What is particularly striking about Sismondi (whose main economic work was published in 1819) is the degree to which he articulates what has become the default “third-way” position of contemporary economics. In part vindicating, perhaps, Marx’s critique, Sismondi attempts to moralize capitalism, remaining tethered to its fundamental categories, while insisting on reforms to mitigate the more brutal effects of market competition. Third way economics—which has some crude affinity with neoliberalism, Clintonite liberalism, and Blairite New Labor—remains the standard economic position for most Western liberals and conservatives. In what follows I sketchily outline the similarities between Sismondi and the third way, while noting interesting points of difference. There’s nothing systematic here, it’s more a meandering through some interesting passages.
Similarities with Third Way Economics
I see four chief areas of agreement between Sismondi and the prevailing consensus: (1) His commitment to a broadly Smithian approach to private property, the division of labor, and market competition; (2) His moralist critique of what we now call classical economics, centered on a demand to consider questions of distribution, not merely aggregate growth; (3) His defense of widespread private ownership and economic stability; and (4) His wariness of a welfare state and what has been called a culture of “dependency.”
A fine summary of Sismondi’s economic philosophy is found in a biographical essay attached to an 1847 translation of some of his writings. The translator describes Sismondi’s objection to the doctrine of laissez faire as follows:
He affirms that the object of the political economist should be, to ascertain how the happiness and well-being of the whole community are affected by the creation and distribution of wealth, not abstractedly how wealth may be created and preserved; that the principles of political economy should be extended to embrace all subjects which relate to the social welfare of man, and that this ought to be considered as the end, to which the increase and security of wealth is but a means; that the purely economical mode of considering the means apart from the end, the calculating theories in which men are too often reckoned as figures, and considered as means of production, have led to a disregard of their value of men: also that the theories of political economy and the legislation founded on them tend to make the rich, richer, and the poor, poorer. Thus the amount of a nation’s wealth being taken as the test of its prosperity without regard to its distribution … M. de Sismondi contends that one of the main objects of political economy should be to regulate this very unequal distribution of wealth, which is not only frequently a source of injustice and a cause of misery to the lower classes, but which causes national insecurity … by continually adding to that dangerous though despised class who, at any time of difficulty or trouble, are ready to revenge their own sufferings by attacking property and institutions which have afforded to them neither advantage nor protection (Political Economy and the Philosophy of Government 67-8).In a more recent translation of Sismondi’s New Principles of Political Economy, an introductory essay by Richard Hyse confirms the similarity between this approach and the today’s prevailing economic common sense:
[His proposals] have become, 150 years later, the accepted institutions of democratic capitalism: wide distribution of share ownership in large corporations, unions and industry-wide bargaining, unemployment insurance, pensions and social security, and equalization of incomes by government-decreed minimum wages and the progressive income tax (New Principles of Political Economy xxxviii-xxxix).Let’s consider some more specific affinities:
1.1 Smith and private property
The first chapter New Principles is an elaboration of an essay published in the (Smithian) Edinburgh Review on the history of economics. He concludes that essay and this chapter with a celebration of Smith’s genius and achievement. In particular, the labor theory of value remains the central discovery of modern political economy. Yet Sismondi continues:
After this profession of our deep admiration of this creative genius, of our keen gratitude for the enlightenment we owe to him alone, one will no doubt be astonished to learn that the practical results of the doctrine we take from him, appeared to us often diametrically opposed to those he drew from it, and that, by combining his very principles with the experience of a half century during which his theory was more or less put into practice, we believe we can show that it was necessary, in more than one instance, to draw from it quite different conclusions (New Principles 52-3).Methodologically, Sismondi remains loyal to Smith’s historical (yet scientific) economics against the overly abstract theorizing of Ricardo et al. He writes, plausibly enough:
One would believe at first sight that in freeing the theory from all surrounding circumstances, one would make it clearer and easier to comprehend; the opposite has happened; the new English economists are extremely obscure and can only be understood with much effort, while our mind is loath to accept the abstractions they require of us (New Principles 55).That indictment applies well, it seems to me, to fields beyond economics. But more importantly, he insists on defending the core Smithian insights concerning the role that private ownership of capital and the division of labor play in driving economic production. The early chapters of Book two on the “formation and progress of wealth” offer restrained praise for the role specialization and private capital ownership play in driving prosperity. Reversing Rousseau, he moreover celebrates the institution of private property rights for making possible unprecedented plenty:
“He who, after having enclosed a field, uttered the first This is mine, has summoned him who possesses no field, and who could not live if the fields of the first would not bring forth a surplus product. This is a fortunate usurpation, and society, for the benefit of all, does well to guarantee it” (New Principles 138).Private property rights, however, should not be understood as any kind of natural right. They are regulated by a principle of “public utility” not justice.
