As domestic economy regulates the acts and habits of a household, political economy regulates those of a society or State, with reference to its maintenance.
Political economy is neither an art nor a science,[66]but a system of conduct and legislature, founded on the sciences, directing the arts, and impossible, except under certain conditions of moral culture.
By the "maintenance" of a State is to be understood the support of its population in healthy and happy life; and the increase of their numbers, so far as that increase is consistent with their happiness. It is not the object of political economy to increase the numbers of a nation at the cost of common health or comfort; nor to increase indefinitely the comfort of individuals, by sacrifice of surrounding lives, or possibilities of life.
The assumption which lies at the root of nearly all erroneous reasoning on political economy—namely, that its object is to accumulate money or exchangeable property—may be shown in few words to be without foundation. For no economist would admit national economy to be legitimate which proposed to itself only the building of a pyramid of gold. He would declare the gold to be wasted, were it to remain in the monumental form, and would say it ought to be employed. But to what end? Either it must be used only to gain more gold, and build a larger pyramid, or to some purpose other than the gaining of gold. And this other purpose, however at first apprehended, will be found to resolve itself finally into the service of man—that is to say, the extension, defence, or comfort of his life. The golden pyramid may perhaps be providently built, perhaps improvidently; but, at all events, the wisdom or folly of the accumulation can only be determined by our having first clearly stated the aim of all economy, namely, the extension of life.
If the accumulation of money, or of exchangeable property, were a certain means of extending existence, it would be useless, in discussing economical questions, to fix our attention upon the more distant object—life—instead of the immediate one—money. But it is not so. Money may sometimes be accumulated at the cost of life, or by limitations of it; that is to say, either by hastening the deaths of men, or preventing their births. It is therefore necessary to keep clearly in view the ultimate object of economy, and to determine the expediency of minor operations with reference to that ulterior end. It has been just stated that the object of political economy is the continuance not only of life, but of healthy and happy life. But all true happiness is both a consequence and cause of life; it is a sign of its vigour, and means of its continuance. All true suffering is in like manner a consequence and cause of death. I shall therefore, in future, use the word "Life" singly: but let it be understood to include in its signification the happiness and power of the entire human nature, body and soul.
That human nature, as its Creator made it, and maintains it wherever His laws are observed, is entirely harmonious.No physical error can be more profound, no moral error more dangerous than that involved in the monkish doctrine of the opposition of body to soul. No soul can be perfect in an imperfect body; no body perfect without perfect soul. Every right action and true thought sets the seal of its beauty on person and face; every wrong action and foul thought its seal of distortion; and the various aspects of humanity might be read as plainly as a printed history, were it not that the impressions are so complex that it must always in some cases—and, in the present state of our knowledge, in all cases—be impossible to decipher them completely. Nevertheless, the face of a consistently just, and of a consistently unjust person, may always be rightly discerned at a glance; and if the qualities are continued by descent through a generation or two, there arises a complete distinction of race. Both moral and physical qualities are communicated by descent, far more than they can be developed by education (though both may be destroyed for want of education), and there is as yet no ascertained limit to the nobleness of person and mind which the human creature may attain, by persevering observance of the laws of God respecting its birth and training. We must therefore yet farther define the aim of political economy to be "the multiplication of human life at the highest standard." It might at first seem questionable whether we should endeavour to maintain a small number of persons of the highest type of beauty and intelligence, or a larger number of an inferior class. But I shall be able to show in the sequel, that the way to maintain the largest number is first to aim at the highest standard. Determine the noblest type of man, and aim simply at maintaining the largest possible number of persons of that class, and it will be found that the largest possible number of every healthy subordinate class must necessarily be produced also.
The perfect type of manhood, as just stated, involves the perfections (whatever we may hereafter determine these to be) of his body, affections, and intelligence. The material things, therefore, which it is the object of political economy to produce and use (or accumulate for use), are things which serve either to sustain and comfort the body, or exerciserightly the affections and form the intelligence.[67]Whatever truly serves either of these purposes is "useful" to man, wholesome, healthful, helpful, or holy. By seeking such things, man prolongs and increases his life upon the earth.
On the other hand, whatever does not serve either of these purposes,—much more whatever counteracts them,—is in like manner useless to man, unwholesome, unhelpful, or unholy; and by seeking such things man shortens and diminishes his life upon the earth. And neither with respect to things useful or useless can man's estimate of them alter their nature. Certain substances being good for his food, and others noxious to him, what he thinks or wishes respecting them can neither change their nature, nor prevent their power. If he eats corn, he will live; if nightshade, he will die. If he produce or make good and beautiful things, they will "recreate" him (note the solemnity and weight of the word); if bad and ugly things, they will "corrupt" or break in pieces—that is, in the exact degree of their power, kill him. For everyhour of labour, however enthusiastic or well intended, which he spends for that which is not bread, so much possibility of life is lost to him. His fancies, likings, beliefs, however brilliant, eager, or obstinate, are of no avail if they are set on a false object. Of all that he has laboured for, the eternal law of heaven and earth measures out to him for reward, to the utmost atom, that part which he ought to have laboured for, and withdraws from him (or enforces on him, it may be)inexorably that part which he ought not to have laboured for. The dust and chaff are all, to the last speck, winnowed away, and on his summer threshing-floor stands his heap of corn; little or much, not according to his labour, but to his discretion. No "commercial arrangements," no painting of surfaces nor alloying of substances, will avail him a pennyweight. Nature asks of him calmly and inevitably, What have you found, or formed—the right thing or the wrong? By the right thing you shall live; by the wrong you shall die.
To thoughtless persons it seems otherwise. The world looks to them as if they could cozen it out of some ways and means of life. But they cannot cozenIT; they can only cozen their neighbours. The world is not to be cheated of a grain; not so much as a breath of its air can be drawn surreptitiously. For every piece of wise work done, so much life is granted; for every piece of foolish work, nothing; for every piece of wicked work, so much death. This is as sure as the courses of day and night. But when the means of life are once produced, men, by their various struggles and industries of accumulation or exchange, may variously gather, waste, restrain, or distribute them; necessitating, in proportion to the waste or restraint, accurately so much more death. The rate and range of additional death is measured by the rate and range of waste, and is inevitable;—the only question (determined mostly by fraud in peace, and force in war) is, Who is to die, and how?
