A minor modification of this page was done: 14 Feb. 2009

The Original "Third Way" Political Economist
(and how the extension of his thoughts leads to a modern, alternative economic paradigm)
Drawn Portrait of Sismondi     Bibliography: of his main works on Political Economy

Tableau de l'agriculture Toscane; Geneva, 1801
De la Richesse commerciale; 2 Vols. Geneva, 1803*   *All these Google downloads are unfortunately incomplete (Vol. II only)
Nouveaux Principes d'Économie Politique; 2 Vols., Paris, 1819.* (*Vol. I only)   2e éd. Paris, 1827*  (*Vol. II only)
Études sur l'Économie Politique; 2 Vols., Bruxelles, 1837-8
Political Economy, and the Philosophy of the Government; a collection of writings translated by F.A.M.A. Mignet, London, 1847
Political Economy; an A.M. Kelley Reprint of an 1815 Encyclopedia article, New York, 1966

SISMONDI

In spite of going quite a bit beyond him in the second half of this page, this site remains dedicated to a tragically almost ignored follower of Adam Smith, named: Jean-Charles Léonard Simonde de Sismondi (1773-1842), Sismondi for short. For he is, and will always be, the giant on whose shoulders I was able to stand. While Ricardo and, later thanks to Keynes, Malthus received all the credit for having advanced on the ideas of their illustrious predecessor, respectively founding the orthodox and heterodox schools of thought; Sismondi, in spite of being the originator of more valid economic ideas than both of them combined, has never received the credit he deserves. To a large degree, I believe, this remains a mystery; even though some telling reasons for this, no doubt are detectable.
First, because his theory was inherently dynamic, not only his contemporaries, all steeped in a static approach, had no idea on how to deal with his concepts on the level it commanded; but, to the extent that his dynamic model plays havoc with the conventional assumption of economic determinacy, this still holds true for modern English interpreters of his works as well1. Furthermore, even the belated acknowledgements of Sismondi's innovative dynamic approach, with some notable exceptions2, all published in French3; in my opinion, by enlarge yet also suffer from the inability of its authors to dispose of deeply ingrained deterministic blinders, while imparting a mathematical exactness to sismondian analysis that he himself strongly denied the existence of.
Second, an article written for the Edinburgh Encyclopedia in 1815, although in the English speaking world generally understood to be an abridged version of his magnum opus first published in 1819, is almost totally devoid of its essence.
Third, here are some of his own ideas regarding this neglect, as expressed in the preface4 of the second edition of his main work. And finally, my own take on the main reason for all of this is that in spite of its title, Sismondi himself did not fully appreciate the fundamental difference between the formal part of his 1803 and at least some significant portions of his colloquial 1819 approach, never could properly explain it; and that he therefore often seemed too ambiguous to be taken seriously, in his quest to overtake the reigning establishment.

So why designating the ignoring of Sismondi's economic ideas as tragic? By far the greater part of historical suffering these past couple of centuries has been the result of a misinterpretation of economics. All dominant socio-economic "-isms": capitalism, communism, fascism, you name it, profess to hold the key to the cornucopia, with powerful forces within those movements forsaking large segments of the population perceived to stand in the way of that end. Sismondi was a "Third Way" (political) economist in spirit, long before Marx founded communism in response to unbridled capitalism, as a so-called second way. And it could even be said that instead of Marx being the original thinker, he simply appropriated crucial sismondian terminology(1b), meant to help palliate the vicious conditions so common during the mid industrial revolution period, while subsequently putting his own stamp on it by radicalizing Sismondi's reasoning. Furthermore it could be argued, that most wars would never have started if a just, ideology-free economic solution had been within the grasp of policy-makers world-wide since Sismondi's time.

But, blissfully unaware of a somewhat similar endeavour underway elsewhere(1b), on the principle of better late than never and in an effort to try to get rid of persistent old ideas inhabiting every nook and cranny not only of economists' but lay-persons' minds as well, I set out to translate the most relevant portions of Sismondi's magnum opus "Nouveaux Principes d'Économie Politique" (2e éd. Paris 1826-7); whose espoused principles conceived almost two centuries ago now, remain surprisingly new. Rather heavily annotated in places where this is deemed pertinent; it not only strives to stress the original indeterminacy slant of sismondian thinking, but is also meant to lay the foundation for a totally different (non-deterministic) economics than is taught at present. Consequently thereby straightening out the notion, that after having advanced algebraic notations of lagged aggregate equilibrium income already in 1803(3d), that are fully in line with those of modern post-Keynesians; Sismondi's later theorizing is not inexplicably retrogressive(2c), but progressive and truly unique in its attempt to go beyond even the keynesian disequilibrium economics of over a century later. This translation's ultimate purport therefore, is to show that the abrogation of classical economics by the marginalists of the late 19th century, was wholly unnecessary to put a close to classic political economic thinking, and a waste of time to say the least; as such it not only differs from Richard Hyse's contemporary rendition(1b) as far as its annotations are concerned, but a liberal use of modern synonyms makes it in my opinion a far easier read.

