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These articles first appeared in the Dictionnaire d’Économie Politique, ed. Guillaumin and Charles Coquelin (Paris: Guillaumin, 1852) and were translated into English and included in Lalor’s Cyclopedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (Chicago: M.B. Carey, 1899) in 3 vols.
The French political economists of the the 19th century, or “the economists” as they liked to call themselves, are less well known than the classical school which appeared in England at the same time. The French political economists differed from their English counterparts on a number of grounds: the radicalism of their support for free markets, the founding of their beliefs on doctrines of natural rights and natural law, and the intellectual debt they owed to Jean-Baptiste Say (1767-1832). Some of their leading figures were Say, Charles Comte, Charles Dunoyer, Frédéric Bastiat (1801-1850), Charles Coquelin, Joseph Garnier, Hippolyte Passy, and Léon Faucher.
Ambroise Clément (1805-86) was an economist and secretary to the mayor of Saint-Étienne for many years. Clément was able to travel to Paris frequently to participate in political economy circles. In the mid 1840s he began writing on economic matters and so impressed Guillaumin that the latter asked him to assume the task of directing the publication of the important and influential Dictionniare de l’économie politique, in 1850. Clément was a member of the Société d’économie politique from 1848, a regular writer and reviewer for the Journal des économistes, and was made a corresponding member of the Académie des sciences morales et politiques in 1872. He wrote the following works: Recherches sur les causes de l’indigence (1846); Des nouvelles Idées de réforme industrielle et en particulier du projet d’organisation du travail de M. Louis Blanc (1846); La crise économique et sociale en France et en Europe (1886); as well as an early review of Bastiat’s Economic Harmonies for the Journal des économistes (1850), in which he praised Bastiat’s style but criticized his position on population and the theory of value.
For additional reading see the following in the Library:
In the Forum:
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: ABSENTEEISM
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ABSENTEEISM, an expression which has arisen out of the discussions on the miserable condition of the Irish people, and which, as its derivation shows, denotes the habitual absence of the landed proprietors of a country from their estates. From such absenteeism has naturally sprung a system of farming out these estates to intermediaries, which has proved in its consequences of ever increasing injury to the tenant. These absentee Irish proprietors grant long leases of their estates to rich English capitalists, who sublet at a profit to other speculators, commonly known as middlemen, and these latter, dealing directly with the tenants, sublet for short terms, and contrive, by the minutest possible subdivisions, so to in crease the number of bidders as to obtain for each holding the highest rental possible. Besides the effect of this feudal system of rack-rents in impoverishing the tenant to the last degree, the bulk of the rentals so accruing is annually exported without any return in exchange. No portion of such rentals is ever applied to the introduction of improved methods of agriculture, nor even to the development of either the manufacturing industries or the commercial enterprises of Ireland, as would naturally be the case were these proprietors themselves residenters. It is unquestionable, then, that absenteeism is one of the causes of the wretched condition of Ireland.
—The politico-economical effects of absenteeism are everywhere the same, and are more marked in Ireland only because more general there than elsewhere. All export of capital or of income, without any counter-balancing return, is hurtful to the country from which such capital is withdrawn, and beneficial to that to which it is exported; it takes from the one for the use of the other, the means for the maintenance of labor, for the improvement of the natural capacities of the soil, and for the accumulation of wealth; and these results are in exact proportion to the magnitude of the sums exported. Among the causes provocative of absenteeism may be cited a corrupt administration of public affairs, or too burdensome taxation. These and like causes have determined many English families to seek homes in other countries. They thus escape a taxation which in England is very great upon all articles of consumption, and hence the government, to obtain the same amount of revenue, has no alternative but to impose upon the resident classes those taxes which the non-residenters escape. Of all the factors which determine this emigration of capital, the most powerful is the feeling of insecurity. The political turmoils which at times so greatly unsettled the state of continental Europe, drove many families of wealth to seek a refuge in England, although the cost of living is greater there than anywhere else.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: ACCUMULATION OF WEALTH
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ACCUMULATION OF WEALTH. It is to the power of accumulation or saving (two terms which in political economy are almost equivalent) that we owe all our capital, all our wealth.
—All the utilities created by man are susceptible of accumulation, whether these utilities are identified with the men themselves, as those which consist in acquired knowledge, in the perfection given our physical, intellectual or moral faculties, or those added to external objects.
—Of the accumulation of utilities of this last class, the most important are those realized in the cultivation of the soil. They consist in the clearing and reclaiming of land; in the increase of its natural fertility by manuring, irrigation or other means; in the substitution of plants useful to man for those with which the ground was primitively covered and not useful to man; in the multiplication and domestication of animals or beasts of burden employed as forces or intended for food; and finally, in the buildings, structures, machines or instruments used in exploitation of any kind. Accumulation of this kind forms the great mass of the material wealth of all nations whose civilization is advanced.
—Next in order of importance come accumulations of wealth under the form of dwelling houses, of factories, shops, machines and tools, roads, railroads, canals, bridges, ships, harbors, etc.; in a word, all the creations of industry destined to facilitate manufacturing or commercial operations, or to satisfy the wants of shelter, of intercourse, communication, etc.
—After these, the most important accumulations in the material order appear under the form of a supply of products destined either for the immediate satisfaction of our wants—such as furniture, utensils, fuel, food, linen, clothing, etc., with which every household is more or less amply provided, or those which have to undergo various changes or modifications, to fit them for consumption.
—Among the utilities which are identified with man, those whose accumulation or extension is most important, consist in the perfection given to the industrial faculties, under which term we comprise: 1st, all positive knowledge capable of rendering man's labors more fruitful; 2nd, the art of applying this knowledge, and the spirit of invention; 3rd, skill in performing all the details in the different kinds of work; 4th, the practice of the habits, individual or collective, most favorable to the development and power of the industrial faculties, and the harmony of economic relations.
—It is plain that the accumulation of utilities, of capital, of wealth, may and really does take place under a multitude of forms. Among these forms we have not included that of money or coin. In reality, accumulations in no way need an increase in the quantity of that particular product; and it is undoubted that a people may double their wealth or increase it tenfold without a single cent being added to their monetary medium. Accumulation of wealth does not take this form except in countries which produce the precious metals.
—Nevertheless it is the almost universal opinion that the greater part of the accumulations of wealth or savings is made under the form of money, and as this false idea is the source of a multitude of economic errors, it seems to us useful to show clearly that although much of the accumulation of wealth appears for a time in the form of money, it consists in reality of something very different. This, a few examples will show. A ditch-digger, by working continuously for six months, has, let us suppose, drained a marsh; the value of his labor is estimated at $400. Of this sum the workman has spent, let us say, $300 for his own personal wants, and there remain to him $100 which he puts into a savings bank. Here is an accumulation equal in value to $100; and all the circumstances remaining the same, this value should be found as an addition to the wealth of the country in one form or another. Is it in the form of money? Evidently not; for the $100, before going into the savings bank, were in possession of the proprietor who received them, let us suppose, from his tenant, who received them from the butcher, who, in turn, received them from the consumer of meat, etc. In short, this money existed in the country before as well as after the operation. The wealth here accumulated, then, does not exist in the form of money, and it can only be found in the improvement given the land by the labor of the ditch-digger, an improvement equal in value to $400, and exceeding by $100 the value of the articles consumed by the workman.
—A builder constructs a house; he expends in its construction, in wages, materials, purchase of land, etc., a sum of $110,000. When he sells the house for $120,000 the excess of $10,000 is his profit, or the price of his services. Of this last sum, $5,000 have been spent in unproductive consumption, and $5,000 are added to the capital which he employs in his business. Does the accumulation here consist in money? By no means; since the money existed before in the hands of the purchaser. It is found in the value of the house which exceeds by $5,000 all that was spent.
—The purchaser of the house receives from his tenants a yearly sum of $6,000. He uses two-thirds of this sum for the personal wants of his family, and he puts the $2,000 of surplus in the bank. Here we have a new accumulation of $2,000, which, although it does not come from new labor, must exist as additional wealth in the country under some form, and, no more than in the preceding cases, under the form of money, since the same money already existed, and has now merely changed hands. In what, then, can the new value acquired to the nation consist? In order to discover this, it is necessary to remark that the service rendered to the tenants by the house is really equal to the value of $6,000, since they have freely consented to pay that sum for its use. They might have applied that service to an industrial purpose and received back its price in that of the products created. But we will suppose that they have consumed it unproductively for their personal wants. Now even in this case the savings of the proprietor add none the less a value of $2,000 to the wealth of the country; and this value must necessarily be found in a form different from that of money. This will be easily understood by noting that without this saving, it would have been necessary to add to the unproductive consumption of the premises other productive consumption still by the proprietor, amounting to the value of $2,000. The saving, therefore, must be found in this case in the form of the different objects which the proprietor has abstained from consuming, the preservation of which has diminished the sum total of consumption in the country and consequently increased its actual wealth to that extent, production remaining the same.
—We might take up in this manner, one after another, all the individual savings accumulated in a year, and it would be seen that all have increased the general wealth in proportion to their importance, either by adding to the utilities which the country already possessed or by preserving a greater part of these, by limiting consumption. It will be seen, at the same time, that these accumulations were made under a multitude of different forms other than money, though most of them appear for a moment under this last form. Thus, that which is accumulated in reality is not money; it is objects fitted to satisfy our needs—utilities of various forms.
—It is to be remarked, that these utilities scarcely ever remain in the hands of those to whom they are due; for even when they are exchanged for money, this money is usually given to others by those who have accumulated its values. Now, to place at the disposition of society a utility under one form or another is to render it a service, to furnish it with the means of labor or satisfaction, of which without this it would have been deprived. He who saves renders to society, therefore, a service proportionate to the value of his savings. It is true that he thus acquires the right of demanding equivalent services in return; but so long as he does not actually demand them, so long as he abstains from consuming their value for his personal wants, this value serves others than himself.
—Thus, for example, the owner of land or capital who obtains from these kinds of productive property an annual revenue of $10,000, and who saves half of it every year, renders to society a new yearly service worth $5,000; and although he reserves to himself the power of demanding back at a later time the sum total of these services, increased by the total of the interest, it is none the less evident that while he abstains from demanding it and consuming it, society has the benefit of it in his place. A family which during several generations, during two centuries, for example, should have saved uninterruptedly half of its annual income, would have really admitted society during all this time to an equal partition with itself of the means of production and satisfaction which this income brought; in other terms, it would have added to the sum total of the enjoyments of society, an amount twice as great as the family itself could have obtained from it. The means of creating new wealth or satisfaction of which the family would have deprived itself, would have been acquired by others. The only exclusive benefit which its savings brought the family consisted in the feeling of security resulting from the power which it preserved of demanding from society, in case of need, services equal to those which it had ceded to it.
—These results of saving are incontestible. It follows, therefore, that it does not profit exclusively those who save, and that it is a very positive public benefit. The rich man who spends the whole of his revenue every year, in personal and unproductive consumption, does not exceed his rights; but in this way he only renders to others services exactly equal to those he receives from them; he is, therefore, of less use to others, and consequently less worthy of approbation and esteem in this regard, than the rich man who saves.
—Nevertheless, common opinion is more disposed to approve him who spends all his income for his personal wants, than him who saves a part of it. Strange fact, that the person who preserves for his family and society the greater number of utilities of every kind, and does it by restricting his personal enjoyments, is just the man whom the vulgar mind is inclined to reproach with egoism, while it attributes laudable and generous sentiments to him who denies himself nothing.
—To explain this unjust judgment it is affirmed that he whose personal wants are few does not quicken the circulation of wealth, that he deprives industry and commerce of its outlets and of the encouragement which the consumption of wealth might give them. In this way men come to believe and to profess that every one renders more service to society the more value he consumes unproductively. Thus, men justify the expenses of luxury, pride, profusion, etc. This error was so generally disseminated in France, that in the greater part of the pamphlets, etc., written in 1848 and 1849, with the intention of combating the aberrations of socialism, it was thought necessary to praise the expenses of luxury, and endeavor to prove that it is, above all, on account of this kind of outlay, that the poor classes are interested in respecting wealth; so that, to combat lamentable economic errors, others as great were propagated. This we shall try to prove in a few words.
—Wealth is made up of all objects having value in exchange, no matter what their nature or their form. When a portion of wealth is consumed, that portion exists no longer; after which, if the want which it has satisfied appear again and we have still the means of providing for it, the object consumed must be reproduced, and the necessity of this reproduction gives new food to labor.
—But we may consume a portion of wealth in two ways: in the first place, we can absorb its entire value, in such manner that absolutely nothing may remain of it. This is a case of unproductive consumption, which takes place, for example, in the case of a sumptuous repast, of fireworks, etc. We consume in this way the services of those who have furnished and prepared the food, those of the pyrotechnist, the powder manufacturer, the decorators, the costumers, the musicians, the actors, etc. We have thus furnished, but for once only, labor and pay to all these persons. In the second place, we may consume wealth in such a manner that after the operation a value may remain equal to or even greater than that consumed. This is a case of reproductive (or productive) consumption. Suppose, for example, that the value consumed at the banquet or the fête, instead of being used in this way, had been employed in improving a barren hillside or in making a vineyard of it: by this application of the value consumed, we should have given work and wages to ditchers, to vinedressers, to teamsters, to manufacturers of compost, to producers of plants and of props; and we should thus have furnished remunerated employment to a number of laborers at least as great as the number hired at the banquet; and, while nothing remained after the banquet, from this there would remain a vineyard, the annual product of which, the income from it, would furnish every year, and during an indefinite period, an entirely new article of food, in consideration of a certain amount of labor. This example suffices to show how much it is to the interest of workmen in general, that the rich, instead of spending all their income in unproductive consumption, in outlays for luxury, should devote the greatest part possible of it to reproductive consumption. Even if they do not watch directly over these operations, and if they confine themselves to placing the sum of their savings at interest, they still render a greater service to the working classes than spending their wealth unproductively. Deposited with a banker or a loan agent, their savings go to the farmer, the artisan, the contractor, who utilize them in reproductive consumption.
—Do not men complain every day that we have not enough of capital; that it is lacking in manufactures, in commerce, in great works of public utility, and above all in agriculture; and that, by reason of its insufficiency, the rate of interest is too high? But if such is the case, what should we desire? Should we not desire that savings and investments should be multiplied as much as possible, that capital should increase and its abundance make the use of it less costly, that is to say, lower the rate of interest?
—Now, rich persons are the only ones who can make savings with ease. It should, therefore, be recommended to them, not by the law, for all liberty should be left them in this regard, but by morals, by the esteem attached to such conduct by an enlightened public opinion, by their own self-interest properly understood, which is here completely in accord with that of the laboring classes. Those who give other counsels to the rich, and desire to persuade them that they render more service and have more merit in proportion as they spend more for their wants, their tastes, their fancies, their vanities, their personal satisfaction, obey, in so doing, a prejudice which is much to be regretted. (See WEALTH, SAVING.)
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: ARMIES
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ARMIES, Standing. The first half of the 19th century will be forever memorable in the history of mankind as the most productive period in industrial wonders. The results which we have succeeded in obtaining from steam, from atmospheric pressure, from electricity, and other natural forces are, in certain respects, so wonderful, that had they been predicted a century ago, such a prediction would have been regarded as an extravagant illusion.
