Chapter X: Seventh Period: Credit

Chapter X: Seventh Period — Credit

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§I Origin and Development of the Idea of Credit

The point of departure of credit is money.

We have seen in chapter II how by a combination of happy circumstances, the value of gold and silver having been the first to be constituted, money became the symbol of all dubious and fluctuating values; that is to say, those not socially constituted or not officially established. It was there demonstrated how, if the value of all products were once determined and rendered highly exchangeable, acceptable, in a word, like money, in all payments, society would by that single fact arrive at the highest degree of economic development of which it is capable from the commercial point of view. Social economy would no longer be then, as it is today, in relation to exchange, in a state of simple formation; it would be in a state of perfection. Production would not be definitely organised, but exchange and circulation would, and it would suffice for the worker to produce, to produce incessantly, either in reducing his costs or in dividing his labour and discovering better processes, inventing new objects of consumption, opposing his rivals or resisting their attacks, for acquiring wealth and assuring his well being.

In the same chapter, we have pointed out the lack of intelligence of socialists in regard to money; and we have shown in going back, to the origin of this contrivance, that what we had to repress in the precious metals is not the use, but the privilege.

Indeed, in all possible societies, even communistic, there is need for a measure of exchange, otherwise either the right of the producer, or that of the consumer, is affected. Until values are generally constituted by some method of association, there is need that one certain product, selected from among all others, whose value seems to be the most authentic, the best defined, the least alterable, and which combines with this advantage durability and portability, be taken for the symbol, that is to say, both for the instrument of circulation and the standard of other values.

It is, then, inevitable that this truly privileged product should become the object of all the ambitions, the paradise in perspective of the worker, the palladium of monopoly; that, notwithstanding all warnings, this precious talisman should circulate from hand to hand, concealed from a jealous authority; that the greater part of the precious metals, serving as specie, should be thus diverted from their real use and become, in the form of money, idle capital, wealth outside of consumption; that, in this capacity as instrument of exchange, gold should be taken in its turn for an object of speculation and serve as the basis of a great commerce; that, finally, protected by public opinion, loaded with public favour, it should obtain power, and by the same stroke destroy the social fabric! The means of destroying this formidable force does not lie in the destruction of the medium — I almost said the depository; it is in generalising its principle. All these propositions are admitted as well demonstrated, and as strictly linked together, as the theorems of geometry.

Gold and silver, that is to say, the merchandise whose value was first constituted, being therefore taken as the standard of other values and as universal instruments of exchange, all commerce, all consumption, all production are dependent on them. Gold and silver, precisely because they have acquired in the highest degree the character of sociality and of justice, have become synonyms of power, of royalty, almost of divinity.

Gold and silver represent commercial life, intelligence and virtue. A chest full of specie is an arch saint, a magic urn that brings wealth, pleasure and glory to those who have the power to draw those things from it. If all the products of labour had the same exchange value as money, all the workers would enjoy the same advantages as the holders of money: everyone would have, in his ability to produce, an inexhaustible source of wealth. But the religion of money cannot be abolished, or, to better express it, the general constitution of values cannot function except by an effort of reason and of justice; until then it is inevitable that, as in polite society, the possession of money is a sure sign of wealth, the absence of money is an almost certain sign of poverty. Money being, then, the only value that bears the stamp of society, the only merchandise standard that is current in commerce, money is, according to the general view, the idol of the human species. The imagination attributing to the metal that which is the effect of the collective thought toward the metal, every one, instead of seeking well being at its true source, — that is to say, in the socialisation of all values, in the continuous creation of new monetary figures — busies himself exclusively in acquiring money, money, always money.

It was to respond to this universal demand for money, which was really but a demand for subsistence, a demand for exchange and for output, that, instead of aiming directly at the mark, a stop was made at the first term of the series, and, instead of making successively of each product a new money, the one thought was to multiply metallic money as much as possible, first by perfecting the process of its manufacture, then, by the facility of its emission, and finally by fictions. Obviously it was to mistake the principle of wealth, the character of money, the object of labour and the condition of exchange; it was a retrogression in civilisation to reconstitute value in the monarchical regime that was already beginning to change. Such is the mother idea which gave birth to the institutions of credit; and such is the fundamental prejudice, which error we need no longer demonstrate, which antagonises in their very conceptions all these institutions.

But, as we have often said, humanity, even when it yields to an imperfect idea, is not mistaken in its views. However, one sees, strange to say, that, in proceeding to the organisation of wealth by a retreat, it has operated as well, as usefully, as infallibly as possible, considering the condition of its evolutionary existence. The retrogressive organisation of credit as well as previous manifestations of economics, at the same time that it gave to industry new scope, had caused, it is true, an aggravation of poverty; but finally the social question appeared in a new light and the contradictions, better known today, give the hope of an immediate and complete solution.