Such being the everlasting law of human existence, the essential work of the political economist is to determine what are in reality useful and life-giving things, and by what degrees and kinds of labour they are attainable and distributable. This investigation divides itself under three great heads—first, of Wealth; secondly, of Money; and thirdly, of Riches.
These terms are often used as synonymous, but they signify entirely different things. "Wealth," consists of things in themselves valuable; "Money," of documentary claims to the possession of such things; and "Riches" is a relative term, expressing the magnitude of the possessions of one person or society as compared with those of other persons or societies.
The study of Wealth is a province of natural science:—it deals with the essential properties of things.
The study of Money is a province of commercial science:—it deals with conditions of engagement and exchange.
The study of Riches is a province of moral science:—it deals with the due relations of men to each other in regard of material possessions; and with the just laws of their association for purposes of labour.
I shall in this paper shortly sketch out the range of subjects which will come before us as we follow these three branches of inquiry.
Wealth, it has been said, consists of things essentially valuable. We now, therefore, need a definition of "value."
Value signifies the strength or "availing" of anything towards the sustaining of life, and is always twofold; that is to say, primarily,Intrinsic, and, secondarily,Effectual.
The reader must, by anticipation, be warned against confusing value with cost, or with price. Value is the life-giving power of anything; cost, the quantity of labour required to produce it; price, the quantity of labour which its possessor will take in exchange for it. Cost and price are commercial conditions, to be studied under the head of Money.
Intrinsic value is the absolute power of anything to support life. A sheaf of wheat of given quality and weight has in it a measurable power of sustaining the substance of the body; a cubic foot of pure air, a fixed power of sustaining its warmth; and a cluster of flowers of given beauty, a fixed power of enlivening or animating the senses and heart.
It does not in the least affect the intrinsic value of the wheat, the air, or the flowers, that men refuse or despise them. Used or not, their own power is in them, and that particular power is in nothing else.
But in order that this value of theirs may become effectual, a certain state is necessary in the recipient of it. The digesting, the breathing, and perceiving functions must be perfect in the human creature before the food, air, or flowers can become their full value to it. The production of effectual value, therefore, always involves two needs; first, the production of a thing essentially useful; then the production of the capacity to use it. Where the intrinsic value andacceptant capacity come together there isEffectualvalue, or wealth. Where there is either no intrinsic value, or no acceptant capacity, there is no effectual value; that is to say, no wealth. A horse is no wealth to us if we cannot ride, nor a picture if we cannot see, nor can any noble thing be wealth, except to a noble person. As the aptness of the user increases, the effectual value of the thing used increases; and in its entirety can co-exist only with perfect skill of use, or harmony of nature. The effectual value of a given quantity of any commodity existing in the world at any moment is therefore a mathematical function of the capacity existing in the human race to enjoy it. Let its intrinsic value be represented byx, and the recipient faculty byy; its effectual value isx y, in which the sum varies as either co-efficient varies, is increased by either's increase,[68]and cancelled by either's absence.
Valuable material things may be conveniently referred to five heads:—
1. Land, with an associated air, water, and organisms.
2. Houses, furniture, and instruments.
3. Stored or prepared food and medicine, and articles of bodily luxury, including clothing.
4. Books.
5. Works of art.
We shall enter into separate inquiry as to the conditions of value under each of these heads. The following sketch of the entire subject may be useful for future reference:—
1. Land. Its value is twofold—
A. As producing food and mechanical power.B. As an object of sight and thought, producing intellectual power.
A. As producing food and mechanical power.B. As an object of sight and thought, producing intellectual power.
A. Its value, as a means of producing food and mechanical power, varies with its form (as mountain or plain), with its substance (in soil or mineral contents), and with its climate. All these conditions of intrinsic value, in order to give effectual value, must be known and complied with by the men who have to deal with it; but at any given time, or place, the intrinsic value is fixed; such and such a piece of land, with its associated lakes and seas, rightly treated in surface and substance, can produce precisely so much food and power, and no more. Its surface treatment (agriculture) and substance treatment (practical geology and chemistry), are the first roots of economical science. By surface treatment, however, I mean more than agriculture as commonly understood; I mean land and sea culture;—dominion over both the fixed and the flowing fields;—perfect acquaintance with the laws of climate, and of vegetable and animal growth in the given tracts of earth or ocean, and of their relations regulating especially the production of those articles of food which, being in each particular spot producible in the highest perfection, will bring the best price in commercial exchanges.
B. The second element of value in land is its beauty, united with such conditions of space and form as are necessary for exercise, or pleasant to the eye, associated with vital organism.
Land of the highest value in these respects is that lying in temperate climates, and boldly varied in form; removed from unhealthy or dangerous influences (as of miasm or volcano); and capable of sustaining a rich fauna and flora. Such land, carefully tended by the hand of man, so far as to remove from it unsightlinesses and evidences of decay; guarded from violence, and inhabited, under man's affectionate protection, by every kind of living creature that can occupy it in peace, forms the most precious "property" that human beings can possess.
The determination of the degree in which these two elements of value can be united in land, or in which either element must, or should, in particular cases, be sacrificed to the other, forms the most important branch of economical inquiry respecting preferences of things.
2. Buildings, furniture, and instruments.
The value of buildings consists—A, in permanent strength, with convenience of form, of size, and of position; so as to render employment peaceful, social intercourse easy, temperature and air healthy. The advisable or possible magnitude of cities and mode of their distribution in squares, streets, courts, etc., the relative value of sites of land, and the modes of structure which are healthiest and most permanent, have to be studied under this head.
