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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, Gustave de Molinari (1819-1912), and Léon Faucher.
The Say family was an important liberal family in 19th century France which helped to develop and spread classical liberal and free market ideas. The family was made up of Jean-Baptiste Say (1767-1832) the economist, Horace Émile Say (1794-1860) the businessman and activist, and Léon Say (1826-96) the businessman and politician. Their lives spanned nearly 130 years covering the major events of the Revolution, the empire of Napoleon, the empire of Napoleon III, and the Third Republic.
Jean-Baptiste Say (1767-1832) was the leading French political economist in the first third of the nineteenth century. Before becoming an academic political economist quite late in life, Say apprenticed in a commercial office, working for a life insurance company; he also worked as a journalist, soldier, politician, cotton manufacturer, and writer. During the revolution he worked on the journal of the idéologues, La Décade philosophique, littéraire, et politique, for which he wrote articles on political economy from 1794 to 1799. In 1814 he was asked by the government to travel to England on a fact-finding mission to discover the secret of English economic growth and to report on the impact of the revolutionary wars on the British economy. His book De l’Angleterre et des Anglais (1815) was the result. After the defeat of Napoleon and the restoration of the Bourbon monarchy, Say was appointed to teach economics in Paris, first at the Athénée, then as a chair in “industrial economics” at the Conservatoire national des arts et métiers, and finally the first chair in political economy at the Collège de France. Say is best known for his Traité d’économie politique (1803), which went through many editions (and revisions) during his lifetime. One of his last major works, the Cours complet d’économie politique pratique (1828-33), was an attempt to broaden the scope of political economy, away from the preoccupation with the production of wealth, by examining the moral, political, and sociological requirements of a free society and how they interrelated with the study of political economy.
Horace Émile Say (1794-1860) was the son of Jean-Baptiste Say. Married Anne Cheuvreux, sister of Casimir Cheuvreux, whose family were friends of Bastiat. Say was a businessman and traveled in 1813 to the United States and Brazil. A result of his trip was Historie des relations commerciales entre la France et le Brésil (1839). He became president of the Chamber of Commerce of Paris in 1834, became a councillor of state (1849-51), and headed an important inquiry into the state of industry in the Paris region (1848-51). Say was also very active in liberal circles, participating in the foundation of the Société d’économie politique, the Guillaumin publishing firm, the Journal des économistes, the Journal du commerce; and was an important collaborator in the creation of the Dictionnaire de l’économe politique and the Dictionaire du commerce et des marchandises. In 1857 he was nominated to the Académie des sciences morales et politiques but died before he could join it formally.
Léon Say (1826-96) was a son of Horace Say and had a career as a banker and administrator of the Chemin de fer du nord. Say wrote a number of articles for the Jouural des débats and was a prominent popularizer of free trade and other economic issues. After 1871 he had a distinguished political career as a deputy for La Seine and then as minister of finance in the Third Republic, where he pursued policies of reducing taxation, deregulating internal trade, and opposing the Méline Tariff. In 1880 he was appointed ambassador to England. Say was elected to the Académie des sciences morales et politiques and also to the Académie française. He was a key editor of and contributor to the Nouveau dictionnaire d’économie politique (1891–92). Many of his writings on finance can be found in Les Finances de la France sous la troisième république (1898-1901).
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: AGIOTAGE
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AGIOTAGE. Commercial speculation is useful to society. Agiotage (stock-jobbing) is harmful to it. Besides, it is always contrary to good morals. Speculation takes its natural course and develops in free and peaceful countries; stock-jobbing is never so active as in times of calamity and national trouble. Speculation is a regular operation; stock-jobbing is a game in which the players cherish the purpose of cheating, if need be. Speculation is an investment of capital intelligently made by the purchase of commodities, etc., at a low price, with the intention of selling them afterward when the price rises; the difference in the prices covers the expense of keeping the goods, the interest on the capital employed, and the profit of the speculator. By the first operation speculation prevents the fall of prices to a degree which would be fatal to producers; by the second it stops an excessive rise which would be disadvantageous to consumers. In stock-jobbing, on the contrary, the purchase is made with the intent of selling as soon as possible. Most frequently a bargain is made on time in order not to-employ capital. There is not the least intention of receiving the thing bought. Again, a sale is made with a promise to deliver a thing not possessed and which the seller has no idea of acquiring. It is calculated in the interval to effect payment by a contrary operation at prices whose difference would be a profit. Fortuitous circumstances are depended on to bring about this result; also the chances of the harvest, the effect of good or bad news which is invented and spread abroad as needed. The stock-jobber, in a word, bases his profit only on a loss which he causes others. When his operation is over, no service is rendered, no value produced. What is produced is a simple transfer of wealth, while a heavy blow is struck at public morality.
—As the passion for play is one of the infirmities natural to man, stock-jobbing does not fail to increase whenever circumstances produce great or rapid changes in the prices of things. Men do not fail at such times to gamble in bonds, stocks and merchandise. According to the times, stock-jobbing has been directed to the shares of the India company, Mississippi lands, the assignats, French national property, building lots in cities, shares in industrial enterprises of every kind, the working of mines, the draining of swamps, canal or railroad enterprises, Marseilles soap, oil, coffee, sugar, bread, etc.
—If it were desired to write the history of stock-jobbing, the year 1719 would occupy a large place in it. Law's system reached its highest point of development at that time; intoxication was at its height; everyone thought to make a fortune by what was called in France dealing in paper (le commerce des papiers.) For those who were skillful enough and realized on the paper in time, it became positive wealth; but disenchantment and ruin overtook all others; and in the month of December, of the same year, a rapid fall of values set in.
