collective body cannot suffer temporarily by the introduction of machinery, or by the sinking of capital in permanent improvements, are, I conceive, necessarily fallacious. That they would suffer in the particular department of industry to which the change applies, is generally admitted, and obvious to common sense; but it is often said, that though employment is withdrawn from labour in one department, an exactly equivalent employment is opened for it in others, because what the consumers save in the increased cheapness of one particular article enables them to augment their consumption of others, thereby increasing the demand for other kinds of labour. This is plausible, but, as was shown in the last chapter, involves a fallacy; demand for commodities being a totally different thing from demand for labour. It is true, the consumers have now additional means of buying other things; but this will not create the other things, unless there is capital to produce them, and the improvement has not set at liberty any capital, if even it has not absorbed some from other employments. The supposed increase of production and of employment for labour in other departments therefore will not take place; and the increased demand for commodities by some consumers, will be balanced by a cessation of demand on the part of others, namely, the labourers who were superseded by the improvement, and who will now be maintained, if at all, by sharing, either in the way of competition or of charity, in what was previously consumed by other people.

3. Nevertheless, I do not believe that as things are actually transacted, improvements in production are often, if ever, injurious, even temporarily, to the labouring classes in the aggregate. They would be so if they took place suddenly to a great amount, because much of the capital sunk must necessarily in that case be provided from funds already employed as circulating capital. But improvements are always introduced very gradually, and are seldom or never made by withdrawing circulating capital from actual pro

duction, but are made by the employment of the annual increase. I doubt if there would be found a single example of a great increase of fixed capital, at a time and place where circulating capital was not rapidly increasing likewise. It is not in poor or backward countries that great and costly improvements in production are made. To sink capital in land for a permanent return-to introduce expensive machinery-are acts involving immediate sacrifice for distant objects; and indicate, in the first place, tolerably complete security of property; in the second, considerable activity of industrial enterprise; and in the third, a high standard of what has been called the "effective desire of accumulation:" which three things are the elements of a society rapidly progressive in its amount of capital. Although, therefore, the labouring classes must suffer, not only if the increase of fixed capital takes place at the expense of circulating, but even if it is so large and rapid as to retard that ordinary increase to which the growth of population has habitually adapted itself; yet, in point of fact, this is very unlikely to happen, since there is probably no country whose fixed capital increases in a ratio more than proportional to its circulating. If the whole of the railways which, during the speculative madness of 1845, obtained the sanction of Parliament, had been constructed in the times fixed for the completion of each, this improbable contingency would, most likely, have been realized; but this very case has afforded a striking example of the difficulties which oppose the diversion into new channels of any considerable portion of the capital that supplies the old: difficulties generally much more than sufficient to prevent enterprises that involve the sinking of capital, from extending themselves with such rapidity as to impair the sources of the existing employment for labour.

To these considerations must be added, that even if improvements did for a time decrease the aggregate produce and the circulating capital of the community, they would not the less tend in the long run to augment both. They

increase the return to capital; and of this increase the benefit must necessarily accrue either to the capitalist in greater profits, or to the customer in diminished prices; affording, in either case, an augmented fund from which accumulation may be made, while enlarged profits also hold out an increased inducement to accumulation. In the case we before selected, in which the immediate result of the improvement was to diminish the gross produce from two thousand four hundred quarters to one thousand five hundred, yet the profit of the capitalist being now five hundred quarters instead of four hundred, the extra one hundred ! quarters, if regularly saved, would in a few years replace the one thousand quarters subtracted from his circulating capital. Now the extension of business which almost certainly follows in any department in which an improvement has been made, affords a strong inducement to those engaged in it to add to their capital; and hence, at the slow pace at which improvements are usually introduced, a great part of the capital which the improvement ultimately absorbs, is drawn from the increased profits and increased savings which it has itself called forth.

This tendency of improvements in production to cause increased accumulation, and thereby ultimately to increase the gross produce, even if temporarily diminishing it, will assume a still more decided character if it should appear that there are assignable limits both to the accumulation of capital, and to the increase of production from the land, which limits once attained, all further increase of produce must stop; but that improvements in production, whatever may be their other effects, tend to throw one or both of these limits farther off. Now, these are truths which will appear in the clearest light in a subsequent stage of our investigation. It will be seen, that the quantity of capital which will, or even which can, be accumulated in any country, and the amount of gross produce which will, or even which can, be raised, bear a proportion to the state of the arts of production there existing; and that every im

provement, even if for the time it diminish the circulating capital and the gross produce, ultimately makes room for a larger amount of both, than could possibly have existed otherwise. It is this which is the conclusive answer to the objections against machinery; and the proof thence arising of the ultimate benefit to labourers of mechanical inventions even in the existing state of society, will hereafter be seen to be conclusive.* But this does not discharge governments from the obligation of alleviating, and if possible preventing, the evils of which this source of ultimate benefit is or may be productive to an existing generation. If the sinking or fixing of capital in machinery or useful works, were ever to proceed at such a pace as to impair materially the funds for the maintenance of labour, it would be incumbent on legislators to take measures for moderating its rapidity and since improvements which do not diminish employment on the whole, almost always throw some particular class of labourers out of it, there cannot be a more legitimate object of the legislator's care than the interests of those who are thus sacrificed to the gains of their fellowcitizens and of posterity.

To return to the theoretical distinction between fixed and circulating capital. Since all wealth which is destined to be employed for reproduction comes within the designation of capital, there are parts of capital which do not agree with the definition of either species of it; for instance, the stock of finished goods which a manufacturer or dealer at any time possesses unsold in his warehouses. But this, though capital as to its destination, is not yet capital in actual exercise: it is not engaged in production, but has first to be sold or exchanged, that is, converted into an equivalent value of some other commodities; and therefore is not yet either fixed or circulating capital; but will become either one or the other, or be eventually divided between them. With the proceeds of his finished goods, a manufacturer will partly pay his work-people, partly replenish his stock of

* Infra, book iv. chap. v.

the materials of his manufacture, and partly provide new buildings and machinery, or repair the old; but how much will be devoted to one purpose, and how much to another, depends on the nature of the manufacture, and the requirements of the particular moment.

It should be observed further, that the portion of capital consumed in the form of seed or material, though, unlike fixed capital, it requires to be at once replaced from the gross produce, stands yet in the same relation to the employment of labour, as fixed capital does. What is expended in materials is as much withdrawn from the maintenance and remuneration of labourers, as what is fixed in machinery; and if capital now expended in wages were diverted to the providing of materials, the effect on the labourers would be as prejudicial as if it were converted into fixed capital. This, however, is a kind of change which never takes place. The tendency of improvements in production is always to economize, never to increase, the expenditure of seed or material for a given produce; and the interests of the labourers has no detriment to apprehend from this

source.