Sismondi Method Of Political Economy

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.

It was at this moment that he was asked to write an article on political economy for the Edinburgh Encyclopedia. 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." This seemed to confirm his first impressions. He took the article which he had contributed to the Encyclopedia and developed it. From this work sprang the treatise which appeared in 1819 under the signifi­cant title of Nouveaux Principes d'e'conomie 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 emphasized by the appearance of his studies in economics, 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. 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." 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," still his spirit shrank from admitting those abstractions which Ricardo and his disciples de­manded from him. 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." 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 visualized and the influence of economic institutions upon him successfully traced. "I am convinced," says he, "that serious mistakes have ensued from the too frequent generaliza­tions which have been made in social science."

This criticism was levelled not only at Ricardo and McGulloch, but it also included J. B. Say within its purview, for Say had treated political economy as an exposition of a few general principles. It also prepared the way for that conception of political economy upon the discovery of which the German Historical school so prided itself at a later date. Sismondi, himself an historian and a publicist interested in immediate reforms, could not fail to see quite clearly the effects that social institutions and political organization were bound to have upon economic prosperity. A good illustration of his method is fur­nished by his treatment of the probable effects of a complete abolition of the English Corn Laws. The question, he remarks, could not be decided by theoretical arguments alone without taking some account of the various methods of cultivating the soil. A country of tenant farmers such as England would find it. difficult to meet the competition of feudal countries such as Poland or Russia, where corn only costs the proprietor "a few hundred lashes judiciously bestowed upon the peasants."

Sismondi's conception of economic method is incontestably just so long as the economist^confines himself to the discussion of practical problems or attempts to gauge the probable effects of a particular legislative reform or is unravelling the causes of a particular event.

But should the economist wish to picture to himself the general aspect of the economic world, he cannot afford to neglect the abstract method, and Sismondi himself was forced to have recourse to it. It is true that he used it with considerable awkwardness, and his failure to construct or to discuss abstract theories perhaps explains his preference for the other method. At any rate it does partly explain the keen opposition which his book aroused among the partisans of what he was the first to call by the happy title of the "Orthodox" school.

But to imagine anything more confused than the reasonings by which he attempts to demonstrate the possibility of a general crisis of over-production is difficult. For his point of departure he takes the distinction between the annual revenue and the annual production of a country. According to him the revenue of one year pays for the production of the following. Accordingly, if the production of any one year exceeds the revenue of the previous year a portion of the produce will remain unsold and producers will be ruined. Sismondi reasons as if the nation were composed of agriculturists who buy the manufactured goods they need with the revenue received from the sale of the present year's crop. Consequently, if manufactured products are superabundant the agricultural revenue will not be enough to pay a sufficient price.

But within the argument there lurks a twofold confusion. At bot­tom a nation's annual revenue is its annual produce, and the one cannot be less than the other. Moreover, it is not the produce of two different years that is exchanged, but the various products of the same year, or rather (for this subdivision of the movements of the economic world into annual periods has no counterpart in actual life) it is the different products created at every moment that are being continually exchanged, thus constituting a reciprocal demand for one another. At any one moment there may be too many or too few products of a certain kind, resulting in a severe crisis in one or more industries. But of every product, at one and the same time, there can never be too much. McGulloch, Ricardo, and Say victoriously upheld this view against Sismondi. We shall see in Book VI how the whole problem has been studied afresh by the most recent writers, starting from the concept of monetary incomes, and how a crisis not general but generalized then becomes easily explicable.

It is not only on the question of method, but still more on the ques­tion of aim, that Sismondi finds himself in opposition to the Classical school. To them political economy was the science of wealth, or chrematistics, as Aristotle called it. But the real object of the science should be man, or at least the physical well-being of man. To con­sider wealth by itself and to forget man was a sure way of making a false start. This is why he gave such prominence to a theory of distribution alongside of the theory of production, which had received the exclusive attention of the Classical writers. The Classical school, it is true, might have retorted that they gave first place to production because the multiplication of products was a sine qua non of all progress in distribution. But Sismondi regarded it otherwise. Wealth only deserves the name when it is proportionately distributed. He could not conceive of an abstract treatment of distribution, and consequently could not appreciate it. In his own treatment of distribution he devoted a special section to the "poor," who live by their labour and toil from morn till eve in field or workshop. They form the bulk of our popula­tion, and the changes wrought in their way of life by the invention of machinery, the freedom of competition, and the regime of private property was what interested him most. "Political economy at its widest," he says, "is a theory of charity, and any theory that upon last analysis has not the result of increasing the happiness of mankind does not belong to the science at all."

What really interested Sismondi was not so much what is called political economy, but what has since become known as economic sociale in France and Sozialpolitik in Germany. His originality, so far as the history of doctrines is concerned, consisted in his having originated this study. J. B. Say scorned his definitions, so different were they from his own.
M. de Sismondi refers to political economy as the science charged with guarding the happiness of mankind. What he wishes to say is that it is the science a knowledge of which ought to be possessed by all those who are concerned with human welfare. Rulers who wish to be worthy of their positions ought to be acquainted with the study, but the happiness of mankind would be much jeopardized if, instead of trusting to the intelligence and industry of the ordinary citizen, we trusted to governments.
And he adds: "The greater number of German writers, by following the false notions spread by the Golbertian system, have come to regard political economy as being purely a science of administration."