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labour, that he benefits the labouring supplied, were it not that the very circlasses, or adds anything to the amount cumstance which gave rise to it has set of their employment.
| at liberty a capital of the exact amount For the better illustration of the required. The very sum which the principle, let us put the following case. consumer now employs in buying velÀ consumer may expend his income vet, formerly passed into the hands of either in buying services or commodi- journeymen bricklayers, who expended ties. He may employ part of it in it in food and necessaries, which they hiring journeymen bricklayers to build now either go without, or squeeze by a house, or excavators to dig artificial their competition, from the shares of lakes, or labourers to make plantations other labourers. The labour and caand lay out pleasure-grounds; or, in- pital, therefore, which formerly prostead of this, he may expend the same duced necessaries for the use of these value in buying velvet and lace. The bricklayers, are deprived of their marquestion is, whether the difference be- ket, and must look out for other emtween these two modes of expending ployment; and they find it in making his income affects the interest of the velvet for the new demand. I do not labouring classes. It is plain that in mean that the very same labour and the first of the two cases he employs capital which produced the necessaries labourers, who will be out of employ-turn themselves to producing the velment, or at least out of that employ- vet; but, in some one or other of a ment, in the opposite case. But those hundred modes, they take the place of from whom I differ say that this is of that which does. There was capital no consequence, because in buying in existence to do one of two things velvet and lace he equally employs to make the velvet, or to produce nelabourers, namely, those who make the cessaries for the journeymen brickvelvet and lace. I contend, however, layers; but not to do both. It was at that in this last case he does not em- the option of the consumer which of ploy labourers; but merely decides in the two should happen; and if he what kind of work some other person chooses the velvet, they go without shall employ them. The consumer the necessaries. does not with his own funds pay to the For further illustration, let us supweavers and lacemakers their day's pose the same case reversed. The wages. He buys the finished com-consumer has been accustomed to buy modity, which has been produced by velvet, but resolves to discontinue that labour and capital, the labour not being expense, and to employ the same paid nor the capital furnished by him, annual sum in hiring bricklayers. If but by the manufacturer. Suppose the common opinion be correct, this that he had been in the habit of ex- change in the mode of his expenditure pending this portion of his income in gives no additional employment to hiring journeymen bricklayers, who labour, but only transfers employment laid out the amount of their wages in from velvet-makers to bricklayers. On food and clothing, which were also pro- closer inspection, however, it will be duced by labour and capital. He, seen that there is an increase of the however, determines to prefer velvet, total sum applied to the remuneration for which he thus creates an extra de- of labour. The velvet manufacturer, mand. This demand cannot be satis- supposing him aware of the diminished fied without an extra supply, nor can demand for his commodity, diminishes the supply be produced without an ex- | the production, and sets at liberty a tra capital: where, then, is the capital corresponding portion of the capital to come from? There is nothing in the employed in the manufacture. This consumer's change of purpose which capital, thus withdrawn from the makes the capital of the country maintenance of velvet-makers, is not greater than it otherwise was. It ap- the same fund with that which the cus: pears, then, that the increased demand tomer employs in maintaining brickfor velvet could not for the present be layers; it is a second fund. There are therefore two funds to be employed in / arising from the mere suddenness of a the maintenance and remuneration of change with the effects of the change labour, where before there was only itself. If when the buyer ceased to purone. There is not a transfer of em- chase, the capital employed in making ployment from velvet-makers to brick- velvet for his use necessarily perished, layers; there is a new employment | then his expending the same amount created for bricklayers, and a transfer | in hiring bricklayers would be no creaof employment from velvet-makers to i tion, but merely a transfer, of employsome other labourers, most probably ment. The increased employment those who produce the food and other which I contend is given to labour, things which the bricklayers consume. would not be given unless the capital
In answer to this it is said, that of the velvet-maker could be liberated, though money laid out in buying velvet and would not be given until it was is not capital, it replaces a capital; liberated. But every one knows that that though it does not create a new the capital invested in an employment demand for labour, it is the necessary can be withdrawn from it, if sufficient means of enabling the existing demand time be allowed. If the velvet-maker to be kept up. The funds (it may be had previous notice, by not receiving said) of the manufacturer, while locked the usual order, he will have produced up in velvet, cannot be directly applied 10001. less velvet, and an equivalent to the maintenance of labour; they do portion of his capital will have been not begin to constitute a demand for already set free. If he had no previous labour until the velvet is sold, and the notice, and the article consequently recapital which made it replaced from mains on his hands, the increase of his the outlay of the purchaser; and thus, stock will induce him next year to susit may be said, the velvet-maker and pend or diminish his production until the velvet-buyer have not two capitals, the surplus is carried off. When this but only one capital between them, process is complete, the manufacturer which by the act of purchase the buyer will find himself as rich as before, with transfers to the manufacturer: and if undiminished power of employing lainstead of buying velvet he buys bour in general, though a portion of his labour, he simply transfers this capital capital will now be employed in mainelsewhere, extinguishing as much de- taining some other kind of it. Until mand for labour in one quarter as he this adjustment has taken place, the creates in another.
