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BOOK I: PRODUCTION - John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy (Ashley ed.) 
Principles of Political Economy with some of their Applications to Social Philosophy, ed. William James Ashley (London: Longmans, Green and Co., 1909, 7th ed.).
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of the requisites of production
§ 1. The requisites of production are two: labour, and appropriate natural objects.
Labour is either bodily or mental; or, to express the distinction more comprehensively, either muscular or nervous; and it is necessary to include in the idea, not solely the exertion itself, but feelings of a disagreeable kind, all bodily inconvenience or mental annoyance, connected with the employment of one's thoughts, or muscles, or both, in a particular occupation. Of the other requisite—appropriate natural objects—it is to be remarked, that some objects exist or grow up spontaneously, of a kind suited to the supply of human wants. There are caves and hollow trees capable of affording shelter; fruit, roots, wild honey, and other natural products, on which human life can be supported; but even here a considerable quantity of labour is generally required, not for the purpose of creating, but of finding and appropriating them. In all but these few and (except in the very commencement of human society) unimportant cases, the objects supplied by nature are only instrumental to human wants, after having undergone some degree of transformation by human exertion. Even the wild animals of the forest and of the sea, from which the hunting and fishing tribes derive their sustenance—though the labour of which they are the subject is chiefly that required for appropriating them—must yet, before they are used as food, be killed, divided into fragments, and subjected in almost all cases to some culinary process, which are operations requiring a certain degree of human labour. The amount of transformation which natural substances undergo before being brought into the shape in which they are directly applied to human use, varies from this or a still less degree of alteration in the nature and appearance of the object, to a change so total that no trace is perceptible of the original shape and structure. There is little resemblance between a piece of a mineral substance found in the earth, and a plough, an axe, or a saw. There is less resemblance between porcelain and the decomposing granite of which it is made, or between sand mixed with sea weed, and glass. The difference is greater still between the fleece of a sheep, or a handful of cotton seeds, and a web of muslin or broad cloth; and the sheep and seeds themselves are not spontaneous growths, but results of previous labour and care. In these several cases the ultimate product is so extremely dissimilar to the substance supplied by nature, that in the custom of language nature is represented as only furnishing materials.
Nature, however, does more than supply materials; she also supplies powers. The matter of the globe is not an inert recipient of forms and properties impressed by human hands; it has active energies by which it co-operates with, and may even be used as a substitute for, labour. In the early ages people converted their corn into flour by pounding it between two stones; they next hit on a contrivance which enabled them, by turning a handle, to make one of the stones revolve upon the other; and this process, a little improved, is still the common practice of the East. The muscular exertion, however, which it required, was very severe and exhausting, insomuch that it was often selected as a punishment for slaves who had offended their masters. When the time came at which the labour and sufferings of slaves were thought worth economizing, the greater part of this bodily exertion was rendered unnecessary, by contriving that the upper stone should be made to revolve upon the lower, not by human strength, but by the force of the wind or of falling water. In this case, natural agents, the wind or the gravitation of the water, are made to do a portion of the work previously done by labour.
§ 2. Cases like this, in which a certain amount of labour has been dispensed with, its work being devolved upon some natural agent, are apt to suggest an erroneous notion of the comparative functions of labour and natural powers; as if the co-operation of those powers with human industry were limited to the cases in which they are made to perform what would otherwise be done by labour; as if, in the case of things made (as the phrase is) by hand, nature only furnished passive materials. This is an illusion. The powers of nature are as actively operative in the one case as in the other. A workman takes a stalk of the flax or hemp plant, splits it into separate fibres, twines together several of these fibres with his fingers, aided by a simple instrument called a spindle; having thus formed a thread, he lays many such threads side by side, and places other similar threads directly across them, so that each passes alternately over and under those which are at right angles to it; this part of the process being facilitated by an instrument called a shuttle. He has now produced a web of cloth, either linen or sack-cloth, according to the material. He is said to have done this by hand, no natural force being supposed to have acted in concert with him. But by what force is each step of this operation rendered possible, and the web, when produced, held together? By the tenacity, or force of cohesion, of the fibres: which is one of the forces in nature, and which we can measure exactly against other mechanical forces, and ascertain how much of any of them it suffices to neutralize or counterbalance.
If we examine any other case of what is called the action of man upon nature, we shall find in like manner that the powers of nature, or in other words the properties of matter, do all the work, when once objects are put into the right position. This one operation, of putting things into fit places for being acted upon by their own internal forces, and by those residing in other natural objects, is all that man does, or can do, with matter. He only moves one thing to or from another. He moves a seed into the ground; and the natural forces of vegetation produce in succession a root, a stem, leaves, flowers, and fruit. He moves an axe through a tree, and it falls by the natural force of gravitation; he moves a saw through it, in a particular manner, and the physical properties by which a softer substance gives way before a harder, make it separate into planks, which he arranges in certain positions, with nails driven through them, or adhesive matter between them, and produces a table, or a house. He moves a spark to fuel, and it ignites, and by the force generated in combustion it cooks the food, melts or softens the iron, converts into beer or sugar the malt or cane-juice, which he has previously moved to the spot. He has no other means of acting on matter than by moving it. Motion, and resistance to motion, are the only things which his muscles are constructed for. By muscular contraction he can create a pressure on an outward object, which, if sufficiently powerful, will set it in motion, or if it be already moving, will check or modify or altogether arrest its motion, and he can do no more. But this is enough to have given all the command which mankind have acquired over natural forces immeasurably more powerful than themselves; a command which, great as it is already, is without doubt destined to become indefinitely greater. He exerts this power either by availing himself of natural forces in existence, or by arranging objects in those mixtures and combinations by which natural forces are generated; as when by putting a lighted match to fuel, and water into a boiler over it, he generates the expansive force of steam, a power which has been made so largely available for the attainment of human purposes.∗
Labour, then, in the physical world, is always and solely employed in putting objects in motion; the properties of matter, the laws of nature, do the rest. The skill and ingenuity of human beings are chiefly exercised in discovering movements, practicable by their powers, and capable of bringing about the effects which they desire. But, while movement is the only effect which man can immediately and directly produce by his muscles, it is not necessary that he should produce directly by them all the movements which he requires. The first and most obvious substitute is the muscular action of cattle: by degrees the powers of inanimate nature are made to aid in this too, as by making the wind, or water, things already in motion, communicate a part of their motion to the wheels, which before that invention were made to revolve by muscular force. This service is extorted from the powers of wind and water by a set of actions, consisting like the former in moving certain objects into certain positions in which they constitute what is termed a machine; but the muscular action necessary for this is not constantly renewed, but performed once for all, and there is on the whole a great economy of labour.
§ 3. Some writers have raised the question, whether nature gives more assistance to labour in one kind of industry or in another; and have said that in some occupations labour does most, in others nature most. In this, however, there seems much confusion of ideas. The part which nature has in any work of man, is indefinite and incommensurable. It is impossible to decide that in any one thing nature does more than in any other. One cannot even say that labour does less. Less labour may be required; but if that which is required is absolutely indispensable, the result is just as much the product of labour, as of nature. When two conditions are equally necessary for producing the effect at all, it is unmeaning to say that so much of it is produced by one and so much by the other; it is like attempting to decide which half of a pair of scissors has most to do in the act of cutting; or which of the factors, five and six, contributes most to the production of thirty. The form which this conceit usually assumes, is that of supposing that nature lends more assistance to human endeavours in agriculture, than in manufactures. This notion, held by the French Economistes, and from which Adam Smith was not free, arose from a misconception of the nature of rent. The rent of land being a price paid for a natural agency, and no such price being paid in manufactures, these writers imagined that since a price was paid, it was because there was a greater amount of service to be paid for: whereas a better consideration of the subject would have shown that the reason why the use of land bears a price is simply the limitation of its quantity, and that if air, heat, electricity, chemical agencies, and the other powers of nature employed by manufacturers, were sparingly supplied, and could, like land, be engrossed and appropriated, a rent could be exacted for them also.
§ 4. This leads to a distinction which we shall find to be of primary importance. Of natural powers, some are unlimited, others limited in quantity. By an unlimited quantity is of course not meant literally, but practically unlimited: a quantity beyond the use which can in any, or at least in present circumstances, be made of it. Land is, in some newly settled countries, practically unlimited in quantity: there is more than can be used by the existing population of the country, or by any accession likely to be made to it for generations to come. But even there, land favourably situated with regard to markets or means of carriage, is generally limited in quantity: there is not so much of it as persons would gladly occupy and cultivate, or otherwise turn to use. In all old countries, land capable of cultivation, land at least of any tolerable fertility, must be ranked among agents limited in quantity. Water, for ordinary purposes, on the banks of rivers or lakes, may be regarded as of unlimited abundance; but if required for irrigation, it may even there be insufficient to supply all wants, while in places which depend for their consumption on cisterns or tanks, or on wells which are not copious, or are liable to fail, water takes its place among things the quantity of which is most strictly limited. Where water itself is plentiful, yet water-power, i.e. a fall of water applicable by its mechanical force to the service of industry, may be exceedingly limited, compared with the use which would be made of it if it were more abundant. Coal, metallic ores, and other useful substances found in the earth, are still more limited than land. They are not only strictly local but exhaustible; though, at a given place and time, they may exist in much greater abundance than would be applied to present use even if they could be obtained gratis. Fisheries, in the sea, are in most cases a gift of nature practically unlimited in amount; but the Arctic whale fisheries have long been insufficient for the demand which exists even at the very considerable price necessary to defray the cost of appropriation: and the immense extension which the Southern fisheries have in consequence assumed, is tending to exhaust them likewise. River fisheries are a natural resource of a very limited character, and would be rapidly exhausted, if allowed to be used by every one without restraint. Air, even that state of it which we term wind, may, in most situations, be obtained in a quantity sufficient for every possible use; and so likewise, on the sea coast or on large rivers, may water carriage: though the wharfage or harbour-room applicable to the service of that mode of transport is in many situations far short of what would be used if easily attainable.
It will be seen hereafter how much of the economy of society depends on the limited quantity in which some of the most important natural agents exist, and more particularly land. For the present I shall only remark that so long as the quantity of a natural agent is practically unlimited, it cannot, unless susceptible of artificial monopoly, bear any value in the market, since no one will give anything for what can be obtained gratis. But as soon as a limitation becomes practically operative; as soon as there is not so much of the thing to be had, as would be appropriated and used if it could be obtained for asking; the ownership or use of the natural agent acquires an exchangeable value. When more water power is wanted in a particular district, than there are falls of water to supply it, persons will give an equivalent for the use of a fall of water. When there is more land wanted for cultivation than a place possesses, or than it possesses of a certain quality and certain advantages of situation, land of that quality and situation may be sold for a price, or let for an annual rent. This subject will hereafter be discussed at length; but it is often useful to anticipate, by a brief suggestion, principles and deductions which we have not yet reached the place for exhibiting and illustrating fully.
of labour as an agent of production
§ 1. The labour which terminates in the production of an article fitted for some human use, is either employed directly about the thing, or in previous operations destined to facilitate, perhaps essential to the possibility of, the subsequent ones. In making bread, for example, the labour employed about the thing itself is that of the baker; but the labour of the miller, though employed directly in the production not of bread but of flour, is equally part of the aggregate sum of labour by which the bread is produced; as is also the labour of the sower and of the reaper. Some may think that all these persons ought to be considered as employing their labour directly about the thing; the corn, the flour, and the bread being one substance in three different states. Without disputing about this question of mere language, there is still the ploughman, who prepared the ground for the seed, and whose labour never came in contact with the substance in any of its states; and the plough-maker, whose share in the result was still more remote. All these persons ultimately derive the remuneration of their labour from the bread, or its price: the plough-maker as much as the rest; for since ploughs are of no use except for tilling the soil, no one would make or use ploughs for any other reason than because the increased returns, thereby obtained from the ground, afforded a source from which an adequate equivalent could be assigned for the labour of the plough-maker. If the produce is to be used or consumed in the form of bread, it is from the bread that this equivalent must come. The bread must suffice to remunerate all these labourers, and several others; such as the carpenters and bricklayers who erected the farm-buildings; the hedgers and ditchers who made the fences necessary for the protection of the crop; the miners and smelters who extracted or prepared the iron of which the plough and other implements were made. These, however, and the plough-maker, do not depend for their remuneration upon the bread made from the produce of a single harvest, but upon that made from the produce of all the harvests which are successively gathered until the plough, or the buildings and fences, are worn out. We must add yet another kind of labour; that of transporting the produce from the place of its production to the place of its destined use: the labour of carrying the corn to market, and from market to the miller's, the flour from the miller's to the baker's, and the bread from the baker's to the place of its final consumption. This labour is sometimes very considerable: flour is  transported to England from beyond the Atlantic, corn from the heart of Russia; and in addition to the labourers immediately employed, the waggoners and sailors, there are also costly instruments, such as ships, in the construction of which much labour has been expended: that labour, however, not depending for its whole remuneration upon the bread, but for a part only; ships being usually, during the course of their existence, employed in the transport of many different kinds of commodities.
To estimate, therefore, the labour of which any given commodity is the result, is far from a simple operation. The items in the calculation are very numerous—as it may seem to some persons, infinitely so; for if, as a part of the labour employed in making bread, we count the labour of the blacksmith who made the plough, why not also (it may be asked) the labour of making the tools used by the blacksmith, and the tools used in making those tools, and so back to the origin of things? But after mounting one or two steps in this ascending scale, we come into a region of factions too minute for calculation. Suppose, for instance, that the same plough will last, before being worn out, a dozen years. Only one-twelfth of the labour of making the plough must be placed to the account of each year's harvest. A twelfth part of the labour of making a plough is an appreciable quantity. But the same set of tools, perhaps, suffice to the plough-maker for forging a hundred ploughs, which serve during the twelve years of their existence to prepare the soil of as many different farms. A twelve-hundredth part of the labour of making his tools, is as much, therefore, as has been expended in procuring one year's harvest of a single farm: and when this fraction comes to be further apportioned among the various sacks of corn and loaves of bread, it is seen at once that such quantities are not worth taking into the account for any practical purpose connected with the commodity. It is true that if the tool-maker had not laboured, the corn and bread never would have been produced; but they will not be sold a tenth part of a farthing dearer in consideration of his labour.
§ 2. Another of the modes in which labour is indirectly or remotely instrumental to the production of a thing, requires particular notice: namely, when it is employed in producing subsistence, to maintain the labourers while they are engaged in the production. This previous employment of labour is an indispensable condition to every productive operation, on any other than the very smallest scale. Except the labour of the hunter and fisher, there is scarcely any kind of labour to which the returns are immediate. Productive operations require to be continued a certain time, before their fruits are obtained. Unless the labourer, before commencing his work, possesses a store of food, or can obtain access to the stores of some one else, in sufficient quantity to maintain him until the production is completed, he can undertake no labour but such as can be carried on at odd intervals, concurrently with the pursuit of his subsistence. He cannot obtain food itself in any abundance; for every mode of so obtaining it, requires that there be already food in store. Agriculture only brings forth food after the lapse of months; and though the labours of the agriculturist are not necessarily continuous during the whole period, they must occupy a considerable part of it. Not only is agriculture impossible without food produced in advance, but there must be a very great quantity in advance to enable any considerable community to support itself wholly by agriculture. A country like England or France is only able to carry on the agriculture of the present year, because that of past years has provided, in those countries or somewhere else, sufficient food to support their agricultural population until the next harvest. They are only enabled to produce so many other things besides food, because the food which was in store at the close of the last harvest suffices to maintain not only the agricultural labourers, but a large industrious population besides.
The labour employed in producing this stock of subsistence, forms a great and important part of the past labour which has been necessary to enable present labour to be carried on. But there is a difference, requiring particular notice, between this and the other kinds of previous or preparatory labour. The miller, the reaper, the ploughman, the plough-maker, the waggoner and waggon-maker, even the sailor and ship-builder when employed, derive their remuneration from the ultimate product—the bread made from the corn on which they have severally operated, or supplied the instruments for operating. The labour that produced the food which fed all these labourers, is as necessary to the ultimate result, the bread of the present harvest, as any of those other portions of labour; but is not, like them, remunerated from it. That previous labour has received its remuneration from the previous food. In order to raise any product, there are needed labour, tools, and materials, and food to feed the labourers. But the tools and materials are of no use except for obtaining the product, or at least are to be applied to no other use, and the labour of their construction can be remunerated only from the product when obtained. The food, on the contrary, is intrinsically useful, and is applied to the direct use of feeding human beings. The labour expended in producing the food, and recompensed by it, needs not be remunerated over again from the produce of the subsequent labour which it has fed. If we suppose that the same body of labourers carried on a manufacture, and grew food to sustain themselves while doing it, they have had for their trouble the food and the manufactured article; but if they also grew the material and made the tools, they have had nothing for that trouble but the manufactured article alone.
The claim to remuneration founded on the possession of food, available for the maintenance of labourers, is of another kind; remuneration for abstinence, not for labour. If a person has a store of food, he has it in his power to consume it himself in idleness, or in feeding others to attend on him, or to fight for him, or to sing or dance for him. If, instead of these things, he gives it to productive labourers to support them during their work, he can, and naturally will, claim a remuneration from the produce. He will not be content with simple repayment; if he receives merely that, he is only in the same situation as at first, and has derived no advantage from delaying to apply his savings to his own benefit or pleasure. He will look for some equivalent for this forbearance: he will expect his advance of food to come back to him with an increase, called in the language of business, a profit; and the hope of this profit will generally have been a part of the inducement which made him accumulate a stock, by economizing in his own consumption; or, at any rate, which made him forego the application of it, when accumulated, to his personal ease or satisfaction. The food also which maintained other workmen while producing the tools or materials, must have been provided in advance by some one, and he, too, must have his profit from the ultimate product; but there is this difference, that here the ultimate product has to supply not only the profit, but also the remuneration of the labour. The tool-maker (say, for instance, the plough-maker) does not indeed usually wait for his payment until the harvest is reaped; the farmer advances it to him, and steps into his place by becoming the owner of the plough. Nevertheless, it is from the harvest that the payment is to come; since the farmer would not undertake this outlay unless he expected that the harvest would repay him, and with a profit too on this fresh advance; that is, unless the harvest would yield, besides the remuneration of the farm labourers (and a profit for advancing it), a sufficient residue to remunerate the plough-maker's labourers, give the plough-maker a profit, and a profit to the farmer on both.
§ 3. From these considerations it appears, that in an enumeration and classification of the kinds of industry which are intended for the indirect or remote furtherance of other productive labour, we need not include the labour of producing subsistence or other necessaries of life to be consumed by productive labourers; for the main end and purpose of this labour is the subsistence itself; and though the possession of a store of it enables other work to be done, this is but an incidental consequence. The remaining modes in which labour is indirectly instrumental to production, may be arranged under five heads.
First: Labour employed in producing materials, on which industry is to be afterwards employed. This is, in many cases, a labour of mere appropriation; extractive industry, as it has been aptly named by M. Dunoyer. The labour of the miner, for example, consists of operations for digging out of the earth substances convertible by industry into various articles fitted for human use. Extractive industry, however, is not confined to the extraction of materials. Coal, for instance, is employed, not only in the process of industry, but in directly warming human beings. When so used, it is not a material of production, but is itself the ultimate product. So, also, in the case of a mine of precious stones. These are to some small extent employed in the productive arts, as diamonds by the glass-cutter, emery and corundum for polishing, but their principal destination, that of ornament, is a direct use; though they commonly require, before being so used, some process of manufacture, which may perhaps warrant our regarding them as materials. Metallic ores of all sorts are materials merely.
Under the head, production of materials, we must include the industry of the wood-cutter, when employed in cutting and preparing timber for building, or wood for the purposes of the carpenter's or any other art. In the forests of America, Norway, Germany, the Pyrenees and Alps, this sort of labour is largely employed on trees of spontaneous growth. In other cases, we must add to the labour of the wood-cutter that of the planter and cultivator.
Under the same head are also comprised the labours of the agriculturist in growing flax, hemp, cotton, feeding silkworms, rising food for cattle, producing bark, dye-stuffs, some oleaginous plants, and many other things only useful because required in other departments of industry. So, too, the labour of the hunter, as far as his object is furs or feathers; of the shepherd and the cattle-breeder, in respect of wool, hides, horn, bristles, horse-hair, and the like. The things used as materials in some process or other of manufacture are of a most miscellaneous character, drawn from almost every quarter of the animal, vegetable, and mineral kingdoms. And besides this, the finished products of many branches of industry are the materials of others. The thread produced by the spinner is applied to hardly any use except as material for the weaver. Even the product of the loom is chiefly used as material for the fabricators of articles of dress or furniture, or of further instruments of productive industry, as in the case of the sail-maker. The currier and tanner find their whole occupation in converting raw material into what may be termed prepared material. In strictness of speech, almost all food, as it comes from the hands of the agriculturist, is nothing more than material for the occupation of the baker or the cook.
§ 4. The second kind of indirect labour is that employed in making tools or implements for the assistance of labour. I use these terms in their most comprehensive sense, embracing all permanent instruments or helps to production, from a flint and steel for striking a light, to a steam-ship, or the most complex apparatus of manufacturing machinery. There may be some hesitation where to draw the line between implements and materials; and some things used in production (such as fuel) would scarcely in common language be called by either name, popular phraseology being shaped out by a different class of necessities from those of scientific exposition. To avoid a multiplication of classes and denominations answering to distinctions of no scientific importance, political economists generally include all things which are used as immediate means of production (the means which are not immediate will be considered presently) either in the class of implements or in that of materials. Perhaps the line is most usually and most conveniently drawn, by considering as a material every instrument of production which can only be used once, being destroyed (at least as an instrument for the purpose in hand) by a single employment. Thus fuel, once burnt, cannot be again used as fuel; what can be so used is only any portion which has remained unburnt the first time. And not only it cannot be used without being consumed, but it is only useful by being consumed; for if no part of the fuel were destroyed, no heat would be generated. A fleece, again, is destroyed as a fleece by being spun into thread; and the thread cannot be used as thread when woven into cloth. But an axe is not destroyed as an axe by cutting down a tree: it may be used afterwards to cut down a hundred or a thousand more; and though deteriorated in some small degree by each use, it does not do its work by being deteriorated, as the coal and the fleece do theirs by being destroyed; on the contrary, it is the better instrument the better it resists deterioration. There are some things, rightly classed as materials, which may be used as such a second and a third time, but not while the product to which they at first contributed remains in existence. The iron which formed a tank or a set of pipes may be melted to form a plough or a steam-engine; the stones with which a house was built may be used after it is pulled down, to build another. But this cannot be done while the original product subsists; their function as materials is suspended, until the exhaustion of the first use. Not so with the things classed as implements; they may be used repeatedly for fresh work, until the time, sometimes very distant, at which they are worn out, while the work already done by them may subsist unimpaired, and when it perishes, does so by its own laws, or by casualties of its own.∗
The only practical difference of much importance arising from the distinction between materials and implements, is one which has attracted our attention in another case. Since materials are destroyed as such by being once used, the whole of the labour required for their production, as well as the abstinence of the person who supplied the means for carrying it on, must be remunerated from the fruits of that single use. Implements, on the contrary, being susceptible of repeated employment, the whole of the products which they are instrumental in bringing into existence are a fund which can be drawn upon to remunerate the labour of their construction, and the abstinence of those by whose accumulations that labour was supported. It is enough if each product contributes a fraction, commonly an insignificant one, towards the remuneration of that labour and abstinence, or towards indemnifying the immediate producer for advancing that remuneration to the person who produced the tools.
§ 5. Thirdly: Besides materials for industry to employ itself on, and implements to aid it, provision must be made to prevent its operations from being disturbed, and its products injured, either by the destroying agencies of nature, or by the violence or rapacity of men. This gives rise to another mode in which labour not employed directly about the product itself, is instrumental to its production; namely, when employed for the protection of industry. Such is the object of all buildings for industrial purposes; all manufactories, warehouses, docks, granaries, barns, farm-buildings devoted to cattle, or to the operations of agricultural labour. I exclude those in which the labourers live, or which are destined for their personal accommodation: these, like their food, supply actual wants, and must be counted in the remuneration of their labour. There are many modes in which labour is still more directly applied to the protection of productive operations. The herdsman has little other occupation than to protect the cattle from harm: the positive agencies concerned in the realization of the product, go on nearly of themselves. I have already mentioned the labour of the hedger and ditcher, of the builder of walls or dykes. To these must be added that of the soldier, the policeman, and the judge. These functionaries are not indeed employed exclusively in the protection of industry, nor does their payment constitute, to the individual producer, a part of the expenses of production. But they are paid from the taxes, which are derived from the produce of industry; and in any tolerably governed country they render to its operations a service far more than equivalent to the cost. To society at large they are therefore part of the expenses of production; and if the returns to production were not sufficient to maintain these labourers in addition to all the others required, production, at least in that form and manner, could not take place. Besides, if the protection which the government affords to the operations of industry were not afforded, the producers would be under a necessity of either withdrawing a large share of their time and labour from production, to employ it in defence, or of engaging armed men to defend them; all which labour, in that case, must be directly remunerated from the produce; and things which could not pay for this additional labour, would not be produced. Under the present arrangements, the product pays its quota towards the same protection, and notwithstanding the waste and prodigality incident to government expenditure, obtains it of better quality at a much smaller cost.
§ 6. Fourthly: There is a very great amount of labour employed, not in bringing the product into existence, but in rendering it, when in existence, accessible to those for whose use it is intended. Many important classes of labourers find their sole employment in some function of this kind. There is first the whole class of carriers, by land or water: muleteers, waggoners, bargemen, sailors, wharfmen, coalheavers, porters, railway establishments, and the like. Next, there are the constructors of all the implements of transport; ships, barges, carts, locomotives, &c., to which must be added roads, canals, and railways. Roads are sometimes made by the government, and opened gratuitously to the public; but the labour of making them is not the less paid for from the produce. Each producer, in paying his quota of the taxes levied generally for the construction of roads, pays for the use of those which conduce to his convenience; and if made with any tolerable judgment, they increase the returns to his industry by far more than an equivalent amount.
Another numerous class of labourers employed in rendering the things produced accessible to their intended consumers, is the class of dealers and traders, or, as they may be termed, distributors. There would be a great waste of time and trouble, and an inconvenience often amounting to impracticability, if consumers could only obtain the articles they want by treating directly with the producers. Both producers and consumers are too much scattered, and the latter often at too great a distance from the former. To diminish this loss of time and labour, the contrivance of fairs and markets was early had recourse to, where consumers and producers might periodically meet, without any intermediate agency; and this plan answers tolerably well for many articles, especially agricultural produce, agriculturists having at some seasons a certain quantity of spare time on their hands. But even in this case, attendance is often very troublesome and inconvenient to buyers who have other occupations, and do not live in the immediate vicinity; while, for all articles the production of which requires continuous attention from the producers, these periodical markets must be held at such considerable intervals, and the wants of the consumers must either be provided for so long beforehand, or must remain so long unsupplied, that even before the resources of society admitted of the establishment of shops, the supply of these wants fell universally into the hands of itinerant dealers: the pedlar, who might appear once a month, being preferred to the fair, which only returned once or twice a year. In country districts, remote from towns or large villages, the industry of the pedlar is not yet wholly superseded. But a dealer who has a fixed abode and fixed customers is so much more to be depended on, that consumers prefer resorting to him if he is conveniently accessible; and dealers therefore find their advantage in establishing themselves in every locality where there are sufficient consumers near at hand to afford them a remuneration.
In many cases the producers and dealers are the same persons, at least as to the ownership of the funds and the control of the operations. The tailor, the shoemaker, the baker, and many other tradesmen, are the producers of the articles they deal in, so far as regards the last stage in the production. This union, however, of the functions of manufacturer and retailer is only expedient when the article can advantageously be made at or near the place convenient for retailing it, and is, besides, manufactured and sold in small parcels. When things have to be brought from a distance, the same person cannot effectually superintend both the making and the retailing of them; when they are best and most cheaply made on a large scale, a single manufactory requires so many local channels to carry off its supply, that the retailing is most conveniently delegated to other agency; and even shoes and coats, when they are to be furnished in large quantities at once, as for the supply of a regiment or of a workhouse, are usually obtained not directly from the producers, but from intermediate dealers, who make it their business to ascertain from what producers they can be obtained best and cheapest. Even when things are destined to be at last sold by retail, convenience soon creates a class of wholesale dealers. When products and transactions have multiplied beyond a certain point; when one manufactory supplies many shops, and one shop has often to obtain goods from many different manufactories, the loss of time and trouble both to the manufacturers and to the retailers by treating directly with one another makes it more convenient to them to treat with a smaller number of great dealers or merchants, who only buy to sell again, collecting goods from the various producers and distributing them to the retailers, to be by them further distributed among the consumers. Of these various elements is composed the Distributing Class, whose agency is supplementary to that of the Producing Class: and the produce so distributed, or its price, is the source from which the distributors are remunerated for their exertions, and for the abstinence which enabled them to advance the funds needful for the business of distribution.
§ 7. We have now completed the enumeration of the modes in which labour employed on external nature is subservient to production. But there is yet another mode of employing labour, which conduces equally, though still more remotely, to that end: this is, labour of which the subject is human beings. Every human being has been brought up from infancy at the expense of much labour to some person or persons, and if this labour, or part of it, had not been bestowed, the child would never have attained the age and strength which enable him to become a labourer in his turn. To the community at large, the labour and expense of rearing its infant population form a part of the outlay which is a condition of production, and which is to be replaced with increase from the future produce of their labour. By the individuals, this labour and expense are usually incurred from other motives than to obtain such ultimate return, and, for most purposes of political economy, need not be taken into account as expenses of production. But the technical or industrial education of the community; the labour employed in learning and in teaching the arts of production, in acquiring and communicating skill in those arts; this labour is really, and in general solely, undergone for the sake of the greater or more valuable produce thereby attained, and in order that a remuneration, equivalent or more than equivalent, may be reaped by the learner, besides an adequate remuneration for the labour of the teacher, when a teacher has been employed.
As the labour which confers productive powers, whether of hand or of head, may be looked upon as part of the labour by which society accomplishes its productive operations, or in other words, as part of what the produce costs to society, so too may the labour employed in keeping up productive powers; in preventing them from being destroyed or weakened by accident or disease. The labour of a physician or surgeon, when made use of by persons engaged in industry, must be regarded in the economy of society as a sacrifice incurred, to preserve from perishing by death or infirmity that portion of the productive resources of society which is fixed in the lives and bodily or mental powers of its productive members. To the individuals, indeed, this forms but a part, sometimes an imperceptible part, of the motives that induce them to submit to medical treatment: it is not principally from economical motives that persons have a limb amputated, or endeavour to be cured of a fever, though when they do so, there is generally sufficient inducement for it even on that score alone. This is, therefore, one of the cases of labour and outlay which, though conducive to production, yet not being incurred for that end, or for the sake of the returns arising from it, are out of the sphere of most of the general propositions which political economy has occasion to assert respecting productive labour: though, when society and not the individuals are considered, this labour and outlay must be regarded as part of the advance by which society effects its productive operations, and for which it is indemnified by the produce.
§ 8. Another kind of labour, usually classed as mental, but conducing to the ultimate product as directly, though not so immediately, as manual labour itself, is the labour of the inventors of industrial processes. I say, usually classed as mental, because in reality it is not exclusively so. All human exertion is compounded of some mental and some bodily elements. The stupidest hodman, who repeats from day to day the mechanical act of climbing a ladder, performs a function partly intellectual; so much so, indeed, that the most intelligent dog or elephant could not, probably, be taught to do it. The dullest human being, instructed beforehand, is capable of turning a mill; but a horse cannot turn it without somebody to drive and watch him. On the other hand, there is some bodily ingredient in the labour most purely mental, when it generates any external result. Newton could not have produced the Principia without the bodily exertion either of penmanship or of dictation; and he must have drawn many diagrams, and written out many calculations and demonstrations, while he was preparing it in his mind. Inventors, besides the labour of their brains, generally go through much labour with their hands, in the models which they construct and the experiments they have to make before their idea can realize itself successfully in act. Whether mental, however, or bodily, their labour is a part of that by which the production is brought about. The labour of Watt in contriving the steam-engine was as essential a part of production as that of the mechanics who build or the engineers who work the instrument; and was undergone, no less than theirs, in the prospect of a remuneration from the produce. The labour of invention is often estimated and paid on the very same plan as that of execution. Many manufacturers of ornamental goods have inventors in their employment, who receive wages or salaries for designing patterns, exactly as others do for copying them. All this is strictly part of the labour of production; as the labour of the author of a book is equally a part of its production with that of the printer and binder.
In a national, or universal point of view, the labour of the savant, or speculative thinker, is as much a part of production in the very narrowest sense, as that of the inventor of a practical art; many such inventions having been the direct consequences of theoretic discoveries, and every extension of knowledge of the powers of nature being fruitful of applications to the purposes of outward life. The electro-magnetic telegraph was the wonderful and most unexpected consequence of the experiments of Œrsted and the mathematical investigations of Ampère: and the modern art of navigation is an unforeseen emanation from the purely speculative and apparently merely curious enquiry, by the mathematicians of Alexandria, into the properties of three curves formed by the intersection of a plane surface and a cone. No limit can be set to the importance, even in a purely productive and material point of view, of mere thought. Inasmuch, however, as these material fruits, though the result, are seldom the direct purpose of the pursuits of savants, nor is their remuneration in general derived from the increased production which may be caused incidentally, and mostly after a long interval, by their discoveries; this ultimate influence does not, for most of the purposes of political economy, require to be taken into consideration; are generally classed as the producers only of books, or other useable or saleable articles, which directly emanate from them. But when (as in political economy one should always be prepared to do) we shift our point of view, and consider not individual acts, and the motives by which they are determined, but national and universal results, intellectual speculation must be looked upon as a most influential part of the productive labour of society, and the portion of its resources employed in carrying on and in remunerating such labour, as a highly productive part of its expenditure.
§ 9. In the foregoing survey of the modes of employing labour in furtherance of production, I have made little use of the popular distinction of industry into agricultural, manufacturing, and commercial. For, in truth, this division fulfils very badly the purposes of a classification. Many great branches of productive industry find no place in it, or not without much straining; for example (not to speak of hunters or fishers) the miner, the road-maker, and the sailor. The limit, too, between agricultural and manufacturing industry cannot be precisely drawn. The miller, for instance, and the baker—are they to be reckoned among agriculturists, or among manufacturers? Their occupation is in its nature manufacturing; the food has finally parted company with the soil before it is handed over to them: this, however, might be said with equal truth of the thresher, the winnower, the makers of butter and cheese; operations always counted as agricultural, probably because it is the custom for them to be performed by persons resident on the farm, and under the same superintendence as tillage. For many purposes all these persons, the miller and baker inclusive, must be placed in the same class with ploughmen and reapers. They are all concerned in producing food, and depend for their remuneration on the food produced; when the one class abounds and flourishes, the others do so too; they form collectively the “agricultural interest;” they render but one service to the community by their united labours, and are paid from one common source. Even the tillers of the soil, again, when the produce is not food, but the materials of what are commonly termed manufactures, belong in many respects to the same division in the economy of society as manufacturers. The cotton-planter of Carolina, and the wool-grower of Australia, have more interests in common with the spinner and weaver than with the corn-grower. But, on the other hand, the industry which operates immediately upon the soil has, as we shall see hereafter, some properties on which many important consequences depend, and which distinguish it from all the subsequent stages of production, whether carried on by the same person or not; from the industry of the thresher and winnower, as much as from that of the cotton-spinner. When I speak, therefore, of agricultural labour, I shall generally mean this, and this exclusively, unless the contrary is either stated or implied in the context. The term manufacturing is too vague to be of much use when precision is required, and when I employ it, I wish to be understood as intending to speak popularly rather than scientifically.
of unproductive labour
§ 1. Labour is indispensable to production, but has not always production for its effect. There is much labour, and of a high order of usefulness, of which production is not the object. Labour has accordingly been distinguished into Productive and Unproductive. There has been not a little controversy among political economists on the question, what kinds of labour should be reputed to be unproductive; and they have not always perceived, that there was in reality no matter of fact in dispute between them.
Many writers have been unwilling to class any labour as productive, unless its result is palpable in some material object, capable of being transferred from one person to another. There are others (among whom are Mr. M'Culloch and M. Say) who looking upon the word unproductive as a term of disparagement, remonstrate against imposing it upon any labour which is regarded as useful—which produces a benefit or a pleasure worth the cost. The labour of officers of government, of the army and navy, of physicians, lawyers, teachers, musicians, dancers, actors, domestic servants, &c., when they really accomplish what they are paid for, and are not more numerous than is required for its performance, ought not, say these writers, to be “stigmatized” as unproductive, an expression which they appear to regard as synonymous with wasteful or worthless. But this seems to be a misunderstanding of the matter in dispute. Production not being the sole end of human existence, the term unproductive does not necessarily imply any stigma; nor was ever intended to do so in the present case. The question is one of mere language and classification. Differences of language, however, are by no means unimportant, even when not grounded on differences of opinion; for though either of two expressions may be consistent with the whole truth, they generally tend to fix attention upon different parts of it. We must therefore enter a little into the consideration of the various meanings which may attach to the words productive and unproductive when applied to labour.
