What is more, through the capitalization of interest, the position of the workers is steadily worsening each year, to the extent that if the analysis is followed through, around the seventh year we find that the entire initial contribution of the workers has passed as interest and profit into the hands of landowner-capitalist-businessmen…

Pierre-Joseph Proudhon
Letter No. 11
P.-J. Proudhon to F. Bastiat

This eleventh letter is tedious. After having explained that nobody is able to give a proper definition of capital and without giving one himself, Pierre-Joseph Proudhon abuses Bastiat orally, telling him that he doesn’t understand “anything of political economy”. In the meantime, he rants about what he calls demonstrations that, once again, are nothing more than assertions in which he manages to find absurd conclusions of the kind of today’s quote whereby all workers are ruined after seven years, which is not fully in line with reality.

Fortunately, I found in Joseph Schumpeter somebody who had spotted the issue before me, which allows me to express my thoughts by simply quoting the following sentences pertaining to Proudhon and found on page 457 of his History of Economic Analysis: “And we are interested in his economics only because it affords an excellent example of a type of reasoning that is distressingly frequent in a science without prestige: the type of reasoning that arrives, through complete inability to analyze, that is, to handle the tools of economic theory, at results that are no doubt absurd and fully recognised as such by the author. But the author, instead of inferring from this that there is something wrong with his methods, infers that there must be something wrong with the object of his research, so that his mistakes are, with the utmost confidence, promulgated as results.”

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