Friday, August 31, 2012

On Consumption in General


Jean-Baptiste Say


We have already seen what consumption is: finish the development of its effects.
"To consume is to destroy its value by destroying its utility; by destroying the quality which had been given to it, of being useful to, or of satisfying the wants of man."
It must be remembered that to consume is not to destroy the matter of a product: we can no more destroy the matter than we can create it. To consume is to destroy its value by destroying its utility; by destroying the quality which had been given to it, of being useful to, or of satisfying the wants of man. Then the quality for which it had been demanded was destroyed. The demand having ceased, the value, which exists always in proportion to the demand, ceases also. The thing thus consumed, that is, whose value is destroyed, though the material is not, no longer forms any portion of wealth.
A product may be consumed rapidly, as food, or slowly, as a house; it may be consumed in part, as a coat, which, having been worn for some months, still retains a certain value. In whatever manner the consumption takes place, the effect is the same: it is a destruction of value; and as value makes riches, consumption is a destruction of wealth.
What is the object of consumption?
To procure to the consumer either an enjoyment or a new value, in general superior to the value consumed, otherwise the consumer would not obtain any profit. In the first case it is anunproductive, and in the second a reproductive consumption.
What would that consumption be which had for its object neither to procure an enjoyment, nor to create a new product?
That would be a sacrifice without compensation; a folly.
What must be thought then of a system, the tendency of which is, to consume for the sole purpose of favoring production?
That which must be thought of a system which should propose to burn down a city, for the purpose of benefiting the builders, by employing them to restore it.
Develop what relates to reproductive consumption.
Everything which has been said on production, serves for that purpose.
What have you to say on the subject of unproductive consumption?
Unproductive consumption, which we shall hereafter, for shortness, call simply consumption, divides itself into two kinds, private and public.
What do you understand by private consumption?
That which has for its object to satisfy the wants of individual and of families.
What do you mean by public consumption?
That which has for its object to supply the wants of men whose association forms a community, a province, or a nation.
Are these two sorts of consumption of the same nature?
They are entirely of the same nature, and their effects are the same. One set of persons cause the consumption in one case, and other persons in the other; that is all the difference.
What is meant by these words, annual consumption of a nation?
It is the sum of the values consumed by a nation in a year, whether for the wants of individuals or of the public.
Do these words comprehend reproductive consumption as well as the others?
Yes; for we may say that France consumes annually so many quintals of soda or of indigo, although the indigo and the soda can only be consumed reproductively, as they cannot satisfy directly any want; and as they can be employed only in the arts, they serve necessarily for reproduction.
Do you comprehend in the consumption of a nation, the merchandise she exports to other countries?
Yes; and I comprehend in its products whatever it receives in return; in the same manner that I comprehend in its consumption the value of the wool it uses for the manufacture of cloth, and in its productions the value of the cloth which results from it.
Does a nation consume all that it produces?
Yes, with very few exceptions; for it is our interest not to create products unless they are demanded, and they are never demanded but to be consumed.
If a nation consumes the total of the values which it produces, how can it accumulate values, form capital, and maintain it?
The values, which serve the purposes of capital, may be consumed perpetually, yet are never lost, for in the same proportion as they are consumed they are reproduced under new forms by the action of industry. This reproduction, once accomplished, if the value reproduced is found superior to the value consumed, there has been an augmentation of capital. In the contrary case, a diminution of capital. If the reproduction has simply equaled the consumption, the capital has been merely kept up.
Show me the application of these truths by examples.
Take, for instance, a farmer, or a manufacturer, or even a merchant. Suppose that he employs in his enterprise a capital of twenty thousand pounds, that is to say, suppose that all the values that he has in his enterprise on the first day of a year, are equal in value to a sum of twenty thousand pounds. In the course of his operations these values change their forms perpetually; and although his capital does not exceed twenty thousand pounds, yet we may suppose, that if all the values which he has consumed in the course of the year were added together, they would amount to sixty thousand pounds, because a value destroyed may have been reproduced, destroyed again a second and a third time before the year revolves. We may suppose also, that if all the values produced in the same year were added together they might amount to a sum of sixty-four thousand pounds. If then this entrepreneur of industry has had consumption for sixty thousand pounds, and productions for sixty-four thousand pounds, he ought to have at the end of the year values amounting to four thousand pounds more than he had at the beginning.
That appears clear to me.
Let us go on. If he has expended unproductively in the same year, to satisfy the wants of his family four thousand pounds, he will have consumed his profits; and if he takes his inventory he will find himself, at the end of the year, with a capital of twenty thousand pounds only, as he had at the beginning of the year. But if, instead of having expended unproductively for the support of his family four thousand pounds, he had only expended two thousand, unless he has hid two thousand pounds, he will find that this value of two thousand pounds, which has not been expended unproductively, will have been laid out productively, and that it will appear in his inventory in augmentation of capital under some form or other, either under that of provisions, of goods in process of manufacture, or even of advances capable of being recovered.
I conceive that.
You perceive then, that although the value of the capital has not been more than twenty thousand pounds, the total value of the products for the year may have been much more considerable?
Yes.
That this form of products, whatever it may be, may have been entirely consumed, and that, nevertheless, the capital of this individual may have been augmented.
Yes.
Well, then, multiply in your mind what has happened to a single individual, and suppose that the same thing has happened to all the individuals of the same nation: or at least suppose that the consequences that have happened to some, balanced by those which have happened to others, have produced a general result analogous to the preceding example, and you will find, by a second example, that a nation which had at the commencement of the year a capital of a hundred millions, may have consumed in a year three hundred millions of values, producing three hundred and twenty millions of values, of which she has consumed reproductively three hundred millions, and unproductively twenty millions; or rather reproductively three hundred and ten millions, and unproductively ten millions.
I grant it.
In this last supposition this little nation, which will have consumed all its productions, will, nevertheless, be enriched during the year ten millions of values, which will be found distributed under different forms among those individuals who have conducted their affairs with the greatest intelligence and economy.





Thursday, August 30, 2012

On Incomes Founded on Immaterial Products


Jean-Baptiste Say


What is meant by immaterial products?
They express a utility produced, but which is not attached to any material.
Explain that by an example.
When a physician visits a sick person and prescribes a remedy or a regimen which cures him, he renders himself useful to him. The physician receives a sum of money in exchange for this utility: but here the utility is not attached to any merchandise where it may be preserved for a time, and exchanged again. It is a product truly immaterial, in exchange for which the physician receives a fee which constitutes his income. The industry of the physician is analogous to that of every entrepreneur of an industry. He applies to the wants of men the medical knowledge which he has collected.
What other professions found their incomes on immaterial products?
There are a great number of them. They include the most elevated as well as the most abject situations in society. The public functionaries, from the chiefs of the government down to the lowest officer, the judges and the priests, receive in exchange for their usefulness to the public, fees paid at the expense of the public.
What causes influence the amount of these fees?
As these fees are never the result of a free agreement, but depend on political circumstances, they are seldom proportioned with exactness to the utility produced.
Give me some other examples of industry productive of immaterial products.
An advocate, an actor, a musician, a soldier, a domestic, render services of which the value may be measured by the price which they receive.
What do you observe respecting immaterial products?
That they are necessarily consumed at the same instant they are produced. Their value, consequently, cannot be reserved for consumption at any other time, or to be employed as capital, because they are not attached to any material by means of which they can be preserved.
What consequence do you draw from that?
That in multiplying the services rendered by these different classes, the consumption of them is multiplied: that it hinders these kind of works from contributing to the increase of the mass of wealth. It follows from this, that in multiplying, for example, placemen, lawyers, soldiers, etc. the wealth of a country is not increased, whatever may otherwise be the utility of these different professions. The services they render exist no longer than the moment they are performed.
They live then on the incomes of other producers?
They live no more on the incomes of other producers than a wine merchant lives on the income of a woolen draper, who buys wine which he pays for with part of his income, and afterwards consumes. An actor is a dealer in amusement; a spectator buys his commodity, pays for it out of his income, and consumes it the instant it is delivered to him. The products furnished by the actor and by the wine merchant, are equally lost; but when the price which has been given to them for it has been freely paid, it is an exchange like all others, followed by a consumption of the same nature as all unproductive consumptions.
Are immaterial products the fruit of industry alone?
Yes, when nothing has been advanced to acquire the talent of which they are the fruit: but when this talent has required long and expensive studies they are the result of an appropriated capital[4], that is to say, of advances which have been made of industry. One part of the fees then serves to pay the life interest in this capital, and another to pay for the industry exercised. When the fees, or gratuities, are not sufficient to pay for the service of these two agents of production, their product becomes more scarce, and its price increases until the moment when the quantity of that product is rendered equal to the demand.
Are there any immaterial products which are the result of capital alone?
Yes, if moveable effects (household furniture) are considered as capital, and if they are kept up to their original value. When their value is not kept up, besides the use of the capital, a part of the capital itself is consumed.
The plate which is used in a family forms part of the capital and riches of that family. It is not unproductive since it renders a daily service, but it does not produce any value which can afterwards be exchanged for any other thing. This service is an immaterial product consumed at the moment. The family consumes the interest of this part of its capital.
Are there any immaterial products which result from land?
Yes: the enjoyment received from a pleasure garden, is a product of the land of this garden and the capital devoted to its arrangement. It has no other exchangeable product.



Wednesday, August 29, 2012

On Wages, Interest, and Rent


Jean-Baptiste Say


What do you observe on the wages of workmen, interest of capital, and rent of land?
That he who lets out his industry, his capital, or his land, renounces the profits he might have drawn from their productive services; he renounces them in favor of an entrepreneur of industry, who hires them, and who draws, from these means of production, a profit which is either superior or equal, or inferior, to what he pays for them.
What causes raise the rate of wages?
The abundance of capital and land compared with the number of workmen: for there must be land, and, above all, capital, in order to employ workmen.
Why is it that wages scarcely ever exceed what is necessary to maintain a workman and his family, according to the custom of the place?
Because wages, by rising higher, encourage an increase of workmen; this occasions such services to be more offered in proportion to the demand for them. Works, which require rare and distinguished talents, are exceptions to this rule, because such talents cannot always be increased according to the demand for them.
What causes influence the rate of interest?
The interest of capital lent, although expressed by one price only, a certain percentage on the capital lent, ought really to be distinguished into two parts.
Explain that by an example.
If you lend a sum of money, and you agree with the borrower for an interest of six percent. per annum, there is in this rate, four percent (more or less), to pay for the productive service of the capital, and two percent (more or less) to cover the risk that you run of never getting your capital back.
On what do you found this presumption?
On this, that if you were enabled to lend the same capital with perfect security, on a very safe mortgage, you would lend it at four percent more or less. The surplus is then a species of premium of insurance which is paid to you to indemnify you for the risk that you run.
Setting aside the premium of insurance, which varies according to the greater or less solidity of the parties, what are the causes which vary the rate of interest, properly so called?
The rate of interest rises when those who borrow have numerous, ready, and lucrative employments for capital, because then many entrepreneurs of industry are desirous of participating in the profits which these employments of capital offer; and capitalists are also more likely to use them themselves, which augments the demand for capital, and diminishes the amount which is offered for employment. The rate of interest increases also when, from whatever cause, the mass of disposable capital, that is, of capitals requiring to be employed, has been diminished.[3] Contrary circumstances lower the rate of interest; and one of these circumstances may so balance the other, that the rate of interest will remain at the same point, because the one tends to heighten, precisely as much as the other to lower, the rate.
When you say that the mass of disposable capital increases or diminishes, do you mean by that the quantity of money?
By no means: I mean values destined by their possessors to reproductive consumption, and which are not so engaged that they cannot be withdrawn in order to use them differently.
Explain that by an example?
Suppose that you have lent funds to a merchant on condition of his paying them back to you on giving him three months notice; or, which comes to the same thing, that you are in the habit of discounting bills of exchange, can you not easily employ these funds in a different way if you find any one more convenient to you?
Without doubt.
Then these funds are a disposable capital. They are so too, if they are in the form of a merchandise easily sold, since you can exchange them readily for any other value. They are still more disposable if they are in specie; but you must understand that the sum of all these disposable capitals is a very different thing from the sum of coined money, and that it may be much more considerable.
I understand so.
Well! It is the sum of these capitals which influences the rate of interest, and not the sums of money under which form these values temporarily present themselves when they are about to pass from one hand to another. A disposable capital may be in the form of a certain sort of merchandise, a sack of guineas for instance: but if the quantity of this merchandise which is in circulation, has no influence on the rate of interest, the abundance or the scarcity of the gold has no influence on it either.
It is not then really the hire of money that one pays when one pays an interest?
By no means.
Why is it called the interest of money?
From very inaccurate ideas which are formed of the nature and use of capital.
What is legal interest?
It is the rate fixed by the law in cases where it has not been fixed by the parties: as when the holder of a capital has enjoyed it in the place of an absentee, or a minor to whom he is bound to account.
Cannot public authority fix a limit to the interest which individuals may agree upon?
It cannot, without violating the freedom of transactions.
What causes influence the rent of land?
The demand for the hire of farms compared with the number to be let. It may be observed on this subject, that the demand commonly exceeds the number to be let, because in all countries the number of these is necessarily limited; while that of farmers and of capitals, which may be applied to this industry, are not necessarily so: so that in those places, where there are not stronger motives to a contrary effect, rent is rather above than below the real profit of land.
What have you more to say on this subject?
That rent tends nevertheless to get down to the profit of land; for when it exceeds it, the farmer is obliged to pay the excess, either out of the profits of his industry, or the interest of his capital; and is no longer completely indemnified for the employment of those means of production.


Tuesday, August 28, 2012

On the Profits of Industry, Capital, and Land; That Is, Income


Jean-Baptiste Say


What is the source of the profits of industry, capital, and land?
It is in the price of the products created by their cooperation. The consumer in buying a product, pays all the charges of its production, that is, the services of the producers (the industrious, the capitalists, and the landholders), who have contributed to its production.
How can these profits, paid by a single consumer, be distributed among the different producers?
By the advances which the producers make of them to one another.
Explain that by an example.
Let us examine how the value of a cloth coat is distributed among the producers of the stuff of which it is made. We see that a farmer who has reared a sheep, has paid a rent to the landholder who let to him the land on which the sheep was fed. That is a profit received for the productive service of the land. If the farmer has borrowed the capital necessary for the cultivation of his farm, the interest which he pays for it is another profit, received by a capitalist, for the productive service of his capital. When the farmer has sold his wool, the price which he receives for it reimburses to him the rent and interest he has paid, and also the profits of his industry. The clothier, in his turn, by means of his capital, advances this value which is already distributed: if his capital is a borrowed one, and he pays interest for it, he pays also in advance the profits of the capitalist who lent it to him; and he is reimbursed the whole, together with his profits, by the woolen draper, who is at last reimbursed for his advances and his profits by the sale which he makes to the consumer. Thus at the time the sale of the cloth was accomplished, the value had already been distributed among its different producers.
In thus tracing the progress of any product whatever, we shall find that its value is scattered among a crowd of producers, many of whom perhaps are ignorant of the existence of the product: so that a man that wears the coat is perhaps, without suspecting it, one of the capitalists, and consequently one of the producers, who have contributed to its formation.
Is not society then divided into producers and consumers?
Everybody consumes, and almost everybody produces. For, not to be a producer, it is necessary neither to exercise any industry, nor any talent, nor to possess either the smallest portion of land or of productive capital.
What do the profits, distributed among society, become?
They compose the income of each individual; and the incomes of all the individuals which form a nation, compose the total income of that nation.
What is called annual income?
It is the sum of all the portions of income received in the course of a year. The annual income of a whole nation, is the sum of all the portions of income received, in the course of a year, by all the individuals of which that nation is composed.
Are incomes paid at fixed periods?
Some of them are so; some not. A landholder who lets his land, a capitalist who lends his capital, and who thus gives up to another the profits which may result from these agents of production, generally stipulate the condition of receiving the rent or interest, which forms their income, at fixed periods. The workman who lets out his industrious talent receives the wages which form his income by portions, every week or every fortnight. But the grocer, who sells sugar and coffee, receives on each ounce that he sells, a small portion of his profit, and all these united profits form his income.
Are incomes, or portions of income, always paid in money?
The manner in which they are paid has nothing to do with the subject. The corn, vegetables, milk, and butter, which a farmer consumes in his own family, form part of his income. If he pays part of his rent in provisions, these provisions form part of the income of the landlord. The essential thing is the value paid, whether this value is paid in provisions, or whether he that owes it, exchanges these provisions for money, in order to pay the value in money, is of no importance. It is the value acquired, under whatever form, for a productive service, that constitutes income.
As the incomes of individuals are so much the more considerable as their profits are greater, and as their profits are greater when their productive services are better paid, it appears to me that the dearer these productive services are, the greater the total income of that nation must be.
Yes: but when the productive services are dearer so are the products; and when the price of the products augments in the same proportion as the incomes, the augmentation of the income is only nominal. When the charges of production have doubled, with an income nominally double, we can only purchase the same quantity of products. That alone really increases the ease of individuals and of nations which lowers the value of products without decreasing incomes.
In what circumstances is this advantage experienced?
It is when, by a better employment of the means of production, the products are multiplied without increasing the charges of production. Then the products fall and incomes remain the same. This is what takes place when a new and ingenious machine has been brought into use, such as the stocking frame and the cotton spinning machines: when a new canal has been cut, which, without increasing the charge, permits the transport of a hundred times more merchandise, etc.

Monday, August 27, 2012

Our Highway To Hell


Our Highway To Hell (via http://www.economicnoise.com)

The Role of The Government in The Economic Crisis At this point, everything the government is doing – and not just the US government but governments everywhere − is not only the wrong thing but exactly the opposite of the right thing. They’re passing more laws, raising taxes, creating more currency…

OF THE LABOUR OP MANKIND, OF NATURE, AND OF MACHINERY RESPECTIVELY.

Jean-Baptiste Say



BY the term labour I shall designate that continuous action, exerted to perform any one of the operations of industry, or a part only of one of those operations.
Labour, upon whichever of those operations it be bestowed, is productive, because it concurs in the creation of a product. Thus the labour of the philosopher, whether experimental or literary, is productive; the labour of the adventurer or master-manufacturer is productive, although he perform no actual manual work; the labour of every operative workman is productive, from the common day-labourer in agriculture, to the pilot that governs the motion of a ship.
Labour of an unproductive kind, that is to say, such as does not contribute to the raising of the products of some branch of industry or other, is seldom undertaken voluntarily; for labour, under the definition above given, implies trouble, and trouble so bestowed could yield no compensation or resulting benefit: wherefore, it would be mere folly or waste in the person bestowing it. When trouble is directed to the stripping another person of the goods in his possession by means of fraud or violence, what was before mere extravagance and folly, degenerates to absolute criminality; and there results no production, but only a forcible transfer of wealth from one individual to another.
Man, as we have already seen, obliges natural agents, and even the products. of his own previous industry, to work in concert with him in the business of production. There will, therefore, be no

difficulty in comprehending the terms labour or productive service of nature, and labour or productive service of capital.
The labour performed by natural agents, and that executed b) pre-existent products, to which we have given the name of capital, are closely analogous, and are perpetually confounded one with the other: for the tools and machines which form a principal item of capital, are commonly but expedients more or less ingenious, for turning natural powers to account. The steam engine is but a complicated method of taking advantage of the alternation of the elasticity of water reduced to vapour, and of the weight of the atmosphere. So that, in point of fact, a steam engine employs more productive agency, than the agency of the capital embarked in it: for that machine is an expedient for forcing into the service of man a variety of natural agents, whose gratuitous aid may perhaps infinitely exceed in value the interest of the capital invested in the machine.
It is in this light that all machinery must be regarded, from the simplest to the most complicated instrument, from a common file to the most expensive and complex apparatus. Tools are but simple
machines, and machines but complicated tools, whereby we enlarge the limited powers of our hands and fingers; and both are,in many respects, mere means of obtaining the co-operation of natural agents.
Their obvious effect is to make less labour requisite for the raising the same quantity of produce, or, what comes exactly to the same thing, to obtain a larger produce from the same quantity of human
labour.—And this is the grand object and the acme of industry.
Whenever a new machine, or a new and more expeditious process is substituted in the place of human labour previously in activity, part of the industrious human agents, whose service is thus ingeniously dispensed with, must needs be thrown out of employ. Whence many objections have been raised against the use of machinery, which has been often obstructed by popular violence, and sometimes
by the act of authority itself.
To give any chance of wise conduct in such cases, it is necessary beforehand to acquire a clear notion of the economical effect resulting from the introduction of machinery.
A new machine supplants a portion of human labour, but does not diminish the amount of the product; if it did, it would be absurd to adopt it. When water-carriers are relieved in the supply of a city by any kind of hydraulic engine, the inhabitants are equally well supplied with water. The revenue of the district is at least as great, but it takes a different direction. That of the water-carriers is reduced, while that of the mechanists and capitalists, who furnish the funds, is increased. But, if the superior abundance of the product and the inferior charges of its production, lower its exchangeable value, the revenue of the consumers is benefited; for to them every saving of expenditure is so much gain.
This new direction of revenue, however advantageous to the community at large, as we shall presently see, is always attended with some painful circumstances. For the distress of a capitalist, when his funds are unprofitably engaged or in a state of inactivity, is nothing to that of an industrious population deprived of the means of subsistence.
Inasmuch as machinery produces that evil, it is clearly objectionable. But there are circumstances that commonly accompany its introduction, and wonderfully reduce the mischiefs, while at the same time they give full play to the benefits of the innovation. For,
1. New machines are slowly constructed, and still more slowly
brought into use; so as to give time for those who are interested, to
take their measures, and for the public administration to provide a
remedy.*
2. Machines cannot be constructed without considerable labour,
which gives occupation to the hands they throw out of employ. For
.nstance, the supply of a city with water by conduits gives increased
occupation to carpenters, masons, smiths, paviours, &c. in the construction of the works, the laying down the main and branch pipes,
&c. &c.
3. The condition of consumers at large, and consequently,
amongst them, of the class of labourers affected by the innovation,
is improved by the reduced value of the product that class was
occupied upon.

Besides- it would be vain to attempt to avoid the transient evil, consequent il upon the invention of a new machine, by prohibiting its employment. If beneficial, it is or will be introduced somewhere or other; its products will be cheaper than those of labour conducted on the old principle; and sooner or later that cheapness will run away with the consumption and demand. Had the cotton spinners on the old principle, who destroyed the spinning-jennies on their introduction into Normandy, in 1789, succeeded in their object France must have abandoned the cotton manufacture; every body would have bought the foreign article, or used some substitute; and the spinners of Normandy, who, in the end, most of them, found employment in the new establishments, would have been yet worse off for employment.

So much for the immediate effect of the introduction of machinery.
The ultimate effect is wholly in its favour.
Indeed if by its means man makes a conquest of nature, and compels the powers of nature and the properties of natural agents to work for his use and advantage, the gain is too obvious to need illustration. There must always be an increase of product, or a diminution in the cost of production. If the sale-price of a product do not fall, the acquisition redounds to the profit of the producer; and that without any loss to the consumer. If it do fall, the consumer is benefited to the whole amount of the fall, without any loss to the producer.
The multiplication of a product commonly reduces its price, that reduction extends its consumption; and so its production, though become more rapid, nevertheless gives employment to more hands
than before. It is beyond question, that the manufacture of cot ton now occupies more hands in England, France, and Germany, than it did before the introduction of the machinery that has abridged and perfected this branch of manufacture in so remarkable a degree.
Another striking example of a similar effect is presented by the machine used to multiply with rapidity the copies of a literary per formance,—I mean the printing press.
Setting aside all consideration of the prodigious impulse given by the art of printing to the progress of human knowledge and civilization, I will speak of it merely as a manufacture, and in an economical point of view. When printing was first brought into use, a multitude of copyists were of course immediately deprived of occupation ; for it may be fairly reckoned, that one journeyman printer does the business of two hundred copyists. We may, therefore, conclude, that 199 out of 200 were thrown out of work. What followed? Why, in a little time, the greater facility of reading printed than written books, the low price to which books fell, the stimulus this invention gave to authorship, whether devoted to amusement or instruction, the combination, in short, of all these causes, operated so effectually as to set at work, in a very little time, more journeymen printers than there were formerly copyists. And if we could now calculate with precision, besides the number of journeymen printers, the total number of other industrious people that the press finds occupation for, whether as type-founders and moulders, paper-makers, carriers, compositors, bookbinders, booksellers, and the like, we should probably find, that the number of persons occupied in the manufacture of books is now 100 times what
it was before the art of printing was invented.
It may be allowable to add, that viewing human labour and machinery in the aggregate, in the supposition of the extreme case, that machinery should be brought to supersede human labour altogether, yet the numbers of mankind would not be thinned; for the sum total of products would be the same, and there would probably be less suffering to the poorer and labouring classes to be appreciated; for in that case the momentary fluctuations, that distress the different branches of industry, would principally affect machinery which, and not human labour, would be paralyzed ; and machinery cannot die of hunger ; it can only cease to yield profit to its employers, who are generally farther removed from want than mere labourers.
But however great may be the advantages, which the adventurers in industry, and even the operative classes, may ultimately derive from the employment of improved machinery, the great gain accrues to the consumers, which is always the most important class, because it is the most numerous; because it comprehends every description of producers whatever; and because the welfare of this
class, wherein all others are comprised, constitutes the general wellbeing and prosperity of a nation. I repeat, that it is the consumers who draw the greatest benefit from machinery; for though the invei/or may indeed for some years enjoy the exclusive advantage of his invention, which it is highly just and proper he should, yet there is no instance of a secret remaining long undivulged. Nothing can long escape publicity, least of all what people have a personal interest in discovering, especially if the secret be necessarily confided to the discretion of a number of persons employed in constructing or in working the machine. The product is thenceforward cheapened by competition to the full extent of the saving in the cost of production; and thenceforward begins the full advantage to the consumer.—The grinding of corn is probably not more profitable to the miller now than formerly; but it costs infinitely less to the consumer.
Nor is cheapness the sole benefit that the consumer reaps from the introduction of more expeditious processes: he generally gains in addition the greater perfection of the product. Painters could undoubtedly execute with the brush or pencil the designs that ornament our printed calicoes and furniture papers, but the copperplates and rollers employed for that purpose give a regularity of pattern, ana uniformity of colour, which the most skilful artist could never equal.
The close pursuit of this inquiry through all the arts of industry would show, that the advantage of machinery is not limited to the bare substitution of it for human labour, but that, in fact- it gives a
positive new product, inasmuch as it gives a degree of perfection before unknown. The flatting-mill and the die execute products, that the utmost skill and attention of the human hand could never
accomplish.
In fine, machinery does still more; it multiplies products with which it has no immediate connexion. Without taking the trouble; to reflect, one perhaps would scarcely imagine that the plough, the
harrow, and other similar machines, whose origin is lost in the night
of ages, 'rave powerfully contributed to procure for mankf id, besides the absolute necessaries of life, a vast number of the superfluities they now enjoy, whereof they would otherwise never have had any conception. Yet, if the different dressings the soil requires could be no otherwise given, than by the spade, the hoe, and other such simple and tardy expedients, if we were unable to* make available in agricultural production those domestic animals, that, in the eye of political economy, are but a kind of machines, it is most likely that the whole mass of human labour, now applicable to the arts of industry, would be occupied in raising the bare necessary subsistence of the actual population. Thus, the plough has been instrumental in releasing a number of hands for the prosecution of the arts, even of the most frivolous kind; and what is of more importance, for the cultivation of the intellectual faculties.
The ancients were unacquainted with water or wind-mills. In their time, the wheat their bread was made of, was pounded by the labour of the hand: so that perhaps no less than twenty individuals
were occupied in pounding as much wheat as one mill can grind.
Now a single miller, or two at the most, is enough to feed nnd superintend a mill. By the aid, then, of this ingenious piece of mechanism, two persons are as productive as twenty were in the dnys of Coesar. Wherefore, in every one of our mills, we make the wind, or a current of water, do the work of eighteen persons; which eighteen extra persons are just as well provided with subsistence; for the mill has in no respect diminished the general produce of the community: and whose exertions may be directed to the creation of new products, to be given by them in exchange for the produce of the mill; thereby augmenting the general wealth of the community.

