** `* . . ` ..
2)

ARTEE
LIBRARY
VERITAS
OF THE
UNIVERSITY OF MICHIGAN
FQUAERIS PEKTI
FROM THE LIBRARY OF
Professor Karl Heinrich Rau
OF THE UniversitY OF HEIDELBERG
PRESENTED TO THE
UNIVERSITY OF MICHIGAN
BY
Mr. Philo Parsons
OF DETROIT
1871
2
1
125
:
Felt the
In fessor RaceLa
.
With the author's compliments à regarde
AN
10
42
University of
PARSONS LIBRARY
OUTLINE OF THE SCIENCE CHIGAN
OF
POLITICAL ECONOM Y.
BY
NASSAU W. SENIOR, A.M.,
FORMERLY FELLOW OF MAGDALEN COLLEGE, AND PROFESSOR OF POLITICAL ECONOMY, IN THE
UNIVERSITY OF OXFORD.
LONDON:
PRINTED BY W. CLOWES AND SONS, STAMFORD STREET.
1836.
م
A
5 May 205.5.
ADVERTISEMENT.
The following pages form the Article POLITICAL ECONOMY in the ENCYCLOPÆDIA
METROPOLITANA. A few Copies have been struck off separately for private distribution.
Political
of the
Science.
sense.
POLITICAL ECONOMY.
Definition of the Science.
Economy. We propose in the following Treatise to give an outline
of the Science which treats of the nature, the production,
Definition and the distribution of wealth. To that Science we give
the name of Political Economy. Our readers must be
aware that that term has often been used in a much wider
The earlier writers who assumed the name of
Political Economists avowedly treated not of wealth but
of government. Mercier de la Riviere entitled his
Work The Natural and Essential Organization of So-
ciety, and professed to propose an organization "which
shall necessarily produce all the happiness that can be
enjoyed on earth.' Sir James Steuart states, that
"the principal object of the Science is to secure a certain
fund of subsistence for all the inhabitants, to obviate
every circumstance which may render it precarious, and
to provide every thing necessary for supplying the wants
of the society." The modern continental writers have
in general entered into an equally extensive inquiry.
"Political Economy," says M. Storch, "is the Science
of the natural laws which determine the prosperity of
nations, that is to say, their wealth and their civiliza
tion."‡ M. Sismondi considers "the physical welfare
of man, so far as it can be the work of government, as
the object of Political Economy."§ "Political Eco-
nomy," says M. Say, "is the economy of society; a
Science combining the results of our observations on the
nature and functions of the different parts of the social
body." The modern writers of the English school
have in general professed to limit their attention to the
theory of wealth; but some of the most eminent among
them, after having expressed their intention to confine
themselves within what appears to us to be their proper
province, have invaded that of the general legislator or
the statesman. Thus Mr. M'Culloch, after having de-
fined Political Economy to be "the Science of the laws
which regulate the production, accumulation, distribu-
tion, and consumption of those articles or products that
are necessarily useful or agreeable to man, and possess
exchangeable value;" or, the Science of values;"
adds, that “its object is to point out the means by which
the industry of man may be rendered most productive of
wealth, to ascertain the circumstances most favourable to
its accumulation, the proportions in which it is divided,
and the mode in which it may be most advantageously.
consumed."**
It is impossible to overstate the importance of these
inquiries, and it is not easy to state their extent. They
involve, as their general premises, the consideration of
the whole theory of morals, of government, and of civil
and criminal legislation; and, for their particular premises,
* Discours Préliminaire, liv. vi.
+ Vol. i. p. 2.
‡
Tom. i. p. 21.
Nouveaux Principes d'Economie Politique, liv. i. ch, ii.
Cours Complet, tom. i. p. 1, 2.
Principles, &c. p. 1.
** Ibid. p. 8
VOL. VI.
129
what distribution of wealth is most desirable in each
the Science
a knowledge of all the facts which affect the social con- Political
dition of every community whose conduct the Economist Economy.
proposes to influence. We believe that such inquiries
far exceed the bounds of any single Treatise, and indeed Limits of
the powers of any single mind. We believe that by
confining our own and the reader's attention to the
nature, production, and distribution of wealth, we
shall produce a more clear, and complete, and instruc-
tive work than if we allowed ourselves to wander into
the more interesting and more important, but far less
definite, fields by which the comparatively narrow path
of Political Economy is surrounded. The questions, to
what extent and under what circumstances the possession
of wealth is, on the whole, beneficial or injurious to its
possessor, or to the society of which he is a member?
different state of society? and what are the means by
which any given Country can facilitate such a distribu-
tion?-all these are questions of great interest and diffi-
culty, but no more form part of the Science of Political
Economy, in the sense in which we use that term, than
Navigation forms part of the Science of Astronomy. The
principles supplied by Political Economy are indeed
necessary elements in their solution, but they are not the
only or even the most important elements. The writer
who pursues such investigations is in fact engaged on the
great Science of legislation; a Science which requires a
knowledge of the general principles supplied by Political
Economy, but differs from it essentially in its subject, its
premises, and its conclusions. The subject of legislation
is not wealth, but human welfare. Its premises are
drawn from an infinite variety of phenomena, supported
by evidence of every degree of strength, and authorizing
conclusions deserving every degree of assent, from per-
fect confidence to bare suspicion. And its expounder is
enabled, and even required, not merely to state certain
general facts, but to urge the adoption or rejection of
actual measures or trains of action.
On the other hand, the subject treated by the Political
Economist, using that term in the limited sense in which
we apply it, is not happiness, but wealth; his premises
consist of a very few general propositions, the result of
observation, or consciousness, and scarcely requiring
proof, or even formal statement, which almost every
man, as soon as he hears them, admits as familiar to his
thoughts, or at least as included in his previous know-
ledge; and his inferences are nearly as general, and, if
he has reasoned correctly, as certain, as his premises.
Those which relate to the nature and the production of
wealth are universally true; and though those which re-
late to the distribution of wealth are liable to be affected
by the peculiar institutions of particular Countries, in the
cases for instance of slavery, legal monopolies, or poor
laws, the natural state of things can be laid down as the
general rule, and the anomalies produced by particular
disturbing causes can be afterwards accounted for. But
his conclusions, whatever be their generality and their
truth, do not authorize him in adding a single syllable of
T
130
POLITICAL ECONOMY.
theScience.
Political advice. That privilege belongs to the writer or the
Economy, statesman who has considered all the causes which may
promote or impede the general welfare of those whom
Limits of he addresses, not to the theorist who has considered only
one, though among the most important, of those causes.
The business of a Political Economist is neither to re-
commend nor to dissuade, but to state general prin-
ciples, which it is fatal to neglect, but neither advisable,
nor perhaps practicable, to use as the sole, or even the
principal, guides in the actual conduct of affairs. In the
mean time the duty of each individual writer is clear.
Employed as he is upon a Science in which error, or
even ignorance, may be productive of such intense and
such extensive mischief, he is bound, like a juryman, to
give deliverance true according to the evidence, and to
allow neither sympathy with indigence, nor disgust at
profusion or at avarice-neither reverence for existing
institutions, nor detestation of existing abuses-neither
love of popularity, nor of paradox, nor of system, to deter
him from stating what he believes to be the facts, or
from drawing from those facts what appear to him to be
the legitimate conclusions. To decide in each case how
far those conclusions are to be acted upon belongs to
the art of government, an art to which Political Eco-
nomy is only one of many subservient Sciences; which
involves the consideration of motives, of which the
desire for wealth is only one among many, and aims at
objects to which the possession of wealth is only a sub-
ordinate means.
The confounding Political Economy with the Sciences
and Arts to which it is subservient has been one of the
principal obstacles to its improvement. It has acted
thus in two different modes:-
First, by exciting in the public unfavourable pre-
judices.
And, secondly, by misleading Economists, both with
respect to the object of their Science and the means of
attaining it.
With respect to the first of these obstacles, it has often
been made a matter of grave complaint against Political
Economists, that they confine their attention to wealth,
and disregard all consideration of happiness or virtue.
It is to be wished that this complaint were better
founded, but its general existence implies an opinion
that it is the business of Political Economists not merely
to state propositions, but to recommend actual measures,
for on no other supposition could they be blamed for
confining their attention to a single subject. No one
blames a writer upon tactics for confining his attention
to military affairs, or, from his doing so, infers that he
recommends perpetual war. It must be admitted that
an author who, having stated that a given conduct is
productive of wealth, should, on that account alone, re-
commend it, or assume that, on that account alone, it
ought to be pursued, would be guilty of the absurdity
of implying that happiness and the possession of wealth
are identical. But his error would consist not in con-
fining his attention to wealth, but in confounding wealth
with happiness. Supposing that error, and it is a very
obvious one, to be avoided, the more strictly a writer con-
fines his attention to his own Science, the more likely he
is to extend its bounds.
Secondly, the confounding the Science of Political
Economy with the Sciences and Arts to which it is sub-
servient, has seduced Economists sometimes to undertake
inquiries too vague to lead to any practical results, and
sometimes to pursue the legitimate objects of the Science
Limits of
by means unfit for their attainment. To their extended Political
view of the objects of Political Economy is to be at- Economy.
tributed the undue importance which many Economists
have ascribed to the collection of facts, and their neglect the Science.
of the far more important process of reasoning accurately
from the facts before them. We are constantly told that it
is a Science of facts and experiment, a Science avide de
faits. The practical applications of it, like the practical
applications of every other Science, without doubt, re-
quire the collection and examination of facts to an
almost indefinite extent. The facts collected as ma-
terials for the amendment of the poor-laws, and the
opening of the trade to China, fill more than twice as
many volumes as could be occupied by all the Treatises
that have ever been written on Political Economy; but
the facts on which the general principles of the Science
rest may be stated in a very few sentences, and indeed
in a very few words. But that the reasoning from
these facts, the drawing from them correct conclusions,
is a matter of great difficulty, may be inferred from the
imperfect state in which the Science is now found after it
has been so long and so intensely studied.
This difficulty arises partly from the extremely com-
plicated nature of the subjects which it investigates, and
the consequent abstractness and generality of its terms.
A description, if it were possible, of all the different
things which are designated by the word "wealth," or
even by the less comprehensive word "capital," would
fill an Encyclopædia. It arises partly, also, from the
circumstance, that the terms which we are forced to use
as signs for these abstractions are taken from ordinary
language, commonly used in senses too wide or too
narrow for scientific purposes. In the case, therefore,
both of the writer and of the reader, they are often as-
sociated with ideas which are intended to be excluded,
or separated from ideas which are meant to be compre-
hended. Thus, in ordinary language, the word capital
is sometimes used as comprehending every species of
wealth, and sometimes as confined to money.
If Economists had been aware that the Science depends
more on reasoning than on observation, and that its
principal difficulty consists not in the ascertainment of
its facts, but in the use of its terms, we cannot doubt
that their principal efforts would have been directed to
the selection and consistent use of an accurate nomen-
clature. So far is this from having been the case, that
it is only within a very short period that serious atten-
tion has been given to its nomenclature. The Wealth of
Nations contains scarcely a definition: most of the
modern French writers, and some indeed of our own,
have not only neglected definitions, but have expressly
reprobated their use; and the English Work which has
attracted the most attention during the present century,
Mr. Ricardo's Principles of Political Economy, is de-
formed by a use of words so unexplained, and yet so
remote from ordinary usage, and from that of other
writers on the same subject, and frequently so inconsist-
ent, as to perplex every reader, and not unfrequently to
have misled the eminent writer himself. We do not
complain of all his innovations in language: such inno-
vations are, for scientific purposes, frequently indispen-
sable, and we shall be forced to make many ourselves.
What we do complain of is, that his innovations, such,
for instance, as the substitution of the word value for
cost, are frequently unnecessary, and are almost always
made without any warning to his readers; and that the
same words, such, for example, as the adjectives high
POLITICAL ECONOMY.
131
Political and low, when applied to wages, are used by him some-
Economy. times in their popular sense, as expressing an amount,
and sometimes in a technical sense of his own, as ex-
pressing a proportion.
Wealth.
Val
Wealth.
lations to the pains and pleasures of mankind. And, Political
as the susceptibility of pain and pleasure from particular Economy.
objects is created and modified by causes innumerable, Wealth.
and constantly varying, we find an endless diversity in
Our object in these remarks has been not only to ac- the relative utility of different objects to different per-
count for the slow progress which has as yet been made sons, a diversity which is the motive of all exchanges.
by Political Economy, and to suggest means by which The next constituent of value is limitation in supply.
its advancement may be accelerated, but also to warn It may appear inaccurate to apply this expression to any
the reader of the nature of the following Treatise. He class of things, as it, in fact, belongs to all; there being
will find it consist, in a great degree, of discussions as to nothing which, strictly speaking, is unlimited in supply.
the most convenient use of a few familiar words. Such But, for the purposes of Political Economy, every thing
discussions it is impossible to render amusing, but we may be considered as unlimited in supply in its existing
trust that they will be useful, by directing his attention state, of which a man may have as much as he pleases
to the great difficulties of the Science, though he may for the mere trouble of taking it into his possession.
often disapprove our classification or nomenclature. Thus the water of the open sea is, in our use of the
term, unlimited in supply; any man who chooses to go
for it may have as much of it as he pleases: that portion
of it which has been brought to London is limited in
supply, and is to be obtained not merely by going to the
reservoir and taking possession of it, but by giving for
it an equivalent. The copper ores which Sir John
Franklin discovered on the shores of the Arctic Sea
may be considered, in their existing state, as unlimited in
supply; any man may have as-much of them as he has
strength and patience to extract.
The extracted por-
tion would be limited in supply, and therefore sus-
ceptible of value. Many things are unlimited in
supply for some purposes, and limited for others.
The water in a river is in general more than suffi-
cient for all the domestic purposes for which it can be
required; nobody pays therefore for permission to
take a bucketfull: but it is seldom sufficient for all
those who may wish to turn their mills with it; they
pay, therefore, for that privilege.
Having stated that the Science which we propose to
consider, and to which we apply the term Political
Economy, is the Science which treats of the nature, the
production, and the distribution of wealth, our first busi-
ness is to explain the meaning in which we use the
word wealth.
Under that term we comprehend all those things,
and those things only, which are transferable, are limited
in supply, and are directly or indirectly productive of
pleasure or preventive of pain; or, to use an equivalent
expression, which are susceptible of exchange; (using
the word exchange to denote hiring as well as absolute
purchase ;) or, to use a third equivalent expression, which
have value; a word which, in a subsequent portion of
this Treatise, we shall explain at some length, merely
premising at present that we use it in its popular sense,
as denoting the capacity of being given and received in
exchange.
Of the three qualities which render any thing an
article of wealth, or, in other words, give it value, the
most striking is the power, direct or indirect, of pro-
ducing pleasure, including under that term gratification
of every kind, or of preventing pain, including under
that term every species of discomfort. Unfortunately,
we have no word which precisely expresses this power;
utility, which comes nearest to it, being generally used
to express the quality of preventing pain or of indirectly
producing pleasure, as a means. We shall venture to
extend the signification of that word, and consider it as
also including all those things which produce pleasure
directly. We must admit that this is a considerable in-
novation in English language. It is, however, sanctioned
by Mr. Malthus, (Definitions, p. 234,) and has been
ventured by M. Say in French, a language less patient
of innovation than our own. Feeling the same diffi-
culty, he has solved it in the same way by using the
term utilité as comprehending every quality that
renders any thing an object of desire. Attractiveness
and desirableness have both been suggested to us as
substitutes, but on the whole they appear to us more
objectionable than utility, objectionable as we must
admit that word to be.
Utility, thus explained, is a necessary constituent of
value; no man would give any thing possessing the
slightest utility for a thing possessing none; and even
an exchange of two useless things would be, on the part
of each party to the exchange, an act without a motive.
Utility, however, denotes no intrinsic quality in the
things which we call useful; it merely expresses their re-
It must be further observed that, for economical pur-
poses, the term limitation in supply always involves the
consideration of the causes by which the existing supply
is limited. The supply of some articles of wealth is
limited by insurmountable obstacles. The number of
Raphael's pictures, or of Canova's statues, may be di-
minished, but cannot possibly be increased. There are
others of which the supply may be increased to an in-
definite extent. Such things may be considered as com-
paratively limited in supply, in proportion, not to the
existing supply of each, but to the force of the obstacles
opposed to their respective increase. It is supposed
that there is now about forty-five times as much of silver
extracted from the mines, and current in Europe, as
there is of gold. Human exertion is the only means by
which the supply of either can be increased, and they
may both be increased by human exertion to an amount
of which we do not know the limit. The obstacle, there-
fore, by which they are each limited in supply is, the
amount of human exertion necessary to their respective
increase. About sixteen times more exertion is neces-
sary to produce an ounce of gold than an ounce of silver.
The obstacle, therefore, which limits the supply of gold
is sixteen times more powerful than that which limits
the supply of silver. In our sense of the term, therefore,
gold is only sixteen times more limited in supply than
silver, though the actual weight of silver in Europe is
forty-five times as great as that of gold. To take a
more familiar example, the number of coats and waist-
coats in England is perhaps about equal. The supply
of each may be increased by human exertion to an inde-
finite extent; but it requires about three times as
much exertion to produce a coat as to produce a waist-
T2
132
POLITICAL ECONOMY.
Political coat. As the obstacle, therefore, which limits the supply
Economy of coats is three times as forcible as that which limits
the supply of waistcoats, we consider coats three
Wealth.
times more limited in supply than waistcoats, though
the existing supply of each may perhaps be equal.
Whenever, therefore, we apply the words limited in
supply, as a comparative expression, to those commo-
dities of which the quantity can be increased, we refer
to the comparative force of the obstacles which limit the
respective supplies of the objects compared.
The third and last quality which a thing must possess
to constitute it an article of wealth, or, in other words, to
give it value, is transferableness, by which term (we are
sorry to say, an unusual one) we mean to express that
all or some portion of its powers of giving pleasure, or
preventing pain, are capable of being transferred, either
absolutely, or for a period. For this purpose it is ob-
vious that it must be capable of appropriation; since no
man can give what he cannot refuse. The sources of
pleasure and preventives of pain which are absolutely
incapable of appropriation are very few. We almost
doubt whether there are any, and we are sure that the
instances which are usually given are incorrect. The
earth," observes M. Say, Econ. Pol. liv. ii. ch. ix. "is
not the only material agent with productive power,
but it is the only one, or nearly so, that can be appro-
priated. The water of rivers and of the sea, which
supplies us with fish, gives motion to our mills, and
supports our vessels, has productive powers. The wind
gives us force, and the sun heat, but happily no man
can say,
The wind and the sun belong to me, and I
will be paid for their services."" Now, in fact, air and
sunshine are local. This is so obvious that it would be
absurd to prove, by serious induction, that some situa-
tions have too much wind, and others too little, or that
the sun's rays are more powerful productive agents in
England than in Melville Island, or in the Tropics than
in England. And as the land is every where capable of
appropriation, the qualities of climate, which are attri-
butes of that land, must be so too. What gives their
principal value to the vineyards of the Côte Rotie, but the
warmth of their sun? or to the houses which overlook
Hyde Park, but the purity of their air? Rivers and
the sea are equally unfortunate illustrations. Many of
the rivers of England are not less strictly appropriated,
and are far greater sources of wealth, than any equal
superficies of land. When M. Say visited Lancashire,
he must have found every inch of fall in every stream
the subject of lease and purchase. And so far are the
services of the sea from being incapable of appropriation,
that, during the late war, £60,000 was sometimes paid
for a licence to make use of it for a single voyage; and
the privilege of fishing in particular parts of it has been
the subject of wars and treaties.
The things of which the utility is imperfectly trans-
ferable may be divided into two great classes. The first
comprises all those material objects which are affected by
the peculiar mental associations, or adapted to the pecu-
liar wants, of individuals. A mansion may flatter the pride
of its owner as having been the residence of his an-
cestors, or be endeared to him as the scene of his child-
hood; or he may have built it in a form which pleases
no eye, or laid it out in apartments that suit no habits
but his own. Still its substantial powers of affording
warmth and shelter will obtain him purchasers or
tenants, though they may demand a reduction from the
price in consequence of those very qualities which, with
Wealth.
him, formed its principal merits. The palace of St. Political
James's is full of comfort and convenience, and would
Economy.
supply a man of large fortune with an excellent resi-
dence; but the long suite of apartments within apart-
ments, which is admirably adapted to holding a Court,
would be a mere incumbrance to any but a royal per-
sonage. Any individual might hire Alnwick or Blen-
heim, and enjoy their mere beauty and magnificence,
perhaps, more than their owners who have been long
familiarized to them; but he could never feel the pecu-
liar pleasure which they seem fitted to give to a Percy
and a Churchill. There are many things, such as
clothes and furniture, which sink in utility in the estima-
tion of every one but their purchaser, from the mere fact
of having changed hands. A hat or a table which has
just been sent home does not appear to the purchaser
less useful than when he saw it in the shop; but if he
attempt to resell either, he will find that with the rest of
the world it has sunk into the degraded rank of second-
hand.
The second class of things imperfectly transferable in-
cludes the greater part, perhaps all, of our personal
qualities. This classification, which places talents and
accomplishments among the articles of wealth, may ap-
pear at first sight strange and inconvenient; it certainly
is different from that of most Economists. We will
therefore venture to illustrate it more fully.
Health, strength, and knowledge, and the other
natural and acquired powers of body and mind, appear
to us to be articles of wealth, precisely analogous to a re-
sidence having some qualities that are universally useful,
and others peculiarly adapted to the tastes of its owner.
They are limited in supply, and are causes of pleasure
and preventives of pain far more effectual than the pos-
session of Alnwick or of Blenheim. A portion of the
advantages which arise from them are inseparably an-
nexed to their possessor, like the associations of an he-
reditary property: another portion, and often a very
large one, is as transferable as the palpable convenience
of the mansion, or beauty of the gardens. What can-
not be transferred are the temporary pleasure which
generally accompanies the exercise of any accomplish-
ment, and the habitual satisfaction arising from the con-
sciousness of possessing it. What can be transferred are
the beneficial results which follow from its having been
employed during the period for which its services have
been hired. If an Erskine or a Sugden undertakes my
cause, he transfers to me, for that occasion, the use of
all his natural and acquired ability. My defence is as
well conducted as if I had myself the knowledge and the
eloquence of an accomplished advocate. What he can-
not transfer is the pleasure which he feels in the exercise
of his dexterity; but how small is his pleasure compared
to mine, if he succeeds for me! A passenger may envy
the activity and intrepidity of the crew; they cannot ac
tually implant in him their strength, or their insensibility
to danger; but so far as these qualities are means
towards an end, so far as they enable him to perform
his voyage with quickness and safety, he enjoys the use
of them as fully as if they belonged to himself. A
hunter probably feels somewhat the same sort of plea-
sure in the chase which Erskine felt in court; and this
pleasure cannot be transferred any more than his muscles
or his lungs; but, so far as his strength, speed, and
bottom are means towards the end of enabling his rider
to keep up with the hounds, they can be purchased or
hired as effectually as his bridle or saddle. In the
POLITICAL ECONOMY.
133
Wealth.
Political greater part of the world a man is as purchasable as a
Economy. horse. In such Countries the only difference in value
between a slave and a brute consists in the degree in
which they respectively possess the saleable qualities
that we have been considering. If the question whether
personal qualities are articles of wealth had been pro-
posed in classical times, it would have appeared too
clear for discussion. In Athens, every one would have
replied that they, in fact, constituted the whole value of an
εμψυχον οργανον. The only differences in this respect
between a freeman and a slave are, first, that the free-
man sells himself, and only for a period, and to a cer-
tain extent, the slave may be sold by others, and abso-
lutely; and, secondly, that the personal qualities of the
slave are a portion of the wealth of his master; those of
the freeman, so far as they can be made the subjects of
exchange, are a part of his own wealth. They perish
indeed by his death, and may be impaired or destroyed
by disease, or rendered valueless by any changes in the
customs of the Country which shall destroy the demand
for his services; but, subject to these contingencies, they
are wealth, and wealth of the most valuable kind. The
amount of revenue derived from their exercise in England
far exceeds the rental of all the lands in Great Britain.
And yet Henry was among the richest and the most
Political
magnificent sovereigns of his times. Our great grand- Economy.
children perhaps will despise the accommodations of
the present Age, and their poverty may, in turn, be
pitied by their successors.
It is obvious, however, that our desires do not aim so
much at quantity as at diversity. Not only are there
limits to the pleasure which commodities of any given
class can afford, but the pleasure diminishes in a rapidly
increasing ratio long before those limits are reached.
Two articles of the same kind will seldom afford twice
the pleasure of one, and still less will ten give five times
the pleasure of two. In proportion, therefore, as any
article is abundant, the number of those who are provided
with it, and do not wish, or wish but little, to increase
their provision, is likely to be great; and, so far as they
are concerned, the additional supply loses all, or nearly
all, its utility. And in proportion to its scarcity the number.
of those who are in want of it, and the degree in which
they want it, are likely to be increased; and its utility,
or, in other words, the pleasure which the possession of a
given quantity of it will afford, increases proportionally.
But strong as is the desire for variety, it is weak
compared with the desire for distinction: a feeling
which, if we consider its universality and its constancy,
that it affects all men and at all times, that it comes with
us from the cradle, and never leaves us till we go into
the grave, may be pronounced to be the most powerful
of human passions.
Of the three conditions of value, utility, transfer-
ableness, and limitation in supply, the last is by far the
most important. The chief sources of its influence on
value are two of the most powerful principles of human
nature, the love of variety, and the love of distinction.
The mere necessaries of life are few and simple. Pota- The most obvious source of distinction is the posses-
toes, water, and salt, simple raiment, a blanket, a hut, an sion of superior wealth. It is the one which excites
iron pot, and the materials of firing, are sufficient to sup-
most the admiration of the bulk of mankind, and the
port mere animal existence in this climate: they do, in only one which they feel capable of attaining. To
fact, support the existence of the greater part of the in- seem more rich, or, to use a common expression, to keep
habitants of Ireland; and in warmer Countries much up a better appearance, than those within their own
less will suffice. But no man is satisfied with so limited sphere of comparison, is, with almost all men who are
a range of enjoyment. His first object is to vary his food; placed beyond the fear of actual want, the ruling princi-
but this desire, though urgent at first, is more easily satis- ple of conduct. For this object they undergo toil which
fied than any other, except perhaps that of dress. Our no pain or pleasure addressed to the senses would lead
ancestors, long after they had indulged in considerable them to encounter into which no slave could be lashed
luxury in other respects, seem to have been contented or bribed. But this object is attained by appearances,
with a very uniform though grossly abundant diet. And and, indeed, cannot be attained by any thing else.
even now, notwithstanding the common declamation All the gold in the Pactolus, even if the Pactolus
on the luxury of the table, we shall find that most were as rich as when Midas had just washed in it, would
persons, including even those whose appetites are not obviously confer no distinction on the man who was
controlled by frugality, confine their principal solid unable to exhibit it. The only mode by which wealth
food to but a few articles, and their liquids to still fewer. can be exhibited is, by the apparent possession of some
object of desire which is limited in supply. Mere limi-
tation of supply, indeed, unless there be some other cir-
cumstance constituting the article in question an object
of desire, or, in other words, giving it utility, is insuffi-
cient. This circumstance must be its having some
quality to which some person beside the owner annexes
the notion of utility. The original manuscript of every
schoolboy's exercise is as limited in supply as any thing
can be, but there is nothing to make it an object of
desire after it has served its purpose in school. It is
merely a blotted manuscript, unique certainly, but
valueless. But if the original manuscript of the Wealth
of Nations could be discovered, it would excite an in-
terest throughout Europe. Curiosity would be eager to
trace the first workings of a mind whose influence will
be felt as long as civilized society endures. It might,
perhaps, be purchased by some ignorant collector only
for the purposes of ostentation, but it could not serve
even those purposes unless recommended by some cir-
cumstance beyond mere singularity.
The next desire is variety of dress; a taste which has
this peculiarity, that, though it is one of the first symp-
toms that a people is emerging from the brutishness of
the lowest savage life, it quickly reaches its highest
point, and, in the subsequent progress of refinement, in
one sex at least, diminishes until even the highest ranks
assume an almost quaker-like simplicity.
Last comes the desire to build, to ornament, and to
furnish tastes which are absolutely insatiable where
they exist, and seem to increase with every improve-
ment in civilization. The comforts and conveniences
which we now expect in an ordinary lodging are more
than were enjoyed by people of opulence a century ago:
and even a century ago a respectable tradesman would
have been dissatisfied if his bed-room had been no
better furnished than that of Henry VIII., which con-
tained, we are told, only a bed, a cupboard of plate, a
joint-stool, a pair of andirons, and a small mirror.*
* Henry, History of Great Britain, book vi. ch. vii.
Wealth.
134
POLITICAL ECONOMY.
Political
It is impossible, however, to conceive any thing more
Economy. trifling or more capricious than the circumstances which
may make a thing an object of desire, and therefore, in
our extended use of that word, give to it utility when its
supply is narrowly limited.
Wealth.
Value.
The substance which at present is the greatest object
of desire, and of which, therefore, a given quantity
will exchange for the greatest quantity of all other
things, is the diamond. A bracelet belonging to the
King of Persia, the stones in which do not weigh two
ounces, is said to be worth a million sterling. Now, a
million sterling would command the whole labour of
about thirty thousand English families for a year. If
that labour were employed in producing and repro-
ducing commodities for the purposes of sale, it would
probably give for ever a clear annual income equal to
the labour of three thousand families, or twelve thou-
sand individuals. It would place at the disposal of
its owner all the commodities that could be produced
by all the labour of all the inhabitants of a con-
siderable town. And a few pieces of mineral, not
weighing two ounces, capable of gratifying no sense
but the sight, and which any eye would be tired of
looking at for a minute, is invested by our caprice
with a value equal to that of the commodities which
would give comfortable support to thousands of human
beings in an advanced state of civilization. Hard-
ness and brightness must have been the qualities
which first attracted notice to the diamond. They en-
abled it to please the eye and adorn the person, and
thus associated with it the notion of utility, But a
diamond weighing an ounce is not found once in a cen-
tury; there are not five such known to exist. The pos-
session of an object of desire so limited in supply soon
became one of the most unequivocal proofs of wealth.
And, as to appear rich is the ruling passion of the bulk
of mankind, diamonds will probably continue the objects
of eager competition while the obstacles that limit their
supply are undiminished. If a Sindbad should discover
a valley of diamonds, or we should succeed in manufac-
turing them from charcoal, they will probably be used
only as ornaments for savages, playthings for children, and
as affording tools and raw materials for some of the Arts;
and we may send cargoes of diamonds to the coast of
Guinea to be bartered for equal quantities of ivory or gum.
Value.
Our definition of wealth, as comprehending all those
things, and those things only which have value, requires
us to explain at some length the signification which we
attribute to the word value; especially as the meaning of
that word has been the subject of long and eager con-
troversy. We have already stated that we use the word
value in its popular acceptation, as signifying that
quality in any thing which fits it to be given and re-
ceived in exchange; or, in other words, to be lent or
sold, hired or purchased.
So defined, value denotes a relation reciprocally exist-
ing between two objects, and the precise relation which
it denotes is the quantity of the one which can be ob-
tained in exchange for a given quantity of the other.
It is impossible, therefore, to predicate value of any
object, without referring, expressly or tacitly, to some
other object or objects in which its value is to be esti-
mated; or, in other words, of which a certain quantity
can be obtained in exchange for a certain quantity of the
object in question.
Value.
We have already observed that the substance which at Political
present is most desired, or, in other words, possesses Economy.
the highest degree of value, is the diamond. By this we
meant to express that there is no substance of which a
given quantity will exchange for so large a quantity of
every other commodity. When we wished to state the
value of the King of Persia's bracelet, we stated first
the amount of gold, and afterwards of English labour,
which it would command in exchange. If we had at-
tempted to give a perfect account of its value, we could
have done so only by enumerating separately the
quantity of every other article of wealth which could be
obtained in exchange for it. Such an enumeration, if it
could have been given, would have been a most instruc-
tive commercial lesson, for it would have shown not only
the value of the diamond in all other commodities, but
the reciprocal value of all other commodities in one
another. If we had ascertained that a diamond weigh-
ing an ounce would exchange for one million five hundred
thousand tons of Hepburn coal, or one hundred thousand
tons of Essex wheat, or two thousand five hundred tons of
English foolscap paper, we might have inferred that the
coal, wheat, and paper would mutually exchange in the
same proportions in which they were exchangeable for the
diamond, and that a given weight of paper would pur-
chase six hundred times as much coal, and forty times as
much wheat.
The causes which determine the reciprocal values of
commodities, or, in other words, which determine that
a given quantity of one shall exchange for a given
quantity of another, must be divided into two sets; those
which occasion the one to be limited in supply and use-
ful, (using that word to express the power of occasion-
ing pleasure and preventing pain,) and those which oc-
casion those attributes to belong to the other. In ordi-
nary language, the force of the causes which give utility
to a commodity is generally indicated by the word de-
mand; and the weakness of the obstacles which limit
the quantity of a commodity by the word supply.
Thus the common statement that commodities ex-
change in proportion to the demand and supply of each,
means that they exchange in proportion to the force or
weakness of the causes which give utility to them re-
spectively, and to the weakness or force of the obstacles
by which they are respectively limited in supply.
Unfortunately, however, the words demand and sup-
ply have not been always so used. Demand is some-
times used as synonymous with consumption, as when
an increased production is said to generate an increased
demand; sometimes it is used to express not only the
desire to obtain a commodity, but the power to give the
holder of it something which will induce him to part with
it. "A demand," says Mr. Mill, Political Economy, p. 23,
3d edition, "means the will to purchase and the power
of purchasing." Mr. Malthus, Definitions in Political
Economy, p. 244, states that "demand for commodities
has two distinct meanings: one in regard to its extent,
or the quantity of commodities purchased; the other in
regard to its intensity, or the sacrifice which the de-
manders are able and willing to make in order to satisfy
their wants."
Neither of these expressions appears to be consistent
with common usage.
It must be admitted that the
word demand is used in its ordinary sense when we
say that a deficient wheat harvest increases the demand
for oats and barley. But this proposition is not true if
we use the word demand in any other sense than as
POLITICAL ECONOMY.
135
Value.
Political expressing the increased utility of oats and barley; or, in
Economy, other words, the increased desire of the community to
obtain them. The deficiency of wheat would not give to
the consumers of oats and barley any increased power of
purchasing them, nor would the quantity purchased or
consumed be increased. The mode of consumption
would be altered; instead of being applied to the feeding
of horses, or to the supply of stimulant liquids, a certain
portion of them would be used as human food. And,
as the desire to eat is more urgent than the desire to feed
horses, or drink beer or spirits, the desire to obtain oats and
barley, or, in other words, the pleasure given, or the pain
averted, by the possession of a given quantity of them,
or, in other words, the utility of a given quantity of
them, would increase. A fact which, in ordinary lan-
guage, would be expressed by saying, that the demand
for them was increased.
But though the vagueness with which the word de-
mand has been used renders it an objectionable term, it
is too useful and concise to be given up; but we shall
endeavour never to use it in any other signification than
as expressing the utility of a commodity; or, what is
the same, for we have seen that all utility is relative, the
degree in which its possession is desired.
We cannot complain of equal vagueness in the use of
the word supply. In ordinary language, as well as in
the writings of Political Economists, it is used to signify
the quantity of a commodity actually brought to market.
The complaint is, not that the word supply has been
used in this sense, but that, when used in this sense, it
has been considered as a cause of value, except in a few
cases, or for very short periods. We have shown, in the
examples of coats and waistcoats, and gold and silver,
that the reciprocal value of any two commodities de-
pends, not on the quantity of each brought to market,
but on the comparative force of the obstacles which in
each case oppose any increase in that quantity. When,
therefore, we represent increase or diminution of sup-
ply as affecting value, we must be understood to mean
not a mere positive increase or diminution, but an in-
crease or diminution occasioned by a diminution or in-
crease of the obstacles by which the supply is limited.
To revert to our original proposition, the reciprocal
values of any two commodities must be determined by
two sets of causes; those which determine the demand
and supply of the one, and those which determine the
demand and supply of the other. The causes which
give utility to a commodity and limit it in supply may
be called the intrinsic causes of its value; those which
limit the supply and occasion the utility of the commo-
dities for which it is to be exchanged, may be called the
extrinsic causes of its value. Gold and silver are now
exchanged for one another in Europe in the proportion
of one ounce of gold for about sixteen ounces of silver.
This proportion must arise partly from the causes which
give utility to gold and limit its supply, and partly from
those which create the utility and limit the supply of
silver. When talking of the value of gold we may con-
sider the first set of causes as influencing its general
value, since they affect its powers of commanding every
commodity in exchange. The second set of causes af-
fect gold only so far as it is to be exchanged for silver,
which may be called one of its specific values; the ag-
gregate of its specific values forming its general value.
If while the causes which give utility to silver and limit
it in supply were unaltered, those which affect gold
should vary; if, for instance, fashion should require
per-
Value.
every well-dressed man to have all his buttons of pure Political
gold, or the disturbances in South America should
Economy.
manently stop all the gold works of Brazil and Colom-
bia, and thus (as would be the case) intercept five-sixths
of our supplies of gold, the reciprocal values of gold
and silver would in time be materially varied. Though
silver would be unaltered both as to its utility and as to
its limitation in supply, a given quantity of it would ex-
change for a less quantity of gold, in the proportion
perhaps of twenty to one, instead of sixteen to one. As
between one another the rise and fall of gold and silver
would precisely correspond, silver would fall and gold
would rise one-fourth. But the fall of silver would not
be general but specific; though fallen as estimated in
gold, it would command precisely the same quantities as
before of all other commodities. The rise of gold would
be general; a giveu quantity of it would command one-
fourth more not only of silver, but of all other commo-
dities. The holder of a given quantity of silver would
be just as rich as before for all purposes except the pur-
chase of gold; the holder of a given quantity of gold
would be richer than before for all purposes.
The circumstances by which each different class of
commodities is invested with utility and limited in
supply are subject to perpetual variation. Sometimes
one of the causes alone varies. Sometimes they both
vary in the same direction; sometimes in opposite direc-
tions.
tions. In the last case the opposite variations, wholly
or partially, neutralize one another.
The effects of an increased demand concurrent with
increased obstacles to supply, and of diminished de-
mand concurrent with increased facility of supply, are
well exemplified by hemp, Its average price before the
revolutionary war, exclusive of duty, did not exceed £30
per ton. The increased demand occasioned by a mari-
time war, and the natural obstacles to a proportionate
increase of supply, raised it, in the year 1796, to above
£50 a ton; at about which price it continued during the
next twelve years. But in 180S, the rupture between Eng-
land and the Baltic powers, the principal source of our
supplies, suddenly raised it to £118 a ton, being nearly
four times the average price in peace. At the close of
the war, both the extraordinary demand and the extra-
ordinary obstacles to the supply ceased together, and
the price fell to about its former average.
We have already stated that the utility of a commo-
dity, in our extended sense of the term utility, or, in
other words, the demand for it as an object of purchase
or hire, is principally dependent on the obstacles which
limit its supply. But there are many cases in which,
while the existing obstacles remain unaltered, the de-
mand is affected by the slightest suspicion that their
force may at a future period be increased or diminished.
This occurs with respect to those commodities of which
the supply is not susceptible of accurate regulation, but
is afforded either in uncertain quantities and at stated
periods, between which it cannot be increased or di-
minished,-in the case for instance of the annual products
of the earth, or is dependent on our relations with
foreign Countries. If a harvest deficient by one-third
should occur, that deficiency must last for a whole year,
or be supplied from abroad at an extravagant cost. If
we should go to war with Russia, the obstacles to the
supply of hemp would be increased while the war lasted.
In either case the holders of corn or hemp would obtain
great profits. In all rich Countries, and particularly in
our own, there is a great number of persons who have
136
POLITICAL ECONOMY.
Value.
Political large masses of wealth capable of being suddenly ap-
Economy, plied to the purchase of any given objects. The instant
The instant
such persons suspect that the obstacles to the supply of
any article are likely to be increased, they are anxious to
become holders of it. They enter the market as new
demanders; the price rises, and the mere fact that it
has risen is a cause of its rising further. The details of
commerce are so numerous, the difficulty of obtaining
early and accurate information is so great, and the facts
themselves are so constantly changing, that the most
cautious merchants are often forced to act upon very
doubtful premises; and the imprudent, dazzled by the
chance of an enormous gain, which will be their own,
and little restrained by the fear of a loss which may prin
cipally fall upon their creditors, are often ready to act
upon scarcely any premises at all. They see that the
price of some article has risen, and they suppose that
there must be some good cause for it. They see that if
they had purchased a month ago, they would have been
gainers now, and conclude that if they purchase now
they will be gainers a month hence. So far is this
reasoning, if it can be called reasoning, carried, that a
rise in the price of any one important commodity is
generally found to occasion a rise in the price of many
others. "A" (thinks a speculator) "bought hemp before
the price had risen and has resold it at a profit. Cotton
has not yet risen, nor do I see clearly why it should
rise, any more than I see why hemp should have risen,
but it probably will rise like hemp, therefore I will
purchase."
Those who are not practically conversant with com-
mercial transactions, and who are probably accustomed
to consider our merchants and capitalists as men of
sober minds, and cautious conduct, may perhaps think
that we exaggerate the influence of imagination over
judgment when we suppose that large fortunes are often
risked on such reasoning as this. We cannot support
our view better than by the authority of Mr. Tooke, a
merchant of great talent and knowledge, and, at the
period when he wrote, forced, for his own safety, to
watch narrowly the phenomena which he described.
The passages which we subjoin are taken from his ac-
count of the circumstances which occasioned the extra-
ordinary rise of prices in the beginning of 1825. "The
close of each year* is the period at which, by annual
custom, the stocks of goods on hand, and the prospects
of supply and consumption for the coming season, are
stated and reasoned upon by merchants and brokers in
circular letters addressed to their correspondents and
employers. By these circulars it appeared (at the close
of 1824) that, of some important articles, the stock on
hand fell short of that at the close of the preceding
year. From this the conclusion was more or less
plausibly deduced, that the rate of the annual consump-
tion of those articles was outrunning the rate of the
annual supply, and that an advance in price ought to
take place; and at the same time, there were, as in the
case of cotton and silk, confident reports of the failure of
crops or other causes which would inevitably diminish
the forthcoming supply. Expectation of scarcity was
thus combined with actual deficiency in exciting the
spirit of speculation. This was directed in the first
instance to the articles which, upon fair mercantile
grounds, justified and called for some advance in price,
inasmuch as the rate of the consumption of them had
* Considerations on the State of the Currency, p. 43.
outrun the average rate of supply. The rise, however, Political
which would have been requisite to increase the supply, Economy,
or to diminish the consumption, would, in most of the
cases in question, have been trifling.
"But when speculation is once on foot, the rise of
any one article may not only be in a ratio far greater
than the occasion really calls for, but may cause in-
directly a rise in other commodities.
The impulse, therefore, to a rise being given, and
every succeeding purchaser having realized, or appear-
ing to have the power of realizing, a profit, a fresh in-
ducement appeared in every step of the advance to bring
forward new buyers. These were no longer such only
as were conversant with the market: many persons
were induced to go out of their own line, and to embark
their funds, or stretch their credit, with a view to engage
in what was represented to them by the brokers a cer-
tain means of realizing a great and immediate gain.
"Cotton exhibited the most extraordinary instance of
speculation carried beyond all reasonable bounds. Silk,
wool, and some other articles in which some advance
was justified by the relative state of the supply and de-
mand, became the subjects of a speculative anticipation,
and advanced much beyond the occasion, as the event
proved, though not in so great a degree as cotton.
"Never did the public, that part of it at least which
entered into the vortex of the operations in question,
exhibit so great a degree of infatuation, so complete an
abandonment of all the most ordinary rules of mercan-
tile reasoning since the celebrated bubble year 1720, as
it did in the latter part of 1824, and in the first three or
four months of 1825.
"The speculative anticipation of an advance was no
longer confined to articles which presented a plausible
ground for some rise however small. It extended itself
to articles which were not only not deficient in quantity
but which were actually in excess. Thus coffee, of which
the stock was increased compared with the average of
former years, advanced from 70 to 80 per cent. Spices
rose in some instances from 100 to 200 per cent. with-
out any reason whatever, and with a total igno-
rance on the part of the operators of every thing con-
nected with the relation of the supply to the consump-
tion.
In short, there was hardly an article of merchandise
which did not participate in the rise. For it became
the business of the speculators or the brokers, who were
interested in raising and keeping up prices, to look mi-
nutely through the general Price Currents with a view
to discover any article which had not advanced, in order
to make it the subject of anticipated demand.
If a person not under the influence of the prevailing
delusion ventured to inquire for what reason any parti-
cular article had risen, the common answer was, ' Every
thing else has risen, and therefore this ought to rise.'
When we consider that the supply of large classes of
commodities is dependent on our amicable or hostile re-
lations with foreign States, and on the commercial and
financial legislation both of those States and of our own
Country, and that the supply of still larger classes is de-
pendent not only on those contingencies, but on the ac-
cidents of the seasons,-and when we consider how the
demand is affected not merely by the existing, or the
anticipated obstacles to the supply, but often by a spirit
of speculation as blind as that of a gambler ignorant of
the odds and even of the principles of his game,—it is
obvious that the general value of all commodities, the
Value.
POLITICAL ECONOMY
137
**
Value.
Political quantity of each which will exchange for a given
Economy. quantity of every other, can never remain the same for a
single day. Every day there will be a variation in the
demand or the supply of one or more of the innume-
rable classes of commodities which are the objects of ex-
change in a commercial Country. A given quantity of
the commodity which has varied will consequently ex-
change for a greater or a less quantity of all other com-
modities. All other commodities, therefore, will have
varied in value as estimated in the first-mentioned com-
modity. It is as impossible for one commodity to remain
perfectly unaltered in value while any other is altered, as
it would be for a light-house to keep at the same dis-
tance from all the ships in a harbour while any one of
them should approach it or recede.
But it may be asked, what do we mean when we say
that a commodity has, for a given period, remained
steady in value?
The question must be answered by referring to the
different effects produced on the value of a commodity
by an alteration in the intrinsic, or an alteration in the
extrinsic, causes on which value depends. If the causes
which give utility to a commodity and limit its supply,
and which we have called the intrinsic causes of its value,
are altered, the rise or fall in its value will be general. A
given quantity of it will exchange for a greater or a less
quantity than before of every other commodity which
has not also varied at the same time, in the same direc-
tion, and in the same degree; a coincidence which
rarely occurs. Every other commodity must also rise or
fall in value as estimated in the first-mentioned commo-
dity, but not generally.
The fluctuations in value to which a commodity is
subject by alterations, in what we have called the ex-
trinsic causes of its value, or, in other words, by altera-
tions in the demand or supply of other commodities,
have a tendency, like all other extensive combinations of
chances, to neutralize one another. While it retains the
same utility, and is limited in supply by the same
causes, a given quantity of it, though it may exchange
for a greater or a less quantity of different specific com-
modities, will in general command the saine average
quantity as before of the general mass of commodities;
what it gains or loses in one direction being made up in
another. It may be said, without impropriety, therefore
to remain steady in value. But the rise or fall in value
which a commodity experiences in consequence of an
alteration in its utility, or in the obstacles to its supply,
is, in fact, entirely uncompensated. It is compensated
only with regard to those commodities of which the
utility or the supply has also varied at the same time
and in the same direction. And as quite as many are
likely to experience a similar variation, but in an op-
posite direction, there is really no compensation. A
commodity, therefore, which is strikingly subject to such
variations, is properly said to be unsteady in value.
But we may be asked to account for another and not
unfrequent statement, that at particular periods all com-
modities have been observed to rise or fall in value.
Literally taken, this statement involves a contradiction in
terms, since it is impossible that a given quantity of
every commodity should exchange for a greater or a less
quantity of every other. When those who make this
statement have any meaning, they always tacitly exclude
some one commodity, and estimate in that the rise or fall
of all others. The excluded commodity is, in general,
money or labour.
VOL. VI.
-
Estimated in labour, all commodities, money included, Political
have fallen in value in England since the XVIth Century. Economy,
It is scarcely possible to mention one of which a given Value.
quantity will not purchase less labour than it did at the
close of Elizabeth's reign; estimated in money, almost
all commodities, labour included, have fallen in Eng-
land since the termination of the late war.
The last remark which we shall now make on value is,
that, with a very few exceptions, it is strictly local. A ton
of coal at the bottom of the pit near Newcastle is perhaps
worth 2s. 6d., at the pit's mouth it is perhaps worth 5s.,
at ten miles off 7s., at Hull 10s. By the time the collier
has reached the Pool, its cargo is seldom worth less than
16s. a ton; and the inhabitant of Grosvenor Square may
perhaps think himself fortunate if he can fill his coal
cellars at 25s. a ton.* A ton of coal, though physically
identical, must be considered, for economical purposes,
as a different commodity at the bottom of the pit and
at its mouth, in Hull and in Grosvenor Square. At
every different stage of its progress it is limited in
supply by different obstacles, and consequently ex-
changeable for different things and in different propor-
tions. Supposing that at Newcastle a ton of the best
wheat is now worth about twenty tons of the best coal :
the same wheat and coal at the west end of London
may probably exchange in the proportions of about four
tons of coal for one of wheat.
At Odessa, they may
perhaps exchange about weight for weight.
Whenever, therefore, we speak of the value of a com-
modity, it is necessary to state the locality both of the
commodity in question, and of the commodity in which
its value is estimated. And in most cases we shall find
their respective proximity to the places where they are
respectively to be made use of one of the principal con-
stituents of their respective values. The purchaser of
the distant commodity has to consider the labour of
transporting it to the place of consumption, the time for
which that labour must be paid in advance, and the
taxation, and the risk of injury or loss to which it may
be subject in its transit. Nor is this all. He must also
consider the danger that its quality may not correspond
with the description or sample which guided him in
making the purchase. The whole expense and risk
attending the transport of a diamond from Edinburgh
to London are but trifling; but its value is so depend-
ent on its form and lustre, and those are qualities as to
which it is so difficult to satisfy any purchaser who
cannot ascertain them by inspection, that it would be
difficult to obtain in London à fair price for a diamond
in Edinburgh. Again, though a given quantity of coal
from a given mine is generally of an ascertained quality,
yet the expense, loss of time, risk, and taxation, which
must be incurred in its transport from Newcastle to
Grosvenor Square, are such that a ton of coal, when it
has reached Grosvenor Square, may be of nearly five
times the value which it bore at Newcastle.
Objections to Definition of Wealth considered.
(The definition of wealth, as comprehending all those Objections
things, and those things only, which have value, or, in to defini-
other words, which may be purchased or hired, does tion of
not, we believe, precisely agree with that adopted by any considered.
Economist except Archbishop Whately.
豪
​These prices are merely assumed for the purpose of illus-
tration.
U
138
POLITICAL ECONOM Y.
Political
Economy.
Objectius
to defini-
tion of
wealth
considered.
The principal differences are these: some writers
confine the term wealth to what have been termed
material products; some to those things which have
been produced or acquired by human labour; and some
object to the ideas of value or exchange being introduced
into the definition of wealth.
The question whether the things which have been
called immaterial ought to be considered articles of
wealth, we shall consider when we treat of production.
Some of the writers who, expressly or impliedly,
restrict the term wealth to the things, the produc-
tion or appropriation of which has cost human labour,
as for instance Mr. Mill, Mr. M'Culloch, Colonel
Torrens, Mr. Malthus, and M. Flores-Estrada, appear
to suppose that a definition so restricted will com-
prise every thing that can properly be termed wealth;
others, among whom is Mr. Ricardo, admit that there
are some things falling within that term which have not
been acquired by human exertion, but think them so few
or unimportant that it is better to omit them than to
disorder the symmetry of the Science by extending it to
any thing that is not the result of labour.
The former doctrine is clearly stated in the following
passages
from Mr. Malthus, Colonel Torrens, and Mr.
M'Culloch.
"Wealth. The material things necessary, useful, or
agreeable to man, which have required some portion of
human exertion to appropriate or produce."*
Wealth, considered as the object of economical
Science, consists of those material articles which are
useful or desirable to man, and which it requires some
portion of voluntary exertion to procure or to preserve.
Thus two things are essential to wealth: the possession
of utility, and the requiring some portion of voluntary
exertion or labour. That which has no utility, which
serves neither to supply our wants, nor to gratify our
desires, is as the dust beneath our feet, or as the sand
upon the shore, and obviously forms no portion of our
wealth; while, on the other hand, things which possess
the highest utility, and which are even necessary to our
existence, come not under the denomination of wealth,
unless to the possession of utility be superadded the
circumstance of having been procured by some voluntary
exertion. Though the air which we breathe and the
sunbeams by which we are warmed are in the highest
degree useful and necessary, it would be a departure from
the precision of language to denominate them articles of
wealth. But the bread which appeases the cravings of
hunger, and the clothing which protects us from the
rigour of the season, though not more indispensably
requisite than the former, are with propriety classed
under the term wealth'; because to the possession of
utility they add the circumstance of having been pro-
duced by labour.Ӡ
“Labour is the only source of wealth. Nature spon-
taneously furnishes the matter of which all commodities
are made; but until labour has been expended in appro-
priating matter, or in adapting it to our use, it is wholly
destitute of value, and is not, nor ever has been, con-
sidered as forming wealth. Place us on the banks of a
river, or in an orchard, and we shall inevitably perish of
thirst or hunger, if we do not, by an effort of industry,
raise the water to our lips, or pluck the fruit from its
parent tree.
*Malthus, Definitions, p. 234.
+ Torrens, Production of Wealth, ch, i.
“An object which it does not require any portion of Political
labour to appropriate or to adapt to our own use may Economy.
be of
the very highest utility, but, as it is the free gift of nature, Objections
it is utterly impossible it can possess the smallest value."* to defini-
Mr. M'Culloch appears to use the word labour as tion of
including all voluntary action. And without doubt, if wealth
considered.
we use the word labour in so extended a sense, it is
true that labour is almost necessarily incidental to the
enjoyment of wealth. If it be an act of industry to
gather an apple, it is equally an act of industry to raise
it from one's plate; and every guest at a festival earns
his food by the labour which he exerts in appropriating
his own portion. Such attempts as these to bend facts
and language into accordance with hasty generalization.
have thrown on Political Economy a degree of ridicule
which is one of the principal obstacles to its progress.
Mr. Malthus, Colonel Torrens, and the other Econo-
mists who consider labour, using that word in its
popular sense, as a necessary constituent of wealth,
appear to have been led to that opinion by observing,
first, that some quality besides mere utility is necessary
to value; secondly, that all those things which are
useful, and are acquired by labour, are valuable; and
thirdly, that almost every thing which is valuable has
required some labour for its acquisition. But the fact
that that circumstance is not essential to value will be
demonstrated if we can suppose a case in which value
could exist without it. If, while carelessly lounging
along the sea-shore, I were to pick up a pearl, would
it have no value? Mr. M'Culloch would answer that
the value of the pearl was the result of my appropriative
industry in stooping to pick it up. Suppose then that
I met with it while eating an oyster? Supposing
that aerolithes consisted of gold, would they have no
value? Or, suppose that meteoric iron were the only
form in which that metal were produced, would not the
iron supplied from heaven be far more valuable than
any existing metal? It is true that, wherever there is
utility, the addition of labour as necessary to production
constitutes value, because, the supply of labour being
limited, it follows that the object, to the supply of which
it is necessary, is by that very necessity limited in supply.
But any other cause limiting supply is just as efficient a
cause of value in an article as the necessity of labour
to its production. And, in fact, if all the commodities
used by man were supplied by nature without any
intervention whatever of human labour, but were sup-
plied in precisely the same quantities as they now are,
there is no reason to suppose either that they would
any other
cease to be valuable, or would exchange in
than their present proportions.
The reply to Mr. Ricardo is, first, that the articles of
wealth which do not owe the principal part of their
value to the labour which has been bestowed on their
respective actual production, form, in fact, the bulk of
wealth instead of a small and unimportant portion of it ;
and secondly, that, as limitation of supply is essential to
the value of labour itself, to assume labour, and exclude
limitation of supply, as the condition on which value
depends, is not only to substitute a partial for a general
cause, but pointedly to exclude the very cause which
gives force to the cause assigned.
We have lastly to consider the objections which have
been raised to the definition of wealth as a general name
for the things which have value. Those who use the
* Principles of Political Economy, 66-72.
POLITICAL ECONOMY.
139
Political
word value as synonymous with cost, or as compre-
Economy, hending whatever is useful, of course object to its intro-
duction into the definition of wealth; and so should we
Objections
do if we used the word value in either of those senses.
to defini-
tion of But other writers, using the word value in its popular
wealth
sense, have objected that, according to the definition
considered. which we have adopted, the same thing will be wealth
to one person and not to another. This consequence
is evident; and it is evident that even to the same person
the same quality may be wealth under some circum-
stances, and not so under others. The knowledge of
English law is profitable in England, that of French law
in France; if an English lawyer, with no other property
than his knowledge, were to settle in France, or a French
lawyer in England, he would find himself instantly re-
duced from affluence to poverty. The power of telling
long stories is a source of profit in Asia, but valueless
in Europe. According to our nomenclature, therefore,
it would be wealth in Persia, and cease to be so in
England. If an actress should embrace a religious
sect of which the tenets should be incompatible with
the stage, her vocal and dramatic talents would no
longer be exchangeable, she would no longer be able to
let them out by the evening. We should say, therefore,
that they had ceased to be a part of her wealth. But
we are at a loss to conceive how the power of making
this distinction is an objection to the language in ques-
tion. It seems to be its principal convenience.
Statement
Again, Colonel Torrens supposes a solitary family, or
a nation in which each person should consume only his
own productions, or one in which there should be a
community of goods, and urges, as a reductio ad absur-
dum, that in these cases, though there might be an
abundance of commodities, as there would be no ex-
changes, there would, in our sense of the term, be no
wealth. The answer is, that, for the purposes of Political
Economy, there would be no wealth; for, in fact, in
such a state of things, supposing it possible, the Science
of Political Economy would have no application. In
such a state of society, Agriculture, Mechanics, or any
other of the Arts which are subservient to the production
of the commodities which are, with us, the subjects of
exchange, might be studied, but the Science of Political
Economy would not exist. We may add, that if the
common usage which identifies wealth with the things
which have value is a convenient one in all the forms
which human nature really exhibits, it is no objection
to it that it would not be convenient in a state of society
of which we have no experience.
Statement of the four Elementary Propositions of the
Science.
We have already stated that the general facts on
of the ele- which the Science of Political Economy rests are com-
mentary
prised in a few general propositions, the result of ob-
propositions
of the
servation or consciousness. The propositions to which
Science. we then alluded are these:
1. That every man desires to obtain additional wealth
with as little sacrifice as possible.
2. That the population of the world, or, in other
words, the number of persons inhabiting it, is limited
only by moral or physical evil, or by fear of a defi-
ciency of those articles of wealth which the habits of the
individuals of each class of its inhabitants lead them
to require.
3. That the powers of labour, and of the other instru-
Statement
of the ele-
ments which produce wealth, may be indefinitely in- Political
creased by using their products as the means of further Economy.
production.
4. That, agricultural skill remaining the same, ad-
ditional labour employed on the land within a given mentary
district produces in general a less proportionate return, propositions
or, in other words, that though, with every increase of of the
the labour bestowed, the aggregate return is increased,
the increase of the return is not in proportion to the
increase of the labour.
The first of these propositions is a matter of conscious-
ness, the three others are matter of observation. As
the first and second involve little use of the peculiar
abstractions of Political Economy, except those implied
in the term wealth, and may therefore be explained
with little recourse to its peculiar nomenclature, we shall
consider them immediately; leaving the third and fourth
for discussion in a subsequent part of this Treatise. They
are however so nearly self-evident, that we will venture
in the mean time to assume their truth. No one who
reflects on the difference between the unassisted force of
man, and the more than gigantic powers of capital and
machinery, can doubt the former proposition; and, to
convince ourselves of the other, it is necessary only to
recollect that, if it were false, no land except the very
best could ever be cultivated: since, if the return from
a single farm were to increase in full proportion to any
amount of increased labour bestowed on it, the produce
of that one farm might feed the whole population of
England.
General Desire for Wealth.
Science.
In stating that every man desires to obtain additional General de
wealth with as little sacrifice as possible, we must not be sire for
supposed to mean, that every body, or indeed any body, wealth.
wishes for an indefinite quantity of every thing; still
less as stating that wealth, though the universal, either
is, or ought to be, the principal object of human desire.
What we mean to state is, that no person feels his whole
wants to be adequately supplied; that every person
has some unsatisfied desires which he believes that
additional wealth would gratify. The nature and the
urgency of each individual's wants are as various as the
differences in individual character. Some may wish
for power, others for distinction, and others for leisure;
some require bodily, and others mental amusement;
some are anxious to produce important advantage to
the public; and there are few, perhaps there are none,
who, if it could be done by a wish, would not benefit
their acquaintances and friends. Money seems to be the
only object for which the desire is universal; and it is so,
because money is abstract wealth. Its possessor may
satisfy at will his ambition, or vanity, or indolence, his
public spirit or his private benevolence; may multiply the
means of obtaining bodily pleasure, or of avoiding bodily
evil, or the still more expensive amusements of the mind.
Any one of these pursuits would exhaust the largest
fortune within the limits of individual acquisition; and, as
all men would engage in some of them, and many in all,
the desire for wealth must be insatiable, though the
modes in which different individuals would employ it
are infinitely diversified.
An equal diversity exists in the amount and the kind
of the sacrifices which different individuals, or even the
same individual, will encounter in the pursuit of wealth.
U 2
140
POLITICAL ECONOMY.
ང
General de-
sire for
wealth.
Political And not only is the same sacrifice more severe to one
Economy than to another, as some will not give up ease or leisure
for study, others good air and a country life, and others
recreation and society, but the absolute desire for wealth
on the one hand, and the absolute will to encounter toils
or privations in its pursuit on the other, are stronger in
some men than in others. These differences form some
of the principal distinctions in individual and national
character. Experience, however, shows, and indeed it
might have been predicted à priori, that the greatest
and longest continued sacrifices will be made in those
Countries in which property is most secure, and the road
to social eminence is the most open. The inhabitants
of Holland and of Great Britain, and of the Countries
that have derived their institutions from Great Britain,
the nations which up to the present time have best
enjoyed those advantages, have up to the present time
been the most ardent and the most successful in the
pursuit of opulence. But even the Indians of Mexico,
though their indolence makes them submit to poverty
under which an Englishman would feel life a burthen,
would willingly be rich if it cost them no trouble.
It may be necessary, however, to explain our
motives for dwelling on so much that is self-evident.
Our first reason is, that the proposition in question,
though we are not aware that any one has thought that
it required to be formally stated, is assumed in almost
every process of economical reasoning. It is the corner-
stone of the doctrine of wages and profits, and, generally
speaking, of exchange. In short, it is in Political Eco-
nomy what gravitation is in Physics, or the dictum de
omni et nullo in Logic: the ultimate fact beyond which
reasoning cannot go, and of which almost every other
proposition is merely an illustration. In an attempt to
state the evidence on which the Science rests, it appeared
to us improper to omit its foundation, though at the
hazard of appearing to take up our reader's time in
defending what it may be supposed that nobody ever
thought of questioning.
But, in the second place, this proposition, apparently
self-evident, has been impliedly questioned. It is directly
opposed to a doctrine of considerable popularity, and
supported by great names, we mean the doctrine of
over-production or universal glut.
By the word glut is meant the production of a given
commodity in an abundance, either absolutely beyond
the desires of its intended consumers, or beyond the
amount for which they are able and willing to offer in
exchange equivalents sufficient to induce the producer
to continue his operations. Books are, perhaps, the
commodities most subject to gluts. The proportionate
expenses of printing and advertising increase so rapidly,
if the number of copies printed be much reduced, and
authors are so little subject to underrate the probable
demand for their labours, that scarcely any edition con-
sists of less than two hundred and fifty copies, and very
few of less than five hundred. But we have seen calcula-
tions showing that not in one case out of two hundred are
all the copies sold off at the price at which they originally
came out. In ordinary cases, from fifty to one hundred
are sold in the first year, and thirty or forty in the
second; by the end of which time the book has been
forgotten, and the unsold copies are put up to sale at
periodical auctions among the booksellers. The best
that can happen to them is to be purchased on this
occasion in order to be again offered to the public; but
the majority of Works are found to be worth purchase Political
not as books, but as paper. They are unsold at the
trade sales, and find their way
In vicum vendentem thus et odores
Et piper, et quidquid chartis amicitur ineptis.
We have selected books as affording an illustration of a
glut arising from a miscalculation not of the ability, but of
the willingness of purchasers. The opening of a new trade
is generally followed by gluts occasioned by miscalcula-/
tions of both. Every one must recollect, when Brazil and
Spanish America first became accessible, our exports of
skaits, and fire-irons, and warming pans to the tropics.
And, until their real poverty was known, we continued to
fill their warehouses with cargoes, adapted indeed to their
wants, but far beyond their means. Miscalculations of this
kind must obviously be of frequent occurrence; and
perhaps what ought to excite our surprise is, not the
extent to which they prevail, but the degree in which
they are avoided.
they are avoided. But it appears clear that they can
arise only from one or the other of two causes: either
from the articles of wealth, with respect to which the
glut exists, having been prepared for persons who do not
want them, or from those persons not being provided
with other articles of wealth, suited to the desires of the
producers of the first-mentioned articles of wealth, to
offer in exchange for them. Partial gluts, occasioned
by the one or the other of these causes, are among the
most ordinary commercial occurrences. But the opinion
to which our doctrine is opposed is that which admits
the possibility not only of partial but of universal gluts,
which supposes it possible that there may be at the
same time a glut of services and commodities in general,
-that we may have too much of every thing; a doctrine
not only of frequent occurrence in conversations on
commercial subjects, but even maintained by some dis-
tinguished writers. Now as by the assumed hypothesis
of a universal glut all the articles of wealth exist not
only in abundance, but in superabundance, an absolute
deficiency of equivalents cannot be one of its causes.
And it can scarcely be supposed that there can be such
a general state of commercial cross-purposes as to pre-
vent, in the majority of cases, the proper sellers and
purchasers from meeting. It can scarcely be supposed
that when A has what B wants, and B what A wants,
A and B should, in the majority of instances, instead of
finding out and exchanging with one another, offer their
respective commodities to Y and Z, who, having also each
reciprocal wants and supplies, neither wish to purchase
from A or B, nor have discovered the means of exchang-
ing with one another. But if it be absurd to suppose
that a general glut could be occasioned by such an
universal spirit of blundering as this, the only remaining
hypothesis on which the existence of a general glut can
be supposed is that of a general satiety, that all men may
be so fully provided with the precise articles which they
desire as to afford no market for each other's superflui-
ties. And this doctrine is opposed to the proposition
with which we set out, that every man desires to obtain
additional wealth.
Population.
Econoir y.
General de-
sire for
wealth.
Having explained the sense in which we use the word Population.
wealth, and stated, or rather recalled to the recollection
of our readers, the general desire to obtain additional
wealth with the least possible sacrifice, we now proceed
POLITICAL ECONOM Y.
141
Political to consider the second of the four elementary propositions
Economy on which the Science of Political Economy is founded;
namely, that the population of the world, or, in other
Population.
words, the number of persons inhabiting it, is limited
only by moral or physical evil, or by fear of the defi-
ciency of those articles of wealth which the habits of the
individuals of each class of its inhabitants lead them to
require.
It is now generally admitted, indeed it is strange
that it should ever have required to be pointed out, that
every species of plant or animal which is capable of in-
crease, either by generation or by seed, must be capable
of a constantly increasing increase; every addition to its
numbers being capable of affording a source of still
further additions; or, in other words, that wherever there
is a capacity of increase, it must be a capacity of in-
crease not by mere addition but by multiplication; or,
to use the short form in which the proposition is usually
stated, not in an arithmetical, but in a geometrical ratio.
The rate at which any species of plant or animal is ca-
pable of increasing must depend on the average power
of reproduction and the average period of existence of
the individuals of which it is constituted. Wheat, we
know, is an annual, and its average power of reproduc-
tion, perhaps, about six for one; on that supposition, the
produce of a single acre might cover the globe in fourteen
years. The rate at which the human race is capable of
increasing has been determined by observation. It has
been ascertained that, for considerable periods and in
extensive districts, under temperate climates, it has
doubled every twenty-five years.
The power of reproduction in the human race must,
under similar climates, be always the same.
We say,
under similar climates, because the acceleration of
puberty, which has been sometimes observed in tropical
climates, unless checked, as is probably the case by an
earlier cessation of child-bearing, would occasion in-
creased fecundity. Now, the United States of America,
the districts in which the rate of increase which we have
mentioned has been most clearly ascertained, are not
remarkable for the longevity of their inhabitants. We
may infer, therefore, that such is the average power of
reproduction and average duration of life in the in-
dividuals constituting the human species, that their
number may double every twenty-five years. At this
rate the inhabitants of every Country would, in the
course of every five centuries, increase to above a mil-
lion times their previous number. At this rate the po-
pulation of England would, in five hundred years, ex-
ceed fifteen million millions: a population which would
not allow them standing room. Such being the human
powers of increase, the question is, by what checks is
their expansion controlled? How comes it that the po-
How comes it that the po-
pulation of the world, instead of being now a million
times as great as it was five hundred years ago, ap-
parently has not doubled within that time, and certainly
has not quadrupled?
Mr. Malthus has divided the checks to population
into the preventive and the positive. The first are
those which limit fecundity, the second those which de-
crease longevity. The first diminish the number of
births, the second increase that of deaths. And as fe-
cundity and longevity are the only elements of the calcu-
lation, it is clear that Mr. Malthus's division is exhaust-
ive. The positive check to population is physical evil.
The preventive checks are promiscuous intercourse and
abstinence from marriage. The first is moral evil; the
an appre-
Population.
second is, with a very few exceptions, so few indeed that Political
Economy.
they do not affect the result, founded on
hended deficiency of some of the things to which we
have given the general appellation of wealth. All the
preventive and positive checks may therefore be dis-
tributed under prudence, moral evil, and physical evil.
We will first consider the positive check.
We have seen that this check includes all the causes
which tend, in any way, prematurely to shorten the du-
ration of human existence: such as unwholesome occu-
pations, severe labour, or exposure to the seasons, bad or
insufficient food or clothing, bad nursing of children, ex-
cesses of all kinds, the corruption of the air from natural
causes, or from large towns, wars, infanticide, plague,
and famine. Of these, some arise from the laws of
nature, and others from the crimes and follies of man:
all are directly and immediately felt in the form of
physical evil, though many of them are the result, more
or less remotely, of moral evil.
The final and irresistible mode in which physical evil
operates is the want of the necessaries of existence:
death produced by hardship or starvation. This is
almost the only check to the increase of the irrational
animals, and as man descends towards their condition
he falls more and more under its influence.
lowest savage state it is the principal and obvious
check; in a high state of civilization it is almost imper-
ceptible; but is unperceived only in consequence of the
operation of its substitutes.
turn.
In the
We have already stated that, as a general rule, addi-
tional labour employed in the cultivation of the land
within a given district produces a less proportionate re-
And it has appeared that such is the power of
reproduction and duration of life in mankind, that the
population of a given district is capable of doubling
itself at least every twenty-five years. It is clear, there-
fore, that the rate at which the production of food is
capable of being increased, and that at which population,
if unchecked, would increase, are totally different. Every
addition made to the quantity of food periodically pro-
duced makes in general a further periodical addition
more difficult. Every addition to the existing popula-
tion diffuses wider the means of still further addition.
If neither evil, nor the fear of evil, checked the popula-
tion of England, it would amount in a century to above
two hundred millions. Suppose it possible that we might
be able to raise or to import the subsistence of two hun-
dred millions of people: is it possible that one hundred and
twenty-five years hence we should be able to support four
hundred millions? or, in one hundred and fifty years,
eight hundred millions? It is clear, however, that long
before the first century had elapsed, long before the period
at which, if unchecked, we should have attained two hun-
dred millions, no excellence in our institutions, or salu-
brity of climate, or unremitting industry, could have saved
us from being arrested in our progress by a constantly in-
creasing want of subsistence. If all other moral and phy-
sical checks could be got rid of, if we had neither wars
nor libertinism, if our habitations, and employments, and
habits were all wholesome, and no fears of indigence or
loss of station prevented or retarded our marriages, fa-
mine would soon exercise her prerogative of controlling,
in the last resort, the multiplication of mankind.
But though it be certain that the absence of all other
checks would only give room for the irresistible in-
fluence of famine, it is equally certain that such a state
of things never has existed and never will exist.
142
POLITICAL ECONOMY.
Political
In the first place the absence of all the other moral
Economy and physical evils which retard population implies a de-
gree of civilization not only high, but higher than man-
Population.
kind have as yet enjoyed. Such a society cannot be
supposed to want sagacity sufficient to foresee the evils
of a too rapidly increasing population, and prudence suf-
ficient to avoid them. In such a state the preventive
check would be in full operation, and its force is quite
sufficient to render unnecessary even the approach of
any positive check.
And, secondly, it is impossible that a positive check,
so goading and so remorseless as famine, should prevail
without bringing in her train all the others. Pestilence
is her uniform companion, and murder and war are her
followers. Whole bodies of men will not tamely lie
down to die, and witness, while they are perishing, their
wives, and children, and parents, starving around them.
Where there is a diversity of fortunes, famine generally
produces that worst form of civil war, the insurrection of
the poor against the rich. Among uncivilized nations it
produces those tremendous hostile migrations in which
a whole people throws itself across a neighbouring
frontier, and either perishes in the attempt to obtain a
larger or a more fertile territory, or destroys the former
possessors, or drives them out to be themselves ag-
gressors in turn.
war.
In fact, almost all the positive checks, by their mutual
reaction, have a tendency to create and aggravate one
another; and the destruction of those who perish im-
mediately by one may generally be found to have been
remotely occasioned or promoted by one or more of the
others. Among nations imperfectly civilized the widest
and the most wasting of the positive checks is predatory
A district exposed to it is likely to suffer all the
others. Mere fear of invasion must generally keep the
great body of its inhabitants pent up in crowded and
consequently unwholesome towns; it must confine their
cultivation to the fields in the immediate neighbourhood
of those towns, and, if it does not destroy, must so much
impede their commerce as to render it useless as a
source of subsistence; and when the invasion does
come, it is often followed by the complete extirpation of
the invaded community. This is the check which has
kept Africa, and the central parts of Asia, in their com-
paratively unpeopled state.
In his journey from Abyssinia to Sennaar, Bruce
crossed the territory of Atbara, subject to the incursions
of the Daveina Arabs. The whole seems to have been
a scene of desolation. He passed a night at Garigara,
a village, of which they had destroyed the crops a year
before. The inhabitants had all perished with hunger,
and their remains were unburied and scattered over the
ground where the village had stood. The travellers
encamped among the bones: no space could be found
free from them. His next stage was Teawa.
sequence," he observes, was to remain only till the
Daveina should resolve to attack it, when its corn fields
being burnt and destroyed in a night by a multitude of
horsemen, the bones of its inhabitants scattered upon
the earth would be all its remains, like those of the
miserable village of Garigara."
tr
" Its con-
Among the positive checks to the population of un-
civilized, or partially civilized, nations, the next in im-
portance to war is famine. When a people depends
principally on that subsistence which is most easily ob-
tained, and such is the case among the nations in ques-
tion, the mere variations of the seasons must, from time
to time, produce destructive want. Where society is Political
better constituted, the evil of these variations is miti- Economy.
gated, partly from the superfluity of the more opulent
classes, partly by importation, and principally by a re- Population.
currence to a less expensive diet; but in a barbarous,
and consequently a poor and non-commercial people,
they are among the most frighful forms of national
calamity. The histories which we possess of such
Countries always particularize periods of dearth as
among the most memorable events recorded. They
seem in a constant oscillation between the want en-
dured by a population that has increased to the utmost
limits of subsistence, and the plenty enjoyed by the sur-
vivors after that population has been thinned by war,
pestilence, or famine. The remainder of the positive
checks, such as infanticide and unwholesomeness of
climate, habits, or situation, appear rather to facilitate
early marriages than to produce any actual diminution,
or prevent any actual increase of population. Infanti-
cide has been supposed to be rather favourable to po-
pulation, by opposing to the prudential check to mar-
riage a mode of disposing of its offspring, which may
appear easy in contemplation, but from which the feel-
ings of the parents eventually recoil. The unwhole-
someness of some districts is unquestionably such as to
keep them totally unpeopled, or inhabited by strangers,
whose numbers must be constantly recruited. Such,
for instance, appears to be the case in the most un-
healthy parts of Italy. Such is the case with large
manufacturing towns even in the most favourable
climates, unless great skill and great care are directed
towards their cleanliness and ventilation. And in a
newly colonized Country like the back settlements of
America, where the abundance of land and the con-
stantly increasing means of subsistence would render
any preventive check unnecessary, any cause diminish-
ing longevity must retard increase. But with these ex-
ceptions, unhealthiness rather
ceptions, unhealthiness rather causes the successive
generations to pass more rapidly away, than diminishes
the actual number of inhabitants. In some of the
healthiest districts of Swisserland the average annual
mortality does not exceed one in forty-eight. In many of
the marshy villages of Holland it exceeds one in twenty-
three. But it would be rash to expect the population
of the former to be more dense or to increase more
rapidly than that of the latter. The case is, in fact, the
reverse. In the Swiss villages of which we have been
speaking the births are as rare as the deaths; the
population is thin and stationary. Among the Dutch
the births somewhat exceed the deaths; the population
is dense and is increasing. It is obvious, indeed, that
the proportion of annual births to the whole number of
people being given, the rate of increase must depend on
the proportion borne by the annual deaths. And again,
the proportion of deaths to the whole number of people
being given, it must depend on the proportion borne by
the births; or, to use a shorter form of expression, given
the longevity it must depend on the fecundity, and
given the fecundity it must depend on the longevity.
If both are given, the rate of increase may be calculated;
but from only one, the conclusion must be in the dis-
junctive. If the annual births bear a large proportion.
to the existing number of people, we may conclude
either that the population is rapidly increasing, or that
the positive checks are in powerful operation. On the
other hand, from a small proportion of annual deaths
may be inferred either a rapid increase of numbers, or a
POLITICAL ECONOMY.
143
Political strong influence of the preventive checks. The average
Economy, duration of life in England is greater than in the United
States of America; but so much greater is the force of
Population.
the preventive checks, that the rate of increase in
America is about double that in England. Again, the
average duration of life in the Swiss villages to which
we have referred is the same as it is in England; but
the preventive check in England, strong as it appears
when compared with its force in America, is so much
weaker than it is in some districts in Swisserland, that,
with the same annual mortality, the population is in the
one Country stationary, in the other rapidly progressive.
But although the average longevity in a Country
affords no decisive evidence as to the increasing or sta-
tionary number of its inhabitants, it is among the least
deceitful tests of their prosperity; far less so than that
on which legislators formerly relied, the number of
births. There is not an evil, moral or physical, which
has not a tendency, directly or indirectly, to shorten life,
but there are many which have a direct tendency to
increase fecundity. The extraordinary duration of life
in Great Britain, exceeding, as it does, the average of
any other equally populous district, is a convincing
proof of the general excellence of our climate, our insti-
tutions, and our habits.
We now proceed to consider the preventive checks
to the increase of population. We have seen that
they are promiscuous intercourse and abstinence from
narriage.
The first does not appear to be of sufficient import-
ance to require much consideration. It is said to pro-
duce some effect in checking the increase of the higher
classes in some of the South Sea Islands; and it ap-
pears to have produced the same effect to a considerable
extent among the West Indian negroes. But the
nobility of the South Seas scarcely deserve to be sepa-
rately considered. And, while the other forms of moral
and physical evil were accumulated, as they were among
the West Indian slaves, it is probable that the removal
of this evil alone would have done little to promote the
increase of their population.
But, with these exceptions, there are scarcely any
females whose fecundity is prevented or diminished by
promiscuous intercourse, except those unhappy indivi-
duals whose only trade is prostitution. And they form
so small a proportion of the population of the whole
world that the check to population, occasioned by their
unfruitfulness, may safely be disregarded.
The only remaining check is abstinence from mar-
riage. Our readers are of course aware that, by the
word "
marriage," we mean to express not the peculiar
and permanent connection which alone, in a Christian
Country, is entitled to that name, but any agreement be-
tween a man and woman to cohabit under circumstances
likely to occasion the birth of progeny. We have already
observed that abstinence from marriage is almost uni-
formly founded on the apprehension of a deficiency of
some of the things which we have denominated by the
general term wealth, or, in other words, on prudence.
Some cases certainly occur in which men remain un-
married, although their fortunes are so ample that the
expenses of a family would be unperceived. But the
number of persons so situated is so small that they
create an exception which would scarcely deserve atten-
tion, even if this conduct were as common among then
as it is, in fact, rare.
We shall scarcely, therefore, be led into error if, in
considering the preventive checks, we confine our atten- Political
tion to prudence, and assume that, as nothing but phy- Economy.
sical evil directly and immediately diminishes the lon-
Population.
gevity of mankind, nothing but an apprehended defi-
ciency of some of the articles of wealth prevents their
fecundity.
But though an apprehended deficiency of some of the
articles of wealth is substantially the only preventive.
check to the increase of population, it is obvious that
fear of the want of different articles operates, with all
men, very differently; and even that an apprehended
want of the same article will affect differently the minds
of the individuals of different classes. An apprehended
want of corn would produce on the minds of all Eng-
lishmen a very different effect from an apprehended
want of silk. An apprehended want of butcher's meat
would affect very differently the minds of Englishmen
of different classes. It appears to us, therefore, con-
venient to divide for this purpose the articles of wealth
into the three great classes of necessaries, decencies,
and luxuries, and to explain the different effects pro-
duced by the fear of the want of the articles of wealth
falling under each class. We must begin, however, by
stating, as precisely as we can, what we mean by the
words necessaries, decencies, and luxuries; terms which
have been used ever since the Moral Sciences first at-
tracted attention, but with little attention to precision or
to consistent use.
It is scarcely necessary to remind our readers that
these are relative terms, and that some person must
always be assigned with reference to whom a given
commodity or service is a luxury, a decency, or
necessary.
a
By necessaries, then, we express those things, the
use of which is requisite to keep a given individual in
the health and strength essential to his going through
his habitual occupations.
By decencies, we express those things which a given
individual must use in order to preserve his existing
rank in society.
Every thing else of which a given individual makes
use, or, in other words, all that portion of his consump-
tion which is not essential to his health and strength,
or to the preservation of his existing rank in society,
we term luxury.
It is obvious that when consumed by the inhabitants
of different Countries, or even by different individuals
in the same Country, the same things may be either
luxuries, decencies, or necessaries.
Shoes are necessaries to all the inhabitants of Eng-
land. Our habits are such that there is not an indi-
vidual whose health would not suffer from the want of
them. To the lowest class of the inhabitants of Scot-
land they are luxuries: custom enables them to go
barefoot without inconvenience and without degrada-
tion. When a Scotchman rises from the lowest to the
middling classes of society, they become to him de-
cencies. He wears them to preserve, not his feet, but
his station in life. To the highest class, who have
been accustomed to them from infancy, they are as
much necessaries as they are to all classes in England.
To the higher classes in Turkey wine is a luxury and
tobacco a decency. In Europe it is the reverse.
Turk drinks and the European smokes, not in obe-
dience, but in opposition both to the rules of health and
to the forms of society. But wine in Europe and the
pipe in Turkey are among the refreshments to which a
The
144
POLITICAL ECONOMY.
Political guest is entitled, and which it would be as indecent to
Economy. refuse in the one Country as to offer in the other.
It has been said that the coal-heavers and lightermen,
Population. and some others among the hardworking London
labourers, could not support their toils without the
stimulus of porter. If this be true, porter is to them
a necessary. To all others it is a luxury. A carriage
is a decency to a woman of fashion, a necessary to a
physician, and a luxury to a tradesman.
The question, whether a given commodity is to be
considered as a decency or a luxury, is obviously one
to which no answer can be given, unless the place, the
time, and the rank of the individual using it be
specified. The dress which in England was only
decent a hundred years ago, would be almost extrava-
gant now, while the house and furniture which now
would afford merely decent accommodation to a gentle-
man, would then have been luxurious for a Peer. The
causes which entitle a commodity to be called a neces-
sary are
more permanent and more general. They
depend partly upon the habits in which the individual
in question has been brought up, partly on the nature of
his occupation, on the lightness or the severity of the
labours and hardships that he has to undergo, and
partly on the climate in which he lives.
Of these causes we have illustrated the two first by the
familiar examples of shoes and porter. But the princi-
pal cause is climate. The fuel, shelter, and raiment,
which are essential to a Laplander's existence, would
And as
be worse than useless under the Tropics.
habits and occupations are very slowly changed, and
climate suffers scarcely any alteration, the commodities
which are necessary to the different classes of the in-
habitants of a given district may, and generally do, re-
main for centuries unchanged, while their decencies and
luxuries are continually varying.
Among all classes the check imposed by an appre-
hended deficiency of mere luxuries is but slight. The
motives, perhaps we might say the instincts, that
prompt the human race to marriage, are too powerful
to be much restrained by the fear of losing conveniences
unconnected with health or station in society. Nor is
population much retarded by the fear of wanting mere
necessaries. In comparatively uncivilized Countries, in
which alone, as we have already seen, that want is of
familiar occurrence, the preventive check has little
operation. They see the danger, but want prudence
On the other
and self-denial to be influenced by it. On the other
hand, among nations so far advanced in civilization as
to be able to act on such a motive, the danger that any
given person or his future family shall actually perish
from indigence appears too remote to afford any general
rule of conduct.
The great preventive check is the fear of losing de-
cencies, or, what is nearly the same, the hope to ac-
quire, by the accumulation of a longer celibacy, the
means of purchasing the decencies which give a higher
social rank. When an Englishman stands hesitating
between love and prudence, a family actually starving is
not among his terrors; against actual want he knows
that he has the fence of the poor-laws. But, however
humble his desires, he cannot contemplate without anxiety
a probability that the income which supported his social
rank, while single, may be insufficient to maintain it
when he is married; that he may be unable to give to
his children the advantages of education which he en-
Men
joyed himself; in short, that he may lose his caste, Men
•
of more enterprise are induced to postpone marriage, not Political
merely by the fear of sinking, but also by the hope that Economy.
in an unincumbered state they may rise. As they mount
the horizon of their ambition keeps receding, until Population.
sometimes the time has passed for realizing those plans
of domestic happiness which probably every man has
formed in his youth.
It is by this desire of decencies, as distinguished from
necessaries, that long-settled civilized Countries are
preserved from the evils of a population greatly ex-
ceeding the means of comfortable subsistence. There
are few triter subjects of declamation than the con-
trast between ancient simplicity and modern luxury.
Few virtues, however useful, have received more ap-
plause than the contented and dignified poverty, the
indifference to display, and the abstinence from unne-
cessary expense, which all refined nations attribute to
their ancestors. Few vices, however mischievous, have
been more censured than the ostentatious expenditure
which every succeeding generation seems to consider its
own characteristic.
It certainly seems at first sight that habits of unneces-
sary expenditure, as they have a tendency to diminish
the wealth of an individual, must have the same effect
on the wealth of a nation. And, separately considered,
it appears clear that each act of unproductive consump-
tion, whatever gratification it may afford to the con-
sumer, must, pro tanto, impoverish the community.
It is so much taken from the common stock and de-
stroyed. And as the national capital is formed from
the aggregate savings of individuals, it is certain
that if each individual were to expend to the utmost
extent of his means, the whole capital of the Country
would be gradually wasted away, and general misery
would be the result. But it appears equally certain
would be the result.
that if each individual were to confine his expenditure
to mere necessaries, the result would be misery quite as
general and as intense.
We have seen that the powers of population, if not
restrained by prudence, must inevitably produce almost
In the case which
every form of moral and physical evil.
we are supposing, the wants of society would be confined
to the food, raiment, and shelter essential to the support
of existence; and they would all consist of the cheapest
materials. At present, among civilized nations, the cul-
tivation of the land employs only a portion of its inhabit-
ants, and, generally speaking, as a nation increases in
wealth, a smaller and smaller proportion; in England
not one third; and a great part of the labourers so
employed are producers of luxuries. Indeed, as po-
tatoes afford a food five or six times as abundant as
corn, and more than twenty times as abundant as
meat, and, as far as can be judged by the appear-
ance and powers of the lower Irish, quite as whole-
some, meat and corn may be considered luxuries,
to the extent in which they are more expensive than
potatoes. Nor, consistently with the existence of private
property, and of the desire of wealth, can the mode of
cultivation be directed to the obtaining the largest pos-
sible return. The object is to obtain the largest return
that is consistent with profitable farming, but, in the
pursuit of this object, quantity of produce must often be
sacrificed to economy of labour or time.
If there were no desire for any thing beyond necessaries,
both the existing partition of the land, and the existing
division of labour, would be varied. No family would
wish to occupy more land than the small plot necessary to
POLITICAL ECONOMY.
145
Political afford them potatoes and milk. Supposing them to give
Economy, to it the utmost nicety of garden cultivation, its manage-
ment would still leave them time to produce the coarse
Population,
manufactures necessary for their own use. The whole of
the population would be agricultural. 761,348 families
so employed at present in England, although their labour
is far from being directed to the production of the
greatest possible amount, provide, without much assist-
ance from importation, subsistence for the whole of our
2,745,336 families. If all were so employed, and if
quantity of produce were their sole object, it is
probable that in ordinary seasons the soil of Eng-
land, instead of fifteen millions, could feed at least
sixty millions of people; and that of Europe, instead
of two hundred, eight hundred millions. And that, in
the absence of any checks more powerful than those
experienced in the United States of America, the popu.
lation of Europe might in fifty years amount to eight
hundred millions. Indeed it is probable that, under the
circumstances which we are supposing, the increase in
Europe would be for a considerable time rather more
rapid than that which has taken place in America. Pre-
ventive checks would not exist; marriages could not be
hindered or even delayed by prudence, since there could
be no reason to anticipate want; the habit of early
marriages would put an end to profligacy; and, as all
our habits would be eminently healthy, the positive
checks would be reduced to their minimum.
So far the picture is rather pleasing; it exhibits a
state of society, not rich certainly, nor refined, but sup-
porting a very numerous population in health and
strength, and in the full enjoyment of the many sources
of happiness connected with early marriage. But it is
obvious that this could not last for ever; it could not last
indeed for two hundred and fifty years. By that time
the population of Europe would amount to above three
million millions; a number which the wildest imagina-
tion cannot conceive capable of existing simultaneously
in the whole earth.
Sooner or later, therefore, the increase must be checked;
and we have seen that prudence is the only check that
does not involve vice or misery. But such is the force
of the passions which prompt to marriage, and such is
each man's reliance on his own good conduct and good
fortune, that the evils, whatever they may be, the appre-
hension of which forms the prudential check, are fre-
quently incurred. Where that evil is the loss of luxuries,
or even of decencies, it is trifling in the first case, and
bearable in the second. But, in the case which we are
supposing, the only prudential check would be an appre-
hended deficiency of necessaries; and that deficiency,
in the many instances in which it would actually be
incurred, would be the positive check in its most fright-
ful form. It would be incurred not only in consequence
of that miscalculation of chances to which all men are
subject, and certainly those not the least so who are
anxious to marry, but through accidents against which
no human prudence can guard. A single bad harvest
be provided against, but a succession of unfavour-
able seasons (and such successions do occur) must reduce
such a people to absolute famine. When such seasons
affect a nation indulging in considerable superfluous ex-
penditure, they are relieved by a temporary sacrifice of
that superfluity. The grain consumed in ordinary years
by our breweries and distilleries is a store always at
hand to supply a scarcity, and the same may be said of
may
VOL. VI.
the large quantity of food raised for the support of Political
domestic animals, but applicable to human subs istene. Economy.
To these resources may be added the importation from
abroad of necessaries instead of luxuries and the mate-
Population.
rials of luxury, of corn, for instance, instead of wine.
It may
be said however, and indeed it has been said,
that while the globe remains in its present irregularly
occupied and irregularly cultivated state, emigration
affords to all comparatively thickly-peopled nations a
resource so ample and so easy as to render every pruden-
tial check to population unnecessary.
It is obvious that if capital and skill equal to those
bestowed on the best parts of Flanders, or of the
Scotch Lowlands, could be applied to the whole
habitable world, a population ten times, perhaps
one hundred times, perhaps even five hundred times
as large could be maintained, as well, perhaps far
better, than the one thousand millions now supposed
to exist on its surface.
to exist on its surface. It is possible, we will not say
even that it is improbable, that in the course of centuries,
or rather of hundreds of centuries, these splendid visions
may be realized. But all experience shows that no
numerous and civilized nation, surrounded by other civi-
lized nations, can venture to rely on emigration as a
permanent and adequate check to population. We say
no numerous and civilized nation surrounded by other
civilized nations; for we are aware that the hordes of
Central Asia and of the Northern parts of Europe, and
the surplus inhabitants of some small communities, such
as the petty States of ancient Greece and Phoenicia,
appear to have found, the one in colonization, the others
in armed migrations, a periodical outlet; and that the
Americans of European descent have enjoyed for cen-
turies, and for centuries to come may enjoy, in the
immense continent behind them, room for as rapid an
increase of their numbers as the most unchecked propa-
gation can supply. But these are not examples which
Europe, as now constituted, can imitate. When all the
land frontier is appropriated,-when invasion for the pur-
pose of settlement is impossible, and the solitary traveller
is repelled by a different language, different laws, diffe-
rent arts, and often a different religion,-when the other
alternative is an expensive and distant voyage, and
either an unsettled, and therefore in general an unwhole-
some country, or equal obstacles from variations of
laws, language, religion, and arts, in a previously settled
district,-when these are the difficulties to be encountered,
no extensive and systematic emigration will be persisted
in. Even the different parts of the same empire afford
little assistance to one another, if difference of language,
or habits, or considerable distance be interposed. The
Austrian dominions contain some of the most thinly and
some of the most thickly peopled portions of Europe;
but Hungary is not colonized from the plains of Lom-
bardy. If any European nation could hope to make
emigration a complete substitute for prudence, that hope
might be entertained by the inhabitants of the British
Islands. We have the command of unoccupied conti-
nents in each hemisphere, the largest navy that the world
ever saw to convey us to them, the largest capital that
ever has been accumulated to defray the expense, and a
population remarkable not merely for enterprise, but for
enterprise of this particular description. These advan-
tages we have enjoyed for centuries; almost from the
times of the Tudors we have possessed a large outskirt
of empire far exceeding in extent our European posses-
X
146
POLITICAL ECONOMY.
Political sions. And yet during this long period how little effect
Economy, has emigration produced on our numbers! The swarms
which we have sent out, and which we now send out,
Population.
seem to be instantaneously replaced. We have founded
one empire, and probably shall found many; but, after
once a colony has been planted, its principal increase
arises, not from the comparatively scanty recruits whom
it receives from home, but from the unrepressed force of
human fecundity.
In a future portion of this Treatise we shall explain
with more detail the causes which impede emigration; at
present we shall only repeat that all experience shows
its inability to keep down the population of any large,
well peopled, and tolerably civilized Country, such as
Europe, China, or Hindostan. It appears, therefore,
that habits of prudence in contracting marriage, and of
considerable superfluous expenditure, afford the only
permanent protection against a population pressing so
closely on the means of subsistence as to be continually
incurring the misery of the positive checks. And as
the former habits exist only in a civilized, and the latter
only in an opulent society, it appears equally clear that,
as a nation advances in civilization and opulence, the
positive checks are likely to be superseded by the pre-
ventive. If this be true, the evil of a redundant popu-
lation, or, to speak more intelligibly, of a population too
numerous to be adequately and regularly supplied with
necessaries, is likely to diminish in the progress of im-
provement. As wealth increases, what were the luxuries
of one generation become the decencies of their succes-
sors. Not only a taste for additional comfort and con-
venience, but a feeling of degradation in their absence,
becomes more and more widely diffused. The increase
in many respects of the productive powers of labour
must enable increased comforts to be enjoyed by in-
creased numbers; and as it is the more beneficial, so it
appears to be the more natural course of events that
increased comfort should not only accompany but rather
precede increase of numbers.
But although we believe that, as civilization advances,
the pressure of population on subsistence is a decreasing
evil, we are far from denying the prevalence of this pres-
sure in all long-settled Countries; indeed in all Countries
except those which are the seats of colonies applying the
knowledge of an old Country to an unoccupied territory.
We believe that there are few portions of Europe the inha-
bitants of which would not now be richer if their numbers
were fewer, and would not be richer hereafter if they
were now to retard the rate at which their population is
increasing. No plan for social improvement can be
complete unless it embrace the means both of increasing
the production of wealth and of preventing population
from making a proportionate advance. The former is
to be effected by legislative, the latter by individual pru-
dence and forethought. The former must be brought
about by the governing classes of society; the latter de-
pends almost entirely on the lower. As a means of
improvement, the latter is, on the whole, more efficient.
It may be acted upon or neglected by almost every one.
But, in the present state of public opinion and of com-
mercial and fiscal policy in Europe, perhaps a greater
progress may be made by insisting on the former. The
statesman who neglects either considers only a portion
of the subject.
#
But we must admit that ours are not the received
opinions; or perhaps we ought to say, that our state-
ment is opposed, on the one side or on the other, to the Political
language used by almost every writer who has directly Economy.
treated the subject of population. Almost every Econo-
Population.
mist will be found, in that part of his writings in which
what has been called the principle of population is the
immediate and principal question considered, to range
himself under one of two hostile banners, each opposed
not only to the other, but also to the doctrines which
we have endeavoured to explain. On one side are
those who believe that an increase of numbers is neces-
sarily accompanied not merely by a positive, but by a
relative increase of productive power; that density of
population is the cause and the test of prosperity; and
that, were every nation under the sun to be released
from all the natural and artificial checks on their in-
crease, and to start off breeding at the fastest possible
rate, many, very many generations must elapse before
any necessary pressure could be felt."*
66
On the other side are those who maintain that popu-
lation has a tendency (using the word tendency to
express likelihood or probability) to increase beyond the
means of subsistence; or, in other words, that, whatever
be the existing means of subsistence, population is likely
fully to come up to them, and even to struggle to pass
beyond them, and is kept back principally by the vice
and misery which that struggle must produce.
The whole of our previous remarks afford an answer
to the first-mentioned class of writers. We shall not
therefore recur to them. The opinions of the other class
we shall consider at some length; and we will begin by
the following quotations from Mr. M'Culloch, Mr.
Mill, and Mr. Malthus.
Among the valuable notes which Mr. M'Culloch has
appended to his edition of the Wealth of Nations, one of
the most interesting treats of population; and one of
the objects of that note is to show that the population
of the United States of America cannot continue to
increase for any very considerable period at the rate at
which it has increased during the last hundred years.
We are perfectly convinced of the correctness of this
anticipation; and we make the following extract not
with any intention to oppose Mr. M'Culloch's opinions
as to America, but because we are anxious to express
our dissent to the form in which he lays down the
general doctrine of population.
"It may be said perhaps," says Mr. M'Culloch, "that
allowance must be made for the effects of the improve-
ments which may be supposed to take place in agricul-
tural science in the progress of society, or the possible
introduction, at some future period, of new and more
prolific species of crops. But it is easy to see that the
influence of such improvements and changes must, sup-
posing them to be realized in the fullest manner, be of
very temporary duration; and that it cannot affect the
truth of the principle, that the power of increase in the
human species must always, in the long run, prove an
overmatch for the increase in the means of subsistence.
Suppose by some extraordinary improvement the quan-
tity of food and other articles required for the subsist-
ence and accommodation of man annually produced in
Great Britain were suddenly doubled; the condition of
all classes being in consequence signally improved,
there would be less occasion for the exercise of moral
* Scrope, Principles of Political Economy, 1833, p. 276.
POLITICAL ECONOMY.
147
Political restraint; the period of marriage would therefore be
Economy accelerated, and such a powerful stimulus would be given
to the principle of increase, that in a very short period
Population. the population
the population would be again on a level with the means
of subsistence; and there would also, owing to the
change that must have been made in the habits of the
people with respect to marriage, during the period that
the population was rising to the level of the increased
supply of food, be an extreme risk lest it should become
too abundant, and produce an increased rate of mor-
tality. Although, therefore, it is not possible to assign
any certain limits to the progress of improvement, it is
notwithstanding evident that it cannot continue for any
considerable period to advance in the same proportion
that population would advance supposing food were
abundantly supplied. The circumstance of inferior
lands, which require a greater outlay of capital and
labour to make them yield the same supply as those
that are superior, being invariably taken into cultivation
in the progress of society, demonstrates, what is other-
wise indeed sufficiently obvious to every one, that, in
despite of improvements, the difficulty of adding to the
supplies of food is progressively augmented as popula-
tion becomes denser."
Mr. Mill's views are to be found in his discussion
of wages. Principles, &c., ch. ii, s. 2. "If it were," he
observes, "the natural tendency of capital (by which
term Mr. Mill designates the instruments of labour, the
materials on which they are to be employed, when pro-
duced by labour, and the subsistence of the labourer)
to increase faster than population, there would be no
difficulty in preserving the prosperous condition of the
people. If, on the other hand, it were the natural tend-
ency of population to increase faster than capital, the
difficulty would be very great. There would be a per-
petual tendency in wages to fall; the progressive fall of
wages would produce a greater and a greater degree of
poverty among the people, attended with its inevitable
consequences, misery and vice. As poverty, and its
consequent misery, increased, mortality would also in-
crease of a numerous family born, a certain number
only, from want of the means of well being, would be
reared. By whatever proportion the population tended
to increase faster than capital, such a proportion of those
who were born would die; the ratio of increase in
capital and population would then remain the same,
and the fall of wages would proceed no further. That
population has a tendency to increase faster than, in
most places, capital has actually increased, is proved
incontestably by the condition of the population in most
parts of the globe. In almost all Countries the condi-
tion of the great body of the people is poor and misera-
ble. This would have been impossible, if capital had
increased faster than population. In that case wages
must have risen; and high wages would have placed
the labourer above the miseries of want. This general
misery of mankind is a fact which can be accounted
for upon one only of two suppositions: either that
there is a natural tendency in population to increase
faster than capital, or that capital has, by some means,
been prevented from increasing so fast as it has a tend-
ency to increase.
This, therefore, is an inquiry of the
highest importance."
As the result of that inquiry, Mr. Mill decides the
second alternative in the negative; and consequently
conceives himself to have established the former, namely,
that there is a natural tendency in population to increase Political
Economy.
faster than capital.
Mr. Malthus's opinions appear to have been con- Population.
siderably modified during the course of his long and
In the first edition of
brilliant philosophical career.
his great Work the principle of population was repre-
sented as an insurmountable obstacle to the permanent
welfare of the mass of mankind. And even in the last
edition the following passages are open to the same
construction
The
"There are few States in which there is not a con-
stant effort in the population to increase beyond the
means of subsistence. This constant effort as constantly
tends to subject the lower classes of society to distress,
and to prevent any great permanent amelioration of
their condition. These effects, in the present state of
society, seem to be produced in the following manner:
We will suppose the means of subsistence in any
Country to be just equal to the easy support of its in-
habitants. The constant effort towards population,
which is found to act even in the most vicious societies,
increases the number of people before the means of
subsistence are increased. The food, therefore, which
before supported eleven millions, must now be divided
between eleven millions and a half. The poor conse-
quently must live much worse, and many of them
be reduced to severe distress. The number of labourers
also being above the proportion of work in the market,
the price of labour must tend to fall, while the price of
provisions would at the same time tend to rise.
labourer therefore must do more work to earn the same
as he did before. During this season of distress the
discouragements to marriage and the difficulty of
rearing a family are so great that the progress of
population is retarded. In the mean time, the cheap-
ness of labour, the plenty of labourers, and the
necessity of an increased industry amongst them, en-
courage cultivators to employ more labour upon their
land, to turn up fresh soil, and to manure and improve
more completely what is already in tillage, till ulti-
mately the means of subsistence may become in the
same proportion to the population as at the period
The situation of the labourer
from which we set out.
being then again tolerably comfortable, the restraints to
population are in some degree loosened; and after a
short period the same retrograde and progressive move-
ments, with respect to happiness, are repeated." Popu-
lation, book i. chap. 2. "According to the principle of
population, the human race has a tendency to increase
faster than food. It has, therefore, a constant tendency
to people a Country fully up to the limits of subsist-
ence; meaning, by these limits, the lowest quantity of
food which will maintain a stationary population.”
Book iii. chap. i. note.
But when the opposite doctrine, namely, that, in the
absence of disturbing causes, subsistence is likely to
increase more rapidly than population, was brought
before him by Mr. Senior, he appears to have disavowed,
we will not say his former expressions, but the infer-
ences to which they lead.
"The meaning," says Mr. Malthus, "which I m-
tended to convey by the expression to which you ob-
iect" (that population has a tendency to increase
faster than food) was, that population was always
ready and inclined to increase faster than food, if the
checks which repressed it were removed; and that
x 2
148
POLITICAL ECONOMY.
Political
though these checks might be such as to prevent popu-
Economy, lation from advancing upon subsistence, or even to keep
Population. it at a greater distance behind, yet that, whether popu-
lation were actually increasing faster than food, or food
faster than population, it was true that, except in new
colonies, favourably circumstanced, population was
always pressing against food, and was always ready to
start off at a faster rate than that at which the food was
actually increasing."
!
"We are quite agreed that, in the capacity of reason
and forethought, man is endowed with a power naturally
calculated to mitigate the evils occasioned by the pressure
of population against food. We are further agreed that,
We are further agreed that,
in the progress of society, as education and knowledge
are extended, the probability is that these evils will
practically be mitigated, and the condition of the labour-
ing classes be improved."*
So explained, Mr. Malthus's opinions are opposed to
the expressions of Mr. Mill and Mr. M'Culloch; his admis-
sion that, "in the progress of society, the probability is
that the evils occasioned by the pressure of population
against food will be mitigated," is opposed to Mr. M'Cul-
loch's statement, "that the power of increase in the
human species must always in the long run prove an
overmatch for the increase in the means of subsistence;"
and to Mr. Mill's, "that the tendency of popula-
tion to increase faster than, in most places, capital has
actually increased, is proved incontestably by the condi-
tion of the population in most parts of the globe."
Archbishop Whately, with his usual acuteness, has in
the following passage traced the question to a verbal
ambiguity.
The doctrine, that, since there is a tendency in popu-
lation to increase faster than the means of subsistence,
hence the pressure of population against subsistence may
be expected to become greater and greater in each succes-
sive generation, (unless new and extraordinary remedies
are resorted to,) and thus to produce a progressive dimi-
nution of human welfare-this doctrine, which some main-
tain in defiance of the fact that all civilized Countries
have a greater proportionate amount of wealth now
than formerly, may be traced chiefly to an undetected
ambiguity in the word 'tendency,' which forms a part
of the middle term of the argument. By a 'tendency'
towards a certain result is sometimes meant, the exist-
ence of a cause which, operating unimpeded, would
produce that result. In this sense it may be said, with
truth, that the earth, or any other body moving round a
centre, has a tendency to fly off at a tangent; (i. e.) the
centrifugal force operates in that direction, though it is
controlled by the centripetal; or, again, that man has a
greater tendency to fall prostrate than to stand erect;
(i. e.) the attraction of gravitation and the position of
the centre of gravity are such that the least breath of air
would overset him, but for the voluntary exertion of
muscular force: and, again, that population has a tend-
ency to increase beyond subsistence; (i. e.) there are in
man propensities which, if unrestrained, lead to that
result.
"But sometimes, again, a tendency towards a certain
result' is understood to mean the existence of such a
state of things that that result may be expected to take
place.' Now it is in these two senses that the word is
used, in the two premises of the argument in question.
But in this latter sense, the earth has a greater tendency
* Appendix to Senior's Lectures on Population, p. 61–82.
to remain in its orbit than to fly off from it; man has a Political
greater tendency to stand erect than to fall prostrate; and Economy.
(as may be proved by comparing a more barbarous with
a more civilized period in the history of any Country) in Population.
the progress of Society, subsistence has a tendency to
increase at a greater rate than population. In this
Country, for instance, much as our population has in-
creased within the last five centuries, it yet bears a far
less ratio to subsistence (though still a much greater
than could be wished) than it did five hundred years
ago."
It is obvious that if the present state of the world,
compared with its state at our earliest records, be one of
relative poverty, the tendency of population to increase
more rapidly than subsistence must be admitted. If
the means of subsistence continue to bear precisely
the same proportion to the number of its inhabitants, it
is clear that the increase of subsistence and of numbers
has been equal. If its means of subsistence have in-
creased much more than the number of its inhabitants,
it is clear not only that the proposition in question is false,
but that the contrary proposition is true, and that the
means of subsistence have a natural tendency (using
these words as expressing what is likely to take place)
to increase faster than population. Now what is the
picture presented by the earliest records of those na-
tions which are now civilized, or, which is the same,
what is now the state of savage nations? state of
habitual poverty and occasional famine. A scanty popu-
lation, but still scantier means of subsistence. Admit-
ting, and it must be admitted, that in almost all Coun-
tries the condition of the great body of the people is
poor and miserable, yet, as poverty and misery were their
original inheritance, what inference can we draw from
the continuance of that misery as to the tendency of
their numbers to increase more rapidly than their wealth?
But if a single Country can be found in which there
is now less poverty than is universal in a savage state,
it must be true that, under the circumstances in which
that Country has been placed, the means of subsistence
have a greater tendency to increase than the population.
Now this
Now this is the case in every civilized Country. Even
Ireland, the Country most likely to afford an in-
stance of what has been called the tendency of
things, poor and populous as she is, suffers less from
want with her eight millions of people than when her
only inhabitants were a few septs of hunters and fishers.
In our own early history, famines, and pestilences, the
consequences of famine, constantly recur.
At present,
though our numbers are trebled or quadrupled, they are
unheard of.
The United States of America afford the best ascer-
tained instance of great and continued increase of num-
bers. They have afforded a field in which the powers
of population have been allowed to exhaust their energy;
but, though exerted to their utmost, they have not as yet
equalled the progress of subsistence. Whole colonies
of the first settlers perished from absolute want; their
successors struggled long against hardship and priva-
tion; but every increase of their number seems to have
been accompanied or preceded by increased means of
support. If it be conceded that there exists in the hu
man race a natural tendency to advance from barbarism
to civilization, and that the means of subsistence are
proportionably more abundant in a civilized than in a
*Archbishop Whately, Lectures on Political Economy. Lecture 9.
J
POLITICAL ECONOMY.
149
Political savage state, and neither of these propositions can be
Economy, denied, it must follow that there is a natural tendency
Population, lation.
in subsistence to increase in a greater ratio than popu-
But although Mr. Malthus himself, in his earlier
publications, has perhaps fallen sometimes into the
exaggeration which is natural to a discoverer, the error,
if he has committed one, does not affect the practical
conclusions which place him, as a benefactor to man-
kind, on a level with Adam Smith. Whether, in the
absence of disturbing causes, it be the tendency of sub-
sistence or of population to advance with greater rapidity,
is a question of slight importance, if it be acknowledged
that human happiness or misery depend principally on
their relative advance, and that there are causes, and
causes within human control, by which that advance
can be regulated. These are propositions which Mr.
Malthus has established by facts and reasoning which,
opposed as they were to long-rooted prejudice, and
assailed by every species of sophistry and clamour, are
now admitted by the majority of reasoners, and even
by a large majority of those who take their opinions
upon trust.
To explain what are the causes of the relative increase
of subsistence and population is rather the business of a
writer on politics than of a Political Economist. At pre-
sent we will only say that knowledge, security of property,
freedom of internal and external exchange, and equal
admissibility to rank and power, are the principal causes
which at the same time promote the increase of sub-
sistence, and, by elevating the character of the people,
lead them to keep at a slower rate the increase of their
numbers. And that restrictions on exchange and com-
merce, artificial barriers excluding the great majority of
the community from the chance of social eminence, and,
above all, ignorance, and insecurity of person and pro-
perty, are the general causes which both diminish the
productiveness of labour, and tend to produce that brutal
state of improvidence in which the power of increase,
unchecked by prudence, is always struggling to pass the
limits of subsistence, and is kept down only by vice and
misery. We use the expression general causes, to ex-
clude those causes which, being peculiar to certain na-
tions, require separate consideration. Such are the
superstitious desire of offspring in China, the political
motives which formerly occasioned the creation of free-
holders in Ireland, and the administration of the poor
laws in some parts of England. But, omitting these
details, it may be generally stated that all that degrades
the character, or diminishes the productive power of a
people, tends to diminish the proportion of subsistence to
population, and vice versâ. And consequently that a
population increasing more rapidly than the means of
subsistence is, generally speaking, a symptom of mis-
government indicating deeper-seated evils, of which it is
only one of the results.
And, notwithstanding the passages which we have
cited, we believe these to be also the opinions of Mr.
Mill and of Mr. M'Culloch. We believe that neither
of these eminent writers doubts that the situation of the
inhabitants of Europe has been gradually improving
during the last 500 years. We believe that neither of
them considers the improvement as having reached its
limit, or as having any definite limit whatever. When
they speak of the probable destinies of mankind, they
teach the same doctrine as ourselves. It is only when
separately discussing the subject of population that they
have used the language to which we have ventured to Political
object. We believe that they have used it without Economy.
being misled by it themselves, and, perhaps on that
Population.
very account, without perceiving its tendency to mislead
others. But that those whose acquaintance with Poli-
tical Economy is superficial (and they form the great
mass of even the educated classes) have been misled
by the form in which the doctrine of population has
been expressed appears to us undeniable. When such
persons are told that "it is the tendency of the human
race to increase faster than food"—" to people a country
fully up to the means of subsistence," they infer that
what has a tendency to happen is to be expected. Be-
cause additional population may bring poverty, they
suppose that it necessarily will do so: because increased
means of subsistence may be followed and neutralized
by a proportionate increase in the number of persons to
be subsisted, they suppose that such will necessarily be
the case.
And unhappily there are many whom indo-
lence, or selfishness, or a turn to despondency, make
ready recipients of such a doctrine. It furnishes an easy
escape from the trouble or expense implied by every
project of improvement. "What use would it be,'
they ask, "to promote an extensive emigration? the
whole vacuum would be immediately filled up by the
necessary increase of population. Why should we alter
the Corn Laws? If food were for a time more abundant,
in a very short period the population would be again
on a level with the means of subsistence, and we should
be just as ill off as before."
There are many also, particularly among those who
reason rather with their hearts than their heads, who
are unable to assent to these doctrines, and yet believe
them to be among the admitted results of Political
Economy, Such persons apply to the whole Science the
argumentum ab absurdo; and, instead of inquiring into
the accuracy of the reasoning, refuse to examine the
premises from which such objectionable conclusions are
inferred.
It is because we believe these misconceptions to be
extensively prevalent that we have ventured to detain
our readers by this long discussion. A discussion which
some may think a mere dispute about the more conve-
nient use of a word, and others an attempt to prove a
self-evident fact.
Production.
Having explained the sense in which we use the word Production.
wealth, and given an outline of the doctrine of popula-
tion, we now proceed to consider production, or the
means by which wealth is produced. The first terms
to be defined are the verb produce, and the substantive
product.
To produce, as far as Political Economy is concerned,
is to occasion an alteration in the condition of the ex-
isting particles of matter, for the occasioning of which
alteration, or for the things thence resulting, something
may be obtained in exchange. This alteration is a
product. It is scarcely necessary to remind our readers
that matter is susceptible neither of increase nor dimi-
nution, and that all which man or any other agent
of which we have experience can effect, is to alter
the condition of its existing particles. But as Political
Economy treats only of wealth, and therefore only
of those alterations of which wealth is the result, we
are forced to exclude all other alterations from the
definition of products. The child who builds a castle
,
150
POLITICAL ECONOMY.
Political with sand on the shore, and the child who kicks it
Economy. down, each occasions effects the same in kind as the man
who builds or pulls down a palace; but as the exertions
Production.
of the latter entitle him to be paid, he is properly said
to produce, and the result of his conduct, whether it be
the covering with buildings ground previously unoccu-
pied, or rendering vacant what was previously built
over, is properly called a product.
Products have been divided into material and im-
material, or, to express the same distinction in dif-
ferent words, into commodities and services. This
distinction appears to have been suggested by Adam
Smith's well-known division of labour into produc-
tive and unproductive. Those who thought the prin-
ciple of that division convenient, feeling at the same
time the difficulty of terming unproductive the labour
without which all other labour would be inefficient, in-
vented the term services, or immaterial products, to
express its results.
It appears to us, however, that the distinctions that
have been attempted to be drawn between productive
and unproductive labourers, or between the producers of
material and immaterial products, or between commo-
dities and services, rest on differences existing not in the
things themselves, which are the objects considered, but
in the modes in which they attract our attention. In
those cases in which our attention is principally called
not to the act of occasioning the alteration, but to the
result of that act, to the thing altered, Economists have
termed the person who occasioned that alteration a pro-
ductive labourer, or the producer of a commodity or
material product. Where, on the other hand, our atten-
tion is principally called not to the thing altered, but to
the act of occasioning that alteration, Economists have
termed the person occasioning that alteration an unpro-
ductive labourer, and his exertions, services, or imma-
terial products. A shoemaker alters leather and thread
and wax into a pair of shoes. A shoeblack alters a
dirty pair of shoes into a clean pair. In the first
case our attention is called principally to the things as
altered. The shoemaker, therefore, is said to make or
produce shoes. In the case of the shoeblack, our at-
tention is called principally to the act as performed.
He is not said to make or produce the commodity, clean
shoes, but to perform the service of cleaning them. In
each case there is of course an act and a result; but in
the one case our attention is called principally to the
act, in the other to the result.
Among the causes which direct our attention princi-
pally to the act, or principally to the result, seem to be,
first, the degree of change produced; and secondly, the
mode in which the person who benefits by that change
generally purchases that benefit.
1. Where the alteration is but slight, especially if the
thing that has been subjected to alteration still retains
the same name, our attention is directed principally to
the act. A cook is not said to make roast beef, but to
dress it; but he is said to make a pudding, or those
more elaborate preparations which we call made dishes.
The change of name is very material: a tailor is said
to make cloth into a coat; a dyer is not said to make
undyed cloth into dyed cloth. The change produced by
the dyer is perhaps greater than that produced by the
tailor, but the cloth in passing through the tailor's
hands changes its name; in passing through the dyer's
it does not the dyer has not produced a new name,
nor, consequently, in our minds, a new thing.
The
The principal circumstance, however, is the mode in Political
which the payment is made. In some cases the pro- Economy.
ducer is accustomed to sell, and we are accustomed to
purchase, not his labour, but the subject on which that Production.
labour has been employed; as when we purchase a wig
or a chest of medicine. In other cases, what we buy is
not the thing altered, but the labour of altering it, as
when we employ a haircutter or a physician. Our
attention in all these cases naturally fixes itself on the
thing which we are accustomed to purchase; and accord-
ing as we are accustomed to buy the labour, or the thing
on which that labour has been expended,—as we are, in
fact, accustomed to purchase a commodity or a service,
we consider a commodity or a service as the thing pro-
duced. The ultimate object both of painting and of
acting is the pleasure derived from imitation.
means adopted by the painter and the actor are the
same in kind. Each exercises his bodily organs, but
the painter exercises them to distribute colours over a
canvass, the actor to put himself into certain attitudes,
and to utter certain sounds. The actor sells his exer-
tions themselves. The painter sells not his exertions,
but the picture on which those exertions have been em-
ployed. The mode in which their exertions are sold
constitutes the only difference between menial servants
and the other labouring classes: a servant who carries
coal from the cellar to the drawing-room performs pre-
cisely the same operation as the miner who raises them
from the bottom of the pit to its mouth. But the con-
sumer pays for the coals themselves when raised and
received into his cellar, and pays the servant for the
act of bringing them up. The miner, therefore, is said
to produce the material commodity, coals; the servant
the immaterial product, or service. Both, in fact, pro-
duce the same thing, an alteration in the condition of
the existing particles of matter; but our attention is
fixed in the one case on the act, in the other on the
result of that act.
In the ruder states of society almost all manufac-
tures are domestic: the Queens and Princesses of heroic
times were habitually employed in overlooking the la-
bours of their maidens. The division of labour has
banished from our halls to our manufactories the distaff
and the loom; and, if the language to which we have
been adverting were correct, the division of labour must
be said to have turned spinners and weavers from un-
productive into productive labourers; from producers of
immaterial services into producers of material commo-
dities.
But objecting as we do to a nomenclature which
should consider producers as divided, by the nature of
their products, into producers of services and producers
of commodities, we are ready to admit the convenience
of the distinction between services and commodities
themselves, and to apply the term service to the act of
occasioning an alteration in the existing state of things,
the term commodity to the thing as altered; the term
product including both commodities and services.
It is to be observed that, in ordinary language, a person
is not said to produce a thing unless he has employed
himself for that especial purpose. If an English oyster-
fisher should meet with an oyster containing a pearl,
he would be called not the producer of the pearl, but its
casual finder. But a Ceylon oyster-fisher, whose trade
is to fish for pearl oysters, is called a producer of pearls.
The mere existence of the pearls is in both cases owing
to the agency of nature; their existence as articles of
POLITICAL ECONOMY.
151
Political value is in both cases owing to the agency of the fisher
Economy. in removing them from a situation in which they were
valueless. In the one case he did this intentionally, in
Production the other accidentally. Attention is directed in the one
and con-
case to his agency, and he is therefore called the producer
sumption.
of the pearl. In the other case it is directed to the
agency of nature, and he is called only the appropriator.
But it appears to us the more convenient classification,
for scientific purposes, to term him in both cases the
producer.
Economists have in general opposed consumption to
production. They have defined consumption to be the de-
struction wholly, or in part, of any portion of wealth. And
they consider it as the ultimate object of all production.
Tout ce qui est produit,* says M. Say, est consommé;
par conséquent, toute valeur créée est détruite, et n'a été
créé que pour être détruite.
66
Consumption," says Mr. Malthus, "is the great
purpose and end of all production.Ӡ By consump-
tion," says Mr. M'Culloch, "is meant the annihilation
of those qualities which render commodities useful or
desirable. To consume the products of Art and in-
dustry is to deprive the matter of which they consist of
utility, and consequently of the exchangeable value com-
municated to it by labour. Consumption is, in fact, the
end and object of human exertion, and when a com-
modity is in a fit state to be used, if its consumption be
deferred, a loss is incurred."‡
That almost all that is produced is destroyed is true;
but we cannot admit that it is produced for the purpose
of being destroyed. It is produced for the purpose of
being made use of. Its destruction is an incident to its
use, not only not intended, but, as far as possible,
avoided. In fact, there are some things which seem
unsusceptible of destruction except by accidental injury.
A statue in a gallery, or a medal, or a gem in a cabinet,
may be preserved for centuries without apparent de-
terioration. There are others, such as food and fuel,
which perish in the very act of using them, and hence,
as these are the most essential commodities, the word
consumption has been applied universally as express-
ing the making use of anything. But the bulk
of commodities are destroyed by those numerous
gradual agents which we call collectively time, and the
action of which we strive to retard. If it be true that
If it be true that
consumption is the object of all production, the inha-
bitant of a house must be termed its consumer, but it
would be strange to call him its destroyer; since it would
unquestionably be destroyed much sooner if uninhabited.
It would be an improvement in the language of Political
Economy if the expression "to use" could be sub-
stituted for that "to consume." There is, however, so
much difficulty in changing an established nomencla-
ture, that we shall continue to use the word consump-
tion, premising that we use it to signify primarily the
making use of a thing; a circumstance to which its de-
struction is generally, but not necessarily, incidental.
The wealth of a Country will much depend on the
question, whether the tastes of its inhabitants lead them
to prefer objects of slow or of rapid destruction.
It will depend, however, much more on their preference
of productive or unproductive consumption.
Productive consumption is that use of a commodity
* Say, Principles, tome iii. p. 276.
+ Principles, &c. p. 219.
‡ Id. p. 511–612. 2d Ed.
which occasions an ulterior product.
Unproductive Political
Economy.
consumption is, of course, that use which occasions no
ulterior product. The characteristic of unproductive Production
consumption is, that it adds to the enjoyment of no one and con-
but the consumer himself. Its only effect upon the sumption.
rest of the community is to diminish pro tanto the mass
of commodities applicable to their use.
Some commodities are unsusceptible of any but unpro-
ductive consumption; such are lace, embroidery, jewellery,
and the other personal ornaments which are simply
decorative, and afford neither warmth nor protection.
Under this head may also be ranked tobacco and snuff,
and the other stimulants, of which the best that can be
said is, that they are not injurious. A much larger
class of commodities is designed solely for productive
use, and is never consumed unproductively, but by mis-
take. In this class are all tools, from the simplest to
the most complicated; from the spade and the raft, to
the steam engine and the Indiaman. But the generality
of commodities may be used, according to the will of the
proprietor, productively or unproductively; may be
consumed so as to substitute some product in lieu of
that which has been destroyed, or without any further
beneficial result than the immediate pleasure which has
accompanied their use.
Whatever is capable of sup-
porting human existence may be used to maintain those
who are themselves producers, or those who are not.
In the first case it is productively, in the second unpro-
ductively consumed.
The distinction between productive and unproduc-
tive consumers is less clearly marked than that between
productive and unproductive consumption. To divide
men into two classes, productive and unproductive con-
sumers, would, in fact, be a false division, there being
few who do not in some respects belong to both classes.
So far as a man's consumption is essential to his pro-
duction, he belongs to the first class; so far as it is not
essential, to the second. Those only can be called
simply unproductive who return nothing whatever for
what they consume; those only simply productive who
indulge in no superfluous consumption whatever.
To the first description belong those who, being pro-
vided, through their own previous exertions, or by the
accidents of donation or inheritance, with a fund suffi-
cient for their subsistence, are content to dedicate their
revenue and their leisure to the purposes of mere
enjoyment. This class is never large in any state of
society.
society. In an ignorant, and consequently a poor com-
munity, the number of those possessing a maintenance
independent of exertion is necessarily small. Among
civilized nations the love of accumulation, of power, of
distinction, and of occupation, and the nobler desire of
being more or less extensively useful, all powerfully
counteract the slothful principles of our nature. As pro-
perty becomes more secure, as the avenues to influènce
are opened, as merit and wealth rise in public estimation
over the accidents of birth, as barbarous prejudices de-
grading to industry wear out, as the influence of sound
religion teaches men that they were created for better
purposes than selfish pleasure or useless mortification,
in fact, as civilization improves, all the motives to vo-
luntary exertion acquire force. And though the num-
ber of those who might live in idleness increases, the
proportion of those who are unhappy enough to exercise
that privilege diminishes.
Another class consists of those who derive their
support solely from the spoil or the charity of others.
152
POLITICAL ECONOMY.
Production
and con-
as
Political The number of those who live by rapine has ob-
Economy, viously a tendency to diminish in the progress of civili-
zation. About mendicancy there may be some doubt,
some superfluous wealth seems necessary to its
sumption. existence, and it may be supposed likely to increase
with the superfluity on which it feeds. That laws ill
framed or ill administered may allow it so to increase
we know, from our own experience. But there seems
to be no reason to doubt that, under a wise system
of commercial and municipal legislation, the number
of able-bodied paupers might be so reduced as to be
practically unimportant.
:
The last class of unproductive consumers consists of
those whom age or infirmity has rendered permanently
incapable of production. We say permanently, to exclude
children, and those suffering under temporary disability.
Though a child or an invalid make no immediate return,
their support is the necessary condition of their future
services. This
This is by far the largest of the unproductive
classes, and one not likely to suffer relative diminution,
the same causes which tend to obviate disease and injury
tending also to prolong life where their effects are in-
curable. But from the information collected in the
House of Commons' Report on Friendly Societies, 5th
July, 1825, vol. iv., we are inclined to think that in
this Country the class in question cannot amount to a
fortieth part, or about two and a half per cent. of the
whole community.
The number of absolutely productive consumers, that
is, of persons who consume solely for the purpose of re-
producing, is much smaller. It may be a question in-
deed whether in a Country free from slavery, or regu-
lations resembling slavery, any such class is to be found.
The humblest labourer has some expenses which are
not essential to his health and strength. We endeavour
to give to our domestic animals nothing beyond what is
strictly necessary, and in the Countries where man is
considered as a domestic animal it might be expected
that the consumption of a slave would be equally limited.
But even the slave generally acquires some peculium,
which implies that his ordinary subsistence somewhat
exceeds his wants.
It appears from this analysis that the bulk of the com-
munity are neither productive nor unproductive con-
sumers, but may be referred to the one class or to the
other, according to the portion of their expenses for the
time being under consideration. So far as the hus-
bandman takes just enough of the least expensive food,
is just sufficiently clad with the simplest raiment, and in-
habits a dwelling just sufficiently weather-tight and spa-
cious to protect him from the seasons, he is a productive
consumer. But his pipe and his gin, and generally
speaking his beer, and the humble ornaments of his
person and his dwelling, form his unproductive con-
sumption.
We do not, of course, mean it to be inferred that all
personal expenditure beyond mere necessaries is ne-
cessarily unproductive. The duties of those who fill
the higher ranks in society can seldom be well per-
formed unless they conciliate the respect of the vulgar
by a certain display of opulence. If a Judge, or an
Ambassador, required by his station to support an es-
tablishment costing £2000 a year, should spend £4000,
half of his consumption would be productive, and the
other half unproductive. It would be a great mistake,
however, to consider the third footman behind his coach,
though a mere useless weight to the horses, an unpro-
ductive consumer. What the footman consumes are his Political
wages, and, so far at least as he consumes them in Economy.
order to enable himself to perform his services as foot-
man, he is a productive consumer. The things unpro-
man, he is a productive consumer.
ductively consumed are his services, and they are con-
sumed by his master.
sumed by his master. Nor is it to be supposed, on the
other hand, that all consumption even of necessaries by
those who are themselves producers, is a productive con-
sumption.
sumption. The half-employed pauper whose labour is
worth £10 a year, and whose consumption is £20, con-
sumes unproductively the difference.
Having explained the nature of production and con- Instru-
sumption, we now proceed to consider the agents by ments of
production.
whose intervention production takes place.
The primary instruments of production are labour, \I. Labour.
and those agents of which nature, unaided by man,
affords us the assistance.
Labour is the voluntary exertion of bodily or mental
faculties for the purpose of production. It may appear
unnecessary to define a term having a meaning so pre-
cise and so generally understood. Peculiar notions
respecting the causes of value have, however, led some
Economists to employ the term labour in senses so
different from its common acceptation, that for some
time to come it will be dangerous to use the word with-
out explanation. We have already observed that many
recent writers have considered value as solely depend-
ent on labour. When pressed to explain how wine in
a cellar, or an oak in its progress from a sapling to a
tree, could, on this principle, increase in value, they re-
plied that they considered the improvement of the wine
and the growth of the tree as so much additional labour
bestowed on each. We do not quite understand the
meaning of this reply; but we have given a definition of
labour, lest we should be supposed to include in it the
unassisted operations of nature. It may also be well to
remind our readers that this definition excludes all those
exertions which are not intended, immediately or
through their products, to be made the subjects of ex-
change. A hired messenger, and a person walking for
his amusement, a sportsman, and a gamekeeper, the
ladies at an English ball, and a company of Natch
girls in India, undergo the same fatigues; but ordinary
language does not allow us to consider those as under-
going labour who exert themselves for the mere pur-
pose of amusement.
Under the term "the agents offered to us by nature,” II. Natural
or, to use a shorter expression, "natural agents," we agents.
include every productive agent so far as it does not
derive its powers from the act of man.
The term "natural agent" is far from being a conve-
nient designation, but we have adopted it partly because
it has been already made use of in this sense by eminent
writers, and partly because we have not been able to
find one less objectionable. The principal of these
agents is the land, with its mines, its rivers, its natural
forests with their wild inhabitants, and, in short, all its
spontaneous productions. To these must be added the
ocean, the atmosphere, light and heat, and even those
physical laws, such as gravitation and electricity, by the
knowledge of which we are able to vary the combina-
tions of matter. All these productive agents have in
general, by what appears to be an inconvenient synec-
doche, been designated by the term land, partly because
the land, as a source of profit, is the most important of
those which are susceptible of appropriation, but chiefly
because its possession generally carries with it the com
POLITICAL ECONOMY.
153
Political mand over most of the others. And it is to be remem-
Economy, bered that, though the powers of nature are necessary to
afford a substratum for the other instruments of produc-
Instru-
tion to work upon, they are not of themselves, when
ments of
Production, universally accessible, causes of value. Limitation in
supply is, as we have seen, a necessary constituent of
value; and what is universally accessible is practically
unlimited in supply.
III. Absti
nence.
But although human labour, and the arency of na-
ture, independently of that of man, are primary
productive powers, they require the concurrence of a
third productive principle to give to them complete
efficiency. The most laborious population, inhabiting
the most fertile territory, if they devoted all their
labour to the production of immediate results, and
consumed its produce as it arose, would soon find their
utmost exertions insufficient to produce even the mere
necessaries of existence.
To the third principle, or instrument of production,
without which the two others are inefficient, we shall
give the name of abstinence: a term by which we ex-
press the conduct of a person who either abstains from
the unproductive use of what he can command, or de-
signedly prefers the production of remote to that of
immediate results.
It was to the effects of this third instrument of pro-
duction that we adverted when we laid down, as the
third of our elementary propositions, that the powers
of labour and of the other instruments which produce
wealth may be indefinitely increased by using their pro-
ducts as the means of further production. All our
subsequent remarks on abstinence are a developement
and illustration of this proposition; we say develope-
ment and illustration, because it can scarcely be said to
require formal proof.
The division of the instruments of production into
three great branches has long been familiar to Econo-
mists. Those branches they have generally termed
labour, land, and capital. In the principle of this divi-
sion we agree; though we have substituted different
expressions for the second and third branches. We
have preferred the term natural agent to that of land,
to avoid designating a whole genus by the name of one of
its species a practice which has occasioned the other
cognate species to be generally slighted and often for-
gotten. We have substituted the term abstinence for
that of capital on different grounds.
The term capital has been so variously defined that it
may be doubtful whether it have any generally received
meaning. We think, however, that, in popular accepta-
tion, and in that of Economists themselves when they
are not reminded of their definitions, that word signifies
an article of wealth, the result of human exertion, em-
ployed in the production or distribution of wealth. We
say the result of human exertion, in order to exclude
those productive instruments to which we have given the
name of natural agents, and which afford not profit, in
the scientific sense of that word, but rent.
It is evident that capital, thus defined, is not a
simple productive instrument; it is in most cases the
result of all the three productive instruments combined.
Some natural agent must have afforded the material,
some delay of enjoyment must in general have reserved
it from unproductive use, and some labour must in
general have been employed to prepare and preserve
it. By the word abstinence, we wish to express that
agent, distinct from labour and the agency of nature,
VOL. VI.
the concurrence of which is necessary to the existence Political
of capital, and which stands in the same relation Economy.
to profit as labour does to wages.
We are aware
Instru-
ments of
that we employ the word abstinence in a more extensive
sense than is warranted by common usage. Attention is Production.
usually drawn to abstinence only when it is not united Abstirence-
with labour. It is recognised instantly in the conduct
of a man who allows a tree or a domestic animal to
attain its full growth; but it is less obvious when he
plants the sapling or sows the seed corn. The obser-
ver's attention is occupied by the labour, and he omits
to consider the additional sacrifice made when labour is
undergone for a distant object. This additional sacri-
fice we comprehend under the term abstinence; not
because abstinence is an unobjectionable expression
for it, but because we have not been able to find one to
which there are not still greater objections. We once
thought of using "providence ;" but providence implies
no self-denial, and has no necessary connection with
profit. To take out an umbrella is provident, but not
in the usual sense of the word profitable. We after-
wards proposed frugality," but frugality implies some
care and attention, that is to say, some labour; and
though in practice abstinence is almost always accom-
panied by some degree of labour, it is obviously neces-
sary to keep them separate in an analysis of the instru
ments of production.
It may be said that pure abstinence, being a mere
negation, cannot produce positive effects; the same re-
mark might as well be applied to intrepidity, or even to
liberty, but who ever objected to their being considered
as equivalent to active agents? To abstain from the en-
joyment which is in our power, or to seek distant rather
than immediate results, are among the most painful ex-
ertions of the human will. It is true that such exertions
are made, and indeed are frequent in every state of society,
except perhaps in the very lowest, and have been made in
the very lowest, for society could not otherwise have im-
proved; but of all the means by which man can be raised
in the scale of being, abstinence, as it is perhaps the most
effective, is the slowest in its increase, and the least ge-
nerally diffused. Among nations those that are the least
civilized, and among the different classes of the same
nation those which are the worst educated, are always
the most improvident, and consequently the least ab-
stinent.
We have already defined capital to be an article of Capital
wealth, the result of human exertion, employed in the
production or distribution of wealth, and we have ob-
served that each individual article of capital is in general
the result of a combination of all the three great instru-
ments of production-labour, abstinence, and the agency
of nature.
When a man has possessed himself of any article of
wealth, and resolves to employ it, not for the mere
purposes of enjoyment, but as capital, or, in other words,
as a means of further production, or of distribution, there
appear to be eight modes in which his design may be
effected.
1. He may intentionally destroy it, in order to obtain
the effects which are the direct consequences of its destruc-
tion. The consumption of gunpowder in a mine, and of
coals in the furnace of a steam-engine, afford instances.
The food which every producer must consume in order
to keep himself in the health and strength necessary
to enable him to continue a producer is also thus con-
sumed.
Y
1
154
POLITICAL ECONOMY.
Political
2. He may retain it and employ it for purposes of
Economy, which its gradual destruction is the incidental but not
the intended, or, in all cases, the necessary consequence.
All implements and machinery are thus employed.
Instru-
ments of
Production.
Capital.
3. He may vary its form, as when materials are con-
verted into finished commodities.
4. He may simply retain it until its value has been
increased by changes occasioned by the lapse of time,
or by an altered state of the market. The proprietor of
a vineyard who, immediately after an abundant vintage,
retains his wine, aims at both these advantages.
5. He may keep it ready for sale to meet the wants
of his customers. A shopkeeper's finished articles or
stock in trade are thus employed.
6. He may give it to the proprietor of some natural
agent for the use of that agent; as when a farmer pays
rent to his landlord.
7. He may give it to a labourer in exchange for his
exertions; or, in other words, he may employ it in the
payment of wages.
8. He may give it in exchange for some other com-
modity, to be itself employed as capital; or, in other
words, he may use it commercially.
Most capitalists employ portions of their capital in all
these eight modes.
If we suppose a wine retailer's capital to consist of
the knowledge which he has acquired during his educa-
tion for his business, of the warehouse and the simple
machinery necessary to his trade, of the stock of com-
modities necessary for his own current consumption,
and of one hundred pipes of wine in wood and in
bottle, we shall find that his knowledge, and machinery,
and necessaries are destroyed without ever being directly
exchanged: the only difference being, first, that his know
ledge remains unimpaired until either his death or his
retirement from business makes it suddenly valueless,
while his buildings, and machinery, and clothes, furniture,
and food are consumed and replaced at successive
replaced at successive
periods; and, secondly, that the destruction of his food
is immediate, and that of his buildings, machinery, fur-
niture, and clothing is gradual. We shall find that of
the wine he retains a portion until it shall have been
improved by age, and keeps a portion as stock in trade
ready for immediate sale, but ultimately sells the whole
and pays away its price, partly in rent for the land
covered by his buildings, partly in wages to his clerks,
porters, shopmen, and other labourers, partly in keeping
up his buildings and machinery, and partly in the re-
purchase of wine, bottles, and corks to keep up the stock
in his warehouse and shop. What remains of the price
of his wine, and something must remain, or he would
be in a worse situation than one of his own labourers,
is generally termed his profit: a part of it he must
employ in replacing the stock of commodities necessary
to keep himself in health and strength; the remainder
he may employ either in his own personal enjoyment
and that of his friends, which is an unproductive use,
or in the increase of his own capital, or in creating a
capital for some other person, in the education, for
instance, of his son, which are productive uses.
Adam Smith has divided capital into fixed and circu-
lating.
"There are two ways," he observes," in which a
capital may be employed so as to yield a revenue or
profit.
First, it may be employed in raising, manufactur-
ing, or purchasing goods, and selling them again with a
Political
profit. The capital employed in this manner yields no
revenue or profit to its employer while it either remains Economy.
in his possession or continues in the same shape. The Instru-
goods of the merchant yield him no revenue or profit ments of
till he sells them for money, and the money yields him Production
as little till it is again exchanged for goods. His Capital.
capital is continually going from him in one shape, and
returning to him in another, and it is only by means of
such circulation, or successive exchanges, that it can
yield him any profit. Such capitals, therefore, may
properly be called circulating capitals.
"Secondly, it may be employed in the improvement
of land, in the purchase of useful machines and imple-
ments of trade, or in such like things as yield a revenue
or profit without changing masters or circulating any
further. Such capitals, therefore, may properly be
called fixed capitals.
"The capital of a merchant is altogether a circulating
capital. He has occasion for no machines or instru-
ments of trade, unless his shop or warehouse be con-
sidered as such.
"Some part of the capital of every master artificer
or manufacturer must be fixed in the instruments of his
trade. This part, however, is very small in some, and
very large in others. A master tailor requires no other
instruments of trade than a parcel of needles; those
of a master shoemaker are a little, though but a little,
more expensive.
"In other works a much greater fixed capital is re-
quired. In a great iron work, for example, the furnace,
the forge, the slit mill, are instruments of trade which
cannot be erected without a very great expense.
That
part of the capital of the farmer which is employed in
the instruments of agriculture is a fixed, that which is
employed in the wages and maintenance of his labour-
ing servants is a circulating, capital. He makes a profit
of the one by keeping it in his own possession, and of
the other by parting with it. A herd of cattle, bought
in to make a profit by their milk and increase, is a fixed
capital; the profit is made by keeping them. Their
maintenance is a circulating capital; the profit is made
by parting with it.” Book ii. ch. i.
We are not aware that the principle of Adam Smith's
division has ever been directly objected to. There may
be some doubt, perhaps, whether the terms fixed and
circulating are the best that could have been selected;
but Adam Smith has stamped on them the meaning which
he intended, and they have passed current in that signi-
fication ever since.
Mr. Ricardo, however, with the inattention to esta-
blished usage which so much diminishes the usefulness
of his writings, has used the terms fixed and circulating
In this he has been
capital in a totally different sense.
followed by Mr. Mill; and as neither of these writers
intimates that his use of the words is not the common
one, it may be well to mark the difference.
66
According as capital is rapidly perishable," says
Mr. Ricardo, and requires to be frequently repro-
duced, or is of slow consumption, it is classed under the
heads of circulating or of fixed capital: a division not
essential, and in which the line of demarcation cannot
be accurately drawn. A brewer, whose buildings and
machinery are valuable and durable, is said to employ
a large portion of fixed capital; on the contrary, a shoe-
maker, whose capital is chiefly employed in the payment
of wages, which are expended on food and clothing, com-
modities more perishable than buildings and machinery,
1
POLITICAL ECONOMY.
155
Political is said to employ a large proportion of capital as circu-
Economy. lating capital. Ch. i. sec. 4.
Instru-
ments of
Mr. Ricardo might well remark that the line of de-
marcation between his two sorts of capital cannot be
Production, accurately drawn; for what can be more vague, or more
Capital.
void of positive meaning, than such comparative terms as
slow and rapid? The singular circumstance is that both
he and Mr. Mill should have supposed, and it appears
clear that they did suppose, that their division followed
that of Adam Smith. It is obviously a cross division.
The master tailor's needles which Adam Smith selects
as an example of fixed capital, because the tailor retains
them, would, according to Mr. Ricardo, be circulating,
because they are perishable. On the other hand, the
materials and stock in trade of an iron founder would
be circulating capital according to Smith, and fixed
according to Ricardo,
We may be able to make the nature of capital, and
Adam Smith's conception of it, still clearer by quoting
his subdivision of fixed and circulating capitals.
"Fixed capital," he says, "consists chiefly of the
four following articles:
First, of all useful machines and instruments of
trade which facilitate and abridge labour.
'
Secondly, of all buildings used for the purpose of
trade or manufacture; such as shops, warehouses, and
farm-buildings, &c. They are a sort of instruments of
trade, and may be considered in the same light.
"Thirdly, of the improvements of land, of what has
been profitably laid out in clearing, draining, enclosing,
manuring, and reducing it into the condition most
proper for culture. An improved farm may be regarded
in the same light as one of those useful machines which
facilitate and abridge labour.
Fourthly, of the acquired and useful abilities of
all the members of the society. The acquisition of such
talents by the maintenance of the acquirer during his
education, study, or apprenticeship, costs an expense,
which is a capital fixed and realized, as it were, in his
person. The improved dexterity of a workman may be
considered in the same light as a machine or instrument
of trade which facilitates and abridges labour.
“The circulating capital is composed likewise of four
parts:
First, of the money by means of which all the
other three are circulated and distributed to their proper
consumers.
"Secondly, of the stock of provisions in the possession
of the butcher, the grazier, &c., for the purpose of sale.
Thirdly, of the materials, whether altogether rude
or more or less manufactured, of clothes, furniture, and
building, which are not yet made up, but remain in the
hands of the growers, manufacturers, or merchants.
"C
Fourthly, of the work which is made up and com-
pleted, but is still in the hands of the merchant or manu-
facturer; such as the finished work in the shops of
the smith, the gold-mith, the jeweller, and the china
merchant. The circulating capital consists, in this
manner, of the provisions, materials, and finished work of
all kinds which are in the hands of their respective
dealers, and of the money that is necessary for circulat-
ing and distributing them to their final consumers,'
Book ii. c. i.
,,
This enumeration contains, perhaps, some useless dis-
tinctions, and, we think, two improper exclusions, but,
generally speaking, it gives an excellent view of the
different species of capital.
Instru-
ments of
The things which appear to be improperly excluded Political
are, first, the necessaries of life, consumed by the Economy.
labourer and the capitalist for their own support; and,
secondly, the houses and other commodities of slow con-
sumption which the owner lets out to the consumer. Production.
Adam Smith can scarcely be said to have explained his Capital.
reason for excluding from the term capital the neces-
saries in the possession of the labourer. He merely
observes that the labourer consumes as sparingly as he
can, and derives his revenue only from his labour.
attention of Mr. Malthus has been drawn to the subject;
he agrees in this respect with Adam Smith, and on the
following grounds:
The
"The only productive consumption, properly so called,
is the consumption or destruction of wealth by capitalists
with a view to reproduction. This is the only marked
line of distinction which can be drawn between produc-
tive and unproductive consumption. The workman whom
the capitalist employs consumes that part of his wages
which he does not save, as revenue, with a view to sub-
sistence or enjoyment; and not as capital with a view
to production." Definitions, p. 258.
Mr. Malthus would admit that the coals in the furnace
of a steam-engine are productively employed; because
their consumption is the necessary condition to the
engine's performing its work. And in what does the
consumption of food by a labourer differ from that of
coals by a steam-engine? Simply in this, that the
labourer derives pleasure from what he consumes, and
the steam-engine does not. If a labourer were so con-
stituted as to feel no craving for food, and no gratifica-
tion from eating, and were reminded of its necessity
only by the debility consequent on its want, would not
his meals, taken as they would be solely to enable him
to undergo his fatigues, be productively consumed?
Nature has wisely enforced an act of daily necessity by
the stimulus of hunger, and the reward of enjoyment,
but do that stimulus and enjoyment detract from its
productiveness? Is the ploughman's dinner less the
means of his toils because he considers it as their end?
Is not the food of working cattle productively employed?
Does not the owner of a West Indian estate consider the
supplies which he sends to his slaves as a capital destined
to productive consumption?
Adam Smith has stated at length his reasons for ex-
cluding from the term capital the houses and other
articles which the owner lets out to the consumer.
“One portion,” he states, "of the stock of a society
is reserved for immediate consumption, of which the
characteristic is that it affords no revenue or profit. The
whole stock of mere dwelling-houses makes a part of
this portion. If a house be let to a tenant, as the house
itself can produce nothing, the tenant must pay the rent
out of some other revenue which he derives either from
labour, or stock, or land. Where masquerades are
common, it is a trade to let out dresses for the night.
Upholsterers frequently let furniture by the month or
the year. The revenue, however, which is derived from
such things must always be ultimately derived from
some other source of revenue. A stock of clothes may
last for several years; a stock of furniture half a century
or a century; but a stock of houses, well built and pro-
perly taken care of, may last many centuries. Though
the period of their total consumption, however, is more
distant, they are still as really a stock reserved for im-
mediate consumption as either clothes or furniture."
Book ii, ch. i.
Y 2
156
POLITICAL ECONOMY.
Political
ments of
This language would have been consistent if Adam
Economy. Smith, like most of his successors, had confined the term
capital to the instruments of further consumption. But
Instru- we have seen that he includes under that term things
Production, incapable of productive consumption, if they have not
Capital. reached the hands of those who are finally to use them.
If a diamond necklace in a jeweller's shop be correctly
termed capital, and Adam Smith has expressly stated that
it is so, why is not a house which has been just finished
by a speculative builder? It is difficult to perceive why he
should have laid so much stress on the perishableness of
the things in question. Perishableness and durability
are not elements in the distinction between what is and
what is not to be correctly termed capital. Many of the
things which are used productively are of almost evanes-
cent existence, such as the gas which lights a manufac-
tory. On the other hand, the jewels of a noble family
are not capital, though no limits can be assigned to their
duration. It is at least conceivable that a house might
be built so as not to require repair, and would this
circumstance affect the question? In fact, however,
the perishableness of these things is unfavourable to Adam
Smith's view, as it shows their resemblance to things
which he has admitted to be capital. A cellar of wine
at a tavern-keeper's falls under his third class of circu-
lating capitals; gradually the cellar is emptied, and
when the last bottle has been drunk the capital is at an
end. A house let ready furnished, a circulating library,
a job carriage, a stage-coach, or a steam-packet, differs
from the cellar of wine only because the progress of its
consumption is less capable of being measu ed. Every
day that it is used a portion wears away; and that por-
tion is as much purchased and as much consumed by
the hirer of the house or the carriage as the bottle of
wine taken from the cellar. It is true that it may be
consumed unproductively, and that in that case the hirer
must pay the rent from some other revenue, as is the
case with the price of whatever is unproductively con-
sumed. But the portion of the house and furniture and
carriage, for the time being unconsumed, is as much the
capital, in the sense in which Adam Smith uses that word,
of the upholsterer and the hackneyman, as the unconsumed
portion of the wine is the capital of the tavern-keeper.
Capital may again be divided, according to the pur-
poses to which it is applicable, into reproductive, simply
productive, and unproductive.
We apply the term reproductive to all those articles of
wealth which may be used to produce things of the
same kind with themselves. All agricultural stock is
reproductive; and so are all the necessaries of life.
That portion of them which is consumed by the capital-
ists and labourers employed in producing necessaries is
one of the means by which the regular supply is kept
up.
The coals in the furnace of a steam-engine used in
working a coal mine, the iron instruments in an iron
work, and a ship freighted with timber and naval stores
are all reproductively employed.
We apply the term simply productive to those articles
of wealth which, though instruments of production, can-
not be employed in producing things of the same kind
with themselves. A lace machine is simply productive.
Its use is to make lace, but that lace cannot be employed
to make a new machine. All the tools and machinery
employed in the production of those things which can-
not be productively consumed are themselves simply
productive.
We apply the term unproductive or distributive
capital to those commodities which are destined to un- Political
productive use, but have not become the property of those Economy.
who are to be their ultimate consumers.
Instru-
A very great portion, perhaps the greater portion in ments of
value, of the commodities produced in an improved state Production.
of society, fall under this head at their first production. Capital.
We have already observed that, in every state of society,
the number of absolutely unproductive consumers is
small, and the number of absolutely productive con-
sumers still smaller. But as wealth increases every
man increases his unproductive consumption, until the
whole amount in the whole society of such consumption
may, and often does, exceed the whole amount of pro-
ductive consumption. If we look through the shops of
an opulent city we shall find the commodities destined
to mere enjoyment far exceeding in value those destined
to be employed in further production.
Some of Adam Smith's successors have excluded the
things of which we are now speaking from the term
capital. We have followed his example in including
them, for two reasons.
First, because their exclusion is an unnecessary devia-
tion from ordinary language. To say that a jeweller,
with £50,000 worth of diamond ornaments in his shop,
had no capital, would be an assertion of which few
hearers would be able to guess the meaning.
But, in the second place, if it were possible to do,
what certainly is much wanted, to form a new technical
nomenclature for Political Economy, still we should
include under the term capital the commodities in ques-
tion. All Economists include under that term the ma-
terials and the instruments with which these commo-
dities are formed.
dities are formed. If the rough diamond and the gold
in which it is to be set are capital while separate, it
seems difficult to see what convenience there is in a
nomenclature which denies them to be capital when
united. Again, no Economist will doubt that a profit is
received in proportion to the average time during
which the commodities in question are retained by the
capitalist.
capitalist. Why this profit is paid we shall endea-
vour to show hereafter, but the fact that it is paid
may be assumed as unquestioned. But Economists are
agreed that whatever gives a profit is properly termed
capital.
The principal advantages derived from abstinence, or,
to express the same idea in more familiar language, from
the use of capital, are two: first the use of implements;
and second the division of labour.
Implements, or tools, or machines (words which ex-
press things perhaps slightly different in some respects,
but precisely similar so far as they are the subjects of
Political Economy) have been divided into those which
produce power, and those which transmit power. Under
the first head are comprehended those which produce
motion independently of human labour. Such are, for
instance, those machines which are worked by the force
of wind, of water, or of steam.
The second head comprises what are usually termed
tools, such as the spade, the hammer, or the knife
which assist the force, or save the time of the workman,
but receive their impulse from his hand.
To these two classes a third must be added, including
all those instruments which are not intended to pro-
duce or transmit motion, using that word in its popular
sense. This class includes many things to which the
name of implement, tool, or machine is not generally
applied. A piece of land prepared for tillage, and the
POLITICAL ECONOMY.
157
Instru-
ments of
'Political corn with which it is to be sown, are among the imple-
Economy. ments by whose use the harvest is produced. Books
and manuscripts are implements more productive than
those invented by Arkwright or Brunel. Again, many
Production, of the things which popularly are called implements,
Capital.
such as the telescope, have no reference to motion; and
others, such as a chain, or an anchor, or indeed any fast-
ening whatever, are intended not to produce or trans-
mit, but to prevent it.
!
1.
The instruments which derive their impulse from the
person who works them are in general of a simple de
scription, and some of them are to be met with in the
rudest state of human society. The first subsistence
offered by nature to the savage consists of the brutes
around him; but some instruments beyond the weapons
which she has given to him must enable him to take
advantage of her bounty.
It will be observed that we consider the use of all
implements as implying an exercise of abstinence, using
that word in our extended sense as comprehending all
preference of remote to immediate results. In civilized
society this appears to be strictly true. It is obviously
true as to the use of all those instruments and materials
which may be used at will, either for the purpose of pre-
sent enjoyment, or for that of further production, such,
for example, as the greater part of agricultural stock.
It is equally true as to the making of all those imple-
ments which are incapable of any but productive use,
such as tools and machinery in the popular acceptation
of those words. In an improved state of society, the
commonest tool is the result of the labour of previous
years, perhaps of previous centuries. A carpenter's tools.
are among the simplest that occur to us. But what a
sacrifice of present enjoyment must have been under-
gone by the capitalist who first opened the mine of
which the carpenter's nails and hammer are the product!
How inuch labour directed to distant results must have
been employed by those who formed the instruments
with which that mine was worked! In fact, when we
consider that all tools, except the rude instruments of
savage life, are themselves the product of earlier tools,
we may conclude that there is not a nail, among the
many millions annually fabricated in England, which is
not to a certain degree the product of some labour for
the purpose of obtaining a distant result, or, in our no-
menclature, of some abstinence undergone before the
Conquest, or perhaps before the Heptarchy.
Instru-
except at an expense very great, when we consider by Political
whom it is to be borne; £15 or £20 is a low apprentice Economy.
fee, but amounts to half the average annual income of
an agricultural family. The greater part of the re- ments of
muneration for skilled labour is the reward for the ab- Production
stinence implied by a considerable expenditure on the Capital.
labourer's education.
We must admit, however, that this reasoning does not
apply to society in that rude state which is not perhaps
within the scope of Political Economy. The savage
seldom employs in making his bow or his dart time
which he could devote to the obtaining of any object of
immediate enjoyment. He exercises therefore labour
and providence, but not abstinence. The first step in
improvement, the rise from the hunting and fishing to
the pastoral state, implies an exercise of abstinence.
Much more abstinence, or, in other words, a much
greater use of capital, is required for the transition from
the pastoral to the agricultural state; and an amount
not only still greater, but constantly increasing, is ne-
cessary to the prosperity of manufactures and com-
merce. An agricultural Country can remain stationary;
a commercial and manufacturing one cannot. The
capital which fifty years ago enabled England to be
the first of commercial and manufacturing nations was
probably far inferior in extent and efficiency to that
now possessed by France, or even to that of the late
Kingdom of the Netherlands. If our capital had re-
mained stationary, we should have sunk to a second or
third rate power. The same consequence might now
follow if commercial restraints, or the waste of a long
war, should check the increase of our present capital,
while that of our rivals should continue progressive.
Having shown the connection between abstinence
and the employment of implements, the next thing to
be considered is the advantage which the use of imple-
ments affords. This subject, however, we shall pass over
very briefly; partly because an attempt to give any thing
like an adequate account of it, however concise, would
far exceed the limits of this Treatise; partly because the
subject has been considered at some length in the Ar-
ticles in this Encyclopædia on MECHANICS and MANUFAC-
TURES; and partly because we believe all our readers
to be aware that the powers of man are prodigiously in-
creased by the use of implements, though probably no
man ever had, or ever will have, sufficient knowledge
of details and perception of their relations and con-
The same remark applies to the acquired abilities sequences, to estimate the whole amount of that in-
which Adam Smith has properly considered a capital crease. A few remarks on those instruments which
fixed and realized in the person of their possessor. In produce motion, or, as it is technically termed, power,
many cases they are the result of long previous exertion
and expense on his own part; exertion and expense
which might have been directed to the obtaining objects
of immediate enjoyment, but which have, in fact, been
undergone solely in the hope of a distant reward. And
in almost all cases they imply much expense, and con-
sequently much sacrifice of immediate enjoyment on the
part of parents or guardians. The maintenance of a
boy during the first eight or nine years of his life is
indeed an unavoidable burthen, and therefore cannot be
considered a sacrifice. But almost all that is expended
on him after that age is voluntary. At nine or ten he
might earn a maintenance in an agricultural, and more
than a bare maintenance in a manufacturing employ-
ment, and at twenty-one obtain better wages than at
any subsequent period of his life. But even the lowest
department of skilled labour is in general inaccessible
are all that we can venture on.
The superior productiveness of modern compared with
ancient labour depends, perhaps, principally on the use of
these instruments. We doubt whether all the exertions of
all the inhabitants of the Roman Empire, if exclusively
directed to the manufacture of cotton goods, could, in a
whole generation, have produced as great a quantity as
is produced every year by a portion of the inhabitants
of Lancashire; and we are sure that the produce would
have been generally inferior in quality. The only
moving powers employed by the Greeks or Romans
were the lower animals, water, and wind. And even
these powers they used very sparingly. They scarcely
used wind except to assist their merchant vessels in a
timid coasting; they used rivers as they found them,
for the purposes of communication, but did not connect
them by canals; they used horses only for burthen and
158
POLITICAL ECONOMY.
1
ments of
Capital.
Political draught, and the latter without the assistance of springs.
Economy. They made little use of that powerful machine to which
we give the general name of a mill, in which a single
Instru- shaft, turning under the impulse of animal power, or
Production. wind, or water, or steam, enables a child to apply a
force equal sometimes to that of a thousand workmen.
A ship of the line under full sail has been called the
noblest exhibition of human power: it is, perhaps, the
most beautiful. But if dominion over matter, if the power
of directing inanimate substances, at the same time to
exert the most tremendous energy, and to perform the
most delicate operations, be the test, that dominion and
power are no where so strikingly shown as in a large
cotton manufactory. One of the most complete which
we have seen is that constructed by the late Mr. Mars-
land at Stockport; and, as it exhibits very strikingly
both the power and the manageableness of machinery,
it may be worth while to give a short description of it,
as we saw it in 1825.
Mr. Marsland was the proprietor of the Mersey for
about a mile of its course, and of a tongue of land which
two reaches of the river form into a peninsula. Through
the isthmus of this peninsula he bored a tunnel suffi-
cient to receive seven wheels of large diameter, and to
give passage to enough of the river to turn them; these
wheels communicated rotatory motion to perpendicular
shafts; and the perpendicular shafts communicated the
same motion to numerous horizontal shafts connected with
them by pinions. Each horizontal shaft ran below the
ceiling of a work-room more than a hundred feet long.
The buildings connected with the wheels worked by the
river contained six or seven stories of work-rooms, each
supplied with its horizontal shaft. The rotatory motion
was carried on from each horizontal shaft by means of
small solid wheels called drums, affixed to the principal
shaft of each detached piece of machinery, and connected
with the great horizontal shaft of the work-room by a
leathern strap. Many of these rooms were not occupied
by Mr. Marsland himself. He let out, by the hour, the
day, or the week, a certain portion of the floor of a work-
room, and the liberty to make use of a certain portion of
the horizontal shaft. The tenant placed his own ma-
chinery on the floor, connected its drum with the shaft that
revolved rapidly above, and instantly saw his own small
mechanical world, with its system of wheels, rollers, and
spindles, in full activity, performing its motions with a
quickness, a regularity, and, above all, a perseverance,
far beyond the exertions of man. In the operation of
machinery, power, like matter, seems susceptible of in-
definite aggregation and of indefinite subdivision. In
the performance of some of its duties the machinery
moved at a rate almost formidable, in others at one
scarcely perceptible. It took hold of the cotton of
which a neckcloth was to be made, cleaned it, arranged
its fibres longitudinally, twisted them into a strong and
continuous thread, and finally wove that thread into
muslin. It took the wool of which a coat was to be
made, and, after subjecting it to processes more nume-
rous than those which cotton experiences, at last wove
it into cloth. For thousands of years, in fact from the
last great convulsion which traced the course of the
river, until Mr. Marsland bored his tunnel, had the
Mersey been wasting all the energy that now works so
obediently.
One of the most striking qualities of machinery is its
susceptibility of indefinite improvement. On looking
through the instructive evidence collected by the Com-
mittee on Artisans and Machinery, (1824,) it will be Political
found that nothing is more impressed on the minds of Economy.
the witnesses than the constant tide of improvement,
rendering obsolete in a very few years all that might ments of
have been supposed to be perfect.
Instru-
Production
Mr. Holdsworth, a spinner and machine-maker at Capital.
Glasgow, states that the best mills at Glasgow are equal
to the best mills at Manchester erected three or four
years before. Mr. Holdsworth's history of his own
proceedings will illustrate many of the previous observa-
tions.
He is asked whether he got his machinery from Man-
chester when he first commenced business. He replies:
"I did not; I contemplated making it myself, and made
1
the attempt, but there was so much difficulty in getting
good workmen, and the expense of tools was so serious,
that I desisted. I then selected a well-qualified young
mechanic, and engaged him to make it for me. I gave
over to him my patterns and my plans, and he executed
well the machinery required in the first mill. Two
years after I built a second mill, the machinery of which
was also executed by him. After two years more I
built a third and a larger mill, the machinery of which
I made myself.”
He is asked why he made the last machinery himself,
and replies:
"In the first place that machine maker was very
busy;" (it appears, subsequently, that, at the time of the
examination, that maker could not have taken an order
to execute any part of it under sixteen months, and that
there were then eight or nine mills waiting for machinery,
some of which had been ready for twelve months, and
had only a small part of their machinery, and others
had been ready six months and were empty ;)
"and as
machine makers do not like to alter their plans, I could ·
not prevail upon him to execute the improvements then
recently made in Manchester." Fifth Report, p. 378.
Mr. J. Dunlop is asked (p. 473) how far he consi-
ders the American factories behind those of Glasgow.
He replies, about thirty years. He goes on to state that
they are in a progressive state, and the men very active
and industrious. He is then asked whether, suppos-
ing English machinery transported to America, with the
assistance of English foremen, he does not think the
population of America would soon be taught to work in
their factories equally to the men of this Country?"
He answers, "Yes, I think they would; but before they
could acquire that we should be ahead of them a long
way again. I reason comparing Scotland with Eng-
land. We began the business of cotton-spinning later,
we were of course behind, and we have always been
behind; we have never been able to get up, and I be-
lieve never will."
ર
Sixty years form a short period in the history of a
nation; yet what changes in the state of England and
the Southern parts of Scotland have the steam-engine
and the cotton machinery effected within the last sixty
years. They have almost doubled the population, more
than doubled the wages of labour, and nearly trebled
the rent of land. They enabled us to endure, not cer-
tainly without inconvenience, but yet to endure, a public
debt more than trebled, and a taxation more than quad-
rupled. They changed us from exporters to importers
of raw produce, and consequently changed our corn laws
from a bounty on exportation to nearly a prohibition of
importation. They have clad the whole world with a
light and warm clothing, and made it so easy of ac-
ས
POLITICAL ECONOMY.
159
Instru-
ments of
Instru-
Political quisition that we are perhaps scarcely aware of the in his whole Work. But, like most of those who have Political
Economy. whole enjoyment that it affords.
discovered a new principle, he has in some respects Economy.
overstated, and in others understated, its effects.
His
remark,
"that the invention of all those machines by ments of
which labour is so much facilitated and abridged seems Production.
to have been originally owing to the division of labour," Capital.
is too general. Many of our most useful implements
have been invented by persons neither mechanics by
profession, nor themselves employed in the operations
which those implements facilitate. Arkwright was, as
is well known, a barber; the inventor of the power-
loom is a clergyman. Perhaps it would be a nearer ap-
proach to truth if we were to say that the division of
labour has been occasioned by the use of implements.
In a rude state of Society, every man possesses, and
every man can manage, every sort of instrument. In
an advanced state, when expensive machinery and an
almost infinite variety of tools have superseded the few
and simple implements of savage life, those only can
profitably employ themselves in any branch of manufac-
ture who can obtain the aid of the machinery, and have
been trained to use the tools, by which its processes are
facilitated; and the division of labour is the necessary
consequence. But, in fact, the use of tools and the di-
vision of labour so act and react on one another, that
their effects can seldom be separated in practice. Every
great mechanical invention is followed by an increased
division of labour, and every increased division of labour
produces new inventions in mechanism.
There appears no reason, unless that reason be to be
found among our own commercial institutions, why the
Production, improvements of the next sixty years should not equal
Capital. those of the preceding. The cotton machinery is far
from perfection; the evidence which we have quoted
shows that it receives daily improvements; and the
steam-engine is in its infancy: its first application to
vessels is within our recollection; its application to
carriages has scarcely commenced; and it is probable
that many other powers of equal efficiency lie still un-
discovered among the secrets of nature, or, if known, are
still unapplied. There are doubtless at this instant in-
numerable productive instruments known but disregarded
because separately they are inefficient, and the effect of
their combination has not been perceived. Printing
and paper are both of high antiquity. Printing was
probably known to the Greeks; it certainly was prac-
tised by the Romans, as loaves of bread stamped with
the baker's initials have been found in Pompeii. And
paper has been used in China from times immemorial.
But these instruments separately were of little value.
While so expensive a commodity as parchment, or so
brittle a one as the papyrus, were the best materials for
books, the sale of a number of good copies sufficient to
pay the expense of printing could not be relied on.
Paper without printing was more useful than printing
without paper; but the mere labour necessary to con-
stant transcription, even supposing the materials to be
of no value, would have been such as still to leave books
an expensive luxury. But the combination of these
two instruments, each separately of little utility, has
always been considered the most important invention in
the history of man.
The second of the two principal advantages derived
from abstinence, or, in other words, from the use of
capital, is the division of labour.
We have already observed that division of produc-
tion would have been a more convenient expression than
division of labour; but Adam Smith's authority has
given such currency to the term division of labour, that
we shall continue to employ it, using it, however, in the
extended sense in which it appears to have been used
by Adam Smith. We say appears to have been used,
because Smith, with his habitual negligence of precision,
has given no formal explanation of his meaning. But
in the latter part of his celebrated first chapter, he ap-
pears to include among the advantages derived from the
division of labour all those derived from internal and
external commerce. It is clear, therefore, that, by divi-
sion of labour, he meant division of production, or, in
other words, the confining as much as possible each dis-
tinct producer and each distinct class of producers to
operations of a single kind.
The advantages derived from the division of labour
are attributed by Smith to three different circumstances.
"First, to the increase of dexterity in every particular
workman; secondly, to the saving of the time which is
commonly lost in passing from one species of work to
another; and lastly, to the invention of a great number
of machines which facilitate and abridge labour, and
enable one man to do the work of many."
""
Smith was the first writer who laid much stress on
the division of labour. The force and the variety of the
examples by which he has illustrated it make the first
chapter perhaps the most amusing and the best known
-Alterius sic
Altera poscit opem res et conjurat amice.
The increased dexterity of the workman, and the
saving of the time which would be lost in passing from
one sort of work to another, deserve the attention which
they have received from Adam Smith. Both are con-
sequences, and the first is a very important consequence
of the division of labour. But he has passed by, or at
least has not formally stated, other advantages derived
from that principle which appear to be far more im-
portant.
One of the principal of these advantages arises
from the circumstance that the same exertions which
are necessary to produce a single given result are
often sufficient to produce many hundred or many
thousand similar results. The Post-office supplies a
familiar illustration. The same exertions which are
necessary to send a single letter from Falmouth to
New York are sufficient to forward fifty, and nearly
the same exertions will forward ten thousand. If every
man were to effect the transmission of his own corre-
spondence, the whole life of an eminent merchant might
be passed in travelling, without his being able to de-
liver all the letters which the Post-office forwards for
him in a single evening. The labour of a few indivi-
duals, devoted exclusively to the forwarding of letters,
produces results which all the exertions of all the in-
habitants of Europe could not effect, each person acting
independently.
The utility of government depends on this principle.
In the rudest state of society each man relies principally
on himself for the protection both of his person and of
his property. For these purposes he must be always
armed, and always watchful; what little property he has
must be movable, so as never to be far distant from its
owner. Defence or escape occupy almost all his
thoughts, and almost all his time, and, after all these
160
POLITICAL ECONOMY.
Political sacrifices, they are very imperfectly effected.
"If ever
Economy.
you see an old man here," said an inhabitant of the
confines of Abyssinia to Bruce, “he is a stranger; the
natives all die young by the lance."
Instru-
ments of
Production.
Capital.
But the labour which every individual, who relies on
himself for protection, must himself undergo is more
than sufficient to enable a few individuals to protect
themselves, and also the whole of a numerous com-
munity. To this may be traced the origin of govern-
ments. The nucleus of every government must have
been some person who offered protection in exchange
for submission. On the governor and those with whom
he is associated, or whom he appoints, is devolved the
care of defending the community from violence and
fraud. And so far as internal violence is concerned,
and that is the evil most dreaded in civilized society, it
is wonderful how small a number of persons can pro-
vide for the security of multitudes. About fifteen
thousand soldiers, and not fifteen thousand policemen,
watchmen, and officers of justice, protect the persons
and property of the seventeen millions of inhabitants of
Great Britain. There is scarcely a trade that does not
engross the labour of a greater number of persons than
are employed to perform this the most important of all
services.
It is obvious, however, that the division of labour on
which government is founded is subject to peculiar
evils. Those who are to afford protection must neces-
sarily be intrusted with power; and those who rely on
others for protection lose, in a great measure, the means
and the will to protect themselves. Under such cir-
cumstances, the bargain, if it can be called one, between
the government and its subjects, is not conducted on
the principles which regulate ordinary exchanges. The
government generally endeavours to extort from its
subjects, not merely a fair compensation for its services,
but all that force or terror can wring from them without
injuring their powers of further production. In fact, it
does in general extort much more; for if we look
through the world we shall find few governments whose
oppression does not materially injure the prosperity of
their people. When we read of African and Asiatic
tyrannies, where millions seem themselves to consider
their own happiness as dust in the balance compared
with the caprices of their despot, we are inclined to sup-
pose the evils of misgovernment to be the worst to
which man can be exposed. But they are trifles com-
pared to those which are felt in the absence of govern-
ment. The mass of the inhabitants of Egypt, Persia,
and Burmah, or to go as low as perhaps it is possible,
the subjects of the Kings of Dahomi and Ashantee, en-
joy security, if we compare their situation with that of
the ungoverned inhabitants of New Zealand. So
strongly is this felt that there is no tyranny which men
will not eagerly embrace, if anarchy is to be the alter-
native. Almost all the differences between the different
races of men, differences so great that we sometimes
nearly forget that they all belong to the same species,
may be traced to the degrees in which they enjoy the
blessings of good government. If the worst govern-
ment be better than anarchy, the advantages of the best
must be incalculable. But the best governments of
which the world has had experience, those of Great
Britain and of the Countries which have derived their
institutions from Great Britain, are far from having at-
tained the perfection of which they appear to be sus-
ceptible. In these governments the subordinate duties
Instru
ments of
are generally performed by persons specially educated Political
for these purposes, the superior ones are not.
It seems Economy.
to be supposed that a knowledge of politics, the most
extensive and the most difficult of all Sciences, is a
natural appendage to persons holding a high rank in Production.
society, or may be acquired at intervals snatched from Capital.
the bustle and the occupation of laborious and engross-
ing professions. In despotisms, the principal evils arise
partly from the ignorance, and partly from the bad
passions of the rulers. In representative governments,
they arise principally from their unskilfulness. It is to
be hoped that a further application of the division of
labour, the principle upon which all government is
founded, by providing an appropriate education for
those who are to direct the affairs of the State, may pro-
tect us as effectually against suffering under ignorance
or inexperience in our governors, as we are now pro-
tected against their injustice.
Another important consequence of the division of
labour, and one which Adam Smith, though he has al-
luded to it, has not prominently stated, is the power
possessed by every nation of availing itself, to a certain
extent, of the natural and acquired advantages of every
other portion of the commercial world. Colonel Torrens
is the first writer who has expressly connected foreign
trade with the division of labour, by designating inter-
national commerce as "the territorial division of
labour."
Nature seems to have intended that mutual depend-
ence should unite all the inhabitants of the earth into
one commercial family. For this purpose she has in-
definitely diversified her own products in every climate
and in almost every extensive district. For this pur-
pose, also, she seems to have varied so extensively the
wants and the productive powers of the different races
of men. The superiority of modern over ancient
wealth depends in a great measure on the greater use
we make of these varieties. We annually import into this
Country about thirty million pounds of tea. The whole
expense of purchasing and importing this quantity
does not exceed £2,250,000, or about Is. 6d. a pound,
a sum equal to the value of the labour of only forty-five
thousand men, supposing their annual wages to amount
to £50 a year. With our agricultural skill, and our
coal mines, and at the expense of above 40s. a pound in-
stead of 1s. 6d., that is, at the cost of the labour of
about one million two hundred thousand men instead
of forty-five thousand, we might produce our own tea,
and enjoy the pride of being independent of China.
But one million two hundred thousand is about the
number of all the men engaged in agricultural labour
throughout England. A single trade, and that not an
extensive one, supplies as much tea, and that probably
of a better sort, as could be obtained, if it were possible
to devote every farm and every garden to its domestic
production.
The greater part of the advantage of rather importing
than growing and manufacturing tea arises, without
doubt, from the difference between the climates of China
and England. But a great part also arises from the
different price of labour in the two Countries. Not
only the cultivation of the tea plant, but the preparation
of its leaves, requires much time and attention. The
money wages of labour are so low in China, that these
processes add little to the money cost of the tea. In
England the expense would be intolerable. When a
nation, in which the powers of production, and con-
POLITICAL ECONOMY.
161
Political sequently the wages of labour, are high, employs its
Economy. own members in performing duties that could be as
effectually performed by the less valuable labour of less
Production. civilized nations, it is guilty of the same folly as a farmer
Capital. who should plough with a race-horse.
Division of
labour.
Another important consequence of the division of
labour is the existence of retailers: A class who, with-
out being themselves employed in the direct production
of raw or manufactured commodities, are, in fact, the
persons who supply them to their ultimate purchasers,
and that at the times and in the portions which the con-
venience of those purchasers requires. When we look
at a map of London and its suburbs, and consider that
that province covered with houses contains more than a
tenth of the inhabitants of England, and consumes
perhaps one-fifth in value of all that is consumed in Eng-
land, and obtains what it consumes, not from its own
resources, but from the whole civilized world, it seems
marvellous that the daily supply of such multitudes
should be apportioned with any thing like accuracy to
their daily wants. It is effected principally by means of
the retailers. Each retailer, the centre of his own system
of purchasers, knows, by experience, the average amount
of their periodical wants. The wholesale dealer, who
forms the link between the actual producer or importer,
and the retailer, knows also, by experience, the average
amount of the demands of his own purchasers, the re-
tailers; and is governed by that experience in purchas-
ing himself from the importer or producer. And the
average amount of these last purchases affords the data
on which the importers and producers regulate the
whole vast and multifarious supply. It can scarcely be
necessary to dwell on the further advantages derived
from the readiness and subdivision of the retailer's
stock; or, to point out the convenience of having to buy
a steak from a butcher, instead of an ox from a grazier.
These are the advantages to which we formerly referred,
as enabling the retailer to obtain a profit proportioned
to the average time during which his stock in trade re-
mains in his possession.
We now proceed to show that the division of labour
is mainly dependent on Abstinence, or, in other words,
on the use of Capital.
"In that rude state of society," says Adam Smith,
"in which there is no division of labour, in which ex-
changes are seldom made, and in which every man
provides every thing for himself, it is not necessary that
any stock should be accumulated or stored up before-
hand in order to carry on the business of the society.
Every man endeavours to supply, by his own industry,
his own occasional wants as they occur. When he is
hungry, he goes to the forest to hunt; when his coat is
worn out, he clothes himself with the skin of the first
large animal he kills; and when his hut begins to go to
ruin, he repairs it as well as he can with the trees and
the turf that are nearest to it.
"But when the division of labour has once been
thoroughly introduced, the produce of a man's own
labour can supply but a very small part of his occasional
wants. The far greater part of them are supplied by
the produce of other men's labour, which he purchases
with the produce, or, what is the same thing, with the
price of the produce of his own. But his purchase
cannot be made until such time as the produce of his
own labour has not only been completed, but sold. A
stock of goods of different kinds, therefore, must be
stored up somewhere, sufficient to maintain him, and to
VOL. VI.
Division of
supply him with the materials and tools of his work, till Political
such time, at least, as both these events can be brought Economy.
about. A weaver cannot apply himself entirely to his
peculiar business, unless there is beforehand stored up Production.
somewhere, either in his own possession, or in that of Capital.
some other person, a stock sufficient to maintain him, labour.
and to supply him with the materials and tools of his
work, till he has not only completed, but sold his web.
This accumulation must evidently be previous to his ap-
plying his industry for so long a time to such a peculiar
business.' Wealth of Nations, book ii. Introduction.
Perhaps this is inaccurately expressed; there are
numerous cases in which production and sale are con-
temporaneous.
temporaneous. The most important divisions of labour
are those which allot to a few members of the commu-
nity the task of protecting and instructing the re-
mainder. But their services are sold as they are per-
formed. And the same remark applies to almost all
those products to which we give the name of services.
Nor is it absolutely necessary in any case, though, if
Adam Smith's words were taken literally, such a neces-
sity might be inferred, that, before a man dedicates
himself to a peculiar branch of production, a stock of
goods should be stored up to supply him with subsist-
ence, materials, and tools, till his own product has been
completed and sold. That he must be kept supplied
with those articles is true; but they need not have been
stored up before he first sets to work, they may have
been produced while his work was in progress. Years
must often elapse between the commencement and sale
of a picture. But the painter's subsistence, tools, and
materials for those years are not stored up before he sets
to work: they are produced from time to time during
the course of his labour. It is probable, however, that
Adam Smith's real meaning was, not that the identical
supplies which will be wanted in a course of progressive
industry must be already collected when the process.
which they are to assist or remunerate is about to be
begun, but that a fund or source must then exist from
which they may be drawn as they are required. That
fund must comprise in specie some of the things
wanted. The painter must have his canvass, the weaver
his loom, and materials, not enough, perhaps, to complete
his web, but to commence it. As to those commodities,
however, which the workman subsequently requires, it
is enough if the fund on which he relies is a productive
fund, keeping pace with his wants, and virtually set
apart to answer them.
But if the employment of capital is required for the
purpose of allowing a single workman to dedicate him-
self to one pursuit, it is still more obviously necessary
in order to enable aggregations, or classes of producers,
to concur, each by his separate exertions, in one pro-
duction. In such cases even the mere matter of distri-
bution, the mere apportionment of the price of the finished
commodity among the different producers requires the
employment of a considerable capital, and for a con-
siderable time, or, in other words, a considerable exer-
tion of abstinence. The produce of independent labour
belongs by nature to its producer. But where there has
been a considerable division of labour, the product has
no one natural owner. If we were to attempt to reckon
up the number of persons engaged in producing a
single neckcloth, or a single piece of lace, we should
find the number amount to many thousands; in fact,
to many tens of thousands. It is obviously impossible
that all these persons, even if they could ascertain their
Z
162
POLITICAL ECONOMY.
Political respective rights as producers, should act as owners of
Economy. the neckcloth or the lace, and sell it for their common
benefit.
labour.
Production
Capital.
This difficulty is got over by distinguishing those
Division of who assist in production by advancing capital, from
those who contribute only labour-a distinction often
marked by the terms master and workman; and by arrang-
ing into separate groups the different capitalists and
workmen engaged in distinct processes, and letting
each capitalist, as he passes on the commodity, receive
from his immediate successor the price both of his own
abstinence and of his workmen's labour.
It may be interesting to trace this process in the
history of a coloured neckcloth or a piece of lace. The
cotton of which it is formed may be supposed to have
been grown by some Tenessee or Louisiana planter.
For this purpose he must have employed labourers in
preparing the soil and planting and attending to the
shrub for more than a year before its pod ripened.
When the pod became ripe, considerable labour, assisted
by ingenious machinery, was necessary to extricate the
seeds from the wool. The fleece thus cleaned was
carried down the Mississippi to New Orleans, and there
sold to a cotton factor. The price at which it was sold
must have been sufficient, in the first place, to repay to
the planter the wages which had been paid by him to
all those employed in its production and carriage; and,
secondly, to pay him a profit proportioned to the time
which had elapsed between the payment of those wages and
the sale of the cotton; or, in other words, to remunerate
him for his abstinence in having so long deprived him-
self of the use of his money, or of the pleasure which he
might have received from the labour of his work-people, if,
instead of cultivating cotton, he had employed them in
contributing to his own immediate enjoyment. The
New Orleans factor, after keeping it perhaps five or six
months, sold it to a Liverpool merchant. Scarcely any
labour could have been expended on it at New Orleans,
and, in the absence of accidental circumstances, its
price was increased only by the profit of the cotton
factor. A profit which was the remuneration of his
abstinence in delaying, for five or six months, the
gratification which he might have obtained by the ex-
penditure on himself of the price paid by him to the
planter. The Liverpool merchant brought it to Eng-
land and sold it to a Manchester spinner. He must
have sold it at a price which would repay, in the first
place, the price at which it was bought from the factor
at New Orleans; in the second place, the freight from
thence to Liverpool; (which freight includes a portion
of the wages of the seamen, and of the wages of those
who built the vessel, of the profits of those who ad-
vanced those wages before the vessel was completed, of
the wages and profits of those who imported the materials
of which that vessel was built, and, in fact, of a chain of
wages and profits extending to the earliest dawn of
civilization;) and, thirdly, the merchant's profit for the
time that these payments were made before his sale to
the manufacturer was completed.
The spinner subjected it to the action of his
work-people and machinery, until he reduced part of
it into the thread applicable to weaving muslin, and
part into the still finer thread that can be formed into
lace.
The thread thus produced he sold to the weaver and
to the lacemaker; at a price repaying, in addition to the
price that was paid to the merchant, first, the wages of
the work-people immediately engaged in the manufac- Political
ture; secondly, the wages and profits of all those who Economy.
supplied, by the labour of previous years, the buildings Production.
and machinery; and, thirdly, the profit of the master Capital.
spiuner. It would be tedious to trace the transmission Division of
of the thread from the weaver to the bleacher, from the labour.
bleacher to the printer, from the printer to the whole-
sale warehouseman, from him to the retailer, and thence
to the ultimate purchaser; or even its shorter progress
from the lacemaker to the embroiderer, and thence to
the ultimate purchaser. At every step a fresh capitalist
repays all the previous advances, subjects the article, if
unfinished, to further processes, advances the wages of
those engaged in its further manufacture and transport,
and is ultimately repaid by the capitalist next in order
all his own advances, and a profit proportioned to the
time during which he has abstained from the unproduc-
tive enjoyment of the capital thus employed.
It will be observed, that we have not mentioned the
taxation that must have been incurred throughout the
whole process which we have described, or the rent that
must have been paid for the use of the various appro-
priated natural agents whose services were requisite or
beneficial. We have left rent unnoticed, because its
amount depènds so much on accident that any further
allusion to it would have much increased the complexity
of the subject. We have not expressly mentioned taxa-
tion, because it is included under the heads which we
have enumerated. The money raised by taxation is
employed in paying the wages and profits of those who
perform, or cause to be performed, the most important
of all services, the protecting the community from fraud
and violence. Those who are thus employed afford pre-
cisely the same assistance to the merchant or the manu-
facturer, as the private watchman who protects the
warehouse, or the smith who fortifies it with bars and
padlocks.
Our limits prohibit our attempting to trace the gra-
dual increase of the value of a pound of cotton from the
time it was gathered on the banks of the Mississippi, till
it appears in a Bond Street window as a piece of elabo-
rate lace. We should probably be understating the dif-
ference if we were to say that the last price was a thou-
sand times the first. The price of a pound of the finest
cotton wool, as it is gathered, is less than two shillings.
A pound of the finest cotton lace might easily be worth
more than a hundred guineas. No means, except the
separation of the functions of the capitalist from those
of the labourer, and the constant advance of capital
from one capitalist to another, could enable so many
thousand producers to direct their efforts to one object,
to continue them for so long a period, and to adjust the
reward for their respective sacrifices.
Productiveness of Labour in Agriculture and Manufac-
tures. Fourth Elementary Proposition.
bour in
Before we quit the subject of production, it is necessary Productive-
to explain an important difference between the efficiency ness of la
of the different productive instruments when employed
agriculture
in cultivating the earth, and their efficiency when em- and manu
ployed in preparing for human use the raw produce factures.
obtained by agriculture: or, in other words, between the
efficiency of agricultural and manufacturing industry.)
In the course of this discussion we shall illustrate the last
of the four elementary propositions on which we believe
the Science of Political Economy to rest; namely,
POLITICAL ECONOM Y.
163
ness of la-
manufac-
tures.
Political that, agricultural skill remaining the same, additional
Economy. labour employed on the land within a given district
produces in general a less proportionate return.
Production. The difference between the efficiency of agricultural and
Productive of manufacturing industry which we have now to consider,
consists in the power which agricultural industry pos-
bour in agri-
culture and sesses, and manufacturing industry does not possess, of
obtaining an additional product from the same materials.
We have seen that the use of implements and the divi-
sion of labour assist the exertions of man to an extent
quite incalculable at present, and apparently capable of
indefinite increase. But manufacturing improvements,
though they enable one man to do the work of hundreds
or of thousands,-though they enable the same amount
of labour employed on the same materials to produce a
more and more useful commodity, cannot enable the
same amount of labour, or even increased labour, em-
ployed on the same quantity of materials, to produce a
much larger amount of finished work of the same quality,
than could have been produced before. If the labour
and the skill now employed throughout England on the
manufacture of cotton were doubled, but the quantity of
raw materials remained the same, the quantity of inanu-
factured produce could not be sensibly increased. The
value of that produce might perhaps be much increased,
it might be made much finer, and consequently of greater
length or breadth; but supposing the quality of the
produce unaltered, its quantity could be increased only
by the saving which might be made of that small por-
tion of the raw material which now is wasted.)
(The case of agriculture is different. Those regions,
indeed, which lie within the limits of perennial snow, or
consist of rock or loose sand, or precipitous mountain,
are unsusceptible of improvement. But with these ex-
ceptions, the produce of every extensive district seems
capable of being almost indefinitely increased by cou-
stantly increasing the labour bestowed on it. Nothing
appears more hopelessly barren than an extensive bog
with its black-looking pools and rushy vegetation. But,
by draining, by burning the limestone on which, in Ire-
land at least, it generally rests, and by employing the
lime to convert the matted fibres of the turf into a vege-
table mould, the bog may be made not only productive
but fertile. There are about thirty-seven millions of
acres in England and Wales. Of these it has been
calculated that not eighty-five thousand, less in fact
than one four-hundredth part, are in a state of high cul-
tivation, as hop grounds, nursery grounds, and fruit
and kitchen gardens; and that five millions are waste.
All that is not waste is productively employed, but how
small is its produce compared to the amount to which
unlimited labour and abstinence might raise it! If the
utmost use were made of lime and marl and the other
mineral manures; if by a perfect system of drainage and
irrigation water were nowhere allowed to be excessive or
deficient; if all our wastes were protected by enclosures
and planting, if all the land in tillage, instead of being
scratched by the plough, were deeply and repeatedly
trenched by manual labour; if minute care were em-
ployed in the selecting and planting of every seed or
root, and watchfulness sufficient to prevent the appear-
ance of a weed; if all live stock, instead of being pas-
tured, had their food cut and brought to them; in short,
if the whole Country were subjected to the labour which
a rich citizen lavishes on his patch of suburban garden;
if it were possible that all this should be effected, the
agricultural produce of the Country might be raised to
Political
Production.
Productive-
ness of la-
ten times, or indeed to much more than ten times its
present amount.) (No additional labour or machinery Economy.
can work up a pound of raw cotton into more than a
pound of manufactured cotton; but the same bushel of
seed-corn, and the same rood of land, according to the
labour and skill with which they are treated, may pro bour in agri-
duce four bushels, or eight bushels, or sixteen.
But although the land in England is capable of pro-
ducing ten times, or more than ten times as much as it
now produces, it is probable that its present produce will
never be quadrupled, and almost certain that it will
never be decupled.
On the other hand, unless our manufactures be
checked by war, or by the continuance or introduction
of legislative enactments unfavourable to their progress,
their produce may increase during the next century at
the same rate, or at a still greater rate, than it increased
during the last century. It may be quadrupled, or
much more than quadrupled.
The advantage possessed by land in repaying in-
creased labour, though employed on the same materials,
with a constantly increasing produce, is overbalanced by
the diminishing proportion which the increase of the
produce generally bears to the increase of the labour.
And the disadvantage of manufactures in requiring for
every increase of produce an equal increase of materials,
is overbalanced by the constantly increasing facility with
which the increased quantity of materials is worked up.
A century ago the average annual import of cotton
wool into Great Britain was about one million two
hundred thousand pounds. The amount now annually
manufactured in Great Britain exceeds two hundred and
forty millions of pounds. But though the materials
now manufactured are increased at least two hundred
times, it is obvious that the labour necessary to manu-
facture them has not increased two hundred times. It
may be doubted whether it has increased thirty times.
The whole number of families in Great Britain, exclu-
sively of those employed in agriculture, amounted, at the
enumeration in 1831, to 2,453,041; if we suppose the
transport, manufacture, and sale of cotton to employ about
one-eighth of them, or about 300,000 families, it is a
large allowance. But with the inefficient machinery
in use a century ago, the annual manufacture of one
million two hundred thousand pounds of cotton could
not have required the annual labour of less than ten
thousand families. It probably required many more.
The result has been that, although we now require two
hundred times as much of the raw material as was re-
quired a century ago, and although that additional
quantity of raw material is probably obtained from the
soil by more than two hundred times the labour that
was necessary to obtain the smaller quantity, yet, in
consequence of the diminution of the labour necessary
to manufacture a given amount, the price of the manu-
factured commodity (a price which exhibits the sum of
the labour necessary for both obtaining the materials
and working them up) has constantly diminished. In
1786, when our annual import was about twenty millions
of pounds of cotton wool, the price of the yarn denomi-
nated No. 100 was 38s, a pound. In 1792, when the im-
port amounted to thirty-four millions of pounds, the price
of the same yarn was 16s. a pound. In 1806, when the
import amounted to sixty millions, the price of the yarn
had
fallen to 7s. 2d. a pound; and with the increased quantity
manufactured, it has now fallen below 3s. a pound.
Every increase in the quantity manufactured has been
z 2
culture and
manufac-
tures.
164
POLITICAL ECONOMY.
"
Political accompanied by improvements in machinery, and an in-
Economy, creased division of labour, and their effects have much
Production. more than balanced any increase which may have taken
Productive- place in the proportionate labour necessary to produce
ness of la- the raw material.
bour in agri-
culture and
manufac-
tures.
The proposition that, in agriculture, additional labour
generally produces a less proportionate result, or, in
other words, that the labour of twenty men employed on
the land within a given district, though it will certainly
produce more than that of ten men, will seldom produce
twice as much, will be best illustrated by confining our
attention to a single example.
We will suppose a farm consisting of one thousand acres,
two hundred very good land, three hundred merely tole-
rable, and the remainder barren down, affording only a
scanty sheep-walk. We will suppose the farmer to em-
ploy upon it twenty men, and to obtain an average
annual product, which, to reduce it to a single denomi-
nation, we will call six hundred quarters of wheat. We
will suppose him now to double the number of his
labourers, and we shall see what probability there is
that the produce will consequently be doubled. If
the twenty additional labourers are employed in culti-
vating the down land, they must necessarily produce a
less return than that which is produced on the other
land by the previous twenty, as the land is supposed to
be worse. It is equally clear that their labour, if applied
to the land already in cultivation, will be less productive
than the labour previously applied to it; or, in other
words, that the produce of that land, though increased,
will not be doubled, since on no other principle can we
account for any land except the very best having been
ever cultivated. For if the farmer could have gone on
applying additional labour to land already in cultiva-
tion without any diminution in the proportionate return,
it is clear that he never would have cultivated the three
hundred acres of inferior land. In fact, if this were the
case, if additional labour employed in agriculture gave a
proportionate return, he never need have cultivated
more than a single acre, or even a single rood. It is
probable that in the supposed case he would employ
some of his additional labourers in breaking up a por-
tion of the down, and some of them in cultivating more
highly the land already in tillage. So employed, they
might produce an additional crop of four hundred, or
five hundred, or five hundred and fifty quarters, but it is
certain that the additional crop would not be equal to the
whole six hundred previously obtained: the produce
would be increased, but would not be doubled.
This imaginary farm is a miniature of the whole King-
dom. We have in England large tracks of barren waste,
and we have under cultivation soil of every description of
fertility, from that which produces forty bushels of wheat
an acre to that which produces, with the same labour,
and on the same extent of land, only twelve or thirteen.
If additional produce is to be raised, the resource, ge-
nerally speaking, must be either the cultivation of what
has been as yet untilled on account of its barrenness, or
the employment of additional labour on what is now in
cultivation. That in either case the additional produce is
not likely to be in the proportion of the additional labour
is as obvious in the case of the whole Kingdom as it
has appeared to be in that of a single farm.
But the proposition which we have been endeavouring
to illustrate, though general, is not universal; it is sub-
ject to material exceptions. In the first place, the
negligence or ignorance of the occupier, or proprietor,
Productive-
or obstacles of ownership, often prevent for a long time Political
particular portions of land from being subjected to the Economy.
average degree of labour bestowed on land of equal
capability. Increased labour, when at length bestowed Production.
on land so circumstanced, may fairly be expected to be ness of la- ·
as productive, indeed more productive, than the average bour in agri-
of agricultural labour. Advantages of this kind have culture and
sometimes been derived from extensive operations of manufac-
drainage and embankment; but the chances of great tures.
profit are so apt to blind men to the amount of phy-
sical obstacles, that projects of this kind are perhaps
more frequently attempted prematurely than deferred
till after the time when an increased demand for raw
produce first rendered them fair speculations. Under-
takings which have been postponed in consequence of
obstacles arising from ownership are far more fre-
quently productive. The enclosure of a common often
subjects to the plough land of which the former unpro-
ductiveness was not owing to deficient fertility. Effects
similar in kind, though not in degree, often take place
when an estate becomes unfettered after the title has
been long so circumstanced that the farmers could not
rely on the duration or renewal of their leases. In these
cases considerable additional produce may often be
obtained by a comparatively small addition of labour.
But the most important exception to the general rule
takes place when increase of labour is accompanied by
increase of skill. More efficient implements, a better
rotation of crops, a greater division of labour, in short,
improvements in the art of agriculture, generally accom-
pany the increase of agricultural labour. They always
accompany that increase when it is accompanied by an
increase of the capital as well as of the population of a
Country; and they always counteract, and often out-
weigh, the inferiority or diminished proportional powers.
of the soil to which they are applied.
The total amount of the annual agricultural produce
of Great Britain has much more than doubled during the
last hundred years; but it is highly improbable that
the amount of labour annually employed in agriculture
has also doubled. It is not supposed that during that
period the population of Great Britain has more than
doubled; and the principal increase has till lately been
in the manufacturing districts. The last hundred years,
with all their misfortunes, form the most prosperous
period of our History. We owe to them the enclosure
of millions of acres formerly almost useless common
field; we owe to them almost all that we possess that
deserves the name of Agricultural Science; and we owe
to them also all the canals, and almost all the roads,
which, by obviating in a great measure the accidents
of situation, enable the amount of labour to bear through-
out the Kingdom something like an average proportion
to the quality of the soil on which it is employed. It is
possible, though certainly not probable, that our pro-
gress may be equal during the next hundred years; but
though indefinite, it certainly cannot be infinite. It is
obviously impossible that the produce of the soil of a
given district can increase geometrically for ever, what-
ever be the amount of the labour employed on it.
On the other hand, every increase in the number of
manufacturing labourers is accompanied not merely by a
corresponding but by an increased productive power. If
three hundred thousand families are now employed in
Great Britain to manufacture and transport two hundred
and forty millions of pounds of cotton, it is absolutely
certain that six hundred thousand families could manu
་་
POLITICAL ECONOMY.
165
Political facture and transport four hundred and eighty millions of laws which regulate exchanges; in treating of the other, Political
Economy pounds of cotton. It is, in fact, certain that they could do the relative proportions in which different classes of the Economy.
The things ex-
It is not improbable that they could manu- community benefit by those laws.
changed will be the principal subjects of the one
cussion, the exchanging parties of the other.
Production.
much more.
Productive facture and transport seven hundred and twenty millions.
ness of la- The only check by which we can predict that the progress
bour in agri- of our manufactures will in time be retarded, is the in-
culture and
creasing difficulty of importing materials and food. If
manufac-
the importation of raw produce could keep pace with
tures.
the power of working it up, there would be no limit to
the increase of wealth and population.
Distribu-
tion.
Distribution.
Of the three great branches of Political Economy,
the nature, the production, and the distribution of wealth,
we have now considered the two former, and we pro-
ceed to treat of the last, namely, of the laws according
to which all that is produced is distributed among those
who become its ultimate consumers. In that state of
society which is presupposed by the Political Economist,
this is principally effected by means of exchange. We
may indeed conceive a state of human existence ad-
mitting of this distribution without the intervention of
exchanges. But such a situation of society, if it can be
called society, neither deserves nor requires scientific
investigation. Political Economy considers men in
that more advanced state, which may fairly be called
their natural state, since it is the state to which they
are impelled by the provisions of nature, in which each
individual relies on his fellows for the greater part,
in many cases for the whole of what he consumes, and
supplies his own wants principally or wholly by the ex-
changes in which he contributes to theirs.
But we must admit that we use each of the words pro-
duction and exchange in a sense rather more extensive
than is usual. We have already stated that we apply the
word production to much that would commonly be called
appropriation, and that we include under exchanges what
are usually termed public burdens. We consider all
that is received by the officers of Government as given
in exchange for services affording protection, more or
less complete, against foreign or domestic violence or
fraud. It is true, as we have already remarked, that
this exchange is conducted on peculiar principles. In
those Governments which are not democratic or re-
presentative, the rulers themselves assess the amount
which they are to receive, and generally assess it at
the utmost which, under such circumstances, can be
extorted from their subjects. And even under repre-
sentative or democratic institutions, no individual in-
habitant is permitted to refuse his share of the general
contribution, though he should disclaim his share in the
general protection. But the transaction, though often
involuntary, and still more often inequitable, is still an
exchange, and on the whole a beneficial exchange. The
worst and most inefficient Government affords to its sub-
jects a cheaper and a more effectual protection than
they could obtain by their individual and unaided
exertions.
The laws by which exchanges are regulated may be
divided into two great branches. The one comprises
those laws which apply generally to all exchanges;
the other those which apply specifically to the respec-
tive kinds of exchanges in which the owners of the dif-
ferent productive instruments exchange specifically with
one another the produce of those instruments.
In treating of the one we have to consider the general
dis- tion.
Distribu-
Nomencla-
One of the greatest difficulties to which a writer on ture.
Political Economy is exposed, arises from the mutual
dependence of the different propositions constituting the
Science; a dependence which makes it difficult to ex-
plain any one without a frequent allusion to many others.
And this is particularly the case with respect to distri-
bution. The proportions in which different classes of
the community are entitled to the things that are pro-
duced cannot be explained without a constant reference
to the general laws of exchange; and, on the other hand,
those laws cannot be discussed without a constant re-
ference to the exchanging parties. Admitting, as we
are forced to do, that no arrangement can be free from
objection, we have thought that the least objectionable
mode of presenting the subject of distribution will be
to begin by a general classification of the parties among
whom the results of the different instruments of produc-
tion are divided; then to proceed to state the general
laws of exchange; and, lastly, to point out the general cir-
cumstances which decide in what proportions the different
classes of the community share in the general distri-
bution.
According to the usual language of Political Econo-
mists, labour, capital, and land are the three instruments
of production; labourers, capitalists, and landlords are
the three classes of producers; and the whole produce is
divided into wages, profit, and rent: the first designat-
ing the labourer's share, the second that of the capitalist,
and the third that of the landlord. We approve, on the
whole, of the principles on which this classification is
founded, but we have been forced, much against our
will, to make considerable alterations in the language
in which it has been usually expressed; to add some
new terms, and to enlarge and contract the signification
of some others.
It appears to us that, to have a nomenclature which
should fully and precisely indicate the facts of the case,
not less than twelve distinct terms would be necessary.
