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however, in by no means necessary in the case of fixed capital. Since machinery, for example, is not wholly consumed by one use, it is not necesBary that it should be wholly replaced from the product of that use. The machine answers the purpose of its owner, if it brings in, during each interval of time, enough to cover the expense of repairs, and the deterioration in value which the machine has sustained during the same time, with a surplus sufficient to yield the ordilary profit on the entire value of the machine.

From this it follows that all increase of fixed capital, when taking place at the expense of circulating, must be, at least temporarily, prejudicial to the interests of the labourers. This is true, not of machinery alone, but of all improvements by which capital is sunk; that is, rendered permanently incapable of being applied to the maintenance and remuneration of labour. Suppose that a person farms his own land, with a capital of two thousand quarters of com, employed in maintaining labourers during one year (for simplicity we omit the consideration of seed and tools), whose labour produces him annually two thousand lour hundred quarters, being a profit of twenty per cent. This profit we shall suppose that he annually consumes, carrying on his operations from year to year on the original capital of two thousand quarters. Let us now suppose that by the expenditure of half his capital he effects a permanent improvement of his land, which is executed by half his labourers, and occupies them for a year, after which he will only require, for the effectual cultivation of his land, half as many labourers as before. The remainder of his capital he employs as usual. In the first year there is no difference in the condition of the labourers, except that part of them have received the same pay for an operation on the land, which they previously obtained for ploughing, sowing, and reaping. At the end of the year, however, the improver has not, as before, a capital of two thousand quarters of corn. Only one thousand quarters of

his capital have been reproduced in the usual way: he has now only those thousand quarters and his improvements. Ho will employ, in the next and in each following year, only half the number of labourers, and will divide among them only half the former quantity of subsistence. The loss will soon be made up to them if the improved land, with the diminished quantity of labour, produces two thousand four hundred quarters as before, because so enormous an accession of gain will probably induce the improver to save a part, add it to his capital, and become a larger employer of labour. But it is conceivable that this may not be the oaBe; for (supposing, as we may do, that the improvement will last indefinitely, without any outlay worth mentioning to keep it up) the improver will have gained largely by his improvement if the land now yields, not two thousand four hundred, but one thousand five hundred quarters ; since this will replace the one thousand quarters forming his present circulating capital, with a profit of twonty-five per cent (instead of twenty as before) on the whole capital, fixed and circulating together. The improvement, therefore, may be a very profitable one to him, and yet very injurious to the labourers.

The supposition, in the terms in which it has been stated, is purely ideal; or at most applicable only to such a case as that of the conversion of arable land into pasture, which, though formerly a frequent practice, is regarded by modern agriculturists as the reverse of an improvement The clear ing away of the small farmers in the north of Scotland, within the present century, was however a case of it; and Ireland, since the potato famine and the repeal of the corn-laws, is another. The remarkable decrease which has lately attracted notice in the gross produce of Irish agriculture, is, to all appearance, partly attributable to the diversion of land from maintaining human labourers to feeding cattle: and it could not have taken place without the removal of a large part of the Irish population by emigration or death

We have thus two recent instances in which what was regarded as an agricultural improvement, has diminished the power of the country to support its population. The effect, however, of all the improvements due to modern science is to increase, or at all events, not to diminish the gross produce. But this does not affect the substance of the argument. Suppose that the improvement does not operate in the manner supposed—does not enable a part of the labour previously employed on the land to be dispensed with—but only enables the same labour to raise a greater produce. Suppose, too, that the greater produce, which by means of the improvement can be raised from the soil with the same labour, is all wanted, and will find purchasers. The improver will in that-case require the Bame number of labourers as before, at the same wages. But where will he find the means of paying them? He has no longer his original capital of two thousand auarters disposable for the purpose. One thousand of them are lost and gone—consumed in making the improvement. If he is to employ as many labourers as before, and pay them as highly, he must borrow, or obtain from some other source, a thousand quarters to supply the deficit. But these thousand quarters already maintained, or were destined to maintain, an equivalent quantity of labour. They are not a fresh creation; their destination is only changed from one productive employment to another; and though the agriculturist has made up the deficiency in his own circulating capital, the breach in the circulating capital of the community remains onrepaired.

The argument relied on by most of those who contend that machinery can never be injurious to the labouring class, is, that by cheapening production it creates such an increased demand for the commodity, as enables, ere long, a greater number of persons than ever to find employment in producing it. This argument does not seem to me to have the weight commonly ascribed to it. The fact, though too broadly stated, is, no doubt, often

true. The copyists who were thrown out of employment by the invention of printing, were doubtless soon outnumbered by the compositors and pressmen who took their place: and the number of labouring persons now occupied in the cotton manufacture ia many times greater than were so occu

?ied previously to the inventions of largreaves and Arkwright, which shows that besides the enormous fixed capital now embarked in the manufacture, it also employs a far larger circulating capital than at any former time But if this capital was drawn from other employments; if the funds which took the place of the capital sunk in costly machinery, were supplied toot by any additional saving consequent on the improvements, but by drafts on the general capital of the community; what better are the labouring classes lor the mere transfer? In what manner is the loss they sustained by the conversion of circulating into fixed capita], made up to them by a mere shifting of part of the remainder of the circulating capital from its old employments to a new one?

