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and cannot therefore be positively disproved, although the supposition be in the highest degree improbable; but to maintain that they must have been the same is a mere gratuitous and wholly unproved assumption, proceeding upon the false and absurd opinion already, I trust, sufficiently refuted in this work, that every thing is produced by labour alone, nothing by capital. Now, it is peremptorily denied that the materials of either of the articles above-mentioned, -cotton or gold,—or indeed any materials or capitals that ever existed, amounting in value to a hundred pounds (weight) of gold, were produced by labour alone,-much capital, not to mention the land (or rent in this place as forming any part of price or value) being always employed in the production both of the material of cotton-yarn and of gold-ingots; and to propose to go back and inquire into the production of the capitals successively employed until we arrive at that produced at first by simple labour, would in reality be to go back to the beginning of time, or, at the least, to that period when the labourer and capitalist began to be distinct

This notion, so very generally entertained, that every thing is wholly produced by labour, has arisen no doubt from the circumstance which we have endeavoured to establish in the first chapter of the first book of this Inquiry; namely, that some portion of labour is always required or employed in the production of every thing, i. e. of every article that can be called wealth. But because this is the case, because labour does a part, it by no means follows that it does the whole. Yet this notion runs through the far greater part of all the writings of political economists, and is strangely jumbled up with their notions of the productiveness of capital. Mr Ricardo's first chapter in his Principles of Political Economy, consisting of five sections, if it has any definite object, seems wholly taken up with an attempt to prove that labour produces all, and is the only ingredient in the value or price of all articles; and in his pamphlet " On Protection to Agriculture," (the last of his writings, I believe, published during his lifetime,) he says, "the labour of the country constitutes its only real source of wealth."-Page 7, fourth edition.

persons; for I have already proved,* that capital is a distinct means or instrument of production as well as labour; and that after the first acquisition or employment of the smallest atom of wealth as capital, this new instrument cooperates thenceforward in causing its own increase; that is, it co-operates in the production and increase of every sort of wealth, and indeed becomes ultimately the most powerful and efficient instrument of all "the grand source of exuberant production."

But although it be undoubtedly certain that it is the capital expended in production which, in the advanced stages of society, regulates the price of commodities, this does not hinder but that that price should be made up of the three distinct parts,-rent, wages, and profit or interest; because all these are included under the expenditure of capital; and it still continues to be as necessary as ever to trace the causes that regulate the amount or rates of these three distinct charges of production, as being the three grand sources of all permanent revenue, and as involving the consideration of the distinct rights and interests of the three great classes of which the community (i. e. every community) is constituted.

In that early and rude period of society which precedes both the accumulation of capital and the appropriation of land, the price of every commodity which then existed would consist or be made up wholly of but one part-wages; because, antecedent to that period, every article possessing the character of wealth was produced by labour alone. But subsequently to that period, that is, as soon as any considerable quantity of wealth was saved and applied to assist

• Book i. chap. 6.

+ The amount of which expenditure, as of all other value, is still of course measured by labour, as explained in chapter 3d of this book.

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in the work of production, and, after such increase in the numbers of people had taken place as required all the land in a particular neighbourhood or country to be cultivated and made private property, both rent and profit, or interest, would thenceforward form distinct constituent parts in the price of the great mass of commodities; although it would be altogether impossible, by any analysis, or any practicable means, to determine exactly in what proportions they were combined in any.

Wages, however, it is to be observed, where they do not constitute the whole price, must always make a part of it in every commodity, because some portion of labour must always have been employed in every process of production; whereas rent, and profit, or interest, may or may not make a part of the price of any commodity, and will be found to do so or not just as rent has been paid or not on the production of the raw material, and as capital has been employed or not either in the production or procuration of such material, or in working it up into a higher value.

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It has been thought by some, that because rent is the consequence, not the cause, of high price of raw produce, that it ought not to be considered as forming a component part of that price. But this does not appear to be a good objection; for as rent must necessarily be paid, and actually is paid, on raw produce, after the land is appropriated and population has but moderately increased in any particular place or neighbourhood, before the whole quantity in demand can be produced and brought to market, or before the whole extent of ground can be cultivated which is required to produce that whole quantity, it still forms a neces

If rent is paid on any part of any particular species of raw material required in production, it must be covered by the price of the article produced, and consequently form a part of that price.

sary part of the price of that whole, and must consequently be regarded as forming a proportional part of the price of any given quantity. For if this is not allowed, of what, I ask, is the whole price of the whole produce made up? Wages and profit do not constitute the whole, and a third portion, therefore, will still be required to balance the ac

count.

To this portion the rent, it will not be denied, is precisely equivalent; and, in point of fact, therefore, this portion really does consist of rent; and rent, therefore, actually does form a constituent part of the price of commodities, whether we choose to acknowledge it or not.

CHAPTER V.

THE DISTINCT NATURE OF THE THREE DIFFERENT DENOMINATIONS OF INCOME OR REVENUE, NAMELY, RENT, WAGES, AND PROFIT OR INTEREST, EXPLAINED AND DISCRIMINATED.

THE three original sources of wealth,-land, labour, and capital,-naturally give rise to three correspondent denominations of income or revenue; namely, rent, wages, and profit or interest; the distinct nature of which it is of the last importance to define and discriminate accurately, since it necessarily happens that the confounding of these different denominations or descriptions of revenue with one another confounds and perplexes all our reasonings concerning them, and especially our reasonings concerning taxation, as it affects those different descriptions of revenue, and consequently as it affects the rights and interests of the

three great classes of persons whereof every civilized society is necessarily constituted.

It has unfortunately happened, that even Dr Smith, who has been the most correct delineator of rent, wages, and profit, and the whole of whose doctrines and ideas concerning these different revenues seem in general so just, has, nevertheless, not always perfectly discriminated between them. In particular, he has not upon all occasions perfectly discriminated wages from profit of stock (of which oversight in some parts of his work he was himself perfectly aware, as will be shown presently ;) and, although this does not appear to have led him into any ulterior error, or to have in any degree vitiated his reasonings in regard to the true ultimate incidence and effect of taxes, it has proved an almost universal stumbling-block to subsequent writers, and particularly to the Ricardo School of Political Economists, almost the whole of whose obscure and paradoxical doctrines are distinctly to be traced to this source of error.

It seems to be sufficiently obvious, that nothing can be justly accounted profit of stock but what can be got for the use of it without the labour of personally applying it, or superintending its application in business or production; because all that is got by means of that labour is wages, and is as properly entitled to this denomination as that which is got by any other species of labour whatever. But this clear line of distinction not being sufficiently attended to by Dr Smith, or at least not being expressly laid down by him, a wide door was thrown open for the admittance of error, and for the superinduction of all that obscurity, perplexity, and contradiction that distinguishes the writings of the school just mentioned; and it is owing to this particular error especially, namely, to the confounding of wages and profit of stock with one another, that the writers just alluded to have been led to promulgate the empty and unsound dog

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