Political Economy by J.C.L. Simonde de Sismondi (1815)
Man brings into the world with him certain wants, which he must satisfy in order to live; certain desires which lead him to expect happiness from particular enjoyments; and a certain industry or aptitude for labour, which enables him to satisfy the requisitions of both. His wealth originates in this industry: his wants and desires are its employments. All that man values is created by his industry; all that he creates is destined to be consumed in satisfying his wants and desires. But, between the moment of its production by labour, and its consumption by enjoyment, the thing destined for man's use may have an existence more or less durable. It is this thing, this accumulated and still unconsumed fruit of labour, which is called wealth.
Wealth may exist not only without any sign of exchange, or without money, but even without any possibility of exchange, or without trade. Suppose a man to be left on a desert island; the undisputed property of this whole island is not wealth, whatever be the natural fertility of its soil, the abundance of the game straying in its forests, of the fish sporting on its shores, or the mines concealed in its bosom. On the contrary, amid all these benefits presented him by nature, the man may sink to the lowest degree of penury, and die perhaps of hunger. But, if his industry enables him to catch some of the animals that wander in his woods: and if, instead of consuming them immediately, he reserves them for his future wants; if, in this interval, he gets them tamed and multiplied, so that he can live on their milk, or associate them to his labour, he is then beginning to acquire wealth, because labour has gained him the possession of these animals, and a fresh labour has rendered them domestic. The measure of his wealth will not be the price, which he might obtain for his property in exchange, because he is debarred from all exchange, but the length of time during which no farther labour will be requisite to satisfy his wants, compared with the extent of those wants.
By subduing those animals, the man has made them his property and wealth; by subduing the ground, he will, in like manner, convert it into property and wealth. His island is destitute of value so long as no labour has been bestowed on it; but if, instead of consuming its fruits the moment they come to his hand, he reserves them for future want; if he commits them again to the earth, again to be multiplied; if he tills his fields to augment their productive power, or defends them by inclosures from wild beasts; if he plants them with trees, the fruit of which he does not look for till many years have elapsed; he is then creating the value, not only of annual produce raised by his labour from the ground, but also of the ground itself, which he had tamed, as he tamed the wild beasts, and rendered fit to second his exertions. In that case he is rich, and the more so the longer he can suspend his labours without suffering new wants.
Our Solitary, being now liberated from the most pressing of all demands, that of hunger, may devote his exertions to provide lodging and clothes, or to improve those already provided. He will build himself a hut, and fit it out with such furniture as his unaided labour may suffice to construct; he will change the skin and fleeces of his sheep into shoes or coats; and the more convenient his dwelling shall be rendered, the better his storehouse shall be filled with provision for his future food and clothing, the more rich may he call himself.
The history of this man is the history of the human race: labour alone has created all kinds of wealth. However great the beneficence of nature, she gives nothing gratuitously to man; though, when addressed by him, she is ready to lend her assistance in multiplying his powers to an indefinite extent. The history of wealth is, in all cases, comprised within the limits now specified - the labour which creates, the economy which accumulates, the consumption which destroys. An article which has not been wrought, or has not mediately or immediately received its value from labour, is not wealth, however useful, however necessary, it may be for life. An article, which is not useful to man, which does not satisfy any of his desires, and cannot mediately or immediately be employed in his service, is not more entitled to the name of wealth, whatever labour may have been bestowed on producing it. And finally, an article which cannot be accumulated or kept for future consumption is not wealth, though created by labour and consumed by enjoyment.
Before possessing any medium of exchange, before discovering the precious metals which render it so easy to us, our Solitary would ere long learn to distinguish the different kinds of labour in their relation to wealth. Labour producing no enjoyment is useless; labour, whose fruits are naturally incapable of being stored up for future consumption, is unproductive; whilst the only productive kinds of labour - the only kinds producing wealth - are such as leave behind them, in the estimation even of our Solitary, a pledge equal in value to the trouble they have cost. Thus the man, misled by analogy, may have imagined that he could multiply his olive-trees by planting the olives; he may not have known but that the stones would germinate as in other such vegetables; till, after preparing the ground by a complete and fatiguing tillage, experience would teach him that his toil had been useless, for no olive-tree was produced by it. On the other hand, he may have secured his dwelling from wolves and bears; and the labour would be useful but unproductive; for its fruits cannot accumulate. If previously accustomed to civilized life, he may have passed many hours in playing on a flute, saved, we shall suppose, at his shipwreck; the labour would still be useful, and probably regarded as his own pleasure; but it would be as unproductive, and for a like reason, as before. He may have bestowed on the care of his person and health much time, very usefully employed; this will also be quite unproductive of wealth. The Solitary will clearly perceive what difference there is between productive labour and the labour of hours in which he amasses nothing for the future; and, without excluding himself from such occupations, he will call them a loss of time.
