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contended, and by some from whom the taxes. The same argument, how. better things might have been ex-ever, equally proves, that it is impospected, that the argument for the in- sible to tax the labourers at all; since come-tax, grounded on its falling on the tax, being laid out either in labour the higher and middle classes only, or in commodities, comes all back to and sparing the poor, is an error; some them; 80 that taxation has the have gone so far as to say, an impos- singular property of falling on nobody. ture; because in taking from the rich On the same showing, it would do the what they would have expended labourers no harm to take from them among the poor, the tax injures the all they have, and distribute it among poor as much as if it had been directly the other members of the community. levied from them. Of this doctrine It would all be "spent among them," we now know what to think. So far, which on this theory comes to the indeed, as what is taken from the rich same thing. The error is produced by in taxes, would, if not so taken, have not looking directly at the realities of been saved and converted into capital, the phenomena, but attending only to or even expended in the maintenance the outward mechanism of paying and and wages of servants or of any class spending. If we look at the effects of unproductive labourers, to that ex- | produced not on the money, which tent the demand for labour is no doubt merely changes hands, but on the comdiminished, and the poor injuriously modities which are used and conaffected, by the tax on the rich; and sumed, we see that, in consequence of as these effects are almost always pro- the income-tax, the classes who pay it duced in a greater or less degree, it is do really diminish their consumption. impossible so to tax the rich as that Exactly so far as they do this, they are no portion whatever of the tax can fall the persons on whom the tax falls. It on the poor. But even here the ques- is defrayed out of what they would tion arises, whether the government, otherwise have used and enjoyed. So after receiving the amount, will not far, on the other hand, as the burthen lay out as great a portion of it in the falls, not on what they would have direct purchase of labour, as the tax consumed, but on what they would payers would have done. In regard to have saved to maintain production, or all that portion of the tax, which, if spent in maintaining or paying unpronot paid to the government, would ductive labourers, to that extent the have been consumed in the form of tax forms a deduction from what would commodities (or even expended in ser- have been used and enjoyed by the vices if the payment has been advanced | labouring classes. But if the governby a capitalist), this, according to the ment, as is probably the fact, expends principles we have investigated, falls fully as much of the amount as the definitively on the rich, and not at all tax-payers would have done in the on the poor. There is exactly the same direct employment of labour, as in demand for labour, so far as this por- hiring sailors, soldiers, and policemen, tion is concerned, after the tax, as or in paying off debt, by which last before it. The capital which hitherto operation it even increases capital; employed the labourers of the country, the labouring classes not only do not remains, and is still capable of employ- lose any employment by the tax, but ing the same number. There is the may possibly gain some, and the whole same amount of produce paid in wages, of the tax falls exclusively where it or allotted to defray the feeding and was intended. clothing of labourers.

All that portion of the produce of If those against whom I am now the country which any one, not a contending were in the right, it would labourer, actually and literally conbe impossible to tax anybody except sumes for his own use, does not contri. the poor. If it is taxing the labourers, bute in the smallest degree to the to tax what is laid out in the produce maintenance of labour. No one is of labour, the labouring classes pay all | benefited by mere consumption, except the person who consumes. And a per-| or them. To know which is the sufson cannot both consume his income ferer, we must understand whose conhimself, and make it over to be consumption will have to be retrenched in sumed by others. Taking away a cer- consequence: this, whoever it be, is tain portion by taxation cannot deprive the person on whom the tax really both him and them of it, but only him | falls.


ON CIRCULATING AND FIXED CAPITAL. § 1. To complete our explanations, fulfils the whole of its office in the proon the subject of capital, it is necessary duction in which it is engaged, by a to say something of the two species single use, is called Circulating Capital. into which it is usually divided. The The term, which is not very approdistinction is very obvious, and though priate, is derived from the circumnot named, has been often adverted to, stance, that this portion of capital rein the two preceding chapters : but it is quires to be constantly renewed by the now proper to define it accurately, and sale of the finished product, and when to point out a few of its consequences. renewed is perpetually parted with in

Of the capital engaged in the pro- buying materials and paying wages; duction of any commodity, there is a so that it does its work, not by being part which, after being once used, kept, but by changing hands. exists no longer as capital; is no Another large portion of capital, longer capable of rendering service to however, consists in instruments of proproduction, or at least not the same ser. duction, of a more or less permanent vice, nor to the same sort of produc- character: which produce their effect tion. Such, for example, is the portion not by being parted with, but by being of capital which consists of materials. kept; and the efficacy of which is not The tallow and alkali of which soap is exhausted by a single use. To this made, once used in the manufacture, class belong buildings, machinery, and are destroyed as alkali and tallow; and all or most things known by the name cannot be employed any further in the of implements or tools. The durability soap manufacture, though in their al- of some of these is considerable, and tered condition, as soap, they are their function as productive instruments capable of being used as a material or is prolonged through many repetitions an instrument in other branches of of the productive operation. 'In this manufacture. In the same division class must likewise be included capital must be placed the portion of capital sunk (as the expression is) in permanent which is paid as the wages, or con- improvements of land. So also the sumed as the subsistence, of labourers. capital expended once for all, in the That part of the capital of a cotton- commencement of an undertaking, to spinner which he pays away to his prepare the way for subsequent operaworkpeople, once so paid, exists no tions: the expense of opening a mine, longer as his capital, or as a cotton for example : of cutting canals, of spinner's capital: such portion of it making roads or docks. Other exas the workmen consume, no longer amples might be added, but these are exists as capital at all: even if they sufficient. Capital which exists in any save any part, it may now be more of these durable shapes, and the return properly regarded as a fresh capital, to which is spread over a period of the result of a second act of accumula corresponding duration, is called Fixed tion. Capital which in this manner / Capital.