For each class there ought to be a name for the instru-
ment employed or exercised, a name for the class of
persons who employ or exercise it, a name for the act of
employing or exercising it, and a name for the share of
the produce by which that act is remunerated. Of
these terms we have not much more than half, as will
appear if we examine each class separately.
66
For the first class we have the terms "to labour,"
a labourer," and " wages." Neither of these terms
expresses the instruments of production: the substantive
labour," and the verb "to labour," express merely an
act. "A labourer" is an agent, and wages are a result:
but what is the thing employed? what is it that the
labourer exerts? Clearly his mental or bodily facul-
ties. With the addition of this term the nomenclature
of the first class will be complete. To labour is to em-
ploy strength of body or mind for the purpose of pro-
duction; the person who does so is a labourer, and
wages are his remuneration.
In the second class we have the words capital, capi-
talist, and profit. These terms express the instrument,
the person who employs or exercises it, and his remu-
neration; but there is no familiar term to express the act,
the conduct of which profit is the reward, and which
166
POLITICAL ECONOMY.
Political bears the same relation to profit which labour does to
Economy. wages. To this conduct we have already given the
ture.
name of abstinence. The addition of this term will
Distribu-
tion.
complete the nomenclature of the second class. Capital
Nomencla- is an article of wealth, the result of human exertion, em-
ployed in the production or distribution of wealth. Ab-
stinence expresses both the act of abstaining from the
unproductive use of capital, and also the similar con-
duct of the man who devotes his labour to the produc-
tion of remote rather than of immediate results. The
person who so acts is a capitalist, the reward of his con-
duct is profit.
The defectiveness of the established nomenclature is
more striking when we come to the third class. Wages
and profits are the creation of man. They are the re-
compense for the sacrifice made in the one case, of ease,
in the other, of immediate enjoyment. But a consider-
able part of the produce of every Country is the recom-
pense of no sacrifice whatever; is received by those who
neither labour nor put by, but merely hold out their
hands to accept the offerings of the rest of the com-
munity.
The powers of nature, as distinguished from those
of man, are necessary to afford a field for the exer-
cise of human abstinence and labour. Of these, some
from their abundance and the notoriety of the means
of employing them, are incapable of appropriation.
Being universally accessible, they bear no price notwith-
standing their utility; and what has been produced with
their assistance has no value beyond that of the labour
and abstinence which it has cost. It sells therefore for
a price equal to, but not exceeding, the sum of the wages
and profits which must be paid if the production is to
be continued. The agency of nature is equally essen-
tial to the production of timber in the forests of Upper
Canada and in England. But the supply of timber in
the forests of Upper Canada is practically unlimited.
No portion of the price of a Canadian hut is paid for
the agency of nature in producing the logs of which it
is constructed. The pine while standing was valueless.
The purchaser pays only for the labour and abstinence
necessary to fell and to fashion it.
But the assistance of an appropriated natural agent
may render possible the production of a commodity more
valuable than the result of equal labour and abstinence
without such assistance. Such a commodity sells for
a price exceeding the sum of the wages and profits
which are sufficient to repay the capitalist and the la-
bourer who have been employed on it. The surplus is
The surplus is
taken by the proprietor of the natural agent, and is his
reward, not for having laboured or abstained, but sim-
ply for not having withheld what he was able to with-
hold; for having permitted the gifts of nature to be ac-
cepted.
If we subtract from the price of an English oak what
must be paid for the labour of him who planted the
sapling, and for the abstinence of those who allowed it
to grow for a century, still something is to be paid for
the use of the land by which it was nourished. And
that is the price of the agency not of man but of nature.
Of the agents afforded by nature, the principal is the
land with its rivers, ports, and mines. In the rare cases
in which the quantity of useful land is practically un-
limited, a state of things which occurs only in the early
stages of colonization, land is an agent universally ac-
cessible, and, as nothing is paid for its use, the whole
produce belongs to the cultivators, and is divided, under
Political
the names of wages and profit, between the capitalists and Economy,
the labourers, of whose abstinence and industry it is the
result.
Distribu-
ture.
But in all old Countries, and even in colonies within tion.
a very few years after their foundation, certain lands, Nomencla-
from peculiar advantages of soil or situation, are found
to make more than the average return to a given expen-
diture of capital and industry. The proprietor of such
lands, if he cultivate them himself, receives a surplus
after having paid the wages of his labourers and de-
ducted the profit to which he is entitled on his capital.
He of course receives the same surplus if, instead of
cultivating them himself, he lets them out to some other
capitalist. The tenant receives the same profit, and the
labourers receive the same wages as if they were em-
ployed on land possessing merely average natural ad-
vantages; the surplus forms the rent of the proprietor,
or, as we usually term him, the landlord. The whole
produce, instead of two, is divided into three shares-rent,
profit, and wages. If the owner is also the capitalist or
farmer, he receives two of these shares, both the profit
and the rent.
If he allow it to be cultivated by the
capital of another, he receives only rent. But rent,
with or without profit, he necessarily receives. And
when the whole of a Country has been appropriated,.
though it be true, as will be shown hereafter, that some
of the produce is raised by the application of additional
capital without payment of additional rent, and may
therefore be said to be raised rent free, yet it is equally
true that a rent is received from every cultivated acre; a
rent rising or falling according to the accidents of soil
and situation, but the necessary result of limited extent
and productive power.
It is obvious, however, as we have already stated, that
land, though the principal, is not the only natural agent
that can be appropriated. The mere knowledge of the
operations of nature, as long as the use of that know-
ledge can be confined either by secrecy or by law,
creates a revenue to its possessor analogous to the rent
of land. The knowledge of the effect on the fibres of
cotton of rollers moving with different velocities, enabled
a village barber to found in a very few years a more than
aristocratic fortune. Still greater wealth might pro-
bably have been acquired by Dr. Jenner, if he could
have borne somewhat to limit the benefits which he has
conferred on mankind.
b
When the author of a useful discovery puts it himself
in practice, he is like a proprietor farming his own pro-
perty; the produce, after paying average wages for
the labour, and average profits for the capital, employed,
affords a still further revenue, the effect not of that capi-
tal or of that labour, but of the discovery, the creation
not of man but of nature. If, instead of using it himself,
he let out to another the privilege of using it, he ob-
tains a revenue so precisely resembling the rent of land
The payment
that it often receives the same name.
made by a manufacturer to a patentee for the privilege
of using the patent process is usually termed in com-
mercial language a rent; and under the same head must
be ranked all the peculiar advantages of situation or con-
nection, and all extraordinary qualities of body and mind.
The surplus revenue which they occasion beyond ave-
rage wages and profits is a revenue for which no addi-
tional sacrifice has been made. The proprietor of these ad-
vantages differs from a landlord only in the circumstance
that he cannot in general let them out to be used by
another, and must consequently either allow them to be
POLITICAL ECONOMY.
167
Distribu-
ture.
Political useless or turn them to account himself. He is forced,
Economy. therefore, always to employ on them his own industry,
and generally his own capital, and receives not only
tion. rent but wages and profit. (If, therefore, the established
Nomencla- division is adhered to, and all that is produced is to be
divided into rent, profit, and wages, and certainly that
appears to be the most convenient classification;—and if
wages and profit are to be considered as the rewards of
peculiar sacrifices, the former the remuneration for
labour, and the latter for abstinence from immediate
enjoyment, it is clear that under the term "rent" must
be included all that is obtained without any sacrifice;
or, which is the same thing, beyond the remuneration
for that sacrifice; all that nature or fortune bestows either
without any exertion on the part of the recipient, or in
addition to the average remuneration for the exercise
of industry or the employment of capital.
But though we see no objection to this extension of
the word rent, the terms land and landlord are too pre-
cise to admit of being equally extended. It would be
too great an innovation to include under the term land
every natural agent which is capable of appropriation,
or under the term landlord every proprietor of such an
agent. For these terms we must substitute those of
natural agent, and proprietor of a natural agent.) And
the third class will then have a term for the third instru-
ment of production, a term for the owner of that in-
strument, and a term for the share which he receives of
the produce: terms corresponding with the terms facul-
ties of body and mind, labourer, and wages, as applied
to the first class, and with capital, capitalist, and profit,
as applied to the second. We shall still want a term
corresponding with labour and abstinence,—a term in-
dicating the conduct which enables the proprietor of a
natural agent to receive a rent. But as this conduct
But as this conduct
implies no sacrifice,-as it consists merely in not suffering
the instrument of which he is the owner to be useless,
it perhaps does not require a distinct designation. When
a man possesses an estate, we take it for granted that he
does not allow it to lie waste, but either uses it himself,
or lets it to a tenant. In ordinary language the receipt
of rent is included under the term ownership. There
There
will therefore be little danger of obscurity if we consider
the word "possess," when applied to the proprietor of
a natural agent, as implying the receipt of the advantages
afforded by that agent, or, in other words, of rent.
Talents, indeed, often lie idle, but in that case they may
be considered for economical purposes as not possessed.
In fact, unaccompanied by the will to use them, they are
useless.
But though the whole produce may be considered as
divided into three shares, one of which is taken by the
capitalists, another by the labourers, and another by the
proprietors of the natural agents which have concurred
in the production, it is very seldom that any given
commodity, or the produce of any one productive ex-
ertion, is thus actually divided. The nearest approach
The nearest approach
to it takes place in those cases in which producers be-
longing to different classes become partners and agree
that the produce of their joint exertions shall be sold
and the price divided between them. Such a partner-
ship is often formed between a capitalist and his labourers
when the success of the enterprise depends much on the
zeal of the labourers, and the capitalist is unable to over-
look them. Such is the case in the Greenland fishery.
The men seldom receive preascertained wages, but, on
the termination of the voyage, the blubber is sold, and
Distribu-
the price divided between the owners and the crew. Political
The practice is the same in privateering, and probably Economy.
in many other maritime speculations. Somewhat similar
is the mode of letting land called the métayer system. tion.
Under that system, which is still common in the Conti- Nomencla-
nent of Europe, and probably is always to be found in ture.
a certain state of society, the landlord supplies the capi-
tal as well as the land, and receives half the crop, the
remainder forming the wages of the tenant or head-
labourer, and of the inferior work-people in his employ.
But these are exceptions occasioned by the peculiarities
of the adventure, or by the poverty or ignorance of imper-
fect civilization. The usual practice is to consider one
of the parties as entitled to the whole product, paying
to the others a price for their co-operation. The person
so entitled is uniformly the capitalist: the sums which he
pays for wages and rent are the purchase-money for the
services of the labourer, and for the use of the natural
agent employed.
In most cases a considerable interval elapses between
the period at which the natural agent and the labourer
are first employed, and the completion of the product.
In this climate the harvest is seldom reaped until nearly
a year after it has been sown; a still longer time is
required for the maturity of oxen; and a longer still for
that of a horse; and sixty or seventy years may pass
between the commencement of a plantation, and the
time at which the timber is saleable. It is obvious that
neither the landlord nor the labourer, as such, can wait
during all this interval for their remuneration. The
doing so would, in fact, be an act of abstinence. It
would be the employment of land and labour in order
to obtain remote results. This sacrifice is made by the
capitalist, and he is repaid for it by his appropriate re-
muneration, profit. He advances to the landlord and
the labourer, and in most cases to some previous capi-
talist, the price of their respective assistance; or, in other
words, the hire of the land and capital belonging to one,
and of the mental and bodily powers of another, and
becomes solely entitled to the whole of the product. The
success of his operations depends on the proportion
which the value of that produce, (or, in commercial
language, the value of his returns) bears to the value of
his advances, taking into consideration the time for
which those advances have been made. If the value of
the return is inferior to that of the advance, he is ob-
viously a loser; he is a loser if it be merely equal, as he
has incurred abstinence without profit, or, in ordinary
language, has lost the interest on his capital. He is a
loser even if the value of his returns do not exceed that
of his advances by an amount equal to the current rate
of profit for the period during which the advance has
been made. In any of these cases the product is sold,
so far as the capitalist is concerned, for less than the
cost of its production. The employment of capital,
therefore, is necessarily a speculation; it is the purchase
of so much productive power which may or may not
occasion a remunerative return.
The common language of Economists, therefore, which
describes the landlord, the capitalist, and the labourer
as sharers of the produce, is a fiction. Almost all that
is produced is in the first instance the property of the
capitalist; he has purchased it by having previously
paid the rent and wages, and incurred or paid for the
abstinence, which were necessary to its production. A
portion of it, but generally a small portion, he consumes
himself in the state in which he receives it; the re-
168
POLITICAL ECONOMY.
Distribu-
tion.
ture.
Political mainder he sells. He may, if he think fit, employ the
Economy, price of all that he sells in purchases for his own grati-
fication; but he cannot remain a capitalist unless he
consent to employ some portion of it in the hire of the
Nomencla- land and labour, by the assistance of which the process
of production is to be continued or recommenced. He
cannot, generally speaking, fully retain his situation as
a capitalist unless he employ enough to hire as much
land and labour as before; and if he wish to raise
himself in the world, he must, generally speaking, not
merely keep up but increase the sum which he devotes
to the purchase of productive force. If, for instance, he
has hired the use of a farm for a year for £1000, and
has paid £2000 more as wages to his labourers, and has
expended £1000 in the purchase, from other capitalists,
of agricultural stock, and at the end of the year has sold
the produce for £4400, he may, if he like, spend on his
own gratification the whole of that £4400; or he may
so spend only £400, and employ the rest in hiring the
farm and the labourers, and purchasing stock for another
year; or he may spend on himself only £200, and by
employing productively £4200 instead of £4000, hire
more land, or more labourers, or purchase more stock
and provide for the increase of his capital and his profit.
But in whatever way he employ his £4400, he still
must pay it to landlords, (using that word to comprise all
proprietors of natural agents,) capitalists, and labourers.
It has been objected, however, that this nomenclature
is incomplete. Rent, profit, and wages, it has been said,
designate only those portions of the annual produce
which the producers consume for their own gratification.
They form the revenue of a nation. A further portion,
and a very large one, must be employed not as revenue,
but as capital; not in directly supplying the wants or
directly ministering to the enjoyments of either land-
lords, labourers, or capitalists, but merely in keeping up
the instruments of production. Thus of the farmer's
whole return, which we have supposed to be of the value
of £4400, we may suppose a portion, amounting in
value to £200, to have consisted of corn which he re-
turned to the earth as seed, and another portion, amount-
ing to the same value, to have consisted of the forage
which he gave to his working cattle. It has been said
that neither this seed nor this forage was rent, profit, or
wages.
The answer to this objection is, that the seed-corn and
forage in question were the result of land, labour, and
abstinence; they were entitled, therefore, when produced,
to be denominated rent, wages, or profit, and the cir-
cumstance that they were employed to produce future
instead of immediate gratification does not vary their
character. When produced, they were revenue: their
conversion into capital was a subsequent accident. No
one would except against the expression that such and
such a labourer has saved part of his wages and em-
ployed them in stocking his garden. If the words re-
venue and income were co-extensive with expenditure,
the common statement, that a man is living within his
income, would be a contradiction in terms.
Perhaps this may be made clearer if we retrace the
history of capital.
The primary instruments of production were labour,
and those productive agents which are spontaneously
afforded by nature. The first dwellers on the earth had
only rent and wages. The savage who, instead of de-
The savage who, instead of de-
vouring the animals which he had entrapped, reserved
them to become the origin of a domesticated flock, and
Distribu-
he who reserved, to be employed as seed, some of the Political
grains which he had gathered, laid the foundation of Economy.
capital. The produce of that flock and of that seed
was partly rent, partly wages, and partly profit. And tion.
it did not cease to be so, although he refused to employ
the whole of it on his immediate gratification.
It must be admitted, however, that the portion of the
annual produce which is employed in the production or
the support of brute or inanimate capital is not usually
termed rent, wages, or profit. It has not, in fact, any
specific name. But it appears to us to be the most
philosophical arrangement to consider it as rent, wages,
or profit, according to the character of its proprietor,
without regard to its subsequent destination.
Having made this general classification of the parties Exchange.
among whom the results of the different productive in-
struments are divided, we now proceed to consider the
general laws which regulate the proportions in which
those results are exchanged for one another. To a
certain degree this question was considered when we
treated of value; but not having at that time explained
the words production, wages, profit, or rent, we were
unable to do more than to state and illustrate the fol-
lowing propositions:-
First, that all those things, and those things only, are
susceptible of exchange, which, being transferable, are
limited in supply, and are capable, directly or indirectly,
of affording pleasure or preventing pain; a capacity to
which we have affixed the name of utility. Secondly, that
the reciprocal values of any two things, or, in other
words, the quantity of the one which will exchange for
a given quantity of the other, depend on two sets of
causes; those which occasion the utility and limit the
supply of the one, and those which limit the supply and
occasion the utility of the other. The causes which oc-
casion the utility and limit the supply of any given
commodity or service, we denominated the intrinsic
causes of its value. Those which limit the supply and
occasion the utility of the commodities or services for
which it is capable of being exchanged, we denomi
nated the extrinsic causes of its value. And, thirdly, that
comparative limitation of supply, or, to speak more
familiarly, though less philosophically, comparative
scarcity, though not sufficient to constitute value, is
by far its most important element; utility, or, in other
words, demand, being mainly dependent on it. We
had not then shown the means by which supply is
effected. Having done this, having shown that human
Labour and Abstinence, and the spontaneous agency of
Nature, are the three instruments of production, we
are at liberty to explain what are the obstacles which
limit the supply of all that is produced, and the mode
in which those obstacles affect the reciprocal values of
the different subjects of exchange.
In the following discussion, however, we shall in
general substitute price or value in money for general
value.
The general value of any 'commodity, that is, the Price.
quantity of all the other subjects of exchange which
might be obtained in return for a given quantity of it, is
incapable of being ascertained. Its specific value in
any other commodity may be ascertained by the experi-
ment of an exchange; the anxiety of each party in the
exchange to give as little, and obtain as much as pos-
sible, leading him to investigate, as accurately as he can,
the intrinsic causes giving value to each of the articles
POLITICAL ECONOMY.
169
Distribu-
tion.
Price.
Political to be exchanged. This is, however, a troublesome
Economy, operation, and many expedients are used to diminish its
frequency. The most obvious one is to consider a
single exchange, or the mean of a few exchanges, as a
model for subsequent exchanges of a similar nature.
By an extension of this expedient it may become a
model for exchanges not of a similar nature. If given
quantities of two different articles are each found by ex-
perience to exchange for a given quantity of a third.
article, the proportionate value of the two first-mentioned
articles may, of course, be inferred. It is measured by
the third. Hence arise the advantages of selecting, as
one of the subjects of every exchange, a single commo-
dity, or, more correctly, a species of commodities con-
stituted of individuals of precisely similar qualities. In
the first place, all persons can ascertain, with tolerable
accuracy, the intrinsic causes which give value to the
selected commodity, so that one half the trouble of an
exchange is ready performed. And, secondly, if an ex-
change is to be effected between any other two commo-
dities, the quantity of each that is usually exchanged for
a given quantity of the third commodity is ascertained,
and their relative value is inferred. The commodity thus
selected as the general instrument of exchange, whatever
be its substance, whether salt, as in Abyssinia, cowries, on
the Coast of Guinea, or the precious metals, as in Europe,
is money. When the use of such a commodity, or, in
other words, of money, has become established, value in
money, or price, is the only value familiarly contem-
plated. The scarcity and durability of gold and silver
(the substances used as money by all civilized nations)
make them peculiarly unsusceptible of alteration in
value from intrinsic causes. On these accounts we think
it better, in the following discussion, to refer rather to
price than to general value, and to consider the value of
money, so far as it depends on intrinsic causes, to be
unvarying.
We must preface our explanation of the effect on
price of the causes limiting supply, by a remark which
may appear self-evident, but which must always be kept
in recollection, namely, that where the only natural
agents employed are those which are universally acces-
sible, and therefore are practically unlimited in supply,
the utility of the produce, or, in other words, its power,
directly or indirectly, of producing gratification, or pre-
venting pain, must be in proportion to the sacrifices
made to produce it, unless the producer has misapplied
his exertions; since no man would willingly employ a
given amount of labour or abstinence in producing one
commodity, if he could obtain more gratification by de-
voting them to the production of another.
We now revert to the causes which limit supply.
There are some commodities the results of agents no
longer in existence, or acting at remote and uncertain
periods, the supply of which cannot be increased, or
cannot be reckoned upon. Antiques and relics belong to
the first class, and all the very rare productions of Nature
or Art, such as diamonds of extraordinary size, or pictures,
or statues of extraordinary beauty, to the second. The
values of such commodities are subject to no definite
rules, and depend altogether on the wealth and taste of
the community. In common language, they are said to
bear a fancy price, that is, a price depending principally
on the caprice or fashion of the day. The Boccaccio,
which a few years ago sold for £2000, and after a year
or two's interval for £700, may perhaps, fifty years
hence, be purchased for a shilling. Relics which, in
VOL. VI,
Distribu-
the IXth Century, were thought too valuable to admit Politica
of a definite price, would now be thought equally in- Economy.
capable of price in consequence of their utter worthless-
ness. In the following discussion we shall altogether
omit such commodities, and confine our attention to Price.
those of which the supply is capable of increase, either
regular, or sufficiently approaching to regularity, to ad-
mit of calculation.)
The obstacle to the supply of those commodities
which are produced by labour and abstinence, with that
assistance only from nature which every one can com-
mand, consists solely in the difficulty of finding persons
ready to submit to the labour and abstinence necessary
to their production. In other words, their supply is
limited by the cost of their production.
tion.
The term cost of production" must be familiar to Cost of pro
those who are acquainted with the writings of modern duction.
Economists; but, like most terms in Political Economy,
though currently used, it has never been accurately de-
fined; and it appears to us impossible that it should
have been defined without the assistance of the term
"abstinence," or of some equivalent expression.
Mr. Ricardo, who originally introduced the term
"cost of production," uses as an equivalent expression,
"the quantity of labour which has been bestowed on
the production of a commodity." Mr. Mill, ch. iii. sec.
2. appears to consider cost of production as equivalent
to "quantity of labour." Mr. Malthus more elaborately
defines it as "the advance of the quantity of accumulated
and immediate labour necessary to production, with such
a per centage upon the whole of the advances for the
time they have been employed as is equivalent to ordinary
profits." Definitions, p. 242.
In a note to the third edition, page 46, Mr. Ricardo
admits that profit also forms a part of the cost of pro-
duction. Mr. Mill, by a stretch of language, in the
convenience of which we cannot concur, includes profit
under the term labour. The definitions of Mr. Ricardo
and Mr. Mill appear, therefore, to coincide. And
that adopted by Mr. Malthus only differs from then in
referring, not to the labour that has been employed, but
to that which must be employed if the production must
be continued. In this respect the language of Mr.
Malthus is undoubtedly the most correct. The sacri-
fices that have been made to produce a given commo-
dity have no effect on its value. All that the purchaser
considers is the amount of sacrifice that its production.
would require at the time of the exchange. If the ex-
pense of producing a pair of stockings were suddenly to
fall or to rise by one half, a rise or fall in the value of the
existing stockings would be the consequence, although
the labour that has been employed on them is of course
unalterable. And when Mr. Ricardo and Mr. Mill speak
of the labour which has been employed on a com-
modity as affecting its value, they must be understood
as implying that the circumstances of production remain
unchanged.
Colonel Torrens considers cost of production as equi-
valent to "the amount of capital expended on produc-
tion," and refuses to consider profit as forming one of
its elements. His remarks throw so much light on the
whole subject, that we will venture to extract them at
some length.
"Those writers who contend for the general equality
of market and natural price, include the customary rate
of profit under the term natural price, or cost of pro-
duction. But this classification is highly unphilosophi-
2 A
170
POLITICAL ECONOMY.
Distribu-
tion.
Price.
Political cal and incorrect. The profits of stock never make any
Economy.
part of the expense of production; they are, on the con-
trary, a new creation brought into existence in conse-
quence of this expense. The farmer, we will suppose,
expends one hundred quarters of corn in cultivating
Cost of pro- his fields, and obtains in return one hundred and
duction.
twenty quarters. In this case twenty quarters, being
the excess of produce above expenditure, constitute the
farmer's profit, but it would be absurd to call this
excess or profit a part of the expenditure. The expen-
diture or cost of production was one hundred quarters.
It has been now repaid with a surplus of twenty quar-
ters; and, unless the surplus which remains after the
expenditure is replaced be a part of the expenditure,
unless, in fact, one hundred and twenty quarters be
equal to a hundred, it is impossible that market price
should be equivalent to natural. Supposing that corn
is £3 per quarter, then, in the case we have stated, the
natural price of the farmer's produce, or the one
hundred quarters expended upon production, will be
equivalent to £300; while the produce of one hun-
dred and twenty quarters obtained in return will be
equivalent to £360. The excess of market above
natural price, or cost of production, is profit; and to
contend that this profit is included in the cost of pro-
duction, is the same thing as contending that the hun-
dred quarters, or £300 laid out in cultivation, are equal
to the one hundred and twenty quarters, or £360 there-
by obtained.
“In manufacturing, as well as in agricultural industry,
the profit of stock is distinct from the cost of production.
The master manufacturer expends a certain quantity of
raw material, of tools and implements of trade, and of sub-
sistence for labourers, and obtains in return a given
quantity of finished work. This finished work must
possess a higher exchangeable value than the materials,
tools, and subsistence, by the advance of which it was
obtained; otherwise the master could have no induce
ment to continue his business. Manufacturing industry
would cease, if the value produced did not exceed the
value expended. But it is the excess of value which the
finished work possesses above the value of the materials,
implements, and subsistence expended, that constitutes
the master's profit; and therefore we cannot assert that
the profit of his stock is included in the cost of produc-
tion without affirming the gross absurdity, that the ex-
cess of value above expenditure constitutes a part of ex-
penditure. Supposing that the materials, tools, and
subsistence cost £300, and that the finished work is
worth £360, then the difference will be the master's
profit; and we cannot maintain that the annual profit is
included in the amount of expenditure, or cost of pro-
duction, without urging the contradiction that £300
are equal to £360.
The profit of stock, so far from forming any part of
the cost of production, is a surplus remaining after this
cost has been completely replaced. In carrying on
their business, the farmer and manufacturer do not ex-
pend their profit, they create it. It forms no part of
their first advances; on the contrary, it forms a part
of their subsequent returns. It could not have been
employed in carrying on the work of production, be-
cause, until this work was completed, it had no exist-
It is essentially a surplus, a new creation, over
and above all that is necessary to replace the cost of
production, or, in other words, the capital advanced.
It is hoped that enough has been said to convince the
ence.
Distribu-
reader of the nature of the error into which those Political
Economists fall who maintain that the profit of stock Economy.
is included in the expense of production, and that
natural and market price tend to an equality. Market tion.
price is that which we give in order to obtain a com- Price.
modity by exchange in the market: natural price is that Cost of pro-
which we give to effect a purchase at the great store- duction.
house of nature: it consists of the several articles of
capital employed in production, and cannot by possi-
bility include the surplus or profit created during the
progress of production.' "*
Colonel Torrens's remarks are just, so far as they
apply to the mere expressions which he is criticising.
Profit is certainly not a means, but a result. It is true
that unless that result were expected, production would
not be continued. Neither the farmer nor the manufac-
turer could be induced by any other motive to abstain
from the unproductive enjoyment of his capital; so
food would not be produced unless its consumption were
necessary or agreeable. But the obtaining a profit is
no more a part of the cost of producing a harvest than
the gratification of appetite is a part of the cost of pro-
ducing a dinner, or protection from cold part of the cost
of producing a coat.
Want of the term abstinence, or of some equivalent
expression, has led Mr. Malthus into inaccuracy of lan-
guage. He seems to have felt that something besides
mere labour is essential to production. He felt that
simple industry would not convert a naked heath into a
valuable wood; that the planter, in addition to the
labour of inserting and protecting the saplings, incurred
the additional sacrifice of directing his labour to the
production of remote results; and that the successive
generations of proprietors, in suffering the young plan-
tation to become mature, sacrificed their own emolu-
ment to that of their successors. He seems to have felt
that these sacrifices were part of the cost of producing
the wood, and, having no term to express them, he de-
nominated them by the name of their reward. When
he termed profit a part of the cost of production, he
appears to us to have meant not profit, but that conduct
which is repaid by profit: an inaccuracy precisely
similar to that committed by those who term wages a
part of the cost of production; meaning not wages,
which are a result, but the labour for which wages are
the remuneration.
Colonel Torrens's error is an error of omission. He
refuses to consider profit as part of the cost of production,
but he does not substitute for it abstinence or any equiva-
lent expression. Although he admits that where equal
capitals are employed the value of the products may differ
if the one be brought to market sooner than the other, he
has not stated the principle on which this difference de-
pends. That principle is that, though in both cases the
labour employed is the same, more abstinence is ne-
cessary in the one case than in the other.
By cost of production, then, we mean the sum of the.
labour and abstinence necessary to production. But
cost of production, thus defined, must be divided into
the cost of production on the part of the producer or
seller, and the cost of production on the part of the con-
sumer or purchaser. The first is of course the amount
of the labour and abstinence which must be undergone
by him who offers for sale a given class of commodities
* Torrens, On the Production of Wealth, 51-55.
POLITICAL ECONOMY.
171
Distribu-
tion.
Price.
duction.
Political. or services in order to enable him to continue to produce
Economy them. The second is, the amount of the labour and
abstinence which must be undergone by those to whom a
given commodity or service is offered for sale, if, instead
of purchasing, they themselves, or some of them on the
Cost of pro- behalf of themselves and the others, were to produce it.
The first is equal to the minimum, the second to the maxi-
mum of price. For, on the one hand, no man would
continue to produce, for the purpose of sale, what should
sell for less than it cost him to produce it. And, on the
other hand, no men would continue to buy what they
themselves, or some of them on the behalf of themselves
and the others, could produce at less expense. With re-
spect to those commodities, or, to speak more accurately,
with respect to the value of those parts or attributes of
commodities, which are the subjects of equal competition,
which may be produced by all persons with equal advan-
tages, the cost of production to the producer and the cost
of production to the consumer are the same. Their price,
therefore, represents the aggregate amount of the labour
and abstinence necessary to continue their production. If
their price should fall lower, the wages or the profits of
those employed in their production must fall below the
average remuneration of the labour and abstinence that
must be undergone if their production is to be con-
tinued. In time, therefore, it is discontinued or di-
minished, until the value of the product has been raised
by the diminution of the supply. If the price should
rise beyond the cost of their production, the producers
must receive more than an average remuneration for
their sacrifices. As soon as this has been discovered,
capital and industry flow towards the employment which,
by this supposition, offers extraordinary advantages.
Those who formerly were purchasers, or persons on their
behalf, turn producers themselves, until the increased sup-
ply has equalized the price with the cost of production.
Some years ago London depended for water on the
New River Company. As the quantity which they can
supply is limited, the price rose with the extension of
buildings, until it so far exceeded the cost of produc-
tion as to induce some of the consumers to become pro-
ducers. Three new Water Companies were established,
and the price fell as the supply increased, until the
shares in the New River Company fell to nearly one-
fourth of their former value; from £15,000 to £4000.
If the metropolis should continue to increase these trans-
actions will recur. The price of water will increase
and exceed the cost at which it could be afforded.
New Companies will arise, and, unless the additional
supply is checked by greater natural obstacles than
those which the existing Companies have to surmount,
the price will again fall to its present level.
But though, under free competition, cost of production
is the regulator of price, its influence is subject to much
occasional interruption. Its operation can be sup-
posed to be perfect only if we suppose that there are no
disturbing causes, that capital and labour can be at
once transferred, and without loss, from one employ-
ment to another, and that every producer has full infor-
mation of the profit to be derived from every mode of
production. But it is obvious that these suppositions
have no resemblance to the truth. A large portion of the
capital essential to production consists of buildings, ma-
chinery, and other implements, the results of much time
and labour, and of little service for any except their exist-
ing purposes. A still larger portion consists of knowledge
and of intellectual and bodily dexterity, applicable only to
Distribu-
duction.
pro
the processes in which those qualities were originally ac- Political
quired. Again, the advantage derived from any given
Economy.
business depends so much upon the dexterity and the good
fortune with which it is managed, that few capitalists can tion.
estimate, except upon an average of some years, the amount Price.
of their own profits, and still fewer can estimate those of Cost of
their neighbours. Established businesses, therefore, may
survive the causes in which they originated, and hecome
gradually extinguished as their comparative unprofitable-
ness is discovered, and the labourers and capital engaged
in them wear away without being replaced; and, on the
other hand, other employments are inadequately supplied
with the capital and industry which they could profitably
absorb. During the interval, the products of the one
sell for more, and those of the others for less, than their
cost of production. Political Economy does not deal with
particular facts but with general tendencies, and when we
assign to cost of production the power of regulating price
in cases of equal competition, we mean to describe it not as
a point to which price is attached, but as a centre of
oscillation which it is always endeavouring to approach.
We have seen that, under circumstances of equal com-
petition, or, in other words, where all persons can
become producers, and that with equal advantages, the
cost of production on the part of the producer or seller,
and the cost of production on the part of the consumer
or purchaser, are the same, and that the commodity
thus produced sells for its cost of production; or, in other
words, at a price equal to the sum of the labour and ab-
stinence which its production requires; or, to use a more
familiar expression, at a price equal to the amount of
the wages and profits which must be paid to induce the
producers to continue their exertions.
It has lately
been a general opinion that the bulk of commodities is
produced under circumstances of equal competition.
By far the greater part of those goods," says Mr.
Ricardo, (Principles, &c. p. 3.) "which are the objects
of desire are produced by labour, and may be multiplied.
almost without any assignable limit if we are disposed
to bestow the labour necessary to obtain them. In
speaking then of commodities, of their exchangeable
value, and of the laws which regulate their relative prices,
we always mean such commodities only as can be in-
creased in quantity by the exertion of human industry,
and in the production of which competition operates
without restraint."
Now it is clear that the production in which no appro-
priated natural agent has concurred, is the only produc-
tion which has been made under circumstances of per-
fectly equal competition. And how few are the com-
modities of which the production has in no stage been
assisted by peculiar advantages of soil, or situation, or
by extraordinary talent of body or mind, or by processes
generally unknown, or protected by law from imitation.
Where the assistance of these agents, to which we have
given the general name of natural agents, has been
obtained, the result is more valuable than the result of
equal labour and abstinence unassisted by similar aids.
A commodity thus produced is called the subject of a
monopoly; and the person who has appropriated such a
natural agent, a monopolist.
Monopolies may be divided into four kinds.
Mon spo
1. Where the monopolist has not the exclusive power lies.
of producing, but only certain exclusive facilities as a
producer, and can increase, with undiminished, or even
increased facility, the amount of his produce.
The value of a commodity produced under suen cir-
2 A 2
172
POLITICAL ECONOMY.
tion.
Price.
Political cumstances approaches more nearly to the cost of pro-
Economy, duction on the part of the seller, than that of any other
monopolized commodity. It is obvious that its price can
Distribu- never permanently fall below the value of the sacrifices
which must be made by the producer, and, on the other
Monopoly hand, that it never can permanently rise above the value of
the sacrifices which must be made by the consumers, if,
instead of purchasing, they, or some persons in their
behalf, were to turn producers. Sir R. Arkwright's yarn
could not sell for more than yarn of an equal quality pro-
duced without the aid of his patent machinery; nor would
Arkwright have sold it for less than the value of the labour
and abstinence employed in its production. The first was
the cost of production to the consumer, the second the cost
of production to the producer. But the difference between
the two was enormous; the cost to Arkwright was not
one-fifth of what it would have been to his customers.
His inventions enabled him to produce a greater
quantity, but not a better quality. The finger and
thumb constitute an instrument more delicate than any
system of rollers, and the muslin formed by the com-
paratively unassisted labour of the Hindoo is finer and
more durable than the produce of our elaborate manu-
factories. The price which Arkwright could exact was
therefore limited, as we have seen, by the competition
of other productive instruments, more expensive but
quite as efficient. The price which he did exact was
still further limited by a regard to his own interest.
He had discovered an instrument of which the powers,
instead of being exhausted, increased with every increase
in its application. To erect a mill for the purpose of
spinning annually a hundred or a thousand pounds of
cotton would be madness. The expense of spinning
ten thousand pounds very little exceeds the expense of
spinning one thousand, and forty thousand might pro-
bably be spun at less than double the expense of ten
thousand. As the quantity produced is increased, the
relative cost of production is diminished. If, therefore,
on the sale of ten thousand pounds weight of yarn at a
given price, which we will call £10,000, his profit
amounted to £5000, the profit of selling one hundred
thousand weight at the same price might have amounted
to £90,000, and his profit on selling one million pounds
weight to £900,000. But to effect this was obviously
impossible. As value depends mainly on limitation
of supply, he could not have at once offered a large
quantity for sale without diminishing the price, if he
left that price to be fixed by the competition of the
purchasers, or without having a large portion unsold,
if he refused to submit to that diminution. His only
mode of stimulating a constant increase of consumption
was to submit to such a constant lowering of price as
should constantly widen the circle of those able and
willing to purchase. As is usually the case, his own
interest and that of the public coincided, and led him
to accept a price far exceeding indeed the cost of pro-
duction to himself, but falling short by a still wider in-
terval of what would have been the cost of production
to them.
Sir R. Arkwright's monopoly, therefore, was of the
most limited kind. His remuneration was bounded, and
it was not his interest even to approach that boundary.
2. A second kind of monopoly is in the opposite ex-
treme. It exists where price is checked neither by the
hopes nor by the fears of the producer, where no competi-
tion is dreaded, and no increased supply can be effected.
The owners of some vineyards have such a monopoly.
Political
Economy.
Constantia owes its peculiar flavour to the agency of a
few acres of ground, and that flavour would be destroyed
if high cultivation were employed to force from that Distribu-
ground a larger quantity of wine. As no person but tion.
the proprietor of the Constantia farm can be a pro- Price.
ducer, the price is not checked by any cost of produc- Monopoly.
tion to the consumer. It is not checked by any wish
of the proprietor to increase the consumption, since the
quantity produced, and consequently the quantity con-
sumed, is incapable of increase. The price cannot of
course fall below the cost of production, but may inde-
finitely exceed it. It is limited solely by the will and
the ability of the consumers. And if fashion were to
make it an object of intense desire among the opulent,
a pipe of Constantia, produced perhaps at the expense
of £20, might sell for £20,000.
3. A third and more frequent kind of monopoly lies be-
tween these two extremes, and is neither so strict as the
last, nor so comparatively open as the first. This com-
prises those cases in which the monopolist is the only
producer, but, by the application of additional labour
and abstinence, can indefinitely increase his production.
The book trade affords an illustration. While a work
is protected by copyright, no person but the proprietor
of that copyright can produce copies; and he may
multiply them indefinitely by the application of addi-
tional labour and abstinence. There is here no cost of
production on the part of the purchaser, and, as far as
he is concerned, the price is limited only by his will and
ability. The efficient check arises from the interest of
the publisher. As is the case with manufactures gene-
rally, the relative expense of publication diminishes as
the number of copies published increases. It is his
interest, therefore, to encourage a large sale by affixing
a price but slightly exceeding the cost of production,
diminished as that cost is by the magnitude of the pro-
duce.
duce. A hundred copies of Waverely might, perhaps,
have been sold at ten guineas a copy; but there can be
no doubt that a larger aggregate profit was obtained by
selling ten thousand at a guinea and a half.
4. The fourth and last class of monopolies exists where
production must be assisted by natural agents, limited
in number, and varying in power, and repaying with
less and less relative assistance every increase in the
amount of the labour and abstinence bestowed on them.
It is under these circumstances that the greater part of
the raw produce, whatever it be, which is the staple food
of the inhabitants in every Country, potatoes in Ireland,
wheat in England, or rice in India, is produced. It is,
in fact, the great monopoly of land; and as there are
scarcely any commodities of which the supply is not in
some measure limited by the limited extent of the land
essential or serviceable to some process in their produc-
tion, all general theories as to value must be subject
to error until the general laws regulating the value of
the assistance to be derived from land have been ascer-
tained. It will be necessary, therefore, to examine them
at some length.
The soil of every extensive district is of different Land.
degrees of fertility and convenience of situation, and
the soils of each degree constitute a distinct class of
natural agents, affording each a distinct amount of assist-
ance to the cultivator. And we have seen that each
portion of soil, whatever be its fertility, agricultural
skill remaining the same, generally gives a less and less
proportionate return to each additional quantity of labour
and abstinence bestowed on its cultivation, and be
may
POLITICAL ECONOMY.
173
Distribu-
tion.
Price.
Land.
Political said, therefore, to comprise within itself a system of
Economy, natural agents of different powers. The different classes
of natural agents will be successively employed, in pro-
portion to their efficiency; an inferior class being never
resorted to while a superior one is equally accessible:
Monopoly. and each class, until it has been completely appropriated,
may be considered as practically unlimited in supply,
since it is universally accessible. What shall be the
worst natural agent employed, or, in other words, to
what extent inferior soils shall be cultivated, or addi-
tional labour and abstinence employed at a comparative
disadvantage on the cultivation of those which are more
fertile or better situated, must always be determined by
the wealth and wants of the community; by the quan-
tity of agricultural produce which they have the power
and the desire to purchase. While those wants can be
satisfied by slightly cultivating only a portion of the
most fertile and best situated land, that land, though
highly productive, indeed more productive in propor-
tion to the labour and abstinence bestowed on it than
at any subsequent stage, cannot be a separate and in-
dependent source of value. It is then a natural agent
universally accessible, and its produce, however large,
will exchange only for the value of the labour and ab-
stinence employed on its production. In short, the
cost of production to the producer, and the cost of pro-
duction to the consumer, are, under such circumstances,
the same.
This is the state of some of the fertile and
thinly-peopled districts of the tropics. The inhabitants
of the greater part of the Tierra Caliente of Mexico ap-
propriate at will from the fertile wilderness over which
they are scattered the small patches which afford them
the materials of lodging, food, and raiment. We are
told that in these districts the labour of a week will
provide subsistence for a year, but even this vast pro-
ductive power, or even any conceivable increase in it, is
incapable of giving value to the assistance afforded as
long as the supply of that assistance remains unlimited.
It becomes limited, however, in the very earliest stages
of improvement. Both the causes and the conse-
quences of this event may be illustrated by tracing the
progress of a colony.
When a body of emigrants arrives on the coast of an
unoccupied district, their first operation must be to fix
the situation of their future metropolis; the seat of go-
vernment, of law, of foreign trade, and of those manu-
factures which require the congregation of numerous
workmen. We may suppose their numbers and the
local advantages to be such as to enable them to occupy,
within such a distance from their infant town as to
render the expense of carriage immaterial, as much land
of the highest fertility as each agricultural family may
wish to cultivate. The agricultural produce thus ob-
tained must sell for its cost of production to the pro
ducer; every consumer being able at will to turn a pro-
ducer, with advantages equal to those enjoyed by the
existing producers, and being unwilling to give for the
result of a given amount of labour and abstinence on
their part more than the result of an equal amount of
labour and abstinence on his own part. Such a com-
munity rapidly increases in numbers and in wealth, and
that increase is accompanied by an increased desire and
ability to purchase agricultural produce. Until the supply
of raw produce has been increased, the price must now
rise above the cost of production. But when the most
fertile lands within a given distance of the town have
been occupied, there remain only three modes of in-
creasing the supply: either 1. by cultivating the fertile Political
lands at a greater distance from the town; or,
2. by
Economy.
cultivating the inferior land in its neighbourhood; or. Distribu-
3. by employing additional labour and abstinence in the tion.
cultivation of the lands already occupied. Whichever of Price.
these plans be adopted, and probably they will all be Monopoly.
adopted, the additional quantity must be supplied at an
increased expense. The first is loaded with the expenses
of carriage; and we know that a given amount of labour
and abstinence is employed to comparative disadvantage,
when applied either to the cultivation of inferior land, or
to the further improvement of the best land.
The immediate consequence of the increase of supply
must be a fall of price, but a fall not equal to the previous
rise.
rise. The additional supply is produced under circum-
stances of equal competition, every consumer having it
in his power to turn producer by occupying the more
distant or less fertile territory; it sells, therefore, for
the cost of production to the producer. But commodi-
ties of precisely the same qualities cannot sell in the
same market for different prices. The purchaser of a
bushel of wheat does not inquire whether it was grown
within a furlong or at ten miles from the place of sale.
The produce, therefore, of the fertile lands in the imme-
diate vicinity of the market sells at the same price as
that of the distant or inferior land.
That price, as it is equal to the cost of production of
what is produced at the greatest expense, must exceed
the cost of production of what is produced at the least
expense. The proprietor of the most fertile and best
situated land has no motive to take less, as he cannot,
like the owner of a patent, increase the amount of what
he produces and continue to produce at equal advan-
tage; and the purchaser cannot support an offer of
less, as he cannot turn producer but by submitting to
disadvantages which equalize the current price and the
cost of production.
As the colony grows into a people and an empire
the same processes are repeated.
the same processes are repeated. Every increase of
wealth and population raises the price of raw produce.
Increase of price occasions an increase of supply, raised
at a comparatively greater expense. The price falls in
consequence of the increased supply, but is prevented
from falling to its former level by the increase which has
taken place in the cost of producing that part of the
whole supply which is brought to market at the greatest
expense.
The effect will be the same whether we select for the
scene a continent or an island; a district containing
soils of every degree of fertility, or of precisely uniform
quality. The Anglo-Americans have supplied their
constantly increasing wants chiefly by spreading them-
selves backwards over their unbounded Western territory,
and have made little use of inferior soils, or of high
cultivation, except in the immediate vicinity of their
cities. In Malta, a single acre receives more labour than
would be devoted to a square mile in the Illinois; but
precisely the same motives impel the Maltese to terrace
his mountains into gardens, and the American to reclaim
the prairies of the Missouri.
It may be inferred, from the picture which we have
given of the progress of society, that we believe an in-
creased difficulty of obtaining raw produce to be the
natural incident to an increase of population. In the
absence of counteracting causes it certainly would be so;
but those causes are so powerful, that, unless checked by
legislation, they in many respects balance the causes
Land.
174
POLITICAL ECONOMY.
Political
Economy.
Distribu-
tion.
Price.
which we have been considering. In a colony, the
counteracting causes appear likely to preponderate for
a period, the duration of which must of course depend
in part on the quantity of fertile and unoccupied land in
its vicinity. As the circle of appropriated land expands,
Monopoly. and the expense of bringing food to the consumers be-
Land.
comes more oppressive, there is a tendency in the con-
sumers to follow the food. The colonial capital, now
turned into a metropolis, may continue to send out por-
tion after portion of her increased inhabitants until the
whole territory acquires something approaching to an
average amount of cultivation. Again, in every Country
increased wealth and numbers are accompanied by in-
creased agricultural skill and improved means of trans-
port. The use of implements, the division of labour,
and physical knowledge are powerful aids to the agricul-
turist, though they do not afford to him the almost
magical increase of power which they give to the manu-
facturer. The improvements in carriage are still more
important: a given amount of labour applied for twenty
years to a given piece of land would probably now
produce a return four or five times as great as would
have been obtained at the Conquest. But the labour
necessary to transport that produce one hundred miles
is probably now not one one-hundredth of what it was
then. No improvements in husbandry instruments, or
in breeding, or in the rotation of crops, have been so
efficient as the substitution of the waggon, the Mac-
adamized road, the canal, the navigable river, and the
railway, for the pack-horse of our ancestors and the dan-
gerous tracks through which they beat out and picked
their way. The intervention of a hill or a morass was
then an obstacle sufficient to allow the price of corn on
one side to be double that on the other; and London
was so dependent on the immediately adjacent Counties
that the landlords of those Counties petitioned against
the opening of roads, as interfering with their vested
right to a monopoly of the metropolitan supply; a peti-
tion which failed because the immediate interest of other
landlords opposed it.
But the principal means by which a Country, when
increasing in wealth and population, may avoid the ne-
cessity of raising its raw produce at a constantly increas-
ing disadvantage is by importation.
In
Distribu-
raw produce; and we have already stated that the in- Political
creased labour at which the additional produce must be Economy.
obtained would retard the progress of such a community.
But though this is unquestionable, though it is even cer- tion.
tain that, if sufficient time be allowed, this obstacle is Price.
able, not merely to retard, but almost to arrest, the ad- Monopoly.
vance of manufactures, there seems to be little to fear Land.
from it within any of those periods within which calcula-
tions for practical purposes are generally confined.
the first place, the stimulus of an advantageous trade
must tend to increase the agricultural skill of the ex-
porting nations, and increase the facilities of transport ;
causes which, especially in the earlier stages of a nation's
improvement, often enable it, and for considerable pe-
riods, to bring to market an increased quantity of raw
produce with the same or even less proportionate labour.
And, secondly, even if we suppose the manufacturing
nation to be supplied by its agricultural customers at an
increased proportionate expense to them, it does not
follow that the proportionate expense to her need be
We have seen that additional labour employed in
manufactures produces an increasing proportionate effect;
that if one thousand men can in a given time work up
one million of pounds of cotton, two thousand men
would be able to work up in the same time more than
two millions of pounds, and four thousand men, much
more than twice as much as two thousand. As a nation
increases in opulence and population, it becomes the in-
terest, therefore, of the community to devote their addi-
tional population rather to manufactures, in which they
have a constantly increasing advantage, than to agricul-
ture, at a constantly increasing disadvantage. As their
industry becomes more and more efficient, they are in
general able to purchase with the produce of a given
amount of labour and abstinence larger and a larger
amount of the produce of the industry of their less ad-
vanced contemporaries. The produce of the labour of a
single Englishman employed for a given time in fabricat
ing cotton will purchase the cotton grown by the labour
of five, or perhaps ten, Hindoos, or the wheat grown
by three, or perhaps five, Lithuanians or Poles.
It must be recollected, indeed, that a nation while ex-
tending its manufactures must increase its importation of
increased.
The increased difficulty on the one side
may be balanced by the increased facility on the other.
We will suppose that at present one hundred thousand
yards of muslin, fabricated by twelve Englishmen, can
be exchanged for one hundred and fifty quarters of
wheat, raised by thirty-six Poles; that an increase in
population of one-third makes it necessary to import
two hundred instead of one hundred and fifty quarters,
and that the two hundred quarters are raised, not by
forty-eight, the former proportion, but by sixty Poles.
If the increase in our skill has kept pace with our in-
crease of numbers, it is probable that eighteen English-
men, instead of one hundred and fifty thousand, the
former proportion, would be able to fabricate at least
two hundred thousand yards of muslin. The exchange
under such circumstances, instead of being less, would
be more beneficial than before. England would pur-
chase more corn, and Poland more muslin, at a less pro-
portionate amount of labour.
It must be carefully remembered that the preceding
remarks apply not to the higher or lower price of raw
produce, but to the greater or less difficulty in obtaining
it; things which have no necessary connection; one of
them depending on the causes which affect the general
value of raw produce, the other on the causes which
affect the general value of money. At the same time,
and in the same place, the prices of articles exactly
measure the difficulty of obtaining them. It is exactly
half as difficult to get a commodity that costs one sove-
reign as to get a commodity that costs two. But this is
only true at the same time and in the same place.
Though in England a quarter of corn now costs about
fifty shillings, and in the reign of Henry VIII. cost
about twenty, it is probable that it was then more diffi-
cult to obtain one than it is now.
cult to obtain one than it is now. This must have been
the case if it was then more difficult to obtain twenty
shillings than it is now to obtain fifty. It is equally
clear that, although a quarter of wheat now costs in Eng-
land about ten ounces of silver, and about six ounces in
Poland, yet, if it is easier in England to obtain ten
ounces of silver than in Poland to obtain six ounces, it
is easier in England to obtain a quarter of wheat than it
is in Poland. Experience shows that wealth and popu-
lation almost always increase together, though not in
equal ratios, the increase of wealth being, as we have
already stated, generally greater than the increase of
population. The increased capital and labour of an in-
POLITICAL ECONOMY.
175
Distribu-
tion.
Price.
Political creasing population are naturally directed to manufac-
Economy, tures, in which, as we have already seen, every increased
production is more easily effected. As their labour be-
comes more productive, the value of the products of a
given quantity of that labour rises in the general market
of the world; or, in other words, they obtain in return
for it a greater amount of the precious metals; or, in
other words, a higher price. Therefore, although they
may have to pay a higher price for a given quantity of
raw produce, whether of home growth or imported, it
does not follow that the difficulty of obtaining that given
quantity has increased; it is possible, and not impro-
bable, that it may have diminished. A nation so situated
may be compared to an individual whose income hap-
pens to be rising at the same time when the price of
corn is rising. If the rise of his income more than
counterbalances the rise of corn, he finds it every year
more easy to purchase a given quantity, though he may
have to give a higher and higher price for it.
产量
​We have seen that production may take place under
five different circumstances.
1. Absence of monopoly; all persons being capable
of producing with equal advantage.
2. A monopoly under which the monopolist has not
the exclusive power of producing, but exclusive facilities
as a producer, which may be employed indefinitely with
equal or increasing advantage.
3. A monopoly under which the monopolist is the
only producer, and cannot increase the amount of his
produce.
4. A monopoly under which the monopolist is the
only producer, and can increase indefinitely, with equal
or increasing advantage, the amount of his produce.
5. A monopoly under which the monopolist is not
the only producer, but has peculiar facilities which di-
minish and ultimately disappear as he increases the
amount of his produce.
The price of those commodities which are compre-
hended in the first class appears to be subject to laws
capable of accurate investigation. Where labour alone
has been employed, the price must be equal to the wages
of that labour. Where that labour has been assisted by
abstinence, or, in other words, where a period has elapsed
between the employment of the labour and the sale of
its produce, the price must be equal to the amount of
the wages of that labour and the remuneration to be
paid either to the labourer for having suffered the pay-
ment of his wages to be deferred, or to the capitalist who
has paid those wages in advance.
There are, however, very few commodities of which
the whole price can be resolved into the remuneration for
the labour, or the abstinence, or both, which must be
bestowed on their production.
Mere abstinence can produce nothing. Labour, or
the agency of nature, must afford the subject with re-
spect to which it is to be exercised. It is possible, in-
deed, that a natural agent universally accessible may
sometimes afford a product of no value at first, but capa-
ble of becoming valuable by mere keeping; but no in-
stance of the kind occurs to us, and some little trouble is
generally requisite for the mere safe custody of any
article.
Mere labour does produce a very few articles. The
laver collected and sold on the coast of Devonshire is an
example. It grows naturally on the unappropriated
rocks within the influence of the tide, and in abundance
practically unlimited. No instruments are necessary to
Political
Economy.
gather or prepare it, and, as it will not keep, it is sold as
soon as it has been collected and washed. The price of
a given quantity consists, therefore, merely of the wages Distribu
of those who gather, wash, and bring it to market.
tiou.
A class of commodities, perhaps rather larger, but Price.
still inconsiderable when compared with the general
mass, is produced by labour and abstinence, assisted
only by those natural agents which are universally ac-
cessible. It is difficult, however, to point out an article,
however simple, that can be exposed to sale without the
concurrence, direct or indirect, of many hundred, or, more
frequently, of many thousand different producers; almost
every one of whom will be found to have been aided by
some monopolized agent.
There are few things of which the price seems to con-
sist more exclusively of wages and profits than a watch;*
but if we trace it from the mine to the pocket of the
purchaser, we shall be struck by the payment of rent
(the invariable sign of the agency of some instrument
not universally accessible) at every stage of its progress.
Rent was paid for the privilege of extracting from the
mines the metals of which it is composed; for the land
which afforded the materials of the ships in which
those metals were transported to an English port; for
the wharfs at which they were landed, and the ware-
houses where they were exposed to sale; the watch-
maker pays a rent for the land covered by his manufac-
tories, and the retailer for that on which his shop is
situated. The miner, the shipwright, the house-builder,
and the watchmaker all use implements formed of
materials produced by the same processes as the mate-
rials of the watch, and subject also in their different
stages to similar payments of rent. The whole amount
of all these different payments forms probably a very
small portion of the value of the watch, but if we were
to attempt to enumerate them they would be found sub-
divided into ramifications too minute for calculation.
What remains consists of the wages of the workmen,
and the profits of the capitalists who paid those wages
in advance.
in advance. The attempt to trace back these wages
and profits to their earliest beginnings would be as vain
as the attempt to enumerate all the payments of rent.
In estimating, therefore, the value of a manufactured
commodity, we seldom go further back than to the price
paid by the manufacturer for his materials and imple
ments, a price which must have included all previous
payments of rent, wages, and profits.
We will now trace the causes which increase the value
of those materials after they have been the property of
the manufacturer. We will suppose a watchmaker's
capital to consist of materials worth £500, that he has
bought the land covered by his buildings for £500, and
has expended £900 in erecting them, that his tools
have cost him £100, and that an annual expense of
£100 is necessary to keep his buildings and tools in
repair. We will suppose him to employ ten workmen,
each receiving at an average £100 a year, and that one
year is the average period from the commencement to
the sale of a watch. We will suppose that his ten
workmen can annually convert his £500 worth of ma-
terials into five hundred watches, and that the average
rate of profit in his business amounts to ten per centum
per annum. To give him this profit it is clear that his
watches must sell for
* It has been used by M. Canard, M. Flores Estrada, and Mr.
M'Culloch, as an example of the value derived from labeur alone.
176
POLITICAL ECONOM Y.
Political
Economy.
Value of materials.
Wages for a year
Repairs for a year
£500
1000
100
Distribu-
tion.
Price.
Profit on the advance of these sums
nd on the value of the land, and
buildings, and tools, for half a year,
at ten per cent. per annum ....
1600
155
£1755
It will be observed that, although a year is supposed
to elapse between the commencement and the sale of a
watch, we suppose the cost of its production to have
been advanced for only half a year. The fact is that
some part of the advances must have been made for
more, and some for less than half a year. Supposing a
workman to have been employed on the watch for a
year, and paid daily, he received his first day's wages
one year before the watch was sold, but his last day's
wages on the very day of the sale; six months, therefore,
is the average period for which the whole were ad-
vanced before the sale; just as large a proportion
having been advanced for a shorter as for a longer
period.
It will be observed, too, that we suppose the whole
value of the materials, repairs, and wages to be repaid,
but only a profit on the value of the land, buildings,
and tools. The first are annually expended by the
capitalist, the second remain to be used as instruments
of further production. The land is indestructible, and
the damage done to the buildings and tools is paid for
by the £100 supposed to be expended in repairs.
But the whole cost of production has not yet been
enumerated.
In the first place, some wages must be allowed to the
master watchmaker himself for his labour in superin-
tending his business; and, secondly, some profit on
the expense of his education. And as his knowledge
and habits, which form his mental capital, will not sur-
vive him, something more than the average rate of pro-
fit is necessary to replace their value.
If we suppose the expense of his education to have
amounted to £1000, and that it will be replaced with
average profit by an annual return of £15 per cent.,
and the average wages of labour to be £30 a year, we
have £180 to add to the price of the watches, and £9
more for the advance of this sum for half a year, making
£1944.
The last source of expense is taxation, or, in other
words, the wages and profits of those who have pro-
tected all the different producers of the watches from
foreign and domestic violence and fraud. A considerable
portion of the price paid by the watchmaker for his ma-
terials, tools, and buildings, probably consisted of the
taxation to which those commodities had been previously
subjected; but the taxation which we are now consider-
ing is that which he incurs during the year supposed
to be employed in manufacturing the watch.
This is an expense little capable of previous estima-
tion; partly because the expenses of government are
subject to constant variation, and partly because no
general principle regulates the proportions in which those
expenses are divided among the contributors. In Eng-
land they are in general imposed upon the persons using
or producing certain commodities; upon the use, for in-
stance, of a carriage or window, and upon the production
of candles or glass. We will suppose the annual taxa-
pro-
Political
tion imposed on the shop and other instruments of
duction used by the watchmaker to amount to £53 7s., Economy.
the profit on the advance of this sum for half a year Distribu-
would exceed by a slight fraction £2 13s., together tion.
£56, making with the £1944, the amount of our pre- Price.
vious calculation, the sum of £2000, the whole cost of
production of the five hundred watches, or £4 a piece.
The different sums in this example have of course
been taken at random; but we have thought it worth
while to go through it partly as an instance of the cal-
culations on which every manufacturer must found his
estimate of the profit or loss likely to follow any given
undertaking; and, partly to show in how many shapes,
labour, abstinence, and the agency of nature, or, in
other words, rent, profits, and wages, are constantly re-
appearing in every productive process.
When we speak, therefore, of a class of commodities
as produced under circumstances of equal competition,
or as the result of labour and abstinence unassisted by
any other appropriated agent, and consider their price as
equal to the sum of the wages and profits that must be
paid for their production, we do not mean to state that
any such commodities exist, but that, if they did exist,
such would be the laws by which their price would be
regulated; and that so far as labour or abstinence, or
both, are conducive to the production of any given
commodity, it is to be considered as produced under
circumstances of equal competition, and as worth the
wages or profits, or both, with which that labour or
abstinence, or both, must be remunerated.
The prices of the commodities comprised in the
second, third, and fourth classes are but little governed
by any general rules. The prices of those comprised
in the second class cannot rise above the cost of pro-
duction when unassisted by the monopolized agent, but
have a tendency to approach the cost of production to
the monopolist. The prices of those comprised in the
third and fourth classes have no necessary limits, but
approach much more nearly to the cost of production in
the fourth class, where the monopolist can increase his
produce, than in the third class, where nature strictly
limits the amount that can be produced.
The price of the commodities comprised in the fifth
and last class, those which are produced under what
may be called unequal competition or qualified mono-
poly, where all persons may become producers, but
every additional quantity is obtained at a greater pro-
portionate expense, has a constant tendency to coincide
with the cost of production of that portion which is con-
tinued to be produced at the greatest expense. The
annual supply of London requires about one million
five hundred thousand quarters of wheat. Of this
quantity, perhaps fifty thousand can be obtained only
by means of high cultivation, or very distant carriage,
at an expense of about 50s. a quarter. While the
wants and the wealth of the inhabitants of London are
such as to make them require, and enable them to pur-
chase, one million five hundred thousand quarters, and
the expenses of carriage and cultivation remain unaltered,
it is clear that the whole quantity, supposing it to be of
uniform quality, must sell at the rate of 50s. a quarter.
If it were to sell for less, the last fifty thousand quarters
would cease to be produced, and the price would again
rise in consequence of the deficiency of the supply.
But of the whole one million five hundred thousand
quarters, a portion, perhaps fifty thousand, might be
produced by slightly cultivating the most fertile and
POLITICAL ECONOMY
177
Political best situated land, at the expense of 10s. a quarter.
Economy. A hundred thousand may cost the producer 20s. a
quarter, two hundred thousand 25s., two hundred thou-
Distribu.
sand more 30s. a quarter, and the cost of production of
tion,
Rent.
all, except the last fifty thousand, must have been less
than the 50s. for which they are sold. The difference
between the price and the cost of production is rent.
It is an advantage derived from the use of a natural agent
not universally accessible. It is taken, therefore, by the
owner of the agent by whose assistance it was obtained.
A portion of the whole supply, however, that portion
which is produced at the greatest expense, is produced
without any payment of rent. If the cost of producing
and sending to market from a given farm be in the fol-
lowing proportions: for one hundred quarters £100
for ninety more £100, for eighty more £100, for
seventy more £100, for sixty more £100, for fifty more
£100, for forty more £100, and for thirty-three and one-
third of a quarter more £100, and the price per
quarter is 60s., it is clear that the landlord's rent will be
in the following proportions:
£100 expended
On the first
On the second
100
On the third
100
On the fourth
100
On the fifth
100
On the sixth
100
•
On the seventh 100
£200
170
140
110
80
50
20
£770
In all ....
And it is equally clear that no rent can be paid by
the farmer for the privilege of producing the last thirty-
three one-third quarters, as the whole £100 for which it
sells is absorbed by the cost of production. The last
thirty-three one-third quarters will continue to be pro-
duced as long as the wants and the wealth of the pur-
chasers render them willing and able to purchase a
quantity of corn, the whole of which cannot be supplied
unless this last and most expensive portion is pro-
duced. If those wants and wealth should increase, it
might become necessary to raise an additional supply at
a still further additional expense, at the cost, we will
say, of £100 for only twenty quarters. But it is clear
that this could not be done unless the price should be
£5 a quarter, since that is the lowest price at which the
cost of producing the last supply would be repaid. The
price, indeed, would probably have previously risen to
above £5 a quarter, since an interval must have elapsed
between the increased demand occasioned by the in-
creased wants and wealth of the purchasers and the
increase of the supply. During that interval the price
must have risen somewhat above the price at which it
would settle when the additional supply had been ob-
tained. The appearance of that additional supply would
sink it to £5 a quarter, the cost at which that supply is
produced, but it could not permanently fall below that
price unless a diminution should take place either in
the wants or wealth of the purchasers, or in the ex-
penses of cultivation or conveyance.
All this appears almost too plain for formal statement.
It is however one of the most recent discoveries in
Political Science: so recent that it can scarcely be said
to be universally admitted even in this Country, and
that abroad it does not seem to be even comprehended.
If any writer could be expected to be fully master of it
it would be Say, the most distinguished of the Continental
Economists, and the annotator on Ricardo. In his
VOL. VI.
Distribu-
tion.
notes to the French translation of the Principles of Political
Political Economy and Taxation, he constantly objects Economy.
to Mr. Ricardo's reasonings, the fact that all cultivated
land pays rent; as if such a fact were inconsistent with
the existence of corn raised without the payment of Rent.
rent. He repeats this objection in a note to a passage
in which Ricardo has demonstrated its falsity. In the
twenty-fourth chapter of the Principles, Mr. Ricardo
examines Adam Smith's opinions on rent.
"Adam Smith," observes Mr. Ricardo, " had adopted
the notion that there were some parts of the produce of
land for which the demand must always be such as to
afford a greater price than what is sufficient to bring
them to market; and he considered food as one of
those parts.
He says that land in almost every situation pro-
duces a greater quantity of food than what is sufficient
to maintain all the labour necessary for bringing it to
market, in the most liberal way in which labour is ever
maintained. The surplus, too, is always more than
sufficient to replace the stock which employed that
labour, together with its profits. Something, therefore,
always remains for a rent to the landlord.'
"But what proof does he give of this? No other
than the assertion that the most desert moors in Norway
and Scotland produce some sort of pasture for cattle, of
which the milk and the increase are always more than
sufficient not only to maintain all the labour necessary
for tending them, and to pay the ordinary profit to the
farmer or owner of the herd or flock, but to afford some
small rent to the landlord.' Now of this I may be
permitted to entertain a doubt. I believe that as yet in
every Country, from the rudest to the most refined,
there is land of such a quality that it cannot yield a
produce more than sufficiently valuable to replace the
stock employed on it, together with the profits ordinary
and usual in that Country. In America we all know
that this is the case, and yet no one maintains that the
principles which regulate_rent are different in that
Country and in Europe. But if it were true that Eng-
land had so far advanced in cultivation, that at this
time there were no lands remaining which did not afford
a rent, it would be equally true, that there formerly
must have been such lands; and that whether there be
or not, is of no importance to this question, for it is the
same thing if there be any capital employed in Great
Britain on land which yields only the return of stock
with its ordinary profits, whether it be employed on
new or old land. If a farmer agrees for land on a lease
for seven or fourteen years, he may propose to employ
on it a capital of £10,000, knowing that at the ex-
isting price of grain and raw produce he can replace
that part of his stock which he is obliged to expend,
pay his rent, and obtain the general rate of profit. He
will not employ £11,000 unless the last £1000 can be
employed so productively as to afford him the usual
profits of stock. In his calculation whether he shall
employ it or not, he considers only whether the price of
raw produce is sufficient to replace his expenses and
profits, for he knows that he shall have no additional
rent to pay. Even at the expiration of his lease his rent
will not be raised; for if his landlord should require
rent, because this additional £1000 was employed, he
would withdraw it, since by employing it he gets by the
supposition, only the ordinary and usual profits which
he may obtain by any other employment of stock."
