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$ 6. To return to our fundamental few ships and machines; and even theorem. Everything which is pro- these would not in most cases have duced is consumed; both what is saved survived so long, if fresh labour had and what is said to be spent; and the not been employed within that period former quite as rapidly as the latter. in putting them into repair. The land All the ordinary forms of language tend subsists, and the land is almost the to disguise this. When people talk of only thing that subsists. Everythirg the ancient wealth of a country, of which is produced perishes, and most riches inherited from ancestors, and things very quickly. Most kinds of similar expressions, the idea suggested capital are not fitted by their nature to is, that the riches so transmitted were be long preserved. There are a few, produced long ago, at the time when and but a few productions, capable of they are said to have been first ac- a very prolonged existence." Westquired, and that no portion of the minster Abbey has lasted many cencapital of the country was produced turies, with occasional repairs; some this year, except as much as may have Grecian sculptures have existed above been this year added to the total two thousand years; the Pyramids amount. The fact is far otherwise. perhaps double or treble that time. The greater part, in value, of the But these were objects devoted to unwealth now existing in England has productive use. If we except bridges been produced by human hands within and aqueducts (to which may in some the last twelve months. A very small countries be added tanks and embankproportion indeed of that large aggre- ments), there are few instances of any gate was in existence ten years ago ; edifice applied to industrial purposes

of the present productive capital of which has been of great duration ; the country scarcely any part, except such buildings do not hold out against farm-houses and manufactories, and a wear and tear, nor is it good economy

dividuals, or raise up a compensation, more which he loses is transferred bodily to them, or less ample, as a consequence of the detri- | and may be added to their capital : his inment itself. One of these is that spend. creased personal consumption being made up thrifts do not usually succeed in consuming by the privations of the other purchasers, all they spend. Their habitual carelessness who have obtained less than usual of their as to expenditure causes them to be cheated | accustomed gratification for the same equivaand robbed on all quarters, often by persons lent. On the other hand, a counter-process of frugal habits. Large accumulations are must be going on somewhere, since the continually made by the agents, stewards, prodigal must have diminished his purchases and even domestic servants, of improvident | in some other quarter to balance the augpersons of fortune; and they pay much mentation in this; he has perhaps called in higher prices for all purchases than people | funds employed in sustaining productive laof careful habits, which accounts for their | bour, and the dealers in subsistence and in being popular as customers. They are, the instruments of production have had comtherefore, actually not able to get into their modities left on their hands, or have repossession and destroy a quantity of wealth ceived, for the usual amount of commodities, by any means equivalent to the fortune which | a less than usual return. But such losses of they dissipate. Much of it is merely trans income or capital, by industrious persons, ferred to others, by whom a part may be except when of extraordinary amount, are saved. Another thing to be observed is, generally made up by increased pinching and that the prodigality of some may reduce privation; so that the capital of the coinothers to a forced economy. Suppose a sud munity may not be, on the whole, impaired, den demand for some article of luxury, and the prodigal may have had his selfcaused by the caprice of a prodigal, which indulgence at the expense not of the permanot having been calculated on beforehand, I nent resources, but of the temporary pleathere has been no increase of the usual sures and comforts of others. For in every supply. The price will rise; and may rise case the community are poorer by what any beyond the means or the inclinations of someone spends, unless others are in consequence of the habitual consumers, who may in con- | led to curtail their spending. There are yet sequence forego theiraccustomed indulgence, other and more recondite ways in which the and save the amount. If they do not, but profusion of some may bring about its comcontinue to spend as great a value as before pensation in the extra savings of others; but on the commodity, the dealers in it obtain, these can only be considered in that part for only the same quantity of the article, a of the Fourth Book, which treats of the return increased by the whole of what the limiting principle to the accumulation of spendthrift has paid; and thus the amount / capital.

