OBSERVATIONS ON THE DEFINITIONS.
_Def. 1._ The reader will be aware that, in almost all definitions, the
same meaning may be conveyed in different language, and that it is the
meaning rather than the mode of expressing it that should be the main
object of our consideration. The essential question in the definition of
wealth is, whether or not it should be confined to material objects, and
the reader is already apprised of my reasons for thinking that it
should. Even M. Say, who admits “_les produits immatériels_,” allows, as
I have before stated (p. 93), that the multiplication of them “_ne fait
rien pour la richesse_;” and M. Storch, in his able “_Cours d’Economie
Politique_,” though he justly lays great stress on what he calls _les
biens internes_, with a view to civilization and the indirect production
of wealth, confines the term _richesses_ to _biens externes_, or
material objects; and according to this meaning treats of the _Théorie
de la Richesse Nationale_, in the first, and far the largest, part of
his work. Altogether, I can feel no doubt that some classification of
this kind, or some separation of material from immaterial objects is, in
the highest degree, useful in a definition of wealth.
The latter part of the definition is of minor importance. It is intended
to exclude such material objects as air, light, rain, &c.—which, however
necessary and useful to man, are seldom considered as wealth; and,
perhaps, it is more objectionable to exclude them, by the introduction
of the term exchangeable value into a definition of wealth, than in the
mode which has been adopted. If the latter clause were not added, the
only consequence would be, that, in comparing different countries
together, such objects as air, light, &c., would be neglected as common
quantities.
_Def. 2._ I have already alluded to the manner in which M. Say has
applied the term Utility. His language cannot be considered as
consistent, when he says that the price of an article is the measure of
its utility, although it might be, according to his own expression, _la
chose la plus inutile_.[96] It is much better for the science of
political economy that the term should retain its natural and ordinary
meaning. All wealth is no doubt useful, but there are so very many
immaterial, and some material objects which are highly useful, and yet
not wealth, that there can be no excuse for confounding them. M. Storch
has not escaped the same kind of error.
_Def. 5._ Two articles are never exchanged with each other without a
previous estimation being formed of the value of each, by a reference to
the wants of mankind and the means of production. This general and most
important relation to the means of production, and the labour which
represents these means, seems to be quite forgotten by those who imagine
that there is no relation implied when the value of a commodity is
mentioned without specific reference to some other commodity.
M. Say, under the head _Valeur des Choses_, observes, “c’est la quantité
d’autres choses évaluables qu’on peut obtenir en échange d’elle.”[97]
This is a most vague and uncertain definition, and much less
satisfactory than the general power of purchasing.
M. Storch says, that “la valeur des choses, c’est leur utilité
relative;” but this certainly cannot be said unless we completely change
the natural and ordinary meaning either of utility or value.
Neither M. Say nor M. Storch has sufficiently distinguished utility,
wealth, and value.
_Def. 6._ The term creation is not here meant to apply to the creation
of matter, but to the creation and production of the objects which have
been defined to be wealth.
_Defs. 11 and 12._ If wealth be confined to material objects, it must be
allowed to be peculiarly convenient and useful, in explaining the causes
of the wealth of nations, to have some appropriate term for that species
of labour which directly produces wealth; and as the principal founder
of the science of political economy has used the terms _productive
labour_ in the restricted sense necessary for this special purpose,
perhaps few objections would have been made to it, if it had not
involved all other kinds of labour, however useful and important, under
the apparently disparaging designation of unproductive. This is a
consequence, no doubt, to be regretted: yet, when it has been repeatedly
stated that the term unproductive, as applied by Adam Smith, in no
degree impeaches the utility and importance of such labour, but merely
implies that it does not directly produce gross wealth, the mere name
ought not to decide against a classification for which it appears from
experience that it is very difficult to find a satisfactory substitute.
In M. Storch’s “_Considérations sur la Nature du Revenu National_,” he
does not appear to me to give a correct view of what Adam Smith means by
productive labour.[98] The difficulty of classification above alluded to
appears strikingly in this treatise. There is some plausibility in the
system, and it is explained with ingenuity and ability; but I think that
the adoption of it would destroy all precision in the science of
political economy.
_Defs. 19 and 20._ I have never been able to understand how the
accumulation of capital and the difference between saving and spending
can be distinctly explained, if we call all labour equally productive.