Sunday, August 26, 2012

OP OPERATIONS ALIKE COMMON TO ALL BRANCHES OF INDUSTRY

Jean-Baptiste Say



IF we examine closely the workings of human industry, to whatever object it be applied, it consists of three distinct operations.

The first step towards the attainment of any specific product, is the study of the laws and course of nature regarding that product.
A lock could never have been constructed without a previous knowledge of the properties of iron, the method of extracting from the mine and refining the ore, as well as of mollifying and fashioning the metal.
The next step is the application of this knowledge to an useful purpose : for instance, the conclusion, or conviction, that a particular form, communicated to the metal, will furnish the means of closing a door to all the wards, except to the possessor of the key.
The last step is the execution of the manual labour, suggested and pointed out by the two former operations; as, for instance, the forging, filing, and putting together of the different component parts of the lock.
These three operations are seldom performed by one and the same person. It commonly happens, that one man studies the laws and conduct of nature; that is to say, the philosopher, or man of science, of whose knowledge another avails himself to create useful products, being either agriculturist, manufacturer, or trader; while the third supplies the executive exertion, under the direction of the former two ; which third person is the operative workman or labourer.
All products whatever will be found, on analysis, to derive existence from these three operations.
Take the example of a sack of wheat, or a pipe of wine. The first stage towards the attainment of either of these products was, the discovery by the natural philosopher or geologist, (a) of the conduct and course of nature in the production of the grain or the grape; the proper season and soil for sowing or planting ; and the care requisite to bring the herb or plant to maturity. The tenant, if not the proprietor himself, must afterward have applied this knowledge to his own particular object, brought together the means requisite to the creation of an useful product, and removed the obstacles in tho way of its creation. Finally, the labourer must have turned up the soil, sown the seed, or pruned and bound up the vine. These three distinct operations were indispensable to the complete production of the product, corn or wine.

Or take the example of a product of external commerce; such as indigo. The science of the geographer, the traveller, the astronomer, brings us acquainted with the spot where it is to be met with, and the means of crossing the seas to get at it. The merchant equips his vessels, and sends them in quest of the commodity; and the mariner and land-carrier perform the mechanical part of this production.
But, loooking at the substance, indigo, as a mere primary material of a further or secondary product, of blue cloth for instance; we all know that the chemist is first applied to for information, as to the nature of the substance, the method of dissolving it, and mordants requisite for fixing the colour; the means of perfecting me process of dyeing are then collected by the master manufacturer, under whose orders the labourer executes the manual part of the process.

Industry is, in all cases, divisible into theory, application, and execution. Nor can it approximate to perfection in any nation, til! that nation excel in all three branches. A people, that is deficient in one or other of them cannot acquire products, which are and must be the result of all three. And thus we may learn to appreciate the vast utility of many sciences, which, at first sight, appear to be the objects of mere curiosity and speculation.

The negroes of the coast of Africa are possessed of considerable ingenuity, and excel in all athletic exercises and handicraft occupations ; but they seem greatly deficient in the two previous operations of industry. Wherefore, they are under the necessity of purchasing from Europe the stuffs, arms, and ornaments, they stand in need of.

Their country yields so few products, notwithstanding its natural fertility, that the slave traders are obliged to lay in their stock of provisions beforehand, tp feed the slaves during the voyage.
In qualities favourable to industry, the moderns have greatly surpassed the ancients, and the Europeans outstrip all the other nations of the globe. The meanest inhabitant of an European town enjoys innumerable comforts unattainable to the sovereign of a savage tribe.