res and com. but of the lot of ti

to construct them of the solidity | knowledge which they had before, with necessary for permanency. Capital their land and its permanent improveis kept in existence from age to age ments undestroyed, and the more durnot by preservation, but by perpetual able buildings probably unimpaired, or Teproduction: every part of it is used only partially injured, they have nearly and destroved, generally very soon after all the requisites for their former it is produced, but those who consume | amount of production. If there is as it are employed meanwhile in produc- much of food left to them, or of valuing more. The growth of capital is ables to buy food, as enables them by similar to the growth of population. any amount of privation to remain Every individual who is born, Jies, but alive and in working condition, they in each year the number born exceeds will in a short time have raised as the number who die: the population, great a produce, and acquired collectherefore, always increases, though not tively as great wealth and as great a one person of those composing it was capital, as before ; by the mere contialive until a very recent date.

nuance of that ordinary amount of ex

ertion which they are accustomed to § 7. This perpetual consumption employ in their occupations. Nor does and reproduction of capital affords the this evince any strength in the princiexplanation of what has so often excited ple of saving, in the popular sense of wonder, the great rapidity with which the term, since what takes place is not countries recover from a state of devas- intentional abstinence, but involuntary tation; the disappearance, in a short privation. time, of all traces of the mischiefs done 1 Yet so fatal is the habit of thinking by earthquakes, floods, hurricanes, and through the medium of only one set of the ravages of war. An enemy lays technical phrases, and so little reason waste a country by fire and sword, and have studious men to value themselves destroys or carries away nearly all the on being exempt from the very same moveable wealth existing in it: all the mental infirmities which beset the vulinhabitants are ruined, and yet in a gar, that this simple explanation was few years after, everything is much as never given (so far as I am aware) by it was before. This vis medicatrix any political economist before Dr. naturce has been a subject of sterile Chalmers; a writer many of whose astonishment, or has been cited to ex- opinions I think erroneous, but who has emplify the wonderful strength of the always the merit of studying phenomena principle of saving, which can repair at first hand, and expressing them in a such enormous losses in so brief an in- language of his own, which often unterval. There is nothing at all won- covers aspects of the truth that the rederful in the matter. What the enemy ceived phraseologies only tend to hide. have destroyed, would have been destroyed in a little time by the inhabit- & 8. The same author carries out ants themselves: the wealth which this train of thought to some important

they so rapidly reproduce, would have conclusions on another closely connected · needed to be reproduced and would subject, that of government loans for

have been reproduced in any case, and war purposes or other unproductive exprobably in as short a time. Nothing penditure. These loans, being drawn is changed, except that during the re- from capital (in lieu of taxes, which production they have not now the ad- would generally have been paid from vantage of consuming what had been income, and made up in part or altoproduced previously. The possibility gether by increased economy) must, of a rapid repair of their disasters, according to the principles we have mainly depends on whether the country laid down, tend to impoverish the has been depopulated. If its effective country: yet the years in which expopulation have not been extirpated at penditure of this sort has been on the the time, and are not starved after- greatest scale, have often been years of wards; then, with the same skill and great apparent prosperity: the wealth

and resources of the country, instead of gain to those whose prosperity usually diminishing, have given every sign of passes, in the estimation of society, for rapid increase during the process, and national prosperity.* of greatly expanded dimensions after This leads to the vexed question to its close. This was confessedly the which Dr. Chalmers has very particucase with Great Britain during the last larly adverted; whether the funds relong Continental war; and it would quired by a government for extraortake some space to enumerate all the dinary unproductive expenditure, are unfounded theories in political economy, best raised by loans, the interest only to which that fact gave rise, and to being provided by taxes, or whether which it secured temporary credence; taxes should be at once laid on to the almost all tending to exalt unproduc- whole amount; which is called in the tive expenditure, at the expense of pro- financial vocabulary, raising the whole ductive. Without entering into all the of the supplies within the year. Dr. causes which operated, and which Chalmers is strongly for the latter commonly do operate, to prevent these method. He says, the common notion extraordinary drafts on the productive is that in calling for the whole amount resources of a country from being so in one year, you require what is either much felt as it might seem reasonable impossible, or very inconvenient; that to expect, we will suppose the most the people cannot, without great hard. unfavourable case possible : that the ship, pay the whole at once out of their whole amount borrowed and destroyed by the government, was abstracted by

* On the other hand, it must be remem.