Today we find an explosion of so-called “left Smithians” who want to reclaim the man from libertarian and doctrinaire free marketeers. Sismondi is helpful and harmful to that project. He, like them, finds something about the Smithian project that is capable of producing a more egalitarian capitalism. Yet unlike them, he sees Smith squarely as part of the laissez faire tradition.
1.2 Moralism and distribution
This leads to our second point—Sismondi’s familiar, moralist critique of the market. While preserving the fundamentals of a market economy, Sismondi points us to the condition of those we would now call “left behind.” The preface to the second edition of New Principles details the shocking contradiction of modern England, which has managed to combine unprecedented economic wealth with unprecedented mass, proletarian misery. We must consider distribution, not merely production. He writes that the “double goal of the science of government” consists in (1) seeking “the means of securing to [men] the highest degree of felicity compatible with their nature,” while (2) “allowing the greatest possible number of individuals to partake in that felicity” (New Principles 21). Radical egalitarians abandon the first demand, rejecting any form of inequality or distinction, caring only about the equal distribution of wealth and privilege. Classical liberals, on the other hand, call the market society “liberty, even though it is founded on the slavery of the lower classes” (New Principles 22).
Again, familiarly enough, Sismondi wants to temper competition-induced wealth with concerns for just distribution. He accepts neither the liberal nor the egalitarian extremes, both the size of the pie and the size of the slices, so to speak, are morally important. Here the gap with Marx—famously contemptuous of this kind of economic moralism—is obvious.
Yet there are few critics of the market today who would go beyond Sismondi in this regard. Third-way consensus economics accepts growth and equality to be a permanent balancing act. All economic debate in modern Western societies becomes a form of haggling within Sismondian bounds.
1.3. Property owning democracy and job stability
Another familiar refrain of third-way economics is that wealth inequality is not just morally objectionable, it is politically destabilizing. Sismondi repeats two consistent themes on this point. The first is that property ownership must be widely distributed so as to ensure the full moral development of the poor and to prevent political revolution. In an analysis that will be echoed by Tocqueville and others, he writes:
The strongest safeguard of an established order may lie in the existence of a numerous class of proprietors. However advantageous it may be for a society to safeguard property, it is an abstract idea difficult to grasp by those to whom it seems only to guarantee privation. When land ownership is taken from the cultivator, and the ownership of factories from workers, all those who create wealth, and who see it passing through their hands without end, are strangers to all its benefits. They form by far the most numerous part of the nation; they see themselves as the most useful part, and they feel disinherited. Constant envy stirs them up against the rich; one can hardly dare to discuss civil rights before them, because one must always be afraid they will go from this discussion to that of property rights, and that they will demand the distribution of possessions and land.Large consolidated farms, for example, pay their workers next to nothing. Efficiency coincides with less employment and terrible compensation. Favoring Swiss and American homesteading models, he demands breaking up large farms and distributing the wealth to smaller producers:
A revolution in such a country is frightful; the whole order of society is subverted; power passes into the hands of the multitude which commands physical power, and this crowd, having suffered much, kept in ignorance by need, is hostile to all types of law, all degrees of distinction, all kinds of property. France experienced such a revolution at a time when the vast majority of the population was a stranger to ownership, and as a consequence to the blessings of civilization (New Principles 146).
in England the excessive consolidation of farms is often caused by the owner against the interest of the nation. England has increased its prosperity so much … that at first glance the drawbacks of its large estates are not obvious. After having admired the well-tended fields, one has to take account of the population which works them; it is less than half of what it would be in France on the same amount of land. In the eyes of some economists this is a gain, in mine it is a loss. But the smaller population is at the same time much poorer. The cottager is below the peasant of almost all the other countries of Europe in happiness, hope, and security; from which I conclude that the goal of wealth creation has been missed (New Principles 188).The logic of efficiency favors economic consolidation, but consequently produces “an abyss between extreme opulence and extreme poverty.” It destroys “that happy independence, that happy mediocrity, which was long the object of the wishes of the wise” (Political Economy 146).
