The Swiss economist Sismondi (J.-C.-L. Simonde de Simondi), who wrote at the beginning of the present century, is of particular interest in considering a solution of the general economic problems which are now coming to the forefront with particular force in Russia. If we add to this that Sismondi occupies a special place in the history of political economy, in that he stands apart from the main trends, being an ardent advocate of small-scale production and an opponent of the supporters and ideologists of large scale enterprise (just like the present-day Russian Narodniks), the reader will understand our desire to outline the main features of Sismondi’s doctrine and its relation to other trends—both contemporary and subsequent—in economic science. A study of Sismondi is today all the more interesting because last year (1896) an article in Russkoye Bogatstvo also expounded his doctrine (B. Ephrucy: “The Social and Economic Views of Simonde de Sismondi,” Russkoye Bogatstvo, 1896, Nos. 7 and 8).
The contributor to Russkoye Bogatstvo states at the very outset that no writer has been “so wrongly appraised” as Sismondi, who, he alleges, has been “unjustly” represented, now as a reactionary, then as a utopian. The very opposite is true. Precisely this appraisal of Sismondi is quite correct. The article in Russkoye Bogatstvo, while it gives an accurate and detailed account of Sismondi’s views, provides a completely incorrect picture of his theory, idealises the very points of it in which he comes closest to the Narodniks, and ignores and misrepresents his attitude to subsequent trends in economic science. Hence, our exposition and analysis of Sismondi’s doctrine will at the same time be a criticism of Ephrucy’s article.
The distinguishing feature of Sismondi’s theory is his doctrine of revenue, of the relation of revenue to production and to the population. The title of Sismondi’s chief work is: Nouveaux principes d’économie politique ou de la richesse dans ses rapports avec la population (Seconde édition. Paris, 1827, 2 vol. The first edition was published in 1819)—New Principles of Political Economy, or Wealth in Relation to Population. This subject is almost identical with the problem known in Russian Narodnik literature as the “problem of the home market for capitalism.” Sismondi asserted that as a result of the development of large-scale enterprise and wage-labour in industry and agriculture, production inevitably outruns consumption and is faced with the insoluble task of finding consumers; that it cannot find consumers within the country because it converts the bulk of the population into day labourers, plain workers, and creates unemployment, while the search for a foreign market becomes increasingly difficult owing to the entry of new capitalist countries into the world arena. The reader will see that these are the very same problems that occupy the minds of the Narodnik economists headed by Messrs, V. V. and N. —on. Let us, then, take a closer look at the various points of Sismondi’s argument and at its scientific significance.
Unlike the classical economists, who in their arguments had in mind the already established capitalist system and took the existence of the working class as a matter of course and self-evident, Sismondi particularly emphasises the ruination of the small producer—the process which led to the formation of the working class. That Sismondi deserves credit for pointing to this contradiction in the capitalist system is beyond dispute; but the point is that as an economist he failed to understand this phenomenon and covered up his inability to make a consistent analysis of it with “pious wishes.” In Sismondi’s opinion, the ruination of the small producer proves that the home market shrinks.
“If the manufacturer sells at a cheaper price,” says Sismondi in the chapter on “How Does the Seller Enlarge His Market?” (ch. III, livre IV, t. 1, p. 342 et suiv.), “he will sell more, because the others will sell less. Hence, the manufacturer always strives to save something on labour, or on raw. materials, so as to be able to sell at a lower price than his fellow manufacturers. As the materials themselves are products of past labour, his saving, in the long run, always amounts to the expenditure of a smaller quantity of labour in the production of the same product.” “True, the individual manufacturer tries to expand production and not to reduce the number of his workers. Let us assume that he succeeds, that he wins customers away from his competitors by reducing the price of his commodity. What will be the ‘national result’ of this? . . . The other manufacturers will introduce the same methods of production as he employs. Then some of them will, of course, have to discharge some of their workers to the extent that the new machine increases the productive power of labour. If consumption remains at the same level, and if the same amount of labour is performed by one-tenth of the former number of hands, then the income of this section of the working class will be curtailed by nine-tenths, and all forms of its consumption will be reduced to the same extent. . . . The result of the invention—if the nation has no foreign trade, and if consumption remains at the same level—will consequently be a loss for all, a decline in the national revenue, which will lead to a decline in general consumption in the following year” (I, 344). “Nor can it be other wise: labour itself is an important part of the revenue” (Sismondi has wages in mind), “and therefore the demand for labour cannot be reduced without making the nation poorer. Hence, the expected gain from the invention of new methods of production is nearly always obtained from foreign trade” (I, 345).