In the first place, even in what is called the production of material objects, it must be remembered that what is produced is not the matter composing them. All the labour of all the human beings in the world could not produce one particle of matter. To weave broadcloth is but to re-arrange, in a peculiar manner, the particles of wool; to grow corn is only to put a portion of matter called a seed, into a situation where it can draw together particles of matter from the earth and air, to form the new combination called a plant. Though we cannot create matter, we can cause it to assume properties, by which, from having been useless to us, it becomes useful. What we produce, or desire to produce, is always, as M. Say rightly terms it, an utility. Labour is not creative of objects, but of utilities. Neither, again, do we consume and destroy the objects themselves; the matter of which they were composed remains, more or less altered in form: what has really been consumed is only the qualities by which they were fitted for the purpose they have been applied to. It is, therefore, pertinently asked by M. Say and others—since, when we are said to produce objects, we only produce utility, why should not all labour which produces utility be accounted productive? Why refuse that title to the surgeon who sets a limb, the judge or legislator who confers security, and give it to the lapidary who cuts and polishes a diamond? Why deny it to the teacher from whom I learn an art by which I can gain my bread, and accord it to the confectioner who makes bonbons for the momentary pleasure of a sense of taste?
It is quite true that all these kinds of labour are productive of utility; and the question which now occupies us could not have been a question at all, if the production of utility were enough to satisfy the notion which mankind have usually formed of productive labour. Production, and productive, are of course elliptical expressions, involving the idea of a something produced; but this something, in common apprehension, I conceive to be, not utility, but Wealth. Productive labour means labour productive of wealth. We are recalled, therefore, to the question touched upon in our first chapter, what Wealth is, and whether only material products, or all useful products, are to be included in it.
§ 2. Now the utilities produced by labour are of three kinds. They are,
First, utilities fixed and embodied in outward objects; by labour employed in investing external material things with properties which render them serviceable to human beings. This is the common case, and requires no illustration.
Secondly, utilities fixed and embodied in human beings; the labour being in this case employed in conferring on human beings, qualities which render them serviceable to themselves and others. To this class belongs the labour of all concerned in education; not only schoolmasters, tutors, and professors, but governments, so far as they aim successfully at the improvement of the people; moralists, and clergymen, as far as productive of benefit; the labour of physicians, as far as instrumental in preserving life and physical or mental efficiency; of the teachers of bodily exercises, and of the various trades, sciences, and arts, together with the labour of the learners in acquiring them; and all labour bestowed by any persons, throughout life, in improving the knowledge or cultivating the bodily or mental faculties of themselves or others.
Thirdly and lastly, utilities not fixed or embodied in any object, but consisting in a mere service rendered; a pleasure given, an inconvenience or a pain averted, during a longer or a shorter time, but without leaving a permanent acquisition in the improved qualities of any person or thing; the labour being employed in producing an utility directly, not (as in the two former cases) in fitting some other thing to afford an utility. Such, for example, is the labour of the musical performer, the actor, the public declaimer or reciter, and the showman. Some good may no doubt be produced, and much more might be produced, beyond the moment, upon the feelings and disposition, or general state of enjoyment of the spectators; or instead of good there may be harm; but neither the one nor the other is the effect intended, is the result for which the exhibitor works and the spectator pays; nothing but the immediate pleasure. Such, again, is the labour of the army and navy; they, at the best, prevent a country from being conquered, or from being injured or insulted, which is a service, but in all other respects leave the country neither improved nor deteriorated. Such, too, is the labour of the legislator, the judge, the officer of justice, and all other agents of government, in their ordinary functions, apart from any influence they may exert on the improvement of the national mind. The service which they render, is to maintain peace and security; these compose the utility which they produce. It may appear to some, that carriers, and merchants or dealers, should be placed in this same class, since their labour does not add any properties to objects: but I reply that it does: it adds the property of being in the place where they are wanted, instead of being in some other place: which is a very useful property, and the utility it confers is embodied in the things themselves, which now actually are in the place where they are required for use, and in consequence of that increased utility could be sold at an increased price, proportioned to the labour expended in conferring it. This labour, therefore, does not belong to the third class, but to the first.
§ 3. We have now to consider which of these three classes of labour should be accounted productive of wealth, since that is what the term productive, when used by itself, must be understood to import. Utilities of the third class, consisting in pleasures which only exist while being enjoyed, and services which only exist while being performed, cannot be spoken of as wealth, except by an acknowledged metaphor. It is essential to the idea of wealth to be susceptible of accumulation: things which cannot, after being produced, be kept for some time before being used, are never, I think, regarded as wealth, since however much of them may be produced and enjoyed, the person benefited by them is no richer, is nowise improved in circumstances. But there is not so distinct and positive a violation of usage in considering as wealth any product which is both useful and susceptible of accumulation. The skill, and the energy and perseverance, of the artisans of a country, are reckoned part of its wealth, no less than their tools and machinery.∗ According to this definition, we should regard all labour as productive which is employed in creating permanent utilities, whether embodied in human beings, or in any other animate or inanimate objects. This nomenclature I have, in a former publication,∗ recommended, as most conducive to the ends of classification; and I am still of that opinion.
But in applying the term wealth to the industrial capacities of human beings, there seems always, in popular apprehension, to be a tacit reference to material products. The skill of an artisan is accounted wealth, only as being the means of acquiring wealth in a material sense; and any qualities not tending visibly to that object are scarcely so regarded at all. A country would hardly be said to be richer, except by a metaphor, however precious a possession it might have in the genius, the virtues, or the accomplishments of its inhabitants; unless indeed these were looked upon as marketable articles, by which it could attract the material wealth of other countries, as the Greeks of old, and several modern nations have done. While, therefore, I should prefer, were I constructing a new technical language, to make the distinction turn upon the permanence rather than upon the materiality of the product, yet when employing terms which common usage has taken complete possession of, it seems advisable so to employ them as to do the least possible violence to usage; since any improvement in terminology obtained by straining the received meaning of a popular phrase, is generally purchased beyond its value, by the obscurity arising from the conflict between new and old associations.
I shall, therefore, in this treatise, when speaking of wealth, understand by it only what is called material wealth, and by productive labour only those kinds of exertion which produce utilities embodied in material objects. But in limiting myself to this sense of the word, I mean to avail myself of the full extent of that restricted acceptation, and I shall not refuse the appellation productive, to labour which yields no material product as its direct result, provided that an increase of material products is its ultimate consequence. Thus, labour expended in the acquisition of manufacturing skill, I class as productive, not in virtue of the skill itself, but of the manufactured products created by the skill, and to the creation of which the labour of learning the trade is essentially conducive. The labour of officers of government in affording the protection which, afforded in some manner or other, is indispensable to the prosperity of industry, must be classed as productive even of material wealth, because without it, material wealth, in anything like its present abundance, could not exist. Such labour may be said to be productive indirectly or mediately, in opposition to the labour of the ploughman and the cotton-spinner, which are productive immediately. They are all alike in this, that they leave the community richer in material products than they found it; they increase, or tend to increase, material wealth.
§ 4. By Unproductive Labour, on the contrary, will be understood labour which does not terminate in the creation of material wealth; which, however largely or successfully practised, does not render the community, and the world at large, richer in material products, but poorer by all that is consumed by the labourers while so employed.
All labour is, in the language of political economy, unproductive, which ends in immediate enjoyment, without any increase of the accumulated stock of permanent means of enjoyment. And all labour, according to our present definition, must be classed as unproductive, which terminates in a permanent benefit, however important, provided that an increase of material products forms no part of that benefit. The labour of saving a friend's life is not productive, unless the friend is a productive labourer, and produces more than he consumes. To a religious person the saving of a soul must appear a far more important service than the saving of a life; but he will not therefore call a missionary or a clergyman productive labourers, unless they teach, as the South Sea Missionaries have in some cases done, the arts of civilization in addition to the doctrines of their religion. It is, on the contrary, evident that the greater number of missionaries or clergymen a nation maintains, the less it has to expend on other things; while the more it expends judiciously in keeping agriculturists and manufacturers at work, the more it will have for every other purpose. By the former it diminishes, caeteris paribus, its stock of material products; by the latter, it increases them.
Unproductive may be as useful as productive labour; it may be more useful, even in point of permanent advantage; or its use may consist only in pleasurable sensation, which when gone leaves no trace; or it may not afford even this, but may be absolute waste. In any case society or mankind grow no richer by it, but poorer. All material products consumed by any one while he produces nothing, are so much subtracted, for the time, from the material products which society would otherwise have possessed. But though society grows no richer by unproductive labour, the individual may. An unproductive labourer may receive for his labour, from those who derive pleasure or benefit from it, a remuneration which may be to him a considerable source of wealth; but his gain is balanced by their loss; they may have received a full equivalent for their expenditure, but they are so much poorer by it. When a tailor makes a coat and sells it, there is a transfer of the price from the customer to the tailor, and a coat besides which did not previously exist; but what is gained by an actor is a mere transfer from the spectator's funds to his, leaving no article of wealth for the spectator's indemnification. Thus the community collectively gains nothing by the actor's labour; and it loses, of his receipts, all that portion which he consumes, retaining only that which he lays by. A community, however, may add to its wealth by unproductive labour, at the expense of other communities, as an individual may at the expense of other individuals. The gains of Italian opera singers, German governesses, French ballet dancers, &c., are a source of wealth, as far as they go, to their respective countries, if they return thither. The petty states of Greece, especially the ruder and more backward of those states, were nurseries of soldiers, who hired themselves to the princes and satraps of the East to carry on useless and destructive wars, and returned with their savings to pass their declining years in their own country: these were unproductive labourers, and the pay they received, together with the plunder they took, was an outlay without return to the countries which furnished it; but, though no gain to the world, it was a gain to Greece. At a later period the same country and its colonies supplied the Roman empire with another class of adventurers, who, under the name of philosophers or of rhetoricians, taught to the youth of the higher classes what were esteemed the most valuable accomplishments: these were mainly unproductive labourers, but their ample recompense was a source of wealth to their own country. In none of these cases was there any accession of wealth to the world. The services of the labourers, if useful, were obtained at a sacrifice to the world of a portion of material wealth; if useless, all that these labourers consumed was to the world waste.
To be wasted, however, is a liability not confined to unproductive labour. Productive labour may equally be wasted, if more of it is expended than really conduces to production. If defect of skill in labourers, or of judgment in those who direct them, causes a misapplication of productive industry; if a farmer persists in ploughing with three horses and two men, when experience has shown that two horses and one man are sufficient, the surplus labour, though employed for purposes of production, is wasted. If a new process is adopted which proves no better, or not so good as those before in use, the labour expended in perfecting the invention and in carrying it into practice, though employed for a productive purpose, is wasted. Productive labour may render a nation poorer, if the wealth it produces, that is, the increase it makes in the stock of useful or agreeable things, be of a kind not immediately wanted: as when a commodity is unsaleable, because produced in a quantity beyond the present demand; or when speculators build docks and warehouses before there is any trade. Some of the States of North America,1 by making premature railways and canals, are thought to have made this kind of mistake; and it was for some time doubtful whether England, in the disproportionate development of railway enterprise, had not, in some degree, followed the example. Labour sunk in expectation of a distant return, when the great exigencies or limited resources of the community require that the return be rapid, may leave the country not only poorer in the meanwhile, by all which those labourers consume, but less rich even ultimately than if immediate returns had been sought in the first instance, and enterprises for distant profit postponed.
§ 5. The distinction of Productive and Unproductive is applicable to consumption as well as to labour. All the members of the community are not labourers, but all are consumers, and consume either unproductively or productively. Whoever contributes nothing directly or indirectly to production, is an unproductive consumer. The only productive consumers are productive labourers; the labour of direction being of course included, as well as that of execution. But the consumption even of productive labourers is not all of it productive consumption. There is unproductive consumption by productive consumers. What they consume in keeping up or improving their health, strength, and capacities of work, or in rearing other productive labourers to succeed them, is productive consumption. But consumption on pleasures or luxuries, whether by the idle or by the industrious, since production is neither its object nor is in any way advanced by it, must be reckoned unproductive: with a reservation perhaps of a certain quantum of enjoyment which may be classed among necessaries, since anything short of it would not be consistent with the greatest efficiency of labour. That alone is productive consumption, which goes to maintain and increase the productive powers of the community; either those residing in its soil, in its materials, in the number and efficiency of its instruments of production, or in its people.
There are numerous products which may be said not to admit of being consumed otherwise than unproductively. The annual consumption of gold lace, pine apples, or champagne, must be reckoned unproductive, since these things give no assistance to production, nor any support to life or strength, but what would equally be given by things much less costly. Hence it might be supposed that the labour employed in producing them ought not to be regarded as productive, in the sense in which the term is understood by political economists. I grant that no labour tends to the permanent enrichment of society, which is employed in producing things for the use of unproductive consumers. The tailor who makes a coat for a man who produces nothing, is a productive labourer; but in a few weeks or months the coat is worn out, while the wearer has not produced anything to replace it, and the community is then no richer by the labour of the tailor, than if the same sum had been paid for a stall at the opera. Nevertheless, society has been richer by the labour while the coat lasted, that is, until society, through one of its unproductive members, chose to consume the produce of the labour unproductively. The case of the gold lace or the pine apple is no further different, than that they are still further removed than the coat from the character of necessaries. These things also are wealth until they have been consumed.
§ 6. We see, however, by this, that there is a distinction, more important to the wealth of a community than even that between productive and unproductive labour; the distinction, namely, between labour for the supply of productive, and for the supply of unproductive, consumption; between labour employed in keeping up or in adding to the productive resources of the country, and that which is employed otherwise. Of the produce of the country, a part only is destined to be consumed productively; the remainder supplies the unproductive consumption of producers, and the entire consumption of the unproductive classes. Suppose that the proportion of the annual produce applied to the first purpose amounts to half; then one-half the productive labourers of the country are all that are employed in the operations on which the permanent wealth of the country depends. The other half are occupied from year to year and from generation to generation in producing things which are consumed and disappear without return; and whatever this half consume is as completely lost, as to any permanent effect on the national resources, as if it were consumed unproductively. Suppose that this second half of the labouring population ceased to work, and that the government or their parishes maintained them in idleness for a whole year: the first half would suffice to produce, as they had done before, their own necessaries and the necessaries of the second half, and to keep the stock of materials and implements undiminished: the unproductive classes, indeed, would be either starved or obliged to produce their own subsistence, and the whole community would be reduced during a year to bare necessaries; but the sources of production would be unimpaired, and the next year there would not necessarily be a smaller produce than if no such interval of inactivity had occurred; while if the case had been reversed, if the first half of the labourers had suspended their accustomed occupations, and the second half had continued theirs, the country at the end of the twelvemonth would have been entirely impoverished.
It would be a great error to regret the large proportion of the annual produce, which in an opulent country goes to supply unproductive consumption. It would be to lament that the community has so much to spare from its necessities, for its pleasures and for all higher uses. This portion of the produce is the fund from which all the wants of the community, other than that of mere living, are provided for; the measure of its means of enjoyment, and of its power of accomplishing all purposes not productive. That so great a surplus should be available for such purposes, and that it should be applied to them, can only be a subject of congratulation. The things to be regretted, and which are not incapable of being remedied, are the prodigious inequality with which this surplus is distributed, the little worth of the objects to which the greater part of it is devoted, and the large share which falls to the lot of persons who render no equivalent service in return.1
§ 1. It has been seen in the preceding chapters that besides the primary and universal requisites of production, labour and natural agents, there is another requisite without which no productive operations, beyond the rude and scanty beginnings of primitive industry, are possible: namely, a stock, previously accumulated, of the products of former labour. This accumulated stock of the produce of labour is termed Capital. The function of Capital in production it is of the utmost importance thoroughly to understand, since a number of the erroneous notions with which our subject is infested originate in an imperfect and confused apprehension of this point.
Capital, by persons wholly unused to reflect on the subject, is supposed to be synonymous with money. To expose this misapprehension, would be to repeat what has been said in the introductory chapter. Money is no more synonymous with capital than it is with wealth. Money cannot in itself perform any part of the office of capital, since it can afford no assistance to production. To do this, it must be exchanged for other things; and anything, which is susceptible of being exchanged for other things, is capable of contributing to production in the same degree. What capital does for production, is to afford the shelter, protection, tools and materials which the work requires, and to feed and otherwise maintain the labourers during the process. These are the services which present labour requires from past, and from the produce of past, labour. Whatever things are destined for this use—destined to supply productive labour with these various prerequisites—are Capital.
To familiarize ourselves with the conception, let us consider what is done with the capital invested in any of the branches of business which compose the productive industry of a country. A manufacturer, for example, has one part of his capital in the form of buildings, fitted and destined for carrying on his branch of manufacture. Another part he has in the form of machinery. A third consists, if he be a spinner, of raw cotton, flax, or wool; if a weaver, of flaxen, woollen, silk, or cotton, thread; and the like, according to the nature of the manufacture. Food and clothing for his operatives it is not the custom of the present age that he should directly provide; and few capitalists, except the producers of food or clothing, have any portion worth mentioning of their capital in that shape. Instead of this, each capitalist has money, which he pays to his workpeople, and so enables them to supply themselves: he has also finished goods in his warehouses, by the sale of which he obtains more money, to employ in the same manner, as well as to replenish his stock of materials, to keep his buildings and machinery in repair, and to replace them when worn out. His money and finished goods, however, are not wholly capital, for he does not wholly devote them to these purposes: he employs a part of the one, and of the proceeds of the other, in supplying his personal consumption and that of his family, or in hiring grooms and valets, or maintaining hunters and hounds, or in educating his children, or in paying taxes, or in charity. What then is his capital? Precisely that part of his possessions, whatever it be, which is to constitute his fund for carrying on fresh production. It is of no consequence that a part, or even the whole of it, is in a form in which it cannot directly supply the wants of labourers.
Suppose, for instance, that the capitalist is a hardware manufacturer, and that his stock in trade, over and above his machinery, consists at present wholly in iron goods. Iron goods cannot feed labourers. Nevertheless, by a mere change of the destination of these iron goods, he can cause labourers to be fed. Suppose that with a portion of the proceeds he intended to maintain a pack of hounds, or an establishment of servants; and that he changes his intention, and employs it in his business, paying it in wages to additional workpeople. These workpeople are enabled to buy and consume the food which would otherwise have been consumed by the hounds or by the servants; and thus without the employer's having seen or touched one particle of the food, his conduct has determined that so much more of the food existing in the country has been devoted to the use of productive labourers, and so much less consumed in a manner wholly unproductive. Now vary the hypothesis, and suppose that what is thus paid in wages would otherwise have been laid out not in feeding servants or hounds, but in buying plate and jewels; and in order to render the effect perceptible, let us suppose that the change takes place on a considerable scale, and that a large sum is diverted from buying plate and jewels to employing productive labourers, whom we shall suppose to have been previously, like the Irish peasantry , only half employed and half fed. The labourers, on receiving their increased wages, will not lay them out in plate and jewels, but in food. There is not, however, additional food in the country; nor any unproductive labourers or animals, as in the former case, whose food is set free for productive purposes. Food will therefore be imported if possible; if not possible, the labourers will remain for a season on their short allowance: but the consequences of this change in the demand for commodities, occasioned by the change in the expenditure of capitalists from unproductive to productive, is that next year more food will be produced, and less plate and jewellery. So that again, without having had anything to do with the food of the labourers directly, the conversion by individuals of a portion of their property, no matter of what sort, from an unproductive destination to a productive, has had the effect of causing more food to be appropriated to the consumption of productive labourers. The distinction, then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist—in his will to employ them for one purpose rather than another; and all property, however ill adapted in itself for the use of labourers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive reinvestment. The sum of all the values so destined by their respective possessors, composes the capital of the country. Whether all those values are in a shape directly applicable to productive uses, makes no difference. Their shape, whatever it may be, is a temporary accident: but once destined for production, they do not fail to find a way of transforming themselves into things capable of being applied to it.
§ 2. As whatever of the produce of the country is devoted to production is capital, so, conversely, the whole of the capital of the country is devoted to production. This second proposition, however, must be taken with some limitations and explanations. A fund may be seeking for productive employment, and find none, adapted to the inclinations of its possessor: it then is capital still, but unemployed capital. Or the stock may consist of unsold goods, not susceptible of direct application to productive uses, and not, at the moment, marketable: these, until sold, are in the condition of unemployed capital. Again, artificial or accidental circumstances may render it necessary to possess a larger stock in advance, that is, a larger capital before entering on production, than is required by the nature of things. Suppose that the government lays a tax on the production in one of its earlier stages, as for instance by taxing the material. The manufacturer has to advance the tax, before commencing the manufacture, and is therefore under a necessity of having a larger accumulated fund than is required for, or is actually employed in, the production which he carries on. He must have a larger capital, to maintain the same quantity of productive labour; or (what is equivalent) with a given capital he maintains less labour. This mode of levying taxes, therefore, limits unnecessarily the industry of the country: a portion of the fund destined by its owners for production being diverted from its purpose, and kept in a constant state of advance to the government.
For another example: a farmer may enter on his farm at such a time of the year, that he may be required to pay one, two, or even three quarters' rent before obtaining any return from the produce. This, therefore, must be paid out of his capital. Now rent, when paid for the land itself, and not for improvements made in it by labour, is not a productive expenditure. It is not an outlay for the support of labour, or for the provision of implements or materials the produce of labour. It is the price paid for the use of an appropriated natural agent. This natural agent is indeed as indispensable (and even more so) as any implement: but the having to pay a price for it, is not. In the case of the implement (a thing produced by labour) a price of some sort is the necessary condition of its existence: but the land exists by nature. The payment for it, therefore, is not one of the expenses of production; and the necessity of making the payment out of capital, makes it requisite that there should be a greater capital, a greater antecedent accumulation of the produce of past labour, than is naturally necessary, or than is needed where land is occupied on a different system. This extra capital, though intended by its owners for production, is in reality employed unproductively, and annually replaced, not from any produce of its own, but from the produce of the labour supported by the remainder of the farmer's capital.
Finally, that large portion of the productive capital of a country which is employed in paying the wages and salaries of labourers, evidently is not, all of it, strictly and indispensably necessary for production. As much of it as exceeds the actual necessaries of life and health (an excess which in the case of skilled labourers is usually considerable) is not expended in supporting labour, but in remunerating it, and the labourers could wait for this part of their remuneration until the production is completed; it needs not necessarily pre-exist as capital: and if they unfortunately had to forego it altogether, the same amount of production might take place. In order that the whole remuneration of the labourers should be advanced to them in daily or weekly payments, there must exist in advance, and be appropriated to productive use, a greater stock, or capital, than would suffice to carry on the existing extent of production: greater, by whatever amount of remuneration the labourers receive, beyond what the self-interest of a prudent slave-master would assign to his slaves. In truth, it is only after an abundant capital had already been accumulated, that the practice of paying in advance any remuneration of labour beyond a bare subsistence, could possibly have arisen: since whatever is so paid, is not really applied to production, but to the unproductive consumption of productive labourers, indicating a fund for production sufficiently ample to admit of habitually diverting a part of it to a mere convenience.
It will be observed that I have assumed, that the labourers are always subsisted from capital: and this is obviously the fact, though the capital needs not necessarily be furnished by a person called a capitalist. When the labourer maintains himself by funds of his own, as when a peasant-farmer or proprietor lives on the produce of his land, or an artisan works on his own account, they are still supported by capital, that is, by funds provided in advance. The peasant does not subsist this year on the produce of this year's harvest, but on that of the last. The artisan is not living on the proceeds of the work he has in hand, but on those of work previously executed and disposed of. Each is supported by a small capital of his own, which he periodically replaces from the produce of his labour. The large capitalist is, in like manner, maintained from funds provided in advance. If he personally conducts his operations, as much of his personal or household expenditure as does not exceed a fair remuneration of his labour at the market price must be considered a part of his capital, expended, like any other capital, for production: and his personal consumption, so far as it consists of necessaries, is productive consumption.
§ 3. At the risk of being tedious, I must add a few more illustrations, to bring out into a still clearer and stronger light the idea of Capital. As M. Say truly remarks, it is on the very elements of our subject that illustration is most usefully bestowed, since the greatest errors which prevail in it may be traced to the want of a thorough mastery over the elementary ideas. Nor is this surprising: a branch may be diseased and all the rest healthy, but unsoundness at the root diffuses unhealthiness through the whole tree.
Let us therefore consider whether, and in what cases, the property of those who live on the interest of what they possess, without being personally engaged in production, can be regarded as capital. It is so called in common language, and, with reference to the individual, not improperly. All funds from which the possessor derives an income, which income he can use without sinking and dissipating the fund itself, are to him equivalent to capital. But to transfer hastily and inconsiderately to the general point of view, propositions which are true of the individual, has been a source of innumerable errors in political economy. In the present instance, that which is virtually capital to the individual, is or is not capital to the nation, according as the fund which by the supposition he has not dissipated, has or has not been dissipated by somebody else.
For example, let property of the value of ten thousand pounds belonging to A, be lent to B, a farmer or manufacturer, and employed profitably in B's occupation. It is as much capital as if it belonged to B. A is really a farmer or manufacturer, not personally, but in respect of his property. Capital worth ten thousand pounds is employed in production—in maintaining labourers and providing tools and materials; which capital belongs to A, while B takes the trouble of employing it, and receives for his remuneration the difference between the profit which it yields and the interest he pays to A. This is the simplest case.
Suppose next that A's ten thousand pounds, instead of being lent to B, are lent on mortgage to C, a landed proprietor, by whom they are employed in improving the productive powers of his estate, by fencing, draining, road-making, or permanent manures. This is productive employment. The ten thousand pounds are sunk, but not dissipated. They yield a permanent return; the land now affords an increase of produce, sufficient, in a few years, if the outlay has been judicious, to replace the amount, and in time to multiply it manifold. Here, then, is a value of ten thousand pounds, employed in increasing the produce of the country. This constitutes a capital, for which C, if he lets his land, receives the returns in the nominal form of increased rent; and the mortgage entitles A to receive from these returns, in the shape of interest, such annual sum as has been agreed on. We will now vary the circumstances, and suppose that C does not employ the loan in improving his land, but in paying off a former mortgage or in making a provision for children. Whether the ten thousand pounds thus employed are capital or not, will depend on what is done with the amount by the ultimate receiver. If the children invest their fortunes in a productive employment, or the mortgagee on being paid off lends the amount to another landholder to improve his land, or to a manufacturer to extend his business, it is still capital, because productively employed.
Suppose, however, that C, the borrowing landlord, is a spendthrift, who burdens his land not to increase his fortune but to squander it, expending the amount in equipages and entertainments. In a year or two it is dissipated, and without return. A is as rich as before; he has no longer his ten thousand pounds, but he has a lien on the land, which he could still sell for that amount. C, however, is 10,000l. poorer than formerly; and nobody is richer. It may be said that those are richer who have made profit out of the money while it was being spent. No doubt if C lost it by gaming, or was cheated of it by his servants, that is a mere transfer, not a destruction, and those who have gained the amount may employ it productively. But if C has received the fair value for his expenditure in articles of subsistence or luxury, which he has consumed on himself, or by means of his servants or guests, these articles have ceased to exist, and nothing has been produced to replace them: while if the same sum had been employed in farming or manufacturing, the consumption which would have taken place would have been more than balanced at the end of the year by new products, created by the labour of those who would in that case have been the consumers. By C's prodigality, that which would have been consumed with a return, is consumed without return. C's tradesmen may have made a profit during the process; but if the capital had been expended productively, an equivalent profit would have been made by builders, fencers, tool-makers, and the tradespeople who supply the consumption of the labouring classes; while at the expiration of the time (to say nothing of any increase), C would have had the ten thousand pounds or its value replaced to him, which now he has not. There is, therefore, on the general result, a difference to the disadvantage of the community, of at least ten thousand pounds, being the amount of C's unproductive expenditure. To A, the difference is not material, since his income is secured to him, and while the security is good, and the market rate of interest the same, he can always sell the mortgage at its original value. To A, therefore, the lien of ten thousand pounds on C's estate, is virtually a capital of that amount; but is it so in reference to the community? It is not. A had a capital of ten thousand pounds, but this has been extinguished—dissipated and destroyed by C's prodigality. A now receives his income, not from the produce of his capital, but from some other source of income belonging to C, probably from the rent of his land, that is, from payments made to him by farmers out of the produce of their capital. The national capital is diminished by ten thousand pounds, and the national income by all which those ten thousand pounds, employed as capital, would have produced. The loss does not fall on the owner of the destroyed capital, since the destroyer has agreed to indemnify him for it. But his loss is only a small portion of that sustained by the community, since what was devoted to the use and consumption of the proprietor was only the interest; the capital itself was, or would have been, employed in the perpetual maintenance of an equivalent number of labourers, regularly reproducing what they consumed: and of this maintenance they are deprived without compensation.
Let us now vary the hypothesis still further, and suppose that the money is borrowed, not by a landlord, but by the State. A lends his capital to Government to carry on a war: he buys from the State what are called government securities; that is, obligations on the government to pay a certain annual income. If the government employed the money in making a railroad, this might be a productive employment, and A's property would still be used as capital; but since it is employed in war, that is, in the pay of officers and soldiers who produce nothing, and in destroying a quantity of gunpowder and bullets without return, the government is in the situation of C, the spendthrift landlord, and A's ten thousand pounds are so much national capital which once existed, but exists no longer: virtually thrown into the sea, as far as wealth or production is concerned; though for other reasons the employment of it may have been justifiable. A's subsequent income is derived, not from the produce of his own capital, but from taxes drawn from the produce of the remaining capital of the community; to whom his capital is not yielding any return, to indemnify them for the payment; it is lost and gone, and what he now possesses is a claim on the returns to other people's capital and industry. This claim he can sell, and get back the equivalent of his capital, which he may afterwards employ productively. True; but he does not get back his own capital, or anything which it has produced; that, and all its possible returns, are extinguished: what he gets is the capital of some other person, which that person is willing to exchange for his lien on the taxes. Another capitalist substitutes himself for A as a mortgagee of the public, and A substitutes himself for the other capitalist as the possessor of a fund employed in production, or available for it. By this exchange the productive powers of the community are neither increased nor diminished. The breach in the capital of the country was made when the government spent A's money: whereby a value of ten thousand pounds was withdrawn or withheld from productive employment, placed in the fund for unproductive consumption, and destroyed without equivalent.1
fundamental propositions respecting capital
§ 1. If the preceding explanations have answered their purpose, they have given not only a sufficiently complete possession of the idea of Capital according to its definition, but a sufficient familiarity with it in the concrete, and amidst the obscurity with which the complication of individual circumstances surrounds it, to have prepared even the unpractised reader for certain elementary propositions or theorems respecting capital, the full comprehension of which is already a considerable step out of darkness into light.
The first of these propositions is, That industry is limited by capital. This is so obvious as to be taken for granted in many common forms of speech; but to see a truth occasionally is one thing, to recognise it habitually, and admit no propositions inconsistent with it, is another. The axiom was until lately almost universally disregarded by legislators and political writers; and doctrines irreconcileable with it are still very commonly professed and inculcated.
The following are common expressions, implying its truth. The act of directing industry to a particular employment is described by the phrase “applying capital” to the employment. To employ industry on the land is to apply capital to the land. To employ labour in a manufacture is to invest capital in the manufacture. This implies that industry cannot be employed to any greater extent than there is capital to invest. The proposition, indeed, must be assented to as soon as it is distinctly apprehended. The expression “applying capital” is of course metaphorical: what is really applied is labour; capital being an indispensable condition. Again, we often speak of the “productive powers of capital.” This expression is not literally correct. The only productive powers are those of labour and natural agents; or if any portion of capital can by a stretch of language be said to have a productive power of its own, it is only tools and machinery, which, like wind or water, may be said to co-operate with labour. The food of labourers and the materials of production have no productive power; but labour cannot exert its productive power unless provided with them. There can be no more industry than is supplied with materials to work up and food to eat. Self-evident as the thing is, it is often forgotten that the people of a country are maintained and have their wants supplied, not by the produce of present labour, but of past. They consume what has been produced, not what is about to be produced. Now, of what has been produced, a part only is allotted to the support of productive labour; and there will not and cannot be more of that labour than the portion so allotted (which is the capital of the country) can feed, and provide with the materials and instruments of production.
Yet, in disregard of a fact so evident, it long continued to be believed that laws and governments, without creating capital, could create industry. Not by making the people more laborious, or increasing the efficiency of their labour; these are objects to which the government can, in some degree, indirectly contribute. But without any increase in the skill or energy of the labourers, and without causing any persons to labour who had previously been maintained in idleness, it was still thought that the government, without providing additional funds, could create additional employment. A government would, by prohibitory laws, put a stop to the importation of some commodity; and when by this it had caused the commodity to be produced at home, it would plume itself upon having enriched the country with a new branch of industry, would parade in statistical tables the amount of produce yielded and labour employed in the production, and take credit for the whole of this as a gain to the country, obtained through the prohibitory law. Although this sort of political arithmetic has fallen a little into discredit in England, it still flourishes in the nations of Continental Europe. Had legislators been aware that industry is limited by capital, they would have seen that, the aggregate capital of the country not having been increased, any portion of it which they by their laws had caused to be embarked in the newly-acquired branch of industry must have been withdrawn or withheld from some other; in which it gave, or would have given, employment to probably about the same quantity of labour which it employs in its new occupation.∗
§ 2. Because industry is limited by capital, we are not however to infer that it always reaches that limit. Capital may be temporarily unemployed, as in the case of unsold goods, or funds that have not yet found an investment: during this interval it does not set in motion any industry. Or there may not be as many labourers obtainable, as the capital would maintain and employ. This has been known to occur in new colonies, where capital has sometimes perished uselessly for want of labour: the Swan River settlement (now called Western Australia), in the first years after its foundation, was an instance. There are many persons maintained from existing capital, who produce nothing, or who might produce much more than they do. If the labourers were reduced to lower wages, or induced to work more hours for the same wages, or if their families, who are already maintained from capital, were employed to a greater extent than they now are in adding to the produce, a given capital would afford employment to more industry. The unproductive consumption of productive labourers, the whole of which is now supplied by capital, might cease, or be postponed until the produce came in; and additional productive labourers might be maintained with the amount. By such means society might obtain from its existing resources a greater quantity of produce: and to such means it has been driven, when the sudden destruction of some large portion of its capital rendered the employment of the remainder with the greatest possible effect, a matter of paramount consideration for the time.
When industry has not come up to the limit imposed by capital, governments may, in various ways, for example by importing additional labourers, bring it nearer to that limit: as by the importation of Coolies and free Negroes into the West Indies. There is another way in which governments can create additional industry. They can create capital. They may lay on taxes, and employ the amount productively. They may do what is nearly equivalent; they may lay taxes on income or expenditure, and apply the proceeds towards paying off the public debts. The fundholder, when paid off, would still desire to draw an income from his property, most of which therefore would find its way into productive employment, while a great part of it would have been drawn from the fund for unproductive expenditure, since people do not wholly pay their taxes from what they would have saved, but partly, if not chiefly, from what they would have spent. It may be added, that any increase in the productive power of capital (or, more properly speaking, of labour) by improvement in the arts of life, or otherwise, tends to increase the employment for labour; since, when there is a greater produce altogether, it is always probable that some portion of the increase will be saved and converted into capital; especially when the increased returns to productive industry hold out an additional temptation to the conversion of funds from an unproductive destination to a productive.
§ 3. While, on the one hand, industry is limited by capital, so on the other, every increase of capital gives, or is capable of giving, additional employment to industry; and this without assignable limit. I do not mean to deny that the capital, or part of it, may be so employed as not to support labourers, being fixed in machinery, buildings, improvement of land, and the like. In any large increase of capital a considerable portion will generally be thus employed, and will only co-operate with labourers, not maintain them. What I do intend to assert is, that the portion which is destined to their maintenance, may (supposing no alteration in anything else) be indefinitely increased, without creating an impossibility of finding them employment: in other words, that if there are human beings capable of work, and food to feed them, they may always be employed in producing something. This proposition requires to be somewhat dwelt upon, being one of those which it is exceedingly easy to assent to when presented in general terms, but somewhat difficult to keep fast hold of, in the crowd and confusion of the actual facts of society. It is also very much opposed to common doctrines. There is not an opinion more general among mankind than this, that the unproductive expenditure of the rich is necessary to the employment of the poor. Before Adam Smith, the doctrine had hardly been questioned; and even since his time, authors of the highest name and of great merit∗ have contended, that if consumers were to save and convert into capital more than a limited portion of their income, and were not to devote to unproductive consumption an amount of means bearing a certain ratio to the capital of the country, the extra accumulation would be merely so much waste, since there would be no market for the commodities which the capital so created would produce. I conceive this to be one of the many errors arising in political economy, from the practice of not beginning with the examination of simple cases, but rushing at once into the complexity of concrete phenomena.
