product is in itself unjust.[400] His point of view is not unlike that adopted at a later period by the German socialists when they sought to justify their social policy. But although Sismondi’s criticism does not amount to socialism, he causes considerable consternation among Liberals by the telling manner in which he shows the falsity of the theory affirmed by the Physiocrats and demonstrated by Smith, namely the natural identity of individual and general interests. It is true that Smith hesitated to apply it except to production. But Sismondi’s peculiar merit lies in the fact that he examined its content in relation to distribution. Sismondi finds himself forced by mere examination of the facts to dispute the very basis of economic Liberalism. Curiously enough, he seems surprised at his own conclusions. _A priori_ the theory of identity of interests appeared to him true, for does it not, in fact, rest upon the two ideas, (1) that “each knows his own interest better than an ignorant or a careless Government ever can,” and (2) that “the sum of the interests of each equals the interests of all”? “Both axioms are true.”[401] Why then is the conclusion false? Here we touch the central theme of Sismondi’s system, the point where he leaves the purely economic ground to which the Classical writers had stuck and approaches new territory—the question of the distribution of property. Sismondi discovered the explanation of the contradiction which exists between private and general interests in the unequal distribution of property among men and the resulting unequal strength of the contracting parties.[402] III: THE DIVORCE OF LAND FROM LABOUR AS THE CAUSE OF PAUPERISM AND OF CRISES Sismondi was the first writer to give expression to the belief that industrial society tends to separate into two absolutely distinct classes—those who work and those who possess, or, as he often put it, the rich and the poor. Free competition hastens this separation, causing the disappearance of the intermediate ranks and leaving only the proletariat and the capitalist.[403] “The intermediate classes,” says he somewhere, “have all disappeared: the small proprietor and the peasant farmer of the plain, the master craftsman, the small manufacturer, and the village tradesmen, all have failed to withstand the competition of those who control great industries. Society no longer has any room save for the great capitalist and his hireling, and we are witnessing the frightfully rapid growth of a hitherto unknown class—of men who have absolutely no property.”[404] “We are living under entirely new conditions of which as yet we have no experience. All property tends to be divorced from every kind of toil, and therein is the sign of danger.”[405]