Elements of Political Economy by James Mill, S. Quire. Author of The History of British India, 2nd Edition. Revised and Corrected, 1824. C. Baldwin, Printer. New Bridge Street, London. Brefas. To this edition I shall prefix only an account of the changes which have been made in it. The whole of the work has been carefully revised and where it appeared that the expression could be rendered more clear or precise. The requisite alteration was attempted. The instances are too numerous to be specified. A greater development has been given to the subject of production and two sections. One on labour, another on capital, have been added to that chapter. In the chapter on interchange, I have endeavour to illustrate more completely the controverted subject of value, and to establish on clear a proof the view which I have taken of the circumstances by which it is regulated. In the same chapter a new section has been introduced, on the effect of employing two metals, as standard money, and of using subsidiary coins, at less than their metallic value. A considerable portion of what relates to the doctrine of exchange, or the transactions by bills among nations, has been rewritten, in the hope that the difficulties by which that subject is enveloped, might be still farther removed. For preface, in the chapter on consumption I have endeavoured by new illustrations to render more palpable what appears to me to be demonstration of that most important doctrine, that the aggregate demand and supply of a nation are always equal, that production can never be too rapid for the market in other words, that there never can be a general glut of commodities. The section which treats of attacks on wages has been rewritten, and the subject more fully expounded, the question relating to the operation of attacks, proportional to their value, upon all commodities, has been cleared of some ambiguity of language, and has received farther illustrations. A new section has been introduced to ascertain the effects of attacks upon farmers' profits, and of taxes upon the instruments of agriculture, in the section which treats of taxes intended to fall indiscriminately upon all sources of income. I have endeavoured to give a reply to the question, whether an income tax or to fall equally on equal incomes, without regard to the time they are to endure, or the value which they derive from that duration. Introduction The subject ITS limits and division, political economy is to the state, what domestic economy is to the family. The family consumes and in order to consume, it must obtain supply. Domestic economy has, therefore, two grand objects the consumption and supply of the family, the consumption being a quantity always indefinite, for there is no end to the desire of enjoyment, the grand concern is, to increase the supply, those things which are produced in sufficient abundance for the satisfaction of all, without the intervention of human labour, as air, the light of the sun, and water, at least in most regions of the globe, are not objects of care or providence and therefore, accurately speaking, do not form part of the subject of domestic economy, the art of him who manages a family consists in regulating the supply and consumption of those things which cannot be obtained but with cost, in other words, with human labour, the original purchase money which is given for everything, the same is the case with political economy, it also has two grand objects, the consumption of the community, and that supply upon which the consumption depends, those things which are supplied without the intervention of human labour, as nothing is required in order to obtain them, need not be taken into the account, had all things desired for consumption, been found without the intervention of human labour, the science of political economy would not have existed, no science is implied in putting forth the hand, and using, when labour, however, is to be employed, and the objects of desire can be multiplied only by a preconcerted plan of operations, it becomes an object of importance to ascertain by what means they may be produced with greatest ease and in greatest abundance and upon these discoveries, when made, to frame a system of rules skillfully adapted to the end, it is not pretended, that writers on political economy have always limited their disquisitions to this class of objects, it seems, however, important to detach the science from all considerations not essential to it, the reader is accordingly requested to mark, that, in the following pages, I have it in view, to ascertain merely the laws according to which the production and consumption are regulated, of those commodities which the intervention of human labour is necessary to procure, the science of political economy, thus defined, divides itself into two grand inquiries that which relates to production, and that which relates to consumption, but after things are produced, it is evident that they must be distributed, before they are consumed, the laws of distribution, therefore, constitute an intermediate inquiry, between that which relates to production, and that which relates to consumption, when commodities are produced and distributed, it is highly convenient, for the sake both of reproduction and consumption, that portions of them should be exchanged for one another, to ascertain, therefore, the laws according to which commodities are exchanged for one another is a second inquiry, preliminary to that which relates to the last great topic of political economy, consumption, it thus appears, that four inquiries are comprehended in this science, first, what are the laws which regulate the production of commodities? tunedly, what are the laws according to which the commodities produced by the labour of the community are distributed? thirdly, what are the laws according to which commodities are exchanged for one another? fourthly, what are the laws which regulate consumption? to one, production, the distinction between what is done by labour, and what is done by nature, is not always observed, a few words, therefore, are necessary to fix the meaning of terms, labour produces its desired effects only by conspiring with the laws of nature, there is no commodity, or thing produced for consumption, which labour provides in any other way than by co-operating i with the laws of nature, apostrophe it is found that the agency of man can be traced to very simple elements, he can do nothing more than produce motion, he can move things towards one another, and he can separate them from one another, the properties of matter perform all the rest, he moves ignited iron to a portion of gunpowder, and an explosion takes place, he moves the seed to the ground, and vegetation commences, he separates the plant from the ground, and vegetation ceases, why, or how, these effects take place, he is ignorant, he has only ascertained, by experience, that if he performs such and such motions, such and such events will follow, in strictness of speech, it is matter itself, which produces the effects, all that men can do is to place the objects of nature in a certain position, the tailor when he makes a coat, the farmer when he produces corn, do but the same thing, each performs a set of motions and the properties of matter do the rest, it would be absurd to ask, to which of any two effects the properties of matter contribute the most seeing they contribute everything, after certain portions of matter are placed in a certain position, as our enquiry is confined to that species of production of which human labour is the instrument, and as human labour produces its effects chiefly hash into modes, either with, or without the aid of implements, this chapter naturally divides itself into two sections, of which the first will treat of labour, simply, and as much as possible detached from the consideration of the instruments by which the powers of labour may be increased, the second will treat of capital, or of the origin, and nature of that provision of materials, on which labour is employed, and by which its operations are assisted, section i. labour, in the state of society in which we exist, we seldom see labour employed, except in conjunction with capital, to conceive the separate operation of labour more distinctly, it may be useful to recur, in imagination, to that simple state of things, in which society pay be conceived to have originated, the savage who climbs a tree, and gathers the fruit he who ensnares a wild beast, or beats it down with a club, may be considered as operating with their naked powers, and without the aid of anything to which the name of capital can properly be annexed, the principle thing which, with a view to the conclusions of political economy, it is necessary to remark in regard to labour, considered separately, as a distinct portion of an analysed whole and apart from capital, is the necessity of subsistence to the labourer, in the idea of labour, the idea of this subsistence is included, whenever we say that such and such effects are produced by pure labour, we mean the consumption and operations of the labourer. Taken conjunctly, there can be no labour without the consumption of the labourer, if the man who climbs the tree to gather the fruit, can manage to find two such trees, and to climb them in a day, he can continue his employment with the subsistence of half a day provided in advance, if the man who subsists on animals cannot make sure of his prey, in less than a day, he cannot have less than a whole day's subsistence in advance, if hunting excursions are undertaken which occupy a week or a month, subsistence for several days may be required, it is evident that when men come to live upon those productions which their labour raises from the soil, and which can be brought to maturity only once in the year, subsistence for a whole year must be laid up in advance, the previous provision of the labourer may be greater or smaller, in proportion to the greater or less time which it may require, to realise the fruit of his labour in the shape of subsistence but in all these cases, equally, whenever we speak of his labour as a thing by itself, a detached independent instrument of production, the idea of the subsistence is included in it, this is the more necessary to be strongly remarked, that, as we shall afterwards see, this important circumstance is liable to be overlooked, the terms labour, and wages, are sometimes unconsciously used and much confusion of ideas, and some fundamental errors, are the consequence, nothing, however, is more clear, than that, when we speak of the labour of a man, for a day, or a month, or a year, the idea of his subsistence is as necessarily included, as that of the action of his muscles, or his life, his labour is not one thing, the action of his muscles another thing in the point of view relevant to the purpose in hand, they are one and the same thing, if wages be taken, therefore, as synonymous with the consumption of the labourer, the labour cannot be taken as one item of an aggregate, and its wage is as another, as often as this is done, an error is the necessary consequence, having thus seen what ideas are necessarily included in that of labour, in its detached, and simplest form, it is only further necessary, under this head, to consider the improvements, in respect to its productive powers, of which it is susceptible, it will be seen, hereafter, that the most important of these improvements arise from the use of those instruments which form one of the portions of capital, great improvements, however, also arise from the division, including the distribution, of labour, and all which it will be necessary, in this work, to advance on that topic, which has been so often explained, and is commonly well understood, maybe here introduced, the foundation of this class of improvements, is the faculty by which an operation, which we perform slowly at first, is performed with greater and greater j-rapidity by repetition, this is a law of human nature so familiar, and well understood, that it hardly stands in need of illustration, the simplest of all operations, that of beating equal times on a drum, is a proper example, a man who has not practiced a similar operation, is often surprised, a bond trial, at the slowness with which he performs it, while the rapidity of a practiced drummer is still more astonishing, the repetition, upon which the greatest celerity depends, must be frequent, it is not therefore compatible with a great number of different operations, the man who would perform an operation, or a few operations, with the greatest possible rapidity, must principally confine his labours to such operations, in the operations, therefore, which are conducive to the production of the commodities desired by man, if anyone confines himself to a small number of those operations, he will perform them with much more rapidity and not only with more rapidity, but with more correctness and precision qualities often of the greatest consequence than if he employed himself in a greater number of operations, there is a certain immense aggregate of operations subservient to the production of commodities useful and agreeable to man, at least in the more complicated states of society, it is, obviously, from the above stated principles, of the highest importance, that this immense aggregate should be divided into portions, consisting, each, of as small a number of operations as possible, in order that every operation may be the more quickly and perfectly performed, each man could, by the more frequent repetition thus occasioned, perform two of these operations, instead of one, and also perform each of them better, the powers of the community in producing articles, useful and agreeable to them, would, upon this supposition, be more, than doubled, they would not only be doubled in point of quantity, but a great advantage would be gained in point of quality, this subject has been beautifully illustrated by Adam Smith, in the first chapter of the first book of the inquiry into the nature and causes of the wealth of nations, where the extraordinary effect of the division of labour in increasing its productive powers, in the more complicated cases, is displayed in some very remarkable instances, he remarks, that a boy who has been accustomed to make nothing but nails, can make upwards of two thousand three hundred of them in a day while a common blacksmith, whose operations are nevertheless so much akin to those of the nailer, cannot make above three hundred, and those very bad ones, in the simplest state of labour, it cannot be doubted, that if one man should confine himself to the operation of climbing trees for their fruit, another to the operations of ensnaring and killing animals, they would acquire a dexterity, the one in climbing trees, the other in procuring animals, greater than they would have acquired, had each occasionally performed both operations and that they would by such means obtain a greater abundance both of fruit, and of game, so obvious is this advantage, that some remarkable cases of the division of labour are exemplified in the earliest stages of the arts, the hands which spin the thread, and the hands which weave it into cloth, were different in every country, perhaps, in which we have any memorial of the early state of the art, the man who stands the hide, and the man who makes it into shoes the man who works in iron, and the man who works in wood, were all separated at an early period, and divisions of labour appropriated to them, if the immense aggregate of the operations which are subservient to the complicated accommodations, required in an artificial and opulent state of society, were six to be divided, under circumstances the best calculated for breaking it down into those small groups of operations, which afford the greatest aid to the productive