Alongside of these brilliant successes we have two new phenomena which were bound to draw the attention of observers and to invite the reflection of the thoughtful. First we have the concentration in the great centres of wealth of a new and miserable class—the workers; and, secondly, we have the phenomenon of over-production.
Factory life during the earlier half of the nineteenth century has been the subject of countless treatises, and attention has frequently been drawn to the practice of employing children of all ages under circumstances that were almost always unhealthy and often cruel,[364] to the habit of prolonging the working day indefinitely, to the inadequate wages paid, to the general ignorance and coarseness of the workers, as well as to the deformities and vices which resulted under such unnatural conditions. In England, medical reports, House of Commons inquiries, and the speeches and publications of Owen aroused the indignation of the public, and in 1819 an Act of Parliament was passed limiting the hours of work of children in cotton factories. This, the first rudiment of factory legislation, was to be considerably extended during the course of the century. J. B. Say, who in 1815 was travelling in England, declared that a worker with a family, despite efforts often of an heroic character, could not gain more than three-quarters and sometimes only a half of what was needed for his upkeep.[365]
In France we must wait until 1840 to find in the great work of Dr. Villermé a complete description of the heartrending life of the workers and the martyrdom of their children. Here, for example, we learn that “in some establishments in Normandy the thong used for the punishment of children in the spinner’s trade appears as an instrument of production.”[366] Even before this, in an inquiry into the state of the cotton industry in 1828, the Mulhouse masters expressed their belief that the growing generation was gradually becoming enervated under the influence of the exhaustive toil of a day of thirteen or fifteen hours.[367] The Bulletin of the Industrial Society of Mulhouse of the same year states that in Alsace, among other places, the general working day averaged from fifteen to sixteen hours, and sometimes extended even to seventeen hours.[368] And all evidence goes to show that things were equally bad, if not worse, in other industrial towns.[369]
Crises supplied phenomena no less disquieting than the sufferings of the proletariat. In 1815 a first crisis shook the English market, throwing a number of workmen on to the street and resulting in riots and machine-breaking. It arose from an error of the English manufacturers, who during the war period had been forced to accumulate the stocks which they could not export, so that on the return of peace their supplies far exceeded the demands of the Continent. In 1818 a new commercial panic, followed by fresh riots, again paralysed the English market. In 1825 a third and more serious crisis, begot probably of the extensive credit given to the newly opened markets of South America, caused the failure of about seventy English provincial banks, bringing much ruin in its train, as well as a shock to several neighbouring countries. During the whole of the nineteenth century similar phenomena have recurred with striking regularity, involving ruin to ever-widening areas, as production on a large scale has extended its sway. No wonder some people were driven to inquire whether the economic system beneath all its superficial grandeur did not conceal some lurking flaw or whether these successive shocks were merely the ransom of industrial progress.
Poverty and economic crises were the two new facts that attracted immediate attention in those countries where economic liberty had secured its earliest triumphs; and no longer could attention be diverted from them. Henceforth they were incessantly employed by writers of the most various schools as weapons against the new régime. In many minds they gradually engendered a want of confidence in the doctrines of Adam Smith. With some philanthropic and Christian writers they provoked sentimental indignation and aroused the vehement protest of humanity against an implacable industrialism which was the source of so much misery and ruin. With others, especially with the socialists, who pushed criticism to much greater lengths, even to an examination of the institution of private property itself, they resulted in a demand for the complete overthrow of society. All critics whatsoever rejected the idea of a spontaneous harmony between private and public interests as being incompatible with the circumstances which we have just mentioned.
Among such writers no one has upheld the testimony of these facts more strongly than Sismondi.[370] All his interest in political economy, so far as theory was concerned, was summed up in the explanation of crises, so far as practice, in the amelioration of the condition of the workers. No one has sought the explanation or striven for the remedy with greater sincerity. He is thus the chief of a line of economists whose works never ceased to exercise influence throughout the whole of the nineteenth century, and who, without being socialists on the one hand or totally blind to the vices of laissez-faire on the other, sought that happy mean which permits of the correction of the abuses of liberty while retaining the principle. The first to give sentiment a prominent place in his theory, his work aroused considerable enthusiasm at the time, but was subjected to much criticism at a later period.
I: THE AIM AND METHOD OF POLITICAL ECONOMY
Sismondi began his career as an ardent supporter of economic Liberalism. In 1803, the year that witnessed the production of Say’s treatise, he published an exposition of the ideas of Adam Smith in a book entitled La Richesse commerciale, a volume which achieved a certain measure of success. During the following years he devoted himself to work exclusively historical, literary, or political, and he only returned to the study of political economy in 1818. “At this period,” he writes, “I was keenly interested in the commercial crises which Europe had experienced during the past years, and in the cruel sufferings of the factory hands, which I myself had witnessed in Italy, Switzerland, and France; and which, according to public reports, were at least equally bad in England, Belgium, and Germany.”[371] It was at this moment that he was asked to write an article on political economy for the Edinburgh Encyclopædia. Upon a re-examination of his ideas in the light of these new facts he found to his surprise that his conclusions differed entirely from those of Adam Smith. In 1819 he travelled in England, “that wonderful country, which seems to have undergone a great experience in order to teach the rest of the world.”[372] This seemed to confirm his first impressions. He took the article which he had contributed to the Encyclopædia and developed it. From this work sprang the treatise which appeared in 1819 under the significant title of Nouveaux Principes d’Économie politique and made him celebrated as an economist. His path was already clear. His want of agreement with the predominant school in France and England was further emphasised by the appearance of his studies in economics,[373] in which he illustrates and confirms the ideas already expounded in the Nouveaux Principes by means of a great number of descriptive and historical studies bearing more especially upon the condition of the agriculturists in England, Scotland, Ireland, and Italy.
Sismondi’s disagreement was not upon the theoretical principles of political economy. So far as these were concerned he declared himself a disciple of Adam Smith.[374] He merely disagreed with the method, the aim, and the practical conclusions of the Classical school. We will examine his arguments on each of these points.
First of all as regards method. He draws an important distinction between Smith and his followers, Ricardo and J. B. Say. “Smith,” says he, “attempted to study every fact in the light of its own social environment,” and “his immortal work is, indeed, the outcome of a philosophic study of the history of mankind.”[375] Towards Ricardo, who is accused of having introduced the abstract method into the science, his attitude is quite different, and much as he admired Malthus, who, “possessed of a singularly forceful and penetrative mind, had cultivated the habit of a conscientious study of facts,”[376] still his spirit shrank from admitting those abstractions which Ricardo and his disciples demanded from him.[377] Political economy, he thought, was best treated as a “moral science where all facts are interwoven and where a false step is taken whenever one single fact is isolated and attention is concentrated upon it alone.”[378] The science was to be based on experience, upon history and observation. Human conditions were to be studied in detail. Allowance was to be made for the period in which a man lived, the country he inhabited, and the profession he followed, if the individual was to be clearly visualised and the influence of economic institutions upon him successfully traced. “I am convinced,” says he, “that serious mistakes have ensued from the too frequent generalisations which have been made in social science.”[379]