Similarly, Sismondi is wary of the precarious nature of employment under conditions of modern market competition. He writes with a twinge of feudal nostalgia, noting that modern industrial laborers are abandoned when they cease to be productive, where feudal dependents were cared for in sickness and old age:
In the entirely barbaric and inhumane society of feudal countries, of slaveholding countries, this basic principle of justice has not been ignored. Never has a lord dreamt to make his vassals, his serfs, his slaves a burden of the province in their misfortunes, their old age, and their sicknesses; he has strongly felt that it was up to him alone to provide for the needs of those who experienced them only for his own benefit (New Principles 579).The same logic applies to manufacturing. He insists in the final chapter of the book that large firms provide more substantial guarantees to their employees. Pensions and health coverage come to mind. He goes further, suggesting that large firms are less capable or willing to provide that kind of longterm support. Favoring more radical measures (like worker co-determination) he looks for means of aligning the interests of labor and capital. In a sense, such a program restores part of the holistic reciprocity the medieval guilds provided—thus giving some credence to Marx’s charge of Sismondi’s de facto reactionary economics. He doesn’t offer a specific plan here, but he summarizes the basic vision as follows:
I wish that the industry of the towns, as those of the land, be divided among a large number of independent businesses, and not brought together under a great single head who commands hundreds or thousands of workers; I wish that the ownership in manufactures be divided among a large number of average capitalists, and not concentrated in a single man, master over many millions; I wish that the industrious worker have before him the opportunity, almost the certainty, to be a partner to his master, in order that he will marry only when he will have a share in the business, instead of growing old, as he does today, without hope of advancement (New Principles 585).The point there about marriage and childrearing is important, and points to our next similarity
1.4. Welfare and dependency
While concerned with the moral costs of economic brutalization, Sismondi is rather wary of public charity as the solution. He fears what today is often called the “culture of dependency” that accompanies direct, state support. The poor laws have not resolved the problem of pauperization, they have exacerbated it. The key target here is irresponsible childrearing. Like with conservative emphases on the “welfare queen” trope in the 90s, Sismondi is centrally concerned that the recipients of public charity will not be driven into productive work, but will instead have too many children. Those children are fated themselves to grow up in conditions of pauperization: “public charity can be considered as an encouragement society gives to a population it cannot sustain” (New Principles 549).
Where welfare reform advocates demand work requirements, however, Sismondi again favors a more harmonious alignment of the interests of labor and capital. The solution is to abolish proletarian wage labor, and to turn the poor into part of a broader middle class of “property owners” (New Principles 550). Indeed, work requirements of the sort conservatives celebrate will only exacerbate the trend of pauperization: “the condition of men who must live by their labour, who can only work when capitalists employ them, and who, when they are idle, must become a burden on the community” (Political Economy 149). Public charity and proletarian labor are two sides of the same coin. He concludes:
there will be no happiness for the working classes, there will be no real and lasting progress towards prosperity until a means will have been found to create a community of interest instead of opposition between the entrepreneur and all those he puts to work; until the workers in the fields will have been called to share in the harvests, and the factory workers in their output (New Principles 551).Some Notable Differences with Third-Wayism
So those are the quick similarities I find between Sismondi’s ethic and the consensus position of third-way economics. While there are quibbles within the consensus, most democratic capitalists today favor broad deference to the market, wish to constrain that market with an eye toward equitable distribution, want to promote broad property ownership, and are somewhat skeptical of welfare state measures that beget greater indigence.
But there are some points of difference, at least in emphasis, as well.
