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CHAPTER X: EFFECTS OF THE ACCUMULATION OF CAPITAL. - Thomas Hodgskin, Popular Political Economy. Four lectures delivered at the London Mechanics Institution 
Popular Political Economy. Four lectures delivered at the London Mechanics Institution (London: Charles and William Tait, 1827).
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EFFECTS OF THE ACCUMULATION OF CAPITAL.
Security of property, and accumulation, said to influence production.—Reasons for not noticing the former, and for noticing the latter.—Definitions of capital.—It is a part of the national wealth, used for the sake of the profit it brings its owner.—Capital considered under three classes of circumstances.—If made and used by the same persons, it aids production.—If made by one set of labourers, and used by another, they appropriating the whole produce between them, it aids production.—If the owners of it be not labourers, it impedes production.—The latter is the present state of society.—Difference between instruments and wages.—Popular language one cause of the prevalent error as to capital.—Question, Would there be any motive for an increase of wealth were there no interest on capital? considered.—CONCLUSION.—Influence of Political Economy on our happiness.—Importance of studying it.—Illustration from the general poverty.—That is generally attributed to nature: but here it is supposed to be caused by social institutions.
THE only circumstances at all deserving the epithet natural, besides those already treated of, which have ever been noticed in treatises on Political Economy, on account of their influence over the production of wealth, are security of property and accumulation of capital.
Of the former, which must be considered as an object to be attained by social regulations—though property itself, or a man's right to the free use of his own mind and limbs, and to appropriate whatever he creates by his own labour, is the result of natural laws—I shall not say one word; because it is necessary, before we discuss the effects of security of property, to have the right of property accurately defined, and we must be quite agreed as to its basis. Not being disposed to regard the existing right of property, with the same respect as those who urge on mankind the necessity of preserving it inviolate, in discussing it I should have many difficulties to encounter, and might incur some reproaches. I admit that the sacredness even of the present right of property, cannot be too strenuously upheld against the aggressions and violations of governments; but as far as it ought to be held sacred against the claims of the labourer to own whatever and all which he produces, I entirely dissent from the prevalent opinions. The power now possessed by idle men to appropriate the produce of labourers, seems to me the great cause of bloated and unhappy weariness in the former, who, having their natural wants provided for, necessarily live having no useful aim and object,—and of poverty and wretchedness in the latter, who being obliged to subsist many more than their own families, have no time and no thought, but how to obtain the means of preserving an existence so filled with toil and care as to seem scarcely worthy of preservation. On account of the respect generally inculcated for the right of property, and on account of the intemperate and furious passions connected with it, the free discussion of this important question is not without danger. I must therefore pass it by, merely observing that the prevalent opinions of most political economists are directly at variance with their own definition of wealth.
Dissenting, also, from the opinions prevalent among them as to the utility of accumulated capital, I propose to make a few remarks on this subject. Not wishing to give this little book a character of controversy, I should have abstained also from treating of capital, were it not of great importance to relieve, as far as possible, the wise system of nature from the imputations cast on it by erroneous theories, and to place the laws regulating production before the reader, in all the clearness of their own simplicity. Both the theory relative to capital, and the practice of stopping labour at that point where it can produce, in addition to the subsistence of the labourer, a profit for the capitalist, seem opposed to the natural laws which regulate production. Moreover, our ideas of just or unjust distribution, will be materially modified by our opinions of the mode and degree in which capital is useful. The subject embraces also several practical questions of considerable importance, if we may judge from the frequency with which they are mentioned in Parliament. And as there can be no violent passions involved in the discussion of the abstract question of the utility of capital, the above considerations have induced me to treat of it. In a little work entitled "Labour Defended against the Claims of Capital,"* the nature and use of both fixed and circulating capital have been, I think, accurately analyzed, which relieves me, at present, from the necessity of doing any thing more than briefly explaining in what sense the employment of capital promotes production.
Political Economists have distinguished two species of capital, viz., fixed and circulating capital. The former consists, according to Dr. Smith, of "1st, useful machines and instruments of trade, which facilitate and abridge labour; 2nd, of all those profitable buildings which are the means of procuring a revenue, such as shops, warehouses, workhouses, farmhouses, with their necessary buildings, stables, granaries &c.; 3rd, of the improvements of land, or what has been profitably laid out in improving, draining, inclosing, manuring, and reducing it into the condition most proper for tillage and culture, (in this category we may probably include bridges, roads, canals; which are both fixtures in the soil and instruments for abridging labour); 4th, of the acquired and useful abilities of all the inhabitants and members of the society."* I prefer Dr. Smith's enumeration of the articles which constitute fixed capital, because it is far more complete than any subsequent description, and it has the great merit of not overlooking the most important part of fixed capital, viz. the acquired and useful abilities of ALL the members of the society.† The definition of circulating capital I shall borrow from Mr. Mill.
"There is another portion of the articles," he says, "subservient to production, which do perish in the using. Such are all the tools worn out in one set of operations, all the articles which contribute to production only by their consumption, as coals, oil, the dye stuffs of the dyer, the seed of the farmer, and so on. Of this nature also are the raw materials worked up in the finished manufacture. Under the same head must be included the expense of repairing and keeping in order the more durable articles of fixed capital; such as repairing roads and bridges. The distinctive character of all this portion of capital is, that it is necessarily consumed in contributing to production, and that it must be reproduced, in order to enable the producer to continue his operations. There is another thing which is also constantly consumed, and constantly needs to be reproduced, and that is the subsistence, or consumption, or wages of the labourer; and that equally whether the labourer supplies it himself, or whether he receives it from the capitalist in the shape of wages."*
Taking into consideration that the articles above mentioned are only given as examples, the two lists include every species of material object which falls within the most comprehensive definition of wealth. In fact, Mr. McCulloch has defined, in his latest work, "Principles of Political Economy," the capital of a country to be that portion of the produce of industry existing in it, which can be made directly available, either to the support of human existence, or to the facilitating production,"—a definition which embraces every species of wealth, except that which serves merely for ornament. There must, therefore, be some accessory idea, or some relation belonging to capital, which distinguishes it from national wealth under other relations. To me it appears that the single and only circumstance which gives to any portion of the produce of labour the relation understood by the term Capital, is, that it be made, employed, or consumed, not for the sake of any enjoyment it affords its owner, in either the making, employing, or consuming of it, but for the sake of some ulterior profit. It is a part of the national wealth employed, to use the language of Dr. Smith, to "procure its owner a revenue."
Thus a steam engine to move cotton spinning machinery is made, and afterwards used—not for any delight we have in the beautiful mechanical contrivance, but for the sake of the profit to be obtained on the cotton yarn. Nobody keeps a shop in the Strand, or a warehouse in Thames Street, except for the revenue he is to derive from either. The ground is drained, ploughed, and inclosed, for the sake of the expected future produce, not from an idea that the furrow and the hedge add to the beauty of the landscape.* He who uses dye-stuffs cares little or nothing about the fascinating colours he fixes in silk or cotton: he only uses them for ulterior profit. The money or goods given by the capitalist, or owner of them, for the labour of workmen, is given, that they, like the steam-engine, or the draining of land, may produce him something of greater value than their wages. These wages, on the contrary, are not capital to those who consume them to support life, or for the sake of enjoyment. All property lent by one man to another, or to the state, for which the lender receives interest, is called his capital; because he does not use it for his own immediate gratification, but for the revenue it gives. In the same manner each man learns, in most cases, some art,—that of making shoes for example; not for any pleasure he finds in making shoes, but that he may ultimately obtain his subsistence by practising this species of industry. There are, perhaps, no arts learnt for the sake of the pleasure they afford, though many give pleasure in the learning; and thus all the acquired and useful abilities of the members of a society are not acquired for their own sake, but for ultimate profit. Whatever an individual makes or acquires for the sake of after-production—whatever he lends for the sake of interest—whatever is used or consumed for the sake of profit, comes under the denomination of fixed or circulating capital.
