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DEFINITIONS

1. As domestic economy regulates the acts and habits of a household, Political economy regulates those of a society or State, with reference to the means of its maintenance.

Political economy is neither an art nor a science; but a system of conduct and legislature, founded on the sciences, directing the arts, and impossible, except under certain conditions of moral culture.

2. The study which lately in England has been called Political Economy is in reality nothing more than the investigation of some accidental phenomena of modern commercial operations, nor has it been true in its investigation even of these. It has no connection whatever with political economy, as understood and treated of by the great thinkers of past ages; and as long as its unscholarly and undefined statements are allowed to pass under the same name, every word written on the subject by those thinkers—and chiefly the words of Plato, Xenophon, Cicero and Bacon—must be nearly useless to mankind. The reader must not, therefore, be surprised at the care and insistance with which I have retained the literal and earliest sense of all important terms used in these papers; for a word is usually well made at the time it is first wanted; its youngest meaning has in it the full strength of its youth: subsequent senses are commonly warped or weakened; and as all careful thinkers are sure to have used their words accurately, the first condition, in order to be able to avail our selves of their sayings at all, is firm definition of terms.

3. By the "maintenance" of a State is to be understood the support of its population in healthy and happy life; and the increase of their numbers, so far as that increase is consistent with their happiness. It is not the object of political economy to increase the numbers of a nation at the cost of common health or comfort; nor to increase indefinitely the comfort of individuals, by sacrifice of surrounding lives, or possibilities of life.

4. The assumption which lies at the root of nearly all erroneous reasoning on political economy,—namely, that its object is to accumulate money or exchangeable property,—may be shown in a few words to be without foundation. For no economist would admit national economy to be legitimate which proposed to itself only the building of a pyramid of gold. He would declare the gold to be wasted, were it to remain in the monumental form, and would say it ought to be employed. But to what end? Either it must be used only to gain more gold, and build a larger pyramid, or for some purpose other than the gaining of gold. And this other purpose, however at first apprehended, will be found to resolve itself finally into the service of man;—that is to say, the extension, defence, or comfort of his life. The golden pyramid may perhaps be providently built, perhaps improvidently; but the wisdom or folly of the accumulation can only be determined by our having first clearly stated the aim of all economy, namely, the extension of life.

If the accumulation of money, or of exchangeable property, were a certain means of extending existence, it would be useless, in discussing economical questions, to fix our attention upon the more distant object—life—instead of the immediate one—money. But it is not so. Money may sometimes be accumulated at the cost of life, or by limitations of it; that is to say, either by hastening the deaths of men, or preventing their births. It is therefore necessary to keep clearly in view the ultimate object of economy; and to determine the expediency of minor operations with reference to that ulterior end.

5. It has been just stated that the object of political economy is the continuance not only of life, but of healthy and happy life. But all true happiness is both a consequence and cause of life: it is a sign of its vigor, and source of its continuance. All true suffering is in like manner a consequence and cause of death. I shall therefore, in future, use the word "Life" singly: but let it be understood to include in its signification the happiness and power of the entire human nature, body and soul.

6. That human nature, as its Creator made it, and maintains it wherever His laws are observed, is entirely harmonious. No physical error can be more profound, no moral error more dangerous, than that involved in the monkish doctrine of the opposition of body to soul. No soul can be perfect in an imperfect body: no body perfect without perfect soul. Every right action and true thought sets the seal of its beauty on person and face; every wrong action and foul thought its seal of distortion; and the various aspects of humanity might be read as plainly as a printed history, were it not that the impressions are so complex that it must always in some cases (and, in the present state of our knowledge, in all cases) be impossible to decipher them completely. Nevertheless, the face of a consistently just, and of a consistently unjust person, may always be rightly distinguished at a glance; and if the qualities are continued by descent through a generation or two, there arises a complete distinction of race. Both moral and physical qualities are communicated by descent, far more than they can be developed by education; (though both may be destroyed by want of education), and there is as yet no ascertained limit to the nobleness of person and mind which the human creature may attain, by persevering observance of the laws of God respecting its birth and training.

