Plutology: or, The theory of the efforts to satisfy human wants

Front matter

Google to make the world's books discoverable online.

It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject

to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books

Chapter I. Of Iluman Wants

I \. Wantscommon toman with other animals ... ... ... 12

2. Man's peculiar power of providing for these wants ... ... 13

8. Consefiucnt expansion in man of the primary wants ... ... 14

4. Permanence of this expansion ... ... ... ... 15

6. Variety of haman desires ... ... ... ... 17

8. Verification of the foregoing principles ... ... ... 20

9. Error of the ascetic doctrine respecting wants ... ... 20

10. Moral function of wants ... ... ... ... 21

IL The subject of this inquiry is the means of human enjoyment

irrespective of their character ... ... ... ... 22

Chaptek II. Of the Instruments by which Want* are Satisfied,

\ 1. The instruments for satisfying wants are Natural Agents and

2. These instruments separately as means of gratification... ... 26

8. These instruments conjointly as means of gratification... ... 28

Chaptek III. Of tJie Circumstances on which t/te Efficiency of

Labour Depends.

I 1. The efficiency of labour depends upon its quantity, its quality, and

2. Circumstances affecting the quantity and the quality of labour.

The natural powers of the labourer ... ... ... 81

3. His skill in his occupation ... ... ... ... 82

4. His general cultivation ... ... ... ... ... 84

S. F-r^i'.I'.ci-^ Tint iz'u=* ;c. ▼Ot* 2. ijc ■-,'iic:ru:M :i ■*gi*ryffCj' Ubcnr

1\ CLzioir Jtf A .-.ci-nt c. .t" "i^n t" iSisrzj - ... 46 o

X ^*z i L Tbe dfcat^cT v<f Libocr 21 -Ji'Tesuk-d rf^tite edsoK&m of the U^«:-crr:r. br cb;* i^crr«» cc ^ 3iLbi7a.iI «cier^ Asd \j the

Adr&Z'.'^ oc SvUfC'^f ii»i c£ Art . . ... ... 5S

2. Tbe tdi-.-acioa of the I^b^-cr^r «# a minus cf "i— Mfnj ccse ^fcieccj

3. FTamrka oc the eo.'ccmic !<>» ArauLC ±cqi vACt of T^i::o:i::oa ... 58

€L Iiicx>:ade of knovLed^ w a meaos of incmAOg the c£cienc]r of

I 1. Circomstaoces which affect the prodnctiTe capacitr of a countzr ... 71

4. The prenenoe in it of osefal idants and animab ... ... 76

5. The prenenoe in it of natural agents sub«idiarj to prodnctioa ... 77

6. Thti jtrcMuce in it of natural agents that facilitate intercoane ... 78

7. f>inditionii of water-tranait as illnstratiTe of £KnIe communication 80

8. N'rgative aiivantages of a country ... ... ... ... 84

9. O/n'Iitionf! of land transit as illostrative of such adrantages ... 85

10. Thf, physical advantages of a country depend upon the concutrenoe

of its positive and its negative advantages ... ... 89

11. All such advantages are relative to the existing powers of the rONTENTS. VU

Chapteb VI. Of the Means hy which tJu Efficiency of Xatural

Agents is Iticreased,

PAOl

2 1. The efficiency of natnral agtints is increased by discorery ... 05

8. And by the increased capacity of men to use these agents ... 1Q2

4. Man proceeds fh)m forces of an inferior to the forces of a superior

6. Moral inflnencc of this principle ... ... ... ... 105

6. Land forms no exception to it ... ... ... ... 107

7. Evidence in support of this view as to land ... ... ... 110

8. How far the Ricardian theory of rent agrees with this principle ... US

9. Examination of the Law of Diminishing Returns ... ... 115

10. This law is not peculiar to land ... ... ... ... 117

11. Why the tendency to diminishing returns is not practically felt ... 118

Chapter VII. Of the Aids to Labour,

{ 1. The a^ to human powers

2. Capitlns such an aid ...

8. Invention as such an aid

4. CkH>peration as such an aid

5. Exchange as such an aid

6. Practical influence of these aids ...

7. Prevalence of errors as to their character and effects ...

1^3

Chapter VIII. Of Capital,

} 1* Natqp of capital

2. Its commencement undiscoverable

8. Amount of the assistance that it renders

4. Mode in which capital assists industry

5. Capital is continually consumed and reproduced

6. Accumulation is not necessarily a good

7. General predominance of savingness

8. Moral influence of capital

Chapter IX. Of the Circumstances lohich Determine the Extent

\ 1. The amount of capital depends upon the quantity of commodities at the di8i)osal of the capitalist, his inclination to save, and his inclination to invest ... ... ... ... 147