—In view of the deficit and financial embarrassments of every kind left by Louis XIV., the regent, after having had recourse to the ordinary expedients of loans, the selling of favors and adulterating money, listened to the suggestions of Law. Educated, skillful, enthusiastic, Law, who had not been able to succeed in Scotland, his native country, was none the less convinced himself of the soundness and practicability of all his financial views. According to him, wealth is greater in proportion as the chief instrument of exchange becomes more abundant, and the banknote above all is useful, in this, that it lends itself to as rapid an increase as possible of the representative sign. But as the sovereign power of the state alone gives value to money, the bank note, in order to keep its value, should rest on the state. To gain this support, a bank should accept the obligations of the state, as capable of forming an important part of its capital. On the other hand, it was necessary that the bank should be a joint stock institution, and in order to attract shareholders, it was necessary to offer them the bait of commercial profits, by obtaining the concession of certain great privileges. The system had thus as its essential elements bank notes and shares of stock.
—Law obtained, May 2, 1716, the privilege of founding a private bank, for which the capital might be subscribed, three-fourths payable in state paper. The following year he obtained a decision that the notes issued by the bank should be received as cash by the State. Nevertheless the success of the scheme was far from remarkable; the shares were below par, and it became necessary to lend them some new attraction. Commerce with distant countries was carried on in those days by privileged companies, and there was in a monopoly of this kind to be found all the chances fitted to awaken hope in the minds of men. Law was permitted to succeed Crozat in the right of developing the commerce of Louisiana and the beaver trade of Canada. Consequently his bank founded the Occidental Company. When we to-day see the degree of wealth of the vast country drained by the Mississippi, and the present splendor of New Orleans, we can easily understand what were the illusions of the people who were promised that the development of this part of the globe would be carried on for their benefit.
—The director of these enterprises governed at the same time the finances of the state. The general bank soon became a royal bank. To the monopoly of the commerce of the west was added the monopoly of the commerce of China and the Indies. The Occidental Company, which besides had acquired the lease of the fermes générales, and also the monopoly of commerce with Senegal, finally assumed the title of the India Company. Every transformation was followed by the issue of new stock. The wish to use the state notes, which were depreciated, attracted shareholders at first, then the habit of trading in stock commenced to take root. Stock-jobbing did the rest. Law excited it by every means in his power, and at the beginning of 1719 he inaugurated the margin market, by buying at par 200 shares of the Occidental Company, paying 40,000 livres on account of 100,000 livres which represented their value, and consenting to lose the earnest money thus given, should he not fulfill his engagement within a fixed time.
—The centre of operations was in Rue Quincampoix, occupied then by bankers and money changers. The report of sudden fortunes made in this place attracted the crowd to it. Operations soon reached dimensions which would appear fabulous even to-day. The gutter of this street was called the Mississippi, and anecdotes abound concerning the strange incidents which happened in those places. It is related that a hunchback made a fortune by letting out his hump to serve as a desk on which to sign contracts.
—The first shares had for a long time failed to reach par, 500 livres. The new ones, with the same nominal value, were issued at 5,000 livres. At the end of November, 1719, they were sold at forty times their nominal value. During this time, paper money was increased imprudently, and the moment of the crash drew near. The most adroit stock-jobbers commenced to retire first. They kept up prices as long as they could, in order to have time to change the fictitious values which they held for real values; but the bulk of the public, composed of simple people and bungling speculators, supported the whole weight of the bankruptcy.
—Since that time stock-jobbing has not again appeared with that ensemble of characteristics which lent it, for a time, an effect truly dramatic. Operations have been more varied; stock gambling has become in some degree regulated, by division and by spending itself on objects of different kinds. State paper has furnished it its most constant and most regular food. Representative governments have been obliged to keep their accounts in public and to give up the precarious resource, left to absolute monarchies, of adulterating money. It was easy to make it a principle that the national honor is bound to the punctual payment of debts contracted in the name of the country. In this way, public credit has been developed; but, with this system, expenses have increased in gigantic proportions, loan has succeeded loan, and the public debt of every state has saddled the future with a heavy burden of interest.
—In order to facilitate the circulation of loans, they established the non-distinction of origin of debts in entering them in the state ledger. State bonds were exempt from seizure by attachment against the owner. Markets were opened at which daily sales were made at auction and for cash; but, above all, the passion for gambling was excited by special privileges reserved to the brokers. Real operations served as a cloak to a much greater number of fictitious ones, and the confusion of transactions of different kinds was so great, that in sales on time, some of which, no doubt, were very legitimate, it was difficult to discover which were the mere result of stock-jobbing. The number and nature of transactions were therefore multiplied.
—At different times, especially in 1827 and 1828, there was veritable stock-jobbing in building lots in Paris. Peace, and commercial prosperity which resulted from it, increased the population With greater prosperity every one sought to obtain better lodgings, cleaner, better situated, better ventilated: whence the necessity of new buildings. Speculation sought the best investments, and when a happy choice had been made, the sale was attended by a large profit. Hence large pieces of land were sought for, in spaces where new wards could be opened, or new streets laid out. So far the transaction was quite legitimate. It was not always so, however, with the means employed to obtain purchasers for the land and raise the price of the lots. For this the ordinary tricks of jobbing were put in play. One of the means employed, with disastrous consequences to many people, was to build houses in many parts of the new ward without spending a cent. For this purpose the speculator, who had bought all the land, selected a lot desirably situated for a residence for himself. He had plans made by an architect. Then he called in contractors of masonry and carpentry, blacksmiths, joiners, roofers, glaziers and painters. He asked each contractor to undertake his part of the building in consideration of pay in land in the same ward, worth more than the work to be done, and at prices which stock-jobbing had raised greatly. Many sub-contractors allowed themselves to be taken by the bait, proud of thus becoming land owners. They commenced to build houses on their own lots, giving their own services for the lots. One returned in carpentry the value which he received in masonry, another in roofing what he received in lock-smithing, and so on to the end of the chapter. But the speculation did not always succeed. The ground was sold at too high a price; the apartments were rarely rented, and the houses still more rarely sold. All this work was accomplished only by delivery of materials by dealers in timber, iron, plaster, stone, paints, materials of every kind. These dealers prosecuted the sub-contractors, and the latter demanded the sale of the houses constructed by them. A settlement was generally effected at a low price. The original speculator became the purchaser, and thus found himself possessor of lots covered with houses, without other expense to himself than the original payment for the bare ground on which he had conceived the ingenious idea of laying out streets. Let this suffice as an example.
