ON POLITICAL ECONOMY. Definition of the Science-Its importance-Causes of its being neg- lected in Greece and Rome, and in the Middle Ages-Evidence on which its Conclusions are founded-Rise of the Science in Modern Europe-Mercantile System-System of M. Quesnay and the French Economists-Publication of the "Wealth of Nations" -Distinction between Politics and Statistics, and Political Economy 9--39 Means by which the Productive Powers of Labour are increased -I. Security of Property-2. Division of Employments among Individuals-3. Accumulation and Employment of Capital—4. Division of Employments among Different Countries, or Commerce Different Employments of Capital and Labour-Agriculture, Manu- factures, and Commerce, equally advantageous-The investment of Capital in different Businesses determined by the Rate of Profit Improvements in Machinery similar in their Effects to Improvements in the Skill and Dexterity of the Labourer-Do not occasion a Glut of Commodities-Sometimes force Workmen to change their Em- ployments, but have no tendency to lessen the effective demand for Labour-Case supposed by Mr. Ricardo, with respect to Machinery, possible, but exceedingly unlikely ever to occur-The True Cause Population always proportioned to the means of Subsistence-Ca- pacity of the Principle of Population to repair the ravages of Plagues Value of two sorts-1. Exchangeable Value-How it is determined -Conditions required to render a Commodity invariable in its Exchangeable Value-2. Real Value-How it is determined- Conditions required to render a Commodity invariable in its Real Value-Quantity of Labour required to produce a Commodity different from the quantity of Labour for which it will exchange Classes among which the Produce of Industry is divided-Equality of Wages in all the Different Departments of Industry-Equality Cost of Production the regulating principle of Price-Influence of Variations in the Demand for and Supply of Commodities on their Price-Influence of Monopolies-Average Price always coincident Commodities belong, in the earliest stage of Society, exclusively to the Labourers--Quantity of Labour required for their Production, the only principle which then determines their Exchangeable Value 1. Nature, Origin, and Progress of Corn or Produce Rents-Rent not a Cause but a Consequence of the High Value of Raw Produce -Does not enter into Price-Distinction between Agriculture and Manufactures. 2. Money Rents depend partly on the Extent to which Tillage has been carried, and partly on Situation-The Principle that the Real Value of Commodities is regulated or de- termined by the Quantities of Labour required for their Production, Effect of the employment of Capital in Production on the Exchange- able Value of Commodities-Effect of Variations in the Rate of Wages on Exchangeable Value—1. When the Capitals employed in Production are of the same degree of Durability; and 2, When they are of Different degrees of Durability-Time not to be taken Circumstances which determine the Rate of Wages-1. Market or real Wages depend on the proportion between Capital and Popu- lation-2. Natural or Necessary Wages depend on the Species and Quantity of Food and other articles required for the consump- tion of the Labourer; different in different Countries and Periods -Effect of Fluctuations in the Rate of Wages on the Condition of the Labouring Classes—Advantage of a high rate of Wages-Ad- vantage of having the Labourers dependent for Support on the cheapest species of Food-High Wages not a cause of Idleness-- Effect of the Poor Laws and of Education, on the condition of the Labourers-3. Proportional Wages; depend partly on the amount and species of the articles consumed by the Labourers, and partly on the productiveness of Industry . Division of the Produce of Industry, under deduction of Rent, between Capitalists and Labourers-Definition of Profits-Mr. Ricardo's Theory of Profits; sense in which it is true-Causes which occasion a Rise or Fall of Profits-Accumulation of Capital, not a Cause of a Fall of Profits-Influence of the decreasing Fertility of the Soil, 172-191 191-204 Definition of Consumption-Consumption the end of Production- Test of Advantageous and Disadvantageous Consumption-Inju- rious operation of Sumptuary Laws-Advantage of a Taste for Luxuries-Error of Dr. Smith's Opinion with respect to unproduc- tive Consumption-Error of those who contend, that to facilitate Production, it is necessary to encourage Consumption-Consump- ESSAY BY JOHN LOCKE. On the Lowering of Interest and Raising the Value of Money: Of Raising the Value of our Coin 310-360 PRINCIPLES OF POLITICAL ECONOMY. PART I.