2. Capital is limited by the productive powers of induRtry ... 148

8. The conditions of the effective desire to save are the 8tato of the

intellect, and the state of the sympathies ... 148 viii 'contents.

4. The state of the Intellect as determining the amount of accumulation ... ... ... ... ... ... 149

6. The state of the'sympathies'as determining the amount of accumulation ... ... ... ... ... ... 152

6. The conditions of the effective desire to Invest are the adequacy of

the consideration and the security of enjoyment ... ... 157

7. The supposed adequacy of the expected advantage as a condition

of the effective desire to invest... ... ... ... IGO

8. Security for enjoyment as a condition of the effective desire to

9. The use of capital, how limited ... ... ... ... 164

Chapter X. Of Invtntion.

2. Amount of the aFsistance that it renders ... ... ... 169

8. The increase of power obtained by invention ... ... 172

4. The saving of time so obtained ... ... ... ... 174

5. The certainty of result so obtained ... •••9 ••• 176

6. The economy of material so obtained ... ... ... 178

7. The power of using better mat<!rial8 so obtained ... ... 181

8. Moral influence of invention ... ... ... ... 183

Chapter XI. Of the Ciraimslances which Determine the Extent

of Invention.

j} 1. Extent of invention, how limited ... ... ... 186

2. Existing state of science as a limit of invention ... ^ ... 187

8. Practical ingenuity as such a limit ... ... ... 189

4. Manual dexterity as such a limit ... ... ... ... 190

5. Existing state of other arts as such a limit ... ... ... 192

6. Inventions dependent upon the demand for them ... ... 193

7. St^me consequences of these principles ... ... ... 195

8. The use of invention, how limited ... ... ... 198

Chapter XII. Co-ojyeration,

2. Amount of the assistance that it renders ... ... ... 204

3. Economy of effort obtained by co-operation ... ... Ii07

4. Increase of skill so obtained ... ... ... ... 208

6. Organization of work so obtained ... ... ... 211

6. Saving of time so obtained ... ... ... ... 212

7. Terms upon which co-operation takes place ... ..213

CONTENTS.

IX

Chapter XIIL Circumstances which Determbie tlie Extent of

Co-operaiUyn,

\ 1. Conditions of sacoeesful co-operation

2. Sufficiency of supply of workers ...

3. Constancy of such supply

4. Reliability of workers ...

5. Docility of workers

6. Honesty of workers

7. Extent to which co-operation may he carried

8. Cases where co-operation tends to excess

9. Joint-stock companies ...

PAGE

. 215

. 216

. 217

, 218

. 227

, 229

Chapter XIV. Exchange,

\\, Importance of exchauge

2. Amount of its assistance

3. Nature of its assistance

4. Conditions of exchangeability

5. Terms on which exchange is effected

6. Causes of variation in price

7. Effect upon consumption of permanent change of cost

Chapter XV. Of the Circumstances tvhich Determine tlt^ Extent^

\ 1. Circumstances on which the power of exchanging depends ... 254

2. Productivity of industry as a limit of exchange ... ... 255

8. This industry is general and not merely agricultural ... ... 256

4. Diversity of production as a limit of exchange ... ... 258

5. Willingness to deal as such a limit ... ... ... 260

6. The facility of finding purchasers as such a limit ... ... 2G2

7. The facility of reaching purchasers as such a limit ... ... 263

8. Extent to which exchange spontaneously proceeds ... ... 265

Chapter XVI. Of Hie Reciprocal Tnflivence of the Industrial

Aids.

I 1. Influence of capital upon invention

2. Influence of capital ui)on co-operation

8. Influence of capital upon exchange

4. Influence of invention upon capital

5. Influence of invention upon co-operation

267 209 270 271 272

K CONTENTS.

