capital which must serve him while waiting for his harvest.'[207]

In this way Sismondi breaks with the superstition of the classical school that with capital expanding all additional capital would be exclusively spent on wages, on the variable capital. He clearly dissents from Ricardo's doctrine--which did not, however, prevent his allowing all the errors arising out of this doctrine three years later again to creep into the second edition of his _Nouveaux Principes_. In opposition to Ricardo's facile doctrine of harmony, Sismondi underlines two decisive points: on the one hand, the objective difficulties of the process of enlarged reproduction which works by no means so smoothly in capitalist reality as it does in Ricardo's absurd hypothesis; on the other hand, the fact that all technical progress in social labour productivity is always achieved under capitalism at the expense of the working class, bought with their suffering. Sismondi shows himself superior to Ricardo in yet a third point: he represents the broad horizon of the dialectical approach as against Ricardo's blunt narrow-mindedness with its incapacity to conceive of any forms of society other than those of bourgeois economics:

'Our eyes,' he exclaims, 'are so accustomed to this new organisation of society, this universal competition, degenerating into hostility between the rich and the working class, that we no longer conceive of any mode of existence other than that whose ruins surround us on all sides. They believe to prove me absurd by confronting me with the vices of preceding systems. Indeed, as regards the organisation of the lower classes, two or three systems have succeeded one another; yet, since they are not to be regretted, since, after first doing some good, they then imposed terrible disasters on mankind, may we conclude from this that we have now entered the true one? May we conclude that we shall not discover the besetting vice of the system of wage labour as we have discovered that of slavery, of vassalage, and of the guilds? A time will come, no doubt, when our descendants will condemn us as barbarians because we have left the working classes without security, just as we already condemn, as they also will, as barbarian the nations who have reduced those same classes to slavery.'[208]

Sismondi's statement, putting in a nutshell the vital differences between the parts played by the proletariat in a modern society and in the society of ancient Rome, shows his profound insight into historical connections. He shows no less discernment, in his polemics against Ricardo, when analysing the specific economic character of the slave-system and of feudal economy as well as their relative historical significance, and finally when emphasising, as the dominant universal tendency of bourgeois economy, 'that it severs completely all kind of property from every kind of labour'.

The second round, no more than the first, between Sismondi and the classical school, brought little glory for Sismondi's opponents.[209]

FOOTNOTES:

[193] It is typical that on his election to Parliament in 1819, when he already enjoyed the highest reputation on account of his economic writings, Ricardo wrote to a friend: 'You will have seen that I have taken my seat in the House of Commons. I fear I shall be of little use there. I have twice attempted to speak 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' (_Letters of D. Ricardo to J. R. MacCulloch_, N.Y., 1895, pp. 23-4). Such diffidence was quite unknown to the gasbag MacCulloch.

[194] _Nouveaux Principes_ ..., book iv, chap. vii.

[195] Ibid., book vii, chap. vii.

[196] D. Ricardo, _On the Principles of Political Economy and Taxation_ (3rd edition, London, 1821), p. 474.

[197] Ibid., p. 478.

[198] This essay, _Sur la Balance des Consommations avec les Productions_, is reprinted in the second edition of _Nouveaux Principes_, vol. ii, pp. 408 ff. Sismondi tells us about this discussion: 'M. Ricardo, whose recent death has been a profound bereavement not only to his friends and family but to all those whom he enlightened by his brilliance, all those whom he inspired by his lofty sentiments, stayed for some days in Geneva in the last year of his life. We discussed in two or three sessions this fundamental question on which we disagreed. To this enquiry he brought the urbanity, the good faith, the love of truth which distinguished him, and a clarity which his disciples themselves had not heard, accustomed as they were to the efforts of abstract thought he demanded in the lecture room.'

[199] Ricardo, op. cit., p. 339.

[200] Sismondi, op. cit., vol. ii, p. 361.

[201] _Nouveaux Principes_ ..., book iv, chap, iv: 'Comment la Richesse commerciale suit l'Accroissement du Revenu' (vol. i, p. 115).

[202] Sismondi, op. cit., vol. ii, p. 412.

[203] Ibid., p. 416.

[204] Ibid., p. 424.

[205] Ibid., p. 417.

[206] Sismondi, op. cit., vol. ii, pp. 425-6.

[207] Ibid., p. 429.

[208] Ibid., pp. 434-5.

[209] Thus, if Tugan Baranovski, championing Say-Ricardo's views, tells us about the controversy between Sismondi and Ricardo (_Studies on the Theory and History of Commercial Crises in England_, p. 176), that Sismondi was compelled 'to acknowledge as correct the doctrine he had attacked and to concede his opponent all that is necessary'; that Sismondi himself 'had abandoned his own theory which still finds so many adherents', and that 'the victory in this controversy lies with Ricardo', this shows a lack of discrimination--to put it mildly--such as is practically unheard-of in a work of serious scientific pretensions.

