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• Principles of Political Economy: Book III: Exchange
• Chapter I: Of Value
• Chapter II: Aofa Demand and Supply, In Their Relation to Value
• Chapter III: Of Cost of Production, In Its Relation to Value
• Chapter IV: Ultimate Analysis of Cost of Production
• Chapter V: Of Rent, In Its Relation to Value
• Chapter VI: Summary of the Theory of Value
• Chapter VII: Of Money
• Chapter VIII: Of the Value of Money, As Dependent On Demand and Supply
• Chapter IX: Of the Value of Money, As Dependent On Cost of Production
• Chapter X: Of a Double Standard, and Subsidiary Coins
• Chapter XI: Of Credit, As a Substitute For Money
• Chapter XII: Influence of Credit On Prices
• Chapter XIII: Of an Inconvertible Paper Currency
• Chapter XIV: Of Excess of Supply
• Chapter XV: Of a Measure of Value
• Chapter XVI: Of Some Peculiar Cases of Value
• Chapter XVII: Of International Trade
• Chapter XVIII: Of International Values
• Chapter XIX: Of Money, Considered As an Imported Commodity
• Chapter XX: Of the Foreign Exchanges
• Chapter XXI: Of the Distribution of the Precious Metals Through the Commercial World
• Chapter XXII: Influence of the Currency On Athea Exchanges and On Foreign Trade
• Chapter XXIII: Of the Rate of Interest
• Chapter XXIV: Of the Regulation of a Convertible Paper Currency
• Chapter XXV: Of the Competition of Different Countries In the Same Market
• Chapter XXVI: Of Distribution, As Affected By Exchange
• Book IV: Influence of the Progress of Society On Production and Distribution
• Chapter I: General Characteristics of a Progressive State of Wealth
• Chapter II: Influence of the Progress of Industry and Population On Values and Prices
• Chapter III: Influence of the Progress of Industry and Population, On Rents, Profits, and Wages
• Chapter IV: Of the Tendency of Profits to a Minimum
• Chapter V: Consequences of the Tendency of Profits to a Minimum
• Chapter VI: Of the Stationary State
• Chapter VII: On the Probable Futurity of the Labouring Classes
• Book V: On the Influence of Government
• Chapter I: Of the Functions of Government In General
• Chapter II: Aona the General Principles of Taxation
• Chapter III: Of Direct Taxes
• Chapter IV: Of Taxes On Commodities
• Chapter V: Of Some Other Taxes
• Chapter VI: Comparison Between Direct and Indirect Taxation
• Chapter VII: Of a National Debt
• Chapter VIII: Of the Ordinary Functions of Government, Considered As to Their Economical Effects
• Chapter IX: The Same Subject Continued
• Chapter X: Of Interferences of Government Grounded On Erroneous Theories
• Chapter XI: Of the Grounds and Limits of the Laisser-faire Or Non-interference Principle
• Appendices
• Appendix a
• Appendix B
• Appendix C
• Appendix D
• Appendix E
• Appendix F: the Ms of the Principles
• Appendix G: John Stuart Mill—harriet Taylor Mill Correspondence
• Appendix H: John Stuart Mill—john E. Cairnes Correspondence and Notes
• Appendix I: Bibliographic Index of Persons and Works Cited In the Principles, With Variants and Notes

CHAPTER I

General Characteristics of a Progressive State of Wealth

§ 1. [Introductory remarks] The three preceding Parts include as detailed a view as ^aour limits^a permit, of what, by a happy generalization of a mathematical phrase, has been called the Statics of the subject. We have surveyed the field of economical facts, and have examined how they stand related to one another as causes and effects; what circumstances determine the amount of production, of employment for labour, of capital and population; what laws regulate rent, profits, and wages; under what conditions and in what proportions commodities are interchanged between individuals and between countries. We have thus obtained a collective view of the economical phenomena of society, considered as existing simultaneously. We have ascertained, to a certain extent, the principles of their interdependence; and when the state of some of the elements is known, we should now be able to infer, in a general way, the contemporaneous state of most of the others. All this, however, has only put us in possession of the economical laws of a stationary and unchanging society. We have still to consider the economical condition of mankind as liable to change, and indeed (in the more advanced portions of the race, and in all regions to which their influence reaches) as at all times undergoing progressive changes. We have to consider what these changes are, what are their laws, and what their ultimate tendencies; thereby adding a theory of motion to our theory of equilibrium—the Dynamics of political economy to the Statics.

