Jean Charles Leonard de Sismondi
Jean Charles Leonard de Sismondi (May 19, 1773 - June 25, 1842), whose real name was Simonde, was a Swiss historian and economist.
Biography
Jean Charles Leonard de Sismondi was born May 19, 1773 in Geneva, Switzerland. His father and all his ancestors seem to have borne the name Simonde, at least from the time they migrated from Dauphiné to Switzerland at the revocation of the Edict of Nantes. It was not until after Sismondi had become an author that, observing the identity of his family arms with those of the once flourishing Pisan house of the Sismondi, and finding that some members of that house had migrated to France, he assumed the connection without further proof and called himself Sismondi.
The future historian was well educated, but his family wished him to devote himself to commerce rather than literature, and so he became a banker's clerk at Lyon. Then the Revolution broke out, and as it affected Geneva, the Simonde family took refuge in England, where they stayed for eighteen months from 1793 to 1794.
They then returned to Geneva, but still found the state of affairs unfavorable. The greater part of the family property was sold, and with the proceeds they emigrated to Italy, bought a small farm at Pescia near Lucca and Pistoia. Sismondi worked hard there, both with his hands and his mind, and his experiences gave him the material for his first book, Tableau de l'agriculture toscane, which, after returning to Geneva, he published in 1801. In 1803, he published his Traité de la richesse commerciale, his first work on the subject of political economy, which, with some differences of view, continued to interest him to the end of his life.
His celebrated sixteen volumed History of the Italian Republics in the Middle Ages (1809-1818) is somewhat marred by his Calvinist bias against the Roman Catholic Church, which he considered chiefly responsible for the loss of liberty in the Italian states.
In April 1819, Sismondi married an English woman, Miss Allen, whose sister was the wife of Sir James Mackintosh. Their marriage appears to have been a very happy one. His later years were chiefly spent in Geneva, in the politics of which city he took a great, though as time and changes went on, a more and more chagrined, interest. Indeed, in his later days he became a kind of reactionary.
He died in 1842.
Main Economic Thoughts
Sismondi popularized the laissez-faire economics of Adam Smith in his De la richesse commerciale (1803). De la Richesse commerciale has a number of original features. For example, it includes an early statement ascribing the international exchange of goods to differences in factor endowments and factor prices: England, being plentifully endowed with capital, will import labor-intensive goods, such as lace from France, from countries where capital is relatively scarce and wages low. Sismondi points the way to doctrinal developments that were bought to full fruition by Bertil Ohlin in the twentieth century but were overshadowed during the nineteenth century by the Ricardian doctrine of comparative cost, which was primarily designed to demonstrate the gains from trade.
However, the social effects of the Industrial Revolution in England led him to become a critic of capitalism and develop a precursor of socialism in Nouveaux Principes d’économie politique (1819). In it he insisted on the fact that economic science studied the means of increasing wealth too much, and the use of wealth for producing happiness too little.
Sismondi’s “Political Economy”
In Political Economy (1815) Sismondi wrote: "Thus men, combined in society, produced more than if each had laboured separately; and they preserve better what they have produced, because they feel the value of it better" (Sismondi 1915; Ch.2).
Speaking of humankind, he wrote, "It invents machines, in which the wind, the fall of water, the expansion of steam, are substituted for the power of limbs" (Sismondi 1915, Ch. 3).
In a lengthier passage, he wrote about exchange that first arose from superabundance: "Give me that article, which is of no service to you, and would be useful to me," said one of the contacting parties, "and I will give you this in return, which is of no service to me, and would be useful to you." (Sismondi 1915; Ch.2).
The same principle which at first separated the trades of the husbandman, shepherd, smith, and weaver, continued to separate those trades into an indefinite number of departments. Each felt that, by simplifying the operation committed to him, he would perform it in a manner still more speedy and perfect. The weaver renounced the business of spinning and dyeing; the spinning of hemp, cotton, wool, and silk, became each separate employment; weavers were still farther subdivided, according to the fabric and the destination of their stuffs; and at every subdivision, each workman, directing his attention to a single object, experienced an increase in his productive powers. In the interior of each manufactory, this division was again repeated, and still with the same success. Twenty workmen all laboured at the same thing, but each made it undergo a different operation: and the twenty workmen found that they had accomplished twenty times as much work as when each had laboured separately (Sismondi 1915; Ch. 2).