—The chances of gambling will, doubtless, have at all times a great attraction for many people; and it will be difficult to abolish stock-jobbing altogether; but it is beyond doubt that the principal remedy for the evil is found, in this as in many other things, in complete liberty. What is needed after this is a repressive law, clearly defining all kinds of fraud, and competent to reach them. There is still another remedy of real efficacy, but which, it appears, our modern legislators will not give us so soon. It is necessary to stop the enormous public expenses, annual deficits, loans which alienate the future, and consume the savings of the present. Then there would be no further need of the aid of those who subscribe to, and negotiate public loans, and there would no longer be any interest in protecting stock-jobbery. (See PRODUCTS ON PAPER, CHAMBER OF COMMERCE). Consult, upon this subject, J. B. Say, Cours complet, 2e ed., t. II., ch. 16, de l'agiotage. (Collect, des princip. Econom.)
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: CLIENTÈLE AND CUSTOM
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CLIENTÈLE AND CUSTOM. The word clientèle is used to designate a number of persons having confidential relations with a counselor, an attorney, a notary, or a physician. A clientèle may be considered capital. It grows gradually by industry, and once obtained, it yields, to speak in the language of political economy, a certain product.
—The counselor, for instance, endeavors to extend his acquaintance by writing good works on law. He pleads in the courts, and strives to convince those who may need his services, of his merits. As soon as he is retained in a case he devotes to it all his attention, studies it with care, and if he displays talent in pleading it, he secures a client, that is, a person who has confidence in him and will always return to him in case of need. One client brings another, the lawyer's name becomes known, his fame spreads, a greater number of people intrust their business to him, and thus his clientèle is formed. From that time he possesses an amount of capital, so to speak, which he can use and which repays him for all his past trouble, with interest. It is true that he can not convey it to another, for he alone can use the labor he has, as we may say, saved. But he can turn it to account, and this fact proves its value. The young lawyer whom another and older one has trained to the bar, and to whom he intrusts the simple cases which he has no time to attend to himself, who will perhaps succeed his teacher in public favor, and is perhaps as diligent and painstaking, has, let us suppose, the same talent and eloquence. What he has less than his teacher is a clientèle.
—In like manner, and by hard work, a physician or a surgeon makes a name for himself. He serves in the hospitals, and devotes himself to the care of the sick during epidemics. He gradually inspires confidence and obtains a clientèle. What has he more than another who has just commenced his career, and has the same learning and skill? A clientèle.
—A clientèle in any form, whether transferable or not, is the result of an accumulation of services rendered, of labor past. It is capital. Like all other capital, but in a greater degree, this kind of capital tends to extinction by inaction. To maintain it in its full value, it is necessary to devote to it a large share of the care which was taken to form it. Otherwise, clients depart one after another; confidence is lost; the name of the lawyer or physician relapses into obscurity, and the clientèle is gone.
—Custom is, in commercial and industrial pursuits, what clientèle is to the liberal professions. The custom of a store or shop is the aggregate of those who patronize it. In such custom there is a value which the manufacturer, for instance, has created by unremitting work, and by a long course of honesty. The public has confidence in him, and goes to him. If a merchant sells out his business he will be paid not only for the value of the material, the stock and the fixtures, but for something more, for his custom. The value of this custom is sometimes considerable, though very uncertain. The patronage of a business always depends upon real merit. It arises from favorable location, good faith and low prices. Although more easily preserved than acquired, it must always be deserved.
—To resume: Clientèle and custom are capital, since those who possess them derive from them a revenue which other persons of equal talent can not obtain without a clientèle or custom. Besides, in many cases, the value of this capital may be so exactly determined that it may be purchased for a definite sum.
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: DIVISION OF LABOR
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DIVISION OF LABOR. The division of employments is a natural consequence of the life of man in society. It is, moreover, an element of productive power and of intellectual development. In the infancy of society each individual, each family, manufactures with difficulty and in an imperfect manner the objects it needs; the wisest, the old man of the tribe, preserves in his head the treasure, as yet very meagre, of acquired knowledge, which he endeavors to transmit by word of mouth to those who are to survive him. But as tribes grow larger, and improve, they come to sanction and maintain the right of the individual property of each man in the fruit of his labor; they come to understand the utility of exchanges freely consented to; and henceforth each man can devote himself to the special occupation for which he feels himself peculiarly fitted. He achieves greater results in the branch of labor to which he thus devotes himself, and produces more than is personally necessary to him; he lacks, on the other hand, everything that his individual labor is unable to supply, and exchange provides him with the means of establishing an equilibrium between what he produces himself and what he wants but can not produce; he gives his surplus in return for what he requires, and thus barters the services which he renders for those which he himself has occasion for.
—When nations become greater and more enlightened, the division of labor becomes more marked. Certain individuals now devote themselves to hunting, to fishing, to the cultivation of the soil, others to manufactures: others there are again who devote themselves exclusively to the culture of the mind: these latter discover the laws of nature which God has placed at the service of man, whom he has charged to discover them and turn them to useful account. Thus they effectively help in the production of the wealth, upon the aggregate of which society subsists.
—In each branch of production the division of labor tends to extend and multiply; farming adapts itself to the nature of the soil, and to the atmospheric condition of the land; in one place cereals are grown, in another the vine, in another cattle are raised: and these various products are afterward exchanged, one for another or for manufactured articles.