It would appear, at the first view, that the greater the quantity of the annual produce devoted to reproduction, or used with a view to procuring its owner a revenue, the more the annual produce would be increased. This idea is at the bottom of all which can be said in favour of the productiveness of capital. But, though every portion of capital brings a profit to its owner, it depends on the nature of the capital itself, whether it assist production. The capital of the national debt, or the capital lent on mortgage, brings its owner a revenue,—a share of the taxes, or of the rent of the estate, mortgaged,—as well as the capital laid out on steam-engines and at the same rate of profit, but it has no wealth-creating power. If every portion of capital were like a steam-engine, or a carpenter's plane, made as well as employed to aid production, the whole annual produce might be increased as capital increased. But a great quantity of capital is always lent to share the revenue or produce of others, and this portion can have no beneficial effect on the wealth of the whole. What enriches the individual capitalist does not necessarily add to national wealth.
Taking only fixed capital into our consideration, and leaving circulating capital, particularly that portion of it which pays wages out of view,—a manner of treating the subject most favourable to the idea of capital aiding production, let us inquire if it really have any such effect. For this purpose we may distinguish three classes of circumstances under which the effects of an accumulation of capital will be very different. First, if it be made and used by the same persons; second, if it be made and used by different classes of persons, who share between them in just proportion the produce of their combined labour; third, if it be owned by a class of persons who neither make nor use it.
First. If the instruments, tools, dye-stuffs, etc., intended to promote production be made and used by one and the same individual, we are bound to suppose that he finds these labours advantageous, or he would not perform them; and that every accumulation in his possession of the instruments he makes and uses, facilitates his labour. The limit to such an accumulation is plainly the power of the labourer to make and use the instruments in question. In the same manner, the quantity of national capital is always limited by the power of the labourers to make and use it with advantage. When capital, therefore, is made and used by the same persons, when all which they produce belongs to themselves, too much cannot be said in its favour.
Second. Capital may be made by one labourer and used by another, and both may divide the commodity obtained by the labour of making and of using the capital between them, in proportion as each has contributed by his labour to produce it. He who makes the capital finds this employment productive to him, or he would not continue it; and he who uses the capital finds that it assists his labour, or he would give nothing for it. Under these circumstances, the accumulation and employment of capital is advantageous. I should rather express this fact, however, by saying, that a part of the society employed in making instruments, while another part uses them, is a branch of division of labour which aids productive power and adds to the general wealth. As long as the produce of the two labourers,—and speaking of society, of the two classes of labourers,—be divided between them, the accumulation or increase of such instruments as they can make and use, is as beneficial as if they were made and used by one person.
Third. One labourer may produce or make the instruments which another uses to assist production—not mutually to share in just proportions the produce of their co-operating labour, but for the profit of a third party. The capitalist being the mere owner of the instruments, is not, as such, a labourer. He in no manner assists production. He acquires possession of the produce of one labourer, which he makes over to another, either for a time,—as is the case with most kinds of fixed capital, or for ever, as is the case with wages,—whenever he thinks it can be used or consumed for his advantage. He never does allow the produce of one labourer, when it comes into his possession, to be either used or consumed by another, unless it is for his benefit. He employs or lends his property to share the produce, or natural revenue, of labourers; and every accumulation of such poverty in his hands is a mere extension of his power over the produce of labour, and retards the progress of national wealth. In this which is at present the case, the labourers must share their produce with unproductive idlers, and to that extent less of the annual produce is employed in reproduction.
If there were only the makers and users of capital to share between them the produce of their co-operating labour, the only limit to productive labour would be, that it should obtain for them and their families a comfortable subsistence. But when in addition to this, which they must have whether they be the owners of the capital or not, they must also produce as much more as satisfies the capitalist, this limit is much sooner reached. When the capitalist, being the owner of all the produce, will allow labourers neither to make nor use instruments, unless he obtains a profit over and above the subsistence of the labourer, it is plain that bounds are set to productive labour much within what Nature prescribes. In proportion as capital in the hands of a third party is accumulated, so the whole amount of profit required by the capitalist increases, and so there arises an artificial check to production and population. The impossibility of the labourer producing all which the capitalist requires prevents numberless operations, such as draining marshes, and clearing and cultivating waste lands; to do which would amply repay the labourer, by providing him with the means of subsistence, though they will not, in addition, give a large profit to the capitalist. In the present state of society, the labourers being in no case the owners of capital, every accumulation of it adds to the amount of profit demanded from them, and extinguishes all that labour which would only procure the labourer his comfortable subsistence. More than this, however, he does not want; and thus, accumulation of capital in the present state of society checks production, and consequently checks the progress of population, the division of labour, the increase of knowledge, and of national wealth.
