LECTURE I.

Of the Propriety of certain Terms employed in Political Economy.

My object in these Lectures on Political Economy will be to explain the opinions which have been delivered on some of the leading questions belonging to the subject by successive eminent writers, and to decide among these. I propound no system of my own. If I can make my hearers know, understand, and estimate some of the most striking and more important passages of the best writers on Political Economy; this will be the best instruction which I can give on the subject. And I may add, that these important passagesstandard and classical passages we may call themare important in literature as well as in Political Economy; so that a person versed in English literature is expected to know such specimens of our eminent authors.

Some of these questions are questions of Definitionquestions whether this or that is the proper Definition of certain words. Other sciences as well as Political Economy have had such controversies in the course of their history; and you may think perhaps that such questions are of little consequence, since they are questions of words only. You ask, may we not define our terms as we please? No for we must define our terms so as to be able to assert True Propositions. The science of Political Economy does not rest upon Definitions. It rests upon facts. But facts are to be described in a general mannerthat is, by means of general terms. And these terms should be well chosen, so as to enable us to assert true Propositions. If our Definitions do this, they are not bad, merely because the boundary cases are perplexing.

What is Wealth?

We cannot do better than begin with Adam Smith's Wealth of Nations. Jt is a book on which all subsequent books on Political Economy rest. And it is a book full of actual facts, and not of mere hypothetical cases.

Now speaking of the Wealth of Nations, what do we mean by Wealth? What is the Definition of it ?

We will see what Mr Malthus says (Malthus, Def in Polit. Econ. p. 10):

"In adverting to the terms and definitions of Adam Smith, in his Wealth of Nations, I think it will be found that lie has less frequently and less strikingly deviated from the rules above laid down, and that he has more constantly and uniformly kept in view the paramount object of explaining in the most intelligible manner the causes of the wealth of nations, according to the ordinary acceptation of the expression, than any of the subsequent writers in the Science, who have essentially differed from him. His faults in this respect are not so much that he has often fallen into the common error, of using terms iii a different sense from that in which they are ordinarily applied in society, but that he is sometimes deficient in the precision of his definitions; and does not always, when adopted, adhere to them with sufficient strictness.

"His definition of wealth, for instance, is not sufficiently accurate; nor does he adhere to it with sufficient uniformity: yet it cannot be doubted that he means by the term generally the material products which are necessary, useful, and agreeable to man, and are not furnished by nature in unlimited abundance; and I own I feel quite convinced that it is in this sense in which it is most generally understood in society, and in which it may be most usefully applied, in explaining the causes of the wealth of nations."

On the same subject we have Mr Senior's remarks, which occur in an Appendix to Dr Whately's Logic.

Wealth.Lord Lauderdale has defined wealth to be `all that man desires.' Mr Malthus, ` those material objects which are necessary, useful, or agreeable.' Adam Smith confines the term to that portion of the results of land and labour which is capable of being accumulated. The French Economists, to the net produce of land. Mr McCulloch and Mr Storch, to those material products which have exchangeable value : according to Colonel Torrens, it consists of articles which possess utility and are produced by some portion of voluntary effort. M. Say divides wealth into natural and social, and applies the latter to whatever is susceptible of exchange. It will be observed that the principal difference between those definitions consists in the admission or rejection of the qualifications `exchangeable' and `material."'

As Mr Senior says, one main point is, whether wealth shall include what is not material. On this point Mr Malthus says (Def. p. 71)

"Mr McCulloch, in the Article on Political Economy, which he published in the Encyclopaedia Britannica had excluded these kinds of gratification [immaterial kinds] from his definition of wealth, and had given such reasons for this exclusion, as would fully have convinced me of its propriety, if I had not been convinced before. He observes that, `if Political Economy were to embrace a discussion of the production and distribution of all that is useful and agreeable, it would include within itself every other science; and the best Encyclopaedia would really be the best treatise on Political Economy. Good health is useful and delightful, and therefore, on this hypothesis, the science of wealth ought to comprehend the science of medicine: civil and religious liberty are highly useful, and therefore the science of wealth must comprehend the science of politics: good acting is agreeable, and therefore, to be complete, the science of wealth must embrace a discussion of the principles of the histrionic art; and so on. Such definitions are obviously worse than useless. They can have no effect but to generate confused and perplexed notions respecting the objects and limits of the science, and to prevent the student ever acquiring a clear and distinct idea of the inquiries in which he is engaged."

