The Online Library of Liberty

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• Preface
• Editorial Note
• I.: Biographical Sketch
• II.: Early Economic Writings: 1804-1808
• An Essay of the Impolicy of a Bounty On the Exportation of Grain
• Introduction
• Essay On the Corn Laws
• Chap. I: Of the History of the Corn Laws
• Chap. II: Influence of the Principle of Population Upon the Corn Trade
• Chap. III: Effects of the Bounty On the Rent of Land
• Chap. IV: Effects of the Bounty On the Profits of the Farmer
• Chap. V: Effects of the Bounty On the Value of Silver
• Chap. VI: Exportation
• Chap. VII: Importation
• Chap. VIII: Landlords, Farmers, and Corn-dealers
• Postscript to Essay On Impolicy
• Commerce Defended.
• Introduction
• Chapter I: On the Security Or Insecurity of the British Commerce
• Chapter II: On Land, As a Source of Wealth
• Chapter III: Of the Definition of the Terms Wealth and Prosperity
• Chapter IV: Of Manufactures
• Chapter V: Commerce
• Chapter VI: Consumption
• Chapter VII: Of the National Debt
• Chapter VIII: General Reflections
• Smith On Money and Exchange
• III.: James Mill and David Ricardo
• Elements of Political Economy,
• Preface
• Preface (to the 2nd Edn.)
• Introduction the Subject—its Limits—and Division
• Chapter I: Production
• Chapter II: Distribution
• Chapter III: Interchange
• Chapter IV: Consumption
• Mill On Scope and Method
• Whether Political Economy Is Useful London Review, Jan. 1836, Vol. Ii, Pp. 553–572.
• V.: James Mill and India
• Book Ii of the Hindus
• Chapter I: Chronology and Ancient History of the Hindus
• Chapter II: Classification and Distribution of the People
• Chapter III: The Form of Government
• Chapter IV: The Laws
• Chapter V: The Taxes
• Bibliography

CHAPTER III

OF THE DEFINITION OF THE TERMS WEALTH AND PROSPERITY

Mr Spence, with a view to introduce accuracy into his inquiry, presents us near the commencement of his pamphlet with a definition of the terms Wealth and Prosperity. This was indeed highly necessary, for while our ideas waver on this point, all our reasonings, respecting the wealth and prosperity of nations, must by consequence be uncertain and deceitful. It is of the utmost importance, therefore, in the examination of Mr Spence's doctrines, to ascertain the precision or inaccuracy of his definition of wealth. The following passage contains not only the definition but its illustration:

‘In investigating the present subject,7 it will be necessary previously to inquire into the opinions which have been held relative to the real sources of wealth and prosperity to a nation, and we shall then be able to apply the results deduced from such an examination to our own case. And in the first place, the meaning of the terms, wealth and prosperity, must be settled; for, if the reader were to take these words in their usual acceptation, if he were to conclude, that by the first is meant gold and silver merely, and by the latter extensive dominion, powerful armies, &c. he would be affixing to these terms meanings very different from those which are here meant to be annexed to them, and ideas, which, however, common, are founded in error. Spain has plenty of gold and silver, yet she has no wealth; whilst Britain is wealthy with scarcely a guinea: and France, with her numerous conquests, her extended influence, and her vast armies is probably not enjoying much prosperity; certainly not nearly so much as we enjoy, though we have far less influence, and much smaller armies than she has. Wealth, then, is defined to consist in abundance of capital, of cultivated and productive land, and of those things which man usually esteems valuable. Thus, a country where a large proportion of inhabitants have accumulated fortunes; where much of the soil is productively cultivated, and yields a considerable revenue to the land-owner, may be said to be wealthy; and on the contrary, a nation where few of the inhabitants are possessed of property, and where the land is badly cultivated, and yields but little revenue to the proprietor, may be truly said to be poor. Britain is an example of the first state, Spain and Italy of the last. A nation may be said to be in prosperity, which is progressively advancing in wealth, where the checks to population are few, and where employment and subsistence are readily found for all classes of its inhabitants. It does not follow, that a prosperous nation must be wealthy; thus America, though enjoying prosperity, has not accumulated wealth. Nor does it follow, that because a nation possesses wealth, it is therein a state of prosperity. All those symptoms of wealth which have been enumerated, may exist, and yet a nation may in prosperity be going retrograde, its wealth may be stationary, its population kept at a stand, and the difficulty of getting employment for those who seek it, may be becoming greater every day.’

