Notes on Sismondi, for the XXI Century

By Umberto Mazzei

Geneva, 03/12/2010

“Among the mistakes that we all have committed, the gravest was to believe that someone knew about socialism, or knew how to construct socialism.”

Fidel Castro (Universidad de la Habana, 17/11/2010)

The XXI Century Socialism – as Pirandello would have said – is a character in search of an author. When it finds him, it will surely displace the present version of capitalism, which, more than savage, seems to be maddened. By now, the XXI Century Socialism is more an aspiration than a concrete proposal – a still babbling aspiration, but a deep, urgent, telluric one. It needs to connect the philosophy of its values and the doctrine for its actions. Both are necessary to forge a coherent political proposal, in order to avoid that kind of improvisation that generates disorder and discredit.

Capitalism and capitalist speculation have always existed, since Antiquity. We are told about the cunning Tales of Mileto – yes, the one of the theorem – that invented futures when he bought before harvest all the olives around his city and became rich fixing the price afterwards. Influence of money in politics is also old: the wealthy Marco Licinio Craso financed Julius Caesar’s political campaigns in the Roman Republic. Closer to us historically are the bankers in the medieval Italian and German republics that, as did the Medici, who turned economic power into dynastic power. The Rothschild …

Present day capitalism – liberal and neo-liberal – has evolved since the XIX and XX centuries, but the purpose is clearer now: the government by the rich for the rich. The origin is attributed to the philosopher Adam Smith. It is false; Smith knew about it and disapproved: “All for ourselves and nothing for other people seems, in every age of the world, to have been the vile maxim of the masters of mankind.[1]” The mother of present day capitalism is the stockbroker and customs agent David Ricardo, who wanted the abrogation of the Corn Laws that protected English agriculture, arguing that opening cereal imports would make bread cheaper so salaries could be lowered and owners’ earnings increased[2].

Current value of Sismondi

There is a historian and economist who contradicted David Ricardo and Jean Baptiste Say and developed Adam Smith’s ideas with a social vision and went further. I am referring to Jean Charles Sismondi, a Genevese thinker that neo-liberal academia try to avoid mentioning and whose economic philosophy admits private property, but channelled by its social utility.

The essence of his thought is that capitalism can be stable and prosperous only if good salaries are paid, because it is the income of working people what creates the indispensable market for selling the products. Sismondi says that if the English wealthy (implying the Industrial Revolution) monopolise the national wealth they must then find markets abroad (imperialism) and that if there is no balance between production and demand, the system’s fate is to go from crisis to crisis.

Sismondi is the only economist mentioned by Karl Marx in the Communist Manifesto, an expensive honour because, as Jean Weiller noticed[3], there is a tendency to forget the thirteen lines were he praises him and to remember the last six where he calls him “utopian” and “petit bourgeois socialiste”.

I believe that regardless of Marx’ opinion, there are plenty of Sismondi’s ideas that can be useful to a modern socialism. A socialism for the XXI Century must be a synthesis that uses previous socialist experiences, that learns from mistakes and from achievements. It must learn from those experiences with economic and social success, from those alive but torpid by lack of dynamism and from those that collapsed.

Another subject of attention should be those versions of social democracy that prospered in Capitalist Europe by a coincidence of Keynesian ideas, labor power and fear of the Soviet Union. In Latin America it never went further than an intellectual pose and in the United States it went on shortly and reluctantly with the New Deal. Its European legacy is a valid system of social protection that is now being dismantled because the public funds were given away to help some big bankers in distress.

Sismondi for the future

Sismondi has two types of contribution for the XXI Century that are complementary – one for the political system and the other for the economic system. In this paper we will only hint that in Sismondi there are interesting political institutional ideas ; but we will mostly concentrate on some highlights of his thought that could be helpful for a socialist economy that would be more realistic, more stable … and less tragic.

a) Contributions for a Political Model

His political contribution is as a historian. Sismondi described and analysed several historic themes, but from the institutional perspective what may interest us is his analysis of the Italian communal republics, killed by royal and pontifical absolutism. The last representative – Venice – perished at the Congress of Vienna. It is the communal system that got us out of the Middle Ages and supported the cultural and economic revolution that carried on during the Renaissance. There are still vestiges of that communal model in the Swiss Cantonal System.

The communal system is a far more recent model and with better adherence to organic society than the vaunted Athenian model, which was not even equalitarian[4]. Studying those models gives ideas for a restoring a republican system more representative of the general political aspiration. It has been frequently stated that present republican systems are not based in communities but in the mobilisation of anonymous masses, which are easily shepherded according to the will of Big Money and its mass media.[5]

b) Contributions for an Economic Model

The main economic work of Sismondi is “New Principles of Economic Policy or about wealth in relation to population”[6], published in 1819. We may start to look at Sismondi from Marx’ perspective, because Marx praises him sometimes and at others disqualifies him. This could be viewed as an ungrateful attitude because no one can deny the influence of Sismondi in Marxist theory. When Marx brands him as “utopian”, let’s not forget that it was Marx who believed in working class solidarity. Class solidarity does exist, but among the rich! The archetypical condition among the poor is “every man for himself”. Sismondi knows it and doesn’t expect redemption by a proletarian revolution but by state intervention.

Sismondi warned early about capitalism sequential crisis as something implicit in the system because of its contradictions. Marx comments on that issue that “ Ricardo’s analysis is frequently absurd. Sismondi instead points out that the limits (of adapting production to needs) are the works of capital itself, which crashes against its own contradictions.”[7] “ Crises for him are not accidents, as for Ricardo, but essential explosions”[8] . Marx’ opinion over both of them is clear “The history of modern economic policy (…) is complete with Ricardo and Sismondi, two antipodes.”[9] In the first book of “The Capital”, Marx praises Sismondi and quotes him copiously[10]. In the second book he also follows him, but suddenly turns against him, saying that Sismondi’s contribution to the study of the relation between capital and income “doesn’t have a single scientific word”[11].

