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.
His life was that of the publicist rather than the scholar. He was not a
bookworm, although he had read Say before he was nineteen, and Franklin’s
_Poor Richard’s Almanac_ soon afterwards. He was very enthusiastic
about the merits of Franklin’s works, and Franklin’s influence upon
his writings, even upon his personal appearance and behaviour, is very
marked. “With his long hair, his small cap, his long frock-coat, and his
large umbrella, he seemed for all the world like a rustic on a visit to
town.” (Molinari in the _Journal des Économistes_, February 1851.)
These biographical details should not be lost sight of, especially by
those who accuse him of lacking scientific culture and of being more of a
journalist than an economist.
Despite the fact that he has been severely judged by foreign economists,
he is still very popular in France. His wit is a little coarse, his
irony somewhat blunt, and his discourses are perhaps too superficial,
but his moderation, his good sense, and his lucidity leave an indelible
impression on the mind. And we are by no means certain that the
_Harmonies_ and the _Pamphlets_ are not still the best books that a young
student of political economy can possibly read. Moreover, we shall find
by and by that the purely scientific part of his work is by no means
negligible.
[701] On this question of who benefits by international trade see our
discussion of Mill’s treatment of the problem (pp. 364-365).
[702] _Harmonies_, p. 21. Our quotations are taken from the tenth edition
of the _Œuvres complètes_.
[703] “Economic phenomena are not without their efficient cause and their
Providential aim.” (_Harmonies_, last page.)
“Looking at this harmony, the economist can join with the astronomer and
the physiologist and say: _Digitus Dei est hic_.” (_Ibid._, chap. 10, p.
39.)
“If everyone would only look after his own affairs, God would look after
everybody’s.” (_Ibid._, chap. 8, p. 290.)
[704] Auguste Comte, _Cours de Philosophie positive_, vol. iv, p. 202.
[705] The liturgy of the Reformed Church reads as follows: “We
acknowledge and confess our manifold sins.” See our chapter on _Doctrines
that owe their Inspiration to Christianity_.
[706] _Harmonies_, chap. 5, p. 140.
[707] “I have attempted to show that value is based not so much upon the
amount of labour which a thing has cost the person who made it, as upon
the amount of labour it saves the persons who obtain it. [He ought to
have acknowledged his indebtedness to Carey in this matter.] Hence I have
adopted the term ‘service,’ which implies both ideas.” (_Ibid._, chap. 9,
p. 341.)
[708] _Ibid._, chap. 5, p. 145.
[709] _Harmonies_, chap. 5, p. 193.
“Socialists and economists, champions of equality and fraternity, I
challenge you, however numerous you may be, to raise even a shadow of
objection to the legitimacy of mutual service voluntarily rendered,
and consequently against the institution of private property as I have
defined it. With regard to both these considerations, men can only
possess values, and values merely represent equal services freely secured
and freely given.” (_Ibid._, chap. 8, pp. 265, 268.)
Had the limits of this work permitted us to speak of the Italian
economists we should have had to refer to Ferrara, professor at Turin
from 1849 to 1858, whose theory of value and economic harmony link him
to his contemporaries Carey and Bastiat. The whole economic edifice,
according to Ferrara, was built upon cost of production. The value of a
commodity is not measured by the amount of labour which it really has
cost to produce, but by the amount of labour that would be required to
produce another similar commodity, or, if the commodity in question be
absolutely limited in quantity, such as is the case with an old work of
art, by the labour necessary to produce a new one that would satisfy the
same need equally well—an application of the principle of substitution
which had not been formulated when Ferrara wrote. The progress of
industry gradually reduces the cost of labour and dispenses with human
effort; hence harmony.
Everything, including the earth and its products, even capital, are
subject to this same law, and a gradual diminution of rent and a lowering
of the rate of interest are thus assured.
Ferrara’s principal writings consist of prefaces to Italian translations
of the works of the chief economists. They were published in a collection
known as _Biblioteca dell’ Economista_ (Turin, 1850-70, 26 vols.).
[710] _Harmonies_, chap. 7, p. 236. The controversy between Bastiat and
Proudhon in 1849 concerning the legitimacy of interest was published
under the title of _Gratuité du Crédit_, but the argument is scarcely
worth examining here. Bastiat’s argument is based upon the supposition
that the person who lends money performs some service or other, and that
the service, whenever given, should be paid for; in other words, he
maintains that capital is productive. A plane means more planks produced,
and it is only just that the owner of the plane should get some of
them. Proudhon replies that he does not deny the legitimacy of interest
under present conditions, but that interest itself is just a historical
category—to use a phrase that only became current after Proudhon’s
time—and that it will be quite unnecessary under the new _régime_. The
Exchange Bank was to be the parent of the new order. The two combatants
never really come to blows. They keep on arguing about nothing. The
result is that this discussion is very trying and brings little honour to
either.
[711] “The relative importance of any service must vary with the
circumstances. This will depend upon its utility, and the number of
people who are willing to give the amount of labour, of ability or
training necessary to produce it, as well as the amount of labour which
it will save us.” (_Harmonies_, chap. 5, p. 146.)
[712] Bastiat himself was obliged to recognise this. “I have not taken
the trouble to ask whether all these services are real and proper or
whether men are not sometimes paid for services which they never give.
The world is full of such injustices.” (_Ibid._, chap. 5, p. 157.)
But if the world is full of people who are paid for services which they
have never given or for merely imaginary and improper work, what is
the use of speaking of value and property as if they were founded upon
service rendered?
See Gide’s article on _La Notion de la Valeur dans Bastiat_, in the
_Revue d’Économie politique_, 1887.
[713] J. B. Say had already employed the term “service” without giving it
any normative significance, simply using it to distinguish between wealth
which consists of acts and wealth which consists of material products.
[714] _Social Possibilities of Economic Chivalry_, in _Economic Journal_,
March 1907.
[715] “And I also declare that you have not intercepted any of the gifts
of God. It is true that you received them free out of nature’s hand. But
it is equally true that you have handed them on freely, reserving nothing
for yourself. Fear not, but live in peace and freedom from every qualm.”
(_Harmonies_, chap. 8, p. 257.)
“Coal is free for everyone. There is neither paradox nor exaggeration
in that. It is as free as the water of the brook, if we only take the
trouble to get it, or pay others for getting it for us.” (_Ibid._, chap.
10.) Bastiat would not regard the shareholders’ dividends as payments for
the trouble which the shareholders have taken in getting the coal. The
dividends simply pay for the trouble taken to save the money which made
the exploitation possible.
Say spoke of free natural agents. What he meant to refer to was such
natural commodities as air and water, which are at the disposal of
everyone.
[716] _Harmonies_, chap. 8, p. 256.
[717] _Ibid._, chap. 5, p. 142.
[718] Bastiat does not seem to have studied rent. The chapter of the
_Harmonies_ on this subject was never completed. Fontenay, one of his
disciples, wrote a brilliant book called _Du Revenu foncier_ (1854),
which is almost forgotten to-day. He attempted to show:
(1) That Ricardian or differential rent would not exist were all the land
equally fertile and suitably cultivated.
(2) That it is incorrect to speak of the rent of natural fertility, as
Adam Smith and the Physiocrats did, if all utility (and not merely value)
is the product of human labour. A fish, a grape, a grain of wheat, a fat
ox, all of them have been created by human industry. Nature is for ever
incapable of doing this. This is quite true if we say nature alone, but
it is equally true of labour taken by itself.
[719] Carey, _Principles of Social Science_.
[720] Even in Algeria, for example, where Carey’s theory was at first
true, now that the fertile plain of the Mitidja has been cultivated
by two generations of colonists it is certain that there is only
second-class land available.
[721] “Wealth consists of the right to command the services of nature,
which are always free.” (Carey, _Principles of Social Science_, vol. i,
chap. 13.)
“As man’s power over nature grows, his power over his fellow-men seems to
dwindle and equality becomes possible.” (_Ibid._, vol. iii, p. 122.)
Compare, for example, the relative equality of comfort enjoyed by those
who travel by rail irrespective of class distinctions (which are only
to be found in some countries) with the former method of travelling by
post-chaise.
[722] “Capitalists and workers, don’t look at one another with an air of
defiance and vengeance.” (_Harmonies_, p. 252.)
[723] A lowering of the rate of interest from 5 to 3 per cent. means that
what formerly cost £60 and yielded 3 per cent. will now cost £100. There
is no decrease of the revenue and there is an increase in the capital. It
is quite a good bargain. A lowering of the rate of interest will simply
reduce the amount of capital in those instances where the borrower can
effect a conversion to his own advantage.
[724] This truth is so obvious that Rodbertus, as we shall see by and by,
took the opposite point of view and attempted to argue on the strength of
the “iron law” that capital’s share is always increasing, while labour’s
is decreasing. This thesis seems to have no better foundation than the
other. See an article by Rist entitled _Deux Sophismes économiques_, in
the _Revue d’Économie politique_ for March 1905.
Bastiat’s thesis may also be seen in Carey. The Liberal school has
clearly adopted it. See Paul Leroy-Beaulieu’s _Répartition der Richesses_.
[725] See Gide’s _Political Economy_, p. 599 (English translation), and
Colson’s _Political Economy_, vol. iii, p. 366. According to Colson,
capital’s share has quadrupled since 1820, while labour’s has only
increased in the proportion of 1:3½.
[726] “Just as the earth is the great reservoir of electricity, so the
public or the consumer is the one source of any gain or loss which
the producer makes or suffers. Everything comes back to the consumer.
Consequently every important question must be studied from the consumer’s
point of view if we want to get hold of its general and permanent
results.” (_Harmonies_, chap. 11, p. 414.)
[727] See one of Bastiat’s best known pamphlets, _La Vitre cassée_.
[728] _Harmonies_, chap. 6, p. 419.
[729] Quoted by his friend Paillottet in his preface to the _Œuvres
complètes_.
[730] _E.g._ Yves Guyot in the _Journal des Économistes_ for 1904 _et
passim_. See p. 326.
[731] The word is not his invention. That honour is claimed by Pierre
Leroux. See p. 235.
[732] _Harmonies_, chap. 21, p. 624.
“There is not a man living whose character has not been determined by a
thousand factors entirely beyond his control.” (_Ibid._, p. 623.)
“All profit by the progress of the one, and the one by the progress of
the many.” (_Ibid._, chap. 11, p. 411.)
[733] “Solidarity implies a kind of collective responsibility. And so
solidarity as well as responsibility is a force that makes for progress.
It is a system that is admirably calculated to check evil and to advance
the good.” (_Ibid._, chap. 21, pp. 622-626.)
[734] “Workers must understand that these collective funds [pension
funds] must be voluntarily contributed by those who are to have a share
in them. It would be quite unjust, as well as anti-social, to raise them
by means of taxation—that is, by force—from the classes who have no share
in the benefits.” (_Harmonies_, chap. 14, p. 471.)
“A peasant marries late in the hope of having a small family, and we
force him to rear other people’s children. He has to contribute towards
the rearing of bastards.” (_Ibid._, chap. 20, pp. 617, 618.)
Speaking of sharing in the benefits, he remarks: “That is really not
worth talking about.” (_Ibid._, chap. 14, p. 457.)
[735] “Organisms in nature have their rank and degree of perfection
determined by the number of organs which they possess and the amount of
difference which exists between each of them.” (_Social Science_, vol.
iii, p. 461.)