The term Fixed Capital, includes some of the most noble inventions of man, which are indispensable to the success of labour. Without machines and tools the labourer could perform but few, and those very imperfect operations. Without dye-stuffs he could produce no colours, and without coals he could not fuse metals. Machines, tools, and coals, undoubtedly facilitate labour; but we must labour to prepare or obtain them. That the labour employed in preparing them facilitates subsequent production, no man can deny; but when it is admitted that labour produces all things, even capital, it is nonsense to attribute productive power to the instruments labour makes and uses. All capital is made and used by man; and by leaving him out of view, and ascribing productive power to capital, we take that as the active cause, which is only the creature of his ingenuity, and the passive servant of his will.
Among the articles enumerated as capital, we find wages, or the subsistence of the labourer; but wages do not, like instruments, facilitate production. The master cotton-spinner, for example, gives to his labourers what is equivalent to an ordér on the neighbouring butcher and baker to obtain a certain quantity of meat and bread, and he redeems this order by giving to the butcher and the baker a certain quantity of cotton cloth. If he give a quantity of money, he does not perhaps get that immediately from the butcher and the baker with whom his workmen expend what he gives them, but he gets it by selling his cloth in the market. The real wages of the labourer do not consist in money, but what the money buys. When a capitalist therefore, who owns a brew-house and all the instruments and materials requisite for making porter, pays the actual brewers with the coin he has received for his beer, and they buy bread, while the journeymen bakers buy porter with their money wages, which is afterwards paid to the owner of the brew-house, is it not plain that the real wages of both these parties consist of the produce of the other; or that the bread made by the journeyman baker pays for the porter made by the journeyman brewer? But the same is the case with all other commodities, and labour, not capital, pays all wages.
If the master, in addition to being a cotton manufacturer or a brewer, be also a banker, and supply the vicinity of his residence with paper-money, the case becomes still plainer. He then gives his workmen a mere promise to pay a certain sum; and, it should be recollected, the greater part of what are called the advances of capitalists consists of such promises; which mere promise is taken in exchange for meat or bread by the butcher or baker, who gives it to the grazier or miller, who returns it back to the banker, either from banking with him, or to remit money, perhaps, to London, in payment of rent.* The master manufacturer has either money or paper with which he pays wages; those wages his labourer exchanges for the produce of other labourers, who will not keep the wages, whether money or paper; and it is returned to the manufacturer, who gives in exchange for it the cloth which his own labourers have made. With it he again pays wages, and the money or paper again goes the same round. In wages, take them in whatever shape we will, whether as stock or money in the hands of the capitalists, or what the labourer consumes, I defy any man to see the least particle of power aiding or facilitating the operations of industry similar to that possessed by instruments and machines.
If accumulation of capital be a source of wealth, as the profit on circulating capital is equal to that on fixed capital, we must conclude, however, that the bread and meat the labourer eats, and the clothes he wears, nay, even that the gin, porter, and tobacco he consumes, because the capitalist has given him a right to consume them, and derives a revenue from making this right over to him,—facilitate labour like the most refined and powerful machine ever made by the cunning art and accumulated knowledge of man. For the wretched hovel of the labouring cotton spinner or weaver, though it scarcely afford the brow-beaten and downcast inhabitant a shelter from the inclemencies of the season, the owner obtains as large a profit, in proportion, as from the use of a steam engine. To say that there is in wages, and in instruments, a similar productive power, because the capitalist obtains a profit on both, seems to me a blunder of no ordinary magnitude. Had it been intentionally made, it would have been deserving our severest reprobation; for its effect is to justify the appropriation by the capitalist of that large share he now receives of the annual produce. It ascribes to his property merely, whether he employ it to pay wages, or whether it consist in useful instruments, all that vast assistance, which knowledge and skill, when realized in machinery, give to labour.