Whatever holds of the isolated man, with regard to creating and preserving wealth, is true also of society, - when labour, shared among numerous individuals, is recompensed by wages, while its fruits are distributed by exchange. For the society, as well as for the Solitary, there may be a useless as well as an unproductive kind of labour; and, though both of them be paid, they still preserve their distinct character, since the first corresponds not to the desires or wants of the labourer's employer, and the second admits no accumulation of its fruits. The wage paid to the workmen in either case must not mislead us; it puts the payer of it in the workman's place. The part which we formerly supposed to be performed by a single individual, is now shared among two or more persons; but the result is not altered in the least. The day-labourer who plants olives performs a task which is useless to his employer, though, if he receives his hire, it may be advantageous to himself. The man who defends his master or society against bears or hostile enterprises; who takes charge of the health or the persons of others; who provides the enjoyment of music, or dramatic exhibition, or dancing, performs, just like the Solitary, a work which is useful because it is agreeable, which is lucrative to him because he receives a hire for his labour, whilst he abandons the enjoyment of it to his employers; but which is unproductive notwithstanding, because it cannot be the object of saving and accumulation. He who paid the wage, no longer has either the wage itself in his possession, or the thing for which he gave it.
Thus labour and economy - the true sources of wealth - exist for the Solitary as well as for the social man, and produce the same kind of advantage to both. The formation of society, however, and with it the introduction of commerce and exchange, were necessary both to augment the productive power of labour, by dividing it, and to afford a more precise aim to economy, by multiplying the enjoyments which wealth procures. Thus men, combined in society, produced more than if each had laboured separately; and they preserve better what they have produced, because they feel the value of it better.
Exchange first arose from superabundance: "Give me that article, which is of no service to you, and would be useful to me,,, said one of the contacting parties, "and I will give you this in return, which is of no service to me, and would be useful to you." Present utility was not, however, the sole measure of things exchanged. Each estimated for himself the selling price, or the trouble and time bestowed in the production of his own commodity, and compared it with the buying price, or the trouble and time necessary for procuring the required commodity by his own efforts; and no exchange could take place till the two contacting parties, on calculating the matter, had each discovered that it was better thus to procure the commodity wanted than to make it for himself. This accidental advantage soon pointed out to both a constant source of advantage in trading, whenever the one offered an article which he excelled in making, for an article which the other excelled in making; for each excelled in what he made often, each was unskillful and slow at what he made but seldom. Now, the more exclusively they devoted themselves to one kind of work, the more dexterity did they acquire in it, the more effectually did they succeed in rendering it easy and expeditious. This observation produced the division of trades; the husbandman quickly perceived, that he could not make as many agricultural tools by himself, in a month, as the blacksmith would make for him in a day.
The same principle which at first separated the trades of the husbandman, shepherd, smith, and weaver, continued to separate those trades into an indefinite number of departments. Each felt that, by simplifying the operation committed to him, he would perform it in a manner still more speedy and perfect. The weaver renounced the business of spinning and dyeing; the spinning of hemp, cotton, wool, and silk, became each separate employment; weavers were still farther subdivided, according to the fabric and the destination of their stuffs; and at every subdivision, each workman, directing his attention to a single object, experienced an increase in his productive powers. In the interior of each manufactory, this division was again repeated, and still with the same success. Twenty workmen all laboured at the same thing, but each made it undergo a different operation: and the twenty workmen found that they had accomplished twenty times as much work as when each had laboured separately.