demand for labour will be merely The premises of this argument are changed, not increased : but as soon as not denied. To set free a capital it has taken place, the demand for which would otherwise be locked up in labour is increased.' Where there was a form useless for the support of labour, formerly only one capital employed in is, no doubt, the same thing to the in maintaining weavers to make 10001. terests of labourers as the creation of a worth of velvet, there is now that same new capital. It is perfectly true that capital employed in making something if I expend 10001. in buying velvet, I else, and 10001. distributed among enable the manufacturer to employ bricklayers besides. There are now 10001. in the maintenance of labour, two capitals employed in remunerating which could not have been so employed two sets of labourers; while before, while the velvet remained unsold : and one of those capitals, that of the cus. if it would have remained unsold for tomer, only served as a wheel in the ever unless I bought it, then by chang- machinery by which the other capital, ing my purpose and hiring bricklayers that of the manufacturer, carried on its instead, I undoubtedly create no new employment of labour from year to year. demand for labour : for while I employ | The proposition for which I am con10001. in hiring labour on the one hand, tending is in reality equivalent to the I annihilate for ever 10001. of the following, which to some minds will velvet-maker's capital on the other. appear a truism, though to others it is But this is confounding the effects a paradox: that a person does good to
labourers, not by what he consumes on tells every one in his own case (though himself, but solely by what he does not he does not see it on the larger scale) so consume. If instead of laying out that the poor-rate which he pays is 1001. in wine or silk, I expendit in really subtracted from his own conwages, the demand for commodities is sumption ; and that no shifting of payprecisely equal in both cases: in the ment backwards and forwards will one, it is a demand for 1001. worth of enable two persons to eat the same wine or silk, in the other, for the same food. If he had not been required to value of bread, beer, labourers' clothing, | pay the rate, and had consequently fuel, and indulgences; but the la- | laid out the amount on himself, the bourers of the community have in the poor would have had as much less for latter case the value of 1001. more of their share of the total produce of the the produce of the community dis country, as he himself would have contributed among them. I have con sumed more.* sumed that much less, and made over my consuming power to them. If it
* The following case, which presents the
argument in a somewhat different shape, were not so, my having consumed less
may serve for still further illustration. would not leave more to be consumed Suppose that a rich individual, A, expends by others; which is a manifest contra a certain amount daily in wages or alms, diction. When less is not produced,
which, as soon as received, is expended and
consumed, in the form of coarse food, by the what one person forbears to consume is receivers. A dies, leaving his property to B, necessarily added to the share of those who discontinues this item of expenditure, to whom he transfers his power of pur
and expends in lieu of it the same sum each
day in delicacies for his own table. I have chase. In the case supposed I do not
chosen this supposition, in order that the necessarily consume less ultimately, two cases may be similar in all their cir. since the labourers whom I pay may
cumstances, except that which is the subject build a house for me, or make some
of comparison. In order not to obscure the
essential facts of the case by exhibiting them thing else for my future consumption. through the hazy medium of a money transBut I have at all events postponed my action, let us further suppose that A, and consumption, and have turned over
B after him, are landlords of the estate on
which both the food consumed by the repart of my share of the present produce
cipients of A's disbursements, and the artiof the community to the labourers. If I cles of luxury supplied
produced; and that their rent is paid to is not from the existing produce, but
them in kind, they giving previous notice
what description of produce they shall refrom a subsequent addition made to it. quire. The question is, whether B's expenI have therefore left more of the exist diture gives as much employment or as much ing produce to be consumed by others;
food to his poorer neighbours as A's gave.