Principles, &c., 389-391.
2 B
178
POLITICAL ECONOMY.
Political
Distribu-
tion.
Rent.
ว
To this passage, M. Say affixes the following note:
Economy. "This is precisely what Adam Smith does not admit,
since he says that the worst land in Scotland gives to its
We answer to M. Say: "This is
proprietor a rent." We answer to M. Say:
precisely what Mr. Ricardo declares to be immaterial,
since a portion of what is produced on a farm giving a
rent of ten guineas an acre, may be produced without
any rent being paid for the privilege of producing it."
It must be admitted, however, that the doctrine in
question has often been stated in a form likely to con-
fuse the dull or inattentive, and liable to the cavils of
the uncandid. Mr. Ricardo, who, though not its dis-
coverer, is its best known expositor, was led, both by
his merits and his deficiences, into frequent inaccuracy
of language. He was not enough master of logic to
obtain precision, or even to estimate its importance. His
sagacity prevented his making sufficient allowance for the
stupidity or carelessness of his readers; and he was too
earnest a lover of truth to anticipate wilful misconstruction.
Under the influence of these causes he is, perhaps, the
most incorrect writer who ever attained philosophical
eminence; and there are few subjects on which he has
been guilty of more faults of expression than on rent.
He perceived that an increased will and power on
the part of the community to purchase raw produce,
and the impossibility of increasing the supply but at an
increased expense, must necessarily raise rents, and
must also occasion an extension of cultivation. Asso-
ciating, therefore, in his own mind the ideas of the rise
of rents and of the extension of cultivation, he has often
spoken of them as if they stood in the relation of cause
and effect as if the extension of cultivation were a
cause of the rise of rent, instead of being, as it obviously
is, a means by which that rise is counteracted. The
inaccuracy is so obvious that we can scarcely suppose it
to have misled any reader of tolerable care and acuteness.
He has also too frequently used the expression “the
corn raised on land paying no rent," as an equivalent
for "the coru raised without the payment of rent."
And when his opponents reply, as is true, that "in old
Countries all land pays a rent," he has sometimes denied
the truth of the reply, instead of showing, as he has done
in the passage which we have quoted, that the doctrine
is just as true when applied to a small district in which
all the land is highly rented, as when applied to a
colony where rent is the exception and freedom from it
the rule.
Again, he has often spoken of the existence of rent
as dependent on the cultivation of land of different
degrees of fertility, or on the fact that the same land
repays, with a proportionably smaller return, the applica-
tion of additional capital. And yet it is clear that if we
suppose the existence of a populous and opulent dis-
trict of great but uniform fertility, giving a large return
to a given expenditure of capital, but incapable of giving
any return whatever on a less expenditure, or any
greater return on a larger expenditure, such a district
would afford a high rent though every rood of land
and every portion of the capital applied to it would be
equally productive.
We now proceed to consider some remarkable con-
sequences of the proposition that additional labour when
employed in manufactures is more, and when employed
in agriculture less efficient in proportion; or, in other
words, that the efficiency of labour increases in manu-
factures in an increasing ratio, and in agriculture in a
Distribu-
decreasing ratio. And, consequently, that every addi- Political
tional quantity of manufactured produce is obtained, so
Economy.
far as the manufacturing it is alone concerned, at a less
proportionate cost, and every additional quantity of tion.
agricultural produce is obtained, generally speaking, at
a greater proportionate cost.
creased de-
raw pro-
So far as the price of any commodity is affected by Different
the value of the new material of which it is formed, it effects of in-
has a tendency to rise, so far as the price consists of the mand on
remuneration to be paid for the labour and abstinence of manufac
those employed in manufacturing it, it has a tendency to tured and
fall, with the increase of population.
It is obvious that commodities of rude or simple duce.
workmanship are subject to the first rule, and the finer
manufactures to the second. Bread may afford an
instance of the first kind, and lace of the second. The
average price in England of a half-peck loaf is now about
1s. 3d. Of this sum 10d., at least, may be assumed to be
the price of the wheat; the wages and profit of the miller,
baker, and retailer absorbing the remainder. If cir-
cumstances should arise, requiring the present supply
of bread to be immediately doubled from our home-
produce, it is obvious that the increased supply of
wheat could not be obtained by merely doubling the
amount of labour now employed in its production. It
is impossible to say to what amount the increased diffi-
culty of production would raise the price of wheat; we
will, however, suppose it to be doubled, and the price of
the wheat necessary to make a half-peck loaf to be 1s. 8d.
instead of 10d.: at the same time the increased labour
employed in its manufacture and sale would become
more efficient. The miller and the baker would em-
ploy better instruments and a greater division of labour,
and the retailer would be able to double his sales at
little additional expense. The price of bread, so far only
as its manufacture and retail is concerned, would be
reduced perhaps one-fourth, or from 5d. to 3 d. In
which case, the whole result of the increased produc-
tion would be that the half-peck loaf would sell for
Is. 11 d. instead of ls. 3d.
We will now see what would be the effect of an
increased use of lace.
At the present price of lace and cotton, a pound of
cotton worth, in the Liverpool-market, 2s., may be
converted into a piece of lace worth 100 guineas.
Suppose the consumption of lace to double, and the
increased difficulty of producing the additional quantity
of the cotton fit for lacemaking to raise its price from
2s. to 4s. a pound; the price of the lace, supposing it
still to be manufactured at the same expense, would
be raised one thousand and fiftieth part, or from £105
to £105 2s. But it is impossible to doubt that the
stimulus thus applied to the production of lace would
improve every process of the manufacture. We should
probably much underrate the amount of that improve-
ment if we were to estimate the consequent saving of
expense at one-fourth; in which case the whole result of
the increased production would be that the lace would
sell for £78 17s. instead of £105; the same circum-
stances which would nearly double the price of bread
would reduce by one-fourth the price of lace.
Another inference from the proposition in question is
the difference between the effects of taxation when im-
posed on raw produce and when imposed on manufac-
tured produce.
POLITICAL ECONOMY.
179
Political
Taxes on manufactured commodities ultimately raise
Economy, the price, and that by an amount exceeding the amount
of the tax. Taxes on agricultural produce in its un-
manufactured state do not necessarily occasion any ulti-
mate rise of price, and raise t, if at all, by an amount less
than that of the tax.
Distribu-
tion.
Different
effects of
taxation on
manufac-
tured and
raw pro-
duce.
Effect of
manufac.
tured
duce.
pro-
The first proposition may be easily illustrated.
We will suppose a tax on watches of twenty-five per
cent. on their value to have existed from the com-
mencement of that trade. As there is no reason to
suppose that the profits or the wages of master watch-
taxation on makers or their workmen are, under present circum-
stances, above the average wages and profits of persons
similarly employed, it is clear that, if such a tax had
always existed, the price for the time being of watches
must always have been one-fourth higher than it has
been, or the trade of watchmaking would have been
followed neither by labourers nor capitalists. It is clear
also that such an increase of price must always have
diminished or retarded in its increase the sale, and,
consequently, the production of watches. But if fewer
watches had been made, the smaller number would have
been made at a greater proportionate expense. And the
price of watches must have been higher than it actually
has been, first by the amount of the tax, and
secondly by the greater expensiveness of the more
limited manufacture. It is equally clear that, after the
It is equally clear that, after the
removal of such a tax, the price of watches would sink,
first by the amount of the tax removed, and secondly by
the improvement in the manufacture consequent on an
increased production. It is equally clear that, if such a
tax were now for the first time to be imposed, the price
of watches must rise, first by the amount of the tax, and
secondly by the amount of the increased proportionate
expense of making and selling the diminished quantity
sold, or watchmaking would cease to be as profitable as
the average of trades. It is clear, too, that the more
the use of watches diminished the higher the price
must eventually rise. If only ten new watches were
made every year, they would probably cost £500
a-piece. If only one were made, it would probably
cost little less than the whole price of the ten. It is
true that these effects would not immediately follow
either the imposition or the removal of the tax: an
interval must in either case elapse, during which, the
existing capital in the watchmaking trade continuing the
same, the supply of watches would be neither increased
nor diminished, and, consequently, the price but little
affected. During this interval, both the wages and the
profits of those engaged in that business would be
unnaturally high, or unnaturally low, and they would
not acquire their natural level until, in the case of the
removal of the tax, a sufficient number of persons were
educated to the business, or, in the case of the imposition
of the tax, the number of persons educated to the
business had been sufficiently diminished, to enable the
supply of watches to be proportioned to the demand, at a
price giving average profits and wages to the capitalists
and labourers employed in their manufacture and sale.
Effect of
But if agricultural produce were subjected to such a
taxation on tax, relief would be afforded by precisely the same
agricultural conduct which in manufactures aggravates the pressure,
produce.
namely, by a diminution of production.
It may be assumed that capital is fairly distributed
among the various channels for its employment, and
that, in the absence of peculiar disturbing causes, agri-
culture, the most agreeable of all occupations, has not
Distribu-
less than an average share of it. It may therefore be Political
assumed, generally speaking, that capital is employed on
Economy.
land until its produce repays, but does not more than
repay, the expense of cultivation; or, in other words, tion.
that the occupier of land pushes its cultivation until the Effect of
additional produce obtained by means of the last labour- taxation on
ers employed is just sufficient, at the existing price, to agricultural
pay their wages, and average profits to himself, for the
produce.
time during which those wages must be paid in advance.
On the imposition of a tax, either the price of what he
produces must rise by the amount of the tax, or the
farmer must discontinue the production of that portion
of his crop which is raised at the greatest expense.
We will suppose a farmer to occupy a farm contain-
ing six hundred acres of arable land of different degrees
of fertility; one hundred acres of which, with the labour
of ten men directly and indirectly employed on them,
would give a return which, in order to reduce it to one
denomination, we will call six quarters of wheat an acre;
one hundred others capable of giving with an equal
number of men only five quarters per acre; one hun-
dred others, four quarters per acre; one hundred others,
three quarters per acre; one hundred others, two quar-
ters per acre; and the last and worst one hundred acres,
only one quarter per acre. We will suppose, also, that
the wages of ten men for a year amount at an average
to £400, or £40 a man; that the farmer has to ad-
vance these wages for a year before the produce is sold;
and that the average rate of profit in similar occupations,
is ten per cent. per annum. Under such circumstances,
when wheat was £2 4s. a quarter it would be worth his
while to employ every man whose labour produced twenty
quarters, the price of which would amount to £44, being
£40 for the labourer's wages, and £4 for the farmer's
profit. The forty men supposed to be employed on
the four best qualities of soil produce each this amount
and more; the ten men employed on the fifth quality of
soil produce each precisely this amount, namely, a return
of two hundred quarters, worth £440. The sixth and
last quality of soil, on which one man could produce
only ten quarters, would not repay the cultivation of
wheat. Now, if a tax were laid on raw produce, which,
to make the illustrations less complex, we will call a
tax of 14s. Sd. on every quarter of wheat, and no rise
of price should take place, it is obvious that it would no
longer be worth his while to cultivate any land of worse
quality than that in which the labour of ten men could
produce three hundred quarters of corn; a return which,
at the existing price of £2 4s. a quarter, would procure
£660, being £220 for the tax, and £440 as before for
wages and profits. But it would obviously be worth
his while to cultivate land of that quality, and also to
employ labour in the cultivation of his superior land up
to the point of which the labour of an additional man
would no longer produce an additional produce of thirty
quarters. Nothing but a tax so great as absolutely to
prohibit agriculture, such a tax as never has existed,
and which would, in fact, be rather a penalty than a tax,
could induce him to discharge all his labourers, and
leave his best land uncultivated. We do not deny that
have supposed him to adopt. We do not deny that he
he would be a loser, even by the conduct which we
would much have preferred a rise in the price of corn
equal to the tax,-a rise which would have enabled him
to continue in its existing investment all his agricultural
capital. But we deny that any imposition to which the
name of a tax can fairly be applied, though unaccom-
2 B2
180
POLITICAL ECONOMY.
Distribu-
tion.
Effect of
Political panied by a rise of price, would induce him altogether to
Economy, discontinue production. And we wish to draw the atten-
tion of our readers to the contrast between his situation
and that of the manufacturer, whom any tax, however
slight, if unaccompanied by a rise of price, must
taxation on in time force to discontinue manufacturing. What is
agricultural
a remedy to the agriculturist is an aggravation of evil
produce.
to the manufacturer; a diminution of capital makes
what remains in agriculture more productive, and makes
what remains in manufactures less so.
It has been supposed, however, that the price of agri-
cultural produce would rise to the full amount of the
tax, and that the whole amount of that tax would con-
sequently fall on the consumer. This is the opinion of
Mr. Ricardo and of Mr. Mill. And it is on this ground
that they both maintain that the effect of tithes is to pro-
duce a rise in the price of raw produce equal to the whole
value of the tithe, and affecting equally all classes so far
as they are consumers of raw produce. We believe that
the immediate effect of a general tax on raw produce is
to raise its price, but to an amount not equal to that of
the tax; but that its ultimate effect is to diminish the
consumption and production of raw produce, but to
leave its price unaffected
To prove
our first proposition we need only
show that the rise of price, which we admit to be
the immediate consequence of the imposition of the
tax, would diminish the consumption, and consequently
the production of the taxed commodity. It has been
shown already that, as production is diminished, the
expense of producing the quantity still produced is di-
minished; and that the price of agricultural produce
depends on the expense of producing that portion of it
which is produced at the greatest expense, or, in other
words, under circumstances of equal competition. That
no person would diminish his consumption of corn in con-
sequence of the rise of its price, is therefore a premise
necessary to the conclusion which we are combating.
This is true as respects that portion of the population of
England which is dependent on parochial relief. In those
districts in which the amount of that relief is calculated
with reference to the price of bread, their means of pur-
chasing are unconnected with price, and neither rise with
its fall nor sink with its rise. It is true, also, as respects
the families of those opulent individuals (a prominent, but
in fact a small portion of society) whose direct expen-
diture in bread and flour bears a small proportion to
their general expenses. But the bulk of the community,
consisting of the labourers who receive no parish assist-
ance, and happily they are now the majority, and we
trust will soon be the great majority; and the smaller
shopkeepers and farmers, unquestionably regulate, in a
great measure, their purchases of wheat by its price.
Much of their consumption, when it is comparatively
cheap, consists of puddings and pies, articles of mere
luxury, which, on the slightest rise, are immediately dis-
continued. If the rise continue, they turn from wheaten
bread to cheaper subsistence: in the North to oatmeal,
in the South to potatoes. And, indeed, without recurring
to details, it may be laid down as a principle of universal
application, that, in the absence of disturbing causes,
every increase in the price of a commodity must diminish
both the ability and the will to purchase it.
We now proceed to prove our second proposition,
namely, that the ultimate effect of a tax on raw produce is
not to raise its price, but to diminish the quantity pro-
duced. It will be at once admitted that the price of raw
;
produce, in any Country, does not depend on the positive Political
extent, or on the positive fertility of that Country, but, all Economy.
the other things remaining the same, on the proportion Distribu-
which that extent, or that fertility bears to the number and tion.
wealth of the existing inhabitants. It may be low in a Effect of
barren territory, if that territory be thinly peopled, just as taxation on
it may be high in a fertile and populous one.
It is high agricultural
produce
in the rich Lowlands of Scotland, and low in the sandy
plains of Poland. And it will also be admitted that, all
other things remaining the same, the population of a
Country is in proportion to its extent and its fertility.
Now, the ultimate effect of tithes, or of any other tax, on
the cultivation of land is precisely the same as if the
Country in which they have long prevailed were thereby
rendered rather less extensive, or rather less fertile,
and consequently, rather less populous, and probably
also rather poorer than it otherwise would have been.
If England, from time immemorial, had been rather
more extensive, or rather more fertile than it now is, no
one will suppose that the price of provisions would have
been lower than it now is. We should have had rather
more corn, and a rather greater population to eat that
corn, than we now have. The increase would have been
positive, not relative. So if Devonshire or Lincolnshire
had never existed, the agricultural produce and the popu-
lation of England would each have been positively dimi-
nished; but, as they would have borne the same propor-
tion to one another as they do now, the price of the
existing quantity of corn could not have been higher
than it is now. So if tithes had never existed, we
should have had rather more corn, and a rather larger
and probably a rather richer population; every thing
else would have been as it is. It is true that, if a
new Devonshire, or a new Lincolnshire, fit for im-
mediate cultivation, were now suddenly added to our
shores, the immediate consequences would be, an in-
creased supply of provisions, and a fall in their price. But
it is also true that, if this accession to our territory were
followed by no change in our habits and institutions, the
comparative cheapness, which would be its immediate
consequence, would gradually disappear as our population
rose with the increased supply of subsistence, and, ulti-
mately, we should be just where we are now, excepting
that we should be rather more numerous. So, if tithes
were suddenly commuted, and their interference, such as
it is, with agricultural improvement, got rid of, the same
consequences would follow as if the extent of our ter-
ritory, or its fertility were suddenly augmented. And,
supposing no improvement to take place in our institu-
tions and habits, the consequent increase of our popu-
lation would bring us back, as far as the price of pro-
visions is concerned, to the point at which we are now.
It is probable, indeed, that the ultimate effect of the
abolition of tithes would be not a lowering but an
increase of the price of raw produce. A denser popula-
tion cultivating a territory, the productiveness of which
had increased in proportion to the increased number of
its inhabitants, would probably advance in opulence.
The productiveness of the soil of a Country in propor-
tion to its population being given, or, in other words,
the amount of raw produce and the number of people
being ascertained, the smaller the extent of the land
from which that amount is obtained the better. The
expenses of transport, and the trouble and loss of time
in journeys, are material elements of the cost of produc-
tion both in agriculture and in manufactures, and the
amount of these expenses depends principally on the
POLITICAL ECONOMY.
181
Distribu-
tion.
Effect of
As our
Political extent of Country affording a given return.
Economy, industry became more efficient the value of our labour
would rise in the general market of the world, and the
consequence would be a general rise of prices, in which
agricultural produce would participate. But these
taxation on statements form no part of our argument. We believe,
agricultural indeed, that the ultimate effect of tithes is to lower the
produce.
price of raw produce: but all that we have undertaken
to show is, that they do not raise it.
that Drewpor
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From these premises follow very important practical
inferences. If we lay a tax on the production at home
of any manufactured commodity which is produced with
the same, or nearly the same, facility abroad, it is abso-
lutely necessary that a duty of the same, or a rather,
greater amount, should be imposed on the importation
of that commodity. On the imposition of the tax the
cost of production at home is increased, first by the tax,
and secondly by the increased expense of producing the
smaller quantity which, when the price becomes higher,
continues to be demanded. But if importation were
untaxed, the cost of production abroad would be dimi-
nished in consequence of the diminished proportionate
expense of producing the larger quantity demanded.
The domestic production, and with the domestic pro-
duction the tax, would not be merely diminished, but
absolutely destroyed, and the whole result would be
gratuitous evil. But when a tax, unbalanced by any
countervailing duty on importation, is imposed on any
agricultural produce for which a foreign substitute can
be obtained, the only result is to stop that portion which
is most expensive of the domestic production. The
least productive part of the existing agricultural capital
is withdrawn, or worn out without being replaced. The
deficiency is attempted to be supplied by importation;
but the increased demand instead of lowering, as would
be the case with manufactures, raises the cost of produc-
tion abroad, just as the diminished demand, instead of
raising, lowers the cost of production at home. The
price of agricultural produce rises until the state of the
population has accommodated itself to the change, and
then falls to its former level. If our present heavy tax
ou the domestic production of glass were unbalanced by
any duty on importation, all the English glass-works
would in time be abandoned. Or, if some of our glass-
works were free from the tax, and others subject to it,
all those which were taxed would be ruined. But the
lands in England which are subject to the payment of
tithes are not thrown out of cultivation by the competi-
tion of those which are free from that burden, or by the
importation of the tithe-free corn and cattle of Scotland,
or of the comparatively tithe-free produce of Ireland.
The estates which are subject to tithes continue to be
productive, they continue even to afford a rent, though
the burden diminishes the productiveness, and dimi-
nishes in a still greater degree the rent.
powers of increase. This will immediately appear on a Political
reference to the familiar illustration of the progress of Economy.
rent.
Distribu-
If we suppose a Country to be divided into ten dis- tion.
tricts designated by the numbers from 1 to 10, each of Effect of
equal extent, but each of a different degree of fertility, taxation on
No. 1 producing, at a given expense, two hundred agricultural
quarters of corn, and the amount of the produce, at the produce.
same expense, of each quality of land, diminishing by
ten quarters until we come to No. 10, which produces
only one hundred quarters, we shall find that when No. 1
only will pay for cultivation, it affords twenty quarters
for tithes, and no rent. When the price of corn has
risen sufficiently to enable No. 2 to be cultivated, there
will be on Nos. 1 and 2 thirty-nine quarters for tithes,
and on No. 1 ten for rent. When No. 3 has become
worth cultivation, there will be on Nos. 1, 2, and 3, fifty-
seven for tithes, and on Nos. 1 and 2 thirty for rent.
When No. 4 has become worth cultivating, there will be
on Nos. 1, 2, 3, and 4, seventy-four for tithes, and on
Nos. 1, 2, and 3, sixty for rent. When No. 5 has become
worth cultivating, there will be on Nos. 1, 2, 3, 4, and 5,
ninety for tithes, and on Nos. 1, 2, 3 and 4, one hundred
for rent. Rent has now passed tithes, and its subse-
quent superiority is very striking. When No. 6 has be-
come worth cultivating, there will be one hundred and
five for tithes, and one hundred and fifty for rent. When
No. 7 has become worth cultivating, there will be one
hundred and nineteen for tithes, and two hundred and
ten for rent. When No. 8 has become worth cultivating,
tithes will be one hundred and thirty-two, and rent two
hundred and eighty. When No. 9 has become worth
cultivating, tithes will be one hundred and forty-four,
and rent three hundred and sixty. And when No. 10
has become worth cultivating, tithes will be one hundred
and fifty-five, and rent four hundred and fifty. And the
same results will follow if, instead of supposing fresh
land of a regularly decreasing fertility to be taken into
cultivation, we suppose further capital to be applied to
the same land, with regularly decreasing proportionate
return. Of course we do not mean that either of these
suppositions represents what actually takes place, but
they each represent the course of events to which there is
a natural tendency. They represent the relative ratio at
which rent and tithes would increase in the absence of
disturbing causes. It must be recollected, however,
that these events would not take place in the regular
order in which we have placed them, except on the
supposition of each different district which we have
supposed to be successively cultivated being of the same
extent, and of each successive application of capital being
of the same value. If, for instance, No. 10 were ten
times as large as any one of the other districts, and
received ten times as much capital, it would increase the
whole amount of titheable produce by one thousand quar-
ters instead of by one hundred quarters, and tithes would
be raised from one hundred and forty-four quarters to two
hundred and forty-four quarters, while rent would have
risen only from three hundred and sixty quarters to four
hundred and fifty. In such an event, therefore, tithes
would rise more than rent. And it must also be recol-
lected that tithes and rent do not rise at precisely the
same period. The highest amount of rent must be just
before the land producing the additional supply has been
cultivated. The increased demand is then in full ope-
ration, and has not been counteracted by the increased
supply. But the amount of tithes is not increased until
Before we quit the subject of tithes, it may be worth
while to expose another error connected with them,
namely, the popular opinion that their tendency to in-
crease in amount is greater than that of rent. We be-
lieve the fact to be just the reverse.
Tithes are a definite, rent is an indefinite, share of the
produce. Tithes can never exceed a tenth; rent need
not be a tenth, or even a hundredth, but may amount to
a fourth, a third, a half, or even more than a half. Tithes,
therefore, can be exacted, where rent cannot be; but
when once any spot of land can afford to pay both rent
and tithes, there is no comparison between their respective
182
POLITICAL ECONOM Y.
Distribu-
tion.
Effect of
Political after the additional supply has been produced. Their
Economy. increase, therefore, is generally contemporaneous with a
temporary fall of rent: which is probably one of the
causes of the popular opinion that their general tendency
to increase is greater than that of rent. Another source
taxation on of that opinion is, that in England the land has been for
agricultural centuries subject to a constant process of subdivision,
produce.
while tithes, except the comparatively small part which
belongs to laymen, have not. The incumbent of a given
benefice receives the tithes of the same quantity of land
which was tithed by his predecessor three hundred years
ago. But that land three hundred years ago may have
belonged to one or two persons, and may now be
divided between ten or twenty. The present incumbent's
income may bear a higher proportion than his prede-
cessor's did to the average income of a single landlord,
though it bears a lower proportion to the aggregate
income of all the landlords of the parish. And as a
general proposition, we have no doubt that, in a pro-
gressive Country, the value of tithes will seldom increase
in proportion to the increasing value of the land out of
which they issue.
Proportions
of rent,
It appears, therefore, that in a new or ill-peopled
Country where the abundance of land aud the want of
agricultural capital almost prevent the existence of
rent, in the economical sense of the word, tithes are the
only endowment which a Clergy can receive from the
soil. We see, therefore, why they were adopted for the
Israelites, who, in fact, were colonists, and by our Danish
and Saxon ancestors. We see too why the attempt to
endow with lands the Canadian Church has so signally
failed. Tithes would not, perhaps, have been a politic,
but they would have been an actual endowment. The
reserves stand so many desert spots in the midst of im-
provements retarding the settlement, interrupting the
communications, and injuring the wealth aud civiliza-
tion of all that is round them. Five centuries hence
they might afford an ample provision,
Relative Proportions of Rent, Profit, and Wages.
Having given a general outline of the three great
classes among whom all that is produced is distributed,
profit, and and of the general laws which regulate the comparative
values of different products, we now proceed to con-
sider the general laws which regulate the proportions in
which landlords, capitalists, and labourers share in the
general distribution, or, in other words, which regulate
the proportions which rent, profit, and wages bear to
one another.
wages.
Nomencla-
ture.
We have followed the established nomenclature which
divides society into landlords, capitalists, and labourers;
and revenue into rent, wages, and profit. And we
have defined rent to be the revenue spontaneously
offered by nature or accident; wages the reward of
labour; and profit that of abstinence. At a distance
these divisions appear clearly marked, but when we
look into the details, we find them so intermingled that
it is scarcely possible to subject them to a classifica-
tion which shall not sometimes appear to be incon-
sistent, and still more frequently to be arbitrary. But
it must be remembered that questions of classification
relate rather to language than to facts; and that our
object will have been effected if we can assist the
memory by supplying a precise and consistent nomen-
clature.
We will begin by recurring to a subject to which we
Distribu-
wages.
have already alluded, the frequent difficulty of deciding Political
whether a given revenue ought or ought not to be Economy.
called rent. When an estate has been for some time
leased to a careful tenant, it generally receives perma- tion.
nent ameliorations, which enable the owner, at the ex- Proportions
piration of the lease, to obtain a higher rent. A bog of rent,
worth 2s. annually an acre may be converted into arable profit, and
or pasture worth annually £2. Is the increase of re- Nomencla-
venue rent or profit? It arises from an additional fer- ture.
tility, now inseparably attached to the land.
It is re-
ceived by the owner without sacrifice on his part. It is,
in fact, undistinguishable from the previous rent. On
the other hand, its existence is owing to the abstinence
of the farmer, who devoted to a distant object, the ame-
lioration of the land, labour which he might have em-
ployed in producing immediate enjoyment for himself.
If the owner of the estate had farmed it himself, and
had directed labour to be employed on its permanent
improvement, the additional produce occasioned by
those improvements would clearly have been termed
profit. It appears, therefore, most convenient to term
it profit when occasioned by the improvements made
by a tenant.
In fact, these improvements are as consistently to be
termed capital as a dock or a cotton-mill. Whose capital
are they then? During the lease the capital of the
tenant; when it has fallen in, the capital of the landlord,
who has purchased them by engaging not to raise the
rent during the currency of the lease.
We may be asked, then, whether the improvements
which form the greater part of the value of the soil of
every well-cultivated district are all, and for ever, to be
termed capital? Whether the payments received from
his tenants by the present owner of a Lincolnshire estate,
reclaimed by the Romans from the sea, are to be termed,
not rent but profit on the capital which was expended
fifteen centuries ago? The answer is that, for all use-
ful purposes, the distinction of profit from rent ceases as
soon as the capital, from which a given revenue arises,
has become, whether by gift or by inheritance, the pro-
perty of a person to whose abstinence and exertions it
did not owe its creation. The revenue arising from a
dock, or a wharf, or a canal is profit in the hands of the
original constructor. It is the reward of his abstinence
in having employed capital for the purposes of produc-
tion instead of for those of enjoyment. But in the hands
of his heir it has all the attributes of rent. It is to him
the gift of fortune, not the result of a sacrifice. It may
be said, indeed, that such a revenue is the reward for
the owner's abstinence in not selling the dock or the
canal and spending its price in enjoyment. But the
same remark applies to every species of transferable
property. Every estate may be sold, and the purchase-
money wasted. If the last basis of classification were
adopted, the greater part of what every Political
Economist has termed rent must be called profit.
*
Again, there are few employments in which extraor-
dinary powers of body or mind do not receive an extra-
ordinary remuneration. It is the privilege of talent to
work not only better but more easily. It will gene-
rally be found, therefore, that the commodity or service
produced by a first-rate workman, while it sells for
more than an average price, has cost less than an
average amount of labour. Sir Walter Scott could write
a volume with the labour of about three hours a day
for a month, and for so doing received £500 or £1000.
An ordinary writer, with equal application, would find
POLITICAL ECONOMY.
183
Distribu-
tion.
of rent,
wages.
Nomencla-
ture.
Distribu-
wages.
Political it difficult to produce a volume in three months, and still ordinary interest on the capital, as the remuneration Political
Economy. more difficult to sell it for £50.
for the abstinence of the capitalist, ordinary wages, as Economy.
Is then the extraordinary remuneration of the labourer, the remuneration for his labour, and any extraordinary
which is assisted by extraordinary talents, to be termed advantages which may have been the result of accident. tion.
Proportions rent or wages? It originates in the bounty of nature; The subject may be made clearer by a few examples; Proportions
so far it seems to be rent. It is to be obtained only on and we have endeavoured to find some in which the of rent,
profit, and the condition of undergoing labour; so far it seems to remuneration for the capitalist's trouble, instead of profit, and
be wages. It might be termed, with equal correctness, being, as is usually the case, mixed up with the gross Nomencla-
rent, which can be received only by a labourer, or amount of his returns, appears as a separate item. The ture.
wages, which can be received only by the proprietor of trade of bill-broking affords an instance. The business
a natural agent. But as it is clearly a surplus, the of a bill-broker is to advance, before it becomes due, the
labour having been previously paid for by average money for which bills of exchange are drawn, deducting,
wages, and that surplus the spontaneous gift of nature, under the name of discount, interest at the rate of not
we have thought it most convenient to term it rent. more than five per cent. per annum on the sum secured
And for the same reason we term rent what might, with by the bill. In time of peace, and in the ordinary state
equal correctness, be termed fortuitous profit. We of the money-market, the rate of discount varies from four
mean the surplus advantages which are sometimes to three per cent. per annum. It has been sometimes as
derived from the employment of capital after making low as two and a half. It appears at first strange that such
full compensation for all the risk that has been encoun- a trade should exist, since the money capital employed in
tered, and all the sacrifices which have been made, by it does not return even so high a profit as may often be
the capitalist. Such are the fortuitous profits of the obtained from the public funds, leaving the additional risk
holders of warlike stores on the breaking out of unex- and labour uncompensated. It is, in fact, a trade which no
pected hostilities; or of the holders of black cloth on the one would carry on if he employed in it his own money.
sudden death of one of the Royal family. Such would
be the additional revenue of an Anglesea miner, if,
instead of copper, he should come on an equally
fertile vein of silver. The silver would, without doubt,
be obtained by means of labour and abstinence; but
they would have been repaid by an equal amount of
copper. The extra value of the silver would be the
gift of nature, and therefore rent.
Secondly. It is still more difficult to draw the line
between profit and wages. There are, perhaps, a few
cases in which capital may improve in value, without
superintendence or change, simply by being preserved
from consumption. Wine and timber, perhaps, afford
instances. But even a wine-cellar or a plantation, if
totally neglected, would probably deteriorate. And, as
a general rule, it may be laid down that capital is an
instrument which, to be productive of profit, must be
employed, and that the person who directs its employ-
ment must labour, that is, must to a certain degree
conquer his indolence, sacrifice his favourite pursuits,
and often incur other inconveniences from his residence,
from the persons to whose contact he is exposed, from
confinement or from exposure to the weather, and must
also often submit to some inferiority of rank. If labour
be in general necessary to the use of material capital, it
is universally necessary to the use of that immaterial
capital which consists of appropriate knowledge, and of
moral and intellectual habits and reputation.-A capital
created and kept up at more expense, and productive of a
greater return than that which is material, but which,
from the impossibility of actually transferring it, or im-
planting in one man the ability of another, can never be
productive but through the labour of its possessor.
Is then the remuneration of this labour to be termed
wages or profit? A certain portion of it, that portion
which would be sufficient to repay equal exertions and
hardships endured by an ordinary labourer, unprovided
with capital, must, without doubt, be termed wages. And
where extraordinary natural talents or favourable acci-
dents have occasioned the exertions of the capitalist to
obtain more than an average remuneration, that excess
is, as we have already seen, rent. But the revenue to
which our present question applies is the revenue
obtained from the employment of capital, after deducting
The commercial inhabitants of a great trading city
have from time to time under their control considerable
sums of money for short periods. Scarcely a single
estate in this Country is mortgaged or sold without the
price or the mortgage-money being placed for some days
at a banker's or agent's until the "more last words" of
the lawyers have been said. These sums cannot in the
mean time be employed in any permanent investment;
but they can be lent from day to day, or, in some cases,
from week to week, and it is better to lend them at the
lowest rate of interest than to suffer them to lie per-
fectly idle. The bill-broker's trade is to borrow these
sums from week to week, or even from day to day, at
one rate of interest, and to lend them from month to
month, or for two or three months, at a higher. To
berrow, for instance, at two per cent. and to lend at three.
It is obvious that these operations require much
knowledge, industry, and skill. The broker must be
well acquainted with the circumstances of almost every
eminent commercial man in order to estimate the value
of his acceptance or indorsement.
He must keep up
his knowledge by unremitting observation, and by in-
ferences drawn from very slight hints and appearances.
He must also have the skill so to manage his concerns
as to have his receipts always falling in to correspond
with his engagements. This knowledge, and the moral
and intellectual habits which enable him to apply it,
form his personal or immaterial capital. But he must
also have a material capital, not for the purpose of being
employed in his business, for no one would so employ
money of his own, but as the means of obtaining con-
fidence. The interest paid by a broker is so trifling
that no one would lend to him if it implied the slightest
risk; and the best pledge which he can give is the
notoriety of his possessing a large capital, which could
at any time make good an unforeseen interruption in his
regular receipts. This capital he must not waste, but he
may employ it productively, and may consume on him-
self the annual profit derived from it. The confidence
which it enables him to enjoy is a distinct advantage.
We will suppose a bill-broker to possess £100,000 in
the Four per Cents; and to have sufficient knowledge,
skill, and character as a man of business and of wealth,
to be able, at an average throughout the year, to borrow
184
POLITICAL ECONOMY.
Political £400,000 at two per cent., and to lend the same sum at
Economy, three per cent. Is the £4000 a year which his business
would give him wages or profit?
Distribu-
tion.
of rent,
wages.
Rent.
Again, a capital which in this Country would enable
Proportions its employer to obtain ten per cent., would often, if he
were to employ it in Jamaica or Calcutta, produce fifteen
profit, and or twenty. If the capitalist with £50,000 encounter the
climate and the society of Jamaica, and is rewarded by
his annual returns being raised from £5000 to £7500, is
his additional income of £2500 a year wages or profit?
There is no doubt that a sufficient portion of it to pur-
chase the same services from a person unprovided with
capital, must be considered as wages: £500 a year,
however, would considerably exceed this sum. The
remaining £2000 a year may be considered, with equal
correctness, either wages which can be received only by
the possessor of £50,000, or profit which can be received
only by a person willing to labour in Jamaica.
Adam Smith considers it as profit. "The profits of
stock,” he observes,*" it may, perhaps, be thought, are
only a different name for the wages of a particular sort
of labour, the labour of inspection or direction. They
are, however, altogether different, are regulated by quite
different principles, and bear no proportion to the quan-
tity, the hardship, or the ingenuity of this supposed
labour of inspection and direction. They are regulated
altogether by the value of the stock employed, and are
greater or smaller in proportion to this stock. If we
suppose two manufacturers, the one employing a capital
of £1000 and the other one of £7300, in a place where
the common profits of manufacturing stock are ten per
cent., the one will expect a profit of about £100 a year,
while the other will expect about £730. Yet their la-
bour of inspection may be very nearly or altogether the
same. In many great works, almost the whole labour
of this kind is committed to some principal clerk. His
wages properly express the value of this labour of inspec-
tion and direction. Though in settling them some
regard is commonly had, not only to his labour and skill,
but to the trust which is reposed in him, yet they never
bear any regular proportion to the capital of which he
oversees the management. And the owner of this
capital, though he is thus discharged of almost all labour,
still expects that his profits should bear a regular pro-
portion to his capital.'
After much hesitation, we have resolved to adopt this
as the most convenient classification, and to confine the
term wages to the remuneration for simple labour; in-
cluding under the word labour the endurance of all its
attendant hardships, but excluding from the word wages
the additional revenue which the labourer often receives
because he happens to be also a capitalist. We have
done so on the grounds which are so ably stated in the
passage which we lastly quoted.
To revert to our supposition of a capitalist with
£50,000 repaid by an extra revenue of £2500 a year
for living in Jamaica: it is clear that another capitalist
taking there £100,000 would, cæteris paribus, obtain
an extra revenue of £5000 a year, and that notwith-
standing his labour would not necessarily be greater than
that of the first-mentioned capitalist, or notwithstanding
it might in fact be much less. Perhaps the best plan
might appear to be, to apply the term wages to the re-
nuneration of mere labour, the term interest to the re-
muneration of mere abstinence, and the term profit to the
* Book i. ch. vi.
combination of wages and interest, to the remuneration Political
of abstinence and labour combined. This would make it Economy.
necessary to subdivide capitalists into two classes, the
inactive and the active: the first receiving mere interest, tion.
the second obtaining profit.
*Proportions
Distribu-
wages.
In this, however, as in many other cases, the inconve- of rent,
niences occasioned by departure from an established no- profit, and
menclature and an established classification are so great, Rent.
that we do not think that they will be compensated by
the nearer approach to precision. We shall continue,
therefore, to include under the term profit the whole
revenue that is obtained from the possession or employ-
ment of capital, after deducting those accidental advan-
tages which we have termed rent, and also deducting a
sufficient sum to pay to the capitalist, if actively employed,
the wages which would purchase an equal amount of
labour from a person unpossessed of capital. In one
respect, however, we are forced to differ from Adam
Smith. Although he considers the useful, acquired
knowledge and abilities of all the inhabitants of a Country
as part of the national fortune, as a capital fixed and
realized in the persons of their possessors, yet he ge-
nerally terms the revenue derived from this capital
wages. "The average and ordinary rates of profit in
the different employments of stock are," he observes,
more nearly on a level than the wages of the different
sorts of labour. The difference between the earnings of
a common labourer and those of a well-employed lawyer
or physician, is evidently much greater than that between
the ordinary profits in any two different branches of
trade." Book i. ch. x.
(C
According to our nomenclature (and indeed according
to that of Smith, if the produce of capital is to be termed
profit) a very small portion of the earnings of the lawyer
or of the physician can be called wages. Forty pounds
a year would probably pay all the labour that either of
them undergoes, in order to make, we will say, £4000 a
year. Of the remaining £3960, probably £3000 may
in each case be considered as rent, as the result of extra-
ordinary talent or good fortune. The rest is profit on
their respective capitals; capitals partly consisting of
knowledge, and of moral and intellectual habits acquired
by much previous expense and labour, and partly of
connection and reputation acquired during years of pro-
bation while their fees were inadequate to their support.
Under this view of the case the revenue which con-
sists of profit will in the progress of improvement bear
a constantly increasing proportion to that which consists
of wages. There appears no reason to doubt that, as
civilization advances, every person will receive an edu-
cation which will materially increase his power of pro-
duction. Brutes and machinery can effect almost every
thing that is to be effected by mere bodily exertion.
Whatever requires mind, will be done better in propor-
tion as the mind has received earlier or more judicious
cultivation. We have heard it made a subject of com-
plaint, that the uneducated Irish have dispossessed the
English of the lowest employments in London and its
neighbourhood. We rather rejoice that the English are
sufficiently educated to be fit for better things. If they
had remained as ignorant as their rivals, many who are
now earning 40s. a week as mechanics, might have been
breaking stones and carrying hods at 2s. a day. Even
in
our present state of civilization, which, high
as it appears by comparison, is far short of what
may easily be conceived, or even of what may
confidently be expected, the intellectual and moral capital
POLITICAL ECONOMY.
185
tion.
of rent,
Political of Great Britain far exceeds all her material capital, not
Economy only in importance, but even in productiveness. The
families that receive mere wages probably do not form a
Distribu- fourth of the community; and the comparatively large
Proportions amount of the wages even of these is principally owing to
the capital and skill with which their efforts are assisted and
profit, and directed by the more educated members of the society.
Those who receive mere rent, even using that word in its
largest sense, are still fewer: and the amount of rent, like
that of wages, principally depends on the knowledge by
which the gifts of nature are directed and employed. The
bulk of the national revenue is profit; and of that profit
the portion which is mere interest on material capital pro-
bably does not amount to one-third. The rest is the result
of personal capital, or, in other words, of education.
wages.
Rent.
Rent.
It is not on the accidents of soil or climate, or on the
existing accumulation of the material instruments of
production, but on the quantity and the diffusion of this
immaterial capital, that the wealth of a Country depends.
The climate, the soil, and the situation of Ireland have
been described as superior, and certainly are not much
inferior, to our own. Her poverty has been attributed to
the want of material capital; but were Ireland now to
exchange her native population for seven millions of our
English North Countrymen, they would quickly create.
the capital that is wanted. And were England, North of
Trent, to be peopled exclusively by a million of families
from the West of Ireland, Lancashire and Yorkshire
would still more rapidly resemble Connaught. Ireland
is physically poor because she is morally and intellec-
tually poor, because she is morally and intellectually
uneducated. And while she continues uneducated,
while the ignorance and violence of her population
render persons and property insecure, and prevent the
accumulation and prohibit the introduction of capital,
legislative measures, intended solely and directly to re-
lieve her poverty, may not indeed be ineffectual, for they
may aggravate the disease, the symptoms of which they
are meant to palliate, but undoubtedly will be productive
of no permanent benefit. Knowledge has been called
power; it is far more certainly wealth. Asia Minor,
Syria, Egypt, and the Northern coast of Africa, were
once among the richest, and are now among the most
miserable Countries in the world, simply because they
have fallen into the hands of a people without a suffi-
ciency of the immaterial sources of wealth to keep up
the material ones. "In what way," asks Adam Smith,
"has Europe contributed to the grandeur of the colo-
nies of America? In one way, and in one way only,
she has contributed a great deal. Magna virum mater.
She bred and formed the men who were capable of
achieving such great actions, and of laying the founda-
tion of so great an empire; and there is no other quar-
ter of the world of which the policy is capable of form-
ing, or has ever actually and in fact formed such men.
The colonies owe to Europe the education and great
views of their active and enterprising founders, and
some of the greatest and most important of them owe
to her scarce any thing else."
Proportionate Amount of Rent.
We have already defined rent to be the revenue
spontaneously offered by nature or accident, or, in other
words, to be the price paid for the assistance of an ap-
propriated natural agent. It might with equal propriety
be defined the surplus produce arising from the use of
VOL. VI.
an appropriated natural agent, or the amount by which Political
the price of the produce of an appropriated natural Economy.
agent exceeds the costs of its production.
The nature and the progress of the rent of land have Distribu-
tion.
usually been illustrated by supposing lands of different
fertility to be successively taken into cultivation.
Thus of rent,
Proportions
the land No. 1 is supposed to afford, in return for the profit, and
application of a given amount of labour and capital, wages.
one hundred quarters; No 2, ninety quarters; No. 3, Rent.
eighty quarters; No. 4, seventy quarters; No. 5, sixty
quarters; and so on. While any portion of the most
fertile lands is unappropriated, No. 1 only is cultivated,
and no rent is paid. Before it has become necessary to
cultivate No. 2, No. 1 must have become an appropriated
agent, affording a larger return than can be obtained
without its assistance. Its owner, or, as he is termed,
the landlord, obtains, therefore, the value of that assist-
ance, being ten quarters, or the difference between
one hundred quarters and ninety quarters; and re-
ceives it himself, in kind, if he himself is the cultivator,
or is paid for it the remuneration termed "rent," if he
allows another person to be the cultivator. Before it
has become necessary to cultivate No. 3, the rent of
No. 1 must have risen from ten quarters to twenty, and
No. 2, from giving no rent, must have given a rent of ten
quarters; and so on until the point is reached at which
the labour and capital employed will produce a return
only sufficient to give a bare subsistence to the la-
bourer and average profits to the capitalist: the highest
extreme to which cultivation can be intentionally
pushed, and one, indeed, beyond which it is seldom
carried.
It is obvious, therefore, that the amount of rent
depends on two causes: 1. the positive productiveness
of the natural agent by which it is afforded; 2. the com-
parative productiveness of that agent, or the degree in
which it exceeds those agents which are universally
accessible. If the supply of natural agents were un-
limited, or if their power of affording assistance were to
cease, in either case rent would be at an end. Rent
is the value of their assistance, and that value, like all
others, depends partly on their utility, and partly on
their limitation of supply. Much error has arisen from
attending to only one of these causes.
The French Economists perceived that the produce
*
* Le laboureur est le seul dont le travail produisse au delà du
salaire du travail. Il est donc l'unique source de toute richesse.
La terre, indépendamment de tout autre homme et de toute con-
vention, lui paie immédiatement le prix de son travail. La nature ne
marchande point avec lui pour l'obliger à se contenter du nécessaire
absolu. Ce qu'elle donne n'est proportionnée ni à ses besoins xi à une
évaluation conventionnelle du prix de ses journées. C'est le résultat
physique de la fertilité du sol, et de la justesse, bien plus que
difficulté des moyens, qu'il a employés pour le rendre fécond. Dès
que le travail du laboureur produit au delà de ses besoins, il peut,
salaire de ses peines, acheter le travail des autres membres de la
avec ce superflu que la nature lui accorde en pur don, au delà du
de la
société. Ceux-ci en le lui vendant ne gagnent que leur vie, mais le
laboureur recueille outre sa subsistence une richesse disponible; qu'il
n'a point achetée, et qu'il vend. Il est donc l'unique source des
richesses, qui, par leur circulation, animent tous les travaux de la
société; parcequ'il est le seul dont le travail produisse au delà du
salaire du travail.
Il reste donc constant qu'il n'y a de revenu que le produit net des
terres, et que tout autre profit annuel, ou est payé par le revenu, ou
fait partie des fraix qui servent à produire le revenu.-Turgot
vol. v. p. 8-9-126.
dans la plus grande richesse possible. J'entends ici
Vous ne pouvez trouver le meilleur état possible d'une nation, que
de richesse, une masse de valeurs disponibles, de valeurs qu'on puisse
par la terme
2 c
186
POLITICAL ECONOMY.
:
Distribu-
tion.
Political of fertile land, the most important of all appropriated
Economy. natural agents, sells for a price exceeding the expense of
its cultivation. This excess of price, or produit net, as
they termed it, they conceived to be the only source of
Proportions wealth.
All other commodities appeared to them
merely to represent the toil employed in their acquisi-
profit, and tion. They believed, therefore, a community to be rich
in proportion to the amount of rent received by the
proprietors of its land; and consequently that produc-
tion enriches only so far as it is subservient to the
creation of rent.
of rent,
wages.
Rent.
It is impossible that they could have maintained this
doctrine, if they had perceived that abundance is an ele-
ment in wealth, and that high rents and the greatest abun-
dance are incompatible; or if they had recollected that, ac
cording to their views, a community possessing the
highest skill and exerting the utmost diligence, but scat-
tered over a territory of unbounded extent and fertility,
as they might be even unacquainted with the existence of
such a thing as rent, must be totally without riches,
must be poor from the mere prodigality of their re-
Sources.
In the following passage Mr. Ricardo seems to have
fallen into an opposite error.
"Nothing is more common than to hear of the ad-
vantages which the land possesses over every other
source of useful produce, on account of the surplus
which it yields in the form of rent. Yet, when land is
most abundant, when most productive, and most fertile,
it yields no rent; and it is only when its powers decay,
and less is yielded in return for labour, that a share of
the original produce of the more fertile portions is set
apart for rent. It is singular that this quality in the
land, which should have been noticed as an imperfection,
compared with the natural agents by which manufac-
tures are assisted, should have been pointed out as con-
stituting its peculiar pre-eminence. If air, water, the
elasticity of steam, and the pressure of the atmosphere,
were of various qualities, if they could have been appro-
priated, and each quality existed only in moderate abun-
dance, they, as well as the land, would afford a rent, as
the successive qualities were brought into use. With
every worse quality employed, the value of the commo-
dities in the manufacture of which they were used would
rise, because equal quantities of labour would be less
productive. Man would do more with the sweat of his
brow, and nature would perform less; and the land
would be no longer pre-eminent for its limited powers.
"If the surplus produce which the land affords in the
form of rent be an advantage, it is desirable that every
year the machinery newly constructed should be less
efficient than the old, as that would undoubtedly give
consommer au gré de ses désirs, sans s'appauvrir, sans allérer le
principe qui les reproduit sans cesse.
Le meilleur état possible est évidemment celui auquel est attachée ia
plus grande sûreté; il consiste donc dans la plus grande masse pos-
sible de valeurs disponibles; car ce sont les seules dont nous puissions
toujours jouir, et sur lesquelles la sûreté puisse s'établir.
Je voudrois bien que mes lecteurs donnassent à cette vérité toute
l'attention qu'elle mérite, je voudrois bien qu'ils saisissent que la
richesse ne consiste que dans les valeurs disponibles, qu'on peut con-
sommer sans aucun inconvénient; par conséquent, qu'il n'y a que le
produit net des cultures qui soit richesse, parcequ'il est dans la
masse des reproductions, la seule partie dont nous puissions disposer
pour nos jouissances; le surplus de cette masse n'est pas disponible
pour nous, il appartient à la culture, c'est elle qui tous les ans doit le
consommer; nous ne pouvons le lui dérober, que nous n'en soyons
p.
punis par l'extinction de nos richesses.—I'Ordre Naturel, &c., P.
379-381.
Distribu-
a greater exchangeable value to the goods manufac- Political
tured, not only by that machinery, but by all other ma- Economy.
chinery in the Kingdom; and a rent would be paid to
all those who possessed the most productive machinery. tion.
"The labour of nature is paid not because she does Proportion
much, but because she does little. In proportion as of rent,
she becomes niggardly in her gifts, she exacts a greater profit, and
price for her work. Where she is munificently bene- wages.
ficent she always works gratis." Principles, p. 63.
Mr. Ricardo seems to have forgotten that the quality
which enables land to afford rent, namely, the power of
producing the subsistence of more persons than are re-
quired for its cultivation, is an advantage without which
rent could not have existed. As the population of any
given district becomes more dense, the surplus produce
of its soil, or, in other words, the amount of its produce
which remains after provision has been made for the
subsistence of those by whom it is cultivated, has a con-
stant tendency to increase; either because the increase
of agricultural skill and capital increases its positive
fertility, or because a diminution of its relative fertility,
a diminution of its produce relatively to the num-
bers of its cultivators, forces the poorer classes to be
satisfied with a less amount of raw produce; or from
both these causes combined. Of these two causes of
rent, one is a benefit, the other an evil. That we have
in this Country perhaps a million of acres capable of
producing, with average labour, forty bushels of corn an
acre, is a benefit; that we have not more than a million
such acres is an evil. That the average amount of what
an agricultural labourer produces much exceeds what is
absolutely necessary for the subsistence of an agricul-
tural family is a benefit. That the extent of our fertile
land, and the amount of our capital, in proportion to our
population, are not sufficient to enable him to consume,
directly or indirectly, for his own advantage and that of
his family, all that he produces, is an evil. To produce
rent, both the benefit and the evil must coexist. The one
occasions rent to be demanded; but it is the other which
enables it to be paid.
It may
Mr. Ricardo's attention seems to have been confined
to the evil.
to the evil. But rent might be enormously increased
without the increase of that evil, or even though that
evil should be diminished. If the proprietor of a single
estate could by a wish triple its produce, he would aug-
ment, in a much greater ratio, its rent. Would this
increase be owing to the parsimony of nature?
be said that it would be owing to the comparative unpro-
ductiveness of the rest of the Country. It must be
admitted that, if we could suddenly triple the produc-
tive powers of all the land in this Country, the population
remaining the same, the whole amount of rent would
fall, and the condition of all classes, except of that
comparatively small class which subsists on the rent
of land, would be much improved. But if our popu-
lation were also tripled, rents would be prodigiously
increased, the situation of the landlords would be im-
proved, and that of no other class deteriorated.
fact, the condition of all other classes would be im-
proved, as the increased division of labour and ease of
communication occasioned by a greater density of popu-
lation would cheapen and improve our manufactures.
If the population, instead of being tripled, were only
doubled, the situation of the Country would be still
better. The rise in rent, though not equal to what it
would still be very great, and both raw produce and
would have been if the population had been tripled,
In
Rent.
POLITICAL ECONOMY.
187
wages.
Rent.
Political manufactures would be more abundant than they were
Economy. previously. Now this is, in fact, what has occurred in
England during the last hundred and thirty years. Since
Distribu-
the beginning of the XVIIIth Century the population
tion.
of Eugland has about doubled. The produce of the land
Proportions
of rent, has certainly tripled, probably quadrupled. Rent has
profit, and risen in a still greater proportion; but that rise has been
accompanied by a rise of wages, estimated in every com-
modity consumed by the labourers, excepting a few, such
as spirituous and fermented liquors, which have been
made the subject of special taxation. With the same
labour the labourer can obtain more corn, and perhaps
five times as much of the most useful manufactures.
Can it be fairly said that rents have risen because nature
has done little? that the price paid for her assistance
has been increased because she has become more nig-
gardly in her gifts? It is true that, if the productive-
ness of the land, instead of being tripled, had been cen-
tupled, rents might not have risen; but it is equally
true that they would not have risen if, instead of being
tripled, it had remained stationary. The condition essen-
tial to the payment of the labour of nature is not, as
Mr. Ricardo states it, that her assistance shall be little,
but that it shall not be infinite.
As rent ari-es from the agency not of man, but of
nature, its amount does not depend on the will or the
exertions of its recipient. The owner of the land, or of
the natural agent, whatever it be, for the use of which
persons are willing to pay rent, receives the sum which
their mutual competition forces them to give. As it is
all pure gain, he accepts the largest sum that is offered,
however trifling its amount. Nor, on the other hand,
does the amount of rent depend on the will or the exer-
tions of those who pay it. Whatever be the value of the
services of an appropriated natural agent, that value
must be paid by the person who wishes to use them, as
both parties to the bargain are aware, that if it is
not hired by one applicant it will be by another. The
amount, therefore, is subject to no general rule; it has
neither a minimum nor a maximum. It depends on the
degree, in which nature has endowed certain instruments
with peculiar productive powers, and the number of those
instruments compared with the number and wealth of
the persons able and willing to hire them. There is,
probably, now land near New York selling for £1000 an
acre, which a century ago could have been obtained for
a dollar.
Proportionate Amounts of Profit and Wages.
Proportions
Profits and wages differ in almost all respects from
of profit
rent. They are each subject to a minimum and a
and wages. maximum. They are subject to a minimum, because
each of them is the result of a sacrifice. It may be
difficult to say what is the minimum with respect to
profit, but it is clear that every capitalist, as a motive
to abstain from the immediate and unproductive enjoy-
ment of his capital, must require some remuneration
exceeding the lowest that is conceivable. The minimum
at which wages can be permanently fixed is of course
the sum necessary to enable the existing labouring popu-
lation to subsist. On the other hand, as the rate of
wages depends in a great measure on the number
of labourers, and the rate of profit on the amount of
capital, both high wages and high profits have a tend
ency to produce their own diminution. High wages,
by stimulating an increase of population, and there-
-
Political
Distribu-
fore an increase of the number of labourers, and high
profits, by occasioning an increase of capital. It will Economy.
be seen in a future portion of this Treatise that, if the
amount of capital employed in the payment of wages tion.
increases, the number of labourers remaining the same, Proportions
profits will fall; and that if the number of labourers of profit
increases, the amount of capital and the productiveness
and wages.
of labour remaining the same, wages will fall; and that,
if they both increase in equal proportions, both will have
a tendency to fall, in consequence of the larger propor-
tion which they will each bear to the power of the natural
agents whose services they each require. And although
it may not be easy to fix the maximum of either wages
or profits, yet it may be laid down generally, that in no
Country have profits continued for any considerable period
at the average rate of fifty per cent. per annum, or wages
at such a rate as to afford the labourer ten times the
amount necessary for the subsistence of a family.
Adam Smith has laid down, that "the whole of the
advantages and disadvantages of the different employ-
ments of labour and capital must, in the same neigh-
bourhood, be either perfectly equal or continually tend-
ing to equality. If in the same neighbourhood there
was any employment evidently either more or less ad-
vantageous than the rest, so many people would crowd
into it in the one case, and so many would desert it in
the other, that its advantages would soon return to the
level of other employments. This at least would be the
case in a society where things were left to take their
natural course, where there was perfect liberty, and
every man was perfectly free both to choose what occu-
pation he thought proper, and to change it as often as
he thought proper. Every man's interest would prompt
him to seek the advantageous and to shun the disadvan-
tageous employment." Wealth of Nations, book i.
ch. x.
The truth of these remarks of Adam Smith is ob-
vious. It is obvious also that, iu the absence of dis-
turbing causes, the desire of obtaining a more advan-
tageous field for the employment of his mental and
bodily faculties, which leads a man to move from one
part of the same neighbourhood to another, would lead
him from village to village and from Country to
Country. For commercial purposes, the whole civilized
world is one extended neighbourhood; and the same
causes which tend to equalize profts in Liverpool and
London tend to equalize them in London and Calcutta.
But when we look into the details, we are struck by the
difference in the remuneration of persons apparently un-
dergoing equal toils, and exercising equal abstinence.
We find a general exempt from more than half the hard-
ships of a private, and receiving more than a hundred
times his pay. We find barristers making £10,000 or
£15,000 a year, while a copying clerk is paid for labour
as assiduous and more irksome by only £100. We
find the purchaser of an Exchequer-bill willing to pay
a large premium for the privilege of advancing capital
at a profit of three per cent. per annum, while a shop-
keeper thinks himself ill paid by less than twenty per
cent. We find a London banker satisfied with a profit
of seven per cent., while his partner in Calcutta requires
fifteen.
These differences are partly real and partly apparent.
So far as they are real, they are occasioned partly by the
influence of the different instruments of production, or,
in other words, the different sources of revenue, on one
another; the influence, for instance, of the rate of profits on
2 c 2
188
POLITICAL ECONOMY.
Distribu-
tion.
Political the amount of wages, and of the amount of wages on the
Economy. rate of profits; partly by the greater or less severity of the
sacrifices which the labourer and the capitalist must
make in addition to the undergoing mere toil or absti-
nence; and partly by the difficulty with which capital and
labour are transferred from one employment to another.
A difficulty caused partly by physical obstacles and
partly by human habits and institutions. The influence
of these causes on the average rates of wages and
of profits in the same Country, in different employ-
ments of labour and capital, we shall consider here-
after; and having assumed for the purposes of the
following discussion that a certain average rate of wages
and a certain average rate of profit exists, we shall now
endeavour to explain the causes by which these average
rates are determined, or, in other words, to explain the
circumstances which decide what, at a given time and in
a given place, shall be the average rate of wages and the
average rate of profit. We have already stated as one
of the principal sources of difficulty in Political Economy
the mutual dependence of its different propositions. A
dependence which, as it respects the theory of wages and
profits, is so great that it is impossible to give a com-
plete view of the causes which affect the one without ad-
verting to all those which affect the other. We shall
endeavour to keep them as distinct as we can, and we
shall begin by wages, as that subject is capable of being
separately considered to the greatest extent.
Rate of
wages,
Meanings
of the ad-
jectives
high and
low, as ap-
plied to
wages.
Average Rate of Wages.
We have already defined wages to be the remunera-
tion received by the labourer in recompense for having
exerted his faculties of mind and body. They are said
to be high or low, in proportion to the extent of that
remuneration. That extent has been estimated by
three different measures; and the words high and low wages
have, consequently, been used in three different senses.
First. Wages have been termed high or low, accord-
ing to the amount of money earned by the labourer
within a given period, without any reference to the
commodities which that money would purchase; as
when we say that wages have risen in England since
the reign of Henry VII., because the labourer now
receives 1s. 6d. or 2s. a day, and then received only 44d.
Secondly. They have been termed high or low, ac-
cording to the quantity and quality of the commodities
obtained by the labourer, without any reference to his
receipts in money; as when we say that wages have
fallen in England since the reign of Henry VII., because
the labourer then earned two pecks of wheat a day, and
now earns only one.
Thirdly. They have been termed high or low, ac-
cording to the share or proportion which the labourer
receives of the produce of his own labour, without any
reference to the total amount of that produce.
The first nomenclature, that which measures wages
simply by their amount in money, is the popular one.
The second, that which considers wages simply with
reference to the quantity and quality of the commodities
received by the labourer, or, to speak more correctly,
purchasable with his money wages, was that, generally
adopted by Adam Smith. The third, that which con-
siders wages as high or low, simply with reference to the
labourer's share or proportion of what he produces, was
introduced by Mr. Ricardo, and has been continued by
many of his followers.
of the words
high and
This last use of the words high and low wages has Political
always appeared to us one of the most unfortunate of Economy.
Mr. Ricardo's many innovations in the language of Distribu-
Political Economy. In the first place, it has a tendency tion.
to withdraw our attention, even when we are considering Rate of
the subject of wages, from the facts which most in- wages.
fluence the labourer's condition. To ascertain whether Meanings
his wages are high or low, we are desired to inquire, not
whether he is ill or well paid, not whether he is well low.
or ill fed, or clothed, or lodged, or warmed, but simply
what proportion of what he produces comes to his
share. During the last four or five years many a
hand-weaver has received only 8s. 3d. for producing,
by a fortnight's exertion, a web that the capitalist has
sold for Ss. 4d. A coal-merchant often pays his men
£2 a week, and charges his employers for their services
£2 10s. But, according to Mr. Ricardo's nomencla-
ture, the wages of the weaver, at 4s. 1 d. a week, are
much higher than those of the coalheaver at £2, since
the weaver receives 99 per cent. of the value of his
labour, while the coalheaver has only 80 per cent.
(6
no-
And, even if the nomenclature in question were free
from this objection, even if the point on which it endeavours
to fix the attention were the most important, instead of
being the least important, incident to wages, it still would
be inconvenient from its tendency to render the writer
who employs it both inconsistent and obscure. It is al-
most impossible to affix to terms of familiar use a per-
fectly new meaning, and not from time to time to slide
into the old one. When Mr. Ricardo says that
thing can affect profits but a rise of wages," p.118; that
"whatever raises the wages of labour lowers the profits
of stock," p. 231; that " high wages invariably affect
the employers of labour by depriving them of a portion
of their real profits," p. 129; that “ as the wages of
labour fall the profits of stock rise," p. 499; he means
by high wages, not a large amount, but a large propor-
tion. But when he speaks of the " encouragement
which high wages give to the increase of population,"
p. 88-361, he means by high wages a large amount.
And many of his followers and opponents have supposed
the words high and low to be used by him as indicative
of quantity, not proportion. The consequence has been
that, since the publication of his great Work, an opinion
has prevailed that high wages and high profits are in-
compatible, and that whatever is taken from the one is
added to the other. The slightest attempt to try this
theory by an actual example will show its absurdity.
The usual supposition is, that the capitalist, at an ave-
rage, advances the wages of his labourers for one year,
and receives, after deducting rent, one-tenth of the value
of what they produce. We are inclined to think that
in England the average rate of profit is rather greater,
and the average period of advance rather less. After
making many inquiries on these subjects in Manchester,
we found the general opinion to be, that the manufac-
turing capitalist turns his capital, at an average, twice in
the year, and receives on each operation a profit of 5 per
cent.; and that the shopkeeper, at an average, turns his
capital four times in a year, and receives on each opera-
tion a profit of about 33 per cent. On these data the
labourer's share would, of course, be much greater
than according to the ordinary estimate. We will
suppose, however, that estimate to be correct, and
that, after rent has been deducted, the labourer receives,
on an average, nine-tenths of the value of what he pro-
duces. Under these circumstances a rise in the amount
POLITICAL ECONOMY.
189
Distribu-
tion.
Political of wages amounting to one-tenth, or from 10s. to 11s.
Economy. a week, if that rise is to be deducted from the capitalist's
share, would utterly destroy all profit whatever. A rise
of one-fifth, or from 10s. to 12s. a week, would occasion
Meanings to the capitalist a loss equal to the whole amount of his
of the words former profit. A fall in wages of one-tenth would double
high and
profits; a fall of one-fifth would treble them. Now we
dow'.
know that general variations in the amount of wages to
the amount of one-tenth or one-fifth, or to a greater ex-
tent, are not of unfrequent occurrence. Yet who ever
heard of their producing such an effect on profits?
And yet this doctrine has received the sanction both
of theoretic and practical men. Mr. Francis Place is
asked by the Committee on Artisans and Machinery
(First Report, p. 46,*) " Do not the masters in conse-
quence of a rise of wages raise their prices ?"—“ No,” he
answers; "I believe there is no principle of Political Eco-
nomy better established than this of wages; increase of
wages must come from profits."
Did Mr. Place ever apply this doctrine when his men
asked for higher wages on a general mourning? Even
the Committee appear to have taken this view of the
question. The subject is so important, that we will
venture to extract the following passage from the Report
made in the following Session :—
"Those eminent persons who, during the last fifty
years, have reduced the rules that govern the operations
of trade and industry to a Science, undertake to show,
by arguments and facts, that the effect of low wages is
not a low price of the commodity to which they are ap-
plied, but the raising of the average rate of profits in
the Country in which they exist. The explanation of
this proposition occupies a large portion of the justly-
celebrated work of the late Mr. Ricardo, on the Principles
of Political Economy; and is also ably set forth in the
following evidence of Mr. M'Culloch, to which your
Committee particularly desire to draw the attention of
the House:
"Have you turned your attention to the effect of
fluctuations in the rate of wages on the price of commo-
dities ?'' I have.'
66 6
"Do you consider that when wages rise the price
of commodities will proportionally increase?'-' I do not
think that a real rise of wages has any effect whatever, or
but a very imperceptible one, on the price of commodities.'
'Then, supposing wages to be really lower in France
than in this Country, do you think that that circumstance
would give the French any advantage over us in the
foreign market?'—' No, I do not; I do not think it would
give them any advantage whatever. I think it would
occasion a different distribution of the produce of industry
in France from what would obtain in England, but that
would be all. In France the labourers would get a less
proportion of the produce of industry, and the capitalists
a larger proportion.'
"Could not the French manufacturer, if he gets his
labour for less than the English manufacturer, afford to
sell his goods for less?'-'As the value of goods is made
up wholly of labour and profit, the whole and only effect
of a French manufacturer getting his labour for less than
an English manufacturer is to enable him to make more
profit than the English manufacturer can make, but not
to lower the price of his goods. The low rate of wages
in France goes to establish a high rate of profits in all
branches of industry in France.'