B. The value of buildings consists, secondarily, in historical association and architectural beauty, of which we have to examine the influence on manners and life.
The value of instruments consists—
A. In their power of shortening labour, or otherwise accomplishing (as ships) what human strength unaided could not. The kinds of work which are severally best accomplished by hand or by machine;—the effect of machinery in gathering and multiplying population, and its influence on the minds and bodies of such population; together with the conceivable uses of machinery on a colossal scale in accomplishing mighty and useful works, hitherto unthought of, such as the deepening of large river channels;—changing the surface of mountainous districts;—irrigating tracts of desert in the torrid zone;—breaking up, and thus rendering capable of quicker fusion edges of ice in the northern and southern Arctic seas, etc., so rendering parts of the earth habitable which hitherto have not been so, are to be studied under this head.
B. The value of instruments is, secondarily, in their aid to abstract sciences. The degree in which the multiplication of such instruments should be encouraged, so as to make them, if large, easy of access to numbers (as costly telescopes), or so cheap as that they might, in a serviceable form, become a common part of the furniture of households, is to be considered under this head.
3. Food, medicine, and articles of luxury. Under this head we shall have to examine the possible methods of obtaining pure and nourishing food in such security and equalityof supply as to avoid both waste and famine; then the economy of medicine and just range of sanitary law; finally, the economy of luxury, partly an aesthetic and partly an ethical question.
4. Books. The value of these consists—
A. In their power of preserving and communicating the knowledge of facts.
B. In their power of exciting vital or noble emotion and intellectual action. They have also their corresponding negative powers of disguising and effacing the memory of facts, and killing the noble emotions, or exciting base ones. Under these two heads we have to consider the economical and educational value, positive and negative, of literature;—the means of producing and educating good authors, and the means and advisability of rendering good books generally accessible, and directing the reader's choice to them.
5. Works of art. The value of these is of the same nature as that of books, but the laws of their production and possible modes of distribution are very different, and require separate examination.
Under this head, we shall have to examine the laws of currency and exchange; of which I will note here the first principles.
Money has been inaccurately spoken of as merely a means of circulation. It is, on the contrary, an expression of right. It is not wealth, being the sign[69]of the relative quantities of it, to which, at a given time, persons or societies are entitled.
If all the money in the world, notes and gold, were destroyed in an instant, it would leave the world neither richer nor poorer than it was. But it would leave the individual inhabitants of it in different relations.
Money is, therefore, correspondent in its nature to the title-deed of an estate. Though the deed be burned, the estate still exists, but the right to it has become disputable.
The worth of money remains unchanged, as long as the proportion of the quantity of existing money to the quantity of existing wealth, or available labour which it professes to represent, remains unchanged.
If the wealth increases, but not the money, the worth of the money increases; if the money increases, but not the wealth, the worth of the money diminishes.
Money, therefore, cannot be arbitrarily multiplied, any more than title-deeds can. So long as the existing wealth or available labour is not fully represented by the currency, the currency may be increased without diminution of the assigned worth of its pieces. But when the existing wealth, or available labour, is once fully represented, every piece of money thrown into circulation diminishes the worth of everyother existing piece, in the proportion it bears to the number of them, provided the new piece be received with equal credit; if not, the depreciation of worth takes place exclusively in the new piece, according to the inferiority of its credit.
When, however, new money, composed of some substance of supposed intrinsic value (as of gold), is brought into the market, or when new notes are issued which are supposed to be deserving of credit, the desire to obtain money will, under certain circumstances, stimulate industry; an additional quantity of wealth is immediately produced, and if this be in proportion to the new claims advanced, the value of the existing currency is undepreciated. If the stimulus given be so great as to produce more goods than are proportioned to the additional coinage, the worth of the existing currency will be raised.
Arbitrary control and issues of currency affect the production of wealth, by acting on the hopes and fears of men; and are, under certain circumstances, wise. But the issue of additional currency to meet the exigencies of immediate expense, is merely one of the disguised forms of borrowing or taxing.
It is, however, in the present low state of economical knowledge, often possible for Governments to venture on an issue of currency, when they could not venture on an additional loan or tax, because the real operation of such issue is not understood by the people, and the pressure of it is irregularly distributed, and with an unperceived gradation. Finally, the use of substances of intrinsic value as the materials of a currency, is a barbarism;—a remnant of the conditions of barter, which alone can render commerce possible among savage nations. It is, however, still necessary, partly as a mechanical check on arbitrary issues; partly as a means of exchanges with foreign nations. In proportion to the extension of civilization, and increase of trustworthiness in Governments, it will cease. So long as it exists, the phenomena of the cost and price of the articles used for currency, are mingled with those of currency itself, in an almost inextricable manner; and the worth of money in the market is affected by multitudinous accidental circumstances, whichhave been traced, with more or less success, by writers on commercial operations; but with these variations the true political economist has no more to do than an engineer fortifying a harbour of refuge against Atlantic tide, has to concern himself with the cries or quarrels of children who dig pools with their fingers for its ebbing currents among the sand.
According to the various industry, capacity, good fortune, and desires of men, they obtain greater or smaller share of, and claim upon, the wealth of the world.
The inequalities between these shares, always in some degree just and necessary, may be either restrained by law (or circumstance) within certain limits; or may increase indefinitely.
Where no moral or legal restraint is put upon the exercise of the will and intellect of the stronger, shrewder, or more covetous men, these differences become ultimately enormous. But as soon as they become so distinct in their extremes as that, on one side, there shall be manifest redundance of possession, and on the other manifest pressure of need,—the terms "riches" and "poverty" are used to express the opposite states; being contrary only in the manner of the terms "warmth" and "cold"; which neither of them imply an actual degree, but only a relation to other degrees, of temperature.