—In the industries which convert raw material into manufactured products, the division of employments is soon pushed further still. One man becomes an iron worker; another hews wood; others still are weavers and cotton spinners.
—To facilitate exchanges, yet another great industry is developed, namely, that which undertakes to place all products within the reach of the consumer, either by carrying them from one place to another, or by the simple division, on the spot, of the merchandise into quantities proportioned to individual wants: this is commerce. Here, too, division of employments soon takes place; the same merchants do not engage in sea, land and river transportation; the same merchant does not sell groceries, hardware and woolen goods. To facilitate commercial operations, a class of intermediary agents spring up. bankers, brokers, commission men.
—It is plain that the division of labor is both a consequence and a cause of the development of nations, and of the progress which they make in all branches of human knowledge. The division of labor tends constantly to increase, and is checked only by the limited extent of the market, that is to say, by the limitation which the wants of the population put to the possible sale of each kind of product.
—In countries, remote from cities, where agricultural operations on a large scale are carried on, those who work in the fields cultivate, too, near their cottages, vegetables for their own use; while in the neighborhood of large cities, kitchen gardeners make it their sole business to cultivate vegetables and fruit; often even they devote themselves to a single branch of gardening; there are some who make floriculture, and even the culture of a single kind of flower, a specialty.
—In villages in which consumption is limited, commercial industry does not admit of a division of labor; in such places there is often but a single shop, a grocer's, who sells sugar, coffee, candles, clothing, nails and stationery; while, on the other hand, in cities each of these branches becomes the object of a different commercial enterprise; each one of which frequently grows to an importance of great dimensions. Thus it is that in metropolitan cities huge emporiums exist for the exclusive sale of tea, candles or chocolate.
—But it is especially in manufacturing industries that the division of employments has attained the most marvelous results, and that its influence is unparalleled in the increase of the values produced. Hence, the first economists who critically examined the vast mechanism of the production of wealth were struck at once with this great phenomenon.
—Adam Smith says, in his "Inquiry into the Nature and Causes of the Wealth of Nations": "The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity and judgment with which it is anywhere directed or applied, seem to have been the effects of the division of labor." (Book i., c. 1.) And to make the full bearing of this observation understood he instances the case of the pin-maker, and shows what an immense difference there would be between the results of a man who should attempt, alone and unaided, the manufacture of pins, and those obtained in a workshop where the labor is suitably subdivided among men skilled each in a distinct branch of their manufacture. Here one draws the wire, another straightens it, a third cuts it, while a fourth points it; it is a distinct process to prepare one end to receive the head, while the head itself is the result of two or three different operations. Then the pins have to be whitened; and lastly the perforation of the paper and the wrapping up are additional and separate departments. It is thus that in the important industry of pin-making there are 18 operations, which in certain factories are the work of as many different hands. The establishment which Adam Smith visited was, as he says, small, and indifferently furnished with suitable machinery; only 10 workmen were employed, and yet it produced 48,000 pins a day, that is, an average of 4,800 apiece. In the presence of such production, and, owing to improved methods much greater to-day than when Smith wrote, how insignificant indeed would be the results of one attempting alone the manufacture of pins; scarcely would he perhaps by dint of the hardest labor make 20 in a day.
—J. B. Say has taken as his example the manufacture of playing-cards, and there is no branch of industry in which immensely greater results are not obtained from the co-operation of individual effort and the division of employments—If Adam Smith had extended his analysis, he might have shown that many other partial operations are divided among different workmen to complete that small product of human industry the value of which is so little, and which is called a pin. He might have directed attention to the work of the miner who brings to the surface of the earth the ore of copper, and to that of the miner having a different origin and habits, who, in another part of the world perhaps, has had to dig out the ore of tin necessary for alloyage and for whitening the pin. But in addition to the labor necessary to bring these metals to the requisite degree of purity, they must besides have been transported by sea and by land to the pin-maker's manufactory How many different operations divided among an infinite number of workmen have not been necessary in the mere construction of the ship employed in carrying the tin from a port of India to England! And what shall we say of the compass which has been used in guiding this vessel across the seas? What an amount of time and of observations of different kinds, by a great number of individuals, was necessary to put mankind in possession of the compass! The imagination is appalled at the extent of the research needed to exhibit all the labor which has been necessary to bring to perfection the most trifling product, in a single branch of any manufacturing industry of our day.
—To return to the consideration of the increase in productive force effected in a branch of manufactures by division of labor. Adam Smith attributes it to three causes: first, to the greater dexterity acquired by each workman in a single and often repeated act; second, to the saving of time commonly lost in passing from one kind of employment to another, and lastly, to the stimulus given to the mind concentrated upon a single purpose, to invent more rapid processes, or even machines to supplement human labor.
—Undoubtedly the first two of these causes have a great effect; the saving of time is an important consideration in industry, bearing at once on the individual labor of the workman and on the capital employed in the undertaking, the interest being less heavy the shorter the term for which the interest is borrowed.
—As to the invention of expeditious methods and of machines for supplementing human labor, division of labor certainly conduces to it, and instances can be given of more than one improvement in mechanism due to the workmen themselves, the discovery of which has permitted of economizing and replacing labor. It must at the same time be observed that it is not alone to the division of labor in workshops, that the great and numerous discoveries constantly made in the arts and sciences are due. The honor of these discoveries belongs rather to the division of labor among all classes; it is to the power that the mind can attain when devoted to one single line of study and investigation, that the greatest achievements are due, that is to say, the discovery of all the laws of nature we are acquainted with, and the combination of means to be employed to render them practically useful.
