CHAPTER I.
DEFINITIONS.
1. As domestic economy regulates the acts and habits of a household,Political economy regulates those of a society or State, with referenceto the means of its maintenance.
Political economy is neither an art nor a science; but a system ofconduct and legislature, founded on the sciences, directing the arts,and impossible, except under certain conditions of moral culture.
2. The study which lately in England has been called Political Economyis in reality nothing more than the investigation of some accidentalphenomena of modern commercial operations, nor has it been true in itsinvestigation even of these. It has no connection whatever withpolitical economy, as understood and treated of by the great thinkers ofpast ages; and as long as its unscholarly and undefined statements areallowed to pass under the same name, every word written on the subjectby those thinkers--and chiefly the words of Plato, Xenophon, Cicero andBacon--must be nearly useless to mankind. The reader must not,therefore, be surprised at the care and insistance with which I haveretained the literal and earliest sense of all important terms used inthese papers; for a word is usually well made at the time it is firstwanted; its youngest meaning has in it the full strength of its youth:subsequent senses are commonly warped or weakened; and as all carefulthinkers are sure to have used their words accurately, the firstcondition, in order to be able to avail our selves of their sayings atall, is firm definition of terms.
3. By the "maintenance" of a State is to be understood the support ofits population in healthy and happy life; and the increase of theirnumbers, so far as that increase is consistent with their happiness. Itis not the object of political economy to increase the numbers of anation at the cost of common health or comfort; nor to increaseindefinitely the comfort of individuals, by sacrifice of surroundinglives, or possibilities of life.
4. The assumption which lies at the root of nearly all erroneousreasoning on political economy,--namely, that its object is toaccumulate money or exchangeable property,--may be shown in a few wordsto be without foundation. For no economist would admit national economyto be legitimate which proposed to itself only the building of a pyramidof gold. He would declare the gold to be wasted, were it to remain inthe monumental form, and would say it ought to be employed. But to whatend? Either it must be used only to gain more gold, and build a largerpyramid, or for some purpose other than the gaining of gold. And thisother purpose, however at first apprehended, will be found to resolveitself finally into the service of man;--that is to say, the extension,defence, or comfort of his life. The golden pyramid may perhaps beprovidently built, perhaps improvidently; but the wisdom or folly of theaccumulation can only be determined by our having first clearly statedthe aim of all economy, namely, the extension of life.
If the accumulation of money, or of exchangeable property, were acertain means of extending existence, it would be useless, in discussingeconomical questions, to fix our attention upon the more distantobject--life--instead of the immediate one--money. But it is not so.Money may sometimes be accumulated at the cost of life, or bylimitations of it; that is to say, either by hastening the deaths ofmen, or preventing their births. It is therefore necessary to keepclearly in view the ultimate object of economy; and to determine theexpediency of minor operations with reference to that ulterior end.
5. It has been just stated that the object of political economy is thecontinuance not only of life, but of healthy and happy life. But alltrue happiness is both a consequence and cause of life: it is a sign ofits vigor, and source of its continuance. All true suffering is in likemanner a consequence and cause of death. I shall therefore, in future,use the word "Life" singly: but let it be understood to include in itssignification the happiness and power of the entire human nature, bodyand soul.
6. That human nature, as its Creator made it, and maintains it whereverHis laws are observed, is entirely harmonious. No physical error can bemore profound, no moral error more dangerous, than that involved in themonkish doctrine of the opposition of body to soul. No soul can beperfect in an imperfect body: no body perfect without perfect soul.Every right action and true thought sets the seal of its beauty onperson and face; every wrong action and foul thought its seal ofdistortion; and the various aspects of humanity might be read as plainlyas a printed history, were it not that the impressions are so complexthat it must always in some cases (and, in the present state of ourknowledge, in all cases) be impossible to decipher them completely.Nevertheless, the face of a consistently just, and of a consistentlyunjust person, may always be rightly distinguished at a glance; and ifthe qualities are continued by descent through a generation or two,there arises a complete distinction of race. Both moral and physicalqualities are communicated by descent, far more than they can bedeveloped by education; (though both may be destroyed by want ofeducation), and there is as yet no ascertained limit to the nobleness ofperson and mind which the human creature may attain, by perseveringobservance of the laws of God respecting its birth and training.
7. We must therefore yet farther define the aim of political economy tobe "The multiplication of human life at the highest standard." It mightat first seem questionable whether we should endeavour to maintain asmall number of persons of the highest type of beauty and intelligence,or a larger number of an inferior class. But I shall be able to show inthe sequel, that the way to maintain the largest number is first to aimat the highest standard. Determine the noblest type of man, and aimsimply at maintaining the largest possible number of persons of thatclass, and it will be found that the largest possible number of everyhealthy subordinate class must necessarily be produced also.
8. The perfect type of manhood, as just stated, involves the perfections(whatever we may hereafter determine these to be) of his body,affections, and intelligence. The material things, therefore, which itis the object of political economy to produce and use, (or accumulatefor use,) are things which serve either to sustain and comfort the body,or exercise rightly the affections and form the intelligence.[10]Whatever truly serves either of these purposes is "useful" to man,wholesome, healthful, helpful, or holy. By seeking such things, manprolongs and increases his life upon the earth.
On the other hand, whatever does not serve either of thesepurposes,--much more whatever counteracts them,--is in like manneruseless to man, unwholesome, unhelpful, or unholy; and by seeking suchthings man shortens and diminishes his life upon the earth.
9. And neither with respect to things useful or useless can man'sestimate of them alter their nature. Certain substances being good forhis food, and others noxious to him, what he thinks or wishes respectingthem can neither change, nor prevent, their power. If he eats corn, hewill live; if nightshade, he will die. If he produce or make good andbeautiful things, they will _Re-Create_ him; (note the solemnity andweight of the word); if bad and ugly things, they will "corrupt" or"break in pieces"--that is, in the exact degree of their power, Killhim. For every hour of labour, however enthusiastic or well intended,which he spends for that which is not bread, so much possibility of lifeis lost to him. His fancies, likings, beliefs, however brilliant,eager, or obstinate, are of no avail if they are set on a false object.Of all that he has laboured for, the eternal law of heaven and earthmeasures out to him for reward, to the utmost atom, that part which heought to have laboured for, and withdraws from him (or enforces on him,it may be) inexorably, that part which he ought not to have laboured foruntil, on his summer threshing-floor, stands his heap of corn; little ormuch, not according to his labour, but to his discretion. No "commercialarrangements," no painting of surfaces, nor alloying of substances, willavail him a pennyweight. Nature asks of him calmly and inevitably, Whathave you found, or formed--the right thing or the wrong? By the rightthing you shall live; by the wrong you shall die.
10. To thoughtless persons it seems otherwise. The world looks to themas if they could cozen it out of some ways and means of life. But theycannot cozen IT: they can only cozen their neighbours. The world is notto be cheated
of a grain; not so much as a breath of its air can bedrawn surreptitiously. For every piece of wise work done, so much lifeis granted; for every piece of foolish work, nothing; for every piece ofwicked work, so much death is allotted. This is as sure as the coursesof day and night. But when the means of life are once produced, men, bytheir various struggles and industries of accumulation or exchange, mayvariously gather, waste, restrain, or distribute them; necessitating, inproportion to the waste or restraint, accurately, so much more death.The rate and range of additional death are measured by the rate andrange of waste; and are inevitable;--the only question (determinedmostly by fraud in peace, and force in war) is, Who is to die, and how?
11. Such being the everlasting law of human existence, the essentialwork of the political economist is to determine what are in realityuseful or life-giving things, and by what degrees and kinds of labourthey are attainable and distributable. This investigation divides itselfunder three great heads;--the studies, namely, of the phenomena, first,of WEALTH; secondly, of MONEY; and thirdly, of RICHES.
These terms are often used as synonymous, but they signify entirelydifferent things. "Wealth" consists of things in themselves valuable;"Money," of documentary claims to the possession of such things; and"Riches" is a relative term, expressing the magnitude of the possessionsof one person or society as compared with those of other persons orsocieties.
The study of Wealth is a province of natural science:--it deals with theessential properties of things.
The study of Money is a province of commercial science:--it deals withconditions of engagement and exchange.
The study of Riches is a province of moral science:--it deals with thedue relations of men to each other in regard of material possessions;and with the just laws of their association for purposes of labour.
I shall in this first chapter shortly sketch out the range of subjectswhich will come before us as we follow these three branches of inquiry.
12. And first of WEALTH, which, it has been said, consists of thingsessentially valuable. We now, therefore, need a definition of "value."
"Value" signifies the strength, or "availing" of anything towards thesustaining of life, and is always twofold; that is to say, primarily,INTRINSIC, and secondarily, EFFECTUAL.
The reader must, by anticipation, be warned against confusing value withcost, or with price. _Value is the life-giving power of anything; cost,the quantity of labour required to produce it; price, the quantity oflabour which its possessor will take in exchange for it._[11] Cost andprice are commercial conditions, to be studied under the head of money.
13. Intrinsic value is the absolute power of anything to support life. Asheaf of wheat of given quality and weight has in it a measurable powerof sustaining the substance of the body; a cubic foot of pure air, afixed power of sustaining its warmth; and a cluster of flowers of givenbeauty a fixed power of enlivening or animating the senses and heart.
It does not in the least affect the intrinsic value of the wheat, theair, or the flowers, that men refuse or despise them. Used or not, theirown power is in them, and that particular power is in nothing else.
14. But in order that this value of theirs may become effectual, acertain state is necessary in the recipient of it. The digesting,breathing, and perceiving functions must be perfect in the humancreature before the food, air, or flowers can become of their full valueto it. _The production of effectual value, therefore, always involvestwo needs: first, the production of a thing essentially useful; then theproduction of the capacity to use it._ Where the intrinsic value andacceptant capacity come together there is Effectual value, or wealth;where there is either no intrinsic value, or no acceptant capacity,there is no effectual value; that is to say, no wealth. A horse is nowealth to us if we cannot ride, nor a picture if we cannot see, _nor canany noble thing be wealth, except to a noble person_. As the aptness ofthe user increases, the effectual value of the thing used increases; andin its entirety can co-exist only with perfect skill of use, and fitnessof nature.
15. Valuable material things may be conveniently referred to five heads:
(i.) Land, with its associated air, water, and organisms.
(ii.) Houses, furniture, and instruments.
(iii.) Stored or prepared food, medicine, and articles of bodily luxury,including clothing.
(iv.) Books.
(v.) Works of art.
The conditions of value in these things are briefly as follows:--
16. (i.) Land. Its value is twofold; first, as producing food andmechanical power; secondly, as an object of sight and thought, producingintellectual power.
Its value, as a means of producing food and mechanical power, varieswith its form (as mountain or plain), with its substance (in soil ormineral contents), and with its climate. All these conditions ofintrinsic value must be known and complied with by the men who have todeal with it, in order to give effectual value; but at any given timeand place, the intrinsic value is fixed: such and such a piece of land,with its associated lakes and seas, rightly treated in surface andsubstance, can produce precisely so much food and power, and no more.
The second element of value in land being its beauty, united with suchconditions of space and form as are necessary for exercise, and forfullness of animal life, land of the highest value in these respectswill be that lying in temperate climates, and boldly varied in form;removed from unhealthy or dangerous influences (as of miasm or volcano);and capable of sustaining a rich fauna and flora. Such land, carefullytended by the hand of man, so far as to remove from it unsightlinessesand evidences of decay, guarded from violence, and inhabited, underman's affectionate protection, by every kind of living creature that canoccupy it in peace, is the most precious "property" that human beingscan possess.
17. (ii.) Buildings, furniture, and instruments.
The value of buildings consists, first, in permanent strength, withconvenience of form, of size, and of position; so as to renderemployment peaceful, social intercourse easy, temperature and airhealthy. The advisable or possible magnitude of cities and mode of theirdistribution in squares, streets, courts, &c.; the relative value ofsites of land, and the modes of structure which are healthiest and mostpermanent, have to be studied under this head.
The value of buildings consists secondly in historical association, andarchitectural beauty, of which we have to examine the influence onmanners and life.
The value of instruments consists, first, in their power of shorteninglabour, or otherwise accomplishing what human strength unaided couldnot. The kinds of work which are severally best accomplished by hand orby machine;--the effect of machinery in gathering and multiplyingpopulation, and its influence on the minds and bodies of suchpopulation; together with the conceivable uses of machinery on acolossal scale in accomplishing mighty and useful works, hithertounthought of, such as the deepening of large river channels;--changingthe surface of mountainous districts;--irrigating tracts of desert inthe torrid zone;--breaking up, and thus rendering capable of quickerfusion, edges of ice in the northern and southern Arctic seas, &c., sorendering parts of the earth habitable which hitherto have beenlifeless, are to be studied under this head.
The value of instruments is, secondarily, in their aid to abstractsciences. The degree in which the multiplication of such instrumentsshould be encouraged, so as to make them, if large, easy of access tonumbers (as costly telescopes), or so cheap as that they might, in aserviceable form, become a common part of the furniture of households,is to be considered under this head.[12]
18. (iii.) Food, medicine, and articles of luxury. Under this head weshall have to examine the possible methods of obtaining pure food insuch security and equality of supply as to avoid both waste and famine:then the economy of medicine and just range of sanitary law: finally theeconomy of luxury, partly an aesthetic and partly an ethical question.
19. (iv.) Books. The value of these consists,
First, in their power of preserving and communicating the knowledge offacts.
&nbs
p; Secondly, in their power of exciting vital or noble emotion andintellectual action. They have also their corresponding negative powersof disguising and effacing the memory of facts, and killing the nobleemotions, or exciting base ones. Under these two heads we have toconsider the economical and educational value, positive and negative, ofliterature;--the means of producing and educating good authors, and themeans and advisability of rendering good books generally accessible, anddirecting the reader's choice to them.
20. (v.) Works of art. The value of these is of the same nature as thatof books; but the laws of their production and possible modes ofdistribution are very different, and require separate examination.
21. II.--MONEY. Under this head, we shall have to examine the laws ofcurrency and exchange; of which I will note here the first principles.
Money has been inaccurately spoken of as merely a means of exchange. Butit is far more than this. It is a documentary expression of legal claim.It is not wealth, but a documentary claim to wealth, being the sign ofthe relative quantities of it, or of the labour producing it, to which,at a given time, persons, or societies, are entitled.
If all the money in the world, notes and gold, were destroyed in aninstant, it would leave the world neither richer nor poorer than it was.But it would leave the individual inhabitants of it in differentrelations.
Money is, therefore, correspondent in its nature to the title-deed of anestate. Though the deed be burned, the estate still exists, but theright to it has become disputable.
22. The real worth of money remains unchanged, as long as the proportionof the quantity of existing money to the quantity of existing wealth oravailable labour remains unchanged.
If the wealth increases, but not the money, the worth of the moneyincreases; if the money increases, but not the wealth, the worth of themoney diminishes.
23. Money, therefore, cannot be arbitrarily multiplied, any more thantitle-deeds can. So long as the existing wealth or available labour isnot fully represented by the currency, the currency may be increasedwithout diminution of the assigned worth of its pieces. But when theexisting wealth, or available labour is once fully represented, everypiece of money thrown into circulation diminishes the worth of everyother existing piece, in the proportion it bears to the number of them,provided the new piece be received with equal credit; if not, thedepreciation of worth takes place, according to the degree of itscredit.
24. When, however, new money, composed of some substance of supposedintrinsic value (as of gold), is brought into the market, or when newnotes are issued which are supposed to be deserving of credit, thedesire to obtain the money will, under certain circumstances, stimulateindustry: an additional quantity of wealth is immediately produced, andif this be in proportion to the new claims advanced, the value of theexisting currency is undepreciated. If the stimulus given be so great asto produce more goods than are proportioned to the additional coinage,the worth of the existing currency will be raised.
Arbitrary control and issues of currency affect the production ofwealth, by acting on the hopes and fears of men, and are, under certaincircumstances, wise. But the issue of additional currency to meet theexigencies of immediate expense, is merely one of the disguised forms ofborrowing or taxing. It is, however, in the present low state ofeconomical knowledge, often possible for governments to venture on anissue of currency, when they could not venture on an additional loan ortax, because the real operation of such issue is not understood by thepeople, and the pressure of it is irregularly distributed, and with anunperceived gradation.
25. The use of substances of intrinsic value as the materials of acurrency, is a barbarism;--a remnant of the conditions of barter, whichalone render commerce possible among savage nations. It is, however,still necessary, partly as a mechanical check on arbitrary issues;partly as a means of exchanges with foreign nations. In proportion tothe extension of civilization, and increase of trustworthiness inGovernments, it will cease. So long as it exists, the phenomena of thecost and price of the articles used for currency are mingled with thoseproper to currency itself, in an almost inextricable manner: and themarket worth of bullion is affected by multitudinous accidentalcircumstances, which have been traced, with more or less success, bywriters on commercial operations: but with these variations the truepolitical economist has no more to do than an engineer, fortifying aharbour of refuge against Atlantic tide, has to concern himself with thecries or quarrels of children who dig pools with their fingers for itsstreams among the sand.
26. III.--RICHES. According to the various industry, capacity, goodfortune, and desires of men, they obtain greater or smaller share of,and claim upon, the wealth of the world.
The inequalities between these shares, always in some degree just andnecessary, may be either restrained by law or circumstance withincertain limits; or may increase indefinitely.
Where no moral or legal restraint is put upon the exercise of the willand intellect of the stronger, shrewder, or more covetous men, thesedifferences become ultimately enormous. But as soon as they become sodistinct in their extremes as that, on one side, there shall be manifestredundance of possession, and on the other manifest pressure ofneed,--the terms "riches" and "poverty" are used to express the oppositestates; being contrary only as the terms "warmth" and "cold" arecontraries, of which neither implies an actual degree, but only arelation to other degrees, of temperature.
27. Respecting riches, the economist has to inquire, first, into theadvisable modes of their collection; secondly, into the advisable modesof their administration.
Respecting the collection of national riches, he has to inquire, first,whether he is justified in calling the nation rich, if the quantity ofwealth it possesses relatively to the wealth of other nations, be large;irrespectively of the manner of its distribution. Or does the mode ofdistribution in any wise affect the nature of the riches? Thus, if theking alone be rich--suppose Croesus or Mausolus--are the Lydians orCarians therefore a rich nation? Or if a few slave-masters are rich, andthe nation is otherwise composed of slaves, is it to be called a richnation? For if not, and the ideas of a certain mode of distribution oroperation in the riches, and of a certain degree of freedom in thepeople, enter into our idea of riches as attributed to a people, weshall have to define the degree of fluency, or circulative characterwhich is essential to the nature of common wealth; and the degree ofindependence of action required in its possessors. Questions which lookas if they would take time in answering.[13]
28. And farther. Since the inequality, which is the condition of riches,may be established in two opposite modes--namely, by increase ofpossession on the one side, and by decrease of it on the other--we haveto inquire, with respect to any given state of riches, precisely in whatmanner the correlative poverty was produced: that is to say, whether bybeing surpassed only, or being depressed also; and if by beingdepressed, what are the advantages, or the contrary, conceivable in thedepression. For instance, it being one of the commonest advantages ofbeing rich to entertain a number of servants, we have to inquire, on theone side, what economical process produced the riches of the master; andon the other, what economical process produced the poverty of thepersons who serve him; and what advantages each, on his own side,derives from the result.
29. These being the main questions touching the collection of riches,the next, or last, part of the inquiry is into their administration.
Their possession involves three great economical powers which requireseparate examination: namely, the powers of selection, direction, andprovision.
The power of SELECTION relates to things of which the supply is limited(as the supply of best things is always). When it becomes matter ofquestion to whom such things are to belong, the richest person hasnecessarily the first choice, unless some arbitrary mode of distributionbe otherwise determined upon. The business of the economist is to showhow this choice may be a wise one.
The power of DIRECTION arises out of the necessary relation of rich mento poor, which ultimately, in one way or a
nother, involves thedirection of, or authority over, the labour of the poor; and this nearlyas much over their mental as their bodily labour. The business of theeconomist is to show how this direction may be a Just one.
The power of PROVISION is dependent upon the redundance of wealth, whichmay of course by active persons be made available in preparation forfuture work or future profit; in which function riches have generallyreceived the name of capital; that is to say, of head-, orsource-material. The business of the economist is to show how thisprovision may be a Distant one.
30. The examination of these three functions of riches will embraceevery final problem of political economy;--and, above, or before all,this curious and vital problem,--whether, since the wholesome action ofriches in these three functions will depend (it appears), on the Wisdom,Justice, and Farsightedness of the holders; and it is by no means to beassumed that persons primarily rich, must therefore be just andwise,--it may not be ultimately possible so, or somewhat so, to arrangematters, as that persons primarily just and wise, should therefore berich?
Such being the general plan of the inquiry before us, I shall not limitmyself to any consecutive following of it, having hardly any good hopeof being able to complete so laborious a work as it must prove to me;but from time to time, as I have leisure, shall endeavour to carryforward this part or that, as may be immediately possible; indicatingalways with accuracy the place which the particular essay will or shouldtake in the completed system.
FOOTNOTES:
[10] _See_ Appendix I.
[11] Observe these definitions,--they are of much importance,--andconnect with them the sentences in italics on this and the next page.
[12] [I cannot now recast these sentences, pedantic in theirgeneralization, and intended more for index than statement, but I mustguard the reader from thinking that I ever wish for cheapness by badquality. A poor boy need not always learn mathematics; but, if you sethim to do so, have the farther kindness to give him good compasses, notcheap ones, whose points bend like lead.]
[13] [I regret the ironical manner in which this passage, one of greatimportance in the matter of it, was written. The gist of it is, that thefirst of all inquiries respecting the wealth of any nation is not, howmuch it has; but whether it is in a form that can be used, and in thepossession of persons who can use it.]