Respecting riches, the economist has to inquire, first, into the advisable modes of their collection; secondly, into the advisable modes of their administration. Respecting the collection of national riches, he has to inquire, first, whether he is justified in calling the nation rich; if the quantity of money it possesses relatively to that possessed by other nations be large, irrespectively of the manner of its distribution. Or does the mode of distribution in any wise affect the nature of the riches? Thus, if the king alone be rich—suppose Crœsus or Mausolus—are the Lydians and Carians therefore a rich nation? Or if one or two slave-masters be rich, and the nation be otherwise composed of slaves, is it to be called a rich nation? For if not, and the ideas of a certain mode ofdistribution or operation in the riches, and of a certain degree of freedom in the people, enter into our idea of riches as attributed to a people, we shall have to define the degree of fluency or circulative character which is essential to their vitality; and the degree of independence of action required in their possessors. Questions which look as if they would take time in answering. And farther. Since there are two modes in which the inequality, which is indeed the condition and constituent of riches, may be established—namely, by increase of possession on the one side, and by decrease of it on the other—we have to inquire, with respect to any given state of riches, precisely in what manner the correlative poverty was produced; that is to say, whether by being surpassed only, or being depressed, what are the advantages, or the contrary, conceivable in the depression. For instance, it being one of the commonest advantages of being rich to entertain a number of servants, we have to inquire, on the one side, what economical process produced the poverty of the persons who serve him; and what advantage each (on his own side) derives from the result.
These being the main questions touching the collection of riches, the next, or last, part of the inquiry is into their administration.
They have in the main three great economical powers which require separate examination: namely, the powers of selection, direction, and provision.
A. Their power ofSelectionrelates to things of which the supply is limited (as the supply of best things is always). When it becomes matter of question to whom such things are to belong, the richest person has necessarily the first choice, unless some arbitrary mode of distribution be otherwise determined upon. The business of the economist is to show how this choice may be a Wise one.
B. Their power ofDirectionarises out of the necessary relation of rich men to poor, which ultimately, in one way or another, involves the direction of, or authority over, the labour of the poor; and this nearly as much over their mental astheir bodily labour. The business of the economist is to show how this direction may be a Just one.
C. Their power ofProvisionor "preparatory sight" (for pro-accumulation is by no means necessarily pro-vision), is dependent upon their redundance; which may of course by active persons be made available in preparation for future work or future profit; in which function riches have generally received the name of capital; that is to say, of head- or source-material. The business of the economist is to show how this provision may be a Distant one.
The examination of these three functions of riches will embrace every final problem of political economy;—and, above, or before all, this curious and vital problem,—whether, since the wholesome action of riches in these three functions will depend (it appears) on the Wisdom, Justice, and Far-sightedness of the holders; and it is by no means to be assumed that persons primarily rich, must therefore be just and wise,—it may not be ultimately possible so, or somewhat so, to arrange matters, as that persons primarily just and wise, should therefore be rich.
Such being the general plan of the inquiry before us, I shall not limit myself to any consecutive following of it, having hardly any good hope of being able to complete so laborious a work as it must prove to me; but from time to time, as I have leisure, shall endeavour to carry forward this part or that, as may be immediately possible; indicating always with accuracy the place which the particular essay will or should take in the completed system.
FOOTNOTES:[66]The science which in modern days had been called Political Economy is in reality nothing more than the investigation of the phenomena of commercial operations. It has no connexion with political economy, as understood and treated of by the great thinkers of past ages; and as long as it is allowed to pass under the same name, every word written by those thinkers—and chiefly the words of Plato, Xenophon, Cicero, and Bacon—must be either misunderstood or misapplied. The reader must not, therefore, be surprised at the care and insistence with which I have retained the literal and earliest sense of all important terms used in these papers; for a word is usually well made at the time it is first wanted; its youngest meaning has in it the full strength of its youth; subsequent senses are commonly warped or weakened; and as a misused word always is liable to involve an obscured thought, and all careful thinkers, either on this or any other subject, are sure to have used their words accurately, the first condition, in order to be able to avail ourselves of their sayings at all, is a firm definition of terms.[67]It may be observed, in anticipation of some of our future results, that while some conditions of the affections are aimed at by the economist as final, others are necessary to him as his own instruments: as he obtains them in greater or less degree his own farther work becomes more or less possible. Such, for instance, are the fortifying virtues, which the wisest men of all time have, with more or less distinctness, arranged under the general heads of Prudence, or Discretion (the spirit which discerns and adopts rightly); Justice (the spirit which rules and divides rightly); Fortitude (the spirit which persists and endures rightly); and Temperance (the spirit which stops and refuses rightly); or in shorter terms still, the virtues which teach how to consist, assist, persist, and desist. These outermost virtues are not only the means of protecting and prolonging life itself, but they are the chief guards or sources of the material means of life, and are the visible governing powers and princes of economy. Thus (reserving detailed statements for the sequel) precisely according to the number of just men in a nation, is their power of avoiding either intestine or foreign war. All disputes may be peaceably settled, if a sufficient number of persons have been trained to submit to the principles of justice. The necessity for war is in direct ratio to the number of unjust persons who are incapable of determining a quarrel but by violence. Whether the injustice take the form of the desire of dominion, or of refusal to submit to it, or of lust of territory, or lust of money, or of mere irregular passion and wanton will, the result is economically the same;—loss of the quantity of power and life consumed in repressing the injustice, as well as of that requiring to be repressed, added to the material and moral destruction caused by the fact of war. The early civil wars of England, and the existing war in America, are curious examples—these under monarchical, this under republican institutions—of the results of the want of education of large masses of nations in principles of justice. This latter war, especially, may perhaps at least serve for some visible, or if that be impossible (for the Greeks told us that Plutus was blind, as Dante that he was speechless), some feelable proof that true political economy is an ethical, and by no means a commercial business. The Americans imagined themselves to know somewhat of money-making; bowed low before their Dollar, expecting Divine help from it; more than potent—even omnipotent. Yet all the while this apparently tangible, was indeed an imaginary Deity;—and had they shown the substance of him to any true economist, or even true mineralogist, they would have been told, long years ago,—"Alas, gentlemen, this that you are gaining is not gold,—not a particle of it. It is yellow, and glittering, and like enough to the real metal,—but see—it is brittle, cat-gold, 'iron firestone.' Out of this, heap it as high as you will, you will get so much steel and brimstone—nothing else; and in a year or two, when (had you known a little of right economy) you might have had quiet roof-trees over your heads, and a fair account at your banker's, you shall instead have to sleep a-field, under red tapestries, costliest, yet comfortless; and at your banker's find deficit at compound interest." But the mere dread or distrust resulting from the want of inner virtues of Faith and Charity among nations, is often no less costly than war itself. The fear which France and England have of each other costs each nation about fifteen millions sterling annually, besides various paralyses of commerce; that sum being spent in the manufacture of means of destruction instead of means of production. There is no more reason in the nature of things that France and England should be hostile to each other than that England and Scotland should be, or Lancashire and Yorkshire; and the reciprocal terrors of the opposite sides of the English Channel are neither more necessary, more economical, nor more virtuous than the old riding and reiving on opposite flanks of the Cheviots, or than England's own weaving for herself of crowns of thorn from the stems of her Red and White Roses.[68]With this somewhat strange and ungeometrical limitation, however, which, here expressed for the moment in the briefest terms, we must afterwards trace in detail—thatx ymay be indefinitely increased by the increase ofyonly; but not by the increase ofx, unlessyincreases also in a fixed proportion.[69]Always, and necessarily, an imperfect sign; but capable of approximate accuracy if rightly ordered.
