The Socialist Critique of Private Property and Free Markets and the French Political Economists’ Response

[The cartoonist “Cham” ridicules the plans of the French socialists like Ledru-Rollin who dreams of a new socialist Terror. See, Amédée de Noé, dit Cham, “Ce qu’on appelle des idées nouvelles en 1848” (Paris?: Imp. Aubert & Cie, 1848).]

Before turning to the criticism of socialism by the French political economists it is important to understand what the socialist critique of wage labour, private property, and the free market societies actually was.

During the 1830s and 1840s the basic socialist criticisms of the free market were first expressed at some length and with some coherence, and solutions proposed (usually involving state ownership, regulation of economic activity, and transfer payments to the poor and unemployed) which would remain essentially the same for the next hundred years or so. These criticisms can be summarized as economic, moral/philosophical, and political in nature, and were usually articulated in the various “Manifestos” which were issued by socialist groups, such as Victor Considerant’s “Manifesto” of 1847, Karl Marx’s “Communist Manifesto” of February 1848, and Ledru-Rollin’s “Manifesto for the Mountain Party” of December 1848.

More extensive criticism of the free market can be found in their longer works such as

  1. Louis Blanc, Organisation du travail. Association universelle. Ouvriers (1841) in French HTML and English HTML ; and Le Socialisme. Droit au travail, réponse à M. Thiers (1848)
  2. Victor Considerant, Principes du Socialisme. Manifeste de la Démocratie au XIXe siècle (1847) in French HTML and English HTML ; and Droit de propriété et du droit au travail (1848)
  3. Joseph Proudhon, Qu’est-ce que la propriété? ou Recherches sur le principe du Droit et du Gouvernement (1840) in French HTML and English HTML ; Système des contradictions économiques, ou philosophy de la misère (1846); Le droit au travail et le droit de propriété (1850);

[Proudhon believes “property is theft”]

These criticisms can be summarized as follows:

  1. Economic Criticism
  • the free market and bourgeois society is based upon private property which is unjust; the exclusive ownership of things, especially land, was a form of “theft” against those who did not own property, such as the ordinary worker. Hence Proudhon’s famous dictum “la propriety, c’est le vol” (property is theft)
  • wage labour leads to the “exploitation” of workers because they do not receive the full value of their labour, since some of it is withheld as “profit” by the factory owner
  • wage labour (especially factory work) “alienates” the workers from both the things they create and their full potential (this objection was put forward most forcibly by Karl Marx)
  • profit, interest, and land rent are unjust because they are “unearned” as the factory owner, capitalist or bank, and landowner do not “labour” to produce anything of value (important because most socialists believed that only “labour” produces wealth, hence if one did not “labour” then one inevitably exploited those who did)
  • competition has disastrous consequences for the workers in that they compete for scarce jobs and thus drive down the level of wages, thus becoming poorer and poorer (immiseration) under capitalism
  • there is a tendency towards the formation of monopolies which ruthlessly exploit consumers by charging excess profits and driving their competitors (and their workers) out of business, hence Louis Blanc’s idea that competition was a form of “murder” of workers
  • there are periodic economic crises which adversely affect the poor working class who are least able to survive during periods of unemployment
  • the emergence of international capitalism leads to “free trade”, global competition, and the destruction of national industry
  1. Moral/Philosophical Criticism
  • there is increasing inequality between the wealthy capitalists and the “bourgeoisie” on the one hand, and ordinary working people on the other
  • capitalism is “heartless” as a result of the selfish behaviour of individuals and the drive to get profits
  • there is the destruction of traditional communities as people seek work in the large cities and industrial towns and leave the countryside and smaller towns
  1. Political Criticism
  • the growing power and wealth of the “capitalist class” (the bourgeoisie) within the political system allows them to further their own ends at the expense of the weaker or non-voting working class
  • there is an unequal relationship between employers and labor, especially when it comes to bargaining for wages and conditions
  • the traditional “nuclear family” perpetuates bourgeois thought and behaviour

The political economists gradually realized the threat the socialists posed, both intellectually and increasingly politically after 1845 and addressed them accordingly in an outpouring of books and pamphlets, which unfortunately having been largely forgotten today:

