VI
LOUIS BLANC’S DISTINCTION of capital and capitalists from capitalism as such makes it possible to bring more precision to bear on the mixture of continuity and discontinuity involved in the concepts of both capitalism and socialism as they came to be formulated before and after the revolutions of 1848. As Blanc described the two concepts, capitalism was a system in which capital was privately owned, while socialism was one in which capital was publicly owned. Although his version of socialism was not particularly different from other proposals to establish a new type of interrelationship of capital, capitalism, and the division of labour, it began to grow more prominent both because of Blanc’s established reputation as the author of The Organisation of Labour and because of his strong endorsement of the relationship between the public ownership of capital and the concept of the right to work. It took some time for Blanc to establish his position. Although The Organisation of Labour was reprinted several times after its first publication in 1839, it was only after Blanc’s confrontation with Lamartine that he began to make a strong distinction between capital and capitalism and call for the public ownership of capital as a simultaneous solution to the problem of capitalism and the problem of the right to work.
The proposal was an unusual mixture of the old and the new. Capitalism, at least as the term was used in the early 1830s, referred primarily to the eighteenth-century system of war finance, when states and their rulers borrowed large sums of money to fund the sudden, often massive increases in government expenditure caused by war or the threat of war. That practice continued to inform the early uses of the term “capitalism” in the first three decades of the nineteenth century when, as a number of historians have shown, defence expenditure continued to account for the largest share of state expenditure. In this sense, and until the fourth decade of the nineteenth century, public debt was usually seen as the other side of warfare. With Blanc, however, public debt became the other side of welfare. Intermittently, but substantially, the switch from warfare to welfare has become the hallmark of state expenditure ever since the age of Louis Blanc.
There was, however, an exception. In keeping with at least one significant line of eighteenth-century thought, using public debt to fund the switch from warfare to welfare was still compatible with this side of eighteenth-century usage. This assessment of the potential of public debt was made very early in the eighteenth century by the Scottish political economist and financier John Law in the elaborate scheme that he devised to use a combination of a public bank, a state-funded paper currency, and a huge trading company to generate a stream of income that was designed to lower interest rates and favour investment in agriculture, industry, and trade, with the longer-term result that their profitability could then be used to liquidate large swathes of private debt. According to Law, public debt could, paradoxically, generate private prosperity. Although Law’s system failed catastrophically, the idea of turning public debt into an engine of growth had an enduring fascination. It was most visible in the eighteenth century in the thought of the Scottish Jacobite political economist Sir James Steuart and his many French followers in the early years of the French Revolution. It continued into the second and third decades of the nineteenth century when Law’s ideas again began to be widely described and discussed, particularly in France before and after the revolution of July 1830. In this respect, Louis Blanc’s idea of relying on capital, because it was publicly owned, to eliminate capitalism, because it was privately owned, was the direct descendant of Law’s system.
In another, more important respect, however, Blanc’s version of socialism was very different from eighteenth-century usage. This was because substituting capital for capitalism still had to address the problem of the right to work. The right to work was, certainly, connected to the subjects of capital and capitalism, but it was also connected to the division of labour. But the division of labour was not necessarily a local or even a national problem because it was also international or global. In this context, Lamartine and even Bastiat had a point. Making the right to work a real right, a right that was perfect in the old, seventeenth-century sense of the term because it was a right that would be enforced by the law and the state, amounted to imposing an intrinsically undefinable constraint not only on the myriads of occupations and activities within any single economy but also on the structure, composition, and viability of every economy in an economically divided world. Establishing and maintaining the right to work under these conditions could mean, very literally, turning socialism into national socialism. With this as its possible outcome it is not clear, as Lamartine insisted vociferously, whether the right to work was a promise or a threat.
The real problem, as should now be clear, was not capital or capitalism, but the division of labour. There were many possible alternatives to capitalism, some more viable than others, but the range of alternatives to the division of labour is not all that easy to see. In part this is because the solutions to the two problems are different. As Louis Blanc presented it, dealing with the problem of capitalism called for centralising the ownership of capital. Instead of the many different owners of capital responsible for the existence of capitalism, there could be a single, state-based, owner of capital that would be responsible for welfare just as eighteenth-century states like Britain had been responsible for warfare. But the problem of the division of labour was a different type of problem. Here, centralisation was as likely to magnify as to eliminate the problem, not only because of the difficulties involved in identifying and allocating resources and activities within any particular economy, but also because any local and particular set of choices and decisions would be subject to the consequences of many other, less controllable but equally local, choices and decisions. Ownership is simple and binary, but decision making is complicated and multidimensional because it usually involves comparisons between things separated by time and space. Solutions to the problem of capitalism are, therefore, not necessarily solutions to the problem of the division of labour. There are, therefore, good analytical and historical reasons to think that Adam Smith had something quite precise in mind in giving the name “commercial society” to the type of society that came after hunting, pastoral, and agricultural societies.
The significance of the distinction between capitalism and commercial society is also relevant to the problem of putative solutions. Here, the dilemma that Lamartine was one of the first to highlight is still salient. If the nationalisation of capital was a solution to the problem of capitalism but did not have much purchase on the problem of the division of labour, while establishing the right to work was a solution to the problem of the division of labour but did not have much purchase on the problem of capitalism, it begins to look as if something different would have to be found. If, in the second place, the problem of capital began as a problem of war and, in this guise, was as familiar in Adam Smith’s day as the problem of the division of labour had become by the time that it was addressed by Lamartine and Louis Blanc, then there is good reason to think that, before they were conflated under the broad and misleading rubric of capitalism, the two problems were once discussed separately. There is, in other words, good reason to think that the first step towards clarifying the problem of capitalism is to start with two problems rather than one. Starting with two problems also means thinking about two solutions rather than one, a solution to the problem of capital and the ownership of capital in the first place and, in the second place, a different solution to the problem of the division of labour and markets. The aim of the second part of this essay is to begin to describe what these were. Here too, the starting point was supplied by Adam Smith because, as several of Smith’s later readers went to some lengths to point out, Smith’s concept of political economy was based on both a theory of justice on the one hand and, on the other, a theory of expediency. Together, they amounted to a new and different approach to the subject of politics in commercial society.