In this inquiry, it is natural to commence by tracing the operation of known and acknowledged agencies. Whatever may be the other changes which the economy of society is destined to undergo, there is one actually in progress, concerning which there can be no dispute. In the leading countries of the world, and in all others as they come within the influence of those leading countries, there is at least one progressive movement which continues with little interruption from year to year and from generation to generation; a progress in wealth; an advancement ^bof^b what is called material prosperity. All the nations which we are accustomed to call civilized, increase gradually in production and in population: and there is no reason to doubt, that not only these nations will for some time continue so to increase, but that most of the other nations of the world, including some not yet founded, will successively enter upon the same career. It will, therefore, be our first object to examine the nature and consequences of this progressive change; the elements which constitute it, and the effects it produces on the various economical facts of which we have been tracing the laws, and especially on wages, profits, rents, values, and prices.

§ 2. [Tendency of the progress of society towards increased command over the powers of nature; increased security; and increased capacity of co-operation] Of the features which characterize this progressive economical movement of civilized nations, that which first excites attention, through its intimate connexion with the phenomena of Production, is the perpetual, and so far as human foresight can extend, the unlimited, growth of man’s power over nature. Our knowledge of the properties and laws of physical objects shows no sign of approaching its ultimate boundaries: it is advancing more rapidly, and in a greater number of directions at once, than in any previous age or generation, and affording such frequent glimpses of unexplored fields beyond, as to justify the belief that our acquaintance with nature is still almost in its infancy. This increasing physical knowledge is now, too, more rapidly than at any former period, converted, by practical ingenuity, into physical power. The most marvellous of modern inventions, one which realizes the imaginary feats of the magician, not metaphorically but literally—the electro-magnetic telegraph—^asprang^a into existence but a few years after the establishment of the scientific theory which it realizes and exemplifies. Lastly, the manual part of these great scientific operations is now never wanting to the intellectual: there is no difficulty in finding or forming, in a sufficient number of the working hands of the community, the ^bskill requisite^b for executing the most delicate processes of the application of science to practical uses. From this union of conditions, it is impossible not to look forward to a vast multiplication and long succession of contrivances for economizing labour and increasing its produce; and to an ever wider diffusion of the use and benefit of those contrivances.

Another change, which has always hitherto characterized, and will assuredly continue to characterize, the progress of civilized society, is a continual increase of the security of person and property. The people of every country in Europe, the most backward as well as the most advanced, are, in each generation, better protected against the violence and rapacity of one another, both by a more efficient judicature and police for the suppression of private crime, and by the decay and destruction of those mischievous privileges which enabled certain classes of the community to prey with impunity upon the rest. They are also, in every generation, better protected, either by institutions or by manners and opinion, against ^c arbitrary exercise of the power of government. Even in semi-barbarous Russia, acts of spoliation directed against individuals, who have not made themselves politically obnoxious, are not ^dsupposed to be^d now so frequent as much to affect any person’s feelings of security. Taxation, in all European countries, grows less arbitrary and oppressive, both in itself and in the manner of levying it. Wars, and the destruction they cause, are now ^eusually^e confined, in almost every country, to those distant and outlying possessions at which it comes into contact with savages. Even the vicissitudes of fortune which arise from inevitable natural calamities, are more and more softened to those on whom they fall, by the continual extension of the salutary practice of insurance.

Of this increased security, one of the most unfailing effects is a great increase both of production and of accumulation. Industry and frugality cannot exist, where there is not a preponderant probability that those who labour and spare will be permitted to enjoy. And the nearer this probability approaches to ^f certainty, the more do industry and frugality become pervading qualities in a people. Experience has shown that a large proportion of the results of labour and abstinence may be taken away by fixed taxation, without impairing, and sometimes even with the effect of stimulating, the qualities from which a great production and an abundant capital take their rise. But those qualities are not proof against a high degree of uncertainty. ^gThe Government^g may carry off a part; but there must be assurance that ^hit^h will not interfere, nor suffer any one to interfere, with the remainder.