The question thus occurs, Do ministers of religion, education, justice; also poets, actors, physicians, add to the wealth of a country?

This question has more commonly been discussed with reference to Smith's distinction of productive and unproductive labour, which we shall therefore consider.

Is the distinction of productive and unproductive labour a solid distinction?

Smith says (W. N. p. 145):

"There is one sort of labour which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be called productive, the latter unproductive labour. Thus the labour of a manufacturer adds generally to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he in reality costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed; but the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers; he grows poor by employing a multitude of menial servants. The labour of the latter, however, has its value, and deserves its reward as well as that of the former; but the labour of the manufacturer fixes and realises itself in some particular subject or vendible commodity, which lasts for some time at least after that labour is past. It is, as it were, a certain quantity of labour stocked and stored up, to be employed, if necessary, upon some other occasion. That subject, or, what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labour equal to that which had originally produced it. The labour of the menial servant, on the contrary, does not fix, or realise, itself into any particular subject or vendible commodity. His services generally perish in the very instant of their performance, and seldom leave any trace or value behind them, for which an equal quantity of service could afterwards be procured."

The distinction of productive and unproductive labour has been impugned by Mr McCulloch: but on a large scale it is well founded, whatever perplexities there may be in doubtful cases. The leading proposition on this subject is that which Smith asserts : "A man grows rich by employing a multitude of manufacturers: he grows poor by employing a multitude of menial servants." The former are called productive, the latter unproductive labourers: and all labourers belong to the one or the other as they can best be classed with the one or the other.

I will take Mr Malthus's account of the character and general effect of the two kinds of labour:

"Let us suppose two fertile countries with the same population and produce, in one of which it was the pride and pleasure of the landlords to employ their rents chiefly in maintaining menial servants and followers, and, in the other, chiefly in the purchase of manufactures and the products of foreign commerce. It is evident that the different results would be nearly what I described in speaking of the consequences of the definition of the economists. In the country, where the tastes and habits of the landlords led them to prefer material conveniences and luxuries, there would, in the first place, be in all probability a much better division of landed property; secondly, supposing the same agricultural capital, there would be a very much greater quantity of manufacturing and mercantile capital; and thirdly, the structure of society would be totally different. In the one country, there would be a large body of persons living upon the profits of capital; in the other, comparatively a very small one: in the one there would be a large middle class of society; in the other the society would be divided almost entirely between a few great landlords and their menials and dependents: in the one country good houses, good furniture, good clothes, and good carriages would be in comparative abundance; while in the other, these conveniences would be confined to a very few.

"Now I would ask, whether it would not be the grossest violation of all common language, and all common feelings and apprehensions, to say that the two countries were equally rich ."

But what are the grounds on which it is alleged that there is no essential difference between productive and unproductive labour? They are such as these.

(Malth. Def. p. 75) "Mr McCulloch has discovered that there is a resemblance between the end accomplished by the menial servant or dependent and by the manufacturer or agriculturist." He says, "the end of all human labour is the same: that is, to increase the sum of necessaries, comforts and enjoyment, and it must be left to the judgment of every one to determine what proportion of the comforts he will have in the shape of menial services, and what in the shape of natural products."

Undoubtedly. But the question with us, as Political Economists, is not whether men shall employ one kind of labour or another; but, what is the effect of their choice on the wealth of a country? That the same end is answered does not make it useless to classify the means. It is not because a resemblance may be discovered among the means, that we are to identify all such means.

Mr Malthus well observes, to this effect:

"Mr McCulloch might unquestionably discover some resemblance between the salt and the meat which it seasons: they both contribute, when used in proper proportions, to compose a palatable and nutritive meal, and in general we may leave it to the taste and discretion of the individual to determine these proportions; but are we on that account to confound the two substances together, and to affirm that they are equally nutritive? Are we to define and apply our terms in such a way as to make it follow from our statements that if the individual were to compound his repast of half salt and half meat, it would equally conduce to his health and strength."