First, here, Mr Spence warns us against supposing that wealth consists in gold and silver merely; that prosperity consists in extensive dominion, powerful armies, and the like: And assuredly if any one entertains this idea of wealth and prosperity, he is in a woeful delusion. Having learned from Mr Spence what wealth and prosperity are not, let us next learn what they are. ‘Wealth’, he says, ‘is defined to consist in abundance of capital, of cultivated and productive land, and of those things which man usually esteems valuable.’ Here three things are enumerated as the constituents of wealth. The first is capital. Now it is an established and indispensible rule in definition, that the words themselves in which the definition is conceived should be of the most precise and determinate signification; because, otherwise, the definition is of no use. But here the term ‘capital’ stands as much in need of definition as the term wealth, which it is brought to define. What is capital, or wherein does it consist? There are as many difficulties in these questions, as in the questions, What is wealth, and wherein does it consist? To define one vague and ambiguous word by another which is equally vague and ambiguous, is to pay us with mere words instead of ideas. The second constituent of wealth, according to Mr Spence's definition, is cultivated and productive land. But would not Mr Spence allow that uncultivated land, if it might be very easily cultivated and rendered productive, ought also to be accounted wealth? In a definition where every thing ought to be in the highest degree accurate, an exception even of this sort is important. Let us, however, attend particularly to what Mr Spence states as the third constituent of wealth; ‘Those things which man usually esteems valuable.’ This is a sweeping clause. In the first place this third constituent includes both the other two, for undoubtedly capital and productive land are among the things which man esteems valuable. The third constituent, therefore, is not only the third, but the first, second, and third all in one.8 It would have been much better without enumerating the first two, which are undoubtedly but parts of the last, to have said at once that wealth consisted in those things which man usually esteems valuable. Still, however, the expression would have been so vague as to be entirely useless as a definition. Man usually esteems air and light as very valuable, but in what sense can they be regarded as national wealth? It is very evident from this explanation that Mr Spence neither understands what is requisite to a definition, nor has formed to himself any distinct idea of the meaning of the term wealth.

Another particularity in this definition is worthy of a little attention. Mr Spence says, that wealth is defined to consist in abundance of capital, &c. When Mr Spence, or any other political philosopher, inquires whether land, or manufactures, or commerce be the source of wealth, the question is not respecting quantity. We say that land is productive of wealth, without considering whether the quantity be one bushel or a million. But when Mr Spence defines wealth as consisting in abundance of capital, land, and valuable things, he evidently confounds the philosophical meaning of the work with the vulgar, in which wealth signifies a great quantity of riches. So much for Mr Spence's definition of wealth.

Let us next consider what he says in regard to prosperity. He does not indeed attempt to define prosperity; But he gives us a description of a nation which may be said to be in prosperity. ‘It is a nation which is progressively advancing in wealth, where the checks to population are few, and where employment and subsistence are readily found for all classes of its inhabitants.’ It would be tedious here to enter into the same minute analysis which we applied to the definition of wealth. We may barely remark, that of the three clauses of which the description consists, the last two are included in the first; as it is in the nation which is progressively advancing in wealth that the checks to population are fewest, and employment and subsistence are most readily found for all classes of the inhabitants. This indeed is that remarkable distinction of the progressive state of society which is so admirably illustrated by Dr Smith.9

Having seen how little useful are the definitions with which Mr Spence has favoured us, it may be requisite for our subsequent inquiries to explain accurately in what sense the term wealth will here be used. Wealth is relative to the term value; it is necessary therefore first to affix a meaning to the latter. The term value has in common acceptation two meanings. It signifies either value in use, or value in exchange. Thus water has great value in use but commonly has no value in exchange, that is to say, nothing can be obtained for it in purchase. On the other hand, a diamond or a ruby has little or no value in use, but great value in exchange. Now the term wealth will always be employed in the following pages as denoting objects which have a value in exchange, or at least notice will be given if we have ever occasion to use it in another sense.

[7]See pp. 9, 10 [pp. 7, 8].

[8]This is just such a definition, as if, describing the corporal part of man, we should say that it consisted of a trunk, limbs, and body.

[9]Wealth of Nations, B. I. c. 8.