Adam Smith, author of this third system, which represents labour as the sole origin of wealth, and economy as the sole means of accumulating it, has, in one sense, carried the science of political economy to perfection, at a single step. Experience, no doubt, has disclosed new truths to us; the experience of late years, in particular, has forced us to make sad discoveries: but in completing the system of Smith, that experience has also confirmed it. (Sismondi 1915, Ch.4).
And, finally:
The application of science to art is not limited to the invention of machinery; its result is the discovery of raw materials, dyeing ingredients, preservative methods more sure and economical. It has produced better work at a cheaper rate; it has protected the health of labourers, as well as their produce; and its effect in augmenting wealth has almost always been beneficial to humanity (Sismondi 1915; Ch. 4)
Sismondi vs. Karl Marx
The landowner, who as Adam Smith recognized, reaps where he has not sown, is confused with the capitalist as an entrepreneur, as the creator of enterprise who marshals investment and innovates new and better goods for the public. The surplus that Marx claimed really belonged to labor but is expropriated by the capitalist is in economic actuality land rent kept by the landlord.
Some claim that the ultimate blame for this confusion falls not on Karl Marx, but on his predecessor, Sismondi, who was in some circles regarded as the original critic of market economies. Actually, Sismondi clearly saw the difference between the landlord, landlord-entrepreneur and entrepreneur—he wanted the entrepreneurs taxed but not the landlord, especially not via tithes; it would diminish the base of the production (Sismondi 1815, Ch. 6)—and he knew very well that the labor and its productivity is the very base of the economy and, eventually, well-being of the nation . Hence, whoever started the "confusion," the liberalism or "the left" split into two camps, the libertarian and the socialist.
The classical liberalism of the French Physiocrats, Adam Smith, and John Locke favored civil liberties and economic freedom. Sismondi looked at the economies of the early 1800s, plagued with the usual poverty and social problems, and concluded that economic science studied the means of increasing wealth too much, and the use of wealth for producing happiness too little. That by no means meant that Sismondi wanted less freedom, he simply felt that a government should, at times, regulate the wealth excesses.
He was definitely not a socialist (let alone a Marxist); but, in protesting against laissez faire and invoking the intervention of government "to regulate the progress of wealth," he was an interesting precursor of the German "socialists of the chair."
It was Sismondi who wrote of profits as a surplus. But he was a welfare statist rather than a socialist, and his ideas should in no way become the foundation for what some would later call Marxism. And yet, some people to this day are Sismondians, even though they never heard of Jean Charles Leonard Sismondi. They want a welfare state, intervention, and big if not huge government.
Sismondi and overproduction
The classical economists' theories of accumulation were combined with a static conception of equilibrium that obliged them to explain disturbances of the system's equilibrium by reference to factors outside the system. The appearance of crises of general overproduction led Sismondi to renounce classical theory and soon to doubt the laissez-faire system as a whole.
In his opinion it was exactly the general competition, based on nothing but prices, which, instead of resulting in equilibrium and general welfare, opened the way to the misery of overproduction. The anarchy of capitalist production, the passion for exchange value without consideration of social needs, gave rise to production in excess of effective demand and therefore to periodic crises. The underconsumption resulting from the unequal distribution of income was the cause of overproduction and the accompanying drive toward foreign markets. Sismondi was thus the founder of the theory, still widespread today, of underconsumption as the cause of capitalist crisis.
Literature and other works
Sismondi considered literature to be a natural product of political and social institutions. It was his custom for a long period of years to never work less than eight hours a day. The chief of the works that he produced are Littérature du midi de l'Europe (1813), a historical novel entitled Julia Severa ou l'an 492 (1822), Histoire de la Renaissance de la liberté en italie (1832), Histoire de la chute de l'Empire romain (1835), and Précis de l'histoire des Français, an abridgment of his own book (1839), with several others, chiefly political pamphlets.
Meanwhile he began to compile his great Histoire des Republiques Italiennes du moyen age. In 1807, appeared the first volumes of the book on the Italian republics, which, first made Sismondi prominent among European men of letters. The completion of this book, which extended to sixteen volumes, occupied him, though by no means entirely, for the next eleven years. He lived at first in Geneva and delivered there some interesting lectures on the literature of the south of Europe, which were continued from time to time and finally published.