[66]The science which in modern days had been called Political Economy is in reality nothing more than the investigation of the phenomena of commercial operations. It has no connexion with political economy, as understood and treated of by the great thinkers of past ages; and as long as it is allowed to pass under the same name, every word written by those thinkers—and chiefly the words of Plato, Xenophon, Cicero, and Bacon—must be either misunderstood or misapplied. The reader must not, therefore, be surprised at the care and insistence with which I have retained the literal and earliest sense of all important terms used in these papers; for a word is usually well made at the time it is first wanted; its youngest meaning has in it the full strength of its youth; subsequent senses are commonly warped or weakened; and as a misused word always is liable to involve an obscured thought, and all careful thinkers, either on this or any other subject, are sure to have used their words accurately, the first condition, in order to be able to avail ourselves of their sayings at all, is a firm definition of terms.
[66]The science which in modern days had been called Political Economy is in reality nothing more than the investigation of the phenomena of commercial operations. It has no connexion with political economy, as understood and treated of by the great thinkers of past ages; and as long as it is allowed to pass under the same name, every word written by those thinkers—and chiefly the words of Plato, Xenophon, Cicero, and Bacon—must be either misunderstood or misapplied. The reader must not, therefore, be surprised at the care and insistence with which I have retained the literal and earliest sense of all important terms used in these papers; for a word is usually well made at the time it is first wanted; its youngest meaning has in it the full strength of its youth; subsequent senses are commonly warped or weakened; and as a misused word always is liable to involve an obscured thought, and all careful thinkers, either on this or any other subject, are sure to have used their words accurately, the first condition, in order to be able to avail ourselves of their sayings at all, is a firm definition of terms.
[67]It may be observed, in anticipation of some of our future results, that while some conditions of the affections are aimed at by the economist as final, others are necessary to him as his own instruments: as he obtains them in greater or less degree his own farther work becomes more or less possible. Such, for instance, are the fortifying virtues, which the wisest men of all time have, with more or less distinctness, arranged under the general heads of Prudence, or Discretion (the spirit which discerns and adopts rightly); Justice (the spirit which rules and divides rightly); Fortitude (the spirit which persists and endures rightly); and Temperance (the spirit which stops and refuses rightly); or in shorter terms still, the virtues which teach how to consist, assist, persist, and desist. These outermost virtues are not only the means of protecting and prolonging life itself, but they are the chief guards or sources of the material means of life, and are the visible governing powers and princes of economy. Thus (reserving detailed statements for the sequel) precisely according to the number of just men in a nation, is their power of avoiding either intestine or foreign war. All disputes may be peaceably settled, if a sufficient number of persons have been trained to submit to the principles of justice. The necessity for war is in direct ratio to the number of unjust persons who are incapable of determining a quarrel but by violence. Whether the injustice take the form of the desire of dominion, or of refusal to submit to it, or of lust of territory, or lust of money, or of mere irregular passion and wanton will, the result is economically the same;—loss of the quantity of power and life consumed in repressing the injustice, as well as of that requiring to be repressed, added to the material and moral destruction caused by the fact of war. The early civil wars of England, and the existing war in America, are curious examples—these under monarchical, this under republican institutions—of the results of the want of education of large masses of nations in principles of justice. This latter war, especially, may perhaps at least serve for some visible, or if that be impossible (for the Greeks told us that Plutus was blind, as Dante that he was speechless), some feelable proof that true political economy is an ethical, and by no means a commercial business. The Americans imagined themselves to know somewhat of money-making; bowed low before their Dollar, expecting Divine help from it; more than potent—even omnipotent. Yet all the while this apparently tangible, was indeed an imaginary Deity;—and had they shown the substance of him to any true economist, or even true mineralogist, they would have been told, long years ago,—"Alas, gentlemen, this that you are gaining is not gold,—not a particle of it. It is yellow, and glittering, and like enough to the real metal,—but see—it is brittle, cat-gold, 'iron firestone.' Out of this, heap it as high as you will, you will get so much steel and brimstone—nothing else; and in a year or two, when (had you known a little of right economy) you might have had quiet roof-trees over your heads, and a fair account at your banker's, you shall instead have to sleep a-field, under red tapestries, costliest, yet comfortless; and at your banker's find deficit at compound interest." But the mere dread or distrust resulting from the want of inner virtues of Faith and Charity among nations, is often no less costly than war itself. The fear which France and England have of each other costs each nation about fifteen millions sterling annually, besides various paralyses of commerce; that sum being spent in the manufacture of means of destruction instead of means of production. There is no more reason in the nature of things that France and England should be hostile to each other than that England and Scotland should be, or Lancashire and Yorkshire; and the reciprocal terrors of the opposite sides of the English Channel are neither more necessary, more economical, nor more virtuous than the old riding and reiving on opposite flanks of the Cheviots, or than England's own weaving for herself of crowns of thorn from the stems of her Red and White Roses.