_Def. 23._ It is this gross surplus of the land which furnishes the
means of subsistence to the inhabitants of towns and cities. Besides the
rents of land, which are powerfully effective in this respect, a large
part of what, in the division of the produce of land, would fall to the
shares of the farmers and labourers, is exchanged by them for other
objects of convenience and gratification, thus giving the main
necessaries of life to a great mass of persons not immediately connected
with the soil. The proportion which this mass of persons may bear to the
cultivators will depend upon the natural fertility of the soil, and the
skill with which it has been improved, and continues to be worked.
_Defs. 28 and 30._ In a valuable publication on the _Price of Corn, and
Wages of Labour_, by Sir Edward West, which has just fallen into my
hands, he proposes that the _price of labour_ should mean the sum paid
for a given quantity of labour of a given character. I quite agree with
him in thinking that it would be useful to have some appropriate term to
express this meaning; but, as the _price of labour_ has certainly not
hitherto been used in this sense, and as it would be, in almost all
cases, extremely difficult to give an answer to a question respecting
the price of labour so understood, it would certainly be proper to vary
the expression in some degree, in order to prepare people for a new
meaning. In Definition 30, therefore, I have given this meaning to _The
price of effective labour_.
_Def. 31._ It would save time and circumlocution, which is one of the
great objects of appropriate terms, if, in speaking of the labour worked
up in commodities, the labour worked up in the capital necessary to
their production were designated by the term _accumulated labour_, as
contradistinguished from the _immediate labour_ employed by the last
capitalist. We must always recollect, however, that labour is not the
only element worked up in capital.
_Def. 38._ I have used the word _elementary_, in order to show that
money-costs are not meant. On account of the doubt which may arise in
this respect when the term _costs of production_ is used alone, and the
further doubt, whether ordinary profits are always included, I am
decidedly of opinion that _the conditions of the supply_ is a more
expressive and less uncertain term for the same meaning. I do not find,
however, that generally it is so well understood. I have defined,
therefore, _the costs of production_ with the addition of the word
_elementary_, and including profits, as having precisely the same
meaning as the conditions of the supply. I once thought it might be
better not to include profits in costs of production; but as Adam Smith
has included them, and more particularly as the profits worked up in the
capital necessary to any production must form a part of the advances or
_costs_ in any sense in which the word costs can be used, I think it
best, on the whole, to include necessary profits in the elementary costs
of production. They are obviously included in the necessary conditions
of the supply.
_Defs. 39 and 40._ In speaking, of the quantity of labour for which a
commodity will exchange, as a measure either of the conditions of its
supply or of its value, it must always be understood, that the different
kinds of labour which may have been employed to produce it, must be
reduced to labour of one description and of the lowest denomination,
namely, common agricultural day-labour, estimated on an average
throughout the year. This is the kind of labour which is always referred
to when labour is spoken of as a measure.
_Def. 57._ It is not true, as stated by M. Say, that prices rise in the
direct ratio of the _quantity_ demanded, and the inverse ratio of the
_quantity_ supplied.[99] They only vary in this way, when the demand is
understood to mean the sacrifice which the demanders are able and
willing to make, in order to supply themselves with what they want;
which may be represented in regard to price by the quantity of money
ready to be employed in purchases in a market. When the demand for
_labour_ is spoken of, it can only relate to _extent_; and a greater
demand can only signify a power of commanding a greater _quantity_ of
labour.
_Def. 59._ The only productive consumption, properly so called, is the
consumption or destruction of wealth by capitalists with a view to
reproduction. This is the only marked line of distinction which can be
drawn between productive and unproductive consumption. The workman whom
the capitalist employs certainly consumes that part of his wages which
he does not save, as revenue, with a view to subsistence and enjoyment;
and not as capital, with a view to production. He is a productive
consumer to the person who employs him, and to the state, but not,
strictly speaking, to himself. Consumption is the great purpose and end
of all production. The consumption of wealth, as revenue, with a view to
support and enjoyment, is even more necessary and important than the
consumption of wealth as capital; but their effects are essentially
different in regard to the direct production of wealth, and they ought
therefore to be distinguished.
