Productivity versus profitability: Adolphe Landry, marginalism and socialism

Born in 1874, Adolphe Landry studied philosophy in the 1890s at the Ecole Nor­male Superieure (ENS) in Paris. During his studies there, he became attracted to socialist ideals, probably under the influence of Lucien Herr, the Ecole’s char­ismatic librarian and a disseminator of socialist ideas.

The influence of Otto Effertz: productivity, profitability and natural resources

Landry encountered how to address these issues when he attended Charles Andler ’s lectures on the “Decomposition du marxisme” at the College Libre des Sciences Sociales in 1896-97. Some of these lectures (Landry 1906, 602) were on the Ger­man philosopher and economist Otto Effertz (1856-1921), whose early socialist theories had been presented in numerous articles since the publication of Arbeit und Boden (Effertz 1889), revised and abridged in a French translation (Effertz 1893-94). Effertz spent many years of his life in France along with a large number of exiled socialists who turned Paris into an internationalised, militant and erudite hub of radical left-wing thought (Rappoport 1991). Effertz enjoyed the support of economists such as Charles Gide and Landry himself when, penniless, he returned to Paris before World War I after spending some years in Mexico.

Landry’s initial economic research focused on the question of the production of wealth and the ways to increase the material well-being of all: “the problem of maximum productivity, in other words the problem of the rational organisation of production, is... in a sense the unique problem of political economy considered as a normative science” (1901a, 252). However, “losses... necessarily result, for society, from the present system of ownership” (1901a, vii). In short, Landry’s aim was to show that private property and its expansion in modern society was “con­trary to the public interest” (1901a, vii) since “the producer is not always interested in using his property or regulating his production according to the social interest” (1901a, viii). There was, as Effertz had observed, a conflict between “profitabil­ity”, “the principle of private economy” and “productivity” (1901a, viii), a prin­ciple of social economy. Profitability was a principle of private economy in the sense that it depended on the strict maximisation of the entrepreneur’s income and not on the maximisation of production. Nevertheless, although production was no more than an adjustment variable in the entrepreneur’s calculation and not a social goal, genuine productivity should be understood in terms of the social interest in maximising the creation of goods and wealth for the benefit of all.

Landry’s ambition was to “find the distribution formula which would bring about the highest level of social welfare”, in other words, which would promote productivity over profitability (Landry 1901a, viii). Other economists paved the way for this investigation, including Cournot, who had adopted the notion of “inventory value” to describe the profitability mechanism - a value that equals, for each possible price of a good, the product of that price and the corresponding

and interest found more in his work, L’interet du capital (Landry 1904) than in his thesis (Landry 1901a).

A large number of phenomena made the conflict between productivity and prof­itability more complex, whatever the type of market: the variability of production costs depended on the quantities produced, for example, or “the mutual relations of producers” (to use Cournot’s expression borrowed by Landry) that assumed that the price of a good was determined in part by the strategies of those who supplied intermediate goods or services (e.g. transport) and who sought to maximise their own income in the process. Landry believed it was also necessary to take into account the social morphology produced by private ownership that, in a vicious circle, reinforced its shortcomings and perverse effects: within this framework, fortunes were inevitably unequal, so that “some can offer much, and others little for the same goods, hence the fact that profitable limits on production become possible for a very large quantity of goods” (Landry 1901a, 25).

Landry found in Effertz’s work if not entirely satisfactory responses to the social question, at least a way of formulating in economic terms the problems which char­acterised it. He sought to expand and improve upon Effertz’s claims. According to Effertz, the way in which we organise production and exchange goods must take into account wealth’s dual characterisation by its “primary factors”, labour and land (or natural resources, as we would say today) (Landry 1906, 604). This meant measuring, in particular, what Effertz called the labour/land quotient (the ratio of nature to labour in each good). The greater the “natural” proportion, the closer the good was to a “food product”; conversely, when the proportional input of labour dominated in the constitution of a good’s value, the latter was considered a “prod­uct of culture” as opposed to the agricultural “products of nature”.

While Landry understood the economy to be concerned with production and humankind’s relationship to matter through transformative work, he also believed that its sphere encompassed questions of exchange and acquisition. A society can “obtain goods only through production”, but the same was not true of individuals: “individuals do not need to produce goods; they need only acquire them” (Landry 1906, 606). Antagonisms emerged from interpersonal relations, taking the form of power struggles (for the exploitation of some people by others) or struggles for destruction (for the elimination of some people by others). Symbiosis, competition and parasitism were the forms these antagonistic interactions took:

1° either each of the two adversaries struggles to dominate the other, and there is symbiosis; 2° or each of the two adversaries struggles to destroy the other, and there is competition; or 3° one of the adversaries wishes to dominate the other and the latter, for his part, seeks to destroy the former, and there is parasitism.