Every one can see that if a benevolent government possessed all the food, and all the implements and materials, of the community, it could exact productive labour from all capable of it, to whom it allowed a share in the food, and could be in no danger of wanting a field for the employment of this productive labour, since as long as there was a single want unsaturated (which material objects could supply), of any one individual, the labour of the community could be turned to the production of something capable of satisfying that want. Now, the individual possessors of capital, when they add to it by fresh accumulations, are doing precisely the same thing which we suppose to be done by a benevolent government. As it is allowable to put any case by way of hypothesis, let us imagine the most extreme case conceivable. Suppose that every capitalist came to be of opinion that not being more meritorious than a well-conducted labourer, he ought not to fare better; and accordingly laid by, from conscientious motives, the surplus of his profits; or suppose this abstinence not spontaneous, but imposed by law or opinion upon all capitalists, and upon landowners likewise. Unproductive expenditure is now reduced to its lowest limit: and it is asked, how is the increased capital to find employment? Who is to buy the goods which it will produce? There are no longer customers even for those which were produced before. The goods, therefore, (it is said) will remain unsold; they will perish in the warehouses; until capital is brought down to what it was originally, or rather to as much less, as the demand of the consumers has lessened. But this is seeing only one-half of the matter. In the case supposed, there would no longer be any demand for luxuries, on the part of capitalists and landowners. But when these classes turn their income into capital, they do not thereby annihilate their power of consumption; they do but transfer it from themselves to the labourers to whom they give employment. Now, there are two possible suppositions in regard to the labourers; either there is, or there is not, an increase of their numbers, proportional to the increase of capital. If there is, the case offers no difficulty. The production of necessaries for the new population, takes the place of the production of luxuries for a portion of the old, and supplies exactly the amount of employment which has been lost. But suppose that there is no increase of population. The whole of what was previously expended in luxuries, by capitalists and landlords, is distributed among the existing labourers, in the form of additional wages. We will assume them to be already sufficiently supplied with necessaries. What follows? That the labourers become consumers of luxuries; and the capital previously employed in the production of luxuries, is still able to employ itself in the same manner: the difference being, that the luxuries are shared among the community generally, instead of being confined to a few. The increased accumulation and increased production, might, rigorously speaking, continue, until every labourer had every indulgence of wealth, consistent with continuing to work; supposing that the power of their labour were physically sufficient to produce all this amount of indulgences for their whole number. Thus the limit of wealth is never deficiency of consumers, but of producers and productive power. Every addition to capital gives to labour either additional employment, or additional remuneration; enriches either the country, or the labouring class. If it finds additional hands to set to work, it increases the aggregate produce: if only the same hands, it gives them a larger share of it; and perhaps even in this case, by stimulating them to greater exertion, augments the produce itself.
§ 4. A second fundamental theorem respecting Capital relates to the source from which it is derived. It is the result of saving. The evidence of this lies abundantly in what has been already said on the subject. But the proposition needs some further illustration.
If all persons were to expend in personal indulgences all that they produce, and all the income they receive from what is produced by others, capital could not increase. All capital, with a trifling exception, was originally the result of saving. I say, with a trifling exception; because a person who labours on his own account, may spend on his own account all he produces, without becoming destitute; and the provision of necessaries on which he subsists until he has reaped his harvest, or sold his commodity, though a real capital, cannot be said to have been saved, since it is all used for the supply of his own wants, and perhaps as speedily as if it had been consumed in idleness. We may imagine a number of individuals or families settled on as many separate pieces of land, each living on what their own labour produces, and consuming the whole produce. But even these must save (that is, spare from their personal consumption) as much as is necessary for seed. Some saving, therefore, there must have been, even in this simplest of all states of economical relations; people must have produced more than they used, or used less than they produced. Still more must they do so before they can employ other labourers, or increase their production beyond what can be accomplished by the work of their own hands. All that any one employs in supporting and carrying on any other labour than his own, must have been originally brought together by saving; somebody must have produced it and forborne to consume it. We may say, therefore, without material inaccuracy, that all capital, and especially all addition to capital, is the result of saving.
In a rude and violent state of society, it continually happens that the person who has capital is not the very person who has saved it, but some one who, being stronger, or belonging to a more powerful community, has possessed himself of it by plunder. And even in a state of things in which property was protected, the increase of capital has usually been, for a long time, mainly derived from privations which, though essentially the same with saving, are not generally called by that name, because not voluntary. The actual producers have been slaves, compelled to produce as much as force could extort from them, and to consume as little as the self-interest or the usually very slender humanity of their taskmasters would permit. This kind of compulsory saving, however, would not have caused any increase of capital, unless a part of the amount had been saved over again, voluntarily, by the master. If all that he made his slaves produce and forbear to consume, had been consumed by him on personal indulgences, he would not have increased his capital, nor been enabled to maintain an increasing number of slaves. To maintain any slaves at all, implied a previous saving; a stock, at least of food, provided in advance. This saving may not, however, have been made by any self-imposed privation of the master; but more probably by that of the slaves themselves while free; the rapine or war, which deprived them of their personal liberty, having transferred also their accumulations to the conqueror.
There are other cases in which the term saving, with the associations usually belonging to it, does not exactly fit the operation by which capital is increased. If it were said, for instance, that the only way to accelerate the increase of capital is by increase of saving, the idea would probably be suggested of greater abstinence, and increased privation. But it is obvious that whatever increases the productive power of labour creates an additional fund to make savings from, and enables capital to be enlarged not only without additional privation, but concurrently with an increase of personal consumption. Nevertheless, there is here an increase of saving, in the scientific sense. Though there is more consumed, there is also more spared. There is a greater excess of production over consumption. It is consistent with correctness to call this a greater saving. Though the term is not unobjectionable, there is no other which is not liable to as great objections. To consume less than is produced, is saving; and that is the process by which capital is increased; not necessarily by consuming less, absolutely. We must not allow ourselves to be so much the slaves of words, as to be unable to use the word saving in this sense, without being in danger of forgetting that to increase capital there is another way besides consuming less, namely, to produce more.
§ 5. A third fundamental theorem respecting Capital, closely connected with the one last discussed, is, that although saved, and the result of saving, it is nevertheless consumed. The word saving does not imply that what is saved is not consumed, nor even necessarily that its consumption is deferred; but only that, if consumed immediately, it is not consumed by the person who saves it. If merely laid by for future use, it is said to be hoarded; and while hoarded, is not consumed at all. But if employed as capital, it is all consumed; though not by the capitalist. Part is exchanged for tools or machinery, which are worn out by use; part for seed or materials, which are destroyed as such by being sown or wrought up, and destroyed altogether by the consumption of the ultimate product. The remainder is paid in wages to productive labourers, who consume it for their daily wants; or if they in their turn save any part, this also is not, generally speaking, hoarded, but (through savings banks, benefit clubs, or some other channel) re-employed as capital, and consumed.
The principle now stated is a strong example of the necessity of attention to the most elementary truths of our subject: for it is one of the most elementary of them all, and yet no one who has not bestowed some thought on the matter is habitually aware of it, and most are not even willing to admit it when first stated. To the vulgar, it is not at all apparent that what is saved is consumed. To them, every one who saves, appears in the light of a person who hoards: they may think such conduct permissible, or even laudable, when it is to provide for a family, and the like; but they have no conception of it as doing good to other people: saving is to them another word for keeping a thing to oneself; while spending appears to them to be distributing it among others. The person who expends his fortune in unproductive consumption, is looked upon as diffusing benefits all around; and is an object of so much favour, that some portion of the same popularity attaches even to him who spends what does not belong to him; who not only destroys his own capital, if he ever had any, but under pretence of borrowing, and on promise of repayment, possesses himself of capital belonging to others, and destroys that likewise.
This popular error comes from attending to a small portion only of the consequences that flow from the saving or the spending; all the effects of either which are out of sight, being out of mind. The eye follows what is saved, into an imaginary strong-box, and there loses sight of it; what is spent, it follows into the hands of tradespeople and dependents; but without reaching the ultimate destination in either case. Saving (for productive investment), and spending, coincide very closely in the first stage of their operations. The effects of both begin with consumption; with the destruction of a certain portion of wealth; only the things consumed, and the persons consuming, are different. There is, in the one case, a wearing out of tools, a destruction of material, and a quantity of food and clothing supplied to labourers, which they destroy by use: in the other case, there is a consumption, that is to say, a destruction, of wines, equipages, and furniture. Thus far, the consequence to the national wealth has been much the same; an equivalent quantity of it has been destroyed in both cases. But in the spending, this first stage is also the final stage; that particular amount of the produce of labour has disappeared, and there is nothing left; while, on the contrary, the saving person, during the whole time that the destruction was going on, has had labourers at work repairing it; who are ultimately found to have replaced, with an increase, the equivalent of what has been consumed. And as this operation admits of being repeated indefinitely without any fresh act of saving, a saving once made becomes a fund to maintain a corresponding number of labourers in perpetuity, reproducing annually their own maintenance with a profit.
It is the intervention of money which obscures, to an unpractised apprehension, the true character of these phenomena. Almost all expenditure being carried on by means of money, the money comes to be looked upon as the main feature in the transaction; and since that does not perish, but only changes hands, people overlook the destruction which takes place in the case of unproductive expenditure. The money being merely transferred, they think the wealth also has only been handed over from the spendthrift to other people. But this is simply confounding money with wealth. The wealth which has been destroyed was not the money, but the wines, equipages, and furniture which the money purchased; and these having been destroyed without return, society collectively is poorer by the amount. It may be said, perhaps, that wines, equipages, and furniture, are not subsistence, tools, and materials, and could not in any case have been applied to the support of labour; that they are adapted for no other than unproductive consumption, and that the detriment to the wealth of the community was when they were produced, not when they were consumed. I am willing to allow this, as far as is necessary for the argument, and the remark would be very pertinent if these expensive luxuries were drawn from an existing stock, never to be replenished. But since, on the contrary, they continue to be produced as long as there are consumers for them, and are produced in increased quantity to meet an increased demand; the choice made by a consumer to expend five thousand a year in luxuries, keeps a corresponding number of labourers employed from year to year in producing things which can be of no use to production; their services being lost so far as regards the increase of the national wealth, and the tools, materials, and food which they annually consume being so much subtracted from the general stock of the community applicable to productive purposes. In proportion as any class is improvident or luxurious, the industry of the country takes the direction of producing luxuries for their use; while not only the employment for productive labourers is diminished, but the subsistence and instruments which are the means of such employment do actually exist in smaller quantity.
Saving, in short, enriches, and spending impoverishes, the community along with the individual; which is but saying in other words, that society at large is richer by what it expends in maintaining and aiding productive labour, but poorer by what it consumes in its enjoyments.∗
§ 6. To return to our fundamental theorem. Everything which is produced is consumed both what is saved and what is said to be spent; and the former quite as rapidly as the latter. All the ordinary forms of language tend to disguise this. When people talk of the ancient wealth of a count, of riches inherited from ancestors, and similar expressions, the idea suggested is that the riches so transmitted were produced long ago, at the time when they are said to have been first acquired, and that no portion of the capital of the country was produced this year, except as much as may have been this year added to the total amount. The fact is far otherwise. The greater part, in value, of the wealth now existing in England has been produced by human hands within the last twelve months. A very small proportion indeed of that large aggregate was in existence ten years ago;—of the present productive capital of the country scarcely any part, except farm-houses and manufactories, and a few ships and machines; and even these would not in most cases have survived so long, if fresh labour had not been employed within that period in putting them into repair. The land subsists, and the land is almost the only thing that subsists. Everything which is produced perishes, and most things very quickly. Most kinds of capital are not fitted by their nature to be long preserved. There are a few, and but a few productions, capable of a very prolonged existence. Westminster Abbey has lasted many centuries, with occasional repairs; some Grecian sculptures have existed above two thousand years; the Pyramids perhaps double or treble that time. But these were objects devoted to unproductive use. If we except bridges and aqueducts (to which may in some countries be added tanks and embankments), there are few instances of any edifice applied to industrial purposes which has been of great duration; such buildings do not hold out against wear and tear, nor is it good economy to construct them of the solidity necessary for permanency. Capital is kept in existence from age to age not by preservation, but by perpetual reproduction: every part of it is used and destroyed, generally very soon after it is produced, but those who consume it are employed meanwhile in producing more. The growth of capital is similar to the growth of population. Every individual who is born, dies, but in each year the number born exceeds the number who die: the population, therefore, always increases, though not one person of those composing it was alive until a very recent date.
§ 7. This perpetual consumption and reproduction of capital affords the explanation of what has so often excited wonder, the great rapidity with which countries recover from a state of devastation; the disappearance, in a short time, of all traces of the mischiefs done by earthquakes, floods, hurricanes, and the ravages of war. An enemy lays waste a country by fire and sword, and destroys or carries away nearly all the moveable wealth existing in it: all the inhabitants are ruined, and yet in a few years after, everything is much as it was before. This vis medicatrix naturae has been a subject of sterile astonishment, or has been cited to exemplify the wonderful strength of the principle of saving, which can repair such enormous losses in so brief an interval. There is nothing at all wonderful in the matter. What the enemy have destroyed, would have been destroyed in a little time by the inhabitants themselves: the wealth which they so rapidly reproduce, would have needed to be reproduced and would have been reproduced in any case, and probably in as short a time. Nothing is changed, except that during the reproduction they have not now the advantage of consuming what had been produced previously. The possibility of a rapid repair of their disasters mainly depends on whether the country has been depopulated. If its effective population have not been extirpated at the time, and are not starved afterwards; then, with the same skill and knowledge which they had before, with their land and its permanent improvements undestroyed, and the more durable buildings probably unimpaired, or only partially injured, they have nearly all the requisites for their former amount of production. If there is as much of food left to them, or of valuables to buy food, as enables them by any amount of privation to remain alive and in working condition, they will in a short time have raised as great a produce, and acquired collectively as great wealth and as great a capital, as before; by the mere continuance of that ordinary amount of exertion which they are accustomed to employ in their occupations. Nor does this evince any strength in the principle of saving, in the popular sense of the term, since what takes place is not intentional abstinence, but involuntary privation.
Yet so fatal is the habit of thinking though the medium of only one set of technical phrases, and so little reason have studious men to value themselves on being exempt from the very same mental infirmities which beset the vulgar, that this simple explanation was never given (so far as I am aware) by any political economist before Dr. Chalmers; a writer many of whose opinions I think erroneous, but who has always the merit of studying phenomena at first hand, and expressing them in a language of his own, which often uncovers aspects of the truth that the received phraseologies only tend to hide.
§ 8. The same author carries out this train of thought to some important conclusions on another closely connected subject, that of government loans for war purposes or other unproductive expenditure. These loans, being drawn from capital (in lieu of taxes, which would generally have been paid from income, and made up in part or altogether by increased economy) must, according to the principles we have laid down, tend to impoverish the country: yet the years in which expenditure of this sort has been on the greatest scale, have often been years of great apparent prosperity: the wealth and resources of the country, instead of diminishing, have given every sign of rapid increase during the process, and of greatly expanded dimensions after its close. This was confessedly the case with Great Britain during the last long Continental war; and it would take some space to enumerate all the unfounded theories in political economy, to which that fact gave rise, and to which it secured temporary credence; almost all tending to exalt unproductive expenditure, at the expense of productive. Without entering into all the causes which operated, and which commonly do operate, to prevent these extraordinary drafts on the productive resources of a country from being so much felt as it might seem reasonable to expect, we will suppose the most unfavourable case possible: that the whole amount borrowed and destroyed by the government, was abstracted by the lender from a productive employment in which it had actually been invested. The capital, therefore, of the country, is this year diminished by so much. But unless the amount abstracted is something enormous, there is no reason in the nature of the case why next year the national capital should not be as great as ever. The loan cannot have been taken from that portion of the capital of the country which consists of tools, machinery, and buildings. It must have been wholly drawn from the portion employed in paying labourers: and the labourers will suffer accordingly. But if none of them are starved; if their wages can bear such an amount of reduction, or if charity interposes between them and absolute destitution, there is no reason that their labour should produce less in the next year than in the year before. If they produce as much as usual, having been paid less by so many millions sterling, these millions are gained by their employers. The breach made in the capital of the country is thus instantly repaired, but repaired by the privations and often the real misery of the labouring class. Here is ample reason why such periods, even in the most unfavourable circumstances, may easily be times of great gain to those whose prosperity usually passes, in the estimation of society, for national prosperity.∗
This leads to the vexed question to which Dr. Chalmers has very particularly adverted; whether the funds required by a government for extraordinary unproductive expenditure, are best raised by loans, the interest only being provided by taxes, or whether taxes should be at once laid on to the whole amount; which is called in the financial vocabulary, raising the whole of the supplies within the year. Dr. Chalmers is strongly for the latter method. He says, the common notion is that in calling for the whole amount in one year, you require what is either impossible, or very inconvenient; that the people cannot, without great hardship, pay the whole at once out of their yearly income; and that it is much better to require of them a small payment every year in the shape of interest, than so great a sacrifice once for all. To which his answer is, that the sacrifice is made equally in either case. Whatever is spent, cannot but be drawn from yearly income. The whole and every part of the wealth produced in the country, forms, or helps to form, the yearly income of somebody. The privation which it is supposed must result from taking the amount in the shape of taxes is not avoided by taking it in a loan. The suffering is not averted, but only thrown upon the labouring classes, the least able, and who least ought, to bear it: while all the inconveniences, physical, moral, and political, produced by maintaining taxes for the perpetual payment of the interest, are incurred in pure loss. Whenever capital is withdrawn from production, or from the fund destined for production, to be lent to the State, and expended unproductively, that whole sum is withheld from the labouring classes: the loan, therefore, is in truth paid off the same year; the whole of the sacrifice necessary for paying it off is actually made: only it is paid to the wrong persons, and therefore does not extinguish the claim; and paid by the very worst of taxes, a tax exclusively on the labouring class. And after having, in this most painful and unjust way, gone through the whole effort necessary for extinguishing the debt, the country remains charged with it, and with the payment of its interest in perpetuity.
These views appear to me strictly just, in so far as the value absorbed in loans would otherwise have been employed in productive industry within the country. The practical state of the case, however, seldom exactly corresponds with this supposition. The loans of the less wealthy countries are made chiefly with foreign capital, which would not, perhaps, have been brought in to be invested on any less security than that of the government: while those of rich and prosperous countries are generally made, not with funds withdrawn from productive employment, but with the new accumulations constantly making from income, and often with a part of them which, if not so taken, would have migrated to colonies, or sought other investments abroad. In these cases (which will be more particularly examined hereafter∗ ), the sum wanted may be obtained by loan without detriment to the labourers, or derangement of the national industry, and even perhaps with advantage to both, in comparison with raising the amount by taxation, since taxes, especially when heavy, are almost always partly paid at the expense of what would otherwise have been saved and added to capital. Besides, in a country which makes so great yearly additions to its wealth that a part can be taken and expended unproductively without diminishing capital, or even preventing a considerable increase, it is evident that even if the whole of what is so taken would have become capital, and obtained employment in the country, the effect on the labouring classes is far less prejudicial, and the case against the loan system much less strong, than in the case first supposed. This brief anticipation of a discussion which will find its proper place elsewhere, appeared necessary to prevent false inferences from the premises previously laid down.
§ 9. We now pass to a fourth fundamental theorem respecting Capital, which is, perhaps, oftener overlooked or misconceived than even any of the foregoing. What supports and employs productive labour, is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities is not demand for labour. The demand for commodities determines in what particular branch of production the labour and capital shall be employed; it determines the direction of the labour; but not the more or less of the labour itself, or of the maintenance or payment of the labour. These depend on the amount of the capital, or other funds directly devoted to the sustenance and remuneration of labour.
Suppose, for instance, that there is a demand for velvet; a fund ready to be laid out in buying velvet, but no capital to establish the manufacture. It is of no consequence how great the demand may be; unless capital is attracted into the occupation, there will be no velvet made, and consequently none bought; unless, indeed, the desire of the intending purchaser for it is so strong, that he employs part of the price he would have paid for it, in making advances to work-people, that they may employ themselves in making velvet; that is, unless he converts part of his income into capital, and invests that capital in the manufacture. Let us now reverse the hypothesis, and suppose that there is plenty of capital ready for making velvet, but no demand. Velvet will not be made; but there is no particular preference on the part of capital for making velvet. Manufacturers and their labourers do not produce for the pleasure of their customers, but for the supply of their own wants, and having still the capital and the labour which are the essentials of production, they can either produce something else which is in demand, or if there be no other demand, they themselves have one, and can produce the things which they want for their own consumption. So that the employment afforded to labour does not depend on the purchasers, but on the capital.1 I am, of course, not taking into consideration the effects of a sudden change. If the demand ceases unexpectedly, after the commodity to supply it is already produced, this introduces a different element into the question: the capital has actually been consumed in producing something which nobody wants or uses, and it has therefore perished, and the employment which it gave to labour is at an end, not because there is no longer a demand, but because there is no longer a capital. This case therefore does not test the principle. The proper test is, to suppose that the change is gradual and foreseen, and is attended with no waste of capital, the manufacture being discontinued by merely not replacing the machinery as it wears out, and not reinvesting the money as it comes in from the sale of the produce. The capital is thus ready for a new employment, in which it will maintain as much labour as before. The manufacturer and his work-people lose the benefit of the skill and knowledge which they had acquired in the particular business, and which can only be partially of use to them in any other; and that is the amount of loss to the community by the change. But the labourers can still work, and the capital which previously employed them will, either in the same hands, or by being lent to others, employ either those labourers or an equivalent number in some other occupation.
This theorem, that to purchase produce is not to employ labour; that the demand for labour is constituted by the wages which precede the production, and not by the demand which may exist for the commodities resulting from the production; is a proposition which greatly needs all the illustration it can receive. It is, to common apprehension, a paradox; and even among political economists of reputation, I can hardly point to any, except Mr. Ricardo and M. Say, who have kept it constantly and steadily in view. Almost all others occasionally express themselves as if a person who buys commodities, the produce of labour, was an employer of labour, and created a demand for it as really, and in the same sense, as if he bought the labour itself directly, by the payment of wages. It is no wonder that political economy advances slowly, when such a question as this still remains open at its very threshold. 1 I apprehend, that if by demand for labour be meant the demand by which wages are raised, or the number of labourers in employment increased, demand for commodities does not constitute demand for labour. I conceive that a person who buys commodities and consumes them himself, does no good to the labouring classes; and that it is only by what he abstains from consuming, and expends in direct payments to labourers in exchange for labour, that he benefits the labouring classes, or adds anything to the amount of their employment.
For the better illustration of the principle, let us put the following case. A consumer may expend his income either in buying services, or commodities. He may employ part of it in hiring journeymen bricklayers to build a house, or excavators to dig artificial lakes, or labourers to make plantations and lay out pleasure grounds; or, instead of this, he may expend the same value in buying velvet and lace. The question is, whether the difference between these two modes of expending his income affects the interest of the labouring classes. It is plain that in the first of the two cases he employs labourers, who will be out of employment, or at least out of that employment, in the opposite case. But those from whom I differ say that this is of no consequence, because in buying velvet and lace he equally employs labourers, namely, those who make the velvet and lace. I contend, however, that in this last case he does not employ labourers; but merely decides in what kind of work some other person shall employ them. The consumer does not with his own funds pay to the weavers and lacemakers their day's wages. He buys the finished commodity, which has been produced by labour and capital, the labour not being paid nor the capital furnished by him, but by the manufacturer. Suppose that he had been in the habit of expending this portion of his income in hiring journeymen bricklayers, who laid out the amount of their wages in food and clothing, which were also produced by labour and capital. He, however, determines to prefer velvet, for which he thus creates an extra demand. This demand cannot be satisfied without an extra supply, nor can the supply be produced without an extra capital: where, then, is the capital to come from? There is nothing in the consumer's change of purpose which makes the capital of the country greater than it otherwise was. It appears, then, that the increased demand for velvet could not for the present be supplied, were it not that the very circumstance which gave rise to it has set at liberty a capital of the exact amount required. The very sum which the consumer now employs in buying velvet, formerly passed into the hands of journeymen bricklayers, who expended it in food and necessaries, which they now either go without, or squeeze by their competition, from the shares of other labourers. The labour and capital, therefore, which formerly produced necessaries for the use of these bricklayers, are deprived of their market, and must look out for other employment; and they find it in making velvet for the new demand. I do not mean that the very same labour and capital which produced the necessaries turn themselves to producing the velvet; but, in some one or other of a hundred modes, they take the place of that which does. There was capital in existence to do one of two things—to make the velvet, or to produce necessaries for the journeymen bricklayers; but not to do both. It was at the option of the consumer which of the two should happen; and if he chooses the velvet, they go without the necessaries.
1 For further illustration, let us suppose the same case reversed. The consumer has been accustomed to buy velvet, but resolves to discontinue that expense, and to employ the same annual sum in hiring bricklayers. If the common opinion be correct, this change in the mode of his expenditure gives no additional employment to labour, but only transfers employment from velvet-makers to bricklayers. On closer inspection, however, it will be seen that there is an increase of the total sum applied to the remuneration of labour. The velvet manufacturer, supposing him aware of the diminished demand for his commodity, diminishes the production, and sets at liberty a corresponding portion of the capital employed in the manufacture. This capital, thus withdrawn from the maintenance of velvet-makers, is not the same fund with that which the customer employs in maintaining bricklayers; it is a second fund. There are, therefore, two funds to be employed in the maintenance and remuneration of labour, where before there was only one. There is not a transfer of employment from velvet-makers to bricklayers; there is a new employment created for bricklayers, and a transfer of employment from velvet-makers to some other labourers, most probably those who produce the food and other things which the bricklayers consume.
In answer to this it is said, that though money laid out in buying velvet is not capital, it replaces a capital; that though it does not create a new demand for labour, it is the necessary means of enabling the existing demand to be kept up. The funds (it may be said) of the manufacturer, while locked up in velvet, cannot be directly applied to the maintenance of labour; they do not begin to constitute a demand for labour until the velvet is sold, and the capital which made it replaced from the outlay of the purchaser; and thus, it may be said, the velvet-maker and the velvet-buyer have not two capitals, but only one capital between them, which by the act of purchase the buyer transfers to the manufacturer, and if instead of buying velvet he buys labour, he simply transfers this capital elsewhere, extinguishing as much demand for labour in one quarter as he creates in another.
The premises of this argument are not denied. To set free a capital which would otherwise be locked up in a form useless for the support of labour, is, no doubt, the same thing to the interests of labourers as the creation of a new capital. It is perfectly true that if I expend 1000l. in buying velvet, I enable the manufacturer to employ 1000l. in the maintenance of labour, which could not have been so employed while the velvet remained unsold: and if it would have remained unsold for ever unless I bought it, then by changing my purpose, and hiring bricklayers instead, I undoubtedly create no new demand for labour: for while I employ 1000l. in hiring labour on the one hand, I annihilate for ever 1000l. of the velvet-maker's capital on the other. But this is confounding the effects arising from the mere suddenness of a change with the effects of the change itself. If when the buyer ceased to purchase, the capital employed in making velvet for his use necessarily perished, then his expending the same amount in hiring bricklayers would be no creation, but merely a transfer, of employment. The increased employment which I contend is given to labour, would not be given unless the capital of the velvet-maker could be liberated, and would not be given until it was liberated. But every one knows that the capital invested in an employment can be withdrawn from it, if sufficient time be allowed. If the velvet-maker had previous notice, by not receiving the usual order, he will have produced 1000l. less velvet, and an equivalent portion of his capital will have been already set free. If he had no previous notice, and the article consequently remains on his hands, the increase of his stock will induce him next year to suspend or diminish his production until the surplus is carried off. When this process is complete, the manufacturer will find himself as rich as before, with undiminished power of employing labour in general, though a portion of his capital will now be employed in maintaining some other kind of it. Until this adjustment has taken place, the demand for labour will be merely changed, not increased: but as soon as it has taken place, the demand for labour is increased. Where there was formerly only one capital employed in maintaining weavers to make 1000l. worth of velvet, there is now that same capital employed in making something else, and 1000l. distributed among bricklayers besides. There are now two capitals employed in remunerating two sets of labourers; while before, one of those capitals, that of the customer, only served as a wheel in the machinery by which the other capital, that of the manufacturer, carried on its employment of labour from year to year.
The proposition for which I am contending is in reality equivalent to the following, which to some minds will appear a truism, though to others it is a paradox: that a person does good to labourers, not by what he consumes on himself, but solely by what he does not so consume. If instead of laying out 100l. in wine or silk, I expend it in wages, the demand for commodities is precisely equal in both cases: in the one, it is a demand for 100l. worth of wine or silk, in the other, for the same value of bread, beer, labourers' clothing, fuel, and indulgences: but the labourers of the community have in the latter case the value of 100l. more of the produce of the community distributed among them. I have consumed that much less, and made over my consuming power to them. If it were not so, my having consumed less would not leave more to be consumed by others; which is a manifest contradiction. When less is not produced, what one person forbears to consume is necessarily added to the share of those to whom he transfers his power of purchase. In the case supposed I do not necessarily consume less ultimately, since the labourers whom I pay may build a house for me, or make something else for my future consumption. But I have at all events postponed my consumption, and have turned over part of my share of the present produce of the community to the labourers. If after an interval I am indemnified, it is not from the existing produce, but from a subsequent addition made to it. I have therefore left more of the existing produce to be consumed by others; and have put into the possession of labourers the power to consume it.
1 There cannot be a better reductio ad absurdum of the opposite doctrine than that afforded by the Poor Law. If it be equally for the benefit of the labouring classes whether I consume my means in the form of things purchased for my own use, or set aside a portion in the shape of wages or alms for their direct consumption, on what ground can the policy be justified of taking my money from me to support paupers? since my unproductive expenditure would have equally benefited them, while I should have enjoyed it too. If society can both eat its cake and have it, why should it not be allowed the double indulgence? But common sense tells every one in his own case (though he does not see it on the larger scale), that the poor rate which he pays is really subtracted from his own consumption, and that no shifting of payment backwards and forwards will enable two persons to eat the same food. If he had not been required to pay the rate, and had consequently laid out the amount on himself, the poor would have had as much less for their share of the total produce of the country, as he himself would have consumed more.∗
It appears, then, that a demand delayed until the work is completed, and furnishing no advances, but only reimbursing advances made by others, contributes nothing to the demand for labour; and that what is so expended, is, in all its effects, so far as regards the employment of the labouring class, a mere nullity; it does not and cannot create any employment except at the expense of other employment which existed before.
But though a demand for velvet does nothing more in regard to the employment for labour and capital, than to determine so much of the employment which already existed, into that particular channel instead of any other; still, to the producers already engaged in the velvet manufacture, and not intending to quit it, this is of the utmost importance. To them, a falling off in the demand is a real loss, and one which, even if none of their goods finally perish unsold, may mount to any height, up to that which would make them choose, as the smaller evil, to retire from the business. On the contrary, an increased demand enables them to extend their transactions—to make a profit on a larger capital, if they have it, or can borrow it; and, turning over their capital more rapidly, they will employ their labourers more constantly, or employ a greater number than before. So that an increased demand for a commodity does really, in the particular department, often cause a greater employment to be given to labour by the same capital. The mistake lies in not perceiving that in the cases supposed, this advantage is given to labour and capital in one department, only by being withdrawn from another; and that when the change has produced its natural effect of attracting into the employment additional capital proportional to the increased demand, the advantage itself ceases.
The grounds of a proposition, when well understood, usually give a tolerable indication of the limitations of it. The general principle, now stated, is that demand for commodities determines merely the direction of labour, and the kind of wealth produced, but not the quantity or efficiency of the labour, or the aggregate of wealth. But to this there are two exceptions. First, when labour is supported, but not fully occupied, a new demand for something which it can produce, may stimulate the labour thus supported to increased exertions, of which the result may be an increase of wealth, to the advantage of the labourers themselves and of others. Work which can be done in the spare hours of persons subsisted from some other source, can (as before remarked) be undertaken without withdrawing capital from other occupations, beyond the amount (often very small) required to cover the expense of tools and materials, and even this will often be provided by savings made expressly for the purpose. The reason of our theorem thus failing, the theorem itself fails, and employment of this kind may, by the springing up of a demand for the commodity, be called into existence without depriving labour of an equivalent amount of employment in any other quarter. The demand does not, even in this case, operate on labour any otherwise than through the medium of an existing capital, but it affords an inducement which causes that capital to set in motion a greater amount of labour than it did before.
1 The second exception, of which I shall speak at length in a subsequent chapter, consists in the known effect of an extension of the market for a commodity, in rendering possible an increased development of the division of labour, and hence a more effective distribution of the productive forces of society. This, like the former, is more an exception. in appearance than it is in reality. It is not the money paid by the purchaser, which remunerates the labour; it is the capital of the producer: the demand only determines in what manner that capital shall be employed, and what kind of labour it shall remunerate; but if it determines that the commodity shall be produced on a large scale, it enables the same capital to produce more of the commodity, and may by an indirect effect in causing an increase of capital, produce an eventual increase of the remuneration of the labourer.
The demand for commodities is a consideration of importance rather in the theory of exchange, than in that of production. Looking at things in the aggregate, and permanently, the remuneration of the producer is derived from the productive power of his own capital. The sale of the produce for money, and the subsequent expenditure of the money in buying other commodities, are a mere exchange of equivalent values for mutual accommodation. It is true that, the division of employments being one of the principal means of increasing the productive power of labour, the power of exchanging gives rise to a great increase of the produce; but even then it is production, not exchange, which remunerates labour and capital. We cannot too strictly represent to ourselves the operation of exchange, whether conducted by barter or through the medium of money, as the mere mechanism by which each person transforms the remuneration of his labour or of his capital into the particular shape in which it is most convenient to him to possess it; but in no wise the source of the remuneration itself.
§ 10. The preceding principles demonstrate the fallacy of many popular arguments and doctrines, which are continually reproducing themselves in new forms. For example, it has been contended, and by some from whom better things might have been expected, that the argument for the income-tax, grounded on its falling on the higher and middle classes only, and sparing the poor, is an error; some have gone so far as to say, an imposture; because in taking from the rich what they would have expended among the poor, the tax injures the poor as much as if it had been directly levied from them. Of this doctrine we now know what to think. So far, indeed, as what is taken from the rich in taxes, would, if not so taken, have been saved and converted into capital, or even expended in the maintenance and wages of servants or of any class of unproductive labourers, to that extent the demand for labour is no doubt diminished, and the poor injuriously affected, by the tax on the rich; and as these effects are almost always produced in a greater or less degree, it is impossible so to tax the rich as that no portion whatever of the tax can fall on the poor. But even here the question arises, whether the government, after receiving the amount, will not lay out as great a portion of it in the direct purchase of labour, as the taxpayers would have done. In regard to all that portion of the tax, which, if not paid to the government, would have been consumed in the form of commodities (or even expended in services if the payment has been advanced by a capitalist), this, according to the principles we have investigated, falls definitively on the rich, and not at all on the poor. There is exactly the same demand for labour, so far as this portion is concerned, after the tax, as before it. The capital which hitherto employed the labourers of the country, remains, and is still capable of employing the same number. There is the same amount of produce paid in wages, or allotted to defray the feeding and clothing of labourers.
If those against whom I am now contending were in the right, it would be impossible to tax anybody except the poor. If it is taxing the labourers, to tax what is laid out in the produce of labour, the labouring classes pay all the taxes. The same argument, however, equally proves, that it is impossible to tax the labourers at all; since the tax, being laid out either in labour or in commodities, comes all back to them; so that taxation has the singular property of falling on nobody. On the same showing, it would do the labourers no harm to take from them all they have, and distribute it among the other members of the community. It would all be “spent among them,” which on this theory comes to the same thing. The error is produced by not looking directly at the realities of the phenomena, but attending only to the outward mechanism of paying and spending. If we look at the effects produced not on the money, which merely changes hands, but on the commodities which are used and consumed, we see that, in consequence of the income-tax, the classes who pay it do really diminish their consumption. Exactly so far as they do this, they are the persons on whom the tax falls. It is defrayed out of what they would otherwise have used and enjoyed. So far, on the other hand, as the burthen falls, not on what they would have consumed, but on what they would have saved to maintain production, or spent in maintaining or paying unproductive labourers, to that extent the tax forms a deduction from what would have been used and enjoyed by the labouring classes. But if the government, as is probably the fact, expends fully as much of the amount as the tax-payers would have done in the direct employment of labour, as in hiring sailors, soldiers, and policemen, or in paying off debt, by which last operation it even increases capital; the labouring classes not only do not lose any employment by the tax, but may possibly gain some, and the whole of the tax falls exclusively where it was intended.
All that portion of the produce of the country which any one, not a labourer,1 actually and literally consumes for his own use, does not contribute in the smallest degree to the maintenance of labour. No one is benefited by mere consumption, except the person who consumes. And a person cannot both consume his income himself, and make it over to be consumed by others. Taking away a certain portion by taxation cannot deprive both him and them of it, but only him or them. To know which is the sufferer, we must understand whose consumption will have to be retrenched in consequence: this, whoever it be, is the person on whom the tax really falls.2
on circulating and fixed capital
§ 1. To complete our explanations on the subject of capital, it is necessary to say something of the two species into which it is usually divided. The distinction is very obvious, and though not named, has been often adverted to, in the two preceding chapters: but it is now proper to define it accurately, and to point out a few of its consequences.
Of the capital engaged in the production of any commodity, there is a part which, after being once used, exists no longer as capital; is no longer capable of rendering service to production, or at least not the same service, nor to the same sort of production. Such, for example, is the portion of capital which consists of materials. The tallow and alkali of which soap is made, once used in the manufacture, are destroyed as alkali and tallow; and cannot be employed any further in the soap manufacture, though in their altered condition, as soap, they are capable of being used as a material or an instrument in other branches of manufacture. In the same division must be placed the portion of capital which is paid as the wages, or consumed as the subsistence, of labourers. The part of the capital of a cotton-spinner which he pays away to his work-people, once so paid, exists no longer as his capital, or as a cotton-spinner's capital: such portion of it as the workmen consume, no longer exists as capital at all: even if they save any part, it may now be more properly regarded as a fresh capital, the result of a second act of accumulation. Capital which in this manner fulfils the whole of its office in the production in which it is engaged, by a single use, is called Circulating Capital. The term, which is not very appropriate, is derived from the circumstance, that this portion of capital requires to be constantly renewed by the sale of the finished product, and when renewed is perpetually parted with in buying materials and paying wages; so that it does its work, not by being kept, but by changing hands.
Another large portion of capital, however, consists in instruments of production, of a more or less permanent character; which produce their effect not by being parted with, but by being kept; and the efficacy of which is not exhausted by a single use. To this class belong buildings, machinery, and all or most things known by the name of implements or tools. The durability of some of these is considerable, and their function as productive instruments is prolonged through many repetitions of the productive operation. In this class must likewise be included capital sunk (as the expression is) in permanent improvements of land. So also the capital expended once for all, in the commencement of an undertaking, to prepare the way for subsequent operations: the expense of opening a mine, for example: of cutting canals, of making roads or docks. Other examples might be added, but these are sufficient. Capital which exists in any of these durable shapes, and the return to which is spread over a period of corresponding duration, is called Fixed Capital.
Of fixed capital, some kinds require to be occasionally or periodically renewed. Such are all implements and buildings: they require, at intervals, partial renewal by means of repairs, and are at last entirely worn out, and cannot be of any further service as buildings and implements, but fall back into the class of materials. In other cases, the capital does not, unless as a consequence of some unusual accident, require entire renewal: but there is always some outlay needed, either regularly or at least occasionally, to keep it up. A dock or a canal, once made, does not require, like a machine, to be made again, unless purposely destroyed, or unless an earthquake or some similar catastrophe has filled it up: but regular and frequent outlays are necessary to keep it in repair. The cost of opening a mine needs not be incurred a second time; but unless some one goes to the expense of keeping the mine clear of water, it is soon rendered useless. The most permanent of all kinds of fixed capital is that employed in giving increased productiveness to a natural agent, such as land. The draining of marshy or inundated tracts like the Bedford Level, the reclaiming of land from the sea, or its protection by embankments, are improvements calculated for perpetuity; but drains and dykes require frequent repairs. The same character of perpetuity belongs to the improvement of land by subsoil draining, which adds so much to the productiveness of the clay soils; or by permanent manures, that is, by the addition to the soil, not of the substances which enter into the composition of vegetables, and which are therefore consumed by vegetation, but of those which merely alter the relation of the soil to air and water; as sand and lime on the heavy soils, clay and marl on the light. Even such works, however, require some, though it may be very little, occasional outlay to maintain their full effect.
These improvements, however, by the very fact of their deserving that title, produce an increase of return, which, after defraying all expenditure necessary for keeping them up, still leaves a surplus. This surplus forms the return to the capital sunk in the first instance, and that return does not, as in the case of machinery, terminate by the wearing out of the machine, but continues for ever. The land, thus increased in productiveness, bears a value in the market, proportional to the increase: and hence it is usual to consider the capital which was invested, or sunk, in making the improvement, as still existing in the increased value of the land. There must be no mistake, however. The capital, like all other capital, has been consumed. It was consumed in maintaining the labourers who executed the improvement, and in the wear and tear of the tools by which they were assisted. But it was consumed productively, and has left a permanent result in the improved productiveness of an appropriated natural agent, the land. We may call the increased produce the joint result of the land and of a capital fixed in the land. But as the capital, having in reality been consumed, cannot be withdrawn, its productiveness is thenceforth indissolubly blended with that arising from the original qualities of the soil; and the remuneration for the use of it thenceforth depends, not upon the laws which govern the returns to labour and capital, but upon those which govern the recompense for natural agents. What these are, we shall see hereafter.∗
§ 2. There is a great difference between the effects of circulating and those of fixed capital, on the amount of the gross produce of the country. Circulating capital being destroyed as such, or at any rate finally lost to the owner, by a single use; and the product resulting from that one use being the only source from which the owner can replace the capital, or obtain any remuneration for its productive employment; the product must of course be sufficient for those purposes, or in other words, the result of a single use must be a reproduction equal to the whole amount of the circulating capital used, and a profit besides. This, however, is by no means necessary in the case of fixed capital. Since machinery, for example, is not wholly consumed by one use, it is not necessary that it should be wholly replaced from the product of that use. The machine answers the purpose of its owner if it brings in, during each interval of time, enough to cover the expense of repairs, and the deterioration in value which the machine has sustained during the same time, with a surplus sufficient to yield the ordinary profit on the entire value of the machine.
From this it follows that all increase of fixed capital, when taking place at the expense of circulating, must be, at least temporarily, prejudicial to the interests of the labourers. This is true, not of machinery alone, but of all improvements by which capital is sunk; that is, rendered permanently incapable of being applied to the maintenance and remuneration of labour. Suppose that a person farms his own land, with a capital of two thousand quarters of corn, employed in maintaining labourers during one year (for simplicity we omit the consideration of seed and tools), whose labour produces him annually two thousand four hundred quarters, being a profit of twenty per cent. This profit we shall suppose that he annually consumes, carrying on his operations from year to year on the original capital of two thousand quarters. Let us now suppose that by the expenditure of half his capital he effects a permanent improvement of his land, which is executed by half his labourers, and occupies them for a year, after which he will only require, for the effectual cultivation of his land, half as many labourers as before. The remainder of his capital he employs as usual. In the first year there is no difference in the condition of the labourers, except that part of them have received the same pay for an operation on the land, which they previously obtained for ploughing, sowing, and reaping. At the end of the year, however, the improver has not, as before, a capital of two thousand quarters of corn. Only one thousand quarters of his capital have been reproduced in the usual way: he has now only those thousand quarters and his improvement. He will employ, in the next and in each following year, only half the number of labourers, and will divide among them only half the former quantity of subsistence. The loss will soon be made up to them if the improved land, with the diminished quantity of labour, produces two thousand four hundred quarters as before, because so enormous an accession of gain will probably induce the improver to save a part, add it to his capital, and become a larger employer of labour. But it is conceivable that this may not be the case1 ; for (supposing, as we may do, that the improvement will last indefinitely, without any outlay worth mentioning to keep it up) the improver will have gained largely by his improvement if the land now yields, not two thousand four hundred, but one thousand five hundred quarters; since this will replace the one thousand quarters forming his present circulating capital, with a profit of twenty-five per cent (instead of twenty as before) on the whole capital, fixed and circulating together. The improvement, therefore, may be a very profitable one to him, and yet very injurious to the labourers.
2 The supposition, in the terms in which it has been stated, is purely ideal; or at most applicable only to such a case as that of the conversion of arable land into pasture, which, though formerly a frequent practice, is regarded  by modern agriculturists as the reverse of an improvement.∗ But this does not affect the substance of the argument. Suppose that the improvement does not operate in the manner supposed—does not enable a part of the labour previously employed on the land to be dispensed with—but only enables the same labour to raise a greater produce. Suppose, too, that the greater produce, which by means of the improvement can be raised from the soil with the same labour, is all wanted, and will find purchasers. The improver will in that case require the same number of labourers as before, at the same wages. But where will he find the means of paying them? He has no longer his original capital of two thousand quarters disposable for the purpose. One thousand of them are lost and gone—consumed in making the improvement. If he is to employ as many labourers as before, and pay them as highly, he must borrow, or obtain from some other source, a thousand quarters to supply the deficit. But these thousand quarters already maintained, or were destined to maintain, an equivalent quantity of labour. They are not a fresh creation; their destination is only changed from one productive employment to another; and though the agriculturist has made up the deficiency in his own circulating capital, the breach in the circulating capital of the community remains unrepaired.
The argument relied on by most of those who contend that machinery can never be injurious to the labouring class, is, that by cheapening production it creates such an increased demand for the commodity, as enables, ere long, a greater number of persons than ever to find employment in producing it. This argument does not seem to me to have the weight commonly ascribed to it. The fact, though too broadly stated, is, no doubt, often true. The copyists who were thrown out of employment by the invention of printing, were doubtless soon outnumbered by the compositors and pressmen who took their place; and the number of labouring persons now occupied in the cotton manufacture is many times greater than were so occupied previously to the inventions of Hargreaves and Arkwright, which shows that besides the enormous fixed capital now embarked in the manufacture, it also employs a far larger circulating capital than at any former time. But if this capital was drawn from other employments; if the funds which took the place of the capital sunk in costly machinery, were supplied not by any additional saving consequent on the improvements, but by drafts on the general capital of the community; what better were the labouring classes for the mere transfer? In what manner was the loss they sustained by the conversion of circulating into fixed capital made up to them by a mere shifting of part of the remainder of the circulating capital from its old employments to a new one?
All attempts to make out that the labouring classes as a collective body cannot suffer temporarily by the introduction of machinery, or by the sinking of capital in permanent improvements, are, I conceive, necessarily fallacious. That they would suffer in the particular department of industry to which the change applies, is generally admitted, and obvious to common sense; but it is often said, that though employment is withdrawn from labour in one department, an exactly equivalent employment is opened for it in others, because what the consumers save in the increased cheapness of one particular article enables them to augment their consumption of others, thereby increasing the demand for other kinds of labour. This is plausible, but, as was shown in the last chapter, involves a fallacy; demand for commodities being a totally different thing from demand for labour. It is true, the consumers have now additional means of buying other things; but this will not create the other things, unless there is capital to produce them, and the improvement has not set at liberty any capital, if even it has not absorbed some from other employments. The supposed increase of production and of employment for labour in other departments therefore will not take place; and the increased demand for commodities by some consumers, will be balanced by a cessation of demand on the part of others, namely, the labourers who were superseded by the improvement, and who will now be maintained, if at all, by sharing, either in the way of competition or of charity, in what was previously consumed by other people.
§ 3. Nevertheless, I do not believe that as things are actually transacted, improvements in production are often, if ever, injurious, even temporarily, to the labouring classes in the aggregate. They would be so if they took place suddenly to a great amount, because much of the capital sunk must necessarily in that case be provided from funds already employed as circulating capital. But improvements are always introduced very gradually, and are seldom or never made by withdrawing circulating capital from actual production, but are made by the employment of the annual increase. There are few if any examples of a great increase of fixed capital, at a time and place where circulating capital was not rapidly increasing likewise. It is not in poor or backward countries that great and costly improvements in production are made. To sink capital in land for a permanent return—to introduce expensive machinery—are acts involving immediate sacrifice for distant objects; and indicate, in the first place, tolerably complete security of property; in the second, considerable activity of industrial enterprise; and in the third, a high standard of what has been called the “effective desire of accumulation:” which three things are the elements of a society rapidly progressive in its amount of capital. Although, therefore, the labouring classes must suffer, not only if the increase of fixed capital takes place at the expense of circulating, but even if it is so large and rapid as to retard that ordinary increase to which the growth of population has habitually adapted itself; yet, in point of fact, this is very unlikely to happen, since there is probably no country whose fixed capital increases in a ratio more than proportional to its circulating. If the whole of the railways which, during the speculative madness of 1845, obtained the sanction of Parliament, had been constructed in the times fixed for the completion of each, this improbable contingency would, most likely, have been realized; but this very case has afforded a striking example of the difficulties which oppose the diversion into new channels, of any considerable portion of the capital that supplies the old: difficulties generally much more than sufficient to prevent enterprises that involve the sinking of capital, from extending themselves with such rapidity as to impair the sources of the existing employment for labour.
To these considerations must be added, that even if improvements did for a time decrease the aggregate produce and the circulating capital of the community, they would not the less tend in the long run to augment both. They increase the return to capital; and of this increase the benefit must necessarily accrue either to the capitalist in greater profits, or to the customer in diminished prices; affording, in either case, an augmented fund from which accumulation may be made, while enlarged profits also hold out an increased inducement to accumulation. In the case we before selected, in which the immediate result of the improvement was to diminish the gross produce from two thousand four hundred quarters to one thousand five hundred, yet the profit of the capitalist being now five hundred quarters instead of four hundred, the extra one hundred quarters, if regularly saved, would in a few years replace the one thousand quarters subtracted from his circulating capital. Now the extension of business which almost certainly follows in any department in which an improvement has been made, affords a strong inducement to those engaged in it to add to their capital; and hence, at the slow pace at which improvements are usually introduced, a great part of the capital which the improvement ultimately absorbs, is drawn from the increased profits and increased savings which it has itself called forth.
This tendency of improvements in production to cause increased accumulation, and thereby ultimately to increase the gross produce, even if temporarily diminishing it, will assume a still more decided character if it should appear that there are assignable limits both to the accumulation of capital, and to the increase of production from the land, which limits once attained, all further increase of produce must stop; but that improvements in production, whatever may be their other effects, tend to throw one or both of these limits farther off. Now, these are truths which will appear in the clearest light in a subsequent stage of our investigation. It will be seen, that the quantity of capital which will, or even which can, be accumulated in any country, and the amount of gross produce which will, or even which can, be raised, bear a proportion to the state of the arts of production there existing; and that every improvement, even if for the time it diminish the circulating capital and the gross produce, ultimately makes room for a larger amount of both, than could possibly have existed otherwise. It is this which is the conclusive answer to the objections against machinery; and the proof thence arising of the ultimate benefit to labourers of mechanical inventions even in the existing state of society, will hereafter be seen to be conclusive.∗ But this does not discharge governments from the obligation of alleviating, and if possible preventing, the evils of which this source of ultimate benefit is or may be productive to an existing generation. If the sinking or fixing of capital in machinery or useful works were ever to proceed at such a pace as to impair materially the funds for the maintenance of labour, it would be incumbent on legislators to take measures for moderating its rapidity: and since improvements which do not diminish employment on the whole, almost always throw some particular class of labourers out of it, there cannot be a more legitimate object of the legislator's care than the interests of those who are thus sacrificed to the gains of their fellow-citizens and of posterity.
To return to the theoretical distinction between fixed and circulating capital. Since all wealth which is destined to be employed for reproduction comes within the designation of capital, there are parts of capital which do not agree with the definition of either species of it; for instance, the stock of finished goods which a manufacturer or dealer at any time possesses unsold in his warehouses. But this, though capital as to its destination, is not yet capital in actual exercise: it is not engaged in production, but has first to be sold or exchanged, that is, converted into an equivalent value of some other commodities; and therefore is not yet either fixed or circulating capital; but will become either one or the other, or be eventually divided between them. With the proceeds of his finished goods, a manufacturer will partly pay his work-people, partly replenish his stock of the materials of his manufacture, and partly provide new buildings and machinery, or repair the old; but how much will be devoted to one purpose, and how much to another, depends on the nature of the manufacture, and the requirements of the particular moment.
It should be observed further, that the portion of capital consumed in the form of seed or material, though, unlike fixed capital, it requires to be at once replaced from the gross produce, stands yet in the same relation to the employment of labour, as fixed capital does. What is expended in materials is as much withdrawn from the maintenance and remuneration of labourers, as what is fixed in machinery; and if capital now expended in wages were diverted to the providing of materials, the effect on the labourers would be as prejudicial as if it were converted into fixed capital. This, however, is a kind of change which seldom, if ever, takes place. The tendency of improvements in production is always to economize, never to increase, the expenditure of seed or material for a given produce; and the interest of the labourers has no detriment to apprehend from this source.
on what depends the degree of productiveness of productive agents
§ 1. We have concluded our general survey of the requisites of production. We have found that they may be reduced to three: labour, capital, and the materials and motive forces afforded by nature. Of these, labour and the raw material of the globe are primary and indispensable. Natural motive powers may be called in to the assistance of labour, and are a help, but not an essential, of production. The remaining requisite, capital, is itself the product of labour: its instrumentality in production is therefore, in reality, that of labour in an indirect shape. It does not the less require to be specified separately. A previous application of labour to produce the capital required for consumption during the work, is no less essential than the application of labour to the work itself. Of capital, again, one, and by far the largest, portion, conduces to production only by sustaining in existence the labour which produces: the remainder, namely the instruments and materials, contribute to it directly, in the same manner with natural agents, and the materials supplied by nature.
We now advance to the second great question in political economy; on what the degree of productiveness of these agents depends. For it is evident that their productive efficacy varies greatly at various times and places. With the same population and extent of territory, some countries have a much lager amount of production than others, and the same country at one time a greater amount than itself at another. Compare England either with a similar extent of territory in Russia, or with an equal population of Russians. Compare England now with England in the Middle Ages; Sicily, Northern Africa, or Syria at present, with the same countries at the time of their greatest prosperity, before the Roman Conquest. Some of the causes which contribute to this difference of productiveness are obvious; others not so much so. We proceed to specify several of them.
§ 2. The most evident cause of superior productiveness is what are called natural advantages. These are various. Fertility of soil is one of the principal. In this there are great varieties, from the deserts of Arabia to the alluvial plains of the Ganges, the Niger, and the Mississippi. A favourable climate is even more important than a rich soil. There are countries capable of being inhabited, but too cold to be compatible with agriculture. Their inhabitants cannot pass beyond the nomadic state; they must live, like the Laplanders, by the domestication of the rein-deer, if not by hunting or fishing, like the miserable Esquimaux. There are countries where oats will ripen, but not wheat, such as the North of Scotland; others where wheat can be grown, but from excess of moisture and want of sunshine, affords but a precious crop; as in parts of Ireland. With each advance towards the south, or, in the European temperate region, towards the east, some new branch of agriculture becomes first possible, then advantageous; the vine, maize, silk, figs, olives, rice, dates, successively present themselves, until we come to the sugar, coffee, cotton, spices, &c. of climates which also afford, of the more common agricultural products, and with only a slight degree of cultivation, two or even three harvests in a year. Nor is it in agriculture alone that differences of climate are important. Their influence is felt in many other branches of production: in the durability of all work which is exposed to the air; of buildings, for example. If the temples of Karnac and Luxor had not been injured by men, they might have subsisted in their original perfection almost for ever, for the inscriptions on some of them, though anterior to all authentic history, are fresher than is in our climate an inscription fifty years old: while at St. Petersburg, the most massive works, solidly executed in granite hardly a generation ago, are already, as travellers tell us, almost in a state to require reconstruction, from alternate exposure to summer heat and intense frost. The superiority of the woven fabrics of Southern Europe over those of England in the richness and clearness of many of their colours, is ascribed to the superior quality of the atmosphere, for which neither the knowledge of chemists nor the skill of dyers has been able to provide, in our hazy and damp climate, a complete equivalent.
Another part of the influence of climate consists in lessening the physical requirements of the producers. In hot regions, mankind can exist in comfort with less perfect housing, less clothing; fuel, that absolute necessary of life in cold climates, they can almost dispense with, except for industrial uses. They also require less aliment; as experience had proved, long before theory had accounted for it by ascertaining that most of what we consume as food is not required for the actual nutrition of the organs, but for keeping up the animal heat, and for supplying the necessary stimulus to the vital functions, which in hot climates is almost sufficiently supplied by air and sunshine. Much, therefore, of the labour elsewhere expended to procure the mere necessaries of life, not being required, more remains disposable for its higher uses and its enjoyments; if the character of the inhabitants does not rather induce them to use up these advantages in over-population, or in the indulgence of repose.
Among natural advantages, besides soil and climate, must be mentioned abundance of mineral productions, in convenient situations, and capable of being worked with moderate labour. Such are the coal-fields of Great Britain, which do so much to compensate its inhabitants for the disadvantages of climate; and the scarcely inferior resource possessed by this country and the United States, in a copious supply of an easily reduced iron ore, at no great depth below the earth's surface, and in close proximity to coal deposits available for working it. In mountain and hill districts, the abundance of natural water-power makes considerable amends for the usually inferior fertility of those regions. But perhaps a greater advantage than all these is a maritime situation, especially when accompanied with good natural harbours; and, next to it, great navigable rivers. These advantages consist indeed wholly in saving of cost of carriage. But few who have not considered the subject, have any adequate notion how great an extent of economical advantage this comprises; nor, without having considered the influence exercised on production by exchanges, and by what is called the division of labour, can it be fully estimated. So important is it, that it often does more than counterbalance sterility of soil, and almost every other natural inferiority; especially in that early stage of industry in which labour and science have not yet provided artificial means of communication capable of rivalling the natural. In the ancient world, and in the Middle Ages, the most prosperous communities were not those which had the largest territory, or the most fertile soil, but rather those which had been forced by natural sterility to make the utmost use of a convenient maritime situation; as Athens, Tyre, Marseilles, Venice, the free cities on the Baltic, and the like.
§ 3. So much for natural advantages; the value of which, caeteris paribus, is too obvious to be ever underrated. But experience testifies that natural advantages scarcely ever do for a community, no more than fortune and station do for an individual, anything like what it lies in their nature, or in their capacity, to do. Neither now nor in former ages have the nations possessing the best climate and soil, been either the richest or the most powerful; but (in so far as regards the mass of the people) generally among the poorest, though, in the midst of poverty, probably on the whole the most enjoying. Human life in those countries can be supported on so little, that the poor seldom suffer from anxiety, and in climates in which mere existence is a pleasure, the luxury which they prefer is that of repose. Energy, at the call of passion, they possess in abundance, but not that which is manifested in sustained and persevering labour: and as they seldom concern themselves enough about remote objects to establish good political institutions, the incentives to industry are further weakened by imperfect protection of its fruits. Successful production, like most other kinds of success, depends more on the qualities of the human agents, than on the circumstances in which they work: and it is difficulties, not facilities, that nourish bodily and mental energy. accordingly the tribes of mankind who have overrun and conquered others, and compelled them to labour for their benefit, have been mostly reared amidst hardship. They have either been bred in the forests of northern climates, or the deficiency of natural hardships has been supplied, as among the Greeks and Romans, by the artificial ones of a rigid military discipline. From the time when the circumstances of modern society permitted the discontinuance of that discipline, the South has no longer produced conquering nations; military vigour, as well as speculative thought and industrial energy, have all had their principal seats in the less favoured North.
As the second, therefore, of the causes of superior productiveness, we may rank the greater energy of labour. By this is not to be understood occasional, but regular and habitual energy. No one undergoes, without murmuring, a greater amount of occasional fatigue and hardship, or has his bodily powers, and such faculties of mind as he possesses, kept longer at their utmost stretch, than the North American Indian; yet his is indolence proverbial, whenever he has a brief respite from the pressure of present wants. Individuals, or nations, do not differ so much in the efforts they are able and willing to make under strong immediate incentives, as in their capacity of present exertion for a distant object; and in the thoroughness of their application to work on ordinary occasions.1 Some amount of these qualities is a necessary condition of any great improvement among mankind. To civilize a savage, he must be inspired with new wants and desires, even if not of a very elevated kind, provided that their gratification can be a motive to steady and regular bodily and mental exertion. If the negroes of Jamaica and Demerara, after their emancipation, had contented themselves, as it was predicted they would do, with the necessaries of life, and abandoned all labour beyond the little which in a tropical climate, with a thin population and abundance of the richest land, is sufficient to support existence, they would have sunk into a condition more barbarous, though less unhappy, than their previous state of slavery. The motive which was most relied on for inducing them to work was their love of fine clothes and personal ornaments. No one will stand up for this taste as worthy of being cultivated, and in most societies its indulgence tends to impoverish rather than to enrich; but in the state of mind of the negroes it might have been the only incentive that could make them voluntarily undergo systematic labour, and so acquire or maintain habits of voluntary industry which may be converted to more valuable ends. In England, it is not the desire of wealth that needs to be taught, but the use of wealth, and appreciation of the objects of desire which wealth cannot purchase, or for attaining which it is not required. Every real improvement in the character of the English, whether it consist in giving them higher aspirations, or only a juster estimate of the value of their present objects of desire, must necessarily moderate the ardour of their devotion to the pursuit of wealth. There is no need, however, that it should diminish the strenuous and business-like application to the matter at hand, which is found in the best English workmen, and is their most valuable quality.1
The desirable medium is one which mankind have not often known how to hit: when they labour, to do it with all their might, and especially with all their mind; but to devote to labour, for mere pecuniary gain, fewer hours in the day, fewer days in the year, and fewer years of life.
§ 4. The third element which determines the productiveness of the labour of a community, is the skill and knowledge therein existing; whether it be the skill and knowledge of the labourers themselves, or of those who direct their labour. No illustration is requisite to show how the efficacy of industry is promoted by the manual dexterity of those who perform mere routine processes; by the intelligence of those engaged in operations in which the mind has a considerable part; and by the amount of knowledge of natural powers and of the properties of objects, which is turned to the purposes of industry. That the productiveness of the labour of a people is limited by their knowledge of the arts of life, is self-evident; and that any progress in those arts, any improved application of the objects or powers of nature to industrial uses, enables the same quantity and intensity of labour to raise a greater produce.
One principal department of these improvements consists in the invention and use of tools and machinery. The manner in which these serve to increase production and to economize labour, needs not be specially detailed in a work like the present: it will be found explained and exemplified, in a manner at once scientific and popular, in Mr. Babbage's well-known Economy of Machinery and Manufactures. An entire chapter of Mr. Babbage's book is composed of instances of the efficacy of machinery in “exerting forces too great for human power, and executing operations too delicate for human touch.” But to find examples of work which could not be performed at all by unassisted labour, we need not go so far. Without pumps, worked by steam-engines or otherwise, the water which collects in mines could not in many situations be got rid of at all, and the mines, after being worked to a little depth, must be abandoned: without ships or boats the sea could never have been crossed; without tools of some sort, trees could not be cut down, nor rocks excavated; a plough, or at least a hoe, is necessary to any tillage of the ground. Very simple and rude instruments, however, are sufficient to render literally possible most works hitherto executed by mankind; and subsequent inventions have chiefly served to enable the work to be performed in greater perfection, and, above all, with a greatly diminished quantity of labour: the labour thus saved becoming disposable for other employments.
The use of machinery is far from being the only mode in which the effects of knowledge in aiding production are exemplified. In agriculture and horticulture, machinery is only now  beginning to show that it can do anything of importance, beyond the invention and progressive improvement of the plough and a few other simple instruments. The greatest agricultural inventions have consisted in the direct application of more judicious processes to the land itself, and to the plants growing on it; such as rotation of crops, to avoid the necessity of leaving the land for one season in every two or three; improved manures, to renovate its fertility when exhausted by cropping; ploughing and draining the subsoil as well as the surface; conversion of bogs and marshes into cultivable land; such modes of pruning, and of training and propping up plants and trees, as experience has shown to deserve the preference; in the case of the more expensive cultures, planting the roots or seeds further apart, and more completely pulverizing the soil in which they are placed, &c. In manufactures and commerce, some of the most important improvements consist in economizing time; in making the return follow more speedily upon the labour and outlay. There are others of which the advantage consists in economy of material.
§ 5. But the effects of the increased knowledge of a community in increasing its wealth, need the less illustration as they have become familiar to the most uneducated, from such conspicuous instances as railways and steam-ships. A thing not yet so well understood and recognised, is the economical value of the general diffusion of intelligence among the people. The number of persons fitted to direct and superintend any industrial enterprise, or even to execute any process which cannot be reduced almost to an affair of memory and routine, is always far short of the demand; as is evident from the enormous difference between the salaries paid to such persons, and the wages of ordinary labour. The deficiency of practical good sense, which renders the majority of the labouring class such bad calculators—which makes, for instance, their domestic economy so improvident, lax, and irregular—must disqualify them for any but a low grade of intelligent labour, and render their industry far less productive than with equal energy it otherwise might be. The importance, even in this limited aspect, of popular education, is well worthy of the attention of politicians, especially in England; since competent observers, accustomed to employ labourers of various nations, testify that in the workmen of other countries they often find great intelligence wholly apart from instruction, but that if an English labourer is anything but a hewer of wood and a drawer of water, he is indebted for it to education, which in his case is almost always self-education. Mr. Escher, of Zurich (an engineer and cotton manufacturer employing nearly two thousand working men of many different nations), in his evidence annexed to the Report of the Poor Law Commissioners, in 1840, on the training of pauper children, gives a character of English as contrasted with Continental workmen, which all persons of similar experience will, I believe, confirm.
“The Italians' quickness of perception is shown in rapidly comprehending any new descriptions of labour put into their hands, in a power of quickly comprehending the meaning of their employer, of adapting themselves to new circumstances, much beyond what any other classes have. The French workmen have the like natural characteristics, only in a somewhat lower degree. The English, Swiss, German, and Dutch workmen, we find, have all much slower natural comprehension. As workmen only, the preference is undoubtedly due to the English; because, as we find them, they are all trained to special branches, on which they have had comparatively superior training, and have concentrated all their thoughts. As men of business or of general usefulness, and as men with whom an employer would best like to be surrounded, I should, however, decidedly prefer the Saxons and the Swiss, but more especially the Saxons, because they have had a very careful general education, which has extended their capacities beyond any special employment, and rendered them fit to take up, after a short preparation, any employment to which they may be called. If I have an English workman engaged in the erection of a steam-engine, he will understand that, and nothing else; and for other circumstances or other branches of mechanics, however closely allied, he will be comparatively helpless to adapt himself to all the circumstances that may arise, to make arrangements for them, and give sound advice or write clear statements and letters on his work in the various related branches of mechanics.”
On the connexion between mental cultivation and moral trustworthiness in the labouring class, the same witness says, “The better educated workmen, we find, are distinguished by superior moral habits in every respect. In the first place, they are entirely sober; they are discreet in their enjoyments, which are of a more rational and refined kind; they have a taste for much better society, which they approach respectfully, and consequently find much readier admittance to it; they cultivate music; they read; they enjoy the pleasures of scenery, and make parties for excursions into the country; they are economical, and their economy extends beyond their own purse to the stock of their master; they are, consequently, honest and trustworthy.” And in answer to a question respecting the English workmen, “Whilst in respect to the work to which they have been specially trained they are the most skilful, they are in conduct the most disorderly, debauched, and unruly, and least respectable and trustworthy of any nation whatsoever whom we have employed; and in saying this, I express the experience of every manufacturer on the Continent to whom I have spoken, and especially of the English manufacturers, who make the loudest complaints. These characteristics of depravity do not apply to the English workmen who have received an education, but attach to the others in the degree in which they are in want of it. When the uneducated English workmen are released from the bonds of iron discipline in which they have been restrained by their employers in England, and are treated with the urbanity and friendly feeling which the more educated workmen on the Continent expect and receive from their employers, they, the English workmen, completely lose their balance: they do not understand their position, and after a certain time become totally unmanageable and useless.”∗ This result of observation is borne out by experience in England itself. As soon as any idea of equality enters the mind of an uneducated English working man, his head is turned by it.1 When he ceases to be servile, he becomes insolent.
The moral qualities of the labourers are fully as important to the efficiency and worth of their labour, as the intellectual. Independently of the effects of intemperance upon their bodily and mental faculties, and of flighty, unsteady habits upon the energy and continuity of their work (points so easily understood as not to require being insisted upon), it is well worthy of meditation, how much of the aggregate effect of their labour depends on their trustworthiness. All the labour now expended in watching that they fulfil their engagement, or in verifying that they have fulfilled it, is so much withdrawn from the real business of production, to be devoted to a subsidiary function rendered needful not by the necessity of things, but by the dishonesty of men. Nor are the greatest outward precautions more than very imperfectly efficacious, where, as is now almost invariably the case with hired labourers, the slightest relaxation of vigilance is an opportunity eagerly seized for eluding performance of their contract.1 The advantage to mankind of being able to trust one another, penetrates into every crevice and cranny of human life: the economical is perhaps the smallest part of it, yet even this is incalculable. To consider only the most obvious part of the waste of wealth occasioned to society by human improbity; there is in all rich communities a predatory population, who live by pillaging or overreaching other people; their numbers cannot be authentically ascertained, but on the lowest estimate, in a country like England, it is very large. The support of these persons is a direct burthen on the national industry. The police, and the whole apparatus of punishment, and of criminal and partly of civil justice, are a second burthen rendered necessarity by the first. The exorbitantly-paid profession of lawyers, so far as their work is not created by defects in the law, of their own contriving, are required and supported principally by the dishonesty of mankind. As the standard of integrity in a community rises higher, all these expenses become less. But this positive saving would be far outweighed by the immense increase in the produce of all kinds of labour, and saving of time and expenditure, which would be obtained if the labourers honestly performed what they undertake; and by the increased spirit, the feeling of power and confidence, with which works of all sorts would be planned and carried on by those who felt that all whose aid was required would do their part faithfully according to their contracts. Conjoint action is possible just in proportion as human beings can rely on each other. There are countries in Europe, of first-rate industrial capabilities, where the most serious impediment to conducting business concerns on a large scale, is the rarity of persons who are supposed fit to be trusted with the receipt and expenditure of large sums of money. There are nations whose commodities are looked shily upon by merchants, because they cannot depend on finding the quality of the article conformable to that of the sample. Such short-sighted frauds are far from unexampled in English exports. Every one has heard of “devil's dust:” and among other instances given by Mr. Babbage, is one in which a branch of export trade was for a long time actually stopped by the forgeries and frauds which had occurred in it. On the other hand, the substantial advantage derived in business transactions from proved trustworthiness, is not less remarkably exemplified in the same work. “At one of our largest towns, sales and purchases on a very extensive scale are made daily in the course of business without any of the parties ever exchanging a written document.” Spread over a year's transactions, how great a return, in saving of time, trouble, and expense, is brought in to the producers and dealers of such a town from their own integrity. “The influence of established character in producing confidence operated in a very remarkable manner at the time of the exclusion of British manufactures from the Continent during the last war. One of our largest establishments had been in the habit of doing extensive business with a house in the centre of Germany; but on the closing of the Continental ports against our manufactures, heavy penalties were inflicted on all those who contravened the Berlin and Milan decrees. The English manufacturer continued, nevertheless, to receive orders, with directions how to consign them, and appointments for the time and mode of payment, in letters, the handwriting of which was known to him, but which were never signed except by the Christian name of one of the firm, and even in some instances they were without any signature at all. These orders were executed, and in no instance was there the least irregularity in the payments.”∗
§ 6. Among the secondary causes which determine the productiveness of productive agents, the most important is Security. By security I mean the completeness of the protection which society affords to its members. This consists of protection by the government, and protection against the government. The latter is the more important. Where a person known to possess anything worth taking away, can expect nothing but to have it torn from him, with every circumstance of tyrannical violence, by the agents of a rapacious government, it is not likely that many will exert themselves to produce much more than necessaries. This is the acknowledged explanation of the poverty of many fertile tracts of Asia, which were once prosperous and populous. From this to the degree of security enjoyed in the best governed parts of Europe, there are numerous gradations. In many provinces of France, before the Revolution, a vicious system of taxation on the land, and still more the absence of redress against the arbitrary exactions which were made under colour of the taxes, rendered it the interest of every cultivator to appear poor, and therefore to cultivate badly. The only insecurity which is altogether paralysing to the active energies of producers, is that arising from the government, or from persons invested with its authority. Against all other depredators there is a hope of defending oneself. Greece and the Greek colonies in the ancient world, Flanders and Italy in the Middle Ages, by no means enjoyed what any one with modern ideas would call security: the state of society was most unsettled and turbulent; person and property were exposed to a thousand dangers. But they were free countries; they were in general neither arbitrarily oppressed, nor systematically plundered by their governments. Against other enemies the individual energy which their institutions called forth, enabled them to make successful resistance: their labour, therefore, was eminently productive, and their riches, while they remained free, were constantly on the increase. The Roman despotism, putting an end to wars and internal conflicts throughout the empire, relieved the subject population from much of the former insecurity: but because it left them under the grinding yoke of its own rapacity, they became enervated and impoverished, until they were an easy prey to barbarous but free invaders. They would neither fight nor labour, because they were no longer suffered to enjoy that for which they fought and laboured.
Much of the security of person and property in modern nations is the effect of manners and opinion rather than of law. There are, or lately were, countries in Europe where the monarch was nominally absolute, but where, from the restraints imposed by established usage, no subject felt practically in the smallest danger of having his possessions arbitrarily seized or a contribution levied on them by the government. There must, however, be in such governments much petty plunder and other tyranny by subordinate agents, for which redress is not obtained, owing to the want of publicity which is the ordinary character of absolute governments. In England the people are tolerably well protected, both by institutions and manners, against the agents of government; but, for the security they enjoy against other evil-doers, they are  very little indebted to their institutions. The laws cannot be said to afford protection to property, when they afford it only at such a cost as renders submission to injury in general the better calculation. The security of property in England is owing (except as regards open violence) to opinion, and the fear of exposure, much more than to the direct operation of the law and the courts of justice.
Independently of all imperfection in the bulwarks which society purposely throws round what it recognises as property, there are various other modes in which defective institutions impede the employment of the productive resources of a country to the best advantage. We shall have occasion for noticing many of these in the progress of our subject. It is sufficient here to remark, that the efficiency of industry may be expected to be great, in proportion as the fruits of industry are insured to the person exerting it: and that all social arrangements are conducive to useful exertion, according as they provide that the reward of every one for his labour shall be proportioned as much as possible to the benefit which it produces. All laws or usages which favour one class or sort of persons to the disadvantage of others; which chain up the efforts of any part of the community in pursuit of their own good, or stand between those efforts and their natural fruits—are (independently of all other grounds of condemnation) violations of the fundamental principles of economical policy; tending to make the aggregate productive powers of the community productive in a less degree than they would otherwise be.
of co-operation, or the combination of labour
§ 1. In the enumeration of the circumstances which promote the productiveness of labour, we have left one untouched, which, because of its importance, and of the many topics of discussion which it involves, requires to be treated apart. This is, co-operation, or the combined action of numbers. Of this great aid to production, a single department, known by the name of Division of Labour, has engaged a large share of the attention of political economists; most deservedly indeed, but to the exclusion of other cases and exemplifications of the same comprehensive law. Mr. Wakefield was, I believe, the first to point out, that a part of the subject had, with injurious effect, been mistaken for the whole; that a more fundamental principle lies beneath that of the division of labour, and comprehends it.
Co-operation, he observes,∗ is “of two distinct kinds: first, such co-operation as takes place when several persons help each other in the same employment; secondly, such co-operation as takes place when several persons help each other in different employments. These may be termed Simple Co-operation and Complex Co-operation.
“The advantage of simple co-operation is illustrated by the case of two greyhounds running together, which, it is said, will kill more hares than four greyhounds running separately. In a vast number of simple operations performed by human exertion, it is quite obvious that two men working together will do more than four, or four times four men, each of whom should work alone. In the lifting of heavy weights, for example, in the felling of trees, in the sawing of timber, in the gathering of much hay or corn during a short period of fine weather, in draining a large extent of land during the short season when such a work may be properly conducted, in the pulling of ropes on board ship, in the rowing of large boats, in some mining operations, in the erection of a scaffolding for building, and in the breaking of stones for the repair of a road, so that the whole of the road shall always be kept in good order: in all these simple operations, and thousands more, it is absolutely necessary that many persons should work together, at the same time, in the same place, and in the same way. The savages of New Holland never help each other, even in the most simple operations; and their condition is hardly superior, in some respects it is inferior, to that of the wild animals which they now and then catch. Let any one imagine that the labourers of England should suddenly desist from helping each other in simple employments, and he will see at once the prodigious advantages of simple co-operation. In a countless number of employments, the produce of labour is, up to a certain point, in proportion to such mutual assistance amongst the workmen. This is the first step in social improvement.” The second is, when “one body of men having combined their labour to raise more food than they require, another body of men are induced to combine their labour for the purpose of producing more clothes than they require, and with those surplus clothes buying the surplus food of the other body of labourers; while, if both bodies together have produced more food and clothes than they both require, both bodies obtain, by means of exchange, a proper capital for setting more labourers to work in their respective occupations.” To simple co-operation is thus superadded what Mr. Wakefield terms Complex Co-operation. The one is the combination of several labourers to help each other in the same set of operations; the other is the combination of several labourers to help one another by a division of operations.
There is “an important distinction between simple and complex co-operation. Of the former, one is always conscious at the time of practising it: it is obvious to the most ignorant and vulgar eye. Of the latter, but a very few of the vast numbers who practise it are in any degree conscious. The cause of this distinction is easily seen. When several men are employed in lifting the same weight, or pulling the same rope, at the same time, and in the same place, there can be no sort of doubt that they co-operate with each other; the fact is impressed on the mind by the mere sense of sight; but when several men, or bodies of men, are employed at different times and places, and in different pursuits, their co-operation with each other, though it may be quite as certain, is not so readily perceived as in the other case: in order to perceive it, a complex operation of the mind is required.”
In the present state of society the breeding and feeding of sheep is the occupation of one set of people, dressing the wool to prepare it for the spinner is that of another, spinning it into thread of a third, weaving the thread into broadcloth of a fourth, dyeing the cloth of a fifth, making it into a coat of a sixth, without counting the multitude of carriers, merchants, factors, and retailers, put in requisition at the successive stages of this progress. All these persons, without knowledge of one another or previous understanding, co-operate in the production of the ultimate result, a coat. But these are far from being all who co-operate in it; for each of these persons requires food, and many other articles of consumption, and unless he could have relied that other people would produce these for him, he could not have devoted his whole time to one step in the succession of operations which produces one single commodity, a coat. Every person who took part in producing food or erecting houses for this series of producers, has, however unconsciously on his part, combined his labour with theirs. It is by a real, though unexpressed, concert, “that the body who raise more food than they want, can exchange with the body who raise more clothes than they want; and if the two bodies were separated, either by distance or disinclination—unless the two bodies should virtually form themselves into one, for the common object of raising enough food and clothes for the whole—they could not divide into two distinct parts the whole operation of producing a sufficient quantity of food and clothes.”
§ 2. The influence exercised on production by the separation of employments, is more fundamental than, from the mode in which the subject is usually treated, a reader might be induced to suppose. It is not merely that when the production of different things becomes the sole or principal occupation of different persons, a much greater quantity of each kind of article is produced. The truth is much beyond this. Without some separation of employments, very few things would be produced at all.
Suppose a set of persons, or a number of families, all employed precisely in the same manner; each family settled on a piece of its own land, on which it grows by its labour the food required for its own sustenance, and as there are no persons to buy any surplus produce where all are producers, each family has to produce within itself whatever other articles it consumes. In such circumstances, if the soil was tolerably fertile, and population did not tread too closely on the heels of subsistence, there would be, no doubt, some kind of domestic manufactures; clothing for the family might perhaps be spun and woven within it, by the labour probably of the women (a first step in the separation of employments); and a dwelling of some sort would be erected and kept in repair by their united labour. But beyond simple food (precarious, too, from the variations of the seasons), coarse clothing, and very imperfect lodging, it would be scarcely possible that the family should produce anything more. They would, in general, require their utmost exertions to accomplish so much. Their power even of extracting food from the soil would be kept within narrow limits by the quality of their tools, which would necessarily be of the most wretched description. To do almost anything in the way of producing for themselves articles of convenience or luxury, would require too much time, and, in many cases, their presence in a different place. Very few kinds of industry, therefore, would exist; and that which did exist, namely the production of necessaries, would be extremely inefficient, not solely from imperfect implements, but because, when the ground and the domestic industry fed by it had been made to supply the necessaries of a single family in tolerable abundance, there would be little motive, while the numbers of the family remained the same, to make either the land or the labour produce more.
But suppose an event to occur, which would amount to a revolution in the circumstances of this little settlement. Suppose that a company of artificers, provided with tools, and with food sufficient to maintain them for a year, arrive in the country and establish themselves in the midst of the population. These new settlers occupy themselves in producing articles of use or ornament adapted to the taste of a simple people; and before their food is exhausted they have produced these in considerable quantity, and are ready to exchange them for more food. The economical position of the landed population is now most materially altered. They have an opportunity given them of acquiring comforts and luxuries. Things which, while they depended solely on their own labour, they never could have obtained, because they could not have produced, are now accessible to them if they can succeed in producing an additional quantity of food and necessaries. They are thus incited to increase the productiveness of their industry. Among the conveniences for the first time made accessible to them, better tools are probably one: and apart from this, they have a motive to labour more assiduously, and to adopt contrivances for making their labour more effectual. By these means they will generally succeed in compelling their land to produce, not only food for themselves, but a surplus for the new comers, wherewith to buy from them the products of their industry. The new settlers constitute what is called a market for surplus agricultural produce: and their arrival has enriched the settlement not only by the manufactured article which they produce, but by the food which would not have been produced unless they had been there to consume it.
There is no inconsistency between this doctrine, and the proposition we before maintained, that a market for commodities does not constitute employment for labour.∗ The labour of the agriculturists was already provided with employment; they are not indebted to the demand of the new comers for being able to maintain themselves. What that demand does for them is, to call their labour into increased vigour and efficiency; to stimulate them, by new motives, to new exertions. Neither do the new comers owe their maintenance and employment to the demand of the agriculturists: with a year's subsistence in store, they could have settled side by side with the former inhabitants, and produced a similar scanty stock of food and necessaries. Nevertheless we see of what supreme importance to the productiveness of the labour of producers, is the existence of other producers within reach, employed in a different kind of industry. The power of exchanging the products of one kind of labour for those of another, is a condition, but for which, there would almost always be a smaller quantity of labour altogether. When a new market is opened for any product of industry, and a greater quantity of the article is consequently produced, the increased production is not always obtained at the expense of some other product; it is often a new creation, the result of labour which would otherwise have remained unexerted; or of assistance rendered to labour by improvements or by modes of co-operation to which recourse would not have been had if an inducement had not been offered for raising a larger produce.
§ 3. From these considerations it appears that a country will seldom have a productive agriculture, unless it has a large town population, or the only available substitute, a large export trade in agricultural produce to supply a population elsewhere. I use the phrase town population for shortness, to imply a population non-agricultural; which will generally be collected in towns or large villages, for the sake of combination of labour. The application of this truth by Mr. Wakefield to the theory of colonization, has excited much attention, and is doubtless destined to excite much more. It is one of those great practical discoveries, which, once made, appears so obvious that the merit of making them seems less than it is. Mr. Wakefield was the first to point out that the mode of planting new settlements, then commonly practised—setting down a number of families side by side, each on its piece of land, all employing themselves in exactly the same manner,—though in favourable circumstances it may assure to those families a rude abundance of mere necessaries, can never be other than unfavourable to great production or rapid growth: and his system consists of arrangements for securing that every colony shall have from the first a town population bearing due proportion to its agricultural, and that the cultivators of the soil shall not be so widely scattered as to be deprived by distance, of the benefit of that town population as a market for their produce. The principle on which the scheme is founded, does not depend on any theory respecting the superior productiveness of land held in large portions, and cultivated by hired labour. Supposing it true that land yields the greatest produce when divided into small properties and cultivated by peasant proprietors, a town population will be just as necessary to induce those proprietors to raise that larger produce: and if they were too far from the nearest seat of nonagricultural industry to use it as a market for disposing of their surplus, and thereby supplying their other wants, neither that surplus nor any equivalent for it would, generally speaking, be produced.
It is, above all, the deficiency of town population which limits  the productiveness of the industry of a country like India. The agriculture of India is conducted entirely on the system of small holdings. There is, however, a considerable amount of combination of labour. The village institutions and customs, which are the real framework of Indian society, make provision for joint action in the cases in which it is seen to be necessary; or where they fail to do so, the government (when tolerably well administered) steps in, and by an outlay from the revenue, executes by combined labour the tanks, embankments, and works of irrigation, which are indispensable. The implements and processes of agriculture are however so wretched, that the produce of the soil, in spite of great natural fertility and a climate highly favourable to vegetation, is miserably small: and the land might be made to yield food in abundance for many more than the present number of inhabitants, without departing from the system of small holdings. But to this the stimulus is wanting, which a large town population, connected with the rural districts by easy and unexpensive means of communication, would afford. That town population, again, does not grow up, because the few wants and unaspiring spirit of the cultivators (joined until lately with great insecurity of property, from military and fiscal rapacity) prevent them from attempting to become consumers of town produce. In these circumstances the best chance of an early development of the productive resources of India, consists in the rapid1 growth of its export of agricultural produce (cotton, indigo, sugar, coffee, &c.) to the markets of Europe. The producers of these articles are consumers of food supplied by their fellow-agriculturists in India; and the market thus opened for surplus food will, if accompanied by good government, raise up by degrees more extended wants and desires, directed either towards European commodities, or towards things which will require for their production in India a larger manufacturing population.
§ 4. Thus far of the separation of employments, a form of the combination of labour without which there cannot be the first rudiments of industrial civilization. But when this separation is thoroughly established; when it has become the general practice for each producer to supply many others with one commodity, and to be supplied by others with most of the things which he consumes; reasons not less real, though less imperative, invite to a further extension of the same principle. It is found that the productive power of labour is increased by carrying the separation further and further; by breaking down more and more every process of industry into parts, so that each labourer shall confine himself to an ever smaller number of simple operations. And thus, in time, arise those remarkable cases of what is called the division of labour, with which all readers on subjects of this nature are familiar. Adam Smith's illustration from pin-making, though so well known, is so much to the point, that I will venture once more to transcribe it. “The business of making a pin is divided into about eighteen distinct operations. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving 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 trade by itself to put them into the paper.... I have seen a small manufactory where ten men only were employed, and where some of them, consequently, performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day.”
M. Say furnishes a still stronger example of the effects of division of labour—from a not very important branch of industry certainly, the manufacture of playing cards. “It is said by those engaged in the business, that each card, that is, a piece of pasteboard of the size of the hand, before being ready for sale, does not undergo fewer than seventy operations, every one of which might be the occupation of a distinct class of workmen. And if there are not seventy classes of work-people in each card manufactory, it is because the division of labour is not carried so far as it might be; because the same workman is charged with two, three, or four distinct operations. The influence of this distribution of employment is immense. I have seen a card manufactory where thirty workmen produced daily fifteen thousand five hundred cards, being above five hundred cards for each labourer; and it may be presumed that if each of these workmen were obliged to perform all the operations himself, even supposing him a practised hand, he would not perhaps complete two cards in a day: and the thirty workmen, instead of fifteen thousand five hundred cards, would make only sixty.”∗
In watchmaking, as Mr. Babbage observes, “it was stated in evidence before a Committee of the House of Commons, that there are a hundred and two distinct branches of this art, to each of which a boy may be put apprentice; and that he only learns his master's department, and is unable, after his apprenticeship has expired, without subsequent instruction, to work at any other branch. The watch-finisher, whose business it is to put together the scattered parts, is the only one, out of the hundred and two persons, who can work in any other department than his own.”∗
5. The causes of the increased efficiency given to labour by the division of employments are some of them too familiar to require specification; but it is worth while to attempt a complete enumeration of them. By Adam Smith they are reduced to three. “First, the increase of dexterity in every particular workman; secondly, the saving of the time which is commonly lost in passing from one species of work to another; and lastly, the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.”
Of these, the increase of dexterity of the individual workman is the most obvious and universal. It does not follow that because a thing has been done oftener it will be done better. That depends on the intelligence of the workman, and on the degree in which his mind works along with his hands. But it will be done more easily. The organs themselves acquire greater power: the muscles employed grow stronger by frequent exercise, the sinews more pliant, and the mental powers more efficient, and less sensible of fatigue. What can be done easily has at least a better chance of being done well, and is sure to be done more expeditiously. What was at first done slowly comes to be done quickly; what was at first done slowly with accuracy is at last done quickly with equal accuracy. This is as true of mental operations as of bodily. Even a child, after much practice, sums up a column of figures with a rapidity which resembles intuition. The act of speaking any language, of reading fluently, of playing music at sight, are cases as remarkable as they are familiar. Among bodily acts, dancing, gymnastic exercises, ease and brilliancy of execution on a musical instrument, are examples of the rapidity and facility acquired by repetition. In simpler manual operations the effect is of course still sooner produced. “The rapidity,” Adam Smith observes, “with which some of the operations of certain manufactures are performed, exceeds what the human hand could, by those who had never seen them, be supposed capable of acquiring.”∗ This skill is, naturally, attained after shorter practice, in proportion as the division of labour is more minute; and will not be attained in the same degree at all, if the workman has a greater variety of operations to execute than allows of a sufficiently frequent repetition of each. The advantage is not confined to the greater efficiency ultimately attained, but includes also the diminished loss of time, and waste of material, in learning the art. “A certain quantity of material,” says Mr. Babbage,† “will in all cases be consumed unprofitably, or spoiled, by every person who learns an art; and as he applies himself to each new process, he will waste some of the raw material, or of the partly manufactured commodity. But if each man commit this waste in acquiring successively every process, the quantity of waste will be much greater than if each person confine his attention to one process.” And in general each will be much sooner qualified to execute his one process, if he be not distracted while learning it, by the necessity of learning others.
The second advantage enumerated by Adam Smith as arising from the division of labour, is one on which I cannot help thinking that more stress is laid by him and others than it deserves. To do full justice to his opinion, I will quote his own exposition of it. “The advantage which is gained by saving the time commonly lost in passing from one sort of work to another, is much greater than we should at first view be apt to imagine it. It is impossible to pass very quickly from one kind of work to another, that is carried on in a different place, and with quite different tools. A country weaver, who cultivates a small farm, must lose a good deal of time in passing from his loom to the field, and from the field to his loom. When the two trades can be carried on in the same workhouse, the loss of time is no doubt much less. It is even in this case, however, very considerable. A man commonly saunters a little in turning his hand from one sort of employment to another. When he first begins the new work, he is seldom very keen and hearty; his mind, as they say, does not go to it, and for some time he rather trifles than applies to good purpose. The habit of sauntering and of indolent careless application, which is naturally, or rather necessarily acquired by every country workman who is obliged to change his work and his tools every half hour, and to apply his hand in twenty different ways almost every day of his life, renders him almost always slothful and lazy, and incapable of any vigorous application even on the most pressing occasions.” This is surely a most exaggerated description of the inefficiency of country labour, where it has any adequate motive to exertion. Few workmen change their work and their tools oftener than a gardener; is he usually incapable of vigorous application? Many of the higher description of artisans have to perform a great multiplicity of operations with a variety of tools. They do not execute each of these with the rapidity with which a factory workman performs his single operation; but they are, except in a merely manual sense, more skilful labourers, and in all senses whatever more energetic.
Mr. Babbage, following in the track of Adam Smith, says, “When the human hand, or the human head, has been for some time occupied in any kind of work, it cannot instantly change its employment with full effect. The muscles of the limbs employed have acquired a flexibility during their exertion, and those not in action a stiffness during rest, which renders every change slow and unequal in the commencement. Long habit also produces in the muscles exercised a capacity for enduring fatigue to a much greater degree than they could support under other circumstances. A similar result seems to take place in any change of mental exertion; the attention bestowed on the new subject not being so perfect at first as it becomes after some exercise. The employment of different tools in the successive processes, is another cause of the loss of time in changing from one operation to another. If these tools are simple, and the change is not frequent, the loss of time is not considerable; but in many processes of the arts, the tools are of great delicacy, requiring accurate adjustment every time they are used; and in many cases, the time employed in adjusting bears a large proportion to that employed in using the tool. The sliding-rest, the dividing and the drilling engine are of this kind: and hence, in manufactories of sufficient extent, it is found to be good economy to keep one machine constantly employed in one kind of work: one lathe, for example, having a screw motion to its sliding-rest along the whole length of its bed, is kept constantly making cylinders; another, having a motion for equalizing the velocity of the work at the point at which it passes the tool, is kept for facing surfaces; whilst a third is constantly employed in cutting wheels.”
I am very far from implying that these different considerations are of no weight; but I think there are counter-considerations which are overlooked. If one kind of muscular or mental labour is different from another, for that very reason it is to some extent a rest from that other; and if the greatest vigour is not at once obtained in the second occupation, neither could the first have been indefinitely prolonged without some relaxation of energy. It is a matter of common experience that a change of occupation will often afford relief where complete repose would otherwise be necessary, and that a person can work many more hours without fatigue at a succession of occupations, than if confined during the whole time to one. Different occupations employ different muscles, or different energies of the mind, some of which rest and are refreshed while others work. Bodily labour itself rests from mental, and conversely. The variety itself has an invigorating effect on what, for want of a more philosophical appellation, we must term the animal spirits; so important to the efficiency of all work not mechanical, and not unimportant even to that. The comparative weight due to these considerations is different with different individuals; some are more fitted than others for persistency in one occupation, and less fit for change; they require longer to get the steam up (to use a metaphor now common); the irksomeness of setting to work lasts longer, and it requires more time to bring their faculties into full play, and therefore when this is once done, they do not like to leave off, but go on long without intermission, even to the injury of their health. Temperament has something to do with these differences. There are people whose faculties seem by nature to come slowly into action, and to accomplish little until they have been a long time employed. Others, again, get into action rapidly, but cannot, without exhaustion, continue long. In this, however, as in most other things, though natural differences are something, habit is much more. The habit of passing rapidly from one occupation to another may be acquired, like other habits, by early cultivation; and when it is acquired, there is none of the sauntering which Adam Smith speaks of, after each change; no want of energy and interest, but the workman comes to each part of his occupation with a freshness and a spirit which he does not retain if he persists in any one part (unless in case of unusual excitement) beyond the length of time to which he is accustomed. Women are usually (at least in their present social circumstances) of far greater versatility than men; and the present topic is an instance among multitudes, how little the ideas and experience of women have yet counted for, in forming the opinions of mankind. There are few women who would not reject the idea that work is made vigorous by being protracted, and is inefficient for some time after changing to a new thing. Even in this case, habit, I believe, much more than nature, is the cause of the difference. The occupations of nine out of every ten men are special, those of nine out of every ten women general, embracing a multitude of details, each of which requires very little time. Women are in the constant practice of passing quickly from one manual, and still more from one mental operation to another, which therefore rarely costs them either effort or loss of time, while a man's occupation generally consists in working steadily for a long time at one thing, or one very limited class of things. But the situations are sometimes reversed, and with them the characters. Women are not found less efficient than men for the uniformity of factory work, or they would not so generally be employed for it; and a man who has cultivated the habit of turning his hand to many things, far from being the slothful and lazy person described by Adam Smith, is usually remarkably lively and active. It is true, however, that change of occupation may be too frequent even for the most versatile. Incessant variety is even more fatiguing than perpetual sameness.
The third advantage attributed by Adam Smith to the division of labour, is, to a certain extent, real. Inventions tending to save labour in a particular operation, are more likely to occur to any one in proportion as his thoughts are intensely directed to that occupation, and continually employed upon it. A person is not so likely to make practical improvements in one department of things, whose attention is very much diverted to others. But, in this, much more depends on general intelligence and habitual activity of mind, than on exclusiveness of occupation; and if that exclusiveness is carried to a degree unfavourable to the cultivation of intelligence, there will be more lost in this kind of advantage, than gained. We may add, that whatever may be the cause of making inventions, when they are once made, the increased efficiency of labour is owing to the invention itself, and not to the division of labour.
The greatest advantage (next to the dexterity of the workmen) derived from the minute division of labour which takes place in modern manufacturing industry, is one not mentioned by Adam Smith, but to which attention has been drawn by Mr. Babbage; the more economical distribution of labour, by classing the work-people according to their capacity. Different parts of the same series of operations require unequal degrees of skill and bodily strength; and those who have skill enough for the most difficult, or strength enough for the hardest parts of the labour, are made much more useful by being employed solely in them; the operations which everybody is capable of, being left to those who are fit for no others. Production is most efficient when the precise quantity of skill and strength, which is required for each part of the process, is employed in it, and no more. The operation of pin-making requires, it seems, in its different parts, such different degrees of skill, that the wages earned by the persons employed vary from fourpence halfpenny a day to six shillings; and if the workman who is paid at that highest rate had to perform the whole process, he would be working a part of his time with a waste per day equivalent to the difference between six shillings and fourpence halfpenny. Without reference to the loss sustained in quantity of work done, and supposing even that he could make a pound of pins in the same time in which ten workmen combining their labour can make ten pounds, Mr. Babbage computes that they would cost, in making, three times and three-quarters as much as they now do by means of the division of labour. In needle-making, he adds, the difference would be still greater, for in that, the scale of remuneration for different parts of the process varies from sixpence to twenty shillings a day.
To the advantage which consists in extracting the greatest possible amount of utility from skill, may be added the analogous one, of extracting the utmost possible utility from tools. “If any man,” says an able writer,∗ “had all the tools which many different occupations require, at least three-fourths of them would constantly be idle and useless. It were clearly then better, were any society to exist where each man had all these tools, and alternately carried on each of these occupations, that the members of it should, if possible, divide them amongst them, each restricting himself to some particular employment. The advantages of the change to the whole community, and therefore to every individual in it, are great. In the first place, the various implements being in constant employment, yield a better return for what has been laid out in procuring them. In consequence their owners can afford to have them of better quality and more complete construction. The result of both events is, that a larger provision is made for the future wants of the whole society.”
§ 6. The division of labour, as all writers on the subject have remarked, is limited by the extent of the market. If, by the separation of pin-making into ten distinct employments, forty-eight thousand pins can be made in a day, this separation will only be advisable if the number of accessible consumers is such as to require, every day, something like forty-eight thousand pins. If there is only a demand for twenty-four thousand, the division of labour can only be advantageously carried to the extent which will every day produce that smaller number. This, therefore, is a further mode in which an accession of demand for a commodity tends to increase the efficiency of the labour employed in its production. The extent of the market may be limited by several causes: too small a population; the population too scattered and distant to be easily accessible; deficiency of roads and water carriage; or, finally, the population too poor, that is, their collective labour too little effective, to admit of their being large consumers. Indolence, want of skill, and want of combination of labour, among those who would otherwise be buyers of a commodity, limit, therefore, the practical amount of combination of labour among its producers. In an early stage of civilization, when the demand of any particular locality was necessarily small, industry only flourished among those who by their command of the sea-coast or of a navigable river, could have the whole world, or all that part of it which lay on coasts or navigable rivers, as a market for their productions. The increase of the general riches of the world, when accompanied with freedom of commercial intercourse, improvements in navigation, and inland communication by roads, canals, or railways, tends to give increased productiveness to the labour of every nation in particular, by enabling each locality to supply with its special products so much larger a market, that a great extension of the division of labour in their production is an ordinary consequence.
The division of labour is also limited, in many cases, by the nature of the employment. Agriculture, for example, is not susceptible of so great a division of occupations as many branches of manufactures, because its different operations cannot possibly be simultaneous. One man cannot be always ploughing, another sowing, and another reaping. A workman who only practised one agricultural operation would be idle eleven months of the year. The same person may perform them all in succession, and have, in most climates, a considerable amount of unoccupied time. To execute a great agricultural improvement, it is often necessary that many labourers should work together; but in general, except the few whose business is superintendence, they all work in the same manner. A canal or a railway embankment cannot be made without a combination of many labourers; but they are all excavators, except the engineers and a few clerks.1
of production on a large, and production on a small scale
§ 1. From the importance of combination of labour, it is an obvious conclusion, that there are many cases in which production is made much more effective by being conducted on a large scale. Whenever it is essential to the greatest efficiency of labour that many labourers should combine, even though only in the way of Simple Co-operation, the scale of the enterprise must be such as to bring many labourers together, and the capital must be large enough to maintain them. Still more needful is this when the nature of the employment allows, and the extent of the possible market encourages, a considerable division of labour. The larger the enterprise, the farther the division of labour may be carried. This is one of the principal causes of large manufactories. Even when no additional subdivision of the work would follow an enlargement of the operations, there will be good economy in enlarging them to the point at which every person to whom it is convenient to assign a special occupation, will have full employment in that occupation. This point is well illustrated by Mr. Babbage.∗
“If machines be kept working through the twenty-four hours,” (which is evidently the only economical mode of employing them,) “it is necessary that some person shall attend to admit the workmen at the time they relieve each other; and whether the porter or other person so employed admit one person or twenty, his rest will be equally disturbed. It will also be necessary occasionally to adjust or repair the machine; and this can be done much better by a workman accustomed to machine-making, than by the person who uses it. Now, since the good performance and the duration of machines depend, to a very great extent, upon correcting every shake or imperfection in their parts as soon as they appear, the prompt attention of a workman resident on the spot will considerably reduce the expenditure arising from the wear and tear of the machinery. But in the case of a single lace-frame, or a single loom, this would be too expensive a plan. Here then arises another circumstance which tends to enlarge the extent of a factory. It ought to consist of such a number of machines as shall occupy the whole time of one workman in keeping them in order: if extended beyond that number, the same principle of economy would point out the necessity of doubling or tripling the number of machines, in order to employ the whole time of two or three skilful workmen.
“When one portion of the workman's labour consists in the exertion of mere physical force, as in weaving, and in many similar arts, it will soon occur to the manufacturer, that if that part were executed by a steam-engine, the same man might, in the case of weaving, attend to two or more looms at once: and, since we already suppose that one or more operative engineers have been employed, the number of looms may be so arranged that their time shall be fully occupied in keeping the steam-engine and the looms in order.
“Pursuing the same principles, the manufactory becomes gradually so enlarged, that the expense of lighting during the night amounts to a considerable sum: and as there are already attached to the establishment persons who are up all night, and can therefore constantly attend to it, and also engineers to make and keep in repair any machinery, the addition of an apparatus for making gas to light the factory leads to a new extension, at the same time that it contributes, by diminishing the expense of lighting, and the risk of accidents from fire, to reduce the cost of manufacturing.
“Long before a factory has reached this extent, it will have been found necessary to establish an accountant's department, with clerks to pay the workmen, and to see that they arrive at their stated times; and this department must be in communication with the agents who purchase the raw produce, and with those who sell the manufactured article.” It will cost these clerks and accountants little more time and trouble to pay a large number of workmen than a small number; to check the accounts of large transactions, than of small. If the business doubled itself, it would probably be necessary to increase, but certainly not to double, the number either of accountants, or of buying and selling agents. Every increase of business would enable the whole to be carried on with a proportionately smaller amount of labour.
As a general rule, the expenses of a business do not increase by any means proportionally to the quantity of business. Let us take as an example, a set of operations which we are accustomed to see carried on by one great establishment, that of the Post Office. Suppose that the business, let us say only of the London letter-post, instead of being centralized in a single concern, were divided among five or six competing companies. Each of these would be obliged to maintain almost as large an establishment as is now sufficient for the whole. Since each must arrange for receiving and delivering letters in all parts of the town, each must send letter-carriers into every street, and almost every alley, and this too as many times in the day as is now done by the Post Office, if the service is to be as well performed. Each must have an office for receiving letters in every neighbourhood, with all subsidiary arrangements for collecting the letters from the different offices and re-distributing them. To this must be added the much greater number of superior officers who would be required to check and control the subordinates, implying not only a greater cost in salaries for such responsible officers, but the necessity, perhaps, of being satisfied in many instances with an inferior standard of qualification, and so failing in the object.
Whether or not the advantages obtained by operating on a large scale preponderate in any particular case over the more watchful attention, and greater regard to minor gains and losses, usually found in small establishments, can be ascertained, in a state of free competition, by an unfailing test. Wherever there are large and small establishments in the same business, that one of the two which in existing circumstances carries on the production at greatest advantage will be able to undersell the other. The power of permanently underselling can only, generally speaking, be derived from increased effectiveness of labour; and this, when obtained by a more extended division of employment, or by a classification tending to a better economy of skill, always implies a greater produce from the same labour, and not merely the same produce from less labour: it increases not the surplus only, but the gross produce of industry. If an increased quantity of the particular article is not required, and part of the labourers in consequence lose their employment, the capital which maintained and employed them is also set at liberty; and the general produce of the country is increased by some other application of their labour.
Another of the causes of large manufactories, however, is the introduction of processes requiring expensive machinery. Expensive machinery supposes a large capital; and is not resorted to except with the intention of producing, and the hope of selling, as much of the article as comes up to the full powers of the machine. For both these reasons, wherever costly machinery is used, the large system of production is inevitable. But the power of underselling is not in this case so unerring a test as in the former, of the beneficial effect on the total production of the community. The power of underselling does not depend on the absolute increase of produce, but on its bearing an increased proportion to the expenses; which, as was shown in a former chapter,∗ it may do, consistently with even a diminution of the gross annual produce. By the adoption of machinery, a circulating capital, which was perpetually consumed and reproduced, has been converted into a fixed capital, requiring only a small annual expense to keep it up: and a much smaller produce will suffice for merely covering that expense, and replacing the remaining circulating capital of the producer. The machinery therefore might answer perfectly well to the manufacturer, and enable him to undersell his competitors, though the effect on the production of the country might be not an increase but a diminution. It is true, the article will be sold cheaper, and therefore, of that single article, there will probably be not a smaller, but a greater quantity sold; since the loss to the community collectively has fallen upon the work-people, and they are not the principal customers, if customers at all, of most branches of manufacture. But though that particular branch of industry may extend itself, it will be by replenishing its diminished circulating capital from that of the community generally; and if the labourers employed in that department escape loss of employment, it is because the loss will spread itself over the labouring people at large. If any of them are reduced to the condition of unproductive labourers, supported by voluntary or legal charity, the gross produce of the country is to that extent permanently diminished, until the ordinary progress of accumulation makes it up; but if the condition of the labouring classes enables them to bear a temporary reduction of wages, and the superseded labourers become absorbed in other employments, their labour is still productive, and the breach in the gross produce of the community is repaired, though not the detriment to the labourers. I have restated this exposition, which has already been made in a former place, to impress more strongly the truth, that a mode of production does not of necessity increase the productive effect of the collective labour of a community, because it enables a particular commodity to be sold cheaper. The one consequence generally accompanies the other, but not necessarily. I will not here repeat the reasons I formerly gave, nor anticipate those which will be given more fully hereafter, for deeming the exception to be rather a case abstractedly possible, than one which is frequently realized in fact.
A considerable part of the saving of labour effected by substituting the large system of production for the small, is the saving in the labour of the capitalists themselves. If a hundred producers with small capitals carry on separately the same business, the superintendence of each concern will probably require the whole attention of the person conducting it, sufficiently at least to hinder his time or thoughts from being disposable for anything else: while a single manufacturer possessing a capital equal to the sum of theirs, with ten or a dozen clerks, could conduct the whole of their amount of business, and have leisure too for other occupations. The small capitalist, it is true, generally combines with the business of direction some portion of the details, which the other leaves to his subordinates: the small farmer follows his own plough, the small tradesman serves in his own shop, the small weaver plies his own loom. But in this very union of functions there is, in a great proportion of cases, a want of economy. The principal in the concern is either wasting, in the routine of a business, qualities suitable for the direction of it, or he is only fit for the former, and then the latter will be ill done. I must observe, however, that I do not attach, to this saving of labour, the importance often ascribed to it. There is undoubtedly much more labour expended in the superintendence of many small capitals than in that of one large capital. For this labour however the small producers have generally a full compensation, in the feeling of being their own masters, and not servants of an employer. It may be said, that if they value this independence they will submit to pay a price for it, and to sell at the reduced rates occasioned by the competition of the great dealer or manufacturer. But they cannot always do this and continue to gain a living. They thus gradually disappear from society. After having consumed their little capital in prolonging the unsuccessful struggle, they either sink into the condition of hired labourers, or become dependent on others for support.
§ 2. Production on a large scale is greatly promoted by the practice of forming a large capital by the combination of many small contributions; or, in other words, by the formation of joint stock companies. The advantages of the joint stock principle are numerous and important.
In the first place, many undertakings require an amount of capital beyond the means of the richest individual or private partnership. No individual could have made a railway from London to Liverpool; it is doubtful if any individual could even work the traffic on it, now when it is made. The government indeed could have done both; and in countries where the practice of co-operation is only in the earlier stages of its growth, the government can alone be looked to for any of the works for which a great combination of means is requisite; because it can obtain those means by compulsory taxation, and is already accustomed to the conduct of large operations. For reasons, however, which are tolerably well known, and of which we shall treat fully hereafter, government agency for the conduct of industrial operations is generally one of the least eligible of resources, when any other is available.
Next, there are undertakings which individuals are not absolutely incapable of performing, but which they cannot perform on the scale and with the continuity which are ever more and more required by the exigencies of a society in an advancing state. Individuals are quite capable of despatching ships from England to any or every part of the world, to carry passengers and letters; the thing was done before joint stock companies for the purpose were heard of. But when, from the increase of population and transactions, as well as of means of payment, the public will no longer content themselves with occasional opportunities, but require the certainty that packets shall start regularly, for some places once or even twice a day, for others once a week, for others that a steam ship of great size and expensive construction shall depart on fixed days twice in each month, it is evident that to afford an assurance of keeping up with punctuality such a circle of costly operations, requires a much larger capital and a much larger staff of qualified subordinates than can be commanded by an individual capitalist. There are other cases, again, in which though the business might be perfectly well transacted with small or moderate capitals, the guarantee of a great subscribed stock is necessary or desirable as a security to the public for the fulfilment of pecuniary engagements. This is especially the case when the nature of the business requires that numbers of persons should be willing to trust the concern with their money: as in the business of banking, and that of insurance: to both of which the joint stock principle is eminently adapted. It is an instance of the folly and jobbery of the rulers of mankind, that until a late period the joint stock principle, as a general resort, was in this country interdicted by law to these two modes of business; to banking altogether, and to insurance in the department of sea risks; in order to bestow a lucrative monopoly on particular establishments which the government was pleased exceptionally to license, namely the Bank of England, and two insurance companies, the London and the Royal Exchange.
1 Another advantage of joint stock or associated management, is its incident of publicity. This is not an invariable, but it is a natural consequence of the joint stock principle, and might be, as in some important cases it already is, compulsory. In banking, insurance, and other businesses which depend wholly on confidence, publicity is a still more important element of success than a large subscribed capital. A heavy loss occurring in a private bank may be kept secret; even though it were of such magnitude as to cause the ruin of the concern, the banker may still carry it on for years, trying to retrieve its position, only to fall in the end with a greater crash: but this cannot so easily happen in the case of a joint stock company, whose accounts are published periodically. The accounts, even if cooked, still exercise some check; and the suspicions of shareholders, breaking out at the general meetings, put the public on their guard.
These are some of the advantages of joint stock over individual management. But if we look to the other side of the question, we shall find that individual management has also very great advantages over joint stock. The chief of these is the much keener interest of the managers in the success of the undertaking.
The administration of a joint stock association is, in the main, administration by hired servants. Even the committee, or board of directors, who are supposed to superintend the management, and who do really appoint and remove the managers, have no pecuniary interest in the good working of the concern beyond the shares they individually hold, which are always a very small part of the capital of the association, and in general but a small part of the fortunes of the directors themselves; and the part they take in the management usually divides their time with many other occupations, of as great or greater importance to their own interest; the business being the principal concern of no one except those who are hired to carry it on. But experience shows, and proverbs, the expression of popular experience, attest, how inferior is the quality of hired servants, compared with the ministration of those personally interested in the work, and how indispensable, when hired service must be employed, is “the master's eye” to watch over it.
The successful conduct of an industrial enterprise requires two quite distinct qualifications: fidelity, and zeal. The fidelity of the hired managers of a concern it is possible to secure. When their work admits of being reduced to a definite set of rules, the violation of these is a matter on which conscience cannot easily blind itself, and on which responsibility may be enforced by the loss of employment. But to carry on a great business successfully, requires a hundred things which, as they cannot be defined beforehand, it is impossible to convert into distinct and positive obligations. First and principally, it requires that the directing mind should be incessantly occupied with the subject; should be continually laying schemes by which greater profit may be obtained, or expense saved. This intensity of interest in the subject it is seldom to be expected that any one should feel, who is conducting a business as the hired servant and for the profit of another. There are experiments in human affairs which are conclusive on the point. Look at the whole class of rulers, and ministers of state. The work they are entrusted with, is among the most interesting and exciting of all occupations; the personal share which they themselves reap of the national benefits or misfortunes which befall the state under their rule, is far from trifling, and the rewards and punishments which they may expect from public estimation are of the plain and palpable kind which are most keenly felt and most widely appreciated. Yet how rare a thing is it to find a statesman in whom mental indolence is not stronger than all these inducements. How infinitesimal is the proportion who trouble themselves to form, or even to attend to, plans of public improvement, unless when it is made still more troublesome to them to remain inactive; or who have any other real desire than that of rubbing on, so as to escape general blame. On a smaller scale, all who have ever employed hired labour have had ample experience of the efforts made to give as little labour in exchange for the wages, as is compatible with not being turned off. The universal neglect by domestic servants of their employer's interests, wherever these are not protected by some fixed rule, is matter of common remark; unless where long continuance in the same service, and reciprocal good offices, have produced either personal attachment, or some feeling of a common interest.
Another of the disadvantages of joint stock concerns, which is in some degree common to all concerns on a large scale, is disregard of small gains and small savings. In the management of a great capital and great transactions, especially when the managers have not much interest in it of their own, small sums are apt to be counted for next to nothing; they never seem worth the care and trouble which it costs to attend to them, and the credit of liberality and openhandedness is cheaply bought by a disregard of such trifling considerations. But small profits and small expenses often repeated, amount to great gains and losses: and of this a large capitalist is often a sufficiently good calculator to be practically aware; and to arrange his business on a system, which if enforced by a sufficiently vigilant superintendence, precludes the possibility of the habitual waste, otherwise incident to a great business. But the managers of a joint stock concern seldom devote themselves sufficiently to the work, to enforce unremittingly, even if introduced, through every detail of the business, a really economical system.
From considerations of this nature, Adam Smith was led to enunciate as a principle, that joint stock companies could never be expected to maintain themselves without an exclusive privilege, except in branches of business which, like banking, insurance, and some others, admit of being, in a considerable degree, reduced to fixed rules. This, however, is one of those over-statements of a true principle, often met with in Adam Smith. In his days there were few instances of joint stock companies which had been permanently successful without a monopoly, except the class of cases which he referred to; but since his time there have been many; and the regular increase both of the spirit of combination and of the ability to combine, will doubtless produce many more. Adam Smith fixed his observation too exclusively on the superior energy and more unremitting attention brought to a business in which the whole stake and the whole gain belong to the persons conducting it; and he overlooked various countervailing considerations which go a great way towards neutralizing even that great point of superiority.
Of these one of the most important is that which relates to the intellectual and active qualifications of the directing head. The stimulus of individual interest is some security for exertion, but exertion is of little avail if the intelligence exerted is of an inferior order, which it must necessity be in the majority of concerns carried on by the persons chiefly interested in them. Where the concern is large, and can afford a remuneration sufficient to attract a class of candidates superior to the common average, it is possible to select for the general management, and for all the skilled employments of a subordinate kind, persons of a degree of acquirement and cultivated intelligence which more than compensates for their inferior interest in the result. Their greater perspicacity enables them, with even a part of their minds, to see probabilities of advantage which never occur to the ordinary run of men by the continued exertion of the whole of theirs; and their superior knowledge, and habitual rectitude of perception and of judgment, guard them against blunders, the fear of which would prevent the others from hoarding their interests in any attempt out of the ordinary routine.
It must be further remarked, that it is not a necessary consequence of joint stock management, that the persons employed, whether in superior or in subordinate offices, should be paid wholly by fixed salaries. There are modes of connecting more or less intimately the interest of the employés with the pecuniary success of the concern. There is a long series of intermediate positions, between working wholly on one's own account, and working by the day, week, or year for an invariable payment. Even in the case of ordinary unskilled labour, there is such a thing as task-work, or working by the piece: and the superior efficiency of this is so well known, that judicious employers always resort to it when the work admits of being put out in definite portions, without the necessity of too troublesome a surveillance to guard against inferiority in the execution. In the case of the managers of joint stock companies, and of the superintending and controlling officers in many private establishments, it is a common enough practice to connect their pecuniary interest with the interest of their employers, by giving them part of their remuneration in the form of a percentage on the profits. The personal interest thus given to hired servants is not comparable in intensity to that of the owner of the capital; but it is sufficient to be a very material stimulus to zeal and carefulness, and, when added to the advantage of superior intelligence, often raises the quality of the service much above that which the generality of masters are capable of rendering to themselves. The ulterior extensions of which this principle of remuneration is susceptible, being of great social as well as economical importance, will be more particularly adverted to in a subsequent stage of the present inquiry.
As I have already remarked of large establishments generally, when compared with small ones, whenever competition is free its results will show whether individual or joint stock agency is best adapted to the particular case, since that which is most efficient and most economical will always in the end succeed in underselling the other.
§ 3. The possibility of substituting the large system of production for the small, depends of course, in the first place, on the extent of the market. The large system can only be advantageous when a large amount of business is to be done: it implies, therefore, either a populous and flourishing community, or a great opening for exportation. Again, this as well as every other change in the system of production is greatly favoured by a progressive condition of capital. It is chiefly when the capital of a country is receiving a great annual increase, that there is a large amount of capital seeking for investment: and a new enterprise is much sooner and more easily entered upon by new capital, than by withdrawing capital from existing employments. The change is also much facilitated by the existence of large capitals in few hands. It is true that the same amount of capital can be raised by bringing together many small sums. But this (besides that it is not equally well suited to all branches of industry) supposes a much greater degree of commercial confidence and enterprise diffused through the community, and belongs altogether to a more advanced stage of industrial progress.
In the countries in which there are the largest markets, the widest diffusion of commercial confidence and enterprise, the greatest annual increase of capital, and the greatest number of large capitals owned by individuals, there is a tendency to substitute more and more, in one branch of industry after another, large establishments for small ones. In England, the chief type of all these characteristics, there is a perpetual growth not only of large manufacturing establishments, but also, wherever a sufficient number of purchasers are assembled, of shops and warehouses for conducting retail business on a large scale. These are almost always able to undersell the smaller tradesmen, partly, it is understood, by means of division of labour, and the economy occasioned by limiting the employment of skilled agency to cases where skill is required; and partly, no doubt, by the saving of labour arising from the great scale of the transactions; as it costs no more time, and not much more exertion of mind, to make a large purchase, for example, than a small one, and very much less than to make a number of small ones.
With a view merely to production, and to the greatest efficiency of labour, this change is wholly beneficial. In some cases it is attended with drawbacks, rather social than economical, the nature of which has been already hinted at. But whatever disadvantages may be supposed to attend on the change from a small to a large system of production, they are not applicable to the change from a large to a still larger. When, in any employment, the régime of independent small producers has either never been possible, or has been superseded, and the system of many work-people under one management has become fully established, from that time any further enlargement in the scale of production is generally an unqualified benefit. It is obvious, for example, how great an economy of labour would be obtained if London were supplied by a single gas or water company instead of the existing plurality. While there are even as many as two, this implies double establishments of all sorts, when one only, with a small increase, could probably perform the whole operation equally well; double sets of machinery and works, when the whole of the gas or water required could generally be produced by one set only; even double sets of pipes, if the companies did not prevent this needless expense by agreeing upon a division of the territory. Were there only one establishment, it could make lower charges, consistently with obtaining the rate of profit now realized. But would it do so? Even if it did not, the community in the aggregate would still be a gainer: since the shareholders are a part of the community, and they would obtain higher profits while the consumers paid only the same. It is, however, an error to suppose that the prices are ever permanently kept down by the competition of these companies. Where competitors are so few, they always end by agreeing not to compete. They may run a race of cheapness to ruin a new candidate, but as soon as he has established his footing they come to terms with him. When, therefore, a business of real public importance can only be carried on advantageously upon so large a scale as to render the liberty of competition almost illusory, it is an unthrifty dispensation of the public resources that several costly sets of arrangements should be kept up for the purpose of rendering to the community this one service. It is much better to treat it at once as a public function; and if it be not such as the government itself could beneficially undertake, it should be made over entire to the company or association which will perform it on the best terms for the public. In the case of railways, for example, no one can desire to see the enormous waste of capital and land (not to speak of increased nuisance) involved in the construction of a second railway to connect the same places already united by an existing one; while the two would not do the work better than it could be done by one, and after a short time would probably be amalgamated. Only one such line ought to be permitted, but the control over that line never ought to be parted with by the State, unless on a temporary concession, as in France; and the vested right which Parliament has allowed to be acquired by the existing companies, like all other proprietary rights which are opposed to public utility, is morally valid only as a claim to compensation.
§ 4. The question between the large and the small systems of production as applied to agriculture—between large and small farming, the grande and the petite culture—stands, in many respects, on different grounds from the general question between great and small industrial establishments. In its social aspect, and as an element in the Distribution of Wealth, this question will occupy us hereafter: but even as a question of production, the superiority of the large system in agriculture is by no means so clearly established as in manufactures.
I have already remarked, that the operations of agriculture are little susceptible of benefit from the division of labour. There is but little separation of employments even on the largest farm. The same persons may not in general attend to the live stock, to the marketing, and to the cultivation of the soil; but much beyond that primary and simple classification the subdivision is not carried. The combination of labour of which agriculture is susceptible, is chiefly that which Mr. Wakefield terms Simple Co-operation; several persons helping one another in the same work, at the same time and place. But I confess it seems to me that this able writer attributes more importance to that kind of co-operation, in reference to agriculture properly so called, than it deserves. None of the common farming operations require much of it. There is no particular advantage in setting a great number of people to work together in ploughing or digging or sowing the same field, or even in mowing or reaping it unless time presses. A single family can generally supply all the combination of labour necessary for these purposes. And in the works in which an union of many efforts is really needed, there is seldom found any impracticability in obtaining it where farms are small.
The waste of productive power by subdivision of the land often amounts to a great evil, but this applies chiefly to a subdivision so minute, that the cultivators have not enough land to occupy their time. Up to that point the same principles which recommend large manufactories are applicable to agriculture. For the greatest productive efficiency, it is generally desirable (though even this proposition must be received with qualifications) that no family who have any land, should have less than they could cultivate, or than will fully employ their cattle and tools. These, however, are not the dimensions of large farms, but of what are reckoned in England very small ones. The large farmer has some advantage in the article of buildings. It does not cost so much to house a great number of cattle in one building, as to lodge them equally well in several buildings. There is also some advantage in implements. A small farmer is not so likely to possess expensive instruments. But the principal agricultural implements, even when of the best construction, are not expensive. It may not answer to a small farmer to own a threshing machine, for the small quantity of corn he has to thresh; but there is no reason why such a machine should not in every neighbourhood be owned in common, or provided by some person to whom the others pay a consideration for its use; especially as, when worked by steam, they are so constructed as to be moveable.∗1 The large farmer can make some saving in cost of carriage. There is nearly as much trouble in carrying a small portion of produce to market, as a much greater produce; in bringing home a small, as a much larger quantity of manures, and articles of daily consumption. There is also the greater cheapness of buying things in large quantities. These various advantages must count for something, but it does not seem that they ought to count for very much. In England, for some generations, there has been little experience of small farms; but in Ireland the experience has been ample, not merely under the worst but under the best management; and the highest Irish authorities may be cited in opposition to the opinion which on this subject commonly prevails in England. Mr. Blacker, for example, one of the most experienced agriculturists and successful improvers in the North of Ireland, whose experience was chiefly in the best cultivated, which are also the most minutely divided, parts of the country, was of opinion, that tenants holding farms not exceeding from five to eight or ten acres, could live comfortably and pay as high a rent as any large farmer whatever. “I am firmly persuaded,” (he says,∗ ) “that the small farmer who holds his own plough and digs his own ground, if he follows a proper rotation of crops, and feeds his cattle in the house, can undersell the large farmer, or in other words can pay a rent which the other cannot afford; and in this I am confirmed by the opinion of many practical men who have well considered the subject... The English farmer of 700 to 800 acres is a kind of man approaching to what is known by the name of a gentleman farmer. He must have his horse to ride, and his gig, and perhaps an overseer to attend to his labourers; he certainly cannot superintend himself the labour going on in a farm of 800 acres.” After a few other remarks, he adds, “Besides all these drawbacks, which the small farmer knows little about, there is the great expense of carting out the manure from the homestead to such a great distance, and again carting home the crop. A single horse will consume the produce of more land than would feed a small farmer and his wife and two children. And what is more than all, the large farmer says to his labourers, go to your work; but when the small farmer has occasion to hire them, he says, come; the intelligent reader will, I dare say, understand the difference.”
One of the objections most urged against small farms is, that they do not and cannot maintain, proportionally to their extent, so great a number of cattle as large farms, and that this occasions such a deficiency of manure, that a soil much subdivided must always be impoverished. It will be found, however, that subdivision only produces this effect when it throws the land into the hands of cultivators so poor as not to possess the amount of live stock suitable to the size of their farms. A small farm and a badly stocked farm are not synonymous. To make the comparison fairly, we must suppose the same amount of capital which is possessed by the large farmers to be disseminated among the small ones. When this condition, or even any approach to it, exists, and when stall feeding is practised (and stall feeding now begins to be considered good economy even on large farms), experience, far from bearing out the assertion that small farming is unfavourable to the multiplication of cattle, conclusively establishes the very reverse. The abundance of cattle, and copious use of manure, on the small farms of Flanders, are the most striking features in that Flemish agriculture which is the admiration of all competent judges, whether in England or on the Continent.∗
The disadvantage, when disadvantage there is, of small or rather of peasant farming, as compared with capitalist farming, must chiefly consist in inferiority of skill and knowledge; but it is not true, as a general fact, that such inferiority exists. Countries of small farms and peasant farming, Flanders and Italy, had a good agriculture many generations before England, and theirs is still , as a whole, probably the best agriculture in the world. The empirical skill, which is the effect of daily and close observation, peasant farmers often possess in an eminent degree. The traditional knowledge, for example, of the culture of the vine, possessed by the peasantry of the countries where the best wines are produced, is extraordinary. There is no doubt an absence of science, or at least of theory; and to some extent a deficiency of the spirit of improvement, so far as relates to the introduction of new processes. There is also a want of means to make experiments, which can seldom be made with advantage except by rich proprietors or capitalists. As for those systematic improvements which operate on a large tract of country at once (such as great works of draining or irrigation) or which for any other reasons do really require large numbers of workmen combining their labour, these are not in general to be expected from small farmers, or even small proprietors, though combination among them for such purposes is by no means unexampled, and will become more common as their intelligence is more developed.
Against these disadvantages is to be placed, where the tenure of land is of the requisite kind, an ardour of industry absolutely unexampled in any other condition of agriculture. This is a subject on which the testimony of competent witnesses is unanimous. The working of the petite culture cannot be fairly judged where the small cultivator is merely a tenant, and not even a tenant on fixed conditions, but (as until lately in Ireland) at a nominal rent greater than can be paid, and therefore practically at a varying rent always amounting to the utmost that can be paid. To understand the subject, it must be studied where the cultivator is the proprietor, or at least a métayer with a permanent tenure; where the labour he exerts to increase the produce and value of the land avails wholly, or at least partly, to his own benefit and that of his descendants. In another division of our subject, we shall discuss at some length the important subject of tenures of land, and I defer till then any citation of evidence on the marvellous industry of peasant proprietors. It may suffice here to appeal to the immense amount of gross produce which, even without a permanent tenure, English labourers generally obtain from their little allotments; a produce beyond comparison greater than a large farmer extracts, or would find it his interest to extract, from the same piece of land.
And this I take to be the true reason why large cultivation is generally most advantageous as a mere investment for profit. Land occupied by a large farmer is not, in one sense of the word, farmed so highly. There is not nearly so much labour expended on it. This is not on account of any economy arising from combination of labour, but because, by employing less, a greater return is obtained in proportion to the outlay. It does not answer to any one to pay others for exerting all the labour which the peasant, or even the allotment-holder, gladly undergoes when the fruits are to be wholly reaped by himself. This labour, however, is not unproductive: it all adds to the gross produce. With anything like equality of skill and knowledge, the large farmer does not obtain nearly so much from the soil as the small proprietor, or the small farmer with adequate motives to exertion: but though his returns are less, the labour is less in a still greater degree, and as whatever labour he employs must be paid for, it does not suit his purpose to employ more.
But although the gross produce of the land is greatest, caeteris paribus,under small cultivation, and although, therefore, a country is able on that system to support a larger aggregate population, it is generally assumed by English writers that what is termed the net produce, that is, the surplus after feeding the cultivators, must be smaller; that therefore, the population disposable for all other purposes, for manufactures, for commerce and navigation, for national defence, for the promotion of knowledge, for the liberal professions, for the various functions of government, for the arts and literature, all of which are dependent on this surplus for their existence as occupations, must be less numerous; and that the nation, therefore (waiving all question as to the condition of the actual cultivators), must be inferior in the principal elements of national power, and in many of those of general well-being. This, however, has been taken for granted much too readily. Undoubtedly the non-agricultural population will bear a less ratio to the agricultural, under small than under large cultivation. But that it will be less numerous absolutely, is by no means a consequence. If the total population, agricultural and non-agricultural, is greater, the non-agricultural portion may he more numerous in itself, and may yet be a smaller proportion of the whole. If the gross produce is larger, the net produce may be larger, and yet bear a smaller ratio to the gross produce. Yet even Mr. Wakefield sometimes appears to confound these distinct ideas. In France it is computed  that two-thirds of the whole population are agricultural. In England, at most, one-third. Hence Mr. Wakefield infers, that “as in France only three people are supported by the labour of two cultivators, while in England the labour of two cultivators supports six people, English agriculture is twice as productive as French agriculture,” owing to the superior efficiency of large farming through combination of labour. But in the first place, the facts themselves are overstated. The labour of two persons in England does not quite support six people, for there is not a little  food imported from foreign countries, and from Ireland. In France, too, the labour of two cultivators does much more than supply the food of three persons. It provides the three persons, and occasionally foreigners, with flax, hemp, and to a certain extent with silk, oils, tobacco, and latterly sugar, which in England are wholly obtained from abroad; nearly all the timber used in France is of home growth, nearly all which is used in England is imported; the principal fuel of France  is procured and brought to market by persons reckoned among agriculturists, in England by persons not so reckoned. I do not take into calculation hides and wool, these products being common to both countries, nor wine or brandy produced for home consumption, since England has a corresponding production of beer and spirits; but England has  no material export of either article, and a great importation of the last, while France supplies wines and spirits to the whole world. I say nothing of fruit, eggs, and such minor particles of agricultural produce, in which the export trade of France is enormous. But not to lay undue stress on these abatements, we will take the statement as it stands. Suppose that two persons, in England, do bonâ fide produce the food of six, while in France, for the same purpose, the labour of four is requisite. Does it follow that England must have a larger surplus for the support of a non-agricultural population? No; but merely that she can devote two-thirds of her whole produce to the purpose, instead of one-third. Suppose the produce to be twice as great, and the one-third will amount to as much as the two-thirds. The fact might be, that owing to the greater quantity of labour employed on the French system, the same land would produce food for twelve persons which on the English system would only produce it for six: and if this were so, which would be quite consistent with the conditions of the hypothesis, then although the food for twelve was produced by the labour of eight, while the six were fed by the labour of only two, there would be the same number of hands disposable for other employment in the one country as in the other. I am not contending that the fact is so. I know that the gross produce per acre in France as a whole (though not in its most improved districts) averages much less than in England, and that, in proportion to the extent and fertility of the two countries, England has, in the sense we are now speaking of, much the largest disposable population. But the disproportion certainly is not to be measured by Mr. Wakefield's simple criterion. As well might it be said that agricultural labour in the United States, where, by a late census (1840), four families in every five appeared to be engaged in agriculture, must be still more inefficient than in France.
The inferiority of French cultivation (which, taking the count as a whole, must be allowed to be real, though much exaggerated) is probably more owing to the lower general average of industrial skill and energy in that country, than to any special cause; and even if partly the effect of minute subdivision, it does not prove that small farming is disadvantageous, but only (what is undoubtedly the fact) that farms in France are very frequently too small, and, what is worse, broken up into an almost incredible number of patches or parcelles, most inconveniently dispersed and parted from one another.
As a question, not of gross, but of net produce, the comparative merits of the grande and the petite culture, especially when the small farmer is also the proprietor, cannot be looked upon as decided. It is a question on which good judges at present differ. The current of English opinion is  in favour of large farms: on the Continent, the weight of authority seems to be on the other side. Professor Rau, of Heidelberg, the author of one of the most comprehensive and elaborate of extant treatises on political economy, and who has that large acquaintance with facts and authorities on his own subject, which generally characterises his countrymen, lays it down as a settled truth, that small or moderate-sized farms yield not only a larger gross but a larger net produce: though, he adds, it is desirable there should be some great proprietors, to lead the way in new improvements.∗ The most apparently impartial and discriminating judgment that I have met with is that of M. Passy, who (always speaking with reference to net produce) gives his verdict in favour of large farms for grain and forage; but, for the kinds of culture which require much labour and attention, places the advantage wholly on the side of small cultivation; including in this description, not only the vine and the olive, where a considerable amount of care and labour must be bestowed on each individual plant, but also roots, leguminous plants, and those which furnish the materials of manufactures. The small size, and consequent multiplication, of farms, according to all authorities, are extremely favourable to the abundance of many minor products of agriculture.∗
It is evident that every labourer who extracts from the land more than his own food, and that of any family he may have, increases the means of supporting a non-agricultural population. Even if his surplus is no more than enough to buy clothes, the labourers who make the clothes are a non-agricultural population, enabled to exist by food which he produces. Every agricultural family, therefore, which produces its own necessaries, adds to the net produce of agriculture; and so does every person born on the land, who by employing himself on it, adds more to its gross produce than the mere food which he eats. It is questionable whether, even in the most subdivided districts of Europe which are cultivated by the proprietors, the multiplication of hands on the soil has approached, or tends to approach, within a great distance of this limit. In France, though the subdivision is confessedly too great, there is proof positive that it is far from having reached the point at which it would begin to diminish the power of supporting a non-agricultural population. This is demonstrated by the great increase of the towns; which have of late  increased in a much greater ratio than the population generally,† showing (unless the condition of the town labourers is becoming rapidly deteriorated, which there is no reason to believe) that even by the unfair and inapplicable test of proportions, the productiveness of agriculture must be on the increase. This, too, concurrently with the amplest evidence that in the more improved districts of France, and in some which, until lately, were among the unimproved, there is a considerably increased consumption of country produce by the country population itself.
1 Impressed with the conviction that, of all faults which can be committed by a scientific writer on political and social subjects, exaggeration, and assertion beyond the evidence, most require to be guarded against, I limited myself in the early editions of this work to the foregoing very moderate statements. I little knew how much stronger my language might have been without exceeding the truth, and how much the actual progress of French agriculture surpassed anything which I had at that time sufficient grounds to affirm. The investigations of that eminent authority on agricultural statistics, M. Léonce de Lavergne, undertaken by desire of the Academy of Moral and Political Sciences of the Institute of France, have led to the conclusion that since the Revolution of 1789, the total produce of French agriculture has doubled; profits and wages having both increased in about the same, and rent in a still greater ratio. M. de Lavergne, whose impartiality is one of his greatest merits, is, moreover, so far in this instance from the suspicion of having a case to make out, that he is labouring to show, not how much French agriculture has accomplished, but how much still remains for it to do. “We have required” (he says) “no less than seventy years to bring into cultivation two million hectares” (five million English acres) “of waste land, to suppress half our fallows, double our agricultural products, increase our population by 30 per cent, our wages by 100 per cent, our rent by 150 per cent. At this rate we shall require three quarters of a century more to arrive at the point which England has already attained.”∗
After this evidence, we have surely now heard the last of the incompatibility of small properties and small farms with agricultural improvement. The only question which remains open is one of degree; the comparative rapidity of agricultural improvement under the two systems; and it is the general opinion of those who are equally well acquainted with both, that improvement is greatest under a due admixture between them.
In the present chapter, I do not enter on the question between great and small cultivation in any other respect than as a question of production, and of the efficiency of labour. We shall return to it hereafter as affecting the distribution of the produce, and the physical and social well-being of the cultivators themselves; in which aspects it deserves, and requires, a still more particular examination.1
of the law of the increase of labour
§ 1. We have now successively considered each of the agents or conditions of production, and of the means by which the efficacy of these various agents is promoted. In order to come to an end of the questions which relate exclusively to production, one more, of primary importance, remains.
Production is not a fixed, but an increasing thing. When not kept back by bad institutions, or a low state of the arts of life, the produce of industry has usually tended to increase; stimulated not only by the desire of the producers to augment their means of consumption, but by the increasing number of the consumers. Nothing in political economy can be of more importance than to ascertain the law of this increase of production; the conditions to which it is subject: whether it has practically any limits, and what these are. There is also no subject in political economy which is popularly less understood, or on which the errors committed are of a character to produce, and do produce, greater mischief.
We have seen that the essential requisites of production are three—labour, capital, and natural agents; the term capital including all external and physical requisites which are products of labour, the term natural agents all those which are not. But among natural agents we need not take into account those which, existing in unlimited quantity, being incapable of appropriation, and never altering in their qualities, are always ready to lend an equal degree of assistance to production, whatever may be its extent; as air, and the light of the sun. Being now about to consider the impediments to production, not the facilities for it, we need advert to no other natural agents than those which are liable to be deficient either in quantity or in productive power. These may be all represented by the term land. Land, in the narrowest acceptation, as the source of agricultural produce, is the chief of them; and if we extend the term to mines and fisheries—to what is found in the earth itself, or in the waters which partly cover it, as well as to what is grown or fed on its surface, it embraces everything with which we need at present concern ourselves.
We may say, then, without a greater stretch of language than under the necessary explanation is permissible, that the requisites of production are Labour, Capital, and Land. The increase of production, therefore, depends on the properties of these elements. It is a result of the increase either of the elements themselves, or of their productiveness. The law of the increase of production must be a consequence of the laws of these elements; the limits to the increase of production must be the limits, whatever they are, set by those laws. We proceed to consider the three elements successively, with reference to this effect; or in other words, the law of the increase of production, viewed in respect of its dependence, first on Labour, secondly on Capital, and lastly on Land.
§ 2. The increase of labour is the increase of mankind; of population. On this subject the discussions excited by the Essay of Mr. Malthus have made the truth, though by no means universally admitted, yet so fully known, that a briefer examination of the question than would otherwise have been necessary will probably on the present occasion suffice.
The power of multiplication inherent in all organic life may be regarded as infinite. There is no one species of vegetable or animal, which, if the earth were entirely abandoned to it, and to the things on which it feeds, would not in a small number of years overspread every region of the globe, of which the climate was compatible with its existence. The degree of possible rapidity is different in different orders of beings; but in all it is sufficient, for the earth to be very speedily filled up. There are many species of vegetables of which a single plant will produce in one year the germs of a thousand; if only two come to maturity, in fourteen years the two will have multiplied to sixteen thousand and more. It is but a moderate case of fecundity in animals to be capable of quadrupling their numbers in a single year; if they only do as much in half a century, ten thousand will have swelled within two centuries to upwards of two millions and a half. The capacity of increase is necessarily in a geometrical progression: the numerical ratio alone is different.
To this property of organized beings, the human species forms no exception. Its power of increase is indefinite, and the actual multiplication would be extraordinarily rapid, if the power were exercised to the utmost. It never is exercised to the utmost, and yet, in the most favourable circumstances known to exist, which are those of a fertile region colonized from an industrious and civilized community, population has continued, for several generations, independently of fresh immication, to double itself in not much more than twenty years.∗ That the capacity of multiplication in the human species exceeds even this, is evident if we consider how great is the ordinary number of children to a family, where the climate is good and early marriages usual; and how small a proportion of them die before the age of maturity, in the present state of hygienic knowledge, where the locality is healthy, and the family adequately provided with the means of living. It is a very low estimate of the capacity of increase, if we only assume, that in a good sanitary condition of the people, each generation may be double the number of the generation which preceded it.
Twenty or thirty years ago, these propositions might still have required considerable enforcement and illustration; but the evidence of them is so ample and incontestable, that they have made their way against all kinds of opposition, and may now be regarded as axiomatic: though the extreme reluctance felt to admitting them, every now and then gives birth to some ephemeral theory, speedily forgotten, of a different law of increase in different circumstances, through a providential adaptation of the fecundity of the human species to the exigencies of society.† The obstacle to a just understanding of the subject does not arise from these theories, but from too confused a notion of the causes which, at most times and places, keep the actual increase of mankind so far behind the capacity.
§ 3. Those causes, nevertheless, are in no way mysterious. What prevents the population of hares and rabbits from overstocking the earth? Not want of fecundity, but causes very different: many enemies, and insufficient subsistence; not enough to eat, and liability to be eaten. In the human race, which is not generally subject to the latter inconvenience, the equivalents for it are war and disease. If the multiplication of mankind proceeded only like that of the other animals, from a blind instinct, it would be limited in the same manner with theirs; the births would be as numerous as the physical constitution of the species admitted of, and the population would be kept down by deaths.∗ But the conduct of human creatures is more or less influenced by foresight of consequences, and by impulses superior to mere animal instincts: and they do not, therefore, propagate like swine, but are capable, though in very unequal degrees, of being withheld by prudence, or by the social affections, from giving existence to beings born only to misery and premature death. In proportion as mankind rise above the condition of the beasts, population is restrained by the fear of want rather than by want itself. Even where there is no question of starvation, many are similarly acted upon by the apprehension of losing what have come to be regarded as the decencies of their situation in life. Hitherto no other motives than these two have been found strong enough, in the generality of mankind, to counteract the tendency to increase. It has been the practice of a great majority of the middle and the poorer classes, whenever free from external control, to marry as early, and in most countries to have as many children, with maintaining themselves in the condition of life which they were born to, or were accustomed to consider as theirs. Among the middle classes, in many individual instances, there is an additional restraint exercised from the desire of doing more than maintaining their circumstances—of improving them; but such a desire is rarely found, or rarely has that effect, in the labouring classes. If they can bring up a family as they were themselves brought up, even the prudent among them are usually satisfied. Too often they do not think even of that, but rely on fortune, or on the resources to be found in legal or voluntary charity.
In a very backward state of society, like that of Europe in the Middle Ages, and many parts of Asia at present , population is kept down by actual starvation. The starvation does not take place in ordinary years, but in seasons of scarcity, which in those states of society are much more frequent and more extreme than Europe is now accustomed to. In these seasons actual want, or the maladies consequent on it, carry off numbers of the population, which in a succession of favourable years again expands, to be again cruelly decimated. In a more improved state, few, even among the poorest of the people, are limited to actual necessaries, and to a bare sufficiency of those: and the increase is kept within bounds, not by excess of deaths, but by limitation of births. The limitation is brought about in various ways. In some countries, it is the result of prudent or conscientious self-restraint. There is a condition to which the labouring people are habituated; they perceive that by having too numerous families, they must sink below that condition, or fail to transmit it to their children; and this they do not choose to submit to. The countries in which, so far as is known, a great degree of voluntary prudence has been longest practised on this subject, are  Norway and parts of Switzerland. Concerning both, there happens to be unusually authentic information; many facts were carefully brought together by Mr. Malthus, and much additional evidence has been obtained since his time. In both these countries the increase of population is very slow; and what checks it is not multitude of deaths, but fewness of births. Both the births and the deaths are remarkably few in proportion to the population; the average duration of life is the longest in Europe; the population contains fewer children, and a greater proportional number of persons in the vigour of life, than is known to be the case in any other part of the world. The paucity of births tends directly to prolong life, by keeping the people in comfortable circumstances; and the same prudence is doubtless exercised in avoiding causes of disease, as in keeping clear of the principal cause of poverty. It is worthy of remark that the two counties thus honourably distinguished, are countries of small landed proprietors.
There are other cases in which the prudence and forethought, which perhaps might not be exercised by the people themselves, are exercised by the state for their benefit; marriage not being permitted until the contracting parties can show that they have the prospect of a comfortable support. Under these laws, of which I shall speak more fully hereafter, the condition of the people is reported to be good, and the illegitimate births not so numerous as might be expected. There are places, again, in which the restraining cause seems to be not so much individual prudence, as some general and perhaps even accidental habit of the country. In the rural districts of England, during the last century, the growth of population was very effectually repressed by the difficulty of obtaining a cottage to live in. It was the custom for unmarried labourers to lodge and board with their employers; it was the custom for married labourers to have a cottage: and the rule of the English poor laws by which a parish was charged with the support of its unemployed poor, rendered landowners averse to promote marriage. About the end of the century, the great demand for men in war and manufactures made it be thought a patriotic thing to encourage population: and about the same time the growing inclination of farmers to live like rich people, favoured as it was by a long period of high prices, made them desirous of keeping inferiors at a greater distance, and, pecuniary motives arising from abuses of the poor laws being superadded, they gradually drove their labourers into cottages, which the landlords now no longer refused permission to build. In some countries an old standing custom that a girl should not marry until she had spun and woven for herself an ample trousseau (destined for the supply of her whole subsequent life), is said to have acted as a substantial check to population. In England, at present , the influence of prudence in keeping down multiplication is seen by the diminished number of marriages in the manufacturing districts in years when trade is bad.
But whatever be the causes by which population is anywhere limited to a comparatively slow rate of increase, an acceleration of the rate very speedily follows any diminution of the motives to restraint.1 It is but rarely that improvements in the condition of the labouring classes do anything more than give a temporary margin, speedily filled up by an increase of their numbers. The use they commonly choose to make of any advantageous change in their circumstances, is to take it out in the form which, by augmenting the population, deprives the succeeding generation of the benefit. Unless, either by their general improvement in intellectual and moral culture, or at least by raising their habitual standard of comfortable living, they can be taught to make a better use of favourable circumstances, nothing permanent can be done for them; the most promising schemes end only in having a more numerous, but not a happier people. By their habitual standard, I mean that (when any such there is) down to which they will multiply, but not lower. Every advance they make in education, civilization, and social improvement, tends to raise this standard; and there is no doubt that it is gradually, though slowly, rising in the more advanced countries of Western Europe. Subsistence and employment in England have never increased more rapidly than in the last forty years , but every census since 1821 showed a smaller proportional increase of population than that of the period preceding; and the produce of French agriculture and industry is increasing in a progressive ratio, while the population exhibits in every quinquennial census, a smaller proportion of births to the population.
The subject, however, of population, in its connexion with the condition of the labouring classes, will be considered in another place; in the present we have to do with it solely as one of the elements of Production: and in that character we could not dispense with pointing out the unlimited extent of its natural powers of increase, and the causes owing to which so small a portion of that unlimited power is for the most part actually exercised. After this brief indication, we shall proceed to the other elements.1
of the law of the increase of capital
§ 1. The requisites of production being labour, capital, and land, it has been seen from the preceding chapter that the impediments to the increase of production do not arise from the first of these elements. On the side of labour there is no obstacle to an increase of production, indefinite in extent and of unslackening rapidity. Population has the power of increasing in an uniform and rapid geometrical ratio. If the only essential condition of production were labour, the produce might, and naturally would, increase in the same ratio; and there would be no limit, until the numbers of mankind were brought to a stand from actual want of space.
But production has other requisites, and of these, the one which we shall next consider is Capital. There cannot be more people in any country, or in the world, than can be supported from the produce of past labour until that of present labour comes in. There will be no greater number of productive labourers in any country, or in the world, than can be supported from that portion of the produce of past labour, which is spared from the enjoyments of its possessor for purposes of reproduction, and is termed Capital. We have next, therefore, to inquire into the conditions of the increase of capital: the causes by which the rapidity of its increase is determined, and the necessary limitations of that increase.
Since all capital is the product of saving, that is, of abstinence from present consumption for the sake of a future good, the increase of capital must depend upon two things—the amount of the fund from which saving can be made, and the strength of the dispositions which prompt to it.
The fund from which saving can be made, is the surplus of the produce of labour, after supplying the necessaries of life to all concerned in the production: including those employed in replacing the materials, and keeping the fixed capital in repair. More than this surplus cannot be saved under any circumstances. As much as this, though it never is saved, always might be. This surplus is the fund from which the enjoyments, as distinguished from the necessaries, of the producers are provided; it is the fund from which all are subsisted, who are not themselves engaged in production; and from which all additions are made to capital. It is the real net produce of the country. The phrase, net produce, is often taken in a more limited sense, to denote only the profits of the capitalist and the rent of the landlord, under the idea that nothing can be included in the net produce of capital, but what is returned to the owner of the capital after replacing his expenses. But this is too narrow an acceptation of the term. The capital of the employer forms the revenue of the labourers, and if this exceeds the necessaries of life, it gives them a surplus which they may either expend in enjoyments, or save. For every purpose for which there can be occasion to speak of the net produce of industry, this surplus ought to be included in it. When this is included, and not otherwise, the net produce of the country is the measure of its effective power; of what it can spare for any purposes of public utility, or private indulgence; the portion of its produce of which it can dispose at pleasure; which can be drawn upon to attain any ends, or gratify any wishes, either of the government or of individuals; which it can either spend for its satisfaction, or save for future advantage.
The amount of this fund, this net produce, this excess of production above the physical necessaries of the producers, is one of the elements that determine the amount of saving. The greater the produce of labour after supporting the labourers, the more there is which can be saved. The same thing also partly contributes to determine how much will be saved. A part of the motive to saving consists in the prospect of deriving an income from savings; in the fact that capital, employed in production, is capable of not only reproducing itself but yielding an increase. The greater the profit that can be made from capital, the stronger is the motive to its accumulation. That indeed which forms the inducement to save, is not the whole of the fund which supplies the means of saving, not the whole net produce of the land, capital, and labour of the country, but only a part of it, the part which forms the remuneration of the capitalist, and is called profit of stock. It will however be readily enough understood, even previously to the explanations which will be given hereafter, that when the general productiveness of labour and capital is great, the returns to the capitalist are likely to be large, and that some proportion, though not an uniform one, will commonly obtain between the two.
§ 2. But the disposition to save does not wholly depend on the external inducement to it; on the amount of profit to be made from savings. With the same pecuniary inducement, the inclination is very different, in different persons, and in different communities. The effective desire of accumulation is of unequal strength, not only according to the varieties of individual character, but to the general state of society and civilization. Like all other moral attributes, it is one in which the human race exhibits great differences, conformably to the diversity of its circumstances and the stage of its progress.
On topics which if they were to be fully investigated would exceed the bounds that can be allotted to them in this treatise, it is satisfactory to be able to refer to other works in which the necessary developments have been presented more at length. On the subject of Population this valuable service has been rendered by the celebrated Essay of Mr. Malthus; and on the point which now occupies us I can refer with equal confidence to another, though a less known work, New Principles of Political Economy, by Dr. Rae.∗ In no other book known to me is so much light thrown, both from principle and history, on the causes which determine the accumulation of capital.
All accumulation involves the sacrifice of a present, for the sake of a future good. But the expediency of such a sacrifice varies very much in different states of circumstances; and the willingness to make it, varies still more.
In weighing the future against the present, the uncertainty of all things future is a leading element; and that uncertainty is of very different degrees. “All circumstances” therefore, “increasing the probability of the provision we make for futurity being enjoyed by ourselves or others, tend” justly and reasonably “to give strength to the effective desire of accumulation. Thus a healthy climate or occupation, by increasing the probability of life, has a tendency to add to this desire. When engaged in safe occupations, and living in healthy countries, men are much more apt to be frugal, than in unhealthy or hazardous occupations, and in climates pernicious to human life. Sailors and soldiers are prodigals. In the West Indies, New Orleans, the East Indies, the expenditure of the inhabitants is profuse. The same people, coming to reside in the healthy parts of Europe, and not getting into the vortex of extravagant fashion, live economically. War and pestilence have always waste and luxury among the other evils that follow in their train. For similar reasons, whatever gives security to the affairs of the community is favourable to the strength of this principle. In this respect the general prevalence of law and order, and the prospect of the continuance of peace and tranquillity, have considerable influence.”∗ The more perfect the security, the greater will be the effective strength of the desire of accumulation. Where property is less safe, or the vicissitudes ruinous to fortunes are more frequent and severe, fewer persons will save at all, and of those who do, many will require the inducement of a higher rate of profit on capital, to make them prefer a doubtful future to the temptation of present enjoyment.
These are considerations which affect the expediency, in the eye of reason, of consulting future interests at the expense of present. But the inclination to make the sacrifice does not solely depend upon its expediency. The disposition to save is often far short of what reason would dictate: and at other times is liable to be in excess of it.
Deficient strength of the desire of accumulation may arise from improvidence, or from want of interest in others. Improvidence may be connected with intellectual as well as moral causes. Individuals and communities of a very low state of intelligence are always improvident. A certain measure of intellectual development seems necessary to enable absent things, and especially things future, to act with any force on the imagination and will. The effect of want of interest in others in diminishing accumulation will be admitted, if we consider how much saving at present takes place, which has for its object the interest of others rather than of ourselves; the education of children, their advancement in life, the future interests of other personal connexions, the power of promoting, by the bestowal of money or time, objects of public or private usefulness. If mankind were generally in the state of mind to which some approach was seen in the declining period of the Roman Empire—caring nothing for their heirs, as well as nothing for friends, the public, or any object which survived them—they would seldom deny themselves any indulgence for the sake of saving, beyond what was necessary for their own future years; which they would place in life annuities, or in some other form which would make its existence and their lives terminate together.
§ 3. From these various causes, intellectual and moral, there is, in different portions of the human race, a greater diversity than is usually adverted to, in the strength of the effective desire of accumulation. A backward state of general civilization is often more the effect of deficiency in this particular, than in many others which attract more attention. In the circumstances, for example, of a hunting tribe, “man may be said to be necessarily improvident, and regardless of futurity, because, in this state, the future presents nothing which can be with certainty either foreseen or governed.... Besides a want of the motives exciting to provide for the needs of futurity through means of the abilities of the present, there is a want of the habits of perception and action, leading to a constant connexion in the mind of those distant points, and of the series of events serving to unite them. Even, therefore, if motives be awakened capable of producing the exertion necessary to effect this connexion, there remains the task of training the mind to think and act so as to establish it.”
For instance: “Upon the banks of the St. Lawrence there are several little Indian villages. They are surrounded, in general, by a good deal of land, from which the wood seems to have been long extirpated, and have, besides, attached to them, extensive tracts of forest. The cleared land is rarely, I may almost say never, cultivated, nor are any inroads made in the forest for such a purpose. The soil is, nevertheless, fertile, and were it not, manure lies in heaps by their houses. Were every family to inclose half an acre of ground, till it, and plant it in potatoes and maize, it would yield a sufficiency to support them one half the year. They suffer, too, every now and then, extreme want, insomuch that, joined to occasional intemperance, it is rapidly reducing their numbers. This, to us, so strange apathy proceeds not, in any great degree, from repugnance to labour; on the contrary, they apply very diligently to it when its reward is immediate. Thus, besides their peculiar occupations of hunting and fishing, in which they are ever ready to engage, they are much employed in the navigation of the St. Lawrence, and may be seen labouring at the oar, or setting with the pole, in the large boats used for the purpose, and always furnish the greater part of the additional hands necessary to conduct rafts through some of the rapids. Nor is the obstacle aversion to agricultural labour. This is no doubt a prejudice of theirs; but mere prejudices always yield, principles of action cannot be created. When the returns from agricultural labour are speedy and great, they are also agriculturists. Thus, some of the little islands on Lake St. Francis, near the Indian village of St. Regis, are favourable to the growth of maize, a plant yielding a return of a hundredfold, and forming, even when half ripe, a pleasant and substantial repast. Patches of the best land on these islands are therefore every year cultivated by them for this purpose. As their situation renders them inaccessible to cattle, no fence is required; were this additional outlay necessary, I suspect they would be neglected, like the commons adjoining their village. These had apparently, at one time, been under crop. The cattle of the neighbouring settlers would now, however, destroy any crop not securely fenced, and this additional necessary outlay consequently bars their culture. It removes them to an order of instruments of slower return than that which corresponds to the strength of the effective desire of accumulation in this little society.
“It is here deserving of notice, that what instruments of this kind they do form, are completely formed. The small spots of corn they cultivate are thoroughly weeded and hoed. A little neglect in this part would indeed reduce the crop very much; of this experience has made them perfectly aware, and they act accordingly. It is evidently not the necessary labour that is the obstacle to more extended culture, but the distant return from that labour. I am assured, indeed, that among some of the more remote tribes, the labour thus expended much exceeds that given by the whites. The same portions of ground being cropped without remission, and manure not being used, they would scarcely yield any return, were not the soil most carefully broken and pulverized, both with the hoe and the hand. In such a situation a white man would clear a fresh piece of ground. It would perhaps scarce repay his labour the first year, and he would have to look for his reward in succeeding years. On the Indian, succeeding years are too distant to make sufficient impression; though, to obtain what labour may bring about in the course of a few months, he toils even more assiduously than the white man.”∗
This view of things is confirmed by the experience of the Jesuits, in their interesting efforts to civilize the Indians of Paraguay. They gained the confidence of these savages in a most extraordinary degree. They acquired influence over them sufficient to make them change their whole manner of life. They obtained their absolute submission and obedience. They established peace. They taught them all the operations of European agriculture, and many of the more difficult arts. There were everywhere to be seen, according to Charlevoix, “workshops of gilders, painters, sculptors, goldsmiths, watchmakers, carpenters, joiners, dyers,” &c. These occupations were not practised for the personal gain of the artificers: the produce was at the absolute disposal of the missionaries, who ruled the people by a voluntary despotism. The obstacles arising from aversion to labour were therefore very completely overcome. The real difficulty was the improvidence of the people; their inability to think for the future: and the necessity accordingly of the most unremitting and minute superintendence on the part of their instructors. “Thus at first, if these gave up to them the care of the oxen with which they ploughed, their indolent thoughtlessness would probably leave them at evening still yoked to the implement. Worse than this, instances occurred where they cut them up for supper, thinking, when reprehended, that they sufficiently excused themselves by saying they were hungry.... These fathers, says Ulloa, have to visit the houses, to examine what is really wanted: for without this care, the Indians would never look after anything. They must be present, too, when animals are slaughtered, not only that the meat may be equally divided, but that nothing may be lost.” “But notwithstanding all this care and superintendence,” says Charlevoix, “and all the precautions which are taken to prevent any want of the necessaries of life, the missionaries are sometimes much embarrassed. It often happens that they” (the Indians) “do not reserve to themselves a sufficiency of grain, even for seed. As for their other provisions, were they not well looked after, they would soon be without wherewithal to support life.”∗
As an example intermediate, in the strength of the effective desire of accumulation, between the state of things thus depicted and that of modern Europe, the case of the Chinese deserves attention. From various circumstances in their personal habits and social condition, it might be anticipated that they would possess a degree of prudence and self-control greater than other Asiatics, but inferior to most European nations; and the following evidence is adduced of the fact.
“Durability is one of the chief qualities, marking a high degree of the effective desire of accumulation. The testimony of travellers ascribes to the instruments formed by the Chinese, a very inferior durability to similar instruments constructed by Europeans. The houses, we are told, unless of the higher ranks, are in general of unburnt bricks, of clay, or of hurdles plastered with earth; the roofs, of reeds fastened to laths. We can scarcely conceive more unsubstantial or temporary fabrics. Their partitions are of paper, requiring to be renewed every year. A similar observation may be made concerning their implements of husbandry, and other utensils. They are almost entirely of wood, the metals entering but very sparingly into their construction; consequently they soon wear out, and require frequent renewals. A greater degree of strength in the effective desire of accumulation would cause them to be constructed of materials requiring a greater present expenditure but being far more durable. From the same cause, much land, that in other countries would be cultivated, lies waste. All travellers take notice of large tracts of lands, chiefly swamps, which continue in a state of nature. To bring a swamp into tillage is generally a process, to complete which, requires several years. It must be previously drained, the surface long exposed to the sun, and many operations performed, before it can be made capable of bearing a crop. Though yielding, probably, a very considerable return for the labour bestowed on it, that return is not made until a long time has elapsed. The cultivation of such land implies a greater strength of the effective desire of accumulation than exists in the empire.
“The produce of the harvest is, as we have remarked, always an instrument of some order or another; it is a provision for future want, and regulated by the same laws as those to which other means of attaining a similar end conform. It is there chiefly rice, of which there are two harvests, the one in June, the other in October. The period then of eight months between October and June, is that for which provision is made each year, and the different estimate they make of to-day and this day eight months will appear in the self-denial they practise now, in order to guard against want then. The amount of this self-denial would seem to be small. The father Parennin, indeed, (who seems to have been one of the most intelligent of the Jesuits, and spent a long life among the Chinese of all classes,) asserts, that it is their great deficiency in forethought and frugality in this respect, which is the cause of the scarcities and famines that frequently occur.”
That it is defect of providence, not defect of industry, that limits production among the Chinese, is still more obvious than in the case of the semi-agriculturized Indians. “Where the returns are quick, where the instruments formed require but little time to bring the events for which they were formed to an issue,” it is well known that “the great progress which has been made in the knowledge of the arts suited to the nature of the country and the wants of its inhabitants” makes industry energetic and effective. “The warmth of the climate, the natural fertility of the country, the knowledge which the inhabitants have acquired of the arts of agriculture, and the discovery and gradual adaptation to every soil of the most useful vegetable productions, enable them very speedily to draw from almost any part of the surface, what is there esteemed an equivalent to much more than the labour bestowed in tilling and cropping it. They have commonly double, sometimes treble harvests. These, when they consist of a grain so productive as rice, the usual crop, can scarce fail to yield to their skill, from almost any portion of soil that can be at once brought into culture, very ample returns. Accordingly there is no spot that labour can immediately bring under cultivation that is not made to yield to it. Hills, even mountains, are ascended and formed into terraces; and water, in that country the great productive agent, is led to every part by drains, or carried up to it by the ingenious and simple hydraulic machines which have been in use from time immemorial among this singular people. They effect this the more easily, from the soil, even in these situations, being very deep and covered with much vegetable mould. But what yet more this marks the readiness with which labour is forced to form the most difficult materials into instruments, where these instruments soon bring to an issue the events for which they are formed, is the frequent occurrence on many of their lakes and rivers, of structures resembling the floating gardens of the Peruvians, rafts covered with vegetable soil and cultivated. Labour in this way draws from the materials on which it acts very speedy returns. Nothing can exceed the luxuriance of vegetation when the quickening powers of a genial sun are ministered to by a rich soil and abundant moisture. It is otherwise, as we have seen, in cases where the return, though copious, is distant. European travellers are surprised at meeting these little floating farms by the side of swamps which only require draining to render them tillable. It seems to them strange that labour should not rather be bestowed on the solid earth, where its fruits might endure, than on structures that must decay and perish in a few years. The people they are among think not so much of future years as of the present time. The effective desire of accumulation is of very different strength in the one, from what it is in the other. The views of the European extend to a distant futurity, and he is surprised at the Chinese, condemned through improvidence, and want of sufficient prospective care, to incessant toil, and as he thinks, insufferable wretchedness. The views of the Chinese are confined to narrower bounds; he is content to live from day to day, and has learnt to conceive even a life of toil a blessing.”∗
When a country has carried production as far as in the existing state of knowledge it can be carried with an amount of return corresponding to the average strength of the effective desire of accumulation in that country, it has reached what is called the stationary state; the state in which no further addition will be made to capital, unless there takes place either some improvement in the arts of production, or an increase in the strength of the desire to accumulate. In the stationary state, though capital does not on the whole increase, some persons grow richer and others poorer. Those whose degree of providence is below the usual standard, become impoverished, their capital perishes, and makes room for the savings of those whose effective desire of accumulation exceeds the average. These become the natural purchasers of the lands, manufactories, and other instruments of production owned by their less provident countrymen.
What the causes are which make the return to capital greater in one country than in another, and which, in certain circumstances, make it impossible for any additional capital to find investment unless at diminished returns, will appear clearly hereafter. In China, if that count has really attained, as it is supposed to have done, the stationary state, accumulation has stopped when the returns to capital are still  as high as is indicated by a rate of interest legally twelve per cent, and practically varying (it is said) between eighteen and thirty-six. It is to be presumed therefore that no greater amount of capital than the country already possesses, can find employment at this high rate of profit, and that any lower rate does not hold out to a Chinese sufficient temptation to induce him to abstain from present enjoyment. What a contrast with Holland, where, during the most flourishing period of its history, the government was able habitually to borrow at two per cent, and private individuals, on good security, at three. Since China is not a country like Burmah or the native states of India, where an enormous interest is but an indispensable compensation for the risk incurred from the bad faith or poverty of the state, and of almost all private borrowers; the fact, if fact it be, that the increase of capital has come to a stand while the returns to it are still so large, denotes a much less degree of the effective desire of accumulation, in other words a much lower estimate of the future relatively to the present, than that of most European nations.
§ 4. We have hitherto spoken of countries in which the average strength of the desire to accumulate is short of that which, in circumstances of any tolerable security, reason and sober calculation would approve. We have now to speak of others in which it decidedly surpasses that standard. In the more prosperous countries of Europe, there are to be found abundance of prodigals; in some of them (and in none more than England) the ordinary degree of economy and providence among those who live by manual labour cannot be considered high: still, in a very numerous portion of the community, the professional, manufacturing, and trading classes, being those who, generally speaking, unite more of the means with more of the motives for saving than any other class, the spirit of accumulation is so strong, that the signs of rapidly increasing wealth meet every eye: and the great amount of capital seeking investment excites astonishment, whenever peculiar circumstances turning much of it into some one channel, such as railway construction or foreign speculative adventure, bring the largeness of the total amount into evidence.
There are many circumstances, which, in England, give a peculiar force to the accumulating propensity. The long exemption of the country from the ravages of war, and the far earlier period than elsewhere at which property was secure from military violence or arbitrary spoliation, have produced a long-standing and hereditary confidence in the safety of funds when trusted out of the owner's hands, which in most other countries is of much more recent origin, and less firmly established. The geographical causes which have made industry rather than war the natural source of power and importance to Great Britain, have turned an unusual proportion of the most enterprising and energetic characters into the direction of manufactures and commerce; into supplying their wants and gratifying their ambition by producing and saving, rather than by appropriating what has been produced and saved. Much also depended on the better political institutions of this country, which by the scope they have allowed to individual freedom of action, have encouraged personal activity and self-reliance, while by the liberty they confer of association and combination, they facilitate industrial enterprise on a large scale. The same institutions in another of their aspects, give a most direct and potent stimulus to the desire of acquiring wealth. The earlier decline of feudalism having removed or much weakened invidious distinctions between the originally trading classes and those who had been accustomed to despise them; and a polity having grown up which made wealth the real source of political influence; its acquisition was invested with a factitious value, independent of its intrinsic utility. It became synonymous with power; and since power with the common herd of mankind gives power, wealth became the chief source of personal consideration, and the measure and stamp of success in life. To get out of one rank in society into the next above it, is the great aim of English middle-class life, and the acquisition of wealth the means. And inasmuch as to be rich without industry, has always hitherto constituted a step in the social scale above those who are rich by means of industry, it becomes the object of ambition to save not merely as much as will afford a large income while in business, but enough to retire from business and live in affluence on realized gains. These causes have, in England, been greatly aided by that extreme incapacity of the people for personal enjoyment, which is a characteristic of countries over which puritanism has passed. But if accumulation is, on one hand, rendered easier by the absence of a taste for pleasure, it is, on the other, made more difficult by the presence of a very real taste for expense. So strong is the association between personal consequence and the signs of wealth, that the silly desire for the appearance of a large expenditure has the force of a passion, among large classes of a nation which derives less pleasure than perhaps any other in the world from what it spends. Owing to this circumstance, the effective desire of accumulation has never reached so high a pitch in England as it did in Holland, where, there being no rich idle class to set the example of a reckless expenditure, and the mercantile classes, who possessed the substantial power on which social influence always waits, being left to establish their own scale of living and standard of propriety, their habits remained frugal and unostentatious.
In England and Holland, then, for a long time past, and now in most other countries in Europe (which are rapidly following England in the same race), the desire of accumulation does not require, to make it effective, the copious returns which it requires in Asia, but is sufficiently called into action by a rate of profit so low, that instead of slackening, accumulation seems now to proceed more rapidly than ever; and the second requisite of increased production, increase of capital, shows no tendency to become deficient. So far as that element is concerned, production is susceptible of an increase without any assignable bounds.
The progress of accumulation would no doubt be considerably checked, if the returns to capital were to be reduced still lower than at present. But why should any possible increase of capital have that effect? This question carries the mind forward to the remaining one of the three requisites of production. The limitation to production, not consisting in any necessary limit to the increase of the other two elements, labour and capital, must turn upon the properties of the only element which is inherently, and in itself, limited in quantity. It must depend on the properties of land.
of the law of the increase of production from land
§ 1. Land differs from the other elements of production, labour and capital, in not being susceptible of indefinite increase. Its extent is limited, and the extent of the more productive kinds of it more limited still. It is also evident that the quantity of produce capable of being raised on any given piece of land is not indefinite. This limited quantity of land, and limited productiveness of it, are the real limits to the increase of production.
That they are the ultimate limits, must always have been clearly seen. But since the final barrier has never in any instance been reached; since there is no country in which all the land, capable of yielding food, is so highly cultivated that a larger produce could not (even without supposing any fresh advance in agricultural knowledge) be obtained from it, and since a large portion of the earth's surface still remains entirely uncultivated; it is commonly thought, and is very natural at first to suppose, that for the present all limitation of production or population from this source is at an indefinite distance, and that ages must elapse before any practical necessity arises for taking the limiting principle into serious consideration.
I apprehend this to be not only an error, but the most serious one, to be found in the whole field of political economy. The question is more important and fundamental than any other; it involves the whole subject of the causes of poverty, in a rich and industrious community: and unless this one matter be thoroughly understood, it is to no purpose proceeding any further in our inquiry.
§ 2. The limitation to production from the properties of the soil, is not like the obstacle opposed by a wall, which stands immovable in one particular spot, and offers no hindrance to motion short of stopping it entirely. We may rather compare it to a highly elastic and extensible band, which is hardly ever so violently stretched that it could not possibly be stretched any more, yet the pressure of which is felt long before the final limit is reached, and felt more severely the nearer that limit is approached.
After a certain, and not very advanced, stage in the progress of agriculture,1 it is the law of production from the land, that in any given state of agricultural skill and knowledge, by increasing the labour, the produce is not increased in an equal degree; doubling the labour does not double the produce; or, to express the same thing in other words, every increase of produce is obtained by a more than proportional increase in the application of labour to the land.
This general law of agricultural industry is the most important proposition in political economy. Were the law different, nearly all the phenomena of the production and distribution of wealth would be other than they are. The most fundamental errors which still prevail on our subject, result from not perceiving this law at work underneath the more superficial agencies on which attention fixes itself; but mistaking those agencies for the ultimate causes of effects of which they may influence the form and mode, but of which it alone determines the essence.
When, for the purpose of raising an increase of produce, recourse is had to inferior land, it is evident that, so far, the produce does not increase in the same proportion with the labour. The very meaning of inferior land, is land which with equal labour returns a smaller amount of produce. Land may be inferior either in fertility or in situation. The one requires a greater proportional amount of labour for growing the produce, the other for carrying it to market. If the land A yields a thousand quarters of wheat, to a given outlay in wages, manure, &c., and in order to raise another thousand recourse must be had to the land B, which is either less fertile or more distant from the market, the two thousand quarters will cost more than twice as much labour as the original thousand, and the produce of agriculture will be increased in a less ratio than the labour employed in procuring it.
Instead of cultivating the land B, it would be possible, by higher cultivation, to make the land A produce more. It might be ploughed or harrowed twice instead of once, or three times instead of twice; it might be dug instead of being ploughed; after ploughing, it might be gone over with a hoe instead of a harrow, and the soil more completely pulverized; it might be oftener or more thoroughly weeded; the implements used might be of higher finish, or more elaborate construction; a greater quantity or more expensive kinds of manure might be applied, or when applied, they might be more carefully mixed and incorporated with the soil. These are some of the modes by which the same land may be made to yield a greater produce; and when a greater produce must be had, some of these are among the means usually employed for obtaining it. But, that it is obtained at a more than proportional increase of expense, is evident from the fact that inferior lands are cultivated. Inferior lands, or lands at a greater distance from the market, of course yield an inferior return, and an increasing demand cannot be supplied from them unless at an augmentation of cost, and therefore of price. If the additional demand could continue to be supplied from the superior lands, by applying additional labour and capital, at no greater proportional cost than that at which they yield the quantity first demanded of them, the owners or farmers of those lands could undersell all others, and engross the whole market. Lands of a lower degree of fertility or in a more remote situation, might indeed be cultivated by their proprietors, for the sake of subsistence or independence; but it never could be the interest of any one to farm them for profit. That a profit can be made from them, sufficient to attract capital to such an investment, is a proof that cultivation on the more eligible lands has reached a point, beyond which any greater application of labour and capital would yield, at the best, no greater return than can be obtained at the same expense from less fertile or less favourably situated lands.
The careful cultivation of a well-farmed district of England or Scotland is a symptom and an effect of the more unfavourable terms which the land has begun to exact for any increase of its fruits. Such elaborate cultivation costs much more in proportion, and requires a higher price to render it profitable, than farming on a more superficial system; and would not be adopted if access could be had to land of equal fertility, previously unoccupied. Where there is the choice of raising the increasing supply which society requires, from fresh land of as good quality as that already cultivated, no attempt is made to extract from land anything approaching to what it will yield on what are esteemed the best European modes of cultivating. The land is tasked up to the point at which the greatest return is obtained in proportion to the labour employed, but no further: any additional labour is carried elsewhere. “It is long,” says an intelligent traveller in the United States,∗ “before an English eye becomes reconciled to the lightness of the crops and the careless farming (as we should call it) which is apparent. One forgets that where land is so plentiful and labour so dear as it is here, a totally different principle must be pursued to that which prevails in populous countries, and that the consequence will of course be a want of tidiness, as it were, and finish, about everything which requires labour.” Of the two causes mentioned, the plentifulness of land seems to me the true explanation, rather than the dearness of labour; for, however dear labour may be, when food is wanted, labour will always be applied to producing it in preference to anything else. But this labour is more effective for its end by being applied to fresh soil, than if it were employed in bringing the soil already occupied into higher cultivation. Only when no soils remain to be broken up but such as either from distance or inferior quality require a considerable rise of price to render their cultivation profitable, can it become advantageous to apply the high farming of Europe to any American lands; except, perhaps, in the immediate vicinity of towns, where saving in cost of carriage may compensate for great inferiority in the return from the soil itself. As American farming is  to English, so is the ordinary English to that of Flanders, Tuscany, or the Terra di Lavoro; where by the application of a far greater quantity of labour there is obtained a considerably larger gross produce, but on such terms as would never be advantageous to a mere speculator for profit, unless made so by much higher prices of agricultural produce.
The principle which has now been stated must be received, no doubt, with certain explanations and limitations. Even after the land is so highly cultivated that the mere application of additional labour, or of an additional amount of ordinary dressing, would yield no return proportioned to the expense, it may still happen that the application of a much greater additional labour and capital to improving the soil itself, by draining or permanent manures, would be as liberally remunerated by the produce, as any portion of the labour and capital already employed. It would sometimes be much more amply remunerated. This could not be, if capital always sought and found the most advantageous employment; but if the most advantageous employment has to wait longest for its remuneration, it is only in a rather advanced stage of industrial development that the preference will be given to it; and even in that advanced stage, the laws or usages connected with property in land and the tenure of farms, are often such as to prevent the disposable capital of the country from flowing freely into the channel of agricultural improvement: and hence the increased supply, required by increasing population, is sometimes raised at an augmenting cost by higher cultivation, when the means of producing it without increase of cost are known and accessible. There can be no doubt, that if capital were forthcoming to execute, within the next year, all known and recognised improvements in the land of the United Kingdom which would pay at the existing prices, that is, which would increase the produce in as great or a greater ratio than the expense; the result would be such (especially if we include Ireland in the supposition) that inferior land would not for a long time require to be brought under tillage: probably a considerable part of the less productive lands now cultivated, which are not particularly favoured by situation, would go out of culture; or (as the improvements in question are not so much applicable to good land, but operate rather by converting bad land into good) the contraction of cultivation might principally take place by a less high dressing and less elaborate tilling of land generally; a falling back to something nearer the character of American farming; such only of the poor lands being altogether abandoned as were not found susceptible of improvement. And thus the aggregate produce of the whole cultivated land would bear a larger proportion than before to the labour expended on it; and the general law of diminishing return from land would have undergone, to that extent, a temporary supersession. No one, however, can suppose that even in these circumstances, the whole produce required for the country could be raised exclusively from the best lands, together with those possessing advantages of situation to place them on a par with the best. Much would undoubtedly continue to be produced under less advantageous conditions, and with a smaller proportional return, than that obtained from the best soils and situations. And in proportion as the further increase of population required a still greater addition to the supply, the general law would resume its course, and the further augmentation would be obtained at a more than proportionate expense of labour and capital.
3. 1 That the produce of land increases, caeteris paribus, in a diminishing ratio to the increase in the labour employed, is a truth more often ignored or disregarded than actually denied. It has, however, met with a direct impugner in the well-known American political economist, Mr. H. C. Carey, who maintains that the real law of agricultural industry is the very reverse; the produce increasing in a greater ratio than the labour, or in other words affording to labour a perpetually increasing return. To substantiate this assertion, he argues that cultivation does not begin with the better soils, and extend from them, as the demand increases, to the poorer, but begins with the poorer, and does not, till long after, extend itself to the more fertile. Settlers in a new country invariably commence on the high and thin lands; the rich but swampy soils of the river bottoms cannot at first be brought into cultivation, by reason of their unhealthiness, and of the great and prolonged labour required for clearing and draining them. As population and wealth increase, cultivation travels down the hill sides, clearing them as it goes, and the most fertile soils, those of the low grounds, are generally (he even says universally) the latest cultivated. These propositions, with the inferences which Mr. Carey draws from them, are set forth at much length in his latest and most elaborate treatise, Principles of Social Science; and he considers them as subverting the very foundation of what he calls the English political economy, with all its practical consequences, especially the doctrine of free trade.
As far as words go, Mr. Carey has a good case against several of the highest authorities in political economy, who certainly did enunciate in too universal a manner the law which they laid down, not remarking that it is not true of the first cultivation in a newly settled country. Where population is thin and capital scanty, land which requires a large outlay to render it fit for tillage must remain untilled; though such lands, when their time has come, often yield a greater produce than those earlier cultivated, not only absolutely, but proportionally to the labour employed, even if we include that which had been expended in originally fitting them for culture. But it is not pretended that the law of diminishing return was operative from the very beginning of society: and though some political economists may have believed it to come into operation earlier than it does, it begins quite early enough to support the conclusions they founded on it. Mr. Carey will hardly assert that in any old country—in England or France, for example—the lands left waste are, or have for centuries been, more naturally fertile than those under tillage. Judging even by his own imperfect test, that of local situation—how imperfect I need not stop to point out—is it true that in England or France at the present day the uncultivated part of the soil consists of the plains and valleys, and the cultivated, of the hills? Every one knows, on the contrary, that it is the high lands and thin soils which are left to nature, and when the progress of population demands an increase of cultivation, the extension is from the plains to the hills. Once in a century, perhaps, a Bedford Level may be drained, or a Lake of Harlem pumped out: but these are slight and transient exceptions to the normal progress of things; and in old countries which are at all advanced in civilization, little of this sort remains to be done.∗
Mr. Carey himself unconsciously bears the strongest testimony to the reality of the law he contends against: for one of the propositions most strenuously maintained by him is, that the raw products of the soil, in an advancing community, steadily tend to rise in price. Now, the most elementary truths of political economy show that this could not happen, unless the cost of production, measured in labour, of those products, tended to rise. If the application of additional labour to the land was, as a general rule, attended with an increase in the proportional return, the price of produce, instead of rising, must necessarily fall as society advances, unless the cost of production of gold and silver fell still more: a case so rare, that there are only two periods in all history when it is known to have taken place; the one, that which followed the opening of the Mexican and Peruvian mines; the other, that in which we now live. At all known periods, except these two, the cost of production of the precious metals has been either stationary or rising. If, therefore, it be true that the tendency of agricultural produce is to rise in money price as wealth and population increase, there needs no other evidence that the labour required for raising it from the soil tends to augment when a greater quantity is demanded.
I do not go so far as Mr. Carey: I do not assert that the cost of production, and consequently the price, of agricultural produce, always and necessarily rises as population increases. It tends to do so; but the tendency may be, and sometimes is, even during long periods, held in check. The effect does not depend on a single principle, but on two antagonizing principles. There is another agency, in habitual antagonism to the law of diminishing return from land; and to the consideration of this we shall now proceed. It is no other than the progress of civilization. I use this general and somewhat vague expression, because the things to be included are so various, that hardly any term of a more restricted signification would comprehend them all.
Of these, the most obvious is the progress of agricultural knowledge, skill, and invention. Improved processes of agriculture are of two kinds: some enable the land to yield a greater absolute produce, without an equivalent increase of labour; others have not the power of increasing the produce, but have that of diminishing the labour and expense by which it is obtained. Among the first are to be reckoned the disuse of fallows, by means of the rotation of crops; and the introduction of new articles of cultivation capable of entering advantageously into the rotation. The change made in British agriculture towards the close of the last century, by the introduction of turnip husbandry, is spoken of as amounting to a revolution. These improvements operate not only by enabling the land to produce a crop every year, instead of remaining idle one year in every two or three to renovate its powers, but also by direct increase of its productiveness; since the great addition made to the number of cattle by the increase of their food, affords more abundant manure to fertilize the corn lands. Next in order comes the introduction of new articles of food, containing a greater amount of sustenance, like the potato, or more productive species or varieties of the same plant, such as the Swedish turnip. In the same class of improvements must be placed a better knowledge of the properties of manures, and of the most effectual modes of applying them; the introduction of new and more powerful fertilizing agents, such as guano, and the conversion to the same purpose, of substances previously wasted; inventions like subsoil-ploughing or tile draining; improvements in the breed or feeding of labouring cattle; augmented stock of the animals which consume and convert into human food what would otherwise be wasted; and the like. The other sorts of improvements, those which diminish labour, but without increasing the capacity of the land to produce, are such as the improved construction of tools; the introduction of new instruments which spare manual labour, as the winnowing and threshing machines; a more skilful and economical application of muscular exertion, such as the introduction, so slowly accomplished in England, of Scotch ploughing, with two horses abreast and one man, instead of three or four horses in a team and two men, &c. These improvements do not add to the productiveness of the land, but they are equally calculated with the former to counteract the tendency in the cost of production of agricultural produce to rise with the progress of population and demand.
Analogous in effect to this second class of agricultural improvements, are improved means of communication. Good roads are equivalent to good tools. It is of no consequence whether the economy of labour takes place in extracting the produce from the soil, or in conveying it to the place where it is to be consumed. Not to say in addition, that the labour of cultivation itself is diminished by whatever lessens the cost of bringing manure from a distance, or facilitates the many operations of transport from place to place which occur within the bounds of the farm. Railways and canals are virtually a diminution of the cost of production of all things sent to market by them; and literally so of all those, the appliances and aids for producing which, they serve to transmit. By their means land can be cultivated, which could not otherwise have remunerated the cultivators without a rise of price. Improvements in navigation have, with respect to food or materials brought from beyond sea, a corresponding effect.
From similar considerations, it appears that many purely mechanical improvements, which have, apparently at least, no peculiar connexion with agriculture, nevertheless enable a given amount of food to be obtained with a smaller expenditure of labour. A great improvement in the process of smelting iron, would tend to cheapen agricultural implements, diminish the cost of railroads, of waggons and carts, ships, and perhaps buildings, and many other things to which iron is not at present applied, because it is too costly; and would thence diminish the cost of production of food. The same effect would follow from an improvement in those processes of what may be termed manufacture to which the material of food is subjected after it is separated from the ground. The first application of wind or water power to grind corn tended to cheapen bread as much as a very important discovery in agriculture would have done; and any great improvement in the construction of corn-mills, would have, in proportion, a similar influence. The effects of cheapening locomotion have been already considered. There are also engineering inventions which facilitate all great operations on the earth's surface. An improvement in the art of taking levels is of importance to draining, not to mention canal and railway making. The fens of Holland, and of some parts of England, are drained by pumps worked by the wind or by steam. Where canals of irrigation, or where tanks or embankments are necessary, mechanical skill is a great resource for cheapening production.
Those manufacturing improvements which cannot be made instrumental to facilitate, in any of its stages, the actual production of food, and therefore do not help to counteract or retard the diminution of the proportional return to labour from the soil, have, however, another effect, which is practically equivalent. What they do not prevent, they yet, in some degree, compensate for.
The materials of manufacture being all drawn from the land, and many of them from agriculture, which supplies in particular the entire material of clothing; the general law of production from the land, the law of diminishing return, must in the last resort be applicable to manufacturing as well as to agricultural history. As population increases, and the power of the land to yield increased produce is strained harder and harder, any additional supply of material, as well as of food, must be obtained by a more than proportionally increasing expenditure of labour. But the cost of the material forming generally a very small portion of the entire cost of the manufacture, the agricultural labour concerned in the production of manufactured goods is but a small fraction of the whole labour worked up in the commodity. All the rest of the labour tends constantly and strongly towards diminution, as the amount of production increases. Manufactures are vastly more susceptible than agriculture of mechanical improvements, and contrivances for saving labour; and it has already been seen how greatly the skilful and economical distribution, depend on the extent of the market, and on the possibility of production in large masses. In manufactures, accordingly, the causes tending to increase the productiveness of industry, preponderate greatly over the one cause which tends to diminish it: and the increase of production, called forth by the progress of society, takes place, not at an increasing, but at a continually diminishing proportional cost. This fact has manifested itself in the progressive fall of the prices and values of almost every kind of manufactured goods during two centuries past; a fall accelerated by the mechanical inventions of the last seventy or eighty years, and susceptible of being prolonged and extended beyond any limit which it would be safe to specify.
Now it is quite conceivable that the efficiency of agricultural labour might be undergoing, with the increase of produce, a gradual diminution; that the price of food, in consequence, might be progressively rising, and an ever growing proportion of the population might be needed to raise food for the whole; while yet the productive power of labour in all other branches of industry might be so rapidly augmenting, that the required amount of labour could be spared from manufactures, and nevertheless a greater produce be obtained, and the aggregate wants of the community be on the whole better supplied, than before. The benefit might even extend to the poorest class. The increased cheapness of clothing and lodging might make up to them for the augmented cost of their food.
