SECTION XLIX.

CRITICAL HISTORY OF THE IDEA OF PRODUCTIVENESS.THE DOCTRINE OF THE PHYSIOCRATES.

The doctrine of the Physiocrates is to be explained in part by a very natural reaction from the narrow-heartedness of the Mercantile System, and at the same time, by a presentiment, misunderstood, of the true theory of rent. (§ 150 ff.). Of the six classes of labor mentioned above (§ 38), those only are called productive which increase the quantity of raw material useful for human ends. All the other classes, it matters not how useful, are called sterile, salaried, because they draw their income only from the superabundance of land-owners and the workers of the soil. Tradesmen, in the narrower sense of the term, produce only a change in the form of the material, the higher value of which depends on the quantity of other material consumed for the purposes of the tradesman's labor. If any of this material is saved, the value of their products sinks, although to the advantage of the economy of the whole nation. In any case, industry could create no wealth, but only make existing wealth more lasting. It might, so to speak, accumulate the value of the quantity of food consumed during the building of a house in the house itself.1

1Qnesnay, Dialogue sur les Travaux des Artisans, 210 ff.; 389 éd Daire; Turgot, Sur la Formation etc., § 8; Dupont, Correspondence avec J. B. Say, 400, éd. Dafre. B. Franklin, Letter to Dr. Evans (1768), and Positions Concerning National Wealth (1769), Works ed. Sparks, VII and II. Similarly even Aristotle, Oec., I, 2, says, that commerce, wage-labor and war win from men, with or without their will; but that only agriculture obtains booty from nature. And so Cicero says of merchants: nihil proficiunt, nisi admodum mentiantur. De Off., I, 42. The same view seems to have prevailed during the middle ages. See Thom. Aquin., De Rebus publicis, II, 3, 5 seq. Luther entertained a like notion (Vom Kaufhandel und Wucher, 1524). He prefers agriculture to the trades. See the Irmischer edition of his works, XXII, 284; XXXVI, 172; LXI, 352. Calvin considered commerce both useful and honorable; so that ex ipsius mercatoris diligentia atque industria, its profit may be greater than that of agriculture. (Opp. ed. Amstelod, 1664, IX, 223.) Asgill,

But if tradesmen really earned, in the value of their products, only what they had consumed during their labor, it would be difficult for them to find employers to provide them with capital. Everyone will acknowledge, that a Thorwaldsen and an ordinary stone-cutter, with the same block of marble, the same implements, the same food, would necessarily, after the same time, turn out exceedingly different values. And, even

in the case that industry should add to the raw material only precisely the same amount of value as had been consumed by the workmen, can it be said that the work ceases to be productive simply because it is consumed by the workmen themselves? If that were so, agriculture even, would, in most countries with a low civilization, be unproductive.3

Commerce, according to the theory of the Physiocrates, only transfers already existing wealth from one hand to another. What the merchants gain by it is at the cost of the nation. Hence, it is desirable that this loss should be as

Several Assertions proved in order to create another Species of Money than Gold (1691): "what we call commodities is nothing but land severed from the soil; man deals in nothing but earth." Concerning Cantillon, compare $47, note 4. How violent an innovation the Physiocratic theory was in its time may be inferred from what Zincke writes in the Leipzig Sammlungen, X, 551 ff. (1753), p. 20, XIII, 861.

2

Qnesnay, 1. c., 189, does not ignore that many workmen earn more than the cost of their necessary subsistence; but he claimed that this was a result of a natural or legal monopoly of the same. The dearer labor was, the more productive it seemed. Per contra, see Dohm on the Physiocratic system, in the Deutsch. Museum, 1778, II, 313 ff.

3 Gournay (compare Turgot, Eloge de G., in Guillaumin's edition, I, 266, 271 ff.), as well as Raynal, Histoire des Indes, vol. X, Livre 19, spite of the similarity of their and Quesnay's views, acknowledged on this account, the productiveness of industry. For some remarkable examples illustrative of how it may increase the value in exchange of raw material, see the anonymous work, Paying Old Debts without New Taxes, London, 1723. See also Algarotti (ob. 1794), 318, in Custodi, Economisti classici italiani, Parte moderna, I. Thus a cwt. of coarse cast iron is converted, in a Berlin manufactory, into 88,440 shirt buttons worth 623 silver groschens each. Hence the value is raised from 1-2 thalers to 19,653 thalers. The increase of the value in use by industrial labor is self-evident.

small as possible. Hence sterility! But, the more important branches of business, especially wholesale trade, are connected with a transportation of goods (Verri), either from one place or from one period of time, into another. Here the genuine merchant speculates essentially on the difference of the values in use which are afterwards greater than before. The ice shipped yearly from Boston to tropical lands met a much more urgent and wide-spread want there than it would if it had remained at home. And thus the storage of grain in large quantities after a bountiful harvest withdraws, indeed, an object of enjoyment from the comsumption of the people; but its sale, after a bad harvest, undoubtedly increases their enjoyment in a much greater degree than it was before diminished. Besides, the condition of both parties to the contract is usually improved in all normal trade. (Condillac.) No one parts with exchangeable goods unless they are of less use to him than the ones he receives in return. And so, the value in use of a nation's resources is really increased by commerce. To the other attributes of goods it adds one of the principal conditions of all use, accessibility (Kudler), with which it either newly endows them, or which it increases in degree. To this end, the merchant makes use of tools, just as the manufacturer

4 Quesnay, Dialogue sur le Commerce.

Recognized very early by Ad. Contzen, Politicorum, Lib. VIII, C. 10

(1629).

