Principles of Political Economy Part 22

There is no production possible without consumption. The embodiment of a special utility into any substance is a limitation of its general utility. Thus, for instance, when corn is baked into bread, it can no longer be used for the manufacture of brandy or of starch.[211-1]

When, therefore, consumption is a condition (outlay) to production it is called productive (reproductive).[211-2] Here, indeed, the form of the consumed goods is destroyed, but the value of the goods lives on in the new product.

There are different degrees of productiveness in consumption also. Thus, to a scholar, his outlay for books in his own branch is immediately productive; but nevertheless, books in departments of literature very remote from his own, pleasure trips, etc. may serve as nutrition and as a stimulus to his mind. According to -- 52, we are compelled to consider all consumption productive which const.i.tutes a necessary means towards the satisfaction of a real economic want. We may, indeed, distinguish between productive consumption in aid of material goods, of personal goods and useful relations; but in estimating the productiveness of these different sorts of consumption we are concerned not so much with the nature of the consumption as the results in relation to the nation's wants. The powder that explodes when a powder magazine burns is consumed unproductively; but the powder shot away in war may be productively consumed just as that used to explode a mine may be unproductively consumed; for instance, when the war is a just and victorious one and the mining enterprise has failed.[211-3]

The maintenance or support of those workmen whom they themselves acknowledge to be productive is presumably accounted productive consumption by all political economists. Why not, therefore, the cost of supporting and educating our children, who, it is to be hoped, will grow up later to be productive workmen. Man's labor-power is, doubtless, one of the greatest of all economic goods. But without the means of subsistence, it would die out in a few days. Hence we may, and even without an atomistic enumeration of the individual services and products of labor, consider the continued duration of that labor-power itself as the continued duration of the value of the consumed means of subsistence.[211-4]

[Footnote 211-1: Even when air-dried bricks are made from water and clay which cost nothing; when purely occupatory work is done, and purely intellectual labor performed, some consumption of the means of subsistence by the workmen is always necessary.]

[Footnote 211-2: ???at?st??a? in contradistinction to ??a??t??a?, according to _Plato_, De Rep., VIII, 559.

Temporary consumption. (_Umpfenbach._)]

[Footnote 211-3: _Storch_, Handbuch, II, 450.]

[Footnote 211-4: Against the difference formerly usually a.s.sumed between productive and unproductive consumption, see _Jacob_, Grundsatze der Nat. Oek., II, 530. It is because of a too narrow view that _Hermann_ (II, Aufl., 311), instead of reproductive consumption, speaks of technic consumption.]

SECTION CCXII.

UNPRODUCTIVE CONSUMPTION.

Moreover, unproductive consumption embraces not only every economic loss, every outlay for injurious purposes,[212-1] but also every superfluous outlay for useful purposes.[212-2] Yet, not to err in our cla.s.sification here, it is necessary to possess the impartiality and many-sidedness of the historian, which enable one to put himself in the place of others and feel after them as they felt. The man, for instance, who, in cities like Regensburg and especially Rome, sees numberless churches often, so to speak, elbowing one another, cannot fail to recognize the difference between the buildings of to-day for business, political, educational and recreative purposes, and the medieval, for the satisfaction of spiritual wants. The latter also may, in their own sphere, and in their own time, have, as a rule, operated productively, as the former operate, often enough, by way of exception unproductively; as in the case of railway and ca.n.a.l speculations which have ended in failure. It would be difficult to decide between the relative value of the two kinds of wants, because the parties to the controversy do not, for the most part, share the want (_Bedurfniss_) of their respective opponents, frequently do not even understand it, and therefore despise it. Thus, there are semi-barbarous nations, who can entertain that respect for the laws which is necessary even from an economic point of view only to the extent that they see the person whose duty it is to cause them to be observed seated on a throne and surrounded by impressive splendor. Hence, such splendor here could not be considered merely unproductive consumption.[212-3]