powers of labour, the most perfect philosophical analysis of the subject would be the first operation to be performed the next would be an equally perfect philosophical synthesis, in order to know what is to be done with a vast aggregate of materials, existing in forms ill adapted in many respects to the ends which are to be obtained, it is necessary to contemplate the aggregate in its elements, to resolve it into these elements, and carefully and comprehensively to pass them under review, this is the analytical operation, when we have the full knowledge of the elements, which we are to combine as means towards our ends, and when we have an equally perfect knowledge of the ends, it then remains that we proceed to form those combinations by which the ends will be most advantageously produced, this is the synthetic operation, it is well known that neither of these operations has as yet been performed, in order to obtain the best division and distribution of labour, it is equally certain that this division is still in a most imperfect state, as far as it has been performed, it has been performed practically as they call it, that is, in a great degree, accidentally, as the fortuitous discoveries of individuals, engaged in particular branches, enabled them to perceive that in these branches a particular advantage was to be gained, such improvements have almost always been founded on some very narrow view and analysis and synthesis, certainly, but including a small number of elements, and these but imperfectly understood, improvements, founded upon narrow views, are almost always equally confined in their application, there is no generalization, an improvement, introduced into one machine, or one manufacture, is often long before it is introduced into another machine, or another manufacture, where it would be equally important, and one improvement is still more slow in suggesting another which is akin to it, because a narrow view discovers no relations between the things which it embraces and those which it excludes, chap. One production, section two, capital, we have already observed, that labour performs its operations either simply by the unaided powers of the human body, or with the use of instruments, which augment not only the quantity, but often also the accuracy and precision of its results, as examples of the earliest and simplest of the instruments can't arrive for this purpose, we may mention the bound arrow, and the sling, of the huntsman, the spade is an instrument soon invented for turning the soil and a certain rude instrument, to which the force of cattle may be applied, and which is the earliest form of a plough, is not long in suggesting itself, from these beginnings men proceed, inventing one instrument after another, the axe, the hammer, the saw, the wheel, the wheel carriage, and so on, till they arrive at last at that copious supply of complicated machinery by which labour is rendered productive in the most artificial states of society, the provision made of these instruments is denominated capital, this, however is not the whole of what is denominated capital, labour in its earliest stage is not employed upon any materials but such as nature presence, without any preparation at the hands of man, when the savage climbs the tree to gather the fruit, when the huntsman tears down the branch to form his club or his bow, he operates upon materials which are prepared for him by the hand of nature, at a subsequent stage in the progress of industry, the materials upon which labour is employed have generally been the result of previous labour, thus, the flax and the cotton which are to be manufactured into cloth and muslin, have been the result of the labour of agriculture the iron has been the result of the labours of the miner and smelter, and so of other cases, the materials upon which labour is to be employed, where they have thus been the result of previous labour, are also denominated capital, and when we speak of labour as one of the instruments of production, and capital as the other, it is certain that these two constituents, namely, the instruments which aid labour, and the materials on j which it is employed, are all that can be correctly included in the idea of capital, it is true that wages are in general included in that idea, but in that case labour is also included, and can no longer be spoken of as an instrument of production apart from capital, we have already seen, that whenever labour is spoken of as a separate, distinct instrument of production, the idea of the subsistence, or consumption of the labourer, for which wages is but another name, is included in the idea of the labour, this subject is noticed in this place merely for the better ensuring of clear ideas, we shall consider here after the errors to which a confusion of ideas on this point has given rise, having thus endeavored to annex precise ideas to the terms capital and labour, a matter of the utmost importance in the study of political economy, and to distinguish their respective departments in the business of production, it is only necessary for the learner father to advert to the origin of capital, the source from which it of necessity springs, and the laws of its accumulation, it is easy to discover that the source from which capital is ultimately derived, is labour, production of necessity begins with the hands, and nothing else, of the labourer, there can be no instrument till it is made and the first instrument had no previous instrument to be made with, the first portion of capital, therefore, was their result of pure labour, without that cooperation of capital, speedily, however, after the first instrument which increased the productive powers of labour, as the bow of the huntsman, had been made, another instrument would be made to assist in the formation of the former, as a knife to aid in the formation of the bow, and then capital first begins to be the result of labour, and of capital conjoined, this subject is too clear to need to be illustrated by tracing the mode in which capital and labour combine in producing the articles which form capital, from the simplest to the most complicated cases, it will be here after seen, that in the more artificial and improved states of the business of production, a very great proportion of the whole of the labour and capital of the country is constantly employed in the production of the articles which form capital, as capital, from its simplest to its most complicated state, means something produced for the purpose of being employed, as the means towards a further production, it is evidently a result of what is called saving, the meaning of this term is so well understood, and so little liable to abuse, that not many words will be necessary to explain this particular relating to capital, though it is a law of great importance to remark, it is sufficiently evident that without saving there could be no capital, if all labour were employed upon objects of immediate consumption, which were all immediately consumed, such as the fruit for which the savage climbs the tree, no article of capital, no article to be employed as a means to further production, would ever exist, to this end something must be produced which is not immediately consumed, which is saved and set apart for another purpose, all the consequences of this fact, to which it is necessary here to advert, are sufficiently obvious, every article which is thus saved becomes an article of capital, the augmentation of capital, therefore, is everywhere exactly in proportion to the degree of saving in fact, the amount of that augmentation annually is the same thing with the amount of the savings which are annually made, the labour and the capital, which combine to the production of a commodity, may belong both to one party, or one of them may belong to one party, the other to another, thus, when the savage who kills a deer, kills it with his own bow and arrows, he is the owner both of the labour and of the capital, when he kills it with the bow and arrows of another man, the one is the owner of the labour, the other of the capital, the man who cultivates his little farm with his own labour and that of his family, without the aid of hired servants, his owner both of the capital and of the labour the man who cultivates with none but hired servants, his owner of the capital, the servants may be considered, at least for the present purpose, as owners of the labour, though we shall presently see under what modifications that meaning is to be taken, in this sense of the term owners of labour, it is familiarly known that the parties concerned about production, are divided into two classes, that of the capitalists, the rich men who supply the materials and instruments of production, and that of the workmen, who supply the labour, these terms are all sufficiently familiar but a few observations are further necessary, in order, on this important subject, to preclude, as far as possible, confusion of ideas, the great capitalist, the owner of a manufactory, if he operated with slaves instead of free labourers, like the West India planter, would be regarded as owner both of the capital and of the labour, he would be owner, in short, of both instruments of production and the whole of the produce, without participation, would be his own, what is the difference in the case of the man who operates by labourers receiving wages, the labourer who receives wages sells his labour for a day, a week, a month, or a year, as the case may be. The manufacturer who pays these wages buys the labour, for the day, the year, or whatever period it may be, he is equally therefore the owner of the labour, with the manufacturer who operates with slaves, the only difference is in the mode of purchasing, the owner of the slave purchases at once the whole of the labour, which the man can ever perform, he who pays wages purchases only so much of a man's labour as he can perform in a day, or any other stipulated time, being equally, however, the owner of the labour so purchased, as of that which the slave owner purchases in the case of the slave, the produce, which is the result of this labour, combined with his capital, is all equally his own, in the state of society in which we at present exist, it is in these circumstances that almost all production is effected, the capitalist is the owner of both instruments of production, and the whole of the produce is his, there is a distinction of capital into two sorts, arising from a difference in the mode of applying it, to which some consequences of importance are attached, and of which it is necessary, therefore, that a correct idea should be retained, of the articles where of capital consists, some are of a durable nature, and contribute to production without being destroyed, of this nature is a great proportion of the tools and machines which are employed both in agriculture and manufacturers, such are the buildings subservient to the various kinds of production and all other accommodations, not necessary to be enumerated, which do not perish in the using, that portion of capital, which comes under Jay his description, has been denominated fixed capital, there is another portion of the articles subservient to production which do perish in the using, such are all the tools worn out in one set of operations, all the articles which contribute to production only by their consumption, as cools, oil, the dye stuffs of the dye, the seed of the farmer, and so on, of this nature, also, other ore materials worked up in the finished manufacture, the wool of the cloth the ore is consumed in the making of his cloth, the cotton of the cotton manufacturer in making his muslins, under the same head must be included the expense of repairing and keeping in order the more durable articles of fixed capital, the distinctive character of all this portion of capital is, that it is necessarily consumed in contributing to production, and that it must be reproduced in order to enable the producer to continue his operations, this has been denominated circulating capital but by a very inappropriate appellation, there is nothing in its consumption and reproduction which bears much resemblance to circulation, it would be much better to call it reproduced capital, although the word reproduced being a past and not a future participle, is not unexceptionable it is capital which constantly needs to be reproduced, because, in contributing to production, it is constantly consumed, there is another thing which is also constantly consumed, and constantly needs to be reproduced, and that is the subsistence, or consumption, or wages of the labourer and that equally whether the labourer supplies it to himself, or whether he receives it from the capitalist in the shape of wages, that is pay, in advance, for his labour, in this latter shape, being advanced by the capitalist out of those funds, which would otherwise have constituted capital in the distinctive sense of the word, and being considered as yielding the same advantage, it is uniformly spoken of under the name of capital, and a confusion of ideas is sometimes the consequence, when all these items are included, it is obvious that a very great proportion of the consumption and production of every country takes place for the sake of reproduction, this is a highly important fact, of which the consequences will hereafter occur for more particular consideration. It follows, necessarily, if the instruments of labour, the materials on which it is employed, and the subsistence of the labourer, are all included under the name of capital, that the productive industry of every country is in proportion to its capital increases when its capital increases, and declines when its capital declines, it is obvious that when there is more instruments of labour, more materials to work upon, and more pay for workmen, there will be more work, provided more workmen can be obtained, if they cannot, two things will happen, wages will be raised, which, giving an impulse to population, will increase the number of labourers while the immediate scarcity of hands will wet the ingenuity of capitalists to supply the deficiency, by new inventions in machinery, and by distributing and dividing labour to greater advantage, chapter two, distribution, we have seen that two classes of persons are concerned in production namely, labourers and capitalists, each of these must have, a share of the commodities produced, or, which comes to the same thing, of the benefit derived from them, when the land is one of the instruments of production, another party comes in for a portion I mean, the owners of the land, and these three form all the classes who immediately share, that is, divide among them, the whole of the annual produce of the country, when the parties are determined, among whom the whole of the produce is distributed, it remains to be ascertained, by what laws the proportions are established according to which the division is made, we shall begin with the explanation of rent, or the share received by landlords, as it is the most simple, and will facilitate the explanation of the laws upon which the shares of the labourers and capitalists depend, section I, rent, land is of different degrees of fertility, there is a species of land, the elevated or stony parts, for example, of high mountains, loose sand, and certain marshes, which may be said to produce nothing. Between this and the most productive sort, there are lands of all the intermediate degrees of fertility, lands of the highest fertility do not yield the whole of what they are capable of yielding, with the same facility, a piece of land, for example, may be capable of yielding annually ten quarters of corn, or twice ten, or three times ten, it yields, however, the first ten with a certain quantity of labour, the second ten not without a greater, the third ten