All attempts to make out that the labouring classes as a collective body cannot suffer temporarily by the introduction of machinery, or by the sinking of capital in permanent improvements, are, I conceive, necessarily fallacious. That they would suffer in the particular department of industry to which the change applies, is generally admitted, and obvious to common sense; but it is often said, that though employment is withdrawn from labonr in one department, an exactly equivalent employment is opened for it in others, because what the consumers Bave in the increased cheapness of one particular article enables them to augment their consumption of others, thereby increasing the demand for other kinds of labour. This is plausible, but, si was 6hown in the last chapter, involves a fallacy; demand for commoditiea being a totally different thing from demand for labour. It is true, the consumers have now additional means of buying other things; but this will not create the other things, unless there is capita) to produce them, and the improvement nas not set at liberty any capital, if even it has not absorbed §ome from other employments. The supposed increase of production and of employment for labour in other departments therefore will not take place; and the increased demand for commodities by some consumers, will be balanced by a cessation of demand on the part of others, namely, the labourers who were superseded by the improvement, and who will now be maintained, if at all, by sharing, either in the way of competition or of charity, in what was previously consumed by other people.

§ 3. Nevertheless, I do not believe that as things are actually transacted, improvements in production are often, if ever, injurious, even temporarily, to the labouring classes in the aggregate. They would be so if they took place suddenly to a, great amount, because much of the capital sunk must necessarily in that case be provided from rands already employed as circulating capital. But improvements are always introduced very gradually, and are seldom or never made by withdrawing circulating capital from actual production, but are made by the employment of the annual increase. There are few, if any, examples of a great increase of fixed capital, at a time and place where circulating capital was not rapidly increasing likewise. It is not in poor or backward countries that great and costly improvements in production are made. To sink capital in land for a permanent return—to introduce expensive machinery—are acts involving immediate sacrifice for distant objects; and indicate, in the first place, tolerably complete security of property; in the second, considerable activity of industrial enterprise; and in the third, a high standard of what has been called the "effective desire of accumulation:" which three things are the elements of a society rapidly progressive in its amount of capital. Although, therefore, the labouring olasses must suffer, not only if the in■neane of fixed capital takes place at

the expense of circulating, bnt even if it is so large and rapid as to retard that ordinary increase to which the growth of population has habitually adapted itself; yet, in point of fact, this is very unlikely to nappeh, since there is probably no country whose fixed capital increases in a ratio more than proportional to its circulating. If the whole of the railways which, during the speculative madness of 1845, obtained the sanction of Parliament, had been constructed in the times fixed for the completion of each, this improbable contingency would, most likely, have been realized; but this very case has afforded a striking example of the difficulties which oppose the diversion into new channels of any considerable portion of the capital that supplies the old: difficulties generally much more than sufficient to prevent enterprises that involve the sinking of capital, from extending themselves with such rapidity as to impair the sources of the existing employment for labour.

To these considerations must ba added, that even if improvements did for a time decrease the aggregate produce and the circulating capital of the community, they would not the less tend in the long run to augment both. They increase the return to capital; and of this increase the benefit must necessarily accrue either to the capitalist in greater profits, or to the customer in diminished prices; affording, in either case, an augmented fund from which accumulation may be made, while enlarged profits also hold out an increased inducement to accumulation. In the case we before selected, in which the immediate result of the improvement was to diminish the gross produce from two thousand four hundred quarters to one thousand five hundred, yet the profit of the capitalist being now rive hundred quarters instead of four hundred, the extra one hundred quarters, if regularly saved, would in a few years leplace the one thousand quarters subtracted from his circulating capital. Now the extension of business which almost certainly follows in any department in which an improvement has ueen made, affords a strong inducement to those engaged in it to add to their capital; and hence, at the slow pace at which improvements are usually introduced, a great part of the capital which the improvement ultimately absorbs, is drawn from the increased profits and increased savings which it has itself called forth.