6. Influence of invention upon exchange

7. Influence of oo-operation upon capital

8. Influence of co-operation upon invention

9. Influence of co-operation upon exchange

10. Influence of exchange upon capital

11. Influence of excliange upon invention

12. Influence of exchange upon co-operation

PAGE

. 273 276

. 278

. 280

. 283

. 286

. 288

Chapter XVn. Of the IndiutrM Organization of Society,

2 1. The social state essential to the full development of industry

2. Growth in society of tacit co-operation

8. Advantages thus obtained

4. Certainty with which the supply of services meets the demand

5. Succession and duration of such supply 8. Localization of industry in districts

7. Causes which determine such localization ...

8. Localization of Industry in nations

9. Causes which determine such localization ...

Chapter XVIII. Of the AdJuMment in Society of the Terms of

Co'Oj)eration.

{ 1. Adjustment of ti^rms in cases of tacit co-operation ... ... 316

'2. Difficulties incident to such adjustment ... ... ... 317

3. The use of natural agents is always gratuitous ... ... 318

4. Circumstances which obscure such gratuity ... ... ... 320

6. Land funus no exception to these principles ... ... 322

G. Why waste land in new countries brings a price ... ... 323

7. Shares of labourer and of capitalist in expressed co-operation ... 325

8. How their relations are modified in tacit co-operation ... ... 328

9. Question of real wages, why not discussed ... ... ... 330

Chapter XIX. Of Com2)etttion.

5 1. Law of price under competition ... ... ... ... 832

8. Its tendency is towards equality of remuneration for equal services 335

4. Character of its operation ... ... ... ... 331

6. Competition diffuses our gains ... ... ... ... 339

6. And diffuses our losses... ... ... ... ... 340

7. And secures the best administration for industrial enterprises ... 343

8. And checks unsuitable projects ... ... ... ... 345

CONTENTS. XI Cbapter XX. Of the Social Contrivances to Promote Organization,

PAGE

2 1. Secondary induBtrial aids ... ... ... ... 348

2. The standard of quantity ... ... ... ... 849 fi. The prerogative of coinage ... ... ... ... 854

6. Expedients for economizing coin ... ... ... ... 855

8. The distributing class ... ... ... ... ... 859

* 9. Notification of readiness to trade ... ... ... 863

10. System of public communications ... ... ... 867

IL The carrying business ... ... ... ... ... 868

15. Analogy between roads and money ... ... ... 879

Chapter XXI. Of the Indiutrial Evolution of Society,

\\, Phenomena of organic evolution ... ... ... ... 882

2. Similar phenomena observable in society ... ... ... 384

8. Conditions and limits of organic growth ... ... ... 885

4. Conditions and limits of social growth ... ... ... 889

5. How man lightens the pressure of the chock upon hisincreasc ... 891

6. Increase of population on reduction of the prudentiafcheck ... 894

7. Principle of development in organisms and in societies ... 897

8. Historical examples of evolution ... ... ... ... 898

9. Interdependence of parts in organisms and in societies ... 402

Chapter XXIL Of the Assistance Bendered to Industry by

Government,

{1. Man is a political animal ... ... ... ... 406

2. The primary object of political association is the maintenance of

8. Political organization is essential to industry ... ... 410

4. Duties of the state other than the maintenance of rights ... 418

5. Matters of common interest the solo subjects of state interference 415

6. Some applications of this principle ... ... ... 417

Xll CONTENTS.

Chapter XXIII. Of the Impedimetits Pret^ited to Industry bj/

Government,

PAGE

31. The non-performaDoe by gOYommcnt of its proper fanctions ... 424

2. The mal-performance by government of its proper functions ... 426

8. Tmpediments from uncertain taxation ... ... ... 427

4. Impediments from excessive taxation ... ... ... 428

5. Impediments from raising revenue otherwise than by taxation ... 429

6. Impediments from indirect taxation ... ... ... 430

7. General principles of public revenue ... ... ... 433

8. Impediments from the regulation of industry by the state ... 485

9. Impediments from the industrial enterprises of the state ... 438 10. Tendency towards the performance of the state of improper functions still vigorous ... ... ... ... ... 442

Chapteb XXIV. Of Some catLses of Poveiiy.