  • Charles Dunoyer, La Liberté du travail (1845): literally on “the liberty of working” as opposed to the socialist notion of “the right to work (or right to a job)” – in French in facs. PDF via this page
  • Adolphe Thiers, De la propriété (1848) – (en français) in HTML and facs. PDF ; and in English with a slightly different title, The Rights of Property: A Refutation of Communism & Socialism (1848) in HTML and facs. PDF
  • Léon Faucher, Du droit au travail (1848)
  • Michel Chevalier, Lettres sur l’Organisation du travail (1848) [in French facs. PDF ] and L’économie politique et le socialisme (1849) [in French facs. PDF ]
  • Frédéric Bastiat’s series of 12 anti-socialist pamphlets (1848-1850) – [these will be discussed in more detail in a future post]
  • Gustave de Molinari, Les Soirées de la rue Saint-Lazare; entretiens sur les lois économiques et défense de la propriété (1849) [ HTML and facs,. PDF in French; draft English trans. at the OLL]
  • Bastiat and Proudhon, Gratuité du crédit (Oct. 1849 – Feb. 1850) – in French [ HTML and facs. PDF ]
  • Dictionnaire de l’économie politique (1852-53): with many articles on socialism and socialist theorists which was designed to be a compendium of criticism of socialist and other forms of interventionism by the state – in French facs. PDF

[Molinari on the other hand believes socialists will inevitably fail because they ignore “economic laws”]

Their rebuttal of socialist criticisms of the free market and their concerns about why socialism would fail in practice were extensive and detailed. The economists argued that the socialists ignored or misunderstood the following problems:

  • the incentive problem: communally organised living and working arrangements destroy incentives for individuals to work hard when all “profits” go to the community to be equally distributed
  • the division of labour problem: people with key skills (managerial, financial, technical, organisational, entrepreneurial) need to be paid for their extra contribution to the productive process
  • the risk problem: all economic activity involves risks (loss, miscalculation, natural disaster) which needs to be rewarded
  • the injustice of expropriation: to create any socialist system of production existing justly owned property has to be confiscated and given to new communally organised groups
  • the individual liberty problem: many socialists modeled their proposed new communal organisations on the army or a government bureaucracy (like the post office); these organisations would be deliberately hierarchical, with command from above, communal eating and sleeping arrangements, and general loss of individual choice and liberty
  • the human nature problem: socialists assumed that human nature is not fixed but malleable, that it is possible to create a” new socialist man” who would not be selfish or acquisitive; the economists believed humans were social but not communist, self-interested (broadly understood) not willing to sacrifice their interests to the community’s; and that people had vastly different tastes, preferences, skills, and interests which would and not be taken into account under socialism
  • the public choice problem – rulers were not disinterested parties but had own agendas
  • the problem of ignoring economic laws – the economy is governed by economic “laws” (such as the law of supply and demand) which cannot be ignored or wished away by well meaning people

What is striking to the modern reader, are the similarities between both the socialist critique of free markets and the economists’ defense of them of the 1840s and those of today. It would seem that we collectively have remembered nothing of them and thus have learned nothing from them. The major differences in my view is the Hayekian notion that free market prices carry vital information about the relative scarcity of goods and services and the changing demands of both consumers and other producers which are all crucial factors in entrepreneurs knowing what to produce, when and where. This idea is only rudimentary at best or completely absent from the political economists’ understanding of the problems faced by socialist production. On the other hand, the modern day socialists have greatly expanded the Malthusian critique of the ability of free markets to feed and clothe the poorest members of society, and applied this to a critique of “capitalism’s” over-exploitation and thus depletion of resources, its pollution of the environment, and the problem of “global warming” (sorry, “climate change”). It would seem that the proposed “Green New Deal” is just another in the long list of attempts by socialists to centrally plan the economy and thus avoid the waste and destruction inherent in free markets.

The socialist challenge in the 1840s was eventually put down by brutal police action in 1849 and many, like Louis Blanc, were imprisoned or sent into exile. However, their ideas were not so easily defeated. Some of their ideas would be taken up by the soon to be (self-)appointed Emperor Napoleon III and imposed from above in what would become a newly invigorated form of French “dirigisme” or “state socialism”. “Socialism proper” (in the form of working class socialist or labour parties) would reemerge in the 1880s and 1890s and would be met again by the French political economists in another round of anti-socialist publishing activity. This will be the topic of a future post.

