Front Page Titles (by Subject) Section I.—: On the Definitions of Wealth. - Principles of Political Economy
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Section I.—: On the Definitions of Wealth. - Thomas Robert Malthus, Principles of Political Economy 
Principles of Political Economy (London: W. Pickering, 1836).
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On the Definitions of Wealth.
Of the subjects which have given rise to differences of opinion among political economists, the definition of wealth is not the least remarkable. Such differences could hardly have taken place, if the definition had been obvious and easy; but in reality, the more the subject is considered, the more it will appear difficult, if not impossible to fix on one not liable to some objection. In a work, however, on a science, the great object of which is, to inquire into the causes which influence the progress of wealth, it must be of use to describe as distinctly as the nature of the subject will admit, what is meant by that wealth the increase or decrease of which we are about to estimate: and if we cannot arrive at perfect accuracy, so as to embrace all we wish, and to exclude all we wish in some short definition, it seems desirable to approach as near to it as we can. It is known not to be very easy to draw a distinct line between the animal, vegetable, and mineral kingdoms; yet the advantages of such a classification are universally acknowledged; and no one on account of a difficulty, in a few cases of little importance would refuse to make use of so convenient an arrangement.
It has sometimes been said, that every writer is at liberty to define his terms as he pleases, provided he always uses them strictly in the sense proposed. Such a liberty however may be fairly questioned; at least, it must be allowed that if a person chooses to give a very unusual and inadequate definition in reference to the subject on which he proposes to treat, he may at once render his inquiries completely futile. If for instance, a writer professing to treat of the wealth of nations were to define wealth as consisting exclusively of broad cloth, it is obvious that however consistent he might be in the use of his terms, or however valuable a treatise he might produce on this one article, he would have given very little information to those who were looking for a treatise on wealth according to any common or useful acceptation of the term.
So important indeed is an appropriate definition, that perhaps it is not going too far to say, that the comparative merits of the system of the Economists,* and of that of Adam Smith depend upon their different definitions of wealth, and of productive labour. If the definitions which the economists have given of wealth and of productive labour, be the most useful and correct, their system, which is founded on them, is the correct one. If the definitions which Adam Smith has given of these terms accord best with the sense in which they are usually applied, and embrace more of the objects, the increase or decrease of which we wish to make the subject of our inquiry, his system must be considered as superior both in utility and correctness.
Of those writers who have either given a regular definition of wealth, or have left the sense in which they understand the term to be collected from their works, some appear to have confined it within too narrow limits, and others to have extended it greatly too far. In the former class the Economists stand preeminent. They have confined wealth or riches to the neat produce derived from the land, and in so doing they have greatly diminished the value of their inquiries in reference to the most familiar and accustomed sense in which the term wealth is understood.
Among the definitions which have extended the meaning of the term wealth too far, Lord Lauderdale’s may be taken as an example. He defines wealth to be, “All that man desires as useful and delightful to him.”
This definition obviously includes every thing whether material or intellectual, whether tangible or otherwise, which contributes to the advantage or pleasure of mankind, and of course includes the benefits and gratifications derived from religion, from morals, from political and civil liberty, from oratory, from instructive and agreeable conversation, from music, dancing, acting, and all personal qualities and services. It is certain, however, that an inquiry into the nature and causes of all these kinds of wealth, would not only extend beyond the bounds of any single science, but would occasion so great a change in the use of common terms as to introduce the utmost confusion into the language of political economists. It would be impossible to form any judgment of the state of a country from the use of the terms rich or richer. A nation might be said to be increasing in wealth, when to all common eyes, and in all common language, it might be growing poorer. This would be the case, according to the definition, if a diminution of the manufacturing and mercantile products had been balanced in the opinions of some persons by the gratifications derived from the intellectual attainments, and the various personal qualities and services of the inhabitants. But how is this balance to be ascertained? how is it possible to estimate the degree of wealth derived from these sources? Yet it is quite obvious that we cannot practically apply any discussions respecting the relative increase in the wealth of different nations, without having some means, however rough, of estimating the amount of such increase.
