Manual of political economy
From the introduction:
Since the publication of the last Edition, a marked fall in the price of silver has taken place, and so many important consequences have been thereby produced, that I have thought it desirable to insert a new chapter on The Depreciation of Silver. The circumstances which determine the value of gold and silver are so intimately connected with each other, that I have substituted a new chapter on The Recent Discoveries of Gold and Silver, in the place of the chapter in former editions, entitled The Recent Gold Discoveries.
The present edition has been carefully revised throughout, and new illustrations have been introduced, where it was thought desirable.
the general arrangement of this book remains unaltered, yet in preparing this Edition it has been found necessary to re-write considerable portions of many of the chapters. Some of the illustrations contained in the former editions are no longer apposite; others have been substituted in the place of these, for it is always desirable as far as possible to illustrate the principles of Political Economy by applying them to the discussion of passing events.
New chapters have been added on the Nationalization of the Land, and on Local Taxation. In the last chapter of the volume an attempt has been made to solve the somewhat complicated economic question of tracing the incidence of local taxation when rates are imposed upon different kinds of property, such as land, houses, shops, manufactories, railways, gas works, and waterworks. In the chapters <»n Socialism and the Nationalisation of the Land, reference is made to a new economic movement, which I have designated modern socialism. Between modern socialism and the socialism of earlier days, there is this characteristic difference, that whereas the latter sought to effect its objects by voluntary associations,.the socialists of the present time make a direct appeal for State intervention.
The recent marked rise in the price of coals is referred to as affording an illustration of the laws which determine the price of mineral products; and in the chapter on Wages, I have directed attention to the very important fact that the unprecedented increase in wealth, which has taken place in England during the last quarter of a century, has not been accompanied by a corresponding improvement in the material condition of many classes of labourers.
Since the last edition was published, the cooperative movement has so rapidly developed that it has been necessary entirely to re-write the chapter on Cooperation. Great stress has been laid on the important economic advantage which would result if the entire people were brought under the influence of a comprehensive system of national education.
Among the many circumstances which tend to perpetuate poverty, particular allusion is made to the encouragement given to improvidence by our Poor Law system and by the facility with which out-door relief is granted. In preparing this edition I have derived the most valuable assistance from my wife, who is applying herself to the work has shown the greatest care and assiduity. I also have to thank her for having suggested many improvements, and she has also pointed out many defects which had previously escaped my notice.
Some contents:
BOOK I.
PRODUCTION OF WEALTH.
CHAPTER I. Introductory Remarks.
CHAPTER I. Introductory Remarks.
In an introductory chapter, it is better to give a general description of Political Economy, rather than to attempt an accurate definition of the science — Political Economy investigates the laws which regulate the production, the distribution, and the exchange of wealth — Popular prejudice considers that Political Economy is hardhearted and selfish — This fallacy explained and refuted — Any commodity which has an exchangeable value is wealth — The civilization of a country determines to what extent its natural resources can be classed as wealth — Fallacies now known as the Mercantile System explained 3 — 9
CHAPTER II. The Requisites of Production.
The production of wealth has three requisites: land, labour, and capital — Capital is defined to be wealth that is saved and applied to the future production of wealth
Chapter III. Labour as an Agent of Production.
The simplest commodity cannot be made available for consumption without the application of many different kinds of labour — All labour does not contribute to the production of wealth — Hence labour is classed as productive and unproductive — Labour is productive when it either directly or indirectly embodies utilities in material objects — The most useful labour maybe sometimes unproductive — As an example, a railway may be partly made and never opened — Labour which is unproductive may yet be very useful — Mr Mill's definition of productive labour would make the labour of the schoolmaster to be unproductive, and this may be obviated by a wider definition — Consumption also may be either productive or unproductive 12 — 16
CHAPTER IV. Of Capital
It is sometimes fallaciously supposed that capital consists of money, to the exclusion of any other kind of wealth — The entire capital of the country can never be simultaneously employed — A most useful com- modity, such as wheat, need not necessarily bs employed as capital — • An individual cannot increase the capital of the country by spending wealth upon his own enjoyments — A demand for commodities is not a demand for labour — hence, the man who saves, and not the spendthrift, is the labourer's best friend — The science of Political Economy often only affirms tendencies, and therefore the results deduced from its principles do not always come into immediate operation — It is fallacious to suppose that there can be a glut of capital, and that consequently, without the unproductive expenditure of the rich, the poor could not be adequately employed — Wealth can only perform the functions of capital by being wholly or partially consumed — Foregoing principles illustrated by examples — The rapidity with which a country recovers from a devastating war explained — The consequences of raising revenue by loans investigated — The effects of loans and taxation compared, with especial reference to England and India — The distinction between circulating and fixed capital — The former is consumed by a single use, the latter may continne to perform its functions for a long period; food which feeds labourers is circulating capital ; whereas fixed capital consists of machinery, buildings, railroads, &c. — The conversion of circulating into fixed capital may temporarily injure the labourers, and may iu certain cases permanently injure some classes of labourer?.
CHAPTER V. On the Productive Power of the Three Requisites of Production.
Political Economy would embrace a great number of sciences if it investigated all the causes upon which depend the productiveness of laud, labour, and capital. Hence a definition of Political Economy is required, so that some limit may be placed upon the scope of the science — The most fertile land may be unproductive of wealth — The chief causes which determine the productiveness of labour — The fallacy of estimating the productiveness of capital by the profits realised — All questions relating to profits concern the distribution and not the production of wealth— Division of labour makes labour far more productive — This proved by Adam Smith's illustration about pin-making — He thinks that division of labour increases its productiveness, for the three following reasons: ist. The dexterity of the workman is increased; 2nd. Time is saved if the workman does not pass from one employment to another; 3rd. When the industry is divided into special processes, suitable machinery is more likely to be invented and applied —
The first of these three causes produce the principal effect — Many writers think that Adam Smith attributes too much importance to the second cause — The application of machinery often enforces a certain division of labour — Mr Babbage has shown that Adam Smith has not pointed out that labour economises when divided since each workman can be solely employed upon the work for which he is best qualified
The demand for a commodity determines the extent to which division of labour can be carried — The combination or cooperation of labour is essential to its efficiency — Mr Wukeiield has classified the cooperation of labour as simple and complex— The first occurs when several workmen combine to do the same thing — The second when one industry is assisted by another — Mr Wakefield explained the mischief of permitting a young colony to be occupied by scattered settlements: the growth of the town population ought always to be encouraged — Mr Wakefield's theory of colonization corroborated by the effects of the gold discoveries in Australia There cannot be cooperation between different industries unless the means of communication are good — Division of labour is an instance of the complex cooperation of labour PAGES 46 — 64
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