not, without a greater still, and so on every additional ten requiring to its production a greater cost than the ten which preceded it, this is well known to be the law according to which capital is applicable to the obtaining a greater and greater produce from the same portion of land, till the whole of the best land is brought under cultivation, and till it has received the application of a certain quantity of capital, all the capital employed. Upon the land is employed with an equal return, at a certain point, however, no additional capital can be employed upon the same land without a diminution of return, in any country, therefore, after a certain quantity of corn has been raised, no greater quantity can be raised but at a greater cost, if an additional quantity is raised, the capital employed upon the land may be distinguished into two portions, one producing a higher, another a lower return, when capital producing a lower return is applied to the land, it is applied in one of two ways, it is either applied to new land of the second degree of fertility, then for the first time brought under cultivation or it is applied to land of the first degree of fertility, which has already received all the capital which can be applied without a diminution of return, where the capital shall be applied to land of the second degree of fertility, or in a second dose to the land of the first degree of fertility, will depend, in each instance, upon the nature and qualities of the two soils, if the same capital which will produce only eight quarters when applied in a second dose to the best land, will produce nine quarters when applied to land of the second degree of fertility, it will be applied to that land, and vice versa, the land of the different degrees of fertility first, or highest second, or next highest, and so on, may, for facility of reference, be denominated number one, number two, number three, etc., in like manner, the different doses of capital which may be applied to the same land, one after another, with less and less effect, may be denominated first dose, 2D dose, 3D dose, and so on, so long as land produces nothing, it is not worth appropriating, so long as a part only of the best land is required for cultivation, all that is uncultivated yields nothing that is, nothing which has any value, it naturally, therefore, remains unappropriated and any man may have it, who undertakes to render it productive, undertaken during this time, land, speaking correctly, yields no rent, there is a difference, no doubt, between the land which has been cultivated, and the land which is yet unclear for cultivation, rather than clear the fresh land, a man will pay an equivalent, annual or otherwise, for the cost of clearing, and it is evident that he will pay no more, this, therefore, is not a payment for the power of the soil, but simply for the capital bestowed upon the soil, it is not rent, it is interest, that time, however, comes, at which it is necessary either to have recourse to land of the second quality, or to apply a second dose of capital, less productively, upon land of the first quality, if a man cultivates land of the second quality, upon which a certain quantity of capital will produce only eight quarters of corn, while the same quantity of capital upon land of the first quality will produce ten quarters it will make no difference to him, whether he pay two quarters for leave to cultivate the first sort, or cultivate the second without any payment, he will therefore be content to pay two quarters for leave to cultivate the first soil and that payment constitutes rent, let us suppose, again, that instead of cultivating land of the second quality, it is more advisable to apply a second dose of capital to land of the first quality and that, while the first dose produces ten quarters, the second of equal amount will produce only eight quarters, it is equally implied in this, as in the former case, that, it being no longer possible to employ any more capital with so great an effect as the ten supposed quarters, there are persons who are willing to apply it with so little a return as eight, but if there are persons who are willing to apply their capital on the land to which a so little a return is eight quarters, the owners of the land may make a bargain, by which they will obtain all that is produced above eight, the effect upon rent is thus the same in both cases, rent increases, therefore, in proportion as the effect of the capital successively bestowed upon the land decreases, if population has arrived at another stage, when, all the land of second quality being cultivated, it is necessary to have recourse to land of third quality, yielding, instead of eight quarters, only six quarters, it is evident, from the same process of reasoning, that the land of second quality will now yield rent, namely, two quarters and that land of first quality will yield an augmented rent, namely, two quarters more, the case will be exactly the same if, instead of having recourse to land of less fertility, a second and a third dose of capital, with the same diminution of produce, are bestowed upon land of the first quality, we may thus obtain a general expression for rent, in applying capital, either to lands of various degrees of fertility, or in successive doses to the same land, some portions of the capital so employed are attended with a greater produce, some with a less, that which yields the least, yields all that is necessary for reimbursing and rewarding the capitalist, the capitalist will receive no more than this remuneration for any portion of the capital which he employs, because the competition of others will prevent him, all that is yielded above this remuneration the landlord will be able to appropriate rent, therefore, is that part of the return, made to the more productive portions of capital, by which it exceeds the return made to the least productive portion, taking for illustration the three stages mentioned above, of ten quarters, eight quarters, and six quarters, we perceived that rent is the difference between six quarters and eight quarters for the portion of capital which yields only eight quarters the difference between six quarters and ten quarters for the portion of capital which yields ten quarters and if three doses of capital, one yielding ten, and another eight, and another six quarters, are applied to the same portion of land, its rent will be four quarters for dose number one, and two quarters for dose number two, making together six quarters for the whole, if these conclusions are well supported, the doctrine of rent is simple, and the consequences, as we shall see hereafter, are exceedingly important, there is but one objection which it seems possible to make to them, it may be said, that after land is appropriated, there is no portion of it which does not pay rent, no owner being disposed to give the use of it for nothing, this objection has, indeed, been raised, and it has been urged, that some rent is paid even for the most barren of the Scottish mountains, when an objection is taken, it affects the conclusion, either to a material, or to an immaterial extent, where the matter alleged an objection, even if admitted, would still leave the conclusion substantially, and to all practical purposes, true, the objection must be owing to one of two defects in the mind of the objector either a confusion of ideas, which prevents him from seeing to how small a degree the matter which he alleges affects the doctrine which he denies or a disposition to evade the admission of the doctrine, even though nothing solid can be found with which to oppose it, that the matter alleged in this objection, even if allowed, would leave the conclusion, to all practical purposes, just where it was, can hardly fail to be acknowledged, as soon as the circumstances are disclosed, it cannot be so much as pretended that the rent paid for the barren mountains of Scotland is anything but a trifle and evanescent quantity, when we speak of any moderate extent, if it were twenty-eight pound, for a thousand acres, that is, about one penny per acre, this would bear so small a proportion to the cost of cultivation, which could not be less than several pounds per acre, that it would little affect the truth of the conclusion we have endeavored to establish. Let us suppose, for the sake of the argument, that the worst species of land under cultivation pays one penny per acre rent, in that case, would be the difference between the producer rising from different portions of capital, as explained above, with the correction required on account of the penny per acre paid as rent for the worst species of land under cultivation, assuredly if right in every other respect, we shall not be far wrong in our conclusion, by leaving this penny out of the question, a very slight advantage, in simplifying our language on the subject, would justify this omission, but it is not true that our conclusions stand in need of any such correction, even for metaphysical exactness, there is land, such as the sands of Arabia, which yields nothing, land is found at all the intermediate stages from this to the highest fertility, some land, though not absolutely incapable of yielding anything for the accommodation of man, could not be made to yield what would maintain the laborers required for its cultivation, this land can never be cultivated, there is land, the annual produce of which would just maintain the labor necessary for its cultivation, and no more, this land is just capable of being cultivated, but obviously incapable of ever paying rent, the objection, therefore, is not only practically immaterial, it is metaphysically unsound, it may be asserted, that there is no country, of any considerable extent, in which there is not land incapable of yielding rent that is, incapable of yielding to human labor more than would be necessary for the maintenance of that labor, that such, at least, is the case in this country, seems very unlikely to be disputed, there are parts of its mountains where nothing less hardy than heath, others where nothing but moss, can vegetate, when it is asserted that every part of the mountains of Scotland pays rent, the state of the facts is misunderstood, it is only true that there is no tenant of any portion of any man's estate in the highlands of Scotland who does not pay rent, the reason is, because even in the mountains of Scotland there are spots in the valleys, the produce of which is considerable, it does not follow, though hundreds of acres of mountain are added to these valleys, for therefore every part of the mountain yields rent it is certain that many parts neither do nor can, even where the land is not absolutely barren, and where there is still something for the more hardy of the useful animals to pick up, it is not to be allowed that rent is the necessary consequence, it ought to be remembered that these cattle are capital, and that the land must afford enough not only to make the return for that capital, but to pay for the tendons of the cattle, of which, in such situations, especially in winter, no inconsiderable amount is required, unless the land yields all this, and something more, it cannot yield any rent, I assert that, in the greater part of this island, there is hardly a farm, of any considerable extent, which does not contain land, some of more, some of less fertility, varying from a high or moderate degree of fertility, down to land which yields not enough to afford any rent, of course I do not request admission to this affirmation upon my authority I rested upon an appeal to the experience of those men who are best acquainted with the circumstances, if the state of the facts corresponds with the affirmation, it follows demonstratively, that the last portion of the land which is placed under cultivation yields no rent, in such farms as those we have now described, the tenant has bargained for a certain sum to the landlord, that sum, of course, was calculated upon the produce of that land which yielded not only the proper return for the capital with which it was cultivated, but something more, as the motive of the tenant to cultivate is wholly constituted by the proper return to his capital, if there is any portion of the barren land included in his farm which will just yield the profit of stock, and no more, though it will not afford anything for rent, it affords to him the adequate motive for cultivation, it can hardly be denied that in the insensible degrees by which land declines from greater to less fertility, the will, in all considerable farms, be generally found a portion with this particular degree of fertility and no more, that particular degree of fertility, is an adequate motive for its cultivation, the conclusion, however, may be established by the clearest evidence, without regard to the question, whether all land pays or does not pay rent, on land which pays the highest rent, we have seen that capital, applied in successive doses, is not attended with equal results, the first dose yields more, possibly much more, than the return for the capital, the second also may yield more, and so on, the rent, if accurately calculated, will be equal to all that is rendered by those several doses, over and above the profits of stock, the cultivator, of course, applies all those several doses of capital on which he has agreed to pay rent, but immediately after them comes another dose, which, though it yields nothing for rent, may fully yield the ordinary profits of stock, it is for the profits of stock, and them alone, that the farmer cultivates, as long, therefore, as capital applied to his farm will yield the ordinary profits of stock, he will apply capital, if he has it, i therefore, conclude, with assurance, that in the natural state of things, in every agricultural country, one portion of the capital employed upon the land pays no rent rent, therefore, consists wholly of that produce which is yielded by the other portions of capital, over and above the return which is due to them, section two, wages, production is performed by labor, labor, however, receives the raw material which it fashions, and the machinery by which it is added, from capital or, more properly speaking, these articles are the capital itself, the laborer is sometimes the owner of all the capital which his labor acquires, the shoemaker or tailor has, sometimes, not only the tools with which he works, but also the leather or cloth upon which his labor is employed, in all cases of that description, the commodity is wholly the property of the man by whose labor it is prepared, in the greater number of cases, however, especially in the more improved stages of society, the laborer is one person, the owner of the capital another, the laborer has neither raw material nor tools, these requisites are provided for him by the capitalist, for making this provision, the capitalist, of course, expects a reward, as the commodity which was produced by the shoemaker, when the capital was his own, belonged wholly to himself, and constituted the whole of his reward both as laborer and capitalist, so, in this case, the commodity belongs to the laborer and capitalist together, when prepared, the commodity, or the value of it, is to be shared between them, the reward to both must be derived from the commodity, and the reward of both makes up the whole of the commodity, instead, however, of waiting till the commodity is produced, and abiding all the delay and uncertainties of the market in which the value of it is realized, it has been found to suit much better the convenience of the laborers to receive their share in advance, the shape under which it has been found most convenient for all parties that they should receive it, is that of wages, when the share of the commodity which belongs to the laborer has been all received in the shape of wages, the commodity itself belongs to the capitalist, he having, in reality, bought the share of the laborer and paid for it in advance, one, that the rate of wages depends on the proportion between population and employment in other words capital, we come now to the question as to what determines the share of the laborer, or the proportion in which the commodity or commodities worth, is divided between him and the capitalist, whatever the share of the laborer, such is the rate of wages and, vice versa, whatever the rate of wages, such is the share of the commodity, or commodities worth, which the laborer receives, it is very evident, that the share of the two parties is the subject of a bargain between them and if there is a bargain, it is not difficult to see on what the terms of the bargain must depend, all bargains, when left in freedom, are determined by competition, and the terms alter according to the state of supply and demand, let us begin by supposing that there is a certain number of capitalists, with a certain quantity of food, raw material, and instruments or machinery that there is also a certain number of laborers and that the proportion, in which the commodities produced are divided between them, has fixed itself at some particular point, let us next suppose that the laborers have increased in number one half, without any increase in the quantity of capital, there is the same quantity of the requisites for the employment of labor that is, of food, tools, and material, as there was before but for every one hundred laborers there are now one hundred and fifty, there will be fifty men, therefore, in danger of being left out of employment, to prevent their being left out of employment they have but one resource they must endeavor to supplant those who have forced all the employment that is, they must offer to work for a smaller reward, wages, therefore, decline, if we suppose, on the other hand, that the quantity of capital has increased, while the number of laborers remains the same, the effect will be reversed, the capitalists have a greater quantity than before of the means of employment of capital, in short, from which they wish to derive advantage, to derive this advantage they must have more laborers than before, these laborers are all employed with other masters, to obtain them they also have but one resource, to offer higher wages, but the masters by whom the laborers are now employed are in the same predicament, and will of course offer higher to induce them to remain, this competition is unavoidable, and the necessary effect of it is a rise of wages, it thus appears, that, if population increases, without an increase of capital, wages fall and that, if capital increases, without an increase of population, wages rise, it is evident, also, that if both increase, but one faster than the other, the effect will be the same as if the one had not increased at all, and the other had made an increase equal to the difference, suppose, for example, that population has increased one eighth, and capital one eighth this is the same thing as if they had stood still, with regard to the effect upon labor, but suppose that, in addition to the above mentioned one eighth, population had increased another eighth, the effect, in that case, upon wages would be the same as if capital had not increased at all, and population had increased one eighth universally, then, we may affirm, other things remaining the same, that if the ratio which capital and population bear to one another remains the same, wages will remain the same if the ratio which capital bears to population increases, wages will rise if the ratio which population bears to capital increases, wages will fall, from this law, clearly understood, it is easy to trace the circumstances which, in any country, determine the condition odd body he great of the people, if that condition is easy and comfortable, all that is necessary to keep it so, is, to make capital increase as fast as population or, on the other hand, to prevent population from increasing faster than capital, if that condition is not easy and comfortable, it can only be made so by one of two methods either by quickening the rate at which capital increases, or retarding the rate at which population increases augmenting, in short, the ratio which the means of employing the people bear to the number of people, if it were the natural tendency of capital to increase faster than population, there would be no difficulty in preserving a prosperous condition of the people, if, on the other hand, it were the natural tendency of population to increase faster than capital, the difficulty would be very great, there would be a perpetual tendency in wages to fall, the fall of wages would produce a greater and a greater degree of poverty among the people, attended with its inevitable consequences, misery and vice, as poverty, and its consequent misery, increased mortality would also increase, of a numerous family born, a certain number only, from want of the means of well being, would be reared, by whatever proportion the population tended to increase faster than capital, such a proportion of those who were born would die, the ratio of increase in capital and population would hence remain the same, and wages would cease to fall, that population has a tendency to increase faster, then, in most places, capital has actually increased, is proved, incontestably, by the condition of the population in almost all parts of the globe, in almost all countries the condition of the great body of the people is poor and miserable, this would have been impossible, if capital had increased faster than population, in that case wages, of necessity, would have risen, and would have placed the laborer in a state of affluence, far above the miseries of want, this general misery of mankind is a fact which can be accounted for upon one only of two suppositions, either that there is a natural tendency in population to increase faster than capital, or that capital has, by some means, been prevented from increasing so fast as it has a tendency to increase, this, therefore, is an inquiry of the highest importance, to, proof of the tendency of population to increase rapidly, the natural tendency of population to increase is to be collected from two sets of circumstances the physiological constitution of the female of the human species, and the statements respecting the rate of increase in different countries, the facts respecting the physiological constitution of the human female are well ascertained, and are indubitable grounds of conclusion, the statements respecting the rate of increase in different countries will be found to be either suppositions with respect to matters of fact, upon the conformity of which suppositions to any real matters of fact we can have no assurance or statements of facts, of such a nature, as prove nothing with regard to the points in dispute, that the possible rate of increase in the numbers of mankind depends upon the constitution of the female, will not be disputed, the facts, which are fully ascertained in regard to the female of the human species, with the additions which the sciences of physiology and comparative anatomy enable that knowledge to derive from the analogy of other animals, whose anatomy and physiology resemble those of the human species, afford the means of very satisfactory conclusions on this subject, the females of those species of animals whose period and mode of gestation are similar to those of the female of our own species, and which bring forth one at a birth, are capable, when placed in the most favorable circumstances, of a birth every year, from the time when the power of producing begins, till the time when it ends, emitting one year now and then, which, at the most, amounts to a very small proportion on the whole, the suckling of the infant, in the case of the female of the human species, if continued more than three months, has a tendency to postpone the epoch of conception beyond the period of a year, this, it is to be observed, is the only physiological peculiarity which authorizes an inference of any difference in the frequency of the births in the case of the female of the human species, and that of those other species to which we have referred, to reason correctly, we should make an allowance for that peculiarity, let such ample allowance be made as will include all interruptions let us say that one birth in two years is natural to the female of the human species, in Europe, to which we may at present confine our observations, the period of childbearing in women extends from sixteen or seventeen to forty-five years of age, let us make still more allowance, and say it extends only from twenty to forty years of age, in that period, at the great allowance of two years to one birth, there is time for ten births, which may be regarded as not more than the number natural to the female of the human species, under favorable circumstances, the mortality among children is very small, mortality among the children of very poor people is unavoidable, from want of the necessary means of health, among the children of people in easy circumstances, who know and practiced the rules for the preservation of health, the mortality is small and there can be no doubt that, under more skillful modes of managing the food, and clothing, the air, the exercise, and education of children, even this mortality would be greatly diminished, we may conclude, therefore, that, in the most favorable circumstances, ten births are the measure of fecundity in the female of the human species and that of the children born a small proportion would die before the age of maturity, for occasional instances of barrenness, and for this small degree of mortality, let us make much more than the necessary allowance, a deduction of one half, and say, that every human bear, united at an early age, commanding a full supply of everything necessary for physical welfare, exempt from the necessity of oppressive labour, and sufficiently skilled to make the best use of their circumstances for preventing disease and mortality among themselves and their children, will, one with another, rear five children, if this is the case, it is needless to exhibit an accurate calculation, to show that population would double itself in some moderate portion of years, it is evident, at once, that it would double itself in a small number of years, to meet a conclusion so well established as this, recourse has been had to certain tables, respecting population, and respecting births and deaths, in various countries, the reasoning from these tables avoids the point in dispute, I know no tables which exhibit anything, even if we give them, what they never deserve, credit for exactness, except the mere fact with regard to the state of increase, they show, or pretend to show, whether a certain population is increasing or not increasing and, if increasing, at what rate, but if it appeared from such tables, that the population of every country in the world was stationary, no man, capable of reasoning, would infer, that the human race is incapable of increasing, everybody knows the fact, that in the greater number of countries, the population is stationary, or nearly so, but what does this prove, so long as we are not informed by what causes it is prevented from increasing, we know well that there are two causes by which it may be prevented from increasing, how great so ever its natural tendency to increase, the one is poverty under which, let the number born be what it may, all but a certain number undergo a premature destruction, the other cause is prudence by which, either marriages are sparingly contracted, or care is taken that children, beyond a certain number, shall not be the fruit, it is useless to inform us that there is little or no increase of population in certain countries, if we receive not, at the same time, accurate information of the degree in which poverty, or prudence, or other causes, operate to prevent it, that population, therefore, has such a tendency to increase as would enable it to double itself in a small number of years, is a proposition resting on the strongest evidence, which nothing worth the name of evidence has been brought to controvert, three, proof that capital has a less tendency than population to increase rapidly slash, we come next to consider the tendency which capital may have to increase, if that should increase as fast as population, for every laborer produced the means of employment and subsistence would also be produced, and no degradation of the great body of the people would ensue, as soon as it is understood from what source all increase of capital must be derived, the opinion of its rapid increase can no longer be retained, all increase of capital is from savings, now, though it is found, that, where property is secure, there is a considerable disposition in mankind to save sufficient, where vast sources of consumption are not opened by the government, and where the difficulties of production are not very greats to make capital progressive this disposition is still so weak, in almost all the situations in which human beings have ever been placed, as to make the progression slow, that the same will continue to be the case, appears to be secured by the strongest principles of human nature, the annual produce is always distributed in such a manner, that, either the great body of the people are liberally provided with what is necessary for subsistence and enjoyment, when of course a smaller portion goes to swell the incomes of the rich or, the great body of the people are reduced to mere necessaries, and there is naturally a class of people whose incomes are large, to one or other of these two cases, the state of every community approximates, let us search for the motives to saving in both, one, in the case, in which there is a class reduced to necessaries, and a class of rich, it is evident that the first have not the means of saving, the consideration of their motives, therefore, is needless, it is well known, however, that a class of rich men, in the middle of a class of poor, are not apt to save, the possession of a large fortune generally wets the appetite for immediate enjoyment, and the man who is already in possession of a fortune yielding him all the enjoyments which fortune can command, has a feeble inducement to save, why should he deprive himself of present enjoyment, to accumulate that of which the use to him is so insignificant, even that command over the sentiments of others, the only thing which a rich is beyond a moderate compass ever give, is, at a certain elevation of fortune, yielded in sufficient quantity, if not to satisfy the minds of most men, at least to render the desire of accumulation a motive insufficient to counteract the powerful demand of immediate indulgence, in such a state of the social order, any rapid increase of capital may be regarded as morally impossible, too, we are next to consider the state of the social order in which a large share of the annual produce is distributed among the great body of the people, in that situation neither the class which labors, nor that which is maintained without laboring, has any forcible motives to save, when a man possesses, what we are now supposing possessed by the great body of the people, food, clothing, lodging, and all other things sufficient not only for comfortable, but pleasurable existence, he possesses the means of all the substantial enjoyments of human life, the rest is in a great measure fancy, the pleasures which can be added to those of which he is thus in possession are comparatively neither numerous nor strong, that any considerable proportion of mankind, with all the temptations of instant enjoyment, will forgo, to any considerable degree, the most substantial pleasures, in order to accumulate the means of a few fanciful pleasures at a distant period, our experience of the laws of human nature forbids us to suppose, there are two sets of men one, in whom the reasoning power is strong, and who are able to resist a present pleasure for a great who one here after another, in whom it is weak, and who can seldom resist the charm of immediate enjoyment, of course, it is not in the latter class that the motive to save can be expected to prevail, the class, on the other hand, in whom reason is sufficiently strong to form a due estimate of pleasures, cannot fail to perceive that those which they can obtain by adding penny to penny, after all the rational desires are satisfied, are not equal to the pleasures which, in the circumstances we have supposed, they must relinquish to obtain them, both the higher and the lower principles of our nature are in such circumstances opposed to accumulation much of it, therefore, cannot take place, even the love of ease, one of the most powerful of all the principles by which we are actuated, is here the steady foe of accumulation because if any man is willing to dispense with the use of a certain portion of the good things which he may command by the fruits of his labour, he may to that extent dispense with labour, and indulge himself in all the luxury of ease, command over the sentiments of other men by the possession of riches, it is unnecessary to mention because all that can be obtained of it by the accumulations of the labourer, cannot constitute a prospect sufficiently brilliant to operate as a powerful incentive, so far, as to the strength of the motive which in the supposed circumstances can operate upon the labouring class, what remains of the annual produce, after the share of that class is deducted, is either distributed in large portions among a small number of very rich men, or among a large number of men of moderate fortunes, we have already examined the state of the motives to accumulate when fortunes are large and have found that it never can be such as to produce very considerable effects, we have now to examine the state of the motives to accumulate, in a society, in which there is a great number of moderate fortunes without the prevalence of large, in the way of physical enjoyment, these fortunes yield everything which the largest fortunes can bestow, there are only two motives, therefore, which in this situation can counteract the strong tendency to immediate enjoyment, either the desire of a command over the sentiments of mankind, or the wish to make a provision for children, the classes of men in such a state of society are too, men of easy, but moderate fortunes and a well paid body of labourers and artisans, the first class, men with fortunes equal to all the purposes of independence, of physical enjoyment, even of taste and elegance, constituting the governing portion of society, and giving the tone to its sentiments and amusements, are not in the situation of men whose imaginations are apt to be dazzled by the glare of superior riches, and likely to pay to their owners any remarkable devotion, the labouring classes are cringing and servile, where the frown of the rich man is terrible, and his little favours important, when placed in circumstances which give them completely the feeling of independence, and allow them opportunity for the cultivation of their minds, they are little affected by the glare of riches, this, therefore, is a state of society in which the possession of extraordinary wealth gives little command over the sentiments of others, and cannot constitute a powerful motive for saving, with respect to the provision for children, if a man feels no great desire to make a larger than the ordinary moderate fortune for himself, he feels as little desire at the least to make it for his children, the provision which he desires to make for them can only, therefore, be such as to place them in the same situation which is held by himself, he will be anxious to afford to them the same means for beginning life advantageously, as were afforded, or would have been desirable, to himself to this extent the desire of making a provision for children might be expected to be very general, and it would ensure a certain moderate increase of capital, this may therefore be considered, as perhaps the most favourable state of society for accumulation with the exception of those cases in which people, with all the knowledge and power of civilised life, are transported into a country uninhabited, or nearly so, and have the power of cultivating without limit the most productive species of land, these are coincidences so extraordinary and so rare, that, in tracing the general laws of human society, it is only necessary to show that they are not forgotten, these considerations prove that more than moderate effects can rarely flow from the motives to accumulation, but the proof, that population has a tendency to increase faster than capital, does not depend upon this foundation, strong as it is. The tendency of population to increase, whatever it may be, greater or less, is at any rate an equitable tendency, at what rate so ever it has increased at any one time, it may be expected to increase at an equal rate, if placed in equally favourable circumstances, at any other time, the case with capital is the reverse, as capital continues to accumulate, the difficulty of increasing it becomes gradually greater and greater, till, finally, increase becomes impracticable, the evidence of this proposition results immediately from the law, as already explained, which determines the return to capital employed in successive doses upon the land, whether, after land of superior quality has been exhausted, capital is applied to new land of inferior quality, or in successive doses with diminished returns upon the same land, the produce of it is continually diminishing in proportion to its increase, if the return to capital is, however, continually decreasing, the annual fund from which savings are made is continually diminishing, the difficulty of making savings is thus continually augmented, and at last they must totally cease, it thus sufficiently appears that there is a tendency in population to increase faster than capital, if this be established, it is of no consequence to the present purpose to inquire about the rapidity of the increase, how slow soever the increase of population, provided that of capital is still slower, wages will be reduced so low that a portion of the population will regularly die from the consequences of want, neither can this dreadful consequence be otherwise averted than by finding means to prevent the increase of capital from falling short of that of population, for, that forcible means employed to make capital in, increase faster than its natural tendency would seven air produce desirable effects, there are two modes in which artificial means may be employed to make population and capital keep pace together, expedience may be sought, either to diminish the tendency of population to increase or to accelerate beyond its natural pace the increase of capital, the principle means by which legislatures have it in their power to alter the course of human actions, is by rewards and punishments, neither is very applicable to the purpose of counteracting the tendency in the human species to multiply, suppose a law were proposed for annexing penalties to the father and mother of a child, the circumstances of whom were inadequate to its maintenance, it would not be easy to find a mode of punishing which would he equal to the effect, without producing almost as much uneasiness in societies that which it would propose to remedy, neither would it be very possible to ascertain and define the state of circumstances which is, and that which is not, adequate to the maintenance of one, or two, or any other number of children, to apply rewards to the case of not having any children, in such a manner as to operate usefully upon the principle of population, would be still more difficult, legislation, in cases ill adapted to its direct, can sometimes produce considerable effects by its indirect operation as when a desire which gratifies itself in a hurtful course of action, and cannot easily be counteracted by reward and punishment, is called to gratify itself in a less hurtful or an innocent direction, if legislatures have taken measures, as they very often have done, sometimes by direct, more frequently by indirect means, to stimulate the principle of population, such mischievous legislation may be corrected, the powerful agency of the popular sanction might in this, as in other cases, be turned to great account if an intense degree of disapprobation were directed upon the men, who, by their folly, involved themselves, through a great family, in poverty and dependence, of approbation upon those who, by their self-command, preserved themselves from this misery and degradation, much of this folly would unquestionably be prevented, the result to be aimed at is, to secure to the great body of the people all the happiness which is capable of being derived from the matrimonial union, without the evils which a too rapid increase of their numbers involves, the progress of legislation, the improvement of the education of the people, and the decay of superstition, will, in time, it may be hoped, accomplish the difficult task of reconciling these important objects, such are the modes in which legislation can weaken the tendency in population to increase, it remains to inquire by what means it can strengthen the tendency in capital to increase, these are, also, direct and indirect, as the legislature, if skillful, has great power over the tastes of the community, it may contribute to render frugality fashionable, and expense disgraceful, the legislature may also produce that distribution of property which experience shows to be the most favorable to saving, sumptuary laws have been adopted in several countries but it is not easy to contrive sumptuary laws, the effect of which would be very considerable, without a minute and vexatious interference with the ordinary business of life, there is certainly one course by which the legislature might produce considerable effects upon the accumulation of capital because it might lay hold of any portion which it pleased of the net produce of the year, and convert it into capital, we have only, therefore, to inquire, in what manner this could be performed, and what effects it would produce, the mode of taking whatever portion it might find expedient, is obvious and simple, an income tax, of the proper amount, would effectively answer the purpose, the legislature might employ the capital thus forcibly created in one or other of two ways, it might lend it to be employed by others, or it might retain the employment in its own hands, the simplest mode, perhaps, would be, to lend it to those manufacturers and capitalists who might apply for it, and could give security for the repayment, the interest of what was thus laid out in one year might be employed as capital the next, every annual portion would thus make compound interest, and comma so long as interest remained pretty high, would double itself in a small number of years, if wages appeared likely to fall, a higher income tax would be required, if wages rose higher than seemed to be necessary for the most desirable condition of the laborer, the income tax might be reduced, without waiting to inquire, whether a machinery, capable of producing these effects, be or be not practicable, we may proceed to another consideration, which seems calculated to decide the merits of the scheme, according to the progress above supposed, the increase of population would be rapid, the progress would also be rapid, in the application of capital to land of a worse and worse quality, or in doses attended with a less and less return, in proportion as capital is attended with less and less of annual return, the owners of capital have less and less income, if the income from capital be continually diminished, in process of time none but the owners of large masses of capital will derive from it the means of existence, this is the extreme state of things to which the operation of the scheme, supposing it not impracticable, certainly tends, it remains to inquire how far these effects are to be considered as good, let us suppose that the command of the laborer over the articles of his consumption remains unaltered, all who are not subsisted by the wages of labor, live either upon the produce of stock, or upon the rent of land, in the case supposed, the tendency is to impoverish those who live upon the produce of stock, but to increase the rent of land, with the exception of the owners of land, all the rest of the community would be either laborers, or capitalists almost equally poor, as often as land were offered to sale, a great amount of capital would of course be given for it nobody, therefore would be able to buy more than a very limited portion, in this state of things, sales of land would either be frequent, or they would be rare, it is necessary to consider what would be the effects in either case, the effects which would arise in the case in which the sales of land would be rare, are simple, the owners of land would be a comparatively small number of rich people, in the midst of a population, all equally, and hopelessly, poor, that there is scarcely any state of society less conducive to human happiness, we need not here spend any time to prove, if sales went on, it being the nature of land, as of other property, to change hands continually, the whole land would be divided, at last, into very small portions covered by a dense population, no portion of whom would be in circumstances much better than those of the laborer, is this, in itself, a desirable state of things, is it either followed or preceded by a desirable state of things, when any of those accidents occur by which the annual produces for one year, or a few years, reduced considerably below the usual standard, in a country in which a considerable proportion of the people have better incomes than those who live upon wages, considerable savings may be made from their expenditure, to mitigate the effects of the deficiency, in a country in which all were reduced to the state of wages, any considerable diminution of the usual supply would diffuse general, irremediable calamity, all the blessings which flow from that grand and distinguishing attribute of our nature, its progressiveness, the power of advancing continually from one degree of knowledge, one degree of command over the means of happiness, to another, seam, in a great measure, to depend upon the existence of a class of men who have their time at their command that is, who are rich enough to be freed from all solicitude with respect to the means of living in a certain state of enjoyment, it is by this class of men that knowledge is cultivated and enlarged it is also by this class that it is diffused it is this class of men whose children receive the best education, and are prepared for all the higher and more delicate functions of society. As legislators, judges, administrators, teachers, inventors in all the arts, and superintendents in all the more important works, by which the dominion of the human species is extended over the powers of nature, it is also, in a peculiar manner the business of those whose object it is to ascertain the means of raising human happiness to its greatest height, to consider, what is that class of men by whom the greatest happiness is enjoyed, it will not probably be disputed, that they who are raised above solicitude for the means of subsistence and respectability, without being exposed to the vices and follies of great riches, the men of middling fortunes, in short, the men to whom society is generally indebted for its greatest improvements, are the men who, having their time at their own disposal, freed from the necessity of manual labor, subject to no man's authority, and engaged in the most delightful occupations, obtain, as a class, the greatest sum of human enjoyment, for the happiness, therefore, as well as the ornament of our nature, it is peculiarly desirable that a class of this description should form as larger proportion of each community as possible, for this purpose it is absolutely necessary that population should not, by a forced accumulation of capital, be made to go on, till the return to capital from the land is very small, to enable a considerable portion of the community to enjoy the advantages of leisure, the return to capital must evidently be large, there is a certain density of population which is convenient, both for social intercourse, and for that combination of powers by which the produce of labor is increased, when these advantages, however, are attained, there seems little reason to wish that population should proceed any further, if it does proceed further, instead of increasing the net revenue derived from the land and labor of the country, or that portion of the annual produce which exceeds what is necessary for replacing the capital consumed, and maintaining the laborers it lessens that important fund, on the largeness of which the happiness of society to a great degree depends, it appears, therefore, by strong evidence that the state of society in which the increase of population has reduced the whole, or nearly the whole, of the community, to the state of those who live even upon liberal wages, is not, in itself, a desirable state, the evidence which proves this to be a state of things unfavorable to human happiness, proves also, that the state which precedes it is unfavorable, it is evident, that whatever be the disadvantages adhering to the state of things in which the income of all, except the receivers of rent, is reduced to the level of wages, the disadvantages of the state which immediately precedes it are, with a slight diminution, the same, what state of things succeeds to that in which an income not above the rate of liberal wages is with a slight exception the lot of all, is the third and last of the questions involved in this part of the inquiry, if the forcible mode of accumulation, by means of the income tax, is carried beyond that boundary, there is immediately a diminution of the income of those who live upon the profits of stock below the rate of liberal wages, followed by all the miseries which such a state of poverty implies, if the forcible accumulation of capital is abandoned, either the rate of births must be diminished, or population increases beyond capital, wages fall, and all the evils of insufficient wages fall upon the labouring class, this analysis has been long and tedious, it thence, however, appears, that human happiness cannot be secured by taking forcible methods to make capital increase as fast as population, on the other hand, it has been seen, that if births take place, more numerous than are required to uphold a population corresponding to the state of capital, human happiness is immediately impaired, the grand practical problem, therefore, is, to find the means of limiting the number of births, it has also appeared, that, beyond a certain state of density in the population, such as to afford in perfection the benefits of social intercourse and of combined labour, it is not desirable that population should increase, the precise problem, therefore, is, to find the means of limiting births to that number which is necessary to keep up the population, without increasing it, were that accomplished, while the return to capital from the land was yet high, the reward of the labourer would be ample, and a large surplus would still remain, if the natural laws of distribution were allowed to operate freely, the greater part of this net produce would find its way, in moderate portions, into the hands of a numerous class of persons, exempt from the necessity of labour, and placed in the most favourable circumstances both for the enjoyment of happiness, and, for the highest intellectual and moral attainments, society would thus be seen in its happiest state, we have yet to mention, that government, instead of lending, may itself employ the capital which it forcibly creates, it is evident, however, that where the government employs this capital, all ends it to be employed by others, all the effects, which we have traced as a rising necessarily from its increase, will be the same, the best mode, perhaps, which could be invented for employing, by government itself, a portion of the annual produce, forcibly taken from the owners, to accelerate the growth of capital, would be that which has been so earnestly pressed upon the public attention by Mr. Owen, of New Lanark, Mr. Owen proposes, that the portion of the annual produce thus converted into capital should be employed by government in making certain establishments each of a mixed nature, partly for agricultural, partly for manufacturing industry in erecting the houses, in providing the instruments or machinery, the previous subsistence, and raw materials which might be required, in these establishments, Mr. Owen is of opinion that labour might be employed under great advantages, and with unexampled means of felicity to the individuals employed, Mr. Owen, however, must intend one of two things either that population should go on, or that it should stop, if it is to go on, capital of course holding pace with it, all the evils which would, as above, result from the forcible increase of capital, when lent by government, would result from its forcible increase, when employed in those establishments. If Mr. Owen means that population should not go on, and if expedience can be employed to limit sufficiently the number of births, there is no occasion for these establishments, still less for the forcible and painful abduction of a part of their income from the people, the limitation of the number of births, by raising wages, will accomplish everything which we desire, without trouble and without interference, the limitation of the numbers, if that object can be attained, may be carried so far as not only to raise the condition of the laborer to any state of comfort and enjoyment which may be desired, but to prevent entirely the accumulation of capital. Section 3 Profits When it is established that the whole of the annual produce is distributed as rent, wages of labor, and profits of stock and when it is ascertained what regulates the portion which goes to rent, and what the portion which goes to wages, the question is also determined with regard to profits of stock for it is evident that the portion which remains is profits, from what has been already explained with regard to rent, it appears that it is something altogether extraneous to what may be considered as the return to the productive operations of capital and labor, as soon as it is necessary to apply capital to land of an inferior quality, or in a further dose with inferior return, all that is yielded more than this inferior return, is as if it did not exist, with respect to the capitalist and laborer. Whatever is yielded beyond this lowest return, either on particular spots of ground, or to particular portions of capital, might be annihilated, the moment it is produced, without affecting the portion which goes to either of those two classes, as soon as a new portion of capital has to be employed with inferior return, it is the same thing, as if the productive powers of all the capital employed upon the land were reduced to the same standard, as if no difference existing in the return made from one portion of land, or to one portion of capital, and another, a quantity of produce, equal to the additional return which used to be made to the former portions of capital, were, by miracle, ranged down from heaven upon the possessors of the land which yielded it, the portion which goes in the shape of rent to the landlord, and is over and above that return which is made to the whole of the capital and labor employed upon the land, is, in fact, the result of an accident, suppose that all the land cultivated in the country were of one uniform quality, and yielded the same return to every portion of the capital employed upon it, with the exception of one acre, that acre, we shall suppose, yields six times as much as any other acre, what, in this case, would be produced upon all the other acres, might justly be regarded as the return made to the labor and capital employed upon the land and the whole of that return, the additional five sixths, accruing from the singular acre, would not be considered as return made to labor and capital it would be considered as the accidental product of a particular virtue in that particular spot, but what is true of this single acre is equally true of any number of acres, as soon as that event occurs which diminishes the return to any portion of capital, and induces all the owners of capital to limit their receipts from their capital to the measure of that diminished return, if there is any portion of capital employed upon the land which pays no rent, it is evident that the wages and profits, derived in that case, must regulate the wages and profits in other cases, it thus fully appears, that all which can be considered as the produce of the joint operations of capital and labor upon the land, is the return to that portion of capital which is applied without paying any rent, and which measures the quantity of the produce allowed to remain, after the rent is deducted, as the return to all the other portions of labor and capital employed upon the land, all, therefore, which can be considered as the real product of labor and capital, remains to be shared between the laborer and capitalist, after the rent is withdrawn, it follows that, in considering what regulates wages and profits, rent may be left altogether out of the question, rent is the effect, and not the cause, of the diminished produce which the capitalists and laborers have to divide between them, when anything is to be divided wholly between two parties, that which regulates the share of one, regulates also, it is very evident, the share of the other for whatever is withheld from the one, the other receives whatever, therefore, increases the share of the one diminishes that of the other, and vice versa, we might, therefore, with equal propriety, it should seem, affirm that wages determine profits, or that profits determine wages and, in framing our language, assume whichever we pleased, as the regulator or standard, as we have seen, however, that the proportion of the shares between the capitalist and laborer depends upon the relative abundance of population and capital, and that population, as compared with capital, has a tendency to superabound, the active principle of changes on the side of population, and constitutes a reason for considering population, and consequently wages, as the regulator, as, therefore, the profits of stock depend upon the share which is received by its owners of the joint produce of labor and stock, profits of stock depend upon wages rise as wages fall, and fall as wages rise, it may be said, however, that profits of stock depend not solely upon the share received of that which is divided, but also upon the magnitude of the whole that is to be divided, that profits, therefore, depend upon two things upon the share which goes to the capitalist of the joint produce of capital and labor, and also upon the magnitude of the return which is made to labor and capital, to speak clearly on this point, we must remove an ambiguity which adheres to the word profits, profits, may mean the quantity of commodities, the number of quarters of corn, or yards of cloth, which the capitalist receives, as the return for a certain quantity of food, raw materials, and tools employed, or the term profits may, as it most commonly does, refer not to the commodities themselves, but their relative values, in this latter sense it is that we use the term when we speak of the rate of profits or when we say that profits are so much percent, when we say that profits are so much percent, we only mean to say that the value of that share of the produce which comes to the capitalist, bears a certain ratio to the value of all the commodities employed, as capital, in effecting the production, when we say, for example, that profits are ten percent, we say that the share of the produce which comes to the capitalist would exchange for one tenth of all the commodities employed, as capital, in the production of it, now, there can be no doubt, if we employ the term profits in the first sense, as denoting merely the quantity of commodities, that the same quantity of food, for example, and of implements of husbandry, employed as capital, will yield a greater number of quarters of corn, for any particular share of the produce, whether it be one half, or one third, or any other share, which comes to the capitalist, when the return to capital from the land is great, than when it is small, in this sense, therefore, of the term profits, profits do depend upon two things upon the quantity of return, as well as the state of wages, if, however, we use the term in the usual sense, to denote the ratio of values, it may be shown that profits, in that sense, depend wholly upon wages, when the same quantity of labor and capital is employed upon two commodities, they will exchange for one another in other words, the exchangeable value of the one is equal to that of the other, this is the same thing as saying, that, when two commodities have been produced at the same cost, they will exchange for one another, what is the reason that the half of a commodity is equal in value to the other half, but that's an equal quantity of labor and capital was required to produce it. The value of commodities, therefore, is determined by the quantity of capital and labor necessary to produce them, if the same quantity of capital and labor, which previously produced a certain quantity of a particular commodity, becomes, by means of some discovery, capable of producing double the former quantity, the whole of the enlarged quantities of no more value than the small quantity had been before the value of each ounce, or yard, sinking one half, in like manner, when the case is reversed, as in land, and when the same quantity of labor, it has been found necessary here to anticipate a little what is contained in the chapter where the causes which regulate the exchangeable value of commodities are explained at length, the reader is referred to that chapter for fuller satisfaction and capital yields a diminished quantity of produce, the value of the diminished quantity remains as great as that of the larger quantity had been before, but if the value of that which is divided as wages of labor and profits of stock remains the same, it is obvious and certain, that the proportion of that value which goes as profits of stock depends wholly upon that which goes as wages, the rate of profits, therefore, or the ratio which the value of that which is received by the capitalist bears to the value of the capital, depends wholly upon wages, a case may be supposed, in which the productive powers of labor and capital would be increased, not in one department only, but in all departments of production at once, the same quantity of labor and capital which produced 10 quarters of corn, may be supposed to produce 20 the same quantity of labor and capital which produced 100 yards of cloth, to produce 200 and so on, it is sufficiently evident that if there was a quantity of labor and capital employed in producing corn, the produce of which exchanged exactly against the produce of a certain quantity of labor and capital, employed in making cloth, the produce of these respective quantities of labor and capital would exchange against one another, in the same manner after the augmented production as before, the same would be the result in every other case, if the produce of a certain capital a, exchanged exactly against the produce of a certain capital b, before the augmentation of produce, it would do so after that augmentation if 100 pair of stockings were the produce of a, and 50 pair of shoes the produce of b and if one of these products exchanged against the other, they would equally do so after the product was augmented to 200 pair of stockings on the one side, and 100 pair of shoes on the other, it is evident, in this case, that not only the whole of each of these two products would have the same value relative to the other as it had before, but each portion of the two, as one pair of shoes was worth two pair of stockings before the augmentation, so it would be after the augmentation and if the same changes are supposed to have taken place in everything, the value of every article of produce relative to every other would be exactly the same as before, we have next to inquire what would be the effects in this case, with regard to wages and profits, the quantity of produce, to be divided between the two, being doubled, if it was shared in the same proportion, each capitalist, and each laborer, would receive twice as much produce as he received before the command of commodities obtained by each would be exactly doubled, if reference is made to the cost of production, they stand exactly as they did before each has received the same share as before of what the same instruments of production have yielded, if reference is made to produce, each has received a great augmentation, in one sense, wages and profits have both been increased in another, neither of them has, the diminution of the return which is made to capital employed upon the land, by the necessity of having recourse to less fertile land, or successive doses of capital up on the same land, diminishes the return which is made to capital in manufacturing, and all other species of industry, we have seen that the diminution of the return to capital employed upon the land is inevitable but what is the rate of profits in any one employment must be the rate of profits in all employments, no one would continue to employ his capital in agriculture, if, by withdrawing it to another occupation, he could obtain greater advantages, all other profits, therefore, must sink to the level of agricultural profits, the steps by which this effect I produced remain to be explained, when the demand arrives for such an additional quantity of corners can only be produced by recourse to inferior lands, or fresh doses of capital on the same land with inferior returns, the cultivators, of course, demer to employ their capital less productively than before the demand for corn, therefore, increases, without a proportional increase of supply, the exchangeable value of corn, by consequence, rises and when it has risen to a certain height, the cultivator can obtain as high profits by raising it under the necessity of a diminished produce, as are obtained by any other owners of stock, by this process his profits are not kept up to their former level, but all other profits are brought down to that to which he has been reduced, by the rise in the value of corn, the cost of maintaining labor is increased, a certain quantity of the necessaries of life must be consumed by the laborer, whether they cost little or much, when they cost more than they did before, his labor costs more than it did before though the quantity of commodities which he consumes may remain precisely the same, his wages, therefore, must be considered as rising, though his real reward may not be increased, by this change, in the cost of producing and in the value of corn, all the owners of capital are constrained to give higher wages to their laborers, their profits, therefore, as we have just seen, are reduced, the farmer, also, is obliged, and for the same reason, to give higher wages, of the produce of the labor and capital which he employs, he is obliged to give a greater share to his laborers, his profits, therefore, are reduced, in the same manner and to the same degree, as those of other capitalists, the price of his commodity has risen but that is only so far as to compensate for the peculiar disadvantage under which he has fallen, the quantity of produce which his capital returns is diminished, the quantity of produce which is returned to the capital of others is not diminished, the value of his commodity rises so far as to compensate for this diminished return which is peculiar to himself, but that diminution of profits which arises from increase of wages he has, to share in common with all, there is no increase of value to compensate for that enhancement of expense, it thus appears, that in proportion as population increases, and as capital is forced upon land of less and less fertility, the profits of stock are gradually and incessantly reduced, it may here be useful to the learner to look back upon his progress, and ascertain the number and importance of the steps which he has made, he has discovered, what are the laws according to which those commodities which form the riches of nations are produced and what are the laws, according to which, when produced, they are distributed, he has seen that there are two instruments of production one primary, the other secondary, that labour is the primary instrument of production, and that, abstracted from those aids which it derives from capital, its productive powers are augmented chiefly by limiting the number of each man's productive operations in other words, by what has been called the division of labour, that capital is secondary to labour, not only because it is subsequent in order of time, but because it owes its existence to labour because the first capital is the result of pure labour, and because that which is subsequently the result of labour and capital combined, may then be resolved into labour, the ultimate principle of all production, the learner has now also seen that what is produced by the operations of labour and capital divides itself, in the first instance, into three portions the rent of land the wages of labour and the profits of stock, till the laws were discovered which determine the boundaries of these several portions, the amount of what goes respectively as rent, as profits, and as wages, almost all the conclusions of political economy were vague and uncertain, it has been seen, that rent is something which may be considered as independent of the general result of the productive powers of labour and capital that it is the result of a peculiar defect of the earth, which does not continue to yield its produce in equal abundance to successive portions of capital and that it is the excess of what is yielded to the more productive portions, above what is equal to the produce of the least productive portion, of capital employed upon the land, after the limits were thus fixed of this one of the three portions into which the produce of industry divides itself, whence it appeared that what may be regarded as the genuine effect of labour and capital in cooperation is left to be divided between the labourer and the capitalist it was easy for the learner to see, that, in respect to proportions, as what fell to the share of the one was increased, what went to the share of the other was diminished, and that in this sense, wages and profits depend on one another that in respect, however, to the quantity of produce which these shares may contain, the productive power of the instruments of production is the determining cause. Chapter 3 Interchange Section I nature of the advantage derived from the interchange of comodaltiffs, and the principal agents employed in IT, when two men have more than they need, one, for example, of food, another of cloth, while the first desires more of cloth than he possesses, the second more of food it is a great accommodation to both, if they can perform an exchange of a part of the food of the one for a part of the cloth of the other and so in other cases, in performing exchanges there are two sets of persons, the intervention of whom is of great advantage, the first are carriers, the second merchants, when the division and distribution of labour has been earned to any considerable extent, goods are produced at some, often at a very considerable distance, from the place where they are wanted for consumption, it is necessary that they should be conveyed from the one place to the other, carriers are of two sorts, carriers by land, and carriers by water, for the business of carriage, both capital and labour are acquired, in carriage by land, the wagons or carts, the horses or other cattle, and the maintenance both of them and of the necessary number of men in carriage by water, the ships, and the maintenance of the men who navigate them, constitute the capital required, to procure articles, as men have occasion to consume them, it would be very inconvenient to repair, in each instance, to the several manufacturers and producers of each, who may often live at a very considerable distance from one another, a great deal of trouble is saved to consumers, when they find assembled in one place the whole, or any considerable portion, of the articles which they use, this convenience gives rise to the class of merchants, who buy from the manufacturers, and keep ready for use, all those articles for which they expect a profitable sale, in small towns, where one or a few merchants can supply the wants of all the population, the shop or store of one merchant contains articles of all, or most of the kinds and general demand, in places where the population is large, instead of a great number of shops, each dealing in almost all kinds of articles, it is found more convenient to divide the articles into classes, and for each shop to confine itself to a particular class one, for example, to hats, another to hosiery one to glass, another to iron and so on, section two, what determines the quantity in which commodities exchange for one another, when a certain quantity of one commodity is exchanged for a certain quantity of another commodity a certain quantity of cloth, for example, for a certain quantity of corn there is something which determines the owner of the cloth to accept for it such and such a quantity of corn and, in like manner, the owner of the corn to accept such and such a quantity of cloth, This is, evidently, the principle of demand and supply. In the first instance, if a great quantity of corn comes to market to be exchanged for cloth, and only a small quantity of cloth to be exchanged for corn, a great quantity of corn will be given for a small quantity of cloth. If the quantity of cloth, which thus comes to market, is increased, without any increase in the quantity of corn, the quantity of corn which is exchanged for a given quantity of cloth will be proportionally diminished, this answer, however, does not resolve the whole of the question, the quantity in which commodities exchange for one another depends upon the proportion of supply to demand, it is evidently therefore necessary to ascertain upon what that proportion depends, to determine the laws according to which supply is furnished to demand, is one of the most important enquiries in political economy, demand creates, and the loss of demand annihilates supply, when an increased demand arises for any commodity, an increase of supply, if the supply is capable of increase, follows, as a regular effect, if the demand for any commodity altogether ceases, the commodity is no longer produced, the connection here, of causes and effects, is easily explained, if corn is brought to market, the cost of bringing it has been so much, if cloth is brought to market, the cost of bringing it has been so much, for the benefit of simplicity, the number of commodities in the market are here supposed to be two, it is of no consequence, with regard to the result, whether they are understood to be few or many, the cost of bringing the corn to market has been either equal to that of bringing the cloth, or unequal, if it has been equal, there is no motive, to those who bring the cloth or the corn, for altering the quantity of either, they cannot obtain more of the commodity which they receive in exchange, by transferring their labour to its production, if the cost has been unequal, there immediately arises a motive for altering the proportions, suppose that the cost of bringing the whole of the corn has been greater than that of bringing the whole of the cloth and that the whole of the one is exchanged against the whole of the other, either at once, or in parts, the persons who brought the cloth of in that case possessed themselves of a quantity of corn at less cost, than that at which it was brought to market, by those who produced it those, on the other hand, who brought the corn have possessed themselves of a quantity of cloth, at a greater cost than that at which it can be made and brought to market, here motives arise, to diminish the quantity of corn, and increase the quantity of cloth because the men who have been producing corn, and purchasing cloth, can obtain more cloth, by transferring their means of production from the one to the other, as soon, again, as no more cloth can be obtained by applying the same amount of means to the production of cloth, than by applying them to corn, and exchanging it for cloth, all motive to alter the quantity of the one as compared with that of the other is at an end, nothing is to be gained by producing corn rather than cloth, or cloth rather than corn, the cost of production on both sides is equal, it thus appears that the relative value of commodities, or, in other words, the quantity of one which exchanges for a given quantity of another, depends upon demand and supply, in the first instance but upon cost of production, ultimately and hence, in accurate language, upon cost of production, entirely, an increase or diminution of demand or supply, may temporarily increase or diminish, beyond the point of productive cost, the quantity of one commodity which exchanges for a given quantity of another but the law of competition, wherever it is not obstructed, tends invariably to bring it to that point, and to keep it there, cost of production, then, regulates the exchangeable value of commodities, but cost of production is itself involved in some obscurity, it is probable that different ideas are very often included under the term by different persons, two instruments are commonly combined in production labour and capital, it follows, either that cost of production consists in labour and capital combined or that one of these may be resolved into the other, if one of them can be resolved into the other, it follows that cost of production does not consist in both combined, the opinion, which is suggested by first appearances, undoubtedly is, that cost of production consists in capital alone, the capitalist pays the wages of his labourer, buys the raw material, and expects that what he has expended shall be returned to him, in the price, with the ordinary profits upon the whole of the capital employed, from this view of the subject, it would appear, that cost of production consists exclusively in the portion of capital expended, together with clear profits upon the whole of the capital employed in effecting the production, it is easy, however, to see, that in the term capital, thus understood, and ambiguity, and hence a fallacy, is involved, when we say that capital and labour, the two instruments of production, belong to two classes of persons we mean that the labourers have contributed so much to the production, and the capitalists so much and that the commodity, when produced, belongs, in certain proportions, to both, it may so happen, however, that one of these parties has purchased the share of the other, before the production is completed, in that case, the whole of the commodity belongs to the party who has purchased the share of the other, in point of fact, it does happen, that the capitalist, as often as he employs labourers, by the payment of wages, purchases the share of the labourers, when the labourers receive wages for their labour, without waiting to be paid by a share of the commodity produced, it is evident that they sell their title to that share, clearly capitalist is then the owner, not of the capital only, but of the labour also, if what is paid as wages is included, as it commonly is, in the term capital, it is absurd to talk of labour separately from capital, the word capital, as thus employed, includes labour and capital both, to say, therefore, that the exchangeable value of commodities is determined by capital, understood in this sense, is to say that it is determined by labour and capital combined, this, however, is returning to the point from which we set out, it is nougatory to include labour in the definition of the word capital, and then to say that, capital without labour, determines exchangeable values, if capital is understood in a sense which does not include the purchase money of labour, and hence the labour itself, it is obvious that capital does not regulate the exchangeable value of commodities, if labour were the sole instrument of production, and capital not acquired, the produce of one day's labour in one commodity would exchange against the produce of one day's labour in another commodity, in the rude state of society, if the hunter and the fisherman desired to vary their food, the one by a portion of game, the other by a portion of fish, the average quantity which they took in a day would form the standard of exchange, if it did not, one of the two would be placed in a more unfavourable situation than his neighbour, with perfect power, which he would of course employ, to pass from the one situation to the other, in estimating equal quantities of labour, and allowance would, of course, be included for different degrees of hardness and skill, if the products of each of two days labour of equal hardness and skill exchanged for one another, the product of a day's labour, which was either harder, or required a greater degree of skill, would exchange for something more, all capital consists really in commodities, the capital of the farmer is not the money which he may be worth, because that he cannot apply to production, his capital consists in his implements and stock, as all capital consists in commodities, it follows, of course, that the first capital must have been the result of pure labour, the first commodities could not be made by any commodities existing before them, but if the first commodities, and of course the first capital, were the result of pure labour, the value of this capital, the quantity of other commodities for which it would exchange, must have been estimated by labour, this is an immediate consequence of the proposition which we have just established, that where labour was the sole instrument of production, exchangeable value was determined by the quantity of labour which the production of the commodity required, if this be established, it is a necessary consequence, that the exchangeable value of all commodities is determined by quantity of labour, the first capital, as has just been seen, being the result of pure labour, bears a value in proportion to that labour, this capital concurs in production, and it is contended that as soon as capital concurs in production, the value of the commodity produced is determined by the value of the capital, but the value of that capital itself, we have just allowed, is determined by labour, to say, therefore, that the value of a product is determined by the value of the capital, is of no use, when you have to go beyond the value of the capital, and ask what it is by which that value is itself determined, to say that the value of the product is determined by the value of the capital, but the value of the capital is determined by the quantity of labour, is to say that the value of the product is determined by the quantity of labour, it thus undeniably appears, that not only the value of the first capital, but, By equal necessity, that of the commodities which are produced by the first capital, is determined by quantity of labour, capital of the second stage must consist in the commodities which are produced by that of the first stage, it must, therefore, be estimated by the quantity of labour, the same reasoning applies to it in every subsequent stage, the value of the first capital was regulated by quantity of labour, the value of that which was produced by the first capital was regulated by the value of the first, that, however, was valued by labour, the last, therefore, is valued by labour and so on, without end, as often as successive productions may be supposed to be made, but if the value of all capital must be determined by labour, it follows, upon all suppositions, that the value of all commodities must be determined by labour, to say, indeed, that the value of commodities depends upon capital as the final standard, implies one of the most obvious of all absurdities, capital is commodities, if the value of commodities, then, depends upon the value of capital, it depends upon the value of commodities the value of commodities depends upon itself, this is not to point out a standard of value, it is to make an attempt for that purpose clearly and completely abortive, it thus appears by the clearest evidence, that quantity of labour in the last resort, determines the proportion in which commodities exchange for one another, there is one phenomenon which is brought to controvert these conclusions, and which it is, therefore, necessary to explain, apostrophe it is said that the exchangeable value of commodities is affected by time, without the intervention of labour because, when profits of stock must be included, so much must be added for every portion of time which the production of one commodity requires beyond that of another, for example, if the same quantity of labour has produced in the same season a casque of wine, and twenty sacks of flour, they will exchange against one another at the end of the season, but if the owner of the wine places the wine in his cellar, and keeps it for a couple of years, it will be worth more than the W sacks of flour, because the profits of stock for the two years must be added to the original price, here, it is affirmed, there has been a new application of labour, but here there is an addition of value, quantity of labour, therefore, is not the principle by which exchangeable value is regulated, to this objection I reply, that it is founded upon a misapprehension with respect to the nature of profits. In reality, the measure of quantity of labour and the only measure of quantity of labour to which, in the case of capital, we can resort, this can be proved by the most rigid analysis. If two commodities are produced, a bale of silk, for example, for immediate consumption, and a machine, which is an article of fixed capital it is certain, that if the bale of silk and the machine were produced by the same quantity of labour, and in the same time, they would exactly exchange for one another, quantity of labour would clearly be the regulator of their value, but suppose that the owner of the machine, instead of selling it, is disposed to use it, for the sake of the profits which it brings, what is the real character and nature of his action, instead of receiving the price of his machine all at once, he takes a deferred payment, so much pranum, he receives, in fact, unannuity, in lieu of the capital sum and annuity, fixed by the competition of the market, and which is therefore an exact equivalent for the capital sum, whatever the proportion which the capital sum bears to the annuity, whether it be ten years purchase, or twenty years purchase, such a proportion is each year's annuity of the original value of the machine, the conclusion, therefore, is incontrovertible, as the exchangeable value of the machine, had it been sold as soon as made, would have been the practical measure of the quantity of labour employed in making it, one tenth or one twentieth of that value measures also a tenth or a twentieth of the quantity of labour, if a piece of machinery, which has cost one hundred days labour, is applied in making a commodity, and is worn out in the making of it and if one hundred days pure labour are employed in making another commodity the produce of the machine, and the produce of the labour, supposing no adjustment necessary for the difference of time, will exchange against one another, make now a difference a position, that the machine is an article of fixed capital, and not worn out, one hundred days labour were correctly supposed to be expended by using them machine as in the first case but one hundred days labour have not been expended by using it as in the second, because the machine is not worn out, some labour, however, has been expended, thus one hundred days labour in a mass has been applied, how much of it shall we say has been expended, we have an exact measure of it in the equivalent which is paid, if the equivalent which was obtained when the machine was worn out, was a measure of the one hundred days labour, whatever proportion of such equivalent is received as a year's use of the machine when not worn out, must represent a corresponding proportion of the labour expended upon the machine, capital is allowed to be correctly described under the title of hoarded labour, a portion of capital produced by one hundred days labour, is one hundred days hoarded labour, but the whole of the one hundred days hoarded labour is not expended, when the article constituting the capital is not worn out, a part is expended, and what part, of this we have no direct, we have only an indirect measure, if capital, paid for by an annuity, is paid for at the rate of ten percent, one tenth of the hoarded labour may be correctly considered as expended in one year, if the wine which is put in the cellar is increased in value one tenth by being kept a year, one tenth more of labour may be correctly considered as having been expended upon it, in the simple cases, which political economists reduce, for the sake of more convenient illustration, one is, that of commodities made purely by capital, without the aid of immediate labour made, for example, by a machine, which is of great duration, and completes the commodity by its own operation, it is evident that if a commodity could be so made, its whole price would consist of profits, but it would surely be absurd to say, that labour had nothing to do in creating the value of such a commodity, since, demonstratively, it is labour which gives to it the whole of its value and if it could be got without labour, it would have no value at all, it is, hoarded labour, indeed, not immediate labour, which has created its value, but as immediate labour creates value in proportion to the quantity of it applied, so also does hoarded labour nor is there any other principle upon which it can be conceived to do so, if there are two machines of the nature supposed above, the one of which is one hundred days hoarded labour, the other two hundred, the days produce of the one will be twice the value of the days produce of the other, why? because twice the quantity of labour has been applied to it, the case is precisely the same, when what they call allowance for time is taken into account, if the one hundred days hoarded labour is applied for two days, its produce will be equal in value to one day's produce of the two hundred days hoarded labour, why? plus one hundred days hoarded labour, applied for two days, is equal in quantity to two hundred days, applied for one day, what is called time, in this case, is the mere computation of the annuity, the measure of the quantity of labour which had been applied, it has been most pertinently and conclusively remarked by Mr. M. C. Killock, that time does nothing, how then can it create value, time is a mere abstract term, it is a word, a sound, and it is the very same logical absurdity, to talk of an abstract unit measuring value, and of time creating it, section three, effect upon exchangeable values of a fluctuation in wages and profits, in stating that commodities are produced by two instruments, labour and capital, of which the last is the result of labour, we, in effect, mean, that commodities are produced by two quantities of labour, differently circumstanced the one, i 77 imitiate labour, that which is applied at once by the hand of the labourer the other, hoarded labour, that which has been the result of former labour, and either is applied in aid of the immediate labour, or is the subject matter upon which it is bestowed, of these two species of labour, two things are to be observed, first, that they are not always paid according to the same rate that is, the payment of the one does not rise when that of the other rises, or fall when that of the other falls, and, secondly, that they do not always contribute to the production of all commodities in equal proportions, if there were any two species of labour, the wages of which did not rise and fall in the same proportion, and which, contributing to the production of all commodities, did not contribute to the more unequal degrees, this circumstance, of there not contributing unequal degrees, would create a difference in exchangeable values, as often as any fluctuation took place in the rate of wages, if all commodities were produced by a portion of skilled, and a portion of unskilled labour, but the ratio which these portions brought to one another were different in the case of different commodities and if, as often as the wages of unskilled labour rose, the wages of unskilled labour rose twice as much it is very obvious, that, upon a rise of wages, those commodities, to the production of which a greater proportion of unskilled labour was applied, would rise in value as compared with those to which a less proportion was applied, it is evident, however, that though this difference in the ratios according to which the wages of two kinds of labour were changed, and the different proportions in which they were applied in the production of different commodities, would, upon a rise or fall in wages, alter the relative value of the commodities, it would do so, without in the least degree affecting the truth of the previous proposition, that quantity of labour determined exchangeable values, the case is precisely the same when we consider that it is the two species of labour, called immediate and hoarded, which are applied in different proportions, three cases will conveniently exemplify the different degrees in which labour and capital respectively contribute to production, these are the two extreme cases, and the medium, the first is that of commodities which are produced by immediate labour alone without capital, the second, that of commodities produced, one half by capital, one half by immediate labour the third, that of commodities produced by capital alone without immediate labour, there are perhaps no species of commodities which perfectly coincide with either of the extremes, there are species, however, which are proximate to both and when the most simple cases are illustrated, as examples, allowance can easily and correctly be made for the differences of the rest, if two species of labour are employed in the production of commodities and if, when the payment of the one species of labour rises, that of the other falls a commodity, in the production of which a greater proportion of the first species of labour is employed, will, upon a rise in the payment of that species of lab