Some modern writers who do not choose to adopt the language of Adam Smith, and yet see the confusion which would arise from including under the head of wealth, every kind of benefit or gratification of which man is susceptible, have confined the definition to those objects alone, whether material or immaterial, which have value in exchange.
This definition is certainly preferable to the more comprehensive one just noticed, but by no means to the extent which might at first be supposed. When it is considered attentively, it will be found to be open to a very great portion of the objections to which the more general one is liable, and to draw the line of demarcation between what ought, and what ought not to be considered as wealth, in the most indistinct and unsatisfactory manner.
Passing over the incorrectness of introducing a term open to so much controversy as value into a definition of wealth, it may be observed,
1st. That if by an object which has value in exchange, be understood its susceptibility of being purchased or hired, then there is scarcely any quality or accomplishment of the mind or body that would not come under the category of wealth. The possessor of the lowest species of literary knowledge, that of reading and writing, may be hired to teach others; and as all or nearly all who had acquired these useful arts are susceptible of such employment, an estimate of national wealth ought to include the value of these attainments, however various in degree, and widely extended.
2dly. All the knowledge acquired by a superior education and superior talents, on account of a similar susceptibility, would have a greater claim to be included in the estimate. The possessors of religious and moral knowledge, though obtained without any view to the instruction of others for a pecuniary remuneration, would be ready to sell such instruction under a reverse of fortune. The same may be said of a knowledge of classical literature, mathematics, history, natural philosophy, chemistry, geology, mineralogy, botany, &c. &c. On the same principle, those who had learnt to dance, to sing, or to fence for their amusement might more or less imperfectly teach dancing, singing, or fencing, for money.
In short, if we include under the denomination of wealth all the qualities of the mind and body which are susceptible of being hired, we shall find that by the restriction of the term wealth, to that which has exchangeable value, we have advanced but little towards removing the confusion and uncertainty attendant upon the former definition; and all idea of estimating the increase of wealth in any country, or making any moderate approaches towards it, must be absolutely hopeless.
On the other hand, if we confine the definition of wealth to those objects which either have been exchanged, or are specifically intended to be exchanged, we shall attempt to draw a broad line of demarcation between things which in regard to their qualities are precisely similar; and further exclude from the category of wealth a great mass of articles, which have been included, and most correctly so, by Adam Smith, and by almost every person who makes use of the term, either in writing or conversation.
The various information acquired by private study, and destined for private use and enjoyment, may be exactly of the same kind as that which is intended to be let out if any body will hire it; yet the first, in this classification, is not to be called wealth, and the other is. The person who buys instruction, buys an amount of wealth, which it must be presumed is equal in value to what he has paid for it, while the self-taught person, who is in possession of much superior knowledge, has acquired no wealth. According to this definition wealth cannot be given; it can only be bought. The instructions of the schoolmaster are wealth; the same instructions given by a friend or father are not wealth. This is sufficiently inconsistent; but this is not all. By this definition of wealth, a very large and most important portion of material commodities is excluded from the denomination. In the business of agriculture, a considerable share of the produce is always destined to be consumed on the spot without being exchanged. The common farmer calculates how much of what he produces must go the support of his own family and working cattle, before he can determine how much he will have to sell. The gentleman farmer supports perhaps a large private establishment upon his farm, lives hospitably, receives numerous guests, and sells comparatively very little. Our feudal ancestors pursued this course in a much greater degree. In fact it was the only way in which they could spend the principal part of the products of their large possessions. The great Earl of Warwick is said to have supported thirty thousand people daily on his different manors; and at an earlier period, the elder Spencer in his petition to Parliament complains of the ravages made by the barons on his estates, and enumerates 20,000 sheep, 1,000 oxen and heifers, 12,000 cows with their breed for two years, 560 cart horses, 2,000 hogs, 10 tons of cyder, together with 600 bacons, 80 carcasses of beef, and 600 muttons in the larder. From this enumeration, Hume observes, “the plain inference is, that the greater part of Spencer’s vast estates, as well as the estates of the other nobility was farmed by the landlord himself, managed by his stewards or bailiffs, and cultivated by his villains.”