There is, thus, no possible improvement in the arts of production which does not in one or another mode exercise an antagonist influence to the law of diminishing return to agricultural labour. Nor is it only industrial improvements which have this effect. Improvements in government, and almost every kind of moral and social advancement, operate in the same manner. Suppose a country in the condition of France before the Revolution: taxation imposed almost exclusively on the industrial classes, and on such a principle as to be an actual penalty on production; and no redress obtainable for any injury to property or person, when inflicted by people of rank, or court influence. Was not the hurricane which swept away this system of things, even if we look no further than to its effect in augmenting the productiveness of labour, equivalent to many industrial inventions? The removal of a fiscal burthen on agriculture, such as tithe, has the same effect as if the labour necessary for obtaining the existing produce were suddenly reduced one-tenth. The abolition of corn laws, or of any other restrictions which prevent commodities from being produced where the cost of their production is lowest, amounts to a vast improvement in production. When fertile land, previously reserved as hunting ground, or for any other purpose of amusement, is set free for culture, the aggregate productiveness of agricultural industry is increased. It is well known what has been the effect in England of badly administered poor laws, and the still worse effect in Ireland of a bad system of tenancy, in rendering agricultural labour slack and ineffective. No improvements operate more directly upon the productiveness of labour, than those in the tenure of farms, and in the laws relating to landed property. The breaking up of entails, the cheapening of the transfer of property, and whatever else promotes the natural tendency of land in a system of freedom, to pass out of hands which can make little of it into those which can make more; the substitution of long leases for tenancy at will, and of any tolerable system of tenancy whatever for the wretched cottier system; above all, the acquisition of a permanent interest in the soil by the cultivators of it; all these things are as real, and some of them as great, improvements in production, as the invention of the spinning jenny or the steam-engine.
We may say the same of improvements in education. The intelligence of the workman is a most important element in the productiveness of labour. So low, in some of the most civilized countries, is the present  standard of intelligence, that there is hardly any source from which a more indefinite amount of improvement may be looked for in productive power, than by endowing with brains those who now have only hands. The carefulness, economy, and general trustworthiness of labourers are as important as their intelligence. Friendly relations, and a community of interest and feeling between labourers and employers, are eminently so: I should rather say, would be: for I know not where any such sentiment of friendly alliance now exists. Nor is it only in the labouring class that improvement of mind and character operates with beneficial effect even on industry. In the rich and idle classes, increased mental energy, more solid instruction, and stronger feelings of conscience, public spirit, or philanthropy, would qualify them to originate and promote the most valuable improvements, both in the economical resources of their country, and in its institutions and customs. To look no further than the most obvious phenomena; the backwardness of French agriculture in the precise points in which benefit might be expected from the influence of an educated class, is partly accounted for by the exclusive devotion of the richer landed proprietors to town interests and town pleasures. There is scarcely any possible amelioration of human affairs which would not, among its other benefits, have a favourable operation, direct or indirect, upon the productiveness of industry. The intensity of devotion to industrial occupations would indeed in many cases be moderated by a more liberal and genial mental culture, but the labour actually bestowed on those occupations would almost always be rendered more effective.
Before pointing out the principal inferences to be drawn from the nature of the two antagonist forces by which the productiveness of agricultural industry is determined, we must observe that what we have said of agriculture, is true with little variation, of the other occupations which it represents; of all the arts which extract materials from the globe. Mining industry, for example, usually yields an increase of produce at a more than proportional increase of expense. It does worse, for even its customary annual produce requires to be extracted by a greater and greater expenditure of labour and capital. As a mine does not reproduce the coal or ore taken from it, not only are all mines at last exhausted, but even when they as yet show no signs of exhaustion, they must be worked at a continually increasing cost; shafts must be sunk deeper, galleries driven farther, greater power applied to keep them clear of water; the produce must be lifted from a greater depth, or conveyed a greater distance. The law of diminishing return applies therefore to mining, in a still more unqualified sense than to agriculture: but the antagonizing agency, that of improvements in production, also applies in a still greater degree. Mining operations are more susceptible of mechanical improvements than agricultural: the first great application of the steam-engine was to mining; and there are unlimited possibilities of improvement in the chemical processes by which the metals are extracted. There is another contingency, of no unfrequent occurrence, which avails to counterbalance the progress of all existing mines towards exhaustion: this is, the discovery of new ones, equal or superior in richness.
To resume; all natural agents which are limited in quantity, are not only limited in their ultimate productive power, but, long before that power is stretched to the utmost, they yield to any additional demands on progressively harder terms. This law may however be suspended, or temporarily controlled, by whatever adds to the general power of mankind over nature; and especially by any extension of their knowledge, and their consequent command, of the properties and powers of natural agents.1
consequences of the foregoing laws
§ 1. From the preceding exposition it appears that the limit to the increase of production is two-fold; from deficiency of capital, or of land. Production comes to a pause, either because the effective desire of accumulation is not sufficient to give rise to any further increase of capital, or because, however disposed the possessors of surplus income may be to save a portion of it, the limited land at the disposal of the community does not permit additional capital to be employed with such a return, as would be an equivalent to them for their abstinence.
In countries where the principle of accumulation is as weak as it is in the various nations of Asia; where people will neither save, nor work to obtain the means of saving, unless under the inducement of enormously high profits, nor even then if it is necessary to wait a considerable time for them; where either productions remain scanty, or drudgery great, because there is neither capital forthcoming nor forethought sufficient for the adoption of the contrivances by which natural agents are made to do the work of human labour; the desideratum for such a country, economically considered, is an increase of industry, and of the effective desire of accumulation. The means are, first, a better government: more complete security of property; moderate taxes, and freedom from arbitrary exaction under the name of taxes; a more permanent and more advantageous tenure of land, securing to the cultivator as far as possible the undivided benefits of the industry, skill, and economy he may exert. Secondly, improvement of the public intelligence: the decay of usages or superstitions which interfere with the effective employment of industry; and the growth of mental activity, making the people alive to new objects of desire. Thirdly, the introduction of foreign arts, which raise the returns derivable from additional capital, to a rate corresponding to the low strength of the desire of accumulation: and the importation of foreign capital, which renders the increase of production no longer exclusively dependent on the thrift or providence of the inhabitants themselves, while it places before them a stimulating example, and by instilling new ideas and breaking the chains of habit, if not by improving the actual condition of the population, tends to create in them new wants, increased ambition, and greater thought for the future. These considerations apply more or less to all the Asiatic populations, and to the less civilized and industrious parts of Europe, as Russia, Turkey, Spain, and Ireland.
§ 2. But there are other countries, and England is at the head of them, in which neither the spirit of industry nor the effective desire of accumulation need any encouragement; where the people will toil hard for a small remuneration, and save much for a small profit; where, though the general thriftiness of the labouring class is much below what is desirable, the spirit of accumulation in the more prosperous part of the community requires abatement rather than increase. In these countries there would never be any deficiency of capital, if its increase were never checked or brought to a stand by too great a diminution of its returns. It is the tendency of the returns to a progressive diminution, which causes the increase of production to be often attended with a deterioration in the condition of the producers; and this tendency, which would in time put an end to increase of production altogether, is a result of the necessary and inherent conditions of production from the land.
In all countries which have passed beyond a rather1 early stage in the progress of agriculture, every increase in the demand for food, occasioned by increased population, will always, unless there is a simultaneous improvement in production, diminish the share which on a fair division would fall to each individual. An increased production, in default of unoccupied tracts of fertile land, or of fresh improvements tending to cheapen commodities, can never be obtained but by increasing the labour in more than the same proportion. The population must either work harder, or eat less, or obtain their usual food by sacrificing a part of their other customary comforts. Whenever this necessity is postponed, notwithstanding an increase of population,2 it is because the improvements which facilitate production continue progressive; because the contrivances of mankind for making their labour more effective, keep up an equal struggle with nature, and extort fresh resources from her reluctant powers as fast as human necessities occupy and engross the old.
From this, results the important corollary, that the necessity of restraining population is not, as many persons believe, peculiar to a condition of great inequality of property. A greater number of people cannot, in any given state of civilization, be collectively so well provided for as a smaller. The niggardliness of nature, not the injustice of society, is the cause of the penalty attached to over-population. An unjust distribution of wealth does not even aggravate the evil, but, at most, causes it to be somewhat earlier felt. It is in vain to say, that all mouths which the increase of mankind calls into existence, bring with them hands. The new mouths require as much food as the old ones, and the hands do not produce as much. If all instruments of production were held in joint property by the whole people, and the produce divided with perfect equality among them, and if, in a society thus constituted, industry were as energetic and the produce as ample as at present, there would be enough to make all the existing population extremely comfortable; but when that population had doubled itself, as, with the existing habits of the people, under such an encouragement, it undoubtedly would in little more than twenty years, what would then be their condition? Unless the arts of production were in the same time improved in an almost unexampled degree,1 the inferior soils which must be resorted to, and the more laborious and scantily remunerative cultivation which must be employed on the superior soils, to procure food for so much larger a population, would, by an insuperable necessity, render every individual in the community poorer than before. If the population continued to increase at the same rate, a time would soon arrive when no one would have more than mere necessaries, and, soon after, a time when no one would have a sufficiency of those, and the further increase of population would be arrested by death.
Whether, at the present or any other time, the produce of industry proportionally to the labour employed, is increasing or diminishing, and the average condition of the people improving or deteriorating, depends upon whether population is advancing faster than improvement, or improvement than population. After a degree of density has been attained, sufficient to allow the principal benefits of combination of labour, all further increase tends in itself to mischief, so far as regards the average condition of the people; but the progress of improvement has a counteracting operation, and allows of increased numbers without any deterioration, and even consistently with a higher average of comfort. Improvement must here be understood in a wide sense, including not only new industrial inventions, or an extended use of those already known, but improvements in institutions, education, opinions, and human affairs generally, provided they tend, as almost all improvements do, to give new motives or new facilities to production. If the productive powers of the country increase as rapidly as advancing numbers call for an augmentation of produce, it is not necessary to obtain that augmentation by the cultivation of soils more sterile than the worst already under culture, or by applying additional labour to the old soils at a diminished advantage; or at all events this loss of power is compensated by the increased efficiency with which, in the progress of improvement, labour is employed in manufactures. In one way or the other, the increased population is provided for, and all are as well off as before. But if the growth of human power over nature is suspended or slackened, and population does not slacken its increase; if, with only the existing command over natural agencies, those agencies are called upon for an increased produce; this greater produce will not be afforded to the increased population, without either demanding on the average a greater effort from each, or on the average reducing each to a smaller ration out of the aggregate produce.
As a matter of fact, at some periods the progress of population has been the more rapid of the two, at others that of improvement. In England during a long interval preceding the French Revolution, population increased slowly; but the progress of improvement, at least in agriculture, would seem to have been still slower, since though nothing occurred to lower the value of the precious metals, the price of corn rose considerably, and England, from an exporting, became an importing country. This evidence, however, is short of conclusive, inasmuch as the extraordinary number of abundant seasons during the first half of the century, not continuing during the last, was a cause of increased price in the later period, extrinsic to the ordinary progress of society. Whether during the same period improvements in manufactures, or diminished cost of imported commodities, made amends for the diminished productiveness of labour on the land, is uncertain. But ever since the great mechanical inventions of Watt, Arkwright, and their contemporaries, the return to labour has probably increased as fast as the population; and would have outstripped it, if that very augmentation of return had not called forth an additional portion of the inherent power of multiplication in the human species. During the twenty or thirty years last elapsed , so rapid has been the extension of improved processes of agriculture, that even the land yields a greater produce in proportion to the labour employed; the average price of corn had become decidedly lower, even before the repeal of the corn laws had so materially lightened, for the time being, the pressure of population upon production. But though improvement may during a certain space of time keep up with, or even surpass, the actual increase of population, it assuredly never comes up to the rate of increase of which population is capable; and nothing could have prevented a general deterioration in the condition of the human race, were it not that population has in fact been restrained. Had it been restrained still more, and the same improvements taken place, there would have been a larger dividend than there now is, for the nation or the species at large. The new ground wrung from nature by the improvements would not have been all used up in the support of mere numbers. Though the gross produce would not have been so great, there would have been a greater produce per head of the population.
§ 3. When the growth of numbers outstrips the progress of improvement, and a country is driven to obtain the means of subsistence on terms more and more unfavourable, by the inability of its land to meet additional demands except on more onerous conditions; there are two expedients by which it may hope to mitigate that disagreeable necessity, even though no change should take place in the habits of the people with respect to their rate of increase. One of these expedients is the importation of food from abroad. The other is emigration.
The admission of cheaper food from a foreign country, is equivalent to an agricultural invention by which food could be raised at a similarly diminished cost at home. It equally increases the productive power of labour. The return was before, so much food for so much labour employed in the growth of food: the return is now, a greater quantity of food, for the same labour employed in producing cottons or hardware or some other commodity, to be given in exchange for food. The one improvement, like the other, throws back the decline of the productive power of labour by a certain distance: but in the one case as in the other, it immediately resumes its course; the tide which has receded, instantly begins to re-advance. It might seem, indeed, that when a country draws its supply of food from so wide a surface as the whole habitable globe, so little impression can be produced on that great expanse by any increase of mouths in one small corner of it, that the inhabitants of the country may double and treble their numbers, without feeling the effect in any increased tension of the springs of production, or any enhancement of the price of food throughout the world. But in this calculation several things are overlooked.
In the first place, the foreign regions from which corn can be imported do not comprise the whole globe, but those parts of it principally which are in the immediate neighbourhood of coasts or navigable rivers. The coast is the part of most countries which is earliest and most thickly peopled, and has seldom any food to spare. The chief source of supply, therefore, is the strip of country along the banks of some navigable river, as the Nile, the Vistula, or the Mississippi; and of such there is not, in the productive regions of the earth, so great a multitude as to suffice during an indefinite time for a rapidly growing demand, without an increasing strain on the productive powers of the soil. To obtain auxiliary supplies of corn from the interior in any abundance, is, in the existing state of the communications , in most cases impracticable. By improved roads, and by canals and railways, the obstacle will eventually be so reduced as not to be insuperable: but this is a slow progress; in all the food-exporting countries except America, a very slow progress; and one which cannot keep pace with population, unless the increase of the last is very effectually restrained.
In the next place, even if the supply were drawn from the whole instead of a small part of the surface of the exporting counties, the quantity of food would still be limited, which could be obtained from them without an increase of the proportional cost. The countries which export food may be divided into two classes; those in which the effective desire of accumulation is strong, and those in which it is weak. In Australia and the United States of America, the effective desire of accumulation is strong; capital increases fast, and the production of food might be very rapidly extended. But in such countries population also increases with extraordinary rapidity. Their agriculture has to provide for their own expanding numbers, as well as for those of the importing countries. They must, therefore, from the nature of the case, be rapidly driven, if not to less fertile, at least what is equivalent, to remoter and less accessible lands, and to modes of cultivation like those of old countries, less productive in proportion to the labour and expense.
But the countries which have at the same time cheap food and great industrial prosperity are few, being only those in which the arts of civilized life have been transferred full-grown to a rich and uncultivated soil. Among old countries, those which are able to export food, are able only because their industry is in a very backward state; because capital, and hence population, have never increased sufficiently to make food rise to a higher price. Such countries are  Russia, Poland, and the plains of the Danube. In those regions the effective desire of accumulation is weak, the arts of production most imperfect, capital scanty, and its increase, especially from domestic sources, slow. When an increased demand arose for food to be exported to other countries, it would only be very gradually that food could be produced to meet it. The capital needed could not be obtained by transfer from other employments, for such do not exist. The cottons or hardware which would be received from England in exchange for corn, the Russians and Poles do not now produce in the country: they go without them. Something might in time be expected from the increased exertions to which producers would be stimulated by the market opened for their produce; but to such increase of exertion, the habits of countries whose agricultural population consists of serfs, or of peasants who have but just emerged from a servile condition, are the reverse of favourable, and even in this age of movement these habits do not rapidly change. If a greater outlay of capital is relied on as the source from which the produce is to be increased, the means must either be obtained by the slow process of saving, under the impulse given by new commodities and more extended intercourse (and in that case the population would most likely increase as fast), or must be brought in from foreign countries. If England is to obtain a rapidly increasing supply of corn from Russia or Poland, English capital must go there to produce it. This, however, is attended with so many difficulties, as are equivalent to great positive disadvantages. It is opposed by differences of language, differences of manners, and a thousand obstacles arising from the institutions and social relations of the country; and after all it would inevitably so stimulate population on the spot, that nearly all the increase of food produced by its means would probably be consumed without leaving the country: so that, if it were not the almost only mode of introducing foreign arts and ideas, and giving an effectual spur to the backward civilization of those countries, little reliance could be placed on it for increasing the exports, and supplying other countries with a progressive and indefinite increase of food. But to improve the civilization of a country is a slow process, and gives time for so great an increase of population both in the country itself, and in those supplied from it, that its effect in keeping down the price of food against the increase of demand, is not likely to be more decisive on the scale of all Europe, than on the smaller one of a particular nation.
The law, therefore, of diminishing return to industry, whenever population makes a more rapid progress than improvement, is not solely applicable to countries which are fed from their own soil, but in substance applies quite as much to those which are willing to draw their food from any accessible quarter that can afford it cheapest. A sudden and great cheapening of food, indeed, in whatever manner produced, would, like any other sudden improvement in the arts of life, throw the natural tendency of affairs a stage or two further back, though without altering its course.1 There is one contingency connected with freedom of importation, which may yet produce temporary effects greater than were ever contemplated either by the bitterest enemies or the most ardent adherents of free-trade in food. Maize, or Indian corn, is a product capable of being supplied in quantity sufficient to feed the whole country, at a cost, allowing for difference of nutritive quality, cheaper even than the potato. If maize should ever substitute itself for wheat as the staple food of the poor, the productive power of labour in obtaining food would be so enormously increased, and the expense of maintaining a family so diminished, that it would require perhaps some generations for population, even if it started forward at an American pace, to overtake this great accession to the facilities of its support.
§ 4. Besides the importation of corn, there is another resource which can be invoked by a nation whose increasing numbers press hard, not against their capital, but against the productive capacity of their land: I mean Emigration, especially in the form of Colonization. Of this remedy the efficacy as far as it goes is real, since it consists in seeking elsewhere those unoccupied tracts of fertile land, which if they existed at home would enable the demand of an increasing population to be met without any falling off in the productiveness of labour. Accordingly, when the region to be colonized is near at hand, and the habits and tastes of the people sufficiently migratory, this remedy is completely effectual. The migration from the older parts of the American Confederation to the new territories, which is to all intents and purposes colonization, is what enables population to go on unchecked throughout the Union without having yet diminished the return to industry, or increased the difficulty of earning a subsistence. If Australia or the interior of Canada were as near to Great Britain as Wisconsin and Iowa to New York; if the superfluous people could remove to it without crossing the sea, and were of as adventurous and restless a character, and as little addicted to staying at home, as their kinsfolk of New England, those unpeopled continents would render the same service to the United Kingdom which the old states of America derive from the new. But, these things being as they are—though a judiciously conducted emigration is a most important resource for suddenly lightening the pressure of population by a single effort—and though in such an extraordinary case as that of Ireland under the threefold operation of the potato failure, the poor law, and the general turning-out of tenantry throughout the country, spontaneous emigration may at a particular crisis remove greater multitudes than it was ever proposed to remove at once by any national scheme;1 it still remains to be shown by experience2 whether a permanent stream of emigration can be kept up, sufficient to take off, as in America, all that portion of the annual increase (when proceeding at its greatest rapidity) which, being in excess of the progress made during the same short period in the arts of life, tends to render living more difficult for every averagely-situated individual in the community. And unless this can be done, emigration cannot, even in an economical point of view, dispense with the necessity of checks to population. Further than this we have not to speak of it in this place. The general subject of colonization as a practical question, its importance to old countries, and the principles on which it should be conducted, will be discussed at some length in a subsequent portion of this treatise.
[∗.]This essential and primary law of man's power over nature was, I believe, first illustrated and made prominent as a fundamental principle of Political Economy, in the first chapter of Mr. [James] Mill's Elements.
[∗.]The able and friendly reviewer of this treatise in the Edinburgh Review (October 1848) conceives the distinction between materials and implements rather differently: proposing to consider as materials “all the things which, after having undergone the change implied in production, are themselves matter of exchange,” and as implements (or instruments) “the things which are employed in producing that change, but do not themselves become part of the exchangeable result.” According to these definitions, the fuel consumed in a manufactory would be considered, not as a material, but as an instrument. This use of the terms accords better than that proposed in the text with the primitive physical meaning of the word “material”; but the distinction on which it is grounded is one almost irrelevant to political economy.
[∗.]Some authorities look upon it as an essential element in the idea of wealth, that it should be capable not solely of being accumulated but of being transferred; and inasmuch as the valuable qualities, and even the productive capacities, of a human being, cannot be detached from him and passed to some one else, they deny to these the appellation of wealth, and to the labour expended in acquiring them the name of productive labour. It seems to me, however, that the skill of an artisan (for instance) being both a desirable possession, and one of a certain durability (not to say productive even of national wealth), there is no better reason for refusing to it the title of wealth because it is attached to a man, than to a coalpit or manufactory because they are attached to a place. Besides, if the skill itself cannot be parted with to a purchaser, the use of it may; if it cannot be sold, it can be hired; and it may be, and is, sold outright in all countries whose laws permit that the man himself should be sold along with it. Its defect of transferability does not result from a natural but from a legal and moral obstacle.
[∗.]Essays on some Unsettled Questions of Political Economy. Essay III. On the words Productive and Unproductive.
[1.][“The bankrupt states of North America” in all editions until the 7th (1871). “It remains to be shown whether England,” &e., remained two lines below until the 5th ed. (1862).]
[1.][See Appendix D. Productive and Unproductive.]
[1.][See Appendix E. The Definition of Capital.]
[∗.]An exception must be admitted when the industry created or upheld by the restrictive law belongs to the class of what are called domestic manufactures. These being carried on by persons already fed—by labouring families, in the intervals of other employment—no transfer of capital to the occupation is necessary to its being undertaken, beyond the value of the materials and tools, which is often inconsiderable. If, therefore, a protecting duty causes this occupation to be carried on, when it otherwise would not, there is in this case a real increase of the production of the country.
[∗.]For example, Mr. Malthus, Dr. Chalmers, M. de Sismondi.
[∗.]It is worth while to direct attention to several circumstances which to a certain extent diminish the detriment caused to the general wealth by the prodigality of individuals, or raise up a compensation, more or less ample, as a consequence of the detriment itself. One of these is, that spendthrifts do not usually succeed in consuming all they spend. Their habitual carelessness as to expenditure causes them to be cheated and robbed on all quarters, often by persons of frugal habits. Large accumulations are continually made by the agents, stewards, and even domestic servants, of improvident persons of fortune; and they pay much higher prices for all purchases than people of careful habits, which accounts for their being popular as customers. They are, therefore, actually not able to get into their possession and destroy a quantity of wealth by any means equivalent to the fortune which they dissipate. Much of it is merely transferred to others, by whom a part may be saved. Another thing to be observed is, that the prodigality of some may reduce others to a forced economy. Suppose a sudden demand for some article of luxury, caused by the caprice of a prodigal, which not having been calculated on beforehand, there has been no increase of the usual supply. The price will rise; and may rise beyond the means or the inclinations of some of the habitual consumers, who may in consequence forego their accustomed indulgence, and save the amount. If they do not, but continue to expend as great a value as before on the commodity, the dealers in it obtain, for only the same quantity of the article, a return increased by the whole of what the spendthrift has paid; and thus the amount which he loses is transferred bodily to them, and may be added to their capital: his increased personal consumption being made up by the privations of the other purchasers, who have obtained less than usual of their accustomed gratification for the same equivalent. On the other hand, a counter-process must be going on somewhere, since the prodigal must have diminished his purchases in some other quarter to balance the augmentation in this; he has perhaps called in funds employed in sustaining productive labour, and the dealers in subsistence and in the instruments of production have had commodities left on their hands, or have received, for the usual amount of commodities, a less than usual return. But such losses of income or capital, by industrious persons except when of extraordinary amount, are generally made up by increased pinching and privation; so that the capital of the community may not be, on the whole, impaired, and the prodigal may have had his self-indulgence at the expense not of the permanent resources, but of the temporary pleasures and comforts of others. For in every case the community are poorer by what any one spends, unless others are in consequence led to curtail their spending. There are yet other and more recondite ways in which the profusion of some may bring about its compensation in the extra savings of others; but these can only be considered in that part of the Fourth Book, which treats of the limiting principle to the accumulation of capital.
[∗.]On the other hand, it must be remembered that war abstracts from productive employment not only capital, but likewise labourers; that the funds withdrawn from the remuneration of productive labourers are partly employed in paying the same or other individuals for unproductive labour; and that by this portion of its effects war expenditure acts in precisely the opposite manner to that which Dr. Chalmers points out, and, so far as it goes, directly counteracts the effects described in the text. So far as labourers are taken from production, to man the army and navy, the labouring classes are not damaged, the capitalists are not benefited; and the general produce of the country is diminished, by war expenditure. Accordingly, Dr. Chalmers's doctrine, though true of this country, is wholly inapplicable to countries differently circumstanced; to France, for example, during the Napoleon wars. At that period the draught on the labouring population of France, for a long series of years, was enormous, while the funds which supported the war were mostly supplied by contributions levied on the countries overrun by the French arms, a very small proportion alone consisting of French capital. In France, accordingly, the wages of labour did not fall, but rose; the employers of labour were not benefited, but injured; while the wealth of the country was impaired by the suspension or total loss of so vast an amount of its productive labour. In England all this was reversed. England employed comparatively few additional soldiers and sailors of her own, while she diverted hundreds of millions of capital from productive employment, to supply munitions of war and support armies for her Continental allies. Consequently, as shown in the text, her labourers suffered, her capitalists prospered, and her permanent productive resources did not fall off.
[∗.]Infra, book iv, chaps. iv, v.
[1.][This sentence replaced in the 3rd ed. (1852) the original text: “So that the capital cannot be dispensed with—the purchasers can.”]
[1.][The rest of this paragraph replaced in the 3rd ed. (1852) the original text: “I am desirous of impressing on the reader that a demand for commodities does not in any manner constitute a demand for labour, but only determines into a particular channel a portion, more or less considerable, of the demand already existing. It determines that a part of the labour and capital of the community shall be employed in producing certain things instead of other things. The demand for labour is constituted solely by the funds directly set apart for the use of labourers.”]
[1.][In the 2nd ed. (1849) there was here inserted “a different mode of stating the argument.” In the 3rd ed. (1852) this became the long footnote of this section; and five new paragraphs were inserted at this point.]
[1.][This paragraph was inserted in the 6th ed. (1865).]
[∗.] The following case, which presents the argument in a somewhat different shape, may serve for still further illustration.
[1.][This paragraph was inserted in the 6th ed. (1865).]
[1.][“Not a labourer” was inserted in the 3rd ed. (1852).]
[2.][See Appendix F. Fundamental Propositions on Capital.]
[∗.]Infra, book ii. chap. xvi. On Rent.
[1.][So altered in 2nd ed. (1849) from the original: “this may not, and often will not, be the case.”]
[2.][The first two sentences of this paragraph were inserted in the 2nd ed. (1849), and the subsequent sentences slightly changed in form.]
[∗.] The clearing away of the small farmers in the North of Scotland, within the present century, was, however, a case of it; and Ireland, since the potato famine and the repeal of the corn laws, is another. The remarkable decrease which has lately attracted notice in the gross produce of Irish agriculture, is, to all appearance, partly attributable to the diversion of land from maintaining human labourers to feeding cattle; and it could not have taken place without the removal of a large part of the Irish population by emigration or death. We have thus two recent instances, in which what was regarded as an agricultural improvement, has diminished the power of the country to support its population. The effect, however, of all the improvements due to modern science is to increase, or at all events, not to diminish, the gross produce.
[∗.]Infra, book iv. chap. v.
[1.][From the 4th ed. (1857) a long passage was omitted at this point. This originally ran as follows:
[1.][The three preceding sentences originally ran as follows: “As much as the industrial spirit required to be stimulated in their case, so much does it require to be moderated in such countries as England and the United States. There, it is not the desire of wealth...; required. Every real improvement in the character of the English or Americans, whether it consist in giving them higher aspirations, or only more numerous and better pleasures, must necessarily moderate the all-engrossing torment of their industrialism; must diminish, therefore, so far as it depends on that cause alone, the aggregate productiveness of their labour. There is no need, however, that it should diminish that strenuous and business-like application to the matter in hand, which is one of their most precious characteristics.”
[∗.]The whole evidence of this intelligent and experienced employer of labour is deserving of attention; as well as much testimony on similar points by other witnesses, contained in the same volume.
[1.][This comment was added in the 3rd ed. (1852).]
[1.][This statement took the place in the 3rd ed. (1852) of the sentence: “Nor are the greatest outward precautions; comparable in efficacy to the monitor within.”]
[∗.]Some minor instances noticed by Mr. Babbage may be cited in further illustration of the waste occasioned to society through the inability of its members to trust one another.
[∗.]Note to Wakefield's edition of Adam Smith, vol. i. p. 26.
[∗.]Supra, pp. 79–90.
[1.][“Now” was omitted before “rapid” in the 3rd ed. (1852).]
[∗.]Say, Cours d'Economie Politique Pratique, vol. i. p. 340.
[∗.]Economy of Machinery and Manufactures, 3rd edition, p. 201.
[∗.]“In astronomical observations, the senses of the operator are rendered so acute by habit, that he can estimate differences of time to the tenth of a second; and adjust his measuring instrument to graduations of which five thousand occupy only an inch. It is the same throughout the commonest processes of manufacture. A child who fastens on the heads of pins will repeat an operation requiring several distinct motions of the muscles one hundred times a minute for several successive hours. In a recent Manchester paper it was stated that a peculiar sort of twist or ‘gimp,’ which cost three shillings making when first introduced, was now manufactured for one penny; and this not, as usually, by the invention of a new machine, but solely through the increased dexterity of the workman.”—Edinburgh Review for January 1849, p. 81.
[∗.]Statement of some New Principles on the subject of Political Economy, by John Rae (Boston, U.S.), p. 164. [Sociological Theory of Capital (1905), p. 102. See infra, p. 165 n.]
[1.][See Appendix G. Division and Combination of Labour.]
[∗.]Page 214 et seqq.
[∗.]Supra, chap. vi.
[1.][This paragraph was added in the 6th ed. (1865).]
[∗.] The observations in the text may hereafter require some degree of modification from inventions such as the steam plough and the reaping machine. The effect, however, of these improvements on the relative advantages of large and small farms, will not depend on the efficiency of the instruments, but on their costliness. I see no reason to expect that this will be such as to make them inaccessible to small farmers, or combinations of small farmers.
[1.][This reference to steam threshing machines was inserted in the 5th ed. (1862); and “until lately” in the reference to Ireland, infra, p. 149.]
[∗.]Prize Essay on The Management of Landed Property in Ireland, by William Blacker (1837), p. 23.
[∗.]“The number of beasts fed on a farm of which the whole is arable land,” (says the elaborate and intelligent treatise on Flemish Husbandry, from personal observation and the best sources, published in the Library of the Society for the Diffusion of Useful Knowledge,) “is surprising to those who are not acquainted with the mode in which the food is prepared for the cattle. A beast for every three acres of land is a common proportion, and in very small occupations, where much spade husbandry is used, the proportion is still greater. After comparing the accounts given in a variety of places and situations of the average quantity of milk which a cow gives when fed in the stall, the result is, that it greatly exceeds that of our best dairy farms, and the quantity of butter made from a given quantity of milk is also greater. It appears astonishing that the occupier of only ten or twelve acres of light arable land should be able to maintain four or five cows, but the fact is notorious in the Wacs country.” (pp. 59, 60.)
[∗.]See pp. 352 and 353 of a French translation published at Brussels in 1839, by M. Fred. de Kemmeter, of Ghent.
[∗.]“In the department of the Nord,” says M. Passy, “a farm of 20 hectares (50 acres) produces in calves, dairy produce, poultry, and eggs, a value of sometimes 1000 francs (£40) a year: which, deducting expenses, is an addition to the net produce of 15 to 20 francs per hectare.” Des Systèmes de Culture, p. 114.
[†.] During the interval between the census of 1851 and that of 1856, the increase of the population of Paris alone exceeded the aggregate increase of all France: while nearly all the other large towns likewise showed an increase.
[1.][This and the following paragraph were added in the 5th ed. (1862).]
[∗.]Economie Rurale de la France depuis 1789. Par M. Léonce de Lavergne, Membre de l'Institut et de la Société Centrale d'Agriculture de France. 2mo éd. p. 59.
[1.][See Appendix H. Large and Small Farming.]
[∗.] This has been disputed; but the highest estimate I have seen of the term which population requires for doubling itself in the United States, independently of immigrants and of their progeny—that of Mr. Carey—does not exceed thirty years.
[†.] One of these theories, that of Mr. Doubleday, may be thought to require a passing notice, because it has of late obtained some followers, and because it derives a semblance of support from the general analogies of organic life. This theory maintains that the fecundity of the human animal, and of all other living beings, is in inverse proportion to the quantity of nutriment: that an underfed population multiplies rapidly, but that all classes in comfortable circumstances are, by a physiological law, so unprolific, as seldom to keep up their numbers without being recruited from a poorer class. There is no doubt that a positive excess of nutriment, in animals as well as in fruit trees, is unfavourable to reproduction; and it is quite possible, though by no means proved, that the physiological conditions of fecundity may exist in the greatest degree when the supply of food is somewhat stinted. But any one who might be inclined to draw from this, even if admitted, conclusions at variance with the principles of Mr. Malthus, needs only be invited to look through a volume of the Peerage, and observe the enormous families, almost universal in that class; or call to mind the large families of the English clergy, and generally of the middle classes of England.
[∗.] Mr. Carey expatiates on the absurdity of supposing that matter tends to assume the highest form of organization, the human, at a more rapid rate than it assumes the lower forms, which compose human food; that human beings multiply faster than turnips and cabbages. But the limit to the increase of mankind, according to the doctrine of Mr. Malthus, does not depend on the power of increase of turnips and cabbages, but on the limited quantity of the land on which they can be grown. So long as the quantity of land is practically unlimited, which it is in the United States, and food, consequently, can be increased at the highest rate which is natural to it, mankind also may, without augmented difficulty in obtaining subsistence, increase at their highest rate. When Mr. Carey can show, not that turnips and cabbages, but that the soil itself, or the nutritive elements contained in it, tend naturally to multiply, and that too at a rate exceeding the most rapid possible increase of mankind, he will have said something to the purpose. Till then, this part at least of his argument may be considered as non-existent.
[1.][So from the 3rd ed. (1852). The original second clause of the sentence ran: “There is always an immense residuary power behind, ready to start into activity as soon as the pressure which restrained it is taken off.”]
[1.][See Appendix I. Population.]
[∗.]This treatise is an example, such as not unfrequently presents itself, how much more depends on accident, than on the qualities of a book, in determining its reception. Had it appeared at a suitable time, and been favoured by circumstances, it would have had every requisite for great success. The author, a Scotchman settled in the United States, unites much knowledge, an original vein of thought, a considerable turn for philosophic generalities, and a manner of exposition and illustration calculated to make ideas tell not only for what they are worth, but for more than they are worth, and which sometimes, I think, has that effect in the writer's own mind. The principal fault of the book is the position of antagonism in which, with the controversial spirit apt to be found in those who have new thoughts on old subjects, he has placed himself towards Adam Smith. I call this a fault, (though I think many of the criticisms just, and some of them far-seeing,) because there is much less real difference of opinion than might be supposed from Dr. Rae's animadversions; and because what he has found vulnerable in his great predecessor is chiefly the “human too much” in his premises; the portion of them that is over and above what was either required or is actually used for the establishment of his conclusions. [A re-arranged reprint of John Rae's New Principles of Political Economy (1834) has been edited by Professor Mixter, and published (1905) under the title The Sociological Theory of Capital.]
[∗.]Rae, p. 123 [ed. Mixter, p. 57].
[∗.]Rae, p. 136 [ed. Mixter, p. 71].
[∗.]Rae, p. 140 [ed. Mixter, p. 76].
[∗.]Rae, pp. 151–5 [ed. Mixter, pp. 88–92].
[1.][From the 6th ed. (1865) was first omitted the following explanatory clause of the original: “as soon, in fact, as men have applied themselves to cultivation with any energy, and have brought to it any tolerable tools.”]
[∗.]Letters from America, by John Robert Godley, vol. i. p. 42, See also Lyell's Travels in America, vol. ii. p. 83,
[1.][The account of Carey's argument, occupying this and the next two paragraphs, took the place in the 6th ed. (1865) of the brief paragraph referring, without mentioning any name, to the assertion that “the returns from land are greater in an advanced, than in an early, stage of cultivation—when much capital, than when little, is applied to agriculture.]
[∗.]Ireland may be alleged as an exception; a large fraction of the entire soil of that country being still  incapable of cultivation for want of drainage. But though Ireland is an old country, unfortunate social and political circumstances have kept it a poor and backward one. Neither is it at all certain that the bogs of Ireland, if drained and brought under tillage, would take their place along with Mr. Carey's fertile river bottoms, or among any but the poorer soils.
[1.][See Appendix J. The Law of Diminishing Return.]
[1.][In the 6th ed. (1865) “rather” replaced the original “very.”]
[2.][The qualifying clause “notwithstanding . . population” was inserted in the 6th ed. (1865).]
[1.][So from the 3rd ed. (1852). The original ran: “so unexampled a degree as to double the productive power of labour.”]
[1.][This one sentence replaced in the 3rd ed. (1852) the following passage of the original text: “If, indeed, the release of the corn trade from restriction had produced, or should still produce, a sudden cheapening of food, this, like any other sudden improvement in the arts of life, would throw the natural tendency of affairs a stage or two further back, but without at all altering its course. There would be more for everybody in the first instance; but this more would begin immediately and continue always to grow less, so long as population went on increasing, unaccompanied by other events of a countervailing tendency.
[1.][The reference to Ireland (“and though... scheme”) was inserted in the 3rd ed. (1852).]
[2.][So from the 6th ed. (1865). The original ran: “There is no probability that even under the most enlightened arrangements a permanent stream, &c.”]