2.1 Sismondi’s Radicalism
The first is that Sismondi theorizes the contradictions of capitalism in far more radical terms than do most contemporary moralizing critics of the market. Indeed, as the helpful footnotes in New Principles are quick to point out, many of Marx’s most famous arguments come straight from Sismondi. Consider this passage, for example:
Let whatever is called progress in the arts, in manufactures, in agriculture, be examined, and it will be found that every discovery, every improvement, may be reduced to doing as much with less labour, or more with the same labour; all progress tends also to reduce the value and reward of labour, or the ease of those who live only to labour.We see here clearly the account of wages falling to subsistence levels and the emergence of a new proletariat class that will become the industrial reserve army.
The fundamental change which has taken place in society, amidst the universal struggle created by competition, is the introduction of the proletary among human conditions, the name of whom, borrowed from the Romans, is ancient, but whose existence is quite new. (Political Economy 144).
We see a discussion of the kind of mystification arising from the new M-C-M dynamics of the monetized market:
the circulating medium simplified all commercial transactions and complicated all the philosophical observations which have these transactions as their object. As much as this invention showed everyone clearly the goal to be pursued in every transaction, by that much it made the totality of these transactions intricate and unclear, and the general direction of commerce difficult to grasp (New Politics 113).We see also a sophisticated account of what today we call business cycles, a theory of the intrinsic proclivity of the market to produce crises of overconsumption and mass unemployment. (The topic of New Politics Book II chapter 6).
Most significantly, Sismondi clearly develops the idea of “surplus labor,” which Marx picks up and ties to exploitation. Surplus labor consists in the gap between the wealth produced by the laborer and the wage he is paid (which covers only his subsistence). Consider the following passages:
The advantage of an employer of labor is often nothing more than the plunder of the worker he hired; he does not profit because his enterprise produced much more than its cost, but because he does not pay all the costs, because he does not grant to the worker sufficient compensation for his work (New Principles 83)
the labor that the worker will perform during the year, will always be worth more than the labor during the preceding year, with which he will maintain himself. Industry provides a constant increase in wealth as a consequence of this surplus value (New Principles 92).
All of the annual product is consumed, partly by workers who, in exchanging it for their work, convert it into capital and reproduce it; and partly by capitalists who destroy it by giving their income in return. Moreover, one should never forget that labor power is incommensurable with wealth. Wages do not represent an absolute quantity of labor, but only a quantity of goods which ahs sufficed to maintain the workers of the previous year (New Principles 93).(The translator notes that Marx cited Sismondi more than anyone else in Capital, but curiously did not cite him on these points).
So in all these respects, Sismondi goes beyond mere moralism about the plight of those left behind. He offers a far more sweeping and radical indictment of the contradictions built into capitalism than modern third-wayers are inclined to offer. Marx could learn something from Sismondi’s treatment of the market. I don’t think he could have learned much from Tony Blair’s.
2.2 Wariness of Innovation
Another break with the third-way consensus is Sismondi’s producerist wariness of technological innovation and entrepreneurial progress. Everyone in the world today favors innovation. Perhaps the fruit of that innovation should be more widely spread, perhaps (with pharmaceuticals, for example) there should be constraints on prices that might tamp down a degree of innovation, and perhaps we were somewhat too cavalier in embracing automization. But on the whole, the strong presumption is in favor of disruptive creative destruction.
Sismondi flips that presumption. Labor saving technology and more general forms of entrepreneurial innovation are expected to harm workers.