I do not mean to notice the various sources of what I conceive to be the error of the Economists, as to capital, though it is justly said, "to trace an error to its source is half way towards destroying it;" but the language commonly in use is so palpably wrong, leading to many mistakes, that I cannot pass it by altogether in silence. We speak, for example, in a vague manner, of a windmill grinding corn, and of steam engines doing the work of several millions of people. This gives a very incorrect view of the phenomena. It is not the instruments which grind corn, and spin cotton, but the labour of those who make, and the labour of those who use them. The co-operating labours of the millwright, for example, and the almost numberless other workmen who prepare his tools and the materials, of which the mill is fabricated, or who bring them from remote parts of the earth,—they themselves using very complicated machines for this purpose, which are prepared by the combined labour of a vast number of persons,—in the first instance construct the mill; and then the labour of the miller, assisted also by various instruments, millstones, sieves, sacks, &c. which are made by some other labourers, profiting by the force of the wind, and the natural hardness of the stones, as compared to the hardness of corn, grinds it, sifts it, and prepares it for the use of the baker. So the united labours of the miner, the smelter, the smith, the engineer, the stoker, and of numberless other persons, and not the lifeless machines perform whatever is done by steam engines. Formerly all spinning was done by the hand, and probably the spinner or the spinner's husband made with a knife the rude distaff and twirl, which were then the only instruments used in spinning. When spinning wheels were invented, the co-operating labours of the wheelwright and the spinner were necessary to complete the thread; but the result was the production of a much greater quantity of yarn than could before be produced by any given quantity of labour. Subsequently those who make steam engines, and set them in motion, and those who make mules and spinning frames, became the assistants of the spinner; and so much more efficacious is this knowledge-guided labour than the first rude mode of spinning, by twirling a piece of wood between the finger and thumb, and causing it to draw out the thread, as it sinks towards the earth, by its own weight, that one person can now probably spin as much thread in a given time, as four or five thousand primitive spinners. The fact is, that the enlightened skill of the different classes of workmen alluded to, comes to be substituted in the natural progress of society, for less skilful labour, and this enlightened skill produces an almost infinitely greater quantity of useful commodities, than the rude labour it has gradually displaced. By the common mode of speaking, the productive power of this skill is attributed to its visible products, the instruments, the mere owners of which, who neither make nor use them, imagine themselves to be very productive persons; particularly, if they are at the same time labourers, planning and directing the operations of those who make and use the instruments. Political Economists have probably been led by this incorrect language into their mistake; and have accordingly attributed that increased productive power, which has its source in the increased knowledge and skill of society at large, to the accumulation of fixed capital.
There is another obvious error leading to absurdities and abuses in practice, against which I must endeavour to guard the reader. It must be quite plain that the greater part of the commodities constituting the capital of a country, cannot, under any circumstances, be removed. The most common instruments and tools are of no use without skilful hands; and many of them are fixed in spots and places, or connected with buildings which cannot be displaced. Shops and warehouses, farm-houses, stables, and granaries, are nearly as immovable as the soil itself. They may be destroyed—not carried away. The improvements of the soil, the draining and manuring of it, are deeds of a man's hand, done and completed, and irrevocable. Other labours may make them useless, but neither they nor the benefit they confer on us, can be transported to France or America. Bridges, roads, and canals, may be neglected or suffered to fall into ruin, or they may be broken up; but no one will be at the trouble of shipping the materials off to Spain or the Brazils. The principal part of circulating capital is food, which we import; and, consequently, not a particle of it could be advantageously sent to other countries. Neither can coals, dye-stuffs, or any other raw materials of manufactures be sent abroad in any greater quantity than at present. We are more generally importers than exporters of such articles; and of those that we can advantageously export, as great a quantity is already exported as is profitable. Thus, except the acquired and useful abilities of the labourers of a society, and what they can carry with them—for there are some few instruments, such as ships, easily transportable—no part of the capital of a country can be either driven or sent away.
