Introductory Lectures on Political Economy

I need not cite more from a book probably so well known to most of you; and will therefore only observe, that the whole chapter
*22 is well worth a re-perusal, with a view to the point now before us.

When then this distribution of employments had been established, the benefits resulting from it would be so obvious, that it would tend towards a continual increase: the benefits, I mean, to each individual; who would discover, without any extraordinary sagacity, that he could much more amply supply his own wants, by directing his whole or his chief attention to one, or to a few, kinds of employment, and receiving from his neighbours in return the fruits of their industry, than by himself providing directly for all his own wants. As for the benefit to the
community thence resulting,
that, as I remarked in a former Lecture, is a provision of Divine Wisdom: it is not necessary, nor is it usually the case, that each who labours in his own department, should be stimulated to do so by public-spirit, or should even perceive and contemplate (as in the case of our supposed little party of travellers) the benefit he is conferring on the rest.

In proportion then as the division of labour was extended,
exchanges would become more and more frequent. For, diversity of production is evidently the foundation of exchange; since, as long as each individual provides for all his own wants, and only for them, he will have nothing to part with, and nothing to receive. Barter then having become a customary transaction, would naturally be superseded, in the progress of society, by the employment of some kind of Money.

I do not design to enter at present on the multifarious and important inquiries which pertain to the subject of Money. It will suffice for our present purpose to state, that by Money, I mean, any commodity in general request, which is received in exchange for other commodities, not for the purpose of being directly used by the party receiving it, (for
that is Barter,) but for the purpose of being again parted with in exchange for something else. It is not the very commodity which the party wants, or expects hereafter to want; but it is a security or pledge (
according to Aristotle) that he may obtain that commodity whenever he wants it, from those who have it to spare. The Herdsman who needed, or expected hereafter to need, a supply of corn, might, if he could not otherwise arrange an exchange, be willing to part with some of his cattle for cloth of which he had no need, in the expectation of being able to exchange that again for corn, with some one who either needed it, or would accept it in the same manner as he had done. The cloth would serve the purpose of money, till it should reach the hands of one who designed to keep it for his own use. And there are some parts of Africa it appears, where pieces of cloth of a certain definite size and quality constitute the current coin, if I may so speak, of the country. In other parts again of Africa, wedges of salt are said to be applied to the same purpose.

But the herdsman would probably prefer receiving in this manner, instead of any articles of food or clothing which he did not himself need, some
ornamental article in general request, such as a bracelet or necklace, of gold, silver, or valued shells or stones; not only as less bulky and less perishable, but because these could be
used by him in the only way they can be used, viz. for the purpose of display, till he should have occasion to part with them; and could then be parted with without any inconvenience. Accordingly the prevailing tendency has always been to adopt as a medium of exchange, in preference to all others, articles of an ornamental character, prized for their beauty and rarity; such as the silver and gold which have long been much the most extensively used for this purpose—the cowry-shells, admired for making necklaces, and very generally used as money throughout an extensive region in Africa—the porcellane shells employed in like manner in some parts of the East Indies, and the wampum of some of the native American Indians, which consists of a kind of bugles wrought out of shells, and used both as an ornament and as money.

Articles of this kind, as traffic increased, would come to be collected and stored up in much greater quantities than their original destination for purposes of ornament could have called for; but it is from
that, no doubt, that they must originally have been in demand; since it is inconceivable that all the members of any one community, much less, various nations, should in the first instance have made a formal agreement arbitrarily to attach a value to something which had not been before at all regarded by them. It is said, that at this day among some half-civilized nations, the women adorn themselves with strings of gold coins. But silver plate, and gold or gilt ornaments, are I believe in use, and that, to a very large amount, among all nations who employ those metals as money. Some years ago I remember hearing an estimate of the gold consumed in gilding alone, in the one town of Birmingham, as amounting to one thousand pounds weight, or about £50,000 worth.

When then property was secured, and when exchanges were facilitated by the intervention of money, the use of this medium would react on the division of labour, and extend it; because, then, any one who could produce any commodity in general request, would be sure of employing himself beneficially in producing it, even though the particular persons who wanted that commodity, could not supply him in return with the precise articles he had need of. They would now be able to purchase it of him for that in exchange for which he might procure from others what he wanted.

As wealth increased, the continued stimulus of emulation would make each man strive to surpass, or at least not fall below, his neighbours, in this. I say “the
continued stimulus of emulation,” because it is important to keep in mind, that the selfishness—the envy—the injustice and baseness of every kind, which we so often see called forth in the competitions of worldly-minded men, are not to be attributed to the increase of national wealth. Among poor and barbarous nations, (as I formerly remarked,) we may find as much avarice, fraud, vanity, and envy, called forth, in reference perhaps to a string of beads, a hatchet, or a musket, as are to be found in wealthier communities.

The desire of wealth (which has no name, except those denoting its vicious excess, Avarice or Covetousness,) and Emulation,—the desire of equalling or surpassing others, are, neither of them, in themselves, either virtuous or vicious. A desire of gain, which is either excessive, or has only selfish gratification in view, is base and odious: when the object is to keep one’s family from want and dependence, it is commendable; when wealth is sought as a means of doing extensive good, the pursuit is noble. Emulation, again, when it degenerates into Envy, is detestable;—when directed to trifling objects, contemptible;—when duly controlled, and directed to the best objects, though it does not of itself furnish the noblest and purest motive, it is a useful and honourable ally of virtue. And, in both cases, there are, between the highest and the basest motives, almost infinite gradations and intermixtures. But the point to which I wish to call your attention, as most pertinent to the present inquiry, is, that by the wise and benevolent arrangement of Providence, even those who are thinking only of their own credit and advantage, are, in the pursuit of these selfish objects, led, unconsciously, to benefit others. The public welfare is not left to depend merely on the operation of public-spirit. The husbandman and the weaver exert their utmost industry and ingenuity, to increase the produce of the earth and of the loom; each, that he may be enabled to command for himself a better share of other productions; but in so doing, they cause the community to be better fed, and better clothed. And the effort of each man, with a view to his own credit, to rise, or at least not to sink, in society, causes, when it
becomes general, the whole Society to rise in wealth.

And the progress thus occasioned by
emulation, is indefinite; because the object aimed at by each of a great number, viz.
superiority to the rest, can never be
attained by all of them. If men’s desires were limited to a supply of the necessaries and commonest comforts of life, their efforts to attain this would indeed bring the society up to a certain point, but would not necessarily tend to advance it any further; because it is conceivable that this object might be attained by
all; and if it were, the society might thenceforward continue stationary; but when a great proportion of its members are striving, each, to attain, not merely an absolute, but a comparative, degree of wealth, there must always be many, who, though they do advance, will yet remain in the same position relative to their neighbours, who are equally advancing; and thus the same stimulus will continue to operate from generation to generation. The race never comes to an end, while the competitors are striving, not to reach a certain fixed goal, but, each, either permanently to keep a-head of the rest, or at least, not to be among the hindmost.
*23

All this, it may be said, is but a melancholy though true description, of the mean and silly ambition of mankind.

It would be more suitable to an Ethical treatise, than to these Lectures, to discuss the question as to the degrees of attention to worldly objects which maybe allowable, or, more or less, foolish, or sinful. Nor is a decision of these questions at all necessary with a view to the particular point now more immediately before us. For that, it is sufficient if we keep in mind, what has been already observed, that a devotedness to temporal objects is no characteristic of a more wealthy and civilized, as distinguished from a more barbarous, state of society. Emulation, though directed to different objects, is found among savages, except when they are indulging in apathetic indolence or gross sensuality. But there is this important difference; that in civilized life it is frequently directed (however seldom in comparison of what it should be) to many nobler objects, of which the savage can not even form any conception; and again, that even when merely selfish, it tends (without design on the part of the individual) to produce many beneficial results to the Society, which it does not produce, or in a far less degree, among savages.

The same may be said of the desire of gain. The savage is commonly found to be covetous, frequently rapacious, when his present inclination impels him to seek any object which he needs, or which his fancy is set on. He is not indeed not so
steady or so
provident, in his pursuit of gain, as the civilized man; but this is from the general unsteadiness and improvidence of his character; not from his being engrossed by higher pursuits. What keeps him poor, in addition to want of skill and insecurity of property, is, not a philosophical contempt of riches, but a love of sluggish torpor and of present gratification. The same may be said of such persons as constitute the dregs of a civilized community; they are idle, thoughtless, improvident; but thievish. Melancholy as it is to see, as we may, for instance, in our own country, multitudes of Beings of such high qualifications and such high destination as Man, absorbed in the pursuit of merely external and merely temporal objects—occupied in schemes for attaining wealth and worldly aggrandizement, without any higher views in pursuing them, we must remember that the savage is not
above such a life, but
below it. It is not from preferring virtue to wealth—the goods of the mind to those of fortune—the next world to the present—that he takes so little thought for the morrow; but, from want of forethought and of habitual self-command. The civilized man, too often, directs these qualities to an unworthy object; the savage, universally, is deficient in the qualities themselves. The one is a stream flowing, too often, in a wrong channel, and which needs to have its course altered; the other is a stagnant pool.
*24

But I am so far from attributing to Man, as a merit, the benefits which, in an advanced stage of society, he confers on the community, that, on the contrary, the very point I am especially dwelling on is, the bountiful wisdom of Providence, in directing towards the public good the conduct of those, who, even when not basely selfish, are yet not impelled to the course they pursue by patriotic motives.

A man, for instance, who has accumulated wealth, as in the progress of Society naturally takes place, more and more, may be so selfishly disposed, that he would willingly consume his whole revenue himself, without a thought of benefiting others. But though there are various modes of expenditure, some more and some less beneficial to the public, in which he may employ it, it is hardly possible for him to keep it entirely to himself. Directly or indirectly he will always be feeding labourers with it. He may employ them in producing something which will add to the stock of national wealth; in which case he will be enriching the community; but if he employ them in making lace, or diving for pearls, to add to the splendour of his dress, or in pulling down his house; and rebuilding it after some fancy of his own, or in waiting at his table, still he maintains them. And though it is a mistake (a very common one, by the way, and which hereafter it will be necessary to treat of) to suppose, that, in all this, he is a benefactor to the community, by furnishing employment, still he is at least no more consuming his revenue himself, than if he had thought fit to give it away to the same number of persons;—to bestow on those, who are now employed in labouring for him, the bread they eat, leaving them to sit idle. The only difference is, that they are at work instead of doing nothing, and that they feel that they earn their own bread, instead of being fed by charity. It is only when a rich man lays down in forest, like William the Conqueror, a quantity of fertile land, or in some such way diminishes human subsistence, that his wealth is detrimental to the community.

And this is one of the points connected with our present subject, which is at once so simple, as to be easily explained to the labouring classes, and of high importance for them to understand. For at the first glance, they are apt to imagine, when they see a rich man whose income is a hundred times as much as suffices to maintain a poor man’s family, that if he were stripped of all, and his wealth divided, a hundred poor families additional might thus obtain subsistence; which, it is plain, would not be the case, even when the income was spent in such ostentatious and selfish vanity, as I have been alluding to.

But, in fact, a very large portion of the wealth that exists in a country, is employed in procuring a further increase of wealth; in other words, is employed as Capital.

It would be premature to enter at present on a discussion of the nature of Capital, and the various questions connected with it. But it is sufficiently evident for our present purpose, that wealth is employed, and is a most important agent, for the production of wealth: so important indeed, that the first beginnings of it must have been attained with extreme difficulty, since labour is comparatively inefficient without it. Corn is raised by labour; but corn is needed both to sow the land, and to support the labourer till the harvest is ripe: the tools with which he works are produced by other tools: the handle of the axe with which he fells the wood, came from the wood; and the iron of it was dug from the mine with iron implements. We hardly know how to estimate the impediments to the few first steps, when stakes and sharp stones were the tools, and the labourer’s subsistence consisted in the spontaneous products of the earth, and the flesh of wild animals. But it is plain, that each succeeding step must have been easier, and at the same time more effective; till at length the various contrivances for abridging labour, that is, rendering labour incomparably more productive, at length enabled a large portion of the community to live exempt from all share in the labour of producing the necessaries of life; while yet the whole population, though immensely increased in numbers, were better fed, clothed, and lodged, than any had been, in that earlier stage, when every one without exception was compelled to labour for his daily food.

And it is remarkable, that the tendency which the conduct of individuals in pursuing their own private ends, even when these ends are purely selfish, has, towards promoting the interest of the community, is more and more developed, as society advances. Take, for example, the case of a Miser; one whose selfishness takes the turn of a love of hoarding. Such a person, though his individual character is of course every where the same, is yet, in respect of the effects of his conduct on others, very different in different stages of society. You will perceive, on a little reflection, that in a community where commercial transactions are yet in a rude state, the conduct of a miser is detrimental to the public; while in one that is in a more advanced stage, he is rather benefiting others by the sacrifice of his own comforts.

In former times, the Miser
withdrew from use such articles as constituted the wealth of the community; such as corn, clothing, implements and furniture of various kinds, and above all, as the least perishable and least bulky, gold and silver and jewels. All these things, even if not kept till spoilt, or hidden so as to be permanently lost, were at least withdrawn during his life-time from the enjoyment of the community; which would supply the deficiency either directly by the labour of its own members, or by exchanging with other nations the produce of that labour.
*25

Some few instances occur, even in such a state of society as ours, of this kind of boarding; but they are very rare, and generally on a very small scale, being chiefly found among the lowest orders.

On the other hand, in countries as far advanced in commercial transactions as almost the whole of Europe is, it may be said that, with hardly any exceptions, hoarding withdraws nothing from the public use. If the miser is engaged in any kind of business; he lives himself indeed (as in the other case) on a miserable pittance; but his desire of gain naturally prompts him to add continually his profits to his capital; which is a part of the capital of the country, viz. of the stock that is employed profitably, in producing more commodities; which are used by others, though the owner will not indulge himself with them. If he is not himself engaged in business, it comes to the same thing; for in that case he
lends to others, for the sake of increasing his store; and continues to invest in like manner the interest they pay him. And it makes no difference whether he lends to individuals, or invests his money in government-securities; for since, in the latter case, the total amount of government-securities is not increased, (the national debt remaining the same,) every purchase he makes sets free an equal amount, which is sure to find its way into the hands of some private borrower; and, generally speaking, of one who will employ this borrowed capital
productively, in trade, agriculture, and manufactures. Whereas if he had lived in what is called a liberal style, most of what he has thus laid by would have been expended unproductively, in sumptuous dinners, the services of menials, race-horses, hounds, and the like; all of which would have left behind no increase of the capital of the country.

The individuals, however, who borrow the miser’s money, not only owe him no thanks, as he had not their benefit in view, but are in most instances unable even to refer that benefit to him. We can no more trace the actual progress of each sum that is thus thrown into the general capital of the country, than of the drops of water of each shower that falls into the ocean; though it is demonstrable that the whole mass of waters must be increased by just so much.

Some points connected with the subject I have now briefly touched on, may, perhaps, present difficulties to such as have not been in the habit of pursuing such inquiries. I shall take occasion to advert to these points hereafter in their proper place. But this slight notice of the subject was introduced here, merely as affording a striking instance of the manner in which, by the wise arrangements of Providence, not only self-interest, but in some instances even the most sordid selfishness, are made, in an advanced stage of society, to conduce to public prosperity.

I am indeed far enough from holding with Mandeville, that on the whole, private vices conduce to public prosperity. The Spend-thrift diminishes it; and even the Miser, though his evil disposition is generally turned by an over-ruling Providence to a good end, yet might lay out his money much
more beneficially still, if he were to receive the endowment of judicious public-spirit.

But the circumstance to which I wish to direct your attention, is, the general tendency—a tendency often interrupted and impeded indeed by human faults and follies—but not wholly or chiefly depending for its operation on human virtue and wisdom—towards the advancement of national wealth. The disturbing forces, as they may be called, of wars, and tumults, and misgovernment, I have not thought it necessary to dwell upon in the outset. The character and direction of the moving principle of a machine, should be first understood generally, before we attend to the impediments of friction and the resistance of the air. And that in spite of all impediments, the tendency I have been speaking of does exist, and produce immensely important results, every one must perceive, who contemplates, for instance, the present condition of this island, as compared with what it was when our Anglo-Saxon ancestors were first settled in it.

As to the connexion of what is usually called national
prosperity, with the advancement of
civilization, in the highest and most proper sense—and as to the question, how far Dr. Mandeville’s doctrine, or its opposite, is true, that Virtue is unfavourable to national Wealth, and national Wealth to Virtue— although I have slightly adverted to the subject already, and shall from time to time recur to it as occasion may require—this, is the subject which will occupy the next Lecture.