A Characterisation of Economic Romanticism (Sismondi and Our Native Sismondists)

Lenin’s important work criticizing Narodnik views on economic issues. It was written between August 1896 and March 1897. It was published in the Novoya Slova magazine between April and July of the same year. The Chinese translation of the work is included in Vol. 2 of the second edition of the Complete Works of Lenin.

Sismondi, a Swiss economist of the early 19th century, is known as the founder of “economic romanticism”, whose core idea was to prove the impossibility and irrationality of capitalist development. The Narodniks applied Sismondi’s ideas to the social analysis of Russia at that time, denying the possibility of the capitalist development in Russia. Lenin exposed the relationship between the Narodnik thoughts and the thought of Sismondi, and pointed out that the economic theory of the Narodniks was only a variation of the European Romanticism, that is, the Russian version of Sismondi’s thought.

This work is divided into two parts. In the first part, Lenin summarized the main points of the theory of Sismondi from 9 aspects and the relationship between Sismondi and other (contemporary and later) economic schools,on the issue of relationship between the shrinking of the domestic market and the bankruptcy of small producers.

The bankruptcy process of small producers emphasized by Sismondi refers to the formation process of the working class. Sismondi asserted that the bankruptcy of small producers proves that the domestic market is shrinking; the domestic market is shrinking due to the inherent inequality of distribution in capitalism, and that the market must be created by equal distribution. Lenin argued that the development of capitalism, 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economy, and to the extent that domestic production gives way to production for sale, while the handicraftsman is superseded by the factory, a market is created for capital.

On the question of the view of national revenue and capital. Sismondi’s complete copying of Adam Smith’s theory of the value of labor, of the three kinds of revenue, namely ground rent, profit and wages, and of the theory that the entire production of capitalist society is made up of two parts, the workers’ (wages, or in modern terms, variable capital) and the capitalists’ (extra value), together with his ignorance of the distinction between capital and revenue, leads him inevitably into absurdity. Since production requires capital, precisely the means and tools of production, the products produced throughout the year cannot all be consumed by workers and capitalists in the form of revenue. Instead of talking about all the means and raw materials of production, Sismondi resolved the distinction between capital and income with the assertion that annual income and national income were equal. The Russian Narodniks repeated this misconception and came to the following erroneous conclusions: extra value cannot be realised in a capitalist society; because extra value cannot be realised at home, foreign markets must be sought; it seems that it is the failure of the product to be realised in the consumption of workers and capitalists that causes the crisis.

On the question of the relationship between production and consumption. According to Sismondi, production should correspond to consumption, and production is determined by revenue, excess of production over revenue causes over-production. Lenin pointed out that he confused the relationship between production and consumption, put the simple peasant ethics directly into the capitalist society, and even came to the conclusion that this would hinder the development of capitalism. According to Marxism, not all the social products produced are used for personal consumption. Machines, coal and other goods are not used for personal consumption, but only for productive consumption. Therefore, dividing social products into two distinct categories, namely, means of production and consumer goods should be the starting point for talking about social capital and social revenue.

On the question of accumulation in the capitalist society. Sismondi argued that rapid accumulation would lead to disaster, and Lenin pointed out that this was completely wrong. Accumulation is a manifestation of production, exceeding income. In order to expand production and obtain accumulation, the means of production must be produced first. To achieve this, workers must be absorbed into that sector, and these workers will also demand consumer goods. It can be seen that “consumption” follows “accumulation”.

On the question of the role of foreign markets in product realization, especially in the realization of surplus value. According to the Sismondi and the Narodniks of Russia, products, especially the surplus value, cannot be realized, so it is necessary to find a foreign market. Lenin pointed out that this is a complete misunderstanding of the law of realization; an inability to divide the product into three (and not two) parts in terms of value, and into two kinds in terms of material form (means of production and articles of consumption). Only part of the surplus-value consists of articles of consumption; the other part consists of means of production (for example, the surplus-value of the ironmaster). The “consumption” of this latter surplus-value is effected by applying it to production; the capitalists, however, who manufacture products in the shape of means of production do not consume surplus-value, but constant capital obtained by exchange with other capitalists. In dealing with foreign market issues, Marxist theory also opposes what romantics say: “the capitalists cannot consume surplus-value and therefore must dispose of it abroad.” Because the result of the development of the bourgeoisie is the formation of the domestic market. Certain kinds of products are exported to import other kinds. Foreign market is necessary for the development of capitalism, but there is no common ground between the foreign market problems and the realization problems. The attempt to integrate them only shows the desire of romantics to retard capitalism and their logical incompetence.

On crisis theory. Lenin pointed out that Sismondi used the discrepancy between production and consumption of the working class in order to explain the crisis, and argued thought that the lack of consumption caused the crisis. Marx explained the crisis with the contradiction between the social character of production and the private ownership of the means of production. He thought that the production conditions were the root of the crisis. These two different understandings are related to different attitudes towards capitalism. If we use the impossibility of product realization to explain the crisis like Sismondi, we will deny the reality and the objective existence and development of capitalism. With the Marxist crisis theory, we will recognize the reality and historical progress of capitalism, and seek a revolutionary way out of its development to solve the crisis.