The single article, glass, that admits light into his apartment, and, at the same time, excludes the inclemency of the weather, is the beautiful result of observation and science, accumulated and perfected during a long course of ages. To obtain this luxury, it was necessary previously to know what kind of sand was convertible into a substance possessing extension, solidity, and transparency; as well as by the compound of what ingredients, and by what degree of heat, the substance was obtainable: to ascertain, besides, the best form of furnace. The very wood-work, that supports the roof of a glass-house, requires, in its construction, the most extensive knowledge of the strength of timber, and the means of employing it to advantage. Nor was the mere knowledge of these matters sufficient; for that knowledge might possibly have lain dormant in the memory of one or two persons, or in the pages of literature. It was further requisite, that a manufacturer should have been found, possessed of the means of reducing the knowledge into practice; who should have at first made himself master of all that was known of that particular branch of industry, and afterwards have accumulated, 01 procured the requisite capital, collected artificers and labourers, and assigned to each his respective occupation. Finally, the work must have been completed by the manual skill of the workmen employed; some in constructing the buildings and furnaces, some in keeping up the fire, mixing up the ingredients, blowing, cutting, rolling out, fitting and fixing the pane of glass.

The utility and beauty of the resulting product, are inconceivable to those who have never beheld this admirable creation of human industry. By means of industry, the vilest materials have been invested with the highest degree of utility. The very rags and refuse
of wearing apparel have been transformed into the white and thin sheets, that convey from one end of the globe to the other, the requisitions of commerce and the particulars of art; that serve as the depositories of the conceptions of genius, and the vehicles of human experience from one age to another; to them we look for the evidence of our properties; to them we entrust the most noble arid amiable sentiments of the heart, and by theYn we awaken corresponding feelings in the breasts of our fellow-creatures. The extraordinary facilities for the communication of human intelligence which paper affords, entitles it to be considered as one of the products that nave been most efficacious in ameliorating the condition of mankind.

Fortunate, indeed, would it have been, had an engine so powerful never have been made the vehicle of falsehood, or the instrument of tyranny!

It is worth while to remark, that the knowledge of the man of science, indispensable as it is to the development of industry, circulates with ease and rapidity from one nation to all the rest. And men of science have themselves an interest in its diffusion ; for upon that diffusion they rest their hopes of fortune, arid, what is more prized by them, of reputation too. For this reason, a nation, in which science is but little cultivated, may nevertheless carry its industry to a very great length, by taking advantage of the information derivable from abroad. But there is no way of dispensing with the other two operations of industry, the art of applying the knowledge of man to the supply of his wants, and the skill of execution. These qualities are of advantage to none but their possessors; so that a country well stocked with intelligent merchants, manufacturers, and agriculturists has more powerful means of attaining prosperity, than one devoted chiefly to the pursuit of the arts and sciences. At the period of the revival of literature in Italy, Bologna was the seat of science; but wealth was centered in Florence, Genoa, and Venice.

In our days, the enormous wealth of Britain is less owing to her own advances in scientific acquirements, high as she ranks in that department, than to the wonderful practical skill of her adventurers in  the useful application of knowledge, and the superiority of her

workmen in rapid and masterly execution. The national pride, that the English are often charged with, does not prevent their accommodating themselves with wonderful facility to the tastes of their customers and the consumers of their produce. They supply with hats both the north and the south, because they have learnt to make them light for the one market, and warm and thick for the other.
Whereas the nation that makes but of one pattern, must be content with the home market only.
The English labourer seconds the master manufacturer; he is commonly patient and laborious, and does not willingly send out an article from his hands, without giving it the utmost possible precision and perfection; not that he bestows more time upon it, but that he gives it more of his care, attention and diligence, than the workmen of most other nations.

There is no people, however, that need despair of acquiring the qualities requisite to the perfection of their industry. It is but 150 years since England herself had made so little progress, that she purchased nearly all her woollens from Belgium ; and it is not more than 80 years since Germany supplied with cotton goods the very nation, that now manufactures them for the whole world.

I have said that the cultivator, the manufacturer, the trader, make it their business to turn to profit the knowledge already acquired, and apply it to the satisfaction of human wants. I ought further to add, that they have need of knowledge of another kind, which can only be gained in the practical pursuit of their respective occupations, and may be called their technical skill. The most scientific naturalist, with all his superior information, would probably succeed much worse than his tenant, in the attempt to improve his own land.

A first-rate mechanist would most likely spin very indifferently without having served his apprenticeship, though admirably skilled in the construction of the cotton-machinery. In the arts there is a certain sort of perfection, that results only from repeated trials, sometimes successful and sometimes the contrary. So that science alone is not sufficient to ensure the progress, without the aid of experiment, which is always attended with more or less of risk, and does not always indemnify the adventurer, whose profit, even when successful, is moderated by competition; although society at large receives the accession of a new product, or, what amounis to the same thing, of an abatement in the price of an old one.

In agriculture, experiments usually cost the rent of the soil for a year or more, over and above the labour and the capital engaged in them.

In manufacture, experiment is hazarded on safer grounds of calculation capital engaged for a much shorter period, and if success ensue, the adventurer rewarded by a longer period of exclusive advantage, because his process is less open to observation. In some places, too, the exclusive advantage is protected by patents of invention. For all "which reasons, the progress of manufacturing is generally more rapid and more diversified than that of agricultural industry.
In commercial industry, the risk of experiment would be greater than in the other two branches, if the costs of the adventure had no auxiliary and concurrent object. But it is usually in the course of a regular trade, that a merchant hazards the introduction of a virgin commodity of foreign growth into an untried market. In this manner it was that the Dutch, about the middle of the seventeenth century, while prosecuting their commerce with China, with no very sanguine expectation, made experiment of a small assortment of dried leaves, from which the Chinese were in the habit of preparing their favourite beverage. Thus commenced the tea-trade, which now occasions the annual transport of more than 45 millions of pounds weight, that are sold in Europe for a sum of more than 80,000,000 of dollars.
In some cases of very rare occurrence, boldness is nearly certain of success. When the Europeans had recently discovered the pas sage round the Cape of Good Hope and the continent of America, their world was suddenly expanded to the East and West; and such was the infinity of new objects of desire in two hemispheres, whereof one was not at all, and the other but very imperfectly known before, that an adventurer had only to make the voyage, and was sure of selling his returns to great advantage.
In all but such extraordinary cases it is perhaps prudent to defray the charges of experiments in industry, not out of the capital engaged in the regular and approved channels of production, but out of the revenue that individuals have to dispose of at pleasure, without fear of impairing their fortune. The whims and caprices that divert to an useful end the leisure and revenue which most men devote to mere amusement, or perhaps to something worse, cannot be too highly encouraged. I can conceive no more noble employment of wealth and talent. A rich and philanthropic individual may, in this way, be the means of conferring upon the industrious classes, and upon the consumers at large, in other words, upon the mass of mankind, a benefit far beyond the mere value of what he actually disburses, perhaps beyond the whole amount of his fortune however princely it may be. Who will attempt to calculate the value conferred on mankind by the unknown inventor of the plough?