7. We must therefore yet farther define the aim of political economy to be "The multiplication of human life at the highest standard." It might at first seem questionable whether we should endeavour to maintain a small number of persons of the highest type of beauty and intelligence, or a larger number of an inferior class. But I shall be able to show in the sequel, that the way to maintain the largest number is first to aim at the highest standard. Determine the noblest type of man, and aim simply at maintaining the largest possible number of persons of that class, and it will be found that the largest possible number of every healthy subordinate class must necessarily be produced also.

8. The perfect type of manhood, as just stated, involves the perfections (whatever we may hereafter determine these to be) of his body, affections, and intelligence. The material things, therefore, which it is the object of political economy to produce and use, (or accumulate for use,) are things which serve either to sustain and comfort the body, or exercise rightly the affections and form the intelligence.10 Whatever truly serves either of these purposes is "useful" to man, wholesome, healthful, helpful, or holy. By seeking such things, man prolongs and increases his life upon the earth.

On the other hand, whatever does not serve either of these purposes,—much more whatever counteracts them,—is in like manner useless to man, unwholesome, unhelpful, or unholy; and by seeking such things man shortens and diminishes his life upon the earth.

9. And neither with respect to things useful or useless can man's estimate of them alter their nature. Certain substances being good for his food, and others noxious to him, what he thinks or wishes respecting them can neither change, nor prevent, their power. If he eats corn, he will live; if nightshade, he will die. If he produce or make good and beautiful things, they will Re-Create him; (note the solemnity and weight of the word); if bad and ugly things, they will "corrupt" or "break in pieces"—that is, in the exact degree of their power, Kill him. For every hour of labour, however enthusiastic or well intended, which he spends for that which is not bread, so much possibility of life is lost to him. His fancies, likings, beliefs, however brilliant, eager, or obstinate, are of no avail if they are set on a false object. Of all that he has laboured for, the eternal law of heaven and earth measures out to him for reward, to the utmost atom, that part which he ought to have laboured for, and withdraws from him (or enforces on him, it may be) inexorably, that part which he ought not to have laboured for until, on his summer threshing-floor, stands his heap of corn; little or much, not according to his labour, but to his discretion. No "commercial arrangements," no painting of surfaces, nor alloying of substances, will avail him a pennyweight. Nature asks of him calmly and inevitably, What have you found, or formed—the right thing or the wrong? By the right thing you shall live; by the wrong you shall die.

10. To thoughtless persons it seems otherwise. The world looks to them as if they could cozen it out of some ways and means of life. But they cannot cozen it: they can only cozen their neighbours. The world is not to be cheated of a grain; not so much as a breath of its air can be drawn surreptitiously. For every piece of wise work done, so much life is granted; for every piece of foolish work, nothing; for every piece of wicked work, so much death is allotted. This is as sure as the courses of day and night. But when the means of life are once produced, men, by their various struggles and industries of accumulation or exchange, may variously gather, waste, restrain, or distribute them; necessitating, in proportion to the waste or restraint, accurately, so much more death. The rate and range of additional death are measured by the rate and range of waste; and are inevitable;—the only question (determined mostly by fraud in peace, and force in war) is, Who is to die, and how?

11. Such being the everlasting law of human existence, the essential work of the political economist is to determine what are in reality useful or life-giving things, and by what degrees and kinds of labour they are attainable and distributable. This investigation divides itself under three great heads;—the studies, namely, of the phenomena, first, of Wealth; secondly, of Money; and thirdly, of Riches.

These terms are often used as synonymous, but they signify entirely different things. "Wealth" consists of things in themselves valuable; "Money," of documentary claims to the possession of such things; and "Riches" is a relative term, expressing the magnitude of the possessions of one person or society as compared with those of other persons or societies.

The study of Wealth is a province of natural science:—it deals with the essential properties of things.

The study of Money is a province of commercial science:—it deals with conditions of engagement and exchange.

The study of Riches is a province of moral science:—it deals with the due relations of men to each other in regard of material possessions; and with the just laws of their association for purposes of labour.

I shall in this first chapter shortly sketch out the range of subjects which will come before us as we follow these three branches of inquiry.

12. And first of Wealth, which, it has been said, consists of things essentially valuable. We now, therefore, need a definition of "value."