* Session of 1824.
"What conclusion do you come to in making a com- Political
parison between wages in England and
Economy.
wages in
France ?' I come to this conclusion, that, if it be true
Distribu-
that wages are really higher in England than in France, tion.
the only effect of that would be to lower the profits of Meanings
capital in England below their level in France, but that of the words
will have no effect whatever on the price of the commo-
high and
low.
dities produced in either Country.'
"When you say that wages do not affect prices,
what is it that does affect prices ?'-' An increase or dimi-
nution of the quantity of labour necessary to the produc-
tion of the commodity.'
666
Supposing that there was a free export of ma-
chinery, so that France could get that machinery, do
you think that under those circumstances we should
retain those advantages which we possess at the present
moment?'' Yes, we should; for the export of the ma-
chinery would not lower our wages, or increase the
wages in France, so that we should preserve that ad-
vantage to the full extent that we have it at this moment.'
Will you explain to the Committee why you are of
opinion that the French manufacturer would not under-
sell the English, seeing that his profits are larger than
the English manufacturer?'-'Because, if he were to offer
to undersell the English, he can only do it by consent-
ing to accept a less rate of profit on his capital than the
other French capitalists are making on theirs, and I
cannot suppose a man of common sense would act upon
such a principle.'
Are the Committee to understand, that although a
French manufacturer pays half the wages to his men in
France which our manufacturers do in England, yet
that his wages being on a par, or a level, in general,
with the other wages in France, will render his profits
on a par with them, and consequently he would not
undersell the English merchant by lowering his profits.
below the average rate of profits in France?'' Precisely
so. I believe, in point of fact, there is no such dif-
ference; but he could not undersell the English manu-
facturer unless he took lower profits than all other pro-
ducers in France were making. I might illustrate this
by what takes place every day in England, where you
never find the proprietor of rich land, in order to get
rid of his produce, offering it in Mark-lane at a lower
rate than that which is got by a farmer or proprietor of
the very worst land in the Kingdom.'
"Would it not produce a larger sale if the French
manufacturer were to sell at a less price?'—' Supposing
that to be so, the greater the sale the greater would be
the loss of profit.'
""'*
Mr.
We have extracted this passage as indicating the views
of the Committee, not those of Mr. M'Culloch.
M'Culloch, as will appear on turning to his evidence,
meant by wages really high and really low, not a larger
or a smaller amount, but a larger or a smaller proportion.
But the Committee appear to have understood him to
mean a larger or a smaller amount.
Mr. Bradbury had previously stated the common day
wages in France to be about half the wages paid in
England.
He was asked, “In what way do you consider that
lower wages in France give the French manufacturers
an advantage over English manufacturers?”—“ I con-
ceive that if they pay 3d. a pound for spinning to the
*
Report from Select Committee on Export of Tools and Ma-
chinery. Session of 1825, p. 13, 14.
190
POLITICAL ECONOMY.
Political operative spinner, and we pay 6d., that would give them
Economy. an advantage of 3d. a pound in the cost."
“You mean to say that the French would be able to
Distribu-
sell the article they make, in consequence of paying
tion.
Meanings
lower wages, cheaper than the English could sell it ?"-
of the words "They could afford it 3d. a pound cheaper."
high and
low.
"You mean to say that, according to the rate of wages
paid, the price of the article for which they are paid is
high or low ?"—"It may be afforded higher or lower,
I should imagine, as the cost be more or less."
"Therefore the whole reason and ground on which
you think that low wages give them an advantage is,
that low wages contribute to enable them to sell the
article cheaper than if they paid higher wages?"-
"Yes, labour constituting a material feature in the
cost.
You conceive that increased cost would be a loss to
the party, if the price was not increased in proportion?"
I should imagine so.”
(C
(
"Might not the profits of the proprietor be lessened?"—
They might be lessened, which is in effect a loss."
Might not that enable him to bear the loss which the
difference of wages produces ?" *—" If he chose to make
If he chose to make
that sacrifice."
66
Might not the profits be lessened until there
were no profits at all!"-" Very easily, I should
think." (Fifth Report of the Select Committee on
Artisans and Machinery, p. 547, 549, 550.)
It was with reference to this evidence that Mr. M'Cul-
loch was examined. His examination commences thus:
"Have you read the evidence which has been given
before this Committee?"-" I have read portions of it
only."
66
Have you read the evidence given by Mr. Brad-
bury?"-"A part of it."
"That part in which he conceives that foreigners
have an advantage over the English_manufacturers in
consequence of wages being lower in France?"—"Yes,
I have read that."
And then follows the question:
"Have you turned your attention to the effect of fluc-
tuations in the rate of wages on the price of commo-
dities ?"
Now if the Committee understood Mr. M'Culloch to
mean, by high or low wages, not a great or small
amount, but a great or small proportion, his evidence
and that of Mr. Bradbury had nothing in common.
The whole of the confusion has been occasioned by
the verbal ambiguity which we have pointed out, and
would not have arisen if Mr. Ricardo had used any
other adjectives than high and low to express a larger or
smaller proportion.
The two other meanings of the words high and low
* In other words, "Might not the loss enable him to bear the
loss ?"
†This question appears to have come from a different interro-
gator. In justice to the clear and intelligent evidence of Mr. Brad-
bury, we should observe that he was far from falling into the com-
mon error, that a generally high rate of wages can be unfavourable
to a Country. He set out by supposing that, with the assistance
of English machinery and English superintendents, the labour of
the French spinners might be as productive as that of the English
spinners. Under such circumstances, if their wages could remain
at one-half of English wages. he believed that the French manu-
facturer could undersell the English manufacturer. Of the accu-
racy of this opinion under the possible, though highly improbable
hypothesis in question, we entertain no doubt, though, from the
tenour of the questions, it appears not to have met with the appro-
bation of the Committee.
of the words
wages, that which refers to the money, and that which Political
refers to the commodities, received by the labourer, are
Economy.
both equally convenient, if we consider the rate of
wages Distribu-
at the same time and place; for then they both mean tion.
the same thing. At the same time and place the la- Rate of
bourer who receives the highest wages necessarily wages.
obtains the most commodities. But when we refer to Meanings
different places, or different times, the words high or
high and
low wages direct the attention to very different subjects, low.
as we understand them to mean more or less in money,
or more or less in commodities. The differences which
have taken place in the amount of money wages at dif-
ferent times inform us of scarcely any thing but the
abundance or scarcity of the precious metals at those
times: facts which are seldom of much importance.
The differences in the amount of money wages in dif-
ferent places at the same time are of much more im-
portance, since they indicate the different values of the
labour of different Countries in the general market of the
world. But even these differences afford no premises
from which the positive condition of the labouring
classes, in any Country, can be inferred, and but imper-
fect grounds for estimating their relative condition. The
only data which enable us to ascertain the actual situa-
tion of the labourers at any given time and place, or
their comparative situation at different times and places,
are the quantity and quality of the commodities which
form their wages, if paid in kind, or are purchasable
with their wages, if paid in money. And as the actual
or comparative situation of the labourer is the principal
object of the following inquiry, we shall use the word
wages to express, not the money, but the commodities,
which the labourer receives; and we shall consider
wages to rise as the quantity or quality of those com-
modities is increased or improved, and to fall as that
quantity or quality is diminished or deteriorated.
It is obvious, too, that the labourer's situation does
not depend on the amount which he receives at any one
time, but on his average receipts during a given period--
during a week, a month, or a year; and that the longer
the period taken, the more accurate will be the estimate.
Weekly wages have, of course, more tendency to equality
than daily ones, and annual than monthly; and, if we
could ascertain the amount earned by a man during five,
or ten, or twenty years, we should know his situation
better than if we confined our attention to a single year.
There is, however, so much difficulty in ascertaining the
amount of wages during very long periods, that a
single year will probably be the best that we can take.
It comprehends what, in most climates, are very different,
summer and winter wages; it comprehends also the
period during which the most important vegetable pro-
ductions come to maturity in temperate climates, and on
that account has generally been adopted by Political
Economists as the average period for which capital is
supposed to be advanced.
We should observe that we include, as part of the
wages of the married labourer, those of his wife and un-
emancipated children. To omit them would lead to in-
accurate estimates of the comparative situation of the
labourers in different Countries, or in different occupa-
In those employments which are carried on
under shelter, and with the assistance of that machinery
which affords power, and requires human aid only for
its direction, the industry of a woman, or a child,
A
approaches in efficiency that of a full-grown man.
girl of fourteen can manage a power-loom nearly as
tions.
POLITICAL
191
ECONOMY.
Distribu-
tion.
Rate of
wages.
Political well as her father; but where strength, or exposure to
Economy, the seasons, is required, little can be done by the wife,
or the girls, or even by the boys, until they approach the
age at which they usually quit their father's house.
The earnings of the wife and children of many a Man-
chester weaver or spinner exceed, or equal, those of
himself. Those of the wife and children of an agricul-
tural labourer, or of a carpenter, or a coalheaver, are
generally unimportant-while the husbands, in each
case, receives 15s. a week, the weekly income of the one
family may be 40s., and that of the other only 17s.
or 18s.
Meanings
of the words
high and
low.
It must be admitted, however, that the workman
does not retain the whole of this apparent pecuniary
advantage. The wife is taken from her household la-
bours, and a part of the increased wages is employed
in purchasing what might, otherwise, be produced at
home. The evils to the children are still greater. The
infants suffer from the want of maternal attention, and
those who are older from fatigue and confinement, fro:n
the want of childish relaxation and amusement, and,
what is far more important, from the deficiency of reli-
gious, moral, and intellectual education. The establish-
ment of infant and Sunday schools, and laws regulating
the number of hours during which children may labour,
are palliatives of these evils, but they must exist, to a
certain degree, whenever the labour of the wife and
children is the subject of sale; and, though not, all of
them, perhaps, strictly within the province of Political
Economy, must never be omitted in any estimate of
the causes affecting the welfare of the labouring classes.
The last preliminary point to which we have to call
the reader's attention is, the difference between the
amount of wages and the price of labour, or, in other
words, between the earnings of a labourer during a
given time and the price paid for the performance of a
given quantity of work.
If men were the only labourers, and if every man
worked equally hard, and for the same number of hours,
during the year, these two expressions would be syno-
nymous. If each man, for instance, worked three
hundred days during each year, and ten hours during
each day, one three-thousandth part of each man's
yearly wages would be the price of an hour's labour.
But neither of these propositions is true. The yearly
wages of a family often include, as we have seen, the
results of the labour of the wife and children. And few
things are less uniform than the number of working
days during the year, or of working hours during the
day, or the degree of exertion undergone during those
hours.
The established annual holidays in Protestant Coun-
tries are between fifty and sixty. In many Catholic
Countries they exceed one hundred. Among the Hin-
doos they are said to occupy nearly half the year. But
these holidays are confined to a certain portion of the
population; the labour of a sailor, or a soldier, or a
menial servant, admits of scarcely any distinction of days.
Again, in Northern and Southern latitudes, the hours
of out-door labour are limited by the duration of light;
and in all climates by the weather. When the labourer
works under shelter, the daily hours of labour may be uni-
form throughout the year. And, independently of natural
causes, the daily hours of labour vary in different Coun-
tries, and in different employments in the same Country.
The daily hours of labour are, perhaps, longer in
France than in England, and certainly are longer in
England than in Hindostan. In Manchester the manu- Political
facturer generally works twelve hours a day; in Bir-
Economy.
mingham, ten: a London shopman is seldom employed Distribu-
more than eight or nine.
tion.
between the
There is still more discrepancy between the exertions Rate of
made by different labourers in a given period. They wages.
are often, indeed, unsusceptible of comparison.
There Difference
is no common measure of the toils undergone by a amount of
miner and a tailor, or of those of a shopman and an iron- wages and
founder. And labour which is the same in kind may the price of
vary indefinitely both in intensity and in productiveness. labour.
Many of the witnesses examined by the Committee on
Artisans and Machinery (Session of 1824) were English
manufacturers, who had worked in France. They agree
as to the comparative indolence and inefficiency of the
French labourer, even during his hours of employment.
One of the witnesses, Adam Young, had been two
years in one of the best manufactories in Alsace.
He is
asked, "Did you find the spinners there as industrious
as the spinners in England?" and replies, “No; a
spinner in England will do twice as much as a French-
man. They get up at four in the morning, and work
till ten at night; but our spinners will do as much in six
hours as they will in ten."
"Had you any Frenchmen employed under you?".
"Yes; eight, at two francs a day."
"What had you a day?". 'Twelve francs "
66
Supposing you had had eight English carders under
you how much more work could you have done?"—
"With one Englishman I could have done more than I
did with those eight Frenchmen. It cannot be called work
they do it is only looking at it, and wishing it done."
Do the French make their yarn at a greater
expense?"-" Yes; though they have their hands for
much less wages than in England."—pp. 5S0, 582.
The following evidence of Edwin Rose, given on the
Factory Inquiry of 1833, relates to a rather later period,
and is valuable from the extensive experience of the
witness.
"Are wages lower in France, as far as you have seen,
than in England?”—“ If I have a shop of men in
England for any thing, then I have to see how much
I have to pay them for the work they turn out of any
kind; but if I have the same shop in France, then I
must have twice the number of hands to do the same
amount of work. It is true I pay them less apiece
there; but I have seen that you must have twice as
large a building to contain the hands, twice as many
clerks and book-keepers, and overlookers to look after
them, and twice as many tools to do the same quantity
of work as is done here in England; and the master
there must have twice as much interest of money on all
this; and their minds seem to me to get more bewildered
with stress of work there than here. It seems to me
that you have double the number of people there to do
the same amount of work, whatever it be; but their
wages are lower in money."
"But do you consider their wages higher in reality?"
"I really do; they are better paid in proportion to the
work they turn out than what the English are."
"What do you think of French workmen, as work-
men ?"—"I don't think they have that perseverance that
English have. I often have noticed them trying a thing,
and then, if it don't answer at first, they seem terrified
aud shrug up their shoulders, and throw it aside; but an
English workman keeps trying and trying, and won't
give up near so soon as the Frenchman. A house-
192
POLITICAL ECONOMY.
Political joiner or carpenter's wages are from thirty-five to forty
Economy.
sous a day. His work compared with English work is
very rough, and but little of it in comparison. A stone-
mason's wages are from three francs to four francs.
They are inferior to our masons in laying foundations.
Then, as to time of work, I think two English masons
in the same time do more work on an average than
amount of three of theirs."
wages and
Distribu-
tion.
Rate of
wages.
Difference
between the
labour.
"In short, do you know any single species of labour
the price of that stands a master cheaper in France than in Eng-
land, quality and quantity of work being considered?"-
"I don't know any, unless it be tailors and shoemakers'
wages; and I am not sure about them. Clothes are
dearer in France than in England; but shoes are
cheaper, the duty being off leather." First Report of
the Factory Commission, D. i. p. 121.
Even in the same Country, and in the same employ-
ments, similar inequalities are constantly observed.
Every one is aware that much more exertion is under-
gone by the labourer by task-work than by the day-la-
bourer; by the independent day-labourer than by the
pauper; and even by the pauper than by the convict.
It is obvious that the rate of wages is less likely to be
uniform than the price of labour, as the amount of
wages will be affected, in the first place, by any varia-
tions in the price, and, in the second place, by any vari-
ations in the amount, of the labour exerted.
In England the average annual wages of labour
are three times as high as they are in Ireland; but as
the labourer in Ireland is said not to do more than one-
third of what is done by the labourer in England, the
price of labour may, in both Countries, be about equal.
In England the labourer by task-work earns much more
than the day-labourer; but, as it is certainly as profitable
to employ him, the price of his labour cannot be higher.
It may be supposed, indeed, that the price of labour is
every where, and at all times, the same; and, if there
were no disturbing causes,-if all persons knew per-
fectly well their own interest, and strictly followed it,
and there were no difficulties in moving capital and la-
bour from place to place, and from employment to em-
ployment, the price of labour, at the same time, would
be every where the same. But these difficulties occa-
sion the price of labour to vary materially, even at the
same time and place; and variations both in the amount
of wages and in the price of labour, at different times
and in different places, are occasioned not only by these
causes, but by others which will be considered in a sub-
sequent part of this Treatise.
These variations affect very differently the labourer
and his employer. The employer is interested in keep-
ing down the price of labour; but while that price re-
mains the same, while at a given expense he gets a given
amount of work done, his situation remains unaltered.
If a farmer can get a field trenched for £12, it is indif-
ferent to him whether he pays the whole of that sum to
three capital workmen, or to four ordinary ones. The
three would receive higher wages than the four, but, as
they would do proportionably more work, their labour
would come just as cheap. If the three could be hired
at £3 10s. apiece, while the four required £3 apiece,
though the wages of the three would be higher, the
price of the work done by them would be lower.
It is true that the causes which raise the amount of
the labourer's wages often raise the rate of the capitalist's
profits. If, by increased industry, one man performs
the work of two, both the amount of wages and the rate
Economy.
of profits will generally be raised. But the rate of profit Political
will be raised, not by the rise of wages, but in conse-
quence of the additional supply of labour having dimi- Distribu-
nished its price, or having diminished the period for which
it had previously been necessary to advance that price, Rate of
or having rendered, as in the instances mentioned by wages.
Edwin Rose, the labour previously employed more pro- Difference
ductive.
tion.
between the
amount of
wages and
The labourer, on the other hand, is principally inte-
rested in the amount of wages. The amount of his wages the price of
being fixed, it is certainly his interest that the price of labour.
his labour should be high, for on that depends the de-
gree of exertion imposed on him. But, if the amount
of his wages be low, he must be comparatively poor-if
that amount be high he must be comparatively rich-
whatever be his remuneration for each specific act of ex-
ertion. In the one case he will have leisure and want;
in the other toil and abundance. We are far from
thinking that the evils of severe and incessant labour, or
the benefits of a certain degree of leisure, ought to be
left out in any estimate of happiness. But, as we ob-
served in the beginning of this Treatise, it is not with
happiness, but with wealth, that we are concerned as Poli-
tical Economists; we profess to state facts for the infor-
mation and instruction of the student, not to lay down
rules to guide the conduct of the legislator. In explain-
ing the general laws according to which wealth is pro-
duced and distributed we do not assume that all the
means by which it can be augmented ought to be
encouraged, or even to be permitted. We do not assume
even that wealth is a benefit. In fact, however, wealth
and happiness are very seldom opposed. Nature, when
she imposed on man the necessity of labour, tempered
his repugnance to it by making long-continued inac
tivity painful, and by strongly associating with exertion
the idea of its reward. The poor and half-employed
Irish labourer, or the still poorer and less industrious
savage, is as inferior in happiness as he is in income to
the hard-worked English artisan. The Englishman's
industry may sometimes be excessive; his desire to
better his condition may sometimes drive him on toils
productive of disease ill recompensed by the increase of
his wages; but that such is not generally the case may
be proved by comparing the present duration of life in
England with its former duration, or with its duration
in other Countries. It is generally admitted that,
during the last fifty years, a marked increase has taken
place in the industry of our population, and that they
are now the hardest-working labourers in the world.
But during the whole of that period the average dura-
tion of their lives has been constantly increasing, and
appears still to increase; and, notwithstanding the ap-
parent unhealthiness of many of their occupations, not-
withstanding the atmosphere of smoke and steam, and,
what appears to be still more injurious, of dust, in which
many of them labour for sixty-nine hours a week, they
enjoy, as a community, longer life than the lightly-toiled
inhabitants of the most favoured soils and climates.
The average annual mortality in England and Wales
is computed by Mr. Rickman at one in forty-nine. In the
extensive inquiry instituted by the Poor-Law Commis-
sioners in 1834 into the state of the labouring classes
in America and the Continent of Europe, the only
Countries in which the mortality appeared to be so
small as in England were Norway, in which it appeared
to be one in fifty-four, and the Basses Pyrenees, in which
it appeared to be one in fifty. In all the other Countries
POLITICAL ECONOMY.
193
Political which gave returns it exceeded the English proportion
Economy. sometimes by doubling it, and in the majority of
instances by more than one-fourth.*
Distribu-
tion.
Wages.
Having marked the distinction which really exists
between the price of labour and the amount of wages,
we shall for the future consider every labouring family
as consisting of the same number of persons, and ex-
erting the same degree of industry. On that supposi-
tion, the distinction between the price of labour and the
amount of wages will be at an end; or rather, the only
distinction will be, that the former expression designates
the remuneration for each specific exertion; the latter,
the aggregate of all those separate remunerations, as
summed up at the end of each year. And the question
to be answered will be, what are the causes which de-
cide what in any given Country, and at any given period,
shall be the quantity and quality of the commodities ob-
tained by a labouring family during a year?
Proximate Cause deciding the Rate of Wages.
The proximate cause appears to be clear. The quantity
and quality of the commodities obtained by each labouring
family during a year must depend on the quantity and
quality of the commodities directly or indirectly appro-
priated during the year to the use of the labouring
population, compared with the number of labouring
families, (including under that term all those who depend
on their own labour for subsistence;) or, to speak more
concisely, on the extent of the fund for the maintenance
of labourers, compared with the number of labourers to
be maintained.
This proposition is so nearly self-evident, that if Poli-
tical Economy were a new Science we should assume it
without further remark. But we must warn our readers
that this proposition is inconsistent with opinions which
are entitled to consideration, some from the number, and
others from the authority, of those who maintain them.
Erroneous First. It is inconsistent with the doctrine that the rate
Opinions. of wages depends solely on the proportion which the
number of labourers bears to the amount of Capital in a
Country. The word capital has been used in so many
senses that it is difficult to state this doctrine precisely;
but we know of no definition of that term which will
not include many things that are not used by the la-
bouring classes; and, if our proposition be correct, no
increase or diminution of these things can directly affect
wages. If half the plate glass in the Country were to
be destroyed to-morrow the capital of the Country would
be diminished; but the only sufferers would be those
who possess or wish to possess plate glass; among
whom the labouring classes are not included. But if
half the existing stock of coarse tobacco were destroyed,
the immediate consequence would be a fall of wages;
not as estimated in money, but as estimated in the com-
modities consumed by the labourer. Though receiving
the same money wages, the labourer would have less
tobacco, or, if he chose to continue undiminished his
consumption of tobacco, then less of other things, than
he had before. So if a foreign merchant were to come
to settle in this Country, and bring with him a cargo of
raw and manufactured silk, lace, and diamonds, that
cargo would increase the capital of the Country; silk,
lace, and diamonds would become more abundant, and
* Senior, Preface to Foreign Communications, p. 238,
VOL. VI.
Distribu-
the enjoyments of those who use them would be in- Political
creased: the enjoyments of the labourers, supposing them Economy.
not to be consumers of silk, lace, or diamonds, would
not be directly increased: indirectly and consequentially, tion.
they might be increased. The silk might be re-exported Wages.
in a manufactured state, and commodities for the use of Erroneous
labourers imported in return; and then, and not till opinions.
then, wages would rise; but that rise would be occa-
sioned, not by the first addition to the capital of the
Country, which was made in the form of silk, but by the
substituted addition made in the form of commodities
used by the labourer.
Secondly. It is inconsistent with the doctrine, that
wages depend on the proportion borne by the number
of labourers to the whole revenue of the society of which
they are members. In the example last suggested, of
the introduction of a new supply of lace or diamonds,
the revenues of those who use lace or diamonds would
be increased; but as wages are not spent on those ar-
ticles, they would remain unaltered. It is possible, in-
deed, to state cases in which the revenue of a large por-
tion of a community might be increased, and yet the
wages of the labourers might fall without an increase of
their numbers. We will suppose the principal trade of
Ireland to be the raising produce for the English market;
and that for every two hundred acres ten families were
employed in raising, on half the land, their own sub-
sistence, and on the remainder corn and other export-
able crops requiring equal labour. Under such circum-
stances, if a demand should arise in the English market
for cattle, butchers'-meat, and wool, instead of corn, it
would be the interest of the Irish landlords and farmers
to convert their estates from arable into pasture. In-
stead of ten families for every two hundred acres, two
might be sufficient: one to raise the subsistence of the
two, and the other to tend the cattle and sheep. The
revenue of the landlords and the farmers would be in-
creased: and, if they employed the whole of that in-
crease in the purchase of Irish labour, all parties would
be benefited. But if they devoted the greater part
of it to the purchase of English manufactures, the services.
of a large portion of the Irish labourers would cease to
be required; a large portion of the land formerly em-
ployed in producing commodities for their use would
be devoted to the production of commodities for the
use of England; and the fund for the maintenance of
Irish labour would fall, notwithstanding the increase
of the revenue of the landlords and farmers.
ism.
Thirdly. It is inconsistent with the prevalent opinion, Absentee-
that the non-residence of landlords, funded proprietors,
mortgagees, and other unproductive consumers, can be
detrimental to the labouring inhabitants of a Country
which does not export raw produce.
In a Country which exports raw produce, wages may
be lowered by such non-residence. If an Irish landlord
resides on his estate, he requires the services of certain
persons, who must also be resident there, to minister to
his daily wants. He must have servants, gardeners, and
perhaps gamekeepers. If he build a house, he must
employ resident masons and carpenters; part of his fur-
niture he may import, but the greater part of it must be
made in his neighbourhood; a portion of his land, or,
what comes to the same thing, a portion of his rent,
must be employed in producing food, clothing, and
shelter for all these persons, and for those who produce
that food, clothing, and shelter. If he were to remove
to England, all these wants would be supplied by Eng-
2 D
194
POLITICAL ECONOMY.
Distribu-
tion.
Political lishmen. The land and capital which was formerly em-
Economy. ployed in providing the maintenance of Irish labourers
would be employed in producing corn and cattle to be
exported to England to provide the subsistence of
Wages.
English labourers. The whole quantity of commodities
Erroneous appropriated to the use of Irish labourers would be di-
opinions. minished, and that appropriated to the use of English
Absentee- labourers increased, and wages would, consequently, rise
in England, and fall in Ireland.
ism.
It is true that these effects would not be co-extensive
with the landlord's income. While, in Ireland, he must
have consumed many foreign commodities, he must
have purchased tea, wine, and sugar, and other things
which the climate and the manufactures of Ireland do
not afford, and he must have paid for them by sending
corn and cattle to England. It is true, also, that while
in Ireland he probably employed a portion of his land
and of his rents for other purposes, from which the la-
bouring population received no benefit, as a deer park,
or a pleasure garden, or in the maintenance of horses or
hounds. On his removal, that portion of his land which
was a park would be employed, partly in producing ex-
portable commodities, and partly in producing sub-
sistence for its cultivators; and that portion which fed
horses for his use might be employed in feeding horses
for exportation. The first of these alterations would do
good; the second could do no harm. Nor must we
forget that, through the cheapness of conveyance between
England and Ireland, a portion, or perhaps all, of those
whom he employed in Ireland might follow him to
England, and, in that case, wages in neither Country
would be affected. The fund for the maintenance of la-
bourers in Ireland, and the number of labourers to be
maintained, would both be equally diminished, and the
fund for the maintenance of labourers in England, and
the number of labourers to be maintained, would both
be equally increased.
But after making all these deductions, and they are
very great, from the supposed effect of the absenteeism
of the Irish proprietors on the labouring classes in Ire-
land, we cannot agree with Mr. M'Culloch that it is
immaterial. We cannot but join in the general opinion
that their return, though it would not affect the prosperity
of the British Empire, considered as a whole, would be
immediately beneficial to Ireland, though perhaps too
much importance is attached to it.
In Mr. McCulloch's celebrated examination before the
Committee on the state of Ireland, (4th Report, 814, Sess.
1825.) he was asked, Supposing the largest export of
Ireland were in live cattle, and that a considerable por-
tion of rent had been remitted in that manner, does not
such a mode of producing the means of paying rent con-
tribute less to the improvement of the poor than any ex-
tensive employment of them in labour would produce?
He replies, "Unless the means of paying rent are
changed when the landlord goes home, his residence
can have no effect whatever."
"Would not," he is asked, "the population of the
country be benefited by the expenditure among them of
a certain portion of the rent which (if he had been ab-
sent) has (would have) been remitted (to England) ?"
No," he replies, "I do not see how it could be bene-
fited in the least. If you have a certain value laid out
against Irish commodities in the one case, you will have
a certain value laid out against them in the other. The
cattle are either exported to England, or they stay at
home. If they are exported, the landlord will obtain an
Political
equivalent for them in English commodities; if they are Economy.
not, he will obtain an equivalent for them in Irish com-
modities; so that in both cases the landlord lives on Distribu-
the cattle, or on the value of the cattle: and whether tion.
he lives in Ireland or in England, there is obviously Wages.
Erroneous
just the very same amount of commodities for the people
of Ireland to subsist upon.”
opinions.
Absentee-
This reasoning assumes that the landlord, while resi- ism.
dent in Ireland, himself personally devours all the cattle
produced on his estates; for on no other supposition
can there be the very same amount of commodities for
the people of Ireland to subsist upon, whether their cattle
are retained in Ireland or exported.
But when a Country does not export raw produce,
the consequences of absenteeism are very different.
Those who derive their incomes from such a Country
cannot possibly spend them abroad until they have pre-
viously spent them at home.
When a Leicestershire landlord is resident on his es-
tate, he employs a certain portion of his land, or, what
is the same, of his rent, in maintaining the persons who
provide for him those commodities and services, which
must be produced on the spot where they are consumed.
If he should remove to London, he would want the ser-
vices of Londoners, and the produce of land and capital
which previously maintained labourers resident in Lei-
cester would be sent away to maintain labourers resi-
dent in London. The labourers would probably follow,
and wages in Leicestershire and London would then be
unaltered; but until they did so, wages would rise in
the one district and fall in the other. At the same time,
as the rise and fall would compensate one another, as
the fund for the maintenance of labour, and the number
of labourers to be maintained, would each remain the
same, the same amount of wages would be distributed
among the same number of persons, though not pre-
cisely in the same proportion as before.
If he were now to remove to Paris, a new distribution
must take place. As the price of raw produce is lower
in France than in England, and the difference in habits
and language between the two Countries prevents the
transfer of labourers from the one to the other, neither the
labourers nor the produce of his estates could follow
him. He must employ French labourers, and he must
convert his share of the produce of his estate, or, what
is the same thing, his rent, into some exportable form in
order to receive it abroad. It may be supposed that he
would receive his rent in money.
would receive his rent in money. Even if he were to
do so, the English labourers would not be injured, for
as they do not eat or drink money, provided the same
amount of commodities remained for their use, they
would be unaffected by the export of money. But it is
impossible that he could receive his rent in money
unless he chose to suffer a gratuitous loss. The rate of
exchange between London and Paris is generally rather
in favour of London, and scarcely ever so deviates from
par between any two Countries, as to cover the expense
of transferring the precious metals from the one to the
other, excepting between the Countries which do, and
those which do not, possess mines. The remittances
from England to France must be sent, therefore, in the
form of manufactures, either directly to France, or to some
Country with which France has commercial relations.
And how would these manufactures be obtained? Of
course in exchange for the landlord's rent. His share
of the produce of his estates would now go to Birming-
ham or Sheffield, or Manchester or London, to main-
POLITICAL ECONOMY.
195
Distribu-
tion.
Wages.
.
Political tain the labourers employed in producing manufactures,
Economy. to be sent and sold abroad for his profit. An English
absentee employs his income precisely as if he were to
remain at home and consume nothing but hardware and
cottons. Instead of the services of gardeners and ser-
Erroneous vants, upholsterers and tailors, he purchases those of
opinions. spinners, and weavers, and cutlers. In either case his in-
Absentee- come is employed in maintaining labourers, though the
class of labourers is different; and in either case, the
whole fund for the maintenance of labourers, and the
number of labourers to be maintained, remaining unal-
tered, the wages of labour cannot be affected.
ism.
But, in fact, that fund would be rather increased in
quantity and rather improved in quality. It would be
It would be
increased, because land previously employed as a park,
or in feeding dogs and horses, or hares and pheasants,
would now be employed in producing food or clothing
for men.
It would be improved, because the increased
production of manufactured commodities would occasion
an increased division of labour, the use of more and
better machinery, and the other improvements which we
have ascertained to be its necessary accompaniments.
One disadvantage, and one only, it appears to us would
be the result. The absentee in a great measure escapes
domestic taxation. We say in a great measure,
because he still remains liable, if a proprietor of houses
or of land, to those taxes which fall upon rent: he pays,
too, a part of the taxes on the materials of manufac-
tures; and if it were our policy to tax income or
exported commodities, he might be forced to pay to the
public revenue even more than his former proportion.
But, under our present system, which throws the bulk
of taxation on commodities produced for internal con-
sumption, he receives the greater part of his revenue
without deduction, and, instead of contributing to the
support of the British Government, contributes to sup-
port that of France or Italy. This inconvenience,
perhaps, about balances the advantages which we have
just mentioned, and leaves a community which exports
only manufactures neither impoverished nor enriched
by the residence abroad of its unproductive members.
We ought, perhaps, on this occasion again to remind
our readers that it is to wealth and poverty that our
attention, when writing on Political Economy, is cou-
fined. The moral effects of absenteeism must never be
neglected by a writer who inquires into the causes
which promote the happiness of nations, but are without
the province of a Political Economist. Nor do we
regret that they are so, for they form a subject on which
it is far more difficult to obtain satisfactory results. In
one respect, indeed, the moral question is the more
simple, as it is not complicated by the consideration
whether raw produce or manufactures are exported, or
whether the non-resident landiord is abroad, or iu some
town within his own Country. If his presence is to be
morally beneficial, it must be his presence on his own
estate. To the inhabitants of that estate the place to
which he absents himself is indifferent. Adam Smith
believed his residence to be morally injurious. "The
The
residence of a Court," he observes, (book ii. ch. iii.)
in general makes the interior sort of people dissolute
and poor.
The inhabitants of a large village, after
having made considerable progress in manufactures,
have beome idle in consequence of a great Lord having
taken up his residence in their neighbourhood." And
Mr. M'Culloch, whose fidelity and intelligence as an ob-
server may be relied on, states, as the result of his own
Distribu-
tion.
ism.
experience, that in Scotland the estates of absentees are Political
almost always the best managed. Much, of course,
Economy.
depends on individual character; but we are inclined to
believe that, in general, the presence of men of large
fortune is morally detrimental, and that of men of
Wages.
moderate fortune morally beneficial, to their immediate Erroneous
neighbourhood. The habits of expense and indulgence opinions.
which, in different gradations, prevail among all the Absentee-
members of a great establishment, are mischievous as
examples, and perhaps still more so as sources of
repining and discontent. The drawing-room and
stable do harm to the neighbouring gentry, and the
housekeeper's room and servants' hall to their inferiors.
But families of moderate income, including under that
term incomes between £500 and £2000 a year, appear
to be placed in the station most favourable to the ac-
quisition of moral and intellectual excellence, and to its
diffusion among their associates and dependents. We
have no doubt that a well-regulated gentleman's family,
removing the prejudices, soothing the quarrels, direc jug
and stimulating the exertions, and awarding praise.
or blame to the conduct of the villagers round them, is
among the most efficient means by which the character
of a neighbourhood can be improved. It is the happi-
ness of this Country that almost every parish has a resi-
dent fitted by fortune and education for these services;
and bound, not merely by feelings of propriety, but as a
matter of express and professional duty, to their perforin-
ance. The dispersion throughout the Country of so
many thousand clerical families, each acting in its own
district as a small centre of civilization, is an advantage
to which, perhaps, we have been too long accustomed
to be able to appreciate its extent.
Still, however, we think that even the moral effects of
absenteeism have been exaggerated. Those who declaim
against the twelve thousand English families supposed
to be resident abroad, seem to forget that not one-half,
probably not one-quarter, of them, if they were to re-
turu, would dwell any where but in towns, where their
influence would be wasted, or probably not even
exerted. What does it signity to the Northumbrian
or
Devonshire peasant whether his laudlord lives
in London, or Cheltenham, or Rome? And even of
those who would reside in the country, how many
would exercise that influence beneficially? How
many would be fox-hunters or game preservers, or sur-
round themselves with dependents whose example
would more than compensate for the virtues of their
masters? Nothing can be more rash than to predict
that good would be the result of causes which are quite
as capable of producing evil.
The economical effects have been still more generally
misunderstood; and we have often been tempted to
wonder that doctrines so clear as those which we have
just been submitting to our readers should be admitted
with reluctance even by those who feel the proofs to be
unanswerable, and should be rejected at once by others,
as involving a paradox too monstrous to be worth
examination.
Much of this, probably, arises from a confusion of
the economical with the moral part of the question.
Many writers and readers of Political Economy forget
that the clearest proof that absenteeism diminishes the
virtue or the happiness of the remaining members of a
community is no answer to arguments which aim only
at proving that it does not diminish their wealth.
Another and perhaps the chief source of error is the
2 D 2
196
POLITICAL ECONOMY.
tion.
Wages.
Erroneous
opinions.
Absentee-
ism.
Political circumstance that, when the landlord is present, the gain
Economy is concentrated, and the loss diffused, when he is absent
Distribu- the gain is diffused, and the loss concentrated. When
he quits his estate, we can put our finger on the
village tradesman and labourer who lose his custom and
employment. We cannot trace the increase of custom
and employment that is consequently scattered among
millions of manufacturers. When he returns, we see
that the expenditure of £2000 or £3000 a year in a
small circle gives wealth and spirit to its inhabitants.
We do not see, however clearly we may infer it, that so
much the less is expended in Manchester, Birmingham,
or Leeds. The inhabitants of his village attribute their
gain and their loss to its causes; and their complaints
and acknowledgments are loud in proportion to the
degree in which they feel their interests to be affected.
No single manufacturer is conscious that the average
annual export of more than forty millions sterling has
been increased or diminished to the amount of
£2000 or £3000. And even if aware of that increase or
diminution, he would not attribute it to the residence
in Yorkshire or Paris of a given individual, of whose
existence he probably is not aware. When to obvious
and palpable effects nothing is to be opposed but infer-
ences deduced by a long, though perfectly demonstrative,
reasoning process, no one can doubt which will prevail,
both with the uneducated, and the educated, vulgar.
Many persons, also, are perplexed by the consideration,
that all the commodities which are exported as re-
mittances of the absentee's income are exports for which
no return is obtained; that they are as much lost to this
Country as if they were a tribute paid to a foreign
State, or even as if they were thrown periodically into
the sea.
This is unquestionably true; but it must be
recollected, that whatever is unproductively consumed
is, by the very terms of the proposition, destroyed, with-
out producing any return. The only difference between
the two cases is, that the resident landlord performs that
destruction here; the absentee performs it abroad. In
either case, he first purchases the services of those who
produce the things which he, for his benefit, not for
theirs, is to consume. If he stays here, he pays a man
to brush a coat, or clean a pair of boots, or arrange a
table; all which in an hour after are in their former
condition. When abroad, he pays an equal sum for
the production of needles, or calicoes, which are sent
abroad, and equally consumed without further benefit
to those who produced them. They are, in fact, sold
for money to be employed in paying the wages of those
foreign servants who now brush the shoes and draw the
corks, which, if the landlord had not been an absentee,
would have been brushed and drawn in England. The
income of unproductive consumers, however paid, is a
tribute; and whether they enjoy it here or elsewhere, is
their own concern. We know that a man cannot eat his
cake and have it; and it is equally true that he cannot
sell a cake to another and keep it for himself.
Again, some acute reasoners appear to us to have been led
into error on this subject, by perceiving that the income of
an absentee is generally remitted to him by means of a trade
in which the returns are comparatively slow,* and that the
expenditure of his income is profitable to those among
whom he resides.† Now assuming that these circumstances
* Professor Longfield, Lectures on Commerce and Absenteeism, p. 6.
+ Carey on Wages, p. 46. A Work which we regret no. to have
received until part of this Treatise had been stereotyped, an. the
remainder was in print.
Distribu-
Absentee-
occasion a loss to any body, it is clear that the loss falls Political
solely on the absentee. His rents are, in the first in- Economy.
stance, expended as quickly as they are received in the
purchase of manufactured commodities, to be exported tion.
for his benefit as a means of remittance. They are ex- Wages.
pended, therefore, in the support of the trade of the Erroneous
English manufacturer, a trade giving quick returns, high opinions.
wages, and, if we may judge from the additional capital ism.
which it is attracting every day, high profits. The ab-
sentee, in thus spending his income, gives to England
all that an unproductive consumer can give, the wages
and the profits arising from the expenditure in England
of his income as fast as he receives it. Neither the gain
nor the loss attending on the remittance or on the subse-
quent expenditure of its amount are any concern of ours.
They affect only the absentee. If he selects ill the place
of his residence, he may have to lose by remittances at
long dates, or at an unfavourable exchange, or have to
pay dearly for bad commodities or unskilful services.
If he selects it well, he may be a gainer by the interme-
diate operations to which his income has been subjected,
and receive a larger revenue than he would have ob-
tained at home, or may spend that revenue more agree-
ably. But with all this England has nothing to do.
The last cause to which we attribute the slow progress
of correct opinions on this subject is their distastefulness.
to the most influential members of the community.
Nothing can be more flattering to landlords, annuitants,
mortgagees, and fundholders, than to be told that their
residence is of vital importance to the Country.
Nothing can be more humiliating than to be assured
that it is utterly immaterial to the rest of the community
whether they live in Brighton, or London, or Paris.
Those who are aware how much our judgment, even in
matters of Science, is influenced by our wishes, will not
be surprised at the prejudices against a doctrine which
forbids the bulk of the educated class to believe that
they are benefactors to their Country by the mere act of
residing within its shores.
We may appear, perhaps, to have dwelt too much on
a single subject; but no prevalent error can be effectually
exposed until its prevalence has been accounted for.
And these are errors which are to be heard in every
society, and often from those whose general views in
Political Economy are correct. They may be called
harmless errors, but no error is, in fact, harmless; and
when there is so much in our habits that really requires
alteration, we may lose sight of the real and the remedi-
able causes of evil, while our attention is misdirected to
absenteeism.
Fourthly. Our proposition that the rate of wages Machines.
depends on the extent of the fund for the maintenance
of labourers, compared with the number of labourers to
be maintained, is inconsistent with the doctrine that the
general rate of wages can, except in two cases, be
diminished by the introduction of machinery.
The two cases in which the introduction of machinery
can produce such an effect are, first, when labour is
employed in the construction of machinery, which labour
would otherwise have been employed in the production
of commodities for the use of labourers; and, secondly,
when the machine itself consumes commodities which
would otherwise have been consumed by labourers, and
that to a greater extent than it produces them.
The first case is put by Mr. Ricardo, in his chapter
on machinery; but in so detailed a form, that, instead
of quoting it, we will extract its substance, with a slight
POLITICAL ECONOMY.
197
:
Political variation of the terms. He supposes a capitalist to
Economy.
carry on the business of a manufacturer of commodities
for the use of labourers; or, to use a more concise
Distribu-
expression, the business of a manufacturer of wages.
tion.
Wages.
He supposes him to have been in the habit of commenc-
Erroneous ing every year with a capital consisting of wages for a
opinions.
certain number of labourers, which we call twenty-six,
Machinery
and of employing that capital in hiring twenty men, to
reproduce, during the year, wages for the whole twenty-
six, and six to produce commodities for himself. He
now supposes him to employ ten of his men during a
year in producing, not wages, but a machine, which,
with the aid of seven men to keep it in repair and work
it, will produce every year wages for thirteen men; that
is, wages for six men besides the seven that work it. At
the end of the year the capitalist's situation would be
unaltered he would have wages for thirteen men, the
produce of the labour of his other ten men during the
year; and his machine, also the produce of the labour
of ten men during the year, and therefore of equal
value. And his situation would continue unaltered.
Every year his machine would produce wages for
thirteen men, of whom seven must be employed in
repairing and working it, and six might, as before, be
employed for the benefit of the capitalist. But we have
seen that, during the year in which the machine was
constructed, only ten men were employed in producing
wages instead of twenty, and, consequently, that wages
were produced for only thirteen men instead of for
twenty-six. At the end of that year, therefore, the fund
for the maintenance of labour was diminished, and
wages must, consequently, have fallen. It is of great
importance to recollect, that the only reason for this fall
was the diminution of the annual production. The
twenty men produced wages for twenty-six men: the
machine produces wages for only thirteen. The vulgar
error on this subject supposes the evil to arise, not from
its true cause, the expense of constructing the machine,
but from the productive powers of that machine. So
far is this from being true, that those productive powers
are the specific benefit which is to be set against the evil
of its expensiveness. If, instead of wages for thirteen
men, the machine could produce wages for thirty, its
use, as soon as it came into operation, would have
increased instead of diminishing the fund for the main-
tenance of labour. The same effect would have been
produced, if the machine could have been obtained with-
out expense; or if the capitalist, instead of building it
out of his capital, had built it out of his profits; if,
instead of withdrawing ten men for a year from the
production of wages, he had employed in its construction,
during two years, five of the men whom he is supposed
to have employed in producing commodities for his own
In either case, the additional produce obtained
from the machine would have been an additional fund
for the maintenance, of labour; and wages must, ac-
cording to our elementary proposition, have risen.
use.
We have thought it necessary to state this possible
evil as a part of the theory of machinery, but we are far
from attaching any practical importance to it. We do
not believe that there exists upon record a single
instance in which the whole annual produce has been
diminished by the use of inanimate machinery. Partly
in consequence of the expense of constructing the
greater part of machinery being defrayed out of profits
or rent, and partly in consequence of the great propor-
tion which the productive powers of machinery bear to
tion-
now Wages.
the expense of its construction, its use is uniformly Political
accompanied by an enormous increase of production. Economy.
The annual consumption of cotton wool in this Country, Distribu-
before the introduction of the spinning-jenny, did not
exceed twelve hundred thousand pounds; it
amounts to two hundred and forty millions. The num- Erroneous
ber of copies of books extant at any one period before opinions.
the invention of the printing-press was probably smaller Machinery.
than that which is now produced in a single day.
Mr. Ricardo's proposition, therefore, (Princ. 474.) that
the use of machinery frequently diminishes the quantity
of the gross produce of a Country, is erroneous, so far
as it depends on the case which he has supposed, and of
which we have stated the substance.
The other exception, that where the machine itself
consumes commodities which would otherwise have
been consumed by labourers, and that to a greater
extent than it produces them, applies only to the case of
horses and working-cattle, which may be termed ani-
mated machines. We will suppose a farmer to employ on
his farm twenty men, who produce annually their own
subsistence, and that of six other men producing com-
If five horses,
modities for the use of their master.
consuming, we will say, as much as eight men, could do
the work of ten men, it would be worth the farmer's while
to substitute them for eight of his men, as he would be
able to increase the number of persons who work for
his own benefit from six to eight.
his own benefit from six to eight. But after deducting
the subsistence of the horses, the fund for the mainte-
nance of labourers would be reduced from wages for
twenty-six men to wages for eighteen. We cannot
refuse to admit that such cases may exist, or to deplore
the misery that must accompany them. They are, in
fact, now occurring in Ireland, and are occasioning much
of the distress of that Country. They seem, indeed, to
be the natural accompaniments of a certain period in the
progress of national improvement.
In the early stages
of society, the rank and even the safety of the landed
proprietor is principally determined by the number of
his dependents. The best mode of increasing that
number is to allow the land, which he does not occupy
as his own demesne, to be subdivided into small
tenements, each cultivated by one family, and just
sufficient for their support. Such tenants can of course
pay little rent, but they are enabled by their abundant
leisure, and forced by their absolute dependence, to
swell the retinue, and aid the political influence, of their
landlord in peace, and to follow his banner in public and
private war. Cameron of Lochiel, whose rental did
not exceed £500 a year, carried with him into the Re-
bellion of 1745 eight hundred men raised from his own
tenantry. But in the progress of civilization, as wealth
becomes the principal means of distinction and influence,
landowners prefer rent to dependents. To obtain rent,
that process of cultivation must be employed which will
give, not absolutely the greatest amount of produce, but
the greatest after deducting the expenses. For this pur-
pose a tract of five hundred acres, from which fifty
families produced their own subsistence, and produced
scarcely any thing more, may be converted into one
farm, and with the labour of ten families, and as many
horses, may produce the subsistence of only thirty fami-
lies. Fortunately, however, the period at which these
alterations take place is generally one of great social
improvement; so that, after a short interval, the in-
creased diligence and skill with which labour is applied
occasion an increase of the produce, after deducting the new
198
POLITICAL ECONOMY.
Political
Economy.
expenditure. The fund for the maintenance of labourers
now becomes increased from two different sources-partly
Distribu-
from the increased efficiency of human labour when aided
tion.
by that of horses and cattle, and partly from the results of
Wages.
a part of the human labour set free by the substitution
Erroneous of brutes. The ultimate consequences of such a change
opinions.
Machinery. be accompanied by distress.
are always beneficial; the change itself must, in general,
But with the exception of these two cases, one of
which produces only temporary effects, and the other,
though apparently possible, seems never actually to
occur, it appears clear that the use of machinery must
either raise the general rate of wages, or leave it un-
altered.
When machinery is applied to the production of com-
modities which are not intended, directly or indirectly,
for the use of labourers, it occasions no alteration in the
general rate of wages; we say the general rate of
wages, because it may diminish the rate of wages in
some employments, a diminution always compensated
by a corresponding increase in some others. A small
screw was shown to us at Birmingham which, in the ma-
nufacture of corkscrews, performed the work of fifty-
nine men; with its assistance one man could cut a spiral
groove in as many corkscrew shanks as sixty men could
have cut in the same time with the tools previously in
use. As the use of corkscrews is limited, it is not pro-
bable that the demand for them has sufficiently increased
to enable the whole number of labourers previously em-
ployed in their manufacture to remain so employed
after such an increase in their productive power. Some
of the corkscrew-makers, therefore, must have been
thrown out of work, and the rate of wages in that trade
probably fell. But as the whole fund for the mainte-
nance of labourers, and the whole number of labourers
to be maintained, remained unaltered, that fall must
have been balanced by a rise somewhere else-a rise
which we may trace to its proximate cause, by recollect-
ing that the fall in the price of corkscrews must have left
every purchaser of a corkscrew a fund for the purchase
of labour, rather larger than he would have possessed if
he had paid the former price.
If, however, machinery be applied to the production
of any commodity used by the labouring population, the
general rate of wages will rise. That it cannot fall is
clear, on the grounds which we have just stated. If
the improvement be great, and the commodity not sub-
ject to a corresponding increase of demand, some of
the labourers formerly employed in its production will
be thrown out of employment, and wages, in that trade,
will fall—a fall which, as the whole fund for the mainte-
nance of labour is not diminished, must be met by a
corresponding rise in some other trade. But the fund
will be increased by the additional quantity produced of
the commodity to which the improvement has been ap-
plied: estimated in that commodity, therefore, the general
rate of wages, or, in other words, the quantity of com-
modities obtained by the labouring population, will be
increased by the introduction of machinery; estimated
in all others, it will be stationary.
The example taken from the manufacture of cork-
screws is as unfavourable to the effects of machinery as
can be proposed; for the use of the commodity is sup-
posed to be unable to keep up with the increased power
of production, and the whole number of labourers em-
ployed on it is, consequently, diminished. This, how
ever, is a very rare occurrence. The usual effect of an
increase in the facility of producing a commodity is so to Political
increase its consumption as to occasion the employment Economy.
of more, not less, labour than before.
Distribu-
We have already called the reader's attention to the tion.
effects of machinery in the manufacture of cotton and in Wages.
printing. Each of these trades probably employs ten Erroneous
times as many labourers as it would have employed if opinions.
spinning-jennies and types had not been invented.
Machinery.
Under such circumstances, (and they are the usual ones,)
the benefits of machinery are not alloyed by even par-
tial inconvenience.
Those who are little affected by inferences from general
propositions may be influenced by a witness who states
the results of his own observations. We will support
our argument, therefore, by the following extract from
Mr. Cowell's valuable preface to the tables of wages
constructed by him in the performance of his duties as a
Commissioner on the Factory Inquiry:-
"As long as the cotton-working continues to extend,
the apprehensions entertained by the operatives of a fall
in wages, either for adults or children, consequent upon
improvements in machinery, are groundless. Their
assertion is, (and it was repeated to me innumerable
times,) that they have to turn out more work now for
less wages than formerly. The Manchester and Salford
Advertiser, which is the journal of the operatives, scarcely
publishes a number which does not ring the changes on
this assertion; and in that for the 11th of January, 1834,
it asserts, that a spinner now turns out double the
work for a tenth less wages than in 1804.'
C
The matter stands thus: in 1804 a spinner was paid
8s. 6d. for every pound of yarn of the fineness of two
hundred hanks to the pound, spinning on a mule of the
average productive power of that time.
What that pro-
ductive power was I do not know. But in 1829 he
was paid at the rate of 4s. 1d. for spinning the same
quality on a mule of the productive power of three hun-
dred and twelve; in 1831, and at present, at the rate of
2s. 5d, and 2s. 81d. for spinning the same quality on a
mule of the productive power of six hundred and forty-
eight. These quotations are from the Manchester prices.
<
Thus, in 1829, the spinner turned off three hundred
and twelve pounds of yarn in the same time that he now
takes to turn off six hundred and forty-eight. He was
paid at the rate of 4s. 1d. per pound in 1829, he is now
paid at the rate of 2s. 5d. But three hundred and twelve
pounds at 4s. 1d. amount to one thousand two hundred
and seventy-four shillings, and six hundred and forty-
eight pounds at 2s. 5d. to one thousand five hundred and
sixty-six shillings. He receives, therefore, two hundred
and ninety-two shillings more than he did in 1829 for equal
times of work. It is perfectly true that he does more
work for less wages than in 1829;' but this is nothing
to the purpose, when the proposition to be proved is,
that' wages are lower than formerly.' I mean to say,
that a spinner earns a shilling, or a pound, or a hun-
dred pounds, in less time at present than he would have
consumed in earning a shilling, or a pound, or a hun-
dred pounds, ten years ago, and with the same or less
labour; that this enhancement of his earnings has been
owing to improvements in machinery; that the progress
of improvements will progressively advance his earnings
still higher, and at the same time enable a greater num
ber of individuals to profit by the enhanced rate than
actually profits by the actual rate; (provided that no-
thing occurs to prevent the cotton business from deve-
loping itself for the next thirty years as it has done for

PARSONS LIBRARY
Distribu-
tion.
POLITICAL ECONOMY.
Political the last;) and that any improvement in the machinery
Economy in any one of the numerous departments of cotton-work-
ing will operate to enhance the rate of wages in all other
branches, (as well as in that department in which it takes
Wages.
place,) by increasing the actual previous demand for
Erroneous labour in those other branches. I assert that every im-
opinions.
provement of cotton machinery, in any department of
Machinery.
cotton-working, has hitherto had the effect of enabling
'an operative' (speaking in general of every one, in
every department whatever) to earn a greater net amount
of money, in any given time, than he would have done if
the improvements had never taken place.
Population.
"The misconceptions as to the real effect of machinery
on the wages of labour which the operatives entertain
are the causes of turn-outs and strikes; they produce
rankling discontent towards their masters, and I regret
that I have not had the opportunity of giving them a
fuller exposure.
"I certainly consider it of great consequence that the
operatives themselves should be satisfied that improve-
ments in machinery tend to raise the amount of money
that they gain individually and generally, for the same
number of hours' work. Those who dispute the fact
must, I think, admit that I have established it in the
cases which I have selected, as far as spinners are con-
cerned; and as they must likewise admit that the im-
provement specified creates a fresh and additional demand
for young hands, they must also admit that the wages of
young hands are augmented in consequence. They
must equally admit, that as the price of the article will
be lowered in the market from the effects of the im-
provement, more of it will be consumed; and hence
that, in all the correlate processes connected with spin-
ning of cotton, more hands will be required, and conse-
quently that wages throughout the whole range of
cotton-working will be better than they were before. If
these considerations should induce operatives to hesitate
before they combine and turn out against new machinery,
before they again cabal for shortening the hours of work,
in order to counteract the (fancied) injurious effect upon
wages of improvements in machinery, and should lead
them to neglect the advice of those who urge them to
strike for eight hours' work and twelve hours' earnings,'
(and this is the advice they have lately received,) my pur-
pose will be answered.
"The generality of the operatives in cotton-working
are well meaning, respectable, shrewd, and sensible; and
I believe that if the real effect of machinery in augmenting
the actual rate of their earnings, and in enabling a greater
number of persons to benefit by the augmented rate,
could be fairly set before them and rendered familiar to
their minds, it would have a most beneficial effect upon
their actions as members of society." Factory Inquiry
Commission, 2d Report. D. i. 119. n. m.
Fifthly. Closely connected with this mistake, and
occasioned by the same habit of attending only to what
is temporary and partial, and neglecting what is perma-
nent and general; of dwelling on the evil that is con-
centrated, and being insensible to the benefit that is dif-
fused, is the common error of supposing that the general
rate of wages can be reduced by the importation of
foreign commodities. In fact, the opening of a new
In fact, the opening of a new
market is precisely analogous to the introduction of a
new machine, except that it is a machine which it costs
nothing to construct or to keep up. If the foreign
commodity be not consumed by the labouring popula-
tion, its introduction leaves the general rate of wages
19gniversity of
MICHIGAN
Distribu-
unaffected; if it be used by them, their wages are Political
raised as estimated in that commodity. If the laws Economy.
which favour the wines of the Cape to the exclusion of those
of France were repealed, more labourers would be employed tion.
in producing commodities for the French market, and Wages.
fewer for that of the Cape. Wages ight temporarily Erroneous
fall in the one trade, a rise in the other. The clear opinions.
Population.
benefit would be derived by the drinkers of wine, who,
at the same expense, would obtain more or better wine.
So if what are called the protecting duties on French
silks were removed, fewer labourers would be employed
in the direct production of silk, and more in its indirect
production, by the production of the cottons or hard-
ware with which it would be purchased. The wearers
of silk would be the only class ultimately benefited;
and as the labouring population neither wear silk nor
drink wine, the general rate of wages would, in both
cases, remain unaltered. But if the laws which prohibit
our obtaining on the most advantageous terms sugar and
corn were altered, that portion of the fund for the
maintenance of labour, which consists of corn and
sugar, would be increased. And the general rate of
wages, as estimated in two of the most important articles
of food, would be raised.
Sixthly. The views which we have been endeavouring Employ-
to explain are inconsistent with the common opinion, ment.
that the unproductive consumption of landlords and capi-
talists is beneficial to the labouring classes, because it
furnishes them with employment. "Tillage," says Paley,
(and this is another form of the same fallacy,)
is pre-
ferable to pasturage, not only because the provision
which it yields goes much further in the sustentation of
life, but because it affords employment to a more nume-
rous peasantry." The production of more subsistence is
certainly an advantage, but what is the advantage of its
requiring more labour? If this be an advantage the
fertility of land is an evil. If the thing required be em-
ployment, we should abandon ploughs and even spades.
To scratch up a rood with the fingers would give more
employment than to dig an acre. Those who maintain
that unproductive consumption does good by affording
employment, must forget that it is not employment, but
food, clothing, shelter, and fuel, in short, the materials
of subsistence and comfort, that the labouring classes
require. The word " employment" is merely a concise.
form of designating toil, trouble, exposure, and fatigue.
It is indeed sometimes elliptically used as implying the
subsistence which is purchased by enduring it. A poor
man complains that he wants work. He might work to
his heart's content, and with no man's leave, if he chose
to carry stones from the bottom to the top of a hill.
But what he wants is work as a means of obtaining pay-
ment. He would be happy to get the payment without
the work. Toil, exposure, and fatigue, per se, are evils,
and the less of them that is required for obtaining a given
amount of subsistence and comfort, or, in other words, the
greater the facility of obtaining that given amount, the
better, cæteris paribus, will be the condition of the labour-
ing classes; indeed, of all classes in the community.
What occasions the prosperity of a colony? Not the
dearness of subsistence, but its cheapness; not the diffi-
culty of obtaining food, clothing, shelter, and fuel, but the
facility. Now how can unproductive consumption increase
this facility? How can the fund from which all are to be
maintained be augmented by the destruction of a portion
of it? If the higher orders were to return to the cus-
toms of a century ago, and cover their coats with gold
200
POLITICAL ECONOMY.
Distribu-
tion.
Wages.
Erroneous
opinions.
Employ-
ment.
Political lace, they might enjoy their own finery; but how would
Economy, that benefit their inferiors? The theory which we are
considering replies that they would be benefited by being
employed in making the lace. It is true that a coat,
instead of costing £5, would cost £55. But what be-
comes now of the extra £50? for it cannot be said that,
because it is not spent on a laced coat, it does not exist.
If a landlord with £10,000 a year spends it unproduc-
tively, he pays it away to those who furnish the embel-
lishments of his house and grounds, and supply his
stable, his equipage, and his clothes. Suppose him now
to abandon all unproductive expenditure, to confine
himself to bare necessaries, and to earn them by his own
labour, the first consequence would be, that those among
whom he previously spent his £10,000 a year would
lose him as an employer; and beyond this the theory in
question sees nothing. But what would he do with the
£10,000 which he would still annually receive? No
one supposes that he would lock it up in a box, or bury
it in his garden. Whether productively or unproduc-
tively, it still must be spent. If spent by himself, as by
the supposition it would be spent productively, it must
increase, and every year still further increase, the whole
fund applicable to the use of the rest of the community.
If not spent by himself, it must be lent, as is done by
a miser of the present day, to some other person, and
by that person it must be spent productively or unpro-
ductively. He might, perhaps, buy with it property
in the English funds; but what becomes of it in the
hands of the person who sells to him that funded pro-
perty? He might buy with it French rentes; but
in what form would the price of those rentes go to
Paris? In the form, as we have seen, of manufactured
commodities. Quâcunque viû datâ, every man must
spend his income; and the less he spends on himself,
the more remains for the rest of the world.
Preference
The seventh and last theory inconsistent with our own
views, to which we shall call the reader's attention, is
that proposed by Mr. Ricardo in the following passage :-
"The labouring class have no small interest in the
of services manner in which the net income of the Country is ex-
to commo- pended, although it should, in all cases, be expended
for the gratification and enjoyment of those who are
fairly entitled to it.
dities.
“If a landlord, or a capitalist, expends his revenue in
the manner of an ancient Baron, in the support of a
great number of retainers or menial servants, he will
give employment to much more labour than if he ex-
pended it on fine clothes or costly furniture.
"In both cases the net revenue would be the same,
and so would be the gross revenue, but the former
would be realized in different commodities. If my re-
venue were £10,000, the same quantity nearly of pro-
ductive labour would be employed, whether I realized it
in fine clothes and costly furniture, &c. &c., or in a
quantity of food and clothing of the same value If,
however, I realized my revenue in the first set of com-
modities, no more labour would be consequently em-
ployed: I should enjoy my furniture and my clothes, and
there would be an end of them; but if I realized my
revenue in food and clothing, and my desire was to em-
ploy menial servants, all those whom I could so employ
with my revenue of £10,000, or with the food and
clothing which it would purchase, would be to be added
to the former demand for labourers, and this addition
would take place only because I chose this mode of ex-
pending my revenue. As the labourers, then, are inte-
rested in the demand for labour, they must naturally de- Political
sire that as much as possible should be diverted from Economy.
expenditure on luxuries, to be expended in the support
of menial servants.
Distribu-
tion.
“In the same manner a Country engaged in war, and Wages.
which is under the necessity of maintaining large fleets Preference
and armies, employs a great many more men than will of services
be employed when the war terminates, and the annual
expenses which it brings with it cease.
"If I were not called upon for a tax of £500 during
the war, which is expended on men in the situations of
soldiers and sailors, I might probably spend that portion
of my income on furniture, clothes, books, &c. &c., and
whether it was expended in the one way or the other,
there would be the same quantity of labour employed in
production; for the food and clothing of the soldier and
sailor would require the same amount of industry to pro-
duce them as the more luxurious commodities: but, in
the case of war, there would be the additional demand
for men as soldiers and sailors; and, consequently, a
war which is supported out of the revenue, and not from
the capital of a Country, is favourable to an increase of
population.
"At the termination of the war, when part of my re-
venue reverts to me, and is employed as before in the
purchase of wine, furniture, or other luxuries, the popu-
lation which it before supported, and which the war called
into existence, will become redundant, and by its
effect on the rest of the population, and its competition
with it for employment, will sink the value of wages,
and very materially deteriorate the condition of the
labouring classes." *
Mr. Ricardo's theory is, that it is more beneficial to
the labouring classes to be employed in the production
of services than in the production of commodities; that
it is better for them to be employed in standing behind.
chairs than in making chairs; as soldiers or sailors than
as manufacturers. Now, as it is clear that the whole
quantity of commodities provided for the use of labour-
ers is not increased by the conversion of an artisan into
a footman or a soldier, either Mr. Ricardo must be wrong,
or our elementary proposition is false.
Mr. Ricardo seems to have been led to his conclusions
by observing that the wages of servants, sailors, and
soldiers are principally paid in kind—those of artisans
in money.
to commo-
dities.
He correctly states, that if a man with
£10,000 a year spends his income in the purchase of
commodities for his own use, he retains, after having
made those purchases, no further fund for the mainte-
nance of labour; but that if he spends it in the purchase
of commodities to be employed in maintaining menial
servants, he has, in those purchased commodities, a
new fund with which he can maintain a certain number
of menial servants. It appeared to him, therefore,
that the landlord would, in the latter case, be able to
spend his income twice over; to subsist twice as many
persons as before. It did not occur to him that the
landlord, by purchasing himself the subsistence of his
servants, merely does for them what they would be able
to do better for themselves; that, instead of spending
his own income twice over, he merely takes on himself
the business of spending theirs for them. He did not
perceive that all that the landlord spends in purchasing
the subsistence and clothing of his servants, is so much
deducted from what he would otherwise have to pay to
i
* Principles, &c. p. 4..
POLITICAL ECONOMY.
201
Distribu-
tion.
dities.
Political them in money, to be by them employed in the purchase
Economy. of subsistence and clothing; and that if he were to give
to his servants the value of their whole subsistence in
money, the whole body of labourers would be just as weil
Wages.
maintained as in the supposed case of his purchasing their
Erroneous subsistence, and then giving it to them in exchange for
opinions. their services. No one would maintain that, if it were the
Preferment
of services general practice, in this Country, as it is in India, to give
to commo- to servants board wages, the demand for labour would
be lessened; or that if it were the practice, as it is in semi-
barbarous Countries, to maintain servants to produce
within their masters' walls the commodities which we
are accustomed to purchase from shops, such as the
fine clothes and furniture to which Mr. Ricardo alludes,
the demand for labour would be increased. Still less
could it be maintained, that if those servants, instead of
producing commodities, were employed in following their
master's person, or mounting guard before his door, such
a change would create an additional demand for men,
and be favourable to an increase of population.
So far are we from concurring in Mr. Ricardo's opi-
nion, that it is the interest of the labourers that revenue
should be spent rather on services than on commodities,
that we believe their interest to be precisely opposite. In
the first place, the labourer can generally manage better
his own income than it can be managed for him by his
master. If a domestic servant could earn as wages the
whole sum which he costs his master, even if he were to
spend it as he received it, he would probably spend it with
more enjoyment. Secondly, the income spent on services
is generally spent in the purchase of what perishes at the
instant of its creation; that spent on commodities often
leaves results which, when their first purchaser has done
with them, are serviceable to others. In this Country
the poor are, to a great extent, clothed with garments
originally provided for their superiors. In all the better
class of cottages may be found articles of furniture which
never could have been made for their present possess-
ors.
