With the completion of the work of Say, Malthus, and Ricardo it really seemed as if the science of political economy was at last definitely constituted.
It would, of course, be extravagant to imagine that these three writers were unanimous on all questions. There were several points that still remained obscure, and more than one theory that was open to discussion. Despite its apparent rigidity, it would not have required much critical ability to detect flaws in the symmetrical doctrine so recently elaborated and to predict its ultimate discredit.
Hardly, indeed, was their task completed before the new doctrine found itself subjected to a most formidable attack, which was simultaneously directed against it from all points of the compass. The criticisms and objections advanced against the new science of political economy form the subject-matter of this second book.
First comes Sismondi, a purely critical mind, with a haunting catalogue of the sufferings and miseries resulting from free competition. Spirits still more daring will essay the discovery of new principles of social organisation. The Saint-Simonians will demand the suppression of private property, the extinction of inheritance, and the centralised control of industry by the arm of an omniscient government. The voluntary socialists—Owen, Fourier, Louis Blanc—will claim the substitution of voluntary co-operation for personal interest. Proudhon will dream of the reconciliation of liberty and justice in a perfect system of exchange from which money shall be excluded. Finally, the broad cosmopolitanism of the Classical writers is to find a formidable antagonist in Friedrich List, and a new Protectionism, based on the sentiment of nationality, is to regild the old Mercantilism which seemed so hopelessly battered under the blows of Adam Smith and the Physiocrats.
These very diverse doctrines, along with much that is fanciful and erroneous, contain many just ideas, many original conceptions. They never succeeded in supplanting the doctrine of the founders; but they demonstrated, once for all, that the science, apparently complete, was in reality far from perfection. To the Orthodox school they flung the taunt which Hamlet cast at Horatius: “There are more things in heaven and earth than are dreamt of in your philosophy.” In this way fruitful discussions were frequently raised, and the public proved sympathetic listeners. The economists who were still faithful to the Classical creed began to doubt the validity of their deductions and were forced to modify their methods and to overhaul their conclusions.
Let us now attempt to realise the importance of the part which these critics played.
CHAPTER I: SISMONDI AND THE ORIGINS OF THE CRITICAL SCHOOL
The first thirty years of the nineteenth century witnessed profound transformations in the structure of the economic world.
Economic Liberalism had everywhere become triumphant. In France the corporation era was definitely at an end by 1791. Some manufacturers, it is true, demanded its re-establishment under the First Empire; but they were disappointed, and their demands were never re-echoed. In England the last trace of the Statute of Apprentices, that shattered monument of the Parliamentary régime, was removed from the Statute Book in 1814. Nothing remained which could possibly check the advent of laissez-faire. Free competition became universal. The State renounced all rights of interference either with the organisation of production or with the relations between masters and men, save always the right of prohibiting combinations in restraint of trade, and this restriction was upheld with a view to giving free play to the law of demand and supply. In France the Penal Code of the Empire proved as tyrannous as the old régime or the Revolution; and although freedom of combination was granted in England by an Act of 1825, the defined limits were so narrow that the privilege proved quite illusory. The general opinion of the English legislator is well expressed in the report of a Commission appointed by the House of Commons in 1810, quoted by Mr. and Mrs. Webb.[363] “No interference of the legislature with the freedom of trade, or with the perfect liberty of every individual to dispose of his time and of his labour in the way and on the terms which he may judge most conducive to his own interest, can take place without violating general principles of the first importance to the prosperity and happiness of the community.” In both countries—in England as well as in France—a régime of individual contract was introduced into industry, and no legal intervention was allowed to limit this liberty—a liberty, however, which really existed only on the side of the employers.
Under this régime the new manufacturing industry, born of many inventions, was wonderfully developed. In Great Britain Manchester, Birmingham, and Glasgow, in France Lille, Sedan, Rouen, Elbeuf, Mulhouse, became the chosen centres of large-scale production.