"Value" signifies the strength, or "availing" of anything towards the sustaining of life, and is always twofold; that is to say, primarily, intrinsic, and secondarily, effectual.

The reader must, by anticipation, be warned against confusing value with cost, or with price. Value is the life-giving power of anything; cost, the quantity of labour required to produce it; price, the quantity of labour which its possessor will take in exchange for it.11 Cost and price are commercial conditions, to be studied under the head of money.

13. Intrinsic value is the absolute power of anything to support life. A sheaf of wheat of given quality and weight has in it a measurable power of sustaining the substance of the body; a cubic foot of pure air, a fixed power of sustaining its warmth; and a cluster of flowers of given beauty a fixed power of enlivening or animating the senses and heart.

It does not in the least affect the intrinsic value of the wheat, the air, or the flowers, that men refuse or despise them. Used or not, their own power is in them, and that particular power is in nothing else.

14. But in order that this value of theirs may become effectual, a certain state is necessary in the recipient of it. The digesting, breathing, and perceiving functions must be perfect in the human creature before the food, air, or flowers can become of their full value to it. The production of effectual value, therefore, always involves two needs: first, the production of a thing essentially useful; then the production of the capacity to use it. Where the intrinsic value and acceptant capacity come together there is Effectual value, or wealth; where there is either no intrinsic value, or no acceptant capacity, there is no effectual value; that is to say, no wealth. A horse is no wealth to us if we cannot ride, nor a picture if we cannot see, nor can any noble thing be wealth, except to a noble person. As the aptness of the user increases, the effectual value of the thing used increases; and in its entirety can co-exist only with perfect skill of use, and fitness of nature.

15. Valuable material things may be conveniently referred to five heads:

(i.) Land, with its associated air, water, and organisms.

(ii.) Houses, furniture, and instruments.

(iii.) Stored or prepared food, medicine, and articles of bodily luxury, including clothing.

(iv.) Books.

(v.) Works of art.

The conditions of value in these things are briefly as follows:—

16. (i.) Land. Its value is twofold; first, as producing food and mechanical power; secondly, as an object of sight and thought, producing intellectual power.

Its value, as a means of producing food and mechanical power, varies with its form (as mountain or plain), with its substance (in soil or mineral contents), and with its climate. All these conditions of intrinsic value must be known and complied with by the men who have to deal with it, in order to give effectual value; but at any given time and place, the intrinsic value is fixed: such and such a piece of land, with its associated lakes and seas, rightly treated in surface and substance, can produce precisely so much food and power, and no more.

The second element of value in land being its beauty, united with such conditions of space and form as are necessary for exercise, and for fullness of animal life, land of the highest value in these respects will be that lying in temperate climates, and boldly varied in form; removed from unhealthy or dangerous influences (as of miasm or volcano); and capable of sustaining a rich fauna and flora. Such land, carefully tended by the hand of man, so far as to remove from it unsightlinesses and evidences of decay, guarded from violence, and inhabited, under man's affectionate protection, by every kind of living creature that can occupy it in peace, is the most precious "property" that human beings can possess.

17. (ii.) Buildings, furniture, and instruments.

The value of buildings consists, first, in permanent strength, with convenience of form, of size, and of position; so as to render employment peaceful, social intercourse easy, temperature and air healthy. The advisable or possible magnitude of cities and mode of their distribution in squares, streets, courts, &c.; the relative value of sites of land, and the modes of structure which are healthiest and most permanent, have to be studied under this head.

The value of buildings consists secondly in historical association, and architectural beauty, of which we have to examine the influence on manners and life.

The value of instruments consists, first, in their power of shortening labour, or otherwise accomplishing what human strength unaided could not. The kinds of work which are severally best accomplished by hand or by machine;—the effect of machinery in gathering and multiplying population, and its influence on the minds and bodies of such population; together with the conceivable uses of machinery on a colossal scale in accomplishing mighty and useful works, hitherto unthought of, such as the deepening of large river channels;—changing the surface of mountainous districts;—irrigating tracts of desert in the torrid zone;—breaking up, and thus rendering capable of quicker fusion, edges of ice in the northern and southern Arctic seas, &c., so rendering parts of the earth habitable which hitherto have been lifeless, are to be studied under this head.

The value of instruments is, secondarily, in their aid to abstract sciences. The degree in which the multiplication of such instruments should be encouraged, so as to make them, if large, easy of access to numbers (as costly telescopes), or so cheap as that they might, in a serviceable form, become a common part of the furniture of households, is to be considered under this head.12

18. (iii.) Food, medicine, and articles of luxury. Under this head we shall have to examine the possible methods of obtaining pure food in such security and equality of supply as to avoid both waste and famine: then the economy of medicine and just range of sanitary law: finally the economy of luxury, partly an æsthetic and partly an ethical question.

19. (iv.) Books. The value of these consists,

First, in their power of preserving and communicating the knowledge of facts.

Secondly, in their power of exciting vital or noble emotion and intellectual action. They have also their corresponding negative powers of disguising and effacing the memory of facts, and killing the noble emotions, or exciting base ones. Under these two heads we have to consider the economical and educational value, positive and negative, of literature;—the means of producing and educating good authors, and the means and advisability of rendering good books generally accessible, and directing the reader's choice to them.

20. (v.) Works of art. The value of these is of the same nature as that of books; but the laws of their production and possible modes of distribution are very different, and require separate examination.

21. II.—Money. Under this head, we shall have to examine the laws of currency and exchange; of which I will note here the first principles.

Money has been inaccurately spoken of as merely a means of exchange. But it is far more than this. It is a documentary expression of legal claim. It is not wealth, but a documentary claim to wealth, being the sign of the relative quantities of it, or of the labour producing it, to which, at a given time, persons, or societies, are entitled.

If all the money in the world, notes and gold, were destroyed in an instant, it would leave the world neither richer nor poorer than it was. But it would leave the individual inhabitants of it in different relations.

Money is, therefore, correspondent in its nature to the title-deed of an estate. Though the deed be burned, the estate still exists, but the right to it has become disputable.

22. The real worth of money remains unchanged, as long as the proportion of the quantity of existing money to the quantity of existing wealth or available labour remains unchanged.

If the wealth increases, but not the money, the worth of the money increases; if the money increases, but not the wealth, the worth of the money diminishes.

23. Money, therefore, cannot be arbitrarily multiplied, any more than title-deeds can. So long as the existing wealth or available labour is not fully represented by the currency, the currency may be increased without diminution of the assigned worth of its pieces. But when the existing wealth, or available labour is once fully represented, every piece of money thrown into circulation diminishes the worth of every other existing piece, in the proportion it bears to the number of them, provided the new piece be received with equal credit; if not, the depreciation of worth takes place, according to the degree of its credit.

24. When, however, new money, composed of some substance of supposed intrinsic value (as of gold), is brought into the market, or when new notes are issued which are supposed to be deserving of credit, the desire to obtain the money will, under certain circumstances, stimulate industry: an additional quantity of wealth is immediately produced, and if this be in proportion to the new claims advanced, the value of the existing currency is undepreciated. If the stimulus given be so great as to produce more goods than are proportioned to the additional coinage, the worth of the existing currency will be raised.

Arbitrary control and issues of currency affect the production of wealth, by acting on the hopes and fears of men, and are, under certain circumstances, wise. But the issue of additional currency to meet the exigencies of immediate expense, is merely one of the disguised forms of borrowing or taxing. It is, however, in the present low state of economical knowledge, often possible for governments to venture on an issue of currency, when they could not venture on an additional loan or tax, because the real operation of such issue is not understood by the people, and the pressure of it is irregularly distributed, and with an unperceived gradation.

25. The use of substances of intrinsic value as the materials of a currency, is a barbarism;—a remnant of the conditions of barter, which alone render commerce possible among savage nations. It is, however, still necessary, partly as a mechanical check on arbitrary issues; partly as a means of exchanges with foreign nations. In proportion to the extension of civilization, and increase of trustworthiness in Governments, it will cease. So long as it exists, the phenomena of the cost and price of the articles used for currency are mingled with those proper to currency itself, in an almost inextricable manner: and the market worth of bullion is affected by multitudinous accidental circumstances, which have been traced, with more or less success, by writers on commercial operations: but with these variations the true political economist has no more to do than an engineer, fortifying a harbour of refuge against Atlantic tide, has to concern himself with the cries or quarrels of children who dig pools with their fingers for its streams among the sand.

26. III.—Riches. According to the various industry, capacity, good fortune, and desires of men, they obtain greater or smaller share of, and claim upon, the wealth of the world.

The inequalities between these shares, always in some degree just and necessary, may be either restrained by law or circumstance within certain limits; or may increase indefinitely.

Where no moral or legal restraint is put upon the exercise of the will and intellect of the stronger, shrewder, or more covetous men, these differences become ultimately enormous. But as soon as they become so distinct in their extremes as that, on one side, there shall be manifest redundance of possession, and on the other manifest pressure of need,—the terms "riches" and "poverty" are used to express the opposite states; being contrary only as the terms "warmth" and "cold" are contraries, of which neither implies an actual degree, but only a relation to other degrees, of temperature.

27. Respecting riches, the economist has to inquire, first, into the advisable modes of their collection; secondly, into the advisable modes of their administration.

Respecting the collection of national riches, he has to inquire, first, whether he is justified in calling the nation rich, if the quantity of wealth it possesses relatively to the wealth of other nations, be large; irrespectively of the manner of its distribution. Or does the mode of distribution in any wise affect the nature of the riches? Thus, if the king alone be rich—suppose Croesus or Mausolus—are the Lydians or Carians therefore a rich nation? Or if a few slave-masters are rich, and the nation is otherwise composed of slaves, is it to be called a rich nation? For if not, and the ideas of a certain mode of distribution or operation in the riches, and of a certain degree of freedom in the people, enter into our idea of riches as attributed to a people, we shall have to define the degree of fluency, or circulative character which is essential to the nature of common wealth; and the degree of independence of action required in its possessors. Questions which look as if they would take time in answering.13

28. And farther. Since the inequality, which is the condition of riches, may be established in two opposite modes—namely, by increase of possession on the one side, and by decrease of it on the other—we have to inquire, with respect to any given state of riches, precisely in what manner the correlative poverty was produced: that is to say, whether by being surpassed only, or being depressed also; and if by being depressed, what are the advantages, or the contrary, conceivable in the depression. For instance, it being one of the commonest advantages of being rich to entertain a number of servants, we have to inquire, on the one side, what economical process produced the riches of the master; and on the other, what economical process produced the poverty of the persons who serve him; and what advantages each, on his own side, derives from the result.

29. These being the main questions touching the collection of riches, the next, or last, part of the inquiry is into their administration.

Their possession involves three great economical powers which require separate examination: namely, the powers of selection, direction, and provision.

The power of Selection relates to things of which the supply is limited (as the supply of best things is always). When it becomes matter of question to whom such things are to belong, the richest person has necessarily the first choice, unless some arbitrary mode of distribution be otherwise determined upon. The business of the economist is to show how this choice may be a wise one.

The power of Direction arises out of the necessary relation of rich men to poor, which ultimately, in one way or another, involves the direction of, or authority over, the labour of the poor; and this nearly as much over their mental as their bodily labour. The business of the economist is to show how this direction may be a Just one.

The power of Provision is dependent upon the redundance of wealth, which may of course by active persons be made available in preparation for future work or future profit; in which function riches have generally received the name of capital; that is to say, of head-, or source-material. The business of the economist is to show how this provision may be a Distant one.

30. The examination of these three functions of riches will embrace every final problem of political economy;—and, above, or before all, this curious and vital problem,—whether, since the wholesome action of riches in these three functions will depend (it appears), on the Wisdom, Justice, and Farsightedness of the holders; and it is by no means to be assumed that persons primarily rich, must therefore be just and wise,—it may not be ultimately possible so, or somewhat so, to arrange matters, as that persons primarily just and wise, should therefore be rich?

Such being the general plan of the inquiry before us, I shall not limit myself to any consecutive following of it, having hardly any good hope of being able to complete so laborious a work as it must prove to me; but from time to time, as I have leisure, shall endeavour to carry forward this part or that, as may be immediately possible; indicating always with accuracy the place which the particular essay will or should take in the completed system.