;-NRLFmKmmSttitnct-printers.POLITICALECONOMY.BYW. STANLEYJEVONS,LL.D.,M.A., F.R.S.,***PROFESSOROF POLITICALECONOMY IN UNIVERSITYCOLLEGE, LONDON;EXAMINER IN LOGICANDMORAL PHILOSOPHY IN THEUNIVERSITY OF LONDON..-UNlVER.SiT/NEWYORK:D.APPLETON ANDCOMPANY,549AND551BROADWAY.1880.'ACONTENTS.CHAP.PAGEI.INTRODUCTION,7II.UTILITY,17III. PRODUCTION OFWEALTH,...24IV. DIVISION OFLABOUR,....32V.CAPITAL, 42VI. DISTRIBUTION OFWEALTH,...48VII.WAGES, 53VIII.TRADES-UNIONS,61IX.CO-OPERATION, ETC.,....77X. THETENUREOFLAND,. . . .87XLEXCHANGE, 95XII.MONEY,.103XIIL CREDITANDBANKING,. . . .noXIV. CREDITCYCLES,. . . . .115XV. THEFUNCTIONS OFGOVERNMENT,.123XVI.TAXATION,. .126183B70/PREFACE.INpreparingthis littletreatise,I havetried toputthetruths of PoliticalEconomyinto a form suitable forelementaryinstruction. WhileconnectedwithOwensCollege,it wasmy duty,as Cobden Lecturer onPoliticalEconomy,toinstructaclass ofpupil-teachers,in order thatthey mightafterwards introduce theteachingof thisimportant subjectintoelementaryschools. There can be no doubt that it is mostdesirable to disseminateknowledgeof the truths ofpolitical economythroughall classesofthepopulationby anymeans whichmaybeavailable. Fromignor-ance of these truths arisemanyof the worst socialevils disastrous strikes andlockouts,oppositiontoimprovements, improvidence,destitution,misguidedchanty,anddiscouragingfailure inmanywell-intendedmeasures. Morethanforty yearsagoMissMartineausuccessfullypopularisedthe truthsofpoliticaleconomyin her admirable tales. Aboutthesametime,Arch-bishop Whatelywas much struck with the need ofinculcating knowledgeof these matters at anearlyage.Withthis viewhepreparedhis"EasyLessonsonMoneyMatters,"of whichmanyeditions havebeenprinted.Inearly boyhoodI learnedmyfirstideas ofpolitical economyfrom acopyof theselessons,from theprefaceto whichIquotetheseremarksofWhately:"Therudimentsofsoundknow-ledge concerningthese(subjects) may,it has beenfoundbyexperience,becommunicatedat averyearlyage.. . .Those, therefore,whoareengagedin con-ducting,or inpatronisingorpromotingeducation,PREFACE.should consider it a matter of no small moment toinstil, betimes, justnotionsonsubjectswithwhichallmust in after-life bepracticallyconversant,and inwhichnoclass ofmen,fromthehighestto thelowest,can,in suchacountryas this atleast,besafelyleft inignoranceor in error." In lateryearslikeopinionshavebeenheldandefforts madebyMr.WilliamEllis,Professor W. B.Hodgson,Dr.John Watts,Mr.Templar,andothers,andexperienceseemsto confirmboth the need and thepracticabilityoftheteachingadvocatedby Whately.But it is evident that onecondition of success in such efforts is thepossessionofasmall text-bookexactlysuited to thepurposesinview.Relyinguponmyexperienceoftenyearsin theinstruction ofpupil-teachersatManchester,I havenowput mylessons into thesimplestformwhichthenature of thesubjectseems to render advisable.It ishopedthat this little treatisemayalsoserveasastepping-stonetoaknowledgeofthescienceamong generalreaders of maturerage,who havehithertoneglectedthestudyofpolitical economy.Owingto the narrow limits ofthespaceatmydis-posal,it wasimpossibleto treat the whole of thescience in asatisfactory way.Ihave, therefore,omitted somepartsofpolitical economy altogether,andhavepassedover otherparts verybriefly.Thusthelarger portionofmyspacehasbeenreservedforsuchsubjectsasProduction,Division ofLabour, CapitalandLabour, Trades-Unions,andCommercialCrises,which are mostlikelyto beinterestingandusefultoreaders ofthis Primer.UNIVERSITYCOLLEGE,GOWERSTREET, LONDON,W.C.$istJanuary-, 1878.SCIENCEPRIMERS.POLITICAL ECONOMY.CHAPTER I.INTRODUCTION.i. What is PoliticalEconomy?Political!*Economytreats ofthewealthofnations;itin-iquiresinto the causeswhich make one nation morerichandprosperousthananother. ItaimsatteachingNwhatshouldbe donein orderthatpoorpeople may beasfewaspossible,andthateverybodymay,as agene-ralrule,bewellpaidfor hiswork.Othersciences, nodoubt,assist us inreachingthe same end. Thescience of mechanics showshowto obtainforce,andhow to use it inworkingmachines.Chemistryteaches howuseful substancesmaybeproducedhowbeautifuldyesandodours andoils,forinstance,maybeextractedfrom thedisagreeablerefuse of thegas-works.Astronomyisnecessaryforthenavigationofthe oceans.Geology guidesin the search for coalandmetals.Various socialsciences,also,areneededtopromotethe welfare ofmankind.Jurisprudencetreats of thelegal rightsofpersons,and howthey maybe bestdefinedandsecuredbyjustlaws. PoliticalPhilosophyinquiresinto the differentforms ofgovernmentandtheir relativeadvantages. SanitaryScienceascertainsthe causes of disease.The science of Statisticscollects all manner of factsrelatingto the state orcommunity.All these sciences are useful in show-inghow wemaybe made morehealthy, wealthy,andwise.ButPoliticalEconomyis distinctfromall theseothersciences,andtreats of wealthitself;itinquireswhatwealth is;howwecanbestconsume it whenwehavegot it;and how wemaytakeadvantageoftheothersciencestogetit.Peopleare fondof find-c8PRIMEROFPOLITICALECONOMY.[CH.ingfault withpolitical economy,because it treatsonlyof wealth;they saythat there aremanybetterthingsthanwealth,such asvirtue, affection,generosity. Theywould have usstudythesegoodqualitiesratherthanmerewealth. Amanmaygrowrichby makinghardbargains,andsaving uphismoneylike a miser. Nowas this is notnearlysogoodas if he weretospendhis wealthforthebenefitof hisrelatives, friends,andthepublicgenerally, theyproceedtocondemnthe science ofwealth.Butthesecomplainersmisunderstandthepurposeofasciencelikepolitical economy. Theydonotseethatinlearningwemustdoonethingat atime. Wecan-notlearnthesocial sciences all atthesame time. Nooneobjectstoastronomythat it treatsonlyof thestars,orto mathematicsthat it treatsonlyofnumbersandquantities.It would be averycurious SciencePrimer which should treat ofastronomy, geology,chemistry, physics, physiology,&c.,all at once.There must bemany physicalsciences,and theremustbealsomanysocialsciences,and each of thesesciencesmusttreat ofits ownproper subject,andnotofthingsingeneral.2. Mistakes about PoliticalEconomy.Agreatmanymistakes are made about the sciencewearegoingto considerbypeoplewhooughtto knowbetter. Thesemistakesoften arise frompeoplethink-ingthattheyunderstand all aboutpolitical economywithoutstudyingit. Noordinary personof senseventures to contradict a chemist aboutchemistry,oran astronomer abouteclipses,or even ageologistabout rocks and fossils. Buteverybodyhas hisopiniononewayor another about badtrade,or theeffect ofhighwages,or the harm ofbeingunderbidbycheaplabour,oranyoneof hundredsofquestionsof socialimportance.It does not occur tosucfrpeoplethatjhesematters arereallymore difficulttoimgerstandjhanchemistry,orastronomy", orgeology,thatlf lifetime ofstudyis" notsufficient to enaSleI.]INTRODUCTION.us tospeak confidentlyabout them.Yet,theywhohaveneverstudiedpoliticaleconomyatall,areusuallythemostconfident.Thefactisthat,justasphysicalsciencewasformerlyhated,sonowthere is akind ofignorantdislike andimpatienceofpolitical economy. Peoplewish tofollow their ownimpulsesandprejudices,and arevexed when told