Further, the matter is thus argued:

"Mr McCulloch states, that a taste for the gratifications derived from the unproductive labourers of Adam Smith, `has exactly the same effect upon national wealth as a taste for tobacco, champagne, or any other luxury."' "This," says Mr Malthus, "may be directly denied unless we define wealth in such a manner as will entitle us to say that the enjoyments derived by a few great landlords, from the parade of menial servants and followers, will tell as effectually in an estimate of wealth as a large mass of manufacturers and foreign commodities. But when M. Chaptal endeavoured to estimate the wealth of France, and Mr Colquhoun that of England, we do not find the value of these enjoyments computed in any of their tables. And certainly if wealth means what it is understood to mea.n in common conversation, and in the language of the highest authorities in the science of Political Economy, no effects on national wealth can or will be more distinct than those which result from a taste for material conveniences and luxuries, and a taste for menial servants and followers. The exchange of the ordinary products of land for manufactures, tobacco, and champagne, necessarily generates capital; and the more such exchanges prevail, the more do those advantages prevail which result from the growth of capital and a better structure of society; while an exchange of necessaries for menial services, beyond a certain limited amount, obviously tends to check the growth of capital, and, if pushed to a considerable extent, to prevent accumulation entirely, and to keep a country permanently in a semi-barbarous state." Dr Travers Twiss, in his View of the Progress of Political Economy, states and criticises the opinions of writers on this subject. He thus gives an account of Mr Malthus's doctrine on this subject.

Mr Malthus, to avoid the prejudice which prevails against what is called unproductive labour, had proposed to call such labour personal services. Dr Twiss remarks,

"Labour then, he" [Mr Malthus] says, "may be distinguished into two kinds, productive labour, and personal services, meaning by productive labour, that labour which is so directly productive of material wealth, as to be capable of estimation in the quantity or value of the object produced, which object is capable of being transferred without the presence of the producer; and meaning by personal services, that kind of labour or industry, which however highly useful and important some of it may be, and however much it may conduce indirectly, to the production and security of material wealth, does not realise itself on any object which can be valued and transferred without the presence of the person performing such service, and cannot therefore be made to enter into an estimate of national wealth."

This," says Dr Twiss, " though differing in name, is essentially the doctrine of Adam Smith."

Mr Senior puts the distinction very ingeniously (Ency. Metrop. art. Polit. Econ.):

"It appears to us," lie writes, "that the distinctions that have been attempted to be drawn between productive and unproductive labourers, or between the producers of material and immaterial products or between commodities or services, rest on differences existing not in the things themselves, but in the mode in which they attract our attention. In those cases in which our attention is principally called, not to the act of occasioning the alteration, but to the result of that act, to the thing (as) altered, economists have termed the person who occasioned that alteration a productive labourer, or the producer of a commodity or material produced. Where on the other hand, our attention is principally called, not to the thing (as) altered, but to the act of occasioning the alteration, economists have termed the person occasioning the alteration an unproductive labourer, and his exertions, services, or immaterial products. A shoemaker alters leather and thread and wax into a pair of shoes. A shoe-black alters a dirty pair of shoes into a clean pair. In the first case, our attention is called principally to the thing as altered. The shoemaker, therefore, is said to make or produce shoes. In the case of the shoe-black, our attention is called principally to the act as performed. He is not said to make or produce the commodity, clean shoes, but to perform the service of cleaning them. In each case, there is of course an act and a result; but in the one case our attention is called principally to the act; in the other, to the result."

"It might have been perhaps more correct," says Dr Twiss, "to have represented the shoe-black as altering blacking and dirty shoes into clean shoes. If the shoe-black is a private servant, lie is simply an instrument of his master to assist him in the consumption of blacking, which consumption takes place, not when it is applied to the boot, for a clean boot is of more value than a dirty boot, but when the boot is soiled afresh. The master, therefore, really consumes the blacking, and the servant assists him. On the other hand, the shoe-black may keep a stall, as is frequently seen in the streets of Paris, and his services may be at the command of the public: in this case he is a trader, and supplies clean shoes in exchange for dirty shoes and money."

Dr Twiss, who praises and apparently adopts this view, applies it in a particular case in a manner which, I think, is quite indefensible. He says (p. 177)'

"The first machine of Newcomen (constructed in 1765) required the most unremitting attention on the part of the person whose business it was to close and open incessantly certain cocks (robinets), by which at one moment the steam was admitted into the cylinder, at another, a jet of cold water entered to condense it. It happened on a particular occasion that whilst a boy named Humphrey Potter was thus employed, his comrades, who were at play, excited him so much by their cries, that he found himself at last unable to resist the temptation to join them. But the task imposed upon him was one which he could not venture to abandon for a single minute. The excitement of the moment, however, kindled in him a spark of genius, and suggested to him certain relations between the parts of the machine, which he had before not observed. Of the two cocks, one required to be opened at the moment when the balance rod, which Newcomen first introduced, completed its descending oscillation, and to be closed at the conclusion of its ascending oscillation. The operations of the second cock were just the reverse. There was thus a necessary dependence between the movements of the balance-rod and the opening and shutting of the two cocks, and it occurred to Potter that the balance-rod might be made to communicate the necessary motion to the other parts of the machine. He at once attached cords from the handles of the cocks to certain parts of the balance-rod, and found that the tightening and loosening of these cords, with every ascending and descending oscillation, would produce the same effect that he hitherto produced with his hand. For the first time the steam-engine worked by itself without any further care than that of feeding the furnace with coals. More complicated constructions were soon adopted to replace the simple contrivance of the child; but the origin of them all was owing to the mere longings of a boy to join his playfellows."

He adds, "According to Adam Smith's division, this boy would be classed under the head of unproductive labourers." But according to Adam Smith's doctrine this boy must certainly be ranked among productive labourers. He was employed in working a machine; and was just as much a productive labourer as the draw-boy who pulls the sheds of a loom, or as the weaver who sits and works at the loom.

We are carefully to remember that unproductive as applied to labourers is not a term of reproach or condemnation. The standard passage on the subject is this (Smith's Wealth of Nations, p. 146):

"The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value, and does not fix or realize itself in any permanent subject or vendible commodity which endures after that labour is past, and for which an equal quantity of labour could afterwards be procured. The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are maintained by a part of the annual produce of the industry of other people. Their service, how honourable, how useful, or how necessary soever, produces nothing for which an equal quantity of service can afterwards be procured. The protection, security, and defence of the commonwealth, the effect of their labour this year, will not purchase its protection, security, and defence for the year to come. In the same class must be ranked, some both of the gravest and most important, and some of the most frivolous professions; churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, &c. The labour of the meanest of these has a certain value, regulated by the very same principles which regulate that of every other sort of labour; and that of the noblest and most useful produces nothing which could afterwards purchase or procure an equal quantity of labour. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production."

Hence the indignation with which Dr Chalmers rejects this term is really uncalled for. In his Political Economy, his chapter xi. is " On the distinction made by Economists between Productive and Unproductive Labour." He there speaks of the disparagement thus laid on ecclesiastics and many other orders of men whose services are indispensable: but there is really no disparagement intended. He says that it has been recommended as the best policy of a government to abridge and economize to the uttermost in the maintenance of unproductive labourers. But this has not been recommended by any wise political economists.

Mr Malthus, as I have said, proposes to use the term personal services instead of unproductive labour. But there is no occasion for such a change, and it would not be convenient.

Mr J. S. Mill has an Essay on the terms productive and unproductive labour which is judicious. He says:

"The end to which all labour and all expenditure are directed, is two fold. Sometimes it is enjoyment immediately; the fulfilment of those desires, the gratification of which is wished for on its own account. Whenever labour or expense is not incurred immediately for the sake of enjoyment, and is yet not absolutely wasted, it must be incurred for the purpose of enjoyment indirectly or mediately; by either repairing and perpetuating, or adding to the permanent sources of enjoyment.

"Sources of enjoyment may be accumulated and stored up; enjoyment itself cannot. The wealth of a country consists of the sum total of the permanent sources of enjoyment, whether material or immaterial, contained in it: and labour or expenditure which tends to augment or to keep up these permanent sources, should, we conceive, be termed productive.