On the question of capitalist land rent and capitalist over population. Sismondi did not agree with Ricardo’s theory of the land rent, opposed application of the categories of commodity economy and capitalism to agriculture, condemned the agricultural production in the capitalist way, and talked about the superiority of the land exploitation system of the patriarchal French style in a sentimental way, so as to accuse the capitalist mode of production and oppose the capitalist development path.

On the issue of overpopulation, Sismondi’s point of view is a peculiar combination of the compassion of the petty-bourgeois and Malthusianism. He believes that the invention of the machine caused overpopulation, and therefore he must oppose the capitalist road. Lenin criticized that the surplus population is an inevitable result of the capitalist accumulation and also an essential part of the process that capitalism is adopting machinized, production; without it, the capitalist economy cannot exist or develop.

On the role of machines related to the problem of overpopulation. Sismondi replaced the question of the historical role of machines in the capitalist society with the question of to what extent the machines were “useful”. He argued that capitalism and the capitalist employment of machines were “dangerous” and urged the necessity of “retarding,” “moderating” and “regulating” the growth of capitalism and, as a consequence, Lenin argued that “he became a reactionary”.  Lenin pointed out that large scale machine industry marks gigantic progress in capitalist society. It not only enormously increeases the productive forces and socialises labor throughout society, but also destroys the manufactory division of labor, completes the destruction of backward patriarchal relations and gives a most powerful impetus to the progress of society. At the same time, it is undeniable that this progress is accompanied by the “progress” of contradictions, that is, their intensification and expansion.

On the issue of tariff protection policy. According to Sismondi, a protective tarif policy is “unwise”, becausethe “nation” suffers losses. Lenin pointed out that the tariff protection policy is a “socio-political factor” of capitalism and it is connected to a definite historical system of social economy and the interests of the predominant class in that system which enjoy the support of governments. The issue of tariff protection or free trade is an issue between entrepreneurs (sometimes between the entrepreneurs of different countries, sometimes between different factions of entrepreneurs in a given country). For Sismondi, the historical point of view was totally alien to him.

Lenin summarized the general role of Sismondi in the history of political economy, and pointed out that the difference between him and the classical economists was that he indicated the contradictions of capitalism, which was his contribution. But he also confines himself to a sentimental criticism of capitalism from the viewpoint of the petty bourgeoisie and this substitution of sentimental complaints for a scientific analysis results in his conception being extremely superficial. The purpose of using Sismondi’s thoughts is to prove the impossibility of the development of capitalism in Russia.

In the second part of his book, Lenin makes the following analysis on the nature of the criticism of capitalism by Sismondi and romantics:

Sismondi and romantics criticized capitalism from the standpoint of the petty bourgeoisie. Sismondi accused the money economy for bringing about disastrous competition, corrupting people’s virtues and prompting people to cheat each other. He regards small production as a “production form” opposite to capitalism in order to eliminate the contradiction of capitalism. Lenin argued that such accusations show that they do not understand the capitalist economy at all. The development of capitalism is the development of division of labor. The development of capitalist industry and commerce is faster than that of agriculture. The population of industry and commerce is increasing rapidly. The proportion and role of industry and commerce in the whole economic system is larger. Lenin argued that this accusation showed that they did not understand the capitalist economy at all. The development of capitalism is the development of division of labor. The development of capitalist industry and commerce is faster than that of agriculture. The population of industry and commerce has increased faster, and industry and commerce have a greater proportion and role in the entire economic system. The imbalanced and violent development of capitalism triggers its progress and accelerates the development of society, the most intuitive feature of romantics’ criticism of capitalism is the criticism of sentimentalism. Romantics regard small production as a form of production and oppose it to capitalism. Infact, the small producers who are praised as the gods are the petty bourgeoisie, still hostile to the proletariat at the bottom of the society. Romantics idealize the petty bourgeoisie and criticize capitalism from the standpoint of the petty bourgeoisie. Sismondi didn’t understand the connection between small production (idealized petty production) and big capital (rejecting it), and didn’t see that the small producers he preferred, namely the peasants, were actually becoming the small bourgeoisie.

Another characteristic of Romanticism’s criticism of capitalism is that it regards the contradictions of various interests as the contradictions and mistakes of theories, systems and even measures. The narrow vision of small producers, who stand outside the contradiction of development and are in the middle of the transition between the two opposites, is combined with naive idealism, which uses people’s opinions to explain social systems rather than social systems to explain people’s opinions. Romantics demand to restore the principles and thoughts of guilds and apply the alliance produced by the narrow and primitive need of uniting local craftsmen to the capitalist society. However, such a claim was fully accepted and idealized by Russian Narodniks. They proved the impossibility and irrationality of the development of Russian capitalism with the help of Sismondi’s theory, and finally embarked the idea of negation, opposing and hindering the development of capitalism. They came to the conclusion that the future of Russian economy lies in a different way from capitalism. To this end, Lenin concluded that the Narodniks are the followers of Sismondi, and the Narodnik theory is a Russian version of European Romanticism from the very date of its emergence, this theory is the theory of petty bourgeoisie and has a reactionary essence.

Lenin’s critique of romanticism was at the same time a critique of the Russian populists, which was of great theoretical and practical importance for the adherence to Marxist economic theory and for the exploration of the Russian path.