[67]It may be observed, in anticipation of some of our future results, that while some conditions of the affections are aimed at by the economist as final, others are necessary to him as his own instruments: as he obtains them in greater or less degree his own farther work becomes more or less possible. Such, for instance, are the fortifying virtues, which the wisest men of all time have, with more or less distinctness, arranged under the general heads of Prudence, or Discretion (the spirit which discerns and adopts rightly); Justice (the spirit which rules and divides rightly); Fortitude (the spirit which persists and endures rightly); and Temperance (the spirit which stops and refuses rightly); or in shorter terms still, the virtues which teach how to consist, assist, persist, and desist. These outermost virtues are not only the means of protecting and prolonging life itself, but they are the chief guards or sources of the material means of life, and are the visible governing powers and princes of economy. Thus (reserving detailed statements for the sequel) precisely according to the number of just men in a nation, is their power of avoiding either intestine or foreign war. All disputes may be peaceably settled, if a sufficient number of persons have been trained to submit to the principles of justice. The necessity for war is in direct ratio to the number of unjust persons who are incapable of determining a quarrel but by violence. Whether the injustice take the form of the desire of dominion, or of refusal to submit to it, or of lust of territory, or lust of money, or of mere irregular passion and wanton will, the result is economically the same;—loss of the quantity of power and life consumed in repressing the injustice, as well as of that requiring to be repressed, added to the material and moral destruction caused by the fact of war. The early civil wars of England, and the existing war in America, are curious examples—these under monarchical, this under republican institutions—of the results of the want of education of large masses of nations in principles of justice. This latter war, especially, may perhaps at least serve for some visible, or if that be impossible (for the Greeks told us that Plutus was blind, as Dante that he was speechless), some feelable proof that true political economy is an ethical, and by no means a commercial business. The Americans imagined themselves to know somewhat of money-making; bowed low before their Dollar, expecting Divine help from it; more than potent—even omnipotent. Yet all the while this apparently tangible, was indeed an imaginary Deity;—and had they shown the substance of him to any true economist, or even true mineralogist, they would have been told, long years ago,—"Alas, gentlemen, this that you are gaining is not gold,—not a particle of it. It is yellow, and glittering, and like enough to the real metal,—but see—it is brittle, cat-gold, 'iron firestone.' Out of this, heap it as high as you will, you will get so much steel and brimstone—nothing else; and in a year or two, when (had you known a little of right economy) you might have had quiet roof-trees over your heads, and a fair account at your banker's, you shall instead have to sleep a-field, under red tapestries, costliest, yet comfortless; and at your banker's find deficit at compound interest." But the mere dread or distrust resulting from the want of inner virtues of Faith and Charity among nations, is often no less costly than war itself. The fear which France and England have of each other costs each nation about fifteen millions sterling annually, besides various paralyses of commerce; that sum being spent in the manufacture of means of destruction instead of means of production. There is no more reason in the nature of things that France and England should be hostile to each other than that England and Scotland should be, or Lancashire and Yorkshire; and the reciprocal terrors of the opposite sides of the English Channel are neither more necessary, more economical, nor more virtuous than the old riding and reiving on opposite flanks of the Cheviots, or than England's own weaving for herself of crowns of thorn from the stems of her Red and White Roses.
[68]With this somewhat strange and ungeometrical limitation, however, which, here expressed for the moment in the briefest terms, we must afterwards trace in detail—thatx ymay be indefinitely increased by the increase ofyonly; but not by the increase ofx, unlessyincreases also in a fixed proportion.
[68]With this somewhat strange and ungeometrical limitation, however, which, here expressed for the moment in the briefest terms, we must afterwards trace in detail—thatx ymay be indefinitely increased by the increase ofyonly; but not by the increase ofx, unlessyincreases also in a fixed proportion.
[69]Always, and necessarily, an imperfect sign; but capable of approximate accuracy if rightly ordered.
[69]Always, and necessarily, an imperfect sign; but capable of approximate accuracy if rightly ordered.
The last paper having consisted of little more than definition of terms, I purpose, in this, to expand and illustrate the given definitions, so as to avoid confusion in their use when we enter into the detail of our subject.
The view which has been taken of the nature of wealth, namely, that it consists in an intrinsic value developed by a vital power, is directly opposed to two nearly universal conceptions of wealth. In the assertion that value is primarily intrinsic, it opposes the idea that anything which is an object of desire to numbers, and is limited in quantity, may be called, or virtually become, wealth. And in the assertion that value is secondarily dependent upon power in the possessor, it opposes the idea that wealth consists of things exchangeable at rated prices. Before going farther, we will make these two positions clearer.
First. All wealth is intrinsic, and is not constituted by the judgment of men. This is easily seen in the case of things affecting the body; we know that no force of fantasy will make stones nourishing, or poison innocent; but it is less apparent in things affecting the mind. We are easily—perhaps willingly—misled by the appearance of beneficial results obtained by industries addressed wholly to the gratification of fanciful desire; and apt to suppose that whatever is widely coveted, dearly bought, and pleasurable in possession, must be included in our definition of wealth. It is the more difficult to quit ourselves of this error because many things which are true wealth in moderate use, yet become false wealth in immoderate; and many things are mixed of good and evil,—as, mostly, books and works of art,—out of whichone person will get the good, and another the evil; so that it seems as if there were no fixed good or evil in the things themselves, but only in the view taken, and use made of them. But that is not so. The evil and good are fixed in essence and in proportion. They are separable by instinct and judgment, but not interchangeable; and in things in which evil depends upon excess, the point of excess, though indefinable, is fixed; and the power of the thing is on the hither side for good, and on the farther side for evil. And in all cases this power is inherent, not dependent on opinion or choice. Our thoughts of things neither make, nor mar their eternal force; nor—which is the most serious point for future consideration—can they prevent the effect of it upon ourselves.