(Landry 1906, 609)

Therefore, an appropriate symbiosis between capitalists and workers needed to be found insofar as if the capitalist destroyed the last worker, this would endanger his existence, just as the elimination of capital would endanger the possibility of work for the worker.

Characterising products (their labour/land quotient) involved measuring dis­tinct forms of relations insofar as the relation to land was one of exclusion (what I consume from nature cannot be consumed by another) whereas the relation to labour was one of rivalry/co-operation (what I consume from labour involved a rival or co-operative relation with others). Thus, consuming a “product of culture” meant dominating the other; consuming a “product of nature” involved excluding or destroying the other. For Effertz, then, “any man, if he wishes to live morally, should ask himself when he consumes goods, what these goods cost to produce” (Landry 1906, 611). In other words, he needed to ask himself to what extent the goods to be consumed depended on nature or labour, given that to consume labour or natural resources implied some form of consumption in terms of what it pre­vented others from doing or what it enabled them to do. Landry concluded from Effertz’s analysis that:

Ideally, each of us should consume as labour only a quantity equal to that which we supply, abstaining, moreover, from any consumption that would involve the producer in the loss of his health or honour. And we should only consume as land the quotient of the total land divided by the population, or better still a proportionate share to the labour we supply.

(1906, 611-12)

Thus, determining the value content in exchange implied regulating resource extraction in accordance with the total given population and its capacity to exploit these resources (Vatin 2013). If individuals in such a population were in a position to maximise their interest to the detriment of social utility and the common good, competition would exacerbate rather than mitigate antagonisms.

Counterproductive competition

The question of the antagonism between individuals became even more pertinent when seen from the perspective of complementary antagonisms pitting individuals against society, or profitability against productivity. If the theoretical aim of a well- organised society was to increase total social wealth to its maximum, then society must eliminate all forms of waste in labour or land caused by individual private owners’ quest for maximum net income. From this perspective, it was important for socialist economists not to consign Marx to oblivion (although sometimes it seemed as if Landry were tempted to do so) but to redefine value and put forward a more comprehensive theory of value than Marx had done. The labour theory of value had unfortunately left “the notion of utility in the shadows” (Landry 1901a, 255). Although Marx showed that “a thing that has cost labour is worth nothing if it is without utility” (Landry 1901a, 255n), he regrettably did not draw from this statement any insights into how to formulate a more compelling theory of value. Nonetheless, Marx’s remark suggested that “[t]he problem... exists, even for followers of Marxist theory” (Landry 1901a, 255n). Utility made it possible to homogenise different aspects of the question, and to define productivity not in a purely physical way but rather in terms of (to use a later vocabulary) opportunity costs since, as Landry put it, “production [always] costs what it prevents from being produced” (Landry 1901a, 258):

In order to know the cost of a production, one should take into account the sum of the utilities which would be created by the labour necessary in this production if it were not spent in this way; ultimately, immediate consump­tion would be reduced whenever a momentary deprivation would seem to result in a greater increase of social income in the future. There is no need to speak of the expenditures that tend only to displace wealth: they would become impossible.... We could get closer and closer to this limit of maxi­mum production.

(Landry 1901a, 293)

However, this limit could only be reached by a public reorganisation of the econ­omy, protecting against too excessive an application of the principles of private economy. Attentive economists found numerous examples of this in modern society - forest usage and rail transport being the most obvious examples. Landry quoted Cournot, who in his Revue sommaire des doctrines economiques (Cournot 1877, 36) had observed that:

the management that is most likely to produce the greatest annual output in cubic metres of wood, and therefore the most useful to society, and the most advantageous from the point of view of exploiting the resources of the atmosphere and the soil in the interests of mankind, is a centuries-old man­agement that no private individual could adapt to.

(Landry 1901a, 246)

But there was a long way to go from this observation to the practical resolution it called for. Landry cited, for example, the Theorie de l'amenagement des forets by Louis Noirot-Bonnet (1842). Noirot-Bonnet had noted that “production in kind and production in money are so repulsive to each other that one of these elements can­not rise without the other immediately obeying an absolutely opposite tendency”. Nonetheless, having established this, he did not call for a reform of forest owner­ship and management (1901a, 245, note 1).

In contrast to Noirot-Bonnet, Landry argued that private property fostered com­petition, which in no way corresponded to the ideal of harmonious private interests. Drawing from the Saint-Simonianism which inspired much of early nineteenth­century socialist thought, he explicitly contrasted the organising potential of social­ism with regimes of “formal freedom” (1901a, 487). But, by defining socialism as “social productivity” (1901a, 487), Landry addressed the problems not only of his own era but also (albeit without seeing it with the same lucidity which led him to criticise wasted labour) of ours. His treatment of the profitability of the soil invites us to think about what a socialist economy of nature might look like, one which, in the late nineteenth century, was partly rendered invisible by the Saint-Simonian legacy of identifying socialism chiefly with an economy of production.

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