On Cham’s cartoon see my talk on “Unfortunately, Hardly Anyone Listens to the Economists”: The Battle against Socialism by the French Economists in the 1840s.

The Socialist Critique of Private Property and Free Markets. Part I: The French

Louis Blanc (1811-1882)

When I was researching Frédéric Bastiat’s series of anti-socialist pamphlets which he wrote between 1848 and 1850 I looked at the works of the main socialist theorists who were the subject of his ire (Louis Blanc, Victor Considerant, Ledru-Rollin, and Joseph Proudhon). Out of this I drew up a list of their main objections to private property and the free market. These socialist writers also provoked a spirited response from the political economists (Charles Dunoyer, Michel Chevalier, Léon Faucher) who in turn wrote a series of critical works to rebut these criticisms in the period between 1845 and 1853, of which Bastiat’s essays were only a small part of a larger whole but which were of special note for their wit and cleverness.

I plan to put online as many of the works (both pro- and anti-socialist) online as I can. Also, in a series of posts I plan to outline the main criticisms of markets and wage labour by the socialists, the response by the political economists, beginning with the French and then moving on to the English and Germans.

I will begin with the French socialists because Paris and the intellectuals who gathered there played a very important role in the emergence of socialist ideas in the first half of the 19th century. The French form of socialism can found in a variety of flavors:

The so-called “utopian socialists” who wanted to create model socialist communities on a voluntary basis in which the superiority of socialist ways of living and working could be demonstrated to others. This group included Saint-Simon (1760-1825) and Charles Fourier (1772-1837) and their major works were:
1. Saint-Simon, L’Organisateur (1819-1820) and Du système industriel (1822)
2. Charles Fourier, Le Nouveau monde industriel et sociétaire (1829-30).

Victor Considerant (1808-1893)

The electoral or political socialists who wanted to work within the electoral system and to introduce legislation in order to regulate the “capitalist” or free market system and to encourage the creation of alternative ways of organizing labour and production, where the state would guarantee jobs for every worker (“le droit au travail” (the right to a job)) which would be paid for by taxpayers. In order to do this, the voting franchise had to be expanded to allow ordinary working people to vote (this was severely limited in pre-1848 France), and these new voters had to be persuaded to vote for socialist candidates in the elections. Gustave de Molinari called this kind of socialism “socialism from below.” The main theorists of and political activists in this form of socialism were Louis Blanc (1811-1882), Victor Considerant (1808-1893), and Alexandre Ledru-Rollin (1807-1874). It should be noted that Considerant wrote a “socialist manifesto” the year before Karl Marx wrote his famous Communist Manifesto in February 1848, and Ledru-Rollin later that same year. Their main works include:
1. Louis Blanc, Organisation du travail. Association universelle. Ouvriers (1841) in French HTML and English HTML; and Le Socialisme. Droit au travail, réponse à M. Thiers (1848)
2. Victor Considerant, Principes du Socialisme. Manifeste de la Démocratie au XIXe siècle (1847) in French HTML and English HTML; and Droit de propriété et du droit au travail (1848)
3. Ledru-Rollin, “The Election Manifesto of the Montagnards” (Manifeste des représentants de la Montagne) (Dec. 1848)

Alexandre Ledru-Rollin (1807-1874)

Pierre Joseph Proudhon (1809-1865)

The anarchist socialism of Pierre Joseph Proudhon (1809-1865) which combined aspects of utopian socialism (workers starting and running their own workshops outside of the state) and electoral socialism (using the government’s taxing and regulating powers to set up a “People’s Bank” to offer low or zero interest rate loans to these workshops). Proudhon’s main works from this period are:
1. Qu’est-ce que la propriété? ou Recherches sur le principe du Droit et du Gouvernement (1840) in French HTML and English HTML; Système des contradictions économiques, ou philosophy de la misère (1846); Le droit au travail et le droit de propriété (1850); and his debate with Bastiat on Free Credit (1850)

The bureaucratic or state socialism of political leaders like Louis Napoléon Bonaparte (Napoleon III 1852-70) who used the power of the state run by elites to introduce socialist measures “from the top down”. Molinari called this form of socialism “socialism from above”. It would be continued under Otto von Bismarck in the Second German Reich (1871-1918) between 1883-89 when the foundations of the modern welfare state were laid down. Louis Napoléon Bonaparte had been influenced by the socialist ideas of Saint-Simon as he shows in his books Des idées napoléoniennes (1839) and L’Extinction du paupérisme (1844).

