On the Principles of Political Economy, and Taxation quotes

the other, value in exchange. The things," he continues, "which have the greatest value in use, have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange, have little or no value in use."

Water and air are abundantly useful; they are indeed indispensable to existence, yet, under ordinary circumstances, nothing can be obtained in exchange for them.

Gold, on the contrary, though of little use compared with air or water, will exchange for a great quantity of other goods.

they are indeed indispensable to existence, yet, under ordinary circumstances, nothing can be obtained in exchange for them. Gold, on the contrary, though of little use compared with air or water, will exchange for a great quantity of other goods.

Utility then is not the measure of exchangeable value, although it is absolutely essential to it.

If a commodity were in no way useful,—in other words, if it could in no way contribute to our gratification,—it would be destitute of exchangeable value, however scarce it might be, or whatever quantity of labour might be necessary to procure it.

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Labour was the first price—the original purchase-money that was paid for all things.

" Again, "in that early and rude state of society, which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects, seems to be the only circumstance which can afford any rule …

The competition of trade would not long allow this; for as capital would flow to the most profitable employment, he would be obliged to lower the price of hats, till his profits had sunk to the general level.

Thus then is the public benefited by machinery: these mute agents are always the produce of much less labour than that which they displace, even when they are of the same money value.

Through their influence, an increase in the price of provisions which raises wages, will affect fewer persons: it will reach, as in the above instance, eighty-five men instead of a hundred;

The value of corn is regulated by the quantity of labour bestowed on its production on that quality of land, or with that portion of capital, which pays no rent.

Corn is not high because a rent is paid, but a rent is paid because corn is high; and it has been justly observed, that no reduction would take place in the price of corn, although landlords should forego the whole of their rent.

Such a measure would only enable some farmers to live like gentlemen, but would not diminish the quantity of labour necessary to raise raw produce on the least productive land in cultivation.

With every worse quality employed, the value of the commodities in the manufacture of which they were used would rise, because equal quantities of labour would be less productive.

Man would do more by the sweat of his brow, and nature perform less; and the land would be no longer pre-eminent for its limited powers.

If the surplus produce which land affords in the form of rent be an advantage, it is desirable that, every year, the machinery newly constructed should be less efficient than the old, as that would undoubtedly give a greater exchangeable value to the goods manufactured, …

The rise of rent is always the effect of the increasing wealth of the country, and of the difficulty of providing food for its augmented population.

It is a symptom, but it is never a cause of wealth; for wealth often increases most rapidly while rent is either stationary, or even falling.

Rent increases most rapidly, as the disposable land decreases in its productive powers.

… rise in the natural price of the raw material of which they are made, this is more than counterbalanced by the improvements in machinery, by the better division and distribution of labour, and by the increasing skill, both in science and art, of the producers.

The market price of labour is the price which is really paid for it, from the natural operation of the proportion of the supply to the demand; labour is dear when it is scarce, and cheap when it is plentiful.

However much the market price of labour may deviate from its natural price, it has, like commodities, a tendency to conform to it.

In those countries, where the labouring classes have the fewest wants, and are contented with the cheapest food, the people are exposed to the greatest vicissitudes and miseries.

They have no place of refuge from calamity; they cannot seek safety in a lower station; they are already so low, that they can fall no lower.

On any deficiency of the chief article of their subsistence, there are few substitutes of which they can avail themselves, and dearth to them is attended with almost all the evils of famine.

The operation of the system of poor laws has been directly contrary to this. They have rendered restraint superfluous, and have invited imprudence by offering it a portion of the wages of prudence and industry.

The nature of the evil points out the remedy.

By gradually contracting the sphere of the poor laws;

for no one accumulates but with a view to make his accumulation productive, and it is only when so employed that it operates on profits. Without a motive there could be no accumulation, and consequently such a state of prices never could take place.

The farmer and manufacturer can no more live without profit, than the labourer without wages.

Their motive for accumulation will diminish with every diminution of profit, and will cease altogether when their profits are so low as not to afford them an adequate compensation for their trouble, and the risk which they must necessarily encounter in employing their capital productively.

Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each.

This pursuit of individual advantage is admirably connected with the universal good of the whole.

By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically:

While gold is exclusively the standard in this country, money will be depreciated, when a pound sterling is not of equal value with 5 dwts. and 3 grs. of standard gold, and that, whether gold rises or falls in general value.

Taxes are a portion of the produce of the land and labour of a country, placed at the disposal of the government; and are always ultimately paid, either from the capital, or from the revenue of the country.

We have already shewn how the capital of a country is either fixed or circulating, according as it is of a more or of a less durable nature. It is difficult to define strictly, where the distinction between circulating and fixed capital begins;

would procure me as much as 1000l. purchased before.

Taxation under every form presents but a choice of evils; if it does not act on profit, it must act on expenditure; and provided the burden be equally borne, and do not repress reproduction, it is indifferent on which it is laid.

Taxes on production, or on the profits of stock, whether applied immediately to profits, or indirectly, by taxing the land or its produce, have this advantage over other taxes; no class of the community can escape them, and each contributes according to his means.

This perhaps would be more particularly the case with respect to a metal used for money, than any other commodity, because the demand for money is not for a definite quantity, as is the demand for clothes, or for food.

The demand for money is regulated entirely by its value, and its value by its quantity.

If gold were of double the value, half the quantity would perform the same functions in circulation, and if it were of half the value, double the quantity would be required.

… that the demand is too great for the supply, in order to put the labourer in the same condition as before, we raise the price of labour, that is, we increase the demand, and are then much surprised, that the price of provisions continues rising.

In this, we act much in the same manner, as if, when the quicksilver in the common weather glass, stood at stormy, we were to raise it by some forcible pressure to settled fair, and then be greatly astonished that it continued raining.

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whilst the Government who received the tax would have an additional fund for the same purpose.

Government and the people thus become competitors, and the consequence of their competition is a rise in the price of labour.

The same number of men only will be employed, but they will be employed at additional wages.

In whatever way an operation may be disguised, whatever forms we may constrain a value to take, whatever metamorphosis we may make it undergo, we can only have a value by creating it, or by taking it from others.

The very best of all plans of finance is to spend little, and the best of all taxes is, that which is the least in amount.

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But unless a plan of finance is of the nature of a commercial undertaking, it cannot give government more than it takes away, either from individuals, or from government itself, under some other form.

Something cannot be made out of nothing, by the stroke of a wand.

In whatever way an operation may be disguised, whatever forms we may constrain a value to take, whatever metamorphosis we may make it undergo, we can only have a value by creating it, or by taking it from others.

If by taxing some, one million be transferred to the disposal of Government, their revenue will still be nominally 10 millions, but they will remain with only nine millions worth of taxable commodities.

There are no circumstances under which taxation does not abridge the enjoyments of those on whom the taxes ultimately fall, and no means by which those enjoyments can again be extended, but the accumulation of new revenue.

Taxation can never be so equally applied, as to operate in the same proportion on the value of all commodities, and still to preserve them at the same relative value. It frequently operates very differently from the intention of the legislature, by its indirect effects.

Another will be content to pay four, yet refuse to pay five shillings. The same may be said of other taxes on luxuries: many would pay a tax of 5l. for the enjoyment which a horse affords, who would not pay 10l. or 20l.

It is not because they cannot pay more, that they give up the use of wine and of horses, but because they will not pay more.

Every man has some standard in his own mind by which he estimates the value of his enjoyments, but that standard is as various as the human character.

for the enjoyment which a horse affords, who would not pay 10l. or 20l. It is not because they cannot pay more, that they give up the use of wine and of horses, but because they will not pay more.

Every man has some standard in his own mind by which he estimates the value of his enjoyments, but that standard is as various as the human character.

A country whose financial situation has become extremely artificial, by the mischievous policy of accumulating a large national debt, and a consequently enormous taxation, is particularly exposed to the inconvenience attendant on this mode of raising taxes.

From what I have said, it must not be inferred that I consider the system of borrowing as the best calculated to defray the extraordinary expenses of the state.

It is a system which tends to make us less thrifty—to blind us to our real situation.

If the expenses of a war be 40 millions per annum, and the share which a man would have to contribute towards that annual expense were 100l., he would endeavour, on being at once called upon for his portion, to save speedily the 100l.

A country which has involved itself in the difficulties attending this artificial system, would act wisely by ransoming itself from them, at the sacrifice of any portion of its property which might be necessary to redeem its debt.

That which is wise in an individual, is wise also in a nation.

A man who has 10,000l., paying him an income of 500l., out of which he has to pay 100l. per annum towards the interest of the debt, is really worth only 8000l., and would be equally rich, whether he continued to pay 100l.

To such an effect the stockholders themselves would largely contribute.

Such a scheme has been often recommended, but we have, I fear, neither wisdom enough, nor virtue enough, to adopt it.

It must however be admitted, that during peace, our unceasing efforts should be directed towards paying off that part of the debt which has been contracted during war;

Nor will distress be experienced in that country alone where such difficulties originate, but in the countries to which its commodities were before exported.

No country can long import unless it also exports, or can long export unless it also imports.

If then any circumstance should occur, which should permanently prevent a country from importing the usual amount of foreign commodities, it will necessarily diminish the manufacture of some of those commodities which were usually exported;

… knowledge of the existence of such a cause will make it reasonable to believe, that the funds for the maintenance of labour have rather been diverted from their usual channel than materially impaired, and that after temporary suffering, the nation will again advance in prosperity.

It must be remembered too that the retrograde condition is always an unnatural state of society.

Man from youth grows to manhood, then decays, and dies; but this is not the progress of nations.

It must be remembered too that the retrograde condition is always an unnatural state of society.

Man from youth grows to manhood, then decays, and dies; but this is not the progress of nations.

When arrived to a state of the greatest vigour, their further advance may indeed be arrested, but their natural tendency is to continue for ages, to sustain undiminished their wealth, and their population.

but the clothing, the food, and the lodging of the labourer in one employment may be devoted to the support of the labourer in another, or the same labourer may receive the same food, clothing, and lodging, whilst his employment is changed.

This, however, is an evil to which a rich nation must submit; and it would not be more reasonable to complain of it, than it would be in a rich merchant to lament that his ship was exposed to the dangers of the sea, whilst his poor neighbour's cottage was safe from all such hazard.

From contingencies of this kind, though in an inferior degree, even agriculture is not exempted.

It would be entirely a matter of calculation with him whether he should abandon the old machinery, and erect the more perfect, losing all the value of the old, or continue to avail himself of its comparatively feeble powers.

Who, under such circumstances, would exhort him to forego the use of the better machinery, because it would deteriorate or annihilate the value of the old?

Yet this is the argument of those who would wish us to prohibit the importation of corn, because it will deteriorate or annihilate that part of the capital of the farmer which is for ever sunk in land.

Yet this is the argument of those who would wish us to prohibit the importation of corn, because it will deteriorate or annihilate that part of the capital of the farmer which is for ever sunk in land.

They do not see that the end of all commerce is to increase production, and that by increasing production, though you may occasion partial loss, you increase the general happiness.

To be consistent, they should endeavour to arrest all improvements in agriculture and manufactures, and all inventions of machinery;

"A man is rich or poor," says Adam Smith, "according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life."

Value then essentially differs from riches, for value depends not on abundance, but on the difficulty or facility of production.

The labour of a million of men in manufactures, will always produce the same value, but will not always produce the same riches.

If again we ask him to explain to us by what means we are to judge of the utility of objects, he answers, by their value.

Thus then the measure of value is utility, and the measure of utility is value.

M. Say, in speaking of the excellences and imperfections of the great work of Adam Smith, imputes to him, as an error, that "he attributes to the labour of man alone the power of producing value.

If he employed his 10,000l. productively, his effectual demand would be for food, clothing, and raw material, which might set new labourers to work; but still it would be demand.33

Productions are always bought by productions, money is only the medium by which the exchange is effected.

