Profits and raw produce, and the fall of profits consequent to the increase of population, would have been so apparent as to force themselves on the attention of every one. When, in such a state of things, it became necessary to resort to poorer soils to raise an additional quantity of food, a corresponding increase of labour would have been required; for, supposing the perfection of art to be attained, nothing except greater exertion can overcome fresh obstacles. Not only, therefore, would additional labour have been necessary to the production of a greater quantity of food, but it would have been necessary in the precise proportion in which the difficulty of its production was increased; so that, had the arts continued stationary, the price of raw produce would have varied directly with every variation in the qualities of the soils successively brought under tillage.

But the circumstances which really regulate the value of raw produce are extremely different. It is true, indeed, that even in those societies that are most rapidly improving, it has, as was previously shown, a constant tendency to rise; for the rise of profits consequent to every invention, by occasioning a greater demand for labour, gives a fresh stimulus to population; and thus, by increasing the demand for food, again inevitably forces the cultivation of poorer soils, and raises prices. But it is evident that improvements render these effects of this great law of nature, from whose all-pervading influence the utmost efforts of human ingenuity cannot enable man to escape, far less palpable and obvious. After inferior soils are cultivated, more labourers are, in most cases, required to raise the same quantities of food; but as the powers of labourers are gradually improved in the progress of society, a much smaller number is required, in proportion to the whole work that is performed, than if no such improvement had taken place. The natural tendency to an increase in the price of raw produce is in this way counteracted. The productive energies of the earth gradually diminish, and we are compelled to resort to less fruitful soils; but the productive energies of the labour employed in their tillage are as constantly augmented by the discoveries and inventions that are always being made. Two directly opposite and continually acting principles are thus set in motion. From the operation of fixed and permanent causes, the increasing sterility of the soil is sure, in the long run, to overmatch the improvements that occur in machinery and agriculture, prices experiencing a corresponding rise, and profits a corresponding fall. Occasionally, however, these improvements more than compensate, during lengthened periods, for the deterioration in the quality of the soils successively cultivated; and a fall of prices and rise of profits take place, until the constant pressure of population has again forced the cultivation of still poorer lands.

In so far as the general principle is concerned, the previous reasoning is applicable alike to the commercial world or to a single nation. It is plain, however, that the fall in the rate of profit, and the consequent check to the progress of society, originating in the necessity of resorting to poorer soils, will be more severely felt in an improving country, which excludes foreign corn from her markets, than in one which maintains an unfettered intercourse with her neighbours. Were a highly manufacturing and commercial country, like England, to deal with all the world on fair and liberal principles, she might avail herself of all those capacities of production which Providence has given to different countries; and besides obtaining supplies of food at the cheapest rate at which they can be raised, the numberless markets to which she could resort would prevent her from feeling any very injurious consequences from the occasional failure of her own harvests, or from deficiencies in one or a few of the sources whence she drew her foreign supplies; so that she would thus go far to secure herself constant plenty, and, what is of hardly less importance, constant steadiness of price. Such a nation would have the foundations of her greatness established on a broad and solid basis; for they would rest, not on the productive powers of her own soil only, but on those of all the countries of the world. And supposing her not to be involved to an unusual degree in war, or subjected to comparatively heavy taxes, her profits would not be reduced, nor would she get clogged in her progress, until the increase of population forced the cultivation of inferior soils in the countries whence she was in the custom of importing corn. And even then she would not be surpassed by her neighbours; her progress being retarded by a cause which equally affects them, her relative power would not be impaired; and should new markets be opened, or new discoveries made, in any quarter of the world, she would reap her full share of the advantage, and be renovated and strengthened for a new career of exertion.

But the case would be very different were foreign raw produce excluded from the markets of a nation like England, which has made an unusual progress in commerce and manufactures, and whose population is therefore comparatively dense. A government which prevents its subjects from exchanging their manufactured goods for the corn of more fertile or less densely-peopled countries, compels them prematurely to resort to poor soils at home; and profits being consequently reduced, the country is made to approach the stationary state at a period when, had the legislature acted on more enlarged principles, she might have been advancing with the same rapidity as before in the career of improvement.

It is needless here to advert to the influence of restrictions on the corn trade in aggravating the evils of scarcity, and occasioning fluctuations of price. Their operation in this respect is too well established to admit of any doubt. But supposing it were otherwise, still it must be obvious, for the reasons stated above, that such restrictions cannot fail to be exceedingly injurious. It may, one should think, be laid down as an axiom, that government should either not interfere at all with industrious undertakings, or interfere only in the view of rendering them more secure or more productive. But to exclude any article, and particularly one so important as corn, when it may be imported cheaper from abroad than it can be raised directly at home, is really to adopt the means most effectual for rendering industry least secure and least productive! It is not merely contradicting the best established principles, but it is employing the power of government to arrest the natural progress of opulence and prosperity, and to accelerate the period of old age, decrepitude, and decay! If we could, by laying out £1,000 on the manufacture of cottons or hardware, produce a quantity of these articles that would exchange for 400 quarters of Polish or American wheat; and if the same sum, when expended in cultivation in this country, would not produce more than 300 quarters; the prevention of importation occasions an obvious sacrifice of 100 quarters out of every 400 consumed in the empire; or, which is the same thing, it occasions an artificial advance of twenty-five per cent. in the price of corn. It is not even true that a system of this sort is, in any respect, advantageous to the landlords or farmers; and to suppose that it can be advantageous to those who are obliged to buy their produce, is too contradictory to merit one moment's attention.

Practically, however, we are not disposed to think that the influence of the existing restrictions on the importation of corn into Great Britain is nearly so injurious as is frequently represented. The fact is, that our average prices have been during the last seven years rapidly approximating to those of the Continent. Owing to the great increase in the imports from Ireland, and still more to the extraordinary improvement made in agriculture since 1825, partly by the greater facilities afforded by steam-navigation for bringing the produce of the more remote districts to market, PART IV.

CONSUMPTION OF WEALTH.

Having in the previous sections endeavoured to explain the means by which labour is facilitated, and wealth produced, and to investigate the laws which regulate its distribution among the various classes of society, we come now to the third and last division of the science, or to that which treats of the Consumption of Wealth.

Definition of Consumption.—Consumption the end of Production.—Test of Advantageous and Disadvantageous Consumption.—Error of Dr Smith's Opinions with respect to Unproductive Consumption.—Error of those who contend, that to facilitate Production, it is necessary to encourage Consumption.—Cause of Gluts.—Consumption of Government.—Conclusion.

It was formerly seen, that by production in this science, is not meant the production of matter, that being exclusively the prerogative of Omnipotence, but the giving to matter such a shape as might fit it for ministering to our wants and enjoyments. In like manner, by consumption is not meant the consumption or annihilation of matter; that being as impossible as its creation, but merely the consumption or annihilation of the qualities which render commodities useful and desirable. To consume the products of art or industry, is to deprive them of the utility, and consequently of the value, communicated to them by labour. And hence we are not to measure consumption by the magnitude, weight, or number of the products consumed, but exclusively by their value. Large consumption is the destruction of large value, however small the bulk in which it may happen to be compressed.

Consumption, in the sense in which the word is used by political economists, is synonymous with use. We produce commodities only that we may use or consume them. Consumption is the end and object of human industry; production is merely a means to attain that end. All the products of art and industry are destined to be consumed, or made use of; and if the consumption of a commodity fit to be used be deferred, a loss is incurred. Products are intended to satisfy the wants or to add to the enjoyments of their producers; or they are intended to be employed as capital, and made to reproduce a greater value than themselves. In the first case, by delaying to use them, we either refuse to satisfy a want, or deny ourselves a gratification;—and in the second, by delaying to use them, we allow the instruments of production to lie idle, and lose the profit derivable from their employment.

But though commodities are produced only to be consumed, we must not fall into the error of supposing, that all consumption is equally advantageous to the individual or the society. If an individual employ a set of labourers to build him a house the one summer, and to pull it down the next, their labour, or the capital paid them in exchange for advantageous it, and which they consumed during the time they were engaged in this futile employment, is evidently destroyed for them, ever, and absolutely lost both to their employer and the public; whereas, had he employed them in the raising of corn, or the production of any species of valuable produce, he would have obtained products equal to, or more valuable than, the capital he gave them. The value of the return, or the advantage obtained from the consumption, is, therefore, the true test of advantageous and disadvantageous, or, as it is more commonly termed, of productive and unproductive consumption. Commodities are consumed productively when the advantage or benefit accruing in consequence to their possessors, or when the value of the products obtained in their stead, exceeds their value; and they are consumed unproductively when the value of the advantage or benefit, or that of the new commodities, is less than their value. The prosperity or decay of every nation depends on this balance of consumption and reproduction. If, in given periods, the commodities produced in a country exceed those consumed in it, the means of increasing its capital will be provided, and its population will increase, or the actual numbers will be better accommodated, or both. If the consumption in such periods fully equals the reproduction, no means will be afforded of increasing the stock or capital of the nation, and society will be at a stand. And if the consumption exceed the reproduction, every succeeding period will see the society worse supplied; its prosperity and population will evidently decline, and panperism will gradually spread itself over the whole country.

It is impossible, however, to fix on any standard by a comparison with which to obtain even a tolerable approximation to the value or advantage of different kinds of consumption. This is a point on which the sentiments of no two individuals ever exactly coincide. The opinions of each will always depend more or less on the situation in which he is placed. The rich man will naturally be inclined to give a greater extension to the limits of advantageous consumption than the man of middling fortune; and the latter than he who is poor. And it is undoubtedly true that a man's expenses should always bear some proportion to his fortune and condition in society; and that what might be proper and advantageous expenditure in one case, might be exceedingly improper and disadvantageous in another. It is, therefore, quite impracticable to frame any system of rules on the subject of expenditure applicable to the case of every individual; and even if it were practicable, there is no ground for thinking that they would be of the smallest utility. The state has no right whatever to control individual expenditure; nor, if it had such a right, could it exercise it without serious injury. The public interest requires that the national capital should, if possible, be constantly kept on the increase; or, which is the same thing, that the consumption of any given period should become the means of reproducing a greater value. But it has been sufficiently proved that this cannot, under any circumstances, be the result of a system of surveillance and restriction. Industry and frugality never have been, and never can be, promoted by such means. To render a man industrious, secure him the peaceable enjoyment of the fruits of his industry—to wean him from extravagance, and make him frugal and parsimonious, allow him to reap all the disadvantage of the one line of conduct, and all the advantage of the other. The poverty and loss of station that inevitably result from improvident and prodigal consumption are a sufficient security against its ever becoming injuriously prevalent. Wherever the public burdens are Consumption moderate, property protected, and industry free, the efforts of the great body of the people to rise in the world and improve their condition occasion the continued increase of national wealth. It is idle to expect that all unproductive and unprofitable expenditure should ever be avoided; but the experience of all tolerably well governed states proves, that the wealth productively expended, is always much greater than that expended unproductively.

Luxury not disadvantageous. It was long a prevalent opinion among moralists, that the labour bestowed on the production of luxuries, and consequently their consumption, was unproductive. But this opinion is now almost universally abandoned. Unless, indeed, all comforts and enjoyments are to be proscribed, it is impossible to say where necessaries end and luxuries begin. But if we are to understand by necessaries such products only as are absolutely required for the support of human life, everything but wild fruits, roots, and water, must be deemed superfluous; and in this view of the matter, the peasantry of Ireland, who live only on potatoes and butter-milk, must be considered as having much more of the character of productive labourers than those of Britain! The mere statement of such a doctrine is sufficient for its refutation. Everything that stimulates exertion is advantageous. The mere necessaries of life may be obtained with comparatively little labour; and those savage and uncivilized hordes, who have no desire to possess its comforts, are proverbially indolent and dissipated. To make men industrious,—to make them shake off that lethargy which is natural to them,—they must be inspired with a taste for the luxuries and enjoyments of civilized life. When this is done, their artificial wants become equally clamorous with those that are strictly necessary, and they increase exactly as the means of gratifying them increase. Wherever a taste for comforts and conveniences is generally diffused, the wants and desires of man become altogether illimitable. The gratification of one leads directly to the formation of another. In highly civilized societies, new products and new modes of enjoyment are constantly presenting themselves as motives to exertion, and as means of rewarding it. Perseverance is, in consequence, given to all the operations of industry; and illibleness, and its attendant train of evils, almost entirely disappear. "What," asks Dr Paley, "can be less necessary, or less connected with the sustentation of human life, than the whole produce of the silk, lace, and plate manufactories? Yet what multitudes labour in the different branches of these arts! What can be imagined more capricious than the fondness for tobacco and snuff? Yet how many various occupations, and how many thousands in each, are set at work in administering to this frivolous gratification!" The stimulus which the desire to possess these articles gives to industry renders their introduction advantageous. The earth is capable of furnishing food adequate for the support of a much greater number of human beings than can be employed in its cultivation. But those who are in possession of the soil will not part with their produce for nothing; or rather, they will not raise at all what they can neither use themselves nor exchange for what they want. As soon, however, as a taste for conveniencies and luxuries is introduced, the occupiers of the ground raise from it the utmost that it can be made to produce, and exchange the surplus for such conveniencies and gratifications as they are desirous of obtaining; and, in consequence, the producers of these articles, though they have neither property in the soil, nor any concern in its cultivation, are regularly and liberally supplied with its produce. In this way, the quantity of necessaries, as well as of useful and agreeable products, is vastly increased by the introduction of a taste for luxuries; and the people are, in consequence, not only better provided for, but their numbers are proportionally and greatly augmented.

It is plain, therefore, that the consumption of luxuries cannot, provided it be confined within proper limits, be justly considered as either disadvantageous or unproductive. If, indeed, a man consume more luxuries than his labour or his fortune enable him to command, his consumption will be disadvantageous. But the same thing will happen if he consume a greater quantity of necessaries than he can afford. The mischief does not consist in the species of articles consumed, but in the excess of their value over the means of purchasing them possessed by the consumers. This, however, is a fault which should always be left to be corrected by the self-interest of those concerned. The poverty and degradation caused by indulging in unproductive consumption is a sufficient guarantee against its ever being carried to an injurious extent. To attempt to lessen unproductive consumption by prescribing luxury, is equivalent to attempting to enrich a country by taking away some of the most powerful motives to production.

Dr Smith has given another criterion of productive and unproductive consumption; but his opinions on this point, though exceedingly ingenious, and supported with his usual ability, appear to rest on no solid foundation. He divides society into two great classes. The first consists of those who fix, or, as he terms it, "realize their labour in some particular subject, or vendible commodity, which lasts for some time at least after that labour is past;" the second, of those whose labour leaves nothing in existence after the moment of exertion, but perishes in the act of performance. The former are said by Smith to be productive, the latter unproductive, labourers. Not that, in making this distinction, Smith meant to undervalue the services performed by the unproductive class, or to deny that they are often of the highest utility; for he admits that such is frequently the case: but he contends, that these services, however useful, do not augment the wealth of the country; and, consequently, that the commodities consumed by this class are unproductively consumed, and have a tendency to impoverish, not to enrich, society. But, to avoid all chance of misrepresentation, we shall give Dr Smith's opinions in his own words.

"There is one sort of labour," says he, "which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be called productive, the latter unproductive, labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a mental servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he, in reality, costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed. But the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude of menial servants. The labour of the latter, however, has its value, and deserves its reward, as well as that of the former. But the labour of the manufacturers fixes and realizes itself in some particular subject, or vendible commodity, which lasts for some time at least after that labour is past. It is, as it were, a certain quantity of labour stocked and stored up, to be employed, if necessary, upon some other occasion. That subject, or, what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labour equal to that which had originally produced it. The labour of the menial servant, on the contrary, does not fix or realize itself in any particular subject or vendible commodity. His services generally perish in the very instant of their performance, and seldom leave any trace or value behind them for which an equal quantity of service could afterwards be procured." The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value, and does not fix or realize itself in any permanent subject or vendible commodity, which endures after that labour is past, and for which an equal quantity of labour could afterwards be procured. The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are maintained by a part of the annual produce of the industry of other people. Their service, how honourable, how necessary, or how useful soever, produces nothing for which an equal quantity of service can afterwards be procured. The protection, security, and defence of the commonwealth, the effect of their labour this year, will not purchase its protection, security, and defence for the year to come. In the same class must be ranked some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, &c. The labour of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labour; and that of the noblest and most useful produces nothing which could afterwards purchase or procure an equal quantity of labour. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production."

(Wealth of Nations, p. 146.)

It will not, we think, be very difficult to show the fallacy of the distinction Dr Smith has here endeavoured to establish between the labour, and consequently also the consumption, of the different classes of society. To begin with the case of the menial servant—Smith says that his labour is unproductive, because it is not realized in a vendible commodity, while the labour of the manufacturer is productive, because it is so realized. But of what, may we ask, is the labour of the manufacturer really productive? Does it not consist exclusively of comforts and conveniences required for the use and accommodation of society? The manufacturer is not a producer of matter, but of utility only. And is it not obvious that the menial servant is also a producer of utility? If, for example, the labour expended in converting the wool when in the fleece into a coat be, as it unquestionably is, productive, then surely the labour expended in cleaning and brushing the coat, and rendering it fit to be worn, must be so too. It is universally allowed, that the labour of the husbandman in raising corn, beef, and other articles of provision, is productive; but if so, why is the labour of the menial servant who performs the indispensable task of preparing and dressing these articles, and fitting them to be used, to be stigmatized as unproductive? It is clear there is no difference whatever between the two species of labour—that they are either both productive, or both unproductive. To produce a fire, is it not quite as necessary that coals should be carried from the cellar to the grate, as that they should be carried from the bottom of the mine to the surface of the earth? And if it be said that the miner is a productive labourer, must we not say as much of the servant employed to make and mend the fire? The whole of Dr Smith's reasoning proceeds on a false hypothesis. He has made a distinction where there is none, and can be none. The end of all human exertion is the same—that is, to increase the sum of necessaries, comforts, and enjoyments; and it must be left to the judgment of every man to determine what portion of these he will have in the shape of menial services, and what in the shape of material products. It is an error to suppose that a man is impoverished by maintaining menial servants, any more than by indulging in any other species of expense. It is true, he will be ruined if he keep more servants than he has occasion for, or can afford to pay; but his ruin would be equally certain were he to purchase an excess of food or clothes, or to employ more workmen in any branch of manufacture than are required to carry it on, or than his capital could employ. The keeping of two ploughmen when one only might suffice, is as improvident and wasteful as the keeping of two footmen to do the business of one. It is in the extravagant quantity of the commodities we consume, or of the labour we employ, and not in the particular species of commodities or labour, that we must seek for the causes of impoverishment.

The same reasoning applies to all the other cases mentioned by Smith. Take, for example, the case of the physician. He tells us that he is an unproductive labourer, because he does not directly produce something that has exchangeable value. But if he do the same thing indirectly, what is the difference? If the exertions of the physician be conducive to health, and if, as is undoubtedly the case, he enable others to produce more than they could do without his assistance, he is indirectly, at least, if not directly, a productive labourer. Dr Smith makes no scruple about admitting the title of the workman employed to repair a steam-engine to be enrolled in the productive class; and yet he would place a physician, who had been instrumental in saving the life of an Arkwright or a Watt, among those that are unproductive! It is impossible that these inconsistencies and contradictions should have occurred to Smith; and the errors into which he has fallen in treating this important branch of the science, show in the strongest manner the necessity of advancing with extreme caution, and of subjecting every theory, how ingenious soever it may appear when first stated, to a severe and patient examination.

The amusements furnished by players, singers, and so forth, come under the description of luxuries, and have the same effect on the public wealth as the introduction of a taste for tobacco, tea, or other superfluities. They create new wants, and, by so doing, stimulate industry to procure the means of gratifying them. They are really, therefore, a means of production; and while they furnish elegant and amusing recreation, they add to the mass of useful material products.

The productivity of the higher class of functionaries is still more obvious. Far, indeed, from being unproductive, they are, when they discharge properly the duties of their high station, the most productive labourers in a state. Smith says, that the results of their service, that is, to use his own words, "the protection, security, and defence of the commonwealth any one year, will not purchase its protection, security, and defence for the year to come." But this is plainly an error. We do not say that the protection and security afforded by good government is directly a cause of wealth; but it is plain that, without it, the productive powers of industry could not be brought into efficient action. Smith allows that the material products produced by the society one year, form the means of producing its supplies of necessaries, conveniences, and enjoyments during the following year. But without the security and protection afforded by government, these products would either not exist at all, or their quantity would be very greatly diminished. How, then, is it possible to deny that those whose labour is necessary to afford this security are productively employed? Take the case of the labourers employed to construct fences; no one ever presumed to doubt that their labour is productive; and yet they do not contribute directly to the production of corn or any other valuable product. The object of their industry is to give protection and security; to guard the fields that have been fertilized and planted by the husbandman from depredation; and to enable him to prosecute his employments without having his attention distracted by the care of watching. But if the security and protection afforded by hedg- Consumption of Wealth.

ers and ditchers justly entitle them to be classed among those who contribute to enrich their country, on what principle can the labours of those public servants who protect property in the mass, and render every portion of it secure against hostile aggression, and the attacks of thieves and plunderers, be said to be unproductive? If the labourers who protect a single corn-field from the neighbouring crows and cattle be productive, then surely the judges and magistrates, the soldiers and sailors, who protect every field in the empire, and to whom it is owing that every class of inhabitants feel secure in the enjoyment of their property, rights, and privileges, have a right to be classed among those whose services are supereminently productive.

That much wealth has been unproductively consumed by the servants of the public, both in this and other countries, it is impossible to doubt. But we are not to argue, from abuses extrinsic to a beneficial institution, against the institution itself. If the public pay their servants excessive salaries, or employ more than are required for the purposes of good government and security, it is their own fault. Their conduct is similar to that of a manufacturer who should pay his labourers comparatively high wages, and employ more of them than he has occasion for. But though a state or an individual may act in this foolish and extravagant manner, it would be not a little rash thence to conclude that all public servants and all manufacturing labourers are unproductive! If the establishments which provide security and protection be formed on an extravagant scale, if we have more judges or magistrates, more soldiers or sailors, than are necessary, or if we pay them larger salaries than would suffice to procure the services of others quite as competent to discharge their duties, let their numbers and their salaries be reduced. The excess, if there be any, is not a fault inherent in the nature of such establishments, but results entirely from the extravagant scale on which they have been arranged.

But, in showing that Dr Smith was mistaken in considering the consumption of menial servants, and of lawyers, physicians, and public functionaries, unproductive, we must beware of falling into the opposite extreme, and of countenancing the erroneous and infinitely more dangerous doctrine of those who contend that consumption, even when most unproductive, should be encouraged as a means of stimulating production, and of increasing the demand for labour! The consumption of the classes mentioned by Smith is advantageous, because they render services in return, which those who employ them, and who are the only proper judges in such a case, consider of greater value than the wages they pay them. But the case would be totally different were government, and those who employ labourers, to do so, not in order to profit by their services, but to stimulate production by their consumption. It is a fallacy and an absurdity to suppose that production is ever encouraged by a wasteful consumption of the products of industry. A man is stimulated to produce when he finds a ready market for the produce of his labour; that is, when he can readily exchange them for other products. And hence the true and only encouragement of industry consists, not in the increase of wasteful and improvident consumption, but in the increase of production. Every new product necessarily forms a new equivalent for, or a new means of purchasing some other product. It must always be remembered, that the mere existence of a demand, how intense soever it may be, cannot of itself be a means of encouraging production. To become a real demander, a man must not only have the will, but also the power, to purchase the commodity he wishes to possess; or, in other words, he must be able to offer an equivalent for it. It is not in the nature of things that there can be any limits to our wish to possess the products of art and industry. The power to give effect to our wishes, or to furnish equivalents for the things we are desirous to obtain, is the only desideratum. The more, therefore, that this power is increased, that is, the more industrious individuals become, their means of buying the products of others will be proportionally increased, and the market rendered so much the more extensive.

M. Sismondi and Mr Malthus have indeed contended, in opposition to this doctrine, that the productivity of industry may be carried to excess, and that where there are great facilities of production, a large unproductive consumption is necessary to stimulate industry, and prevent the overloading of the market. But if we attend to the motives which make men engage in any branch of industry, we shall be satisfied that the apprehensions of these writers are unfounded, and that the utmost facility of production can never be productive of a permanent glut of the market, or require to be counteracted by means of unproductive expenditure. In exerting his productive powers, every man's object is either directly to consume the produce of his labour himself, or to exchange it for such commodities as he may wish to get from others. If he do the first,—if he directly consume the produce of his industry, there is an end of the matter, and it is evident that no conceivable increase of such produce could occasion a glut; If he do the second,—if he bring the produce of his industry to market, and offer it in exchange for other things, then, and then only, there may be glut; but why? Not because there has been an excess of production, but because the producers have not properly adapted their means to their ends. They wanted, for example, to obtain silks, and they offered cottons in exchange for them; the holders of silks being, however, already sufficiently supplied with cottons, wanted broad cloths. The cause of the glut is therefore obvious. It consists not in over-production, but in the production of cottons, which were not wanted, instead of broad cloths, which were. Let this error be rectified, and the glut will disappear. Even supposing the proprietors of silks to be not only supplied with cottons, but with cloth and every other commodity that the demanders could produce, it would not invalidate the principle for which we are contending. If those who want silks cannot get them from the holder by means of an exchange, they have an obvious resource at hand,—let them cease to produce the things which they do not want, and directly produce the silks which they do want, or substitutes for them. It is plain, therefore, that the utmost facility of production can never be a means of overloading the market. Too much of one thing may occasionally be produced; but it is quite impossible that there should be too great a supply of everything. For every excess on the one hand there is a corresponding deficiency on the other. The fault is not in producing too much, but in producing commodities which do not suit the tastes of those with whom we wish to exchange them, or which we cannot ourselves consume. If we attend to these two grand requisites, we may increase the power of production a ten or a twenty times, and we shall be as free of all excess as if we diminished it in the same proportion. Unproductive consumption is not therefore required to prevent the overloading of the market; and though it were, no government would be justified in carrying it on for such a purpose.

---

1 M. Say was the first who showed, in a satisfactory manner, that effective demand depends upon production. (See his chapter 'De Debonchelis.') But the principles from which his conclusions are drawn had been stated so early as 1762, in a tract of Dean Tucker, entitled Queries on the late Naturalization Bill. As this tract is now become of rare occurrence, we subjoin the queries referred to. It must, however, be remembered, consistently with what has been previously advanced, that in deciding as to the character of the consumption or expenditure of any quantity of wealth, we must look at its indirect and ultimate, as well as its direct and immediate, effects. An outlay of capital or labour which, if we take its immediate results only into account, we should pronounce improvident and unproductive, may yet be discovered, by looking at it in its different bearings, and in its remote influences, to be distinctly the reverse; and it is also true, that cases frequently occur in which that expenditure which is injurious to the individual may not be injurious, but beneficial, to the state.

Montesquieu has said, "Si les riches ne dépensent pas beaucoup, les pauvres mourront de faim." The truth of this proposition has, however, been disputed; nor is this to be wondered at, as it may be either true or false according to the sense in which it is understood. If it be construed to mean that a rich man will be able directly to employ a greater number of servants or labourers if he spend his revenue in luxurious accommodations than if he lay out a part of it on the improvement of his estate, or accumulate it as a provision for his younger children, it is plainly erroneous. The demand for labour cannot be sensibly increased without an increase of capital; and it is quite impossible for those who spend their whole revenue on immediate gratifications to amass any capital, or consequently to employ an additional individual. But the proposition advanced by Montesquieu should not be interpreted in this confined sense, or as referring only to the influence of the expenditure of wealthy individuals on their own demand for labour, but as referring to its influence on that of the society; and if we so interpret it, and suppose it to mean that the lavish expenditure and luxury of the great and the affluent becomes a means of materially benefiting the poor, by exciting the emulation of others, who cannot expect, except through an increase of industry and economy, to be able to indulge in a similar scale of expense, it will, we apprehend, be found to be perfectly correct. To suppose, indeed, that the passion for luxurious gratifications should decline amongst the rich, and that men should notwithstanding continue equally industrious, is a contradiction. Riches are desirable only because they afford the means of obtaining these gratifications; and so powerful is the influence of a taste for them, that it may be doubted whether the extravagance which has ruined so many individuals, has not been, by giving birth to new arts and new efforts of emulation and ingenuity, of material advantage to the public.

These remarks are not made in the view of countenancing extravagant expenditure, but merely to show that those who attempt to decide as to the influence, in a public point of view, of any outlay of wealth, without endeavouring to appreciate and weigh its remote as well as its immediate effects, must, when they are right in their conclusions, be so only through accident. But without insisting farther on this point, it is abundantly certain that there is nothing to fear from the improvidence of individuals. There is not, as has been already observed, an instance of any people having ever missed an opportunity to save and amass; and in all tolerably well governed countries the principle of accumulation has always had a marked ascendency over the principle of expense.

Individuals are fully sensible of the value of the articles they expend; for in the vast majority of instances they are the produce of their own industry and frugality; and they rarely consume them unless in order to subsist, or to obtain some equivalent advantage. Such, however, it must be allowed, is not often the case with the consumption of governments and their servants. They do not consume their own wealth, but that of others; and this circumstance prevents them from being so much interested in its profitable outlay, or so much alive to the injurious consequences of wasteful expenditure, as their subjects. But economy on the part of governments, though more difficult to practise, is of infinitely greater importance than economy on the part of individuals. A private gentleman may, inasmuch as he is master of his own fortune, dispose of it as he pleases. He may act on the erroneous principle of profusion being a virtue, or he may attempt to excite the emulation and industry of his fellow-citizens by the splendour of his equipages and the magnificence of his mode of living. But government can with propriety do none of these things. It is merely a trustee for the affairs of others; and it is consequently bound to administer them as economically as possible. Were the principle admitted that government might raise money, not for the protection and good government of the state, but in order to excite industry and ingenuity by the pressure of taxation, or the luxury of public functionaries, an avenue would be opened to every species of malversation. It is indeed pretty certain that no people would submit to be taxed for such purposes; but if they did, the flagrant abuses to which it would inevitably lead could scarcely fail of ending either in revolution or in national poverty and degradation. Economy in expenditure is, upon all occasions, the first virtue of a government, and the most pressing of its duties.

We have now seen how labour may be rendered most productive of wealth—how that wealth is distributed among the various classes of society—and how it may be most advantageously consumed. We have seen the indissoluble connection between private and public opulence; that whatever has any tendency to increase the former, must, to the same extent, increase the latter; and that security of property, freedom of industry, and moderation in the public expenditure, are the only, as they are the certain, means by which the various powers and resources of human talent and ingenuity may be called into action, and society made continually to advance in the career of wealth and civilization. Every increase of security or of freedom is a benefit, as every diminution, whether of the one or the other, is an evil. It is by the spontaneous and unconstrained efforts of individuals to improve their condition and rise in the world, that nations become rich and powerful. The labour and the savings of individuals are at once the source and the measure of national opulence and public prosperity. They may be compared to the drops of dew, which invigorate and mature all vegetable nature. None of them has singly any perceptible influence; but we owe the foliage of summer and the fruits of autumn to their combined action.

(c. c.)

---

1 Whether it is possible, in the nature of things, for all trades and professions to be overstocked? And whether, if you were to remove any proportional number from each calling, the remainder would not have the same grounds of complaint they had before?

2 Whether, in fact, any tradesman thinks there are too many of other occupations to become his customers; though narrow selfish views lead him to wish there were fewer of his own trade?

3 If a particular trade be at any time overstocked, will not the disease cure itself? That is, will not some persons take to other trades, and fewer young people be bred up to that which is least profitable? And whether any other remedy but this is not, in fact, curing one transient disorder by bringing on many which are dangerous, and will grow inveterate?

4 Whether it is not an infallible maxim, that one man's labour creates employment for another?" (P. 13)

For a farther demonstration of the same principle, see Mill's Commerce Defended, p. 80.

1 Esprit de Loir, liv. vii. cap. 4.