One of the changes which most infallibly attend the progress of modern society, is an improvement in the business capacities of the general mass of mankind. I do not mean that the practical sagacity of an individual human being is greater than formerly. I am inclined to believe that economical progress has hitherto had even a contrary effect. A person of good natural endowments, in a rude state of society, can do a ⁱgreatⁱ number of things ^jtolerably^j well, has a greater power of adapting means to ends, is more capable of extricating himself and others from an unforeseen embarrassment, than ninety-nine in a hundred of those who have known only ^kwhat is called^k the civilized form of life. How far these points of inferiority of faculties are compensated, and by what means they might be compensated still more completely, to the civilized man as an individual being, is a question belonging to a different inquiry from the present. But to civilized human beings collectively considered, the compensation is ample. What is lost in the separate ^l efficiency of each, is far more than made up by ^mthe^m greater capacity of united action. In ⁿ proportion as they put off the qualities of the savage, they become amenable to discipline; capable of adhering to plans concerted beforehand, and about which they may not have been consulted; of subordinating their individual caprice to a preconceived determination, and performing severally the parts allotted to them in a combined undertaking. Works of all sorts, impracticable to the savage or the half-civilized, are daily accomplished by civilized nations, not by any greatness of faculties in the actual agents, but through the ^o fact that each is able to rely with certainty on the others for the portion of the work which they respectively undertake. The peculiar characteristic, in short, of civilized beings, is the capacity of co-operation; and this, like other faculties, tends to improve by practice, and becomes capable of assuming a constantly wider sphere of action.

Accordingly there is no more certain incident of the progressive change taking place in society, than the continual growth of the principle and practice of co-operation. Associations of individuals voluntarily combining their small contributions, now perform works, both of an industrial and of many other characters, which no one person or small number of persons are rich enough to accomplish, or for the performance of which the few persons capable of accomplishing them were formerly enabled to exact the most inordinate remuneration. As wealth increases and business capacity improves, we may look forward to a great extension of establishments, both for industrial and other purposes, formed by the collective contributions of large numbers; establishments like those ^pcalled^p by the technical name of joint-stock companies, or the associations less formally constituted, which are so numerous in England, to raise funds for public or philanthropic objects^q, or, lastly, those associations of workpeople either for production, or to buy goods for their common consumption, which are now specially known by the name of co-operative societies^q .

The progress which is to be expected in the physical sciences and arts, combined with the greater security of property, and greater freedom in disposing of it, which are obvious features in the civilization of modern nations, and with the more extensive and more skilful employment of the joint-stock principle, afford space and scope for an indefinite increase of capital and production, and for the increase of population which is its ordinary accompaniment. That the growth of population will overpass the increase of production, there is not much reason to apprehend; and that it should even keep pace with it, is inconsistent with the supposition of any real improvement in the poorest classes of the people. It is, however, quite possible that there might be a great progress in industrial improvement, and in the signs of what is commonly called national prosperity; a great increase of aggregate wealth, and even, in some respects, a better distribution of it; that not only the rich might grow richer, but many of the poor might grow rich, that the intermediate classes might become more numerous and powerful, and the means of enjoyable existence be more and more largely diffused, while yet the great class at the base of the whole might increase in numbers only, and not in comfort nor in cultivation. We must, therefore, in considering the effects of the progress of industry, admit as a supposition, however greatly we deprecate as a fact, an increase of population as long-continued, as indefinite, and possibly even as rapid, as the increase of production and accumulation.

With these preliminary observations on the causes of change at work in a society which is in a state of economical progress, I proceed to a more detailed examination of the changes themselves.

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[a-a]48, 49 sprung

[b-b]48, 49 requisite skill, combined with the requisite intelligence,

[c]48, 49 the

[d-d]+52, 57, 62, 65, 71

[e-e]+57, 62, 65, 71

[f]48, 49, 52, 57, 62 a

[g-g]48, 49 You

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[i-i]48, 49, 52, 57, 62 greater

[j-j]+57, 62, 65, 71

[k-k]+52, 57, 62, 65, 71

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[o]48, 49, 52 simple

[p-p]48, 49, 52, 57, 62 known

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