A large portion of the commodities which now
contribute to the comfort of the labouring classes would
never have existed if it had been the fashion in this
Country, during the last fifty years, to prefer retinue and
attendance to durable commodities. And, thirdly, the
income employed on commodities is favourable to the
creation of both material and immaterial capital; that
employed on services is not. The duties of a servant are
so easily learned, that he can scarcely be termed a skilled
labourer; his accumulations are small in amount, and
seldom turned to much advantage. The artisan learns
a trade, in which every year adds to his skill, and is
taught mechanical and chemical processes, often suscep-
tible of indefinite improvement, and in which a single
invention may raise the author to wealth, and diffuse
prosperity over a whole district, or even a whole nation.
An industrious artisan can often save a large portion of
his income, and invest it with great and immediate pro-
fit. He purchases with his savings a small stock of tools
and materials, and, by the vigilance and activity which
can be applied only to a small capital, renders every
portion of it efficient. The ancestors, and not the remote
ancestors, of some of our richest and our proudest fami-
lies, the authors of some of our most valuable discoveries,
were common mechanics. What menial servant has in
this Country, and in modern times, been a public bene-
factor, or even raised himself to affluence? Both his-
tory and observation show that those Countries in which
expenditure is chiefly employed in the purchase of ser-
VOL. VI.
vices are poor, and those in which it is chiefly employed Political
Economy.
on commodities are rich.
Mr. Ricardo's theory as to the effects of war is still Distribu-
more strikingly erroneous.
It is, in the first place, open tion.
to all the objections which we have already opposed to Wages.
his views respecting menial servants. The revenue
which is employed in maintaining soldiers and sailors
would, even if unproductively consumed, maintain at
least an equal number of servants and artisans; and that
portion of it which would have been employed in the
maintenance of artisans would (as we have seen) have
been far more beneficially employed. The demand for
soldiers and sailors is not, as he terms it, an additional, it
is merely a substituted, demand.
is merely a substituted, demand. But a great part of
that revenue would have been productively consumed.
Instead of employing some labourers in converting sub-
urbs into fortifications, and forests into navies, to perish
by dry rot in harbour, or by exposure at sea, and others
in walking the deck and parading on the rampart, it
would have employed them in adding more and more
every year to the fund from which their subsistence is
derived. War is mischievous to every class in the com-
munity; but to none is it such a curse as to the
labourers.
We have now explained the principal errors which
are inconsistent with our elementary proposition, namely,
that the quantity and quality of the commodities ob-
tained by each labouring family during the year must
depend on the quantity and quality of the commodities
directly or indirectly appropriated during the year to the
use of the labouring population, compared with the
number of labouring families, or, to speak more concisely,
on the extent of the fund for the maintenance of labour-
ers, compared with the number of labourers to be main-
tained.
On what, then, does the extent of that fund depend?
In the first place, on the productiveness of labour in the
direct or indirect production of the commodities used by
the labourer; and, in the second place, on the number
of persons directly or indirectly employed in the produc-
tion of things for the use of labourers, compared with the
whole number of labouring families. If we wished to
ascertain the comparative wages of the labouring popu-
lation in two parishes, containing each, we will say,
twenty-four labouring families, these are the only two
points to which we need direct our inquiries. If we
found that in the one parish eighteen families, and in the
other only twelve, were employed in producing commo-
dities for the whole twenty-four, we should infer that,
supposing the labour of each to be equally productive,
wages must be higher by one-fourth in the first than in
the second. But if we found that in the second parish
labour was more productive by one-half than in the first,
we should infer an equality of wages in the two.
bour.
We will begin by considering the causes which Productive-
affect the productiveness of labour in the direct or ness of la-
indirect production of the commodities used by the
labourer. We add the word indirect, not with refer-
ence to the whole fund which supplies the mainte-
nance of all the labourers throughout the world, but
with reference to the fund which supplies the wants of
the labourers in a particular Country. If we consider
the whole world as forming one community, it is obvious
that the fund for the subsistence of the labouring por-
2 E
202
POLITICAL ECONOMY.
•
Political tion of that community cannot be increased by the in-
Economy creased production of those commodities which they do
not use; by the increased production, for instance, of
lace or statues.
Distribu-
tion.
Wages.
Productive
ness of la-
bour.
But the fund for the maintenance of the labourers in
any given Country may be, and often is, materially de-
pendent on the facility with which they can produce
commodities useless to themselves except as the instru-
ments of exchange. The tea, the tobacco, and the sugar
used by our labouring population are principally ob-
tained in return for exported commodities unfitted for
our climate and our habits, But the superior facility
with which we produce those exported commodities en-
ables, or, if legislative interference did not prevent it,
would enable, our labouring population to obtain tea,
sugar, and tobacco with less labour than they cost in
the Countries of which they are the natural growth. It
is unimportant to the labourer whether his corn is the
produce of the soil of England or of Poland; whether
it is obtained directly by means of the plough, or indi-
rectly by means of the loom.
On what then does the first of these two causes,
namely, the productiveness of labour, depend?
First. It depends partly on the corporeal, intellectual,
and moral qualities of the labourer; on his diligence,
his skill, and his strength of body and mind. And these
depend on causes, many of which are imperfectly un-
derstood, and others are too complicated to admit of
concise explanation, or to be fully considered without en-
tering into investigations connected indeed with Political
Economy, but not within its peculiar province. Much
may depend on race and on climate; much more de-
pends on religion, education, and government. One
cause only we shall slightly dwell on, because it is sim-
ple, and has not been sufficiently considered by any
writers except M. Quetelet,* and Sir F. D'Ivernois,†
and that is, the mean age of the labouring popula-
tion. This depends partly on the average duration of
life in a Country, and partly on the rate at which its
population is increasing. In England, the average du-
ration of life is supposed to amount to about forty-four
years. In many Countries it does not reach thirty-five; in
some it does not attain twenty-five. Again, in some
Countries the population doubles every twenty-five years.
At the present rate of increase in England it would
double in about fifty. The average period of its doubling
throughout Europe is supposed to be about a century.
Now it is obvious that, the number of persons and the
rate of increase in any two Countries being given, that
Country would have the greater number of adults in
which the average duration of life was the longer; and,
the longevity being given, that Country would have the
greater proportion of adults in which the rate of increase
was the slower. Longevity, and a population stationary
or slowly increasing, are therefore favourable to the
productiveness of labour.
Secondly. The corporeal, intellectual, and moral
qualities of the labourer being given, the productiveness
of labour in any Country will partly depend on the na-
tural agents by which it is assisted, or, in other words, on
the climate, soil, situation, and extent in proportion to
its population, of that Country.
To some Countries nature has refused the means of
supporting human life; to others she has refused the
}
* Sur l'Homme, tome i. P.
324.
† Sur la Mortalité Proportionelle, &c.
Distribu-
tion.
means of wealth. No exertions would enable a com- Political
munity to exist long on Melville Island, or in the Deserts Economy.
of Africa, or to exist comfortably in Greenland or Nova
Zembla. But, though she can deny riches, she cannot
give them. The finest districts in the world are among Wages.
the poorest. With all the brute and inanimate sources Productive-
of affluence profusely scattered before them, the inhabit- ness of la-
ants of the greater part of Africa, America, and Asia bour.
want the moral and intellectual qualities by which the
raw materials of wealth are to be worked up. Even
the Iceland ersseem to be richer than the Guachos. But,
although local advantages are far from being the most
efficient causes of the productiveness of labour, their in-
fluence must not be disregarded. They have enabled the
colonies of highly civilized nations to advance to opu-
lence with a rapidity of which we have no other ex-
ample.
Thirdly. The productiveness of labour partly depends.
on the degree in which it is assisted by abstinence, or, to
use a more familiar expression, by the use of capital.
We have already explained the advantages afforded
by capital, and traced them to the use of implements
and the division of labour, and need only remind our
readers that, of all means by which labour can be ren-
dered productive, the use of capital is far the most effi-
cient. Without tools, and without the division of em
ployments, man would be an animal less capable of ob-
taining enjoyment, or even subsistence, than the brutes
of the field.
Fourthly. The last of the causes which influence the
productiveness of labour is the existence or the absence
of government interference.
The essential business of government is to afford de-
fence; to protect the community against foreign and
domestic violence and fraud. Unfortunately, however,
governments have generally supposed it to be their duty,
not merely to give security but wealth; not merely to
enable their subjects to produce and enjoy in safety, but
to teach them what to produce and how to enjoy ; to give
them instruction how to manage their own concerns,
and to force them to obey that instruction.
Unfortunately, too, the ignorance and folly with which
they have attempted to execute this office have been
equal to the ignorance and folly which led them to
undertake it. Partly under the influence of what has
been called the mercantile theory, the theory which
teaches that wealth consists of gold and silver, and may
be indefinitely increased by exporting commodities, and
receiving only money in return; and partly misled by the
circumstance, that when an individual, or a class, obtains
a
monopoly against the public, the loss, however great,
becomes imperceptible from its diffusion, and the gain,
however trifling, is obvious, because it is concentrated, it
has long been the ruling principle of commercial states-
men to favour direct at the expense of indirect production ;
to refuse participation in the benefits bestowed by nature
on foreign Countries, though at the expense of surren-
dering a portion of what she has conferred on their own;
and to force the industry of their subjects from those chan-
nels in which they have peculiar advantages, into those
for which their climate, their habits, and their soil are
inappropriate.
It is under the influence of these causes that the
civilized world has lately exhibited the strange spectacle
of general peace accompanied by general distress.
During the War, the greater part of Southern Europe
had coalesced into one vast Empire; a single Sovereign
POLITICAL ECONOMY.
203
"
Political ruled from Hamburgh to Rome; and hundreds of
Economy. lines of custom-houses and revenue-officers, that had
Distribu-
bour.
previously interposed against commerce barriers more
impassable than seas or mountains, were swept away.
tion.
Wages.
Napoleon was deeply steeped in the mercantile theory,
Productive and his conduct shows how completely his views were
ness of la- founded on unreflecting prejudice. In obedience to that
theory, he believed free trade between independent States
to be like gambling between individuals, and therefore
mischievous to the one or to the other: mischievous in
fact to the one which, in the ultimate settling of accounts,
had to pay a balance in money. While France and
While France and
Italy were under different rulers, he therefore must have
believed that the inhabitants of one of the two Countries
would be injured by being allowed to purchase the
commodities of the other. But the framers of the
mercantile theory, blind as they were, had never ven-
tured to object to the freest intercourse between the
inhabitants of contiguous districts in the same Em-
pire. When he had forced under his yoke Belgium
and France, he allowed them therefore a freedom of
intercourse which he still prohibited between France
and Austria; totally forgetting that the benefit of an
exchange does not depend on the accident, whether the
parties to it are, or are not, fellow-subjects. His theories
were servile copies of errors unhappily too prevalent,
and faded away before his strong common sense on the
slightest variation of appearances, though the facts on
which the question turns were unaltered.
On the termination of the War, Napoleon's Empire
was broken up into independent Kingdoms, and each
State set to work to reimpose on itself the fetters which
his powerful hand had broken. Douaniers and pre-
ventive-service men were found instruments as efficient
in wasting the resources of their own Country, and in
arresting the improvement of their neighbours, as armies
and fleets. The produce of France became contraband
in Belgium and Italy, and the produce of Belgium and
Italy in France. America solemnized the Peace by a
tariff, and England by a corn law. To prohibit what-
ever is wanted became again the rule in commercial
policy. Russia is an agricultural Country; she there-
fore forbad the import of foreign manufactures. Eng-
land is abundantly supplied with manufactures, she
therefore prohibited corn.
We are inclined to think that the conduct of Russia was
practically more mischievous than that of England. She
has adhered to the anti-commercial system with far
more pertinacity than we have; indeed, every change
which she has made, has been to add to duties, and to
extend prohibitions. But the objections in principle
against the exclusion of raw produce seem to us still
more forcible than those against the exclusion of manu-
factures. In the first place, the consumption of the
labourer consists principally of raw produce, or slightly
worked commodities. No restrictions on the importa-
tion of the finer manufactures can affect him. But laws
against the importation of raw produce are specifically
directed against the labouring population. Their pro-
fessed object is to diminish, in fact, the principal fund for
the maintenance of labour. And, secondly, when an
agricultural Country prohibits foreign manufactures, the
labourer is, to a certain extent, indemnified by a conse-
quent fall in the price of raw produce. On the other
hand, when a manufacturing Country prohibits the im-
portation of raw produce, the price of all commodities,
excepting labour, has a tendency to increase, and the
labourer finds it more difficult to obtain every article of Political
his consumption.
Economy.
tion.
bour.
This may require some explanation. We have already
shown, that every additional quantity of raw produce is, Distribu-
generally speaking, obtained at a greater proportional
Wages.
expense. To prohibit the importation of manufactures Productive-
is, of course, to prohibit the exportation of the raw pro- ness of la-
duce, which otherwise would have been employed in pur-
chasing them. As a smaller quantity of raw produce is
wanted, a smaller quantity is produced, and that quantity
is produced at a less proportionate expense; labour,
though less productive in clothes and furniture, becomes
more productive in raw produce; the price of raw produce,
therefore, falls, and the labourer, in having less to pay for
food, obtains some compensation for having more to pay
for other commodities. The greater part of the evil falls on
the proprietors of the land. On the contrary, every addi-
tional quantity of manufactured produce is obtained, so
far as the manufacturing of it is concerned, at a less pro-
portionate expense. Every increase of the supply is
accompanied by the introduction of more and better
machinery, and by a further division of labour. As in
the former case, restrictions on the importation of raw
produce are, in fact, restrictions on the exportation of
manufactures. Fewer manufactured commodities being
wanted, and consequently fewer produced, what are
produced are produced at the expense of proportionately
more labour than would otherwise be necessary. More
raw produce must be raised at home, and that also must
be raised at a greater proportionate expense of labour.
The price of the one kind of commodities rises, because
it has become necessary to produce more, and that of
the other, because it has become necessary to produce
less. The productiveness of labour is diminished each
way, and the only person uninjured is the landlord.
To a certain extent, however, the misdirection of indus-
try by government interference is a necessary evil. The
duties of government cannot be performed without a public
revenue; nor can a considerable public revenue be raised
without taxation; and the struggle to escape taxation
always tends to divert industry from its natural channels.
The tax which is least open to this objection, a tax on rent,
must tend to prevent the application of capital to land;
a tax on profits to occasion the exportation of capital;
a tax on income derived from property to prevent accu-
mulation; a tax on wages to occasion their payment
rather in kind than in money, and to prevent the labourer
from acquiring durable and visible property in the hope
of pleading his poverty as an excuse. Taxes on specific
articles are evaded by the substitution of some less bur-
dened or cheaper commodity. The beer and malt
duties are avoided by the substitution of spirits. The
duties on tea and coffee by the use of roasted corn.
Now, every tax, so far as it is evaded, is simply mis-
chievous. A window blocked up to avoid window tax
may diminish the light and air enjoyed by a whole
family, but adds nothing to the public revenue. A dis-
tinet and a still greater injury arises from taxation im-
posed on the instruments and processes of industry
The salt tax, while it existed, prevented in a great
measure the use of salt in agriculture. The duty on
advertisements prevents vendors and purchasers from
knowing each other's wants and supplies. The duties
on leather, on spirits, and on glass, have not only pre
vented England from attaining, in the manufacture of
those commodities, her usual superiority, but have kept
her positively behind the improved part of Europe. To
!
2 E 2
204
POLITICAL ECONOMY.
Distribu-
tion.
Political prevent fraud on the Excise, the manufacturer is subject
Economy. to innumerable regulations and prohibitions incompati-
ble with a proper economy of materials and division of
labour, and which bend very reluctantly to improve-
meuts. To improve is necessarily to alter, and any
alteration in the process prescribed by law may entangle
tiveness of the manufacturer within the meshes of a regulating Act
Wages.
Produc-
labour.
of Parliament.
It is commonly supposed that men are sufficiently
ready to grumble at taxation; but the fact that they are
very imperfectly aware of the degree and kind of evil
indirectly inflicted might be proved from many instances.
To select only one. Most persous are aware of the far
higher price borne by good malting barley above the
ordinary barley used only for feeding stock; nor can
any one doubt that the price of beer is materially en-
hanced by this circumstance. But, probably, not one
consumer in ten thousand has any idea that this is
connected with taxation. Yet, in fact, a large propor-
tion of the barley set aside as unfit for malting would
make, as far as nature is concerned, very good malt, but
requires a process somewhat different from that which
the Excise regulations prescribe, and is consequently ren-
dered by law useless for that purpose. It may easily be
conceived that, if the times and mode of ploughing,
harrowing, and sowing were prescribed by law, a large
portion of land now productive would lie waste.
A Country which has been forced by the folly or the
rapacity of its own government, or by the folly or ra-
pacity of other States, to raise a large public revenue,
suffers in general far more from the indirect than from
the direct effects of taxation; suffers more by being pre-
vented from producing, than by being obliged to pay.
The causes which determine the productiveness of
labour in the direct or indirect production of the com-
modities used by the labourer appear, therefore, to be
four. First, the personal character of the labourer,
his corporeal, intellectual, and moral qualities; secondly,
the degree in which he is assisted by natural agents;
thirdly, the degree in which he is assisted by capital;
fourthly, the degree of freedom with which he is allowed
to direct his industry.
Proportion of Persons employed in the Production of
Commodities for the Use of Labourers to the whole
Number of Labouring Families.
If all labourers were employed in the production,
direct or indirect, of commodities for their own use, the
rate of wages would depend solely on the productiveness
of labour. But it is obvious that this could never be
the case, unless the labourers themselves were the
owners of all the capital and all the natural agents of
the country; a state of existence so utterly bar-
so utterly bar-
barous as to be without distinction of ranks or division
of labour; a state in which a few scattered savage fami-
lies have sometimes been found, but which exhibits.
none of the phenomena which it is the business of Poli-
tical Economy to trace to their causes. A great portion
of the labour employed in a civilized community is em-
ployed in the production of things in the use of which
the labourer is not to participate. In a civilized com-
munity, therefore, the extent of the fund for the mainte-
nance of labour depends not only on the productiveness
of labour, but also on the number of persons employed
in the production of things for the use of labourers, com-
pared with the whole number of labouring families.
Economy.
Distribu-
tion.
It appears to us that there are three purposes to Political
which labour, which might otherwise be employed in
supplying the fund for the use of labourers, may be di-
verted; namely, the production of things, first, to be
used by the proprietors of natural agents; secondly, to Wages.
be used by the government; and thirdly, to be used Direction of
by capitalists; or, to speak more concisely, though less labour.
correctly, labour, instead of being employed in the pro-
duction of wages, may be employed in the production of
rent, taxation, or profit.
First, with respect to rent.
Rent.
Direction of
We have already seen that rent depends in part on labour.
the productiveness of the natural agent for the assistance 1. To rent.
of which it is paid. Now any increase in the produc-
tive powers of that agent has a tendency to increase
rent, and can have none to diminish wages.
The improvements in agricultural skill which have
taken place during the last one hundred years have
greatly increased the productiveness of the Lowlands of
Scotland, and greatly increased the amount of rent;
but that increase has been accompanied by an increase,
though not in an equal ratio, of the amount of wages.
Adam Smith states, that at the time when he wrote
(the period of the American War) the usual price of
common labour there was Sd. a day, or 4s. a week. It
is now more than Ss. a week; a sum capable of pur-
chasing one-third more of raw produce, and three or
four times as much of manufactured produce, as the
former wages. Though the rental of the Lowlands has
more than tripled, though a much larger portion of what
the labourer produces is produced for the benefit of the
landlord, yet the positive increase of the whole produce
more than compensates this apparent inconvenience.
Instead of producing, we will say, twenty bushels, of
which the landlord received ten, the capitalist two, and
the labourer eight, he produces perhaps thirty-five, of
which the landlord receives twenty, the capitalist three,
and the labourer twelve.
It appears, therefore, that the whole fund for the
maintenance of labour is not necessarily diminished in
consequence of a considerable portion of the labourers in
a Country being employed in producing commodities.
for the use of the proprietors of the natural agents in
that Country. Such labourers may, in fact, be consi-
dered as existing only in consequence of the existence
of natural agents of extraordinary productiveness. They
draw their subsistence not from the common fund, such
as it otherwise would be, but from the addition made to
that fund by that extraordinary productiveness.
Of course, when we speak of the amount of rent as
unimportant to the labourer, we must be understood to
mean only that rent which arises from the peculiar or
increased productiveness of the natural agent in question,
not of that which arises merely from an increase of popu
lation. We have already stated that, in the absence of
disturbing causes, subsistence may be expected to in-
crease in a greater ratio than population. But, as we
then remarked, it certainly is possible, and perhaps,
under the influence of superstition and misgovernment,
it is probable, that the number of inhabitants in a Country
might increase without a commensurate increase of the
means, direct or indirect, of obtaining raw produce.
Under such circumstances, rents would rise, and labour,
which, if the population had remained stationary, would
have been employed in the production of commodities
for the use of labourers, would now be employed in
producing commodities for the use of landlords.
A
POLITICAL ECONOMY.
205
tion.
go-
Political rise of rent so occasioned would of course be detri-
Economy. mental to the mass of the community. It must be recol-
lected, also, that the government of every Country has
Distribu- in some measure the power of deciding in what pro-
portions the different classes of its subjects shall contri-
Wages.
Direction of bute to the public burdens. Some governments have
labour to attempted to exempt, as far as they could, the labourers
supply the
from these burdens, and to throw them as far as they
consump-
could upon the landlords. Others again have charged,
tion of
vernment. or have allowed individuals to charge, the revenue arising
from land with an expenditure for purposes in which the
landlords were not solely or principally interested; such
as the establishment and maintenance of roads and
bridges, the supply of religious, moral, and intellectual
instruction, the affording gratuitous medical relief to the
sick, and even support to the able-bodied poor or their
families. Others, on the other hand, have endeavoured
to favour the landlords by imposing public expenditure
on the more defenceless portion of the community, the
labourers; and many have adopted each of these dif-
ferent lines of conduct on different occasions, or with
respect to different portions of their expenditure. The
tendency of every such institution must be to augment
or diminish the proportion of the labourers employed for
the benefit of landlords, compared with that of those who
are employed for the benefit of labourers.
2. Direction
supply the
Another cause disturbing these proportions is the attempt
by a government to create rent, if it can be called rent,
by forcibly limiting the bounty of nature. It is possible
that, if we had continued to prohibit the corn of Ireland,
the incomes of English landlords might have been in-
creased. So, if no coal were allowed to be burned except
the produce of a single colliery, the possessor of that
colliery would enjoy a princely revenue. But the gain
from such a monopoly is not strictly rent; it is oppression
and robbery.
The second purpose to which labour may be diverted
of labour to from the supply of commodities for the use of labourers
is the supply of the consumption of government. It
consump-
tion of go-
is clear that all the labour that is employed in the sup-
vernment. port of unnecessary establishments, and all the surplus
labour which is employed in supporting on an unne-
cessary scale of expense those establishments which are
strictly wanted, is so much taken from the revenue of the
whole people. Still more injurious is the employment
of labour for the purposes not merely useless, but posi-
tively mischievous; in the support of pagodas or bonzes,
to keep up or disseminate a demoralizing superstition;
| in the support of armies and navies to plunder the com-
merce and ravage the territories of States, which nature
enabled to confer mutual benefits, but the folly or wicked-
ness of their rulers force to inflict mutual evil; or in the
support of barriers and blockades to maintain the com-
mercial war in which nations are accustomed to spend
the breathing time of actual hostility. Unnecessary
taxation, even when innocently applied, is fraud or rob-
bery. It is difficult to find a designation for that which
is applied to ends still more mischievous than the means;
for that which makes plunder and extortion the instru-
ments of still further injury.
It appears at first sight that only this mischievous or
useless expenditure ought to be considered as a deduction
from wages, since the labour which is employed in effect-
ing the legitimate purposes of government is as much
employed for the benefit of the labouring classes as that
go-
vernment.
which is employed in the direct production of commodities Political
for their use. The great object of government is to afford Economy.
security, and security is of all blessings the most im- Distribu-
portant, and the one least capable of being obtained by tion.
uncombined exertions.
uncombined exertions. Those writers who have main- Wages.
tained that whatever is raised by taxation is deducted Direction of
from the revenue of the Country, seem to have been labour to
led to this conclusion, by observing that the object of supply the
government is to occasion not positive but negative tion of
effects, not to produce good, but to prevent evil. And
they have thought it right to deduct what
so spent
from the net revenue of the people. But it must be
recollected that the mere prevention of evil is one of the
principal objects even of individual expenditure. We
do not build houses because it is pleasant to breathe the
confined atmosphere of a room, but because roofs and
walls are the only means by which the inclemency of
the seasons can be avoided. We do not buy drugs for
our pleasure, but to avert or remove disease.
Yet no
one ever thought what he spends on medicines and on
house rent a deduction from his income. When the
members of a Friendly Society raise among themselves
a fund for their relief in sickness, they do not consider
their contributions a deduction from their wages, but a
mode of expenditure. And it may be asked, in what
respect does each man's contribution towards the means
by which the community is to be protected against
internal and external violence and fraud differ from his
contribution to a Friendly Society, excepting that those
evils are more severe and more constantly imminent
than sickness, and less capable of being warded off by
individual efforts? It is true that, if the protection could
be less expensively obtained, the fund for the mainte-
nance of labour would be increased. But this is merely
an exemplification of what we have already stated, that
the extent of the fund for the maintenance of labour
depends mainly on the productiveness of labour. If fewer
fleets, and armies, and magistrates, could preserve the
peace, that is, if labour were more productive in affording
security, the labouring clases would, cæteris paribus, be
better off, just as they would be better off if fewer hus-
bandmen or artisans could produce, directly or indirectly,
the same quantity of corn; that is, if labour were more
productive in supplying food.
But admitting all this to be true, it is also true, as we
have already remarked, that the labourer is interested
not only in the amount and application of the public
revenue, and in the degree in which its payment affects
the productiveness of labour, but also in the manner in
which the burthen of supplying it is distributed. If the
duty on wine were abolished, and an equal revenue
raised by substituting an additional duty on coarse to-
bacco, the labourers, who are the only consumers of
coarse tobacco, would purchase, with the same propor-
tion of their wages, less tobacco than before, and the
landlords and capitalists, who are the only consumers of
wine, would purchase, with the same proportions of their
rents and profits, more wine. The productiveness of
our labour and the export of our manufactures would
be undiminished; even the nature of our exports need
not be altered; the only change would be in the returns.
More wine and less tobacco would be imported. More
labourers, therefore, than before would be employed in
obtaining wine for landlords and capitalists, and fewer
in obtaining tobacco for labourers.
Nor must it be forgotten that a part of the taxes
206
POLITICAL ECONOMY.
Distribu-
tion.
Political received by the government of one Country is often paid
Economy, by the inhabitants of another. We now purchase an-
nually in China about thirty millions of pounds of tea, at
about 1s. a pound. On the tea so purchased we impose
Wages and in different ways taxes to the amount of about two hun-
Profits. dred per cent. Were we to repeal that taxation, and
the price in China were to remain unaltered, our con-
sumption would probably quadruple; but it is highly
improbable that we could purchase one hundred and
twenty millions of pounds of tea at 1s. a pound. The
price in China might possibly double; it probably would
rise one-half. That rise would have a tendency to raise
the rent of land and the wages of labour in the tea-
growing districts of China. It must be admitted, there-
fore, that they are both kept down by the existence
of the tax; and that a portion of our duty on tea is, in
fact, paid by the inhabitants of the tea-growing districts
of China. The same reasoning proves that a part of
the English duty on claret is paid by France, and that
a part of the duties imposed by foreign nations on some
of the commodities which we export, is paid by Eng-
land. As a portion of the taxes raised by every State
is, in fact, paid by the inhabitants of those Countries
with which it has commercial relations, and as war and
misgovernment are the great causes of taxation, an
additional proof is afforded of the degree in which each
Country is interested in the freedom and tranquillity of
its neighbours.
Influence
wages.
We have lastly to consider the influence of profits on
wages; or, in other words, the extent to which wages
may be affected by the employment of labour to produce,
instead of wages, things for the use of capitalists. In
civilized and well-governed communities, this is the prin-
cipal purpose to which labour, that otherwise might be
employed for the benefit of the labourers, is diverted.
The labourers who are employed for the benefit of the
owners of natural agents may, as we have seen, be in
general considered as a separate class, not withdrawn
from the general body, but added to it by the existence
of those natural agents. Those who are necessarily em-
ployed in effecting the legitimate purposes of govern-
ment are, in fact, employed for the benefit of the labour-
ing population, and the taxation which supplies their
maintenance is not necessarily a deduction from wages,
but a mode of expenditure. That few governments have
confined themselves to their legitimate office, or em-
ployed in effecting that office only the necessary amount
of labour, is a melancholy truth; and it is true that the
fund for the maintenance of labour may be, and in most
Countries has been, and is, more diminished in its amount,
and more retarded in its increase, by misgovernment
than by all other causes put together. But both mis-
government and that interference of the ruling power
between the different classes of its subjects which we
have already described as affecting the proportions of
rent, profit, and wages to one another, are rather disturb-
ing causes than necessary elements in the calculations of
Political Economy; and with these allusions to their in-
fluence we shall dismiss them.
Rent then being considered as something extrinsic,
of profit on and taxation a mode of expenditure, the only remaining
deduction from wages is profit. And the productive-
ness of labour being given, the extent of the fund for
the maintenance of labour will depend on the pro-
portion which the number of labourers employed in
producing things for the use of capitalists bears to that
of those employed in producing things for the use of Political
labourers; or, to use a more common expression, on the Economy.
proportions in which the produce of labour is shared
between the capitalist and the labourer.
Distribu-
tion.
In a previous portion of this Treatise we defined the Wages and
word "abstinence" to mean the conduct of him who ab- profits.
stains from the unproductive consumption of any commo-
dity, or who employs labour to produce distant results. In
fact, the act of deferring enjoyment. And we explained that
labour cannot be efficient unless assisted by, what is the re-
sult of abstinence, capital; nor abstinence in itself efficient
unless assisted by labour; that each is disagreeable, and
must therefore be called into exertion by the prospect of
its specific remuneration; abstinence by the hope of
profit, and labour by the hope of wages: and we stated,
that although in fact the same individual often under-
goes both abstinence and labour, yet that we thought
it more convenient to consider the capitalist and the
labourer as different persons. In the absence of rent,
and of unnecessary or unequally distributed taxation, it
is between these two classes that all that is produced
is divided; and the question now to be considered is,
what decides the proportion of the shares?
The facts which decide in what proportions the capi-
talist and labourer share the common fund appear to be
two: first, the general rate of profit in the Country on the
advance of capital for a given period; and, secondly, the
period which in each particular case has elapsed between
the advance of the capital and the receipt of the profit.
First, as to the general rate of profit. We have seen General
that profit is the remuneration of abstinence, and that rate of pro-
abstinence is the deferring of enjoyment. The commo-
fit.
dity which owes its existence or its preservation to ab-
stinence is capital. Its owner is termed a capitalist, and
he is said to advance the means by which it is created or
preserved. These means are partly materials and im-
plements, (including, under the last term, not merely
the ordinary tools of manual labour, but machinery,
ships, and even roads, wharfs, and canals,) and partly
labour. The materials and implements are supplied by
the capitalist directly, the labour is supplied by him
indirectly, by advancing the wages of the labourers.
The labourers, aided by their implements, convert the
materials into a new and vendible commodity, which is
termed the return of the capitalist. And the capitalist's
profit depends on the difference between the value of
the advance and the value of the return. In producing
the return, the wages and materials are necessarily con-
sumed; they are parted with by the capitalist, and there-
fore termed circulating capital. The implements are
not necessarily consumed; so far as they are uncon-
sumed they remain the property of the capitalist, and
are therefore termed fixed capital. The value of that
portion of them which remains unconsumed must be
added to that of the other returns before the profit can
be estimated. The capital of a builder is almost entirely
circulating. It consists principally of the bricks, lime,
timber, stone, and slate which are the materials with
which the house is to be constructed, and of the money
necessary to pay the wages of the workmen. His fixed
capital (exclusively of his knowledge) consists merely of
scaffolding and ladders. All these he advances, and the
result, after a certain interval, is a house, together with
the former ladders and scaffolding somewhat the worse
for wear. The cotton-spinner's advances consist of raw
cotton and wages, which are his circulating capital, and
buildings and machinery, which are his fixed capital.
POLITICAL ECONOMY.
207
Distribu-
tion.
Political His returns are a certain quantity of manufactured cotton,
Economy, and the old buildings and machinery. So a ship-owner's
advances consist of his ship, which is his fixed capital, and
of its stores, and the wages of his sailors, which are his
Wages and circulating capital; his returns are his freight, or, in
other words, the hire which he receives for the use of
his ship, the ship itself, such as it may be, after the voy-
rate of pro- age, and the stores, if any of them remain unconsumed.
The profit in every case consists, as we have already
stated, of the difference between the value of the ad-
vances and the value of the returns.
profits.
General
fit.
How to be
estimated.
But in what is this value to be estimated? Of course
in something as unsusceptible as possible of variations
in its general value. If the value of the advances and
returns of the capitalist were estimated in corn or in
hops, an abundant season might so reduce the value of
either as to make him appear a gainer when in fact a
loser. His returns might be worth twenty per cent.
more of corn or hops than his advances, and yet be in-
ferior in general value. The commodity least susceptible
of variation in its general value, during short periods, is
money; and partly from this circumstance, and partly
from its general use as a measure of value, it is the
medium in which calculations of profit are usually
expressed. But, if considerable periods are to be taken,
even money is subject to great variations, and any sudden
change in the facility of obtaining it, arising from an in-
creased fertility of the mines, or an increased productive-
ness of labour, or an abuse of banking or paper cur-
rency, or from similar causes operating in an opposite
direction, may materially raise or depress the general
value of money in any one Country, even during short
periods.
The best standard of value for philosophical purposes
appears to be the command of labour. In the first
place, labour, next to money, is the principal subject of
exchange. And, in the second place, labour, as the
principal instrument of production, as the only instru-
ment that can be employed at will in the creation of
whatever is most wanted, varies less in its general value
than any other article of exchange. Money, and the
necessaries of life which approach nearest to it, derive in
part their steadiness of value from their constant power of
commanding labour, a power belonging to no other
commodity. Estimated indeed in one class of objects,
and it is the class most coveted by man, we mean power
and pre-eminence, the value of the command of labour
is almost invariable. Two persons who, at different times
or in different places, can each command the labour of one
thousand average labourers, may indeed enjoy in very dif-
ferent degrees the comforts and conveniences of life; but
in power and pre-eminence in their respective Countries
they must be nearly on a par.
Each must be one
man in a thousand. Each must be a thousand times
richer than the mass of his countrymen. If two shil-
lings in Hindostan will command as many labourers as
twenty in England, a Hindoo with £3000 a year is,
generally speaking, as great a man in Hindostan as an
Englishman with £30,000 a year in England.
Philosophically, therefore, we think that the value of
the capitalist's advances and returns ought to be esti
mated in their command of labour; popularly, their
value is estimated in money; and, as the reciprocal
values of money and labour seldom vary much between
the times of those advances and returns, the popular
mode of estimation is seldom incorrect; and we shall
therefore use both indifferently.
The great difficulty of the subject arises from the cir- Political
Economy.
cumstance, that the rate of profit is not the subject of
contract, but of experiment, and cannot be ascertained Distribu-
even by an individual, except as to his past operations. tion.
While a transaction is going on, the capitalist may hope Wages and
that the value of the returns will exceed the value of the profits.
advances; he may hope that the excess will be consi- Causes re-
derable; but he cannot be certain that there will be any the rate of
excess at all; that there will not be a positive loss. He profit.
may say what his profit has been, but not what it is.
Frequently, indeed, he cannot say what it has been. A
whole series of mercantile or manufacturing transactions
may be so linked together that, after having been appa-
rently profitable for years, they may terminate in ruin.
If, however, we could ascertain the value of the re-
turns in all the transactions in this Country which were
concluded in the year ending yesterday; and also could
ascertain what was the value of the advances, and the
average time for which those advances were made before
the returns were received, we should know what was the
average rate of profit in this Country during the last
year. Suppose this point ascertained, and the result to
be, that the average rate of profit on an advance of ca-
pital for a year was in this Country during the last year
ten per cent., the question recurs, what were the causes
which determined it to be ten per cent. rather than five
per cent. or twenty per cent.?
It appears to us that it must have depended princi-
pally on the previous conduct of the capitalists and of the
labourers of this Country; on the value of the capital
which at some previous period was appropriated by the
capitalists to produce commodities for the use of labourers,
or, to use a more concise expression, to produce wages;
and the number of labourers whom the previous con-
duct of the labouring population had caused to exist.
It will be admitted that, in the absence of disturb-
ing causes, the rate of profit in all employments of
capital is equal. If we can ascertain, therefore, what are
the causes which regulate the rate of profit in any one of
the main employments of capital, we may infer that, in the
absence of peculiar disturbance, either the same causes,
or, causes of equal force, occasion it to be the same in
all others We will inquire, therefore, into the causes Causes re-
which regulate the rate of profit in one of the main em- gulatingthe
ployments of capital,-the advance of wages to the rate of pro-
labourers who are themselves employed in producing
wages, using the word wages to signify commodities for
the use of the labouring population.
To simplify the question, we will suppose a small
colony settled in a district where there is abundance of
fertile land, and protected by situation and character
from external and internal violence, so that neither rent
nor taxation need be supposed to exist: we will sup-
pose it to be inhabited by ten capitalists and one thou-
sand two hundred labouring families; that the use
of money is unknown; that all the buildings, the
clothes, the furniture, and the food, in fact, the whole
consumption of the people, is consumed in one year
and reproduced in the next; that each family receives
its wages for the year on the first day of the year, and
completes its production on the last day, so that all the
advances are made on the first day of the year, and all
the returns received on the last day; and that, at the
time when the situation of the colony was first noticed,
each capitalist had in his possession wages for one hun-
dred and twenty families during a year, the produce of
the labour of one hundred families during the previous
fit.
208
POLITICAL ECONOMY.
Distribu-
tion..
Political year, (being his capital, and which, to reduce it to one
Economy, denomination, we will call one thousand quarters of
corn;) and commodities for his own use, which we will
call twenty casks of wine, the produce of the labour of
Wages and twenty families during the previous year; (being the
profits. stock reserved for his own consumption.)
Causes re-
gulating
lating
the rate of
profit.
Under such circumstances, if each capitalist should
employ his capital in setting one hundred families to
work to reproduce wages, and twenty more to reproduce
commodities for his own use, and the labouring popula-
tion should neither increase nor diminish, the rate of
profit would remain stationary at twenty per cent. per
annum. The advances every year would be one thou-
sand quarters of corn, being wages produced by the
labour of one hundred families, and commanding the
labour of one hundred and twenty; the returns would
be a stock of wages commanding the labour of one hun-
dred and twenty families during the next year, which
would be, in fact, a reproduction of the previous capital
of one thousand quarters, and also a stock of commo-
dities for the capitalist's own use, produced by one-sixth
of the labour employed in reproducing the capital, and
therefore one-sixth of the value of the capital. The
value of the returns on an advance of capital for a year
would exceed the value of the advances by one-sixth.
The rate of profit therefore would, as we said before, re-
main stationary at twenty per cent. per annum. And
five-sixths of the labourers would be employed in pro-
ducing commodities for their own use, and one-sixth in
producing commodities for the use of the capitalists.
We will now consider the effects of any alteration in
the proportion of capital to labour. Suppose that emi-
gration or an unhealthy season should diminish by fifty
the number of labouring families: each capitalist would
have the same capital; consisting of wages produced by
the labour of one hundred families during the year, and
which we have called one thousand quarters of corn: but
the number of labourers being diminished by one-twenty-
fourth, instead of commanding the labour of one hun-
dred and twenty families, they would command the
labour of only one hundred and fifteen. The one thousand
quarters of corn would be divided among one hundred and
fifteen families instead of among one hundred and
twenty, and the capitalist would get only fifteen casks of
wine during the subsequent year instead of twenty. To
take the converse: if immigration or an increase of
population should have increased the number of labourers
by fifty, each capitalist, instead of one hundred and twenty
families, would be able to command the labour of one
hundred and twenty-five. The one thousand quarters
would be divided among one hundred and twenty-five
families, instead of among one hundred and twenty, and
the capitalist might employ twenty-five families to pro-
duce wine for himself instead of twenty. In the one case,
profits rise from twenty to about twenty-five per cent. ;
in the other, they fall to about fifteen. On the other
hand, if we suppose the labouring population to remain
stationary at one thousand two hundred families, but
the capitalists, instead of employing each one hundred
families in the production of wages, and twenty in the
production of profits, to employ each one hundred and five
in the production of wages, each capitalist would at the
end of the year have a capital of one thousand and fifty
quarters produced by the labour of one hundred and five
families, and commanding the labour of one hundred
and twenty; or if they each employed in the production
of wages only ninety-five families, and in the production
Distribu-
tion.
of profits twenty-five, each would have at the end of the Political
year a capital of nine hundred and fifty quarters, pro- Economy.
duced by the labour of ninety-five families, and com-
manding the labour of one hundred and twenty. Profits
would fall in the first instance from twenty per cent. to Wages and
less than fifteen; in the second, they would rise to more profits.
than twenty-five. If, however, the increase of the num- Causes re-
ber of labourers employed in the production of wages the rate of
gulating
should be accompanied by a proportionate increase in profit.
the whole number of labourers; or if, when the number
of labourers employed in the production of wages was
diminished, the whole number of labourers should be
diminished in proportion; or, in other words, if the
proportion of capital to labour remained unaltered, the
rate of profit would be also unaltered. If each were in-
creased, or each diminished, but in different proportions,
profits would rise or fall according to the relative vari-
atious in the supply of wages and labour.
It appears, therefore, that, under the most simple
state of circumstances, the rate of profits depends, as
we said before, on the previous conduct of the capi-
talists and the labourers in a Country.
In this hypothesis we have supposed all the capitalists
to act together. And as every permanent increase of
capital while the number of labourers remained the
same would, under the supposed circumstances, occasion
a proportionate diminution of the rate of profit, it never
could be the interest of the capitalists, as a body, to
increase their capital, except with a view to increase
the number of labourers; or even to keep up their
capital, except so far as it should be necessary to keep
up the existing number of labourers. It would be their
interest, if the population were incapable of increase, to
devote to the production of wages labour just sufficient
to produce the necessaries of life for that stationary po-
pulation, if the population were advancing just sufficient
to enable it to advance; to treat the labourers, in short,
as a farmer treats his horses, or a slave-owner his slaves.
Under such circumstances, supposing the capitalists to
be governed solely by their interest, the rate of
profit would depend partly on the productiveness of
labour, and partly on the period that must elapse
between the time of the advances and of the re-
turns.
•
Given the period of advance, it would depend
on the productiveness of labour. If a labourer by
a year's labour could produce a return which, to re-
duce it to one denomination, we will call ten quarters of
corn, and five quarters were enough for his support, the
rate of profit would be one hundred per cent. per annum.
By an advance of five quarters the capitalist would obtain
a return of ten. If the labourer could produce fifteen,
the rate of profit would be two hundred per cent.; by
an advance of five the capitalist would obtain fifteen.
If the labourer could produce only seven and a half,
profits would be fifty per cent. On the other hand, the
productiveness of labour being given, the rate of profit
would depend on the period for which the capital must
be advanced. When the labourer receiving five quar-
ters as wages could, by a year's labour, produce ten, a
capitalist with a capital consisting of ten quarters could
employ two labourers, each of whom would return to
him ten quarters every year. But if, instead of returning
ten quarters at the end of one year, a labourer returned
twenty quarters at the end of two years, a capitalist with
a capital of ten quarters would be able to employ only
one labourer instead of two; for if he were to employ
two his capital would be exhausted before it was repro-
POLITICAL ECONOMY.
209
Political duced. Only one-half of the number of labourers could
Economy. be employed by the same amount of capital, and instead
of getting a net revenue of ten quarters every year, the
capitalist would get a net revenue of only ten quarters
Wages and every two years.
Distribu-
tion.
the rate of
profit.
profit.
Happily, however, the capitalists of a Country do
Causes re- not act as a body. Each pursues his own scheme
gulating
indifferent to its effect on his
of aggrandizement, indifferent to its effect on
neighbours, and it is chiefly to their mutual competi-
tion that we owe the increase both of capital and of po-
pulation. To revert to our original hypothesis; suppose
one of the capitalists, instead of employing, like each of
the others, twenty labourers to produce commodities for
his own use and one hundred to produce wages, to em-
ploy one hundred and ten labourers in the production
of wages. At the end of the year he would have a
capital consisting of one thousand one hundred quarters
of corn produced by the labour of one hundred and ten
families, and commanding, at the existing rate of wages,
the labour of one hundred and thirty-two families; and
the nine others would have each a capital consisting of
one thousand quarters, produced by the labour of one
hundred families, and commanding, at the existing rate
of wages, one hundred and twenty families. The whole
capital of the Country, instead of its former amount,
namely, ten thousand quarters, being wages for one
thousand two hundred families, would amount to ten
thousand one hundred quarters, being wages for one
thousand two hundred and twelve families. But as
there would be only one thousand two hundred fami-
lies to receive them, profits would fall about one per
cent., or from twenty per cent. to a fraction less than
nineteen per cent. per annum. This fall of profits would
prevent the capitalist to whose conduct it was owing
from reaping the full benefit of his accumulation. He
would find himself possessed of a capital consisting of
one thousand one hundred quarters, being wages pro-
duced by the labour of one hundred and ten families,
and commanding the labour of one hundred and thirty
and a fraction; but every other capitalist would find his
capital of one thousand quarters, produced by the labour
of one hundred families, commanding the labour of a
small fraction less than one hundred and nineteen fami-
lies. The first, or accumulating capitalist, would find
the value of his capital and the amount of his profits
increased, though the rate of profits had fallen one per
cent. But all the other capitalists would find both the
value of their capital and the amount of their profits
diminished.
Now there is nothing to which a capitalist submits
so reluctantly as the diminution of the value of his
capital. He is dissatisfied if it even remain stationary.
Capitals are generally formed from small beginnings by
acts of accumulation, which become in time habitual. The
capitalist soon regards the increase of his capital as the
great business of his life; and considers the greater part
of his profit more as a means to that end than as a
subject of enjoyment. It is probable, therefore, that the
other capitalists in the Country would endeavour to
keep the value of their capitals unimpaired, though at
the expense of a diminution of the general rate of profit.
One after another would follow the example of the first
mentioned capitalist, and devote to the increase of their
respective capitals a portion of the labour previously em-
ployed in furnishing commodities for their own use. In
time each capitalist, instead of employing one hundred
families in the reproduction of capital, and twenty in sup-
VOL. VI.
Distribu-
the rate of
plying his own enjoyments, would employ one hundred Political
and ten in the reproduction of capital, and only ten for Economy.
his own purposes.
his own purposes. The rate of profit would fall from
twenty to ten per cent., and, of the one thousand two tion.
hundred labouring families, one thousand one hundred
Wages and
would be employed in producing wages, and only one profit.
hundred in producing profits. The annual produce of Causes re-
the Country, instead of ten thousand quarters of corn gulating
and two hundred casks of wine, would consist of ten
profit.
thousand one hundred quarters of corn and one hundred
casks of wine, Instead of five-sixths of the labourers in
the Country being employed in producing commodities.
for the use of the labourers, and one-sixth for the use of
capitalists, eleven-twelfths would be employed for the
benefit of the labourers, and only one-twelfth for the be-
nefit of the capitalists.
This fall of profit, however, could take place only on
the supposition of the number of labouring families re-
maining unaltered. But it is highly improbable that it
could remain unincreased. The increase of wages would
enable the labourers to marry earlier, or to raise more
numerous families. If labour should remain equally
porductive, their numbers might increase until the former
proportion of labourers to capital had been restored. All
the results would be beneficial. The labourers would
not be worse off than before the additional accumulation
took place, and the capitalists would be better off. The
value of their capitals and the amount of their profits
would be increased, and the rate of profit would be again
twenty per cent. per annum.
We set out with supposing a Country possessing an
abundance of fertile land. Under such circumstances
the productiveness of labour might for a long period
continue, or even increase, with every addition to the
number of its inhabitants. But in a densely-peopled
Country the powers of labour seldom remain the same
during an increase of population. In manufactures
labour becomes proportionably more productive. In
agriculture, unless aided by increased industry or
skill, or by permanent improvements of the soil,
it becomes proportionably less so. And, as the labourer
consumes chiefly raw or slightly-manufactured pro-
duce, the increased facility of obtaining manufac-
tures may not make up for an increased difficulty in
obtaining raw produce. In an old Country, therefore,
when the rate of profit has been reduced by an increase
of capital, it seldom can be fully restored by a propor-
tionate increase of population, unless either the labourer
receives a smaller quantity of raw produce than before,
or the necessity of cultivating lauds of inferior produc-
tiveness is obviated either by permanent improvements,
such as draining marshes or fertilizing bogs, or by addi-
tional industry or skill, or by the importation of raw
produce. In such Countries the natural progress seems
to be an increase of capital, occasioning a fall of the rate
of profit; a check to that fall, occasioned by an increase
of the labouring population; a check to that increase,
occasioned by an increased difficulty in obtaining raw
produce; and a diminution, rarely amounting to a re-
moval, of that difficulty, occasioned by permanent agri-
cultural improvements, increased industry or skill, or
foreign importation; leaving, as the general result, a
constant tendency towards an increase of capital and
population, and towards a fall in the rate of profits.
In our hypothesis we have supposed the whole capital
of the Country to be consumed and reproduced every
2 F
210
POLITICAL ECONOM Y.
Distribu-
tion.
Political Year. Under such circumstances it has appeared that,
Economy, the number of labourers remaining the same, uo permanent
addition could be made to capital without occasioning im-
mediately a proportionate diminution of the rate of profit,
Wages and since that addition would disappear in a year unless
profit.
reproduced by a repetition of the sacrifice on the part of
the capitalist by whom it was originally created. But
the result would be different if that addition were made
in a form requiring no further labour for its reproduc-
tion. Suppose the capitalist, instead of adding five to
the hundred families employed in producing wages,
were to employ the additional five in the construction of
a durable machine enabling one man to do some piece
of work that previously required two. At the end of
the first year each capitalist would possess wages for
one hundred and twenty families, produced by the labour
of one hundred families; commodities for his own use,
produced by the labour of fifteen families; and his ma-
chine, produced by the labour of five families. But in
every subsequent year he might obtain wages for one
hundred and twenty families by employing only ninety
nine families and his machine, and might employ twenty-
one families in producing commodities for himself. Both
the rate and the amount of profit would be increased
without any diminution of wages. Such a machine
is a new labourer added to the existing number of
labourers, but a new labourer whom it costs nothing
to maintain. It adds to the amount of the profit of
the capitalist who has constructed it, without either
taking from the profits of other capitalists, as must be
the case when additional capital is created, which
must be kept up and worked by additional labour; or
taking from the wages of the other labourers, as must
be the case when an additional labourer is added, whose
subsistence must be taken from the common fund. A
machine or implement is, in fact, merely a means by
which the productiveness of labour is increased. The
millions which have been expended in this Country in
making roads, bridges, and ports, have had no tendency
to reduce either the rate of profit or the amount of
wages. They have, in fact, had a tendency to keep up
both, by enabling labour to be more productive, and con-
sequently enabling the circulating capital and the popu-
lation of the Country to increase in corresponding ratios.
It appears, therefore, that in one of the main employ-
ments of capital, namely, the employment of labourers
to produce commodities for the use of labourers, or, in
other words, to produce wages, the difference between
the value of the returns and the value of the advances
depends on the amount of labour which at a previous
period was devoted to the production of wages, com-
pared with the amount of labour which those wages
when produced can command. And as the rate of pro-
fits in every different employment of capital has a tend-
ency to equality, we may infer that all capitals, how-
ever employed, yield about the same rate of profit
as those which are employed in the production of wages.
Average
The first of the two principles which regulate the division
period of
of the produce between the capitalist and the labourer,
advance of namely, the rate of profit in the advance of capital for a
capital.
given time, having been, in some measure, ascertained,
we proceed to inquire into the causes which regulate
the second principle, namely, the average time for which
the capital must be advanced.
It must be recollected, however, that the expression
"the capitalist's share," though familiarly used by Eco-
1
Distribu-
vance of
nomists, is not strictly correct. When the product is Political
completed, it is the sole property of the capitalist, who Economy.
has purchased it by paying in advance the labourer's
wages. What is meant, therefore, by "the capitalist's tion.
share," is that portion of the product, or of the price for Wages and
which it sells, which the capitalist can retain and apply profit.
for his own purposes, keeping the value of his capital Time of ad-
unimpaired. What is meant by
"the labourer's share"
capital.
is that portion of the produce, or of the price for which
it sells, which the capitalist, if he keep his capital unim-
paired, cannot employ for his own purposes, but must
employ in advancing the price of the labour by which
the work of reproduction is to be performed. We have
already shown that, the period of advance being given,
these proportions are determined by the rate of profit.
It is equally clear that, the rate of profit being given,
they must be determined by the period of advance. If
a capitalist has a return which we will call twelve quar-
ters of corn, and we wish to know how much of it he
must retain as capital, and how much he may use as
profit, the first inquiry is, for what period must he ad-
vance his capital before he can again obtain a similar
return? The next inquiry is, what is the current rate
of profit? If the answer to the first inquiry be, one
year, and to the second, twenty per cent. per annum, it
follows that, by constantly employing ten quarters as
wages, he will receive two as profit. If the period of
advance be only six months, the rate of profit continuing
at twenty per cent. per annum, he must employ eleven
and a fraction as capital, and will not receive quite one
as profit. If the period of advance be two years, the
rate of profit continuing at twenty per cent. per annum,
rather less than eight quarters will form a sufficient
capital, and rather more than four will be profit. With
every prolongation of the period of advance, the rate of
profit continuing the same, the capitalist's share must
increase. With every abridgement of that period it must
diminish. And it is equally obvious that, the period of
advance being given, the capitalist's share must aug-
ment with every increase of the rate of profit, and
diminish as that rate decreases.
On what then does the period for which capital is to
be advanced depend? To this question no general
answer can be given. The period differs according to
the accidents of soil and climate; it varies indefinitely
in every different business, and even in employments
which, in other respects, are perfectly similar.
In Europe the harvest is annual; in Hindostan it
recurs every six months. The average period for
which agricultural wages are advanced must be at
least twice as long in Europe as in Hindostan. A
great part of the capital employed in breeding horses
must be advanced four or five years; that employed in
planting must be advanced forty or fifty. A very small
part of the capital of a butcher or a baker is advanced
for more than a week. The stock of a fishmonger spoils
in a day; that of a Rhenish wine-merchant is improved
by being kept a century. As a general rule, the average
period is longer or shorter in one Country than in an-
other in an inverse proportion to the general rate of profit.
In the general market of the world, a Country in which
the rate of profit is low has over one where it is high an
advantage which increases at compound interest, as the
period of advance is prolonged. The rate of profit in
Russia is supposed to be above twice as high as in Eng-
land. We will suppose that rate to be five per cent.
per annum in England, and ten in Russia. A commo-
POLITICAL ECONOMY.
211
Distribu-
tion.
vance of
.capital.
Political dity produced in Russia by an advance of £10 for
Economy, twenty years would sell for nearly £70. A commodity
produced in England by the advance of £20 for the
same time would sell for less than £60. The difference
Wages and in the rate of profit would far outbalance a doubling of
prófit. the first expenditure. Profits are supposed to be lower
Time of ad- in Holland and in England than in any other part of
the globe. The English and the Dutch, therefore, have
almost a monopoly in those trades in which the returns
are distant. Ábstinence with them is a cheap instru-
ment of production, and they use it to the utmost. In
their commerce with other nations they generally pay
in ready money, but give a very long credit. They
purchase raw produce, and sell manufactures. In many
instances they even advance to the foreign Countries
the first expenses of production. The indigo of Bengal,
the wines of the Cape, the wool of Australia, and the
silver of Mexico, are in a great measure produced by the
advance of English capital. The accumulated interest
on such advances would be an intolerable addition to
the value of the returus if the rate of profit were high.
This circumstance occasions a tendency to uniformity in
the proportion, in different Countries, in which the pro-
duce is shared between the capitalist and the labourer.
Where profits are high the capitalist's share is kept
down by the shortness of the period for which his capital
is advanced. Where they are low it is kept up by the
prolongation of that period.
The labourer is far more interested in the comparative
rate of profit than in the comparative period for which
capital is advanced. The productiveness of labour and
the period of advance being given, we have seen that
the amount of his share of the product depends on the
rate of profit. It is his interest, therefore, in the first
place, that when capital is employed in the production
of the commodities which he consumes, all other things
remaining the same, the rate of profit should be low.
And if it were possible that the rate of profit in other
employments could be higher, capital would be diverted
from the only production in which the labourer is
directly interested-the production of commodities for
his own use—and the general fund for the maintenance
of labour would be diminished. All other things,
therefore, remaining the same, it is the labourer's in-
terest that the rate of profit should be universally low.
But it must be recollected, first, that the average period
for which capital advanced, especially in the produc-
tion of the commodities used by labourers, is so short
that the capitalist's share is small even when profits are
high if the advance has been for six months, the capi-
talist's share, at the high rate of twenty per cent. per
annum, would be less than one-eleventh: and, secondly,
that a high rate of profit is generally found to accom-
pany a great productivenes of labour. And therefore
that, in general, the labourer is better paid, or, in other
words, receives a larger amount of commodities, when
profits are high, that is when he receives a small share,
than when profits are low, that is when he receives a
large share, of the value of what he produces. The
increase of the labourer's share from ten-elevenths to
twenty-one-twenty-seconds, which would be the conse-
quence in the case which we have supposed of a fall of
profits by one-half, would add very little to the amount
of his wages.
:
On the other hand it is his interest that, when capital
is employed in the production of what he himself con-
sumes, the period of advance should be short. We will
suppose a labourer employed on the least productive soil
tion.
to produce by a year's labour employed in hoeing and Political
weeding an additional produce of twenty-two quarters of Economy.
corn; the wages of labour to be £20 a year; the rate
of profit to be ten per cent. per annum, and a year to Distribu-
elapse between the advance of the wages and the corn Profit.
being fit for use; the price of the corn would be £22;
the labourer would receive twenty quarters, or, what is
the same, £20, with which he could purchase twenty
quarters. But if corn were not fit for use until it had
been kept for ten years, on the same data, the corn,
instead of selling for £22, would sell for above £50; the
labourer would receive less than ten quarters instead
of twenty, or, what comes to the same, his wages, instead
of twenty, would purchase less than ten quarters. To pro-
duce the corn would require the same degree of labour as
before, but ten times as much abstinence,
Another consequence of the prolongation of the
period of advance would be, that with the same
amount of capital the capitalist would be able to main-
tain much fewer labourers than before. If ten quarters
were necessary to maintain a labouring family during a
year, and they could reproduce eleven in a state fit for
consumption at the end of the year. a capital of one
hundred quarters would enable a capitalist to keep in
constant employ ten labouring families during the first
year, and eleven during every subsequent year.
But, if
the corn were not fit for consumption till the end of ten
years, a capitalist starting with a capital of one hundred
quarters could not maintain more than a single family,
For, if he were to maintain more, the capital would be
exhausted before it was reproduced. The prolongation
of the period of advance would have precisely the same
effect as a diminished productiveness of labour.
But the prolongation of the period of advance of the
capital employed in the production of the commodities.
which the labourer does not consume is utterly indif-
ferent to him. If a labourer by a year's labour can
produce twenty-two ounces of lace, his wages being
£20 a year, and advanced for a year, and the rate o
profit being ten per cent., he will receive ten elevenths
of the value of the lace, or, in other words, he might
purchase with his wages twenty ounces of lace.
If the
lace required keeping for ten years, his wages would
purchase less than ten ounces of the lace in its complete
state. But as he never wishes to purchase lace, and as
the prolongation of the period for which capital must be
advanced in the production of lace would not affect
either the productiveness of labour, or the rate of profit,
or the period of advance in any other employment, it
would be utterly indifferent to him; it would affect only
the consumers of lace.
We have seen that, although practically high wages
and high profits generally go together, yet, all other
things remaining the same, it is the interest of the la-
bourers that profits should be universally low. It is
equally clear that it is the interest of the capitalists
that they should be universally high. A fall in the rate
of profit in any one employment has a tendency to force
capital into the others. This diminishes the compe-
tition among the first-mentioned capitalists, but in-
creases it among the others. The first are relieved, but
it is only by the loss being spread over the whole body.
But a prolongation of the period of advance affects
the capitalist only so far as he uses the specific com-
modity with respect to which that prolongation has
taken place. The rate of profit on the advance of
capital for a given period being given, the length of
2 F 2
212
POLITICAL ECONOMY.
Political the period between the bottling of a pipe of port and its
Economy. being fit for use affects a wine merchant only so far as
he drinks port.
As a consumer, it is his interest that the
period should be short; as a capitalist it is immaterial
to him.
Distribu-
tion.
Inequa-
lities of
wages and
profit in
different
employ-
ments.
We have now given an outline of the causes which
affect the general rate of wages, the most important and
the most difficult of all the subjects embraced by Political
Economy. It has appeared, first, that the general rate
of wages depends on the amount of the fund for the
maintenance of labourers, compared with the number of
labourers to be maintained.
Secondly, that the amount of that fund depends partly
on the productiveness of labour in the production of the
commodities used by the labourer, or, to speak more
concisely, in the production of wages, and partly on the
number of labourers employed in the production of wages
compared with the whole number of labourers.
Thirdly, that the productiveness of labour depends on
the character of the labourer, or the assistance which he
derives from natural agents, and from capital, and on his
freedom from interference.
Fourthly, that, in the absence of rent and improper
or unequally-distributed taxation, the proportion of the
labourers employed in producing wages to the whole
number of labourers depends partly on the rate of
profit, and partly on the time for which the capital em-
ployed in the production of wages must be advanced.
Fifthly, that the rate of profit, at any given time,
depends on the previous conduct of capitalists and la-
bourers.
And, sixthly, that the period for which capital must
be advanced is subject to no general rule, but has a
tendency to be prolonged when profits are low, and
shortened when they are high.
The inquiry into the causes which regulate wages
has, in a great measure, ascertained those which affect
profits. We have to add only that profits may be con-
sidered in three points of view: first, as to their rate;
secondly, as to their amount; and, thirdly, as to the
amount of desirable objects which a given amount of
profit will command. The causes which decide the rate
of profit have been already considered. It has been
shown that they depend on the proportion which the
supply of capital employed in providing wages bears
to the supply of labour. The rate being given, the
amount of the profit received by any given capi-
talist must depend, of course, on the amount of his
capital. It follows that, when the rate of profit falls in
consequence of an increase of capital without a propor-
tionate increase of labourers, the situation of the existing
capitalists, as a body, cannot be deteriorated, unless the
fall in the rate has been so great as to overbalance the
increase of the amount. Two millions, at five per cent.,
would give as large an amount of profit as one million
at ten. At seven and a half per cent. they would give a
much larger. And such is the tendency of an increase
of capital to produce, not indeed a corresponding, but
still a positive increase of population, that we believe
there is no instance on record of the whole amount of
profits having diminished with an increase of the whole
amount of capital.
Totally distinct from the amount of profit is the
amount of desirable objects which a given amount of
profit will purchase. A Chinese and an English capi-
talist, each of whose annual profit will command the
different
ments,
labour of ten families for a year, will enjoy in different Political
degrees the comforts and conveniences of life. The Economy.
Englishman will have more woollen goods and hardware,
the Chinese more tea and silk. The difference de- Distribu-
pends on the different productiveness of labour in China tion.
and in England in the production of those commodities ties of
Inequali-
which are used by the capitalists in each Country. In wages and
the command of labour, and in the rank in society which profit in.
that command gives, they are on a par.
We have seen
that, as population advances, labour has a tendency to employ-
become less efficient in the production of raw produce,
and more productive in manufactures.
The same
amount of profit, therefore, will enable the capitalist in a
thinly-peopled Country to enjoy coarse profusion, or
among a dense population moderate refinement. A
South American, with an annual income commanding
the labour of one hundred families, would live in a log-
house on the skirts of a forest, and keep, perhaps, one
hundred horses. An Englishman with the same com-
mand of labour would live in a well-furnished villa, and
keep a chariot and pair. Each would possess sources
of enjoyment totally beyond the reach of the other.
Variations of the Amount of Wages and the Rate of
Profits in different Employments of Labour and
Capital.
In the previous discussion we have assumed the
existence of a certain average rate of wages and average
rate of profits. We now propose to consider the
influence of some specific causes on the amount of
wages and the rate of profits in different employments
of labour and capital.
The justly celebrated chapter on this subject in the
Wealth of Nations begins with the following words:
"The five following are the principal circumstances
which, so far as I have been able to observe, make up
for a small pecuniary gain in some employments, and
counterbalance a great one in others. 1. The agreeable-
ness or disagreeableness of the employments themselves.
2. The easiness and cheapness, or the difficulty and
expense, of learning them. 3. The constancy or incon-
stancy of employment in them.
4. The small or great
trust which must be reposed in those who exercise them.
5. The probability or improbability of success in them."
Book i. ch. x.
As our remarks will be chiefly a commentary on
those of Adam Smith, we shall, as far as we can, follow
his arrangement. We shall begin, therefore, by the
influence of agreeableness or disagreeableness.
is
The act of labouring implies a sacrifice of ease, and it
chiefly to this sacrifice that our attention is directed
when we speak of wages as the remuneration for labour.
But, as we have already observed, the indolence which
generally indisposes to severe or long-continued bodily
exertion is not in all cases the only feeling which the
labourer has to conquer. His employment may be
dangerous, or physically disagreeable, or degrading. In
any one of these cases his wages are the reward not only
of the fatigue, but of the hazard, the discomfort, or the
discredit which he has encountered.
Adam Smith, 1. Agree-
however, has remarked, that the prospect of hazards ableness.
from which we can hope to extricate ourselves by
courage and address is not disagreeable, and does not
raise the wages of labour in any employment.
dangers and hair-breadth escapes of a life of adventure,
instead of disheartening young people, seem frequently
to recommend a trade to them. But it is otherwise,"
"The
POLITICAL ECONOMY.
213
Political he observes, "with those in which courage and address
Economy. can be of no avail. In trades which are known to be
very unwholesome the wages of labour are always
remarkably high.'
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
employ-
ments.
Unwholesomeness, indeed, is generally united to other
disagreeable circumstances. Dirt, dust, deleterious atmo-
sphere, exposure to continued heat or cold, or to sudden
transitions from the one to the other, which are the prin-
cipal causes of unhealthiness in any business, are also the
principal causes of its being generally disagreeable. When
toil, disease, and discomfort, are all to be encountered, the
temptation must indeed be high. But this union is not
universal. The trade of a house-painter is one of the
most agreeable, and one of the most unwholesome, among
ordinary occupations. On the other hand, that of a
On the other hand, that of a
butcher, though brutal and disgusting, is eminently
healthy. The wages of each are, we believe, about
equal, and considerably exceed the remuneration for the
mere labour undergone, which, in fact, is in both cases
very trifling. But the fear of popular odium, and, what
is always strongest amongst the least educated, the fear
of popular ridicule, as they are amongst the most
powerful feelings of our nature, are the most effectual
means by which the wages of an employment can be
increased. To Adam Smith's instance of a public
executioner may be added that of a common informer;
both of whom are remunerated at a rate quite dispro-
portioned to the quantity of work which they do. They
They
are paid not so much for encountering toil as for being
pelted and hissed. The most degrading of all common
trades, perhaps, is that of a beggar; but, when pursued
as a trade, it is believed to be a very gainful one.
Such appears to be the influence upon wages of
danger, discomfort, and disgrace. And it may be sup-
posed that any peculiarly agreeable employment is
generally as comparatively underpaid as peculiarly
disagreeable ones are overpaid. Adam Smith has
accordingly remarked that in a civilized society hunters
and fishers, who follow as a trade what other people
pursue as a pastime, are generally very poor people.