“Life has been defined as an exchange of mutual obligations, but if there
were no difference between the various objects how could the exchange
take place?” (_Ibid._, vol. i, pp. 54-55.)
“The more perfectly co-ordinated the whole is, the better developed will
be each of its parts.” (_Ibid._, vol. iii, p. 462.)
[736] Charles Dunoyer was Bastiat’s senior. The first edition of _De la
Liberté du Travail_, to which we have already referred, dates from 1825,
and the last edition from 1845. He took an active part in opposing the
Restoration Government, but he became prefect and subsequently Conseiller
d’État under Louis Philippe.
[737] Molinari, a modern French economist, holds similar views.
[738] If a person died intestate he was in favour of equal division of
wealth. The arguments which he employed are very interesting, especially
those directed against the upholders of primogeniture. They thought that
by depriving the younger sons of their inheritance they became more
industrious and thoughtful. Dunoyer replies by asking whether it would
not be an advantage to deny the right of succession to the eldest son
as well, “for it is obviously unfair that he should be deprived of that
kind of training which is so profitable to his younger brothers.” Dunoyer
forgot that it would have gone ill with his arguments if the socialists
had taken him at his word.
[739] “Labour is the only source of productive power. Capital is a human
creation, and land is simply a form of capital.” (_De la Liberté du
Travail_, Book VI.)
[740] Say had already recognised the claims of immaterial wealth
alongside of material, and he had employed the term “services” in
describing them. In this way he considered that the professor, the doctor
and the actor had claims to be regarded as producers. Dunoyer, while
accepting his conclusion, criticises his way of putting it. He recognises
no distinction between material and immaterial wealth. There is nothing
but utility. “It is true that taste, education, etc., are immaterial,
but so is everything that man produces.” But he is entirely wrong when
he says that a good teacher is a producer of enlightened men and a
doctor a producer of healthy persons. We are at a loss to explain why at
one moment he refuses to recognise the material element in production,
while at another he grossly exaggerates the material results of purely
intellectual labour.
[741] “Labour and exchange belong to two categories of facts which are
absolutely distinct in their nature. Labour implies production. Commerce
and exchange imply nothing of the kind.” (_De la Liberté du Travail_, p.
599.)
[742] Seligman in the _Economic Journal_ for 1903, pp. 335-511, devotes
two very interesting articles to such writers under the title of _Some
Neglected British Economists_. One is astonished to find how many there
are and the originality which they show, and to learn that several of the
more important modern theories are simply rediscoveries.
[743] Mrs. Marcet’s _Conversations_ belong to 1817, Miss Martineau’s
_Illustrations_ to 1832. The latter had a wonderful vogue.
[744] Quoted by Seager in a lecture on economics at Columbia University
in 1908.
[745] We have already referred to McCulloch and James Mill, two of
Ricardo’s immediate disciples. We must just add the names of Torrens and
Gibbon Wakefield. Wakefield was the author of a book which had a great
reputation at one time, but which was simply an attempt to apply the
Ricardian principles to the practice of colonisation.
[746] Nassau Senior during a part of his life was Professor of Political
Economy at Oxford. The Oxford chair, created in 1825, was the first chair
of economics to be established in England. His writings, which treat of
various subjects, belong to the period 1827-52. The bulk of his doctrine
is contained in his _Political Economy_, contributed to the _Encyclopædia
Britannica_ in 1836 and afterwards published separately. This small
volume may be regarded as the earliest manual of political economy.
[747] The four principles were: (i) the Hedonistic Principle; (ii) the
Principle of Population; (iii) the Law of Increasing Returns in Industry;
(iv) the Law of Diminishing Returns in Agriculture.
[748] “But a considerable part of the produce of every country is the
recompense of no sacrifice whatever; is received by those who neither
labour nor put by, but merely hold out their hands to accept the
offerings of the rest of the community.” (_Political Economy_, p. 89.) He
takes the income of a successful doctor as an illustration, and divides
it up as follows (_ibid._, p. 189):
Wages or payment for labour £40
Profit or payment for abstinence £960
Rent £3000
See _Senior’s Theory of Monopoly_, by Richard Ely (American Economic
Association, 1899).
[749] This confusion between rent and the income of inherited wealth does
little honour to Senior, for the two facts belong to entirely different
categories. Rent is a purely economic phenomenon, resulting from the
necessary conditions of exchange. It owes nothing to social organisation,
not even to the institution of private property. Inheritance, on the
other hand, is a purely juridical phenomenon, the product of civil law.
Even if inheritance were abolished it would make no difference to the
existence and growth of rent, whether obtained from the soil or from
some other source; whereas under the hypothetical _régime_ of perfectly
free competition, although rent would no longer be known, inheritance,
together with all its privileges, might still continue to exist. Senior
evidently understands by the term “rent” any kind of income that is not
obtained by personal effort. But this is clearly a perversion of the
original meaning.
[750] Rau’s treatise on political economy belongs to the years 1826-37,
and von Thünen’s _Der Isolirte Staat_ appeared in 1826.
[751] Pellegrino Rossi, who became a naturalised Frenchman in 1833, was
an Italian by birth. He succeeded Say as professor at the Collège de
France. He afterwards became Lecturer on Constitutional Law, and his
name is commemorated in one of the annual prizes. He eventually entered
the diplomatic service, and was attached to the Papal See during the
pontificate of Pius IX. He was assassinated at Rome in 1848.
[752] John Stuart Mill, born in 1806, was the son of James Mill the
economist of whom we have already spoken. The system of education which
his father planned for him can only be described as extraordinary.
Practised on anyone else it would have been fatal. At the age of ten
he was already well versed in universal history and in the literatures
of Greece and Rome. At thirteen he had a fair grasp of science and
philosophy, and had written a history of Rome. By the time he was
fourteen he knew all the political economy that there was to know then.
In 1829, then a young man of twenty-three, he published his first essays
on political economy. In 1843 appeared his well-known _System of Logic_,
which immediately established his fame. In 1848 he issued the admirable
_Principles of Political Economy_. Mill was in the service of the East
India Company up to the time when it lost its charter in 1858. From
1865 to 1868 he was a member of the House of Commons. After the death
of his wife, who collaborated with him in the production of several of
his works, especially _Liberty_ (1859), being unwilling to quit the
spot where she lay buried, he spent the last years of his life, except
those taken up by his Parliamentary work, at Avignon. His autobiography
contains a precious account of his life and of his gradual conversion to
socialistic views.
[753] _Principles_, Book II, chap. 1, § 3.
[754] _Ibid._, Book IV, chap. 7, § 7.
[755] Dupont de Nemours, writing very much in the spirit of the Classical
school, had already given an excellent definition of natural law. “By
natural law we are to understand those essential conditions that regulate
all things in accordance with the design laid down by the Author of
Nature. They are the ‘essential conditions’ to which men must submit if
they would obtain all the benefits which the natural order offers them.”
(Introduction to Quesnay’s works, p. 21.)
[756] Adam Smith, let us remember, also wrote a book on the _Theory
of Moral Sentiments_ (see Book I, chap. 2), and Stuart Mill writes as
follows: “In the golden rule of Jesus of Nazareth we read the complete
spirit of the ethics of utility. To do as you would be done by and to
love your neighbour as yourself constitute the ideal perfection of
utilitarian morality.” (_Utilitarianism_, chap. 2.)
[757] This is how Mill views it: “It is only in a very imperfect state
of the world’s arrangements that anyone can best serve the happiness of
others by the absolute sacrifice of his own.” (_Utilitarianism_, chap.
2.) But it is scarcely necessary to add, seeing that the two propositions
are necessarily complementary, that one of the best ways of securing
happiness is to sacrifice one’s self in the cause of others. All that is
required is a little patience. “Education and opinion will so use that
power as to establish in the mind of every individual an indissoluble
association between his happiness and the good of the whole.” Interpreted
in this way, individualism is closely akin even to the most transcendent
form of solidarity.
[758] One is sometimes asked to state the differences between the
Classical, the Individualist, the Liberal, and the Optimist schools.
The question does not seem to us to be a very important one, but we may
answer it in this way:
(_a_) The Individualist school, according to the worst interpretation put
upon it, thinks that egoism is the only possible system of ethics and
that each for himself is the sole principle of action. But, naturally
enough, everyone is anxious to avoid the taunt of selfishness, and the
existence of such economic ties as exchange and division of labour
make egoism impossible as an ethical system. According to the broadest
interpretation of the term, individualism implies the recognition of
individual welfare as the sole aim of every activity, whether individual
or social, economic or political. But this does not take us very far, for
every socialist and individualist would accept this interpretation. We
seldom speak of the welfare of society _per se_ as an entity possessed
of conscious feeling. This definition is much too wide. It includes
solidarity and association, State intervention and labour legislation,
provided the aim be to protect the individual against certain dangers.
Self-sacrifice is not excluded, for what can strengthen individualism
like self-sacrifice? This is the interpretation which Schatz puts
upon it in his _L’Individualisme économique et social_. But the term
“individualist” is too indefinite and we must avoid it whenever we can.
(_b_) The so-called Liberal school uses the term in a much more definite
fashion. The individual is to be not merely the sole end of economic
action, but he is also to be the sole agent of the economic movement,
because no one else can understand his true interests or realise them
in a better way. Interpreted in this fashion, it means letting the
individual alone and removing every external intervention, whether by the
State or the master.
According to the one definition, individualism is a creed which everyone
can adopt; according to the other it is open to very serious objections.
Experience shows that the individual, whether as consumer buying
injurious, costly, or useless commodities, or as worker working for
wages that ruin his health and lower his children’s vitality, is a poor
judge of his own interest, and is helpless to defend himself, even where
science and hygiene are on his side.
(_c_) If we push this interpretation a stage farther and admit not only
that each individual is best qualified to speak for himself, but also
that the social interest is simply the sum of the individual interests,
all of which converge in a harmonious whole, then the Liberal school
becomes the Optimistic. In France it has the tradition of a generation
behind it, and an attempt has been made to revive it in certain recent
works; still it may now be regarded as somewhat antiquated.
(_d_) When we speak of the Classical school we mean those who have
remained faithful to the principles enunciated by the earlier masters
of economic science. An effort has been made to improve, to develop,
and even to correct the older theories, but no attempt has been made to
change their essential aspects. Individualistic and liberal by tradition,
this school has never been optimistic. It lays no claim to finality of
doctrine or to the universality of its aim, but simply confines itself to
pure science.
[759] _Auguste Comte and Positivism._
[760] _Principles_, Book IV, chap. 7, par. 7 (Ashley’s ed., p. 793). See
the recent work of Molinari, or _La Morale de la Concurrence_, by Yves
Guyot.
[761] “It is in vain to say that all mouths which the increase of mankind
calls into existence bring with them hands. The new mouths require
as much food as the old ones and the hands do not produce as much.”
(_Principles_, Book I, chap. 11, § 2.)
[762] “It is seldom by the choice of the wife that families are too
numerous; on her devolves (along with all the physical suffering and
at least a full share of the privations) the whole of the intolerable
domestic drudgery resulting from the excess.” (_Principles_, Book II,
chap. 13, § 2.)
[763] “While a man who is intemperate in drink, is discountenanced and
despised by all who profess to be moral people, it is one of the chief
grounds made use of in appeals to the benevolent that the applicant
has a large family and is unable to maintain them.” (_Ibid._, Book II,
chap. 13, § 1.) “Little improvement can be expected in morality, until
the producing large families is regarded with the same feelings as
drunkenness or any other physical excess. But while the aristocracy and
clergy are foremost to set the example of this kind of incontinence what
can be expected of the poor?” (_Ibid._, Ashley’s ed., p. 375, note.)
