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PRINCIPLES

OF

POLITICAL ECONOMY.

INTRODUCTION.

RISE AND PROGRESS OF THE SCIENCE.

Definition of the Science—its Importance-Causes of its being neglected 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.

1

POLITICAL ECONOMY may be defined to be the science of the laws which regulate the production, accumulation, distribution, and consumption of those articles or products that are necessary, useful, or agreeable to man, and which at the same time possess exchangeable value.

1 Economy, from oizos, a house, or family, and vóuos, a law-the government of a family. Hence, Political Economy may be said to be to the State what domestic economy is to a family.

Б

When it is said that an article or product is possessed of exchangeable value, it is meant that there are individuals disposed to give some quantity of labour, or 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 one or more of 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 utility of some kind or other, no article can ever become an object of demand; but how necessary soever any article may be to our comfort, or even existence, still, if it be a spontaneous production of nature-if it exist independently of human agency-and if every individual may command it in indefinite quantities, without any voluntary exertion or labour, it is destitute of value, and can afford no basis for the reasonings of the economist. A commodity, or product, is not valuable, merely because it is useful or desirable; but it is valuable when, besides being possessed of these qualities, it can only be procured through 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 the latter 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, 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 are the only subjects which engage his attention. Political Economy might, indeed, be called the science of values; for, nothing destitute 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, no doubt, been 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, or 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, and of water to quench thirst is a totally different and distinct quality from their capacity of exchanging for other commodities. Smith perceived this difference, and showed the importance of carefully distinguishing between utility, or, as he expressed it, "value in use," and 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 of these opposite qualities has been a principal cause of the confusion and obscurity in which many branches of the science, not in themselves difficult, are still involved. When, for example, it is said that water is highly valuable, the phrase has a very different meaning from what is attached to it when it is said 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, a very low value in exchange. Gold, on the other hand, is of comparatively little utility; but as it exists only in limited. quantities, and requires a great deal of labour for its production, it has a comparatively high exchangeable value, and may be exchanged or bartered for a proportionally large quantity of most other commodities. Those who confound qualities so different can hardly fail to arrive at the most erroneous conclusions. And hence, to avoid all chance of error from mistaking the sense of so important a word as value, we shall

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