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29: Of the Respective Wealth of Nations - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

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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.


29

Of the Respective Wealth of Nations

We have distinguished landed wealth and movable wealth.

Within landed wealth I place not only all products, but also all the animals: indeed they must be considered as a product of the lands which feed them.

Within movable wealth I place everything to which labour has given a new form. There you have the categories to which all wealth is reducible, it would be impossible to imagine a third kind.

If you were to say that gold and silver are of another type, I should ask whether these metals are not formed in the ground, and if it is not true that they only really show themselves for us when we draw them from the mine and refine them.

Gold and silver are thus landed wealth, which, like corn, are the product of the land and of our work; and these metals are mobile wealth, when we have caused them to take the forms which make them suited to various uses; when we have made from them coins, vessels, etc.

We have seen that all this wealth only increases by reason of our work. We owe all the products to the cultivator’s work; and we owe to the artisan or the artist all the forms given to raw materials.

We have further seen that all these riches are only at their true value in so far as circulation makes them pass from the places where they are surplus to the places where there is a shortage of them. This circulation is the result of trade. The value of wealth is thus in part due to the work of the merchants.

Finally, we have seen how much wealth depends for its production and preservation on a power which protects the cultivator, the artisan, the artist and the merchant; that is to say, which keeps order without having preferences.

The works of this power therefore combine for the increase of wealth, as for its preservation.

Following this résumé it is easy to judge which is the nation that must be the richest.

It is the one where there is simultaneously the most work of every type.

Are all the lands as well cultivated as they can be? Are all the workshops of artisans and artists full of workers constantly occupied? Do an adequate number of merchants cause the whole surplus to circulate promptly and constantly? Finally, the vigilance of the sovereign power, this toil watching over all labour, does it maintain order and freedom without partiality? Then a nation is as rich as it can be.

Therefore I beg people not to ask if one should prefer agriculture to manufactures, or manufactures to agriculture. One must not prefer anything; one must see to all.

It is for the individual to have preferences; he has by law the right to choose the type of work that suits him. Now he would lose this right if the government protected one type of work exclusively or if it favoured it.

Will a nation, destined by its soil to be agricultural, neglect the products which nature wants to heap on it, this wealth which belongs to the nation and only to it, and which one cannot take away from it?

Will it neglect them, I say, to spend its days in workshops? In truth it will acquire real wealth but this is wealth of the second order; it is precarious and other nations will take it to themselves.

Because these people are agriculturalists, shall they scorn all works which do not have direct relevance to agriculture? Will they wish to have no artisans or artists? They will then draw all movable goods from outside and be compelled to pay a higher price for them, because they will have transport costs to pay. They could have had among them a large number of workmen who would have consumed their produce, and they will send their products at great expense to enable these workmen to subsist in foreign lands.

So whether a people gives preference to agriculture, or whether it gives it to manufactures, it is certain that, in the one case as in the other, it is never as rich as it might have been.

Shall it neglect agriculture and manufacturing to concern itself principally with commission trade [trading: 1798]? It will then bring itself down to being no more than the salesman for other peoples. It will have nothing for itself, and it will only subsist so long as the nations do not envy the profit it makes at their expense. Commission trade can only be preferred when a people that lacks from its own resources enough foodstuffs or primary materials in relation to its population has no other resources for subsistence.

So in order for an agricultural country to be as rich as it can be, it needs to concern itself at the same time with every type of work: the different occupations must be spread among the citizens, and in each profession the number of workers must be proportionate to the need for them. Now we have seen how this allotment comes about naturally when commerce enjoys full, complete and permanent freedom.

Allow me to assume for a moment that all the nations of Europe work according to these principles, which perhaps they will never understand.

With this assumption, each will acquire real, tangible wealth, and their respective wealth will reflect the fertility of the soil and the industry of its inhabitants.

They will trade among themselves with complete freedom; and they will each find their own advantage in this trade which will cause the surplus to circulate.

With all equally involved, they will feel the need they have of each other. They will not consider at all taking away from each other manufactures or trade: it will be enough for each to work and to have work to exchange. For example, what does it matter to us that a certain type of cloth is made in France or in England, if the English are obliged to exchange their cloth for other products of our manufactures? Just let us work, and we shall have nothing to envy other nations. As much as we need to work for them, so they need to work for us. If we were to wish to do without their manufactures, they would want to do without ours: we would hurt them, they us.

Every type of work, and freedom of choice given to all citizens, there you have the real source of wealth; and you can see that this spring will spread plenty to a greater or lesser degree; according to whether it is more or less free in its course.

This chapter would be finished did I not have prejudices to fight.

Does a nation attempt a new trade? All want to carry it out. Does a new manufacturing process establish itself in one nation? Each nation wants to establish it. It seems that we only think of doing what is done elsewhere, and that we do not give a moment’s thought to what we can do at home. It is that, lacking the freedom to do what we want, we think to find that freedom in a new type of trade or of manufacture which seems to assure us government protection.

If we were to start by concerning ourselves with the things for which our land and our industry intend us, we should not work in vain, since foreigners would seek out our work. Our goods will stay on our hands in contrast, if we work on the types of goods where they must succeed better than us.

But when we have succeeded as well as them, have we done all we can in our wish to make everything that others make? If our old manufactures languish, why should we establish new ones? And why should we multiply our manufactures if we have fields fallow, or if those we cultivate are not fully exploited? We have work to do, we do not do it, and we envy other nations the works they do! Still, if we only had articles similar to theirs to exchange with them, there would no longer be trade between them and us. These reflections are trivial indeed: but why should I fear to say trivial things when people are not ashamed to ignore them? Do we recognise these trivial matters when we prohibit foreign merchandise to give preference, as they say, to our manufactures, or when we subject it to exorbitant duties?

Busy as they are in hurting each other, the nations would each like to enjoy the advantages of trade exclusively. Each one, in the exchanges it makes, would wish all the profit to be for itself. They do not see that in the nature of exchanges there is necessarily profit to both sides, since on each side one gives less for more.

An individual who does not know the market price may be deceived in the purchases he makes. Nations are merchants: it is on their own soil that markets are held; the price of goods is known to them. So by what art shall we force them always to give us more for less where they are concerned, when we only ever give them less for more where we are concerned? This art is however the great object of politics: it is the philosopher’s stone that it seeks and that it certainly will not find.

But you will say, we must draw to ourselves as far as possible the gold and silver of foreign nations. Therefore we must prevent them selling us goods produced or manufactured in their lands, and force them to buy goods produced or manufactured in our country.

So you think that a million in gold and silver is greater wealth than a million in products or a million in worked-up materials! Are you still at the point of being unaware that products form first-order wealth? What will you do then, if other nations which reason as badly as you also wish to attract your gold and silver to themselves? That is what they will attempt. All the peoples will therefore be busy preventing foreign goods entering their lands; and if they succeed it is a necessary consequence that native merchandise will not leave any of them. So, as a result of each having wanted to find exclusively a great profit in trade, they will cease trading among themselves, and in rivalry they will deprive themselves of all profit.

There you have the effect of prohibitions. Nevertheless who would dare to assert that Europe will open its eyes? I desire it: but I know the force of prejudice, and I have no hope of it.

Indeed, for Europe trade is not an exchange of works in which all the nations will each find their advantage; it is a state of war in which they only think how to plunder each other. They still think as in those barbarous times when peoples only knew to enrich themselves from plundering their neighbours. In perpetual rivalry they only worked at hurting each other. There is not one of them that would not wish to destroy all the others; and not one of them considers ways to make its real strength grow.

You ask what would be the benefit or the disadvantage for a nation, France for example, if it were the first to give full and complete freedom to export and import.

I reply that if it was the first, and consequently alone in giving this freedom, it would have no advantage or disadvantage for it; since then it would export nothing and nothing would be imported on her soil. Since for export to be possible in France we must be able to import on foreign soil; and the foreigner must export for import into France to take place.

This question is thus badly presented. I ought rather to ask what would be the benefit or the disadvantage for France if she were to give export and import permanent and never-interrupted freedom, while elsewhere export or import were now allowed, now forbidden.

Cereals form one of the branches of commission trade that Holland engages in; and that Republic always allows their export and import. It appreciates that if it hindered that trade it would be all the more exposed to a shortage of cereals as its lands do not produce enough for its consumption.

In Poland, the export of cereals is always allowed, because in normal years the harvests there are always in surplus. Since it draws all manufactured goods from outside, it needs this surplus for its purchases, and it guarantees itself the surplus by its work. If it had at home all the manufactures it lacks, its crops would be less over flowing, because it would be more populous, and perhaps it would forbid export.

In England export is seldom forbidden: but freedom to import is restrained to a greater or lesser extent by the duties which rise or fall according to circumstances.

Finally, elsewhere export is allowed when cereals are cheap, and import is allowed when they are dear. However, the freedom, whether to export or to import, is never full and complete: it is always to a greater or lesser degree limited by tariffs. There you have, more or less, what happens in Europe. I say, more or less since it is enough for me to reason on assumptions. It will always be easy to apply my reasoning to the changing conduct of government among the different peoples.

France, we assume, is alone in giving export full, complete, permanent freedom without restriction, limitation or interruption. All her ports are always open and no one ever demands any duty on entry or exit there.

I say that, on this assumption, the trade in grain must be more profitable for France than for any other nation.

It is certain that the seller sells to greater advantage when a larger number of buyers make him a greater number of offers in competition with each other. So France will find advantage in the sale of her cereals if, not limiting herself to selling to domestic consumers, she sells as well to consumers in those states where import is allowed.

It is clear that if she could import equally throughout Europe she would sell with even more benefit still, since a larger number of buyers would make her a larger number of requests. If her benefit is not all that it might be, it is therefore because she cannot import everywhere equally.

You will doubtless say that cereals will become dearer in France if we sell them to all the foreigners who request them.

But we have assumed that import into France is as unrestrained as export, and we have noted that there are nations which export their grain: now these nations will import into our country when they find in the high price a profit in selling to us. On that point it must be seen that that high price is not dearness; it is the true price fixed by competition, a true price which has its high, its low and its middle limit.

So long as this price has not reached its highest point, people will not bring us grain, and we shall not need them to bring it to us. When it has reached its ceiling all the grain-exporting nations will bring us grain; and we shall buy to all the more advantage, as a larger number of sellers will make us a larger number of offers. We shall buy with all the more advantage still if grain is brought to us from every part of Europe, since the offers will multiply with the sellers. Kindly reflect on the position of France: as she is placed to be the depot of the north and of the Midi, can she fear doing without or having to buy dear? One sees on the contrary that she will be the common market of all Europe.

Whether she sells or whether she buys grain, France will, on our assumption, thus have a great advantage over the nations which forbid export and import, over those which allow only the one or the other, and finally over those which only allow both temporarily and with restrictions. Because by forbidding export, they reduce the number of purchasers, and consequently they sell at a lower price; and by forbidding import they buy at a higher price, because they reduce the number of those selling to them.

We may conclude that if the states of Europe persist in denying complete freedom to trade, they will never be as rich or as populous as they might be; that if one of them gave complete and permanent liberty, while the others only allowed a temporary and restrained freedom, it would be, other things being equal, the richest of all; and that finally, if all ceased to place obstacles in the way of commerce, they would all be as rich as they could be; and then their respective wealth would depend, as we have already noted, on the fertility of the soil and the hard work of its inhabitants.