Jean-Charles de Sismondi Economist-theorist, historian Date of Birth: 09.05.1773 Country: Switzerland

Biography of Jean-Charles Sismondi

Jean-Charles Sismondi, an economist and historian, was born in 1773 near Geneva. His ancestors came from Northern Italy and had lived in France for a long time before settling in Geneva to escape religious persecution. Sismondi's father was a Calvinist pastor, and the family belonged to the wealthy Geneva aristocracy. In the 18th century, Geneva was a tiny independent republic, loosely connected to the rest of the Swiss cantons. The population of this part of Switzerland spoke French. Like Rousseau, his great compatriot and to some extent his teacher, Sismondi was, according to one biographer, a Genevan by birth and sentiment, but French in character and direction of his work. However, he could also be claimed by the Italians: in addition to his ancestry, he dedicated a significant part of his work to the history and economics of Italy and felt at home in that country. Sismondi was also fluent in Latin, German, English, Spanish, Portuguese, and Provençal. He was a European and a cosmopolitan. The roots of Sismondi's ideas can be partly seen in the peaceful patriarchal atmosphere of his childhood and youth. Throughout his life, he maintained the belief that happiness most often comes to honest working artisans and farmers and escapes from big cities with their factories, trading houses, and banks. However, this patriarchal life was fading away, destroyed by the industrial revolution in which handicrafts were replaced by factory production and independent artisans, proud of their craftsmanship and modest prosperity, turned into impoverished proletarians. Sismondi, who did not complete his education, was forced to leave Geneva at the age of 18 and work as a clerk in Lyon for a merchant who was a friend of his father. The reason was that Sismondi's father had invested money in French government bonds and lost them during the revolution, which undermined his fortune.
The Jacobin Revolution soon reached Lyon and later captured Geneva, which was always closely linked to neighboring France. For the Sismondi family, it was a time of wandering. In early 1793, they emigrated to England, where they lived for a year and a half. Soon after their return, they had to flee again, this time to Northern Italy, which, however, was also soon occupied by the French. For five years, Sismondi managed a small farm in Tuscany, which was purchased with the money saved during their escape. During these turbulent years, he was imprisoned several times as a politically suspicious person. The Sismondi family returned to their homeland after Geneva officially became part of France in 1798 when the First Consul, Napoleon Bonaparte, restored order and legality. By this time, the abilities and inclinations of the young Sismondi were well developed. His first literary work was a book on Tuscan agriculture. In 1803, he published a work on political economy entitled "On Commercial Wealth" in which he appeared as a disciple of Adam Smith and a preacher of his ideas.
Sismondi became part of a circle of scholars and writers who gathered around the famous banker, politician, and thinker Jacques Necker and his daughter Madame de Stael, a writer and social activist. Sismondi lived and worked for a long time on Necker's estate and accompanied Madame de Stael on her travels. The literary Romanticism of Madame de Stael and the writers close to her apparently had some influence on Sismondi. History was Sismondi's main occupation. He wrote a multi-volume "History of the Italian Republics" and delivered a brilliant series of lectures on the history of Romance literatures. In 1813, Sismondi went to Paris, where he witnessed the fall of Napoleon and the restoration of the Bourbons. These events suddenly turned him from an opponent into a supporter of Napoleon: he hoped that the new empire would realize his somewhat vague ideals of freedom and happiness. After Waterloo and the Congress of Vienna in 1815, Sismondi returned to Switzerland, of which Geneva became a part again. He also traveled to England and some other countries. During these years, Sismondi's socio-economic ideas took shape, which he presented in his book "New Principles of Political Economy" published in 1819. This is Sismondi's main contribution to the science of economics. The book soon made him a well-known economist in Europe. In 1827, Sismondi released a second edition, in which his polemics with the Ricardo school in England and the Say school in France became even more pronounced. He considered the economic crisis of 1825 as evidence of his correctness and the fallacy of the notion of the impossibility of general overproduction.