—Who, for instance, in 1750, could have believed that we should find in the expansive force of steam a power of such utility as compared with which all human and animal strength would scarcely admit of comparison; and that this force when applied to great ships would impel them against the most rapid currents, and across the whole width of the Atlantic in eight days; that when applied to our railroads, we would be able to travel at the rate of from 45 to 60 miles an hour; that our cities and dwellings would be brilliantly illuminated with a gas extracted from coal; that an engineer would search in the bowels of the earth, at a depth of 1,700 feet beneath the soil of Paris for an inexhaustible fountain of pure water, which he would cause to spout to a height of 60 feet above that same soil; that an artist would be able to compel rays of light to work for him, that is to say, to fix permanently the image of objects, with an exactness and faithfulness that neither the pencil nor the brush will ever be able to equal; that we would succeed, at last, by means of the electric telegraph, in subduing an invisible, intangible agent, of a nature entirely unknown to us, to such an extent as to compel it at will to transmit words at the distance of hundreds and thousands of miles? Assuredly, if these wonders and many others could have been predicted a hundred years ago, their prediction would have been overwhelmed with ridicule.
—Nevertheless, whatever power these unlooked-for evidences of progress may have added to our productive agents, to our comfort and civilization, our social existence remains imperfect, or improves but very slowly; politics, so far from following in the wake of industrial progress, actually seems to retrograde; the conditions of its amelioration appear so uncertain, or are so generally ignored, that after decades of commotion and of revolution, France, for instance, is still in search of a form of government which will be able, without the imposition of too heavy taxes, to fairly guarantee its freedom and protection.
—It is here that human intelligence has to contend not only against forces which bend to its service from the moment their secrets are discovered, but against passion, against old prejudices propped up by vanity, against interests founded on ignorance and injustice. These obstacles, however, are not insurmountable; and although they may be able to retard the progress of political or economic order, they can not stop that progress, for the truths of this order, as they become better known, derive very great support from all interests suffering unjustly, while time inevitably weakens everything founded on error or iniquity.
—The political reform of the greatest consequence and the one most earnestly demanded by the requirements of the age will consist, if not entirely doing away with, at least in greatly lessening the standing armies maintained by the nations of Europe. We venture to assert that this reform will take effect in the near future, however opposed by the ambition of certain classes, and the pusillanimity of others. It seems to us impossible that Europe, industrious and civilized Europe, can for any length of time persist in that strange policy, which, spite of the evident wishes of its citizens to avoid all international warfare, and notwithstanding the effective peace of thirty years which preceded the revolutionary crisis of 1848, has compelled them to maintain both land and sea armaments more extensive and more ruinous than they had ever been before.
—It is now some time since enlightened men of the United States, of England, of Germany, and of France exerted themselves to give practical effect to the idea of extirpating this cause of ruin and misery which, everywhere diametrically opposed to industrial pursuits, renders almost null the most brilliant and most fruitful discoveries for the bettering the condition of the masses. The idea of the Abbé de Saint Pierre, considered chimerical by many, that of substituting arbitration for brute force in great international questions, obtained in England such a number of supporters as to induce Mr. Cobden, the famous leader of the free trade party, to believe it possible to successfully bring the subject before the house of commons. In a session of parliament he made a motion tending to commit the English government to the policy advocated by the Abbé de St. Pierre; and this motion, notwithstanding its somewhat unusual and eccentric nature, was supported by seventy-nine votes. If one reflects upon the determination that the English have ever evinced in the matter of reforms, of which they have once felt the propriety or usefulness; if we will but call to mind what obstacles, apparently insurmountable, have been overcome by the agitators of the abolition of slavery, the changes effected in the system of promotion, in the old laws of navigation, etc., we can not but hope that a new idea which in its very incipiency obtained 79 adherents in the national parliament, is destined to triumph in a future not far off; and if the English government some day joins sides and co-operates with the advocates of this measure, and furthers their salutary wishes with that immense influence which it exerts in Europe and the world over, the system of great standing armies will indeed be near its dissolution.
—It will most probably be in France that this great reform will meet with the greatest opposition. The French people are as a class imbued with what is called "the military spirit," which is nothing else than a spirit of silly vanity, with a touch of aversion for useful labor. It appears as if the French were to make good the prediction of Montesquieu: "The military of France will be its ruin." However, the French working classes begin to understand that this military spirit is one of the causes which have most impeded the amelioration of their condition. They are still, indeed, imbued with a large amount of national vanity. The words: "preëminence, supremacy of France," still sway their minds a great deal too much, and they are only too easily governed by the notion that it becomes them to dictate the destinies of other nations; but they no longer admit the right of maintaining at their expense, in times of peace, of from 400,000 to 500,000 men. This agency of ruin now finds its only supports in those directly interested in its continued existence, and in the exaggerated fears of an influential but relatively small portion of the population. Even in France then we may look for the growth and spread of the principle which seeks to deliver the nations of Europe from the greatest part of the burden imposed upon them by their standing armies. Now one of the most efficacious methods of accelerating the progress of this principle, is to keep constantly before the public eye a statement of the enormous sacrifices required for the maintenance of large armies.
—Among the number of economists who have busied themselves with the nature and formation of forces necessary for purposes of national defense and to the maintenance of state government, Adam Smith is, as far as we know, the only one who considered a standing army preferable to a national militia force. According to him the civilization of a country could not be perpetuated or preserved long without a standing army. This opinion he dwells upon at length in the first chapter of the 5th book of his "Wealth of Nations," but his statements indicate that he based his opinions on a social condition of affairs which has long ceased to prevail among the states of Europe. We can judge of this from the following extract: "When a civilized nation depends for its defense upon a militia, it is at all times exposed to be conquered by any barbarous nation which happens to be in its neighborhood. The frequent conquests of all the civilized countries in Asia by the Tartars, sufficiently demonstrates the natural superiority which the militia of a barbarous has over that of a civilized nation. A well regulated standing army is superior to every militia. Such an army, as it can best be maintained by an opulent and civilized nation, can alone defend such a nation against the invasion of a poor and barbarous neighbor. It is only by means of a standing army, therefore, that the civilization of any country can be perpetuated, or even preserved for any considerable time."
—J. B. Say thinks, that far from protecting national independence, a great military establishment is that which compromises it the most, by reason of the aggressive tendencies which it incites among those who have the control of it. "England," he says, "would not have interfered with the intrigues of all Europe, if she had not been possessed of great fleets which she could send out in all directions; and Napoleon, if he had not had at his command the bravest and the best drilled troops of the world, would have directed his ambition toward ameliorating the affairs of France." In this way, the very existence of large armaments incite to war; and war always brings about, in the end, cruel retaliation on those who provoked it. "The ambassadors of Louis XIV.," adds J. B. Say, "at the congress of Gertruydenberg were obliged to be silent spectators at the deliberations concerning their master's fate." England, in its war with America, was compelled to surrender its sovereignty over the colonies, and, later on, it was her insular position alone that saved her from threatened invasion. Bonaparte, with a better army than that of any other nation, suffered a more signal defeat than all others. Everywhere the more formidable the army, the more inevitably has it been the cause of war and all its attendant evils. There is not one that has ever saved its country from invasion. J. B. Say further considers whether, in the present condition of Europe, militia forces would be sufficient to preserve the independence of the individual states, and relying upon the opinion of experienced military men, such as Guibert, Lieutenant General Tarayre and others, he decides the question in the affirmative; only, he thinks that for the military corps which require an intricate course of instruction, as the engineers, the artillery and the cavalry, which could not be formed at a moment's notice, permanent provision must be made, but only to such an extent as a purely defensive system may demand. He shows how the maintenance of large naval forces, usually justified on the grounds of protecting and extending commerce, is ruinous to nations, and how little, in reality, they contribute to the extension of commerce. The fact of England's great commerce proves nothing in favor of the excessive increase of its marine service, for its commerce would be quite as great without this appendage. "Is it with sword in hand," asks Say, "that business is successfully transacted? The reason that England can sell her wares as well in the Archipelago, as in the East, and in America, both north and south, is because she understands how to manufacture those things which the consumers of those various countries require, and can make them cheap. Her cannon has nothing to do with it." (J B. Say, Cours Complet, vol. ii. pp. 280-297.). The maritime commerce of the United States is next to that of England the most extensive, and will probably soon equal and even surpass it, and yet the naval power of that great republic is one of the least important. As regards the naval service of France, we can not do better than quote from the excellent remarks on the subject by Mons. Bastiat: "Is a powerful naval service not necessary, it is asked, in order to open up to our commerce new foreign markets? Truly the measures of government in respect to commerce are singular! It begins by flattering it, impeding it, restraining it, and that at enormous expense; then, if any small portion of it has escaped its vigilance, at once government is seized with a tender solicitude for the petty articles which have successfully eluded the meshes of the custom house. We wish to protect our merchants, it is said, and for that reason we exact another 150 millions from the people, in order to cover the seas with armed vessels. But, in the first place, ninety-nine hundreths of the commerce of France is with countries where our flag-ships have never yet, and never will be seen. Have we naval stations in England, or in the United States, in Belgium, in Spain, in the Zollverein, or in Russia? And so we are taxed more in francs than we will ever possibly gain in centimes from the trade of those places.
—Moreover, what is it that establishes new channels of commerce? One thing alone, viz.: cheapness. Send where you will goods which cost five or six cents more than like goods of English or Scotch manufacture, neither your ships nor your cannon will effect a sale of them for you. Send thither products five or six cents cheaper, and you will have no need of either cannon or ships to enable you to dispose of them. Is it not a fact, that Switzerland, with not even a brigantine, unless it be on its lakes, has driven from Gibraltar itself certain qualities of English goods, and this spite of the guard ever at its gates? If then cheapness be the sure protector of commerce, in what manner is it that our government sets about to take advantage of it? In the first place, it raises, by its tariff, the price of raw material, of all the instruments of labor, of all articles of consumption; and in the next place, under the pretext of sending out vessels in search of new channels of commerce, it overburdens us with taxes. It is stupidity, the grossest stupidity; and the time is not far off when it will be said of us: The French people of the 19th century had strange systems of commerce, but they ought at least to have refrained from believing themselves to have already reached the epoch of universal knowledge. A very able German author, Mr. Rotteck, published, in 1816, an important work entitled, "Standing Armies and National Militia." He proves, from the history of all wars, from those of the most ancient peoples down to the termination of the wars of 1815, that standing armies, or paid troops, under the sole control of their officers, and knowing no duty but toward them, have never served except to destroy the liberty of nations, and that the liberty and independence of subject peoples has been regained only by its citizen soldiery. "When France had to defend its liberty against the allied sovereigns," he says, "it was the citizen soldiery, mere raw recruits, who effected the triumph of the revolution, and later it was the militia of the Germans, that restored the independence of their fatherland." Mr. Rotteck in that work lays special stress on the mischievous influence of a standing army upon the morals of a people, particularly as it weakens among all classes of citizens the feeling of responsibility, by habituating them to rely upon others for the defense of their dearest interests, and tends but to relax those bonds of solidarity which would otherwise exist.
—"A nation," says Mr. Rotteck, "which surrenders the defense of its liberties to any special class, becomes cowardly and incapable of opposing the most unjust aggression."
—The same thought has been elaborated by an eminent French author. "What innumerable pretexts for war do you not cultivate by the creation of an army of which each member has a career to work out, and in which war is the primary, the only means of success! And the existence of an army of this nature is rendered the more serious, as it is almost impossible to change its tendency, inasmuch as it is not to be expected that men will willingly remain stationary in a profession once embraced as the business of life. * * * Let us add that if such an army by its natural bent is ever ready to compromise our safety, it compromises that safety still more by the extreme weakness to which it reduces us. While it increases our dangers, it at the same time paralyzes the greatest part of our national strength. It dwarfs the nation; it reduces it, in a certain sense, to the size of the army. France, in relation to her enemies, is no longer a people of 30 millions; she is a power of three hundred thousand men. All her strength is inventoried in the roll call of her troops. Beyond this, one sees but a sparse population, inactive, feeble in proportion as the army is strong; and, as they believe themselves, exempt from the necessity of self-defense. * * * * * Is such an army the best guarantee of our liberties? In order to determine this question, it is sufficient to consider what there is in common between the interests of liberty and the interests of the army as established by the law of enlistment. That law, as we have said, makes a profession of the military service. Are the interests of that profession compatible with those of liberty? Is it possible that the army should prosper, and at the same time that liberty should flourish? The profession of arms flourishes in times of war, liberty in times of peace. The army flourishes by the tribute it exacts, and liberty by labor. The greatest interest of liberty is to curtail power, while to extend it is of the greatest importance to the army. One of the chief interests of the army is to yield nothing to the spirit of reform, because, were this desire for reformation to prevail, it might extend even to the army itself. * * * * * It is evident that as regards liberty and the profession of arms there exists no conditions of mutual welfare, that the very reverse is the case, and that members of the army, professional soldiers, as such, far from having the interests of liberty to defend, have but the interests of despotism to maintain. It might be true, undoubtedly, that an army such as ours would not lend itself to the maintenance of despotism; but this is rather a disposition we could wish it to have, than one we can do it the honor of attributing to its nature."
—It has been frequently urged that militia or a national guard would never acquire that disposition and those habits of discipline which constitute the strength of standing armies; but this assertion, which has some foundation, perhaps, in the case of the militia of those states which have for a long time past maintained great standing armies, and the militia of which, consequently, is almost reduced to a service of parade, is not at all applicable to the militia which constitute the sole defensive force of their country. The militia of Switzerland have often enough proved that they could sustain the fight against the best troops, and as much can be said of those of the United States. There is nothing that appears to us more instructive and more fit to shake the prejudices prevailing on the subject with which we are engaged than the testimony which we are about to adduce. It is taken from the message addressed to the congress of the Union in December, 1848, by president Polk:—"One of the most important results of the war into which we were recently forced with a neighboring nation, is the demonstration it has afforded of the military strength of our country. Before the late war with Mexico. European and other foreign powers entertained imperfect and erroneous views of our physical strength as a nation, and of our ability to prosecute war, and especially a war waged out of our own country. They saw that our standing army on the peace establishment did not exceed 10,000 men. Accustomed themselves to maintain in peace large standing armies for the protection of thrones against their own subjects, as well as against foreign enemies, they had not conceived that it was possible for a nation without such an army, well disciplined and of long service, to wage war successfully. They held in low repute our militia, and were far from regarding them as an effective force, unless it might be for temporary defensive operations when invaded on our own soil. The events of the late war with Mexico have not only undeceived them, but have removed erroneous impressions which prevailed to some extent even among a portion of our own countrymen. That war has demonstrated, that upon the breaking out of hostilities not anticipated, and for which no previous preparation had been made a volunteer army of citizen-soldiers equal to veteran troops, and in numbers equal to any emergency, can in a short period be brought into the field. Unlike what would have occurred in any other country, we were under no necessity of resorting to drafts or conscriptions. On the contrary, such was the number of volunteers who patriotically tendered their services, that the chief difficulty was in making selections and determining who should be disappointed and compelled to remain at home. Our citizen-soldiers are unlike those drawn from the population of any other country. They are composed indiscriminately of all professions and pursuits: of farmers, lawyers physicians, merchants, manufacturers, mechanics, and laborers; and this, not only among the officers but the private soldiers in the ranks. Our citizen-soldiers are unlike those of any other country in other respects. They are armed, and have been accustomed from their youth up to handle and use fire-arms; and a large proportion of them, especially in the western and more newly-settled states, are expert marksmen. They are men who have a reputation to maintain at home by their good conduct in the field. They are intelligent, and there is an individuality of character which is found in the ranks of no other army. In battle, each private man, as well as every officer, fights not only for his country, but for glory and distinction among his fellow-citizens, when he shall return to civil life."