Mention shield also be made of the revolutionary or so-called “scientific” socialism of Karl Marx (1818-1883) who lived and worked in Paris 1843-45, Brussels 1845-48 (where he attended a meeting of the free market Congress of Economists in 1847 to deliver a speech critical of free trade), and Paris 1848-49. His major works from this period include:
Economic and Philosophic Manuscripts of 1844 (The Paris Manuscripts) written while he was living in Paris
Wage Labour and Capital (1847)
– Undelivered speech in Brussels to the Congress of Economists attacking free trade, “The Protectionists, the Free Traders and the Working Class” (16 and 18 September 1847)
Manifesto of the Communist Party (1848) presented to the German Workers Association in Paris in February 1848
– these early writings would be consolidated into his more mature works such as Grundrisse (Sketch of a Criticism of Political Economy (1857); A Contribution to the Critique of Political Economy (1859); and Capital, Vol. I (Das Kapital) (1867)

The French socialists had an opportunity in the early months of the February Revolution of 1848 to put some of their ideas into practice with the National Workshops scheme run by Louis Blanc. This was the first attempt to create a modern welfare state, and was the precursor of what would emerge after WW2 in western Europe, UK, and later USA. The idea was for the state to provide tax-payer funded employment for those who were out of work as the first step towards a universal state-guaranteed “right to a job” (droit au travail), a measure which they also tried to make part of the new French constitution which was debated over the summer of 1848.

This is how Louis Blanc in 1841 conceived the role of government in running the “ateliers sociaux” (social workshops) which would replace private firms operating in a free market and which he attempted to put into practice in 1848:

Le gouvernement serait considéré comme le régulateur suprême de la production, et investi, pour accomplir sa tâche, d’une grande force.
Cette tâche consisterait à se servir de l’arme même de la concurrence, pour faire disparaître, la concurrence.
Le gouvernement lèverait un emprunt, dont le produit serait affecté à la création d’*ateliers sociaux* dans les branches les plus importantes de l’industrie nationale.
Cette création exigeant une mise de fonds considérable, le nombre des ateliers originaires serait rigoureusement circonscrit; mais, en vertu de [103] leur organisation même, comme on le verra plus bas, ils seraient doués d’une force d’expansion immense.
Le gouvernement étant considéré comme le fondateur unique des *ateliers sociaux*, ce serait lui qui rédigerait les statuts. Cette rédaction, délibérée et votée par la représentation nationale, aurait forme et puissance de loi.
Seraient appelés à travailler dans les *ateliers sociaux*, jusqu’à concurrence du capital primitivement rassemblé pour l’achat des instruments de travail, tous les ouvriers qui offriraient des garanties de moralité.

The government ought to be considered as the supreme regulator of production, and ought to be invested with great coercive powers in order to carry out its task.
This task would entail using the weapon of competition itself in order to make competition disappear.
The government would raise a loan the proceeds of which would be used to create *social workshops* in the most important sectors of national industry.
This creation (of workshops) would require the investment of considerable funds and the number of of workshops would at first be strictly limited; but in virtue of the fact of their very organisation, as one will see below, they would be endowed with a huge power of expansion.
Since the government would be considered to be the sole founder of these *social workshops,*it would be it (the government) which would draw up the statutes. This document, deliberated and voted upon by the national representative body would have the form and power of the law.
All workers who could offer guarantees of their moral (uprightness) would be called upon to work in the *social workshops*, until (enough) primitive capital had been gathered to purchase the tools of work.

Source: “Conclusion. De quelle manière on pourrait, selon nous, organiser le travail” in Louis Blanc, Organisation du travail. Association universelle. Ouvriers. – Chefs d’ateliers. – Hommes de lettres. (Paris: Administration de librairie, 1841. First edition 1839), pp. 76-93.

What is important for our purposes here is that is was during this period that the basic socialist criticisms of the free market were first expressed at some length and with some coherence, and solutions proposed (usually involving state ownership, regulation of economic activity, and transfer payments to the poor and unemployed) which would remain essentially the same for the next hundred years or so.

I will describe the socialists criticisms of the free market and wage labour and the response by the political economists in another post.