On completing his great book on the Italian republics (1809-1818), he undertook a still greater work, the Histoire des Français (1821-1844), which he planned on a vast scale, and of which during the remaining twenty-three years of his life be published twenty-nine volumes. His untiring industry enabled him to compile many other books, but it is on these two that his fame chiefly rests. The earlier displays his qualities in the most favorable light, and has been least injuriously affected by subsequent writings and investigations; but the Histoire des Français, as a careful and accurate sketch on the great scale, has been superseded.
Sismondi’s legacy
As an economist, Sismondi represented a humanitarian protest against the dominant orthodoxy of his time. For the science of economics, the most important contribution was probably his macroeconomic model, which was the very first ever to appear (Sismondi 1803).
In the algebraic version of his model, net investment is X (the increase in the ‘necessary’ wage bill this year compared with that of the previous year), the previous year’s wage bill is N. Production this year is P, and (P - N) defines ‘revenue’. Consumption out of revenue is then D.
The analysis is extended to an open economy by the inclusion of loans to or from foreigners (C, which when a nation lends to foreigners is regarded as a subtraction from expenditure, and when it borrows from foreigners is added to expenditure). In this case any excess of (P - N) over D may take the form of either net investment or lending to foreigners, both of which Sismondi regarded as contributing to a nation’s progress (Sismondi 1803).
In his illustrative examples Sismondi assumed given ratios between each of net investment and lending to foreigners on the one hand, and last year’s necessary wage on the other. With both X and C now being expressed in terms of N, Sismondi was able to draw up a ‘balance’ for a borrowing nation between D and P + C - (N + X), and for a lending nation between D and P - C - (N + X), concluding that the nation was progressing or retrogressing respectively depending on whether the right hand side fell short of or exceeded (P - N).
Sismondi’s model thus reinforces Adam Smith’s criticism of the Mercantilist emphasis on the importance of consumption. It is also worth noting that in this open economy macro-analysis, Sismondi anticipated the modern concept of ‘absorption’, which is represented by (D + N + X) in the equation C = P - (D + N + X), where C is the balance of payments on current account ( ibid. ).
But, the model notwithstanding, he was above all, a historian whose economic ideas passed through different phases but always generated thought-provoking discussion. The acceptance of free-trade principles in De la richesse commerciale was abandoned in favor of a critical posture towards free trade and industrialization.
His Nouveaux principes attacked wealth accumulation both as an end in itself, and for its detrimental effect on the poor. His critique was noticed by Thomas Malthus, David Ricardo and John Stuart Mill, but despite his favorable attitude towards the poor, he was attacked by Marx, Lenin, and other socialists.
Major Works
- de Sismondi, Simonde. 1801. Tableau de l'agriculture toscane.
- de Sismondi, Simonde. 1803. De la richesse commerciale, ou principes d’économie politique, appliqués à la législation du commerce, Vol. I, Vol. II, Chapter IV, ft.7.
- de Sismondi, Simonde. 1809-1818. Histoire des republiques italiennes du moyen age, Vol. I, Vol. II.
- de Sismondi, Simonde. 1814. De l'interet de la France a l'egard de la traite des negres
- de Sismondi, Simonde. 1815. Examen de la Constitution francoise
- de Sismondi, Simonde. 1815. Political Economy.
- de Sismondi, Simonde. 1819. Nouveaux principes d'economie politique, ou de la Richesse dans ses rapports avec la population(New Principles of Political Economy, vol. 1)
- de Sismondi, Simonde. 1821-1844. Histoire des francais.
- de Sismondi, Simonde. 1837. Les colonies des anciens comparees a celles des modernes.
- de Sismondi, Simonde. 1837. Etudes de sciences sociale.
- de Sismondi, Simonde. 1837. Etudes sur l'economie politique.
- de Sismondi, Simonde. 1839. Precis de l'histoire des Francais, Vol. I, Vol. II.
- de Sismondi, Simonde. 1857. Fragments de son journal et correspondance.
- de Sismondi, Simonde. "The History of the Italian Republics in the middle Ages"
ReferencesISBN links support NWE through referral fees
- This article incorporates text from the Encyclopædia Britannica Eleventh Edition, a publication now in the public domain.
External Links
- The General Glut Controversy Retrieved May 21, 2007.
- Political Economy Retrieved May 21, 2007.
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