Elements of Political Economy
By James Mill
There are few things of which I have occasion to advertize the reader, before he enters upon the perusal of the following work.My object has been to compose a school-book of Political Economy, to detach the essential principles of the science from all extraneous topics, to state the propositions clearly and in their logical order, and to subjoin its demonstration to each. I am, myself, persuaded, that nothing more is necessary for understanding every part of the book, than to read it with attention; such attention as persons of either sex, of ordinary understanding, are capable of bestowing. [From the Preface]
First Pub. Date
London: Henry G. Bohn
The text of this edition is in the public domain.
The distinction, between what is done by labour, and what is done by nature, is not always observed.
Labour produces its effects only by conspiring with the laws of nature.
It is found that the agency of man can be traced to very simple elements. He does nothing but produce motion. He can move things towards one another, and he can separate them from one another. The properties of matter perform 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 perform such and such motions, such and such events are the consequence. 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; the properties of matter accomplish the rest. It would be absurd to ask, to which of any two effects the properties of matter contribute the most; seeing they contribute every thing, after certain portions of matter are placed in a certain position.
As our inquiry is confined to that species of production, of which human labour is the instrument; and as human labour produces its effects chiefly in two 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 maybe improved: 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 may be conceived to have originated.
When the savage climbs a tree, and gathers the fruit; when he ensnares a wild beast, or beats it down with a club, he may be considered as operating with his naked powers, and without the aid of any thing, to which the name of Capital can properly be annexed.
The principal thing, which, with a view to the conclusions of Political Economy, it is necessary to remark, in regard to Labour, considered as a distinct portion of a composite 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, 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, that subsistence for a whole year must be laid up in advance.
The previous provision of the labourer may be greater or smaller, in different cases, in proportion to the greater or less time which it may require, to realize 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 or the subsistence is included in it.
This is the more necessary to be remembered, that the terms, Labour, and Wages, are, sometimes, incautiously used; and confusion of ideas, and some fundamental errors, are the consequence. It is clear, 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; to the purpose in hand, they are one and the same thing. If wages be taken as synonymous with the consumption of the labourer, the labour cannot be taken, as one item of an aggregate, and its wages 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 also arise, from the division, including the distribution, of labour.
The foundation of this latter class of improvements is laid, in the fact, that an operation, which we perform slowly at first, is performed with greater and greater 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 a drum, is a proper example. A man who has not practised this operation, is often surprised, upon trial, at the slowness with which he performs it, while the rapidity of a practised 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 one, or a few, operations, with the greatest possible rapidity, must confine himself to one or a few. Of the operations, therefore, conducive to the production of the commodities desired by man, if any one confines himself to a small number, he will perform them with much more rapidity, than if he employed himself in a greater; and not only with more rapidity, but, what is often of the highest consequence, with greater correctness and precision.
A certain immense aggregate of operations, is subservient to the production of the commodities useful and agreeable to man. It is of the highest importance that this 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. If 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. Not only would they be doubled in quantity, but a great advantage would be gained in point of quality.
This subject has been fully illustrated by Dr. 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 states that a boy, who has been accustomed to make nothing but nails, can make upwards of two thousand three hundred 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.
Even 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 tans 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 had 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 to be divided, under circumstances the best calculated for breaking it down into those small groupes 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 to the ends which are to be obtained, it is necessary to contemplate the aggregate in its elements; to resolve it into those 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 synthetical 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; an 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, 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 the things which it excludes.
Section II. 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, contrived for this purpose, we may mention the bow and arrow, and the sling, of the huntsman. The spade is an instrument easily invented for turning the soil; and a certain rude machine, to which the force of cattle may be applied, and which is the first form of a plough, suggests itself at an early stage of improvement.
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 which is 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 presents, 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 things. The materials, upon which labour is to be employed, when they have thus been the result of previous labour, are also denominated capital.
When we speak of labour, as one of the instruments of production, and of capital, as the other, these two constituents, namely, the instruments which aid labour, and the materials on 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 under that term. But, in that sense, 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.
Having thus endeavoured 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 further necessary, to advert to the origin of capital, 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. 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 the result of pure labour, without the co-operation of capital.
Speedily, however, after the first instrument, which increased the productive powers of labour, had been made, another instrument would be made to assist in the formation of it, as a knife, to aid in the formation of the bow; and then capital, for the first time, becomes 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, of which capital is composed, from the simplest, to the most complicated, cases. It will be hereafter 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.
Without saving there could be no capital. If all labour were employed upon objects of immediate consumption, 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.
Of the consequences of this fact, all, 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 every where 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, is owner both of the capital and of the labour. The man, who cultivates with none but hired servants, is 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 modification that meaning is to be taken.
In this sense of the term “owners of labour,” the parties, concerned about production, are divided into two classes, that of 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 means of 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 the owner of the slave is of that 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 this distinction as some consequences of importance are attached, it is necessary that a correct idea should be attained of it.
Of the articles, whereof 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 manufactures. Such are the buildings subservient to the various kinds of production; and such are all the other accommodations, not necessary to be enumerated, which do not perish in the using. That portion of capital, which comes under this 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 coals, oil, the dye stuffs of the dyer, the seed of the farmer, and so on. Of this nature, also, are the raw materials worked up in the finished manufacture. The wool of the clothier 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 expence 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 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 it declines. If the instruments of labour, the materials to work upon, and the pay of workmen, are all increased, the quantity of work will be increased, provided more workmen can be obtained. If more workmen cannot be obtained, two things will happen: First, wages will be raised; which, giving an impulse to population, will increase the number of labourers: Secondly, the scarcity of hands will whet the ingenuity of capitalists to supply the deficiency, by new inventions in machinery, and by distributing and dividing labour to greater advantage.