I am far from meaning to present the foregoing definitions to the notice
of the reader as in any degree complete; either in regard to extent, or
correctness. In extent, they have been purposely limited, and in regard
to correctness, I am too well aware of the difficulty of the subject to
think that I have succeeded in making my definitions embrace all I wish,
and exclude all I wish. I am strongly, indeed, disposed to believe, that
in the sciences of morals, politics, and political economy, which will
not admit of a change in the principal terms already in use, the full
attainment of this object is impossible; yet a nearer approach to it is
always something gained. I should not indeed have been justified in
offering these definitions to the public, if I had not thought that they
were, on the whole, less objectionable, and would be more useful in
explaining the causes of the wealth of nations than any which I had
seen. But I am conscious of some anomalies, and probably there are some
more of which I am not conscious. Knowing, however, that the attempt to
remove them might destroy useful classifications, I shall not consider a
few individual cases, of little importance, as valid objections.
It is known that Adam Smith gave few regular definitions; but the
meanings in which he used his terms may be collected from the context,
and to these I have, in a considerable degree, adhered. For some I have
been indebted to M. Say; others are my own; and in all, I have
endeavoured to follow the rules for the definition and use of terms laid
down at the beginning of this treatise. I shall consider my object as
fully answered, if what I have done, should succeed in drawing that
degree of attention to the subject which may lead to the production of
something of the same kind, more correct and more useful, and so
convincing as to be generally adopted.
FINIS.
-----
Footnote 1:
It may seem strange to the reader, but it is nevertheless true, that
the meanings of all these terms, which had been settled long ago, and
in my opinion with a great approach towards correctness, by Adam
Smith, have of late been called in question, and altered.
Footnote 2:
Wealth of Nations, b. ii. c. iii. p. i. vol. ii. 6th ed.
Footnote 3:
Traité d’ Economie Politique, liv. i. c. i. pp. 2, 4, 4th ed.
Footnote 4:
Wealth of Nations, b. i. c. v. p. 43. 6th edit.
Footnote 5:
Polit. Econ. c. xx. p. 320. 3rd Edit.
Footnote 6:
Polit. Econ. c. xx. p. 326. 3rd edit.—It may be remarked, by the way,
that Mr. Ricardo here uses labour as a measure of value in the sense
in which I think it ought always to be used, and not according to his
own theory. He measures the exchangeable value of the plate and
velvet, not by the quantity of labour worked up in them, but by the
quantity they will command or employ.
Footnote 7:
Polit. Econ. c. i. sec. iii. pp. 16, 18, 3rd edit.
Footnote 8:
Polit. Econ. c. vii. p. 137, 3rd edit.
Footnote 9:
Id. p. 152.
Footnote 10:
Polit. Econ. c. v. p. 98, 3rd edit.
Footnote 11:
Polit. Econ. c. i. sec. vi. p. 45, 3rd edit.
Footnote 12:
Elements of Polit. Econ. c. ii. sec. iii. p. 75, 2nd edit.
Footnote 13:
Elements of Polit. Econ. c. iii. sec. ii. p. 92.
Footnote 14:
Elements of Polit. Econ. c. iii. sec. ii. p. 94.
Footnote 15:
Id. c. iii. sec. ii. p. 95.
Footnote 16:
Sec. viii. p. 188.
Footnote 17:
Elements of Polit. Econ. c. iv. s. iii. p. 225. If the demand of every
individual were equal to his supply, in the correct sense of the
expression, it would be a proof that he could always sell his
commodity for the costs of production, including fair profits; and
then even a _partial_ glut would be impossible. The argument proves
too much. It is very strange that Mr. Mill should not have seen what
appears to be so very obvious,—that supply must always be proportioned
to _quantity_, and demand to _value_.
Footnote 18:
Elem. of Polit. Econ. c. iv. s. iii. p. 233.
Footnote 19:
Elem. of Polit. Econ. c. iv. s. iii. p. 234.
Footnote 20:
Foreign trade is, no doubt, mainly a trade of barter; but the question
whether British woollens find an adequate market in the United States,
does not depend upon their purchasing the same quantity of tobacco as
usual, but upon whether the tobacco, or whatever the returns may be,
will purchase the British money or the British labour necessary to
enable the woollen manufacturer to carry on his business successfully.
If both woollen manufactures and tobacco are below the costs of
production in money or labour, both parties may be carrying on a
losing trade, at the time when the rate at which the two articles
exchange with each other is the same as usual. This is the answer to
the pamphlet, which M. Say addressed to me some years ago.