According to Sismondi, this book did not result so much from an in-depth study of the works of other scholars as from observations of life that convinced him of the fallacy of the fundamental principles of orthodox science, i.e., the teachings of Smith as developed by Ricardo on the one hand and Say on the other. As we know, Ricardo regarded all social phenomena from the standpoint of the interests of production and the growth of national wealth. Sismondi stated that production is not an end in itself, that national wealth is not true wealth since the majority of the population receives mere crumbs from it. The path of large-scale industry is fatal for humanity. Sismondi demanded that political economy see living people behind its abstract schemes. In 1819, Sismondi married a young Englishwoman, but they had no children. He spent the remaining years of his life peacefully on his small estate near Geneva, immersed in his work on the grand "History of the French". Although he managed to publish 29 volumes, he did not complete this work. He also published a number of other historical and political writings. During his lifetime, he was considered more an historian than an economist. However, now his historical and political works have lost serious significance, while his contribution to the science of economics remains important from a contemporary point of view.
He was an indefatigable worker. Until the last days of his life, he spent at least eight hours a day at his desk, often more. Sismondi's works amounted to a total of 70 volumes! His entertainments were walks and conversations with numerous friends and guests who gladly gathered in his hospitable home. The famous Genevan spent the twilight of his life as clear and happy as his childhood and youth. He died in 1842 at the age of 69. In his portrait, Sismondi is seen as a solid, broad-faced man. As one contemporary recounts, Sismondi was remarkably clumsy and awkward from a young age. This supposedly even repelled him from wider society and made him a reclusive scholar. He had a very gentle character, kind and responsive. Authors describing the circle of Madame de Stael call him "good-natured Sismondi". He was a loyal friend, exemplary husband, caring son and brother. At the same time, his gentleness did not prevent Sismondi from being a principled person and, when necessary, being bold and firm in his views and actions. One of his contemporaries writes: Although he was undoubtedly a peace-loving person by nature, he repeatedly engaged in fierce struggles when it was necessary to defend a friend's honor. Sismondi was associated with a well-known journal that published an article offending the feelings of a certain gentleman who was too vain about his nobility. He accused Sismondi of being the author and demanded that he either admit it or name the true author. Sismondi refused to give any answer. A challenge was sent, which Sismondi accepted. He faced his opponent's shot and fired into the air, declaring for the first time that he was not the author of the article. He emerged from this ridiculous conflict with all the proper honors.
Sismondi placed the problem of markets, realization, and crises at the center of his theory and closely linked it to the development of the class structure of bourgeois society and the tendency to turn the masses of workers into proletarians. In doing so, he hit the nail on the head, capturing the contradiction that was historically unfolding, which turned from a minor ailment in Sismondi's time into a dangerous disease. It would not be an exaggeration to say that thousands, perhaps tens of thousands of works in the literature of political economy are devoted to the problem of economic crises. Sismondi's works did not get lost in this mass. Of course, Sismondi did not solve the problem of crises. But the fact that he raised it (in 1819!) was a major step forward compared to his contemporaries.
For Ricardo and his followers, the economic process was an endless series of equilibrium states; they were interested precisely in these states, and they essentially ignored transitions. Sismondi, on the other hand, stated that these transitions are not smooth adjustments but acute crises, and it is precisely the mechanism of these crises that is important for science.
Sismondi's model can be summarized as follows. Since profit is the driving force and goal of production, capitalists seek to extract as much profit as possible from their workers. Due to natural laws of population growth (Sismondi mainly followed Malthus), the supply of labor chronically exceeds demand, allowing capitalists to keep wages at a starvation level. In order to survive, workers are forced to work, as Sismondi noted, 12-14 hours a day. The purchasing power of these proletarians is extremely low and limited to small quantities of basic necessities. Meanwhile, their labor is capable of producing more and more goods. The introduction of machines only exacerbates the disproportion: they increase labor productivity and simultaneously displace workers. As a result, more and more social labor is engaged in the production of luxury goods for the rich. However, the demand of the latter for luxury goods is limited and unstable. Hence, almost without intermediate links in Sismondi's logic, the inevitability of crises of overproduction is deduced.
From this, the remedies that Sismondi offers can be derived. A society in which more or less pure capitalism exists and two classes prevail - capitalists and wage laborers - is doomed to severe crises. Sismondi seeks salvation, like Malthus, in third parties - intermediate classes and strata. However, for Sismondi, unlike Malthus, these are primarily small-scale producers - peasants, craftsmen, artisans.
Sismondi demanded extensive state intervention in economic life. He proposed a series of measures that at the time seemed dangerously socialist but are now quite acceptable: social insurance and provisions for workers, workers' participation in the profits of enterprises, etc. These sections of Sismondi's book are interesting from a contemporary point of view.