  

Noted References:
1a.) Mao-Lan Tuan, Simonde de Sismondi as an Economist; Columbia University Press, New York, 1927.
1b.) J.C.L. Simonde de Sismondi, NEW PRINCIPLES OF POLITICAL ECONOMY, of Wealth in its Relation to Population. Translated and annotated by Richard Hyse. Transaction Publishers; New Brunswick, (N.J.) 1991.
2a.) A. Amonn, Simonde de Sismondi, Als National Oekonom. Francke Verlag, Bern; 2-Vol's 1945-9.
2b.) J. A. Schumpeter, History of Economic Analysis. London: George Allen and Unwin, 1954. pp. 493-6.
2c.) Thomas Sowell, Sismondi: A Neglected Pioneer; History of Political Economy. Spring 1972.
3a.) J. Weiller, Préface des Nouveaux Principes d'Économie Politique, J. C. L. Simonde de Sismondi. éd. Calmann-Lévy, 1971.
3b.) A. Parguez, "Sismondi et la théorie du déséquilibre macro-économique" Revue économique, 05, 1973.
3c.) Jean Weiller,  Société des amis de Sismondi, "Histoire, socialisme et critique de l'économie politique"; ISMEA Paris, 1976.
3d.) R. Arena, "Réflexions sur l'analyse sismondienne de la formation des prix"; Revue économique, 01, 1982. pp.132-149
4.) Reprinted in the "Revue Encyclopédique", Sept. 1826, and translated by F. Mignet, 1847

Once this work is read and the mind opened up, if not cleared of the countless misconceptions regarding commonly held economic notions, at least be made aware of a potentially valid alternative point of view; a follow up is meant to continue from where Sismondi left off, in a quest to make economics an open book. By that I mean that its principles, as developed in a logically constructed thesis, could then be used to furnish answers to any real-world economic problem that might arise, rather than inherently containing all those possible answers already. For the real-world economy, being man-made and as such very much subject to human foibles at all times, requires a synthesis of its thesis and collective antinomies in order to understand it, and promulgate an equitable progression in a non-utopian setting.

A fair bit of work in that regard has already been done; but, since virtually all economic concepts will need to be restated, its task is huge and I wouldn't mind some collaboration. Aside from writing a 35+ page outline some time ago, that throws the validity of the orthodox population endogeneity axiom into doubt; I have also started on a book, accumulating about a 100 pages so far. Tentatively it is called: AN APPROACH TO A "THIRD WAY": An Alternate Economic Paradigm for the 21st Century. Thus if you have some background preferably, though not necessarily, in heterodox economics, and you are also willing to redirect the better part of the hard earned intellectual investment made in your formative years; please consider getting in touch with me, your expertise is sorely needed. I also would be willing to start a Google discussion group if the interest warrants it.

To give you a starting idea what this alternative approach to uncovering the true nature of our economy is all about, below are some of its tenets. These are all deductively determined in terms of three high level axioms; but unlike all the other approaches from the earliest pamphleteers till modern theoreticians (with the possible exception of Sismondi), it doesn't take an existing economy as point of departure. Instead, its axioms derive from the pre-analytical position, of how an economy would be organized if it did not yet exist at all. In other words, how a hypothetical society with the knowledge of modern human beings, but simply living of the land and obtaining its standard of living from Nature, would organize an economy to add to its existing living standard with a minimum of waste (in supra-economic terms). These additions would thereby necessarily have to be valued in terms, identical to the values of the natural provisions currently being enjoyed, for otherwise they could not be added as such; which means that any notionally expressed values of the contemplated system, would have to annihilate one another at the point of its fruits becoming additional to a currently enjoyed standard of living.
The essence of the above epitome is that humanity, its motives and utilities, and of course natural resources, exist exogenous to the economic system of its creation. So with the economy strictly a means to an exogenous end, being subject to and driven by exogenous impulses, whereby determinate economic own-values by definition are ruled out; their very annihilation instead determines what these values had been, thus making its economics non-deterministic. Or, to put it mathematically, the macroeconomy's determinant matrix, though the inverse of its supply matrix, is non-contemporaneous with the former, complex, and incompatible with fixed-coefficient micro values; the latter in its terms are indeterminate in time, whose unit of account is elastic due to its value being induced exogenously, and only become determinate bit by bit over time. The cardinal economic question is under what conditions do these non-fixed in time coefficients fulfill their determinant task; and which kind of, if any, intervention is required for its optimality.
General equilibrium modeling on the other hand, through base assertions of micro values that are endogenously fixed as "real" in time, not only defines away the possible existence of a higher level truth, but turns the entire process into a trivial tautology. An integrated falsifiable theory of the unit of account's value would be required, prior to modeling in its terms.
If this alternate methodology is not only logically valid at a high level of generality, but also relevant in uncovering during "normal" times obfuscated economic consequences (read: outside of crises, when it doesn't seem to matter in the least whether values are determinate or not); virtually the entire body of orthodoxy and a substantial portion of heterodox thought would be rendered inferior and suspect, by being mutually exclusive.  So here goes...