—The advantages of the division of labor in the production of wealth are, therefore, incontestable; but we must not forget to call attention to the drawbacks which may be consequences of these advantages The most glaring and one specially calculated to attract the attention of generous minds, is the effect which the restriction of a man to a single piece of work always the same and constantly repeated, may have upon his moral development. It is a melancholy thing, it has been observed, for one reaching the end of life to have to realize that his every day has been passed in making pin heads. Those who present the disadvantages of the division of labor under this dramatic form are, in part at least, unjust to humanity. Man must not be thus personified in the only work which it is his business to do; though a worker, he is one of a family; he is a citizen; in addition to the labor which he gives in exchange for the services of others of which he has need, he participates in all the advantages of the society in which he lives; he has his share in the progress made about him. In all vocations the working man has intervals of rest, and it is especially according to the use to which he turns his spare moments that man can elevate himself and come to enjoy the general advantages offered him by society. A steady and unvaried occupation does not necessarily dull the mind; and the artist who, during a year or two, grows pale over the same plate of copper or steel that he may produce a master-piece, does not live wholly amid the regular lines traced successively by his graver.
—It would, moreover, narrow the question of the division of labor to see it and to study it within the walls of a manufactory only; it is not less worthy of observation in the little work shops of a great city like Paris. There, occupations are not only apportioned among the workingmen employed, but also among a great number of petty manufacturers, each the possessor of a small capital, each conducting for himself some undertaking and affording employment to one or two workmen and an apprentice. A single little article of Parisian manufacture is thus often the result of the successive co-operation of many; for instance, the wood-work of a lady's work box is made by a cabinet maker; each separate article which goes to complete it comes from a distinct trade, that of the turner, the cutler, the engraver, etc.; while finally, another tradesman, a furnisher, having selected these different articles, fits up the inside of the box. In the manufacture of artificial flowers the division of the labor of workmen and of manufacturers into departments is carried to quite as great an extent. The manufacture of what are called the preparations for flowers is very extensive, and gives rise to important industries; there are color makers, and mould makers, those who crimp the cloth, and those who make the stamens, the seeds and other accessories, and all these different people hand over their productions to the monteurs; among these latter, again, some make buds only, others roses, and others mourning flowers, and so on. This great division of labor largely reduces the cost of production, and the article is of improved quality. It may be observed, also, that among this vast laboring class where each one's employment is so narrow, quickness of wit and intelligence is developed to a much greater extent than in vocations where work is less subdivided.
—Thus division of labor greatly facilitates and increases production; but it is at the same time a material aid to investigation and to the development of the sciences. Hence its influence is as deserving the attention of philosophers as of economists.
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: MORAL AND POLITICAL SCIENCE
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MORAL AND POLITICAL SCIENCE. J. B. Say, in the passages which we quote below, has defined the nature, object and utility of moral and political science in such a manner that there can be no need of our adding anything upon the subject.—"The general laws which constitute political and moral science exist in spite of disputes on the subject. This is so much the better for those who would discover these laws by means of judicious and continued observation, demonstrate their connection, and deduce the consequences which result from them. They flow from the very nature of things, just as certainly as the laws of the physical world; we do not imagine them, but find them; they govern the men who govern others, and can not be violated with impunity. The general laws which regulate the march of things are called principles, as soon as it is a question of applying them; that is to say, as soon as they are made use of to judge of circumstances, and serve as a rule of action. The knowledge of these principles alone insures the success of this march, which is constantly and successfully directed toward a good end."
—After defining the experimental method, the same writer adds: "The natural, physical and mathematical sciences must be the first to share the progress which method renders possible: the facts upon which they are based affect the senses more directly; it is more difficult to deny them; their investigation does not wound any interest; a man may study physics in the Austrian states without exciting the alarm either of the prince, the nobles, or the clergy. The same can not be said of moral and political science. Its study is proscribed in all countries that are governed in the interest of a few, and Napoleon prohibited it in all the institutions of France, as soon as he became all powerful. Vain effort! If moral and political science is, like other sciences, based upon realities, it shares in the progress which the human mind owes to experimental methods; but is it based upon realities? If we consult experience and repeated observations, many moral facts may acquire a certitude equal to that of many physical facts. We see them and see them repeated a thousand times; by means of analysis we know their nature, their formation and their results; we can not doubt their reality. After weighing gold and iron several times, we are convinced that gold is comparatively heavier than iron; this is an indubitable fact; but it is no less real a fact that iron is less valuable than gold. However, value is a purely moral quality and one which seems to depend upon the fleeting and changeable will of men. Nor is this all. The spectacle of the physical world presents to us a series of phenomena, linked one to another; there is no fact which has not one or several causes. All other things being equal, the same cause can not produce two different effects: the grain of corn which I plant does not produce at one time an ear of corn, at another a thistle; it always produces corn. When the land is mellowed by cultivation and fertilized by manure, the same field will, with an equally favourable season, produce more than if the land had not been treated in this way. Thus it is that like causes always produce like effects. Now, it may be readily perceived that the same is true in political economy. A fact is always the result of one or several facts which have gone before it, and are the causes of it. The events of to-day have been brought about by those of yesterday, and will exert an influence over those of to-morrow; all have been effects and will become causes, just as the grain of corn, which, being a product of last year, will produce the ear of corn of this year. To pretend that any effect whatever in either the moral or the physical would happens without a cause, is to pretend that a plant may grow without the seed having been sown; it is to suppose a miracle. Hence has originated the expression the chain of events, which proves that we regard events as links which are connected one with another.
—But what certainly have we that a fact which goes before is the cause of one which follows, and that a series of links connect these two with one another? We attribute an event which we witness to a certain circumstance that went before it; but may we not be mistaken? The circumstance that preceded the event was perhaps not the cause of it. It is because it does not know the true causes of events that the human mind seeks for supernatural causes, and has recourse to superstitious practices and charms, the use of which was so common in times of ignorance; useless and sometimes injurious practices, which always have the deplorable effect of turning men away from the only means whereby they can attain the end desired.