Little or none of it was let on lease to husbandmen. Its produce was consumed in rustic hospitality by the baron, or his officers.
Now this large mass of material commodities, increased as it would be by the flax and wool raised, spun, and wove for home consumption, few, it is conceived, would venture to exclude from the denomination of wealth; and yet this produce has neither actually been exchanged for money or other goods, nor has it been raised with the intention of being so exchanged, and therefore, according to the last definition, it ought not to be considered as wealth.
It must be allowed nevertheless, that it has exchangeable value; and here one of the great characteristic differences between material objects and objects which are not material appears in a striking point of view. Of the quantity and quality of the material commodities here noticed it would not be difficult to make an inventory. Many household books indeed furnish one; and knowing pretty nearly the quantity and quality of such articles, a fair approximation to their value might be attained by estimating them according to the market prices of the district at the time. But in regard to immaterial objects, the difficulty seems to be insurmountable. Where is an inventory to be found, or how is one to be made of the quantity and quality of that large mass of knowledge and talents reserved for the use and consumption of the individual possessors and their friends. Or supposing it were possible to form such an inventory, how could we make any moderate approaches towards a valuation of the articles it contained.
Consequently, if by objects which have value in exchange we mean objects which are susceptible of being exchanged, we shall include such a mass of the mental and physical qualities of mankind as to make the term wealth convey no tolerably distinct and useful meaning.
And if by objects which have value in exchange we mean only those objects which have actually been, or are specifically intended to be exchanged, we shall exclude from the denomination of wealth a large mass of material commodities which have always, and most justly, been classed under that head?
To get rid of these obvious embarrassments, it has sometimes been the practice to consider the labour which is hired, as the wealth which is purchased without reference to its results. But it seems very strange and incorrect to consider mere labour as wealth. No one would give anything for it if he were sure that it would yield no gratifying result. It is in the expectation of this result alone that labour is employed. The sick man employs a physician, not because he is pleased with the trouble which he gives him, but because he expects that his health may be benefited by the advice which he receives. The lawyer is consulted and feed, only because his client expects to derive some advantage from the opinion to be given, or the cause to be pleaded. And even the menial servant is not hired on account of the desire to see a man work, but on account of the trouble which he will save his master in performing certain offices for him, or the gratification afforded to his vanity by the shew of having a person at his command.
The natural consequences of these difficulties is, that the ablest writers who have deserted matter, in their definition of wealth, have fallen almost inevitably into contradictions and inconsistencies.
M. Say, for instance, in his chapter on immaterial products, which he defines to be, “des valeurs qui sont consommées au moment de leur production,” and of such a nature “qu’on ne saurait les accumuler,”* can only refer to the personal services which are hired, or to some particular kinds of immaterial products. He cannot refer to immaterial products in general, because it is quite impossible to deny that knowledge, talents, and personal qualities are capable of being accumulated. Yet he says, “Une nation où il se trouverait une foule de musiciens, de prêtres, d’employés pourrait être une nation fort divertie, bien endoctrinée, et admirablement bien administrée; mais voilà tout; son capital ne recevrait de tous les travaux de ces hommes industrieux aucun accroissement direct, parce que leurs travaux seraient consommés à mesure qu’ils seraient créés.”† A few pages further on, he observes that most immaterial products “sont le résultat d’un talent; tout talent suppose une étude préalable; et aucune étude ne peut avoir lieu sans des avances.” He applies this to the advice of the physician, the consultation of the lawyer, and the song of the musician, and then expressly states that, “le talent d’un fonctionnaire public lui-même est un capital accumulé.”* Now if it be true that the talents which produce music and good administrations are accumulated capitals, on what possible ground can it be asserted that musicians and employés, who can alone be the teachers of their arts to others, do not increase the national capital, particularly as the rapid consumption of the products of such capitals, so far from impeding accumulation, tends greatly to facilitate, it, and to increase the number and skill of the capitalists.