"This did not escape the notice of Frederick II. Von Raumer, Hohenstaufen, III, 535

Condillac acknowledges the productive power both of industry and of commerce; and that the service rendered by the state is at least economically indispensable. (Le Commerce et le Gouvernment, 1776, I, 6, 7, 10.) Beccaria, Economia pubblica (1769 ff.), IV, 4, 24. Boisguillebert (ob. 1714), Sur la Nature des Richesses, illustrated the utility of commerce by the picture of a number of men bound to pillars, one hundred steps apart, one with a superabundance of food but naked, a second with a superabundance of fuel, a third with a superabundance of clothing etc.; all of whom perish, because unable to exchange their respective surpluses with one another. According to Lotz, Revision, I, 217, “buying dear," apart from real fraud, means only a decrease of possible gain.

does. What spinning-wheels, looms and workshops are to the latter, ships, warehouses, cranes etc., are to the former. If production be not complete until the thing produced is made fit for its last end, consumption, commerce may be looked upon as the last link in the chain of productive labor. It, at the same time, constitutes a series of intermediate links; as without it no division of labor is possible, and without a division of labor, no higher economic productiveness. How commerce may increase the value in exchange of goods, and without in any way injuring the purchaser, needs no further illus

tration.9

SECTION L.

THE SAME SUBJECT CONTINUED.

Even Adam Smith called services, in the narrower sense of the term (§ 3), the grave and important ones of the statesman, clergyman and physician, as well as the "frivolous" ones of the opera singer, ballet-dancer and buffoon, unproductive. The labor of none of these can be fixed or incorporated in any

Verri, Meditazioni, XXIV, instead of calling the merchant productive, calls him a mediator between producers and consumers. It would be just as reasonable to call the shoemaker a mediator between the production and consumption of leather; or the cloth merchant, who cuts the material from the piece, an assistant preparatory to the tailor. The labor of commerce is especially like that of the fisherman or the turf digger, because they produce only in so far as they transfer goods from inaccessible to accessible places. See, however, Rau, Lehrbuch, I, § 103. See the demonstration of the productive power of commerce in general, as well as of what is, by way of preference, called industry, in Ad. Smith, W. of N., IV, ch. 9. A much more fundamental refutation of the Physiocratic Principle is to be found in Jacob, N. Ek., 204 ff.

* In 1843, about 55,000 tons of ice were shipped from Boston. Less than 25 cents. per ton was paid for the ice in the first instance. When packed on board ship, it was worth $2.55 per ton. The ultimate sale brought $3,575,000. Ausland, 1844, No. 278. The ancients were acquainted with a similar production of ice, the value in exchange of which might be almost entirely reduced to the labor of commerce. See Xeuoph., Memor., II, 1, 30; Athen. III, 97; Proverbs of Solomon, 25, 13.

particular object.12 But how strange it is that the labor of a violin-maker is called productive, while that of the violinplayer is called unproductive; although the product of the former has no other object than to be played on by the latter? (Garnier.) Is it not strange that the hog-raiser should be called productive, and the educator of man unproductive (List); the apothecary, who prepares a salve which alleviates for the moment, productive, the physician, unproductive, spite of the fact that his prescription in relation to diet, or his surgical operation, may radically cure the severest disease?

If the productiveness of an employment of the factors of production be made to depend on whether it is attended by a material result, no one will deny that the labor of the plowman, for instance, is productive; and no one, of Adam Smith's school, at least, that that of the clerk, who orders the raw material for the owner of the manufactory, is. They have participated indirectly in the production. But, has not the servant of the state, who protects the property of its citizens, or the physician, who preserves the health of the producer, an equally mediate but indispensable share in it? The fieldguard who keeps the crows away, every one calls productive; why, not, then, the soldier, who keeps away a far worse

1 W. of N., ch. 3. See, however, Garnier's French translation of Ad. Smith, Préf. p. IX and V, note 20. Similarly, Malthus, Principles, ch. 1, Lect. 21. Definitions, ch. 7, 10.

Bacon had already said of the nobility, clergy and literateurs: sorti reipublicæ nihil addunt (Serm., 15, 29); in opposition to which, Hobbes justly remarks, that even human labor may, like other things, be exchanged against goods of all sorts. (Leviathan, 24.) In the work, Discourse of Trade, Coyn and Credit, p. 44 ff., and p. 156, the absolute necessity of "head-work" as well as bodily labor, is conceded; but it is insisted that physicians, clergymen and jurists can never enrich a country, and that a relatively large number of them would even conduce to national poverty. (See Roscher, Geschichte der englischen Volkswirthschaftslehre, 138.) David Hume considers merchants as productive, but says that a doctor or lawyer can grow rich only at the expense of some one else. (Discourses, No. 4, On Interest.) Ferguson, very cleverly compares such a valuation of national wealth to that of a miser. Hist. of Clvil Society, VI, I.