A History of Economic Doctrines from the time of the physiocrats to the present day. Charles Gide
by 1,046,982 cultivators, and now it is expected that the number may be still further reduced. Not only have all the small farmers been reduced to the position of labourers, but a great number of the day labourers have been forced to abandon field work altogether. The industry of the towns has adopted the principle of amalgamation of forces, and capital has been added to capital with a vigour greater than that which has joined field unto field. The manufacturer with a capital of £1000 was the first to disappear. Soon those who worked with £10,000 were considered small—too small. They were reduced to ruin and their places taken by larger employers. To-day those who trade with a capital of £100,000 are considered of an average size, and the day is not far distant when these will have to face the competition of manufacturers with a capital of £1,000,000. The refining mills of the Gironde dispensed with millers; the cask mills of the Loire ruined the coopers; the building of steamboats, of diligences, of omnibuses and railways with the aid of vast capitals have replaced the unpretentious industries of the independent boatman, carriage- or wagon-maker. Wealthy merchants have entered the retail trade and have opened their immense shops in the great capitals, where, in virtue of the improved means of transit, they are able to offer their provisions even to consumers who live at the very extremities of the empire. They are well on the way towards suppressing the wholesale trader as well as the retail dealer, and the petty shopkeeper of the provinces. The places of these independent tradesmen will soon be taken over by clerks, hirelings, and proletarians.”[406]
And now for the consequences of such a condition of things. In this opposition existing between these two social classes which formerly lived together harmoniously we shall find an explanation of the workman’s misery and of economic crises.
The sufferings of workmen, whence do they spring, if not from the fact that their numbers are in excess of the demand for their labour, thus forcing them to be content with the first wage that is offered them, even though it be opposed to their own interests and the interest of the whole class?[407] But “whence the necessity of submitting to these onerous conditions and of tolerating a burden that is ever becoming heavier under pain of hunger and death?” The explanation lies in the separation of property and toil.[408] Formerly the workman, an independent artisan, could gauge his revenue and limit his family accordingly, for population is always determined by revenue.[409] Robbed of his belongings, all his revenue is to-day got from the capitalist who employs him. Ignorant of the future demand for his products, as well as of the quantity of labour that may be necessary, he has no longer any excuse for exercising forethought, and accordingly he discards it. Population grows or diminishes in accordance with the will of the capitalist. “Let there be an increased demand for labour and a sufficient wage offered it and workmen will be born. If the demand fails, the workmen will perish.”[410]
This theory of population and wages is really Smith’s, who tried to prove that men, like commodities, extended or limited their numbers according to the needs of production. Sismondi, rather than accept it as a proof of the harmonious adaptation of demand to supply, emphasises the lamentable effects of the separation of wealth from labour.[411] Smith and Sismondi both fell into the error of Malthus and Ricardo, who imagined that high wages of necessity increased population. To-day facts seem to show that a higher standard of well-being, on the contrary, tends to limit it, and the proletarians, who constitute the majority of the nation, can no longer be treated as mere tools in the hands of the capitalists, to be taken up or thrown aside according to fancy or interest.
What is true of industrial employees is no less true of the toilers of the field. In this connection Sismondi introduces the celebrated distinction between net and gross production which has occupied the attention of many economists since then. If the peasants collectively owned all the land they would at least of a certainty find both the security and the support of their life in the soil. They would never let the gross produce fall below what was sufficient to support them.[412] But with great landed proprietors, and with the peasant transformed into the agricultural labourer, things have changed. The large proprietors have the net product only in view—that is, the difference between the cost of production and the sale price. It matters little to them if the gross produce is sacrificed for the sake of increasing the net produce. Here you have land which, when well cultivated, brings gross produce of the value of 1000 shillings to the farmer and yields 100 shillings in rent to the proprietor. But the proprietor thinks that he would gain 110 shillings if he left it fallow or let it as unprofitable pasture. “His gardener or vinedresser is dismissed, but he gains 10 shillings and the nation loses 890. By and by the capital employed in producing this plentiful supply will no longer be so employed, and there will be no profit. The workers whose former toil produced these products will no longer be employed and no wages will be paid.”[413] Examples are plentiful enough. A number of the great Scotch proprietors, in order to replace the ancient system of cultivation by the open pasture system, sent the tenants from their dwellings and drove them into the towns or huddled them on board ships for America. In Italy a handful of speculators called the Mercanti di tenute, animated by similar motives, have hindered the repopulation and cultivation of the Roman Campagna, “that territory formerly so very fertile that five acres were sufficient to provide sustenance for a whole family as well as sending a recruit to the army. To-day its scattered homesteads, its villages, the whole population, together with the farm enclosures, the vineyards, and the olive plantations—products that require the continual loving attention of mankind—have all disappeared, giving place to a few flocks of sheep tended by a few miserable shepherds.”[414] The criticism is just, but is directed rather against the abuse of private property than against the principle of the net product, for this principle is incident to peasant proprietorship as well. It is inevitable wherever production for a market takes place.[415]
It is just this opposition between proprietorship and labour that supplies an explanation of economic crises.
Sismondi holds the view that crises are partly due to the difficulty of acquiring exact knowledge of a market that has become very extensive, and partly to the fact that producers are guided in their actions by the amount of their capital rather than by the demand of the market.[416] But above all he thinks that they are due to the unequal distribution of revenues. The consequence of the separation of property from labour is that the revenues of those who possess lands increase while the incomes of the workers always remain strictly at the minimum. The natural result is a want of harmony in the demand for products. With property uniformly divided and with an almost general increase in the revenue there would result a certain degree of uniformity in the growth of demand. Those industries which supply our most essential and most general wants would experience a regular and not an erratic expansion. But as a matter of fact at the present time it is the revenue of the wealthy alone that increases. Hence there is a growing demand for the more refined objects in place of a regular demand for the ordinary things of life; a neglect of the more fundamental industries, and a demand for the production of luxuries. If the latter do not multiply quickly enough, then the foreigner will be called in to satisfy the demand. What is the result of these incessant changes? The old, neglected industries are obliged to dismiss their workmen, while the new industries can only develop slowly. During the interval the workmen who have suffered dismissal are forced to reduce their consumption of ordinary goods, and permanent under-consumption, attended by a crisis, immediately follows. “Owing to the concentration of wealth in the hands of a few proprietors, the home market is contracted and industry must seek other outlets for its products in foreign markets, where even more considerable revolutions are possible.”[417] Thus “the consumption of a millionaire master who employs 1000 men all earning but the bare necessities of life is of less value to the nation than a hundred men each of whom is much less rich but who employ each ten men who are much less poor.”[418]
Sismondi’s explanation of crises, though adopted by many writers since then, is not one of the best. The difficulty of adaptation would in all probability not disappear even if wealth were to be more equally distributed. Moreover, what he attempts to explain is an evil that is chronic in certain industries and not the acute periodical crises. But the theory has the merit of attempting to explain what still remains obscure, and what J. B. Say and Ricardo preferred to pass over in silence or regarded as of secondary importance under pretext that in the long run equilibrium would always be re-established.
IV: