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 XXI.

On Regulations or Restraints of Industry.

What regulations are commonly made relating to industry?

The laws and regulations made by governments on this subject, have for their object either to determine on what products we may or may not employ ourselves; or to prescribe the manner in which the operations of industry shall be carried on.

What examples are there of the manner in which a government determines the nature of the products in which we may engage?

In agriculture, when it prohibits such or such or a culture, as tobacco, or when it gives extraordinary encouragement to other crops, such as corn.

In manufactures, when it favours certain manufactures, such as silks, and prohibits or restrains others, such as cottons.

In commerce, when it favours by treaties, communications with certain countries, and interdicts it with others; or when it gives privileges to trade in certain articles, and prohibits it in others.

What is the effect of such regulations?

To direct the efforts of industry towards productions less suitable to the wants of the nation, and less lucrative to their producers.

On what evidence do you suppose that the favoured productions are less suitable to the wants of the nation and less lucrative?

By this alone, that these productions are not sufficiently paid for to be able to support themselves without such encouragement.

In what way do governments interfere in the manner in which products ought to be created?

In manufactures, public authority sometimes prescribes the number of those who are to be employed in them, and the conditions they must comply with, as when it establishes corporations, freedoms, and companies: or when it fixes the material which must be employed, the number of threads which the warp and weft of a stuff must contain, and subjects them to particular marks. In commerce it sometimes prescribes the route by which the merchandize must pass, the port at which it must be landed, &c.

What is the object of corporations and freedoms?

It is to prevent incapable or inexpert workmen from deceiving the consumers by delivering to them an article of inferior quality to that which it represents.

In what cases are the precautions taken by government to prevent such abuses, really useful?

When the verification is impossible, or at least very difficult to the purchasers; as in the case of apothecaries’ drugs. The care which a government takes to ascertain the capacity and honesty of apothecaries, and even of physicians, is then incontestibly useful. The same may be said of that control by which it puts a stamp on all articles of gold or silver.

What is the inconvenience of corporations and freedoms?

The establishing, in favor of producers united in corporations, of a monopoly, that is, the exclusive trade in what they produce; a monopoly of which the workmen on the one hand, and the consumers on the other, are the victims.

Why the workmen?

Because the corporation, in limiting the number of undertakers, and in subjecting them to certain formalities, limits the free competition of those who might employ the workmen.

But if the workmen on their parts agree together to demand certain wages?

It is then the workmen who form an unauthorized corporation just as prejudicial as those which are authorised.

How do corporations establish a monopoly against the consumers?

The production not being open to the competition of all producers without distinction, the products are not permitted to fall to the rate at which they might have been afforded by the charges of production; in which are comprised, as we know, the profits of the different producers.

What inconvenience arises from the profits being raised beyond what they would have been if left to free competition? These profits forming part of the income of the nation, is not the income augmented by this monopoly?

That which the producers gain beyond the rate of free competition, is an excess of price lost by the consumer at the same time that it is gained by the producer. It is not a value created, but displaced; it is a portion of riches which goes out of one purse into another, and which diminishes the general riches on the one hand, as much as it increases it on the other.

But this loss is trivial to the consumer, while it is of importance to the productor.

It is little on each individual purchase; but when repeated on all the articles we purchase, it becomes considerable at the end of the year; and the expenses of individuals being thus greater in proportion to their incomes, it is the same as if their incomes were less with respect to their consumption: they are poorer.