Therefore, the object of special analysis of wealth into which we have presently to enter will be not so much to enumerate what is serviceable, as to distinguish what is destructive; and to show that it is inevitably destructive; that to receive pleasure from an evil thing is not to escape from, or alter the evil of it, but to be altered by it; that is, to suffer from it to the utmost, having our own nature, in that degree, made evil also. And it will be shown farther that, through whatever length of time or subtleties of connexion the harm is accomplished (being also less or more according to the fineness and worth of the humanity on which it is wrought), still, nothing but harm ever comes of a bad thing.
So that, finally, wealth is not the accidental object of a morbid desire, but the constant object of a legitimate one.[70]By the fury of ignorance, and fitfulness of caprice, large interests may be continually attached to things unserviceable or hurtful; if their nature could be altered by our passions, the science of Political Economy would be but as the weighingof clouds, and the portioning out of shadows. But of ignorance there is no science; and of caprice no law. Their disturbing forces interfere with the operations of economy, but have nothing in common with them; the calm arbiter of national destiny regards only essential power for good in all it accumulates, and alike disdains the wanderings of imagination and the thirsts of disease.
Secondly. The assertion that wealth is not only intrinsic, but dependent, in order to become effectual, on a given degree of vital power in its possessor, is opposed to another popular view of wealth;—namely, that though it may always be constituted by caprice, it is, when so constituted, a substantial thing, of which given quantities may be counted as existing here, or there, and exchangeable at rated prices.
In this view there are three errors. The first and chief is the overlooking the fact that all exchangeableness of commodity, or effective demand for it, depends on the sum of capacity for its use existing, here or elsewhere. The book we cannot read, or picture we take no delight in, may indeed be called part of our wealth, in so far as we have power of exchanging either for something we like better. But our power of effecting such exchange, and yet more, of effecting it to advantage, depends absolutely on the number of accessible persons who can understand the book, or enjoy the painting, and who will dispute the possession of them. Thus theactual worth of either, even to us, depends no less on their essential goodness than on the capacity consisting somewhere for the perception of it; and it is vain in any completed system of production to think of obtaining one without the other. So that, though the great political economist knows that co-existence of capacity for use with temporary possession cannot be always secured, the final fact, on which he bases all action and administration, is that, in the whole nation, or group of nations, he has to deal with, for every grain of intrinsic value produced he must with exactest chemistry produce its twin grain of governing capacity, or in the degrees of his failure he has no wealth. Nature's challenge to us is in earnest, as the Assyrian's mock, "I will give you two thousand horses, if thou be able on thy part to set riders upon them." Bavieca's paces are brave, if the Cid backs him; but woe to us, if we take the dust of capacity, wearing the armour of it, for capacity itself, for so all procession, however goodly in the show of it, is to the tomb.
The second error in this popular view of wealth is that, in estimating property which we cannot use as wealth, because it is exchangeable, we in reality confuse wealth with money. The land we have no skill to cultivate, the book which is sealed to us, or dress which is superfluous, may indeed be exchangeable, but as such are nothing more than a cumbrous form of bank-note, of doubtful and slow convertibility. As long as we retain possession of them, we merely keep our bank-notes in the shape of gravel or clay, of book leaves, or of embroidered tissue. Circumstances may perhaps render such forms the safest, or a certain complacency may attach to the exhibition of them;—into both these advantages we shall inquire afterwards; I wish the reader only to observe here, that exchangeable property which we cannot use is, to us personally, merely one of the forms of money, not of wealth.
The third error in the popular view is the confusion of guardianship with possession; the real state of men of property being, too commonly that of curators, not possessors of wealth. For a man's power of Use, Administration, Ostentation, Destruction, or Bequest; and possession is in use only, which for each man is sternly limited; so that such things,and so much of them, are well for him, or Wealth; and more of them, or any other things, are ill for him, or Illth. Plunged to the lips in Orinoco, he shall drink to his thirst measure,—more, at his peril; with a thousand oxen on his lands, he shall eat to his hunger measure,—more, at his peril. He cannot live in two houses at once; a few bales of silk or wool will suffice for the fabric of all the clothes he can ever wear, and a few books will probably hold all the furniture good for his brain.[71]Beyond these, in the best of us but narrow,capacities, we have but the power of administering, or if for harm, mal-administering, wealth (that is to say, distributing, lending, or increasing it);—of exhibiting it (as in magnificence of retinue or furniture), of destroying, or, finally, of bequeathing it. And with multitudes of rich men, administration degenerates into curatorship; they merely hold their property in charge, as Trustees, for the benefit of some person or persons to whom it is to be delivered upon their death; and the position, explained in clear terms, would hardly seem a covetable one. What would be the probable decision of a youth on his entrance into life, to whom the career hoped for him was proposed in terms such as these: "You must work unremittingly, and with your utmost intelligence, during all your available years; you will thus accumulate wealth to a large amount; but you must touch none of it, beyond what is needful for your support. Whatever sums you may gain beyond those required for your decent and moderate maintenance shall be properly taken care of, and on your death-bed you shall have the power of determining to whom they shall belong, or to what purposes be applied?"