He complains that the Christian religion inculcates the belief that God
in His wisdom and care blesses a numerous family.
[764] “The laws which in many countries on the Continent forbid marriage
unless the parties can show that they have the means of supporting a
family, do not exceed the legitimate powers of the State. They are not
objectionable as violations of liberty.” (_Liberty_, chap. 5.)
On the other hand he thought that a law which limited the number of
public-houses involved a violation of liberty because it meant treating
the workers as children. (_Ibid._, chap. 5.)
[765] “The rise or the fall continues until the demand and supply are
again equal to one another: and the value which a commodity will bring
in any market is no other than the value which in that market gives a
demand just sufficient to carry off the existing or expected supply.”
(_Principles_, Book III, chap. 2, § 4.)
Cournot in his criticisms of the law of demand and supply had anticipated
Mill. But it is very probable that Mill was not acquainted with the
_Recherches_.
[766] _Principles_, Book III, chap. 3, § 1.
[767] _Ibid._, Book III, chap. 1, § 1.
[768] “Wages depend, then, on the proportion between the number of the
labouring population and the capital or other funds devoted to the
purchase of labour, and cannot under the rule of competition be affected
by anything else.” (_Ibid._, Book II, chap. 11, parts 1 and 3.)
[769] Saving with a view to augmenting the wages fund is only possible
for the rich, and Mill is as insistent upon their doing it as he is upon
the workers refraining from marriage. He also tries to impress upon the
workers the importance of saving, but his way of showing its advantages
is often laborious and obscure.
[770] Stuart Mill admitted that trade unions might modify the relations
between demand and supply, forgetting for the moment that this meant a
contradiction of the Classical theory.
The unions might limit the number of available men. He feared that this
would result in high wages for the small number of organised labourers
and in low wages for the others. They might check the birth-rate, their
members becoming accustomed to such a degree of comfort and well-being as
would raise their standard of life. He was always a strict Malthusian.
[771] See the quarterlies of Harvard and Columbia. It was an American,
however, Francis Walker, in his _Wages Question_ (1876), who did more
than anyone to destroy the old wage fund theory.
[772] “The cost value of a thing means the cost value of the most costly
portion of it.” (_Principles_, Book III, chap. 6, § 1, prop. 7.)
“The extra gains which any producer or dealer obtains through superior
talents for business or superior business arrangements are very much of
a similar kind. If all his competitors had the same advantages, and used
them, the benefit would be transferred to their customers through the
diminished value of the article: he only retains it for himself because
he is able to bring his commodity to market at a lower cost while its
value is determined by a higher.” (_Ibid._, Book III, chap. 5, § 4.)
Senior had already emphasised one important difference between
agricultural and industrial production, namely that whilst the law of
diminishing returns operates in the former case, the law of increasing
returns is operative in the second. In other words, the cost of
production diminishes as the quantity produced increases. The result is,
as Mill points out elsewhere, that the industrial employer is anxious to
reduce the sale price in order to produce more and to recoup himself for
a reduction in price by a reduced cost of production.
[773] Ricardo, moreover, gives an exposition of the advantages of
international trade in terms that Bastiat might have adopted. “Under a
system of perfectly free commerce each country naturally devotes its
capital and labour to such employments as are most beneficial to each.
This pursuit of individual advantage is admirably connected with the
universal good of the whole. By stimulating industry, by rewarding
ingenuity, and by using most efficaciously the peculiar powers bestowed
by nature, it distributes labour most effectively and most economically:
while by increasing the general mass of productions it diffuses
general benefit and binds together, by one common tie of interest and
intercourse, the universal society of nations throughout the civilised
world. It is this principle which determines that wine shall be made in
France and Portugal, that corn shall be grown in America and Poland,
and that hardware and other goods shall be manufactured in England.”
(Ricardo, _Works_, p. 75.)
[774] The following apparent paradox may be deduced from Ricardo’s
theory. A country is wise in importing not only those commodities which
it can only produce at a disadvantage as compared with its rivals, but
also those goods in which it has a distinct advantage in the matter of
production, though not so great as the advantage enjoyed in some other
case. Under those circumstances it is better that it should produce that
product in the making of which it has the greater advantage and exchange
it for some other product in which it has less.
“Two men can both make shoes and hats, and one is superior to the
other in both employments; but in making hats, he can only exceed his
competitor by one-fifth, or 20 per cent., and in making shoes he can
excel him by one-third, or 33 per cent. Will it not be for the interest
of both, that the superior man should employ himself exclusively in
making shoes, and the inferior man in making hats.” (Ricardo, _Works_, p.
77, note.)
And so England might find it advantageous to exchange her coal for French
cloths, although she may be able to produce those cloths cheaper herself.
[775] “The value of a thing in any place depends on the cost of its
acquisition in that place; which in the case of an imported article means
the cost of production of the thing which is exported to pay for it.”
(_Principles_, Book III, chap. 18, § 1.)
[776] Mill first treated of the theory in his _Unsettled Questions of
Political Economy_. A more complicated but more precise exposition is
given in the _Principles_ Book III, chap. 18, § 7. The whole process of
reasoning, based as it is upon the hypothetical conduct of two persons,
is purely abstract, and is of very little practical use. What is really
important is to know the relation between the advantages gained by either
side. It is true that on the whole imports and exports balance one
another, thanks to the operation of money, but that is another question.
[777] “It still appears, that the countries which carry on their foreign
trade on the most advantageous terms are those whose commodities are
most in demand by foreign countries, and which have themselves the least
demand for foreign commodities, from which, among other consequences, it
follows that the richest countries, _ceteris paribus_, gain the least
by a given amount of foreign commerce, since, having a greater demand
for commodities generally they are likely to have a greater demand for
foreign commodities and thus modify the terms of interchange to their
own disadvantage.” (_Principles_, Book III, chap. 18, § 8.) Note the
phrase “a given amount of foreign commerce.” That is, although the rate
of interchange is less advantageous for the rich country than it is for
the poor, still, since the former exchanges much more than the latter
it gains more on the whole transaction. Mill states this expressly
elsewhere. The rich and the poor country are like the wholesale house and
the little shop. The former gains very little on each article sold, but
gains much on the whole turnover.
[778] _Ibid._, Book V, chap. 10, § 1.
[779] An even more important concession to the Protectionist view is
his admission that the duties are not always borne by the home consumer
in the form of higher prices, but that they are sometimes paid by the
foreigner.
[780] _Principles_, Book V, chap. 10, § 1. The duty would check the
demand of the importing country, and according to Mill’s own formula it
ought to modify the exchange equation in its favour.
[781] _Histoire des Doctrines économiques_, p. 338.
[782] Mill was for many years resident in France, and died at Avignon.
An article written by him in defence of the Revolution of 1848 has been
translated into French and published in book form by M. Sadi Carnot.
[783] _Principles_, p. 210.
[784] _Representative Government_, chap. 3.
[785] “The laws and conditions of the production of wealth partake of the
character of physical truths. There is nothing optional or arbitrary in
them.… It is not so with the distribution of wealth. This is a matter of
human institution solely. The things once there, mankind, individually
or collectively, can do with them as they like.” (_Principles_, Book
II, chap. 1, § 1.) Karl Marx, a little later than this, claimed that
distribution is wholly determined by production.
[786] See Chatelain’s introduction to Rodbertus’s _Kapital_.
[787] See _Autobiography_, p. 133 (“Popular” edition).
[788] “If the improvement which even triumphant military despotism has
only retarded, not stopped, shall continue its course there can be
little doubt that the status of hired labourers will gradually tend to
confine itself to the description of workpeople whose low moral qualities
render them unfit for anything more independent, and that the relation
of masters and workpeople will be gradually superseded by partnership
in one of two forms: in some cases, association of the labourers with
the capitalist; in others, and perhaps finally in all, association of
labourers among themselves.” (_Principles_, Book IV, chap. 7, § 4.)
“In this or some such mode, the existing accumulations of capital might
honestly and by a kind of spontaneous process become in the end the
joint property of all who participate in their productive employment—a
transformation which, thus effected, would be the nearest approach to
social justice and the most beneficial ordering of industrial affairs for
the universal good which it is possible at present to foresee.” (_Ibid._,
Book IV, chap. 7, § 6.)
[789] The co-operative movement probably suggested this idea to him. He
several times expresses the opinion that middlemen’s profits exceed those
of the capitalists, and that the working class would gain more by the
removal of the former than they would by the extinction of the latter.
[790] But Young remained a champion of _grande culture_, while Mill was a
complete convert to peasant proprietorship. But peasant proprietorship is
proposed simply as a step towards association.
“The opinion expressed in a former part of this treatise respecting
small landed properties and peasant proprietors may have made the reader
anticipate that a wide diffusion of property in land is the resource
on which I rely for exempting at least the agricultural labourers from
exclusive dependence on labour for hire. Such, however, is not my
opinion. I indeed deem that form of agricultural economy to be most
groundlessly cried down, and to be greatly preferable in its aggregate
effects on human happiness to hired labour in any form in which it exists
at present. But the aim of improvement should be not solely to place
human beings in a condition in which they will be able to do without one
another, but to enable them to work with or for one another in relations
not involving dependence.” (_Principles_, Book IV, chap. 7, § 4.)
Mill was not the only one who looked to peasant proprietorship partly
to solve the social problem. Not to mention Sismondi, who was very
much taken up with the idea, we have Thornton in England in his _Plea
for Peasant Proprietors_ (1848) and Hippolyte Passy in France in his
excellent little volume _Des Systèmes de Culture_ (1852) strongly
advocating it. The Classical economists for the most part took the
opposite point of view, especially Lavergne in his _Essai sur l’Économie
rurale de l’Angleterre_.
[791] “Were I framing a code of laws according to what seems to me best
in itself, without regard to existing opinions and sentiments, I should
prefer to restrict, not what anyone might bequeath, but what anyone
should be permitted to acquire by bequest or inheritance. Each person
should have power to dispose by will of his or her whole property; but
not to lavish it in enriching some one individual beyond a certain
maximum.” (_Principles_, Book II, chap. 2, § 4.)
It is hardly necessary to say that this limitation of the right of
inheritance is a purely personal opinion of Mill, and that it is rejected
along with his other solutions by most individualists. It is not quite
correct to say then, as Schatz has said in his _Individualism_, that
Stuart Mill is “the very incarnation of the individualistic spirit.” He
was really a somewhat sceptical disciple of the school, and his frequent
change of opinion was very embarrassing!
[792] _Principles_, Book II, chap. 6, § 2.
[793] “There is at every time and place some particular rate of profit,
which is the lowest that will induce the people of that country and time
to accumulate savings.… But though the minimum rate of profit is thus
liable to vary, and though to specify exactly what it is would at any
given time be impossible, such a minimum always exists; and whether it
be high or low, when once it is reached no further increase of capital
can for the present take place. The country has then attained what is
known to political economists under the name of the Stationary State.”
(_Ibid._, Book IV, chap. 4, § 3.)
Mill indicates the causes that contribute to a fall in the rate of
profits as well as the causes that arrest that fall, such as the progress
of production and the destruction of wealth by wars and crises.