8 1. Positive causes of poverty ... ... ... ... 447

2. Failures from accident or external interference ... ... 448

8. Failures incidental to the organization of society ... ... 4oO

4. Facility with which losses are repaired ... ... ... 455

6. Feebleness of desire as a cause of poverty ... ... ... 468

6. Preference of other objects to wealth as a cause of i>overty ... 461

7. Degradation of industry as a cause of poverty ... ... 463

8. Waste of natural agents as a cause of poverty ... ... 466

9. Existence of a criminal class as a cause of poverty ... ... 468

10. The causes of poverty evanescent ... ... ... 472

Introduction

J name Political Economy, as applied to a department a] philosophy, has been frequently the subject of arable criticism. Its etymology, to some extent, inat least an inconsistency. Its meaning is by no distinct to an uninitiated ear. One portion of preasion relates to the Family ; the other porlates to something quite different from the Family, iate. The name hardly conveys without explanthe idea usually attached to it by economists, , the theory of national wealth. But no trifling of etymology or of precision would of itself be a it reason for abandoning the use of a term which ad continued usage had sanctioned. If Political ly be generally understood to mean the science of and if there be no other objection to its use, a writer lat subject ought not to depart from the established J of his predecessors.

re are, however, other objections to the use of the )litical Economy far more serious than any which rmologist or the lexicographer can suggest. He g of the expression, if it be tak«n strictly, is sueh tgement of the affairs of a State as is anakgmii

B

2 INTRODUCnOX.

to the prudent maiiagenient of the affidrs of an individual In this sense Political Eoonomy is clearly an art It ought to lay down practical precepts for the administraiion of public afiaira This meaning, too, suggests ui analogy which most economists now regard as &lse, although probably when the name was given, it was considered peculiarly exact It seems to indicate that the Government ought to direct and control the industry of its subjects in the same manner as a great millowner or contractor now directs and controls the industry of his millhands or his navvies. In a less strict sense Political Economy may mean that management which the State, as such, should exercise for the common benefit In this view, as in the former, we still have to do with an art Political Economy would thus, according to either explanation, be equivalent to the art of government : in the one case, to the art of paternal government ; in the other case, to the art of government generally, without reference to any particular system.

Such a meaning is not what Political Economy, if it be a science, ought to express. The art of government is doubtless of the highest importance, but it is a different thing from the theory of wealth. This theory, indeed, must, in common with many other theories, furnish some of the premises upon which that art is constructed ; but it is only one out of many sciences, which, in the case of this, as of every scientific art, are thus laid under a willing contribution to the purposes of life. The distinction is itself abundantly clear ; but words, as Bacon has observed, shoot back, like the Tartar bowman, upon the understanding from which they proceed : and so Political Economy, which was at first considered as synonymous with administrative art, even still, when its name has been limited to one of the sciences on which that art is based, retains in practice its original force. Thus, partly fix)m its connotation, and partly from the nature of the subject with which it deals, the name inevitably suggests a code of practical precepts alterable by human will for the purposes of supposed convenience, and not the investigation and the statement of certain sequences that spring from the nature of man and his relations to surrounding objecta

Political Economy, indeed, has rarely, except in name, been ever regarded as a science. It is as an art that the older economists have always treated it : it is as an art that Adam Smith defines the term : it is as an art that it has acquired its present popularity : it is as an art that even those who insist upon its scientific rank habitually discuss it In the Wealth of Nations the theoretical part is merely introductory to the practical part Mr. J. S. Mill avowedly follows the example of Smith. Mr. McCulloch declares his opinion that a merely scientific treatise can find no readers in England. Mr. Laing insists that every country has a Political Economy of its own, suitable to its own physical circumstances and its own national character. Even Mr. Senior, who has more steadily than most economists kept before him the scientific character of Political Economy, fi:^uently diverges into those practical applications of his theory that most occupied the public mind at the period at which he wrote. In the French and the American writers, too, as in M. Bastiat and Mr. Carey, we find a continual reference to the polemics of the day, or to the policy, or the institutions of their countries. In most of the detached essays and lectures of the present generation of economists, the subject, where it is not a discussion upon logical method, is almost always some question of immediate practical interest Recent events have greatly increased this tendency. In the days of Malthus and Bicardo, economists fit audience found, though few : but the great success of that commercial policy which economic writers so strongly advocated, and with which the names of many of them were identified, both led

B 2

4 nrrRODUcnoN.

to the belief that Political Economy was essentially an art, and enlisted upon its side many enthusiastic but ill-instructed admirers. Under the influence of these injudicious friends and in their impatient activity, the economic inquiries that bring fruit seem likely to supersede the inquiries that bring light The art is built up before its foundations in the science are securely laid. It is therefore no matter for surprise, however much it may be for regret, that the progress of economic knowledge has been much slower than its friends in the earlier part of the century had anticipated.

I have said that the name Political Economy does not convey to the novice any definite meaning. Unfortunately, it is not much more distinct to the professed Economist. I do not now speak of any disputes as to the precise terms in which its formal definition should be expressed, or as to its position as a Science or as an Art. Irrespective of its relation to other sciences or of its mode of treatment, the extent of the subject is still unsettled. Apart from those extensions of the term which most economists would now regard as abusive, Mr. Senior* attributes to it three distinct meanings. He states that Political Economy may be defined, either as the science which states the laws regulating the production and distribution of wealth, so &r as they depend on the action of the human mind : or as the art which points out the institutions and habits most conducive to the production and accumulation of wealth : or as the art which points out the institutions and habits most conducive to that production accumulation and distribution of wealth which is most fiivourable to the happiness of mankind. According to this authority, and it is one which ranks deservedly high, a writer upon Political Economy may reasonably adopt,-f- at his

• Four Introductory Lectures on Political Economy, p. 86. t lb., p. 46.

discretion, any one of these widely differing definitions. Mr. Senior admits and sanctions a still wider latitude of construction. Even when he selects the more restricted definition and proposes to deal with the subject as a science, he declares that he is entitled to discuss its applications, and to estimate, although by way only of episode, its influence not only upon wealth, but upon well being. I cannot but think that a name which admits and invites such doubts and digressions is objectionable on other than mere sesthetic grounda Value itself is hardly a more misleading and dangerous term than is Political Economy.

There is yet another objection to this name. The former objections have chiefly had reference to the word Economy : the present difficulty is occasioned by the adjective which qualifies that word. I venture to think that, for scientific purposes, an inquiry into public or national wealth, before the principles of private or individual wealth have been ascertained, is an inversion of the natural arrangement The wealth of a nation, in the sense in which economists use the phrase, is the aggregate of the wealth of all the individuals that compose that nation : an inquiry, therefore, into the nature of wealth and its processes in the individual ought to precede any inquiry of the same kind as to communities. The influence of the aggregation of men in a community materially affects indeed the power of acquiring wealth in each of its individual members ; but this influence is rather a modiflcation of the circumstances of the individual, than an independent subject of inquiry. Society is not different from its component parts : it only establishes between these parts certain relations which are additional to the powers of the isolated man, and do not supersede them. Political Economy, therefore, is not a proper description of the theory of wealth : it both restricts the extent of that theory, and it inverts its method ; it limits the inquiry to that part of the theory of wealth which relates to the economic influence of society ; and it commences the study not in its simpler but in its most complex forms.

The notion which Political Economy is usually intended to convey is expressed by the greatest expositor of the science as an Inquiry into the nature and causes of the wealth of nations. This expression, notwithstanding the great authority on which it rests, has never become popular. For our present purpose it is exposed to some of the objections which aSect the title Political Economy. Both titles direct attention to the society, and not to the pre-existing parts of which that society is composed. But the expression, "the wealth of nations," presents another and a peculiar difficulty. The term wealth is both surrounded with a haze of bewildering associations, and is by no means free from ambiguity. It appears to be generally restricted to material objects ; and by most economists it is expressly so limited. The reasons for which I am unable to agree with this limitation of the subject matter of the science will appear in the following pages. But wealth has also been taken as equivalent to exchangeable objects, and some of the best English economists have even proposed to call Political Economy the Science of Exchanges, or some equivalent name. I hope hereafter to show the true position which, in my view. Exchange holds in relation to the theory of wealth. For the present it is enough that I am now dealing with the means that men use to satisfy their wants. But as all exchangeable objects, by reason of their being exchangeable, satisfy some want, it follows that some objects which satisfy wants are exchangeable, and that exchange is but one means out of several of procuring us satisfaction. Neither exchange, therefore, nor wealth when used as equivalent to exchange, would suitably describe the present essay. In making, then, an attempt to inquire, without any direct practicalreference, into the theoryof wealth, whether the owner of it be, or be not, associated with other men, I have, but with all the timidity that becomes an innovating Briton, ventured, on the authority of a distinguished French* writer, to describe this work by the somewhat novel title of Plutology. I now proceed to explain more fully the meaning which by this term I desire to convey, and to state the scope and design of the present treatise.

Man is by his nature so constituted as to be liable to various wants and desires. He is impelled to gratify them partly by the pleasure which attends the gratification, and pcurtly by the pain which is the consequence of its neglects These desires depend upon man's mental and moral powers, and, consequently, expand with the expansion of his &culties. like all other human aflbirs, wants and desires may be regarded firom different aspects. That with which we are now concerned is neither physical nor moral, but industrial % These wants or desires when so considered form one of the chief sources of human action. They involve for their satis&ction a certain effort either personal or vicarioua These efforts, and the contrivances by which either their result is increased or their amount diminished, and the circumstances &vourable or un&vourable to such contrivances, form the subject of this inquiry.

The instruments by which our desii'es are satisfied are either human or physical, including, under the latter term, both animate and inanimate forces. These instruments may act either separately or in conjunction. In either case the circumstances must be separately considered on which the efficiency of each instrument depends. With respect to labour, its efficiency depends upon its amount, its kind,

and the direction which it receives. With regard to natural agents, they too vary in their quantity and their kind ; but their utility to man is also affected by another consideration. They must be regarded not merely with reference to their intrinsic qualities, but with reference to man's ability to use them. Thus the agent which in one state of circumstances is useless or even noxious, may in other circumstances be highly beneficial Man, then, may increase his control over nature by discovering new forces ; or by applying improved methods to forces with which he is already familiar; but the principal source of his increased control is found in his own increased knowledge and increased industrial powers. This knowledge and these powers are constantly expanding ; and men, consequently, are enabled to use natural agents of constantly increasing potency. Hence the course of human industry is fix>m the worse to the better, and not otherwise. Our tendency is towards wealth, and not towards poverty ;iand the conditions on which the realization of that tendency depends, are our attentive study of nature and our fitting preparations to fulfil her requirements.

Satisfieu^on implies effort, but efforts are fix)m their very nature more or less disagreeable. Consequently, men aJwajrs strive either to reduce the amount of any particular effort, or to obtain from the same amount a larger quantity of satisfaction. With this object, four great classes of contrivances have been adopted in aid of labour. These industrial auxiliaries are Capital, Invention, Co-operation, and Exchange. Each of these has its own conditions, and its own limits ; each admits of its appropriate development ; and each in its turn affects the action of all the others. These agencies and these contrivances are of universal application. It is by these means and by no other that every man supplies his wants, and supplies them to the greatest advantage. Their oonsideration compriBes the theory of wealth, so &r as an isolated man, or rather an isolated family of men, is concerned. But men never live in absolute isolation ; and seldom, and then only in an abnormal state, in mere groups of &inilies. Man, partly from a sympathetic impulse, analogous perhaps to the instinct of gregarious animals, and partly from a deliberate choice, constantly tends towards the formation of that union of families which is called society. The social state re-acts most powerfully upon the industrial condition of the labourer. It largely extends the influence of all those industrial aids which exist indeed but in a merely rudimentary form apart from society. But, in addition to this expansion of the aids there is spontaneously formed that industrial organization of society itself, which forms one of the most striking phenomena that nature, amid all her wonders, has presented to ua We cannot, it has been truly said,* conceive of a more marvellous spectacle in the whole range of natural phenomena^ than the regular and constant convergence of an innumerable multitude of human beings, each possessing a distinct, and, in a certain degree, independent existence, and yet incessantly disposed, amid all their discordance of talent and character, to concur in many ways in the same general development, without concert and even consciousness on the part of most of them, who believe that they are merely following their personal impulsea This natural evolution of society, which, in the absence of interruption, proceeds with all the regularity of physical development, is not limited exclusively to occupations. It frirther tends by localizing industry to extend its organizing influence both to entire localities in the same community, and even to different communities themselvea like all other organisms, the social organism is subject to