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: ASSOCIATION AND ASSOCIATIONS
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ASSOCIATION AND ASSOCIATIONS. Association, in the politico-economical sense, consists either in a union of efforts tending to the same end, or in a community of goods, interests, or of consumption. Its determining causes are found either in the sentiments of affection or benevolence, or merely in personal interest.
—The questions pertaining to association have been considered in the works of the principal economists from a rather narrow point of view; most of them have confined themselves to pointing out the advantages it affords for the execution of great works of public utility; they have given but little attention to the examination of the numerous cases in which it has already been applied, nor have they endeavored to discover under what conditions it can be used to advantage.
—On the other hand, other classes of publicists, and especially those belonging to the different socialistic schools, have discovered in association the dominant question of our time; it seemed to them that all social misery could be remedied by association and all social difficulties solved by it. They seem convinced that there are yet undiscovered new forms, new modes of association destined to change completely the organization of modern society, and the progress of mankind.
—I. Among nations advanced in civilization, association has a multitude of various applications and appears under different forms which we shall briefly enumerate.
—1. The Family. Dictated by the most powerful instincts of our nature, the intimate association of father, mother and children is as old as humanity itself; its conditions may be modified in certain respects according to the belief, morals and institutions of each people; but we find it everywhere manifesting the most invariable example of unity of effort and community of interest.
—2. The Commune. The simple fact of a greater or less number of families residing in one place, renders it necessary for them to put together a part of their means to satisfy their wants. All can understand that if they acted separately they could not construct nor maintain properly objects intended for use by all, such as roads, churches, bridges, etc.; that they could not themselves prove with the requisite authenticity births, marriages and deaths, nor effectually provide protection against all attacks upon person and property. They must therefore inevitably intrust these different services to town-councils or corporations, invested with the authority and supplied with the material means necessary to accomplish them. These are the causes which led to the establishment of municipalities.
—In proportion as population increases, as industry and civilization develop, as wealth increases and as learning is diffused, communes become more important. cities are formed and grow, collective wants increase in number and urgency, and municipalities are led to extend the circle of their powers accordingly. They provide for religious service, interments, public feasts and ceremonies, and for the paving, cleaning and lighting of the streets, they see to it that the buildings or works of individuals do not interfere with traffic and are not injurious to health and safety. They draw up and enforce regulations as well for this latter purpose as for the maintenance of good order and tranquillity in the city. They provide and distribute the water necessary for drinking and domestic uses; they found, or concur in founding or in supporting hospitals and other charitable institutions, colleges, schools, libraries, museums, theatres, parks, etc.; lastly, they determine and collect the local contributions necessary to defray the expense of all these services. Thus we see that the commune, as its very name implies, associates and unites a multitude of interests and consumptions, and this de facto communism, as has already been remarked by the renowned administrator, Horace Say, becomes more inevitable, more exacting, and more extended in proportion as the density of population increases.
—3. Other collective interests, of the same nature as the preceding, associate together the communes of the same district, or the same province; in France, for instance, the communes of each department are associated together for the building and maintenance of highways, departmental routes, and certain prisons; for the care of foundlings and the indigent insane; for the necessary expenses of certain judicial or public services, etc.
—4. The powers with which the government of each nation is invested also establish between provinces, communes and families, associations of force and communities of interest for a great many important objects: first, for the defense of person and property, whether against the aggression of foreign nations, or against the violence or fraud to which they might be exposed at home; also, for the foundation, support, or enjoyment of national property, such as forests, streams, rivers, highways, canals, light-houses, harbors, etc.; and also for certain services, for the performance of which sufficient guarantees could not be given, without the concurrence or control of public authority, such as the carrying of the mail, the coining of money, the general management of forests and streams, the regulation of weights and measures; finally, for other services, of which the administration of some states assumes the direction, such as those of religious worship and education.
—5. Religious Associations. Among Catholics there are a great many associations founded on religious belief; they generally practice community of labor and of consumption, and frequently, community of goods.
—6. Private Charitable Associations. In addition to the public charitable institutions, that is, those founded or controlled by local administration and governments, there is a multitude of others founded and governed by voluntary associations of individuals which put into a common fund to be used for charitable purposes the money contributed or collected by their members, whose personal services they also make use of in different ways.
—7. There are numerous other philanthropic associations formed for the advancement or propagation of science, for the progress of the arts and of industry, for reforming habitual drunkards, etc, the members of which mutually contribute, besides their personal services, material resources.
—8. Insurance Societies. The aim and result of these associations is to lighten the losses occasioned by certain specified accidents, such as fires, shipwrecks, etc., by sharing them in common. When the number of associates is very large, the assessment levied upon each is hardly felt, and nevertheless it suffices to save the one insured, upon whom the calamity falls, from the ruin or reduction of fortune which it would otherwise cause. At the same time, insurance gives to all the benefit of security against the accidents in question.
—9. Savings Associations. This class comprises the tontine or life insurance, and societies for mutual aid among workmen. The money accumulated by these establishments is intended for use in time of sickness or other misfortunes, and, like the insurances of which we have just spoken, serves to lighten the consequences of the misfortune to the individuals or families stricken by it, and to increase the security of the other associates.
—10. Agricultural, Manufacturing and Commercial Associations. After the associations just enumerated, these associations are the most important because of their number, and of the aggregate of interests which they put in common. All those who concur in the same productive operation, by furnishing either land, capital or labor, by this concurrence alone unite their productive services and their interests, no matter how the share of remuneration belonging to each of them is determined. From this point of view, association would embrace almost all kinds of labor. However, those only are ordinarily regarded as associates, in the sense of partners, in industrial enterprises, who are expressly entitled by previous agreement to share in the chances of the profit or loss which these enterprises may offer; but even reckoning among the number of these industrial associations only those based upon this sharing of profit and loss, they nevertheless control a very large proportion of the entire production. In agriculture, they embrace all farms cultivated on the metayer system, in the cultivation of which the owner and the farmer share the risk. In manufacturing industries, there are few enterprises of any importance that have not a certain number of associates. In great enterprises such as mines, iron works, railroads, canals, banks, navigation, etc., whose capital is usually divided into shares, the associates are counted by hundreds and thousands.
—II. Our intention in briefly enumerating, as we have just done, the nature and object of the different existing associations, has not been to explain each of them, and to point out its respective advantages and inconveniences, or to discover the modifications which it might profitably receive. Our desire here has been to give a general idea of the different kinds of associations that may be formed, and the extent of their operations. Surely, never before have associations embraced such a diversity of labor and interests; and we do not think it would be any exaggeration to affirm that in England and France, for instance, the number of persons who combine their efforts and their capital for a common end, the community of interests and consumption and the importance of the resources of all kinds devoted to the various species of associations, are to-day at least ten times greater than they were a century ago.
—But this prodigious increase of common interests, although we have but to open our eyes to see it, seems to have escaped general attention, for in our own days more than at any other time declamation has everywhere been loud on the alleged increase of the isolation of interests and of individualism, and on the necessity of substituting for this state of things association, that is, apparently, associations new and entirely different from those with which we are acquainted. Some socialistic reformers have, in fact, ventured to formulate new modes of association; but their formulas have exhibited such false judgments of men and things, such folly and extravagance, that the most prudent socialists, without ceasing to recommend association as the panacea for all our ills, now abstain from specifying precisely the use they would wish to make of it.
—These vague tendencies toward new forms of association, in which, by some unaccountable illusion of the imagination, they hope to find an inexhaustible source of abundance and prosperity, are, however, of late years directed to an appreciable object, to the method of remunerating workmen in industrial enterprises. The socialists seem to believe that if workmen, instead of receiving wages, determined beforehand and independent of the final results of the enterprise, had a share in these results, their condition would be improved.
—They say that wages fall below what is requisite to supply the workman's wants, only because the system of wagehire puts the workingman at the mercy of the contractor or the capitalist; that it is absurd to suppose that the workingman is at liberty to argue about the price of his labor, when hunger forces him to accept whatever is offered. They say too, that association in the profits of enterprises would interest the workman in its success, and would stimulate the development of his useful faculties, would hasten the perfecting of the processes of labor, and would put an end to the antagonism between employers and workmen, which causes strikes, suspensions of work, collisions, etc. In a word, they think the interest of the working classes requires all those who desire to improve the condition of these classes to labor for the realization of the principle the suppression of wages, by association.
—These ideas had at one time sufficient power in France to cause the national assembly to assist in founding certain associations of workmen and employers, or of workmen alone, by devoting to that object, under the title of a loan, sums amounting to three million francs. In spite of the ill success of the experiments made, with the assistance of this loan, the opinions which led to them are still widespread, and as they tend, in our opinion, to urge men into evil ways, and to turn their attention from useful and practical reforms, to make them follow after a chimera, we do not believe we can do anything better than endeavor to lay bare the error and delusion of these opinions.
—The various services necessary in all productive operations are united together by the care of the capitalist-employer. When he disposes of the productive resources of others, he usually agrees with them beforehand upon the price he is to pay for their use: he pays rent to the land owner or house-owner, interest to those who loan him capital, and wages to the workmen whom he employs. When public authority does not interfere in regulating these transactions, these three kinds of remuneration, rent, interest and wages, are all freely discussed and agreed to on both sides, and it is not true that the urgency of his wants leaves the workman less liberty in this respect than the man who employs him; the employer's need of the workman's services is at least as urgent as the continued payment of the workman's wages to him; the employer who is without workmen loses not only the price of his personal services, but also the interest on all the capital engaged in his business; he loses, besides, his patronage and his market, which last fact alone would suffice to render his need of the workman's labor, perhaps, more imperiously urgent than the wants of the workman himself. This is proved by strikes; for, although these suspensions of labor, continued sometimes for several months by the will of the workmen, are prejudicial to all and never beneficial to any, yet the injury recoils upon employers and not unfrequently causes their ruin. It is certain, therefore, that the urgency of the want on both sides is at least equal, and that the liberty of the workman, in fixing the wages for which he will work, is no more constrained by his position than that of his employer.
—But this is not all; in order that the capitalist-employer should be disposed to take advantage of the position of the workman, to compel him to accept insufficient wages, he must have an interest in doing it. and to have an interest in doing it, he must be able to appropriate to himself the amount of the reduction in the workman's wages; but this is not the case. If we except monopolies, in all branches of labor in which there is competition, the capitalist employer can no more profit by the lowering of workmen's wages than he can sell his products, if of the same quality as those of his competitors, at a higher price than they: with perfectly free competition, it is impossible for a reduction to occur in the cost price of products, and consequently in wages, without its being followed by a corresponding reduction in the selling price of these same products; this is a universal fact so constant, and so plainly evident to all, that nothing can give rise to a doubt concerning it. It can not be supposed that the capitalist. employers enjoy the benefit of a lowering of wages; it is clear that they have no share in this benefit, which goes entirely to the consumers.
—There can be but two causes of a permanent lowering of wages; it must be occasioned either by an inopportune increase in the number of workmen, or a decrease in the demand for labor. Now these two causes which depend upon the general movement of the population, revenue, and consumption, are absolutely independent of the will of the capitalist-employer When the supply of labor is less than the demand, he is forced by competition to raise the wages of his workmen, and when, on the contrary, the supply is greater than the demand, competition compels him to lower these wages; for if he were to keep them up, as the cost price of his products would be higher than that of his competitors, he could not sell his products, and would speedily fail.
—So true is it that capitalist-employers are not benefited by the lowering of wages, that we invariably find that their business is most prosperous when wages are high; nor is this difficult to explain, for the wages paid in any branch of industry never increase but when the demand for its products increases, and the capitalist-employer naturally profits by this increase as well as his workmen; if there is, on the contrary, a falling off in the demand sufficient to cause a noticeable reduction in labor and wages, the capitalist-employer inevitably suffers a corresponding reduction, in the returns he receives for his capital and personal industry.
—Finally, it is so radically impossible to raise wages above the rate determined by the relation of the supply and demand of labor, that it could not be done, even if all the capitalist-employers should combine to attempt it. In fact, to raise wages would be to decrease consumption, for all consumers combined have together but a certain amount of resources, and to make them pay more for products, would evidently be equivalent to reducing the amount of products which these resources could buy; this would be to diminish production, or the amount of labor; so that the wages of some can not be arbitrarily raised without taking away the wages of others, by depriving them of their share of labor.
—These are mathematical truths against which it would be vain to contend. It will indeed be said that they are severe and inexorable, that economists in stating them, prove their insensibility, and—as they have been reproached with doing—that they substitute a figure for the heart. This puerile kind of declamation can work no change in the nature of things, nor alter the fact that there is a more profound, more manly and more real feeling of humanity and benevolence toward the suffering classes in the laborious researches of science which seek to ascertain the only real means of improving their lot, than in all the cheap affectation of zeal in the cause of those classes, an affectation which has to this day done nothing but encourage among them illusions always followed by disappointment.
—But, is it true that the position of the laboring classes would be improved by their general association in the enterprises in which they are employed, by changing the mode of remuneration and substituting, in the place of wages, a share in the final profits of the business? We do not think so.
—Many are apt to exaggerate the magnitude of the profits which capitalist-employers may realize, because they direct their attention principally to enterprises unjustly favored by regulations restricting competition, or by legal monopolies, or enterprises which are placed in exceptional circumstances. The truth is, that, in most branches of industry, competition does not allow the profits to exceed what is strictly necessary to pay for the use of the capital engaged and the personal industry of the capitalist-employers. If we will but notice within the sphere of our own observation, the position of the farmers, manufacturers, mechanics, and merchants, we will readily perceive that for one head of an industrial enterprise that succeeds and makes a fortune, there are ten who scarcely do more than realize the amount of profit indispensable to the continuance and to the maintenance of their business, and at least one who fails and is ruined. This condition of things, which has long been that of most of the agricultural, manufacturing and commercial enterprises of France, is hardly calculated to justify the opinion which sees in the sharing of workmen in the chances of industrial enterprises a means of considerably increasing their remuneration.
—We must ever bear in mind that the services of heads of industrial enterprises suppose knowledge, talent and special qualities and faculties more or less indispensable to the successful management of an enterprise, and which by no means fall to the common lot of all men. Under the present system, those who possess these faculties and employ them in establishing or conducting a business, generally receive in the shape of profits only a remuneration proportioned to the importance of their services, and in keeping with the state of supply and demand relatively to this kind of service: would it be otherwise if workmen shared the profits of the business? Certainly not. If these associations were optional, (and to render them obligatory would be going farther than even Louis Blanc), the men possessed of the qualities of a good capitalist-employer would remain only as long as the advantages they received were equal to those they could obtain outside the association, and as long as this equality was assured to them, either by the amount of their share in the value produced, or in some other way; all that could be expected of them would be that, in consideration of the participation of the workmen in the chances of loss, they would exact for their services not quite so large a share of the profits, and this concession would be exactly compensated for by the risks which the associated workmen would assume. These associated workmen would therefore be obliged to give from the profits of their common labor, for the services of the agents who would supply the place of the capitalist-employer, a share proportioned to the value of these services, that is to say, equivalent to what they now generally receive; thus there would remain for the workmen to divide only a sum equal to the amount of their actual wages. If they should attempt, on the contrary, to reduce the remuneration to be paid to the agent or manager whom they employ below its proper rate, they could not obtain the services of a capable manager, their association would be unable to sustain the competition of the well-conducted enterprises which would continue to employ workmen for wages, and they would, of their own accord, soon give up association to return to their former manner of working.