Much more work was executed in the world by the division of labour; but, at the same time, much more was required to supply the consumption. The wants and the enjoyments of the Solitary, who laboured for himself, were both very limited. Food, clothing, and lodging, he indeed required; but he did not so much as think of the delicacies, by which the satisfaction of those wants might be converted into pleasure; and still less of the artificial desires, induced by society, which in their gratification become new sources of enjoyment. The Solitary's aim was merely to amass, that he might afterwards repose. Before him at no great distance, was a point in the accumulation of wealth, beyond which it would have been foolishness to accumulate more, because his consumption could not be increased proportionably. But the wants of the social man were infinite, because the society's labour offered him enjoyment infinitely varied. Whatever wealth he might amass, he could never have occasion to say it is enough; he still found means to convert it into pleasure, and to imagine at least that he applied it to his service.
Trade, the generic name given to the total mass of exchangers, complicated the relation required to subsist between production and consumption; yet far from diminishing, it increased its importance. At first, every one procured what he himself intended to consume; but when each had come to work for all, the production of all must be consumed by all; and each, in what he produced, must have an eye to the final demand of the society, for which he destined the fruit of his labour. This demand, though not well ascertained by him, was limited in quantity. for, in order to continue his expenditure, every one must confine it by certain restrictions, and the sum of those private expenditures constituted that of the society. The distinction between capital and income, which in the Solitary's case was still confused, became essential in society. The social man was under the necessity of adjusting his consumption to his income, and the society, of which he formed part, were compelled to observe the same rule; without incurring ruin, they could not annually consume more than their annual income, leaving their capital untouched. All that they produced, however, was destined for consumption; and if their annual products, when carried to the destined market, found no purchaser, reproduction was arrested, and the nation ruined as before. We shall attempt to explain this double relation, at once so essential and so delicate, by showing, on the one hand, how income springs from capital; on the other, how what is income for one may be capital for a second.
To the Solitary, every kind of wealth was a provision made beforehand against the moment of necessity; yet still in this provision he distinguished two things - the part which it suited his economy to keep in reserve for immediate, or nearly immediate use, and the part which he would not need before the time when he might obtain it by a new production. One portion of his corn was to support him till the next harvest; another portion, set apart for seed, was to bring forth its fruit the following year.
The formation of society, the introduction of exchange, allowed him almost indefinitely to multiply this seed, - this fruit-bearing portion of accumulated wealth. It is what we name capital.
The ground and his animals were all that man could force to work in concert with him; but, in society, the rich man could force the poor to work in concert with him. After having set apart what corn was necessary till the next harvest, it suited him to employ the remaining surplus of corn in feeding other men, that they might cultivate the ground and make fresh corn for him: that they might spin and weave his hemps and wools; that, in a word, they might take out of his hands the commodity ready for being consumed, and at the expiration of a certain period, return him another commodity, of a greater value, likewise destined for consumption. Wages were the price at which the rich man obtained the poor man's labour in exchange. The division of labour had produced the distinction of ranks. The person who had limited his efforts to perform only one very simple operation in a manufacture, had made himself dependent on whoever chose to employ him. He no longer produced a complete work, but merely the part of a work; in which he required not only the cooperation of other workmen, but also raw materials, proper implements, and a trader to undertake the exchange of the article which he had contributed to finish. Whenever he bargained with a master-workman for the exchange of labour against subsistence, the condition he stood in was always disadvantageous, since his need of subsistence and his inability to procure it of himself, were far greater than the master's need of labour; and therefore he almost constantly narrowed his demand to bare necessaries, without which the stipulated labour could not have proceeded; whilst the master alone profited from the increase of productive power brought about by the division of labour.
The master, who hired workmen, was situated, in all points, exactly as the husbandman who sows the ground. The wages paid to his workmen were a kind of seed which he entrusted to them, and expected in a given time to bring forth fruit. Like the husbandman, he did not sow all his productive wealth; a part of it had been devoted to such buildings, or machines, or implements, as make labour more easy and productive; just in the way that a part of the husbandman's wealth was devoted to permanent works, destined to render the ground more fertile. It is thus that we see the different kinds of wealth springing up and separating, whilst each exerts a different influence on its own reproduction. The funds of consumption, such as domestic necessaries, do not any longer produce fruit, after each has secured them for his own use; fixed capital, such as improvement of the soil, canals of irrigation, and machinery, during the progress of its own slow consumption, co-operates with labour of which it augments the products; and, lastly, circulating capital, such as seed, wages, and raw materials, destined to be wrought, is consumed annually, or even more rapidly, in order to be again re-produced. It is essentially important to remark, that those three kinds of wealth are all equally advancing towards consumption. But the first when consumed is absolutely destroyed; for societies, as for individuals, it is merely an expense: whereas the second and third, after being consumed, are re-produced under a new form; and for societies, as for individuals, the consumption of them is a putting out to profit, or the circulation of capitals.