From the case as stated, it seems to follow and have put into the possession of
that while A lived, that portion of his income labourers the power to consume it. which he expended in wages or alms, would
be drawn by him from the farm in the shape
of food for labourers, and would be used as absurdum of the opposite doctrine than
such ; while B, who came after him, would that afforded by the Poor Law. If it require, instead of this, an equivalent value be equally for the benefit of the labour in expensive articles of food, to be consumed ing classes whether I consume my
in his own household: that the farmer,
therefore, would, under B's régime, produce means in the form of things purchased
that much less of ordinary food, and more of for my own use, or set aside a portion expensive delicacies, for each day of the in the shape of wages or alms for their year, than was produced in A's time, and
that there would be that amount less of direct consumption, on what ground
food shared, throughout the year, among the can the policy be justified of taking my labouring and poorer classes. This is what money from me to support paupers ?
would be conformable to the principles laid since my unproductive expenditure
down in the text. Those who think differ
ently, must, on the other hand, suppose that would have equally benefited them,
the luxuries required by B would be produced, not instead of, but in addition to, the
food previously supplied to A's labourers, and it, why should it not be allowed the
that the aggregate produce of the country
would be increased in amount. But when it double indulgence? But common sense / is asked, how this double production would
It appears, then, that a demand de- , in the velvet manufacture, and not in. layed until the work is completed, and tending to quit it, this is of the utmost furnishing no advances, but only re- importance. To them, a falling off in imbursing advances made by others, the demand is a real loss, and one contributes nothing to the demand for which, even if none of their goods labour; and that what is so expended, finally perish unsold, may mount to is, in all its effects, so far as regards any height, up to that which would the employment of the labouring class, make them choose, as the smaller evil, a mere nullity; it does not and cannot to retire from the business. On the create any employment except at the contrary, an increased demand enables expense of other employment which them to extend their transactions to existed before.
make a profit on a larger capital, if But though a demand for velvet does they have it, or can borrow it; and, nothing more in regard to the employ- | turning over their capital more rapidly, ment for labour and capital, than to they will employ their labourers more determine so much of the employment constantly, or employ a greater numwhich already existed, into that par- ber than before. So that an increased ticular channel instead of any other ; demand for a commodity does really, still, to the producers already engaged in the particular department, often be effected-how the farmer, whose capital sonally concerned, in A's manner nor in his and labour were already fully employed, own, really saves that portion of his income, would be enabled to supply the new wants of and lends it to the farmer. And if, in subB, without producing less of other things; sequent years, confining himself within the the only mode which presents itself is, that year's income, he leaves the farmer in arrears he should first produce the food, and then, to that amount, it becomes an additional giving that food to the labourers whom A capital, with which the farmer may performerly fed, should by means of their manently employ and feed A's labourers. labour, produce the luxuries wanted by B. Nobody pretends that such a change as this, This, accordingly, when the objectors are a change from spending an income in wages hard pressed, appears to be really their of labour, to saving it for investment, demeaning. But it is an obvious answer, that | prives any labourers of employment. What on this supposition, B must wait for his is affirmed to have that effect is, the change luxuries till the second year, and they are from hiring labourers to buying commodities wanted this year. By the original hypo for personal use; as represented by our thesis, he consumes his luxurious dinner day original hypothesis. by day, pari pas8u with the rations of bread In our illustration we have supposed no and potatoes formerly served out by A to his buying and selling, or use of money. But labourers. There is not time to feed the the case as we have put it, corresponds with labourers first, and supply B afterwards: actual fact in everything except the details he and they cannot both have their wants of the mechanism. The whole of any ministered to: he can only satisfy his own country is virtually a single farm and manudemand for commodities, by leaving as much factory, from which every member of the of theirs, as was formerly supplied from that community draws his appointed share of the fund, unsatisfied.