If a government, that knows and practises its duties, and has large lesources at its disposal, does not abandon to individuals the whole glory and merit of invention and discovery in the field of industry.

The charges of experiment, when defrayed by the government, are not subtracted from the national capital, but from the national revenue; for taxation never does, or, at least, never ought to touch any thing beyond the revenue of individuals. The portion of them so spent is scarcely felt at all, because the burthen is divided among innumerable contributors; and, the advantages resulting from success being a common benefit to all, it is by no means inequitable that the sacrifices, by which they are obtained, should fall on the community at large.

A Treatise on Political Economy



Saturday, August 25, 2012

OF THE DIFFERENT KINDS OF INDUSTRY, AND THE MODE IN WHICH THEY CONCUR IN PRODUCTION - by mankind, that the objects of rational desire are within their provided they have the will and intelligence to employ the true means of obtaining them. Those means it is the purpose of Una work to investigate and unfold.


SOME items of human consumption are the spontaneous gifts of nature, and require no exertion of man for their production ; as air water, and light, under certain circumstances. These are destitute of exchangeable value; because the want of them is never felt, others being equally provided with them as ourselves. Being neither procurable by production, nor destructible by consumption, they come not within the province of political economy.

But there are abundance of others equally indispensable to our existence and to our happiness, which man would never enjoy at all, did not his industry awaken, assist, or complete the operations of nature. Such are most of the articles which serve for his food, garments and lodging.

When that industry is limited to the bare collection of natural products, it is called agricultural industry, or simply agriculture.

When it is employed in severing, compounding, or fashioning the products of nature, so as to fit them to the satisfaction of our various wants, it is called manufacturing industry.

When it is employed in placing within our reach objects of want which would otherwise be beyond reach, it is called commercial industry, or simply commerce.

It is solely by means of industry that mankind can be furnished, in any degcee of abundance, with actual necessaries, and with that variety of other objects, the use of which, though not altogether indispensable, yet marks the distinction between a civilized community and a tribe of savages. Nature, left entirely to itself, would provide a very scanty subsistence to a small number of human beings. Fertile but desert tracts have been found inadequate to the bare nourishment of a few wretches, cast upon them by the chances of shipwreck: while the presence of industry often exhibits the spectacle of a dense population plentifully supplied upon the most ungrateful soil.

The term products is applied to things that industry furnishes to mankind.

A particular product is rarely the fruit of one branch of industry exclusively. A table is a joint product of agricultural industry, which has felled the tree whereof it is made, and of manufacturing
industry, which has given it form. Europe is indebted for its coflee to the agricultural industry, which has planted and cultivated the bean in Arabia or elsewhere, and to the commercial industry, which
hands it over to the consumer.

These three branches of industry, which may at pleasure be again infinitely subdivided, are uniform in their mode of contributing to the act of production. They all either confer an utility on a substance that possessed none before, or increase one which it already possessed. The husbandman who sows a grain of wheat that yields twenty-fold, does not gain this product from nothing: he avails himself of a powerful agent; that is to say, of Nature, and merely directs an operation, whereby different substances previously scattered throughout the elements of earth, air, and water, are converted into the form of grains of wheat.

Gall-nuts, sulphate of iron, and gum-arabic, are substances existing separately in nature. The joint industry of the merchant and manufacturer brings them together, and from their compound derives the
black liquid, applied to the transmission of useful science. This joint operation of the merchant and manufacturer is analogous to that of the husbandman, who chooses his object and effects its attainment
by precisely the same kind of means as the other two.

No human being has the faculty of originally creating matter which is more than nature itself can do. But any one may avail himself of the agents offered him by nature, to invest matter with
utility. In fact, industry is nothing more or less than the human employment of natural agents; the most perfect product of labour, the one that derives nearly its whole value from its workmanship, rs
probably the result of the action of steel, a natural product upon some substance or other, likewise a natural product.

Through ignorance of this principle, the economists of the 18th century, though many enlightened writers were to be reckoned amongst them, were betrayed into the most serious errors. They allowed no industry to be productive, but that which procured the raw materials; as the industry of the husbandman, the fisherman and the miner; not adverting to the distinction, that wealth consists, not in matter, but in the value of matter; because matter without value is no item of wealth; otherwise water, flint-stones, and dust of the roads, would be wealth. Wherefore, if the value of matter constitutes wealth, wealth is to be created by the annexation of value. Practically, the man who has in his warehouse a quintal of wool worked up into fine cloths, is richer than one who has the same quantity of wool in packs.

To this position the economists replied, that the additional value communicated to a product by manufacture, was no more than equivalent to the value consumed by the manufacturer during the process; for, said they, the competition of manufactures prevents their ever raising the price beyond the bare*amount of their own expenditure and consumption ; wherefore their labour adds nothing to the total wealth of the community, because their wants on the one side destroy as much as their industry produces on the other.

But it should have been previously demonstrated by those who made use of this argument, that the value, consumed by mechanic and artizans, must of necessity barely equal the value produced by them, which is not the fact; for it is unquestionable, that more savings are made, and more capital accumulated from the profits of trade and manufacture, than from those of agriculture.

Besides, even admitting that the profits of manufacturing industry are consumed in the satisfaction of the necessary wants of the manufacturers and their families, that circumstance does not prevent them being positive acquisitions of wealth. For unless they were so, they could not satisfy their wants: the profits of the land-owner and agriculturist are allowed to be items of positive wealth; yet they are equally consumed in the maintenance of those classes.

Commercial, in like manner as manufacturing industry, concurs in production, by augmenting the value of a product by its transport from one place to another. A quintal of Brazil cotton has acquired greater utility, and therefore larger value, by the time it reaches a warehouse in Europe, than it possessed in one at Pernambuco. The transport is a modification that the trader gives to the commodity, whereby he adapts to our use what was not before available; which modification is equally useful, complex and uncertain in the result, as any it derives from the other two branches of industry. He avails himself of the natural properties of the timber and the metals used in the construction of his ships, of the hemp whereof his rigging is composed, of the wind that fills his sails, of all the natural agents brought to concur in his purpose, with precisely the same view and the same result, and in the same manner too, as the agriculturist avails himself of the earth, the rain, and the atmosphere.


Thus, when Raynal says of commerce, as contrasted with agriculture and the arts, that " it produces nothing of itself," he shows himself to have had no just conception of the phenomenon of production. In this instance Raynal has fallen into the same error with regard to commerce, as the economists made respecting both commerce and manufacture. They pronounced agriculture to be the sole channel of production; Raynal refers production to the two channels of agriculture and manufacture: his position is nearer the truth than the other, but still is erroneous.

Condillac also is confused in his enrl^avour to explain the mode in which commerce produces. He pretends that, because all commodities cost to the seller less than the buyer, they derive an increase of value from the mere act of transfer from one hand to another. But this is not so; for, since a sale is nothing else but an act of barter, in which one kind of goods, silver for example, is received in lieu
of another kind of goods, the loss which either of the parties dealing should sustain on one article would be equivalent to the profit he would make on the other, and there would be to the community no
production of value whatsoever.* When Spanish wine is bought at raris, equal value is really given for equal value: the silver paid, and the wine received, are worth one the other; but the wine had not the same vaiue before its export from Alicant: its value has really increased in the hands of the trader, by  he circumstance of transport, and not by the circumstance, or at the moment, of exchange.


The seller does not play the rogue, nor the buyer the fool; and Condillac h/is no grounds for his position, that " if men always exchanged equal value for equal value, there would be no profit to be made by the traders."

In some particular cases the two other branches of industry produce in a manner analogous to commerce, viz. by giving a value to things to which they actually communicate no new quality, but that of approximation to the consumer. Of this description is the industry of miners. The coal or metal may exist in the earth, in a perfect state, but unpossessed of value. The miner extracts them thence, and this operation gives them a value, by fitting them for the use of mankind. So also of the herring fishery. Whether in or out of the sea, the fish is the same; but under the latter circumstances, it has acquired an utility, a value, it did not before possess, f Examples might be infinitely multiplied, and would all bear as close an affinity, as those natural objects, which the naturalist classifies only to facilitate their description.

This fundamental error of the economists, in which I have shown that their adversaries in some measure participated, led them to the strangest conclusions. According to their theory, the traders and manufacturers, being unable to add an iota to the general stock of wealth, live entirely at the expense of the sole producers, that is to say, the proprietors and cultivators of the land. Whatever new value they may communicate to things, they at the same time consume an equivalent product, furnished by the real producers: manufacturing and commercial nations, therefore, subsist wholly upon the wages they receive from their agricultural customers; in proof of which position, they alleged that Colbert ruined France by his protection of manufactures.

The truth is, that, in whatever class of industry a person is engaged, he subsists upon the profit he derives from the additional value, or portion of value, no matter in what ratio, which his ag mcy attaches to the product he is at work upon. The total value of products serves in this way to pay the profits of those occupied in production. The wants of mankind are supplied and satisfied out ot the gross values produced and created, and not" out of the net values only.

A nation, or a class of a nation, engaged in manufacturing or commercial industry, is not a whit more or less in the pay of another, than one employed in agriculture. The value created by one branch is of the same nature as that created by others. Two equal values are worth one the other, although perhaps the fruit of different branches of industry: and when Poland barters its staple product, wheat, for the staple commodity of Holland, East and West India produce, Holland is no more in the pay or service of Poland, than Poland is of Holland.

Nay, Poland herself, which exports at the rate of ten millions of wheat annually, and therefore, according to the economists, takes the sure road to national wealth, is, notwithstanding, poor and depopulated : and why ?—Because she confines her industry to agriculture, though she might be at the same time a commercial and manufacturing state. Instead of keeping Holland in her pay, she may with more propriety be said to receive wages from the latter, for the raising of ten millions of wheat, per annum. Nor is she a jot less dependent than the nations that buy wheat of her: for she has just as much desire to sell to them, as they have to buy of her.

Moreover, it is not true that Colbert ruined France. On the contrary, the fact is that France, under Colbert's administration, emerged from the distress that two regencies and a weak reign had involve.! her in. She was, indeed, afterwards ruined again; but for this second calamity, she may thank the pageantry and the wars of Louis XIV. Nay, the very prodigality of that prince is an undeniable evidence of the vast resources that Colbert had placed at his disposal. It must, however, be admitted that those resources would have been still more ample, if he had but given the same protection to agriculture, as to the other branches of industry.

Thus it is evident, that the means of enlarging and multiplying wealth within the reach of every community are much less confined than the economists imagined. A nation, by their account, was unable to produce annually any values beyond the net annual products of its lands; to which fund alone recourse could be had for the support not only of the proprietary and the idler, but likewise of the merchant, the manufacturer, and the mechanic, as well as for the total consumption of the government. Whereas we have just seen that the annual produce of a nation is composed, not of the mere net produce of its agriculture, but of the gross produce of its agriculture, commerce, and manufacture united. For, in fact, is not the sum total, that is to say, the aggregate of the gross product raised by the nation, disposable for its consumption ? Is value produced less an item of wealth, because it must needs be consumed ? And does not value itself originate in this very applicability to consumption.

The English writer, Stewart,who may be looked upon as the leading advocate of the exclusive system, the system founded on the maxim, that the wealth of one set of men is derived from the impoverishment of another, is himself no less mistaken in asserting, that, " when once a 6top is put to external commerce, the stock of internal wealth cannot be augmented."* Wealth, it seems, can come only from abroad; but abroad, where does it come from ? from abroad also. So
that in tracing it from abroad to abroad, we must necessarily, in the end, exhaust every source, till at last we are compelled to look for it beyond the limits of our own planet, which is absurd.

Forbonnais,f too, builds his prohibitory system on this glaring fallacy; and to speak freely, on this fallacy are founded the exclusive systems of all the short-sighted merchants, and all the governments of Europe and of the world. They all take it for granted, that what one individual gains must needs be lost to another; that what is gained by one country is inevitably lost to another: as ii the possessions of abundance of individuals and of communities could not be multiplied, without the robbery of somebody or other. It one man or set of men, could only be enriched at others' expense, how could the whole number of individuals, of whom a state is composed, be richer at one period than at another, as they now confessedly are in France, England, Holland, and Germany, compared with what they were formerly? How is it, that nations are in our days more opulent, and their wants better supplied in every respect, than they were in the seventeenth century? Whence can they have derived that portion of their present wealth, which then had no existence ? Is it from the mines of the new continent ? They had
already advanced in wealth before the discovery of America. Be sides, what is that which these mines have furnished? Metallic wealth or value. But all the other values which those nations now possess, beyond what they did in the middle ages, whence are they derived ? Is it not clear, that these can be no other than created values?

We must conclude, then, that wealth, which consists in the value that human industry, in aid and furtherance of natural agents, communicates to things, is susceptible of creation and destruction, of
increase and diminution, within the limits of each nation and independently of external agency, according to the method it adopts to bring about those effects. An important truth, which ought to teach mankind, that the objects of rational desire are within their provided they have the will and intelligence to employ the true means of obtaining them. Those means it is the purpose of the work to investigate and unfold.


A Treatise on Political Economy