The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Advertisement.
• Letters, &c.
• Letter I.
• Letter II.
• Letter III.
• Letter IV.
• Letter V.
• Advertisement.
• Catechism of Political Economy; Or, Familiar Conversations On the Manner In Which Wealth Is Produced, Distributed, and Consumed.
• Chapter the First.: On the Composition of Wealth and the Use of Money.
• Chapter II.: On the Utility and Value of Products.
• Chapter III.: On Production.
• Chapter IV.: On the Operations Common to All the Species of Industry.
• Chapter V.: On Capital and Land.
• Chapter VI.: On the Formation of Capital.
• Chapter VII.: On the Manner In Which the Value of Products Is Established, and of the Charges of Production.
• Chapter VIII.: On the Profits of Industry, Capital, and Land; That Is, Income.
• Chapter IX.: On Wages, Interest, and Rent.
• Chapter X.: On Incomes Founded On Immaterial Products.
• Chapter XI.: On Consumption In General.
• Chapter XII.: On Private Consumption.
• Chapter XIII.: On Public Consumption.
• Chapter XIV.: On Public Property and Taxes.
• Chapter XV.: On Public Loans.
• Chapter XVI.: On Property, and the Nature of Riches.
• Chapter XVII.: On the Real and Nominal Price.
• Chapter XVIII.: On Money.
• Chapter XIX.: On Signs Representing Money.
• Chapter XX.: On Markets.
• Chapter XXI.: On Regulations Or Restraints of Industry.
• Chapter XXII.: On Importations, Duties, and Prohibitions.
• Chapter XXIII.: On Exportation.
• Chapter XXIV.: On Population.
• Chapter XXV.: On Colonies.
• Erratum.

CHAPTER XIII.

On Public Consumption.

What do you call public consumptions?

Those which are made for the service of men, assembled in communities, provinces, or nations. It is the purchase of services and products, consumed for public utility, which constitute the public expences.

What are the principal objects of public expences?

The payment of the administrators of the government, the judges, soldiers, and professors in the public institutions; the providing for the army and navy, and maintaining the public establishments, edifices, roads, canals, ports, hospitals, &c.

What do you observe generally with respect to public expences?

That the public is never so cheaply served as individuals.

What are the reasons?

There are three. First, that political circumstances fix the number and salaries of the public functionaries, and that their services are consequently not open to a free competition. The second, that those who direct the public expences, devoting to them money which is not their own, are less sparing of it than individuals would be. The third, that works executed for the public, are easily superintended, and are never watched by personal interest.

I am inclined to believe that public consumptions, by returning to society the money which has been drawn from it, do not impoverish it.

They do impoverish it the same as private consumptions, by the whole amount of the values consumed.

How do you explain this?

The money is wrested from the people without equivalent. A value is taken away from the community, without its receiving any other value in return. But when this money is returned to the community, it is not gratuitously; it is in virtue of a purchase in which the seller delivers to government, or its agents, things which have a value. The community has twice delivered the same value. It has delivered the contribution, and also the merchandize, which the government has bought with the amount of that contribution. Of these two values the one is returned by the purchase which the government has made; the other is never returned at all: it is consumed, that is to say, it is destroyed.

Illustrate this by an example.

We will suppose that a community pays in money a hundred thousand pounds; there is a value equal to one hundred thousand pounds drawn from the community. The agents of the government, with this sum, purchase clothes for the army; this is another value equal to one hundred thousand pounds drawn from the community. The government, in paying the clothier, restores the one hundred thousand pounds it had raised by contribution: but the value of the one hundred thousand pounds in clothes is not restored, and will be consumed and lost. It is the same case with that of a man who draws from the community his revenue in money, and returns it back by means of his expenditure; but who does not return the provisions he has purchased with his revenue, and which he has consumed.

But when a government constructs buildings, and with the amount of the contributions pays the workmen, does it not then restore to society the values which it has drawn from it?

Not an atom more. It draws from society, in this last case, one value in contribution, and then another value equal to it in services which it consumes. The purchase of the services is not a restitution, but an exchange.

Is not this a mere distinction of words, and is not the purchase of services equivalent to a restitution?

Not in the least. When the government employs workmen, it receives from them in exchange for their wages a real value, which is their labour; a value founded on the products which are to result from this labour; a value, which being consumed by the government, cannot be consumed in any other design, nor with any other result.

The workmen thus employed would have perhaps been without work?

Why? The government by this operation has not multiplied the values appropriated to the payment of workmen. If it distributes them on the one hand, it takes away from the contributor on the other, the power of distributing them, either directly, by employing the workmen himself, or indirectly, by means of his consumptions.

When a government consumes, it stands then in the same situation with any other consumer?

Almost always; the exceptions to this rule are too rare to be worth noticing.

What consequences do you draw from it?

That the consumptions, or, if you will, the expences of government, are always a sacrifice made by society, which is never indemnified for it, otherwise than by the product which results from it.

What do you mean by a product resulting from public expenditure?

When the government constructs a bridge, the service which the public derive from it, repays, and often with very great advantage, the sacrifice of values which the bridge has cost. But no benefit results from the mere expenditure of the money, nor the employment of the workmen employed on its construction; for, if this money had remained in the hands of the contributors, it would either directly or indirectly have put in activity an equal quantity of industry.

When a part of the contributions is employed in the construction of monuments or buildings, which have no public utility, there is then on the part of society a sacrifice without compensation?

Precisely: it is for that reason that a good government makes no expenditure which has not a useful result. The economy of nations is exactly the same with that of individuals.

[Page 59, line 7,]between the words are and easily insert the word less.