Too much of a particular commodity may be produced, of which there may be such a glut in the market, as not to repay the capital expended on it; but this cannot be the case with respect to all commodities;

Some would consume more wine, if they had the ability to procure it. Others having enough of wine, would wish to increase the quantity or improve the quality of their furniture. Others might wish to ornament their grounds, or to enlarge their houses.

The wish to do all or some of these is implanted in every man's breast; nothing is required but the means, and nothing can afford the means, but an increase of production.

If I had food and necessaries at my disposal, I should not be long in want of workmen who would put me in possession of some of the objects most useful or most desirable to me.

Of commodities so limited in number, there might undoubtedly be an universal glut, and consequently there might neither be demand for an additional quantity of such commodities, nor profits on the employment of more capital.

If men ceased to consume, they would cease to produce.

This admission, does not impugn the general principle. In such a country as England, for example, it is difficult to suppose that there can be any disposition to devote the whole capital and labour of the country to the production of necessaries only.

High profits are favourable to the accumulation of capital. The demand for labour would further increase, and landlords would be permanently benefited by the increased demand for land.

The interest of the landlord is always opposed to that of the consumer and manufacturer.

Corn can be permanently at an advanced price, only because additional labour is necessary to produce it; because its cost of production is increased.

It is evident then, that the trade with a colony may be so regulated, that it shall at the same time be less beneficial to the colony, and more beneficial to the mother country, than a perfectly free trade.

As it is disadvantageous to a single consumer to be restricted in his dealings to one particular shop, so is it disadvantageous for a nation of consumers to be obliged to purchase of one particular country.

If the shop or the country afforded the goods required the cheapest, they would be secure of selling them without any such exclusive privilege;

M. Say acknowledges that the cost of production is the foundation of price, and yet in various parts of his book he maintains that price is regulated by the proportion which demand bears to supply.

The real and ultimate regulator of the relative value of any two commodities, is the cost of their production, and neither the respective quantities which may be produced, nor the competition amongst the purchasers.

According to Adam Smith the colony trade, by being one in which British capital only can be employed, has raised the rate of profits of all other trades;

"Our merchants frequently complain of the high wages of British labour as the cause of their manufactures being undersold in foreign markets; but they are silent about the high profits of stock.

They complain of the extravagant gain of other people, but they say nothing of their own.

The high profits of British stock, however, may contribute towards raising the price of British manufacture in many cases as much, and in some perhaps more, than the high wages of British labour."

Is not the real interest of the nation similar? Provided its net real income, its rent and profits be the same, it is of no importance whether the nation consists of ten or of twelve millions of inhabitants.

Its power of supporting fleets and armies, and all species of unproductive labour, must be in proportion to its net, and not in proportion to its gross income.

If five millions of men could produce as much food and clothing as was necessary for ten millions, food and clothing for five millions would be the net revenue.

if gold alone were employed for the circulation of commodities, a quantity would be required, one fifteenth only of what would be necessary, if silver were made use of for the same purpose.

A circulation can never be so abundant as to overflow; for by diminishing its value, in the same proportion you will increase its quantity, and by increasing its value, diminish its quantity.

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below that rate at which the merchants could have borrowed elsewhere; but I confess that to me this seems rather an objection to their establishment, than an argument in favour of it.

What should we say of an establishment which should regularly supply half the clothiers with their wool under the market price?

Of what benefit would it be to the community? It would not extend our trade, because the wool would equally have been bought, if they had charged the market price for it.

How then can money, or gold and silver, exchange for more corn in rich, than in poor countries? It is only in rich countries, where corn is dear, that landholders induce the legislature to prohibit the importation of corn.

Who ever heard of a law to prevent the importation of raw produce in America or Poland?—Nature has effectually precluded its importation by the comparative facility of its production in those countries.

How then can it be true, that "if you except corn, and such other vegetables, as are raised altogether by human industry, all other sorts of rude produce—cattle, poultry, game of all kinds, the useful fossils and minerals of the earth, &c., naturally grow dearer …

Why should corn and vegetables alone be excepted? Dr. Smith's error throughout his whole work, lies in supposing that the value of corn is constant; that though the value of all other things may, the value of corn never can be raised.

Corn, according to him, is always of the same value, because it will always feed the same number of people.

In the same manner it might be said, that cloth is always of the same value, because it will always make the same number of coats. What can value have to do with the power of feeding and clothing?

that though the value of all other things may, the value of corn never can be raised. Corn, according to him, is always of the same value, because it will always feed the same number of people.

In the same manner it might be said, that cloth is always of the same value, because it will always make the same number of coats.

What can value have to do with the power of feeding and clothing?

In the same manner it might be said, that cloth is always of the same value, because it will always make the same number of coats.

What can value have to do with the power of feeding and clothing?

Corn, like every other commodity, has in every country its natural price, viz. that price which is necessary to its production, and without which it could not be cultivated:

the proportion between supply and demand may, indeed, for a time affect the market value of a commodity, until it is supplied in greater or less abundance, according as the demand may have increased or diminished; but this effect will be only of temporary duration.

Diminish the cost of production of hats, and their price will ultimately fall to their new natural price, although the demand should be doubled, trebled, or quadrupled.

Diminish the cost of subsistence of men, by diminishing the natural price of the food and clothing, by which life is sustained, and wages will ultimately fall, notwithstanding that the demand for labourers may very greatly increase.

but the effect of its being rated at 5l. per quarter, instead of 4l., would be to transfer a portion of the value of the corn and commodities from their former possessors to the landlords.

Rent then is a creation of value, but not a creation of wealth; it adds nothing to the resources of a country, it does not enable it to maintain fleets and armies; for the country would have a greater disposable fund if its land were of a better quality, and it could employ the same capital without generating a rent.

In another part of Mr.

… namely, "that quality peculiar to the necessaries of life, of being able to create their own demand, or to raise up a number of demanders in proportion to the quantity of necessaries produced," does not appear to me to be any way essential to it.

It is not the abundance of necessaries which raises up demanders, but the abundance of demanders which raises up necessaries.

We are under no necessity of producing permanently any greater quantity of a commodity than that which is demanded.

it can never then by its cheapness and abundance be a stimulus to population. In proportion as corn can be produced cheaply, the increased wages of the labourers will have more power to maintain families.

In America, population increases rapidly, because food can be produced at a cheap price, and not because an abundant supply has been previously provided.

In Europe population increases comparatively slowly, because food cannot be produced at a cheap value. In the usual and ordinary course of things, the demand for all commodities precedes their supply.

In America, population increases rapidly, because food can be produced at a cheap price, and not because an abundant supply has been previously provided. In Europe population increases comparatively slowly, because food cannot be produced at a cheap value.

In the usual and ordinary course of things, the demand for all commodities precedes their supply.

By saying, that corn would, like manufactures, sink to its price of production, if it could not raise up demanders, Mr. Malthus cannot mean that all rent would be absorbed;

[7] "In agriculture too," says Adam Smith, "nature labours along with man; and though her labour costs no expense, its produce has its value, as well as that of the most expensive workman."

The labour of nature is paid, not because she does much, but because she does little.

In proportion as she becomes niggardly in her gifts, she exacts a greater price for her work. Where she is munificently beneficent, she always works gratis.

The labour of nature is paid, not because she does much, but because she does little. In proportion as she becomes niggardly in her gifts, she exacts a greater price for her work.

Where she is munificently beneficent, she always works gratis.

"The labouring cattle employed in agriculture, not only occasion, like the workmen in manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, together with its owner's profits, but of a much greater value.

to say nothing of the effects of the matter of heat in softening and melting metals, of the decomposition of the atmosphere in the process of dyeing and fermentation.

There is not a manufacture which can be mentioned, in which nature does not give her assistance to man, and give it too, generously and gratuitously.

In remarking on the passage which I have copied from Adam Smith, Mr.

The public treasury will be benefited by what the purchaser pays in addition, and also by the sacrifice which the producer is obliged to make of a part of his profits.

It is the effort of gunpowder, which acts at the same time on the bullet which it projects, and on the gun which it causes to recoil.

" Vol. ii. p. 333.