-RISE AND PROGRESS OF THE SCIENCE. Definition of the Science-Its Importance-Causes of its being neg lected in Greece and Rome, and in the Middle Ages-Evidence on which its Conclusions are founded-Rise of the Science in Modern Europe-Mercantile System-System of M. Quesnay and the French Economists-Publication of the Wealth of Nations'-Distinction between Politics and Statistics and Political Economy. POLITICAL Economy* is the science of the laws which regulate the production, distribution, and consumption of those articles or products which have exchangeable value, and are either necessary, useful, or agreeable to man. When it is said that an article or product is possessed of exchangeable value, it is meant that one or more individuals are disposed to give a certain quantity of labour, or a certain quantity of some other article or product, obtainable only by means of labour, in exchange for it. The power or capacity which particular articles or products have of satisfying the various wants and desires of which man is susceptible, constitutes their utility, and renders them objects of demand. An article may be possessed of the highest degree of utility, or of power to minister to our wants and enjoyments, and may be universally made use of, without possessing exchangeable value. This is an attribute or quality of those articles only which it requires some portion of voluntary human labour to produce, procure, or preserve. Without possessing utility of some species or other, no article can ever become an object of demand; but how necessary soever any particular article may be to our comfort, or even existence, still, if it be a spontaneous production of nature—if it exists independently of human agency-and if every individual can command indefinite quantities of it without any Economy, from oikos, a house, or family, and vouòs, a law-the government of a family. Hence Political Economy may be said to be to the State what domestic economy is to a single family. voluntary exertion or labour of any sort, it is destitute of value, and can afford no basis for the reasonings of the economist. A commodity or a product is not valuable because it is useful; but it is valuable because it can only be procured by the intervention of labour. It cannot justly be said, that the food with which we appease the cravings of hunger, or the clothes by which we defend ourselves from the inclemency of the weather, are more useful than atmospheric air; and yet they are possessed of that exchangeable value of which it is totally destitute. The reason is, that food and clothes are not, like air, gratuitous products they cannot be had at all times, and in any quantity, without exertion; on the contrary, labour is always required for their production, or appropriation, or both; and as no one will voluntarily sacrifice the fruits of his industry, without receiving an equivalent in return, they are truly said to possess exchangeable value. The economist does not investigate the laws which determine the production and distribution of such articles as exist, and may be obtained in unlimited quantities, independently of all voluntary human agency. The results of the industry of man form the only objects with which he is conversant. Political Economy might, indeed, be defined to be the science of values; for, nothing which is not possessed of exchangeable value, or which will not be received as an equivalent for something else which it has taken some labour to produce or obtain, can ever properly be brought within the scope of its inquiries. The word value has been very frequently employed to express, not only the exchangeable worth of a commodity, or its capacity of exchanging for other commodities, but also its utility, or capacity of satisfying our wants, and of contributing to our comforts and enjoyments. But it is obvious, that the utility of commodities-that the capacity of bread, for example, to appease hunger, or of water to quench thirst-is a totally different and distinct quality from their capacity of exchanging for other commodities. Dr. Smith perceived this difference, and showed the importance of carefully distinguishing between the utility, or, as he expressed it, the ‘value in use,' of commodities, and their value in exchange. But he did not always keep this distinction in view, and it has been very often lost sight of by subsequent writers. There can be no doubt, indeed, that the confounding together of these opposite qualities has been one of the principal causes of the confusion and obscurity in which many branches of the science, not in themselves difficult, are still involved. When, for instance, we say that water is highly valuable, we unquestionably attach a very different meaning to the phrase from what we attach to it when we say that gold is valuable. Water is indispensable to existence, and has, therefore, a high degree of utility, or of ' value in use ;' but as it can generally be obtained in large quantities, without much labour or exertion, it has, in most places, but a very low value in exchange. Gold, |