—In every productive industry, success depends entirely upon the action of the man who superintends the work, buys the raw material, sells the products; in a word, who fills the post of capitalist-employer. When all the chances of loss and gain fall upon this agent alone, all his useful, available faculties are actively stimulated and strive for success with all the energy which they can command; and we may rest assured that, under these conditions, his management will be as efficient as possible. But this efficiency can not but become more uncertain in proportion as the interest of the manager is lessened, and as he is less exclusively responsible for the results of the business, and in proportion as others are called to share the risks with him. It is, therefore, very likely that, if it were possible to associate workmen in the chances of industrial enterprises by making them sharers in their losses or gains, and thus lessening the interest of capitalist-employers or managers, this association would lessen the chances of success, and render losses more frequent. The increased interest which the workmen would have in the success of the business could not compensate for the interest which would be lacking in the action of the manager, for they could not interfere in the management of the business without renouncing unity of management, the loss of which would surely precipitate the ruin of the enterprise; their zeal could therefore only be applied to matters of detail, and it is doubtful whether, even in these, it would advantageously replace the active surveillance of a capitalist-employer under the present system.
—We feel authorized to conclude from what precedes that, if workmen, instead of being paid a certain predetermined remuneration, were associated in the chances of industrial enterprises, the total amount of the remuneration they would thus receive would not net them a greater income than they now receive in the form of wages. Under like conditions, the revenue of the workmen would only be more variable and more uncertain, and they would need more foresight than they ordinarily exhibit, to save the surplus of prosperous years to make up for the deficit of unsuccessful ones. Is it not evident that the present system, by procuring them at least the same amount of income, and distributing it to them in a surer and more equal manner, is more advantageous to them?
—Another truth, moreover, which controls all these considerations, is that with freedom of labor and of business dealings, the remuneration of workmen and of their employers is just what it should be, whatever the manner of determining it. Whether this remuneration come to the former in the shape of wages determined before hand, and to the latter in the form of resulting profit, or whether it is based for all upon the resulting profits, their general and permanent relations will suffer no change; the capitalist-employers or managers will always deduct, under one form or the other, the share which the state of the supply and demand of their services allows them, and the workmen will never receive more than the share similarly determined by the supply and demand of their labor. Under a free government, these natural laws alone determine the just value of each kind of service, and any new combination of free associations would be as powerless permanently to modify this value as to change the level of the ocean.
—We are, therefore, firmly convinced that all researches looking to the discovery of new processes of voluntary association, capable of improving the condition of the laboring classes, are absolutely vain, and that to be successful, the efforts of those who are interested in the cause of the workingmen must take another course. In France, for instance, these efforts might be usefully applied to influencing public opinion in favor of a simpler and cheaper system of administration, and one less calculated to excite covetousness and ambition, less compromising to public security than the one to which that country has been subjected for many years. They might be effectually employed also in inclining public opinion to suppression of all opposing legal obstacles in promoting the prosperity of certain particular interests, and the freedom of labor and business. The reforms which a change of public opinion could obtain would serve to render productive forces more fruitful, and to increase the demand for labor and for workmen.
—III. To complete the task which we have undertaken, we have still to assign the limits or general conditions beyond which association can not be practiced for the greater benefit of all.
—Association, notwithstanding the grandeur of its results, can never obtain the marvelous power which some have attributed to it. Men have made use of this means of increasing their prosperity ever since the world began, and it is undoubtedly true that its most effectual combinations have already been discovered and put in practice: they are the family, the commune, the state, the great enterprises of public works, etc.; and if there still remain any methods of association which have not been discovered or applied, which during forty or fifty centuries have escaped the incessant search of personal interest, we may be sure that they would not offer any very certain or very important advantages. Be this as it may, we would approve of granting entire liberty to the attempts of new associations, so long as they result in no disorder or prejudice to general interests; but we could wish, at the same time, that there were less inclination to indulge in dreams of this kind than generally exists to-day.
—The advantages and saving to be realized from living in common, from community of consumption, in particular, have been greatly exaggerated. It is true that if a limited number of individuals, twenty or thirty for instance, agree to combine their resources and share in common their expenses for food, lodging, clothing, furniture, fuel, washing, etc., they will be able to economize very largely in these expenses; but, because this economy is practicable for a limited number of persons, on condition of a more or less rigorous discipline, of a similarity of habits more or less irksome to each, and of a regulated management, we must not conclude that the saving would be still greater as the community became more numerous; for this conclusion would be contradicted by facts. We will furnish the reader the means of judging of this for himself, by citing two conclusive examples.
—Standing armies afford occasion for the greatest community of consumption to be found anywhere, and if it be true that the economy which results from this community is greater, in proportion as there are more persons combined to share in it, the individual expense for each soldier taken separately should furnish the strongest proof of this truth. Now, according to the French budget of 1849, the cost of supplying 320,000 soldiers (not including officers) with food, fuel, clothing, bedding, etc., is estimated at 136,000,000 francs, or 424 francs per man; and still this expense does not include the cost of administration and surveillance, which are always indispensable and necessarily very considerable in every large community of this kind. We should, therefore, add to the amount stated, the pay of the officers, and the cost of military administration; this, according to the same budget, would increase the amount to 262,000,000 francs for a force of 338,000 men, including officers, which makes the expense for each man 775 francs. It is evident that the economy obtained by this community of consumption is not very wonderful; assuredly, the greater part of these soldiers, especially those from the country districts, did not spend at home for the objects of consumption we have mentioned, more than 775 francs, nor even more than 424 francs each; for the average consumption in France, according to the largest valuation made of the total annual products, would not exceed from 300 to 350 francs for each individual.
—We will take as our second example the consumption of the individuals received into and cared for by the hospitals and hospices of Paris.
—The ordinary expense of these establishments shows the average cost of one bed occupied throughout the year to be.
|For the hospitals taken together...||656 fr. 37 c.|
|For the hospices and maisons de retraile...||406 fr. 21 c.|
|For endowed hospices...||528 fr. 35 c.|
And we must note that these figures do not include one single centime for interest on the very large amount of capital employed in the establishments in question, so that, we would come very near the truth if we were to place the real expense of each individual entertained in these establishments, at from 800 to 1,000 francs.
—So, for the soldiers and the indigent received into hospitals, (two classes of persons whose wants surely are not more expensive or better supplied, on an average, than those of the individuals of all other classes taken together), community of consumption has no other result than to increase this consumption in the one case to double and in the other to treble that of the average individual consumption of the entire population.
—This shows what the magical power of association amounts to in this regard.
—These results, which so ill conform to the exaggerated notions of the advantages of community of consumption, can, however, be very readily explained. In proportion as these communities increase, their administration becomes complicated, intermediary agencies are multiplied, the necessities of surveillance and control require personal services more and more numerous, the cost of which is necessarily added to the cost of consumption proper. On the other hand, the chiefs and employés of the administration act as public officers generally do, that is to say, the special points of interest to them about their mission are almost without exception, the position and personal advantages which it confers upon them; so that we can hardly expect of them, so far as good management and economy are concerned, anything more than is strictly necessary to relieve them of responsibility. Now, when the object of their management interests the general public, or a considerable portion of the population, this responsibility is not of a kind to require any great effort at improvement, when we consider that the general control of the administration can be exercised only by delegates, who have no direct or very special interest in discovering its defects, and that this interest is, besides, weakened by the thought that the ill consequence of these defects or abuses is hardly felt by each one separately on account of the great number interested. The very complicated nature of the administration itself offers, moreover, almost insurmountable obstacles to the exercise of an effectual control. By increasing the means of surveillance and auditing, and, in consequence, the expense, theft, waste, and the more evident abuses can be restrained; but that incessantly watchful attention, with its care for every moment and application to every detail, which are necessary in the management of every business in order to discover the simplest and most efficacious means of practicing all possible economy, can be prompted by personal interest alone; a government can never obtain them. This is one of the chief causes which will always prevent community of consumption from being as great a source of economy in large bodies as when practiced in families.
—Small communities, administered by their own members and under the eyes of all the associates, may, nevertheless, save considerably by this system, because by it the same dwelling, the same fire, the same light serves, at the same time, for a great many persons, because by purchasing their supplies of all kinds in larger quantities and of the same quality, they obtain them on better terms. But these advantages have long been known, and still (except in religious associations, which are determined by motives other than temporal interests) people seem little disposed to make use of them. We hardly ever see several families uniting to live in common; the reason is, that in order to obtain the advantages of this system, it is indispensably necessary for the members to submit to uniform rules, to subordinate to them their wills, their individual tastes and their personal convenience, and because each one prefers the preservation of his liberty to the economy thus realized. Now, this obstacle to community of consumption will last as long as men prefer liberty to constraint; it is not probable, therefore, that this method of association will ever be very extensively adopted, unless men are involuntarily compelled to submit to it.
—We have yet to assign the conditions, without which association when applied to labor ceases to work for the general good.
—There is in political economy no better established truth than that of freedom of labor which asserts competition to be the indispensable condition of the improvement of industry, of the increase of wealth, of goods, and of its equitable division. Still, competition has many enemies among publicists; but it is likely that many of them are merely misled by a prejudice against the word competition, for most of them would not want to be regarded as enemies of freedom of labor. Besides, when under another form, liberty or competition seems to be generally approved, for no one undertakes openly before the public the defense of monopoly, which, ostensibly at least, is condemned by all, and finds defenders only on condition that it conceal its name. Now we can not reject monopoly without admitting liberty, and consequently competition.
—In any case, all who think free labor preferable to monopoly will probably admit the following proposition without hesitation:—Association ceases to be advantageous, when, applied to works capable of being surrendered to competition, it renders, or tends to render, competition impossible.
—This proposition supposes that the suppression of competition, and consequently the establishment of monopoly, may result from association, and it remains for us to prove that this is really possible. We will first briefly recall the reasons why competition is preferable to monopoly.
—By the freedom of labor, all capabilities of individuals, which are infinite in variety, receive the application most advantageous for all, inasmuch as each one, prompted by personal interest, endeavors to make the best use of his faculties; and, under a system of liberty, this best use is precisely that which renders the most service to all, since in the general exchange of services no one obtains more than the equivalent of what he has given. The effect of this system, therefore, generally is not only to apply each particular faculty to the labor for which it is best suited, and in which it can work most successfully, but also to maintain in all pursuits an active emulation, and a constant disposition to make improvements and inventions calculated to render labor more fruitful. Competition does not allow any capitalist-employer to remain behind in this movement, for if he allows himself to be passed by his rivals, his services will be dispensed with at once. The general result of these energetic and incessant efforts is a rapid increase in the number and importance of the services which we mutually render one another, that is to say, in our general well-being.
—Monopoly deprives the majority of men of the choice of the kind of labor in which they shall engage; and those for whom the employments which it offers are reserved, can not change the task assigned them by managers. Individual initiative is thus in great part suppressed, on the other hand, the tendency toward progress is null or nearly so, because the efforts for improvement have no longer the stimulant of competition, nor even that of personal interest, monopoly having done away with these efforts, in order to secure the disposal of its products. Under this system, therefore, there are no longer any innovations, improvements or inventions, but those conceived or approved of by the managers of monopolies; and experience has superabundantly proven that monopoly is as sterile in this respect as liberty is fruitful. Under the system of liberty, each one's remuneration is the equivalent of the services which he has rendered to others; it is therefore proportioned to the service rendered; and this is perfectly just. Under the monopoly system, the profit is proportioned to the extent and urgency of the wants which the monopoly supplies, and to the obstacles which it puts in the way of people seeking to supply their wants elsewhere; monopoly profits are proportioned, therefore, to the degree of oppression which the monopoly exercises. In short, the general results of monopoly are to retard or suppress progress, to reduce the number and importance of our means of prosperity, to secure an iniquitous division of these means, and to paralyze or enfeeble the useful faculties.
—We may now say, there is no doubt but that association may lead, and in fact does lead to monopolies more or less absolute. All great concentration of industrial enterprises is a step toward this result, the realization of which is more or less probable according to the nature of the work which they suppose. In France, for example, those working in mines and foundries are more likely than those in most other branches of production to lend themselves to the founding of monopolies by way of association; the reason of this is that the heavy-bearing veins of mineral are thinly scattered through that country, and too far apart for the products of the miners' work to come into competition; so that the miners working in each mine, who are never very numerous, could by associating themselves together easily suppress all competition, if not at all the points which their products can reach, at least throughout the whole extent of the market wherein most of the sales are effected.
—We conclude, therefore, that association can contribute to the bettering of man's condition only to a certain extent, and that when it passes beyond the limit we have assigned it, when it amounts to monopoly, its results, far from being beneficial, are injurious.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: CHARITY, Private.
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CHARITY, Private. Economists reject public or state charity as producing incomparably more evil than good. This has sufficed to bring upon their doctrines the accusation of extolling egoism, of stifling feelings of charity, of under valuing generosity and devotion. Happily these accusations are as stupid as they are odious, a fact which may be shown without difficulty.
—We shall first examine the arguments put forward by the two most eminent defenders of public charity, Lamartine and Thiers. Says Lamartine, in his Le Conseiller du Peuple: "Are fraternity and charity virtues? They are. Then society itself ought to exercise these two virtues; society should not, as is pretended by economists, who have no religion but arithmetic, free itself from these great duties and let misery and death take their course." Thiers, in his report to the French legislative assembly on public assistance, brings up the same considerations: "If the individual has virtues, can not society have them too? To our thinking the answer is not doubtful. We must not look upon the state as a cold, senseless, heartless being. The collection of members composing the nation, as they may be intelligent, courageous, polished, may be humane, charitable, as well as individuals themselves."
—What is society? If it be the collection of members composing the nation, it is clear that this collection will unite in themselves the total of all the virtues possessed by each one of the individuals composing it. If it is wished to personify the collection, and to make of it that creature of the mind called society or the state, it is absurd to attribute to this being which has no existence, an action independent of that of all the members composing the nation. If, however, we understand by society or the state the government, the question is changed altogether; and we must no longer ask whether charity being a virtue in the individual, is not equally a virtue in society, but whether it is proper, moral and advantageous to have charity practiced by the government, or whether it is even possible for the government to practice charity at all We say not. It is very evident that Charity and fraternity are virtues only when they are free and spontaneous. State and, therefore, forced, charity is not a virtue, it is a tax. Now, the sacrifice imposed on some in favor of others clearly loses the character of charity. The legislator has no merit in the case, for all he has to do is to cast his vote in its favor. The executive power or the tax collector has still less, for, instead of giving, he retains a part of the gift as pay for his services. Neither has the tax payer, since he contributes only in spite of himself. Where can we find here the conditions of charity: a benevolent inspiration followed by a voluntary sacrifice on the part of him who feels it? Is not that a strange kind of charity whose acts are performed by the tax gatherer and policeman?
—Economists who, according to Lamartine have no religion but arithmetic, have always shown themselves filled with pity for the sufferings of their neighbors, as profound as that which he himself felt; and if we look into the lives of the most illustrious among them, Quesnay, Turgot, Malthus, Smith, J. B. Say, Charles Comte, etc., we shall find a series of acts of noble disinterestedness, of devotion to truth, to justice and the unfortunate classes, worthy to be held up to all men animated by real philanthropy.
—Economists are specially occupied with the means of dispensing exact justice to every man, and with diminishing misery by acting on the causes which produce it; but they know that preventive measures will never be enough to eradicate it: that there will always exist in society a great number of individuals absolutely incapable of obtaining for themselves enough to escape from the sufferings brought on by indigence, and whose support can never be assured except through the wealth created by others; that, consequently, feelings of pity, benevolence and charity will always be indispensable; and that too much force and activity can not be given them when there is a question of solacing unmerited misfortune.