The labour of life, under such conditions, would probably be neither zealous nor cheerful; yet the only difference between this position and that of the ordinary capitalist is the power which the latter delights in supposing himself to possess, and which is attributed to him by others, of spending his money at any moment. This pleasure, taken in the imagination of power to part with that which we have no intention of parting with, is one of the most curious though commonest forms of Eidolon, or Phantasm of Wealth. But the political economist has nothing to do with this idealism, and looks only to the practical issue of it,—namely, that the holder of wealth, in such temper, may be regarded simply as a mechanical means of collection; or as a money-chest with a slit in it,[72]set in the public thoroughfare;—chest of whichonly Death has the key, and probably Chance the distribution of contents. In his function of lender (which, however, is one of administration, not use, as far as he is himself concerned), the capitalist takes, indeed, a more interesting aspect; but even in that function, his relations with the state are apt to degenerate into a mechanism for the convenient contraction of debt;—a function the more mischievous, because a nation invariably appeases its conscience with respect to an unjustifiable expense by meeting it with borrowed funds,—expresses its repentance of a foolish piece of business by letting its tradesmen wait for their money,—and always leaves its descendants to pay for the work which will be of the least service to them.[73]
Quit of these three sources of misconception, the reader will have little farther difficulty in apprehending the real nature of Effectual value. He may, however, at first not without surprise, perceive the consequences involved in the acceptance of our definition. For if the actual existence of wealth be dependent on the power of its possessor, it follows that the sum of wealth held by the nation, instead of being constant or calculable, varies hourly, nay, momentarily, with the number and character of its holders; and that in changing hands, it changes in quantity. And farther, since the worth of the currency is proportioned to the sum of material wealth which it represents, if the sum of the wealth changes, the worth of the currency changes. And thus both the sum of the property, and power of the currency, of the State, vary momentarily, as the character and number of the holders. And not only so, but a different rate and manner of variation is caused by the character of the holders of different kinds of wealth. The transitions of value caused by the character of the holders of land differ in mode from those caused by character in holders of works of art; and these again from those caused by character in holders of machinery or other working capital. But we cannot examine thesespecial phenomena of any kind of wealth until we have a clear idea of the way in which true currency expresses them; and of the resulting modes in which the cost and price of any article are related to its value. To obtain this we must approach the subject in its first elements.
Let us suppose a national store of wealth, real or imaginary (that is to say, composed of material things either useful, or believed to be so), presided over by a Government,[74]and that every workman, having produced any article involving labour in its production, and for which he has no immediate use,brings it to add to this store, receiving, from the Government, in exchange an order either for the return of the thing itself, or of its equivalent in other things,[75]such as he may choose out of the store at any time when he needs them. Now, supposing that the labourer speedily uses this general order, or, in common language, "spends the money," he has neither changed the circumstances of the nation nor his own, except in so far as he may have produced useful and consumed useless articles, or vice versa. But if he does not use, or uses in part only, the order he receives, and lays aside some portion of it; and thus every day bringing his contribution to the national store, lays by some percentage of the order received in exchange for it, he increases the national wealth daily by as much as he does not use of the received order, and to the same amount accumulates a monetary claim on the Government. It is of course always in his power, as it is his legal right, to bring forward this accumulation of claim, and at once to consume, to destroy, or distribute, the sum of his wealth. Supposing he never does so, but dies, leaving his claim to others, he has enriched the State during his life by the quantity of wealth over which that claim extends, or has, in other words, renderedso much additional life possible in the State, of which additional life he bequeaths the immediate possibility to those whom he invests with his claim, he would distribute this possibility of life among the nation at large.
We hitherto consider the Government itself as simply a conservative power, taking charge of the wealth entrusted to it.
But a Government may be far other than a conservative power. It may be on the one hand constructive, on the other destructive.
If a constructive, or improving power, using all the wealth entrusted to it to the best advantage, the nation is enriched in root and branch at once, and the Government is enabled for every order presented, to return a quantity of wealth greater than the order was written for, according to the fructification obtained in the interim.[76]
This ability may be either concealed, in which case the currency does not completely represent the wealth of the country, or it may be manifested by the continual payment of the excess of value on each order, in which case there is (irrespectively, observe, of collateral results afterwards to be examined) a perpetual rise in the worth of the currency, that is to say, a fall in the price of all articles represented by it.
But if the Government be destructive, or a consuming power, it becomes unable to return the value received on the presentation of the order.
This inability may either (A), be concealed by meeting demands to the full, until it issue in bankruptcy, or in some form of national debt;—or (B), it may be concealed during oscillatory movements between destructiveness and productiveness, which result on the whole in stability;—or (C), it may be manifested by the consistent return of less than value received on each presented order, in which case there is a consistent fall in the worth of the currency, or rise in the price of the things represented by it.
Now, if for this conception of a central Government, we substitute that of another body of persons occupied inindustrial pursuits, of whom each adds in his private capacity to the common store: so that the store itself, instead of remaining a public property of ascertainable quantity, for the guardianship of which a body of public men are responsible, becomes disseminated private property, each man giving in exchange for any article received from another, a general order for its equivalent in whatever other article the claimant may desire (such general order being payable by any member of the society in whose possession the demanded article may be found), we at once obtain an approximation to the actual condition of a civilized mercantile community from which approximation we might easily proceed into still completer analysis. I purpose, however, to arrive at every result by the gradual expansion of the simpler conception; but I wish the reader to observe, in the meantime, that both the social conditions thus supposed (and I will by anticipation say also all possible social conditions) agree in two great points; namely, in the primal importance of the supposed national store or stock, and in its destructibility or improvability by the holders of it.
I. Observe that in both conditions, that of central Government-holding, and diffused private-holding, the quantity of stock is of the same national moment. In the one case, indeed, its amount may be known by examination of the persons to whom it is confided; in the other it cannot be known but by exposing the private affairs of every individual. But, known or unknown, its significance is the same under each condition. The riches of the nation consist in the abundance, and their wealth depends on the nature of this store.
II. In the second place, both conditions (and all other possible ones) agree in the destructibility or improvability of the store by its holders. Whether in private hands, or under Government charge, the national store may be daily consumed, or daily enlarged, by its possessors; and while the currency remains apparently unaltered, the property it represents may diminish or increase.
The first question, then, which we have to put under our simple conception of central Government, namely, "What store has it?" is one of equal importance, whatever may be the constitution of the State; while the second question—namely, "Who are the holders of the store?"—involves the discussion of the constitution of the State itself.
The first inquiry resolves itself into three heads: