Economic condition

“ The question of the play of economic forces thus generally reduces itself to a problem which may be thus stated: What are the conditions of industrial equilibrium? How must prices, rates of wages, and profit be related in order that the various classes concerned may receive such proportions of produce as are compatible with the maintenance of the existing system of organisation? If any specified change occurs, if production becomes easier or more difficult, if a tax be imposed, or a regulation of any kind affects previous conditions, what changes will be necessary to restore the equilibrium? ”

“ We may readily see, moreover, that those two primary allocations subdivide into almost infinitesimal and extremely confusing secondary categories, comprising every variety of Labor, every variety of Land, every variety of Wealth, every variety of Economic desire. It is to satisfy those desires out of that continuous flow of Wealth that the infinitude of processes indicated in the next preceding Lesson enter into the comprehensive Productive Process which includes delivery to ultimate consumers, and that an infinitude of corresponding processes enter into Distribution. ”

“ This two-fold current in the economic world, the upward tendency of the prices of provisions and the downward tendency of the prices of manufactured products, continues to increase the wealth of the land-owner and the poverty of the factory employé. The latter is obliged to produce a constantly increasing number of manufactured goods to exchange for the agricultural products necessary to sustain life ”

“ Economic growth has liberated societies from the natural pressures that forced them into an immediate struggle for survival; but they have not yet been liberated from their liberator. The commodity’s independence has spread to the entire economy it now dominates. This economy has transformed the world, but it has merely transformed it into a world dominated by the economy. ”

“ Seeing that production is limited by consumption, what rule must be followed in distributing the results of production to be consumed in order to develop consumption to the highest possible point, and thereby in turn to create the greatest possible demand for production. ”

“ In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite stage of development of their material powers of production. The sum total of these relations of production constitutes the economic structure of society—the real foundation, on which rise legal and political superstructures and to which correspond definite forms of social consciousness. ”

“ The labourer may obtain greater comforts; wages in kind real wages may rise. Or the progress of population may force down cultivation to inferior soils, and more costly processes; thus raising the cost of production, the value, and the price, of the chief articles of the labourer's consumption. On either of these suppositions, the rate of profit will fall. ”

“ The great end of legislation in matters of national wealth, according to the prevalent opinion, was to create consumers. A great and rapid consumption was what the producers, of all classes and denominations, wanted, to enrich themselves and the country. This object, under the varying names of an extensive demand, a brisk circulation, a great expenditure of money, and sometimes totidem verbis a large consumption, was conceived to be the great condition of prosperity. ”

“ The essential difference between the various economic forms of society, between, for instance, a society based on slave labour, and one based on wage labour, lies only in the mode in which this surplus-labour is in each case extracted from the actual producer, the labourer. ”

“ We have surveyed the field of economical facts, and have examined how they stand related to one another as causes and effects; what circumstances determine the amount of production, of employment for labour, of capital and population; what laws regulate rent, profits, and wages; under what conditions and in what proportions commodities are interchanged between individuals and between countries. We have thus obtained a collective view of the economical phenomena of society, considered as existing simultaneously. ”

“ Political economy requires farther expansion in order to include all the elements of this great social problem.
It is a true doctrine that demand and supply regulate the price of all things, labour included. ”

“ To any advance in the arts of industry or the comforts of life, a rate of production exceeding the rate of consumption, with consequent accumulation of resources, or in other words, the formation of capital, is indispensable. ”

“ Capital does not limit industry, the only limit to industry being the access to natural material. But capital may limit the form of industry and the productiveness of industry, by limiting the use of tools and the division of labour. ”

“ Has the progress of wealth and industry no effect in regard to cost of production, but to diminish it? Are no causes of an opposite character brought into operation by the same progress, sufficient in some cases not only to neutralize, but to overcome the former, and convert the descending movement of cost of production into an ascending movement? ”

“ We have investigated the laws which determine the value of two classes of commodities: the small class which, being limited to a definite quantity, have their value entirely determined by demand and supply, save that their cost of production (if they have any) constitutes a minimum below which they cannot permanently fall; and the large class, which can be multiplied ad libitum by labour and capital, and of which the cost of production fixes the maximum as well as the minimum at which they can permanently exchange. ”

“ If every commodity on an average remained unsold for a length of time equal to that required for its production, it is obvious that, at any one time, no more than half the productive capital of the country would be really performing the functions of capital. ”

“ Irrespective of the increase of population, the effect of improvements in methods of production and exchange is to increase rent.... The effect of labor-saving improvements will be to increase the production of wealth. Now, for the production of wealth, two things are required, labor and land. ”

“ The second exception, of which I shall speak at length in a subsequent chapter, consists in the known effect of an extension of the market for a commodity, in rendering possible an increased development of the division of labour, and hence a more effective distribution of the productive forces of society. ”

“ If the improvement, which we suppose to take place, is not in the production of food, but of some manufactured article consumed by the labouring class, the effect on wages and profits will at first be the same ”

“ By such means society might obtain from its existing resources a greater quantity of produce: and to such means it has been driven, when the sudden destruction of some large portion of its capital rendered the employment of the remainder with the greatest possible effect, a matter of paramount consideration for the time. ”

“ Of such cases, the argument to show that Demand for Commodities is not Demand for Labor, the Doctrine of International Values, and the Effect of the Progress of Society on wages, profits, and rent, are examples. ”