—But economists deny that public charity is a means of supporting and developing these sentiments. On the contrary, they are convinced that it tends to weaken them continually, to blot them out, by apparently diminishing the necessity for them, by adding to the suggestions of egoism plausible pretexts against generous impulse. They are convinced that charity practiced by individuals or free associations would be more extensive and powerful in proportion to the decrease of state interference in the collection and distribution of relief; that this interference tends to suppress the principal stimulant to charity and the condition which can best assure its efficacy, by destroying direct relations between the benefactor and the benefited; that by this state interference the individuals assisted are bound to feel grateful only to the law, that is to say, to no one, and that, by making assistance obligatory to those who render it, they naturally dispose those who receive it to look upon it as a right; that thenceforth, relief loses all character of uncertainty or contingency and that the poor classes accustom themselves to count on it, and yield more and more to improvidence, idleness and other vices, productive of misery; that, in this way, public charity engenders more evils than it can cure.
—Charity consists in interesting one's self in the misfortunes of others, and in the making of sacrifices to diminish them. When it is freely practiced it can present no danger; the sacrifices are generally proportioned to the resources of those who make them, and no one can count on them positively; they have not the inconvenience of lessening the preventive effects of penalties attached to misconduct and habits generating misery. But if charity is imposed by the law, what shall be its limit? What part of the penalties on improvidence, etc., will be left in force? That will depend on the opinions, the disposition, the caprice of the legislator. Lamartine, for example, wished to bind the state to begin 500 million francs worth of public works. Louis Blanc understood popular fraternity in a wider sense. He wanted all the shops to be taken by the state and put at the disposition of associated workmen. On another occasion, Barbès and Sobrier, "considering that fraternity is not an empty word, and that it ought to manifest itself in acts," wanted a tax of a milliard of francs on capitalists for the benefit of workmen. It is evident that if this principle of fraternity or public assistance be once admitted, its consequences have no assignable limits, and might extend until one-half of the population was despoiled in favor of the other half.
—Such are the motives which have caused economists to reject public charity and oppose all measures tending to give it a greater extension than it already has; but far from wishing to weaken the feeling of charity by this action, or restrain charity freely practiced, they claim, on the contrary, that they give it more intensity and breadth, for they contend that the interference of the law, in place of rendering the sources of charity more abundant, tends inevitably to exhaust them. Political economy does not approve of state rule, either in the practice of charity or in the church, or in industry. It maintains and demonstrates that but for the unfortunate claim of governments to direct these different branches of social activity, we should be more charitable, more religious and more industrious.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 1 Abdication-Duty. Chapter: CONSUMPTION
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CONSUMPTION, Taxes on Articles of. Taxes imposed on consumption of provisions, merchandise or products of any kind, and collected, either at the time when the articles taxed pass the boundaries of a state, a province, or a commune, or at the time they are sold, removed or manufactured, constitute, in almost all the modern states of Europe, and in those of European origin, the chief source of public revenue.
—In France, these taxes comprise those included under the title of indirect taxes—duties on liquors, native sugar, the proceeds from the sale of tobacco, gunpowder, paper, etc., plus the customs duties and the proceeds from the sale of salt; the total amounting, according to the estimate of the budget of 1869, to 742,559,000 francs on a total national receipt of 1,722,444,903 francs. The octrois of French cities are also taxes on consumption, and their gross annual amount exceeds 150,000,000 francs. Certain direct taxes are in their nature similar to taxes on articles of consumption: such are those imposed on carriages, horses, dogs, etc., when used as luxuries. If the stamp duty was extended to all writing paper, that duty also would be a tax on consumption, but as in France it is confined to paper which may be produced in court, or for agreements, contracts, checks, etc., they are included under the large class of taxes on documents.
—In Great Britain duties on consumption, comprising the custom house duties and excise, in the year 1867-8, reached the sum of £45,642,851, on a total receipt of £83,333,217.
—In Austria indirect taxes, imposed generally on consumption, figure in the budget of 1868 at 220,292,813 florins, on an ordinary total receipt of 546,035,407 florins.
—These taxes are put down in the budget of Prussia of 1861, including salt, at 44,627,107 thalers, on a total receipt of 135,094,415 thalers.
—The budget of Russia for 1868 gives indirect taxes, customs and excise duties at 193,850,330 rubles, on a total receipt of 480,593,517 rubles.
—Before the war between the north and south the income of the United States was almost entirely furnished by customs duties. For the year included between July 1, 1859, and June 30, 1860, the ordinary receipts were made up from the three following sources only (see UNITED STATES): customs, $53,187,511; sale of lands, $1,778,557; from various sources, $1,010,761; total, $55,976,829.
—Among the drawbacks inseparable from all taxes there are some which taxes on articles of consumption have in the highest degree: 1. The distribution of the burden which it imposes is in no way proportionate to the resources of the taxpayers; and the most productive of these taxes, those on liquors and provisions in general use, on salt, combustibles, etc., weigh as heavily on the poor as on the rich. 2. Their collection demands an amount of administration, supervision and verification very damaging to production, and to the circulation of or trade in the objects taxed. It is well known in France what a network of minute rules and difficulties are connected with the general taxes on liquors and the octrois. 3. A considerable part of the proceeds of the taxes in question is absorbed by the cost of collecting them. That proportion is not generally less than 13 or 14 per cent.
—It has been urged, in favor of these taxes, that the payers, for different reasons, meet them more willingly than direct taxes. It is said, first of all, that their collection is generally divided into smaller fractions, and more easily paid. It is next alleged, that, in the majority of cases, they are added to the price of the articles taxed in such a way that the consumer, confounding them with the price, bears the burden of them almost without knowing it; that weighing more frequently on kinds of consumption not indispensable to the maintenance of life or health, the taxes in question are paid only when it is convenient to buy articles which could really be done without; so that the poorest, the most prudent or the most economical have always the power of avoiding them by refraining from buying, and find in this a new stimulant to saving.
—These motives often appealed to by financiers, politicians and all publicists occupied with fiscal questions, may be more or less justified in reference to certain special taxes, but if it is intended to appeal to them in the case of all duties on articles of consumption, it is very questionable whether it can rightly be done. It is by no means demonstrated that these duties are acknowledged and paid more willingly than direct taxes, and, as to customs duties and octrois, smuggling, which always continues in spite of the activity and the severity of repression, shows the contrary clearly enough. We know, besides, to what an extent taxes are collected under the inspection of officers of indirect taxes, such as the retail duty on wine, the duties on the manufacture of beer, native sugar, etc., and how impatiently they are borne by those on whom they are imposed. We know, also, that in France the octrois have always been the most unpopular of all taxes; and the favor with which their complete suppression in Belgium was received by public opinion, shows well enough what a general object of hatred they are.
—It will not be easier to justify the allegation that these taxes are paid more easily and in smaller fractions than direct taxes which may be collected in twelfth parts. This is not the case with customs duties, which are generally collected in large sums; nor with taxes on liquors, native sugar, salt, etc. Although divided, so far as the consumers are concerned, they cause heavy expenses to producers, merchants and dealers, before reaching their final destination. It is quite true that consumers, when they have to pay or refund these taxes, pay them in fractions more or less small, and confound them with the price of the object taxed, without thinking how much they pay in this way to the government. But is this really a public advantage? In view of the use which the greater number of governments make of their resources, is it really desirable that they should increase them at the expense of private persons, without the masses observing, or, at least, without their being able to render an account of all that has been thus taken from them?
—And lastly, the assertion that taxes on consumption are generally levied on articles of little need in the maintenance of life or health, and which can be dispensed with conveniently, is not better founded than the other considerations appealed to in defense of these taxes. This assertion lacks truth altogether with regard to salt, meat and the greater part of other provisions on which a customs duty or an octrois is levied. Sugar, indeed, appears to be of less absolute necessity, the populations of Europe having done without it for a long time; but they have also done without shirts and shoes; and would it be proper at present to tax these articles of clothing heavily under the pretext that those who wish to avoid the tax are able to do without them? The use of sugar is common among all classes: it is used in preserving fruits, in the preparation of a multitude of medicines and food; and its consumption has become almost as necessary in the civilized world as that of salt. As to beverages, such as wine, beer and cider, it is not certain that a suppression of their consumption would not be very injurious to the health of people who use them. The use of fermented liquors is universal in human society; it exists in every degree of civilization; and if this does not sufficiently authorize us to consider it one of the necessaries of social life, if we must see in it but an artificial want or pleasure, we should still have to ask ourselves whether it is reasonable and just to make this pleasure much more costly, more difficult for the most numerous classes, by overloading with taxes the objects capable of procuring that want or pleasure.
—Taxes on consumption, considered in their totality, are not justified by any of the reasons generally adduced in their favor; and they present, in a higher degree than any others, the drawbacks arising from a want of proportion between them and the resources of tax payers, the heavy cost of collection and the hindrances and difficulties imposed by them on production and commerce. There is, therefore, no valid reason for giving them the preference in the general system of taxation; and there are very strong reasons why they should be resorted to as little as possible. Their only raison d'être is to be found in excessive public outlay which the resources procurable by the most equitable and least harmful means can never meet, and which brings about recourse to all possible methods of collecting taxes, whatever they may be.
—Some of the taxes on consumption weigh, nevertheless, on articles injurious to the health, to the mental or moral faculties, of those who use them habitually, such as tobacco and alcoholic drinks. These taxes are certainly among the best warranted, and their establishment or maintenance can only be approved; but, the best method of collecting them should be a constant object of research.66
[66.]It is proper to add that indirect taxation finds its real justification in the unwillingness which all ratepayers exhibit in giving the necessary information on which to base direct taxation or distribute its burdens equitably. M. B.
Footnotes for COUNCILS.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 2 East India Co. - Nullification Chapter: FUNCTIONARIES
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FUCTIONARIES. "Public functionaries" says M. Viven,(Etudes administrative, p.43) "are the dispensers or instruments of the power of the society: through their agency justice is done, knowledge is diffused, order is preserved, taxes collected, public property administered, national wealth increased, and the security, dignity and greatness of a country are maintained and guaranteed.
—Adam Smith, while recognizing the necessity of the service of functionaries, classed them with those laborers he called unproductive. Because he did not discern the product of their labor in any material object, he supposed that no accumulation of wealth could result from it. The erroneousness of this opinion has since been often demonstrated. Industrial production consists in modifying, transporting from one place to another, or transforming, the materials furnished by nature, so as to adapt them to our needs. What it has thus created is not matter, a thing wholly beyond human power to create, but utility; and to that end it must overcome obstacles of various kinds, among which those which arise from the passions of men, and which would arrest production by taking away security, are among the most considerable and the most difficult to vanquish. Now the especial mission of governments is to institute and apply the guarantees indispensable to that security. The functionaries they employ for this purpose co-operate then most certainly in production, while laboring to overcome one of the principal difficulties which hinder its development, and succeeding to a greater or less degree in the effort. When this mission is properly fulfilled, the utility resulting from it attaches to man himself, whom it renders more restrained in his evil inclinations, more enlightened in regard to his duties and his rights better disposed to observe the former and defend the latter; better fitted, in short, for all the useful functions of social life. One can not, then, fail to recognize that functionaries devoted to such a mission take a considerable part in the production and accumulation of the utilities of human creation which constitute wealth; but it would not be necessary hence to conclude that their co-operation is the more efficacious as they are more numerous and their field of action more extended, for this conclusion would be contrary to the truth; and here a distinction, which appears to us important, should be made between functionaries and other workers.
—All labors governed by liberty, that is to say, originating in individual activity and its voluntary combinations, are subject, in their development and their results to natural laws which observation has caused to be recognized: but the labors of functionaries, governed by authority, that is, by men invested with the power of constraining the will, do not generally fall under the operation of these laws. A few indications will suffice to give an idea of the difference and even of the frequent opposition of the conditions which govern these two classes of labor.
—Free labor has its determining cause the various needs every one experiences and satisfies at his will, according to the extent of his resources; it can not, in its various applications, take any greater development than comforts with the extent of the various classes of wants to which it responds, for no workman has the power to make others accept products or services which do not suit them, nor to oblige them to pay for more than they require. In the absence of all constraint or hindrance, every service, whether it be of labor or of exchange, is necessarily remunerated by reason if its real value, that is to say, the value, generally recognized. If a class of services increases faster than the condition of the corresponding wants requires, the value of such services falls, and laborers tend to withdraw from this class. If, on the contrary, a class of services is not sufficiently extensive relatively to the demand for them, their value rises and the tendency is for new workmen to immediately devote themselves to them. Thus freedom insures to every one a part of the general product equal to recognized value of his co-operation, and it maintains, better than could otherwise be maintained, a constant proportion between each branch of labor and the wants it is designed to satisfy. Under this régime every worker has a lively interest, in his special sphere of activity, in multiplying and perfecting his services, because the recompense from them increases with his success in increasing their importance, and because, on the other hand, they would soon fall in value and be neglected if they became inferior to those of his competitors. Hence arises, among all laborers an energetic and persevering emulation, the assured result of which is a constant improvement in the quality of work, and the progressive increase, as well in quantity as in importance, of all the services we mutually render and whose products constitute our wealth.
—Such are the most general conditions which govern free labor. But the case is quite otherwise with the labors of functionaries. The determining cause of these is the needs freely manifested by each of the individuals by which society is composed; it is in the will, that is to say, in the opinions, the views, the passions of the men invested with authority, and in the real or pretended needs which theysuppose, with more or less reason and disinterestedness to exist among the population. These labors are not then necessarily proportioned to the extent of the corresponding needs, for this extent is determined only by arbitrary estimates which are more or less independent of the assent of those interested, and also more or less well grounded. Again, those for whom the services are destined, have not the option of refusing them or of limiting the quantity. These services are not then remunerated with reference to their real value, for this value is not discussed and determined by agreement between the one who furnishes it and the one who pays for it, and the determination of its amount is the result of estimates almost inevitably erroneous or partial. Finally, the principal causes of the continued improvements in free labor are not operative in the case of the labor of functionaries, for the latter lack the stimulus of self-interest, which, in public functions, is better satisfied by canvassing and by intrigue than by improvement in the service. Besides, they lack the stimulus of competition and the certainty of a recompense exactly proportioned to the services rendered. It is evident that the labors of functionaries are not assimilable, in scarcely any respect, to free labors, and that the one class could not, in political economy, be confounded with the other; nor could they be considered as subject to the same general laws without opening the way to many errors.
—Another conclusion from the preceding indications is, that the labors of functionaries are subject to conditions incomparably less favorable to their improvement than those which govern free labor; and experience fully confirms, on this point, the indications of theory, for improvements in organization or methods of procedure are as rare in the public service as they are frequent in free labors. The latter are constantly transformed or modified under the impetus of discoveries in science or of a constantly stimulated spirit of invention, and there is scarcely an innovation adopted the effect of which is not to increase their productiveness. The former, on the contrary, are distinguished by a sort of immutability, which is rarely disturbed except at revolutionary epochs, and the innovations which are made at such times are far from always constituting true progress. As to the results of labors, such is the inferiority of those directed by public authority that we may affirm, without the least fear of exaggerating, that if free production employed as many faculties and resources to obtain, on the whole, so few useful results, it would not succeed in satisfying a tenth part of the wants for which it provides, This consideration alone would authorize us to conclude that nations which understand their own interests should endeavor to reduce as much as possible the number of pubic employments, or, in other terms, the functions of their governments; because all the branches of activity which they allow, without absolute necessity, to be taken away from the domain of individual initiative and liberty, and made an apanage of authority, lose, by that very fact, the greater part of the their usefulness. But the necessity of restricting, as far as possible, the number of public employments and functionaries appears much greater skill, if one observes all the evil results of the contrary system. Among the latter results may be counted the tendency of the system to make people lose the habit of personal effort and the feeling of responsibility, and to withdraw as much as possible from all individuals initiative and expect everything of the government. At the same time this system leads to the creation of an immense number of offices or public employments, and multiplies to a dangerous degree that portion of the population which, aspiring to live on governmental favors or the income from taxation, employs all means to that end—corruption, intrigue, solicitation, mendicity, émeutes, revolutions, counter-revolutions, etc. It thus substitutes, on a vast scale, a harmful activity for a useful activity, and renders infinitely more difficult, more precarious and more onerous the maintenance of security. Finally, it contributes greatly to increase public expenses.