It may be worth while pointing out that the word profit as employed
by the English economists, and especially by Mill, has not the same
meaning as it has with the French writers. French economists since the
time of Say have employed the term profit to denote the earnings of
the _entrepreneur_, the capitalist’s income being designated interest.
The English economists do not distinguish between the work of the
_entrepreneur_ and that of the capitalist, and the term profit covers
them both. The result is that the French Hedonistic economists can say
that under a _régime_ of absolutely free competition profit would fall
to zero, while the English economists cannot accept their thesis because
profits include interest, which will always remain as the reward of
waiting.
The French point of view is more generally adopted to-day.
[794] In a letter to Gustave d’Eichthal, recently published, speaking of
Auguste Comte, he writes as follows: “How ridiculous to think that this
law of civilisation requires as its correlative constant progress! Why
not admit that as humanity advances in certain respects it degenerates in
others?”
[795] On the question of co-operation as a method of social reform,
Cairnes, who simply refers to it as a possible alternative, may have owed
something to Mill.
[796] _Essays_, p. 281.
[797] Since 1830 there have only been four professors.—J. B. Say, Rossi,
Michel Chevalier, and Chevalier’s son-in-law, M. Paul Leroy-Beaulieu. The
history of the chair is a fair summary of the history of French economics.
[798] His most curious book, perhaps, was _De la Baisse probable de l’Or_,
a title that caused a good deal of amusement during the latter half of the
nineteenth century, but which proved somewhat of a prophecy after all.
[799] Joseph Garnier, who must not be confused with Germain Garnier, the
translator of Smith’s works, published the first edition of his _Éléments
d’Économie politique_ in 1845. From 1848 up to his death in 1881 he was
chief editor of the _Journal des Économistes_.
[800] G. Schmoller, _Zur Litteraturgeschichte der Staats- und
Sozialwissenschaften_ (Leipzig, 1888). The expression will be found in
his study of Roscher.
[801] A. Toynbee, _The Industrial Revolution_.
[802] It is curious that the Historians never refer to Sismondi as
one of the pioneers of historical study. Roscher and Hildebrand never
mention him at all, and Knies only thinks of him as a socialist (cf. _Die
Nationalökonomie vom historischen Standpunkt_, 2nd ed., p. 322).
[803] Even List did not escape criticism at their hands. Hildebrand
thinks that he was infected with the atomic views of Adam Smith and never
showed himself sufficiently conscious of the ethical nature of society.
“List seems to think that the entire subordination of private interest to
public utility is dictated by custom, and even by private interest when
properly understood, but he never regards it as a public duty rising out
of the very nature of society itself.” (Hildebrand, _Die Nationalökonomie
der Gegenwart und Zukunft_, p. 73.) Note the ethical standpoint of the
school.
[804] See, among others, Max Weber’s articles in Schmoller’s _Jahrbuch_
for 1903, p. 1881, and 1905, p. 1323. The methodological errors of
Roscher, Knies, and Hildebrand get their due meed of criticism.
[805] _Grundriss_, preface.
[806] Knies is of the same opinion. He remarks that Roscher’s work
simply means “a completion of historiography rather than a correction
of political economy.” (_Die Nationalökonomie vom geschichtlichen
Standpunkte_, p. 35.)
[807] _Grundriss_, preface, pp. iv-v.
[808] _Untersuchungen über die Methode der Sozialwissenschaften und der
Politischen Oekonomie insbesondere._ (Leipzig, 1883.)
[809] Schmoller, _loc. cit._ For further information concerning the
Cameralists see _Geschichte der Nationalökonomie_, by M. Oncken. Menger
and Schmoller also connect Roscher with Heeren, Gervinus, and the other
historians of Göttingen who during the first quarter of the nineteenth
century tried to found a science of politics upon a general study of
history. Roscher had studied history under them, and his aim is in every
respect similar to theirs.
[810] In the introduction, p. v, he declares that the object of his work
is “to open a way for an essentially historical standpoint in political
economy and to transform the science of political economy into a body of
doctrines dealing with the economic development of nations.”
[811] Even Roscher had ventured to say that they partook of a
mathematical nature. This is how he expresses his views as against those
of Hildebrand on the real aim of political economy in the _Jahrbücher
für Nationalökonomie und Statistik_, vol. i, p. 145: “Economic science
need not attempt to find the unchangeable, identical laws amid the
multiplicity of economic phenomena. Its task is to show how humanity has
progressed despite all the transformations of economic life, and how this
economic life has contributed to the perfection of mankind. Its task is
to follow the economic evolution of nations as well as of humanity as a
whole, and to discover the bases of the present economic civilisation as
well as of the problems that now await solution.”
[812] The exact title of the first edition was _Die Politische Oekonomie
vom Standpunkte der geschichtlichen Methode_. A second edition appeared
in 1883 with a slightly different title. Our quotations are taken from
the second edition.
[813] Schmoller, _Grundriss der Volkswirtschaftslehre_, vol. i, p. 107
(1904).
[814] _Ibid._, vol. i, p. 108.
[815] _Ibid._, vol. ii, p. 653.
[816] All historians, however, are not equally sceptical. Ashley in his
preface to _English Economic History and Theory_ writes as follows: “Just
as the history of society, in spite of apparent retrogressions, reveals
an orderly development, so there has been an orderly development in the
history of what men have thought, and therefore in what they have thought
concerning the economic side of life.” And Ingram, in his _History of
Political Economy_, points out that “As we have more than once indicated,
an essential part of the idea of life is that of development—in other
words, of ordered change. And that such a development takes place in the
constitution and working of society in all its elements is a fact which
cannot be doubted.… That there exist between the several social elements
such relations as make the change of one element involve or determine
the change of another is equally plain; and why the name of natural
laws should be denied to such constant relations of coexistence and
succession it is not easy to see. These laws being universal admit of the
construction of an abstract theory of economic development.” (P. 205.)
[817] Schmoller thinks that the science in the present stage of
development, while it cannot be prevented from attempting a philosophy
of history, is much better employed in building up simple scientific
hypotheses with a view to gauging the future course of development than
in getting hold of “absolute truths.”
[818] Marshall, _Principles_, Appendix A.
[819] Its influence has been noted by Toynbee in his article on _Ricardo
and the Old Political Economy_. “It was the labour question, unsolved
by that removal of restrictions which was all deductive political
economy had to offer, that revived the method of observation. Political
economy was transformed by the working classes.” Elsewhere he adds:
“The Historical method is often deemed conservative, because it traces
the gradual and stately growth of our venerable institutions; but
it may exercise a precisely opposite influence by showing the gross
injustice which was blindly perpetrated during this growth.” (_Industrial
Revolution_, p. 58.)
[820] The first edition appeared in 1857.
[821] We would specially mention Levasseur’s excellent work, _Histoire
des Classes ouvrières en France_ (first edition, 1867).
[822] More especially we must mention the group of workers associated
with M. Durkheim and the _Anné sociologique_. But it would be a great
mistake to confuse the two methods, the Historical and the Sociological.
See Simiand, _Méthode historique et Science sociale_, in the _Revue de
Synthèse historique_, 1903. See also _La Méthode positive en Science
économique_ (Paris, 1912), which contains a study of the methodological
problems presented by political economy.
[823] There is one aspect of the critical work of the German school
with which we have not dealt in this book—namely, the criticism of
_laissez-faire_. Some of the members, _e.g._ Hildebrand, have insisted
on the ethical criterion, but none of them share in the optimism of
either Smith or Bastiat. The emphasis laid upon relativity made this
quite impossible. But all the more eminent writers have remained
faithful to the Liberal teaching of the founders. See Hildebrand’s
confession of faith at the beginning of vol. i of the _Jahrbücher für
Nationalökonomie_, 1863, vol. i, p. 3. And although some of them, _e.g._
Brentano and Schmoller, seem to be connected with the new current of
ideas that gave rise to State Socialism, the association was quite
accidental. They never considered it an organic part of their teaching,
and they made no very original contribution to that part of the study.
Their connection with economics must always depend upon the light which
they have thrown upon the question of method.
[824] Cf. Schmoller’s account of Menger’s work published in the
_Jahrbuch_ in 1884. The article appears also in the volume entitled _Zur
Litteraturgeschichte der Staats- und Sozialwissenschaften_ (1888).
[825] Cf. Menger, _loc. cit._, pp. 130 _et seq._ Marshall’s ironical
remark is very apposite here: “German economists have done good service
by insisting on this class of consideration, but they seem to be mistaken
in supposing that it was overlooked by the older English economists.”
(_Principles_, Book I, chap. 6, note.)
[826] Knies, _loc. cit._, pp. 24-25. Ashley gives an unmistakable
expression to the same opinion in his _History_. “Political economy is
not a body of absolutely true doctrines, revealed to the world at the
end of the last and the beginning of the present century, but a number
of more or less valuable theories and generalisations.… Modern economic
theories, therefore, are not universally true; they are true neither for
the past, when the conditions they postulate did not exist, nor for the
future, when, unless society becomes stationary, the conditions will have
changed.” (Preface.)
[827] See Karl Pearson, _The Grammar of Science_.
[828] Marshall, _Principles_, 4th ed., Book I, chap. 6, § 6.
What we say about the mathematical method does not imply any criticism of
the Mathematical method in political economy. To establish mathematical
relations between economic phenomena, as Walras and his school did, and
to deduce economic conclusions from general mathematical theories are two
different things.
[829] Knies employs the differences there set up in order to deny
that economic laws have even the character of national laws. The new
Historical school does not go quite so far, as we shall see presently.
[830] Chap. 4, “Of the Logic of the Moral Sciences.”
[831] _Principles_, Book I, chap. 6, § 6.
[832] Walras, _Economie politique pure_.
[833] Some authors would not admit complete assimilation; e.g. Wagner
(_Grundlegung_, vol. i, p. 335).
[834] Schmoller especially insists on this point.
[835] Knies, _op. cit._, p. 23.
[836] A. Wagner, _Grundlegung_, § 67.
[837] Vol. ii, p. 502.
[838] _Logic_, vol. ii, p. 497.
[839] _Principles_, Book I, chap. 5, § 9.
[840] Marshall, _Principles_, Book I, chap. 5, § 7.
[841] _Zur Litteraturgeschichte_, p. 279.
[842] _Untersuchungen über die Methode_, p. 279.
[843] The English economists, even the most eminent, are often mistaken,
says Wagner (_Grundlegung_, chap. 4, § 4), but their errors are not to
be imputed to their method so much as to the use they make of it. And
Menger, who so energetically undertook the defence of deduction, further
undertakes to renew the Classical theories. Economic theory, says he, as
constituted by the English Classical school, has not succeeded in giving
us a satisfactory science of economic laws (Menger, _loc. cit._, p. 15).
[844] Cf. Menger, _loc. cit._, p. 79: “The student of pure mechanics does
not deny the existence of air or friction, any more than the student of
pure mathematics denies the existence of real bodies, of surfaces, and
lines, or the student of pure chemistry denies the influence of physical
forces or the physicist the presence of chemical factors in actual
phenomena, although each of these sciences only considers one side of
the real world, making an abstraction of every other aspect of it. Nor
does the economist pretend that men are only moved by egoism or that they
are infallible and omniscient because they envisage social life from the
point of view of the free play of individual interest uninfluenced by
other considerations, by sin or ignorance.” Wagner and Marshall take the
same view.
[845] So great is the respect for psychology among the deductive writers
of to-day that it has been suggested that the Austrian school should be
known as the Psychological school. We can say that they have done much
more in this direction than the Historical school.
[846] _Manuale di Economia politica_, p. 24 (Milan, 1906).
[847] _Principles_, 4th ed., Book I, chap. 3.
[848] _Handwörterbuch der Staatswissenschaften._ In his _Grundriss_ we
read: “The writers who figure as representatives of inductive research
in recent German economics are not opposed to the practice of deduction
as such, but they do believe that it is too often based upon superficial
and insufficient principles and that other principles derived from a more
exact observation of facts might very well be substituted for these.”
Everyone would subscribe to this view.
[849] _Die Entstehung der Volkswirtschaft_, Dr. Wickett’s translation.
[850] “National life, like every other form of existence, forms a whole
of which the different parts are very intimately connected. Complete
understanding even of a single aspect of it requires a careful study
of the whole. Language, religion, arts and sciences, law, politics and
economics must all be laid under tribute.” (Roscher, _Principles_.) Cf.
also Hildebrand, _Die Nationalökonomie der Gegenwart und Zukunft_, p. 29.
This is also Knies’s thought.
[851] _Die Nationalökonomie der Gegenwart und Zukunft_, p. 29.
[852] _Principles_, Book I, chap. 4, § 1. “History,” says Wagner
(_Grundlegung_, § 83), “may well affirm the existence of causal or
conditional relations, but it can never prove it.”
[853] History may, as a matter of fact, become explanatory, but only in a
particular sense. In other words, although it cannot discover the general
laws regulating phenomena, it may show what special circumstances (whose
general laws are already supposed to be known) have given rise to some
event equally specialised in character. But every honest historian has
to admit that such explanations are definitely personal and subjective
in character. For a recent examination of these ideas from the pen of
a historian see the profound yet charming introduction contributed by
Meyer to the second edition of his _Geschichte des Alterthums_. Cf. also
Simiand, pp. 14-16.
[854] Cf. Marshall, _Principles_, Book I, chap. 6, § 4, and especially
Menger, _Untersuchungen_, pp. 15-17: “We may be said to have historical
knowledge of a particular phenomenon when we have traced its individual
genesis, _i.e._ when we have succeeded in representing to ourselves the
concrete circumstances among which it came into being, with their proper
qualifications, etc. We may be said to have a theoretical knowledge
of some concrete phenomenon when we are enabled to envisage it as a
particular instance of a certain law or regularity of sequence or
coexistence, _i.e._ when we are able to give an account of the _raison
d’être_ and the nature of its existence as an exemplification of some
general law.”
[855] A full exposition of this idea is given in his _Grundriss_, but
Knies, in the name of the conception of a unique evolution, contests the
view.
[856] This is what M. Renouvier thinks of this conception: “If we proceed
to ask another question in addition to the difficult one already asked
and inquire as to the circumstances under which different nations have
advanced or declined in the path of goodness and of truth and transmitted
their triumphs or their defeats to the next generations, and if we
support ourselves in the quest by the belief that we already have some
knowledge of a scientific law and consequently of the aim of human
society (this kind of knowledge generally begins with formulating such
aims), we shall find ourselves in the position of a religious prophet
who, not merely content with an inspired version of the truth, and of the
destiny of mankind, proceeds to expound to his auditors the necessity
under which both preacher and auditors are compelled to believe and to
act in accordance with what will undoubtedly come to pass. Philosophical
and religious imagination seeks in external observation the elements of
a confidence which it can no longer place in itself. History becomes
a kind of inspiring divinity. But although the object of the illusion
is different its nature is still the same, for the new deity is as
little effective as were the ancient ones in the opinion of those who
have no faith in it, and it only inspires those who already believe.”
(_Introduction à la Philosophie analytique de l’Histoire_, 2nd ed.,
vol. i, p. 121.) Bergson’s philosophy also contests the possibility of
guessing what the future may be like from the character of the present.
See especially _Creative Evolution_.
[857] _Grundlegung_, p. 342.
[858] Cf. Ingram, _History of Political Economy_, and Denis, _Histoire
des Systèmes_.
[859] A. Comte, _Cours_, vol. iv, p. 198.
[860] _Cours_, vol. iv, p. 328.
[861] It is interesting to learn the views of historians on this point.
Meyer thinks that the object of history is not to discover the general
laws of development, but to describe and explain particular concrete
events as they succeed one another. Such descriptions can only be made
in accordance with the rules of historical criticism, but explanation is
only possible with the aid of analogy. “It is only by the use of analogy
that the historian can explain past events, especially where there are
psychological motives that require analysis. The explanation thus given
will necessarily be of a subjective character, and from its very nature
somewhat problematic.” Cf. Ed. Meyer, _Geschichte des Alterthums_,
Introduction, 2nd ed. §§ 112 _et seq._ There does not seem to be any
connection between this method and that of Aug. Comte. One becomes
still more convinced of this after reading Langlois and Seignobos’s
_Introduction aux Études historiques_ or G. Monod’s study in historical
method in _De la Méthode dans les Sciences_ (Paris, 1909), or, finally,
the numerous articles dealing with this question of method which have
appeared in the _Revue de Synthèse historique_.
[862] _Theory of Political Economy_, preface to the second edition, 1879.
[863] Schmoller’s _Jahrbuch_ contains descriptive studies of present-day
commercial and industrial undertakings which are veritable models.
[864] _The Present Position of Political Economy_, in the _Economic
Journal_, 1907, p. 481.
[865] We have not the necessary space in this volume to refer to the
history of statistics. This science, though independent of political
economy, is, however, such a powerful auxiliary that its progress has to
some extent been parallel with the growth of economics. During the last
twenty years the methods of interpreting statistics (we are speaking
merely of observation) have been very considerably improved. The logical
problems involved have been studied with much care, and the application
of mathematics to these problems has proved very fruitful. No student
of the social sciences can afford to neglect such mathematical theories
as those of combination, correlation, degree of error, etc. The history
of statistics, which contains many eminent names, from Quetelet to Karl
Pearson, would certainly deserve a chapter in a book dealing with method,
although there would be some risk of giving it too statistical a bias. We
must rest content with referring the reader to Udny Yule’s _Introduction
to the Theory of Statistics_, which constitutes what is perhaps the
best recent introduction to the discussion concerning the method to be
employed in this social science, and forms an indispensable complement to
the study of the problems examined in this chapter.
[866] Dupont-White makes the remark somewhere that the State, strictly
speaking, has only existed since 1789. It appears, then, that a State
which is not constitutional, democratic, and liberal has none of the
virtues of the true State. Such exclusion, although permissible in the
publicist, is indefensible in the theorist or historian.
[867] “The distinctive character of the State merely consists in this
necessity to have recourse to force, which also helps to indicate the
extent and the proper limits of its action. Government is only possible
through the intervention of force, and its action is only legitimate when
the intervention of force can be shown to be justifiable.” (_Harmonies_,
10th ed., pp. 552-553.)
[868] _Wealth of Nations_, Book IV, chap. 9; Cannan’s ed., vol. ii, p.
185.
[869] _Harmonies_, 10th ed., p. 556.
[870] Hermann, _Staatswirtschaftliche Untersuchungen_, 1st ed., pp. 12-18.
[871] A similar idea is contained in _Liberty_, where it is stated that
“trade is a social act,” that the conduct of every merchant “comes
within the jurisdiction of society,” and that “as the principle of
individual liberty is not involved in the doctrine of Free Trade, so
neither is it in most of the questions which arise respecting the limits
of that doctrine; as, for example, what amount of public control is
admissible for the prevention of fraud by adulteration; how far sanitary
precautions, or arrangements to protect workpeople employed in dangerous
occupations, should be enforced on employers.… But that they [people] may
be legitimately controlled for these ends is in principle undeniable.”
(Chap. 5.)
[872] Michel Chevalier, Introductory Lectures, No. 10, in _Cours_, vol.
i, p. 221.
[873] _Cours_, vol. i, pp. 211, 214; vol. ii, pp. 38, 115.
[874] Pareto, _Cours d’Économie politique_, vol. ii, § 656 (1897).
[875] _Principes_, p. 422.
[876] _Ibid._, pp. 444, 462, 521.
[877] Stuart Mill has tried to do so in a formula that is not very
illuminating: “To individuality should belong the part of life in which
it is chiefly the individual that is interested; to society, the part
which chiefly interests society.” (_Liberty_, chap. 4.)
[878] Republished in his _Études d’Économie sociale_, 1896. See a brief
_résumé_ in our chapter on Rent.
[879] For a general account of Lassalle’s life, and especially his
relations with Bismarck, see Hermann Oncken, _Lassalle_ (Stuttgart, 1904).
[880] There has been no dispute concerning the French origin of
Rodbertus’s ideas since the evidence was sifted by Menger in his
_Das Recht auf den vollen Arbeitsertrag_ (1st ed., 1886). But
Menger only mentions two sources of inspiration, Proudhon and the
Saint-Simonians. The text will sufficiently indicate his indebtedness
to the Saint-Simonians, but we think that Sismondi might well have
been substituted for Proudhon. The only Proudhonian doctrine that is
discoverable in Rodbertus is the theory concerning the constitution of
value. But in the second of the _Soziale Briefe_ (_Schriften_, vol.
ii, p. 46, note) he states definitely that the idea was not a borrowed
one, and that he himself was the first to formulate it, although he
omits to state in what connection. He may be referring to a passage in
his _Forderungen_, where the idea is quite clearly expressed. Speaking
of Ricardo’s theory of value, he says: “That theory comes to grief on
a single issue, namely, in regarding a thing as existing when it only
exists in the mind, and treating a thing as a reality when it only
becomes real in the future.” (_Schriften_, vol. iii, p. 120.) It is
clearly pointed out that the task of the future is to determine what
value is. The _Forderungen_, where all the master ideas of Rodbertus may
be studied, was published in 1837, nine years before the _Contradictions
économiques_ was published by Proudhon, who made his first reference to
the question in that work.
[881] _Zur Erkenntniss unserer staatswirtschaftlichen Zustände_ (New
Brandenburg, 1842). The work was to consist of three parts, only the
first of which was published, and that has not been reissued since.
[882] The first three _Soziale Briefe_, as well as the _Forderungen_,
have been republished in _Schriften von Dr. Karl Rodbertus-Jagetsow_
(Berlin, 1899, 3 vols.). This is the edition we quote. The fourth
_Brief_, entitled _Das Kapital_, was written in 1852, but was not
published until after Rodbertus’s death. It was translated into French
in 1904 by M. Chatelain, and published by Messrs. Giard and Brière.
Our references in the succeeding pages are to this edition. Two other
articles written by Rodbertus have been published, one by R. Meyer under
the title _Briefe u. Sozialpolitische Aufsätze_ (Berlin, 1882), the other
by Moritz Wirth under the title of _Kleine Schriften_ (Berlin, 1890). For
a complete bibliography of Rodbertus’s work see Andler’s _Le Socialisme
d’État en Allemagne_ (Paris, 1897). Professor Gonner has written an
illuminating study of his political philosophy.
[883] In his introduction to the _Briefe von Lassalle an Rodbertus_, p. 8
(Berlin, 1878).
[884] On the other hand, as Menger shows, the sources of Marx’s theory
are English rather than French—another point of difference between the
two socialists.
[885] He was for a short time Minister of Public Worship. Appointed on
July 4, he resigned at the end of a fortnight because his colleagues
refused to recognise quite as fully as he wished the rights of the
Parliament of Frankfort.
