CHAPTER V. Consequences of the Tendency of Profits to § 1. Abstraction of capital not necessarily a national loss 2. In opulent countries, the extension of machinery not detrimental CHAPTER VI. Of the Stationary State. § 1. Stationary state of wealth and population, dreaded and deprecated by writers - 3. Probable effects of improved intelligence in causing a better 5. Examples of the association of labourers with capitalists. CHAPTER I. Of the Functions of Government in general. § 1. Necessary and optional functions of government distinguished. 2. Multifarious character of the necessary functions of government 3. Should the same percentage be levied on all amounts of income? 4. Should the same percentage be levied on perpetual and on termi- 5. The increase of the rent of land from natural causes a fit subject of peculiar taxation CHAPTER IV. Of Taxes on Commodities. § 1. A Tax on all Commodities would fall on profits CHAPTER VII. Of a National Debt. § 1. Is it desirable to defray extraordinary public expenses by loans? . 526 2. Not desirable to redeem a national debt by a general contribution 528 3. In what cases desirable to maintain a surplus revenue for the CHAPTER XI. Of the Grounds and Limits of the Laisser faire or Non-Interference Principle. § 1. Governmental intervention distinguished into authoritative and 2. Objections to government intervention--the compulsory character of the intervention itself, or of the levy of funds to support it. increase of the power and influence of government. increase of the occupations and responsibilities of government superior efficiency of private agency, owing to stronger interest but liable to large exceptions. Cases in which the consumer is an incompetent judge of the commodity. Education 9. Case of persons exercising power over others. Protection of chil- 11. Cases of delegated management 13. Case of acts done for the benefit of others than the persons con- PRINCIPLES OF POLITICAL ECONOMY. PRELIMINARY REMARKS. In every department of human affairs, Practice long precedes Science: systematic enquiry into the modes of action of the powers of nature, is the tardy product of a long course of efforts to use those powers for practical ends. The conception, accordingly, of Political Economy as a branch of science, is extremely modern; but the subject with which its enquiries are conversant has in all ages necessarily constituted one of the chief practical interests of mankind, and, in some, a most unduly engrossing one. That subject is Wealth. Writers on Political Economy profess to teach, or to investigate, the nature of Wealth, and the laws of its production and distribution including, directly or remotely, the operation of all the causes by which the condition of mankind, or of any society of human beings, in respect to this universal object of human desire, is made prosperous or the reverse. Not that any treatise on Political Economy can discuss or even enumerate all these causes; but it undertakes to set forth as much as is known of the laws and principles according to which they operate. Every one has a notion, sufficiently correct for common purposes, of what is meant by wealth. The enquiries which relate to it are in no danger of being confounded with those relating to any other of the great human interests. All know that it is one thing to be rich, another thing to be enlightened, brave, or humane; that the questions how a nation is made wealthy, and how it is made free, or virtuous, or eminent in literature, in the fine arts, in arms, or in polity, are totally distinct enquiries. Those things, indeed, are all indirectly connected, and react upon one another, A people has sometimes become free, because it had first grown wealthy; or wealthy, because it had first become free. The creed and laws of a people act powerfully upon their economical condition; and this again, by its influence on their mental development and social relations, reacts upon their creed and laws. But though the subjects are in very close contact, they are essentially different, and have never been supposed to be otherwise. But, It is no part of the design of this treatise to aim at metaphysical nicety of definition, where the ideas suggested by a term are already as determinate as practical purposes require. little as it might be expected that any mischievous confusion of ideas could take place on a subject so simple as the question, what is to be considered as wealth, it is matter of history that such confusion of ideas has existedthat theorists and practical politicians have been equally, and at one period universally, infected by it, and that for many generations it gave a thoroughly false direction to the policy of Europe. I refer to the set of doctrines designated, since the time of Adam Smith, by the appellation of the Mercantile System. B While this system prevailed, it was assumed, either expressly or tacitly, in the whole policy of nations, that wealth consisted solely of money; or of the precious metals, which, when not already in the state of money, are capable of being directly converted into it. According to the doctrines then prevalent, whatever tended to heap up money or bullion in a country added to its wealth. Whatever sent the precious metals out of a country impoverished it. If a country possessed no gold or silver mines, the only industry by which it could be enriched was foreign trade, being the only one which could bring in money. Any branch of trade which was supposed to send out more money than it brought in, however ample and valuable might be the returns in another shape, was looked upon as a losing trade. Exportation of goods was favoured and encouraged (even by means extremely onerous to the real resources of the country), because the exported goods being stipulated to be paid for in money, it was hoped that the returns would actually be made in gold and silver. Importation of anything, other than the precious metals, was regarded as a loss to the nation of the whole price of the things imported; unless they were brought in to be re-exported at a profit, or unless, being the materials or instruments of some industry practised in the country itself, they gave the power of producing exportable articles at smaller cost, and thereby effecting a larger exportation. The commerce of the world was looked upon as a struggle among nations, which could draw to itself the largest share of the gold and silver in existence; and in this competition no nation could gain anything, except by making others lose as much, or, at the least, preventing them from gaining it. can ever have appeared credible. It now In common discourse, wealth is always expressed in money. If you ask how rich a person is, you are answered that he has so many thousand pounds. All income and expenditure, all gains and losses, everything by which one becomes richer or poorer, are reckoned as the coming in or going out of so much money. It is true that in the inventory of a person's fortune are included, not only the money in his actual possession, or due to him, but all other articles of value. These, however, enter, not in their own character, but in virtue of the sums of money which they would sell for; and if they would sell for less, their owner is reputed less rich, though the things themselves are precisely the same. is true, also, that people do not grow rich by keeping their money unused, It often happens that the universal and that they must be willing to belief of one age of mankind-a belief spend in order to gain. Those who from which no one was, nor without enrich themselves by commerce, do so an extraordinary effort of genius and by giving money for goods as well as courage, could at that time be free-goods for money; and the first is as becomes to a subsequent age so palpable an absurdity, that the only difficulty then is to imagine how such a thing It necessary a part of the process as the last. But a person who buys goods for purposes of gain, does so to sell |