The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Lecture I.
• Lecture II.
• Lecture III.
• Lecture IV.
• Lecture V.
• Lecture VI.
• Lecture VII.
• Lecture VIII.
• Lecture IX.
• Lecture X.
• Lecture XI.
• Appendix.
• Note On Page 32.
• Page 37.
• Page 39.
• Page 57.
• Page 65.
• Page 133.
• Page 145.
• Page 149.
• Page 164.
• Page 175.
• Page 183.
• Page 203.
• Page 223.

Page 164.

I consider the consumption by labourers to be as strictly unproductive as the consumption of rich landlords or capitalists. The opposite opinion appears to lead to several serious errors, and is, I think, founded upon a false analogy, and a misconception of the nature of productive consumption. The distinction I have made between productive and unproductive consumption, is by the object which the consumer has immediately in view in the consumption. If the object is profit, or to transfer a value to some commodity, then the consumption is to be deemed productive. But if the maintenance or enjoyment of the consumer is the object which he has in view, and the value is not, by such consumption, transferred to some other commodity, the consumption may be considered as unproductive consumption. This is the only distinction which can be consistently adhered to. On any other distinction, it will not be found easy to give an answer to such questions as these. If two labourers earn, the one ten shillings, the other twenty shillings a week, and if the latter spends fifteen shillings, and saves five, how much of his consumption is to be deemed productive? Is it the ten shillings which he spends on necessaries, or is the five shillings to be added which he spends on luxuries? In either case his labour adds a value to the work beyond the amount of his consumption, and which would not be increased or diminished by an increase or diminution of his expenditure. The value added by the toil of the labourer to any commodity, is the value of his labour, that is, the amount of his wages. It certainly is not equal to the amount of both his wages and his consumption, and it would be an inconvenient and unnecessary enumeration to say, that the value of his labour is equal to the amount of what he spends in necessaries and in luxuries, and of what he saves.

Persons are misled by a false analogy. Inanimate matter has no will, no choice to work or to refuse, no power to select a master. It therefore does its work gratuitously, and therefore the work done has no value except that which is caused by the expense of making and working the machinery. The supply is not limited by any other principle. If a greater value was created by their work, more machines would be made and worked, until the increased supply reduced the value produced by them to the amount just stated. But in the case of men the matter is different. They may work or not, as they think proper, and the number of men willing to work at any time is limited, and an additional supply cannot be immediately procured. They may choose their masters and their employments, and make terms for themselves, and are not driven like machines to work for such a sum as in the most economical manner will be sufficient to keep them in repair, and to supply them with the commodities necessarily consumed during the work. The wages of labour can never sink to this limit, and have not even any tendency to approach it.

This opinion, together with an error as to the source from which profit is derived, has led to the agricultural theory which represents land as the only source of wealth. The supporters of this theory alleged that land, besides the wages of the labourer, and the profit of the farmer, yields a net surplus produce which is paid as rent to the landlord; but that in manufactures, no value is added to the manufactured commodity, except the value of the provisions and other articles consumed by the labourer during the progress of the work. No value therefore is created by such labour, since the labourer is consuming for his support as much as he is producing by his toil.

Now this argument proceeds upon a total disregard of the productive power of capital, which is the source of profit, and without injury to the consumer or labourer, produces a surplus equally net as the rent of land. Besides, the value produced by the labourer, or the wages he receives, may much exceed the value consumed by him. He may be a painter of eminence, annually creating a value of £10,000, and perhaps not spending £1,000. But even the sum consumed by the labourer does not detract from the value produced by him. The necessity he lies under of procuring food and raiment is not caused by his labour. The ultimate object of all production is consumption, and I would not deem any labour unproductive of wealth or utility merely because the value of the produce is shortly afterwards consumed by the labourer and his family. The two very opposite errors are nearly allied—that of considering the artisan’s consumption as productive, and his labour as unproductive. It might with as much reason be contended that land does not produce any wealth, since the net surplus it yields is punctually consumed by the landlord. There are in the savings banks in England several millions of money, deposited there by labourers, whose wages must to at least that amount have exceeded their consumption.