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.

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