bered that war abstracts from productive the lender from a productive employ

employment not only capital, but likewise ment in which it had actually been in labourers, that the funds withdrawn from vested. The capital, therefore, of the

the remuneration of productive labourers

are partly employed in paying the same or country, is this year diminished by so

other individuals for unproductive labour ; much. But unless the amount ab and that by this portion of its effects, war stracted is something enormous, there expenditure acts in precisely the opposite is no reason in the nature of the case

manner to that which Dr. Chalmers points

out, and, so far as it goes, directly counterwhy next year the national capital

acts the effects described in the text. So far should not be as great as ever. The as labourers are taken from production to loan cannot have been taken from that man the army and navy, the labouring

classes are not damaged, the capitalists are portion of the capital of the country

not benefited, and the general produce of which consists of tools, machinery, and the country is diminished by war expendi. buildings. It must have been wholly ture. Accordingly, Dr. Chalmers's doctrine, drawn from the portion employed in

though true of this country, is wholly inap

plicable to countries differently circumpaying labourers : and the labourers

stanced; to France, for example, during the will suffer accordingly. But if none of Napoleon wars. At that period the draught them are starved; if their wages can

on the labouring population of France, for a

long series of years, was enormous, while bear such an amount of reduction, or

the funds which supported the war were if charity interposes between them and mostly supplied by contributions levied on absolute destitution, there is no reason the countries overrun by the French arms, that their labour should produce less

a very small proportion alone consisting of

French capital. In France, accordingly, the in the next year than in the year wages of labour did not fall, but rose; the before. If they produce as much as employers of labour were not benefited, but usual, having been paid less by so

injured; while the wealth of the country was

impaired by the suspension or total loss of 80 many millions sterling, these millions

vast an amount of its productive labour. In are gained by their employers. The England all this was reversed. England breach made in the capital of the employed comparatively few additional

soldiers and sailors of her own, while she country is thus instantly repaired, but

diverted hundreds of millions of capital from repaired by the privations and often

productive employment, to supply munitions of war and support armies for her Continental allies. Consequently, as shown in the

text, her labourers suffered, her capitalists even in the most unfavourable circum

prospered, and her permanent productive stances, may easily be times of great resources did not fall off.


yearly income, and that it is much / ment, but with the new accumulations better to require of them a small pay- constantly making from income, and ment every year in the shape of interest, often with a part of them which, if not than so great a sacrifice once for all. so taken, would have migrated to coloTo which his answer is, that the sacri- nies, or sought other investments fice is made equally in either case. abroad. In these cases (which will Whatever is spent, cannot but be be more particularly examined heredrawn from yearly income. The whole after*), the sum wanted may be oband every part of the wealth produced tained' by loan without detriment to the in the country, forms, or helps to form, labourers, or derangement of the nathe yearly income of somebody. The tional industry, and even perhaps with privation which it is supposed must advantage to both, in comparison with result from taking the amount in the raising the amount by taxation; since shape of taxes, is not avoided by taking taxes, especially when heavy, are a.. it in a loan. The suffering is not | most always partly paid at the expense averted, but only thrown upon the of what would otherwise have been labouring classes, the least able, and saved and added to capital. Besides, who least ought, to bear it: while all in a country which makes so great the inconveniences, physical, moral, yearly additions to its wealth that a and political, produced by maintaining part can be taken and expended untaxes for the perpetual payment of the productively without diminishing capiinterest, are `incurred in pure loss. tal, or even preventing a considerable Whenever capital is withdrawn from increase, it is evident that even if the production, or from the fund destined whole of what is so taken would have for production, to be lent to the State become capital, and obtained employand expended unproductively, that ment in the country, the effect on the whole sum is withheld from the labouring classes is far less prejudicial, labouring classes : the loan, therefore, and the case against the loan system is in truth paid off the same year; the much less strong, than in the case first whole of the sacrifice necessary for supposed. This brief anticipation of a paying it off is actually made : only it discussion which will find its proper is paid to the wrong persons, and place elsewhere, appeared necessary to therefore does not extinguish the claim; 1 prevent false inferences from the preand paid by the very worst of taxes, à mises previously laid down. tax exclusively on the labouring class. And after having, in this most painful 89. We now pass to a fourth funand unjust way, gone through the damental theorem respecting Capital, whole effort necessary for extinguishing which is, perhaps, oftener overlooked the debt, the country remains charged or misconceived than even any of the with it, and with the payment of its foregoing. What supports and employs interest in perpetuity.

