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24: How Production Regulates Itself According to Consumption - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

Edition used:

Commerce and Government Considered in their Mutual Relationship, translated by Shelagh Eltis, with an Introduction to His Life and Contribution to Economics by Shelagh Eltis and Walter Eltis (Indianapolis: Liberty Fund, 2008).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


24

How Production Regulates Itself According to Consumption

Now that I have explained all that relates to the true price of goods, I intend to look at the reason for the progress of agriculture and the arts, the use of land, the employment of men, luxury, public revenues, and the respective wealth of nations. There you have the purpose of the chapters by which I end this first part.

The need that citizens have of each other places them all in mutual dependency.

As masters of lands the proprietors are masters of all the riches the lands bear. In this respect, it seems that they are independent, and that the other citizens depend on them. Indeed, all are in their pay: it is on the wages that they pay that the farmers, the artisans, and the merchants subsist; and there you have the reason why the économiste writers judge them independent.

But if the lands were not cultivated, the artisans would be without raw materials, the traders would be without merchandise, the landowners would lack all kinds of products, and the land would not be adequate for the subsistence of its inhabitants. There would no longer properly be artisans, merchants or owners.

Farmers as the prime movers of production seem then in their turn to hold all the citizens in their dependency. It is their work which enables the citizens to subsist.

However, if raw materials were not worked up, agriculture and all the arts would be without all the most necessary instruments. There would be no arts in consequence; and society would be destroyed, or reduced to a wretched state. Therefore all the citizens still depend on the artisans.

Our tribe had no need of merchants when the settlers, sole owners of the land, lived on the lands they cultivated. Then each person could get himself the things he needed by exchanges with his neighbours. Sometimes someone bought a foodstuff which he did not have with the surplus from another; sometimes with the same surplus he paid the artisan for the raw material he had worked up. These exchanges were made without money and no one as yet thought of estimating the value of things exactly.

But as the landowners establish themselves in the towns it becomes all the more difficult for them to obtain all the goods they require, now that they consume much more. So shops need to be set up where they can supply themselves.

These shops are no less essential to the artisans, who need raw materials from one day to the next, and who cannot go each time to buy them in the countryside, which is often distant. Finally, they are essential to the farmers, to whom it is important, each time that they come to town, to sell their produce rapidly, and at the same time to buy all the tools they need. There you have the era when all the citizens fall into dependence on the merchants, and where goods begin to have a value estimated by a common measure.

Such is in general the nature of men: the person on whom one depends wants to draw advantage from his position; and all would be despots if they could. But when, in different respects, dependence is mutual, all are forced to give way to each other, and no one can abuse the need one has of him. So interests come together: they merge: and although all men seem dependent, they are all in fact independent. There you have order: it is born from the respective and combined interests of all the citizens.

Among these respective and combined interests is one which seems the moving power of all the others: it is that of the landowners. As the greatest consumption is made in the towns, and they have the largest share of it, their taste will be the yardstick of farmers, of artisans and of merchants. People will grow, by choice, the foodstuffs with which the landowners like to nourish themselves, people will work at the objects in which they are interested, and people will set out for sale the merchandise they seek.

It is natural for this to happen. Since the proprietors, as owners of lands, are masters of all the products, they alone can pay the wage that gives subsistence to the farmer, the artisan and the merchant. All the money, which must circulate and which in consequence must be the price of all tradable effects, originally belonged to them. They receive it from their farmers and they spend it as they please.

This money must return to the farmers, either immediately when they themselves sell to the landowners, or through an intermediary when they sell to the artisan or the merchant, to whom the landowner will have given some of this money as a wage.

Now this circulation will be rapid if the farmers, the artisans and the merchants study the tastes of the landowners and adapt to them. They will do it, because it is their interest.

Let us assume that, from generation to generation, the landowners have accustomed themselves to the same consumption; we shall assume from it that, in so far as there has been no variation in their tastes, people have grown the same products, worked at the same crafts and carried out the same kind of trade.

There we have the state through which our tribe must have passed. As it is accustomed to a simple life, for a long time it will be satisfied with the first products it has had occasion to know, and there will have been no others in commerce.

As later the tribe becomes more refined, it will vary in its tastes, preferring in one period what it has rejected, and rejecting in another what it has preferred.

But then the goods which it most seeks after would not be in proportion to the need it has formed for them, if the farmers, the artisans and the merchants did not vie with each other in busying themselves to supply the increase of this type of consumption.

Now they have an interest in seeing to it; because initially, as these goods were not plentiful enough, they were at a higher price; they can thus count on a higher wage.

They will not even be satisfied with observing the variations which bring them new profits. Once they have noticed they are possible, they will put all their effort into creating them, and there will be a revolution in commerce, in the arts and in agriculture. Previously consumption adjusted to the products; now production will adjust to consumption.

A more extensive commerce will embrace a greater number of objects. It will awaken the efforts of artisans and cultivators, and all will take on a new life. But that is only true with the assumption that commerce will be perfectly free. If it were not, it would soon degenerate into a state of convulsion which, in causing the price of goods to rise and fall without rules, would create a thousand disastrous enterprises for a few which would succeed, and would spread disorder in fortunes.

Our tribe has not yet reached this point. Its commerce, which I assume is confined within its lands, must naturally produce abundance. It opens up all the sources of commerce, it spreads them, and the previously sterile fields are cultivated and become fertile. It is certain that, so long as its commerce is supported by the produce of its soil alone, the mass of consumption, whether in foodstuffs, or in raw materials, can only encourage the farmers to draw from this soil all the wealth it encloses.

There you have the effects of free, internal commerce. A people is then really rich, because its wealth belongs to it, and only to it. It is in its possessions alone that it finds all the sources of its wealth, and it is its work alone that directs them.

Consumption, multiplied simultaneously by new tastes and revived tastes, must therefore multiply products, so long as there remain lands to cultivate, or lands which can be made more productive. Up to that point wealth will keep on growing and will only have a limit in the final advances of agriculture. Happy is the free people which, rich from its own soil, will not be drawn into commercial dealings with others!