This tendency of improvements in production to cause increased accumulation, and thereby ultimately to increase the gross produce, even if temporarily diminishing it, will assume a still more decided character if it should appear that there are assignable limits both to the accumulation of capital, and to the increase of production from the land, which limits once attained, all further increase of produce must stop; but that improvements in production, whatever may be their other effects, tend to throw one or both of these limits farther off. Now, these are truths which will appear in the clearest light in a subsequent stage of our investigation. It will be seen, that the quantity of capital which will, or even which can, be accumulated in any country, and the amount of gross produce which will, or even which can, be raised, bear a proportion to the state of the arts of production there existing; and that every improvement, even if for the time it diminish the circulating capital and the gross produce, ultimately makes room for a larger amount of both, than could possibly have existed otherwise. It is this which is the conclusive answer to the objections against machinery; and the proof thence arising of the ultimate benefit to lahourers of mechanical inventions even in the existing state of society, will hereafter be seen to be conclusive.* But this does not discharge governments from the obligation of alleviating, and if possible preventing, the evils of which this source of ultimate benefit is or may he productive to an existing generation. If the sinking or fixing of capital in machinery or useful works, were ever to proceed at such a pace as to impair materially the funds for the mainte* Infra, book iv. chap. ▼.

nance of labour, it would be incumbent on legislators to take measures for moderating its rapidity: and since improvements which do not diminish employment on the whole, almost always throw some particular class of labourers out of it, there cannot be a more legitimate object of the legislator's care than the interests of those who are thus sacrificed to the gains of their fellow-citizens and of posterity.

To return to the theoretical distinction between fixed and circulating capital Since all wealth which is destined to be employed for reproduction comes within the designation of capital there are parts of capital which do not agree with the definition of either species of it; for instance, the stock of finished goods which a manufacturer or dealer at any time possesses unsold in his warehouses. But this, though capital as to its destination, is not yet capital in actual exercise: it is not engaged in production, but has first to be sold or exchanged, that is, converted into an equivalent value of some other commodities; and therefore is not yet either fixed or circulating capital; but will become either one or the other, or be eventually divided between them. With the proceeds of his finished goods, a manufacturer will partly pay his work-people, partly replenish his stock of the materials of his manufacture, and partly provide new buildings and machinery, or repair the old; but how much will be devoted to one purpose, and how much to another, depends on the nature of the manufacture, and the requirements of the particular moment.

It should be observed further, thai the portion of capital consumed in the form of seed or material, though, unlike fixed capital, it requires to be at once replaced from the gross produce, stands yet in the same relation to the employment of labour as fixed capital does. What is expended in materials is as much withdrawn from the maintenance and remuneration of labourers, as what is fixed in machinery; and it capital now expended in wages were diverted to the providing of materials, the effect on the labourers would ba it prejudicial As if it were converted into fixed capital. This, however, is a kind of change which never takes place. The tendency of improvements in production is always to economize, never

to increase, the expenditure of Beed or material for a given produce; and the interest of the labourers has no detriment to apprehend from this source.

CHAPTER VH,

ON WHAT DEPENDS THE DEOREE OP PRODUCTIVENESS OP PRODUCTIVE ASENTS

§ 1. We have concluded our general survey of the requisites of production. We have found that they may be reduced ti) three: labour, capital, and the materials and motive forces afforded by nature. Of these, labour and the raw material of the globe are primary and indispensable. Natural motive powerB may be called in to the assistance of hibonr, and are a help, but not an eslential, of production. The remaining requisite, capital, is itself the product of labour: its instrumentality in production is therefore, in reality, that of labour in an indirect shape. It does not the less require to be specified leparately. A previous application of labour to produce the capital required for consumption during the work, is no less essential than the application of labour to the work itself. Of capital, again, one, and by far the largest, portion, conduces to production only by sustaining in existence the laboui rhion produces: the remainder, namely the instruments and materials, contribute to it directly, in the same manner with natural agents, and the materials supplied by nature.

We now advance to the second great

Sueation iu political economy; on what te degree of productiveness of these agents depends. For it is evident that their productive efficacy varies greatly at various times and places. With the same population and extent of territory, •ome countries have a much larger amount of production than others, and the same country at one time a greater amount than itself at another. Compare England either with a similar extent of territory in Russia, or with

an equal population of Russians. Compare England now with England in the Middle Ages; Sicily, Northern Africa, or Syria at present, with the same countries at the time of their greatest prosperity, before the Roman conquest. Some of the causes which contribute to this difference of productiveness are obvious; others not so much so. We proceed to specify several of them.

§ 2. The most evident cause of superior productiveness is what are called natural advantages. These are various. Fertility of soil is one of the principal. In this there are great varieties, from the deserts of Arabia to the alluvial plains of the Ganges, the Niger, and the Mississippi. A favourable climate is even more important than a rich soil. There are countries capable of being inhabited, but too cold to be compatible with agriculture. Their inhabitants cannot pass beyond the nomadic state; they must live, like the Laplanders, by the domestication of the rein-deer, if not by hunting or fishing, like the miserable Esquimaux. There are countries where oats will ripen, but not wheat, such as the North of Scotland; others where wheat can be grown, but from excess of moisture and want of sunshine, affords but a precarious crop; as in parts of Ireland. With each advance towards the south, or, in the European temperate region, towards the east, some new branch of agriculture becomes first possible, then advantageous; the vine, maize, figs, olives, silk, rice, dates, successively present themselves, until we come to the

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