"Labour which is employed for the purpose of directly affording enjoyment, such as the labour of a performer on a musical instrument, we term unproductive labour. Whatever is consumed by such a performer, we consider as unproductively consumed: the accumulated total of the sources of enjoyment which the nation possesses, is diminished by the amount of what he has consumed; whereas, if it had been given to him in exchange for his services in producing food or clothing, the total of the permanent sources of enjoyment in the country might have been not diminished, but increased.

"The performer on a musical instrument then is, so far as respects that act, not a productive, but an unproductive labourer. But what shall we say of the workman who made the musical instrument? He, most persons would say, is a productive labourer; and with reason; because the musical instrument is a permanent source of enjoyment, which does not begin and end with the enjoying, and therefore admits of being acccumulated.

"The skill of a tailor, and the implements he employs, contribute in the same way to the convenience of him who wears the coat, namely, a remote way: it is the coat itself which contributes immediately. The skill of Madame Pasta, and the building and decorations which aid the effect of her performance, contribute in the same way to the enjoyment of the audience, namely, an immediate way, without any intermediate instrumentality. The building and decorations are consumed unproductively, and Madame Pasta labours and consumes unproductively; for the building is used and worn out, and Madame Pasta performs, immediately for the spectator's enjoyment, and without leaving, as a consequence of the performance, any permanent result possessing exchangeable value: consequently the epithet unproductive must be equally applied to the gradual wearing out of the bricks and mortar, the nightly consumption of the more perishable `properties' of the theatre, the labours of Madame Pasta in acting, and of the orchestra in playing. But notwithstanding this, the architect who built the theatre was a productive labourer; so were the producers of the perishable articles; so were. those who constructed the musical instruments; and so, we must be permitted to add, were those who instructed the musicians, and all persons who, by the instructions which they may have given to Madame Pasta, contributed to the formation of her talent. All these persons contributed to the enjoyment of the audience in the same way, viz, in the production of a permanent source of enjoyment.

"The difference between this case, and the case of the cotton-spinner already adverted to, is this. The spinning-jenny, and the skill of the cotton~spinner, are not only the result of productive labour, but are themselves productively consumed. The musical instrument and the skill of the musician are equally the result of productive labour, but are themselves unproductively consumed."

Miss Martineau, in her Tale, Life in the Wilds, one of her Tales entitled Illustrations of Political Economy, describes a party of persons who, in a settlement near the Cape of Good Hope, arc deprived of all their possessions by an onslaught of Caffres, and have to begin life afresh, without tools, capital, or social organization. There is an instructive account given of the manner in which tools and capital are gradually acquired: and of the manner in which the wages of labour are paid. And in this case, besides the productive labourers, there is found a need for a minister of religion and a governor, and these are also paid, though unproductive labourers; productive meaning, as Miss Martineau says, productive of wealth.

There is nothing unusual in this arbitrary limitation of the meaning of a phrase. `The Quarterly' means the Quarterly Review. With us in Cambridge `the Long' means the Long Vacation. In architecture, the `Decorated style' means that in which the windows are decorated with tracery. The tenacity with which some writers have urged that that labour cannot be properly called unproductive which produces enjoyment, involves a rejection of the ordinary usages of language.

Nor is it true that because all the kinds of labour tend to the same end they need to be classed together, though Dr Twiss urges this argument. He says:

"The first link of a chain-cable is just as instrumental as the last link in holding a ship by its anchor; and so each individual, who forms a link in the great chain of operations of human labour, however far remote his place may be from that of the person out of whose hands the product issues, in its finished state of preparation for the consumer, as he has in his place contributed a share of that general result, seems justly entitled to be considered a productive labourer equally with the last workman."

But to this we reply, that a cable may be of different materials and have different properties in one part and another. If the cable be half an iron chain and half a hempen rope, shall we be forbidden to examine the different properties of iron chain and hempen rope because the first link of one and the last fathom of the other are equally instrumental in holding a ship to its anchor?

I conceive therefore, that, as I have said, Dr Twiss's argument is of no force, and the distinction of productive and unproductive labour remains a fundamental point in Political Economy.