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 acc.u.mulated, than in diverting capital from its actual employment.'[197]

Yet the problem of crises and acc.u.mulation 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 Encyclopedique_ 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 pa.s.sed 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 compet.i.tion 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 acc.u.mulation, 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 a.s.sumptions, 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 a.n.a.lyse 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 quant.i.ty 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 a.n.a.lyse their invisible contradictions, plaintively saying that these a.s.sumptions, 'just like German metaphysics, abstract from time and s.p.a.ce'.[204] He grafts Ricardo's hypothesis on to 'society in its real organisation, with unpropertied workers whose wage is fixed by compet.i.tion 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 cla.s.sic 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 a.s.sumption 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 superst.i.tion of the cla.s.sical 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 cla.s.s, 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 compet.i.tion, degenerating into hostility between the rich and the working cla.s.s, 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 cla.s.ses, 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 va.s.salage, and of the guilds? A time will come, no doubt, when our descendants will condemn us as barbarians because we have left the working cla.s.ses without security, just as we already condemn, as they also will, as barbarian the nations who have reduced those same cla.s.ses to slavery.'[208]

Sismondi's statement, putting in a nutsh.e.l.l 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 a.n.a.lysing 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 cla.s.sical 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 embarra.s.sed manner, and I have no hope of conquering the alarm with which I am a.s.sailed 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'Accroiss.e.m.e.nt 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 Encyclopedique_ of May 1824, was the final challenge for J. B. Say, at that time the acknowledged 'prince of economic science' (_prince de la science economique_), 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 Encyclopedique_, 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 _Traite d'economie 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 princ.i.p.al work const.i.tutes a sustained polemic against this thesis. At this stage Say charges to the attack in the _Revue Encyclopedique_ 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 quant.i.ties 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 mult.i.tude 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 coa.r.s.est 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 quant.i.ty 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 cla.s.s, an expansion of production, Sismondi says, must inevitably lead to slumps, crises and ever greater misery for the great ma.s.ses. 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 acc.u.mulation 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: