Chapter 6

A Treatise on Political Economy Icon

September 30, 2015

What Branches of Production Yield the most Liberal Recompense to Productive Agency.

The aggregate value of a product, in the way just described, refunds to its different concurring producers the amount of their advances, with the addition in most cases, of a profit, that constitutes their revenue. But the profits of productive agency are not of equal amount in all its branches; some yielding but a very scanty revenue for the land, capital, or indus- try, embarked in them; while others give an exorbitant return.

No value, whether received in the shape of money or otherwise, can form a portion of annual revenue, unless it be the product, or the price of a product, created within the year all else is capital, — as property passing from one hand to an- other, either in exchange, as a gift, or by inheritance.

For an item of capital, or one of revenue, may be transferred or paid any how, whether in the shape of personal or real, of move- able or immoveable property, or of money. But, no matter what shape it assume, revenue differs from capital essentially in this, that it is the result or product of a pre-existing source, whether land, capital, or industry.

True it is, that productive agents always endeavour to direct their agency to those employments, in which the profits are the greatest, and thus, by their competition, have as much tendency to lower price, as demand has to raise it; but the effects of competition can not always so nicely proportion the supply to the demand, as in every case to ensure an equal remuneration. Some kinds of labour are scantily supplied, in countries where people are not accustomed to them; and capi- tal is often so sunk in a particular channel of production, that it can never be transferred to any other from that wherein it was originally embarked. Besides, the land may stubbornly resist that kind of cultivation, whose products are in the great- est demand.

It has with some been a matter of doubt, whether the same value, which has already been received by one individual as the profit or revenue of his land, capital, or industry, can constitute the revenue of a second. For instance, a man receives 100 crowns in part of his personal revenue, and lays it out in books; can this item of revenue, thus converted into books, and in that shape destined to his consumption, further contribute to form the revenue of the printer, bookseller, and all the other concurring agents in the production of the books, and be by them consumed a second time? The difficulty may be solved thus. The value forming the revenue of the first individual, derived from his land, capital, or industry, and by him consumed in the shape of books, was not originally produced in that form. There has been a double production= 1. Of corn perhaps by the land and the industry of the farmer, which has been converted into crown pieces, and paid as rent One cannot trace the fluctuation of profit on each particular occasion. A wonderful change may be effected by a new invention, a hostile invasion, or a siege. Such partial circumstances may influence or derange the operation of general causes, but can not destroy their general tendency. No dissertation, however voluminous, could be made to embrace every individual circumstance, that by possibility may influence the relative value of objects; but one may specify general causes, and such as have an uniform activity; thereby enabling every one, when the particular occasion may present itself, to estimate the effect produced by the operation of partial and transient circumstances.

Commodities of general use are attainable by a greater num- ber of persons, and are in demand with almost every class of society. The chandelier is to be found only in the mansions of the rich; but the meanest cottage is furnished with the conve- nience of a candlestick= the demand for candlesticks is, there- fore, regular, and always more brisk than that for chande- liers; and, even in the most opulent country, the total value of the candlesticks is far greater than that of the chandeliers. It may appear extraordinary at first sight, but will on inquiry be found generally true, that the largest profit is made, not on the dearest commodities or upon those which are least indis- pensable, but rather on those, which are the most common and least to be dispensed with. In fact the demand for these latter is necessarily permanent; for it is stimulated by actual want, and grows with every increase of the means of produc- tion; inasmuch as nothing tends to increase population more, than providing the means of its subsistence. The demand for superfluities, on the contrary, does not expand with the in- creased power of producing them. An extraordinary run, which, by the way, can never take place but in large towns, may raise the current considerably above the natural price; that is to say, above the actual cost of production; or a change of fashion may again depress it infinitely below that point. Superfluities are, after all, but objects of secondary want even to the rich themselves; and the demand for them is limited to the very small number of persons that can indulge in them. When a casual calamity obliges individuals to reduce their expenditure, when their revenues are curtailed by the ravages of war, by taxation, or by natural scarcity, the first items of retrenchment are always the articles of least necessary con- sumption. And this may serve, perhaps, to explain, why the productive agency directed to the raising of superfluities, is generally worse paid than that otherwise employed. The articles of human food are unquestionably those of most indispensable use; the demand for them recurs daily; and no occupations are so regular as those which minister to human sustenance. Wherefore, it is they that yield the most certain profit, notwithstanding the effects of brisk competition. 36 The butchers, bakers, and porkmen, of Paris, are pretty sure to retire with a fortune sooner or later; indeed, I have it from pretty good authority in such matters, that half the houses and real property sold in Paris and the environs, is bought up by tradesmen in those lines.

It is on this account, that individuals and nations, who under- stand their true interest, unless they have very cogent reasons for acting otherwise, apply themselves in preference to the production of what tradesmen call current articles. Mr. Eden, who, in 1706, negotiated on the part of Great Britain the treaty of commerce concluded by M. de Vergennes, went upon this principle, in stipulating the free import of the common En- glish earthenware into France. “The few dozens of plates we may sell you,” said the English agent, “will be a poor set-off against the magnificent services of Sevres porcelain we shall take of you.” This appeal to the vanity of the French agent was decisive. But, as soon as the English earthenware was admitted, its lightness, cheapness, convenience and simplic- ity of form, recommended it to the most moderate establish- ments; its regular import, in a short time, amounted to many millions, and continued increasing every year until the war. The exportation of Sevres china, was a mere trifle in com- parison.

I say generally, for it is possible enough that, in a great me- tropolis, where the demand for luxuries is more urgent than elsewhere, and the dictates of fashion, however absurd, more implicitly obeyed than the eternal laws of nature; where a man will, perhaps, be content to lose his dinner, so he may appear in the evening circle in embroidered ruffles, it is pos- sible, that in such a place the price of the gewgaws may some- times very liberally reward the labour and capital devoted to their production. But, except in such particular cases, bal- ancing one year’s profits with another, and allowing for con- tingent losses, it has been ascertained, that the adventurers in the production of superfluities make the most scanty profits, and that their workmen are the worst paid. The manufactur- ers of the finest laces in Normandy and Flanders are a very indigent set of people; and at Lyons, the workers of gold- embroidery are absolutely clothed in rags. Not but that very considerable profits have occasionally been derived from such articles. A hat-maker has been known to make a fortune by a fancy hat; but, taking all the profits made on superfluities, and deducting the value of goods remaining unsold, or, though sold, never paid for, we shall find that this class of products affords, on the whole, the scantiest profit. The most fashion- able tradesmen are oftenest in the list of bankrupts. The scale for current articles, besides being more consider- able, is likewise more steady. A tradesman is never long in disposing of common linen shirting.

The examples I have selected from the class of manufacture might easily, be paralleled in the agricultural and commercial branches. A much larger value is consumed in lettuces then in pine-apples, throughout Europe at large; and the superb shawls of Cachemere are, in France, a very poor object in trade, in comparison with the plain cotton goods of Rouen. Wherefore, it is a bad speculation for a nation to aim at the export of objects of luxury, and the import of objects of gen- eral utility. France supplies Germany with fashions and fin- 173Jean-Baptise Say, A Treatise on Political Economy In countries thus circumstanced, the condition of man is gen- erally the most comfortable; because those, who live in idle- ness upon the profits of their capital and land, are better able to live on moderate profits, than those who live upon the profits of their own industry only; the former, besides the resource of living on their capital, can, when they please, add the prof- its of industry to their other revenue; but the mere mechanic or labourer can not add at pleasure to the profits of his indus- try those of capital and land, of which he possesses none. ery, which very few persons can make use of; and Germany makes the return in tapes and other merceries, in files, scythes, shovels, tongs, and other hardware of common use. But for the wines and oils of France, the annual product of a soil highly favoured by nature, together with a few products of superior execution, France would derive less advantage from Germany than Germany from France. The same may be said of the French trade with the north of Europe. 37 Proceeding next to compare the profits of different branches of industrious agency one with another, we shall find them greater or less in proportion, 1st, To the degree of danger, trouble, or fatigue, attending them, or to their being more or less agreeable; 2dly, To the regularity or irregularity of the occupation; 3dly, To the degree of skill or talent that may be requisite.

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