GENERAL REVIEW: POLITICS AND ECONOMICS. & 1. Unsatisfactory Character of the Theories of Production and Dis- tribution regarded from a purely Scientific Point of View, 2. Practical Character of the Theories of Production and Distribution, 3. Uselessness of the Theories of Production and Distribution in regard to Combination and Socialism, . 392 395 401 409 CHAPTER I THE WEALTH OF A NATION § 1. Originally a state or condition. 'PRODUCTION' and 'distribution' in political economy have always meant the production and distribution of wealth. The first problem that confronts us is therefore the question of the nature of this wealth' which is the subject of production and distribution. Etymologically nothing but a longer form of the word 'weal,' 'wealth' originally meant a particular state of body and mind. In the Litany it is opposed to 'tribulation,' and in the prayer for the Queen's Majesty it is obviously intended to cover as much of welfare in general as is not already included in 'health.' In the words of the Authorised Version of the Bible, Mordecai seeks 'the wealth of his people'; 2 the wicked, according to Job's complaint, 'spend their days in wealth'; and St. Paul exhorts the Corinthians to 'let no man seek his own, but every man another's wealth.'4 The kind of welfare denoted by 'wealth' in this older sense is so dependent on the possession or periodical receipt of certain external objects, such as bread, meat, clothes, or money, that the word came to be applied to those objects. themselves as well as to the state of body and mind produced by access to them. Before Adam Smith adopted the phrase, An Inquiry into the Nature and Causes of the Wealth of Nations, as the title of his work, the use of the word to indicate the objects which were supposed to make a man 1 Skeat, Etymological Dictionary, s. v. Wealth: An extended form of weal (ME wele), by help of the suffix -th, denoting condition or state; cf. heal-th from heal, dear-th from dear,' etc. 2 Esther x. 3. 8 Job xxi. 13. A 4 1 Cor. x. 24. wealthy had become so common that lexicographers forgot to mention the older sense. In the dictionary compiled by Dyche and Pardon (1735) wealth' is made to signify only 'all sorts of riches, whether money, sheep, horses, merchandise, land, etc.' Johnson in 1755 explained it as 'riches, money or precious goods,' and gave examples of its use in this sense alone from Spenser, Shakespeare, Bishop Corbet, and Dryden. § 2. Supposed identification with gold and silver. Though Adam Smith says that it would be too ridiculous to go about seriously to prove that wealth does not consist in money or in gold and silver, but in what money purchases and is valuable only for purchasing,'1 he certainly seems to try to give his readers the impression that the groundless opinion that wealth consists exclusively in money was firmly held by the mercantilist writers of the seventeenth and eighteenth centuries. Now it is quite possible to quote from these writers passages in which bullion and wealth are identified, and the riches or poverty of a nation made to depend upon the quantity of bullion it possesses. But whether this 1 Bk. Iv. ch. i. M'Culloch's ed., p. 191 b. 2 E.g. 'The general measures of the trade of Europe at present are gold and silver, which, though they are sometimes commodities, yet are the ultimate objects of trade; and the more or less of those metals a nation retains it is denominated rich or poor.'-William Richardson, Essay on the Causes of the Decline of the Foreign Trade, 1744, in Overstone's Select Tracts on Commerce, p. 157. 'So mistaken are many people that they cannot see the difference between having a vast treasure of silver and gold in the kingdom, and the mint employed in coining money, the only true token of treasure and riches, and having it carried away; but they say money is a commodity, like other things, and think themselves never the poorer for what the nation daily exports.'-Joshua Gee, The Trade and Navigation of Great Britain considered, showing that the surest way for a nation to increase in riches is to prevent the importation of such foreign commodities as may be raised at home, etc., 1729, 6th ed. 1755, p. 8. 'That which is commonly meant by the balance of trade is the equal importing of foreign commodities with the exporting of the native. And it is reckoned that nation has the advantage in the balance of trade that exports more of the native commodities and imports less of the foreign. The reason of this is, that if the native commodities be of a greater value that are exported, the balance of that account must be made up in bullion or money; and the nation grows so much richer as the balance of that account amounts to.'-Postlethwayt, Universal Dictionary of Trade and Commerce, 2d ed., 1757, vol. i. p. 184 a, s.v. Balance of Trade. Cf. vol. ii. p. 283 top. is absurd or not entirely depends on the meaning given to the words wealth, riches, and poverty. A writer may use a word in a sense which is not given to it in ordinary conversation without being ridiculous. It would be ridiculous, indeed, to contend that a nation could be well fed and comfortably clothed and housed by gold alone; but there is no reason to suppose that the wildest mercantilist ever suffered from this delusion. The mere existence of the fable of Midas was a sufficient safeguard. The mercantilists may be justly accused of exaggerating the importance of having a hoard of bullion and of recommending a number of useless regulations for the purpose of securing such a hoard, but none of them ever imagined gold and silver to be the only economic good. They were, indeed, rather inclined to represent the acquisition of gold and silver as the only economic good which could be obtained by one single department of industry, foreign trade;1 but in this they were not, considering the nature of European and especially English foreign trade at the time they wrote, so very ridiculously wrong. Exchange between nation and nation of the bulky articles which constitute the necessaries of life is a thing which has grown up with modern facilities of transport. In the seventeenth century the articles other than bullion. imported into England were mostly of a somewhat insignificant character. Most of them were superfluous, and many deleterious. Writers of that time may well be excused for having imagined that the chief use of foreign trade to England was to introduce gold and silver rather than nutmeg.2 1 'The balance of trade is commonly understood two ways:-(1) Generally, something whereby it may be known whether this kingdom gains or loses by foreign trade; (2) Particularly, something whereby we may know by what trades this kingdom gains, and by what trades it loses. For the first of these it is the most general received opinion, and that not ill-grounded, that this balance is to be taken by a strict scrutiny of what proportion the value of the commodities exported out of this kingdom bear to those imported; and if the exports exceed the imports, it is concluded the nation gets by the general course of its trade, it being supposed that the overplus is imported bullion, and so adds to the treasure of the kingdom, gold and silver being taken for the measure and standard of riches.'-Josiah Child, A New Discourse of Trade, 4th ed., p. 164. 2 Davenant urged that Europe sustained a loss by the trade with India on this ground: 'Europe draws from thence nothing of solid use; materials to supply luxury and only perishable commodities, and sends thither gold |