M. Say, in a note to the second part of M. Storch’s Cours d’Economie Politique, adverting to those objects which he thinks should be considered as riches, observes, “que, ce n’est que la possibilité de les déterminer, de connaître par conséquent quand, et comment les biens augmentent, quand et comment ils diminuent, et dans quelles proportions ils se distribuent qui a fait de l’économie politique une science positive qui a ses expériences, et fait connaître des resultats.”†
Nothing can be more just than this. It is the main criterion to which, with a view to useful and practical conclusions, I should wish to refer. But M. Say, both in the last edition of his Traité d’Economie Politique, and still later in his Cours Complet‡ includes under the name of riches, all talents, natural and acquired; and I would ask in reference to such qualities, how it is possible to ascertain, “quand et comment ils augmentent, quand et comment ils diminuent, et dans quelles proportions ils se distribuent.” In every improved country there must always be a vast mass of natural and acquired talents, which are never made the subject of regular exchange or valuation; and of this vast mass which would be included in M. Say’s definition of riches, it may safely be affirmed that it is not composed of objects, “dont la quantité soit rigoureusement assignable, et dont l’accroissement ou le déclin soit soumis à des lois déterminées.”*
One motive which seems to have induced M. Say to force into his definition of riches, “les plus nobles vertus, et les plus rare talens,”† is to enlarge and exalt the domain of political economy, which he says has been reproached with occupying itself upon worldly goods, and encouraging a spirit of avarice. But even if such a classification would give the subject more importance, this additional importance would be dearly purchased at the expense of the precision of its conclusions. The question, however, is not whether the results of useful labours may not very properly find a place in a Treatise on Political Economy, as they have done in the Inquiry of Adam Smith; but whether the specific term wealth should be so defined, as to make not only its own meaning quite indistinct, but to introduce still greater indistinctness into the terms of the science of morals.
Every moral writer, from the most ancient to the most modern, has instructed us to prefer virtue to wealth; and though it has been generally allowed that they may be united in the same person; yet it has always been supposed that they were essentially different in themselves, and that it was often necessary to place them in direct contradistinction one to the other.
If, however, virtue be wealth, how are we to interpret all those moral admonitions which instruct us to underrate the latter in comparison with the former? What is the meaning of not setting our hearts upon riches, if virtue be riches? What do we intend to express when we say of a person of our acquaintance, that he is a very virtuous and excellent man, but poor. The commonest terms used in moral discussions will become quite uncertain without constant circumlocutions, and the meanings of virtue, morals, rich and poor, in our dictionaries, if applied in the ordinary way, and according to the best authorities, will lead us into perpetual error.
It will be recollected that it has never been a question, whether a preacher of the gospel, or a lecturer in moral philosophy who is remunerated for his instructions obtains wealth in exchange for them. The only question is, whether it would be a convenient and useful classification to consider all that was obtained by his hearers, as wealth under the absolute impossibility of appreciating it. That such knowledge has not in the ordinary language of society been called wealth, except metaphysically, must be allowed, and it is equally certain that there is no way of arriving at its amount. In estimating the usual cost of a material object, we are pretty sure of coming near to its usual price. Generally speaking, those commodities, the conditions of the supply of which have been the same, are found to have nearly the same exchangeable value, or if not, the estimate is very soon rectified by an appeal to the next market. But in regard to moral and intellectual qualities, the same expenses of production terminate in results as different as can well be imagined. Even in the learned professions of law and physic, in which the students acquire their knowledge for the express purpose of exchanging it, an attempt to estimate the skill and attainments of each person by the expenses of his education would lead to the most fallacious conclusions. And in the more general education obtained by the great mass of the higher classes of society, such an attempt would be perfectly ridiculous. Those who have paid the most for their instruction, are often those who have the least profited by it. If the products were material, and sold with a view to gain, their production would very soon come to an end; but education still goes on, and most properly so, although the inequality of possessions arising from the same outlay is known to be prodigious, while in reference to the great mass of them, there are no means of rectifying the estimate founded on cost, by an appeal to their market values. How then is it possible to say with any truth, that morals, talents, and personal attainments may be placed with propriety in the category of wealth, because they are capable of being rigorously appreciated.