Of fixed capitals, some kinds require | leaves a surplus. This surplus forms to be occasionally or periodically re- the return to the capital sunk in the newed. Such are all implements and first instance, and that return does not, buildings : they require, at intervals, as in the case of machinery, terminate partial renewal by means of repairs, by the wearing out of the machine, but and are at last entirely worn out, and continues for ever. The land thus incannot be of any further service as creased in productiveness, bears & buildings and implements, but fall back value in the market, proportional to into the class of materials. In other the increase : and hence it is usual to cases, the capital does not, unless as a consider the capital which was inconsequence of some unusual accident, .vested, or sunk, in making the improverequire entire renewal : but there is ment, as still existing in the increased always some outlay needed, either value of the land. There must be no regularly or at least occasionally, to mistake, however. The capital, like keep it up. A dock or a canal, once all other capital, has been consumed. made, does not require, like a machine, It was consumed in maintaining the to be made again, unless purposely labourers who executed the improvedestroyed, or unless an earthquake or ment, and in the wear and tear of the some similar catastrophe has filled it tools by which they were assisted. up: but regular and frequent outlays But it was consumed productively, and are necessary to keep it in repair. has left a permanent result in the imThe cost of opening a mine needs not proved productiveness of an appropribe incurred a second time; but unless ated natural agent, the land. We some one goes to the expense of keeping may call the increased produce the the mine clear of water, it is soon ren joint result of the land and of a capital dered useless. The most permanent fixed in the land. But as the capital, of all kinds of fixed capital is that em having in reality been consumed, canployed in giving increased productive not be withdrawn, its productiveness ness to a natural agent, such as land. is thenceforth indissolubly blended The draining of marshy or inundated with that arising from the original tracts like the Bedford Level, the qualities of the soil; and the remunereclaiming of land from the sea, or its ration for the use of it thenceforth deprotection by embankments, are im pends, not upon the laws which govern provements calculated for perpetuity; the returns to labour and capital, but but drains and dykes require frequent upon those which govern the recomrepair. The same character of perpe- pense for natural agents. What these tuity belongs to the improvement of are, we shall see hereafter.* land by subsoil draining, which adds so much to the productiveness of the § 2. There is a great difference beclay soils ; or by permanent manures, tween the effects of circulating and that is, by the addition to the soil, not those of fixed capital, on the amount of of the substances which enter into the the gross produce of the country. Circomposition of vegetables, and which culating capital being destroyed as are therefore consumed by vegetation, such, or at any rate finally lost to the but of those which merely alter the owner, by a single use; and the prorelation of the soil to air and water; duct resulting from that one use being as sand and lime on the heavy soils, the only source from which the owner clay and marl on the light. Even such can replace the capital, or obtain any works, however, require some, though remuneration for its productive emit may be very little, occasional outlay ployment; the product must of course to maintain their full effect.

be sufficient for those purposes, or in These improvements, however, by other words, the result of a single use the very fact of their deserving that must be a reproduction equal to the title, produce an increase of return, whole amount of the circulating capiwhich, after defraying all expenditure tal used, and a profit besides. This, · necessary for keepipg them up, still ' * Infra, book ii. chap. xvi. On Rent.

however, is by no means necessary in his capital have been reproduced in the case of fixed capital. Since mar | the usual way: he has now only chinery, for example, is not wholly | those thousand quarters and his imconsumed by one use, it is not neces- provements. He will employ, in the sary that it should be wholly replaced next and in each following year, only from the product of that use. The half the number of labourers, and will machine answers the purpose of its divide among them only half the owner, if it brings in, during each in former quantity of subsistence. The terval of time, enough to cover the ex loss will soon be made up to them if pense of repairs, and the deterioration the improved land, with the diminished in value which the machine has sus- quantity of labour, produces two tained during the same time, with a thousand four hundred quarters as besurplus sufficient to yield the ordi-fore, because so enormous an accession nary profit on the entire value of the of gain will probably induce the im. machine.

