The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Principles of Political Economy
• Introduction
• Chapter I: On the Definitions of Wealth and Productive Labour
• Chapter II: On the Nature and Measures of Value
• Chapter III: Of the Rent of Land
• Chapter IV: Of the Wages of Labour
• Chapter V: Of the Profits of Capital
• Chapter VI: Of the Distinction Between Wealth and Value
• Chapter VII: On the Immediate Causes of the Progress of Wealth

INTRODUCTION

[The science of political economy resembles more the sciences of morals and politics than the science of mathematics.

This conclusion, founded on a view of the subjects about which political economy is conversant, is further strengthened by the differences of opinion which have prevailed among those who have directed a great portion of their attention to this study.

The Economists and Adam Smith differed on some important questions in political economy, though they agreed on others still more important.

Among the most distinguished modern writers, differences of opinion continue to prevail on questions of great importance.

The correct determination of these questions is of great practical consequence.

An agreement among the principal writers in Political Economy is very desirable with a view to the authority of the science in its practical application.

In the present state of the science, an endeavour to settle some important yet controverted points may be more useful than an attempt to frame a new and complete treatise.]

The principal cause of error, and of the differences which prevail at present among the scientific writers on political economy, appears to me to be | a precipitate attempt to simplify and generalize; and while their more practical opponents draw too hasty inferences from a frequent appeal to partial facts, these writers run into a contrary extreme, and do not sufficiently try their theories by a reference to that enlarged and comprehensive experience which, on so complicated a subject, can alone establish their truth and utility.

To minds of a certain cast there is nothing so captivating as simplification and generalization. It is indeed the desirable and legitimate object of genuine philosophy, whenever it can be effected consistently with truth; and for this very reason, the natural tendency towards it has, in almost every science with which we are acquainted, led to crude and premature theories.

In political economy the desire to simplify has occasioned an unwillingness to acknowledge the operation of more causes than one in the production of particular effects; and if one cause would account for a considerable portion of a certain class of phenomena, the whole has been ascribed to it without sufficient attention to the facts, which would not admit of being so solved. I have always thought that the late controversy on the bullion question presented a signal instance of this kind of error. Each party being possessed of a theory which would account for an unfavourable exchange, and an excess of the market price above the mint price of bullion, adhered to that single view of the question, which it had been accustomed to consider as correct; and scarcely one 7 writer seemed willing | to admit of the operation of both theories, the combination of which, sometimes acting in conjunction and sometimes in opposition, could alone adequately account for the variable and complicated phenomena observable.*(1)

It is certain that we cannot too highly respect and venerate that admirable rule of Newton, not to admit more causes than are necessary to the solution of the phenomena we are considering, but the rule itself implies, that those which really are necessary must be admitted. Before the shrine of truth, as discovered by facts and experience, the fairest theories and the most beautiful classifications must fall. The chemist of thirty years ago may be allowed to regret, that new discoveries in the science should disturb and confound his previous systems and arrangements; but he is not entitled to the name of philosopher, if he does not give them up without a struggle, as soon as the experiments which refute them are fully established.

The same tendency to simplify and generalize, produces a still greater disinclination to allow of modifications, limitations, and exceptions to any rule or proposition, than to admit the operation of more causes than one. Nothing indeed is so unsatisfactory, and gives so unscientific and unmas-|terly an air to a proposition as to be obliged to make admissions of this kind; yet there is no truth of which I feel a stronger conviction than that there are many important propositions in political economy which absolutely require limitations and exceptions; and it may be confidently stated that the frequent combination of complicated causes, the action and reaction of cause and effect on each other, and the necessity of limitations and exceptions in a considerable number of important propositions, form the main difficulties of the science, and occasion those frequent mistakes which it must be allowed are made in the prediction of results.

To explain myself by an instance. Adam Smith has stated, that capitals are increased by parsimony, that every frugal man is a public benefactor,† and that the increase of wealth depends upon the balance of produce above consumption.‡ That these propositions are true to a great extent is perfectly unquestionable. No considerable and continued increase of wealth could possibly take place without that degree of frugality which occasions, annually, the conversion of some revenue into capital, and creates a balance of produce above consumption; but it is quite obvious that they are not true to an indefinite extent, and that the principle of saving, pushed to excess, would destroy the motive to production.(2) If every person were satisfied with the simplest food, the poorest clothing, and the meanest houses, it is certain that no other sort | of food, clothing, and lodging would be in existence; and as there would be no adequate motive to the proprietors of land to cultivate well, not only the wealth derived from conveniences and luxuries would be quite at an end, but if the same divisions of land continued, the production of food would be prematurely checked, and population would come to a stand long before the soil had been well cultivated. If consumption exceed production, the capital of the country must be diminished, and its wealth must be gradually destroyed from its want of power to produce; if production be in a great excess above consumption, the motive to accumulate and produce must cease from the want of will to consume. The two extremes are obvious; and it follows that there must be some intermediate point, though the resources of political economy may not be able to ascertain it, where, taking into consideration both the power to produce and the will to consume, the encouragement to the increase of wealth is the greatest.

[The necessity of limitations and exceptions illustrated in the rules which relate to the division of land.

The tendency to premature generalization among political economists occasions also an unwillingness to bring their theories to the test of experience.

The first business of philosophy is to account for things as they are.

A comprehensive attention to facts is necessary, both to prevent the multiplication of theories, and to confirm those which are just.

The science of political economy is essentially practical, and applicable to the common business of human life.

Some eminent political economists think that, though exceptions may exist to the general rules of political economy, they need not be noticed.

But the most perfect sincerity, together with the greatest degree of accuracy attainable, are necessary to give that credit and circulation to general principles, which is so desirable.

Another class of persons seem to be satisfied with what has been already done in political economy, and shrink from further inquiries, if they do not immediately see the practical results to which they lead.

Such a tendency, if indulged too far, strikes at the root of all improvement in science.

More of the propositions in political economy will bear the test of cui bono than those of any other department of human knowledge.

Further inquiries, however difficult, should be pursued, both with a view to the improvement and completion of the science, and the practical advantages likely to result from them.

It is of great importance to draw a line, with tolerable precision, between those cases where the expected results are certain, and those where they are uncertain.

Practical statesmen, who have not leisure for the necessary inquiries, should not object, under the guidance of a sound discretion, to make use of the leisure of others.

The principle of non-interference, necessarily limited in practice—1st, By some duties connected with political economy, which it is universally acknowledged belong to the sovereign.

2dly, By the prevalence, in almost every country, of bad regulations, which require to be amended or removed.

3dly, By the necessity of taxation.

The propriety of interfering but little, does not supersede, in any degree, the use of the most extensive professional knowledge either in a statesman or a physician.

One of the specific objects of the present work is to fit the general rules of political economy for practice, by endeavouring to consider all the causes which concur in the production of particular phenomena.

This mode of proceeding is exposed to a danger of an opposite kind to that which arises from a tendency to simplification, a danger which Adam Smith has not always avoided.

A just mean between the two extremes is the point aimed at with a view of arriving at the truth.]

Many of the doctrines of Adam Smith, which had been considered as settled, have lately been called in question by writers entitled to great attention; but they have often failed, as it appears to me, to make good their objections; and in all such cases I have thought it desirable to examine anew, with reference to such objections, the grounds on which his doctrines are founded.

It has been my wish to avoid giving to my work a controversial air. Yet to free it entirely from controversy, while one of my professed objects is to discuss controverted opinions, and to try their truth by a reference to an enlarged experience, is obviously not possible. There is one modern work, in particular, of very high reputation, some of the fundamental principles of which have appeared to me, after the most mature deliberation, to be erroneous; and I should not have done jus-|tice to the ability with which it is written, to the high authority of the writer, and the interests of the science of which it treats, if it had not specifically engaged a considerable portion of my attention. I allude to Mr. Ricardo’s work, “On the Principles of Political Economy and Taxation.”

I have so very high an opinion of Mr. Ricardo’s talents as a political economist, and so entire a conviction of his perfect sincerity and love of truth, that I frankly own I have sometimes felt almost staggered by his authority, while I have remained unconvinced by his reasonings. I have thought that I must unaccountably have overlooked some essential points, either in my own view of the subject, or in his; and this kind of doubt has been the principal reason of my delay in publishing the present volume. But I shall hardly be suspected of not thinking for myself on these subjects, or of not feeling such a degree of confidence in my own conclusions, after having taken full time to form them, as to be afraid of submitting them to the decision of the public.

To those who are not acquainted with Mr. Ricardo’s work, and do not properly appreciate the ingenuity and consistency of the system which it maintains and developes with so much ability, I am apprehensive that I shall appear to have dwelt too long upon some of the points on which we differ. But as they are, for the most part, of great importance both theoretically and practically, and as it appeared to me extremely desirable, with a view to the interests of the science, that they | should, if possible, be settled, I did not feel myself justified in giving less time to the consideration of them.

I am far from saying that I may not be wrong in the conclusions at which I have arrived, in opposition to those of Mr. Ricardo. But I am conscious that I have taken all the means to be right, which patient investigation and a sincere desire to get at the truth can give to the actual powers of my understanding. And with this consciousness, both with respect to the opinions I have opposed, and those which I have attempted to establish, I feel no reluctance in committing the results to the decision of the public.

t. r. malthus.

East India College, Dec. 1, 1819.

[* ]It must be allowed, however, that the theory of the Bullionists, though too exclusive, accounted for much the largest proportion of the phenomena in question; and perhaps it may be said with truth that the Bullion Report itself was more free from the error I have adverted to than any other work that appeared.

[† ]Wealth of Nations, Book II. c. iii. pp. 15–18. 6th edit.

[‡ ]Book IV. c. iii. p. 250.