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WHAT ARE RICHES ?

&c. &c.

The Definition of Riches may have seemed to those, who have not studied the subject, to be a much easier thing, than it is !

On the 6th day of September, 1819-a date which, for a reason that will presently appear, the reader is particularly requested to attend to, I published in a Tract on Population and Riches, (printed at Geneva) the following DEFINITION on this subject :

“ Riches are such material things, as have a value in exchange either with other material things, or with such immaterial things, as gratify the wants, conveniences, or amusements of man.”

I added in a note:

" It seems to me that Adam Smith's omission of this word ma. terial has led GARNIER, SAY, and others, into inextricable confusion and errors about immaterial Riches, and productive and nonproductive labor.

" I contend that to entitle that which is produced to belong to the class of Riches, it must have something of substance, of which the producer, when he transfers it, loses the property; and which is of a nature to be capable of being re-exchanged or retransferred. It may be consumed as soon as produced, either by the producer, or by him who takes it in exchange ; but it must have the capacity of some duration, and of being exchangeable and re-exchangeable."

In the following year, 1820, Mr. MALTHUS published his great work on THE PRINCIPLES OF POLITICAL ECONOMY. His Introduction is dated from Hertford College, 1 Dec. 1819. He commences with a definition of Riches, in which he also confines them to objects material.

But in another important point even his definition is defectively worded.

Lord LAUDERDALE defines Riches to be
“Every thing necessary, useful, or agreeable to man.”
M. Say defines them to be :

“Every thing that can procure whatever is necessary, useful, or agreeable to man." Mr. MALTHUS defines them to be :

Such material objects as are necessary, useful, or agreeable to man.”

All these definitions are mainly defective.

Lord LAUDERDALE omits both the materiality, and the power of procuring

M. Say omits the materiality.
Mr. Malthus omits the power of procuring.
Supply these defects, and the definition may be made perfect,

, thus :

- « Riches are such material objects as have the power of procuring whatever is necessary, useful, or agreeable to man."

The indefinite latitude of Lord LAUDERDALE's (miscalled) definition is apparent to all.

The latitude of M. Say's definition is sufficient to destroy all the distinctions on which depends a clear knowledge of the causes of the increase or decrease of Roches. It involves a series of confusions, which meet us at every step; and rests its support on innumerable subtleties, of which I can scarcely name another example.

Mr. MALTHUS's defectiveness is confined to his definition. His whole doctrine entirely agrees with the corrected definition which I have supplied. It is singular, that he should have fallen into an omissiveness similar to that which he has blamed in Adam Smith. Smith's doctrine was right: but he omitted the word material in his definition. So Malthus has omitted to name the ingredient of procurability, or exchangeable value.

Say's error is not a mere defect in wording his definition. It pervades all his theory, and is its corner-stone. It lets in what he calls Immaterial Riches, and on this he prides himself. 7. It is not my present purpose to pursue this, which I contend to be a most important error, into all its consequences. It may be at this moment sufficient to say only enough to show its nature.

In assuming whatever will procure Riches, to be RICHES : 5 1. There is a confusion between the means and the end. 2. A confusion between the

posse

and the esse. 9. A confusion between exchangeability and identity of kind.

One might have expected, that the words Immaterial Riches would have struck every one as a contradiction in terms.

RICHES VOL. XX.

Pam.
NO. XL.

2 H

in the universal opinion, as testified by the word synonymously applied to them, mean something of substance.

If they have no substance, how can they be appropriated ? how can they circulate ? how can they be transferred from one to another ? how can they accumulate ? how can they be detached from the person of the originator ?

Yet surely that which is deficient in any one of these qualities, cannot be Riches.

Those things, which M. Say calls Immaterial Riches, are deficient in them all.

Immaterial things may procure Riches, and Riches may procure immaterial things; but they are not therefore the same.

Nor is even every material thing which is necessary, useful, or agreeable, RICHES ; because it must also have a value in ezchange ; and it cannot have a value in exchange unless it be an object in which a property can be had : for no one will give any thing in exchange for that which he can have for nothing; as (speaking generally), he may have water, and some other productions of Nature.-(It is to this point that the defect in the wording of Mr. Malthus's definition refers.)

RICHES then are such material objects whether of Nature only, or improved by human' labor, as have a value in exchange, compounded of their necessity, usefulness, or amusement to man; and of the right of property in them.

If this definition be just, we come at once to the test of the soundness and accuracy of Adam Smith's grand distinction of productive and unproductive labor, (with reference to Riches).

No labor can be productive, except of things which come within this definition.