[886] A characteristic sign of this evolution is the substitution
throughout the second edition of the _Sociale Briefe_ of the word
_Staatswille_ (“the will of the State”) for the word _Volkswille_ (“the
people’s will”). This second edition, comprising the second and third
letters, was published by him in 1875 under the title _Zur Beleuchtung
der sozialen Frage_.
[887] Letter to R. Meyer, November 29, 1871. This point of view is
developed at length in his “Open Letter to the Committee of the
Association of German Workmen at Leipzig,” April 10, 1863, published by
Moritz Wirth in the _Kleine Schriften_.
[888] Letter to R. Meyer, March 12, 1872. Cf. the letters of January 23
and February 3, 1871.
[889] _Ibid._, November 30, 1871. In 1874 he proposes to offer himself as
a socialist candidate for the Reichstag, but recognises that the State
must first of all be strengthened on the military side as well as on the
religious.
[890] _Ibid._, October 17, 1872.
[891] _Ibid._, January 6, 1873.
[892] _Ibid._, March 10, 1872, and _Physiokratie u. Anthropokratie_, in
_Briefe u. Sozialpolitische Aufsätze_, pp. 521, 522.
[893] He protests vigorously against the title of _Katheder Sozialist_
in a letter of August 26, 1872. A vigorous criticism of the Socialism of
the Chair, written in a private letter of Rodbertus, is quoted at length
by Rudolf Meyer in his _Emancipationskampf des 4ten Standes_, pp. 60-63
(Berlin, 1874).
[894] “Communion or community of labour would be a better term than
division of labour” (_Kapital_, p. 74); and in another connection:
“The only real division of labour is territorial division of labour”
(_ibid._). Elsewhere (p. 87) he warns his readers against confusing the
terms “social” and “national.” Adopting the Saint-Simonian philosophy
of history, he declares history to be a process of unification which
brings gradually widening circles into closer unity with one another
(_Zur Geschichte der römischen Tributsteuer_, in the _Jahrbücher für
Nationalökonomie u. Statistik_, 1865, vol. v, p. 2). “The course of
history is just the expansion of communism.” (_Kapital_, p. 85, note.)
[895] _Physiokratie u. Anthropokratie_, in _Briefe u. Sozialpolitische
Aufsätze_, p. 519.
[896] _Schriften_, vol. iii, p. 216.
[897] “In a social State of this description people produce, not with a
view to satisfying the needs of labour, but the needs of possession; in
other words, they produce for those who possess.” (_Kapital_, p. 161. Cf.
also p. 51.)
[898] “Provided we knew the time that a person could afford to devote to
the work of production, we could easily determine the quantity that would
be sufficient to satisfy the needs of everybody.” (_Kapital_, p. 109.)
[899] _Ibid._, p. 108.
[900] _Kapital_, p. 143.
[901] The question of the net and gross product was one of the
outstanding problems of this period. Vidal (_Répartition des Richesses_,
p. 219, Paris, 1846) and Ott (_Traité d’Économie sociale_, p. 95, 1851)
lay stress upon it. Since then Cournot, Dühring, and more recently
Effertz and Landry, have handled the problem anew. But each of them when
he comes to define the word “productivity” defines it in his own fashion,
so that they do not really discuss the same question. Rodbertus, as we
shall have occasion to point out in the text, uses the word in a very
vague fashion indeed, but still it is the basis of his whole discussion.
It seems to us that under a _régime_ of division of labour rentability
should be the one criterion. But it would be a mistake to imagine that
when dwindling profits make a change in the methods of production
imperative, that change will be welcomed with equal enthusiasm by
everybody, by both master and worker alike.
[902] He is dealing merely with individual wants. Rentability is not the
only guide. Many collective wants must be satisfied, but the process is
not always a profitable one. The problem is to determine which are those
wants. Rodbertus is speaking of private wants; he has taken good care to
leave the public needs aside, so that his argument applies only to the
former.
[903] _Kapital_, pp. 164-166.
[904] Rodbertus further adds that a portion of everybody’s income should
be expended in supplying such public needs. (_Kapital_, pp. 132-133.)
[905] _Kapital_, pp. 150-160.
[906] Cf. _Zur Erkenntniss_, pp. 7-10: “Every economic good costs labour
and only labour.” In the third of the _Soziale Briefe_ he expresses this
idea in a slightly different form: “All economic goods are the product of
labour” (_Schriften_, vol. ii, pp. 105-106). Developing the same thought,
he declares that this formula means: (1) that “only those goods which
have involved labour should figure in the category of economic goods”;
(2) that, “economically speaking, goods are regarded, not as the product
of nature or of any other force, but simply as the product of labour”;
(3) that “goods economically considered are just the product of labour,
carried out by means of the material operations which are necessary for
production.” The work of industrial direction and its remuneration are
regarded in the same light. Cf. _Schriften_, vol. ii, p. 219.
[907] On this point see Rist’s _Le Capital provient-il uniquement du
Travail?_ in the _Revue d’Économie politique_, February 1906.
[908] Rodbertus expressly declares that to say that goods are the product
of labour is not to imply that the value of the product is always equal
to what it cost in the way of labour, or, in other words, that the labour
spent on it does not always measure its value (_Schriften_, vol. ii, pp.
104, 105). A similar statement is made in the _Forderungen_ (1837). In
the _Zur Erkenntniss_ (1842) (pp. 129-131) he gives some of the reasons
why he thinks that the value of a product is not equal to the labour
it has cost: (1) There is the necessity for equalising the gains of
capital; (2) the price of a unit of any commodity is fixed by the price
of the unit which costs most to reproduce. In the second of the _Soziale
Briefe_ he repeats the statement that the labour value theory is nothing
better than an ideal (_Kapital_, Appendix, p. 279). In a letter written
to R. Meyer on January 7, 1872, he affirms the demonstration which he
had already given, “that goods do not and cannot exchange merely in
proportion to the quantity of labour which has been absorbed by them
simply because of the existence of capital”; and he adds the significant
words: “a demonstration that might in case of need be employed against
Marx.”
[909] “The coincidence between the value of the products and the quantity
of labour involved in their production is simply the most ambitious ideal
that economics has ever formulated.” (Second _Sozial Brief_.)
[910] Occasionally Rodbertus admits for the sake of hypothesis or
demonstration that prices do coincide with the labour cost; but his
essential theory has no need of any such hypothesis, and it really plays
quite an auxiliary or subordinate _rôle_. It is in the course of his
exposition of the theory concerning the distribution of unearned income
between landed proprietors and capitalists (quite an erroneous theory,
by the way) that he is driven to admit that “the exchange value of each
completed product, as well as of each portion of the product, is equal to
its labour value.” (Third _Sozial Brief, Schriften_, vol. ii, p. 101.)
[911] _Kapital_, p. 105.
[912] “Whenever exchange is allowed to take its own course in the matter
of distributing the national dividend, certain circumstances connected
with the development of society and with the growing productivity of
social labour cause the wages of the working classes to diminish so as
to constitute a decreasing fraction of the national product.” (Second
_Sozial Brief, Schriften_, vol. ii, p. 37.)
[913] _Kapital_, p. 153.
[914] The idea that _entrepreneurs_ base their production upon the
demand of the higher classes is a somewhat novel one, but it is quite
definitely stated by Rodbertus. “The classes can only influence the
market in proportion to the quantity of the social product which is
given them. But the _entrepreneurs_ must determine the quantities which
they will produce, according to the size of their demands.” (_Kapital_,
pp. 51-52. Cf. also pp. 170-171.) It is quite obvious, on the contrary,
that the _entrepreneurs_ base their production solely upon the demand
for the particular goods which they manufacture, and that they are quite
indifferent to the share which goes to the higher classes.
[915] _Kapital_, p. 53.
[916] We shall soon be convinced of the similarity that exists between
the two theories if we read the passage in the article on _Balance des
Consommations avec les Productions_, published by Sismondi as an appendix
to the second edition of the _Nouveaux Principes_, vol. ii, p. 430.
Rodbertus agrees with Sismondi that equilibrium will be re-established in
the long run, but that in the meantime a crisis may have to intervene.
(_Kapital_, p. 171, note; cf. p. 190, _supra_.)
[917] Such, as we have already seen, is Colson’s conclusion (_Cours_,
vol. iii, p. 366), and such is the verdict of M. Chatelain after studying
the United States census returns. According to Chatelain (_Questions
pratiques de Législation ouvrière_, June and July, 1908), the American
metal-workers’ share in the product fell from 71 to 68 per cent. between
the years 1890 and 1905, while capital’s share increased from 28 to 32
per cent. The men’s wages during the same period rose from 551 dollars
to 626, while the rate of interest fell from 9 to 8 per cent. Despite
this diminution in labour’s share of the total product it is impossible
to say whether the remuneration of labour in general is moving upward or
downward, for the working classes do not depend solely upon the wages of
their labour. Some of them have a little capital—a very small amount,
perhaps, but there is no reason for thinking that it will not grow in
future.
It is quite clear that this complicated question must be carefully
defined. Three different factors must be distinguished: (1) The
individual’s wage; (2) labour’s share in the product; (3) the income of
the working class. On this problem see Edwin Cannan’s article in the
_Quarterly Journal of Economics_, 1905, and his statements in his _Theory
of Production and Distribution_, 1776-1848.
[918] _Kapital_, p. 176.
[919] _Ibid._, p. 187.
[920] “And so I believe that just as history is nothing but a series
of compromises, the first problem that awaits economic science at the
present moment is that of effecting some kind of a working compromise
between labour, capital, and property.” (_Kapital_, p. 187.) In a letter
written on September 18, 1873, to R. Meyer, he declares that the great
problem “is to help us to pass by a peaceful evolution from our present
system, which is based upon private property in land and capital, to
that superior social order which must succeed it in the natural course
of history, which will be based upon desert and the mere ownership of
income, and which is already showing itself in various aspects of social
life, as if it were already on the point of coming into operation.”
[921] Cf. _Kapital_, pp. 109 _et seq._, and especially his article _Der
Normalarbeitstag_, which appeared in 1871 and was republished in _Briefe
u. Sozialpolitische Aufsätze_, p. 552 _et seq._ The idea of determining
value in the way Rodbertus intended was criticised by Marx in his _Misère
de la Philosophie_, _à propos_ of Proudhon’s attempt in 1847. The
socialisation of production involves the socialisation of exchange as
well. This is another point upon which Marx and Rodbertus differ.
[922] Cf. _Kapital_, p. 188, note.
[923] _Zur Geschichte der römischen Tributsteuer_, in _Jahrbücher für
Nationalökonomie u. Statistik_, vol. viii, pp. 446-447, note.
[924] “Extreme socialism,” says Wagner, “is simply an exaggeration of
that partial socialism which has long been a feature of the economic
and social evolution of all nations, especially the most civilised.”
(_Grundlegung_, 3rd ed., p. 756.)
[925] George Meredith in his _Tragic Comedians_ weaves his story round
this tragic adventure, giving us an admirable study of Lassalle’s
psychology. Cf. also _Lassalle_, by Georges Brandes, and Oncken’s
_Lassalle_ (Stuttgart, 1904).
[926] _Théorie systématique des Droits acquis_, vol. i, p. 274, note
(Paris, 1904).
[927] _Briefe von Lassalle an Rodbertus_, p. 46 (Berlin, 1878).
[928] _Ibid._, p. 44.
[929] _Freilich darf man das dem Mob heut noch nicht sagen._ (_Ibid._, p.