produce, having a certain number of counIt may, indeed, be rejoined by an objector, ters, called pounds sterling, put into his that, since on the present showing, time is hands, which, at his convenience, he brings the only thing wanting to render the expen back and exchanges for such goods as he prediture of B consistent with as large an em- fers, up to the limit of the amount. He does ployment to labour as was given by A, why not, as in our imaginary case, give notice may we not suppose that B postpones his in- beforehand what things he shall require; creased consumption of personal luxuries but the dealers and producers are quite capa. until they can be furnished to him by the ble of finding it out by observation, and any labour of the persons whom A employed ? In change in the demand is promptly followed that case, it may be said, he would employ by an adaptation of the supply to it. If a and feed as much labour as his predecessors. consumer changes from paying away a part Undoubtedly he would; but why? Because of his income in wages, to spending it that his income would be expended in exactly same day (not some subsequent and distant the same manner as his predecessor's; it day) in things for his own consumption, and would be expended in wages. A reserved perseveres in this altered practice until profrom his personal consumption a fund which duction has had time to adapt itself to the he paid away directly to labourers; B does alteration of demand, there will from that the same, only instead of paying it to them time be less food and other articles for the himself, he leaves it in the hands of the use of labourers, produced in the country, by farmer, who pays it to them for him. On exactly the value of the extra luxuries now this supposition, B, in the first year, Deither demanded; and the labourers, as a class, expending the amount, as far as he is per- will be worse off by the precise amount.
cause a greater employment to be of an extension of the market for a comgiven to labour by the same capital. modity, in rendering possible an inThe mistake lies in not perceiving that creased development of the division of in the cases supposed, this advantage labour, and hence a more effective disis given to labour and capital in one tribution of the productive forces of sodepartment, only by being withdrawn ciety. This, like the former, is more from another; and that when the an exception in appearance, than it is change has produced its natural effect in reality. It is not the money paid by of attracting into the employment ad- the purchaser which remunerates the ditional capital proportional to the in- labour; it is the capital of the procreased demand, the advantage itself | ducer: the demand only determines in ceases.
| what manner that capital shall be emThe grounds of a proposition, when ployed, and what kind of labour it shal' well understood, usually give a tolera- remunerate; but if it determines that ble indication of the limitations of it. the commodity shall be produced on a The general principle, now stated, is, large scale, it enables the same capital that demand for commodities deter- to produce more of the commodity, and mines merely the direction of labour, may, by an indirect effect in causing and the kind of wealth produced, but an increase of capital, produce an evennot the quantity or efficiency of the tual increase of the remuneration of the labour, or the aggregate of wealth. labourer. But to this there are two exceptions. The demand for commodities is a First; when labour is supported, but consideration of importance rather in not fully occupied, a new demand for the theory of exchange, than in that something which it can produce, may of production. Looking at things in stimulate the labour thus supported to the aggregate, and permanently, the increased exertions, of which the re- remuneration of the producer is derived sult may be an increase of wealth, to from the productive power of his own the advantage of the labourers them- capital. The sale of the produce for selves and of others. Work which can money, and the subsequent expenditure be done in the spare hours of persons of the money in buying other commosubsisted from some other source, can dities, are a mere exchange of equiva(as before remarked) be undertaken lent values, for mutual accommodation. without withdrawing capital from other It is true that, the division of employoccupations, beyond the amount (often ments being one of the principal means very small) required to cover the ex- of increasing the productive power of pense of tools and materials, and even labour, the power of exchanging gives this will often be provided by savings rise to a great increase of the produce; made expressly for the purpose. The but even then it is production, not exreason of our theorem thus failing, the change, which remunerates labour and theorem itself fails, and employment capital. We cannot too strictly repreof this kind may, by the springing up sent to ourselves the operation of exof a demand for the commodity, be change, whether conducted by barter called into existence without depriving or through the medium of money, as labour of an equivalent amount of em- the mere mechanism by which each ployment in any other quarter. The person transforms the remuneration of demand does not, even in this case, his labour or of his capital into the paroperate on labour any otherwise than ticular shape in which it is most convethrough the medium of an existing nient to him to possess it; but in no wise capital; but it affords an inducement the source of the remuneration itself. which causes that capital to set in motion a greater amount of labour than § 10. The preceding principles deit did before.
monstrate the fallacy of many popular The second exception, of which I arguments and doctrines, which are shall speak at length in a subsequent continually reproducing themselves in chapter, consists in the known effect | new forms. For example, it has been