prover to save a part, add it to his From this it follows that all increase capital, and become a larger employer of fixed capital, when taking place at of labour. But it is conceivable that the expense of circulating, must be, at this may not be the case ; for (supleast temporarily, prejudicial to the in-posing, as we may do, that the imterests of the labourers. This is true, provement will last indefinitely, withnot of machinery alone, but of all im- out any outlay worth mentioning to provements by which capital is sunk; keep it up) the improver will have that is, rendered permanently incapa- gained largely by his improvement if ble of being applied to the maintenance the land now yields, not two thousand and remuneration of labour. Suppose four hundred, but one thousand five that a person farms his own land, with hundred quarters ; since this will rea capital of two thousand quarters of place the one thousand quarters forming corn, employed in maintaining la- his present circulating capital, with a bourers during one year (for simplicity profit of twenty-five per cent (instead we omit the consideration of seed and of twenty as before) on the whole capital, tools), whose labour produces hiin an- fixed and circulating together. The nually two thousand four hundred improvement, therefore, may be a very quarters, being a profit of twenty per profitable one to him, and yet very cent. This profit we shall suppose injurious to the labourers. that he annually consumes, carrying The supposition, in the terms in on his operations from year to year on which it has been stated, is purely the original capital of two thousand ideal; or at most applicable only to quarters. Let us now suppose that by such a case as that of the conversion of the expenditure of half his capital he arable land into pasture, which, though effects a permanent improvement of his formerly a frequent practice, is reland, which is executed by half his garded by modern agriculturists as the labourers, and occupies them for a reverse of an improvement. The cleap year, after which he will only require, ing away of the small farmers in the for the effectual cultivation of his land, north of Scotland, within the present half as many labourers as before. The century, was however a case of it; and remainder of his capital he employs as Ireland, since the potato famine and usual. In the first year there is no the repeal of the corn-laws, is another. difference in the condition of the la- The remarkable decrease which has bourers, except that part of them have lately attracted notice in the gross received the same pay for an operation produce of Irish agriculture, is, to all on the land, which they previously appearance, partly attributable to the obtained for ploughing, sowing, and diversion of land from maintaining reaping. At the end of the year, how- human labourers to feeding cattle: and ever, the improver has not, as before, it could not have taken place without a capital of two thousand quarters of the removal of a large part of the Irish corn, Only one thousand quarters of population by emigration or death. We have thus two recent instances in true. The copyists who were thrown which what was regarded as an agri- | out of employment by the invention cultural improvement, has diminished of printing, were doubtless soon outthe power of the country to support its numbered by the compositors and population. The effect, however, of pressmen who took their place: and all the improvements due to modern the number of labouring persons now science is to increase, or at all events, occupied in the cotton manufacture is not to diminish the gross produce. But many times greater than were so occuthis does not affect the substance of pied previously to the inventions of the argument. Suppose that the im- Hargreaves and Arkwright, which provement does not operate in the shows that besides the enormous fixed manner supposed-does not enable a capital now embarked in the manufacpart of the labour previously employed ture, it also employs a far larger circu. on the land to be dispensed with—but lating capital than at any former time. only enables the same labour to raise But if this capital was drawn from a greater produce. Suppose, too, that other employments; if the funds which the greater produce, which by means of took the place of the capital sunk in the improvement can be raised from costly machinery, were supplied not by the soil with the same labour, is all any additional saving consequent on wanted, and will find purchasers. The the improvements, but by drafts on the improver will in that case require the general capital of the community; same number of labourers as before, at what better are the labouring classes the same wages. But where will he for the mere transfer? In what manner find the means of paying them? He is the loss they sustained by the conhas no longer his original capital of version of circulating into fixed capital, two thousand quarters disposable for made up to them by a mere shifting of the purpose. One thousand of them part of the remainder of the circulating are lost and gone-consumed in making capital from its old employments to & the improvement. If he is to employ new one ? as many labourers as before, and pay | All attempts to make out that the them as highly, he must borrow, or labouring classes as a collective body obtain from some other source, a thou cannot suffer temporarily by the introsand quarters to supply the deficit. duction of machinery, or by the sinking But these thousand quarters already of capital in permanent improvements, maintained, or were destined to main are, I conceive, necessarily fallacious. tain, an equivalent quantity of labour. That they would suffer in the parThey are not a fresh creation; their ticular department of industry to which destination is only changed from one the change applies, is generally adproductive employment to another; mitted, and obvious to common sense ; and though the agriculturist has made but it is often said, that though emup the deficiency in his own circulating ployment is withdrawn from labour in capital, the breach in the circulating | one department, an exactly equivalent capital of the community remains un- / employment is opened for it in others, repaired.

because what the consumers save in The argument relied on by most of the increased cheapness of one parthose who contend that machinery can ticular article enables them to augment never be injurious to the labouring their consumption of others, thereby class, is, that by cheapening produc- increasing the demand for other kinds tion it creates such an increased de- of labour. This is plausible, but, as mand for the commodity, as enables, was shown in the last chapter, involves ere long, a greater number of persons a fallacy; demand for commodities than ever to find employment in pro being a totally different thing from ducing it. This argument does not demand for labour. It is true, the conseem to me to have the weight com- sumers have now additional means of monly ascribed to it. The fact, though buying other things; but this will not too broadly stated, is, no doubt, often create the other things, unless there is

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