Probable error of Dr Adam Smith in representing every increase of
the revenue or stock of a society as an increase in the funds for
the maintenance of labour - Instances where an increase of wealth
can have no tendency to better the condition of the labouring
poor - England has increased in riches without a proportional
increase in the funds for the maintenance of labour - The state
of the poor in China would not be improved by an increase of
wealth from manufactures.
THE professed object of Dr Adam Smith's inquiry is the nature and
causes of the wealth of nations. There is another inquiry,
however, perhaps still more interesting, which he occasionally
mixes with it, I mean an inquiry into the causes which affect the
happiness of nations or the happiness and comfort of the lower
orders of society, which is the most numerous class in every
nation. I am sufficiency aware of the near connection of these
two subjects, and that the causes which tend to increase the
wealth of a state tend also, generally speaking, to increase the
happiness of the lower classes of the people. But perhaps Dr Adam
Smith has considered these two inquiries as still more nearly
connected than they really are; at least, he has not stopped to
take notice of those instances where the wealth of a society may
increase (according to his definition of 'wealth') without having
any tendency to increase the comforts of the labouring part of
it. I do not mean to enter into a philosophical discussion of
what constitutes the proper happiness of man, but shall merely
consider two universally acknowledged ingredients, health, and
the command of the necessaries and conveniences of life.
Little or no doubt can exist that the comforts of the
labouring poor depend upon the increase of the funds destined for
the maintenance of labour, and will be very exactly in proportion
to the rapidity of this increase. The demand for labour which
such increase would occasion, by creating a competition in the
market, must necessarily raise the value of labour, and, till the
additional number of hands required were reared, the increased
funds would be distributed to the same number of persons as
before the increase, and therefore every labourer would live
comparatively at his ease. But perhaps Dr Adam Smith errs in
representing every increase of the revenue or stock of a society
as an increase of these funds. Such surplus stock or revenue
will, indeed, always be considered by the individual possessing
it as an additional fund from which he may maintain more labour:
but it will not be a real and effectual fund for the maintenance
of an additional number of labourers, unless the whole, or at
least a great part of this increase of the stock or revenue of
the society, be convertible into a proportional quantity of
provisions; and it will not be so convertible where the increase
has arisen merely from the produce of labour, and not from the
produce of land. A distinction will in this case occur, between
the number of hands which the stock of the society could employ,
and the number which its territory can maintain.
To explain myself by an instance. Dr Adam Smith defines the
wealth of a nation to consist. In the annual produce of its land
and labour. This definition evidently includes manufactured
produce, as well as the produce of the land. Now supposing a
nation for a course of years was to add what it saved from its
yearly revenue to its manufacturing capital solely, and not to
its capital employed upon land, it is evident that it might grow
richer according to the above definition, without a power of
supporting a greater number of labourers, and, therefore, without
an increase in the real funds for the. maintenance of labour.
There would, notwithstanding, be a demand for labour from the
power which each manufacturer would possess, or at least think he
possessed, of extending his old stock in trade or of setting up
fresh works. This demand would of course raise the price of
labour, but if the yearly stock of provisions in the country was
not increasing, this rise would soon turn out to be merely
nominal, as the price of provisions must necessarily rise with
it. The demand for manufacturing labourers might, indeed, entice
many from agriculture and thus tend to diminish the annual
produce of the land, but we will suppose any effect of this kind
to be compensated by improvements in the instruments of
agriculture, and the quantity of provisions therefore to remain
the same. Improvements in manufacturing machinery would of course
take place, and this circumstance, added to the greater number of
hands employed in manufactures, would cause the annual produce of
the labour of the country to be upon the whole greatly increased.
The wealth therefore of the country would be increasing annually,
according to the definition, and might not, perhaps, be
increasing very slowly.
The question is whether wealth, increasing in this way, has
any tendency to better the condition of the labouring poor. It is
a self-evident proposition that any general rise in the price of
labour, the stock of provisions remaining the same, can only be a
nominal rise, as it must very shortly be followed by a
proportional rise in the price of provisions. The increase in the
price of labour, therefore, which we have supposed, would have
little or no effect in giving the labouring poor a greater
command over the necessaries and conveniences of life. In this
respect they would be nearly in the same state as before. In one
other respect they would be in a worse state. A greater
proportion of them would be employed in manufactures, and fewer,
consequently, in agriculture. And this exchange of professions
will be allowed, I think, by all, to be very unfavourable in
respect of health, one essential ingredient of happiness, besides
the greater uncertainty of manufacturing labour, arising from the
capricious taste of man, the accidents of war, and other causes.
It may be said, perhaps, that such an instance as I have
supposed could not occur, because the rise in the price of
provisions would immediately turn some additional capital into
the channel of agriculture. But this is an event which may take
place very slowly, as it should be remarked that a rise in the
price of labour had preceded the rise of provisions, and would,
therefore, impede the good effects upon agriculture, which the
increased value of the produce of the land might otherwise have
occasioned.
It might also be said, that the additional capital of the
nation would enable it to import provisions sufficient for the
maintenance of those whom its stock could employ. A small country
with a large navy, and great inland accommodations for carriage,
such as Holland, may, indeed, import and distribute an effectual
quantity of provisions; but the price of provisions must be very
high to make such an importation and distribution answer in large
countries less advantageously circumstanced in this respect.
An instance, accurately such as I have supposed, may not,
perhaps, ever have occurred, but I have little doubt that
instances nearly approximating to it may be found without any
very laborious search. Indeed I am strongly inclined to think
that England herself, since the Revolution, affords a very
striking elucidation of the argument in question.
The commerce of this country, internal as well as external,
has certainly been rapidly advancing during the last century. The
exchangeable value in the market of Europe of the annual produce
of its land and labour has, without doubt, increased very
considerably. But, upon examination, it will be found that the
increase has been chiefly in the produce of labour and not in the
produce of land, and therefore, though the wealth of the nation
has been advancing with a quick pace, the effectual funds for the
maintenance of labour have been increasing very slowly, and the
result is such as might be expected. The increasing wealth of the
nation has had little or no tendency to better the condition of
the labouring poor. They have not, I believe, a greater command
of the necessaries and conveniences of life, and a much greater
proportion of them than at the period of the Revolution is
employed in manufactures and crowded together in close and
unwholesome rooms.
Could we believe the statement of Dr Price that the
population of England has decreased since the Revolution, it
would even appear that the effectual funds for the maintenance of
labour had been declining during the progress of wealth in other
respects. For I conceive that it may be laid down as a general
rule that if the effectual funds for the maintenance of labour
are increasing, that is, if the territory can maintain as well as
the stock employ a greater number of labourers, this additional
number will quickly spring up, even in spite of such wars as Dr
Price enumerates. And, consequently, if the population of any
country has been stationary, or declining, we may safely infer,
that, however it may have advanced in manufacturing wealth, its
effectual funds for the maintenance of labour cannot have
increased.
It is difficult, however, to conceive that the population of
England has been declining since the Revolution, though every
testimony concurs to prove that its increase, if it has
increased, has been very slow. In the controversy which the
question has occasioned, Dr Price undoubtedly appears to be much
more completely master of his subject, and to possess more
accurate information, than his opponents. Judging simply from
this controversy, I think one should say that Dr Price's point is
nearer being proved than Mr Howlett's. Truth, probably, lies
between the two statements, but this supposition makes the
increase of population since the Revolution to have been very
slow in comparison with the increase of wealth.
That the produce of the land has been decreasing, or even
that it has been absolutely stationary during the last century,
few will be disposed to believe. The enclosure of commons and
waste lands certainly tends to increase the food of the country,
but it has been asserted with confidence that the enclosure of
common fields has frequently had a contrary effect, and that
large tracts of land which formerly produced great quantities of
corn, by being converted into pasture both employ fewer hands and
feed fewer mouths than before their enclosure. It is, indeed, an
acknowledged truth, that pasture land produces a smaller quantity
of human subsistence than corn land of the same natural
fertility, and could it be clearly ascertained that from the
increased demand for butchers' meat of the best quality, and its
increased price in consequence, a greater quantity of good land
has annually been employed in grazing, the diminution of human
subsistence, which this circumstance would occasion, might have
counterbalanced the advantages derived from the enclosure of
waste lands, and the general improvements in husbandry.
It scarcely need be remarked that the high price of butchers'
meat at present, and its low price formerly, were not caused by
the scarcity in the one case or the plenty in the other, but by
the different expense sustained at the different periods, in
preparing cattle for the market. It is, however, possible, that
there might have been more cattle a hundred years ago in the
country than at present; but no doubt can be entertained, that
there is much more meat of a superior quality brought to market
at present than ever there was. When the price of butchers' meat
was very low, cattle were reared chiefly upon waste lands; and
except for some of the principal markets, were probably killed
with but little other fatting. The veal that is sold so cheap in
some distant counties at present bears little other resemblance
than the name, to that which is bought in London. Formerly, the
price of butchers, meat would not pay for rearing, and scarcely
for feeding, cattle on land that would answer in tillage; but the
present price will not only pay for fatting cattle on the very
best land, but will even allow of the rearing many, on land that
would bear good crops of corn. The same number of cattle, or even
the same weight of cattle at the different periods when killed,
will have consumed (if I may be allowed the expression) very
different quantities of human substance. A fatted beast may in
some respects be considered, in the language of the French
economists, as an unproductive labourer: he has added nothing
to the value of the raw produce that he has consumed. The present
system of grating, undoubtedly tends more than the former system
to diminish the quantity of human subsistence in the country, in
proportion to the general fertility of the land.
I would not by any means be understood to say that the former
system either could or ought to have continued. The increasing
price of butchers' meat is a natural and inevitable consequence
of the general progress of cultivation; but I cannot help
thinking, that the present great demand for butchers' meat of the
best quality, and the quantity of good land that is in
consequence annually employed to produce it, together with the
great number of horses at present kept for pleasure, are the
chief causes that have prevented the quantity of human food in
the country from keeping pace with the generally increased
fertility of the soil; and a change of custom in these respects
would, I have little doubt, have a very sensible effect on the
quantity of subsistence in the country, and consequently on its
population.
The employment of much of the most fertile land in grating,
the improvements in agricultural instruments, the increase of
large farms, and particularly the diminution of the number of
cottages throughout the kingdom, all concur to prove, that there
are not probably so many persons employed in agricultural labour
now as at the period of the Revolution. Whatever increase of
population, therefore, has taken place, must be employed almost
wholly in manufactures, and it is well known that the failure of
some of these manufactures, merely from the caprice of fashion,
such as the adoption of muslins instead of silks, or of
shoe-strings and covered buttons, instead of buckles and metal
buttons, combined with the restraints in the market of labour
arising from corporation and parish laws, have frequently driven
thousands on charity for support. The great increase of the poor
rates is, indeed, of itself a strong evidence that the poor have
not a greater command of the necessaries and conveniences of
life, and if to the consideration, that their condition in this
respect is rather worse than better, be added the circumstance,
that a much greater proportion of them is employed in large
manufactories, unfavourable both to health and virtue, it must be
acknowledged, that the increase of wealth of late years has had
no tendency to increase the happiness of the labouring poor.
That every increase of the stock or revenue of a nation
cannot be considered as an increase of the real funds for the
maintenance of labour and, therefore, cannot have the same good
effect upon the condition of the poor, will appear in a strong
light if the argument be applied to China.
Dr Adam Smith observes that China has probably long been as
rich as the nature of her laws and institutions will admit, but
that with other laws and institutions, and if foreign commerce
were had in honour, she might still be much richer. The question
is, would such an increase of wealth be an increase of the real
funds for the maintenance of labour, and consequently tend to
place the lower classes of people in China in a state of greater
plenty?
It is evident, that if trade and foreign commerce were held
in great honour in China, from the plenty of labourers, and the
cheapness of labour, she might work up manufactures for foreign
sale to an immense amount. It is equally evident that from the
great bulk of provisions and the amazing extent of her inland
territory she could not in return import such a quantity as would
be any sensible addition to the annual stock of subsistence in
the country. Her immense amount of manufactures, therefore, she
would exchange, chiefly, for luxuries collected from all parts of
the world. At present, it appears, that no labour whatever is
spared in the production of food. The country is rather
over-people in proportion to what its stock can employ, and
labour is, therefore, so abundant, that no pains are taken to
abridge it. The consequence of this is, probably, the greatest
production of food that the soil can possibly afford, for it will
be generally observed, that processes for abridging labour,
though they may enable a farmer to bring a certain quantity of
grain cheaper to market, tend rather to diminish than increase
the whole produce; and in agriculture, therefore, may, in some
respects, be considered rather as private than public advantages.
An immense capital could not be employed in China in
preparing manufactures for foreign trade without taking off so
many labourers from agriculture as to alter this state of things,
and in some degree to diminish the produce of the country. The
demand for manufacturing labourers would naturally raise the
price of labour, but as the quantity of subsistence would not be
increased, the price of provisions would keep pace with it, or
even more than keep pace with it if the quantity of provisions
were really decreasing. The country would be evidently advancing
in wealth, the exchangeable value of the annual produce of its
land and labour would be annually augmented, yet the real funds
for the maintenance of labour would be stationary, or even
declining, and, consequently, the increasing wealth of the nation
would rather tend to depress than to raise the condition of the
poor. With regard to the command over the necessaries and
comforts of life, they would be in the same or rather worse state
than before; and a great part of them would have exchanged the
healthy labours of agriculture for the unhealthy occupations of
manufacturing industry.
The argument, perhaps, appears clearer when applied to China,
because it is generally allowed that the wealth of China has been
long stationary. With regard to any other country it might be
always a matter of dispute at which of the two periods, compared,
wealth was increasing the fastest, as it is upon the rapidity of
the increase of wealth at any particular period that Dr Adam
Smith says the condition of the poor depends. It is evident,
however, that two nations might increase exactly with the same
rapidity in the exchangeable value of the annual produce of their
land and labour, yet if one had applied itself chiefly to
agriculture, and the other chiefly to commerce, the funds for the
maintenance of labour, and consequently the effect of the
increase of wealth in each nation, would be extremely different.
In that which had applied itself chiefly to agriculture, the poor
would live in great plenty, and population would rapidly
increase. In that which had applied itself chiefly to commerce,
the poor would be comparatively but little benefited and
consequently population would increase slowly.