Fishermen," he observes, "have been poor from the
times of Theocritus. The natural taste for these
employments makes more people follow them than can
live comfortably by them; and the produce of their
labour, in proportion to its quantity, comes always too
cheap to market to afford any thing but the most scanty
subsistence to the labourers.' Hunting, however, can
scarcely be said to exist as a trade in any well-civilized
Country. And we doubt the accuracy of Adam Smith's
statement as to fishermen; unless, as perhaps was the
case, he intended to confine them to the small number
of anglers and poachers on rivers, who do, in fact, follow
as a trade what other men enjoy as a pastime. Marine
fishery is a business of too much toil and hardship to
be very attractive; and if any proof, besides the well-
fed persons and ample clothing of the men and their
families were required, of its being well paid, it would
be found in the fact that the capital employed in it,
which is far from inconsiderable, generally belongs to the
fishermen themselves.
As a general rule, we fear it must be admitted that
the occupations open to those who are not possessed of
capital differ only in the degree in which they are
disagreeable. The least disagreeable are man's primeval
*Book i. ch. x.
Political
Economy.
tion.
occupations, those of a shepherd and a tiller of the
ground. And, accordingly, we believe that in every
state of society the lowest wages are those which are Distribu-
of
paid to agricultural labourers. The current wages
common agricultural labourers may, therefore, in general Inequali-
be considered as representing the value, at the time and ties of
If, at wages and
place where they are paid, of mere bodily labour.
profit in
the same time and place, we find the services of any different
other labourer more highly paid, we may infer either employ-
that his employment is subject to some peculiar dis- ments.
advantage, or that, in fact, rent or profit enter into his
remuneration.
Adam Smith states that, in point of agreeableness or
disagreeableness, there is little or no difference in the
greater part of the different employments of stock,
though a great deal in those of labour; and he infers,
as we have seen, that average profits are more nearly on
a level than average wages.
That portion of profit
which is simply the remuneration for abstinence is cer-
tainly, at the same time and place, nearly on a level; for
abstinence, being a negative idea, does not admit of
degrees, excepting in the amount of capital from the
unproductive use of which the capitalist abstains, and
the length of time during which he abstains.
But we cannot admit that the agreeableness or dis-
agreeableness of the greater part of the different em-
Nor would
ployments of capital is about the same.
Adam Smith have stated them to be so unless he
had used wages in a wider, and profit in a narrower
sense than that which has been adopted in this Treatise.
Wages, in the sense in which we have used the word,
are paid almost exclusively for undergoing bodily
labour or bodily inconvenience, and bodily labour is
almost always disagreeable. But the labour of employ-
ing capital is principally mental, and mental exertion is
often delightful. We frequently hear of men who are
devoted to their profession or their business, however
generally unattractive. A surgeon once told us that,
whatever were his income, his utmost happiness would
be to superintend a great military hospital. Half the
miseries of mankind have arisen from the delight of
statesmen in governing, and of generals in war. Again,
the mere labourer receives mere pecuniary wages, or food,
shelter, and clothing, of equal value. The capitalist is
often paid by power or reputation, and sometimes re-
ceives the highest of human rewards, the consciousness
that he has been widely and permanently useful. And,
on the other hand, there are employments, as for instance
the slave-trade, which imply fatigue, hardship, and danger,
public execration, and, if a slave-trader can be supposed
to reflect on the nature of his occupation, self-reproach.
It is unnecessary to prove by a formal induction that,
when almost all that renders life agreeable, or even en-
durable, is sacrificed to profit, the profit must be great;
or that competition must reduce very low the pecuniary
reward or valuable remuneration of occupations which
seem to carry with them their own reward.
It may not appear obvious why the extra profit of a
disagreeable employment should bear any proportion
to the value of the capital employed in it. It must be
remembered that, since the number of persons possessed
of a given capital becomes rapidly smaller as the amount of
the supposed capital is larger, the possessors of any given
amount of capital enjoy a sort of monopoly, which be-
comes stricter and stricter as the given amount is larger;
and, secondly, that the larger a man's capital, and conse-
quently his income, the greater must be the temptation
214
POLITICAL ECONOMY.
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
employ-
ments.
Political necessary to induce him to encounter moral or physical
Economy. evil in the hope of increasing it. On the other hand, both
the trouble and the inferiority of rank that accompany any
trade are generally in inverse proportion to the capital em-
ployed. Where, indeed, the objection to a trade arises
from its moral turpitude, as in the case of the keeper of a
gambling-house, or of any place of still more shameful
resort, its extent will only increase its infamy. But in the
absence of this peculiar objection, the same trade which
on a small scale is mean, is respectable in a large way, and
almost dignified when carried to its greatest extent. The
trouble cannot be so completely got rid of, but when the
capital is large enough to enable the employment of
clerks and junior partners of great knowledge and high
character, it may often be so far reduced as to occupy a
small portion of the principal's daily time. There are
at this instant many persons busily engaged, and even
distinguished in politics and literature, who are also at
the head of great banking, brewing, or mercantile esta-
blishments. It is not probable that their occupations in
business can employ much of their time.
2. Facility
of learning
the busi-
ness,
The result that might be anticipated from these oppos-
ing circumstances is, that that part of profit which is the
remuneration for the trouble and other sacrifices, inde-
pendent of abstinence made by the capitalist, though it
must positively increase in amount, yet generally bears
a smaller proportion to the capital employed as that
capital increases in value. And this anticipation is, we
think, confirmed by observation. There are, we apprehend,
few persons employing in England a capital of £100,000,
who would not be satisfied with a profit of less than ten per
cent. per annum. A manufacturer of considerable emi-
nence, with a capital of £40,000, complained to us of the
smallness of his profits, which he estimated at twelve and
a half per cent. About fifteen per cent. we believe to be the
average that is expected by men with mercantile capitals
between £10,000 and £20,000. Scarcely any whole-
sale trade can be carried on with a capital of less than
£10,000. The capitals of less value, therefore, gene-
rally belong to farmers, shopkeepers, and small manu-
facturers, who, even when their capital amounts to £5000
or £6000, expect twenty per cent., and when it is lower
a much larger per centage. We have heard that stall
fruit-sellers calculate their gains at 2d. in the shilling,
or twenty per cent. per day, or something more than 7000
per cent. per annum. This seems, however, almost too low.
The capital employed at any one time seldom exceeds
in value 5s., twenty per cent. on which would only be Is.
a day; a sum which would scarcely pay the wages of
the mere labour employed. It is, however, possible that
the capital may sometimes be turned more than once in
a day; and the capitalists in question, if they can be called
so, are generally the old and infirm, whose labour is of
little value. The calculation, therefore, may probably be
correct, and we have mentioned it as the highest appa-
rent rate of profit that we know.
Secondly," says Adam Smith, "the wages of labour
vary with the easiness and cheapness, or the difficulty
and expense, of learning the business.
"When any expensive machine is erected, the extra-
ordinary work to be performed by it before it is worn out,
it must be expected, will replace the capital laid out on
it with at least the ordinary profits. A man educated at
the expense of much labour and time may be compared
to one of these expensive machines. The work which
he learns to perform, it must be expected, over and above
Distribu-
tion.
the usual wages of common labour, will replace to him Political
the whole expense of his education with at least the or- Economy.
dinary profits of an equally valuable capital.
It must
do this in a reasonable time, regard being had to the
very uncertain duration of human life, in the same Inequali-
manner as to the more certain duration of the machine. ties of
The difference between the wages of skilled labour and wages and
those of common labour is founded on this principle." profit in
Book i. ch. x.
different
employ-
We agree with the whole of this admirable passage, ments.
except that we think it shows the propriety of rather
terming the surplus remuneration of skilled over com-
mon labour profit than wages. It is an advantage de-
rived by the skilled labourer in consequence partly of his
own previous conduct, and partly of that of his parents
or friends;-of the labour and of the expense which
they respectively contributed to his education. It is
profit on a capital, though on that sort of capital which
cannot be made available without the labour of its
possessor.
wrote.
Adam Smith has remarked that, in the liberal pro-
fessions, this labour and expense are very inadequately
remunerated; and he attributes the slightness of their
remuneration first to the desire of the reputation which
attends upon superior excellence in any of them; se-
condly, to the natural confidence which every man has,
more or less, not only in his own abilities, but in his
own good fortune; and thirdly, as far as literature and
the church are concerned, to the number of persons who
are educated for those occupations at the public expense.
The two first causes operate very forcibly. The in-
fluence of the third he has, we think, exaggerated, or,
perhaps, its force may have much diminished since he
In the first place, though our population has
nearly doubled in the interval, the number of provisions
for affording gratuitously the means of a liberal educa-
tion has not materially increased. And, secondly, from
the change which has taken place in the style of living
at the places of education, and in many cases from the
nominal value of the provisions having remained unaltered,
while money has lost more than half its value, these
provisions now afford much less real assistance to the
persons who obtain them. Adam Smith seems to have
supposed that the greater part of the clergy were
educated at the expense of the public, and he expressly
states that few were educated altogether at their
own. But at present there are scarcely any under-
graduates at either of our Universities wholly main-
tained by a foundation: probably there are not twenty
who receive from such a source one half of their expen-
diture, and by far the greater number receive no pecuni-
ary assistance except from the relative cheapness of in-
struction. We say relative cheapness, because the sum
of money positively paid for instruction is perhaps as great
at Oxford and Cambridge as at most other Universities;
but the attention bestowed by the teacher on each indi-
vidual student is considerably greater. In the foreign
Universities a lecture is a discourse delivered by the pro-
fessor; in ours, the College lectures, which are the prin-
cipal means of instruction, are, in a great degree, exami-
nations undergone by the pupils. There can be no
comparison between the labour imposed on the teacher
in these two modes of education. But that which is
the laborious one necessarily confines each tutor to a
small number of pupils.
small number of pupils. If our foundations did not
afford them an income, our tutors must either require a
much larger remuneration from each pupil, or adopt the
POLITICAL ECONOMY.
215
Political foreign mode of teaching by discourses delivered to large
Economy, assemblies.
The principal cause which fills the avenues to some
Distribu- of the liberal professions with candidates so numerous
tion. as materially to diminish one another's reward is one
Inequali- which Adam Smith has omitted.
ties of
wages and
profit in
different
employ-
ments.
The average expense of providing in the cheapest
manner for the maintenance of a child until it can main-
tain itself by ordinary labour may perhaps amount to
about £40. This is double the sum for which a parish
will indemnify the father of a bastard. The parish,
however, speculates on the chances of the child's death.
The average expense of giving to a gentleman's son the
education which is essential to his holding his father's rank
cannot be estimated at less than £2,040. But neither the
labour which the boy undergoes, nor the expense borne
by his father, is incurred principally in order to obtain
future profit. The boy works under the stimulus of im-
mediate praise or immediate punishment. It never
occurs to the father that it would be cheaper to have his
child nursed in the country at 2s. a week till he is eight
years old, and then removed to a farm-yard or a cotton-
mill; and that in giving him a more expensive education
he is engaging in a speculation which is likely to be un-
profitable. To witness a son's daily improvement is,
with all well-disposed men, or rather with all men, ex-
cept a few outcasts, one of the greatest sources of im-
mediate gratification. The expense incurred for that
purpose is as much repaid by immediate enjoyment as
that which is incurred to obtain the most transitory
pleasures. It is true that a further object may also be
obtained, but the immediate motive is ample.
But the extra expense and labour thus incurred in
some cases constitute the whole expense and labour of
preparation for a liberal profession, and in all cases con-
stitute the bulk of that expense and labour. In the
church they constitute the whole of the expense, and
almost all the labour. A graduate of Oxford or Cam-
bridge may have a very little more to read before he
takes orders, but has absolutely nothing more to pay.
What he obtains, therefore, as a clergyman, after deduct-
ing the mere wages of his additional labour, is pure
gain. And when we consider how many are the motives
for undergoing that labour, besides the merely pecuniary
ones, we might be tempted to wonder that the pecuniary
rewards should remain so high. Three circumstances
keep them up two by diminishing the number of can-
didates, and the third by raising the fund applicable to
their use.
The two former ones are the indelibility of
the clerical character, and the interdiction of clergymen
from almost all secular employments, especially from
those which offer the most glittering rewards. Many
men would enter the church if they could combine it
with other occupations, or if they might quit it at
pleasure, who refuse to enter into a path in which it is
not permitted to turn back or to diverge. These are
probably the principal causes which tend in this Country
to keep down the number of clergymen. The revenue
of the existing members is kept up by means of the
fund set apart by law for their use, and somewhat equal-
ized by the repeated intervention of the Legislature to
raise the remuneration of curates by prohibiting the in-
cumbent from offering, and the curate from accepting,
a stipend as low as would have been fixed on mere prin-
ciples of competition. The expense of entering the
army is probably about equal to that of the church;
for though about £600 is to be added for the price of
Political
the first commission and for outfit, the difference is about
made up by the early age at which the profession can be Economy.
begun. The expense of the navy is much less, and Distribu-
either profession may be entered upon without further tion.
preparatory study. The Legislature has fixed the pay Inequali-
and other advantages of the army and navy (moderate ties of
as they appear to be) much higher than would have been wages and
necessary to keep up the supply of qualified candidates. Profit in
The difficulty of obtaining permission to enter either of employ-
them is so notorious, that few persons without considera- ments.
ble interest ever think of them. Yet, notwithstanding
the influence of this feeling in diminishing the number
of competitors, the Admiralty and the Horse Guards
are besieged by candidates for first commissions ten times
more numerous than the vacancies.
The same may be said of what are the subjects of
almost a distinct profession, public offices. Small as the
emoluments are, if they are to be considered as repaying
the expenses of education, they are objects of eager
competition.
If further proof were wanted that the number of the
candidates for the liberal professions is principally kept up
by the feeling which forces every parent to endeavour to
give to his children at least the education of his own rank
rather than by calculation, it may be found in the abun-
dance of governesses. The expense of giving to a girl
the education which will fit her to be a governess, though
not quite equal to that of educating a boy as a gentleman,
is yet very considerable: no part of it is ever supplied
by the public; and yet that profession is so overstocked
with candidates that the pay scarcely equals that of a
servant.
An expense of nearly £1000 beyond the common
expense of a regular education may be necessary to start
a young man as a physician, and perhaps nearly £1500
as a barrister. The lower branches of the legal and
medical professions are about as expensive as the church
or the army. But no branch of either law or physic
admits of practice till after an apprenticeship of from
three to five years, or of success, without three or four
years of diligent study. The effect of all these causes
has been so much to diminish the number of competitors
in the medical and legal professions, that we much doubt
whether they are now, as Adam Smith states them to have
been in his time, under-recompensed in point of pecu-
niary gain. We speak more doubtfully as to medicine ;
but we can say, from the observation of many years, that
his statement that, "if you send your son to study the
law, it is at least twenty to one if he ever makes such
proficiency as will enable him to live by the business,"
has no resemblance to the existing state of things.
have watched the progress of perhaps a hundred legal
students, and, where fair diligence has been employed,
success has been the rule, and failure the exception.
Many, indeed, have not applied fair diligence; but we
have seen much more success among the idle than failure
among the laborious. So far from the chances being
twenty to one against a young lawyer, we should be in-
clined to rate them at two to one in his favour.
We
different
:
A third cause of variableness both in wages and in 3. Constan-
profits is constancy or inconstancy of employment. The cy of em-
variations which it occasions are, however, rather appa- ployment.
rent than real. A London porter, employed for an hour,
would think himself ill paid by less than a shilling. A
pavior or a hodman, whose labour is much more severe,
seldom receives more than 3d. an hour. But the pa-
216
POLITICAL ECONOMY.
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
employ-
ments.
Political vior can always find a market for his services. At 3d.
Economy, an hour, he can at an average earn three shillings a day,
or about £46 a year. The porter may be sometimes a
day without a job. If his employment be less regular by
three-fourths than that of the pavior, to make his annual
wages equal, his hourly wages must of course be three
times as high. Adam Smith, indeed, thinks that his annual
wages ought to be higher than the average, to make him
some compensation for those anxious and desponding
moments which the thought of so precarious a situation
must sometimes occasion. But this evil is compensated,
But this evil is compensated,
aud, in most dispositions, more than compensated, by the
diminution of his toil. We believe, after all, that nothing
is so much disliked as steady, regular labour; and that
the opportunities of idleness afforded by an occupation
of irregular employment are so much more than an
equivalent for its anxiety as to reduce the annual wages
of such occupations to below the common average.
4. Trust.
5. Probabi-
In the employment of capital, however, this compen-
sation does not often exist. The occasional unproduc-
tiveness of his capital, generally speaking, affords no
relief to the capitalist. It must, therefore, be compen-
sated by a surplus profit, when productive, at least
enough to balance its periods of unproductiveness. A
house-builder's capital often lies unproductive; there are
some places in which the majority of the houses are un-
occupied for nine months in the year. The builder's
profit during their occupation must be at least four times
as great as if they were regularly inhabited. One of the
consequences of the effect of irregularity of employment
on wages and profits is to occasion many services and
commodities to cheapen as the demand for them in-
creases. A man who can count on employment for four
hours a day would be forced by competition to sell his
services for nearly half of what he might have asked if
he could have reckoned on only two hours. Prices in a
watering-place always fall as the season becomes longer.
The fourth cause assigned by Adam Smith for the varia-
tion in wages, the small or great trust which must be re-
posed in the workman, appears to be in a great measure
included in the second of his causes, the expense of edu-
cation. Occasionally, indeed, we see persons receiving
and deserving confidence though brought up under dis-
advantageous circumstances. The integrity of such per-
sons must arise from a peculiarly happy natural disposi-
tion, and its reward may then be considered a species of
rent; but, as a general rule, trustworthiness is the result
of early moral cultivation, and in that case is as much to
be considered a part of a man's immaterial capital as his
prudence or his knowledge.
The last of the causes mentioned by Adam Smith,
lity of suc- as affecting the remuneration of different employments,
is the probability or improbability of success.
cess.
Uncertainty of success, in some respects, resembles
inconstancy of employment. A few examples will show
them to be different. The legal and medical professions
are generally thought to be remarkably uncertain, but
the employment of a successful physician or barrister is
painfully incessant. On the other hand, a man may be
morally sure that in a given occupation he will have a
day's work forty or fifty times during a year, and that
his earnings on those occasions will supply well his
annual subsistence. Such an occupation would be
certain, notwithstanding its inconstancy.
Uncertainty of success cannot well affect the wages
1
of common labour, since no man, unless he be to a cer- Political
tain extent a capitalist, unless he have a fund for his Economy.
intermediate support, can devote himself to an employ- Distribu-
ment in which the success is uncertain.
But its tion.
apparent, and indeed its real effect on profits, is very Inequali-
considerable.
ties of
Perfect knowledge, of course, excludes the idea of wages and
profit in
chance; but if all men had sufficient information to different
enable them to calculate fairly the chances of success, employ-
and were subject neither to rashness nor to timidity, it ments.
appears clear that even then the average profits of any
employment would be raised by uncertainty of success.
When the sums are equal, to lose is obviously a
greater evil than to gain is a good. If two men, with
each a capital of £2000, toss up for £1000, the gainer
augments his fortune by only one-third, and the loser
sacrifices one-half. Laplace calculates the disadvantage
at twenty-six per cent. At an equal game, he observes,
the loss is relatively greater than the gain. Suppose a
player with a fortune of 100 francs to risk 50 of them at
heads and tails, his fortune, after he has deposited his
stake, will be reduced to 87 francs; that is to say, 87
francs unhazarded would procure him as much happi-
ness as 50 unhazarded, with 50 more subjected to the
chance of being doubled or lost. Admitting this calcu-
lation to be correct, and admitting the existence of the
degree of information and prudence which we have sup-
posed, no one possessed of £10,000 would venture
£5000 with an even chance of losing it, unless he had
an even chance of gaining not merely £10,000, and an
adequate profit on his capital of £5000, but could
reckon on a further profit of £1300, as the price for
undergoing the risk.
It is needless to say that men are far from possessing
this degree either of information or of prudence. It is
to be observed, however, that there are two sorts of
uncertainty. In some cases the hazard is essentially
connected with the employment itself, and recurs, in
about an equal degree, at every operation. Smuggling,
and the manufacture of gunpowder, are instances.
Experience and skill may somewhat diminish the risk ;
but the best smuggler, and the best maker of gun-
powder, probably each, suffers an average amount of
loss. But there are employments in which success, if
once obtained, is permanent. Such is often the case in
mining. That mining is generally the road to ruin is
notorious in all mining countries; but there are miners
who have never suffered a loss. The same may be
said of the liberal professions. Granting them to be as
uncertain as Adam Smith believed them to be, the evil
to which that uncertainty refers is experienced only by
those who fail. To those who succeed they afford a
revenue eminently safe and regular. Their uncertainty
is personal. It arises from the error to which every
man is subject when he compares his own qualifications
with those of his rivals.
with those of his rivals. If he be found on the actual
trial inferior, his failure is irretrievable. In the other
alternative his success is as permanent. Where any
business is necessarily and permanently hazardous, the
fortunes of any one individual engaged in it afford a
sample from which we may estimate the fortunes of all.
If only one old farmer could give to us all his personal
experience, we should probably have a tolerably correct
conception of the hazards to which farming is exposed.
But, if we were to estimate the chances of legal or
medical success from the average of ten or twenty
selected instances, we should be likely to be grossly
POLITICAL ECONOMY.
217
Political misled. The first sort of uncertainty, therefore, is likely
Economy, to be estimated with a much greater approach to correct-
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
employ-
ments.
ness than the second.
Adam Smith believed both to be under-estimated,
and, consequently, that the average profits of all hazard.
ous employments are below the average profits of safe
ones. His views are stated with so much force and
ingenuity, that we will extract them at considerable
length.
"The overweening conceit which the greater part of
men have of their own abilities is an ancient evil
remarked by the philosophers and moralists of all ages.
Their absurd presumption in their own good fortune
has been less taken notice of. It is, however, if possible,
still more universal. There is no man living who,
when in tolerable health and spirits, has not some share
of it. The chance of gain is by every man, more or less,
overvalued; and the chance of loss is by most men under-
valued; and by scarce any man, who is in tolerable
health and spirits, valued at more than it is worth.
"That the chance of gain is naturally overvalued we
may learn from the universal success of lotteries. The
world neither ever saw, nor ever will see, a perfectly
fair lottery, or one in which the whole gain compensated
the whole loss, because the undertaker could make
nothing by it. In the state lotteries the tickets are
really not worth the price which is paid by the original
subscribers, and yet commonly sell in the market for
twenty, thirty, and sometimes forty per cent. advance.
The vain hope of gaining some of the great prizes is the
sole cause of this demand. The soberest people scarce
look upon it as a folly to pay a small sum for the chance
of gaining £10,000 or £20,000, though they know
that even that small sum is perhaps twenty or thirty per
cent. more than the chance is worth. In a lottery in
which no prize exceeded £20, though, in other respects,
it approached much nearer to a perfectly fair one than
the common state lotteries, there would not be the same
demand for tickets. In order to have a better chance
for some of the great prizes, some people purchase
several tickets, and others small shares in a still greater
number. There is not, however, a more certain propo-
sition in Mathematics, than that the more tickets you
adventure upon, the more likely you are to be a loser.
Adventure upon all the tickets in the lottery, and you
lose for certain; and the greater the number of your
tickets, the nearer you approach to this certainty.
66
•
That the chance of loss is frequently undervalued,
and scarce ever valued more than it is worth, we may
learn from the very moderate profit of insurers. In
order to make insurance either from fire or sea risk a
trade at all, the common premium must be sufficient to
compensate the common losses, to pay the expenses of
management, and to afford such a profit as might have
been drawn from an equal capital employed in any
common trade. The person who pays no more than
this evidently pays no more than the real value of the
risk, or the lowest price at which he can reasonably
expect to insure it. But, though many people have
made a little money by insurance, very few have
made a great fortune: and from this consideration alone
it seems evident enough that the ordinary balance of
profit and loss is not more advantageous in this than in
other common trades, by which so many people make
fortunes. Moderate, however, as the premium of
insurance commonly is, many people despise the risk too
much to care to pay it. Taking the whole kingdom at
VOL. VI.
an average, nineteen houses in twenty, or rather perhaps Political
ninety-nine in a hundred, are not insured from fire. Economy.
Sea risk is more alarming to the greater part of people, Distribu-
and the proportion of ships insured to those not insured tion.
is much greater.
is much greater. Many sail, however, at all seasons, Inequali-
This ties of
and even in time of war, without any insurance.
may sometimes, perhaps, be done without any impru- wages and
dence. When a great company, or even
a great profit in
different
merchant, has twenty or thirty ships at sea, they may, employ-
as it were, insure one another. The premium saved ments.
upon them all may more than compensate such losses
as they are likely to meet with in the common course of
chances. The neglect of insurance upon shipping,
however, in the same manner as upon houses, is, in
most cases, the effect of no such nice calculation, but of
mere thoughtless rashness and presumptuous contempt
of the risk. The ordinary rate of profit always rises,
nore or less, with the risk. It does not, however, seem
to rise in proportion to it, or so as to compensate it
completely. Bankruptcies are most frequent in the most
hazardous trades. The most hazardous of all trades,
that of a smuggler, though, when the adventure
succeeds, it is likewise the most profitable, is the
infallible road to bankruptcy.
infallible road to bankruptcy. The presumptuous hope
of success seems to act here as upon all other occasions,
and to entice so many adventurers into those hazardous
trades, that their competition reduces their profit below
what is sufficient to compensate the risk. To compen-
sate it completely, the common returns ought, over and
above the ordinary profits of stock, not only to make up
for all occasional losses, but to afford a surplus profit to
the adventurers of the same nature with the profits of
insurers. But if the common returns were sufficient for
all this, bankruptcies would not be more frequent in
these than in other trades." Book i. ch. x.
Whether Adam Smith's conclusions be true or false,
they certainly do not follow from his premises. Bank-
ruptcies might be frequent in a trade of extra-
ordinary profit. We will suppose ten merchants each
to employ for a year a capital of £10,000 in a remark-
ably safe trade, and ten others to employ equal capitals
for the same period in a hazardous trade; and ten per
cent. per annum to be the average rate of profit in
undertakings involving similar trouble. The capital of
£100,000 engaged in the safe trade would, at the end
of the year, be raised to £110,000, but be distributed
in the same proportions as before. If the capital
engaged in the hazardous trade were also, at the end of
the year, to amount to £110,000, it is clear that each
trade would have been equally profitable, although a
different distribution of the capital might have ruined
some, and made the fortunes of others, among the
merchants engaged in it. Two might have lost, and
two others might have doubled, their whole property.
If the capital in the hazardous trade were found, at the
end of the year, to have been raised from £100,000 to
£120,000, it is clear that the hazardous trade must
have been twice as profitable as the safe one, though the
whole of the advantage might have fallen to two or
three or even to one of the supposed ten merchants,
leaving all the others to bankruptcy.
Insurance was a still more unfortunate source of argu-
ment; for all the premises that it affords lead to a con-
clusion directly opposed to Adam Smith's. Insurance
is one of the safest of employments. If its profits be re-
markably moderate, their moderation can be accounted
for only by the extra competition which its safety invites.
26-H
218
POLITICAL ECONOMY.
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
employ-
ments.
Political It affords, therefore, at least one example in favour of
Economy. the superior profits of hazardous employments. Nor
can it be said that the majority of persons despise the
risk too much to secure themselves against it by paying
a moderate premium. So much do they fear the risk
that they are willing to guard against it by paying a
most immoderate premium. The sum received by the
insurance office must, as Adam Smith has remarked,
exceed the value of the risk by an amount sufficient to
pay the expenses of management, and afford ordinary
profit. The sum received by the office on common
insurances against fire is 1s. 6d. per £100; of which at
least 6d. must go to pay expenses and profit, leaving Is.
as the value of the risk. But a duty is also paid to
Government by the insured of 3s. per £100; so that the
whole expense of insurance is 4s. 6d. per £100, or nearly
five times the value of the risk. And, even at this ex-
travagant rate, we believe that of good houses not one in
a hundred is uninsured. So little do people despise
the risk that, with their eyes open, they purchase a
security against it at nearly five times its real value.
We suspect the fact to be that the imagination is
unduly affected by the prospect either of enormous gain
or of enormous loss; and, consequently, that men are
ready to purchase the chance of obtaining a very great
advantage, or the certainty of not suffering a very great
disadvantage, at a price far beyond the value of either
contingency. And this appears to be sufficiently proved
by the facts which have been stated respecting insurance
and lotteries. The English state lotteries of late times,
indeed, afforded much more striking proofs of men's
tendency to over-estimate the chances of extravagant
gain than those which Adam Smith had seen. The
tickets were always worth exactly £10 apiece-£10 for
each ticket forming always a sum equal to the aggregate
amount of all the prizes; the average price of a ticket was
from £21 to £24 apiece. Instead of twenty or thirty per
cent, the purchasers paid more than one hundred per cent.
more than the value of their hope, just as, in the case of
insurance, they pay nearly five hundred per cent. more than
the value of their fear. The purchasers of tickets seem to
have considered the relation between £24 and £20,000,
not that between £24 and the one two-thousandth chance
of getting £20,000. Just as those who insure their houses
compare £2.5s. with £1000 instead of comparing it with
the one two-thousandth chance of losing £1000. Adam
Smith has well remarked, that if the disproportion between
the sum paid and the sum attainable were altered, even
though the bargain were rendered more favourable, the
competition for it would diminish.
would diminish. No one would buy
half the tickets in a lottery, even at £12 a ticket; he would
at once see the absurdity of paying £120,000 for an even
chance of getting £200,000, though, if a state lottery
were now opened, a folly just twice as great in kind would
be committed by thousands. So if, instead of one in
two thousand, which we believe to be about the present
average, one house in ten were annually burned down,
and the annual expense of insurance were £22 10s. per
cent., insurance would diminish, though the terms would
be twice as favourable as they now are.
Those employments which offer the possibility of a
great return for a small outlay are of the nature of lot-
teries; and it may be supposed that they attract compe-
tition in proportion not so much to the real value of the
contingency as to the excess of the possible return over
the certain outlay. If that excess be very great, it may
be supposed that the number of competitors in propor-
tion.
wages and
ments.
tion to that of prizes will reduce so low the value of Political
each man's contingency as to render such employments Economy.
on the whole unprofitable. In this Country the church,
the army, and the bar, are such employments. They Distribu-
offer prizes that may satisfy to its utmost almost every
human desire; and they require, as we have seen, ties of
Inequali-
from those who have already received a gentleman's
education, a very moderate further outlay the church profit in
and the army scarcely any; the bar perhaps £1500. different
Under these circumstances, if the number of barristers employ-
were not kept down by the necessity of years of irksome
study, and the emoluments of the church and of the
army and navy kept up by the funds appropriated to
their respective use, we have no doubt that the compe-
tition in these professions would reduce their average
profit far below even its present moderate amount. We
often hear proposals for equalizing, or rather for
diminishing, the inequality in ecclesiastical preferments.
At first sight it appears a waste to pay £20,000 a year
to an Archbishop for doing less than is required from
the curate of a populous parish with only £100 a year.
But if our object were to obtain an expensively edu-
cated clergy on the cheapest terms, that object would
probably be best effected, not by diminishing, but by
increasing, the value of the highest prizes.
revenues of all the English Bishoprics put together
fall short of £150,000 a year. This sum, divided
among the ten thousand livings, would raise the value of
each by £15. Can any one believe that such a change
would not diminish the worldly attractions of the church?
Nothing sells so dearly as what is disposed of by a well-
constructed lottery, and if we wish to sell salaries dearly,
that is, to obtain as much work and knowledge as pos-
sible for as little pay as possible, the best means is to
dazzle the imagination with a few splendid prizes, and,
by magnificently overpaying one or two, to induce thou-
sands to sell their services at half price.
The
We have been told that it was once proposed at Rome,
as the easiest mode of constructing a vast dome, to raise
a mound of earth of the required shape, and build over
it. But the expense of then removing the earth ap-
peared enormous. On the principle which we have en-
deavoured to illustrate it was proposed that in raising the
mound the earth should be i regularly mixed with coins
of gold, silver, and copper, amounting in the aggregate
to a sum equal to about half the aggregate amount of
the wages which it would have cost to remove by
paid labourers, and then to allow the populace to remove
it in barrows, without payment. It was supposed that
a sufficient number of persons would offer their services,
though, in fact, working, in the aggregate, at half price.
We have already expressed an opinion that the bar
is better paid than the church, and we attribute this to
its being less of a lottery. The expenditure, as we have
seen, is far greater, and the prizes, on the whole, are
smaller. The learned profession which offers the
fewest prizes and requires the largest outlay, that of a
schoolmaster, as it ceases to be a lottery, is by far the
best paid. There are probably few capitals which in the
aggregate yield so certain and at the same time so large
a profit.
In some few cases commercial adventures are of the
nature of a lottery. Such were the shares which ex-
cited the strange fevers of cupidity and speculation which
marked the years of 1720 and 1825. Of the thousands
who crowded to buy Chili and Peruvian, and Rio la
Plata, and Columbian, and Mexican shares, how many
POLITICAL ECONOMY.
219
tion.
Political can be supposed not to have ascertained, but to have
Economy, endeavoured to ascertain, or even to have thought of
ascertaining, the probability of their Company's success?
Distribu- All they knew was that Real del Monte shares, for
Inequali- which £70 had been given, were selling for £1200:
and they bought a few shares in other Companies,
because, if the speculation succeeded, they might get one
thousand per cent., and if it failed they had only lost
one or two hundred pounds.
ties of
wages and
profit in
different
employ.
ments.
Generally speaking, however, those commercial ad-
ventures which offer a large immediate advantage are
more in the nature of ordinary gambling than of a
lottery. The possible loss often equals or exceeds, and
generally bears a large proportion to, the possible gain.
The undue hopes and the undue fears, which we have
described as excited by the prospect of enormous gain
and enormous loss, may now be supposed to balance
one another, and to leave room for the action of Adam
Smith's principle, an absurd presumption in our own
good fortune. If his theory be correct, if every man in
tolerable health and spirits have a tendency to miscal-
culate the chances in his own favour, it must follow
that those speculations, which offer a great gain at the
hazard of a great loss, invite so much competition as to
be, if not positively unprofitable, at least less advan-
tageous than ordinary employments. And we believe
such to be the case. Mining and stock-jobbing are
employments of capital which offer splendid success at
the hazard of ruinous failure. The former employment
is notorious not merely as affording less than average
profits, but as affording no aggegate balance of profit at
all as productive in the aggregate of loss. Knowledge,
diligence, capital, all the materials of success, are
applied in Cornwall to one of the richest mineral dis-
tricts in the world, and yet it is supposed that the aggre-
gate price of the whole of the copper and tin annually
raised in Cornwall-is not equal to the whole of the ex-
pense of raising it. A few capitalists, however, make
large fortunes, and their success draws on the rest,
generally to loss, often to ruin.
Even if speculation in the funds were attended by no
expense, it is mathematically certain that it could in the
aggregate afford no profit, as what is gained by one
must be lost by another. But it is carried on at a very
great expense. Every transfer costs a commission of
2s. 6d. for every £100 stock. A man who annually
buys and sells stock to the amount of £800,000, and
that is far from a large amount for an habitual specu-
lator, must at an average pay for commission £1000
a year; and that £1000 exactly represents the amount
of his annual loss, supposing him to speculate with
average success.
On the whole, however, though we attribute some-
thing to men's confidence in their superior good for-
tune, we attribute much more to their confidence in
their superior ability. A confidence which, if universal,
would, on the whole, produce as much miscalculation
as the former, but which is not obviously irrational
not obviously irrational
in each particular instance, and on that very account
is stronger and more general.
The third and last class of the employments of
capital which are subject to uncertainty comprises those
which are just the reverse of a lottery: those in which
the gain is in each instance small, but nearly certain;
and the loss great, but highly improbable.
If our theory be correct, this remote contingency of
great loss must in general be overvalued, and the capi-
talist who submits to it must, in addition to the profit Political
which would content him if his business were perfectly Economy.
safe, receive at an average in the first place an extra
profit equal to the risk, and in the second place, a further Distribu-
tion.
the
profit to compensate his anxiety, to compensate Inequali-
excess of evil occasioned by loss over the benefit that
attends on gain, and a still further profit to compensate wages and
the undue importance which he is likely to attribute to profit in
the chances against him.
ties of
different
employ-
Now this class comprises almost all those employ- ments.
ments of capital which, to distinguish them from those
attended by extraordinary risk, are generally termed
safe. A merchant or a manufacturer who wishes to be
safe must in general give up the hope of obtaining great
profit by any single transaction. But no productive
employment of capital can be perfectly safe. A capi-
talist may, indeed, lend his capital to one who wishes to
employ it, on receiving a pledge, and the pledge may so
much exceed in value the sum lent as to make the loan
secure; but the capital itself, if employed, must be
risked. Credit must be given, confidence must be
reposed in agents, and when every precaution has been
taken, an extraordinary season, an unexpected source of
supply, a sudden change in foreign or domestic politics,
or a commercial panic, may produce ruin out of the best-
arranged operations. No man in business can be per-
fectly sure that in ten years' time he shall not be a
bankrupt. If we are right, this risk of enormous loss,
when unbalanced by the hope of enormous gain, must
be compensated by an extra profit of something more
than its value, just as the chance of enormous gain,
when not balanced by the fear of enormous loss, is
purchased at more than its value; and as the latter class
of employments gives a smaller, so the former must give
a greater average return than would be afforded by an
employment perfectly safe, if any such there be.
Inequalities in wages and profits occasioned by the
difficulty of transferring capital and labour from one
employment to another.
The inequalities in wages and profits which we have
as yet considered arise from causes inherent in the em-
ployments themselves which have been the subjects of
discussion, and would, generally speaking, exist even if
one occupation could at will be exchanged for another.
But great inequalities are found which cannot be ac-
counted for by any circumstances leading men to
prefer one employment to another, and which therefore
continue only in consequence of the difficulties expe-
rienced by the labourers and the capitalists in changing
their employments.
The difficulty with which labour is transferred from
one occupation to another is the principal evil of a high
state of civilization. It exists in proportion to the
division of labour. In a savage state almost every man
is equally fit to exercise, and in fact does exercise, almost
every employment. But in the progress of improve-
ment two circumstances combine to render narrower and
narrower the field within which a given individual can
be profitably employed. In the first place the opera-
tions in which he is engaged become fewer and fewer.
"In a pin-manufactory," says Adam Smith, one man
draws out the wire, another straightens it, a third cuts
it, a fourth points it, a fifth grinds it at the top for re-
ceiving the head; to make the head requires two or
three distinct operations; to put it on is a peculiar
business; to whiten the pins is another; it is even a
2 G-H 2
220
POLITICAL ECONOMY.
Distribu-
tion.
Inequali-
ties of
Political trade by itself to put them into the paper; and the im-
Economy, portant business of making a pin is in this manner
divided into about eighteen distinct operations." In a
large manufactory the man who is engaged in one of
these operations has little experience in any of the others.
And, in the second place, the skill which the division
wages and of labour gives to each distinct class of artificers gene-
profit in
rally prevents whatever peculiar dexterity an individual
different
Countries. may have from being of any value in a business to which
he has not been brought up. A workman whose spe-
cific labour has ceased to be in demand finds every
other long-established employment filled by persons
whose time has been devoted to it from the age at which
their organs were still pliable and their attention fresh.
Mr. Ewart, one of the many intelligent witnesses ex-
amined by the Committee on Artisans and Machinery,
is asked:
"Can you state any facts to prove the inefficiency of
even the best workmen when they are taken out of the
immediate line of their daily business, though in the same
trade?"
He replies, "Yes, I can: I should state particularly
the case of the clock and watch tool and movement
makers in Lancashire; they are considered the best
workmen; they use the same sort of tools that the
cotton-machine makers use; but they are brought up
to no employment but making those clock and watch
tools and movements. When those men come to be em-
ployed in making cotton machines we find that they
have almost as much to learn as if they had never
learnt any working in metal at all. We have found
them quite insufficient to do any ordinary filing and
turning."
Garnier, in the amusing notes to his translation of
Adam Smith, contrasts the comfort of the lower orders
in France with the pauperism of England, and ascribes
the difference which he discovers to artificial restraints
on the circulation of labour in England, and the absence
of such restraints in France. "Under a government,'
"Under a government,"
he observes," which does not interfere with the direction
of industry, it is impossible that a man in health and
strength can be without employment, unless his vices
make employment intolerable to him. Let the workman
be allowed to choose the market for his labour, and you
may be sure that he will find one, and more and more
certainly in proportion to the wealth of the Country. The
complaint of want of work is the threadbare excuse of
the idler who prefers relief to wages. If he were to
search for it, he would find it as well as his companions.
In France, though our population is one-third more nu-
merous than that of England, and the fund for the sup-
port of labour much smaller, the labouring classes are
free from want, or even discomfort."
There can be no doubt that we have among our insti-
tutions and our habits much that fetters and misdirects
the industry of our labourers; and that these causes
frequently occasion, and always prolong, the want of
employment to which large portions of our labourers
are frequently exposed. We believe, too, that from many
of these causes France is comparatively free. The mo-
nopolies possessed by towns and by incorporated bodies
of artificers, with their oppressive bye-laws and duties,
were swept away by the Revolution. Much, however,
that is productive of evils similar in kind, still remains.
* Report on Artisans and Machinery, 1824, p. 251.
+ Note 25.
different
Not long ago the number of butchers in Paris was, by an Political
ordonnance of police, restricted to four hundred. The most Economy.
important of all employments, that of affording education, Distribu-
is a government monopoly; and the commercial code of tion.
France is even worse than our own. If, therefore, the Inequali-
labouring classes of France never suffer from want of ties of
employment, they do not owe their immunity to a com- wages and
plete, or even a very considerable, freedom from interfe- profit in
rence. If their employment be actually more constant than Countries.
that of our labouring classes, we believe that they owe that
constancy principally to the inferior extent of their ma-
nufactures, and, what is both the cause and the effect of
that inferiority, to a much less subdivision of labour.
Less than one-third of the population of England, and
more than two-thirds of the population of France, are
employed in the cultivation of the soil. We are inclined
to think that, notwithstanding this disproportion, the
English labouring classes are better fed than the French.
But there is no comparison between their respective en-
joyment of clothing and other manufactures. The
greater part of the coarser manufactures are both cheaper
and better in England; while the wages in France, both
of manufacturing and agricultural labourers, are about
half what they are with us. "A peasant suffering
severely from rheumatism," says M. Say, (Cours Complet,
toine i. p. 46,) "asked my advice. I recommended to
him a flannel waistcoat next the skin. He did not know
that there was such a thing as flannel. I told him then
to wear under his shirt a cloth waistcoat turned inside-out.
How, he asked, am I to get cloth to wear under my shirt,
when I have never been able to afford to wear it above?
And yet he was no worse off than his neighbours."
'
The French labourer, being employed in more capa-
cities than the Englishman, has more trades to turn to,
and for that very reason is less efficient at any one. The
Russian is probably more seldom out of employ than
the Frenchman, and the Tartar less frequently than
either. But few principles are more clearly established
than that, cæteris paribus, the productiveness of labour
is in proportion to its subdivision, and that, cæteris pari-
bus, in proportion to that subdivision must be the occa-
sional suffering from want of employment. A savage
may be compared to one of his own instruments, to his
club, or his adze, clumsy and inefficient, but yet com-
plete in itself. A civilized artificer is like a single wheel
or roller, which, when combined with many thousand
others in an elaborate piece of machinery, contributes to
effects which seem beyond human force and ingenuity,
but, alone, is almost utterly useless.
The difficulty in transferring material capital from one
employment to another depends principally on the de-
gree in which it has been manufactured, and on the
change to be made in the disposition of its parts. The
destination of raw material can, in general, be changed
with little inconvenience. The stones that have been col-
lected for a bridge may easily be employed for a house.
But if they have been formed into a house, or a bridge, the
value of the materials would scarcely pay the expense of
removing them. Those costly instruments which form
the principal part of fixed capital can scarcely ever
be applied in their original state to any but their original
purposes. They are employed, therefore, in the same
way, long after they have ceased to afford average profit
on the expense of their construction, because a still greater
loss would be incurred by attempting to use them in a
different manner. It would be a bad speculation to
erect a steam-engine at the cost of £20,000 which should
POLITICAL ECONOMY.
221
Political return an annual profit of only £100, but it would be
Economy. a still worse one to sell it as old iron for £500.
Distribu-
tion.
Inequali-
ties of
wages and
profit in
different
Countries.
66
There is a considerable resemblance in this respect
between mental and inanimate capital. Probity, in-
dustry, judgment, elementary knowledge, and the other
moral and intellectual habits and acquirements to which
we give the general name of a good education," are
a kind of mental raw material, of which the destination
can be altered at pleasure. The peculiar knowledge and
habits of a given profession are like a steam-engine or a
water-mill, of comparatively small value for any but their
appropriate purposes. In general, however, mental capi-
tal is the more transferable of the two, and becomes more
and more so the more exclusively it is exclusively mental.
The professional knowledge and dexterity of a weaver
would be of little use to him in any other employment.
A lawyer or a physician, prevented by circumstances
from continuing to practise, would find the information
and the intellectual habits which he had acquired in his
former profession of considerable advantage in any new
one. Bodily labour, especially when the labourer is con-
fined to a very few operations, so that a few muscles have
too much and the rest too little to do, often weakens, and
almost always distorts, the frame. Mr. Shaw, a surgeon
of great eminence in the treatment of distortion, told us
that, as he walked along the streets, he could in general
tell each man's trade by his characteristic deformity. But
mental exertion, unless in those rare cases in which it is
carried to such an excess as to produce cerebral derange-
ment, never seems to weaken the mind. It may some-
times, perhaps, a little distort it, may sometimes give to
one or two faculties an undue preponderance; but even
this, to such an extent as to diminish the productiveness
of the individual's subsequent exertions, is comparatively
And, in general, it will be found, that the more
work a man's mind has done, the more he is able to do,
and the better he will do it.
rare.
The obstacles which exist, even within the same neigh-
bourhood and the same Country, to the transfer of
labour and capital from one employment to another, are
of course aggravated, when not only the occupation but the
neighbourhood or the Country is to be changed. Adam
Smith states the common price of labour in London and
its neighbourhood to have been, when he wrote, 1s. 6d.
a day, and the usual price in the Lowlands of Scotland
to have been 8d. "Such a difference of prices,” he adds,
"which it seems is not always sufficient to transport a
man from one parish to another, would necessarily occa-
sion so great a transportation of the most bulky commo-
dities, not only from one parish to another but from one
end of the kingdom, almost from one end of the world,
to another, as would soon reduce them more nearly to a
level. After all that has been said of the levity and in-
constancy of human nature, it appears evidently from
experience, that a man is, of all sorts of luggage, the
most difficult to be transported." Book i. ch. vi.
When we compare the wages of labour in different
Countries, we usually estimate them in money. And we
are forced to do this for two reasons: first, because the
precious metals are the only important commodities uni-
versally distributed throughout the world; and, secondly,
because they are the only commodities of which the
value is every where the same, or very nearly the same.
We should gain little information by comparing the
number of pine-apples that can be earned in Java and in
England by a week's ordinary labour. And still less by
comparing the quantity of pulque earned by a Mexican
wages and
profit in
different
with the quantity of whisky earned by an Irishman. Political
Economy.
But money wages, though they measure accurately the
value of national labour in the general market of the Distribu-
world, afford a very imperfect test of the degree of com- tion.
fort and convenience obtained by the labourer in different Inequali-
Countries. Now it is this difference, not the difference ties of
in money wages, that leads him to change his residence ;
and we can ascertain, or rather approximate to ascer-
taining, these differences only by translating the money Countries.
wages in different Countries into the commodities used by
the labourer. The money wages of labour in North
America are about one-third higher than in England;
this is in some measure compensated by the higher price
of manufactures. But as food, which every where forms
the largest portion of the labourer's expenses, is con-
siderably cheaper than with us, the real superiority of the
American over the English labourer is greater than is
We are told
indicated by the difference in their wages.
(Crawford's Embassy, p. 468) that a day labourer in Ben-
gal can hardly earn £3 a year. Notwithstanding this
low rate of wages, most manufactures are dearer there
than in England. Food, of course, is cheaper; for were
it at the same price as the cheapest food in England, a
And it is
family could not exist at about 1s. a week.
obvious that in every Country the average wages of labour
must be sufficient to support an average family. In
proportion to the quantity of land and labour required,
rice is, perhaps, the most abundant food that the earth
affords. Rice, therefore, is the food of the Bengallee, and
his wages, supposing them to be all laid out in food, would
produce him about eight hundred pounds; the same
quantity of rice might be purchased here for about £10
sterling. Estimated in money, therefore, wages in England,
at £30 a year, are ten times as high as in Bengal; esti-
mated in manufactures, they are more than ten times;
estimated in rice, they are about three times as high.
In comparing the rate of profits in two Countries, this
difficulty does not exist; both the advances and the re-
turns being always estimated in money, the apparent
must be the real difference between the rate of profits in
any two Countries.
The great obstacles to the circulation of labour are
difference of climate, distance of place, and difference of
language. The first is by far the most powerful, and is
so great that there is little voluntary emigration of la-
bourers to a very dissimilar climate.
Difference of lan-
guage seems often a greater obstacle than very consider-
able distance of place. The advance of wages obtained
by an English mechanic in France is greater than he
can get by going to America; but ten go to America for
one who will venture to France. Differences in habits,
government, and religion are comparatively weak obsta-
cles, except in those cases where the differences have
caused an antipathy, making immigration dangerous.
Few Countries differ more in habits and religion than
England and Ireland, or in government than Ireland
and the United States. Yet we know how great is the
emigration from Ireland to both those Countries. In
general, however, the physical and moral obstacles to
the emigration of single labourers, or even of bodies of
labourers, unless supported and directed by a very con-
siderable capital, are such that it seldom takes place
unless under peculiar circumstances; such as those of
Ireland and England, or Ireland and America, where
the temptation is very great, the physical obstacle only
a passage of a few weeks in the one case, and a few
hours in the other, and the language the same.
>
}
>
>
>
>
222
POLITICAL ECONOMY.
Political
But the voluntary migrations of capitalists and la-
Economy. bourers united, and the attempts by capitalists to force
the involuntary migration of labourers, have been among
Distribu-
the principal causes that have advanced and retarded the
tion.
Inequali- improvement of mankind. To the first class belong
ties of those hostile migrations in which a whole nation, in the
wages and
hope of obtaining a climate or a soil more favourable to
profit in
different
production, has moved in a body to seize the territory of
Countries. a neighbour. From the invasion of Egypt by the Shep-
herd Kings to that of Greece by the Turks these move-
ments have kept the inhabitants of the whole of our
hemisphere in a constant fluctuation. Many Countries,
and among them our own, have been so covered by suc-
cessive strata of occupants, that no trace of the first
settlers can be discovered; in others, the poor remains
of the aborigines are discovered, like the Helots of La-
conia, the Fellahs of Egypt, or the Bheels of Hindostan,
by their misery and degradation. Europe, in its present
state, does not fear these invasions. They could not be
attempted by a civilized nation, nor, in the present state
of the art of war, could they be successful against one.
But, until the improvement of military science and the
extensive use of machinery in war, gave to wealth and
knowledge their present superiority, these attributes seem
to have been sources rather of weakness than of strength.
The least polished people seem, on the whole, to have had
the advantage. Cicero confesses the warlike superiority
of the Gauls over the Romans. It was not till after
Gaul had become comparatively civilized that her mili-
tary fame was recalled as a tradition.* A few centuries
of peace made the Britons an easy prey to the Saxons,
and the Saxons to the Danes. Under such circumstances
the permanent improvement of the human race seemed
almost hopeless. And if gunpowder had not been
brought into use just at the time when those military
virtues which belong to semi-barbarism were decaying,
it appears probable that another irruption of barbarians
might have brought back another middle age, in which
Europe might have lost all that she gained between the
XIIth and the XVth Centuries.
Resembling in kind these migratory invasions, but
very different from them in effect, have been those emi-
grations on a smaller scale, to which we give the name
of colonization; in which a portion of a comparatively
civilized nation have gone out, with their knowledge and
wealth, their material, and moral, and intellectual capital,
and settled in an unoccupied or thinly peopled district.
It is a remarkable and a most unhappy circumstance
that, notwithstanding the progress of political knowledge,
the true principles of colonization have been less and
less understood, or, if understood, less and less acted on,
as civilization has advanced. The earliest colonies with
which we are acquainted, those founded by the Pho-
nicians and the Greeks, seem to have been founded for
the benefit of the colonists. They were allowed to ap-
point their own governors, to direct their own industry,
and to manage their own concerns; and they relied
on themselves for their defence. They were children,
but emancipated children; and their progress was in
proportion to their independence. The Phoenician
colonies in Africa and Syria, and the Grecian colonies in
Italy, Thrace, Sicily, and Asia, seem quickly to have
risen to an equality with, or to have surpassed, their
Mother Countries; to have obtained, in fact, all the
wealth and power which their extent of territory, and
* Gullos in bello floruisse audivimus.
Distribu-
the religion and knowledge of the times, made it possible Political
to acquire. The Roman colonies scarcely deserve that Economy,
name. They were generally formed by grants of the
lands, the capital, and the persons of conquered Tribes, tion.
almost as civilized as their conquerors, to the armies or Inequali-
to the populace of Rome, as a reward for services in ties of
foreign or civil war, or for sedition and riot in the forum. wages and
profit in
It may be a question whether they accelerated or re- different
tarded the improvement of the world.
The colonies of modern Europe have been established
partly for the benefit of the colonists, and partly, as it was
supposed, for that of the parent state. The latter has,
in general, contributed a part of the expense of outfit,
and almost all the expense of protection against foreign
aggression. She has also, in general, given to her
colonies a monopoly, or something approaching to a
monopoly, of her market. On the other hand, she has,
in general, required her colonies to give to her own pro-
ductions a much stricter monopoly. She has, in general,
required her colonies to receive European productions
solely from the Mother Country, and to export only to
the Mother Country colonial productions. She has, in
general, appointed the principal officers, and interfered
in the internal management of her colonies. She has
not only prohibited the colonists from purchasing in
any other market what could be produced in the Mother
Country, but has prohibited them from producing for
themselves. She has peopled them with the refuse of
her gaols, and governed them by the refuse of her aristo-
cracy. The Court of Spain commanded the vineyards
of Mexico to be rooted up; the English Parliament for-
bade Jamaica to discontinue the slave-trade, prohibited
the establishment of iron, woollen, and hat manufactures
in our North-American colonies, and even now forbids
the West Indians to refine their own sugar. The
Mother Country dragged the colonists into all her wars,
and, from their comparatively defenceless situation,
exposed their trade to more loss, and their persons and
property to more danger, than she encountered herself.
And when the rising strength of the colony rendered
these oppressions intolerable, no Mother Country has
yet had the good sense to submit quietly to a separation,
which, even if it could have been avoided, might have
been desirable; and which, whether expedient or not,
was inevitable. England, France, Portugal, and Spain
have all wasted, in the vain attempt to retain their
colonies, ten times more wealth than was expended in
founding them.
But, mismanaged as colonies have been, they have,
without doubt, been one of the principal means by
which civilization has been diffused.
The separate attempts by independent capitalists to
procure the voluntary emigration of labourers have
generally been made on a small scale, and have been
unprofitable to the undertakers, in consequence of the
difficulty of compelling or inducing the labourers to
perform their engagements, and work diligently at a
rate of wages sufficiently inferior to the current rate of
the colony to repay the expense and risk of the capi-
talist. Sir R. Wilmot Horton's plans for effecting
emigration on an extended scale, and as a national
undertaking, have not received the attention which the
magnitude of the probable advantage, and the unwearied
diligence and public spirit of its proposer, deserved.
And the scheme for founding in Australia a colony in
which the first price of all the land shall be employed in
Countries
POLITICAL ECONOMY.
223
Distribu-
tion.
Political transporting labourers, has not yet been submitted to
Economy, the test of experience.
The attempts by capitalists to force the involuntary
migration of labourers have been productive of almost
Inequali- unmixed evil. They produced, and have continued, the
ties of
abominable traffic in which man is the commodity;-a
wages and
traffic which, partly by its direct effects, and partly by
profit in
different
the wars and general insecurity which are its necessary
Countries. accompaniments, retarded more than any other cause the
early civilization of Europe; has kept, and continues to
keep, the greater part of Asia, and the whole of Africa,
in hopeless barbarism; and has divided the inhabitants
of the most fertile portions of the Continent of America,
and, until lately, those of almost all her islands, into two
classes only, the oppressors and the oppressed.
The transfer of capital from one Country to another is
subject to less difficulty. When the exchange is at par
between any two Countries, capital can be transmitted in
the shape of money without any expense.
And as
the occasional loss which occurs when the exchange is
against the Country to which it is to be exported is
compensated by the occasional gain when it is in favour
of that Country, it may fairly be said that monied
capital is transferred from Country to Country without
wages and
expense. The chief obstacle is the unwillingness of Political
Economy.
capitalists either to trust their capital out of their own
superintendence, or to encounter a change of govern- Distribu-
ment, habits, climate, and language, by accompanying tion.
it. Difference of language, however, is felt as a slight Inequali-
objection by educated men. Nor is difference of ties of
government of great importance to those who propose
profit in
only a transitory residence. The difference indeed is different
often considered an advantage. During the late war, Countries.
London was filled by foreign capitalists, whose principal
motive was to escape the tyranny of Napoleon. Differ-
ences of habits and climate are more material, especially
the latter; but even these do not seem to counter-
balance a great increase of profit. There is scarcely a
port in the civilized world in which a considerable part
of the mercantile class does not consist of the natives of
Great Britain. The inequality in the rate of profit
throughout the civilized world is, therefore, much less
than the inequality of wages. And as the general
progress of improvement tends more and more
equalize the advantages possessed by different Countries
in government and habits, and even in salubrity of
climate, the existing inequalities of profits are likely to
diminish.
to
CONTENTS.
Contents. POLITICAL ECONOMY defined as, The Science which treats of the NA-
TURE, the PRODUCTION, and the distribution of WEALTH, 129.
WEALTH defined, as comprehending all those things, and those
things only, which are transferable, limited in supply, and
directly or indirectly productive of pleasure or preventive of
pain, or, to use an equivalent expression, which are susceptible
of exchange, or, to use a third equivalent expression, which
have value, 131.
Constituents of WEALTH :-
1. Utility, 131.
2. Limitation in supply, 131.
3. Transferableness, 132.
Limitation in supply the most important, 133.
VALUE defined as, The quality in any thing which fits it to be given
and received in exchange, 134.
The intrinsic causes of the value of a commodity defined as, Those
which give to it utility and limit it in supply.
The extrinsic as, Those which limit the supply and occasion the
utility of the commodities for which it is to be exchanged, 134.
Steadiness in value depends on the permanence of the intrinsic
causes of value, 137.
Objections to the definition of wealth considered, 137,
Statement of the four elementary propositions of the Science:
1. That every man desires to obtain additional wealth with
as little sacrifice as possible.
2. That the population of the world, or, in other words, the
number of persons inhabiting it, is limited only by
moral or physical evil, or by fear of a deficiency of
those articles of wealth which the habits of the indivi-
duals of each class of its inhabitants leud them to
require.
3. That the powers of labour, and of the other instruments
which produce wealth, may be indefinitely increased by
using their products as the means of further production.
4. That, agricultural skill remaining the same, additional
labour employed on the land within a given district
produces in general a less proportionate return, or, in
other words, that though, with every increase of the
labour bestowed, the aggregate return is increased, the
increase of the return is not in proportion to the in-
crease of the labour, 139.
Developement of the first elementary proposition, namely, the ge- Contents.
neral desire of wealth, 139.
Developement of the second elementary proposition, namely, the
causes which limit population, 140.
Production defined as the occasioning an alteration in the condition
of the existing particles of matter, for the occasioning of which
alteration, or for the things thence resulting, something may be
obtained in exchange. This alteration is a product, 119.
Products divided into services and commodities. A service is the
act of occasioning the above-mentioned alteration. A commo-
dity is the thing as altered, 150.
Consumption defined as the making use of a thing, 151.
Productive consumption defined as that use of a product which occa-
sions an ulterior product. Unproductive consumption as that
use which occasions no ulterior product, 151.
Instruments of production :-
Primary, 1. labour; 2. natural agents, 152.
1. Labour defined as the voluntary exertion of bodily or
mental faculties for the purpose of production, 152.
2. Natural agents defined as those productive agents which
do not derive their powers from man, 152.
3. Third and secondary instrument of production. Ab-
stinence. Abstinence defined as the conduct of a
person who either abstains from the unproductive use
of what he can command, or designedly prefers the
production of remote, to that of immediate, results,
153.
Abstinence, combined with one or both of the other two instruments
of production, occasions the existence of capital. Capital de-
fined as an article of wealth, the result of human exertion, em-
ployed in the production or distribution of wealth, 153.
Different modes in which capital may be employed, 153.
Statement of the advantages derived from the use of capital.
1. The use of implements, 156.
2. The division of labour, 159.
Under these heads the third elementary proposition of
the Science is developed.
Additional labour when employed in manufactures is more, when
employed in agriculture is less, efficient in proportion. 162.
Developement of the fourth elementary proposition of the Science.
DISTRIBUTION.
224-228
CONTENTS.
Contents. Society divided into three classes, labourers, capitalists, and pro-
prietors of natural agents, each class having a different instru-
ment, a different conduct, and a different remuneration, 165.
Nomenclature applicable to the first class, the labourers, 165.
Nomenclature applicable to the second class, the capitalists, 165.
Nomenclature applicable to the third class, the proprietors of
natural agents, 166.
EXCHANGE.
Cost of production defined as the sum of the labour and abstinence
necessary to production, 170.
Divided into cost of production on the part of the producer, and cost
of production on the part of the consumer, 170.
These are the same, unless the production be subject to a monopoly,
171.
Monopolies divided into four kinds :-
1. A monopoly under which the monopolist has not the
exclusive power of producing, but exclusive facilities
as a producer which may be employed indefinitely
with equal or increasing advantage, 171.
2. A monopoly under which the monopolist is the only
producer and cannot increase the amount of his pro-
duce, 172.
habitants of a Country which does not export raw
produce, 193.
4. The doctrine that the general rate of wages can, ex-
cept in two cases, be diminished by the introduction
of machinery, 196.
5. The doctrine that the general rate of wages can be re-
duced by the importation of foreign commodities, 199.
6. The doctrine that the unproductive consumption of
landlords and capitalists is beneficial to the labour-
ing classes because it furnishes them with employ-
ment, 199.
7. The doctrine that it is more beneficial to the labouring
classes to be employed in the production of services
than in the production of commodities, 200.
Statement of the causes on which the extent of the fund for the
maintenance of labourers really depends. 1. The productive-
ness of labour in the direct or indirect production of the com-
modities used by the labourers. 2. The number of persons
directly or indirectly employed in the production of things
for the use of labourers compared with the whole number
of labouring families, 201.
I.
3. A monopoly under which the monopolist is the only
producer and can increase indefinitely with equal or
increasing advantage the amount of his produce,
172.
4. A monopoly under which the monopolist is not the only
producer, but has peculiar facilities which diminish
and ultimately disappear as he increases the amount
of his produce, 172.
The last is the great monopoly of land, 172.
Effects of the cost of production on price, 175.
Effects of monopolies on price, 176.
Consequences of the proposition that additional labour when em-
ployed in manufactures is more, and when employed in agri-
culture is less, efficient in proportion.
I. Different effects of increased demand on the prices of manufac-
tured, and of raw, produce, 178.
II. Different effects of taxation on the prices of manufactured, and
of raw, produce, 179.
Discussion whether certain revenues ought to be called rent, profit,
or wages, 182.
Causes on which the proportionate amount of rent depends, 185.
Discussion of the circumstances which decide what, at a given
time and in a given place, shall be the average rate of wages
and the average rate of profit.
Statement of the question, 188.
Meaning of the words high and low as applied to wages, 188.
Difference between the amount of wages and the price of labour,
191.
Proximate cause deciding the rate of wages stated to be the extent
of the fund for the maintenance of labourers compared with
the number of labourers to be maintained, 193.
Discussion of seven opinions inconsistent with this proposition
1. The doctrine that the rate of wages depends solely
on the proportion which the number of labourers
bears to the amount of capital in the Country, 193.
2. The doctrine that wages depend on the proportion
borne by the number of labourers to the whole re-
venue of the society of which they are members, 193.
3. The doctrine that the non-residence of unproductive
consumers can be detrimental to the labouring in-
Causes on which the productiveness of labour depends :-
1. The corporeal, intellectual, and moral qualities of the
labourer, 202.
2. The assistance of natural agents, 202.
3. The assistance of capital, 202.
4. The existence or the absence of government inter-
ference, 202.
II. Causes which divert labour from the production of commodi-
ties for the use of labouring families:
1. Rent, 204.
2. Taxation, 205.
3. Profit, 206.
Profit consists of the difference between the value of the advance
made by the capitalist and the value of the return, 207.
How that value should be estimated, 206.
The facts which decide in what proportions the capitalists and
labourers share the common fund after the deduction of rent
and taxation stated to be two: first, the general rate of profit
in the Country on the advance of capital for a given period:
and, secondly, the period which in each particular case has
elapsed between the advance of the capital and the receipt of
the profit, 206.
Cause regulating the rate of profit ascertained to be the proportion
which the supply of capital employed in providing wages bears
to the supply of labourers, 209.
Causes regulating the period of advance incapable of a general
statement, 210.
Capitalists and labourers interested in the period of advance only
so far as they are consumers, 211.
Causes of variation in the amount of wages and the rate of profits
in different employments of labour and capital assigned by
Adam Smith:-
1. Agreeableness, 212.
2. Facility of learning the business, 214.
3. Constancy of employment, 215.
4. Trustworthiness, 216.
5. Probability of success, 216.
Variations occasioned by the difficulty of transferring labour and
capital from one employment to another, 219.
From one country to another, 221.
Contents.
Page Line
ERRATUM.
177 15 for £1000 read £100.
LONDON: PRINTED BY W. CLOWES AND SONS, STAMFORD-STREET.
A
THE FOLLOWING WORKS ON POLITICAL ECONOMY ARE BY
THE SAME AUTHOR.
I.
AN INTRODUCTORY LECTURE on POLITICAL ECONOMY, delivered before the University of Oxford,
on the 6th of December, 1826. Third Edition.
II.
TWO LECTURES on POPULATION delivered before the University of Oxford, in Easter Term, 1828,
with an Appendix, containing a Correspondence between the Rev. T. R. Malthus and the Author.
III.
THREE LECTURES on the TRANSMISSION of the PRECIOUS METALS from COUNTRY to
COUNTRY, and the MERCANTILE THEORY of WEALTH, delivered before the University of Oxford, in
June, 1827. Second Edition.
IV.
THREE LECTURES on the COST of OBTAINING MONEY, and on some EFFECT of PRIVATE
and GOVERNMENT PAPER MONEY, delivered before the University of Oxford, in Trinity Term, 1829.
Second Edition.
√.
A LETTER TO LORD HOWICK on a Legal Provision for the Irish Poor, Commutation of Tithes, and a
Provision for the Irish Roman Catholic Clergy. Third Edition.
VI.
THREE LECTURES on the RATE of WAGES, delivered before the University of Oxford, in Easter Term,
1830. With a Preface on the Causes and Remedies of the present Disturbances. Third Edition.
VII.
A STATEMENT of the PROVISION for the POOR, and of the Condition of the Labouring Classes in a
considerable Portion of America and Europe.
The Works of which the titles are printed in Italics have been partially embodied in this Treatise.

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