On the other hand, there seems to be no kind of incongruity in allowing that wealth, according to the most common acceptation of the term, may be employed in obtaining gratifications which it would be most inconvenient and embarrassing to call by the same name as the material products which were given for them. A man of fortune has the means of purchasing the gratification of leisure; he has often the means of collecting at his table persons from whom he is likely to hear the most agreeable and instructive conversation; he has the means of travelling into different countries, seeing the beauties of nature in her grandest forms, contemplating the finest models of art, ancient and modern, studying the character and polity of different nations, and laying in a stock of taste and information calculated to refine, improve, and enlarge his mind.
It will not be denied, that these are some of the modes of employing wealth, which are always, and most justly, considered as much superior in respectability, to the purchase of fine clothes, splendid furniture, or costly jewels. It is equally certain that the power of wealth to purchase these sources of intellectual gratification forms a most natural encouragement to the acquisition of it, and may therefore, with perfect propriety, be said to be indirectly productive of it. But it is a wide step in advance of these concessions, at once to place in the category of wealth, leisure, agreeable conversation, cultivated tastes, and general information. And yet if the gratification and information derived from a lecture on chemistry or the belles lettres, are to be considered as wealth, in consequence of a specific sum being paid for attendance, why should the taste and information acquired by a larger outlay in foreign travels be refused the same title.
The fact really is, that if we once desert matter in the definition of wealth, there is no subsequent line of demarcation which has any tolerable degree of distinctness, or can be maintained with any tolerable consistency, till we have included such a mass of immaterial objects as utterly to confuse the meaning of the term, and render it impossible to speak with any approach towards precision, either of the wealth of different individuals, or different nations.
If then we wish, with M. Say, to make political economy a positive science, founded on experience, and capable of making known its results, we must be particularly careful in defining its principal term, to embrace only those objects, the increase or decrease of which is capable of being estimated; and the line which it seems most natural and useful to draw, is that which separates material from immaterial objects.
Adam Smith has nowhere given a very regular and formal definition of wealth; but that the meaning which he attaches to the term is confined to material objects is, throughout his work, sufficiently manifest. His prevailing description of wealth may be said to be, “the annual produce of the land and labour.” The objections to it as a definition are, that it refers to the sources of wealth before we are told what wealth is, and that it is not sufficiently discriminate, as it would include all the useless and unappropriated products of the earth, as well as those which are appropriated and enjoyed by man.
To avoid these objections, and to keep at an equal distance from a too confined, or a too indiscriminate sense of the term, I should define wealth to be the material objects, necessary, useful, or agreeable to man, which are voluntarily appropriated by individuals* or nations. The definition thus limited includes nearly all the objects which usually enter into our conceptions when we speak of wealth or riches—an advantage of considerable importance, as long as we retain these terms both in common use, and in the vocabulary of political economy.
A country will therefore be rich or poor, according to the abundance or scarcity with which these material objects are supplied, compared with the extent of territory; and the people will be rich or poor, according to the abundance or scarcity with which they are supplied, compared with the population.
[* ] The reader will understand that when the term the Economists is used, it is intended to apply to the French economists, of the school of Quesnay. In order the better to mark the distinction from other economists, without circumlocution, italics are used.
[* ] Traité d’Econ. Polit. Liv. I. c. xiii. 5th edit.
[† ] Id. Ib. p. 148.
[* ] Traité d’Econ. Polit. pp. 150, 151.
[† ] Livre I. c. ii. p. 229.
[‡ ] Tome I. p. 7.
[* ] Cours d’Econ. Pol. Tome I. p. 99.
[† ] Id. Ib. p. 100.
[* ] In my little work on the “Definitions in Political Economy,” published in 1827, I defined wealth to be “The material objects necessary, useful, or agreeable to man, which have required some portion of human industry to appropriate or produce. The latter part was added, in order to exclude air, light, rain, &c.; but there is some objection to the introduction of the term industry or labour into the definition, because an object might be considered as wealth which has had no labour employed upon it. A diamond accidentally found on the sea shore might have a high value; and the fruit at the top of a tree must be considered by the savage as necessary or agreeable to him, before he will make the exertions required to obtain it.