We must, moreover, remark in this place as we did above, -- 54, that it is easiest to pa.s.s the boundary line between productive and unproductive consumption in personal services. In 1830, the expenses of the state, in Spain, amounted to 897,000,000 of reals per annum; the outlay of munic.i.p.al corporations, to 410,000,000, and that for external purposes of religion, 1,680,000,000. (_Borrego._) This is certainly no salutary proportion; but it is scarcely evidence of a worse economic condition than the fact that in Prussia it would require a basin one Prussian mile in length, thirty-three and eight-tenths feet broad, and ten feet deep to hold all the brandy drunk in the country (_Dieterici_); or this other, that the British people spend yearly 68,000,000 sterling for taxes and 100,000,000 yearly for spirituous liquors.[212-4] Berkeley rightly says that the course practiced in Ireland, with its famishing proletarian population, of exporting the means of subsistence and exchanging them against delicate wines, etc., is as if a mother should sell her children's bread to buy dainties and finery for herself with the proceeds.[212-5] [212-6]

[Footnote 212-1: Thus, for instance, food which spoils unused, and food which is stolen and which puts a thief in a condition to preserve his strength to steal still more.]

[Footnote 212-2: So far _Senior_, Outlines, 66, is right: the richer a nation or a man becomes, the greater does the national or personal productive consumption become.]

[Footnote 212-3: Such gigantic constructions as the palaces, pyramids, etc. of Egypt, Mexico or Peru are a certain sign of the oppression of the people by rulers, priests or n.o.bles. One of the Egyptian pyramids is said to have occupied 360,000 men for twenty years. (_Diodor._, I, 63; _Herodot._, II, 175; _Prescott_, History of Mexico, I, 153, History of Peru, I, 18.)]

[Footnote 212-4: Edinburg Rev., Apr., 1873, 399.]

[Footnote 212-5: _Berkeley_, Querist, 168, 175, says that the national wants should be the guiding rule of commerce, and that besides, the most pressing wants of the majority should be first considered.]

[Footnote 212-6: _Ricardo_, Principles, p. 475, was of opinion that an outlay of the national or of private income in the payment of personal services increased the demand for labor and the wages of labor in a higher degree than an equal outlay for material things. The error at the foundation of this is well refuted by _Senior_, Outlines, 160 ff.

The first to zealously advocate and treat the theory of productive consumption was _J. B. Say_, Traite, III, ch. 2, seq.; Cours pratique, II, 265. But the germs of the doctrine are to be found in _Dutot_, Reflexions politiques sur le Commerce et les Finances, 1738, 974, _ed_. Daire. His distinctions are in part drawn with great accuracy. Thus he says that, among others, a manufacturer of cloth, productively consumes the results of his workmen, but that the workmen themselves who exchange these results for bread, consume the latter unproductively. _Say_ is guilty of the inconsistency of claiming that only that consumption is productive which contributes directly to the creation of material exchangeable goods, spite of the fact that he gave the productiveness of labor a much wider scope. _Rau_, Lehrbuch, I, -- 102 ff., 323 seq., is more consistent in so far as he applies the same limitation in both cases.

(Compare also -- 333, 336.) _Hermann_, Staatsw.

Untersuchungen, 170 seq., 231 ff., would prefer to see the idea of productive consumption banished from the science, for the reason that if the value of the thing alleged to be consumed continues, there can be no such thing as its consumption. But, I would rejoin: in a good national economy, there would be, according to this, scarcely any consumption whatever, because the aggregate value of that which I have called above productive consumption is unquestionably preserved, and continues in the aggregate value of the national products.

Productive consumption is ultimately a stage of production, just as production itself is ultimately a means to an end, consumption, and therefore a preparation for the latter.

Both ideas may be rigorously kept apart from each other, just as the expenses and receipts of a private business man, who makes a great portion of his outlay simply with the intention of reaping receipts therefrom, may be. Every one desires his production to be as large as possible, and his productive consumption, so far it does not fail of its object, as small as possible. _Riedel_ rightly says that the theory of reproductive consumption serves Political Economy as the bridge which closes the circle formed by the action of production, distribution and consumption. (Nat. Oek. III, 49.) One of the chief fore-runners of the view we advocate was _McCulloch_, Principles, IV, 3 ff. _Gr. Soden_, Nat.

Oek., distinguishes economic consumption, un-economic and anti-economic consumption. (Nat. Oek., I, 147.)]

SECTION CCXIII.

EQUILIBRIUM BETWEEN PRODUCTION AND CONSUMPTION.