46.)
[930] “No workman will ever forget that property whenever legally
acquired is absolutely inviolable and just,” says he in an address
delivered to the workers of Berlin on April 12, 1862, and published under
the title of _Arbeiterprogramm_ (_Schriften_, vol. i, p. 197). Elsewhere
he defends himself against the charge of inciting the proletariat by
claiming that his agitation was of a purely democratic character, and
intended to facilitate the fusion of classes (_ibid._, vol. ii, pp.
126-127). (Our quotations are taken from Pfau’s edition. We were unable
to obtain the latest and by far the best edition of Lassalle’s works,
published by Bernstein.)
[931] Wagner’s introduction to _Briefe von Lassalle an Rodbertus_, p.
5. Lassalle has himself defined this somewhat Machiavellian attitude
in a letter written to Marx in 1859, in which he speaks of a drama
which he had just written dealing with Franz von Sickingen. “It looks
like the triumph of superior realistic ability when the leader of a
rebellion takes account of the limited means at his disposal and attempts
to hide from other men the real object which he has in view. But the
success achieved by deceiving the ruling classes in this way puts him in
possession of new forces which enable him to employ this partial triumph
for carrying out his real object.” (_Aus dem litterarischen Nachlass
von K. Marx, F. Engels, und Lassalle_, vol. iv, p. 133; published by F.
Mehring, Stuttgart, 1902.)
[932] _Schriften_, vol. ii, p. 99. This address has been published under
the title of _Arbeiterlesebuch_. This is just the attitude of which Marx
disapproved. In a letter written to Schweitzer on October 13, 1868,
quoted by Mehring (_Aus dem litterarischen Nachlass_, etc., vol. iv, p.
362), he expresses himself as follows: “He is too liable to be influenced
by the immediate circumstances of the moment. He exaggerates the trivial
difference between himself and a nonentity like Schulze-Delitzsch, until
the issue between them, governmental intervention as against private
initiative, becomes the central point of his agitation.”
[933] _Schriften_, vol. i, p. 213.
[934] See, among others, the chapter entitled _Hegel et la Théorie de
l’État_, in Lévy-Brühl’s _L’Allemagne depuis Liebnitz_, especially p. 398
(Paris, 1890). The State, according to Hegel, is an expression of the
spirit realising itself in the conscience of the world, while nature is
an expression of the same spirit without the conscience, an _alter ego_—a
spirit in bondage. God moving in the world has made the State possible.
Its foundation is in the might of reason realising itself in will. It
is necessary to think of it not merely as a given State or a particular
institution, but of its essence or idea as a real manifestation of the
mind of God. Every State, of whatever kind it may be, partakes of this
divine essence. For full information concerning the philosophical origin
of State Socialism see Andler’s _Le Socialisme d’État en Allemagne_
(1897).
[935] Fichte issued a very curious work in 1800 entitled _Der
geschlossene Handelsstaat_, published in vol. iii of his complete works
(Berlin, 1845), and containing ideas with many points of resemblance to
those of State Socialism. Fichte thought that the State should not merely
guarantee to every citizen his property, but should first of all rear its
citizens, let them build their property, and then defend it. In order to
do this everyone should be given the necessary means of livelihood, for
the one aim of all human activity is to live, and everyone here has an
equal right to live (p. 402)—a declaration of the right of existence.
Until all are so provided for no luxuries should be allowed. No one
should decorate his house until he feels certain that everyone has a
house, and everyone should be comfortably and warmly clad before anyone
is elegantly dressed (p. 400). “Nor is it enough to say that I can afford
to pay for it, for it is unjust that one individual should be able to
buy luxuries while his fellow citizens have not enough to procure the
necessaries of life. The money with which the former purchases his
luxuries would in a rational State not be his at all.” Adopting this as
his guiding principle, Fichte proposes to organise a State in which the
members of every profession, agriculturists, artisans, merchants, etc.,
would make a collective contract with one another, in which they would
promise not to encroach upon one another’s labour, but would guarantee
to everyone a sufficient number of the goods which each has made for
his own use. The State would also undertake to see that the number of
persons in every profession was neither too few nor too many. It would
also fix the price of goods. Lastly, in view of the fact that foreign
trade would naturally upset the equilibrium established by the contract
which guaranteed security of existence to each individual, the commercial
State would have to be entirely hemmed in by tariff walls. The whole work
is original and interesting. A. Menger, who gives a brief _résumé_ of
it in his second chapter of _The Right to the Whole Produce of Labour_,
thinks that Fichte was influenced by what he saw of the Convention during
the Reign of Terror, by the issue of assignats, and perhaps by Babeuf.
Fichte, on the other hand, takes care to point out that his commercial
State is not realisable as such, but that a book like his is not less
useful in view of the general hints which it affords a statesman.
[936] It is remarkable that the majority of the commercial and financial
measures introduced in Germany between 1866 and 1875, such as a uniform
system of weights and measures, the reform of the monetary system, banks,
the tariffs, etc., were directly inspired by the principles of economic
Liberalism.
[937] A copy of the text translated into French appeared in the _Revue
d’Économie politique_, 1892. The translation was the work of our
regretted colleague Saint-Marc.
[938] In addition to Wagner we might mention Albert Schaeffle, who has
shown considerable literary activity, but who is more of a sociologist
than an economist. His great work, _Bau und Leben des sozialen Körpers_
(1875-78), contains an organic and biological theory of society, but his
best known book is the _Quintessenz des Sozialismus_.
[939] Wagner’s principal works, which contain an exposition both of
the ideas and programme of State Socialism, are _Grundlegung_ (1st ed.
1876), translated into French in 1900 under the title _Fondements de
l’Économie politique_; _Finanzwissenschaft_; his article _Staat_ in the
_Handwörterbuch der Staatswissenschaften_; and especially two articles
entitled _Finanzwissenschaft_ and _Staatssozialismus_, published in the
_Zeitschrift für die gesammte Staatswissenschaft_, 1887, pp. 37-122,
675-746. One might profitably consult two addresses, the one of March 29,
1895, _Sozialismus, Sozialdemokratie, Katheder u. Staatssozialismus_, the
other of April 21, 1892, _Das neue sozialdemokratische Programm_.
[940] It is a curious fact that Wagner’s definition of the province
and functions of the State is not very different from Smith’s, though
differing considerably from Bastiat’s. “As a general rule,” says he,
“the State should take charge of those operations which are intended
to satisfy the wants of the citizens, but which private enterprise or
voluntary associations acting for the community either cannot undertake
or cannot perform as well or as cheaply.” (_Grundlegung_, 3rd ed., 1893,
1st part, p. 916.)
[941] “Liberalism only recognises one task which the State can perform,
namely, the production of security.” (Quoted by Schönberg, _Handbuch
der politischen Oekonomie_, 3rd ed., vol. i, p. 61. The quotation
is taken from Rentzsch’s dictionary, articles on _Freihandel_ and
_Handelsfreiheit_.)
[942] “Kultur und Wohlfahrtzweck” (Wagner, _Grundlegung_, p. 885.)
[943] Wagner, _Grundlegung_, 3rd ed., pp. 811 _et seq._; 839 _et seq._
The State Socialists have a habit of wrongfully using the two expressions
“free competition” and “economic liberty” as if they were synonymous
terms. See _Grundlegung_, p. 97.
[944] Dupont-White, _L’Individu et l’État_, 5th ed., p. 9.
[945] _Ibid._, p. 267.
[946] Preface to Stuart Mill’s _Liberty_.
[947] Wagner, _Grundlegung_, 3rd ed., pp. 892 _et seq._
[948] _Finanzwissenschaft und Staatssozialismus_, p. 106.
[949] See _supra_, p. 430.
[950] Dupont-White, _Capital et Travail_, p. 353 (1847); _L’Individu et
L’État_, p. 81.
[951] _L’Individu et l’État_, p. 65.
[952] _Ibid._, pp. 163, 164.
[953] “No means has as yet been suggested which will help to delimit the
functions of the State from those of the individual. But that is not a
consideration of any great moment, for we can always arrange matters so
as to make them balance roughly when it comes to a particular case.”
(_L’Individu et l’État_, pp. 298 and 301.) Elsewhere (in his preface to
Mill’s _Liberty_) he gives it as his opinion that such a delimitation is
impossible, and that when we are speaking of the State and the individual
we are speaking of two distinct powers, such as life and law (p. vii).
Law has to follow in the footsteps of life, reproving its excesses and
correcting its faults (p. xiii).
[954] Wagner, _Grundlegung_, p. 887.
[955] State enterprise is to be recommended wherever possible, “not
only for specific reasons which make the State ownership of certain
industries highly desirable, but also for reasons of social policy,
such as the advisability of helping industry to pass from a _régime_ of
individual ownership to that of communal control.” (_Finanzwissenschaft
und Staatssozialismus_, p. 115.)
[956] Dupont-White’s individualism is as unimpeachable as Wagner’s,
which proves that an individualist need not always be a Liberal. “The
author of _Liberty_,” says he in his preface to Mill’s _Liberty_, p.
lxxxix, “has a keen sympathy for individualism, which I share to the
full, though without any misgivings as to the future destiny of this
unalterable element. Individualism is life. In that sense individualism
is imperishable.”
[957] Cf., for example, Schmoller’s open letter to von Treitschke
(1874-75), translated in his _Politique sociale et Économie politique_
(Paris, 1902). To the objection that the civil list of European monarchs
is condemned in principle Schmoller replies that he is “speaking of the
average man,” but that “the Hohenzollerns, when considered in this light,
have no more than they deserve” (p. 92). We suspect that this argument
will not carry much weight outside Germany.
[958] Wagner recognises the arbitrary nature of his suggestions.
Theoretically, he says, this method of procedure is quite legitimate,
but practically it is not so simple, “for the object, in short, is to
employ the principles of equity and of social utility, which are by no
means difficult to formulate, and to transmute those principles into
legislative enactments, so as to put a check upon the arbitrary and
excessive accumulation of wealth in the hands of a few individuals, such
as is the case under a régime of free competition.” (_Finanzwissenschaft
und Staatssozialismus_, p. 719.)
[959] P. 398.
[960] _Finanzwissenschaft und Staatssozialismus_, p. 718.
[961] The imperial message of November 17, 1881, announcing the
celebrated series of Insurance Acts admits the necessity for a more
marked policy of State intervention: “To lay hold of the ways and means
whereby the working classes may best be helped is by no means an easy
task, but it is one of the highest which a moral and Christian community
can set its heart upon.” Bismarck, in his speech of May 9, 1884, said:
“I unhesitatingly recognise the rights of labour, and so long as I
occupy this place I shall uphold them. In so doing I base my plea, not
upon socialism, but upon the Prussian Landrecht.” Section 2 of Art. XIX
of the second part of the Prussian Landrecht (February 5, 1794) reads
as follows: “To such as have neither the means nor the opportunity of
earning their own livelihood or that of their family, work shall be
given, adapted to their strength and capacity.” Despite its general tone,
it did not contemplate giving relief.
[962] Speech delivered on March 18, 1889, quoted by Brodnitz, _Bismarcks
Nationalökonomische Ansichten_, p. 141 (Jena, 1902).