Thus the ulterior object, hitherto unperceived, of credit is to constitute, with the aid and on the prototype of money, all the values still fluctuating whose immediate and avowed end is to furnish to that combination the supreme condition of order in society and of well being among the workers, by a still greater diffusion of metallic value. Money, the promoters of this new idea tell us, money is wealth; if then we can provide everybody with money, plenty of money, all will be rich: and it is by virtue of this syllogism that institutions of credit have developed everywhere.

But it is clear that, to the extent that the ulterior object of credit presents a logical, luminous and fruitful idea, conforms, in a word, to the law of progressive organisation, its immediate end, alone sought, alone desired, is full of illusion and, by its tendency toward the status quo, of perils. Since money as well as other merchandise is subject to the law of proportionality, if its quantity increases and if at the same time other products do not increase in proportion, money loses it value, and nothing, in the last analysis, is added to the social wealth; if, on the contrary, with specie production increasing everywhere, population following at the same rate, there is still no change in the respective position of the producers, in both cases, the solution required does not advance a single step. A priori, then, it is not true that the organisation of credit, in the terms in which it is proposed, contains the solution of the social problem.

After having related the development of and the reason for the existence of credit, we have to justify its appearance, that is to say, the rank to which it should be assigned in the category of science. It is here above all that we have to point out the lack of profundity and the incoherence of political economy.

Credit is at once the result and the contradiction of the theory of markets, since the last word, as we have seen, is the absolute freedom of trade.

I have said from the first that credit is the consequence of the theory of markets, and as such already contradictory.

At this point in this history of society, both real and fanciful, we have seen all the processes of organisation and the means of equilibrium tumble one upon the other and reproduce constantly, more arrogantly and more murderously than before, the antinomy of value. Arriving at the sixth phase of its evolution, social genius, obedient to the movement of expansion that pushes it, seeks abroad, in foreign commerce, the market, that is to say, the counterpoise which it lacks. Presently we shall see it, deceived in its hope, seek this counterpoise, this output, this guarantee of exchange that it must have at any price in domestic commerce, at home. By credit, society falls back in a manner on itself: it seems to have understood that production and consumption are for it identical and inadequate things; it is in itself, and not by indefinite ejaculations, that it ought to find the equilibrium.

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Credit is the canonisation of money, the declaration of its royalty over all products whatsoever. In consequence, credit is the most formal denial of free trade, a flagrant justification on the part of the economists, of the balance of trade. Let the economists learn, then, to generalise their ideas, and let them tell us why, if it is immaterial for one nation to pay for the goods which it buys with money or with its own products, it always has need of money? How can it be that a nation which works, exhausts itself? Why is there always a demand from it for the only product that it does not consume, that is to say, money? How all the subtleties conceived up to this day for supplying the lack of money, such as bills of exchange, bank paper, paper money, do nothing but interpret and make this need more evident?

In truth, the free trade fanaticism, which today distinguishes the sect of economists, is not understandable, aside from the extraordinary efforts by which it tries to propagate the commerce of money and to multiply credit institutions

What then, once more, is credit? It is, answers the theory, a release of engaged value, which permits the making of this same value, which before was sluggish, circulable; or, to speak a language more simple: credit is the advance made by a capitalist, against a deposit of values of difficult exchange, of the merchandise the most susceptible of being exchanged, in consequence the most precious of all money, money which holds in suspense all exchangeable values, and without which they would themselves be struck down by the interdiction; money which measures, dominates and subordinates all other products; money with which alone one discharges one’s debts and frees oneself from one’s obligations; money which assures nations, as well as individuals, well being and independence; money, finally, that not only is power, but liberty, equality, property, everything.

This is what the human species, by an unanimous consent, has understood; that which the economists know better than anyone, but what they never have ceased combating with a comical stubbornness, to sustain I know not what fantasy of liberalism in contradiction to their most loudly confessed principles. Credit was invented to assist labour, to bring into the hands of the worker the instrument that destroys him, money: and they proceed from there to maintain that, among manufacturing nations, the advantage of money in exchange is nothing; but that it is insignificant in balancing their accounts in merchandise or specie: that it is low prices alone that they have to consider!

But if it is true that, in international commerce, the precious metals have lost their preponderance, this means that, in international commerce, all values have reached the same degree of determination, and like money, are equally acceptable; in other words, that the law of exchange is found, and labour is organised, among the various nations. Then, let them formulate this law; let them explain that organisation, and, instead of talking of credit and forging new chains for the labouring class, let them teach, by an application of the principle of international equilibrium, all the manufacturers who ruin themselves because they are not exchanging, teach those workers, who die of hunger because they have no work, how their products, how the work of their hands are values which they can use for their consumption, as well as if they were bank-bills or money. What! this principle which, following the economists, rules the trade of nations, is inapplicable to private industry! How is this? Why? Some reasons, some proofs, in the name of God.

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