1. The economy functions non-linearly, contains no paradoxes, yet is sequentially causative (non of this "simultaneous determination" sophistry of mainstream economics); with all supply-side activity keeping it in disequilibrium as its normal state of affairs, and the demand-side only potentially and non-contemporaneously pulling it back towards, though without ever reaching, a true equilibrium in time.

2. The optimal distribution of income has a pure economic meaning, and is not pushed away into some irrelevant ethical realm; as the consequence of a rising inequality in remuneration, while merely asset inflationary for some, diminishes real terms living standard achievability for the rest. Money is no longer neutral.  

3. Monetary phenomena as well as the nature of capital are derived from axioms rather than inductively determined; imparting a quantum leap advancement over the Keynesian critique of money-neutral (neo-)classical economics, through allowing comprehensive theories of inflation, growth, and profit.

4. As a "true" economic system, it is able to unify all its micro with its macro principles, whereby it refutes "the whole is the sum of its parts" of conventional microeconomic theory; the parts having been identified as an agglomeration of abstractions yet in search of determinants, and in no position to be added up at any time.

5. It is stimulated through direct spending and expertise underwritten "new" income, and not necessarily by the saving/investing of "old" income; as the latter may lead to a situation where claims to output far exceed that output, without such inflation being at all detectable by claim-holders in any economic fashion whatsoever.

6. It allows a level of aggregate profit realization that is totally independent of the remuneration rate of wage earners, but results instead from the combination of [more or less ostentatious] lifestyles of profit earners and a decrease in unemployment.

7. It is vertically integrated, with the direct spending of profit income at the retail level, ex post "closing" all economic pursuits, which happens through ever diminishing numerically interlocking feedback loops; thus not only ruling out neat (ex ante fixed) econometric coefficients but a static determinacy as well, and whereby a multiplier of sorts enables the distribution of achieved growth in final output.

8. It not only disregards any determinacy in its capital values and/or equity; but, by being designated as valid claims to an eventual share in economy transcendent standard of living, the economy is in debt to its claim-holders; whose resolution requires the means of others over time. This puts the validation of all economic activity into the realm of distribution, and not into the one of production; and makes the satiation for produced output, and not its unbounded wants, the ultimate determinant of economic well-being.

8a. Therefore capitalism thought to be an own-value creating entity, is unable to produce an appropriatable surplus in its conventional meaning, (all financing being in fact deficit financing!) and becomes invalid; but its component free-enterprise, having humanistic criteria determining the rightful development of its "free" natural resources, remains very much valid indeed.

9. It is unable to lower its already achieved standard of living, unless this either: actively, however unwittingly, is induced by an in essence inept but under current directives unduly powerful, "economic man", or the population outruns the availability of natural resources.

10. Not only is it ideologically neutral, but by enlarge it is also readily understandable to anyone of average intelligence; for, in spite of being non-deterministic, it is far easier to understand than conventional economics.

...  It possesses many more surprising attributes as most of them, just like the above, are bearing virtually no resemblance at all to the way the economy is thought to function, according to present deterministic (equilibrium) theories. And thereby opens up the possibility to resurrect the definition of the term "Third Way" as a fundamentally different economic approach; underpinning a variety of reformative ideas, rather than just joining the chorus of progressive thinkers.

If this all sounds interesting enough but you are still not sure it's not the work of a crank, why not download my translation of Sismondi's N.P.; that should be sufficiently informative to make up your mind one way or the other. If once having read Sismondi and thirsting for more, but you're unable to read beyond a smidgen of French, I was able to scan, OCR, and babelfish translate his "Essays in Political Economy" , so this too is available for download; with a proper translation perhaps to come later. Furthermore, a most favourable review of Sismondi's thoughts from a marxian perspective can be downloaded here.
So to all you disgruntled economists out there, fed up with orthodox policy and crisis management agendas, but having been told ad nauseam that it takes a system to beat a system; this may just be it!

John S. Vertegaal       vertegaa@vcn.bc.ca
I'm getting a lot of spam on this address, that is deleted without opening. Thus if you decide to contact me, please put "Sismondi follow-up" in the subject line, so I don't inadvertently delete your mail.