In all cases economic production is a means to some kind of consumption as its end.[213-1] The sharpest spur to productive activity is the feeling of want.[213-2] "Want teaches art, want teaches prayer, blessed want!" Well too has it been said: "Necessity is the mother of invention!" Leaving mere animals out of consideration,[213-3] those men who experience very few wants, with the exception of some rare and highly intellectual natures, prefer rest to labor. Therefore, when European merchants desire to engage in trade with a savage nation they have uniformly to begin by sending them their nails, axes, looking-gla.s.ses, brandy, etc., as gifts. Not until the savage has experienced a new enjoyment does the want of continuing it make itself felt; or is he prepared to produce for purposes of commerce.[213-4] In a state of normal development, the complete and continuing satisfaction of the coa.r.s.er wants should const.i.tute the foundation for the higher.[213-5]

[Footnote 213-1: We should not, indeed, say, on this account, with _Adam Smith_, IV, ch. 8, that "consumption is the sole end and purpose of all production," for labor and saving, besides their economic object have a higher one, imperishable and personal. Compare _Knies_, Polit. Oek. 129, and _supra_, -- 30.]

[Footnote 213-2: According to _Sir F. M. Eden_, State of the Poor, I, 254, it is one of the most unambiguous symptoms of advanced civilization when families eat regularly at the same table; so also sleeping in real beds. "Bed and board!"

It is said that the regularity of meal times was introduced among the Greeks by Palamedes. _Athen._ I, 11, after _aeschylus_.]

[Footnote 213-3: Hibernating animals have supplies and dwellings, that is something a.n.a.logous to capital.]

[Footnote 213-4: This advance is generally observed to be introduced by the _jus fortioris_. _Steuart_, Principles I, ch. 7. (Compare ---- 45-6-8.) In this way, the earliest oriental despotisms have unwittingly been of great service to mankind. What the sultan here accomplished with his few favorites was done in the lower stages of civilization of the west by the aristocracy of great va.s.sals, in a manner more worthy of human beings, and in a much more stable form.

(_J. S. Mill_, Principles I, 14 ff.)]

[Footnote 213-5: _Banfield_, Organization of Industry, 1848, 11.]

SECTION CCXIV.

CAUSES OF AN INCREASE OF PRODUCTION.

Only when wants increase does production increase also.[214-1] The old maxim: _Si quem volueris esse divitem, non est quod augeas divitias, sed minuas cupiditates (Seneca)_, would, if consistently carried out, have thwarted the advance of civilization and frustrated the improvement of man's condition. On the other hand, most political economists, without more ado, a.s.sume that individuals, and still more nations, are wont to extend the aggregate of their enjoyments just as far as there is a possibility of satisfying their wants. But they forget here how great a part is played in the world, as men are const.i.tuted, by the principle of inertia.[214-2] At the first blush, what seems more natural than that the less labor a people need employ to obtain the most indispensable means of subsistence, the more time and taste would remain to them to satisfy their more refined wants. According to this, we should expect to discover a more refined civilization, especially, in intellectual matters, in the earliest periods, when population is small, when land exists in excess and is not yet exhausted. But, in reality, precisely the reverse is the case. In the earliest stages of civilization accessible to our observation, we find materialism prevailing in its coa.r.s.est form, and life absorbed entirely by the lowest physical wants.

(Tropical lands.) Where bread grows on the trees, and one needs only to reach out his hand and pluck it; where all one wants to cover his nakedness is a few palm leaves, ordinary souls find no incentive to an ant-like activity, or to a union among themselves for economic purposes.[214-3] When a Mexican countryman earns enough to keep himself and his family from absolute want by two days' labor in a week, he idles away the other five. It never occurs to him that he might devote his leisure time to putting his hut or his household furniture, etc., in better shape. The necessity of foresight even is almost unknown; and in the most luxuriantly fertile country in the world, a bad harvest immediately leads to the most frightful famine. Humboldt was a.s.sured that there was no hope of making the people more industrious except by the destruction of the banana plantations.[214-4] But, indeed, there would be little gained by such compulsory industry. To work for any other end than satiation, it is necessary that man should feel wants beyond the want created by mere hunger.[214-5] There are so many conditions precedent (and mutually limiting one another) to a general advance in civilization, that such an advance can, as a rule, take place only very gradually. Let us suppose, for instance, a single Indian in Mexico, perfectly willing to work six days in the week, and in this way to cultivate a piece of land three times as great as his fellow Indians.