In the social aspects of economics Sismondi is an intermediary between Francois Quesnay[12] and Marx. It was Sismondi who replaced Quesnay’s division of society in three classes (productive, proprietary and sterile) for another that reflects the Industrial Revolution: owners and employees. This is a functional and abstract outline that puts on one side capital’s income (rents, earnings, interest) and on the other consumption, as its necessary counterpart. He divides consumption in two types: a) indispensable consumption (survival) and b) luxury consumption.

It is Sismondi, who coins the term “proletarian” and uses it to name manual workers, the poor and all those to whom the system attributes the function of assuring with their children (latin: prole) the provision of a workforce. He says “The English nation found it more profitable … to reduce all workers to the lowest salary that can allow them to live and the workers, which are proletarians, make their misery deeper by raising ever growing families”[13].

Sismondi had affinities with some other well-known thinkers. There are coincidences with Thomas Malthus in defending small farm owners and other sectors endangered by the Industrial Revolution. He says that their income is an important part of the “effective demand” that is necessary for a balance between production and consumption. He complains that “there are no peasants in the fields, … no more artisans in the cities or independent heads of small industries, only factories”; but he doesn’t share the Malthusian idea of putting a brake on industrialisation. On that issue he is closer to Claude de Saint-Simon, in his enthusiasm for the usefulness of machines, science and technology. He says “It is not against machines, against discoveries, it is not against civilisation that my objections are aimed; it is against the organisation of modern society.”[14] Then adds “I don’t want to go back to what has been, but I want something better than what is now” – like if he was talking to us now!

There is a paragraph by Sismondi that I will quote because it describes a realistic social picture with an impressionist palette. “Within a few years lapse, two crises ruined part of the banking sector and spread desolation in British manufacturing; at the same time another crisis ruined farmers and brought about a decline in retail trade. Moreover, that trade regardless of its great scope ceased to attract young people in search of a career; all positions are already taken and in the higher ranks of society, as with the lower, an important number seeks work in vain, unable to obtain a salary.”[15] Does it sound familiar?

My purpose is to propose the study of Sismondi as a source for a new socialist vision. Marx used his ideas, but in the Comunist Manifesto pettily branded him as head of a “petit bourgeois” socialist tendency. Lenin reproached him of including sub-consumption among the causes of crisis in capitalism, but Nicolai Boukharin – one of the best Marxist economists – approved Sismondi’s explanation and said that discarding sub-consumption would make Marxist interpretation of capitalism absurd.

Ydelfonso Finol – a Venezuelan poet and economic thinker – synthesized the whole issue when proclaiming that “It is false that socialism must be associated with scarcity”. In fact, China is today the second greatest economy in the world, but its biggest achievement is to have taken already 400 million people out of poverty and continues doing so. China is an example of an evolving socialism, since Deng Chao Ping started a policy of allowing individual initiative, within a frame of collective welfare.

It is undeniable that Marxist-Leninism failed as a provider of human welfare, without forgetting that it was always obliged to invest more in cannons than in butter. I strongly believe that for the Twenty First Century it is more realistic to think about a less epical socialism; a socialism that worries about the welfare and security of working people by making them owners of something and stable in their jobs, a socialism that makes us all … “petits bourgeois socialistes”.

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[1] Adam Smith, Wealth of Nations, Book III, Chapter 4.

[2] David Ricardo, Principles of Political Economy and Taxation. “He tratado de demostrar, a través de toda esta obra, que la tasa de utilidades no podrá ser incrementada a menos que sean reducidos los salarios, y que no puede existir una baja permanente de salarios sino a consecuencia de la baja del precio de los productos necesarios en que los salarios se gastan” David Ricardo, Principios de economía y tributación, Fondo de Cultura Económica, México, 1959, p. 101.

[3] Jean Weiller, Preface, Nouveaux Principes de Economie Politique, Calmann-Levy, Paris, 1971.

[4] Aristotle, when he describes the Athenian constitution, says that only those that did not work with their hands were considered citizens. At the time – more than now – it excluded most of the population. He then explains that only about 20.000 were citizens in a population of around half a million.

[5] Read: José Ortega y Gasset, La rebelión de las masas; Jack London, The Iron Heel; Maurice Duverger, Les Parties Politiques; Giuseppe Maranini, La Costituzione di Venezia; Tönnies, and many more.

[6] Nouveau Principes d’Economie Politique ou de la richesse dans ses rapports avec la population.

[7] Karl Marx, Principes d’une critique de l’Economie politique, Ouvres I, Pléiade, p.261 y 262. Own translation.

[8] Karl Marx, Ibid, Oeuvres II. p.1682. Own translation.

[9] Karl Marx, Ibid. Oeuvres I. p.175. Own translation.

[10] To define: capital, price of labor force, relative plus-value, simple reproduction, the capital production process, capital accumulation, primitive conversion of money into Capital, the antagonist character of capitalist production and the notion of salaried worker.

[11] Kart Marx, Ouvres II, p.751.

[12] French economist, founder of the first systemic school on Economic Policies and Luis XV physician .

[13] Jean Charles Sismondi, Nouveaux Principes de Economie Politique, Calmann-Lévy, 1971, France. p.54

[14] Jean Charles Sismondi, Sur l’équilibre entre consumation et la production. Revue Encyclopédique, 1824.

[15] Jean Charles Sismondi, Nouveau Principes … , p. 53