“ The savings of labor which have fallen so largely into the hands of the few, making them rich men, have built our railroads, steamships, telegraphs, manufactories, thus in many ways adding to the means of production, and the facilities of commerce at home and abroad. These saved earnings in the hands of men seeking investment for profit have increased the wealth, resources, and refinements of civilization, made abundance possible, and brought it within reach of all, except the unfortunate, or the indolent and improvident. ”

“ Rates of pay, prices, hours of labour, qualities, and kinds of output were all fixed by custom and tradition which often received the sanction of the law of the land. Gradually the market grew and demand became less easy to gauge. ”

“ Land, labour and capital are the factors of production. The term land includes all natural opportunities and forces; the term labour, all human exertion; and the term capital, all wealth used to produce more wealth. In returns to these three factors is the whole produce distributed. The part that goes to landowners as payment for the use of natural opportunities is called rent; the part that constitutes the reward of human exertion is called wages; and the part that constitutes the return for the use of capital is called interest. ”

“ In manufactures, accordingly, the causes tending to increase the productiveness of industry, preponderate greatly over the one cause which tends to diminish it: and the increase of production, called forth by the progress of society, takes place, not at an increasing, but at a continually diminishing proportional cost. ”

“ Production does not merely mean the making of things, but includes the increase of value gained by transporting or exchanging things. There is a produce of wealth in a purely commercial community, as there is in a purely agricultural or manufacturing community; and in the one case as in the others, some part of this produce will go to capital, some part to labour and some part, if land has any value, to the owners of land. ”

“ Every feature of the competitive system of production and distribution was appropriately illustrated, together with the inevitable consequences to the people; wealth beyond the dreams of avarice for a favored few and hopeless poverty and degradation for the many. ”

“ Economy no more means saving money than it means spending money. It means, the administration of a house; its stewardship; spending or saving, that is, whether money or time, or anything else, to the best possible advantage. In the simplest and clearest definition of it, economy, whether public or private, means the wise management of labour; and it means this mainly in three senses: namely, first, applying your labour rationally; secondly, preserving its produce carefully; lastly, distributing its produce seasonably. ”

“ Her economy was not the mean, penny-wise, pound foolish policy which many mistake for true economy. It was the art of calculation joined to the habit of order, and the power of proportioning our wishes to the means of gratifying them. ”

“ Economy without industry will barely appear in a whole coat; industry without economy will appear in rags. The first is detrimental to the community, by preventing the circulation of property; the last is detrimental to itself. It is a singular remark, that even industry is sometimes the way to poverty. ”

“ If the additional demand could continue to be supplied from the superior lands, by applying additional labour and capital, at no greater proportional cost than that at which they yield the quantity first demanded of them, the owners or farmers of those lands could undersell all others, and engross the whole market. ”

“ The inevitable result was to check production, and this check to production propagated itself in a cessation of demand, which checked production to the furthest verge of the wide circle of exchanges, operating with accumulated force in the centers of the great industrial commonwealth into which commerce links the civilized world. ”

“ If we examine, on what the pecuniary value of labour, and the pecuniary value of the use of land, depend, we shall find that it is on the very same causes by which we found that wages and rent would be regulated if there were no money and no exchange of commodities. ”

“ If, by the introduction of the turnip husbandry, or by the use of a more invigorating manure, I can obtain the same produce with less capital, and without disturbing the difference between the productive powers of the successive portions of capital, I shall lower rent; for a different and more productive portion will be that which will form the standard from which every other will be reckoned. ”

“ Production is not a fixed but an increasing thing. When not kept back by bad institutions, or a low state of the arts of life, the produce of industry has usually tended to increase; stimulated not only by the desire of the producers to augment their means of consumption, but by the increasing number of the consumers.
We have seen that the essential requisites of production are three—labor, capital, and natural agents; the term capital including all external and physical requisites which are products of labor, the term natural agents all those which are not. ”

“ The injury suffered will be what I have just described; there will be a worse distribution of the general capital and industry, and therefore less will be produced. The natural price of commodities will be raised, and therefore, though the consumer will be able to purchase to the same money value, he will obtain a less quantity of commodities. ”

“ Economically it extended from peasant proprietorship and a use economy to a market-money economy; from a society of working peasant farmers to an economy resting upon war captives reduced to slavery; from an economy based on production for trade and profit to an economy based on power-grabbing, special privilege, speculation and corruption; from an austerity economy based on primary production to an economy based on affluence, exploitation, and gluttony. ”

“ But if C has received the fair value for his expenditure in articles of subsistence or luxury, which he has consumed on himself, or by means of his servants or guests, these articles have ceased to exist, and nothing has been produced to replace them: while if the same sum had been employed in farming or manufacturing, the consumption which would have taken place would have been more than balanced at the end of the year by new products, created by the labour of those who would in that case have been the consumers. ”

“ Continuing the inquiry into the nature of the economical changes taking place in a society which is in a state of industrial progress, we shall next consider what is the effect of that progress on the distribution of the produce among the various classes who share in it. We may confine our attention to the system of distribution which is the most complex, and which virtually includes all others—that in which the produce of manufactures is shared between two classes, laborers and capitalists, and the produce of agriculture among three, laborers, capitalists, and landlords. ”