_CHAPTER XIII_

SAY _v_. SISMONDI

Sismondi's essay against Ricardo in the _Revue Encyclopédique_ of May 1824, was the final challenge for J. B. Say, at that time the acknowledged 'prince of economic science' (_prince de la science économique_), the so-called representative, heir and populariser of the school of Adam Smith on the Continent. Say, who had already advanced some arguments against Sismondi in his letters to Malthus, countered the following July with an essay on 'The Balance Between Consumption and Production' in the _Revue Encyclopédique_, to which Sismondi in turn published a short reply. The chronology of Sismondi's polemical engagements was thus inverse to the sequence of the opposing theories, for it had been Say who first communicated his doctrine of a divinely established balance between production and consumption to Ricardo who had in turn handed it down to MacCulloch. In fact, as early as 1803, Say, in his _Traité d'Économie Politique_, book i, chapter xii, had coined the following peremptory statement: 'Products are paid for with other products. It follows that if a nation has too many goods of one kind, the means of selling them would be to create goods of a different kind.'[210]

Here we meet again the all too familiar conjuring recipe which was accepted alike by Ricardo's school and by the 'vulgar economists' as the corner-stone of the doctrine of harmony.[211]

Essentially, Sismondi's principal work constitutes a sustained polemic against this thesis. At this stage Say charges to the attack in the _Revue Encyclopédique_ with a complete _volte-face_, as follows:

'Objection may be made that, because of man's intelligence, because of the advantage he can draw from the means provided by nature and artifice, every human society can produce _all_ the things fit to satisfy its needs and increase its enjoyment in far larger quantities than it can itself consume. But there I would ask how it is possible that we know of no nation that is supplied with everything. Even in what rank as prospering nations seven-eighths of the population are lacking in a multitude of things considered necessities in ... I will not say a wealthy family, but in a modest establishment. The village I live in at present lies in one of the richest parts of France; yet in 19 out of 20 houses I enter here, I see but the coarsest fare and nothing that makes for the well-being of the people, none of the things the English call comforts.'[212]

There is something to admire about the effrontery of the excellent Say. It was he who had maintained that in a capitalist economy there could be no difficulties, no surplus, no crises and no misery; since goods can be bought one for the other, we need only go on producing more and more and everything in the garden will be lovely. It was in Say's hands that this postulate had become a tenet of the doctrine of harmony, that doctrine so typical of vulgar economics, which had evoked a sharp protest from Sismondi who proved this view untenable. The latter had shown that goods cannot be sold in any quantity you like, but that a limit is set to the realisation of goods by the income of society in each case, by _v + s_; inasmuch as the wages of the workers are depressed to a mere subsistence level, and inasmuch as there is also a natural limit to the consumptive capacity of the capitalist class, an expansion of production, Sismondi says, must inevitably lead to slumps, crises and ever greater misery for the great masses. Say's come-back to this is masterly in its ingenuity: If you will insist that over-production is possible, how can it happen that there are so many people in our society who are naked, hungry and in want? Pray, explain this contradiction if you can. Say, whose own position excels by contriving blithely to shrug off the circulation of money altogether by operating with a system of barter, now censures his critic for speaking of an over-abundance of products in relation not only to purchasing power but to the real needs of society, and that although Sismondi had left no doubt at all about this very salient point of his deductions. 'Even if there is a very great number of badly fed, badly clothed and badly housed people in a society, the society can only sell what it buys, and, as we have seen, it can only buy with its income.'[213]

A little further on, Say concedes this point but alleges that his opponent has made a new mistake: 'It is not consumers, then, in which the nation is lacking,' he says, 'but purchasing power. Sismondi believes that this will be more extensive, when the products are rare, when consequently they are dearer and their production procures ampler pay for the workers.'[214]

That is how Say attempts to degrade, in his own trite method of thought, or better, method of canting, Sismondi's theory which attacked the very foundations of capitalist organisation and its mode of distribution. He burlesques the _Nouveaux Principes_, turning them into a plea for 'rare' goods and high prices, and holds up to them the mirror of an artfully flattered capitalist accumulation at its peak. If production becomes more vigorous, he argues, labour grows in numbers and the volume of production expands, the nations will be better and more universally provided for, and he extols the conditions in countries where industrial development is at its highest, as against the misery of the Middle Ages. Sismondi's maxims he declares subversive to capitalist society: 'Why does he call for an inquiry into the laws which might oblige the entrepreneur to guarantee a living for the worker he employs? Such an inquiry would paralyse the spirit of enterprise. Merely the fear that the authorities might interfere with private contracts is a scourge and harmful to the wealth of a nation.'[215]

Not to be diverted from his purpose by this indiscriminate apologia of Say's, Sismondi once more turns the discussion on the fundamental issue: