in his remark that the noblest and most useful' unproductive labour 'produces nothing which could afterwards purchase or procure an equal quantity of labour,' and also in his observation that 'the work of all' unproductive labourers 'perishes in the very instant of its production.' When he could say, 'Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production,' it is clear that he did not mean to deny that the actor, the orator, and the musician produce1 declamations, harangues, and tunes. He even admits that the labour of producing declamations, harangues, or tunes 'has a certain value regulated by the very same principles which regulate that of every other sort of labour,' and as he could scarcely have maintained that any sort of labour has a value except for what it produces, he would probably, if pressed, have admitted that the declamations, harangues, and tunes, have a value. Evidently what really impressed him was not the valuelessness of the produce of 'unproductive labour,' but its want of duration. Unproductive labour' does not fix and realise itself in any permanent subject or vendible commodity which endures after the 'labour is past, and for which an equal quantity of labour could afterwards be procured.' Now as regards the capital wealth of a community, this distinction between labour which produces permanent subjects or vendible commodities, and labour which produces things which perish in the very instant of their production, is by no means absurd. The things which perish in the very instant of their production can never form a part of the capital wealth of a country. The declamation of the actor, the harangue of the orator, and the tune of the musician find no place in Sir R. Giffen's Growth

1 Quesnay sometimes speaks of 'sterile' classes 'producing,' e.g.: 'Par exemple, deux millions d'hommes peuvent faire naître par la culture des terres la valeur d'un milliard en productions: au lieu que trois millions d'hommes ne produiront que la valeur de 700 millions en marchandises de main d'œuvre.'-Œuvres, ed. Oncken, p. 289 note. In one of his dialogues he says: 'On n'a point entrepris de faire disparaître la production des ouvrages formés par le travail des artisans.' The only 'production' which he has endeavoured to disprove is, 'une production réelle de richesses; je dis réelle, car je ne veux pas nier qu'il n'y ait addition de richesses à la matière première des ouvrages formés par les artisans.'—Ibid. p. 529.

of Capital. So the 'unproductive' labour, though it may often assist men to produce things which will, while they last, form a part of the capital of the country, does not directly and immediately produce such things. And it must be remembered that it is in the Second Book, 'Of the Nature, Accumulation, and Employment of Stock,' that the distinction between productive and unproductive labour occurs.

But, unfortunately, being far from clear as to the difference between capital-wealth and income-wealth, Adam Smith allowed the fact that some labour is unproductive of 'stock' to affect his conception of the annual produce, the 'real wealth' of the nation, with regard to which the durability of the things produced by labour is in reality of no significance. The declamations, harangues, and tunes are just as much a part of the annual produce as champagne or boots; but Adam Smith, in his Second Book, excludes them all from the annual produce, which is, he declares, produced entirely by the 'productive labourers,'1 who thus 'maintain' not only themselves but all other classes, including the unproductive labourers. 2

People have always been rather apt to imagine that the class which they happen to think the most important ‘maintains all the other classes with which it exchanges commodities. The landowner, for instance, considers, or used to consider, his tenants as his 'dependants.' All consumers easily fall into the idea that they are doing a charitable act in maintaining a multitude of shopkeepers. Employers of all kinds everywhere believe that the employed ought to be grateful for their wages, while the employed firmly hold that the employer is maintained entirely at their expense. So the physiocrats alleged that the husbandman maintained himself and all other classes; and Adam Smith alleged that

1 'The whole annual produce, if we except the spontaneous productions of the earth, being the effect of productive labour.'-Bk. 11. ch. iii. p. 147 a. 2 Both productive and unproductive labourers and those who do not labour at all are all equally maintained by the annual produce of the land and labour of the country.'-Bk. 11. ch. iii. p. 146 b. Hume apparently shared these opinions:- Lawyers and physicians beget no industry; and it is even at the expense of others they acquire their riches; so that they are sure to diminish the possessions of some of their fellow-citizens as fast as they increase their own. Merchants, on the contrary, beget industry by serving as canals to convey it through every corner of the State.'-Essay of Interest, vol. ii. p. 71 in 1770 ed. of Essays.

the husbandman, the manufacturer, and the merchant maintained themselves and all other classes. The physiocrats did not see that the husbandman was maintained by the manufacturing industries of threshing, milling, and baking, just as much as the millers or the tailors are maintained by the agricultural industries of ploughing and reaping. Adam Smith did not see that the manufacturer and merchant are maintained by the menial services of cooking and washing just as much as the cooks and laundresses are maintained by the manufacture of bonnets and the import of tea.

The annual produce or 'real wealth' of a nation, in the later part of Adam Smith's work, thus comes to consist exclusively of material objects. The total annual produce ceases to be equal to the total annual income or revenue of the community; the annual revenue is divided into two parts— original revenue and derived revenue, and the total 'produce' is equal to the original revenue alone. The original revenue is equal to the wages of productive labour, the rent of land, and the profits of stock, and the derivative revenue is equal to the wages of unproductive labour and the rent of houses. A house is no doubt extremely useful' to its owner when he lives in it, but it 'contributes nothing to the revenue of its inhabitant.' If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue which he derives either from labour, or stock, or land.' It did not occur to Adam Smith to reflect that if a plough is let for rent, as the plough itself can produce nothing, the tenant must always pay the rent out of some other revenue. He concludes that the revenue of the whole body of the people can never be in the smallest degree increased' by the existence of houses, so that a people living in palaces have no more original revenue, produce, or 'real wealth' than if they were housed in mud hovels.2 1 Bk. II. ch. i. p. 121 a.

...

2 The unproductiveness of houses was a physiocratic tenet. Cp. Mercier de la Rivière, L'Ordre Naturel et Essentiel, 12mo ed., 1767, vol. ii. p. 123, in Daire's Physiocrates, p. 487. 'Ce n'est pas cette maison qui produit elle même ces mille francs. Le loyer d'une maison n'est point pour la société une augmentation de revenu, une création de richesses nouvelles, il n'est au contraire qu'un changement de main.' The canonist Pontas, on the other hand, writing a little before the physiocratic period, says: 'La maison qu'Aristide a venduë est un fonds qui lui produiroit un revenu dont il se prive par la vente.'-Dictionnaire, 1736, s. v. Interêt, vol. ii. p. 786.

This very narrow conception of the annual produce or wealth of a nation, though perhaps it is generally considered the 'orthodox' conception, was by no means readily accepted by Adam Smith's followers. In France, where familiarity with the physiocratic system had bred contempt, it never obtained any hold. Sismondi accepted it,1 but Garnier and J.-B. Say set the example, which has been followed by t subsequent French writers, of rejecting it. Garnier acutely points out that Adam Smith's assertion in the Second Book that a large proportion of wage-paid labour does not 'produce' is in contradiction with the doctrine of the First Book that the produce of labour constitutes the natural recompense or wages of labour.' J.-B. Say has a chapter,3 'Des produits immatériels, ou des valeurs qui sont consommées au moment de leur production, in which he entirely declines to accept Adam Smith's restriction of wealth to durable objects. In England Lauderdale exposed Adam Smith's inconsistency as follows:

'There is no one who has criticised the distinction which rests the value of commodities on their durability with greater acrimony than the person who wishes to make the distinction betwixt productive and unproductive labour depend merely upon the duration of its produce. "We do not," says he, "reckon that trade disadvantageous which consists in the exchange of the hardware of England for the wines of France, and yet hardware is a very durable commodity, and were it not for this continual exportation, might, too, be accumulated for ages together, to the incredible augmentation of the pots and pans of the country."'4

Wealth 'regarded in its true light' is, according to Lauderdale, 'the abundance of the objects of man's desire,' whether durable or perishable. The able criticism of Lauderdale's book in the Edinburgh Review for July 1804, though it found many faults with Lauderdale's theories, followed him on this question. When Adam Smith spoke of unproductive labourers he did not mean, says the reviewer, to undervalue

1 De la Richesse Commerciale, 1803, vol. i. pp. xxxiii, 29, 84.

2 Recherches sur la nature et les causes de la richesse des nations par Adam Smith, vol. v. p. 171.

3 Traité, Livre I. ch. xiii.

• Public Wealth, 1804, pp. 152, 153; Wealth of Nations, p. 192 a.

their work,1 but merely to assert that they do not augment the wealth of the community':

'But it may be observed in general that there is no solid distinction between the effective powers of the two classes whom Dr. Smith denominates productive and unproductive labourers. The end of all labour is to augment the wealth of the community; that is to say, the fund from which the members of that community derive their subsistence, their comforts, and enjoyments. To confine the definition of wealth to mere subsistence is absurd. Those who argue thus admit butcher's meat and manufactured liquors to be subsistence; yet neither of them are necessary; for if all comfort and enjoyment be kept out of view, vegetables and water would suffice for the support of life; and by this mode of reasoning the epithet of productive would be limited to the sort of employment that raises the species of food which each climate and soil is fitted to yield in greatest abundance with the least labour; . . . and in no country would any variation of employment whatever be consistent with the definition. According to this view of the question, therefore, the menial servant, the judge, the soldier, and the buffoon are to be ranked in the same class with the husbandmen and manufacturers of every civilised community. The produce of the labour is, in all these cases, calculated to supply either the necessities, the comforts, or the luxuries of society; and that nation has more real wealth than another which possesses more of all those commodities.' 2

The writer of the article 'Political Economy' in the fourth edition of the Encyclopædia Britannica (1810), though himself rather disposed to adhere to the doctrine of Smith,' says of the distinction between productive and unproductive labour :

'The most eminent writers on this subject in the present age seem disposed to treat this distinction as nugatory. They urge that wealth consists merely in the abundance of conveniences and pleasures of life, and that whoever contributes to augment these is a productive labourer, though he may not present us with any tangible commodity.'s

1 If Adam Smith did not undervalue their work, why did he say of the physiocrats that they honour' farmers and labourers with the peculiar appellation of the productive class,' and 'endeavour to degrade' artificers, manufacturers, and merchants 'by the humiliating appellation of the barren or unproductive class'? (Bk. IV. ch. ix. p. 300 a).