thattheyaredoing justwhat willhave theoppositeeffect to that whichtheyintend.Take the case of so-calledcharity.There aremanygood-heartedpeoplewhothinkthat it isvirtuoustogivealmstopoorpeoplewhoaskforthem,withoutconsideringthe effectproduced uponthepeople.Theysee thepleasureof thebeggarongettingthealms,buttheydo not see the aftereffects,namely,thatbeggarsbecome more numerous than before.Muchofthepovertyandcrimewhich nowexist havebeencausedbymistakencharityinpasttimes,whichhascausedalargepartof thepopulationtogrowup*careless, andimprovident,andidle. Politicaleconomy-jprovesthat,insteadofgivingcasualill-consideredalms,/we should educatepeople,teach them to work and/earntheirownlivings,and saveupsomethingtoliveiuponin oldage.Iftheycontinue idle andimprovi-dent,theymust suffer the results of it. But as thisseems hard-heartedtreatment,politicaleconomistsarecondemnedbysoft-heartedandmistakenpeople.Thescience is said tobeadismal,cold-bloodedone,andit isimpliedthattheobjectofthescience is to maketherichricher,and to leave thepoortoperish.Allthis isquitemistaken.Thepolitical economist,when heinquireshowpeoplemaymosteasilyacquireriches,doesnotteachthattherichmanshouldkeephis wealthlikeamiser,norspendit inluxuriouslivinglike aspendthrift.There isabsolutelynothingin thescience to dissuadetherichmanfromspendinghiswealthgenerouslyandyetwisely.Hemayprudentlyhelphis relatives andfriends;hemayestablish usefulpublicinstitutions,ioPRIMER OFPOLITICALECONOMY.[CH.such as freepubliclibraries, museums,public parks,dispensaries,&c.;hemayassist ineducatingthepoor,orpromotinginstitutions forhighereducation;hemayrelieveanywho aresufferingfrommisfortuneswhichcouldnothavebeenprovidedagainst;cripples,blindpeople,andallwhoareabsolutelydisabledfromhelp-ingthemselves,areproper objectsof the rich man'scharity.Allthat thepoliticaleconomist insistsuponis thatcharityshall bereally charity,andshall notinjurethose whomit is intendedto aid. It is sadto think that hitherto much harmhasbeendonebythosewhowishedonlytodogood.It issad,again,to see thousands ofpersons tryingtoimprovetheirpositions bymeanswhich havejustItheoppositeeffect,I meanbystrikes,byrefusingtoyusemachinery,andby trying,in variousways,toresist theproductionof wealth.Workingmen havemadeapoliticaleconomyof their own:theywant tomakethemselvesrichbytakingcare not toproducetoo much riches.They, again,see an immediateeffect of whattheydo,buttheydo not see whathappensas the after result. It is the samewiththequestionof Free Trade. InEnglandwe have atlengthlearned thewisdom ofleavingcommercefree.Inothercountries,andevenintheAustralianColonies,lawsareyetpassedtomakepeoplericherbyprevent-ingthem fromusingthe abundantproductsofotherlands.Peopleactuallyrefuse to see thatwealthmustbeincreasedbyproducingitwhere it canbeproducedmosteasilyandplentifully.Eachtrade,eachtown,each nation must furnish what it canyieldmostcheaply,and othergoodsmust beboughtfrom theplaceswheretheyalsocanberaisedmosteasily.Politicaleconomyteaches us to lookbeyondtheimmediateeffect of whatwedo,andto seekthegoodof the wholecommunity,andeven of the whole ofmankind. ThepresentprosperityofEnglandisgreatlydue to the science which Adam Smithgaveto theworld in his "Wealth of Nations." HetaughtusI.]INTRODUCTION.the value of Free Labour and FreeTrade,andnow,ahundredyearsafter thepublicationof hisgreatbook,thereoughtnot to be somanymistakenpeoplevainlyactinginoppositionto his lessons. Itis certain that ifpeopledo not understand atruepolitical economy, theywill make afalse one of their own. Hence theimperativeneed that noone,neither man norwoman,shouldgrow upwithoutacquiringsomecomprehensionofthe sciencewhichwearegoingtostudy.3.Divisionsofthe Science. I willbegin bystatingthe order in which the several branches ordivisions of the science ofeconomyare to be con-sidered in this little treatise.Firstly,we must learnjwhatwealth,thesubjectof thescience,consists of.eeondly,weproceedtoinquirehowwealth is usedor consumed; nothing,we shallsee,can bewealth,unless it beputto someuse,and before we makewealthwe mustknowwhatwewantto use.TJairdly,wecangoonto consider howwealth isproducedorbroughtinto existence;andhow,in the fourthplace,havingbeenproduced,it issharedamongthedifferent*classes ofpeoplewho havehadahand inproducingit.Briefly,wemaysaythatpolitical economytreatsof(i)TheNature,(2)TheConsumption,_(3)TheProduction,and(4)The Distributionof Wealth. It will alsobenecessarytosaya littleabout Taxation. Apartof the wealth ofevefycountrymust be takenbythegovernment,in ordertopaytheexpensesofdefendingandgoverningthenation. But taxationmaycome,perhaps,under theheadofdistribution.4.Wealth and Natural Riches. Wedo notlearnanything byreadingthatpolitical economyis the science ofwealth,unless we knowwhatscienceis,andwhat wealth is. When one term isdefinedbymeansof otherterms,wemustunderstandtheseotherterms,in order toget anylight uponthesubject.In the Primer ofLogicI havealready12PRIMEROF POLITICALECONOMY.[CH.attemptedtoexplainwhat scienceis,andI will nowattempttomakeplainwhatwealth is.Doubtlessmany peoplethink that there is nodifficultyinknowingwhat wealth is;the realdifficultyis togetit. But in thistheyare mistaken.There are agreat many peoplein thiscountrywhohavemadethemselvesrich,andfewor none of themwouldbe able toexplain clearlywhatwealth is. Infact it is notat alleasyto decide thequestion.Thepopularidea is that wealth consists ofmoney,andmoneyconsists ofgoldand silver;thewealthyman,then,wouldbeonewhohasan iron safe full ofbagsofgoldand silvermoney.Butthis is farfrombeingthe case;richmen,as ageneralrule,haveverylittlemoneyin theirpossession.Insteadofbagsofmoneytheykeep goodbalances at their bankers. Butthisagaindoes not tell us what wealthis,because it isdifficult tosaywhat a bank balance consistsof;thebalance is shownbya fewfiguresin the bankers*books. As ageneralrule the banker has notgotin hispossessionthemoneywhich he owes to hiscustomers.Perhapssomeonewillsaythat he isbeyond ques-tionrich,who owns agreatdeal of land. Butthisdepends entirely uponwhere and what the land is,Amanwho owns anEnglish countyisverywealthy;amanmightownanequalextentoflandinAustralia,withoutbeing remarkablyrich. ThesavagesofAustralia,who held the land before theEnglishtookit,had enormousquantitiesofland,buttheywere neverthelessmiserably poor.Thus it isplainthatlandalone is notwealth.Itmaybeurgedthat,in order to formwealth,the land should befertile,the soil should begoodrtheriversandlakesaboundinginfish,and theforestsfull ofgoodtimber. Under thegroundthere shouldbeplentyofcoal, iron,copper,reefs ofgold,&c.If,in additiontothese,there is agood climate,plentyofsunlight,andenough,but not toomuch,water,theni.jINTRODUCTION.13thecountryiscertainlyrich. It is true that thesethingshave been called natural riches;but Imention them in order topointout thattheyarenot in themselves wealth.People mayliveuponland full of naturalriches,as the North AmericanIndiansliveduponthecountrywhich nowforms theUnited States;neverthelessthey maybevery poor,becausetheycannot,ortheywill notlabour,in suchawayastoturnthenaturalrichesinto wealth.