The reader will see that in these words he already has before him all that so-familiar “theory” of “the shrinkage of the home market” as a consequence of the development of capitalism, and of the consequent need for a foreign market. Sismondi very frequently reverts to this idea, linking it with his theory of crises and his population “theory”; it is as much the key point of his doctrine as it is of the doctrine of the Russian Narodniks.
Sismondi did not, of course, forget that under the new relationships, ruination and unemployment are accompanied by an increase in “commercial wealth” that the point at issue was the development of large-scale production, of capitalism. This he understood perfectly well and, in fact, asserted that it was the growth of capitalism that caused the home market to shrink: “Just as it is not a matter of indifference from the standpoint of the citizens’ welfare whether the sufficiency and consumption of all tend to be equal, or whether a small minority has a superabundance of all things, while the masses are reduced to bare necessities, so these two forms of the distribution of revenue are not a matter of indifference from the view point of the development of commercial wealth (richesse commerciale). Equality in consumption must always lead to the expansion of the producers’ market, and inequality, to the shrinking of the market” (de le [le marché] resserrer toujours davantage) (I, 357).
Thus, Sismondi asserts that the home market shrinks owing to the inequality of distribution inherent in capitalism, that the market must be created by equal distribution. But how can this take place when there is commercial, to which Sismondi imperceptibly passed (and he could not do otherwise, for if he had done he could not have argued about the market)? This is something he does not investigate. How does he prove that it is possible to preserve equality among the producers if commercial wealth exists, i.e., competition between the individual producers? He does not prove it at all. He simply decrees that that is what must occur. Instead of further analysing the contradiction he rightly pointed to, he begins to talk about the undesirability of contradictions in general. “It is possible that when small-scale agriculture is superseded by large-scale and more capital is invested in the land a larger amount of wealth is distributed among the entire mass of agriculturists than previously” . . . (i.e., “it is possible” that the home market, the dimension of which is determined after all by the absolute quantity of commercial wealth, has expanded—expanded along with the development of capitalism?). . . . “But for the nation, the consumption of one family of rich farmers plus that of fifty families of poor day labourers is not equal to the consumption of fifty families of peasants, not one of which is rich but, on the other hand, not one of which lacks (a moderate) a decent degree of prosperity” (une honnête aisance) (I, 358). In other words: perhaps the development of capitalist farming does create a home market for capitalism. Sismondi was a far too knowledgeable and conscientious economist to deny this fact; but—but here the author drops his investigation, and for the “nation” of commercial wealth directly substitutes a “nation” of peasants. Evading the unpleasant fact that refutes his petty-bourgeois point of view, he even forgets what he himself had said a little earlier, namely, that the “peasants” became “farmers” thanks to the development of commercial wealth, “The first farmers,” he said, “were simple labourers. . . . They did not cease to be peasants. . . . They hardly ever employed day labourers to work with them, they employed only servants (des domestiques), always chosen from among their equals, whom they treated as equals, ate with them at the same table . . . constituted one class of peasants” (I, 221). So then, it all amounts to this, that these patriarchal muzhiks, with their patriarchal servants, are much more to the author’s liking, and he simply turns his back on the changes which the growth of “commercial wealth” brought about in these patriarchal relationships.
But Sismondi does not in the least intend to admit this. He continues to think that he is investigating the laws of commercial wealth and, forgetting the reservations he has made, bluntly asserts:
“Thus, as a result of wealth being concentrated in the hands of a small number of proprietors, the home market shrinks increasingly (!), and industry is increasingly compelled to look for foreign markets, where great revolutions (des grandes revolutions ) await it” (1, 361). “Thus, the home market cannot expand except through national prosperity” (I, 362). Sismondi has in mind the prosperity of the people, for he had only just admitted the possibility of “national” prosperity under capitalist farming.
As the reader sees, our Narodnik economists say the same thing word for word.
Sismondi reverts to this question again at the end of his work, in Book VII On the Population, chapter VII; “On the Population Which Has Become Superfluous Owing to the Invention of Machines.”