Men may be, and frequently have been, forced from their native land by arbitrary and oppressive laws, by religious persecution, or political tyranny, and by a grinding and ruinous system of taxation; but unless men are, capital never is either forced or sent abroad. To talk of sending away roads, bridges, canals, and cultivated fields, is a striking absurdity, and yet we hear perpetually a sort of cuckoo song among members of Parliament, who are capitalists themselves, or leagued with capitalists, about the danger of forcing these things under the name of capital out of the country. In fact, to prevent them from being driven away, as it is said, laws against the combination of workmen have been made in this country, quite as atrocious in principle, as the slave codes of the West Indies. It may suit the views of those who imagine they are benefited by keeping up our monstrous system of taxation, our corn laws, and church establishment, and our West and East India monopolies, to ascribe all the evils of the country to a demand for higher wages, and they may consistently with their own selfish views, enact laws to keep labourers obedient: I can understand their motives, but I cannot comprehend how their statements can be believed by society at large. While the industry of this country labours under its present enormous burdens, arising from social regulations, to attribute the fact of our manufacturers being sometimes undersold in the foreign market, to the high wages of our labourers, is like omitting the influence of the moon, and attributing the tides of the ocean to the sudden impetuosity of a few mountain streams.
In asserting that accumulation of capital in the hands of persons who neither make nor use it, impedes the progress of society, let me not be supposed to overlook the statement, that if there were no profit to be obtained on the capitalists' stock, there would be no motive to save, no spur to industry, and no increase of national wealth. I do not overlook this statement, but because I am sensible of its importance, I will not hastily and dogmatically decide concerning it. It is plain, however, that the assertion of interest on capital being necessary to stimulate saving and industry, as it can only be taken from the produce of the labourer, is quite irreconcileable with the assertion that labour will be energetic and skilful in proportion as it is rewarded. I can understand how a right to appropriate the produce of other men, under the name of interest or profit, may be a stimulus to cupidity; but I cannot understand how lessening the reward of the labourer, to add to the wealth of the idle, can increase industry or accelerate the progress of society in wealth. Interest on capital was beneficial, when, feudal landlords being then the absolute masters of all the slave labourers of the country, it tended to reduce their power; but it is an error of no small magnitude to describe that as a general law of nature, which is only applicable to remove or lessen a particular usurpation.
We shall be led, I think, to a different solution of the question, "whether or not society could advance were there no interest on capital" than that generally given, by reflecting on the principle of population in union with our affections, and by observing what takes place in the wilds of America. The former will convince us, that the produce of every labourer is all required for the nourishment of his own family. To bring up and provide for his children, is a sufficient motive, in general, for the labourer to be industrious. As they are brought up and provided for, and taught some manual art, they become labourers, extend division of labour, promote increase of knowledge, and add in their turn to the population and annual produce of society. In our present state, the savings of the capitalist are as much consumed, and generally by labourers, as any other part of the annual produce; but first passing into the hands of the capitalist, he takes a large portion for himself, which would otherwise remain with the labourers and enable them to rear larger families, adding, which multiplying capitalists does not, to division of labour. "The motives," says a writer in the Westminster Review, "which operate to save, exist totally independent of any addition which might be made to the savings themselves." In parental affection, there is, I think, a source both for industry, and for that saving from his own consumption, which enables a man to rear up a family, by sharing with them the produce of his labour: and where there are many families properly brought up, the nation increases in wealth and people.
In fact it is a miserable delusion to call capital something saved. Much of it is not calculated for consumption, and never is made to be enjoyed. When a savage wants food, he picks up what nature spontaneously offers. After a time he discovers that a bow or a sling will enable him to kill wild animals at a distance, and he resolves to make it, subsisting himself, as he must do, while the work is in progress. He saves nothing, for the instrument never was made to be consumed, though in its own nature it is more durable than deer's flesh. This example represents what occurs at every stage of society, except that the different labours are performed by different persons—one making the bow, or the plough, and another killing the animal or tilling the ground, to provide subsistence for the makers of instruments and machines. To store up or save commodities, except for short periods, and in some particular cases, can only be done by more labour, and in general their utility is lessened by being kept. The savings, as they are called, of the capitalist, are consumed by the labourer, and there is no such thing as an actual hoarding up of commodities.