—A science is complete in its relations to a certain order of facts, in proportion as it is possible for us to point out the bond which unites these facts to one another, and to connect effects with their real causes. This is achieved by scrupulously studying the nature of each thing that plays any part whatever in the phenomenon which we desire to explain; the nature of things discloses to us the manner in which things act and the manner in which they support the actions of which they are the object: it shows us the relations and connections of facts one with another. Now the best way to ascertain the nature of a thing is to analyze it, to see in it everything that it contains, and nothing but what it contains.
—To produce values, we do not act upon insensible beings only, nor do we employ only material properties. We have more to do with men who have wants, desires and passions, and who are subject to the laws which are imposed upon them, some of them by their nature as men, others by society, of which they are members. To guide us in our labors all these laws must be known, and to be known they must be studied. This is the object proposed by moral and political science, whose end is to study moral and social man. These laws are very numerous in the social state, because in this state our relations with men and things are extremely numerous. This study embraces not only the laws which flow from our moral nature or our physical wants or from our means of satisfying them, but also the laws of the body politic, civil and criminal legislation.
—In speaking of the laws to which men and things are subject, note that I do not examine in virtue of what right such or such a law is imposed upon them, nor in virtue of what duty they submit to them. The fact and not the right is what we are considering here. I call law, whether in physics or in morality, every rule from whose influence we can not withdraw ourselves, without concerning myself with the question whether that rule be equitable or not, or whether it is baneful or beneficial, questions which are the object of a different study from that which we are now considering(political economy).
—The knowledge of the nature of things, moral and physical, and of the laws which flow therefrom, can be acquired only by numerous observations, repeated experiments, comparisons and combinations beyond number. All this requires profound meditation and assiduous study. The more science is extended and perfected, the longer and more difficult this study becomes; for a science extends because it comes to consist of a great number of observed relations and of a greater number of laws discovered or recalled to memory. When the branches of human knowledge are very numerous, the life of man is not long enough to learn even one single order of facts and laws, that is, one single science. A savant, therefore, is thought to have used his time and faculties well, and to have rendered sufficient service to his fellow-men, if he has thoroughly mastered a single branch of a single science. Pythagoras and Thales knew all that could be known in their time. Aristotle wrote the best books of his age on politics, morality, belles-lettres, and natural history; but if he lived in our day, not only would he have to renounce belles-lettres to study all there is to be learned of natural history, but, supposing that he wished to make himself a master of one single branch of natural history, such as botany or mineralogy, he would be obliged to limit himself to a superficial acquaintance with the other branches. To become famous in mineralogy, he would have to leave to other savants the study of animals and plants. Thus only could he hope to extend the sphere of that branch of knowledge which he had cultivated."
J. B. SAY.
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: NATURE OF THINGS
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NATURE OF THINGS. Political economy is not, as has been sometimes said and thought, a collection of arbitrary principles and maxims; it is a science founded upon the observation of the permanent laws of the very nature of things, following the experiential or inductive method, which also guides human investigations in the physical sciences. J. B. Say has expressed with his usual precision this fundamental truth, and we do not think we can do better than reproduce here what he has written upon this subject.
—The manner in which we find things, or in which they happen, constitutes what is called the nature of things, and the exact observation of the nature of things is the only foundation of all truth. Hence spring two kinds of sciences: the sciences which may be called descriptive, and which consist in naming and classifying things, like botany and natural history; and the experimental sciences, which teach us the reciprocal action which things exercise upon each other, or, in other words, the connection of effects with their causes; such are physics and chemistry. These latter require that we should study the intimate nature of things, for it is by virtue of their nature that they act and produce effects; it is because it is the nature of the sun to be luminous, and the nature of the moon to be opaque that, when the moon passes before the sun, the latter body is eclipsed. A careful analysis is sometimes sufficient to enable us to understand the nature of things; at other times it is completely revealed to us only by its effects; and observation, when we can not have recourse to experiment, is necessary to confirm what analysis was able to teach us.
—These principles, which have guided me, will aid me to distinguish two sciences, which have almost always been confounded: political economy, which is an experimental science, and statistics, which is only a descriptive science. Political economy, as it is studied today, is entirely founded upon facts; for the nature of things is a fact, as well as the event which results from it. The phenomena, the causes and results of which it seeks to make known, may be considered either as constant and general facts, which are always the same in all similar cases, or as particular facts, which happen by virtue of general laws, but where many laws act at once, and modify without destroying one another: as in the jets of water in our gardens, where the laws of gravity are modified by the laws of equilibrium but do not cease to exist on that account. Science can not pretend to make known all these modifications, which are renewed each day and vary ad infinitum; but it exposes their general laws, and explains them by examples the reality of which each reader may prove for himself.
—There is in society a nature of things which depends in no way upon the will of man, and which we can not arbitrarily regulate. This does not mean that the will of man has no influence upon the arrangement of society, but only that the parts of which it is composed, the action which perpetuates it, are not an effect of its artificial organization but of its natural structure. The art of the cultivator can prune a tree, can train it against a wall, but the tree lives and produces by virtue of the laws of vegetation, which are superior to the art and skill of any gardener. In the same way, society is a living body, provided with organs, which give it life; the arbitrary action of legislators, administrators, military men, a conqueror, or even the effect of fortuitous circumstances, may influence its manner of life, can make it suffer or cure it of its troubles, but can not give it life. Artificial organization has so little to do with producing this effect, that it is in the places where it is limited to preserving the social body from the attacks which threaten its proper action and its development, that society increases the most rapidly in numbers and in prosperity. The artificial organization of nations changes with time and place. The natural laws which govern their maintenance and effect their preservation are the same in all countries and in all ages. They were among the ancients what they are to-day; only they are better known now. The blood which circulates in the veins of a Turk obeys the same laws as that which circulates in the veins of a Frenchman; it circulated in those of the Babylonians as in our own; but it is only since the discovery of Harvey that we have known that the blood circulates, and that we have been acquainted with the action of the heart. Capital fed the industry of the Phœnicians in the same way that it feeds that of the English; but it is only since a few years that the nature of capital, and the manner in which it works, and produces the effects which we observe, has become known; effects which the ancients saw as well as we do, but which they could not explain. Nature is old; science is new.
—Now, it is the knowledge of these natural and constant laws, without which human societies could not subsist, which constitutes the new science, designated by the name of political economy. It is a science, because it is not composed of invented systems, of plans of organization arbitrarily conceived, of hypotheses devoid of proof; but of the knowledge of what is, of the knowledge of facts, the reality of which can is established. A science is complete, relatively to a certain order of facts, in proportion as we succeed in determining the bond which unites them, in connecting their effects with their real causes. This is attained by studying carefully the nature of each of the things which play any part in the phenomenon which is to be explained; the nature of things unfolds to us the manner in which things work, and the manner in which they support the action of which they are the object; it shows us the relations and the connection of facts with each other. Now, the best way to know the nature of a thing is to make an analysis of it, to see all that is in it, and nothing but what is in it. For a long time the fluctuations of the tides were observed without man having the power to explain them, or rather to give a satisfactory explanation of them. To be able to assign the true cause of this phenomenon, it was necessary that the spherical form of the earth and the communication established between the large bodies of water should be demonstrated facts; it was necessary that universal gravitation should be a proven truth; from that time the action of the moon and sun upon the sea was known, and it was possible to assign with certainty the cause of the tides. So, when analysis had shown the nature of that quality of certain things which we have called their value, and when the same process had revealed to us what are the component parts of the cost of production, and the influence of such cost on the value of things, we knew positively why gold is more precious than iron. The connection between this phenomenon and its causes has become as certain as the phenomenon is constant.
—The nature of things, proud and disdainful as well in the moral and political sciences as in the physical sciences, while it allows any one who studies it with constancy and good faith to penetrate its secrets, pursue its way regardless of what is said or done. Men, who have learned to know the nature of things, can, in truth, direct the acting part of society to the way of applying the truths which have been revealed to them; but, even supposing that their eyes and deductions have not deceived them, they can not know the numerous and diverse relations which make the position of each individual, and even of each nation, a special one. which no other resembles in all its aspects. Sciences is only systematized experimentation, or, perhaps, a mass of experiments pure in order, and accompanied by analyses, which unfold their causes and their results. The inductions, which those who profess science draw from it, may pass for example, which it would be well to follow strictly only under exactly similar circumstances, but which must be modified according to the position of each. The man who knows most about the nature of things can not foresee the infinite combinations which the movement of the universe is constantly bringing about."
J. B. SAY.
[Editor’s note: the title used in Lalor’s Cyclopedia for Say’s article, “Outlet”, is better rendered into English as “Markets” and, as such, is a useful introduction to Say’s famous “Law of Markets.” It comes from the article “Débouchés” in the Dictionnaire d’Économie Politique and was an excerpt from Say’s Cours complet d’économie politique, Part 3, chapter 2.]
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: OUTLET
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OUTLET. An outlet, properly speaking, is an opening made for the sale of certain products. We say that a merchant seeks an outlet for his wares, when he is in quest of places where he can sell them; that he finds an outlet abroad, when his products are ordinarily sold abroad. To open outlets to a country is to give it the opportunity of entering upon friendly relations with other countries, which will afford it new avenues of sale. It would seem that this subject does not allow of any really economic development. But J. B. Say has almost given us a theory of it. We here reproduce his thoughts on the matter. They have been approved and appreciated by all economists.—"As the division of labor makes it impossible for producers to consume more than a small part of their products, they are compelled to seek consumers who may need these surplus products. They are compelled to find what is called, in the language of commerce, outlets, or markets, that is, means of effecting the exchange of the products which they have created against those which they need. It is important for them to know how these outlets are opened to them.
—Every product embodies a utility, the faculty of ministering to the satisfaction of a want. A product is a product only by reason of the value which has been given to it; and this value can be given to it only by giving it utility. If a product cost nothing, the demand for it would be infinite; for no one would neglect an opportunity to procure for himself what satisfies or serves to satisfy his wants, when he could have it for the wishing it. If this were the case with all products, and one could have them all for nothing, human beings would come into existence to consume them; for human beings are born wherever they can obtain the things necessary to their subsistence. The outlets opened to them would become immense in number. These outlets are limited only by the necessity under which consumers are to pay for what they wish to acquire. It is never the will to acquire, but the means to acquire, that is wanting.
—Yet in what does this means consist? In money, we shall be hastily told. Granted; but I ask in turn, by what means does this money come into the hands of these who desire to buy? must it not be obtained by the sale of another product? The man who wishes to buy must first sell, and he can only sell what he produces, or what has been produced for him. If the owner of land does not sell with his own hands the portion of the harvest which comes to him by reason of his proprietorship, his lessee sells it for him. If the capitalist, who has made advances to a manufacturer, in order to get his interest, does not himself sell a part of the manufactured goods, the manufacturer sells it for him. It is always by means of products that we purchase the products of others. Beneficiaries, pensioners of the state themselves, who produce nothing, are able to buy goods only because things have been produced, by which they have profited.
—What must we conclude from this? If it be with products that products are purchased, each product will find more purchasers in proportion as all other products shall have increased in quantity. How is it that in France eight or ten times more things are bought to-day, than under the miserable reign of Charles VI.? It must not be imagined that it is because there is more money in that country now; for if the mines of the new world had not increased the amount of specie in circulation, gold and silver would have preserved their old value; that value would even have increased; silver would be worth perhaps what gold is worth now; and a smaller amount of silver would render the same service that a very considerable quantity renders us, just as a gold piece of twenty francs renders us as much service as four five-franc pieces. What is it, then, that enables the French to purchase ten times as many things, since it is not the greater quantity of money which they possess? The reason is, that they produce ten times as much. All these things are bought, the ones by the others. More wheat is sold in France, because cloth and a great number of other things are manufactured there in a much greater quantity. Products unknown to our ancestors are bought by other products of which they had no idea. The man who produces watches (which were unknown in the time of Charles VI.; purchases with his watches, potatoes (which were also then unknown).
—So true is it, that it is with products that products are purchased, that a bad harvest injures all sales. Indeed, bad weather, which destroys the wheat and the vines of the year, does not, at the same time, destroy coin. Yet the sale of cloths instantly suffers from it. The products of the mason, the carpenter, the roofer, joiner, etc., are less in demand. The same is true of the harvests made by the arts and by commerce. When one branch of industry suffers, others suffer too. An industry which is prosperous, on the other hand, makes others prosper also.
—The first deduction which may be drawn from this important truth is, that in every state the more numerous the producers are, and the more production is increased, the more easy, varied and vast do outlets become. In the place which produce much, there is created the substance with which alone purchases are made: I mean value.
—Money fills only a transient office in this double exchange. After each one has sold what he has produced, and bought what he wishes to consume, it is found that products have always been paid for in products.
—We thus see that each has an interest in the prosperity of all, and that the prosperity of one kind of industry is favorable to the prosperity of all others. In fact, whatever may be the industry to which man devotes himself, whatever the talent which he exercises, he will find it easier to employ it and to reap a greater profit from it in proportion as he is surrounded by people who are themselves gaining. A man of talent, sadly vegetating in a country in a state of decline, would find a thousand avenues of employment for his faculties in a productive country, where his talents might be used and paid for. A merchant established in an industrious city, sells much larger amounts than one who lives in a country in which indifference and idleness rule. What would an active manufacturer or a capable merchant do in one of the poorly peopled and poorly civilized cities of certain portions of Spain or Poland? Although he would encounter no competitor there, he would sell little, because little is produced there; whereas in Paris. Amsterdam or London, despite the competition of a hundred merchants like himself, he might do an immense business. The reason is simple: he is surrounded by people who produce much in a multitude of ways, and who make purchases with what they have produced; that is to say, with the money resulting from the sale of what they have produced, or with what their land or their capital has produced for them.
—Such is the source of the profits which the people of cities make from the people of the country and which the latter make from the former. Both have more to buy in proportion as they produce more. A city surrounded by a productive country finds there numerous and rich buyers; and in the neighborhood of a manufacturing city the products of the country sell much better. It is by a vain distinction that nations are classed as agricultural, manufacturing and commercial nations. If a nation is successful in agriculture, it is a reason why its commerce and its manufactures should prosper. If its manufactures and its commerce become flourishing, its agriculture will be better in consequence. A nation is in the same position as regards neighboring nations that a province is in relation to the country; it is interested in their prosperity; it is certain to profit by their wealth; for nothing is to be gained from a people who have nothing wherewith to pay. Hence, well-advised countries do all in their power to favor the progress of their neighbors. The republics of America have for neighbors savage peoples who live generally by the chase, and sell furs to the merchants of the United States; but this trade is of little importance, for these savages need a vast extent of country to find only a limited number of wild animals, and these wild animals are diminishing every day. Hence, the United States much prefer to have these Indians civilized, become cultivators of the soil, manufacturers, in fine, more capable producers; which unfortunately is very difficult of accomplishment, because it is very hard for men reared in habits of vagabondage and idleness to apply themselves to work. Yet there are examples of Indians who have become industrious. I read in the description of the United States, by Mr. Warden, that the tribes then living on the banks of the Mississippi, and who afforded no market to the citizens of the United States, were enabled to purchase of them in 1810 more than 80,000 francs' worth of merchandise; and probably they afterward bought from them a much larger amount. Whence came this change? From the fact that these Indians began to cultivate the bean and Indian corn, and to work the lead mines which were within their reservation.
—The English rightly expect that the new republics of America, after their emancipation shall have favored their development, will afford them more numerous and richer consumers, and already they are reaping the harvest of a policy more in consonance with the intelligence of our age; but this is nothing compared with the advantages which they will reap from them in the future. Narrow minds imagine some hidden motives in this enlightened policy. But what greater object can men propose to themselves than to render their country rich and powerful?
—A people who are prosperous should therefore be regarded rather as a useful friend than as a dangerous competitor. A nation must doubtless know how to guard itself against the foolish ambition or the anger of a neighbor, who understands its own interests so badly as to quarrel with it; but after it has put itself in the way to fear no unjust aggression, it is not best to weaken any other nation. We have seen merchants of London and Marseilles dread the enfranchisement of the Greeks and the competition of their commerce. These men had very false and very narrow ideas. What commerce could the independent Greeks carry on which would not be favorable to French industry? Can they carry products to France without buying her products and carrying away an equivalent value? And if it is money that they wish, how can France acquire it otherwise than by the products of her industry? A prosperous people is in every way favorable to the prosperity of the other. Could the Greeks indeed carry on business with French merchants against the will of the latter? And would French merchants consent to a trade which was not lucrative to themselves and consequently for their country?
—If the Greeks should become established in their independence, and grow rich by their agriculture, their arts and their commerce, they would become for all other peoples valuable consumers; they would experience new wants, and have wherewith to pay for their satisfaction. It is not necessary to be a philanthropist to assist them; it is only necessary to be in a condition to understand one's own true interests.
—These truths so important, which are beginning to penetrate among the enlightened classes of society, were absolutely unknown in the periods previous to our own. Voltaire made patriotism consist in wishing evil to one's neighbors. His humanity, his natural generosity, lamented this. How much happier are we, who, by the simple advance of enlightenment, have acquired the certainty that we have no enemies but ignorance and perversity; that all nations are, by nature and by their interests, friends of one another; and that to wish prosperity to other peoples, is to love and serve our own country."
J. B. SAY.