We shall better understand this movement of wealth, which, perhaps, it is difficult to follow, by fixing our observation on a single family engaged in the simplest of all speculations. A solitary farmer has reaped a hundred bags of corn, and is destitute of any market to which he can carry it. At all events, this corn must be consumed within the year, otherwise it will be worth nothing to the farmer. But he and his family may require only thirty bags of it; this is his expense: another thirty may be employed to support workmen engaged in felling the forests, or draining the marshes of the neighbourhood, to put them under culture; this will be converting thirty bags into fixed capital: and, finally, the remaining forty bags may be sown, and formed into a circulating capital, in place of the twenty bags sown the preceding year. The hundred are thus consumed; but seventy of them are put out to profit, they will reappear partly at the next harvest, partly at those which follow. By this means, in consuming he will have saved. Yet the limits of such an operation are easily discerned. If, this year, out of the hundred bags which he reaped, he could get no more than sixty eaten, who will eat the two hundred bags produced next year by the augmentation of his seed?*
Resuming these three sorts of wealth, which, as we have seen, become distinct in a private family, let us now consider each sort with regard to the whole nation, and see how the national revenue may arise from this division.
As the farmer required a primitive quantity of labour to be expended in cutting down the forests, and draining the marshes which he meant to cultivate; so, for every kind of enterprise, there is required a primitive quantity of labour to facilitate and augment the circulating capital. The ore cannot be obtained till the mine is opened; canals must be dug, machinery and mills must be constructed, before they can be used; manufactories must be built, and looms set up, before the wool, the hemp, or the silk can be weaved. This first advance is always accomplished by labour; this labour is always represented by wages; and these wages are always exchanged for necessaries of life, which the workmen consume in executing their task. Hence what we have called fixed capital, is a part of the annual consumption, transformed into durable establishments, calculated to increase the productive power of future labour. Such establishments themselves grow old, decay, and are slowly consumed in their turn, after having long contributed to augment the annual production.
As the farmer required seed, which, after being committed to the earth, was returned fivefold in harvest; so likewise, every undertaker of useful labour requires raw materials to work upon, and wages for his workmen, equivalent to the necessaries of life consumed by them in their labour. His operations thus begin with a consumption; and this is followed by a reproduction which should be more abundant, since it must be equivalent to the raw materials worked upon, so the necessaries of life consumed by his workmen in their labour, to the sum by which his machinery and all his fixed capitals have been deteriorated during the production, and lastly to the profit of all concerned in the labour, who have supported its fatigues solely in the hope of gaining by it. The farmer sowed twenty bags of corn to reap a hundred; the manufacturer will make a calculation nearly similar. And as the farmer at harvest must recover not only a compensation for his seed, but likewise for all his labours, so the manufacturer must find in his production, not the raw materials only, but all the wages of his workmen, all the interests and profits of his fixed capital, with all the interests and profits of his circulating capital.
In the last place, the farmer may augment his seed every year; but he will not fail to recollect that, since his crops increase in the same necessaries, he is not sure of always finding men to eat them. The manufacturer, in like manner, devoting the savings of each year to increase his re-production, must recollect the necessity of finding purchasers and consumers for the increasing products of his establishment.
Since the fund destined for consumption no longer produces any thing, and since each man strives incessantly to preserve and augment his fortune, each will also restrict his consumable fund, and instead of accumulating in his house a quantity of necessaries greatly superior to what he can consume, he will augment his fixed or circulating capital, by all that he does not expend. In the present condition of society, a part of the fund destined for consumption remains in the retail-dealer's hand, awaiting the buyer's confidence; another part destined to be consumed very slowly, as houses, furniture, carriages, horses, continues in the hands of persons whose business it is to sell the use of it, without abandoning the property. A considerable portion of the wealth of opulent nations is constantly thrown back into the fields destined for consumption; but although it still gives profit to its holders, it has ceased to augment the national re-production.
The annual distribution of the wealth, annually reproduced, among all the citizens composing the nation, constitutes the national revenue. It consists of all the value, by which the re-production surpasses the consumption that produced it. Thus the farmer, after deducting from his crop a quantity equal to the seed of the foregoing year, finds remaining the part which is to support his family, - a revenue to which they have acquired right by means of their annual labour; the part which is to support his workmen, who have acquired the right to it by the same title; the part with which he is to satisfy the landlord, who has acquired right to this revenue by the original improvement of the soil, now no longer repeated; and lastly, the part with which he is to pay the interest of his debts, or indemnify himself for the employment of his own capital - a revenue to which he has acquired right by the primitive labours which produced his capital.
So likewise, the manufacturer finds, in the annual produce of his manufactory, first the raw material employed; secondly, the equivalent of his own wages, and those of his workmen, to which their labour alone gives them right; thirdly, an equivalent for the annual detriment and interest of his fixed capital, to which revenue he or the proprietor has acquired right by a primitive labour; and lastly, an equivalent for the interest of his circulating capital, which has been produced by another primitive labour.
It is to be observed that, among those who share the national revenue, some acquire a new right in it every year by a new labour, others have previously acquired a permanent right by a primitive labour, which has rendered the annual labour more advantageous. No one obtains a share of the national revenue, except in virtue of what he himself or his representatives have accomplished to produce it; unless, as we shall soon see, he receives it at second hand, from its primitive proprietors, by way of compensation for services done to them. Now, whoever consumes without fulfilling the condition which alone gives him right to the revenue; whoever consumes without having a revenue, or beyond what he has; whoever consumes his capital in place of revenue, is advancing to ruin; and a nation composed of such consumers is advancing to ruin likewise. Revenue, indeed, is that quantity by which the national wealth is increased every year, and which accordingly may be destroyed, without the nation's becoming poorer; but the nation which, without re-production, destroys a quantity of wealth, superior in this annual increase, destroys the very means by which it would have acquired an equal re-production in subsequent years.
By a circular concatenation, in which every effect becomes a cause in its turn, production gives revenue, revenue furnishes and regulates a consumable fund, which fund again causes production and measures it. The national wealth continues to augment, and the state to prosper, so long as these three quantities, which are proportional to each other, continue to augment in a gradual manner, but whenever the proportion among them is broken, the state decays. A derangement of the mutual proportion subsisting among production, revenue, and consumption, becomes equally prejudicial to the nation, whether the production give a revenue smaller than usual, in which case a part of the capital must pass to the fund of consumption; or whether, on the contrary, this consumption diminish, and no longer call for a fresh production. To cause distress in the state, it is enough that the equilibrium be broken. Production may diminish when habits of idleness gain footing among the labouring classes; capital may diminish when prodigality and luxury become fashionable; and lastly, consumption may diminish from causes of poverty, unconnected with the diminution of labour, and yet, as it will not offer employment for future re-production, it must diminish labour in its turn.
Thus nations incur dangers that seem incompatible: they fall into ruin equally by spending too much, and by spending too little. A nation spends too much whenever it exceeds its revenue, because it cannot do so except by encroaching on its capital, and thus diminishing future production; it then does what the solitary cultivator would do if he should eat the corn which ought to be secured for seed. A nation spends too little, whenever, being destitute of foreign commerce, it does not consume its own production; or when, enjoying foreign commerce, it does not consume the excess of its production above its exportation; for, if so, it soon comes into the condition of the solitary cultivator, who having filled all his granaries far beyond the probability of consumption, would be obliged, that he might not work in vain, partly to abandon his cultivation of the ground.
The nation does not indeed spend all that it consumes; the name expenditure, in such a case, can properly be given to that consumption only which produces nothing; while that part of the consumption which represents the wages of productive workmen, is an employment of funds, not an expenditure. Thus, the nation, when it forms manufacturing establishments, does not diminish its consumption; it consumes, in a productive manner, what it formerly consumed unproductively. Still, however, this employment of the national produce in giving movement to new labour, though it does not destroy the balance between production and consumption, renders it much more complex. The new produce thus obtained must, at last, find a consumer; and though it may be generally affirmed, that to increase the labour is to increase the wealth, and with it in a similar proportion the revenue and the consumption; still it is any thing but proved, that by too rapid an increase of its labour a nation may not altogether deviate from the proper rate of consumption, and thus ruin itself by economy as well as prodigality. Happily, in most cases, the increase of capital, of revenue and of consumption, requires no superintendence; they proceed, of their own accord, with an equal pace; and when one of them, at any time, happens to pass the others for an instant, foreign commerce is almost always ready to restore the equilibrium.
We have designedly carried on our history of the formation and progress of wealth thus far, without mentioning a circulating medium, to show, that, in fact, such an instrument is not necessary for its development. A circulating medium did not create wealth; but it simplified all the relations, and facilitated all the transactions of commerce; it gave to each the means of finding sooner what suited him best; and thus presenting an advantage to every one, it still further increased the wealth, which was already increasing without it.
The precious metals are one of the numerous values produced by the labour of man, and applicable to his use. It was soon discovered that they, more than any other species of riches, possessed the property of being preserved without alteration for any length of time, and the no less valuable one of uniting easily into a single whole, after being divided almost infinitely. The two halves of a piece of cloth, of a fleece, and still less of an ox, - though these are supposed to have once been employed as money, - were not worth the whole; but the two halves, the four quarters of a pound of gold are always, and will be, a pound of gold, however long they may be kept. As the first exchange of which men feel the need, is that which enables them to preserve the fruit of their labour for a future season, every one became eager to get precious metals in exchange for his commodity, whatever it might be; not because he at all intended to use those metals himself; but because he was sure of being able to exchange them at any time afterwards, in the same manner, and for the same reason, against whatever article he might then need. From that time the precious metals began to he sought after, not that they might be employed in the use of man, as ornaments or utensils, but that they might be accumulated, at first, as representing every species of wealth, and then that they might be used in commerce, as the means of facilitating all kinds of exchange.
Gold dust, in its primitive state, continues, even now, to be the medium of exchange among the African nations. But when once the value of gold comes to be universally admitted, there remains but a single step, much easier and far less important, till it be converted into coin, which warrants, by a legal stamp, the weight and the fineness of every particle of the precious metals employed in circulation.
The invention of money gave quite a new activity to exchange. Whoever happened to possess any superfluity had no longer occasion to seek the article likely to be needed in time to come. He no longer delayed selling his corn till he should meet the oil-merchant or the wool-dealer to offer them the thing they wanted; he reckoned it enough to find money, being certain that for this he could always obtain any required commodity. The buyer, too, on his side, needed not to study what would suit the seller: money was always sure to satisfy all his demands. Before the invention of a circulating medium, a fortunate concurrence of conveniences was requisite for an exchange: whereas after this invention, there could scarcely be a buyer that did not find a seller, or a seller who did not find a buyer.
As exchanges, and afterwards sales and purchases, were voluntary, it might be inferred that all values were given for values completely equal. It is more correct, however, to say, that bargains were never made without advantages to both parties. The seller found a profit in selling, the buyer in buying. The one drew more advantages from the money which he received, than he would have done from his merchandise; the other more advantage from the merchandise which he acquired, than he would have done from his money. Both parties had gained, and hence the nation gained doubly by their bargain. On the same principle when a master set any workman to labour, and gave him in exchange for the work expected to be done, a wage which corresponded to the workman's maintenance during his labour; - both these contractors gained; the workman because he had received in advance the fruit of his labour before it was accomplished; - the master, because this workman's labour was worth more than his wages. The nation gained with both; for as the national wealth must, at the long run, be realized in enjoyment, Whatever augments the enjoyment of individuals, must be considered as a gain for all.
Thus the labour of man created wealth; but wealth, in its turn, created the labour of man. Wherever wealth offered a profit, a wage, a subsistence, it produced a class of men, eager to acquire them. The accumulation of primary labour had created the value of land, by unfolding its productive power. This power, as it seconded the labour, of man, henceforth became a species of wealth; and a person possessed of land might, without himself labouring, obtain payment for surrendering the use of it to such as laboured. Hence the origin of sales and leases of land. The farmer again might hire workmen to labour, and thus might acquire the advantages attached to exchanging present subsistence against distant produce. He incurred all the charges of cultivation, he drew all its profits, and left to his workmen nothing but their wages. Thus the revenues of land, all comprised in the annual crop, were divided among three classes of men, under the name of rent, profit, and wages; whilst a surplus included the seed and the farmer's advance.
The manufacturer again possessed machinery and materials: he offered to his labourers an immediate subsistence for the fruit of a labour which required time and long advances. He enabled them to live, he furnished them with lodging, tools, machinery, and paid himself with interest by their work. If, in his own hand, he had not enough of accumulated wealth, or enough of the money which represents it, to provide his workmen with all the advances which their enterprise required, and to wait for the sale of their labour, he borrowed money, and paid the lender an interest, analogous to the rent which a farmer pays his landlord. The labour of the workmen employed by him annually produced a certain quantity of goods, in the value of which were to be included the interest of capital for the money-lender, the rent of implements, machines, immovables, and all kinds of fixed capital; the profits of the head manufacturer, the wages of his workmen, and, lastly, the capital expended in raw materials, together with the whole of that capital which, as it circulates annually in the manufactory, must be deducted from its annual produce, in order to leave the net revenue.
The produce of the soil and of manufactories belonged often to climates very distant from those inhabited by their consumers. A class of men undertook to facilitate all kinds of exchange, on condition of sharing in the profits which it yields. These men gave money to the producer, at the time when his work was finished and ready for sale; after which having transported the merchandise to the place where it was wanted, they waited the consumer's convenience, and retailed to him in parcels what he could not purchase all at once. They did service to every one, and repaid themselves for it by the share which is named profits of trade. The advantage arising from a judicious management of exchanges was the origin of those profits. In the north, a producer reckoned two measures of his merchandize equivalent to one of southern merchandize. In the south, on the other hand, a producer reckoned two measures of his merchandize equivalent to one of northern merchandize. Between two equations so different there was room to cover all the expenses of transport, all the profits of trade, and interest for all the money advanced to carry it on. In fact, at the sale of such commodities transported by commerce, there must be realized, first the capital repaid to the manufacturer; then the wages of the sailors, carriers, clerks, and all persons employed by the trader; next the interest of all those funds to which he gives movement; and lastly, the mercantile profit.
Society requires something more than wealth; it would not be complete if it contained nothing but productive labourers. It requires administrators, judges, lawgivers; men employed about its general interests; soldiers and sailors to defend it. No one of those classes produces any thing; their labour never assumes a material shape; it is not susceptible of accumulation. Yet without their assistance all the wealth arising from productive labour would be destroyed by violence; and work would cease, if the labourer could not calculate on peaceably enjoying its fruits. To support this guardian population, a part must be deducted from the funds created annually by labour. But as the service done to the community, by such persons, how important soever it be, is felt by no one in particular; it cannot, like other services, be an object of exchange. The community itself was under the necessity of paying it by a forced contribution from the revenues of all. It was not long, indeed, till this contribution came to be regulated by the persons destined to profit from it; and hence the contributors were loaded without measure; civil and military offices were multiplied far beyond what the public weal required; there was too much government, too much defence of men, who were forced to accept those services, and to pay them, superfluous or even burdensome as they might be; and the rulers of nations, established to protect wealth, were often the main authors of its dilapidation.
Society needs that kind of labour which produces mental enjoyments; and as mental enjoyments are, nearly all, immaterial, the objects destined to satisfy them cannot be accumulated. Religion, science, the arts, yield happiness to man; their origin is labour, their end enjoyment; but what belongs only to the soul is not capable of being treasured up. If a nation, however, does not reckon literature and the arts among its wealth, it may reckon literary men and artists; the education they receive, the distinction they acquire, accumulate a high value on their heads; and the labour which they execute being often better paid than that of the most skilled workmen, may thus contribute to the spread of opulence.
Society, in the last place, needs those kinds of labour, the object of which is to take care of the persons, not the fortunes of men. Such labour may be of the most elevated, or of the most servile kind: according as it requires either the knowledge of nature and the command of her secrets, like the physician's labour, or merely complaisance and obedience to the will of a master, like the footman's labour. All of them are species of labour intended for enjoyment, and differing from productive labour, only in so far as their effects are incapable of accumulation. Hence, though they add to the well-being of a state, they do not add to its wealth; and such as are employed in them must live on voluntary contributions drawn from the revenue formed by other kinds of labour.