productive labour, is the capital exThese views appear to me strictly pended in setting it to work, and not just, in so far as the value absorbed in the demand of purchasers for the proloans would otherwise have been em duce of the labour when completed. ployed in productive industry within Demand for commodities is not demand the country. The practical state of the for labour. The demand for commodicase, however, seldom exactly corre- ties determines in what particular sponds with this supposition. The branch of production the labour and loans of the less wealthy countries are capital shall be employed; it determade chiefly with foreign capital, which mines the direction of the labour ; but would not, perhaps, have been brought not the more or less of the labour itself, in to be invested on any less security or of the maintenance or payment of than that of the government: while the labour. These depend on the those of rich and prosperous countries amount of the capital, or other funds are generally made, not with funds withdrawn from productive employ. * Infra, book iv. chaps. iv. V. _


directly devoted to the sustenance and continued by merely not replacing thy remuneration of labour.

| machinery as it wears out, and not reSuppose, for instance, that there is investing the money as it comes in from a demand for velvet; a fund ready to the sale of the produce. The capital be laid out in buying velvet, but no is thus ready for a new employment, in capital to establish the manufacture. which it will maintain as much labour It is of no consequence how great the as before. The manufacturer and his demand may be ; unless capital is at work-people lose the benefit of the skill tracted into the occupation, there will and knowledge which they had acbe no velvet made, and consequently quired in the particular business, and none bought; unless, indeed, the desire which can only be partially of use to of the intending purchaser for it is so them in any other; and that is the strong, that he employs part of the amount of loss to the community by the price he would have paid for it, in change. But the labourers can still making advances to work-people, that work, and the capital which previously they may employ themselves in making employed them will, either in the same velvet; that is, unless he converts part hands, or by being lent to others, of his income into capital, and invests employ either those labourers or an that capital in the manufacture. Let equivalent number in some other occuus now reverse the hypothesis, and sup pation, pose that there is plenty of capital This theorem, that to purchase proready for making velvet, but no de duce is not to employ labour; that the mand. Velvet will not be made; but demand for labour is constituted by the there is no particular preference on the wages which precede the production, part of capital for making velvet. Ma- and not by the demand which may nufacturers and their labourers do not exist for the commodities resulting from produce for the pleasure of their cus- the production; is a proposition which tomers, but for the supply of their own greatly needs all the illustration it can wants, and having still the capital and receive. It is, to common apprehenthe labour which are the essentials of sion, a paradox; and even among poliproduction, they can either produce tical economists of reputation, I can something else which is in demand, or hardly point to any, except Mr. Ricardo if there be no other demand, they and M. Say, who have kept it conthemselves have one, and can produce stantly and steadily in view. Almost the things which they want for their all others occasionally express themown consumption. So that the employ selves as if a person who buys comment afforded to labour does not depend modities, the produce of labour, was an on the purchasers, but on the capital. employer of labour, and created a deI am, of course, not taking into con mand for it as really, and in the same sideration the effects of a sudden sense, as if he bought the labour itself change. If the demand ceases unex directly, by the payment of wages. It pectedly, after the commodity to supply is no wonder that political economy it is already produced, this introduces advances slowly, when such a question a different element into the question: as this still remains open at its very the capital has actually been consumed threshold. I apprehend, that if by de.. in producing something which nobody | mand for labour be meant the demand wants or uses, and it has therefore by which wages are raised, or the numperished, and the employment which ber of labourers in employment init gave to labour is at an end, not be creased, demand for commodities does cause there is no longer a demand, but not constitute demand for labour. I because there is no longer a capital. conceive that a person who buys comThis case therefore does not test the modities and consumes them himself, principle. The proper test is, to sup does no good to the labouring classes ; pose that the change is gradual and and that it is only by what he abstains foreseen, and is attended with no waste from consuming, and expends in direct of capital, the manufacture being dis- payments to labourers in exchange for

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