Footnote 21:
On the Production of Wealth, c. vi. s. vi. p. 349.
Footnote 22:
On the Production of Wealth, c. vi. s. vi. p. 349.
Footnote 23:
On the Production of Wealth, c. vi. s. vi. p. 345.
Footnote 24:
Id. p. 348.
Footnote 25:
It is quite astonishing that political economists of reputation should
be inclined to resort to any kind of illustration, however clumsy and
inapplicable, rather than refer to money. I suppose they are afraid of
the imputation of thinking that wealth consists in money. But though
it is certainly true that wealth does not consist in money, it is
equally true that money is a most powerful agent in the distribution
of wealth; and those who, in a country where all exchanges are
practically effected by money, continue the attempt to explain the
principles of demand and supply, and the variations of wages and
profits, by referring chiefly to hats, shoes, corn, suits of clothing,
&c., must of necessity fail.
Footnote 26:
Elem. of Polit. Econ. c. iv. s. iii. p. 234.
Footnote 27:
Elements of Polit. Econ. c. ii. sec. ii. p. 41.
Footnote 28:
Principles of Political Economy, part i. p. 5.
Footnote 29:
These remarks were principally directed against Lord Lauderdale’s
definition of wealth—_all that man desires as useful and delightful to
him_; but they apply with nearly equal force to Mr. Macculloch’s
present definition, which is limited to those objects which possess
exchangeable value. According to Mr. Macculloch’s own statement,
health is purchased from the physician, and the gratification derived
from acting from the actor; and it must be allowed that it is
impossible to enjoy the benefits of civil and religious liberty
without paying those who administer a good government. It has been
said by Mr. Hallam, with some truth, that the liberties of England
were chiefly obtained by successive purchases from the crown.
Footnote 30:
Principles of Polit. Econ., part iv. p. 406.
Footnote 31:
Principles of Polit. Econ., part iv. p. 410.
Footnote 32:
Principles of Polit. Econ., part ii. p. 71. This language has
absolutely no meaning, if all labour be equally productive in regard
to national wealth.
Footnote 33:
Mr. Macculloch dwells very much upon the extreme importance of
accumulation to the increase of national wealth. But how are the
gratifications afforded by menial servants to be accumulated?
Footnote 34:
Principles of Polit. Econ., part ii. p. 92.
Footnote 35:
Principles of Polit. Econ., part ii. p. 114.
Footnote 36:
This is very justly stated in Mr. Mill’s “Elements of Political
Economy,” ch. iv. sec. i. p. 219, 2d edit.: both Mr. Ricardo and Mr.
Mill, indeed, fully allow the distinction between productive and
unproductive labour. M. Say, though he calls the labour of the menial
servant productive, makes a distinction between the labour which is
productive of _material_ products and the labour which is productive
of _immaterial_ products. Of the latter products he says, “En
favorisant leur multiplication, on ne fait rien pour la richesse, on
ne fait que pour la consommation.”—_Table Analytique_, liv. i. ch. 13.
This is a most characteristic difference; and though I prefer the
classification of Adam Smith, as more simple, I should allow that, on
these principles, the causes of the wealth of nations may be clearly
explained. But I own myself utterly at a loss to conceive how they can
be explained, if all labour be considered as equally productive.
Footnote 37:
Elem. of Polit. Econ. part ii. p. 93.
Footnote 38:
Princip. of Polit. Econ., part iv. p. 409.
Footnote 39:
Princip. of Polit. Econ., part iv. p. 411.
Footnote 40:
Principles of Polit. Econ., part iii., pp. 313, 317.
Footnote 41:
Principles of Polit. Econ., part iii. p. 313.
Footnote 42:
Principles of Polit. Econ., part iii. p. 313.
Footnote 43:
Principles of Polit. Econ. part ii. p. 69.
Footnote 44:
Wealth of Nations, b. i. c. vi.
Footnote 45:
It must always be recollected, that the advance of a certain number of
days’ labour necessarily involves the wages paid for them, however
these wages may vary in quantity. But the essential advance is the
quantity of labour, not the quantity of money or corn.
Footnote 46:
Principles of Polit. Econ., part iii. p. 223. This is a most
remarkable passage to come from Mr. Macculloch, who, though he agrees
with Mr. Ricardo in words, has, in reality, deserted him, and agrees
in substance with Adam Smith. According to the new meaning, which Mr.
Macculloch has given to the term profits—the quantity of labour
required to produce a commodity, is precisely equal to the quantity of
labour for which it will ordinarily exchange, and certainly not equal
to what Mr. Ricardo meant by the quantity of labour bestowed upon it.
Footnote 47:
Principles of Polit. Econ., part iii, s. 1. p. 221.
Footnote 48:
A person who uses a term in a particular sense practically defines it
in that sense. Mr. Macculloch sometimes makes what have hitherto
always been considered as profits mean labour; and sometimes makes
labour, when used simply without any adjunct, mean fermentation,
vegetation, or profits.
Footnote 49:
Macculloch’s Principles of Polit. Econ., part ii. p. 189.
Footnote 50:
Id. p. 190.
Footnote 51:
I own I want words to express the astonishment I feel at the proposal
of such a remedy. A man, under the intoxication of what he conceives
to be a new and important discovery, may be excused for occasionally
making a rash statement; but that a proposal directly involving the
discontinuance of the division of labour should, in a civilized
country, be repeated over and over again by succeeding writers, and
considered as an _obvious resource_ in a sudden fall of profits,
absolutely passes my comprehension. What a strange and most inapt
illustration too, is it to talk about the possessors of broad cloths
wanting to change them for silks! Who ever heard of a great producer
of any commodity wishing to obtain an equivalent for it in some _one_
other sort of completed commodity? If he is to produce what he wants,
it must not be silks, but raw materials, tools, corn, meat, coats,
hats, shoes and stockings, &c. &c.; and this is the _obvious resource_
which is at hand in a glut!!!
Footnote 52:
Preface, p. 5.
Footnote 53:
Dissertation on Value, c. 1. p. 3.
Footnote 54:
Dissertation on Value, c. 1. p. 4.
Footnote 55:
Wealth of Nations, b. i. c. xi.
Footnote 56:
Production of Wealth, c. i. p. 49.
Footnote 57:
P. 242.
Footnote 58:
Dissertation on Value, c. i. p. 3.
Footnote 59:
C. ii. p. 39.
Footnote 60:
Dissertation on Value, c. iii. p. 58.
Footnote 61:
Dissertation on Value, c. xi. p. 194, 224. In the question between
Colonel Torrens and Mr. Mill, “Whether the value of commodities
depends upon capital as the final standard,” the author decides
against Mr. Mill, but surely without reason. Mr. Mill cannot be wrong
in thinking, that no progress whatever is made towards tracing the
value of a commodity to its elements, by saying, that its value is
determined by the value of the capital employed to produce it. The
question still remains, how is the value of the capital determined? As
to what the author says, p. 202, about the _amount_ of capital, unless
this amount be estimated in _money_, which quite alters the question,
it is entirely inapplicable as a standard.
Footnote 62:
C. viii. p. 160.
Footnote 63:
C. vi. p. 135.
Footnote 64:
Dissertation on Value, c. ii. p. 58.
Footnote 65:
Id. p. 39.
Footnote 66:
P. 240.
Footnote 67:
Dissertation on Value, c. ii. p. 40.
Footnote 68:
Dissertation on Value, c. vi. p. 117.
Footnote 69:
Dissertation on Value, c. vi. p. 117.
Footnote 70:
Dissertation on Value, c. vi. p. 117.
Footnote 71:
Dissertation on Value, c. vi. p. 113, et seq.
Footnote 72:
Dissertation on Value, c. vi. p. 110.
Footnote 73:
Dissertation on Value, c. vi. p. 102.
Footnote 74:
Dissertation on Value, c. vi. p. 120.
Footnote 75:
Dissertation on Value, c. vi. p. 122.
Footnote 76:
Dissertation on Value, c. vi. p. 121.
Footnote 77:
Wealth of Nations, b. i. c. xi. p. 291, 6th edit.
Footnote 78:
Dissertation on Value, c. vii. p. 140.
Footnote 79:
Dissertation on Value, c. vi. p. 145.
Footnote 80:
It has always been a matter of great surprise to me that I should have
been accused of _arbitrarily_ adopting labour as the measure of value.
If there be not a most marked and characteristic distinction between
labour and any _product_ of labour, I do not know where a
characteristic distinction between two objects is to be found; and
surely I have stated this distinction often enough, and brought
forward the peculiar qualities of labour as my reasons for thinking
that it may be taken as a measure of value. Opinions may differ as to
the sufficiency of these reasons, or as to the degree of accuracy with
which it will serve the purpose of a measure. But how it can be said
that I have adopted it arbitrarily, is quite unintelligible to me. If
I had merely stated, that I had adopted it because it was the main
element in the natural costs of production, there could have been no
ground for such a charge.
Footnote 81:
Dissertation on Value, c. vii. p. 148.
Footnote 82:
Dissertation on Value, c. vii. p. 150.
Footnote 83:
On the Production of Wealth, c. i. p. 56.
Footnote 84:
I am very ready to include myself among those political economists who
have not been sufficiently attentive to this subject.
Footnote 85:
If in a foreign country, in which the relation of money to men and
labour was unknown to us, we were told that a quarter of corn was
selling for four ounces of silver, we should not know whether there
was a famine, and corn was held in the highest estimation, or whether
there was a glut of corn, and it was held in the lowest estimation.
The very term estimation, as applied to commodities, must of necessity
refer to man and labour.
Footnote 86:
It is a truth fruitful in important consequences, that the labour
which commodities will command when in their natural state, by
representing accurately the quantity of labour and profits necessary
to produce them, must represent accurately the effectual demand for
them. And this holds good at different places and times, referring of
course to the labour of the same description at each place and time.
Footnote 87:
What could give us any information respecting the scarcity of a
commodity in China, or the state of its supply as compared with the
demand, but a reference to Chinese labour?
Footnote 88:
Principles of Polit. Econ., c. i. s. i. p. 5. 3d edit.
Footnote 89:
M. Say’s comprehensive expression, “_Services productifs_,” includes
profits and rents as well as labour; but it is certain that labour
will measure accurately the value of the whole amount of these
services.
Footnote 90:
If this concession be once made, the whole question respecting labour
as a measure of value is at once decided.
Footnote 91:
C. xi. p. 232.
Footnote 92:
I own that I was myself for a very long time of this opinion; but I am
now perfectly convinced that I was wrong, and that Adam Smith was
quite right in the prevailing view which he took of value, though he
did not always strictly adhere to it. I am also convinced that it
would be a great improvement to the language of political economy, if,
whenever the term value, or value in exchange, is mentioned without
specific reference, it should always be understood to mean value in
exchange for labour,—the great instrument of production, and primary
object given in exchange for every thing that is wealth; in the same
manner as, when the price of a commodity is mentioned without specific
reference, it is always understood to mean price in money—the
universal medium of exchange, and practical measure of relative value.
I am further convinced that the view of value here taken throws
considerable light on the nature of demand and the means of expressing
and measuring it, and that just view of value is absolutely necessary
to a correct explanation of rents, profits, and wages. These
convictions on my mind, which have acquired increase of strength the
longer I have considered the subject, must be my apology to the reader
for dwelling on it longer than, in considering it cursorily, he may
think it deserves.
Footnote 93:
Wealth of Nations, b. i. c. v.
Footnote 94:
Wealth of Nations, b. i. c. v.
Footnote 95:
It is specifically on this ground that I think the meaning of the term
Wealth should be confined to material objects; that productive labour
should be confined to that labour alone which is directly productive
of wealth; and that value, or value in exchange, when no specific
object is referred to, should mean value in exchange for the means of
production, of which labour, the great instrument of production, is
alone the representative.
Footnote 96:
Traité d’Economie Politique, Epitome, vol. ii. p. 506, 4th edit.
Footnote 97:
Epitome, vol. ii. p. 507.
Footnote 98:
C. iv. p. 83.
Footnote 99:
Vol. ii. p. 17. 4th edition.
------------------------------------------------------------------------
TRANSCRIBER’S NOTES
1. Silently corrected typographical errors and variations in spelling.
2. Archaic, non-standard, and uncertain spellings retained as printed.
3. Footnotes have been re-indexed using numbers and collected together
at the end of the last chapter.
4. Enclosed italics font in _underscores_.
End of Project Gutenberg's Definitions in Political Economy, by T. R. Malthus