In filial affection we may also find, I think, a better security for the supply of our wants in old age, than any interest on accumulated savings can give. Labourers, at least, should always remember that the interest on savings, or capital, is paid by the produce of labour. It merely gives them a power over the labour of their own descendants, which would be obtained, I hope, from affection if it were not extorted by law. The natural and best method of saving against the wants of old age, is to rear, educate and instruct our offspring. In their willing contributions paying back to their parents, when no longer able to toil, some of those advances the parents had made in manhood, to support and rear them, old age would find a certain subsistence derived from a pleasing source. Those who would substitute parliamentary decrees and social regulations, enforced by punishment, for this mutual affection—looki rather to them, than to it, for national prosperity, must have more confidence in legislative skill than in the wisdom of nature.
If we look to the wilds of America, where families multiply very fast; where most of what is raised or produced is consumed in the family; where, except in the towns, no part of the annual revenue is saved and put out to interest; where the labourers have large possessions, and many instruments which they use for their own advantage; but where there is comparatively little labouring for the profit of the capitalist,—we shall find, I think, this view confirmed. The United States are increasing more rapidly in wealth, power, and population, than any of the countries in which capital has been extensively accumulated. Whether the progress of society depends or not on interest being paid on capital, is a question, however, which comes home to the feelings and private lives of individuals, and rests for its solution on our affections. If parents are generally willing to share with their offspring what they produce, if they have natural motives for carefully bringing up their children and teaching them the arts of life, we must conclude, that independent of the wish to obtain power over the produce of other men's labour,—independent of vulgar avarice, or the vulgar ambition of what is called rising in the world, and imitating the follies and vices of those who already lord it over their fellow-men,—independent also of all gradations of rank and degrees of opulence,—there are motives which continually tend to increase the number of labourers. As their numbers are increased, both increased production and consumption take place, which is all that is ever meant by the terms accumulation or increase of national wealth.
[*]Published in London by Knight and Lacy, in 1825.
[*]Wealth of Nations, book ii. chap. 2.
[†]It is somewhat extraordinary that many of the acquired and useful abilities mentioned in the text, are the only parts of the national fixed capital which never bring their owner a profit, while the produce of these acquired and useful abilities in the possession of the capitalist, obtains an ample reward. "The national capital," says M. Storch, "includes the natural and acquired faculties of the productive classes, the nature of individual capital excludes them. However gifted with such faculties an individual may be, and however large may be the revenue he acquires by them; it would overthrow all our received ideas to call him a capitalist, if he did not possess besides this personal and unalienable capital, a capital composed of transmissable values." "Cours d'Economie Politique," vol. v. p. 60. This anomaly is not explained by any existing theory of the distribution of wealth.
[*]Elements of Political Economy, by James Mill, Esq. second Edition.
[*]It deserves to be remarked, that the claims now made by landlords and farmers, to be allowed to tax the rest of the community for the capital vested in the soil, are neither more nor less than claims to make us pay them for the labour they have extorted from the parish-fed peasant. There is no other capital vested in the ground, nor can there be any other than the labour of the labourer; and his task-master, having already grown rich on it, now tries to exact a further reward for his oppression.
[*]If the invention and employment of paper-money had done nothing else but show the incorrectness of the notion, that capital is something saved, it would have led to one important consequence. As long as the capitalist, to realize his wealth, or command over other people's labour, was obliged to have in his possession an actual accumulation of the precious metals or of commodities, we might have continued to suppose, that accumulation of capital was the result of an actual saving, and that on it depended the progress of society. But when paper-money and parchment securities were invented,—when the possessor of nothing but such a piece of parchment received an annual revenue in pieces of paper with which he obtained whatever was necessary for his own use or consumption, and not giving away all the pieces of paper, was richer at the end of the year than at the beginning, or was entitled next year to receive a still greater number of pieces of paper, obtaining a still greater command over the produce of labour, it became evident to demonstration that capital was not any thing saved; and that the individual capitalist did not grow rich by an actual and material saving, but by doing something which enabled him, according to some conventional usage, to obtain more of the produce of other men's labour.