Each improvement introduced into industry, if it has not been the result of a new demand, and if it has not been followed by a greater consumption, has almost always produced the same effects—it has killed, far away, old producers no one saw, and which have disappeared unsung; it has enriched, besides the inventor, new producers who, because they did not know their victim, have regarded each new invention as a benefit to mankind (New Principles 265).We speak today of Kaldor-Hicks efficiency to justify the costs of dislocation. Of course, that's a rather brutal standard. A cash transfer is not the same thing as gainful employment, nor is mandated retraining particularly attractive. Regardless, those transfers and retraining investments never happen. But the modern third-wayist still presumptively favors disruptive innovation. For Sismondi, that stems from a bias in favor of consumption and an incapacity to properly value producers’ welfare and moral interests. He offers the following charming story in a footnote:
It is said that the Emperor Alexander, astonished to see, in England, that the entire population that surrounded him was wearing stockings, shoes and dress tolerably similar to that of a proper burgher, exclaimed in surprise: ‘Where are the poor? Are there no poor people in this country?’ However, more than one-half of these individuals, whom custom forced to spend a good deal for their clothing, had no other property than the wages they would receive that Saturday for the entire week; and more than a tenth of them were helped by their parish. There would be more independence and more happiness for the poor, to walk barefoot, or in wooden shoes, and owning a cottage, some fields, a garden and two cows, like the majority of the peasants on the Continent (New Principles 560).Sismondi is presumptively hostile to all advances in labor-saving technology:
if the manufacturer, without an increase in demand, and without an increase in capitals, merely converts a part of his circulating capital into machines and lays off a number of his workers proportional to the work he has done by his blind servants, and without extending his sales, only increases his profit becasue he produces what he sells at a lower price, the social loss will be certain whatever the advantage he finds there for his own account (New Principles 300).He develops this point too with an interesting aside on what will happen to the household with the development of new domestic labor-saving technology:
Why, it says, should the housewife spin, weave, and prepare all the linen of the family? All this work would be done infinitely cheaper at the manufactory … Why should she knead the bread? … Why should she make the pot boil? (Political Economy 148)The future promises that “omnibus kitchens” will emerge to supply all the household’s food needs. Uber Eats! Sismondi warns that the abolition of these domestic duties will harm women, destroying the grounds of their independence and authority within the home. We should therefore oppose these changes because:
reciprocal cares and duties form and strengthen domestic ties; because the wife endears herself to the family of the poor man by the solicitude with which she provides for its first necessities ; because love is often in a labouring man only a brutal and transient passion ; but his affection for her who every day prepares for him the only enjoyment which he can obtain in the day, thus increases also every day. It is the wife who foresees, and who remembers, in the midst of that life passed so rapidly in labour, and physical wants; it is she who knows how to combine economy, neatness, and order, with abundance. It is in the happiness she gives that she finds strength to resist, if it is necessary, the imperious demands of drunkenness and gluttony. When the wife has nothing to do in the house but to produce children, can it be supposed that the sacred bond of marriage is not more broken, than by the lessons and the example of the most reprehensible immorality? (Political Economy 148-9).You definitely won’t hear that argument today.
As Sismondi puts it in a rebuke of Ricardo and today’s prevailing consumptivist ethic: “Wealth is everywhere, men are absolutely nothing? What? … In truth, then there is nothing more to wish for than that the king, remaining alone on the island, by constantly turning a crank, might produce, through automata, all the output of England” (New Principles 563).
Hopefully we are recovering a bit of this producerist instinct today, but it remains absent for the most part, it seems to me.
2.3 Population control
Our final example is a break in emphasis with today’s third-wayism. I mentioned above the affinity with contemporary critics of the welfare state who warn of dependency and reckless procreation. Sismondi offered a somewhat more extreme discussion on that theme. He like many is terrified by the growth of an indigent population, and initially proposed laws to bar the poor from marrying. He dropped that argument in the second edition, but continued to insist that steps be taken to discourage the poor from marrying young and having many children. He doesn’t share Malthus’ pessimism on the matter, and claims that the right set of economic incentives will encourage the working class to delay marriage. Indeed, he argues that one of the chief failures of a mystifying market economy is that workers no longer can reasonably predict their future economic condition. That uncertainty is partly responsible for the growth in what he sees as a parasitic excess population:
the more property is taken from the poor, the more he will be in danger of miscalculating his income, and contributing to a population increase which will not in any way match the demand for labor, and will not find any subsistence (New Principles 520).Greater ownership within factory life, for example, will give the worker a clearer sense of his lifetime earnings schedule, inclining him to delay marriage until he has attained the necessary advancement in the firm (New Principles 573).
Again, we don’t talk in this way today. Though the third-wayist enthusiasm for long-acting reversible contraception is perhaps not so different.
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