E. J. L. Tr
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 2 East India Co. - Nullification Chapter: IMMATERIAL PRODUCTS.
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IMMATERIAL PRODUCTS. To "produce," in the economic sense of the word, is not to create matter, which is beyond human power, but a valid utility, that is to say, one that may be exchanged for other utilities. Now utility in itself has nothing material in it; it is a quality, a property which only exists by its relation to our wants. From this point of view all products without exception are immaterial; but it has been thought desirable to distinguish, among the utilities produced, those directly connected with man, and these have been called "immaterial products."
—Adam Smith, Malthus, and other economists, did not admit this last class of products. Smith, while recognizing the utility and even the necessity of the services of functionaries, magistrates, the army, etc., did not admit that these services were productive. "Their service," he says, "how honorable, how useful or how necessary soever, produces nothing for which an equal quantity of service can afterward be procured. The protection, security and defense of the commonwealth, the effect of their labor this year, will not purchase its protection, security and defense for the year to come. In the same class must be ranked, some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera singers, opera dancers, etc. The labor of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labor; and the labor of the noblest and most useful of these professions produces nothing which could afterward purchase or cause an equal quantity of labor to be performed. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes at the very instant of its production."
—Malthus thought that "from the moment the line of demarcation between material and immaterial objects is taken away, the explanation of the causes which determine the wealth of nations and every means of appraising it become extremely difficult, if not impossible."
—J. B. Say thus sums up the characteristics which seem to him to distinguish the products in question: "An immaterial product," he says, "is any sort of utility which is unconnected with any material body, and which consequently is consumed as soon as produced. Certain immaterial products, although consumed as soon as produced, are susceptible of accumulation, and consequently of forming capital when their consumed value is met with and fixed on a durable basis (fonds). It is thus that the oral lesson of a teacher of the art of healing is reproduced in the industrial faculties of those of his pupils who have profited by it. This value is then attached to a durable subject, the pupil." M. Dunoyer seems to us to have considerably elucidated and perfected the idea of immaterial products; he does not admit that they are consumed as soon as produced, and he thinks that this statement has only been made on account of a want of distinction between work and its results. M. Dunoyer has himself recalled in his article headed "Production," the theory evolved by him on this subject in his great work on "Freedom of Labor." His observations seem to us completely justified; but great care must be taken, in considerations relative to the class of products which we are dealing with, never to forget the distinction between labor and its results, a point on which in some respects, perhaps, M. Dunoyer has not sufficiently insisted. It is certain that all useful labor is productive, and that everything which can satisfy our various wants or assist in perfecting our intellectual or moral nature is useful; but the labor performed on man or his faculties, which, to use M. Dunoyer's expression, has man for its subject, is far from being always useful and productive. Too often, on the contrary, this labor is not only useless and unproductive, but to the last degree hurtful and destructive. It is then absolutely necessary, before deciding if labor having man for its subject is or is not productive, to examine its object and its results.
—An armed force, used exclusively, according to the need there may be of it, in preserving national independence, in assuring internal tranquillity and respect of persons and property, performs an unquestionably productive labor; for, on the one hand, it represses collective or individual violence with all its accompanying evils; while, on the other hand, it gives to all that feeling of security which is indispensable to activity and productiveness in labor. But an army which should become the tool of the ambition, pride or vanity of certain personages; which should serve to maintain at home an oppressive and grasping rule, and to carry abroad war and its devastations, would no longer be a productive force, but a scourge.
—Magistrates who conscientiously fulfill their duty, who administer with rigid impartiality the laws of justice as the general condition of enlightenment has established them, are eminently producers; for they contribute to insure to the nation security and at the same time to perfect the morality of the people. But a magistracy which should make itself the accomplice of a destructive and tyrannical power, would by so doing only contribute to produce evils of every description.
—A civil administration which applied itself to attending to, by efficacious means, but as simple and as little costly as possible, collective interests of such a nature that they could not be left with advantage to the care of individual activity; to collecting the taxes which the public service might render indispensable; to protecting without harassing the regular growth of general activity; to preventing dangers or hurtful acts in the few cases where the evil resulting from preventive measures would not equal or exceed that which the action is taken to prevent, would fulfill a mission whose usefulness and consequently whose productiveness could not be contested. But an administration, which, instead of confining its efforts to protecting, in the best way possible, the free and legitimate application of general activity, should pretend to direct and regulate it on all points; which supposed itself authorized in many cases to take from some to give to others; which, in order to extend its action everywhere, should complicate more and more the public service, and should without stay or limit increase the personnel of the administration, would only succeed by such a course in trammeling all useful works, in producing a forced and unjust distribution of part of the values produced, a more and more energetic and general desire for public employment, a progressive increase in the parasite population, the weakening and discouragement of productive activity in proportion to the development given to destructive activity, and finally, the insecurity and disorders inseparable from all these causes of disturbance. Such an administration, taken as a whole, would little merit to be considered productive of utility.
—Ministers of a religion, who, to propagate their faith or their beliefs, used no other arm than persuasion, the only one for that matter of any avail; who made themselves the teachers of ethics and the consolers of their adherents; who, by the help of religious sentiments, strove to elevate and purify more and more their intelligence and their habits, to develop and enlighten their better feelings, to resist and diminish their evil and mischievous propensities—in a word, to direct their desires, their tendencies and their activity into the path most beneficial for all, would undoubtedly be the most valuable of all producers, the most worthy of respect and veneration; for they would contribute more than all others to the perfecting of human life, to raising men to the highest level it is given them to attain. But a clergy who, to establish their influence, counted less on persuasion than on authority; who lacked the necessary enlightenment to enable them to act on the affective faculties of their followers in such a way as to improve them and wisely guide their natural tendencies; who, besides, ignored the importance of this part of their mission and devoted themselves mainly to obtaining a submission, a passive obedience, voluntary or forced, to all the tenets or forms prescribed by them, and should be contented with such a result as sufficient to assure their power and serve their temporal interests—could a clergy, we ask, who employed such means for such an object, be fitly classed among producers?
—The same may be said about the labor of the teacher, the professor, the man of letters, or the artist. We might ask if secondary education, as it exists in France for example, is in accordance with the needs or the real interests of the population; if the study and praise bestowed on the manners, the institutions, the opinions and the actions of the ancient peoples of Greece and Rome, are well fitted to make honorable and useful citizens; if the ideas drawn from such teaching are really utilities; if there might not be something better to teach, etc. We might ask if all authors, poets and artists have a good effect in improving the mind, elevating the soul, or refining the taste; but the reader can easily supply for himself what is here omitted. What has been said seems to us sufficient to, establish our statement that all labor which has man as its object is not productive. And that to distinguish such as is from such as is not, it is necessary to examine its results.
—It is of importance, however, to explain that utility "can not be estimated in political economy as it is in ethics, and that we must recognize here as useful everything which has an exchangeable value. There must in consequence be admitted as veritable products, all the results of the labors of the author, the artist, the doctor, etc., to which the public attaches a price freely agreed upon, even when to the eyes of reason some of these results are worth nothing or less than nothing, but it is quite otherwise with the labor whose wages are not freely determined, and the results of which men are forced to accept, whatever they may be, such as those regulated by authority; the effects of this labor have no price current which the economist is obliged to accept, whether reasonable or not, and their appraisement is entirely a matter for the decision of enlightened reason.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 2 East India Co. - Nullification Chapter: INDUSTRY, Progress of.
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INDUSTRY, Progress of. In political economy this expression ought to be understood as the improvement of all the conditions on which the power and productiveness of labor depend. To appreciate correctly the magnitude of the results which we owe to industrial progress, as well as to distinguish with certainty the general characteristics which mark it, thought must go back to man's primitive condition, and the attention be given for a little to the principal industrial achievements which, in the course of centuries, have gradually brought about the present condition of things.
—The immense multitude of different kinds of matter and force, of organized and living creatures which compose the terrestrial creation, was not, from the beginning, more particularly appropriate to our existence than to that of most other animate beings, but we received, more than they, the faculty of altering extensively, of completing in some sort to suit our own needs, the primitive creation, and thus only is it that this world has really become man's domain.
—It is to the successive developments of this faculty, too little thought of, that we owe all the means of existence and of well-being accumulated by our race—means which have permitted it to multiply to a thousand times greater extent than it could have done had it been compelled to subsist on the spontaneous productions of nature. To this faculty do we owe our success in changing completely, to our own advantage, the original proportions of the different species of living creatures; in substituting for the forests and plants which covered a great part of the earth irrespective of their suitability to our wants, those that might prove most useful to us; in arresting the increase of numerous species of noxious creatures; and in subduing and then multiplying at will all such as were of a nature to be useful to us. It is also by the more and more extensive employment of this powerful faculty that we have succeeded in fertilizing large tracts of desert, in drying up large tracts of marshy land, and in making the watercourses nourish our crops, move our machines, and transport us and our products; that we are enabled to extract from the bosom of the earth the shapeless metals destined to become the instruments of our labor and of our exchanges, the coal which we use in our homes and our manufactories, and from which we distill the inflammable gas which gives light to us in the night; that we can quarry from the mountain side and the crag those myriad buildings, palaces, temples, cities, roads, canals, etc., which are the boast of civilization; that we have discovered in compressed steam one of our most powerful natural helpers; that we have made of the seas and winds one of the great means of communication between the peoples distributed over the earth; that we have found in magnetism the guide to show us the way across the vast expanse of the ocean; and lastly, that we have made of that other mysterious force which we name electricity, the marvelous messenger which instantaneously transmits our thoughts to distances of thousands of miles. The faculty which has already been successful in obtaining such admirable results from the wonderful world which it has to explore, and which is possibly destined to obtain others still more astonishing, is that known to political economy as industry. We must then admit as industrial progress everything which tends to increase the power and productiveness of this faculty, all that contributes to swell the mass or the importance of the utilities of every sort which are the ultimate end of its action, the satisfaction of our wants and the necessary basis of the amelioration and diffusion of human life. Hence it follows that industrial progress can be shown in all useful works, without exception; in those of the savant, the statesman, the magistrate, the clergyman, the artist or the author, as well as in those of the agriculturist, the manufacturer or the merchant. The first named labor, or at least may labor, to develop and improve our intellectual and moral faculties, which are so closely bound up with our industrial faculties that the latter are necessarily elevated or debased with the former. Thus the labors of the savant, by extending our acquaintance with nature and with the properties of the objects submitted to our action, manifestly increase the real power of industry, and it is commonly labor of this sort which paves the way to the greatest industrial advances; the labor of the statesman or the magistrate has as its legitimate object to fit us for social life, to protect our life, liberty and property against violence or any attack that might be made on them, thus giving to all the security, lacking which, industry would soon cease to be productive; the labor of the clergyman or the moralist may, if it be well directed, tend to the same result by adding to the force of authority used by the legislator or the magistrate, the force of persuasion; they may, in addition, impart to life consolation and hope, which are utilities of no mean order, and they may also influence our passions and our habits by enlightening us as to their consequences in the manner most favorable to the productive power of our industrial faculties; finally, the labor of the artist and the author may also tend to the same result by cultivating and purifying our imaginations, our affectional faculties, by inspiring us with a taste for the beautiful and the good. True it is that the different kinds of labor have not always the tendency we have just attributed to them, and that instead of contributing to the amelioration of our intellectual and moral faculties they have often for effect, if it be not their aim, to deteriorate and degrade them; but if such be the case they are no longer useful works, and, far from assisting industrial advance, they are powerful obstacles to it.
—The first want of all animate beings is food. As long as men look to hunting, fishing, or the few vegetable foods which the earth produces spontaneously, for their livelihood, their existence is a wretched one and little above that of the beasts; their wants, like their industries, are limited, and yet to live thus even in the sorriest way each individual must occupy a square league or more of fruitful soil. The first step in advance is taken when, abandoning the pursuit of their prey in the forest or the waters, men learn to assure themselves of their daily food by capturing the creatures most easily tamed and forming them into flocks which they feed, wandering with them from pasturage to pasturage which the untilled soil affords. But this means of providing food demands also the occupation of immense tracts of country by a small population, and in that case wants and industry continue extremely limited. The most important step in industrial progress is taken when populations, recognizing that they can by cultivation substitute alimentary vegetation for that which has not that quality, determine to exchange a savage or a pastoral existence for an agricultural one.
—When it reaches this last degree of development, industry is in possession of the most powerful means which have been given it for the improvement and spread of human life; agriculture soon succeeds in producing a quantity of substances far in excess of that needed for the sustenance of the cultivators of the soil, population increases, and some are able to turn their attention to other labor; henceforward wants increase progressively, and food, shelter, furniture, clothing, fuel, the want of utensils and machines of all sorts, of communication, of transport, etc., put to work whole masses of laborers, divided into series corresponding to each particular class of wants, then subdivided into a multitude of different professions, which form the special occupation of those who practice them. Since this specialization of labor rapidly increases the force of industry, wealth accumulates, and as its sum increases, populations find it easier to create new wealth; it is then that numerous classes can be exempted from material labor and may apply their energies to the cultivation and perfecting of human faculties. This last named variety of labor is no less necessary than any of the others to the continuation of industrial progress, for the obstacles to this progress appear as much in the imperfection of our moral faculties, in the evil bent of our passions, in the wrongs we are too prone to do each other, as in the things on which we act.
—In the present state of civilized communities the main conditions most necessary or most favorable to industrial progress seem to consist: 1st, In security, which includes the maintenance of peace and the guarantee, as complete as possible, of property; 2d, In specialization of employments; 3d, In abundance of capital; and 4th, In freedom of labor and contract.
—It will be needless to dwell at length on the intimate relations between industrial progress and security. In times of agitation, of trouble or of war, multitudes of men who might contribute to this progress, are occupied, on the contrary, only with what injures and arrests it, and those who are not directly engaged in hurtful acts, weakened in general by anxiety and by the uncertainty of the future, lose much of their energy. The experience of all ages proves that the most fruitful periods in industrial progress have always been those in which security and peace seemed best assured. It has only been through chance or by the efforts of men of genius that important discoveries destined to increase greatly the power of industry, have been made in a time of violence or disorder, but it is evident that it was not this condition of affairs which gave birth to them, and it was only after the restoration of peace and security that all the benefits derivable from them were obtained.
—The security of property is the indispensable condition of industrial progress; for this progress is generally the result of a succession of efforts which no one would make unless certain of reaping the fruit of them. Without this guarantee, industry, far from making progress, would rapidly slip back to its original starting point. Where property is not secure, men must necessarily look upon one another as enemies rather than as friends. The idle and improvident constantly seek to take possession of what has been earned by steady and industrious men; and if the strong arm of the law did not hinder their aggressions they would become, by destroying all security, an obstacle to industry and to all idea of accumulation, and would thus drag down all classes of society to the level of hopeless destitution to which they have themselves fallen. (See M'Culloch's "Principles.") It is certain then that, all else being equal, industrial progress will be most rapid and most extensive where property is best guaranteed, not only against illegal attacks, but against those made on it in the name of the law itself or of public authority.
—Adam Smith, in his endeavor to determine how it is that division or rather specialization of labor develops greatly the power of industry, assigns three principal reasons as its cause. The first, is the increase in aptness and dexterity which workmen gain by the constant repetition of one operation; the second, is the saving of the time which is unavoidably lost, in labor not sufficiently specialized, by passing from one operation to another; the third, is the facility given by specialization of labor, to the discovery of machines or of natural motors which may save human labor. It is especially by the last named of the three causes that division of labor contributes powerfully to industrial progress; by concentrating the attention of each worker on operations reduced to their simplest elements, it has paved the way for a multitude of inventions and discoveries. It would be an error to suppose, as has often been done, that division of labor does not sharpen and improve the inventive faculties, among workmen and artisans. As society advances, the study of the different branches of science and of philosophy becomes the principal or the exclusive occupation of the most intelligent men, and each of them, by concentrating his research and his thought on one special branch of knowledge, arrives at a degree of perfection or experience never, or at most very rarely, attained by those who busy themselves with all the sciences. (M'Culloch's "Principles.")
—The possibility of specializing labor depends evidently on the power of exchange; without this power each one of us would be obliged to produce by himself all the objects of his different wants; it may therefore be affirmed that all which serves to extend the power of exchange, permits the increased specialization of labor, and in consequence contributes to the industrial progress which depends on that specialization.
—It is easy to understand how this progress is furthered by abundance of capital; without tools or machines, without materials, without supplies resulting from previous labor, the most highly perfected industry could effect but little; it was only by the continued accumulation of capital that industry became powerful; and its power necessarily increases as capital increases. Suppose, for example, that it be desired to bring under cultivation a distant and uninhabited land; if those who undertook such a scheme began it with their hands only to help them, it would not be long before they would perish of want, however industrious they might be; but if they arrived at the place well supplied with all the implements needed for cultivation, for clearing land and for transport; with provisions, cattle, seeds, etc., their enterprise might succeed, and their success would be the more assured the greater the capital they could devote to it, the better they were in a position to renew at need their supplies, until the newly broken land could furnish them itself. That a people may establish canals, railways, steam engines, electric telegraphs, etc., they must previously possess a multitude of workshops and of instruments necessary to the preparation of all the materials used in producing these things, unless they receive them ready made from some other people, in which case they must give in exchange other capital of the same value; they must also be provided with provisions of every description in sufficient quantity to support the workmen, while they are being established. Without those conditions, and as long as they can not fulfill them, they must resign themselves to remain deprived of these powerful means of progress and civilization.
—We have enumerated, among the main conditions needful in industrial progress, freedom of labor and of contract. By this freedom all men are occupied with the career in which it is likely that they will contribute most to the production of wealth, because each man has been able to choose for himself the career which seemed to him best suited to his position and to his peculiar talents; on the other hand, each is urged by all the force of personal interest to multiply and improve the services which he can render others in the career which he has chosen, for with entire freedom in transactions, the rewards which he can obtain will necessarily be proportioned to the quantity or the value of his services, a value determined by the free judgment of the interested parties. Hence, it follows that the more extensive this liberty of the individual is, the more universal, persevering and fruitful will be the efforts which urge men to industrial progress. Experience also amply bears this out, for the history of industrial development shows that it is more powerful in proportion as each person is free to choose his own profession, to practice it as he understands it, (under the sole condition of respecting the liberty and property of others), and to dispose at will of the products he obtains. In our times the industrial power of any nation may be judged of by the extent of the liberty assured to its labor. The most progressive are those which have best known how to guarantee to every man the free disposition of his useful faculties and of what they produce; the least so, those where that freedom is most restricted, where work and commerce are most subject to regulation by the state.
—We have already alluded to the fact that the division of labor is closely allied to the exchange of wealth, and that in restricting the latter, obstacles are thrown in the way of the industrial progress depending on the former. We may here remark, that on the day industrial populations shall have done away with or greatly diminished the legislative obstacles in the way of international trade, they will have opened the way to immense industrial progress; for these obstacles oblige each nation to devote part of its energy to those kinds of labor which with it are less favored by natural circumstances than they are elsewhere, and oblige it to restrain within the limit of what it can consume the exploitation of the special advantages of the country it occupies, which is simply squandering the gifts of Providence.
—Industrial progress is rarely made without entailing some partial suffering, for it almost always consists in a new and more perfect mode of satisfying certain classes of wants which were formerly met by other means. The industrial faculties engaged in the abandoned processes can not always be turned immediately to other occupations; there is, therefore, more or less intense and more or less extended suffering undergone by all those whose special industry is thus rendered, at least temporarily, useless, and who are consequently obliged to change their calling. This is unfortunately an inevitable in convenience connected with the gradual progress of industry.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 3 Oath - Zollverein Chapter: WANTS.
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WANTS. Man alone, of all animate beings, possesses the faculty of constantly adding to his wants, and to the means of providing for them. This double faculty, in course of time, very materially modifies human life, and the life of most organic beings; it completely changes the primitive distribution of the different genera of animals and vegetables, as well as their respective proportions. It is that faculty which, in the words of Buffon, "ends by impressing our ideas upon the face of the earth"; the faculty which has given our intellect the exercise that has so prodigiously developed its power, and without which the human mind would have remained but little above that of the different species of apes. To this faculty we must also attribute the multiplication of our race upon the earth, whose spontaneous productions would not furnish sufficient sustenance for a millionth part of those who now dwell upon it.
—The faculty of increasing our wants should always be joined to that of increasing the means of satisfying them, for these two faculties are inseparable, they stand to each other in the relation of cause and effect, and the latter could never act but under the spur of the former; so that we can not logically deplore, with certain schools of pretended philosophers, the continual extension which is given to human wants by the onward march of humanity, without at the same time censuring the increase of the means of subsistence, and of the goods of all kinds which the second faculty, that is, industry, has procured for us.
—Of all the publicists who have maintained the doctrine of the limitation of wants, J. J. Rousseau is the most radical, and the only consistent one; for he is the only one who, looking upon the faculty of extending our wants as a direful gift, has entirely repudiated, at least in theory, all the goods whose production is due to that faculty. According to him, mankind entered upon the path of degradation, from the very day that they thought of substituting a cabin for a cave in the rocks and the foliage of trees, or determined to add the bow and arrow to their teeth or their nails. (Discours sur l'origine de l'inégalité.) If Rousseau had reflected, that, in order to reduce the human race to this manner of living, it would be necessary to sacrifice it almost entirely, he would probably have acknowledged that the advantage of thus elevating a few rare individuals to the condition of the orang-outang, would not be worth such a sacrifice.
—The theorizers of to-day do not push the doctrine of the limitation of wants as far as Rousseau did; and, although they hold the same principle, they assign different motives for it. They consider the generalization of the desire for well-being the principal source of our ills, because it is calculated to develop cupidity, envy and other maleficent motives; and they would counteract it by inculcating austere religious tenets, a contempt for the pleasures of this world, and resignation to present suffering, in anticipation of happiness in a future life. They think of perfecting man's life on earth by contemning and despising it. They assure us that the general observance of their doctrines or precepts is the best means to secure the tranquillity and happiness of nations, and of strengthening social order.
—Unfortunately these modern defenders of what Bentham calls the principle of asceticism, do not preach by example. Fully provided themselves with all that can satisfy most completely awakened wants, it ill becomes them to censure in the impoverished classes the aspiration to a position more or less nearly resembling their own, unless they first themselves renounce the advantages of their position. This, however, they do not do; they very willingly make use of the goods which they pretend to despise; we generally find them very anxious to escape privation, and none of them has yet been able to persuade himself to live in a Diogenes tub. This contradiction between their theory and their practice gives ground for the belief that their faith in the truth and efficacy of their doctrine is not very lively or sincere, and this is probably one of the causes of the fruitlessness of their preaching.
—But even if they were to join example to precept, as did some of their predecessors in past ages, they would succeed no better than did these in inducing mankind to live a life contrary to their instincts. We can not change the nature of things by ignoring it; it remains what it is despite all our opinions and all our errors. The soul of man, such as God made it, and as it manifests itself during the entire time of its union with the body—from the cradle to the grave—is an inexhaustible source of desires (Frederick Bastiat, Harmonies Économiques); and a desire is nothing but a seeking for some satisfaction, or a shrinking from some pain, that is to say, a tendency to well-being.
—This tendency, therefore, is essential to the soul; it is as intimately connected with, and inherent in, our nature, as the mysterious force which attracts them to the centre of the earth is to heavy bodies. All that the will of man can do is to direct this tendency toward some gratifications rather than toward others; but we obey them in all our resolves, even when we constrain present wants in order to enjoy a future gratification, or impose a hardship upon ourselves to escape still greater ones, or resist the temptation to a physical gratification with a view to intellectual or moral pleasure, or even when we practice the greatest possible renunciation, and deny ourselves all of this world's goods with the hope of thus obtaining a happy existence in a better world.
—Among the infinite variety of directions that may be given to our wants, some are more and some less favorable, some are more and some less opposed to the perfecting or improvement of human life. Thus, for instance, nations whose desires are too exclusively directed toward sensual gratifications, soon degenerate, because it is the nature of such gratifications to weaken the vigor and manhood of those who give themselves over to them without restraint, to degrade their affective faculties, to render them at the same time less fitted for intellectual operations, and thus to weaken the principal element of our power. But too absolute a repression of the instincts which urge us to sensual gratifications would be attended with no less pernicious results. Whether this repression be inspired by religious belief, or prompted by the idea—an idea which bears the impress rather of laziness than of philosophy—that it is better for man to stifle his wants than to have to produce the means of satisfying them, the inevitable effect will be to degrade his most precious faculties by allowing them to remain inactive. For it is to their activity alone that we must attribute the immense development which they have acquired, a development which may be estimated by comparing the most civilized portions of the population of Europe with the tribes that have remained almost in their primitive state of barbarism.
—The science of morals point-out to us the reefs upon which our blind tendencies would wreck us; its duty is to show us as clearly as possible the good or evil courses which wants may take, by discovering and indicating to us all the consequences of our inclinations, whether proximate or remote. Of the many courses which these inclinations may take, there is one which will surely lead to our ruin, and others which lead as surely to the progressive improvement of humanity in every respect. It is the part of morals to tell us whither these different courses lead, in order that, while obeying the irresistible impulse of our nature to seek after well-being, we may be less exposed to losing our way.
—In the present state of science this mission of morals is scarcely even outlined, and the only real progress which we have made in this respect for over a century, is due to political economy.
—But, although political economy has thrown a great deal of light upon the consequences of some of the tendencies and habits of mankind taken collectively, its object is not so much to influence us in the direction of our wants as to enlighten us on the general means of insuring their satisfaction. It is for this reason that it takes these wants as they are, and recognizes utility in everything which they cause us to seek, without stopping to examine whether they are rational or not. Those who find fault with it for proceeding in this manner, do not realize that it could not act otherwise without extending its field of investigation beyond measure; that it could not furnish suitable rules to guide us in the choice of our satisfactions, and in the development of our inclinations and tastes, without creating out of whole cloth a science which does not exist. The principles of political economy are in every way independent of the direction our wants take, and they will be none the less true and useful when the progress of morality shall have made the general wants of man better understood, and more strictly conformable to well-being and the perfection of life than they are at present. The natural laws of production, distribution and consumption of the objects of our wants remain the same, no matter what the nature of the satisfactions which these objects procure, and independently of the favorable or injurious results which the habit of these gratifications may have upon individuals and nations. It is with the principles of political economy as with those of mechanics: they remain the same whether applied to the creation of an implement of warfare—an instrument of death and destruction—or suggesting rules for the better employment of the forces employed in the production of means of subsistence. Thus, for instance, the principles of political economy are as well adapted to point out to the savages of North America the general means of obtaining abundantly the alcoholic wants which degrade and kill them, as they are to enlighten civilized nations upon the social conditions most favorable to the increase and diffusion of all that can contribute to the improvement of physical life and of the intellect.
—It is nevertheless true that the progress of morality, without changing anything in the principles of political economy, must aid in rendering the application of those principles more profitable; and the realization of this truth has led most economists to some extent into the domain of morals, while they were seeking to measure the relative extent and merit of different classes of wants, while they were combating the errors and prejudices which favor luxurious and purely frivolous expenses, and condemning those which tend to enervate and degrade nations.
—The wants of nations are never a fixed quantity, they are constantly varying and generally progressive; but they are endowed with such elasticity, even in what concerns food, that experience has frequently shown that great variations may occur in their yearly alimentary production without exercising any proportionate influence upon the number of the population, that the population may increase without an equivalent increase in the quantity of products, and that an increase of general production may coincide with the stationary state of the population. In this latter case the wants of each are more fully satisfied; in the former cases they are necessarily restricted, and there is, consequently, more suffering.
John Joseph Lalor, Cyclopaedia of Political Science, Political Economy, and of the Political History of the United States by the best American and European Authors, ed. John J. Lalor (New York: Maynard, Merrill, & Co., 1899). Vol 3 Oath - Zollverein Chapter: WEALTH.
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WEALTH. In the most ordinary acceptation of the term, the word wealth indicates, and always indicated, especially when it was applied almost exclusively to the precious metals, things having an exchangeable value; but the greater part of economists have applied it to all useful things, even to those which are entirely devoid of such value; but it is always inconvenient in scientific nomenclature to designate by the same word, things which differ by essential characteristics, for such designation invariably causes confusion and misunderstandings. It might easily be shown that a great part of the discussions to which some of the principles of political economy have given rise, was due only to the two-fold meaning given to the words wealth and value, which made them designate both gratuitous utility, that is to say, a utility acquired without cost or labor, and powerless to obtain anything by way of exchange, and the utility obtained by means of labor, and possessed of an exchangeable value. It will, therefore, be of interest to inquire whether the nomenclature of politico-economical science would not be rendered clearer and more precise if it were once well understood that the words wealth and value designated only utilities of this last kind, and this is what we shall attempt to demonstrate. But we must first point out the difficulties which result from the two-fold scientific meaning given to these two words, or the lack of precision in the meaning given to each in the definitions of them by the principal economists. The intimate correlation of these two words, and of the ideas which they awaken, will not allow us to treat of wealth without at the same time treating of value; we will, however, as far as possible confine our observations on the latter word to what is necessary in order to elucidate the question of nomenclature which we are considering: the other questions relating to the subject are considered in the article on VALUE.—"Every man is rich or poor," says Adam Smith, "according to the degree in which he can afford to enjoy the necessaries, conveniences and amusements of human life. But after the division of labor has once thoroughly taken place, it is but a very small part of these with which a man's own labor can supply him. The far greater part of them he must derive from the labor of other people; and he must be rich or poor according to the quantity of that labor which he can command or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labor which it enables him to purchase or command." ("Wealth of Nations," book i., chap. 5.)
—From this we see that Adam Smith at first seems to consider everything useful as wealth, but afterward restricts the qualification to things which have an exchangeable value. "The word value." he says elsewhere, "it is to be observed, has two different meanings; it sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called value in use, and the other value in exchange. The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water; but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use, but a very great quantity of other goods may frequently be had in exchange for it." ("Wealth of Nations," book i., chap. 4.) Here we have the word value used to express both gratuitous utility and utility which brings a price.—"Everybody knows," says J. B. Say, "that things have sometimes a value in use very different from their value in exchange; that common water, for example, has scarcely any value, although very necessary, while a diamond has a very great value in exchange, although of very little service; but it is evident that the value of water is a part of our natural wealth, which does not belong to the domain of political economy, and that the value of the diamond forms a part of our social wealth, which is the only wealth within the province of the science. The word exchangeable is always indispensable, and included in the values with which political economy is concerned; it is unnecessary to repeat it continually, for it is always understood." (Cours Complet, t. i., p. 74.) And again he says, "The value which constitutes wealth is not the arbitrary value which a person attaches to a thing he possesses, and which is purely relative to his particular wants; it is the value given by industry and appreciated by the public." (Ibid., p. 306.) Thus J. B. Say understood by value and wealth only what possesses an exchangeable value, and it was probably only by the example of Smith that he was induced to give to gratuitous utility the name of value in use (valeur d'utilité), or natural wealth.