Where would he get the land? He would, for a time find no purchasers for his surplus, and therefore not be in a condition to pay the landlord as much as the latter hitherto received from the pasturage alone. Not until cities are built and offer the rural population the products of industry in exchange for theirs, can they be incited to, or become capable of effecting a better cultivation of the land. This incentive and this capacity, are inseparably connected with each other. Where the agricultural population produce no real surplus, but after the fashion of medieval times, produce everything they want themselves, and consume all their own products with the exception of the part paid to the state as a tax, there can scarcely be an industrial cla.s.s, a commercial cla.s.s, or a cla.s.s devoted to science, art, etc. And, conversely, it is only the higher civilization which finds expression in the development of these cla.s.ses, that, by a more skillful guidance of the national labor, can call forth its productiveness to an extent sufficient to yield a considerable surplus of agricultural commodities over and above the most immediate wants of the cultivators of the soil themselves. Hence, we find that precisely in those countries which are most advanced in the economic sense, there is relatively the smallest number of men engaged in agriculture, and relatively the largest number in production of a finer kind.[214-6] It is here as in private housekeeping: the poorer a man is, the greater is the portion of his income which he is wont to lay out for indispensable necessities.[214-7] [214-8]

[Footnote 214-1: There is obviously here supposed besides the want thus increased, a capacity for development. Thus, for instance, the inhabitants of New Zealand brought with them, in what concerns clothing, dwellings, etc., the customs of a tropical into a colder country, and did not understand how to oppose the rigor of the new climate, except by building immoderately large fires, until they became acquainted with European teachers. (Edinb. Review, April, 1850, 466.)]

[Footnote 214-2: Compare _R. S. Zacharia_, Vierzig Bucher vom Staate, VII, 37. Men in the lower stages of civilization cherish a greater contempt for those more advanced than they are themselves visited with by the latter. Thus it was customary for the Siberian hunting races to utter a malediction: May your enemy live like a Tartar, and have the folly to engage in the breeding of cattle. (_Abulghazi Bahadur_, Histoire genealogique des Tartares.) Nomadic races look upon the inhabitants of cities as for the most part prisoners.]

[Footnote 214-3: The "happy, contented negroes," as Lord John Russel called them, work in Jamaica, on an average, only one hour a day since their emanc.i.p.ation. (Colonial Magazine, Nov. 1849, 458.) Egypt, India, etc., from time immemorial, the cla.s.sic lands of monkish laziness. Compare _Hume_, Discourses, No. 1, on Commerce. On the other hand, the person who has six months before him for which he must labor and lay up a store, if he would not famish or freeze, must necessarily be active and frugal; and there are other virtues which go along with these. (_List_, System der polit. Oek., I, 304.) According to _Humboldt_, the change of seasons compels man to get accustomed to different kinds of food, and thus fits him to migrate. The inhabitants of tropical countries are, on the other hand, like caterpillars, which cannot emigrate nor be made to emigrate, on account of the uniform nature of their food.]

[Footnote 214-4: _Humboldt_, N. Espagne, IV, ch. 9, II, ch.

5. Similarly among the coa.r.s.er Malayan tribes, the facility with which fish is caught and the cheapness of sago are the princ.i.p.al causes of their inertia and of their unprogressive uncivilization. (_Crawfurd._)]

[Footnote 214-5: _Le travail de la faim est toujours borne comme elle. (Raynal.)_]

[Footnote 214-6: Compare _Adam Smith_, I, ch. 11, 2; _supra_, -- 54. In Russia, nearly 80 per cent. of the population live immediately from agriculture; in Great Britain, in 1835, only 35; in 1821, only 33; in 1831, only 31; in 1841, only 26 per cent. (_Porter._) According to _Marshall_, there were, in 1831, in British Europe, 1,116,000 persons who lived from their rents, etc. In Ireland, there were, in 1831, over 65 per cent. of the population engaged in agriculture (_Porter_); in 1841, even 66 per cent.]

[Footnote 214-7: In Paris, in 1834, the average income per capita was estimated to be 1,029.9 francs, of which 46 francs were paid out for service; 55.7 for education; 11.5 for physicians' services, etc.; 7 on theatrical shows; 36 for washing; 13.6 for public purposes. (_Dingler_, Polyt.

Journal, LIII, 464.) According to _Ducpetiaux_, Budgets economiques des Cla.s.ses ouvrieres en Belgique, 1855, and _Engel_, Sachs. Statist. Ztschr., 1857, 170, the proportional percentage of family expenses for the following articles of consumption is:

=======================+========================================= | EXPENSES OF +--------------------+----------+--------- | _a laborer's_ | _family_ |_a well-_ | _family_ | _of the_ |_to-do_ _Consumption Purpose._ | _in comfortable_ | _middle_ |_family._ | _circ.u.mstances._ | _cla.s.s._ | +----------+---------+----------+--------- | _In_ | _In_ | _In_ | _In_ |_Belgium._|_Saxony._|_Saxony._ |_Saxony._ | _per_ | _per_ | _per_ | _per_ | _cent._ | _cent._ | _cent._ | _cent._ -----------------------+----------+---------+----------+--------- Food, | 61 | 62 | 55 | 50 Clothing, | 15 } | 16 } 95 | 18 } 90 | 18 } 85 Shelter, | 10 } 95 | 12 } | 12 } | 12 } Heating and lighting, | 5 } | 5 / | 5 / | 5 / Utensils and tools, | 4 / | | | | | | | Education, instruction,| 2 | 2 | 3.5 | 5.5 Public security, | 1 } 5 | 1 } 5 | 2 } 10 | 3 } 15 Sanitary purposes, | 1 } | 1 } | 2 } | 3 } Personal services, | 1 / | 1 / | 2.5 / | 3.5 / =======================+==========+=========+==========+=========

Hence _Engel_ thinks that when the articles of food, clothing, shelter, heating and lighting have become dearer by 50 per cent., and other wants have not, and it is desired to proportionately increase the salaries of officials, salaries of 300, 600 and 1,000 thalers should be raised to 427.5, 800 and 1,275 thalers respectively. (Preuss. Statist.

Zeitschr., 1875.) _E. Herrmann_, Pricipien der Wirthsch., 106, estimates that in all Europe, 45.6 of all consumption is for food, 13.2 for clothing, 5.7 for shelter, 4.6 for furnishing, 5.3 for heating and lighting, 2.6 for tools and utensils, 13.3 for public security, 6.6 for purposes of recreation. Compare _Leplay_, Les Ouvriers Europeens, 1855, and _v. Prittwitz_, Kunst reich zu werden, 487 ff. The expenses for shelter, service and sociability are specially apt to increase with an increase of income.]

[Footnote 214-8: The necessity of an equilibrium between production and consumption was pretty clear to many of the older political economists. Thus, for instance, _Petty_ calls the coa.r.s.e absence of the feeling of higher wants among the Irish the chief cause of their idleness and poverty. Similarly _Temple_, Observations on the N.

Provinces, ch. 6, in which Ireland and Holland are compared in this relation. _North_, Discourses upon Trade, 14 seq.; Potscr. _Roscher_, Zur Geschichte der english.

Volswirthschaftslehre, 83, 91, 127 ff. _Becher_, polit.

Discurs., 1668, 17 ff., was of opinion that the princ.i.p.al cause keeping the three great estates together, the very soul of their connection, was consumption. Hence the peasant lived from the tradesman, and the tradesman from the merchant. (_Boisguillebert_, Detail de la France, I, 4, II, 9, 21.) According to _Berkeley_, Querist, No. 20, 107, the awakening of wants is the most probable way to lead a people to industry. And so _Hume_, loc. cit., _Forbonnais_, Elements du Commerce, I, 364. The Physiocrates were in favor of active consumption. Thus _Quesnay_, Maximes generales, 21 seq.; _Letrosne_, De l'Interet social, I, 12. _La reproduction et la consommation sont reciprocquement la mesure l'une de l'autre._ Some of them considered consumption even as the chief thing (_Mirabeau_, Philosophie rurale, ch. 1), which could never be too great. Further, _Verri_, Meditazioni, I, 1-4. _Busch_, Geldumlauf, III, 11 ff.