[963] The well-known German economist Professor Lexis has unfortunately
not been mentioned in this chapter, for the Göttingen professor has
the misfortune of being neither a State Socialist nor a member of the
Historical school. His works, dealing with various topics—money, the
population theory, and general economic theory—are scattered through a
number of reviews and other publications, especially the _Jahrbücher
für Nationalökonomie und Statistik_, Schönberg’s _Handbuch_, and the
great _Handwörterbuch der Staatswissenschaften_. His writings are
distinguished not only by a definitely scientific method of treatment,
but also by a remarkable clearness of thought. While appearing to
continue the tradition of the Classical school, he takes care to reject
the optimistic conclusions which are too often regarded as an inseparable
element of that tradition. In 1900 Lexis gave us a general _résumé_
of his teaching in the _Allgemeine Volkswirtschaftslehre_, where he
treats of the economic world as concerned merely with the circulation
of goods. In addition to an interesting theory of crises, upon which
we cannot dwell just now, the most original part of the work consists
of a theory concerning the method of distributing the social product
between workers and capitalists. Lexis thinks that all material goods are
produced by labour and measurable in terms of labour. The problem then
is to determine where the capitalist gets his income. The capitalist’s
profit is not the result of exploitation, as Marx thought, but is simply
what is added to the sale price—a sum corresponding to the capitalist’s
interest is added to the sum representing the workmen’s wages. Profit
originates in the sphere of circulation. But how will this increased sale
price benefit the capitalists, seeing that under existing conditions
the workers can only buy the equivalent of the products which they have
already helped to produce? We need to remember, however, that they
produce for the capitalist as well as for themselves, and with the money
thus obtained the working classes are enabled to buy whatever they
need at market prices, _i.e._ at a price that includes interest, which
constitutes the capitalist’s profit. Whenever the capitalists themselves
purchase goods made by themselves they are reciprocally benefiting one
another. Their class position is not modified by such procedure, for
each _entrepreneur_ simply draws profits in proportion to his capital.
And so we avoid the most serious objection which can be raised to Marx’s
theory. This explanation of the surplus value received by the capitalists
is at least very ingenious. Lexis has been mostly influenced by Marx and
Rodbertus, and has attempted a fusion of their more vigorous conceptions.
Despite the objections that might be raised to it, the work is certainly
one of the most original of recent years.
[964] Karl Marx, generally spoken of as a Jew, was born on May 5,
1818, of Jewish parents who had been converted to Protestantism. Born
of a respectable _bourgeois_ family and wedded to the daughter of a
German baron, few would have predicted for him the career of a militant
socialist. Such was to be his lot, however. In 1843, at the age of
twenty-five, the authorities having suppressed a newspaper which he
was conducting, he fled to Paris, and thence to Brussels. Returning to
Germany during the Revolution of 1848, in which he took an active part,
he was again expelled, and this time took refuge in London (1849). Here
he spent the rest of his life (about thirty years), leaving for France
a short time before his death in 1883. He died at London on March 14 in
that year.
Although Marx was one of the founders and directors of the famous
association known as the “International,” which was the terror of
every European Government between 1863 and 1872, he was not a mere
revolutionary like his rival Bakunin, nor was he a famous tribune of
the people like Lassalle. He was essentially a student, an affectionate
father, like Proudhon, an indefatigable traveller, and a man of great
intellectual culture.
The best known of his works, which is frequently quoted but seldom read,
is _Das Kapital_, of which the first volume—the only one published during
his lifetime—appeared in 1867. The other two volumes were issued after
his death, in 1885 and 1894, through the efforts of his collaborator
Engels.
This book has exercised a great influence upon nineteenth-century
thought, and probably no work, with the exception of the Bible and the
Pandects, has given rise to such a host of commentators and apologists.
Marx’s other writings, though much less frequently quoted, are also
exceedingly important, especially _La Misère de la Philosophie_,
published in 1847 in answer to Proudhon’s _Les Contradictions
Économiques_; _Zur Kritik der politischen Oekonomie_ (1859); and
particularly the _Communist Manifesto_, published in January 1848. The
_Manifesto_ is merely a pamphlet, and at first it attracted scarcely
any attention, but Labriola goes so far as to say—not without some
exaggeration, perhaps—that “the date of its publication marks the
beginning of a new era” (_Essai sur la Conception matérialiste de
l’Histoire_, p. 81). At any rate, it is the breviary of modern socialism.
There is scarcely a single one of its phrases, each of which stings like
a dart, that has not been invoked a thousand times. The _Programme of the
Communist Manifesto_ is included in Ensor’s _Modern Socialism_.
It is a much-debated question as to whether Karl Marx was influenced
by French socialists, and if so to what extent. On the question of his
indebtedness to Pecqueur and Proudhon see Bourguin’s article in _La
Revue d’Économie politique_, 1892, on _Des Rapports entre Proudhon et K.
Marx_. Proudhon’s work, at any rate, was known to him, for one of his
books was a refutation of the doctrines of the _petit bourgeois_, as he
called him. Certain analogies between the works of these two writers to
which we shall have to call attention will help us to appreciate the
extent to which Marx is indebted to Proudhon. But, as Anton Menger has
pointed out, we must seek Marx’s antecedents among English socialists,
in the works of writers like Thompson especially. Nor must we forget his
friend and collaborator Friedrich Engels, who for the sake of his master
has been content to remain in the background. Engels collaborated in the
publication of the famous _Manifesto_ in 1848, and it was he who piously
collected and edited Karl Marx’s posthumous work. It is difficult to know
exactly what part he played in the development of Marx’s ideas, but it is
highly probable that it was considerable.
[965] Marx calls attention to the fact that even Aristotle was puzzled
by this common element which exchanged objects seemed to possess, and by
the fact that exchange appeared to make them of equal value. We say that
5 beds = 1 house. “What is that equal something, that common substance,
which admits of the value of the beds being expressed by a house? Such
a thing, in truth, cannot exist, says Aristotle. And why not? Compared
with the beds the house does represent something equal to them, in so
far as it represents what is really equal, both in the beds and the
house. And that is—human labour.” (_Kapital_, p. 29; Moore and Aveling’s
translation—to which the Translator is indebted for the succeeding
quotations also.)
“If we make abstraction from its use-value we make abstraction at the
same time from the material elements and shapes that make the product
a use-value.… Its existence as a material thing is put out of sight.
Neither can it any longer be regarded as the product of the labour of
the joiner, the mason, the spinner, or of any other definite kind of
productive labour … there is nothing left but what is common to them all;
all are reduced to one and the same sort of labour—human labour in the
abstract.” (_Ibid._, p. 5.)
[966] “The capitalist epoch is therefore characterized by this, that
labour-power takes in the eyes of the labourer himself the form of
a commodity which is his property; his labour consequently becomes
wage-labour.… Given the individual, the production of labour-power
consists in his reproduction of himself or his maintenance. For his
maintenance he requires a given quantity of the means of subsistence.
Therefore the labour-time requisite for the production of labour-power
reduces itself to that necessary for the production of those means of
subsistence: in other words, the value of labour-power is the value of
the means of subsistence necessary for the maintenance of the labourer.”
(_Kapital_, p. 149.)
[967] This demonstration implies that the wages drawn by the worker is
necessarily only just equal to the value of the means of his subsistence.
It is the old classic law of Turgot and Ricardo over again, which
Lassalle, Marx’s contemporary and rival, graphically called the “brazen
law of wages.” We are simply given a more scientific demonstration of it,
that is all.
The demonstration is based upon a postulate which ought first to have
been proved, namely, that the quantity of labour necessary to keep the
worker alive is always less than the quantity which he provides for his
master. But what is there to prove that a man who works ten hours a
day does not require all those ten hours to produce sufficient for his
upkeep? Is there some natural law that supports this contention? Marx
simply regards it as an axiom and attempts no proof. Everyone would
admit it to be true in a general way—as a kind of empirical law. For
were it true that man’s labour was wholly absorbed by the necessaries of
life there would be no increase of numbers, no saving of capital, and
civilisation, which is the product of leisure, would never have been
possible.
What we have here is the Physiocratic “net product” once again, with this
difference, that instead of being confined to agricultural labour it is
now regarded as an attribute of labour of every kind.
[968] See p. 184 for what is said of Sismondi and his conception of
“increment value.”
[969] It is necessary to point out that this proportion, which gives
half the value to hand labour, leaving 100 per cent. surplus value, is
put forward merely for the sake of illustration. Some Marxians, however,
among whom is Jules Guesde, claim that this is actually the proportion
in practice. Marx himself would probably have been more moderate in his
estimate, because in one part of his thesis he accepts the statement of
English manufacturers who declared that it was just the last hour that
gave them their profits.
[970] The development of machinery, according to the Marxian theory,
tends to reduce the cost of living, and consequently the price of labour,
by producing cheaper clothes, furniture, etc., and to a lesser extent
cheaper food.
By parity of reasoning ought it not to reduce the price of goods produced
by the wage-earner and so lower the surplus value? We must be careful,
however, not to confuse a reduction in the price of each unit with a
reduction in the total value of the articles produced by machinery. A
yard of cloth produced by a modern loom has not the same value as a
yard produced by an old hand-loom. But the value of the total quantity
produced each day must be equal to the value produced by hand, provided
the same number of hours have been spent upon its production.
[971] Marx points out that there are other ways of increasing the amount
of work done and of adding to the surplus value, such as the speeding
up of labour. Speeding up does not increase the value of the goods,
because the value depends upon the time spent upon them, and not upon
the intensity of the effort put forth, but it does lower the cost of
production.
[972] “Our friend Money-bags … must buy his commodities at their value,
must sell them at their value, and yet at the end of the process must
withdraw more value from circulation than he threw into it at starting.…
These are the conditions of the problem. _Hic Rhodus! hic salta!_”
(_Kapital_, p. 145.) Cf. p. 215, where something is said about the
different phases through which the idea of exploitation has passed.
Although Marx never says that the worker is actually robbed by the
capitalist, but simply that the capitalist profits by circumstances
which he is powerless to change, that has not prevented him treating the
capitalist somewhat harshly and unjustly even, judging from his own point
of view. He speaks of the capitalist as “a vampire which thrives upon the
blood of others and becomes stouter and broader the more blood it gets.”
He might have added that no blame could be attached to the vampire,
seeing that it only obeyed the tendencies of its nature.
[973] “By turning his money into commodities that serve as the material
elements of a new product, and as factors in the labour process by
incorporating living labour with their dead substance, the capitalist
at the same time converts value—_i.e._ past, materialized, and dead
labour—into capital, into value big with value, a live monster that is
fruitful and multiplies.” (_Ibid._, p. 176.)
[974] A potter working with his hands makes a vase in ten hours; each
vase, then, costs ten hours’ labour. The same potter decides to make a
wheel—a species of fixed capital. Setting up the wheel was a hundred
hours’ task. If he still continues to produce only one vase _per diem_,
which is a perfectly absurd proposition, for he would never have gone to
the trouble of making the wheel if it did not mean some advantage to him,
the value of each vase will now be 10 hours + 100 hours divided by _x_,
which is the number of vases he would have produced had he not wasted his
time making a wheel.
[975] Take two industries, A and B, each employing a capital of £1000.
In A the amount of fixed capital is £100 and circulating £900. In B the
fixed = £900 and the circulating £100. Admitting that surplus value is at
the rate of 100 per cent., as in the example chosen just now, the total
surplus value in A will be £900, equal to a profit of 90 per cent. on a
capital of £1000. B, on the other hand, will only make £100 profit, which
is equal to 10 per cent.
[976] This explanation only appears in the later volumes, which were
published after his death.