—Ricardo fully admits the distinction established by Smith between value in use and value in exchange ("The Principles of Political Economy in Taxation," ch. i.); however, in a letter to J. B. Say he maintains that we ought to give the name of wealth only to the things which have an exchangeable value (Œuvres diverses de, J. B. Say. p. 410). In turn J. B. Say writes him: "I can not admit what you and Adam Smith are pleased to call value in use: what is value in use, if it is not utility pure and simple? The word utility is therefore sufficient." (Ibid., p. 409.) This remark is well grounded, and that of Ricardo is not less so.
—M'Culloch recognizes that the double meaning given to the two words value and wealth has not always been clearly perceived, and that at often becomes a cause of confusion and errors hence, from the very beginning of his book, he makes it a rule to use the word value to signify only exchangeable value, and the word wealth only to specify products susceptible of appropriation, and which are obtained only by the use of human labor, and which consequently are not gratuitously acquired, but are possessed of an exchangeable value.—"When exchanges are introduced," says Storch, "the useful things or the values which we possess may serve us in two different ways: first, directly, when we employ them in our own use, and then indirectly, when we exchange them for other values. Thus, therefore, the utility of things is either direct or indirect, and so with their value. Notwithstanding the difference of expression, this distinction is the same as that established by Smith, for Storch includes gratuitous utility in direct value.—"What is value? what is wealth?" asks Rossi. "If common sense answers these questions easily, the books answer them in so many different ways that the critics have reason to assert they have not been answered at all. Once more, value is the expression of the relation which exists between the wants of man and things. Wealth is a generic term which embraces all the objects in which this relation is verified. Every object that can satisfy a human want possesses a value. The object itself is wealth. Thus value and wealth, without being synonymous, are two expressions necessarily correlative. Value is the relation; wealth is the aggregate of all the objects in which this relation is realized. This is what common sense tells us, and science has no right to depart from common sense."
—It is quite evident that Rossi confounds here, as in other parts of his course of political economy, the words value, utility, etc. It is to be regretted, that, after having pretended that the books did not at all answer the questions which he propounded, he himself answers them much more imperfectly than those who preceded him. But the confusion which prevented him from forming an exact idea of value is due to the fact that he admitted, with Smith, a value in use, which is nothing else than utility, and a value in exchange, which is the sole value.
—Frederick Bastiat distinguished perfectly utility from value: utility is what may be called the expression of the relation which exists between the wants of man and things. Value, indeed, supposes utility, but admits of still other characteristics. Bastiat distinguishes gratuitous utility, that is, the utility we enjoy without labor or previous effort, such as the light of the sun, from onerous utility, which is acquired only after a service done. To procure this latter utility we must first overcome a difficulty which stands between the want and its satisfaction; we obtain it by means of the effort or service which by rendering utility onerous prevents it from being transmitted for nothing, and gives rise to value. Exchangeable value is the only value he recognizes; and he clearly demonstrates that the idea which this word expresses must be the result of exchange, and was introduced into the world when two men for the first time agreed to exchange their services or the results of their services. (Harmonies Économiques, p. 170, etc.)
—But Bastiat held that the word wealth should be applied to gratuitous utility only. He distinguishes two kinds of wealth: effective wealth, which comprises all utilities, whether obtained gratuitously or with the assistance of human effort; and relative wealth, which consists exclusively of onerous utilities or utilities which have a price. The more gratuitous utilities increase by the progress of industry, the more effective wealth do nations or the whole human race possess. But the relative wealth of an individual, a family, or a limited agglomeration of individuals, depends upon the amount of values which it possesses, provided the share of the mass of existing wealth, which they can obtain by way of exchange, is proportioned to the sum of these values.
—If we had to distinguish in political economy two kinds of wealth, we would rather admit the distinction made by J. B. Say, between natural wealth and social wealth, than that proposed by Bastiat, as the former seems to us much more exact; but how can Bastiat, who has so ably proved that exchangeable value is the only value, admit wealth without value? An examination of his motives seems worthy of attention, and we hope it will afford us an opportunity of elucidating one of the difficult points of political economy.
—The "science of political economy," he says, "concerns itself with the general welfare of men, with the proportion which exists between their efforts and their satisfactions, a proportion which modifies to advantage the progressive participation of gratuitous utility in the work of production. The science can not, therefore, exclude this element from the idea of wealth. We may conceive two nations, one of which has more satisfactions than the other; but it has fewer values because nature has favored it, and because it meets with fewer obstacles: which is the richer of the two? Nay more, let us take the same people at two different epochs: the obstacles which it has to overcome are the same, but to-day it surmounts them with such facility (it effects, for instance, the transportation of its merchandise, carries on its labor and manufactures with so little effort) that values are, in consequence, considerably reduced. It may therefore adopt either of these two courses, remain content with the same satisfactions as formerly, and turn its progress into leisure. Can its wealth in this case be said to be retrograde, because that wealth possesses less value? Or it may devote its unemployed efforts to increase its enjoyments. In this latter case can we conclude that because the sum of the values of that people has remained stationary, its wealth has remained stationary also? This is a momentous question for political economy. Should it measure wealth by the satisfactions realized or by the values created?" (Harmonies Économiques, p. 234.)
—This is really a very specious argument, and one which, if we are not mistaken, will appear unanswerable to many economists; and yet we believe we can show that all this argumentation is based upon an incomplete notion of value, and forgetfulness of some of its essential characteristics. The question is an important one. Is it true, as Bastiat asserts, that a people who by its progress in industry is enabled to procure the same satisfactions as formerly with less labor, thereby reduce the sum of these values? Or is it true that the latter remain stationary, if this same people, continuing to work as much as formerly, obtain more products? Let us see.
—How is the value of a product, of a service, or of an aggregate of products and services, measured? By the quantity of all other objects having a price which they enable one to obtain in exchange for them. This is an axiom of political economy which has never been contested.
—Let us now suppose that a people has, without greater effort or more human labor than formerly, succeeded in doubling the quantity of the products of all kinds which minister to its wants: we are told that then the value of these products, although their quantity has been doubled, has not been increased; but what is there to base such an assertion on? How is the value of the products measured before and after the doubling? If we measure it as we should do, by the quantity of all objects having a price which each class of products enables us to obtain in exchange, we shall inevitably find that in doubling the quantity of all the products we have likewise doubled their total value, since each class of products can be exchanged against a double quantity of all the others. But it is said that this double quantity will have no greater value than the single quantity had before. How is this possible? We ask again, what is there to base such an assertion on? Since the value of an object can not be better measured than by the quantity of all other objects having a price which can be obtained in exchange for it, is it not plain that a class of products, which, because it has been doubled at the same time that all others have been doubled, enables us to obtain, in exchange, the double of the latter, has doubled in value as well as in quantity? What misleads the mind, and prevents the clear apprehension of this truth, is that value is confounded with price, and it is very true, that if the quantity of money did not increase during this doubling of the other products, the price of the latter might have sunk one-half or nearly one-half; but what clearly proves that it is not their value which is sunk, is that if we suppose the quantity of money to have doubled in the same time as the quantity of all the other products, we shall see that the price of these latter, taken as a whole, must have doubled likewise.
—What next hinders the conception and acceptation of the truth we have just stated, is, that many economists continue to suppose, with Adam Smith, that the value of products is measured by the quantity of human labor employed in their creation—an incorrect notion, which has led to many errors, and which prevents those who adhere to it from recognizing the fact that value may be increased without increasing the amount of labor.
—But the greatest obstacle to a proper appreciation of the question we are considering is, in the first place, that it is too easily forgotten that value is a quality essentially relative, which can not vary in one object without varying at the same time, and in an inverse sense in all others; so that if sugar or wheat falls in value, all other products necessarily rise relatively to wheat or sugar, and that if iron or meat rise in value all other products fall in value relatively to meat or iron; and in the second place, that in considering the value of products the value of the unit is confounded with that of the class, and that when the fall in the value of the unit is observed, that fall is attributed to the entire class, and it is not remarked that the decline is compensated for, and often more than compensated for, by the increase in the quantity, as will appear from the following. It is noticed, for instance, that the use of the knitting machine enables us to produce a pair of stockings with half the labor or cost of production that was needed to produce the same pair of stockings when knit by hand; it is said that the value of the stockings has fallen one-half, and this is true so far as the unit is concerned; but is it equally true that the total value of the production of stockings has been reduced by half, since the introduction of the knitting machine? By no means, and it is very probable, on the contrary, that it has more than doubled; the same is true of the production of books compared with that of manuscripts; of the manufacture of thread by machinery, compared with its production by the wheel or spindle: of transportation furnished by the locomotive, compared with that afforded by the peddler. In these different classes of production, the unit has considerably fallen in value, but the entire class represents a value incomparably greater than that which it possessed before the fall. The value of the unit of products has been more or less reduced in Europe since the beginning of the fifteenth century in many other branches of production, but there is probably not a single one which in the aggregate does not furnish a sum of values much greater than it was before that reduction. The value of products taken en masse is therefore far from being lessened by the effect of industrial progress, what men detract from the value of the unit, they far more than restore by the increase of the quantity. This evidently escaped Bastiat in the passage which we have quoted. He believed that a like quantity of labor could never produce anything but a like sum of values, and that the only result of industrial progress was to increase gratuitous utility: it is, however, very certain that industrial progress increases at the same time utility, which has a price; for nobody, surely, would hesitate to acknowledge that the most industrious peoples are also the richest in exchangeable values Bastiat was imbued with the idea that values would go on constantly decreasing from the effect of industrial progress: this may be admitted in the case of various classes of products so far as the unit is concerned; but, so far as the class or the mass of products is concerned, the effect of this progress up to the present time has been to increase its value considerably, and there is nothing which authorizes us to think that it will be otherwise in the future.
—This is not, therefore, so momentous a question as Bastiat imagined it to be; it may be boldly affirmed that wealth consists of objects possessed of exchangeable value, and that it is proportioned to the sum of those values, measured as it should be.
—Although we realize how tiresome such discussions are to the mind, the desire to render them henceforth entirely superfluous by elucidating as clearly as possible the questions with which they are concerned, induces us to beg the reader's attention a few moments longer.
—J. B. Say regarded, as one of the greatest difficulties of political economy, the solution of the question: As the value of things possessed is what constitutes wealth, why is it, that, the lower prices are in a country, the richer that country is? The question, it seems to us, is not here put in its true terms; for it would be difficult to show that the countries in which products have the lowest prices are always the richest. In certain large countries, as, for example, in Poland, or in certain provinces of Russia, in America, and Hindostan, the principal products (cereals, meat, wood, wool, leather, etc.) are lower in price than anywhere else; and yet these countries can not by any means be reckoned among the richest. It seems evident to us that the problem which the illustrious French economist meant to propound is this: "Wealth being made up of the value of things possessed, how can a nation grow wealthy in proportion as it succeeds in lowering the value of its products by reducing the cost of their production?" J. B. Say answers, that the productive stock of such a nation has then more value, since the services which it furnishes are exchanged for a greater quantity of objects of every kind having a price; but this solution is incomplete, for it does not explain why the wealth produced (and no longer the power of producing) is greater in the country in which the progress of industry has reduced the cost of production, and the value of the different species of products, most.
—To give a complete solution to this question, we must recall, first, that value is an essentially relative quality, and then all that we have said above. It results from this that the lowering of value brought about by industrial progress, in the unit of a class of products, does not diminish the value of the entire class, because it is at the very least compensated for by the increase in the quantity produced, while it increases proportionately the value of all other products relatively to that in which it has become manifest, because it allows these to be exchanged for a larger quantity of the products whose value has fallen.
—We repeat, therefore: on the one hand, there is no reduction in the value of the class of products in which the fall has occurred, the increase in the quantity at least compensating therefor; on the other hand, this fall gives a superadded value to all other classes of products. Is not the final result, therefore, an increase in the sum of values? Thus a fall in the value in the unit of one class of products, may be perfectly reconciled with the increase of sum total of values or wealth.
—This shows why we were able to prove, as we did above, that the doubling of the quantity of all the products obtained without an increase of cost or effort, would necessarily double the sum of their total value, since each class of products would then obtain in exchange a double quantity of all the others.
—What precedes seems to us to have provided sufficiently for the solution of the question of nomenclature which we proposed to ourselves. The quality which renders things capable of satisfying our wants, is called utility. There are utilities like the air we breathe, or the light of the stars, which apply themselves to our wants, without requiring the least preparation or previous effort on our part; moreover, they are not susceptible of private or exclusive appropriation, being equally at the disposal of all. We agree with Bastiat, in classing all the utilities of this sort under the denomination of gratuitous utility. Others can not be applied to our wants except after some service performed by us; they become the property of those who have furnished that service, and they are endowed with a quality which enables their possessor to obtain other utilities of the same class, but of varied species, when he wishes to exchange them. This is the quality which is expressed by the word value. This class of utilities may be comprised under the general term of utility having a price.
—Value exists only by labor and exchange; the value of any particular object is measured, not by the quantity of labor employed in producing it, but by the quantity of all the other objects having a price which can be obtained in exchange for it.
—It is only the utility which has a price that constitutes wealth. The only politico-economical difference between the words wealth and value is, that the latter designates a quality, as Rossi has remarked, while the word wealth indicates the object in which that quality resides.
—There is no value but exchangeable value: what many economists have called value in use is only utility. For an object to possess an exchangeable value, it is not indispensable, as Rossi supposes, that it be in circulation, that is to say, offered in exchange; it suffices that it be recognized to have some value if it be offered for sale; thus public monuments, or the clothes we wear, although they are not offered in exchange, still possess an exchangeable value.
—There is no wealth but that which consists in objects possessing utility having a price. What J. B. Say calls natural wealth is only gratuitous utility.
—When industrial progress enables us without more labor or effort to obtain greater quantities of objects that possess utility having a price, no fall in the sum of values takes place in consequence; for the reduction in value of the unit of the product in which that progress is realized, is immediately compensated for by the additional value acquired, relatively to this object, by all the other products for which it may be exchanged. On the contrary, the result is that the sum of values is increased proportionately to the surplus obtained in the quantity of products; this we think we have fully demonstrated.
—Wealth, therefore, is really proportionate to the sum total of values, and this sum is itself proportionate to the quantity of products of all kinds, and, consequently, to the amount of gratifications we are able to procure.
—The progress of industry, the increase of our power over natural agents, have not, therefore, as Bastiat supposes, the effect of reducing the sum of the utility which has a price. On the contrary, that progress increases it in proportion as it enables us to increase the objects which possess that utility. And this is the reason why the nations whose industry has made most progress are also the wealthiest, in the only legitimate sense of the word, the wealthiest in the utility which has a price in exchangeable wealth.
—Every reduction in the cost of production, and in the value of the unit of any class of products, is none the less a benefit of that industrial progress; but it is a benefit only because it increases the units of that class, and because it gives an additional value to all the other products.
—It seems to us that our propositions relating to the fixing of the meaning of the words value and wealth are sufficiently demonstrated.