But no one can deny, that there is an incalculable quantity of human labor, bodily and intellectual, which neither produces, nor can produce, such things. This last then is unproductive labor: domestic servants, soldiers, sailors, all the liberal professions, are occupied in unproductive labor.

When we understand precisely what this unproductive labor is, we can judge with much greater facility and certainty, in what cases and to what extent it is desirable, and in what cases and to what extent it is not.

For let it be recollected, that Riches are not always best expended in procuring Riches : they may sometimes be expended in procuring what is far more useful or desirable. For as other things, which are the means of Riches, must not be confounded with Riches themselves ; so Riches themselves are but the means of something higher, of which happiness is the end.

' It may be doubted if any thing can be comprehended in this which does not require the addition of some human labor. The very of making the right of property available involves human labor.

Nothing can be more important than this distinction. Without it, it is impossible to comprehend the nature and causes of the distress under which Great Britain has long been suffering, and still suffers. With it, we may have a clear conception of the disease; and if we will, may apply a remedy.

When M. Say asserts that products can only be bought by products, he means products in his own sense, including what he calls immaterial Riches :-and when he asserts that there exists abundance of products, and therefore that means of purchase cannot be wanting, and that such want cannot be the cause of the present stagnation, he means products in the sense of Malthus ; viz. material commodities.

But employed labor, as far as regards what Smith, Malthus, &c. call unproductive labor, is wanting : therefore the means of purchasing the goods, which overload the warehouses, are wanting. And this again throws productive labor out of employ, because there is no demand for it.

Here then is a point, at which productive and unproductive labor become disproportionate to each other in the market. And here it becomes evident how necessary they both are in their due proportions; and how incalculably important it is, therefore, to distinguish them precisely from each other.

It is clear, that in proportion to the excess of produce above its cost, will be the means of accumulation; and in proportion to the means of accumulation, a nation has the means of augmenting its RICHES : in proportion to the same excess of produce above cost, it has also the means of consumption. To decide soundly between the one and the other, as circumstances vary, trial of wisdom in Political Economy.

What is the advantage of accumulation, but a greater future good at the expense of a minor present sacrifice ? What is the advantage of Riches, but to spend them at the moment when they can be spent with the greatest benefit ? Do we not therefore mistake the means, or the supposed means, for the end, when we economise at unseasonable times ? There

appear to be at least three cases, in which there is a great limit to the wisdom of accumulation, or saving.

The first is, where a nation is arrived at such a degree of Riches, and such a facility of increasing them, that a diminution of expenditure for the purposes of economy, or even a refusal of a proportionate increase of such expenditure, would be a vain and idle forbearance.

The second is, where great and necessary wars render a stop to

is the great

accumulation, or to the same degree of accumulation, or even a sacrifice of part of the existing capital, indispensable.

The third is, where the whole labor, the whole machinery, and the whole products, having been swelled out in proportion to this increased expenditure, no future good to be derived from accumulation can equal the frightful distresses arising from a great and violent curtailment of the same cost and consumption ; and where, as an additional objection, even if the pecuniary gain were worth the price, a pecuniary loss, instead of gain, would ensue. We all know, that in private affairs, a cessation of expense is very often falseeconomy. Where buildings have been erected; where lands have been highly cultivated ; where capital has been hazarded, and must be lost, unless it is nurtured to the time of its fructification, there it is a false economy to withhold the continuance of the cost which is necessary to carry them forward.

Nothing can be more demonstrative, than that the expenses of the late wars re-created themselves. The evil was, not in the destruction of capital ; but in this incident to public loans, that one set of people, (the already rich,) pay a large portion of the interest of that, of which another set receive the benefit; by which means the property of a country too violently changes hands.

A continuation of loans therefore would be a good, were it not for this counterbalancing incident. But though loans are so far mainly objectionable, yet it may be confidently asserted, that there are numerous diminutions of expense by saving, which are false economy. They are the aggravation of the very life of the disease.

Now let us consider how Great Britain has been lately circumstanced. A war of unexampled expenditure created an unexampled demand both for productive and unproductive labor. The increased produce arising from capital, machinery, industry, and extended commerce, kept pace with the augmentation of consumption caused by the unprecedented increase of unproductive labor.

All the additional apparatus therefore, and all the additional population equal to the new demand, had been completely developed in three and twenty years.

Whether this was a good, or an evil ; whether less production, less population, and less Riches, would have been a better thing; and whether (good or bad) it could no longer have been avoided, was now no longer the question :- the machinery, the vested capital, the produce, the population, existed. The question was, how to enable them to go on, with the least balance of evil.

To me it is one of those questions which leaves not the smallest particle of doubt in the mind. I should say, " Go on with a liberal expenditure. The population thus excited into being, thus

ers.

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