“The introduction of large-scale farming in the countryside has in Great Britain led to the disappearance of the class of peasant farmers (fermiers paysans ), who worked themselves and nevertheless enjoyed a moderate prosperity; the population declined considerably, but its consumption declined more than its numbers. The day labourers who do all the field work, receiving only bare necessities, do not by any means give the same encouragement to urban industry as the rich peasants gave previously” (II, 327). “Similar changes also took place among the urban population. . . . The small tradesmen, the small manufacturers disappear, and one big entrepreneur replaces hundreds of them who, taken all together, were perhaps not as rich as he. Nevertheless, taken together they were bigger consumers than he. The luxury he indulges in encourages industry far less than the moderate prosperity of the hundred households he has superseded” (ibid.).
The question is: what does Sismondi’s theory that the home market shrinks with the development of capitalism amount to? To the fact that its author, who had hardly attempted to look at the matter squarely, avoided analysing the conditions that belong to capitalism (“commercial wealth” plus large-scale enterprise in industry and agriculture, for Sismondi does not know the word “capitalism.” Identity of concepts makes this use of the term quite correct, and in future we shall simply say “capitalism”), and replaced an analysis by his own petty-bourgeois point of view and his own petty-bourgeois utopia. The development of commercial wealth and, consequently, of competition, he says, should leave intact the average, uniform peasantry, with its “moderate prosperity” and its patriarchal relations with its farm servants.
It goes without saying that this innocent desire remained the exclusive possession of Sismondi and the other romanticists among the “intelligentsia"; and that day after day it came into increasing conflict with the reality that was developing the contradictions of which Sismondi was not yet able to gauge the depth.
It goes without saying that theoretical political economy, which in its further development joined that of the classical economists, established precisely what Sismondi wanted to deny—that the development of capitalism in general, and of capitalist farming in particular, does not restrict the home market, but creates it. The development of capitalism proceeds simultaneously with the development of commodity economy, and to the extent that domestic production gives way to production for sale, while the handicraftsman is superseded by the factory, a market is created for capital. The “day labourers” who are pushed out of agriculture by the conversion of the “peasants” into “farmers” provide labour-power for capital, and the farmers are purchasers of the products of industry, not only of articles of consumption (which were formerly produced by the peasants at home, or by village artisans), but also of instruments of production, which could not remain of the old type after small farming had been superseded by large-scale farming.  The last point is worth emphasising, for it is the one that Sismondi particularly ignored when, in the passage we have quoted, he talked about “consumption” by peasants and farmers as if only personal consumption (the consumption of bread, clothing, etc.) existed and as if the purchase of machines, implements, etc., the erection of buildings, warehouses, factories, etc., were not also consumption, except that it is of a different kind, i.e., productive consumption, consumption by capital and not by people. And again we must note that it is precisely this mistake, which, as we shall soon see, Sismondi borrowed from Adam Smith, that our Narodnik economists took over in toto.
 Ephrucy died in 1897. An obituary was published in Russkoye Bogatstvo, March 1897. —Lenin
 It is quite true that Sismondi was not a socialist, as Ephrucy states at the beginning of his article, repeating what was said by Lippert —Lenin (see Handwörterbuch der Staatswissenschaften, V. Band, Artikel “Sismondi” von Lippert, Seite 678) (Dictionary of Political Science, Vol. V, article by Lippert entitled “Sismondi,” p. 678.—Ed.). —Lenin
 All subsequent quotations, unless otherwise stated, are taken from the above-mentioned edition of Nouveaux Principes. —Lenin
 Italics here and elsewhere are ours, unless otherwise stated. —Lenin
 This refers to Marxism. (Author’s footnote to the 1908 edition.—Ed.) —Lenin
 Thus, simultaneously the elements of both variable capital (the “free” worker) and constant capital are formed; the means of production from which the small producer is freed pertain to the latter. —Lenin
 Ephrucy says nothing at all concerning this part of Sismondi’s doctrine—the shrinking of the home market as a result of the development of capitalism. We shall see again and again that he left out what is most typical of Sismondi’s viewpoint and of the attitude of Narodism towards his doctrine. —Lenin
 V. V. (pseudonym of V. P. Vorontsov) and N.-on (pseudonym of N. F. Danielson) were ideologists of liberal Narodism of the 1880s and 1890s.